Arrangements with referring physicians are common in healthcare, but they can be very danagerous if not structured properly. Too often they are used to obfuscate the purpose of payments to physicians.
The Department of Justice for the Eastern District of Michigan announced three civil settlements which serve as good reminders of the types of arrangements that can get providers into trouble:
- The health system had contracts with several physicians to serve as medical directors, and none of these arrangements satisfied any exceptions to the Stark Law or the AKS, such that referrals these physicians made to the health system violated the False Claims Act.
- The health system employed a physician and this financial relationship did not satisfy any exception to the Stark Law, such that referrals for designated healthcare services were prohibited and violated the False Claims Act.
- The health system rented office space to a physician and forgave rent payments, constituting remuneration paid in exchange for referrals from that physician in violation of the AKS and the False Claims Act, and creating a financial relationship that did not meet any exception to the Stark Law, also violating the False Claims Act.
- The health system permitted a group of referring physicians to secure an equipment lease through non-arm’s-length negotiations, in order to induce referrals of patients from these physicians, in violation of the AKS and the False Claims Act.