AMARILLO, TX – The lifeblood of the successful DME supplier is an innovative marketing program. In implementing a marketing program the supplier must adhere to multiple federal anti-fraud laws. This article discusses what those laws are, how marketing programs can be properly structured, and what types of marketing programs must be avoided.
Federal Anti-Fraud Statutes
• Medicare Anti-Kickback Statute (“AKS”) – This statute makes it a felony to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce a person or entity to refer (or arrange for the referral of) an individual for an item or service covered by a federal health care program.
• Beneficiary Inducement Statute – This statute imposes civil monetary penalties upon a person or entity that offers or gives something of value to prospective customers covered by a government health care program. However, this statute does not prohibit the giving of a gift that is of “nominal value” (no more than $15 per item or $75 in the aggregate over 12 months).
• Stark Physician Self-Referral Statute (“Stark”) – This statute provides that if a physician (or an immediate family) has a financial relationship with an entity providing designated health services (“DHS”), then the physician may not refer patients to the entity unless an exception is met. DHS includes prescription drugs. One of the exceptions states that a provider can spend up to $393 per year, on behalf of a physician, for non-cash/non-cash equivalent items.
Federal Safe Harbors
The Office of Inspector General (“OIG”) has issued a number of “safe harbors” to the AKS. If an arrangement falls within a safe harbor, then, as a matter of law, the arrangement does not violate the AKS. If the arrangement does not fall within a safe harbor, it does not mean that the AKS is violated. Rather, it means that a stringent analysis of the arrangement must be made. Two important safe harbors are:
• Employee Safe Harbor – This states that prohibited remuneration does not include any amount paid by an employer to a bona fide employee.
• Personal Services and Management Contracts Safe Harbor – This states that prohibited remuneration does not include any payment made to an independent contractor as long as a number of conditions are met, including the following: (i) the parties must sign an agreement with a term of at least one year; (ii) the compensation paid must be fixed one year in advance (e.g., $24,000 over the next 12 months); and (iii) the compensation must be the fair market value (“FMV”) equivalent of the payee’s services.
• Advisory Opinions – A health care provider may submit to the OIG a request for an advisory opinion concerning whether a current or future arrangement will violate the AKS.
• Fraud Alerts and Advisory Bulletins – The OIG publishes alerts and bulletins that discuss business arrangements that the OIG believes may be abusive.
“Dos” of Marketing
• Use of Employees – The supplier can pay commissions to full-time or part-time bona fide employees.
• Use of Independent Contractors – The supplier can compensate 1099 independent contractors for marketing to government program patients so long as the arrangement complies with the Personal Services and Management Contracts Safe Harbor.
• Expenditures for Physicians – The supplier can spend up to $398 per year on a physician for non-cash/non-cash equivalent items such as meals and golf.
• Expenditures for Physicians’ Staffs, Hospital Discharge Planners, and Other Referral Sources – It is permissible for the supplier to provide non-cash/non-cash equivalent items to non-physicians so long as the amount spent is modest. For example, while it is permissible for the supplier to sponsor lunch (with an in-service) for the physician’s staff twice a year, it is not permissible for the supplier to sponsor lunch every month. In determining whether an arrangement amounts to a kickback, the “duck” test applies: “If it looks like a duck, walks like a duck, and sounds like a duck, then it is a duck.”
• Medical Director Agreement – It is permissible for a supplier to enter into a 1099 independent contractor Medical Director Agreement (“MDA”) with a referring physician so long as the MDA complies with the Personal Services and Management Contracts Safe Harbor and the personal services exception to Stark. The safe harbor and exception essentially say the same thing.
• Employee Liaison – The supplier can place an employee liaison at a facility so long as the liaison does not perform services that the facility would normally have to perform.
• Waiver of Copayments – A supplier must make a reasonable attempt to collect copayments. The supplier can waive a patient’s copayment only if the patient’s financial condition justifies the waiver.
