For those of you who contract with physicians for medical director and other services with physicians and have to work within the confines of the Stark law, the U.S. District Court for the District of Columbia recently issued an interesting opinion.
The case involves the personal services safe harbor of Stark and the methods for determining fair market value under the Stark II regulations. The Plaintiffs in the case specifically challenged the two methods for determining fair market value under the Stark II regulations, because the association believed that rates that result from these calculations are well below fair market value for physicians in certain specialties.
As you may recall, when discussing fair market value for physician compensation arrangements, Stark II included two methods to determine when a physician’s compensation was “fair market value.” The first method is the hourly payment must be less than or equal to the average hourly rate for emergency room physicians in the relevant market. The second method involves averaging the fiftieth percentile salary for the physician’s specialty from four national physician salary surveys, and dividing the average by 2000 hours to obtain an hourly rate.
The Renal Physicians Association filed suit to challenge the validity of these methodologies. The Association alleged that the compensation rates derived by these methods do not truly reflect “fair market value” for physician’s services. The court found that it lacked the authority to remedy the alleged injury, because it could neither order facilities that contracted with doctors to pay a higher rate and it could not direct the government regarding the regulations.
The basis for the Court’s decision is of far more interest to the home care and hospice community, because it addresses a concern I have heard form more than one provider. That concern is the belief that you must use the listed methods to calculate fair market value. In discussing the association’s claims, the Court, and CMS, noted that use of these two methodologies is voluntary. CMS specifically stated that any harm resulting from reduced pay to physicians was the result of employer’s decisions to use the methodologies. CMS argued that this was a completely voluntary decision by the providers.
Many providers would disagree, because they feel if CMS tells you how to calculate an amount you had better do it that way. There are other ways to calculate fair market value. The Stark law is concerned that the value be “the value in arm’s length transactions, consistent with general market value”. Using the two stated methods is simply a way to guarantee that CMS will agree with you. That does not mean if you use another method to calculate fair market value, CMS will simply dismiss it as not fair market value. The rule remains the same-compensation must be fair market value for the safe harbor to apply.
The court discussed at length the numerous comments CMS made regarding fair market value while drafting the first and second phases of the Stark regulations. In addition to these many comments on fair market value, CMS has stated on the record again that the methods in the regulations are voluntary.
When you are contracting with a physician, you should endeavor to reach a fair market value. There are many ways to determine this and you should not feel that you are required to use the methods in the Stark regulation. If you can demonstrate that the compensation for the physician is equivalent to the compensation that would be reached at “arm’s length”, it is fair market value. Given CMS repeated statements that the methods outlined in the rule are “voluntary” it strikes me that CMS would be acting rather arbitrarily to turn around and penalize a provider for not using the voluntary methods.
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I have had a number of conversations recently with providers about offering free assessments to patients. This has come up in a number of contexts, including providers asking if there was a problem with not charging Medicare beneficiaries for initial assessments. I have always said that it is a problem under fraud and abuse, because the free visit could be considered remuneration under the rules.
Well, the Department of Health and Human Services Office of Inspector General (“OIG”) issued an advisory opinion yesterday on a very similar subject. A provider requested an advisory opinion regarding its practice of providing free pre-surgical “home safety assessments”. A home safety assessment involves an agency physical therapist traveling to a pre-operative patient’s home to determine whether the patient’s home is appropriate for post-operative recovery. The agency stated in its request for an opinion that some insurance companies will reimburse this assessment at $85 - $100. The agency also offered a "telphonic" assessment that cost the Agency $10 in employee time.
Each patient that receives a home safety assessment is referred by the patient’s surgeon prior to the surgery.
OIG offered the opinion that this arrangement potentially violated the civil monetary penalties statue and might also generate prohibited remuneration under the Anti-kickback statute.
OIG’s explanation of its opinion provides some insight into how OIG might view other arrangements where a Medicare beneficiary receives free services. OIG noted that the beneficiary receives something of sufficient value to constitute remuneration under the CMP and Anti-kickback statutes. This was in part due to the amount an insurance company would reimburse for the service. However, in regard to a telephonic safety assessment, OIG noted that the proper focus was on the beneficiary, not on the cost to the agency to provide the telephonic assessment.
