Home Health & Hospice Week

Business relationship is in dangerous waters, latest federal guidance shows.

Suppliers and docs can say goodbye to another potential business arrangement.

A proposed deal in which a durable medical equipment supplier would provide equipment to a physician would potentially violate the federal anti-kickback statute, the HHS Office of Inspector General says in Advisory Opinion 06-02.

How it works: The agreement would have allowed the physician to become a DME supplier for non-Medicare patients, and the DME supplier would have rented space in the physician's office to supply DME directly to the physician's Medicare patients.
 
The DME supplier would have paid rent, plus a percentage of revenues from the sale and rental of DME. A trained professional would have been on-site to fit and supply the DME to the patients.

Trap: The programs, together or individually, pose a "significant risk of fraud and abuse," the OIG says.

The non-Medicare program would essentially amount to a "contractual joint venture" for private pay business, the opinion notes. "The OIG has a long-standing concern about arrangements pursuant to which parties 'carve out' referrals of Federal health care beneficiaries ... from otherwise questionable financial arrangements."

The physician could have extra incentive to steer patients to the non-Medicare DME offerings to boost the private-pay business, the OIG says. And the Medicare business arrangement holds a risk of various types of kickbacks from the supplier to the docs, the OIG warns. 

Note: The advisory opinion is at http://oig.hhs.gov/fraud/docs/advisoryopinions/2006/ao0602.pdf.