Stark Law and Anti-Kickback in Dentistry
Investigations, audits, and indictments related to the Stark Law and Anti-Kickback Statute violations in the dental sleep community are beginning to become common place in dental circles. Unfortunately, most dentists who are at risk of violating these federal laws may not even be aware these laws exist.
Why is it dentists and dental practices should be concerned about the Stark Law (SL) and the Anti-Kickback Statute (AKS)? Many dentists and dental practices are making deals with physicians to get referrals for Oral Appliance Therapy. The SL and AKS were enacted to ensure that health care professionals do not enter into prohibited referral agreements and to prevent over-utilization of health care services. If a dentist or dental practice is considering entering into a quid pro quo agreement and arrangement with physicians to get referrals, proceed forward cautiously and ensure that any agreements are in full compliance with the federal SL and AKS, as well as any applicable state regulations regarding patient referrals and payment terms between providers.
Any time a dentist and physician enters into an agreement where the dentist expects to receive referrals and the physician receives some type of benefit, the SL and AKS will be triggered. The federal SL and AKS applies only if providers provide services to patients who are beneficiaries of a government program, including but not limited to, the Medicare and Medicaid programs. Therefore, if you do not accept Medicare, Medicaid, Tricare or other federally funded plans, these statutes may not apply to you. However, most states have their own versions of the SL and AKS and some states, for example California, Colorado and Florida, are more restrictive than the federal statutes. Therefore, make sure you check your state’s statutes before you enter into any agreements for the provision of oral appliance therapy.
During the past few years, several dental organizations have emerged that are signing up dentists and selling the “right” to implement their dentist/physician referral program within certain zip codes. These organizations and dentists are recruiting physicians to participate in patient screening programs where the dentist get referrals for oral appliance therapy. In these organizations, dentists provide physicians with a dental sleep employee to work in the physician’s office to screen all patients for Obstructive Sleep Apnea (“OSA”).
When a potential OSA patient is identified, the physician then orders a Home Sleep Test (“HST”). The HST equipment is supplied by the dentist without cost to the physician. The physician is then paid by the patient’s medical insurance or Medicare for the HST and OSA diagnosis. After the diagnosis of OSA, the physician then rewards the dentist with a referral for oral appliance therapy. After oral appliance therapy is completed, the patient returns to the physician’s office for a final HST to confirm efficacy. The physician is again paid for an HST by the patient’s health insurance.
Overview of the SL and AKS
The SL (Ethics in Patient Referral Act) prohibits physicians from referring Medicare patients for “designated health services” (“DHS”) to any facility or other entity with which the referring physician (or any of his or her immediate family members) has any financial relationship, unless an exception in the SL or related regulations is satisfied.1 Furthermore, the entity providing the DHS would be prohibited from billing Medicare for the services. The SL also prohibits the entity from presenting, or causing to be presented, claims to Medicare (or billing another individual, entity, or third party payer) for those referred services. The SL establishes a number of specific exceptions and grants the Secretary the authority to create regulatory exceptions for financial relationships that do not pose a risk of program or patient abuse.
The original SL (Stark I) applied only to Medicare referrals for clinical laboratory services. Stark II, enacted in August 1993, expanded the prohibition to apply to an additional list of DHS and to referrals to Medicaid as well as Medicare patients. Under Stark I and Stark II, prohibited financial relationships include: ownership or investment interests through equity, debt or other means and include indirect ownership interests through other entities, as well as compensation arrangements including virtually any form of remuneration. Possible sanctions for violation of the SL include: civil monetary penalties, exclusion from the federal health care programs (including Medicare and Medicaid) and forfeiture of all improperly collected amounts.
The following are some DHS prohibited by Stark II :
Physical therapy, occupational therapy, and speech-language pathology services;
The professional and technical components of radiology and certain other imaging services, including MRIs, CT scans and ultrasound services, but excluding nuclear medicine and certain other procedures;
Durable medical equipment and supplies;
Prosthetics, orthotics and prosthetic devices and supplies;
In general, a “referral” is a physician’s request for, ordering of (or certifying or re-certifying the need for), any DHS for Medicare patients, including a consultation request and tests or procedures ordered, performed or supervised by the consulting physician or the physician’s request or establishment of a plan of care involving Medicare DHS. In addition, a physician who directs or controls referrals by others is deemed to be a “referring physician”. A financial relationship includes ownership, investment interest, and compensation arrangements. (42 U.S.C. 1395nn(h)(5).
Durable medical equipment includes oral appliance therapy, and referrals for and the provision of DME between providers, including physicians and dentists, and triggers analysis under the SL to ensure that such referrals would not be a prohibited referral between the parties.
Penalties for Violation of the SL include:
Denial of payment for the DHS provided;
Refund of monies received by physicians and facilities for amounts collected;
Payment of civil penalties of up to $15,000 for each service that a person “knows or should know” was provided in violation of the SL, and three times the amount of improper payment the entity received from the Medicare program;
Exclusion from the Medicare program and/or state healthcare programs including Medicaid; and
Payment of civil penalties for attempting to circumvent the SL of up to $100,000 for each circumvention scheme.
