www.bakerdaniels.com Introduction to the Anti-Kickback Statute and Stark La and Stark Law October 24 2011 October 24, 2011 Isaac M. Willett Baker & Daniels LLP
Federal Anti-Kickback Statute Federal Anti Kickback Statute Prohibits the offering, paying soliciting or receiving of any remuneration in return for – Referral of patients; or Referral of patients or – Inducing purchases, leases, or orders Remuneration includes kickbacks, bribes and R ti i l d ki kb k b ib d rebates, cash or in kind, direct or indirect Statute is broad and applies to anyone Statute is broad and applies to anyone Penalties – Civil and Criminal 2
Penalties Penalties Criminal and Civil Penalties C i i l d Ci il P lti $25,000 per offense Imprisonment up to 5 years Civil Money Penalties Civil Money Penalties (exclusion and $50,0000) 3
Health Reform Kickback = False Claim Kickback False Claim – Previously, prosecutors and whistleblowers were required to bootstrap a claims that a kickback was connected to the submission of a false claim such as through a certification of submission of a false claim, such as through a certification of compliance – Now, the Anti-Kickback Statute specifically provides that a violation constitutes a false or fraudulent claim under the False violation constitutes a false or fraudulent claim under the False Claims Act. Intent Requirement – A person need not have “actual knowledge of” or “specific intent to commit a violation” 4
Statutory Exceptions Statutory Exceptions Discount Exception Employee Exception Group Purchasing Organization Waivers of Certain Co-Payments W i f C t i C P t Risk Sharing Arrangements Safe Harbors Safe Harbors Waivers of Part D Cost Sharing FQHC’s Electronic Prescribing (See 42 USC § 1395-104(e)) 5
Timeline of Safe Harbor Issuances Timeline of Safe Harbor Issuances July ‘91 – First 11 SHs Finalized Sept. ‘93 – 7 SHs Proposed Jan. ‘96 - Managed Care SHs Finalized and “Clarifications” to First 11 SHs Nov. ‘99 – Interim Final Risk Sharing SHs Dec ‘01 Dec. 01 – Ambulance Restocking SH Ambulance Restocking SH Sept. ‘02 – Medicare SELECT Proposed Aug ‘06 – E Prescribing Final Aug. 06 E Prescribing Final Oct. ‘08 – FQHC Final 6
What are Safe Harbors? What are Safe Harbors? Safe harbors provide immunity, but adherence is not p y, required Failure to comply with a safe harbor can mean one of three things: th thi – arrangement does not fall within ambit of the statute – arrangement is obviously abusive, constitutes a clear statutory violation, and is very likely to be prosecuted; or – arrangement involves risk because it may violate the statute in a less serious manner… - 7 -
General Investment Interest SHs General Investment Interest SHs Large Investment Interests Large Investment Interests – Large publicly traded company registered with SEC – At lease $50 million in undepreciated assets Small Investment Interests – 60/40 Investor Rule – 60/40 Revenue Rule – 60/40 Revenue Rule Investments in Entities in MUAs – No Revenue rule, but 50/50 Investor Rule , – 75% of business derived from services furnished to persons in MUA 8
Personal Service Equipment and Personal Service, Equipment and Office Space Leases Written agreement for a term of at least one year Aggregate payment amount as well as the gg g p y premises, equipment, or services covered must be specified If not full-time services, agreement must specify schedule of intervals Compensation must be based on FMV and not vary based upon referrals or business 9
Discounts Statutory exception “discount or other reduction in price obtained by a provider … if the reduction … is properly disclosed and appropriately reflected in the properly disclosed and appropriately reflected in the costs claimed or charges made by the provider or entity…” Safe Harbor categorizes protection based upon the type of party involved in the transaction (buyers, sellers and offerors) and then further divides based upon the type of offerors) and then further divides based upon the type of purchasing entity (MC/MA risk contractors, cost reporting entities, and all others (e.g., Part B. suppliers)) 10
Other Guidance Case Law Advisory Opinions Special Fraud Alerts and Special Advisory Bulletins Special Advisory Bulletins 11
Stark Law “ … If a physician (or an immediately family member of such physician) has a financial relationship with an entity …, then the physician may not make a referral to the entity for the furnishing or designated health services for which furnishing or designated health services for which payment otherwise may be made” under Medicare and to some extent Medicaid and to some extent Medicaid. 12
Brief Overview of the Stark Law Brief Overview of the Stark Law Stark I – Passed ’89, eff. ’92 (clinical laboratory services only) only) Stark II – Passed ’93, eff. ’95 (remaining 10 DHS) Regulations Regulations 3/92 – Proposed Stark I 8/95 – Final Stark I 1/98 – Proposed Stark II 1/01 – Phase I Stark II Final Regulations 3/04 – Phase II Stark II Final Regulations g 9/07 - Phase III Stark II Final Regulations Additional modification in Medicare Physician Fee Schedules and Hospital PPS Rules Physician Fee Schedules and Hospital PPS Rules 13
Important Definitions Important Definitions “ Financial Relationship ” defined to include both Financial Relationship defined to include both compensation arrangements and investment and ownership interests p “ Referral ” defined more broadly than merely recommending a vendor of designated health g g services to a patient; instead, it is defined as “the request by a physician for the item or service” or the “establishment of a plan of care by a th “ t bli h t f l f b physician which includes the provision of the designated health service ” designated health service. 14
“D “D “Designated Health Services” “Designated Health Services” i i t d H t d H lth S lth S i i ” ” clinical laboratory services; durable medical equipment and supplies; physical therapy services; radiation therapy services and occupational therapy supplies; supplies; services; services; parenteral and enteral radiology, including nutrients, equipment, and magnetic resonance supplies; li imaging, computerized prosthetics, orthotics, and axial tomography scans and ultrasound services; ; p prosthetic devices; ; home health services and outpatient prescription drugs; supplies ; and inpatient and outpatient i ti t d t ti t hospital services 15
P P Penalties Penalties lti lti Civil sanctions Civil sanctions Exclusion from federal programs Recoupment of payments Recoupment of payments Bootstrap of False Claims Act violation 16
Exceptions Exceptions General exceptions from the scope of the Stark prohibition Exceptions relating only to ownership or investment interests Exceptions relating only to compensation arrangements 17
In In Office Exception In In-Office Exception Office Exception Office Exception Applies to DHS furnished in a physician’s office except for DME (excluding infusion pumps, crutches, canes, walkers, folding wheelchairs, blood glucose monitors) and parenteral/enteral glucose monitors) and parenteral/enteral Referring physician or another physician in the same “group practice” must personally furnish the services g p p p y or “directly supervise” another person performing the tests – N t Note: for purposes of supervision, the physician can be either f f i i th h i i b ith an owner or a employee of the practice (which are “members of the practice”) or can be an independent contractor physician 18
H Health Reform H Health Reform lth R f lth R f Amendment to In-Office Ancillary Services Exception (Section 6003) – Referring physician must inform patient in writing that the patient may obtain the service from a person other than patient may obtain the service from a person other than the referring physician or the physician’s group practice. – Referring physician must provide list of suppliers who furnish such services in the area where the patient f i h h i i th h th ti t resides – Applies to: MRI, CT, PET and any other DHS the pp , , y Secretary determines appropriate – Applies to services furnished on or after January 2, 2010 19
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