2005 2005 FPMP Compliance FPMP Compliance

Training:Training:Physician/Hospital Physician/Hospital

Financial Financial ArrangementsArrangements

Presented by:Presented by:

Brigid M. Maloney, Esq.Brigid M. Maloney, Esq.

U.B. AssociatesU.B. Associates

Financial Arrangements Financial Arrangements with Hospitalswith Hospitals

Important Considerations:Important Considerations:• Stark LawStark Law• Antikickback StatuteAntikickback Statute• Internal Revenue CodeInternal Revenue Code

Stark LawStark Law

If a physician (or immediate family If a physician (or immediate family member) has a member) has a financial relationshipfinancial relationship

with an entity, then the physician with an entity, then the physician may not make referrals to the entity may not make referrals to the entity

for the furnishing of for the furnishing of designated designated health serviceshealth services, and the entity may , and the entity may

not submit a bill for the furnishing of not submit a bill for the furnishing of any such services.any such services.

Designated Health ServicesDesignated Health Services• Clinical lab servicesClinical lab services• Physical therapy, occupational therapy and speech-language pathology Physical therapy, occupational therapy and speech-language pathology

servicesservices• Radiology and other imaging services not including nuclear medicine Radiology and other imaging services not including nuclear medicine • Radiation therapy not including nuclear medicine Radiation therapy not including nuclear medicine • Durable medical equipment and supplies Durable medical equipment and supplies • Prosthetics, orthotics and prosthetic devices and supplies Prosthetics, orthotics and prosthetic devices and supplies • Home health services Home health services • Outpatient prescription drugsOutpatient prescription drugs• Parental and enteral nutrients and PEN-associated equipment and supplies. Parental and enteral nutrients and PEN-associated equipment and supplies.

• Inpatient hospital services Inpatient hospital services • Outpatient hospital services Outpatient hospital services

If a physician (or immediate family member) has a “financial If a physician (or immediate family member) has a “financial relationship” with an entity, then the physician may not make relationship” with an entity, then the physician may not make referrals to the entity for the furnishing of referrals to the entity for the furnishing of “designated health “designated health services”services”,, and the entity may not submit a bill for the and the entity may not submit a bill for the furnishing of any such services.furnishing of any such services.

ReferralsReferrals

A “referral” is a request by a physician for an item or service for which Medicare Part B may pay,

including a request for a consultation (including any tests ordered by the consultant), as well as a request or establishment of a plan of care, with certain exceptions. A referral does not include a

request for a DHS item or service that is provided or performed by the referring

physician.If a physician (or immediate family member) has a “financial If a physician (or immediate family member) has a “financial relationship” with an entity, then the physician may not make relationship” with an entity, then the physician may not make referrals to the entity for the furnishing of referrals to the entity for the furnishing of “designated health “designated health services”services”,, and the entity may not submit a bill for the and the entity may not submit a bill for the furnishing of any such services.furnishing of any such services.

Financial RelationshipFinancial Relationship

Compensation ArrangementCompensation Arrangement

--or----or--

Ownership or Investment InterestOwnership or Investment Interest

If a physician (or immediate family member) has a If a physician (or immediate family member) has a “financial “financial relationship”relationship” with an entity, then the physician may not make with an entity, then the physician may not make referrals to the entity for the furnishing of “designated health referrals to the entity for the furnishing of “designated health services”, and the entity may not submit a bill for the services”, and the entity may not submit a bill for the furnishing of any such services.furnishing of any such services.

Compensation Compensation ArrangementArrangement

Direct or indirect remuneration Direct or indirect remuneration between a physician and an entity, between a physician and an entity,

overtly or covertly, overtly or covertly,

in cash or in kind.in cash or in kind.

If a physician (or immediate family member) has a If a physician (or immediate family member) has a “financial “financial relationship”relationship” with an entity, then the physician may not make with an entity, then the physician may not make referrals to the entity for the furnishing of “designated health referrals to the entity for the furnishing of “designated health services”, and the entity may not submit a bill for the services”, and the entity may not submit a bill for the furnishing of any such services.furnishing of any such services.

Compensation Compensation Arrangements -- ExamplesArrangements -- Examples

Physician employment agreements Physician professional service

agreements (e.g., independent contractor agreements)

Medical director agreements Lease of office space or equipment Lease of time or a “per service” lease

with an MRI imaging center.

