By Adrienne Dresevic, Esq., and Leslie A. Rojas, Esq., of The Health Law Partners, P.C.
For imaging providers, marketing services to referring physicians is an essential part of the business. In the healthcare arena, marketing efforts are highly regulated to avoid an improper influence over physician referrals. The challenge for imaging providers, as well as most healthcare providers, is that their marketing efforts often implicate healthcare fraud and abuse laws, such as the federal Stark Law and the Anti-Kickback Statute (AKS).
Do you or other imaging providers you know utilize any of the following practices?
- Sending gifts to physicians
- Entertaining physicians at lunches or dinners
- Offering free transportation to physicians’ patients
- Offering pre-authorization assistance to physicians’ patients
- Offering a free electronic interface to physicians with which they can place imaging orders and receive test results
If so, then it is essential for you to have a basic understanding of how your marketing efforts implicate the Stark Law and AKS.
The Stark Law: Overview
In general, unless an exception applies, Stark prohibits physicians from referring Medicare and Medicaid patients for certain designated health services (DHS) to an entity with which the physician or their immediate family member has a financial relationship. Stark also prohibits the DHS entity (eg, radiology facility) to which the “tainted” referral was sent from billing for the service provided. These referrals are “tainted” due to the referring physician’s financial relationship with the DHS entity, which may take the form of a direct or indirect ownership interest in the entity or compensation relationship with the entity.
Most applicable in the marketing context is a physician’s “compensation” relationship with a DHS entity. A compensation relationship will be present if any remuneration is transferred between the parties. Many marketing efforts by imaging providers implicate Stark, because DHS includes radiology services such as MRIs, CTs, ultrasounds, radiation therapy, and radiation therapy supplies.
The Anti-Kickback Statute: Overview
Many of the same marketing practices that implicate Stark will also implicate the Anti-Kickback Statute. The AKS prohibits the knowing and willful payment, offer, solicitation, or receipt of remuneration in return for referring, or to induce the referral of, a federal healthcare program patient (eg, Medicare). Remuneration is anything of value, including discounts, direct payments, gifts, or free items or services. If even one purpose of the remuneration is to induce referrals or to compensate for past referrals, then the AKS is violated.
These Laws’ Effect on Marketing
Radiologists are not often the referring physician – in fact, the AKS contains an exception for referrals made by a radiologist. It excludes requests by radiologists for certain diagnostic services from the definition of referral when the request is initiated by another physician and the services are furnished by, or under the supervision of, the radiologist.But radiologists and imaging providers often seek out other referral sources who will send business to them. It is in this context that the fraud and abuse laws have a significant impact on imaging providers’ marketing practices.
Marketing drives any business and can create a competitive advantage in the marketplace. However, one trap for imaging providers to avoid in their pursuit of a competitive advantage is the mindset of: “Most other imaging providers employ these marketing practices, so it must be legal.” With the hefty fines and penalties of Stark Law and the AKS, this mindset invites trouble.
Monetary gifts should never be given to referral sources. But there are other marketing practices that confer a benefit on referral sources such that the Stark Law and AKS are implicated. Common marketing practices include: gifts; meals and entertainment; transportation offered to physicians’ patients; pre-authorization assistance offered to physicians’ patients; waiver of patient copayments and deductibles; and physician access to an electronic interface for test orders and test results. Each of these practices confers some benefit on the referral source. It is important to have these and other marketing practices vetted by healthcare legal counsel for compliance. Many of these practices can be structured to comply with an applicable exception to the Stark Law and AKS. For example, under Stark, nominal non-monetary gifts may be offered under the Stark Law’s “non-monetary compensation” exception if the value does not exceed $392 per year per physician (this number may be adjusted in 2017 and each subsequent year for inflation).
A good rule of thumb is that marketing expenditures should never correlate to the volume or value of referrals. For example, it would be inappropriate for marketing practices to lead a referral source to believe that there is any connection between a gift or other reward and a referral target. Conversely, it would also be inappropriate for marketing practices to lead a referral source to believe that there is a connection between a reduction in the number of gifts or other rewards provided and a decrease in the number of referrals.
Similarly, it is high risk for providers to pay their marketers based on a percentage of sales or on the volume or value of services “sold” (ie referrals). Instead, it is advisable to pay marketers a flat fee for their services. It is also high-risk to engage marketing personnel as independent-contractors as opposed to bona fide employees. Any contracts with marketers should be carefully reviewed by experienced healthcare legal counsel for high-risk arrangements and overall compliance.
In summary, any remuneration tied to referrals is high-risk and should be structured to fit in to an applicable exception to these laws.
How to Stay Competitive and Legally Compliant
The first step to continuing a successful marketing program while remaining compliant with healthcare fraud and abuse laws is to draft a marketing compliance manual. An important component is the establishment of a tracking and documentation system for marketing expenditures to referral sources. All staff members – not just marketers – should be educated on the policies in the marketing manual to ensure that they understand what is and is not allowed when it comes to relationships with referral sources.
If you already have a manual in place, then it is important to review it once or twice a year for compliance and to determine what policies are and are not working. A robust marketing manual and concerted efforts to follow its policies will evidence good-faith compliance efforts if you unintentionally find yourself in non-compliance.
Additionally, it is important to have your common marketing practices and your contracts with marketers vetted by healthcare legal counsel for compliance. An attorney will tell a provider whether the government will view a particular marketing practice favorably or unfavorably. Then, it is up to the provider to determine what level of risk they are comfortable assuming.
There is no better marketing than good service. Shift your marketing efforts from what benefits and perks you can offer to referral sources to, instead, the quality of your services and your availability to referral sources and patients. This will ensure that you stay competitive but remain compliant in this highly-regulated market.
Adrienne Dresevic, Esq., is a Founding Shareholder of The Health Law Partners, P.C., a nationally recognized healthcare law firm with offices in Michigan and New York. Practicing in all areas of healthcare law, she devotes a substantial portion of her practice to providing clients with counsel and analysis regarding compliance, Stark Law, Anti-Kickback Statute, and compliance related issues. Ms. Dresevic serves on the American Bar Association Health Law Section’s Council, which serves as the voice of the national health law bar within the ABA. Ms. Dresevic also serves as the ABA Health Law Section’s Co-Chair of the Physicians Legal Issues Conference Committee, Vice Chair of the Programs Committee (Executive Leadership), and Vice Chair of the Sponsorship Committee. She is licensed to practice law in Michigan and New York, and can be contacted at firstname.lastname@example.org.
Leslie A. Rojas, Esq., is an associate with The Health Law Partners, P.C., a nationally recognized healthcare law firm with offices in Michigan and New York. Ms. Rojas’ healthcare practice focuses on compliance with federal and state healthcare regulations; fraud and abuse issues, including the Stark Law and the Anti-Kickback Statute; HIPAA and health information privacy issues; and transactional and corporate aspects of healthcare. Ms. Rojas is licensed to practice law in Michigan and Illinois, and can be contacted at email@example.com.
The authors are members of The Health Law Partners, P.C. and may be reached at (248) 996-8510 or (212) 734-0128, or at www.thehlp.com.
For more regulatory news, visit www.ahraonline.org/news.
Excellent article, thank you!