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The Anti-Kickback Prohibition April 21, 2003 Mark Lupe, General Counsel

The Anti-Kickback Prohibition April 21, 2003 Mark Lupe, General Counsel. What is the Anti-Kickback Prohibition?.

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The Anti-Kickback Prohibition April 21, 2003 Mark Lupe, General Counsel

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  1. The Anti-KickbackProhibition April 21, 2003Mark Lupe, General Counsel

  2. What is the Anti-Kickback Prohibition? In its most general terms, federal and state law prohibit the offer of, or actual exchange, of items of value in order to induce the purchase of healthcare goods or services that will be paid for by a state or federal health care program.

  3. Why The Prohibition? • The government should not pay any more for health care services than is necessary to pay the actual provider of health care services. • Referrals to healthcare providers should be driven by considerations of care for the patient and not the identity of the highest bidder.

  4. The Federal Statute 42 U.S.C. § 1320a-7b(b) Illegal Remuneration Whoever knowingly and willfully solicits or receives (or offers or pays) any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind – in return for……….. • Knowingly and willfully– the required state of mind • But note the breadth - directly or indirectly in cash or in kind

  5. The Federal Statute 42 U.S.C. § 1320a-7b(b) • In return for referring an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program, or • In return for purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under a Federal health care program. . .

  6. The Federal Statute 42 U.S.C. § 1320a-7b(b) • Shall be guilty of a felony and upon conviction thereof, shall be fined not more than $25,000 or imprisoned for not more than five years, or both.

  7. The Federal Statute 42 U.S.C. § 1320a-7b(b) • Note – this statute also applies equally both sides of a prohibited transaction. • Its also illegal to offer or actually pay for referrals and purchases, leases and orders that are to be paid for in whole or in part under a Federal health care program.

  8. The Federal Statute 42 U.S.C. § 1320a-7b(b) • A transaction that that is an exchange for more or less than fair market value for good or services may create “remuneration.” • There is a violation of the anti-kickback prohibition if just “one purpose” is to induce referrals, even if there are other legitimate purposes for the payment.

  9. The Federal Statute 42 U.S.C. § 1320a-7b(b) There are statutory “safe harbors” • Excluded from the definition of “remuneration” is “a discount or other reduction in price obtained by a provider of services or other entity . . . if the reduction in price is properly disclosed and properly reflected in the costs claimed or charges made by the provider or entity under a federal health care program.”

  10. The Federal Statute 42 U.S.C. § 1320a-7b(b) Also excluded from the definition of “remuneration” are: • Amounts paid pursuant to a bona fide employment relationship for employment in the provision of covered items or services. • Administrative fees paid to group purchasing organizations (GPOs) under certain explicit conditions.

  11. The Federal Statute 42 U.S.C. § 1320a-7b(b) Also excluded from the definition of “remuneration” are: • Certain “risk-sharing” arrangements between individuals or entities providing goods or services to managed care organizations. • Any payment practice specified by the Secretary in regulations ……….

  12. Civil Monetary Penalties • The Balanced Budget Act of 1997 (BBA) included a number of provisions addressing health care fraud and abuse offenses, and revising and adding additional CMPs for violations occurring on or after the date of enactment, August 5, 1997.

  13. Civil Monetary Penalties • Today, a violation of the Anti-Kickback statute is may also furnish a basis for the imposition of a civil monetary penalty or a “CMP.” • The amount of a CMP can range up to $50,000 for each violation plus the additional imposition of 3 times the amount of the remuneration offered, paid, solicited or received.

  14. The Federal Statute 42 U.S.C. § 1320a-7b(b) In the Baptist Medical Center case from Kansas City, Missouri two physicians and the president of a hospital were convicted of violating the Federal Anti-Kickback Act as a result of consulting relationships between hospitals and physicians. The Tenth Circuit Court of Appeals approved of a jury instruction that the statute is violated if "any purpose" of an arrangement is to induce referrals of Medicare and Medicaid patients.

  15. Consider This Jury Instruction The intent to be influenced must, at least in part, have been the reason the remuneration was solicited or received. On the other hand, defendants . . . cannot be convicted merely because they received remuneration wholly in return for services and also decided to refer patients to the hospital. Likewise, mere referral of patients because of oral encouragement or because of a belief that the place to which the patients are to be referred is attractive does not violate the law. There must be a solicitation or receipt of remuneration in return for referrals. . .

  16. Regulation Safe Harbors • Investment in certain large or small entities • Investments in medically underserved areas • Space rentals • Equipment rentals personal services and management contracts • Sale of physician practices by one practitioner to another

  17. Regulation Safe Harbors • Referral services • Warranties • Discounts • Bona fide employment arrangements • Group purchasing organizations • Coinsurance and deductible waivers • Increased coverage, reduced cost sharing amounts, reduced premium amounts offered by health plans • Certain specified ambulance restocking arrangements

  18. Regulation Safe Harbors • Price reductions offered to health plans • Practitioner recruitment activities in underserved areas • Subsidies for obstetrical malpractice insurance insurance in underserved areas • Investment in group practices • Cooperative hospital service organizations

  19. Missouri State Law • No person shall knowingly solicit or receive any remuneration, including any kickback, bribe, or rebate, directly or indirectly, overtly or covertly, in cash or in kind in return for: • Referring another person to a health care provider for the furnishing or arranging for the furnishing of any health care; or • Purchasing, leasing, ordering or arranging for or recommending purchasing, leasing or ordering any health care.

  20. State Law – 191.905.2 RSMo. • No person shall knowingly solicit or receive any remuneration, including any kickback, bribe, or rebate, directly or indirectly, overtly or covertly, in cash or in kind in return for: • Referring another person to a health care provider for the furnishing or arranging for the furnishing of any health care; or • Purchasing, leasing, ordering or arranging for or recommending purchasing, leasing or ordering any health care.

  21. State Law – 191.905.3 RSMo. • No person shall knowingly offer or pay any remuneration, including any kickback, bribe, or rebate, directly or indirectly, overtly or covertly, in cash or in kind, to any person to induce such person to refer another person to a health care provider for the furnishing or arranging for the furnishing of any health care.

  22. State Law – 191.900 RSMo. State Law Definitions • "Health care", any service, assistance, care, product, device or thing provided pursuant to a medical assistance program, or for which payment is requested or received, in whole or part, pursuant to a medical assistance program;

  23. State Law – 191.900 RSMo. State Law Definitions • "Medical assistance program", any program to provide or finance health care to recipients which is established pursuant to title 42 of the United States Code, any successor federal health insurance program, or a waiver granted thereunder. A medical assistance program may be funded either solely by state funds or by state and federal funds jointly. The term "medical assistance program" shall include the medical assistance program provided by section 208.151, RSMo, et seq., and any state agency or agencies administering all or any part of such a program;

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