Home Health & Hospice Week

It's not just flagrant fraud that the federal watchdog cares about.

The OIG may have slammed hospices and suppliers in a recent report, but kickback schemes of all stripes still dominate the agency's share of audits and sanctions.

The HHS Office of Inspector General recently released its Health Care Fraud and Abuse Control Program report for 2006. The report touted the program's $2.2 billion in judgments and settlements in fiscal year 2006. The report also particularly focused on hospice and durable medical equipment fraud examples, among others (see Eli's HCW, Vol. XVII, No. 7).

Throughout the report, the OIG refers to instances of anti-kickback violations, occurring among many providers including suppliers, insurers, hospitals, physician practices, medical device manufacturers and clinics. In addition to the higher profile cases, there are some basic arrangements that providers are more likely to encounter--and that could cause them trouble.

One of the more common anti-kickback arrangements involves space sharing. "This is such an area where the OIG issued a specific Fraud Alert on the subject of physicians who sublease space to therapy practices, the principles of which are generally applicable to various arrangements between tenants and subtenants," says attorney Howard Sollins of Ober Kaler in Baltimore.

Home care providers that lease space from physicians can also learn from the alert.

"Certain common arrangements that are ordinarily customary in a general business context can be problematic in the physician context," Sollins warns. "For instance, in some commercial lease agreements, a landlord gets a percentage of the revenues of the subtenant. You may see that in a retail location, but if you had two referring healthcare providers, one taking a percentage of the other's revenues, that could be a problem."

The OIG's February 2000 Fraud Alert addresses various rental agreements that it deems questionable, such as rental amounts that vary based on the number of referrals, or rental agreements on unoccupied spaces. The Fraud Alert also offers "safe harbor" criteria to protect legitimate arrangements. (The alert is at http://oig.hhs.gov/fraud/docs/alertsandbulletins/office%20space.htm).

Avoid this misstep: One physician practice's medical director says he requires the physical therapist who rents space from him to pay more in rent than he would charge other tenants because he wants to make sure the OIG doesn't view him as providing a referral inducement.But accepting such an arrangement from a physician could be a mistake, legal experts warn.

"If a physician practice has determined the fair market value of the space rental for a PT subleasing space, there is no reason to have any variance--up or down--from the fair market value," says attorney David Harlow of The Harlow Group in Newton, MA. "Overcharging may be just as problematic as undercharging, given the right set of circumstances," he cautions.

Example: The practice in [...]