Compensation Compensation Arrangements--ExceptionsArrangements--Exceptions

Office space and equipment Office space and equipment rentalsrentals

Bona fide employment Bona fide employment relationshipsrelationships

Personal service arrangementsPersonal service arrangements

Office Space RentalsOffice Space Rentals• Written lease, signed by the parties, Written lease, signed by the parties,

specifying the covered premises or specifying the covered premises or equipmentequipment

• Leased space/equipment must not exceed Leased space/equipment must not exceed that which is reasonable and necessary for that which is reasonable and necessary for legitimate business purposeslegitimate business purposes

• Space/equipment is used exclusively by Space/equipment is used exclusively by lessee when being used by lesseelessee when being used by lessee

• Lease term of at least one yearLease term of at least one year• Rental amount is set in advance, FMV, not Rental amount is set in advance, FMV, not

determined in a manner that takes into determined in a manner that takes into account value of referrals or other business account value of referrals or other business generated between the partiesgenerated between the parties

• Commercially reasonableCommercially reasonable

Bona fide employment Bona fide employment relationshipsrelationships

• Employment is for identifiable Employment is for identifiable servicesservices

• Compensation is FMVCompensation is FMV• Compensation not determined in a Compensation not determined in a

manner that takes into account the manner that takes into account the volume or value of referrals by the volume or value of referrals by the referring physicianreferring physician

• Compensation is commercially Compensation is commercially reasonablereasonable

Personal Service Personal Service ArrangementsArrangements

• Arrangement is set out in writing, signed by the Arrangement is set out in writing, signed by the parties, and specifies the services covered by the parties, and specifies the services covered by the arrangementarrangement

• The aggregate services contracted for do not The aggregate services contracted for do not exceed those that are reasonable and necessary exceed those that are reasonable and necessary for the legitimate business purposes of the for the legitimate business purposes of the arrangementarrangement

• The term of the arrangement is at least one yearThe term of the arrangement is at least one year• Compensation is set in advance, does not exceed Compensation is set in advance, does not exceed

FMV, does not take into account the volume or FMV, does not take into account the volume or value of referrals or other business generated value of referrals or other business generated between the partiesbetween the parties

• Services performed do not involve any illegal Services performed do not involve any illegal activitiesactivities

Stark Reporting Stark Reporting RequirementsRequirements

Required informationRequired information• The name and unique physician identification The name and unique physician identification

number (UPIN) of each physician who has a number (UPIN) of each physician who has a reportable financial relationship with the entity. reportable financial relationship with the entity.

• The name and UPIN of each physician who has The name and UPIN of each physician who has an immediate family member who has a an immediate family member who has a reportable financial relationship with the entity. reportable financial relationship with the entity.

• The covered services furnished by the entity. The covered services furnished by the entity. • The nature of the financial relationship as The nature of the financial relationship as

evidenced in records that the entity knows or evidenced in records that the entity knows or should know about.should know about.

Consequences of failure to report Consequences of failure to report • Up to $10,000 for each day following the Up to $10,000 for each day following the

deadline until the information is submitted.deadline until the information is submitted.

SanctionsSanctions• No payment may be made for a designated No payment may be made for a designated

health service (DHS) that is provided in health service (DHS) that is provided in violation of Stark.violation of Stark.

• If an entity collects any amounts that were If an entity collects any amounts that were provided in violation of Stark, those amounts provided in violation of Stark, those amounts must be refunded on a timely basis.must be refunded on a timely basis.

• Unrefunded collections are subject to a Unrefunded collections are subject to a $15,000 civil monetary penalty for each $15,000 civil monetary penalty for each service rendered in violation of Stark.service rendered in violation of Stark.

• Fines for cross-referral arrangements or Fines for cross-referral arrangements or other unlawful referral schemes may be up other unlawful referral schemes may be up to $100,000 per arrangement.to $100,000 per arrangement.

• Physician exclusion from federal payor Physician exclusion from federal payor programs.programs.

Antikickback StatuteAntikickback Statute

Whoever Whoever knowingly and willfully solicits or receives any knowingly and willfully solicits or receives any remunerationremuneration (including any kickback, bribe, or rebate) (including any kickback, bribe, or rebate)

directly or directly or indirectly, overtly or covertly, in cash or in kind— indirectly, overtly or covertly, in cash or in kind—

in return for referring an individualin return for referring an individual to a person for the to a person for the furnishing or arranging for the furnishing of any item or furnishing or arranging for the furnishing of any item or service service for which payment may be made in whole or in for which payment may be made in whole or in part under a Federal health care program…part under a Federal health care program…

shall be guilty of a shall be guilty of a felonyfelony and upon conviction thereof, and upon conviction thereof, shall beshall be

fined not more than $25,000 or imprisoned for not more fined not more than $25,000 or imprisoned for not more than fivethan five

years, or both. years, or both.

