Demystifying Fee Splitting in Healthcare: What You Need to Know

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In the complex world of healthcare, one term that often arises is “fee splitting.” This practice has raised concerns in the medical community due to its potential ethical and legal implications. In this blog, we will delve into what fee splitting is, why it’s considered problematic, and its consequences in healthcare, including its impact on Medicare.

What Is Fee Splitting?

Fee splitting in healthcare refers to the practice of sharing a portion of a healthcare provider’s fees with another party in exchange for patient referrals. This typically occurs when a healthcare professional, such as a physician, offers financial incentives to colleagues, facilities, or third parties in return for sending patients their way. It is essential to note that fee-splitting is not exclusive to monetary rewards; it can also include gifts, services, or other valuable considerations.

Is Fee Splitting Illegal?

Fee splitting is generally considered unethical and, in many jurisdictions, illegal. The primary reason behind its prohibition is to safeguard the integrity of patient care and maintain the trust between healthcare providers and their patients. When healthcare professionals are motivated by financial gain rather than the patient’s best interest, it can compromise the quality of care and lead to unnecessary procedures or treatments.

Fee Splitting Occurs When…

1. **Financial Arrangements for Referrals**: Fee splitting takes place when a healthcare provider enters into an agreement where they pay or receive money, goods, or services in exchange for patient referrals. This can involve physicians referring patients to specialists, hospitals, or diagnostic facilities for personal financial gain.

2. **Kickbacks**: Kickbacks, a form of fee splitting, involve offering payments or incentives to induce referrals. This unethical practice can be especially harmful when it affects decisions related to Medicare or other government-funded healthcare programs.

3. **Overutilization of Services**: When fee splitting becomes prevalent, there is a risk of overutilization of healthcare services. Patients may receive unnecessary tests, treatments, or procedures because they were referred to providers with financial incentives, rather than because it is in their best interest.

Medicare and Fee Splitting

Medicare, as a government-funded healthcare program, has strict rules against fee splitting. Any form of fee splitting in the context of Medicare can lead to serious consequences, including fines, exclusion from the Medicare program, and even criminal charges. The government is committed to preventing fraud and abuse within the program to protect both patients and the integrity of the system.

Fee Splitting and Medical Ethics

Beyond the legal implications, fee splitting also violates medical ethics. Healthcare professionals are bound by ethical codes, such as those outlined by the American Medical Association (AMA), which prohibit fee splitting and emphasize the importance of putting patients’ well-being first.

Consequences of Fee Splitting

The consequences of fee splitting in healthcare can be far-reaching:

1. **Legal Ramifications**: Healthcare providers involved in fee splitting can face severe legal consequences, including fines, civil litigation, and criminal charges.

2. **Damage to Reputation**: Fee splitting tarnishes the reputation of healthcare providers and can result in a loss of trust among patients, colleagues, and the broader healthcare community.

3. **Patient Harm**: Patients may receive suboptimal care, unnecessary treatments, or be subject to medical procedures driven by financial incentives rather than medical necessity.

In healthcare, fee splitting is a practice that raises significant ethical and legal concerns. Healthcare providers should be aware of its potential consequences and the strict regulations surrounding it, particularly in the context of government-funded programs like Medicare. Upholding ethical principles and putting patients’ interests first should always be the primary focus of healthcare professionals, ensuring the highest quality of care and maintaining the trust of those they serve.

Healthcare Fraud Scheme Indictment Starts the New Year

The U.S. Attorney arrested 13 people in a $100 Million healthcare fraud scheme in NY and NJ involving automobile insurance claims.  Some of the facts alleged include—

  • Bribed 911 operators and hospital employees for confidential information of insured drivers
  • Unnecessary and painful medical procedures
  • A non-physician owning medical clinics
  • Paying hundreds of thousand of dollars to “runners” who used the money to bribe people

Healthcare businesses that largely serve people injured in motor vehicle accidents remain a top tier focus for law enforcement and special investigative units (SIUs) of insurers.  But so do many other providers in the healthcare sector, such as pharmacies, durable medical equipment (DME) providers, addiction treatment providers and labs.  Payer and governmental presumption is often that financial motives are driving clinical behavior, NOT documented medical necessity.  Hence the need for active compliance plans and policies and procedures that don’t sit on a shelf, but rather are woven into daily business and clinical operations.  Nothing less than the right contracts, the right compliance plan and the right business culture will establish and maintain a sustainable healthcare business!

Healthcare Marketing: Measure Twice, Cut Once

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fhlf healthcare marketingBy: Jeff Cohen

Wanna know how often we’re asked whether the laws re healthcare marketing are really enforced?  How often we hear “Everyone is doing it.”  “Surely they [regulators] understand that every healthcare business has to market its services and item,” we’re told.  And when we start to educate people re the state and federal laws that pertain to marketing healthcare items and services (INCLUDING those for which payment isn’t made by a state or federal healthcare program), their impatience and intolerance is palpable.

