Providing Protection to Federal Healthcare Programs

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Providing Protection to Federal Healthcare Programs

Introduction

The main purpose of federal anti-kickback laws is to provide protection to federal healthcare programs and patients from fraud relating to corruption on decisions of healthcare. Straightforward but broad, the law states that anyone who knowingly and willfully receives or pays anything of value to influence the referral of federal health care program business, including Medicare and Medicaid, can be held accountable for a felony and violations of the law are punishable by up to five years in prison, criminal fines up to $25,000, administrative civil money penalties up to $50,000, and exclusion from participation in federal health care programs (Office of Inspector General, 1999). Because of the broad aspects of this law, there was a need to daft the safe harbors that provide legal immunity to health practitioners to engage in arrangements that are not permitted by law. A number of modifications on these safe harbors have been instituted to effectively protect patients and health care providers from fraud while at the same time providing a chance for healthcare practitioners to benefit from certain commercially beneficial arrangements.

Federal regulations relating to kick-backs and safe-harbor regulations

The regulations prohibit the receipt of payment or anything of value with an aim of influencing the referral of healthcare program business. Such activities include the provision of free medical testing to employers that sponsor employee assistance programs, the performances of unnecessary services or surgeries and false electronic claim submissions. Furthermore, the culture of billing all services as comprehensive or complicated, billing of services that belongs to a deceased person, charging more for the value of drugs dispensed, and a case of an insured person who sells the use of his or her insurance plan are also considered as abuse and fraud. These are the activities under which the anti-kickback laws seek to protect healthcare programs. The most relevant and applicable safe harbor in the case between Feldstein v. Nash Community Health Servs., Inc. is the Specialty Referral Arrangements between Providers. This safe harbor seeks to protect particular arrangements in cases involving the entry of an individual or entity consent to refer a patient to another individual or entity for services classified under specialty services. This is done in return for the party receiving the referral powers to refer the patient back after the completion of the specialty service. An example includes an arrangement between a physician and a specialist to whom the physician has made a referral. The specialist then makes a consent that when the patient recovers to a certain particular stage, the physician resumes treatment. While this is a safe harbor regulation, it, however, does not cover arrangements between parties that split fees received from federal programs. Furthermore, it requires that the referral be clinically appropriate that seeks to rectify the medical condition of the patient rather than be of personal commercial benefits.

Applicable Statutes and the Feldstein Case

The federal anti-kickback statute, 42 U.S.C. § 1320a-7b(b), prohibits individuals or entities from knowingly and willfully offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid or any other federally funded program (except the Federal Employees Health Benefits Program) (American College of Radiology, 1998). The reasons behind the arrangement between Sundown Community Hospital and Central Park Medical Corps is definitely against The federal anti-kickback statute, 42 U.S.C. § 1320a-7b(b). The directive by the Board of Directors to offer permanent staff privileges to the physician owners as well as monthly bonus arrangements to make this arrangement attractive amounts to soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid, or any other federally funded program. This is due to the fact that 60% of Central Park Medical Groups patients are covered by the Medicare federal healthcare program. In an analysis of Feldstein v. Nash Community Health Servs., Inc. and its relation to this scenario, it is obvious that proceeding with this arrangement will be a violation of anti-kickback laws.

Figueredo paid cash kickbacks to a medical doctor in exchange for the referral of patients for medical tests reimbursable by Medicare and that was the violation of anti-kick-back laws responsible for his prosecution. In this arrangement, the Board of Directors has instructed me to offer permanent staff privileges to the physician owners as well as a monthly bonus. Both of these practices amount to corruption or intent to commit a corruptible offense with an aim of influencing the referral of federal health care program business; in this case, is Medicare federal healthcare program. The reason behind such payments in the form of privileges and bonuses is to make the arrangement lucrative.

A strong prosecution bench would definitely interpret that the intention of the whole arrangement is to coerce the physicians of The Central Park Medical Group by paying them bonuses to accept the arrangement. The provision of gifts, entertainment, and free goods by companies to customers is an easy target for the government (Wasserstein & Butler, 2007). That definitely amounts to corruption. In addition to that, it could be interpreted that such a system was capable of developing a cycle of cash movement. This implies that cash drawn from Medicare federal healthcare programs could then end up paying for the privileges and bonuses of the Central Park Medical Groups physicians.

Recommendations

Federal law enforcement agencies such as the OIG and the Justice Department regard the law as a key weapon in the anti-fraud and anti-abuse tool kit and ACR members-both those who are hospital-based and those who are practicing in groups or clinics-face potential kickback violations in financial arrangements with other physicians, hospitals and managed care organizations. (American College of Radiology, 1998). There is therefore the need to develop internal measures to prevent an entity from violating the provisions of anti kick back laws. In this scenario, I would recommend that I be given enough time to obtain an advisory opinion from the Office of Inspector General (OIG) at the U.S. Department of Health and Human Services on the possibility of this arrangement violating the kickback law. Secondly, an in-depth interpretation of the Regulatory Safe Harbors such as the safe harbors maximum limit of 40 percent ownership by physicians who engage in the referral of individuals and entities they own.

In addition to the above, I recommend an exploration of the Investments in Group Practices regulatory safe harbor. This safe harbor protects the investments accumulated by physicians in group practice. While it does not protect investments that are involved in ancillary services joint ventures, they may qualify for protection under this harbor regulation. Lastly, the best approach is to seek the advice of company counsel or the advisory opinion of OIG.

References

American College of Radiology. (1998). Anti-Kickback Law and Suspect Financial Agreements. Web.

Office of Inspector General. (1999). Federal Anti-Kickback Law and Regulatory Safe Harbors. Web.

Wasserstein, J. and Butler, M. (2007). Crossing the Line: Kickbacks Come Under Increased Government Scrutiny. Web.

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