The consequences for non-compliance with the SL are the denial of payment or recoupment of overpayment. Specifically, the SL states, “no payment may be made” for DHS provided in violation of the physician self-referral statute and that “if a person collects any amounts that were billed in violation of the statute, the person shall be liable to the individual for, and shall refund on a timely basis to the individual, any amounts so collected.” Sanctions for violating the statute are often severe and sometimes lead to disproportionately large damage amounts compared to the severity of the violation. Because all claims associated with the prohibited referrals for DHS, even if medically necessary, are not payable, providers who submit such claims are subject to significant overpayment liability. The statute’s overpayment sanction creates a significant potential financial burden on health care providers.
Federal Anti-Kickback Statute
The Federal AKS was enacted to protect patients and federal health care programs from fraud and abuse by prohibiting the use of money, remuneration, either directly or indirectly, to influence health care decisions. The AKS specifically provides that anyone who knowingly and willfully accepts or offers remuneration of any sort and in any manner intended to influence the referral of Medicare and Medicaid services can be held accountable for a felony.
The AKS, 42 U.S.C. § 1320a-7b(b), prohibits any person or entity from making or accepting payment to induce or reward any person for referring, recommending or arranging for the purchase of any item for which payment may be made under a federally funded health care program. The statute not only prohibits outright bribes, but also prohibits offering inducements or remuneration that has as one of its purposes the inducement of a physician to refer patients for services that will be reimbursed by a federal healthcare program. The statute ascribes liability to both sides of an impermissible kickback relationship.
Any person, including a dentist, physician, or other third party or entity, who is involved in making or accepting payment to induce referrals may be indicted. Illegal remuneration includes bribes and rebates, gifts, above or below market rent or lease arrangements, discounts, supplying services or equipment for free or at above- or below-market rates, cash of any kind, whether they are paid directly or indirectly. Almost anything bought by or between medical providers can be characterized as remuneration, if given with the intent to influence medical decision making. If a dentist is providing an employee to a physician to screen the physician’s patients for free or is providing equipment (HST) free or below market rates, the AKS may be triggered.
The federal AKS incurs a criminal violation charge because by definition it requires a specific intent to induce referrals or orders for services. Anti-Kickback violations are punishable by up to five years in prison, with the potential for additional criminal fines up to $25,000, and administrative civil money penalties reaching as much as $50,000 per occurrence. Additionally, the Department of Health and Human Services’ Office of Inspector General may commence administrative proceedings to prohibit anyone convicted of an Anti-Kickback violation from participation in federal and state health care programs or impose civil monetary penalties for fraud, kickbacks, and other prohibited activities.
To assist the federal government in policing the referral process, federal whistle-blower statutes have been promulgated where employees of health care practitioners or other knowledgeable parties can initiate federal or state investigations into referral or kickback violations. The False Claims Act offers whistleblowers an effective way to expose and stop kickbacks in the health care system. Kickbacks, which are hidden financial arrangements between doctors and hospitals or other healthcare providers or companies, are one of the most complicated and troubling aspects of the health care system. Qui tam lawsuits are a type of civil lawsuit whistleblowers bring under the False Claims Act, a law that rewards whistleblowers if their qui tam cases recover funds for the government.
Under the False Claims Act, a private citizen or employee may sue an individual or a business that is defrauding the government and recover funds on the government’s behalf. The qui tam lawsuit is filed “under seal,” meaning that it is kept secret from everyone but the government to give the Justice Department time to investigate the allegations. Even the person or entity being accused of fraud is not told about the qui tam case. The qui tam lawsuit and supporting documents should provide the government with detailed information about the fraud. Under the Affordable Care Act and its False Claims provision a party with general knowledge or suspicion of fraud or violation can act as a whistleblower. As an incentive, whistleblowers receive a percentage of the funds recovered from wrong-doers. Therefore, any disgruntled employee or a dentist practicing next door can take his evidence to an attorney and sue you as a federal whistleblower. Consider the potential risk exposure. Any party with knowledge of a referral scheme could potentially act as a federal whistleblower, including employees and competing providers.
Don’t misunderstand, dental sleep medicine is one of our most successful business functions and we are sympathetic to any dentist struggling to get a dental sleep practice established. We are not trying to rain on your parade. We are aware that it is difficult to establish a referral network! We are all trying to develop relationships with referring physicians and there is nothing innately wrong with that. However, contracting with companies, owned or operated in any way by physicians, for referrals is too risky for us. DO NOT give a physician anything of value for a referral - playing for interp. of sleep study, renting sleep testing equipment, etc! If you are sued by a whistleblower attorney, it could be financially devastating. All it takes for you to get into trouble is for you to make a staff member or competitor mad enough for her or him to contact a whistleblower attorney. In the case of an employee, he/she could initiate the lawsuit and still be working for your office since the relater is undisclosed and unidentified. Ultimately, the employee could be paid a portion of any recovery. Sadly, even if you win the case you will lose financially. You don’t want to be the dentist who has to defend this in court. If you are currently participating in some type of arrangement with an entity that a physician has any financial stake and where you receive referrals, I strongly urge you to consider hiring a good health care attorney and have him review your protocol and any agreements (contracts) that you have with physicians. “If in doubt, Get Out!” #weshouldtalk