Federal Fraud and Abuse Laws

On October 24, 2018, Congress enacted a new anti-kickback law that applies to many commercial health insurance plans, as well as Medicare and Medicaid.  The law, known as the “Eliminating Kickbacks in Recovery Act of 2018” (the “Law”), was passed as part of the SUPPORT for Patients and Communities Act, which generally targets the national opioid crisis.

PillsMoneyThe Law makes it a criminal offense to do any of the following:

  1. Solicit or receive any remuneration (including any kickback, bribe or rebate), directly or indirectly, in return for referring a patient or patronage to a recovery home, clinical treatment facility or clinical laboratory; or
  2. Offer or pay a kickback to “induce” a referral of an individual to a recovery home, clinical treatment facility or clinical laboratory, or in exchange for an individual using the services of a recovery home, clinical treatment facility or clinical laboratory.

A “Clinical treatment facility” is broadly defined under the Law as essentially any non-hospital licensed facility that provides treatment for substance use.  Penalties for each violation can include a fine of up to $200,000 and imprisonment of up to 10 years.

The Law has seven “safe harbors”, some of which are similar to the safe harbors under the federal Anti-Kickback Statute that is generally applicable to Medicare and Medicaid services.  However, in contrast to the Anti-Kickback Statute, the safe harbor for employees and independent contractors under the Law expressly excludes from safe harbor protection any payment made to an employee or independent contractor that is determined or varies by:  (1) the number of individuals referred to one of the above facilities; (2) the number of tests or procedures performed; or (3) the amount billed to or received from the individual’s health insurance plan.

Although the Anti-Kickback Statute prohibits conduct similar to that prohibited by the Law in the context of Medicare and Medicaid, the Law casts a wider net in the context of referrals to recovery homes, clinical treatment facilities and clinical laboratories, as it applies to many commercial insurance plans.

It remains to be seen whether and how this Law may be narrowed down in application.  The U.S. Attorney General has the authority to issue additional safe harbor regulations under the Law, which could be used to clarify existing safe harbors.  The Law may also be amended by Congress in the future.

In addition to having a significant impact on the clinical laboratory industry, the Law could affect physicians employed or engaged by recovery homes or clinical treatment facilities, or participating in an arrangement directly or indirectly involving referrals to such homes or facilities.

The full text of the Law may be accessed at this link:  Eliminating Kickbacks in Recovery Act of 2018.

If you have any questions about how the Law may apply to your practice, please consult with experienced legal counsel.

CMS recently issued an Advisory Opinion suggesting that physicians who refer diagnostic tests reimbursable under Medicare to a laboratory may, under certain circumstances, receive electronic pop-up notifications in the laboratory’s web-based portal alerting the physicians to various potential issues related to the test results.  In the Advisory Opinion, CMS considered certain alerts which a laboratory proposed to provide to its referring physicians without charge via the laboratory’s web-based portal.  The entire Advisory Opinion can be read here.

In short, CMS concluded that the alerts proposed by the laboratory, which would be limited to issues relating to the test results, would not constitute illegal remuneration under the federal Stark law, as long as (1) the alerts are provided solely in connection with the ordering or communication of diagnostic test results from the laboratory, and (2) appropriate safeguards are in place to avoid overutilization or medically unnecessary testing.

Some of the key safeguards that CMS found persuasive included the following:

  • Alerts recommending additional testing would be based on industry-standard, peer-reviewed guidelines;
  • The alerts would not be “overly intrusive” and would not override the physician’s independent medical judgment;
  • Where multiple additional tests would be recommended in an alert, there would be no “select all” button for the physician to click to order all of the tests together;
  • The physician could turn off the alerts for a particular disease condition; and
  • The physician could obtain the information provided in the alerts free of charge from other sources.

An advisory opinion from CMS is a rare occurrence, in comparison to advisory opinions issued by the Office of Inspector General regarding the federal Anti-Kickback Statute, which occur a number of times each year.  This is the first and only advisory opinion issued by CMS in 2017.  To that end, CMS likely considers this Opinion to be useful guidance to physicians and providers regarding their use of online web portals to order diagnostic tests.

If you or your practice has any questions regarding alerts or other benefits you may receive via a laboratory’s online web portal, please consult experienced legal counsel.

Many physicians mistakenly believe that federal healthcare fraud and abuse statutes only apply to the Medicare fee-for-service program. However, physicians need to be aware that many federal healthcare statutes apply to any program or plan funded, in whole or in part, with federal dollars. One such example is the Medicare Advantage program. Although these plans are implemented by private insurance companies, they are funded with Medicare dollars. As such, they are generally subject to federal healthcare fraud and abuse laws including, without limitation, the federal Health Care Fraud statute and the False Claims Act.
In February 2015, a Florida physician and his medical practice were indicted by a federal grand jury for allegedly engaging in a scheme to defraud the Medicare program through a Humana Medicare Advantage plan. Specifically, the physician and clinic in question are alleged to have submitted fraudulent diagnoses to Humana which resulted in the Medicare program making larger Medicare Advantage capitated payments to Humana. The physician and clinic, in turn, received a larger monthly payment from Humana under the Medicare Advantage Program. Although healthcare fraud cases arising under the Medicare Advantage program are not yet commonplace, this case demonstrates the potential pitfalls associated with federally funded health care programs that all physicians need to be aware of. For more on the indictment, see “Delray Beach Doctor Charged with Health Care Fraud”.