Anti-Kick Back Laws and Violation - Term Paper Example

Revision . Anti-Kick Back Laws and Violation Outline A matter Anti-kick Back Laws and Violation Thesis or main idea The anti-kickback statute was put in place as a means of protecting patients and government sponsored programs such as Medicare and Medicaid from abuse and fraud. It is one of the ways that is used to mitigating the corrupting influence of money on making healthcare services. It removes the potential of economic incentives being used to influence decision making regarding healthcare. This is because healthcare is fundamentally a social amenity and not a business entity. The purpose of the article is to illustrate what the anti-kickback laws entails, safe harbors and fines that physicians face if found guilty of violating this law. Source of Law The Ethics in Patients Referrals Act Related legal cases Tuomey Hospital in Sumter was made to pay $49.4 million for going against the Stark Act Owners of Los Angeles-Based City of Angels Medical Center pay 10$ million for paying illegal kickbacks Christiana Care Health System in Wilmington paid $3.3 million to clear up a whistleblower kickback charge. The former owners of Los Angeles-based City of Angeles Medical Centre; Robert Bourseau and Rudra Sabaratnam were made to pay $10 million for illegitimate kickbacks. Major points/ Areas of paper discussion a. Introduction b. Definition of the anti-kickback laws and Stark Law c. Definition of Terms used in the anti-kickback laws and Stark Law d. Punishment for Violation e. Safe harbors f. Cases involving anti-kickback and Stark Laws violation g. PPACA and Anti-kickback h. Argument against anti-kickback laws and Stark Law i. Conclusion Introduction Anti-kickback laws are laws that are used to protect patients from frauds by the physicians. The patient who is subjected to such abuse usually has a financial alliance with the physician. The financial alliance can either be ownership of property or remuneration of certain goods. Physicians tend to take advantage of the beneficiaries whom they are supposed to offer medical services to decompensate their financial losses. They do this by asking for extra funds or providing poor services to the patients. Statutory laws were made governing the conducts of physicians and the punishment given thereafter (Schachter 2008). Physicians violate the anti-kickback laws due to poor salaries and denial of some insurance companies over the claim of the physician. Here are some of the state laws that control the referral of beneficiaries by physicians. (I)The Federal Anti-kickback Statute The statute forbids state healthcare providers from deliberately imploring any compensation from the beneficiary for a service offered whose payment is to be made under the state health care program. The Federal Anti-kickback Statute is a purpose-based statute. The Federal Healthcare Program in the United States Government is a program that provides health services and acquires its funds from the government either partly or in whole. Some of the transactions are federal apart from the Federal Anti-kickback Statute (Schachter 2008). The consequences of going against the Federal Anti-Kickback Statute are very brutal which includes fines of up to $25000, imprisonment of up to five years, barring from participating in state healthcare programs and administrative public money fines of up to $50000. In order to avoid violating the stark laws, it is important to understand the definition of some of the terms used in the stark law. This includes understanding which people count as the immediate family and what a financial relationship is, investment interest. Who is part of the immediate family? A physician is condemned of “self referrals if they have a direct or indirect financial relationship with patients that are of the immediate family. In this case, the “immediate family is used to describe a parent, sibling, spouse, stepparent, stepchild, stepsister, stepbrother, in-laws, grandparent grandchild. What is Financial Relationship? This is defined as a direct or indirect possession interest, investment interest or compensation interest with any person or entity that furnishes the referral. A financial relationship is considered to exist if the physician with direct interest refers a member of the immediate family to the health service without the intervention of any other person or entity (Schachter 2008). This implies that even if the physician may not have a direct relationship with the entity providing health aid, he may have a direct financial relationship through an immediate family member. What Counts as an Investment or Ownership Interest? This is seen as a form of certain stock, debt, equity, stock options, membership interest in a limited liability company, partnership interests’ e.t.c. As such, an interest in a subsidiary firm is not considered an interest in the main firm or another subsidiary unless the subsidiary has an interest in the main firm. Interest in the retirement plan is not considered as an investment interest but is at the same time considered as a compensation arrangement (Leap 2011). The following are also excluded from being ownership or investment interest but are categorized as compensation arrangements: Stock option and convertible securities up to the time they are executed An of the record contract between a physician-owned entity and a hospital Security interest that a physician has in an equipped purchased by a hospital through a loan given by the physician Unsecured loan that has been subordinated to a credit facility Indirect