Online Referral Service Runs Afoul of Anti-Kickback Statute

Recently, HHS-OIG was asked to examine a proposed business plan, in which post-acute care providers would pay money to a for-profit online referral service. Under this business arrangement, healthcare providers, such as nursing homes and home health facilities, would pay a fee to electronically receive and respond to referral requests from hospitals. This fee would consist of an initial “implementation fee” and a fixed monthly subscription fee that was not based on the number of referrals. HHS-OIG was asked to opine on whether this arrangement potentially violated the federal Anti-kickback statute.

The federal anti-kickback statute makes it a criminal offense to knowingly and willfully offer to pay, solicit, or receive any remuneration to induce or reward referrals of items or services reimbursable by a federal health care program. Thus, where remuneration is paid purposefully to induce or reward referrals of items or services payable by a federal health care program, the anti-kickback statute is violated.

In a recently released advisory opinion, HHS-OIG determined that the proposed arrangement would implicate the Anti-kickback statute, because the online company would be soliciting and accepting, and providers would be paying, remuneration in return for the company arranging for the post-acute care services for Medicare and Medicaid patients.

This advisory opinion is noteworthy, for it seems to rest on the monopolistic impact of the online service. Specifically, HHS-OIG stressed that non-paying providers would be faced with significant competitive disadvantage, for hospitals tend to discharge patients to post-acute care providers on a first-come, first served basis. In other words, the online system would unfairly move its paying customers to the front of the line, leapfrogging those providers who were unwilling or unable to pay for the online referral service. The end result is that providers would be pressured to pay for the service, regardless of whether they could afford the charge, thus creating incentives to, among other things, “prolong patient stays, provide separately billable, unnecessary services, or upcode resident Resource Utilization Group assignments.”

As evident in this proposed arrangement, emerging technologies are adding a little extra spice to modern-day kickback schemes. However, at their very essence, these illegal practices still consist of the same basic ingredients of bribing others to steer Medicare and Medicaid patients.

For more information about qui tam law and Medicare fraud, contact Nolan and Auerbach, P.A.