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How to determine possible anti-kickback statute violations

Radiology Administrator's Compliance and Reimbursement Insider, May 1, 2008

Consider: A radiology group furnishes services to a small critical access hospital on an exclusive basis. The hospital, via teleradiology, transmits digitized images of hospital patients to the radiology group for interpretation.

The radiology group interprets the images, prepares written reports, and bills third-party payers, including Medicare and Medicaid. It does not charge the hospital for the written reports.

The hospital certifies that, overall, its exclusive relationships are at fair market value in arm’s-length transactions.

In this situation, does the radiology group’s preparation of the written reports violate federal anti-kickback laws?

According to the Office of Inspector General’s (OIG) Advisory Opinion 07-19, delivered January 3, the above arrangement could have potentially generated prohibited remuneration under the anti-kickback statute if there were intent to induce or reward referrals of federal healthcare program business, says Michael F. Schaff, Esq., a healthcare attorney at Wilentz, Goldman & Spitzer, P.A., in Woodbridge, NJ.

If a situation is absent this intent (such as the above situation), the OIG would not impose sanctions, according to the opinion. (For a copy of this opinion, see http://oig.hhs.gov/fraud/docs/advisoryopinions/2007/AdvOpn07-19C.pdf.)

Keep in mind that whether the OIG ascertains fraud will be dependent on all the facts in an arrangement, says Schaff.

The OIG explained how an arrangement could violate the federal anti-kickback statute: The hospital receives something of value from the radiology group (free written reports) in return for referring Medicare patients to the group for radiology services.

Arrangements between hospitals and radiologists or other hospital-based physicians “may implicate the anti-kickback statute if the hospital solicits or receives something of value—or the physicians offer or pay something of value—for access to the hospital’s federal health care program business,” the OIG noted.

However, according to the OIG, in this case, written reports the group provides to hospital Medicare patients do not constitute remuneration and, so, cannot implicate the anti-kickback statute. According to the OIG (regarding this case):

CMS rules obligate radiologists to prepare reports for Medicare reimbursement. CMS will not pay a radiology group for its interpretation unless the radiologist prepares a written report for inclusion in patients’ medical records. Thus preparation of the report “is part of the covered professional service that is reimbursed to the radiologist under Medicare Part B, and the radiologist is obligated to prepare a written report for such patients in order to receive Medicare reimbursement,” the OIG stated.

The radiology group would receive double payment if reimbursed. The free reports are not remuneration to the hospital. The hospital, a critical access hospital, must maintain the written report within its clinical records system, but is not obligated to prepare a written report for the group’s radiology services. The radiology group’s preparation of the written report at its own cost is proper, according to the applicable payment rules. In fact, the OIG notes that if the hospital reimbursed the radiology group for costs incurred for preparing the written report, the group would receive double payment for the reports, that is, a payment from the hospital and a payment from Medicare.

The radiology group is not relieving the hospital of financial obligation. The OIG also noted that by preparing a written report for inclusion within the hospital’s records, the radiology group is not relieving the hospital of any financial cost the hospital is otherwise obligated to incur for Medicare patients. But if the radiologist was performing a service that a hospital was obligated to perform, the outcome could be different.

Keep in mind that the OIG would not reach the same definitive conclusion with respect to whether reports prepared for non-Medicare patients by the group and provided to the hospital constitute remuneration, says Schaff. But the OIG stated that the arrangement poses a low risk under the anti-kickback law.

First, the OIG noted that preparation of the reports at issue appears to be a reasonable and limited service that directly relates to the professional radiology services provided by the group to the hospital.

Second, the arrangement is unlikely to result in over- utilization because the group’s ability to ”generate additional Medicare Part B billings to recoup the costs it incurs for the written reports for non-Medicare beneficiaries provided to the hospital is limited by the nature of its hospital-based specialty,” according to the OIG.

In conclusion, the OIG stated: “In the circumstances presented here, the group’s preparation of such reports without charge appears to be a reasonable and limited service that directly relates to the professional radiology services provided by the group under its exclusive relationship with the hospital.”

Tip: There are caveats to this opinion. Keep in mind that each scenario is different, says Schaff. For example, the opinion may not apply to another situation, he says. The OIG cautions that other hospitals and radiology groups should not rely on this opinion. Talk to your attorney about the facts of your case.

Insider source

Michael F. Schaff, Esq., Wilentz, Goldman & Spitzer, P.A., 90 Woodbridge Center Drive, Suite 900, Box 10, Woodbridge, NJ 07095-0958, 732/855-6047; mschaff@wilentz.com.

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