• Purchase of Internet Leads – The supplier can purchase “raw” or “unqualified” leads (i.e., name, address and phone number) on a per lead basis. If the supplier desires to purchase “qualified” leads, then the arrangement must comply with the Personal Services and Management Contracts Safe Harbor.
• Charitable Contributions – The OIG will approve charitable contributions so long as (i) the contributions are for a bona fide charitable purpose, (ii) the contributions are made in a manner that do not take into account the value or volume of referrals, and (iii) the arrangement incorporates safeguards to ensure that contributions are not tied to referrals or other business generated between the organizations.
• Joint Venture With Referral Source (e.g., Hospital) – A supplier and a hospital can jointly own a supplier (“joint venture” or “JV”). Preferably, the JV will comply with the Investment Interest Safe Harbor to the AKS. If this is not possible, then the JV needs to comply with the OIG’s 1989 Special Fraud Alert entitled “Joint Ventures” and the OIG’s April 2003 Special Advisory Bulletin entitled “Contractual Joint Ventures.” In essence, these say that a JV cannot be a “sweetheart deal” for the hospital.
• Use of Protected Health Information (“PHI”) – PHI, as defined by HIPAA, is essentially any information that a supplier has on a patient. The supplier cannot use or disclose PHI unless a specific HIPAA exception is met. Under HIPAA, a supplier can “use” a patient’s PHI by educating the patient about other health care products and services offered by the supplier.
• Gifts to Prospective Customers – A supplier can provide gifts of minimal value ($15 or less) to prospective customers.
“Don’ts” of Marketing
• Use of Independent Contractors – If a 1099 independent contractor is generating government program patients for the supplier, then the supplier cannot pay percentage compensation to the independent contractor. Rather, the compensation must comply with the Personal Services and Management Contracts Safe Harbor to the AKS. The supplier and independent contractor cannot engage in a “carve out” arrangement in which the supplier pays (i) the independent contractor percentage compensation for commercial insurance patients and (ii) nothing for government program patients.
• Expenditures for Physicians – The supplier cannot give cash or cash equivalents (e.g., gift cards) to physicians. The supplier cannot give non-cash/non-cash equivalent gifts to physicians that exceed $398 in value over a 12 month period.
• Expenditures for Non-Physician Referral Sources – The supplier should not spend more than a modest amount on non-cash/non-cash equivalent items (e.g., meals with an in-service) on physicians’ staffs, hospital discharge planners, and other referral sources.
• Medical Director Agreements – The compensation paid by the supplier to a Medical Director cannot vary based on the number of referrals from the Medical Director to the supplier. The services by the Medical Director must be important and substantive, not “made up.”
• Sham Copayment Insurance Programs – In a “sham” copayment insurance program, patients pay a small monthly amount to suppliers or intermediaries. These monthly payments are called “insurance premiums” and are designed to allow the patients to obtain “insurance” to pay copayments. In reality this type of program is a “sham” designed to routinely waive copayments.
• Purchasing Internet Leads – The supplier cannot purchase “qualified” leads on a per lead basis. The only way that a supplier can purchase qualified leads is if the arrangement complies with the Personal Services and Management Contracts Safe Harbor.
• Disclosing PHI – The supplier cannot disclose PHI to another company in order to allow that company to market to the supplier’s customers.
• Gifts to Prospective Customers – The supplier cannot provide gifts to prospective customers in which the value of the gift exceeds $15.
Social media allows a supplier to add value to its “brand” and make connections that can help build a relationship between a customer/prospective customer and the supplier. These relationships create the foundation for what can become one of the supplier’s greatest marketing assets: customer advocacy. Advocacy is the nirvana of social media, and it is through advocacy that businesses scale and grow. Advocacy shows that a brand is doing such an amazing job that customers are willing to utilize their social media platform to say something favorable about the supplier’s brand. This type of advocacy is the best marketing a brand can ask for.
