Home Health & Hospice Week

Inappropriate compensation for marketers could cost you thousands. 

Despite a new federal appeals court decision exonerating per-referral compensation for marketing, home health agencies may want to bring their marketing activities in-house to avoid serious kickback land mines.

Basing payments to outside marketers on referral numbers is a major no-no with the feds, warn kickback experts. It can invoke the Anti-Kickback Statute provisions that prohibit paying anyone for arranging for or recommending referrals (see "Court Ok's Per Patient Marketing Compensation").

"You're playing with fire if you engage in these kinds of practices," warns attorney Bob Ramsey with Ingersoll Buchanan in Pittsburgh. Violating kickback laws is no minor offense -- it can carry five years in prison and termination from the Medicare program, Ramsey reminds providers.

Avoid this land mine: Even if you think you've insulated yourself against kickback concerns, if you're paying your outside marketers anything extra to produce referrals, you're asking for trouble, Ramsey stresses. "The real danger is that without your knowledge, [marketers] will go out and engage in unethical practices you may not know about" to reach their referral goals, he cautions.

"There are many things that are perfectly acceptable in the regular business world that are not acceptable in certain regulated occupations" such as Medicare, points out attorney Virginia Caudill with Indianapolis-based Gilliland & Caudill. Your outside marketers might think they are doing business as usual, but really are putting you in the crosshairs for kickbacks.

HHAs "should really get away from a reward system altogether" in marketing contracts, Ramsey advises.

"Make certain that payments are not tied to referrals generated -- directly or indirectly -- from the PR firm," counsels attorney Mark Langdon with Arent Fox Kintner Plotkin & Khan in Washington.

Langdon recommends following these tips, included in the personal services safe harbor of the Anti-Kickback Statute, to steer clear of trouble:

1. Have a written contract signed by both parties.

2. Detail all services to be provided in the contract.

3. Set the term of the contract for at least one year.

4. Set total compensation in advance at fair market value.

If you can't meet all these requirements, at least try to meet as many as possible to protect yourself from kickback risk, Langdon recommends.

Providers tend to cry foul over these restrictions due to concerns over accountability, Ramsey acknowledges. "It's frustrating and difficult," he says, but agencies must find other ways to motivate contractors to generate business.

Dissatisfaction with service and threatening termination when the contract is up are a few ways to do that, he says.

Another option: To make things easier, many HHAs may want to bring their marketing services in-house, Langdon says. "It's much simpler to pay an employee of a company," he notes. "You can pay them whatever you want."