Key Points You Need to Remember About Fee-Splitting

Key Points You Need to Remember About Fee-Splitting

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In today’s video, we discuss fee-splitting, anti-kickback, Stark and anti-markup rules, and how these are all related.

Many healthcare companies come to us with a new business model, and they want to know whether their business model complies with fee-splitting, anti-kickback, Stark, and anti-markup rules or not, and how to become more compliant.

Because we advise hundreds and hundreds of healthcare companies that ask similar questions, we know this territory very well.

My name is Michael H. Cohen and I’m founding attorney of the Cohen Healthcare Law Group. I’ve practiced healthcare law for over 20 years, and we’ve represent over a thousand healthcare clients.

Today, I’m going to give you some important tips about these related areas of healthcare law, so you can know what to look for when you have a new healthcare business model and are looking to hire a healthcare attorney or healthcare law firm.

The first thing you need to know is that you have both federal law and state law.  Normally, federal law applies whenever the medical or other healthcare practice will be billing Medicare for healthcare services.  This isn’t always the case, though.  Sometimes, healthcare companies look to federal law as a model, because state enforcement authorities often turn to federal law for guidance.

And sometimes, healthcare clients look to federal law as a precaution, because somewhere in the equation, Medicare reimbursement might be involved.

State law in many respects mirrors federal law; so, for example, you have state laws and regulations that are the state law analogues to the federal Stark or self-referral law; state law analogues to the federal anti-kickback statute; and state law analogues to the federal anti-markup rule.

Stark or self-referral deals with a situation in which the healthcare provider, typically the physician, has a financial interest in the entity to whom the healthcare provider refers a patient.

Kickback typically deals with a situation in which the physician or other healthcare provider, gives, or receives, payment or any form of compensation in exchange for the referral.

Fee-splitting often occurs during a kickback scenario, and basically involves a claim that the physician has “split the check” with the person delivering the referral.

The anti-markup rule has to do with a scenario in which the physician orders a diagnostic test, and bills the patient for the technical component (or TC) or the professional component (or PC) of the test, or for both.

Don’t worry about the specifics of these definitions; you can find more detail on our blog.  The main thing is to start to familiarize yourself with the language and legal landscape, so you can understand that any given business model might fall under a number of related rules—and understand that both federal and state law might apply.

The second piece I’d like you to take away from this video, is that normally, the essence of a kickback is when a physician pays something for the referral.  So, let’s say you refer Dr. Ned a patient, and Dr. Ned expresses his gratitude by paying you $20.  That is a kickback.

Now, having said that, there are legitimate reasons why, and situations where, Dr. Ned might want to pay a marketing company for doing marketing work that will generate referrals.

One key principle in kickback prohibitions, is that the payment made by Dr. Ned, should not “vary by value or volume of referrals.”  So if, for example, Dr. Ned pays a marketing company a flat fee of $5,000 a month to do marketing for his practice, and that fee does not vary based on how many patients end up calling the practice, or how much in revenues the practice generates, that would likely be a fairly safe arrangement.

Last, there are many exceptions to the Stark and state self-referral laws, and many ways that an arrangement will not necessarily trigger anti-kickback enforcement.  In the anti-kickback arena, we refer to these likely safe arrangements, as “safe harbors.”  Literally it’s a place for your healthcare ship to park, in the turbulent sea of healthcare regulation.

These exceptions and safe harbors can get very tricky, which is why you’ll want an experienced captain, your healthcare attorney, to guide your ship so your venture doesn’t get dashed on the enforcement rocks.

Thanks for watching.  Here’s to the success of your healthcare venture, we look forward to speaking with you soon.

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