Increasingly, chiropractors have been in the headlines facing charges of Medicare fraud. Although Medicare fraud is not new, one of the largest problems facing chiropractors throughout the country is the increased enforcement by the federal government when it comes to healthcare fraud. For example, recently a chiropractor was sentenced to prison for a $3 million Medicare fraud scheme. The laws impacting chiropractors can have real consequences and this article discusses the applicable healthcare fraud laws facing chiropractors and tips for ensuring compliance with these complex regulations.
Anti-Kickback Statute
The Anti-Kickback Statute prohibits the knowing and willful solicitation, offer, payment or acceptance of any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or provide the referral of patients or business for which payment may be made under a Federal health care program. Note that “referral” is not defined under the Anti-Kickback Statute. It is typically presumed to include at least referrals for tests, plans of care, and referrals based upon consultations with other providers.
To violate the Anti-Kickback Statute, there must be the requisite intent, meaning that the parties must intend to induce the referral of patients or business for remuneration. However, the Anti-Kickback Statute also has been interpreted to cover an arrangement where just one purpose of the remuneration (cash or value gifts) was to obtain remuneration for the referral of services or to induce further referrals. In other words, if one purpose is to influence referrals, the Anti-Kickback Statute is implicated.
Perhaps one of the largest risk areas for chiropractors under the Anti-Kickback Statute relates to joint ventures with other individuals. For example, the Office of Inspector General (the “OIG”) has issued various advisory bulletins related to joint ventures and the Anti-Kickback Statute. The OIG is focused on problematic arrangements that include certain elements such as an owner expanding into a related line of business which is dependent on referrals from the owner’s existing business, the owner neither operates nor commits resources to the new business, the owner and the manager to whom services may be provided under the new business share in the economic benefits of the new business. Finally, the OIG has also made it clear that a referring practitioner who can earn profits through an investment entity which he or she generates business could constitute a violation of the Anti-Kickback Statute.
A joint venture could include a distributorship of medical supplies or equipment such as back braces or other items a chiropractor may use. In this type of arrangement, a chiropractor could become an owner in such a distributorship and refer patients to receive equipment from the entity in which they own. Although there are numerous types of joint ventures that could exist for chiropractors, beware that the OIG is consistently focusing on these types of arrangements. Although payment directly for referrals is a blatant issue under the Anti-Kickback Statute and joint ventures are suspect, it is possible for an arrangement to meet an applicable safe harbor. If a safe harbor is met, such liability is limited.
The Stark Law
The Stark Law is famous for controlling the ways in which certain entities interact with medical doctors and osteopathic doctors; however most chiropractors forget that the Stark Law applies directly to them. The Stark Law applies to physicians but the Social Security Act defines a physician as a dentist, MD, DO, optometrist, and a chiropractor. Specifically, the Stark Law prohibits a physician from referring Medicare patients for designated health services (“DHS”) to entities with which the physician has a financial relationship unless all criteria of an exception have been met.
Under the Stark Law, a “referral” is broadly defined and can be direct or indirect. A referral is defined as “a request by a physician for [an] item or service” including the request of a consultation of another physician and any test or procedure ordered by, or performed by the other physician. A referral may also include the request or the establishment of a plan of care which includes the provision of DHS. In the event a referral has occurred, the referral must be made to an entity for the furnishing of DHS. Under the Stark Law, an entity is broadly defined and includes an organization that bills the Medicare Program or performs a DHS. Assuming a chirpractor has made a referral to an entity, such referral must be made for the furnishing of any DHS. Pursuant to the Stark Law, an entity will be considered to be furnishing DHS if the entity “has presented a claim to Medicare for the DHS.”
Finally, for the Stark Law to apply, a chiropractor must have a financial relationship with the entity furnishing or billing for the DHS. Broadly, under the Stark Law, a financial relationship can occur through either a direct or indirect ownership or investment interest, or a direct or indirect compensation arrangement. In short, if a chiropractor refers DHS to an entity in which the chiropractor receives some remuneration, the Stark Law is implicated. An example of this includes a chiropractor making a referral for durable medical equipment. Because durable medical equipment can be considered DHS, the Stark Law could be implicated.
False Claims Act
The False Claims Act is yet another Federal law that imposes liability on chiropractor related to their billing practices. Generally, the False Claims Act is utilized by the Federal government to combat fraudulent activity committed against the government. In healthcare this typically occurs when a practitioner bills for a service that he or she did not provide or the practitioner bills for services at a higher level than what was actually performed. In the event, the payment by the government to the practitioner would be considered false because it was not otherwise payable. A violation under the Anti-Kickback Statute or the Stark Law could create False Claims Act liability which increases penalties on a per claim basis.
Recent Enforcement Against Chiropractors
One recent case that highlights the importance of properly analyzing chiropractor business relationships occurred in Southern Indiana and Northern Kentucky. Allegedly the clinic billed insurance companies for $5 million worth of services that were never performed. This case is interesting because allegedly the chiropractors were not aware of the services being billed through a medical billing corporation that they had contracted with.
In another case, a chiropractor plead guilty to submitting false claims. Specifically, the chiropractor developed an integrated practice in which various practitioners were involved in the services. The chiropractor billed for services the he was not qualified to perform. Above all, these cases highlight the serious risks and increased enforcement focused upon chiropractor and their billing practices. Because of this increased enforcement, chiropractors should be aware of these complex laws and regulations.