A supplier must figure out what type of advocates that its brand attracts and then find ways to recognize the advocates for their advocacy. These relationships should be organic and not induced; savvy social media users know when someone is speaking from an individual position versus a representative position.
Jeff Baird and Bradley Howard will be presenting the following webinar:
Webinar sponsored by Mediware Information Systems, Inc.
The OIG and Department of Justice: How DME Providers Can Avoid the Crosshairs
Presented by: Jeffrey S. Baird, Esq. and Bradley W. Howard, Esq. Brown & Fortunato, P.C.
Thursday, July 20, 2017
1:00 p.m. CENTRAL TIME
The DME supplier lives in the proverbial “glass house.” Through Medicare Fraud Strike Forces, data analytics, and “whistleblowers” (normally disgruntled employees), there are myriad ways that the DME supplier and find itself on the OIG’s and DOJ’s radar screen. This webinar will describe the responsibilities of the OIG and DOJ and how these two federal agencies work together. The webinar will discuss the “tools” that the OIG and DOJ have to peer into the supplier’s operations to determine if the supplier is intentionally or inadvertently violating the law. This program will talk about the various ways (some obvious and some subtle) that the OIG/DOJ use to conduct investigations. Lastly, this program will lay out the steps the DME supplier can take to (i) reduce the risk of an OIG/DOJ enforcement action and (ii) successfully respond to such an action.
Learning Objectives –
• Understand the responsibilities of the OIG and DOJ.
• Understand the methods (or “tools”) by which the OIG and DOJ can determine if a DME supplier’s operations are breaking the law.
• Learn the steps the supplier can take to reduce the risk of an OIG/DOJ investigation.
• Learn the steps the supplier can take to successfully respond to an OIG/DOJ investigation.
Register now for “The OIG and Department of Justice: How DME Providers Can Avoid the Crosshairs” on Thursday, July 20, 2017, 1:00 pm CT, with Jeffrey S. Baird, Esq. and Bradley W. Howard, Esq. of Brown & Fortunato, PC.
Contact Kolby Wegener at Kolby.Wegener@mediware.com if you experience any difficulties registering.
This webinar is free for attendees.
Jeff Baird will be presenting the following webinar:
AAHOMECARE’S EDUCATIONAL WEBINAR
Selling at Retail: Legal Guidelines to Follow
Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato, P.C.
Tuesday, July 25, 2017
2:30-4:00 p.m. EASTERN TIME
DME suppliers are caught in the “perfect storm” of competitive bidding, aggressive audits, low reimbursement and strict documentation requirements. As a result, it is extremely difficult for suppliers to rely on the traditional Medicare fee-for-service business model. Out of necessity, many suppliers are pushing themselves out of their comfort zone and are entering the retail/cash market. What this means is that suppliers are requiring customers, including Medicare beneficiaries, to pay cash for items. These include Medicare covered items and items not covered by Medicare. The law allows suppliers to do this, but as is often the case “the devil is in the details.” This webinar will discuss what the law says DME suppliers can … and cannot … do as they push into the retail/cash market. For example, what can suppliers charge when they sell a Medicare covered item for cash? Are there any restrictions on selling non-covered items for cash? When suppliers sell or rent items for cash on a non-assigned basis, must they submit a claim to Medicare for the customer? And when is it proper to use an ABN? These and other questions will be answered in this webinar.
Register for Selling at Retail: Legal Guidelines to Follow on Tuesday, July 25, 2017, 2:30-4:00 pm ET, with Jeffrey S. Baird, Esq., of Brown & Fortunato, PC.
Please contact Ika Sukh at firstname.lastname@example.org if you experience any difficulties registering.
Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, PC, a law firm based in Amarillo, Tex. He represents pharmacies, infusion companies, HME companies and other health care providers throughout the United States. Mr. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization, and can be reached at (806) 345-6320 or email@example.com.