civil monetary penalties law

As the healthcare industry moves towards value-based purchasing, pay-for-performance, and other payment reform models, industry leaders have identified federal fraud and abuse laws as a barrier to full implementation of such models.  Last month, the Health Care Leadership Council released a White Paper entitled “Health System Transformation: Revisiting the Federal Anti-Kickback Statute and Physician Self-Referral (“Stark”) Law to Foster Integrated Care Delivery and Payment Models” (“HCL White Paper”), identifying current fraud and abuse laws as impeding transformation of the healthcare system.  Pharmaceutical and device manufacturers have also taken advantage of the OIG’s Solicitation of New Safe Harbors and Special Fraud Alerts (“OIG Solicitation”) to advocate for more flexible fraud and abuse laws with respect to value-based arrangements. Continue Reading Pharmaceutical Manufacturers and Healthcare Leaders cite Fraud and Abuse Laws as Obstacle to Value-Based Arrangements

In a fraud alert released today, the OIG warns that physician compensation arrangements, such as medical directorship compensation, may potentially violate the anti-kickback statute.  The fraud alert reiterates the “one purpose” doctrine (a compensation arrangement may violate the anti-kickback statute if even one purpose is to compensate a physician for past or future referrals of Federal health care program business).  While this concept is hardly headline news to providers or health law attorneys, the OIG issued the fraud alert after recently reaching settlements with 12 individual physicians who entered into “questionable” arrangements.  The fraud alert cites a variety of issues that made these arrangements questionable, including taking into account the volume or value of referrals, payments that were inconsistent with fair market value for services to be performed and failure of physicians to actually perform the services.  Some of the arrangements included payment by an affiliated health care entity of the physicians’ front office staff, constituting improper remuneration to the physicians.  The fraud alert notes that the OIG determined that the “physicians were an integral part of the scheme and subject to liability under the Civil Monetary Penalties Law.”

Medical directorship and other arrangements with physicians often make good sense and reflect bona fide physician services that further the goals of coordination of care, improvement of quality, and cost savings.  This fraud alert serves as a not-so-gentle reminder to remember the basics in structuring, documenting and monitoring these arrangements to assure initial and ongoing compliance with the anti-kickback statute.  It also highlights that the OIG will not hesitate to pursue individual physicians in these cases.