Antikickback Statute Safe Antikickback Statute Safe HarborsHarbors

Space/Equipment RentalsSpace/Equipment Rentals

Personal Services & Management Personal Services & Management ContractsContracts

Bona fide Employment Bona fide Employment ArrangementsArrangements

Space/Equipment Space/Equipment RentalsRentals

• Written lease, signed by both parties. Written lease, signed by both parties. • Lease specifies the premises/equipment Lease specifies the premises/equipment

covered by the lease.covered by the lease.• If part-time rental, lease specifies exactly the If part-time rental, lease specifies exactly the

schedule of intervals, their precise length, and schedule of intervals, their precise length, and the exact rent for such intervals. the exact rent for such intervals.

• The term of the lease is for not less than one The term of the lease is for not less than one year. year.

• Rental amount is set in advanceRental amount is set in advance• Rental amount is fair market value Rental amount is fair market value • Rental amount is not determined in a manner Rental amount is not determined in a manner

that takes into account the volume or value of that takes into account the volume or value of any referralsany referrals

Space/Equipment Space/Equipment RentalsRentals

Fair market value = value of the rental Fair market value = value of the rental property or equipment for general property or equipment for general commercial purposescommercial purposes

Caveat: FMV cannot be adjusted to reflect Caveat: FMV cannot be adjusted to reflect the additional value that one party would the additional value that one party would attribute to the property based on attribute to the property based on proximity to sources of referrals or proximity to sources of referrals or business otherwise generated.business otherwise generated.

Personal Services & Personal Services & Management ContractsManagement Contracts

• The agreement is set out in writing and signed by the The agreement is set out in writing and signed by the parties.parties.

• The agreement specifies the services to be provided by The agreement specifies the services to be provided by the agent. the agent.

• If the agreement is intended to provide for services on a If the agreement is intended to provide for services on a periodic, sporadic or part-time basis, the agreement periodic, sporadic or part-time basis, the agreement specifies exactly the schedule of such intervals, their specifies exactly the schedule of such intervals, their precise length, and the exact charge for such intervals.precise length, and the exact charge for such intervals.

• The term of the agreement is for not less than one year. The term of the agreement is for not less than one year. • The aggregate compensation is set in advance, The aggregate compensation is set in advance,

consistent with FMV and not determined in a manner consistent with FMV and not determined in a manner that takes into account the volume or value of any that takes into account the volume or value of any referrals or business otherwise generated between the referrals or business otherwise generated between the parties parties

• The services performed under the agreement are not The services performed under the agreement are not illegal. illegal.

Employment Employment ArrangementsArrangements

A bona fide employment relationship A bona fide employment relationship with the with the

employer, for employment in the employer, for employment in the furnishing of any furnishing of any

item or service for which payment may item or service for which payment may be made in be made in

whole or in part under Medicare or a whole or in part under Medicare or a State health State health

care program.care program.

The big pictureThe big picture

FMV – look at all remunerative sources:FMV – look at all remunerative sources:

contract dollarscontract dollars++

billing and collectionsbilling and collections++

equipment/supplies/personnelequipment/supplies/personnel++

other perks and freebiesother perks and freebies==

Total compensation packageTotal compensation package

Internal Revenue CodeInternal Revenue Code

IRC Sec. 501(c)(3):IRC Sec. 501(c)(3):Corporations…organized and operated Corporations…organized and operated

exclusively exclusively

for religious, charitable…or educational for religious, charitable…or educational purposes…purposes…

no part of the net earnings of which inures no part of the net earnings of which inures to the benefit to the benefit

of any private shareholder or individualof any private shareholder or individual……

If you only remember If you only remember one thing…one thing…

Fair Market Fair Market ValueValue

And one more thing….And one more thing….

CONTRACT, CONTRACT, CONTRACT, CONTRACT, CONTRACTCONTRACT

Provide no services without a contract…Provide no services without a contract…

Accept no payment (cash or in kind) Accept no payment (cash or in kind) without a contract…without a contract…

Use no hospital resources without a Use no hospital resources without a contract…contract…

Post TestPost Test

InstructionsInstructions