Home Health & Hospice Week

Florida HHA settles medical director-related kickback charges for $300K.

With so many requirements pressing down on home care providers, don’t let compliance for your medical director arrangements fall by the wayside.

If you do, you could face the same fate as Home Health Care of Florida, a Medicare-certified agency serving 11 counties on the state’s Northeast coast.

HHCF has agreed to pay $300,000 to resolve allegations that it paid its medical director kickbacks in exchange for Medicare patient referrals, according to the Department of Justice. From 2013 to 2017, the agency “engaged in a kickback scheme” that violated both the Anti-Kickback Statute and the Stark Law, the DOJ says in a release.

“Kickback arrangements have no place in federal healthcare programs,” U.S. Attorney Maria Chapa Lopez says in the release.

The agency’s settlement came significantly after the medical director’s, which was initiated in December 2018, the DOJ notes.

The feds don’t reveal the details of the arrangement with the medical director, but it usually goes something like this, says whistleblower law firm McCabe Rabin: The “healthcare facility hires physician to become a ‘Medical Director,’” the firm notes. “In return, physician refers patients to healthcare facility. Healthcare facility then pays Medical Director fees to the physician, even though the physician performs few, if any, of the actual duties of the Medical Director.”

Over the years, the feds have increasingly cracked down on this area, including for the physicians involved. “The legal risks associated with ‘sham’ physician/provider medical directorship arrangements are significant for all parties,” warns attorney Wade Miller with Alston & Bird in analysis published by the Health Care Compliance Association. “With the increase in government enforcement action in this area, it is imperative that providers and physicians become educated on the requirements of the [False Claims Act], the AKS, and the Stark Law, and that they implement robust compliance programs that prevent possible civil and criminal violations of the healthcare fraud and abuse laws,” Miller stresses.

In 2016, the HHS Office of Inspector General issued a Special Fraud Alert, “Improper Arrangements and Conduct Involving Home Health Agencies and Physicians,” calling out kickbacks in the industry. “Although many compensation arrangements are legitimate, a compensation arrangement may violate the Federal Anti-Kickback Statute if even one purpose of the arrangement is to compensate a physician for his or her past or future referrals of Federal health care program business,” the OIG warns in the Alert. “Payments made (or received) to induce (or in return for) referrals, or for arranging for referrals, potentially raise a number of concerns, including corruption of medical judgment, patient steering, overuti­lization, increased costs to Federal health care programs, and unfair competition.”

“The United States Attorney’s Office will continue to target improper payment schemes and advocate for the proper care of our senior citizens,” Chapa Lopez says in the release.

Make Sure You Sail Into This Safe Harbor

Medical director arrangements are a definite risk area. Settlements such as the HHCF one “cause me considerable heartburn,” emphasizes Washington, D.C.-based healthcare attorney Elizabeth Hogue. “Agreements with referring physicians are still low hanging fruit for enforcers,” she warns.

Some providers have decided to forego medical directors and/or their compensation altogether, but that’s not necessary, Hogue reassures. “Medical directors have an increasingly important role to play,” Hogue tells AAPC. “Providers can have constructive relationships without risking enforcement action.”

To judge whether your compensation arrangements for medical directors are leaving you exposed, take a look at the AKS safe harbor practices for personal services and management contracts, Hogue advises:

• Enter into written agreements with physicians that are signed by providers and physicians that specify the services covered by the arrangement;
• The arrangement must cover all of the services to be furnished by referring physicians to providers;
• Aggregate services provided do not exceed those that are reasonable and necessary for the legitimate business purposes of providers;

The term of each arrangement is for at least one year. If the agreement is terminated in less than one year, the parties can’t enter into another agreement until the end of the first year of the agreement except upon the same terms;

Compensation paid over the term of the agreement is set in advance, does not exceed fair market value, and is not determined in a manner that takes into account the volume or value of any referrals or other business generated between the parties. If the arrangement is for services on a part-time basis, compensation is set in advance if an hourly rate at fair market value is included in agreements; and

The services to be furnished under each arrangement do not involve the counseling or promotion of a business arrangement or other activity that violates any State or Federal law.

Plus: Some states have “so-called ‘mini’ Stark/anti-kickback statutes, so providers must also be sure they are in compliance with state requirements,” Hogue adds.

Heed These 2 Crucial Tips

Take these two “practical” steps to make sure your arrangements comply with the AKS and Stark Law, Hogue counsels:

1. Providers should pay physicians by the hour at fair market value; and
2. Providers must require physicians to document the time they actually spent working. But that’s not enough, Hogue cautions. “Providers must review this documentation for accuracy before they pay physicians,” she recommends.

Note: The OIG Special Fraud Alert is at https://oig.hhs.gov/compliance/alerts/guidance/HHA_ Alert2016.pdf.