ownership/investment interest is said to exist if there is a continuous link of persons having such interests with the firm providing the DHS despite their having many intermediaries What counts as Compensation Arrangement? Compensation arrangement is defined as any form of remuneration between the physician or a member of the immediate family of the physician and an entity. This includes both the direct and indirect compensation arrangement. Indirect compensation arrangement is considered to have taken place when there is unbroken chain of connection between the referring physician and the DHS entity. There exceptions in the Federal Anti-kickback Statutes simply because the statute was written in a broad manner. These exceptions are known as ‘safe harbors’ which exempt an individual from trial under the anti-kickback statute. The purpose of the safe harbors is to cut off certain kind of conduct which could be a criminal act under the Anti-kickback stipulations from the trial (Schachter 2008). For one to be protected by the safe harbors there need to make an arrangement that will be at par with the safe harbor. The Safe Harbors Includes; I. Investment Interests There are certain types of payment that are exempted under this safe harbor; this includes payments of hospital items and services that are less than $50 million dollars in value. For passive and active investors, restrictions have been placed on the ownership interests on those who are in a position to furnish Medicare or Medicaid covered services or make referrals. However, these restrictions are reduced if the entity in question is found in areas that have been categorized as “underserved”. This exemption allows that in certain circumstances interests or dividends are not deemed as payments in relation to Anti-Kickback laws (Johnson & Keegan 2006). Nevertheless, there is a long list of conditions that a person need to comply with in order to be exempted and requires one to consult with an attorney to ensure full compliance. II. Space Rental The anti-kickback regulations prohibit some leasing arrangement. However, since the healthcare providers may have trouble getting space to set up a business, some restrictions on space rental have been lifted (Olson, Stanley & Coker Group 2007). The space rental safe harbor, has conditions that require that a lease be done in writing, covering all the premises leased and the healthcare providers should not lease more space that what is considered to be reasonably necessary. III. Equipment Rental Safe Harbor Since modern health care requires certain expensive equipment, it may not be possible to acquire all the equipment making it necessary for health care provider to rent some of the equipments. As such a safe harbor for equipment rental has been created has conditions similar to that of space rental(Wolpe 2004). This safe harbor exception permits physicians and other health care providers to rent room and tools to those who provide health care services without being subjected to public or illegal penalties as long as they follow certain specifications. The safe harbors were revised so as to rule out protection by safe harbors to those physicians who lease more tools and rooms than required. IV. Personal Services and Management Contracts Safe Harbor There exists a safe harbor that allows payment to be made to agents. This safe harbor is also subjected to conditions (Olson, Stanley & Coker Group 2007). These conditions includes that the agency contract be contained in writing, be less than one year, offer services at a fair amount that is equivalent to the prevalent market value and should take into account the number of referrals by Medicare or Medicaid. V. Bona Fide Employees’ Safe Harbor This safe harbor states that the payment that is made to an employee is safe as long as the actual employment relationship and payments are not based on the volume of referrals for Medicaid and Medicare services. (VII) Recruitment This safe harbor allows for payment to be made to induce a medical practitioner to join an entity. Nevertheless, there is a number of conditions that should be met for this safe harbor to be practiced. For instance, if the recruit is coming from an established entity, then the recruiting entity should be in a position to generate 75% of its income from new patients. As such, the new recruit can only bring 25% of his patients from the previous practice (Olson, Stanley & Coker Group 2007). At the same time, the new recruit should not make referrals, influence referrals or be asked to generate business for the recruiting entity as a condition of employment. Some of the state anti-kickback laws are different from the federal statute and still others are similar in some parts. In order to make sure that there is conformity, the practitioner assesses his/her home state Anti-kickback statute in addition to federal Anti-Kickback rations .Fee splitting in some states is taken differently from kickback offence (Wolpe 2004). In some states, fee splitting by physicians generated from their services with referral source is forbidden and still in other states fee splitting is generally prohibited irrespective of whether there is a referral source or not. When some states consider fee splitting by the physicians as a kickback, others still treat it differently from kickback offence. Physicians and nurses should put into consideration the state and federal prohibitions against the act of splitting fee. If physicians go against the fee splitting laws they are to be subjected to penalties by the states licensing board plus other sanctions. A