Q My practice is located in Florida. I don’t have any Medicare patients, so I don’t need to worry about the anti-kickback laws and I can pay for referrals, right?
A Florida, like many states, has its own set of anti-kickback laws that apply, regardless of whether you are treating Medicare patients — and you must be aware of them. Although the following describes Florida law, many state laws are similar, and doctors in different states should check with their health-care attorneys regarding what is, and is not, permissible.
Florida used to have a relatively ineffective Anti-Kickback Statute. The statute made it unlawful for any health-care provider to offer, pay, solicit, or receive a kickback for referring or soliciting patients. However, no specific criminal penalty provision was provided. This law was given “teeth” when it was amended by the Patient Brokering Act (Florida Statutes 817.505), which prohibits any activity that: induces the referral of patients or patronage from a health-care provider or facility by offering, paying, soliciting or receiving any commission, bonus, rebate, kickback or bribe; engages in any split-fee arrangement; or aids, abets, advises, or otherwise participates in the aforementioned prohibited conduct.
The only exemptions to this type of conduct are:
- payments permitted by federal law;
- compensation arrangements within a group practice;
- payments for professional consultation (not professional management) services;
- commissions paid to insurance agents;
- payments by health insurers;
- payments by or to health-care providers contracting with health insurers;
- insurance advertising gifts;
- payment to nurse registries;
- referrals by health-care information services that charge a set fee.
The penalties for violating this law vary. A first offense may be treated as a first-degree misdemeanor and/or $5,000 fine; a second offense may result in a third-degree felony and/or $10,000 fine. In all prosecuted cases, the activity would be stopped and you would be liable for any legal costs incurred from the prosecution.
Q I’ve heard there have been new rules issued for group practices by the Stark rules. Do I need to implement these in my multi-specialty practice?
A On Jan. 4, 2001, the Health Care Financing Administration (HCFA) issued Phase I of the final Stark II regulations (aka the Final Rule). The Final Rule was scheduled to become effective on Jan. 4, 2002; however, the Bush administration directed agency heads to postpone by 60 days the effective date of published regulations that had not yet gone into effect. Assuming that this directive applies, the Final Rule would become effective on March 5, 2002.
The Final Rule has been split into two phases, with the second phase still to be issued. Phase One of the Final Rule provides interpretation of the Stark laws and gives guidance to physicians concerning what is and what isn’t permissible. Overall, it has been construed as fair legislation, and in some cases has lightened some of the restraints previously imposed.
For purposes of answering your specific question, bear in mind that the Stark rules apply to your group only if it treats Medicare/Medicaid patients. Additionally, the rule only applies if your group is providing these Medicare/Medicaid patients with services described by HCFA as designated health services (DHS).
DHS include:
- clinical laboratory services;
- physical therapy services;
- occupational therapy services;
- radiology services;
- radiation therapy and supplies;
- durable medical equipment and supplies;
- parenteral and enteral nutrients, equipment and supplies;
- prosthetics, orthotics and prosthetic devices and supplies;
- home health services;
- outpatient prescription drugs;
- inpatient and outpatient hospital services.
HCFA has stated that it intends to “protect” these types of referrals under the “doctors’ services” or “in-office ancillary services” exceptions to the prohibition against self-referrals only if the group practice is a bona fide group practice, and not a loose confederation of individual doctors bound together primarily to benefit from DHS referrals. Therefore, HCFA requires that the group practice be “fully integrated, medically and economically.”
In order to be “fully integrated, medically and economically,” your group practice must comply with the following:
- Your group practice must be a group of two or more doctors legally organized as a partnership, professional corporation, foundation,
not-for-profit corporation, faculty practice plan associated with a hospital, institution of higher education, or medical school with an approved medical residency training program, or similar association. - Each doctor who is a member of the group must furnish/provide substantially the full range of services that the doctor routinely furnishes, including care, consultation, diagnosis, or treatment, through the joint use of shared office space, facilities, equipment and personnel (“full range of service” test).
- All the services of the doctors who are members of the group must be furnished through the group and billed under a billing number assigned to the group, and the amounts received are treated as receipts of the group (“substantially all” test).
- The overhead expenses of, and the income from the practice, must be distributed in accordance with methods previously determined (“unified business” test).
- No doctor who is a member of the group, directly or indirectly, can receive compensation based on the volume or value of referrals by the doctor, except for permitted profit distributions and personal productivity bonuses. (However, a doctor may be paid a share of the group’s overall profits or a productivity bonus based on the services personally performed by the doctor, as long as the volume or value of referrals of DHS services is not taken into account in determining the doctor’s bonus or compensation.)
- Members of the group must personally conduct at least 75% of the group’s doctor-patient encounters.
- The group must meet such other standards as the government may impose.
Keep in mind that even if you do not provide any of the designated health services and/or you do not service Medicare/Medicaid patients, your state laws probably have similar group practice laws with which you must comply.