Pathology/Lab Coding Alert

Distinguish Stark, AKS.

The way your lab gets patient referrals could be the subject of an Office of Inspector General (OIG) fraud case if you don't steer clear of certain practices.

Refresher: You face two main areas of concern where labs and pathologists may unwittingly violate patient referral rules: The Anti-Kickback Statute (AKS) and the Physician Self-Referral Law, more commonly known as the Stark Law.

Read on to see how your lab can stay on the good side of the OIG with reference to how these rules impact services for Medicare beneficiaries.

Focus on Kickbacks

Kickbacks refer to any acceptance of reward, incentive, or payment for a referral from anyone, or in technical terms, "patient referrals or the generation of business involving any item or service payable by the Federal healthcare programs," the Anti-Kickback Statute (AKS) states. You run the risk of both civil and criminal charges under the AKS, which makes kickbacks more detrimental to the offender than referral fraud.

Consider this scenario: If your lab offers providers "incentives" for referring patients, that is considered a kickback. In this kind of situation, cash rewards, gifts, vacations, and even discounted services or supplies are considered kickbacks.

Fine breakdown: Monetary damages for engaging in kickback fraud vary depending on the level of severity, but "civil penalties for violating the AKS may include penalties of up to $50,000 per kickback plus three times the amount of kickback," according to the Medicare Learning Network fraud and abuse fact sheet. Criminal penalties may, however, include fines, incarceration, and exclusion from the Medicare, Medicaid, and state health programs.

How Is Stark Different?

Self-referral fraud is a little tricky and falls under the Physician Self-Referral Law or Stark Law. The federal rule "prohibits physicians from referring patients to receive 'designated health services' payable by Medicare or Medicaid from entities with which the physician or an immediate family member has a financial relationship, unless an exception applies," the guidance says.

For example: If you have partial interest in another healthcare company or service, such as a fee-for-service independent anatomic pathology lab, you cannot exclusively refer patients to the firm unless you have a documented exception. Exceptions include an "in-office" anatomic pathology lab, although efforts to remove that exception have been ongoing.

For those who get caught making a prohibited referral, you can expect a civil suit to follow with punishments ranging from fines, forced refunds, Civil Monetary Penalties (CMPs) up to $15,000 for each service, and program exclusions.

Here's how they differ: "Stark applies only to physicians, while AKS is applicable to anyone," reminds attorney John E. Morrone, Esq, a partner at Frier Levitt Attorneys at Law in New York, New York. "Stark's fundamental focus is to prevent physicians (except in particular circumstances) from making referrals to entities with which they have a financial relationship."

He adds however that the "AKS is violated when a payment is made based on the 'volume or value of referrals.'"

"For example, AKS is a criminal statute, while Stark is not," points out attorney Michael D. Bossenbroek, Esq. of Wachler & Associates, P.C. in Royal Oak, Michigan. "However, Stark is a strict liability statute, meaning intent is not required, but AKS has an intent requirement."

Practical details: The laws are not administered by the same federal agencies. "Stark applies to Designated Health Services (DHS), but the AKS is not so limited," Bossenbroek says. "Stark involves physician self-referral, but the AKS does not apply only to physician referral arrangements."

He continues, "Also, both laws have their respective exceptions or safe harbors which, while often similar, may have different elements. Ultimately, it is important to give attention to both laws when analyzing their applicability, and not collapse the two together."

Beware OIG Involvement

Weather perusing a recent OIG semi-annual report or keeping an eye on OIG monthly updates online, you'll see self-referral as an ongoing concern.

"OIG remains committed to working collaboratively with our partners to protect beneficiaries and oversee HHS programs," said Inspector General Daniel R. Levinson in the OIG's latest report on why the agency aggressively pursues offenders.

Beware: The "hit list" for HHS program fraud, waste, and abuse investigations consistently include inappropriate self-referral and kick-back payments for laboratory services.

If you want to read more about Stark and AKS, and the OIG's take on these issues, you can refer to the following resources:

• www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/Downloads/Avoiding_Medicare_FandA_Physicians_FactSheet_905645.pdf
• oig.hhs.gov/reports-and-publications/workplan/index.asp oig.hhs.gov/reports-and-publications/archives/semiannual/2017/sar-spring-2017.pdf