A bribe is a bribe.  It is not as easy as it sounds.  Not all payments of money or transfers of value are bribes.  The FCPA tells us that.  It is even more complicated when trying to navigate Anti-Kickback and Stark law violations.

Doctors like to make money.  As the government expands its role in our healthcare system, doctors have to be even more mindful of compliance when it comes to earning Medicare and Medicaid fees.

The risks become apparent in two common scenarios: (1) when physicians organize separate businesses to provide related services such as clinical laboratory services, physical therapy, radiology, durable medical equipment, home healthcare and other services; and (2) when physicians lease office space for their practices from a hospital or other related healthcare provider.

The government has plenty of tools to use against doctors and they are not shy about aggressive enforcement of the anti-kickback law, the self-referral prohibition (Stark law) and false claims act violations.

The Stark law, which is actually a combination of statutes and three phases of regulations that address the federal physician self-referral provision, prohibits a physician from referring patients to entities with which the physician has a financial relationship for certain designated health services that are reimbursable by Medicare.  The primary remedy for a Stark violation is denial of payment for a prohibited claim or required return (refund) of any amounts collected under such claim.  The significance of a self-referral violation is possible civil false claims act liability consisting of per claim penalties and treble damages for each claim.

Physician groups usually rely on some of the well-established exceptions to the Stark law which allow physician investments where the compensation paid to the individual physician-investors does not vary based on the volume or the value of referrals generated by the referring physician/owner; where: (1) a formal, written agreement has been executed between the parties;   (2) the value of the service is provided at fair market value; and (3) the arrangement does not violate the anti-kickback law.  Physician groups typically provide such services at the same site as their medical practice.

The federal health care anti-kickback statute is a criminal statute that prohibits, among other things, giving or receiving any financial benefit or “remuneration” in exchange for, or to induce, the referral of any patients for, or the purchase, order or recommendation of, any item or service for which payment may be made under Medicare or other federal health care programs.

Given the surrounding risks, a paper compliance program can result in devastating consequences to physicians.  Compliance officers have to be vigilant – basic controls are essential.

Compliance officers have to review and monitor every possible contractual arrangement between a physician’s group and any related service provider.  Policies and procedures have to be drafted and enforced.  A database for contracts should be maintained, along with logs for rental payments and approvals.  Physicians need to be trained on these issues and periodic audits should be performed.  All of this sounds familiar but substantive analyses is important to the overall compliance function.

For example, the determination of the fair market value of office space rented by a physician’s group has to be calculated and documented.  CMS has enforced the Stark law against physicians where there was no written contract nor fair market analysis.  The use of space which is not covered by a lease is a clear violation of the Stark law. Further, any failure to enforce the terms of a lease, such as ignoring a failure to pay rent, will be deemed a clear violation.

The same vigilance is needed when reviewing any payments by doctors by a healthcare service provider.  This potential anti-kickback risk arises when a hospital compensates a doctor for services which the doctor never provides in order to try and induce the doctor to refer patients to the hospital.  For example, a cardiology group was paid by a hospital to provide teaching services which they never provided.  Not surprisingly, the doctors referred more patients to the hospital.  The cardiology group was prosecuted (some civil and other criminal).

As a practical matter, a chief compliance officer at the hospital has to verify that personal services are provided under the terms of the contract.  Documentation of the services, review of timesheets and other basic monitoring has to be conducted and audited.