OIG: Doc proposals could run afoul of anti-kickback statutes

Wednesday, May 31, 2006

WASHINGTON - A DME provider looking to boost referrals by strengthening its relationships with physicians submitted two proposals to do just that to the Office of Inspector General (OIG) for review.
In March, the OIG issued an advisory opinion that both plans could violate Medicare's anti-kickback statute.
The first proposal would allow suppliers to sell DME and orthotics to physicians under a pre-arranged fee schedule. The OIG ruled such an arrangement was a "essentially a contractual joint venture that offered physicians the opportunity to expand into DME with little risk."
Because the physician practice would be referring patients to a DME with which it had a financial relationship, the proposal risked running afoul of Stark laws.
To avoid that, physicians must only sell DME to patients with private insurance, said Jeff Baird, an attorney with Brown & Fortunato in Amarillo, Texas. But it's a fine line easily crossed.
"The physician is going to be pocketing some money from the sale of (equipment) and services being offered by the DME for (private pay) patients," said Baird.
On the surface, that's fine, said Baird. However, because the physician would also refer Medicare/Medicaid patients to the DME company, there is essentially a kickback to the physician, because any money pocketed by the physician is at least partially attributable to the referral of Medicare/Medicaid patients.
Under the second proposal, suppliers would rent product storage space from physicians, pay them a percentage of revenues generated from the sale and rental of products and provide the physician practice with a trained technician.
The OIG expressed concern that rent paid for the rental space could "exceed fair market value and may be disguised kickbacks."