Take a look at the latest report from the Department of Justice guilty plea from someone who marketed the services of a genetic testing lab.  He admitted being guilty of receiving over $300K in kickback money (presumably in the form of marketing fees) and now faces (1) a $250K fine, (2) returning all the money he received, and (3) five years in prison!

Marketing any healthcare service or item is at the tip of the sword in terms of regulatory investigation and enforcement.  It’s that simple.  And so when your lawyers drag you through laws like the Anti-Kickback Statute, the Florida Patient Brokering Act, the federal health insurance fraud law, the bona fide employee exception, the personal services arrangement and management contract safe harbor and EKRA, thank them!  And expect nothing less.  If you do ANYTHING at all in the neighborhood of marketing a healthcare item or services, the first place to start is:  meet with a very experienced healthcare lawyer who is not learning on your dime.  And have them take a couple hours to educate you about the laws, the options and the risks of each one.  And once you’ve done that, ask them what more you can do to reduce your risk, for instance—Continue reading

When Does a Gift Become a Kickback?

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There’s a fine line between gifts and kickbacks within the healthcare setting. Read about the differences and how to properly plan your healthcare marketing in your business.

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Two Big Changes to Florida’s Patient Brokering Act Affect All Healthcare Facilities and Providers

patient brokering act anti kickback healthcare law health lawHas your attorney ever told you to do your best to comply with certain safe harbors to the Federal Anti-Kickback Statute, and you’ll be likely to survive scrutiny under the Florida Patient Brokering Act (the PBA)? If you’ve heard that, it’s time to re-examine that relationship. In the last month, the Patient Brokering Act has been amended, and then interpreted by a court of law in a way that affects all healthcare providers.

The Patient Brokering Act has been used in recent years to prosecute abuses in the addiction treatment industry. Other healthcare providers subject to the act have largely been uninvolved in these prosecutions. However, the PBA has been remolded 4 times in the past 5 years as a means to tailor it to allow for prosecutions of bad actors in healthcare, including addiction treatment. One item should be made clear: the PBA applies to any facility at all that is licensed by the Agency for Healthcare Administration (AHCA) or practitioner licensed by the Department of Health (DOH), including physicians, surgery centers, home health agencies, skilled nursing facilities, hospitals, DME providers, diagnostic imaging facilities, clinical laboratories, pharmacies and many other. During the legislative process, barely any healthcare industry representatives (from any provider group) showed up to any legislative workshops or produced counterbalancing input or language proposals that reflected a broader perspective.Continue reading

A New Perspective from CMS? Medicare, Stark Law and Whistleblower Changes on Deck

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medicare stark lawBy: Dave Davidson

Over the past several months, the Centers for Medicare & Medicaid Services (CMS) has taken a number of steps that show an awareness of the regulatory burden placed upon participants in the government’s health care programs, and even some willingness to consider reducing those burdens.  While it remains to be seen whether the recent proposals will have measurable results, the following actions can still be viewed with guarded optimism.

Proposed Changes to Medicare

In July, 2018, CMS proposed significant changes to Medicare, to be included in rules that take effect in 2019.  These changes cover physician fee schedules, streamlining Evaluation & Management (E&M) billing, advancing “virtual care,” decreasing drug costs, revising the MIPS program and establishing the MAQI demonstration project.  The agency also asked for comments on price transparency issues.Continue reading

Anti-Kickback Statute and Healthcare Marketing: 3 Legal Considerations

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healthcare marketingBy: Matt Fischer

Healthcare marketing arrangements that violate the Anti-Kickback Statute (AKS) can lead to serious financial and criminal consequences.  Understanding the types of marketing arrangements that courts have found to be in violation of the statute and the potential implications are critical for marketers to know in order to operate in the healthcare industry.

Under the AKS, it is a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce referrals of items or services reimbursable by the Federal health care programs.  Where remuneration is paid purposefully to induce referrals of items or services paid for by a Federal health care program, the AKS is violated.  By its terms, the AKS ascribes criminal liability to parties on both sides of an impermissible transaction.  An example of a highly scrutinized arrangement involves percentage compensation.  For regulators, percentage compensation arrangements provide financial incentives that may encourage overutilization and increase program costs.

Here are 3 important things to know:Continue reading

False Claims Act Case Beaten by Bona Fide Employee Arrangement

false claims actBy: Jeff Cohen     

One healthcare employer’s compensation arrangement with its employees just got much needed support from the 11th Circuit Court of Appeals.  The employer there, which provided AIDS patients certain healthcare related services, paid its employees a bonus of $100 per patient.  The case was brought on the argument that the compensation arrangement constituted an illegal kickback under the federal Anti- Kickback Statute.  The court, however, disagreed because the employees who received the bonuses were “bona fide employees.”

The court’s focus on the plain language of the safe harbor for bona fide employees was refreshingly clear, notably that “any amount paid by an employer to an employee (who has a bona fide employment relationship with such an employer) for employment in the furnishing or any item or service.”  Essentially, any amount paid by an employer to a bona fide employee is not considered to be “remuneration” under the Anti-Kickback Statute.Continue reading