The Big Gotcha
The idea that a person can be compensated for doing something they would likely do anyway has always been out there. Car dealers frequently say "send me anyone you know looking for a good deal, and if they buy from me, you'll get a $50 gift card from the steak house." The person making the referral feels good because they made a little money, and the person buying the car feels good, because they got a good deal. Everyone benefits. Right?
As long as you keep it to cars, furniture, Amway products, and non-health-care related items, that's true. But the minute that you apply this kind of thinking -- or this kind of incentive -- to health care, you run afoul of the law.
The Medicare and Medicaid Patient Protection Act of 1987, as amended, 42 U.S.C. §1320a-7b (the "Antikickback Statute"), provides for criminal penalties for certain acts impacting Medicare and state health care (e.g., Medicaid) reimbursable services. Section 1320a-7b(b), commonly called the "anti-kickback" provision, says:
"Whoever knowingly and willfully solicits or receives any remuneration (including any kickback, bribe or rebate) directly or indirectly, overtly or covertly, in cash or in kind 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 [Medicare] or a State 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 [Medicare] or a State health care program, 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."
If that wasn't bad enough, this subsection also provides:
"Whoever knowingly and willfully offers and pays 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 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 [Medicare] or a State health care program, or to purchase, lease, order, or arrange for or recommend purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under [Medicare] or a State health care program, 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."
The Antikickback Statute prohibits offering money (or services or property) in exchange for a referral or recommendation of health care services by a provider. The law has generally been applied to broker-style arrangements, where an individual or organization offers money to someone for the purpose of recommending or referring an individual for health care services or products. These kinds of payments are frequently found in nursing facilities, and the HHS OIG is looking carefully for these kinds of arrangements. Both the person who offers the money and the person who accepts are in trouble.
In an Antikickback Statute analysis, it is immaterial whether the offered money actually induces the referral or recommendation. It is enough that it has the capacity to do so. In the sentinel case, United States v. Greber, 760 F.2d 68, 71 (3rd Cir.), cert. denied, 474 U.S. 988 (1985), the defendant was an osteopathic physician who in addition to teaching duties, owned a company called Cardio-Med that provided holter-monitor services. Whenever another physician ordered a holter monitor through Cardio-Med, Dr. Greber billed Medicare, and paid a referral fee to the physican who ordered the test. The government charged Greber with mail fraud and false statements, and violation of the anti-kickback statute. In his defense Greber said that part of the payments were to compensate the referring physician for explaining the results to the patient.
The Court held that it was irrelevant that there were other legitimate reasons for the remuneration. If one purpose was to induce referrals, then the Antikickback Statute was violated. Id. at 71.
The Anti-Kickback Statute is very broadly worded, and it applies to any money or property paid to another. For example, where a nurse receives a $50 gift card for every patient she successfully switches from other pharmacies to XYZ Pharmacy, she and XYZ are guilty of a violating the anti-kickback statute. The financial records showing the gift card purchases will be exhibit 1 in the criminal trial.
Similarly, suppose that Morpheus Hospice has the contract for hospice services in a nursing home, and a competing hospice, Advantage Hospice, wants the business. Advantage proposes that in return for recommending Advantage Hospice to nursing home patients, Advantage will provide monthly inservices at the nursing home to assist nurses with their continuing education credits. During these inservice presentations, free food is provided, pens are given away, and other items of value pass between the hospice and the facility's nurses. If the facility accepts this offer, both Advantage and the facility are breaking the law. The law not only prohibits offering the payment, it prohibits accepting the payment. Both entities could be in serious trouble. While there are no financial records to establish the payment, if even one nurse is prepared to testify that she understood the switch of hospice providers was linked to the furnishing of freebies by the hospice, there is a good chance that someone will be spending the night in a federal lockup.
Additionally, an arrangement of this type that violates the Anti-Kickback statute also violates the False Claims Act. That makes thousands of eagle-eyed nurses, aides, therapists, and beneficiaries potential reward-driven whistleblowers who can profit from the facility's failure to follow the law.
When it comes to kickbacks or rewards for referrals in healthcare, the safest policy is "just say no."