OIG stated that because the patient’s physician recommended the assessment and the assessment is conducted by a licensed physical therapist, the beneficiary would reasonably believe they were receiving something of value. This perception led OIG to conclude that the telephonic safety assessments were not of “nominal value.” This meant that either the in-home or telephonic assessment constituted potential remuneration.
OIG also evaluated whether this potential remuneration was likely to induce the beneficiary to select the agency as a provider of postoperative items and services covered by Medicare. In this discussion, OIG focused on the fact that the free pre-operative assessment allowed the agency to establish a relationship with the prospective patient. OIG noted that the agency is referred by the patient’s surgeon and the agency therapist has the opportunity to initiate a relationshipwith the patient. OIG stated that the patient was likely to assume the referral for the pre-operative assessment was also a recommendation to use the agency for post-operative care. The fact that the assessment was free, served to increase the likelihood that that patient will schedule the assessment, which “maximizes” the opportunity for the agency.
OIG went on to explain that these facts also indicated it was probably that the Requestor knows or should know this free assessment is likely to generate reimbursable business for the Requestor.
The key point from this is that OIG will take a very close look at any arrangement under which a beneficiary receives free services. Many businesses will provide a free service up front, for example many lawyers provide a free initial consultation. They do this, because it entices in a potential customer and allows you to establish a relationship. Unfortunately, in the world of Medicare fraud and abuse, a good business practice has become a crime.
One final point, in issuing this letter, OIG specifically stated that the letter offered no opinion as to whether offering a free service to a beneficiary was a violation of the anti-kickback statutes in regard to the referring physician. However, given the logic of this opinion, it is likely that any such arrangement would be considered to violate the anti-kickback laws. As I said at the beginning, whenever you are giving away services to referral sources or Medicare/Medicaid beneficiaries, you should pause and consider the anti-kickback implications.
Attachments:
FreeSafetyAssessments.pdf
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I read an interesting article in a trade publication today about increasing referrals by improving relationships with physicians. The article mentioned a number of practices, including assisting the physician with submitting claims for oversight.
In the article, the assistance came in the form of printing and highlighting a 485 form. I have heard stories that indicate this practice may go much further. Some home health agencies may actually have their staff preparing the claims paperwork for the physician so that the physician can simply sign the paperwork and submit it.
While printing the 485 and highlighting the necessary billing information may not cause an agency to pause and consider potential fraud and abuse issues, actually completing the form should cause the agency to consisder whether this is a kickback. Anytime you provide anything to a potential referral source, it should raise red flags. If you are providing it for less than fair market value or for free, you should be concerned, because OIG may consider it a violation of the anti-kickback statute.
The Department of Health and Human Services Office of Inspector General (“OIG”) has stated repeatedly that the provision of free services to an actual or potential referral source can constitute a kickback. OIG has specifically stated that placing a phlebotomist into a physician’s office would raise a strong inference of a kickback, if the phlebotomist performed additional tasks that are “normally the responsibility of the physician’s office staff.”
In another case, the OIG stated that a clinical laboratory providing services to a nursing home that included, among other things, reviewing doctor’s orders, reviewing drug regimens, and providing infection control services for free bestowed a benefit upon the recipient. OIG stated that this benefit could constitute prohibited remuneration under the anti-kickback statute, if one purpose of providing the service was to induce referrals.
In the second example from above, the home health agency’s staff would be providing a service to the physician’s office that the physician’s staff would otherwise provide. This service would be provided for free. That is a benefit to the doctor’s office. The physician’s office staff is freed from having to complete the paperwork to bill for physician oversight services, but they can still receive the reimbursement. It’s as if the physician had an extra staff person or two without having to pay any of the costs for that staff.
An enterprising home health agency that does this might argue that they are just trying to be professional. However, it is hard to fathom why an agency would invest their staff time in completing another provider’s paperwork, except to induce referrals. The thinking would be that a doctor is more likely to refer patients to a home health agency if he can bill for his time on oversight without his staff having to complete the paperwork.
Because of this link and OIG’s longstanding skepticism about providing free staff to actual or potential referral sources, I would be very cautious before I started providing clerical services to an actual or potential referral source, unless I could fit the arrangement into a safe harbor.
If you want to provide the physician with information needed to complete and submit claims forms, be careful that is all you are doing. Each step you take to further assist the physician runs the risk of being a step into a fraud and abuse violation.
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