person can protect him/herself against anti-kickback liability by ensuring that you are falling in line with the state anti-kickback laws or the fee splitting laws (Johnson & Keegan 2006). This can be done by examining the laws involved in the activity you are performing, the one who is offering the service, and the way in which the service is being offered. In case a person goes against these state laws, heavy penalties will be rendered to him. Some examples of safe harbor arrangements covering liability under the Anti-Kickback Statute (a)Space and Equipment Rental (b)Bone Fide Employees (c)Personal Services and Management Contracts (d)Electronic Health Records Arrangements (e)Electronic Prescribing Arrangements The personal services and management contracts anti-kickback law safe harbor exception only applies after meeting certain standards which includes; (A)The agency agreement is set up in writing and the parties involved sign it. (B)The agency agreement covers up all the specific services provided by the agent to the principal for the terms of contract. (C)If the agency agreement is supposed to provide for the services of the agent on part time basis, as agreed rather than full time basis, the agreement gives specific timetable, the exact time taken and the specific amount given for the work done. (D)The term of agreement takes at least one year. Anti-Kickback Cases The former owners of Los Angeles-based City of Angeles Medical Centre; Robert Bourseau and Rudra Sabaratnam were made to pay $10 million for illegitimate kickbacks. They were found guilty of paying patient recruiters illegal payment for the recruitment of dispossessed patients. The recruited destitute patients went through several medical treatments which were not of importance and were to be paid by the federal health care programs. Christiana Care Health System in Wilmington paid $3.3 million to clear up a whistleblower kickback charge. This followed after Christiana Care awarded physicians for referring patients to that hospital at Neurology Associates for in-hospital readings of EEGs. The payments made were a section of a deal dating 1989, preceding the endorsement of the present Stark Act and the Delaware Anti-kickback Statute (Buchbinder & Shanks 2012). The deal had been made for the rebid in 2003, when the Neurology Associates was brought to an end, a contract that was in the Stark Act though the act gained back the agreement in 2003. (ii)The Stark Law The Stark Law rules out the recommendation of health services to patients’ payable by Medicare or Medicaid to an article for the provision of ‘chosen health services ’by the physician if he has a financial connection with the article unless a federal exception is involved. The Stark Law as compared the Anti-Kickback Statute is an exacting legal responsibility statute and therefore needs no evidence of bad intention to violate this law. If there is no exemption that is found harsh punishments are given to the offender which includes refutation of payment, repayment of funds, imposition of $15,000 per penalty and $100,000 for any plan well thought-out to be underhand plot. The exceptions includes; In-Office Ancillary Services Exception, the Bona Fide Employment Exception and also the Whole Office Exception. These exceptions have some fundamentals which must be followed to the latter so that the exemption can be permitted (Wolpe 2004). In case there is an omission of any of the fundamentals, then there will be violation of the Stark Law. It is very critical for a person to ask for help so as to scrutinize and comprehend everything that makes up the exception if he/she is seeking assistance from a physician with whom he/she has a financial connection. In cases where the physician is referring certain analytical examination, under the In-Office Ancillary Services Exception, he/she must present a notice in black and white to the beneficiary during the medical appointment (Acampora 2009). The notice by the physician must clarify that the patient is not indebted to obtain the health services at the flair with which the benefactor has a financial relationship. The notice should entail at least five facilities situated within a radius of 25 miles of the office and in case there are less than five suppliers within the 25-mile radius, then the physician should note down all the suppliers and also include their personal details which includes their names, address and phone numbers If any person has violated the Stark Law by for example receiving an overpayment, he/she should report and return the overpayment and inform the individual to whom the overpayment was taken back in script giving explanations for the overpayment (Wolpe 2004). Any overpayment must be reported and taken back to the overcharged within 60 days of the detection of the overpayment or any date the equivalent cost is appropriate. If by any chance a person hang on to the overpayment, he/she is liable under the False Claims Act which can end up to fines of large sums of money ,and severe damages and expulsion from the state healthcare programs. Cases Involving Violation Of Stark Law Owners of Los Angeles-Based City of Angels Medical Center pay 10$ million for paying illegal kickbacks Bradford was found guilty of getting into an illegitimate fiscal liaison with two physicians and their medical performance and handing in the over to the Medicare basing the recommendation from them (Buchbinder & Shanks 2012). The contract made by the hospital and the two physicians was a hidden attempt to pay the physicians for the medical appointment of the patients rather than a bona fide sublease of the nuclear camera required by the hospital which they already had. A board of judges is supposed to make a decision whether the accused really went against the anti-kickback statute or not. Tuomey Hospital in Sumter was made to pay $49.4 million for going against the Stark Act The hospital violated the law by having employment contracts with physicians at its Out Patience Surgery Centre. The hospital was also accused of violating the False Claims Act by handing out claims that came out as a result of medical appointments that went against the self-referral law (Wolpe 2004). Nevertheless the board of judges discharged that allege releasing the hospital of Medicare hoax charges. PPACA and Anti-kickback The PPACA stands for the Patient Protection and Affordable Care Act which protects the government from fraud and abuse. The PPACA also may permit the expansion of False Claims Act and the Whistleblower in a way that it would not have applied in the former law. In order to counter frauds, waste and abuse in public healthcare services, there needs to be more power increase in these acts, the PPACA and the Stark act. Heavy penalties are rendered to those found going against the laws. In the previous years the hospitals were required to provide a false statement showing that they were against the law but the physicians needed not to do so. There have been amendments whereby the Act has settled the controversial act in different federal courts. This action along with others in the Anti-kickback Law has made the False Claims Act together with the whistleblower more frequent. In cases of overpayment, the PPACA requires that the person who received the overpayment should return it by 60 days after the identification of the overpayment or the date any equivalent cost is appropriate. If the person happens to retain an overpayment then or does not submit the overpayment in due time, then he/she will be subjected to heavy penalties by the Fraud Enforcement and Recovery Act (FERA). Arguments against the Anti-kickback Laws and Stark laws On the contrary the stark law and the anti-kickback statute are not always favorable to the physicians especially when intention is immaterial and there lacks even the minimum exception. Some minor details such as the signatures, termination dates missing or failing to amend changes in the market value can imply that genuine physician speculations are illegitimate and no one can be in a position to know about it (Acampora 2009). The physicians are then made to learn in the most painful manner that nobody cares that whether the plans he had were for the benefit of the patients or the community at large. A single minute mistake can be very costly if it does not comply with the Stark Law. In addition, the penalties rendered by the Stark Law can cause financial constrain in a business organization since they are severe in nature (Leap 2011). In cases where the plans are against the Stark Law, the results can be very unpleasant an example is when a hospital makes arrangement with a physician and there is inappropriate reimbursement that is higher than the fair market price, the Medicare will take back all the money that it paid when there was no practical agreement. Although some people argue that the anti-kickback laws are unnecessary restrictions and are too tough. This is not true because a physician is said to have violated the anti-kickback statute when it is done knowingly and willfully. If the offender is known to have violated the statute without the intention doing so, they cannot be condemned. There is no legal responsibility on the part of the physician if they have no intent to reward or induce referrals. The laws are thus important because they ensure that the Medicare and Medicaid services are enjoyed by people who deserve them. It ensures that the doctors do not use their position in the wrong way. This goes a long in increasing accessibility of healthcare services to people by ensuring that the people in the low earning levels access free medical care. The laws ensure that the money which has been paid under unlawful referrals is returned. As such, there is a creation of a greater pool of money to help patients who need the resources. This law can however, be fully implemented if the people who are in charge of monitoring these referral correctly identify the unlawful referrals. There is need for the whistle blowers to expose those physicians who benefits themselves at the expense of helping patients. If properly enacted, this law can help the government save the government a lot of money. References Acampora, C. L. (2009). Marketing chiropractic to medical practices. Sudbury, Mass: Jones and Bartlett. Buchbinder, S. B., & Shanks, N. H. (2012). Introduction to health care management. Burlington, Mass: Jones & Bartlett Learning. Johnson, B. A., & Keegan, D. W. (2006). Physician compensation plans: State-of-the-art strategies. Englewood, CO: Medical Group Management Association. Leap, T. L. (2011). Phantom billing, fake prescriptions, and the high cost of medicine: Health care fraud and what to do about it. Ithaca: ILR Press. Olson, E. E., Stanley, K., & Coker Group. (2007). Physician recruitment and employment: A complete reference guide. Sudbury, Mass: Jones and Bartlett Publishers. Schachter, S. C. (2008). Managing relationships with industry: A physicians compliance manual. Amsterdam: Academic Press/Elsevier. Wolper, L. F. (2004). Health care administration: Planning, implementing, and managing organized delivery systems. Sudbury, MA: Jones and Bartlett Publishers. Read More