Six skilled nursing facilities (SNFs), a management company, and its owner have agreed to pay $45.6 million to settle allegations of submitting false claims to Medicare by paying kickbacks to physicians to induce patient referrals. The US Department of Justice’s Office of Public Affairs announced the settlement in a press release on November 15, 2023.
From 2009 to 2021, the SNF defendants, under the direction and control of the management company and its owner, systematically entered into medical directorship agreements with physicians that purported to provide compensation for administrative services, but were really vehicles for the payment of kickbacks to induce the physicians to refer patients to the six SNFs. Specifically, the defendants hired physicians who promised in advance to refer a large number of patients to the SNFs, paid physicians in proportion to the number of their expected referrals, and terminated physicians who did not refer enough patients.
On one occasion, a management company employee told the owner that two physicians were being hired because “they are promising at least 10 patients for $2000 per month,” to which the owner responded, “good job. Make sure they give you patients every day. [W]e can also expand to other buildings with them, if possible.” On another occasion, an employee informed the owner that the defendants previously had paid a certain doctor “$1500 each month and he only send [sic] us 2 patients[,] so we didn’t pay him anything from Jan[uary] onwards.” On a third occasion, the owner rejected a proposed stipend for a new medical director, explaining that the defendants had paid the previous medical director that amount because “we were getting admission[s] from him,” whereas she did not expect the new medical director to refer many patients. More generally, the owner complained that if her employees did not pay medical directors promptly every month, “[t]hese doctors will not give us patients.”
Under the settlement, in addition to entering into a $45,645,327.25 consent judgment, the defendants will make scheduled payments to the United States of at least $385,000 over the next five years. In addition to resolving their False Claims Act liability, the defendants have entered into a five-year corporate integrity agreement with the Department of Health and Human Services’ Office of Inspector General (HHS-OIG) which requires, among other compliance obligations, an Independent Review Organization’s review of their physician relationships.
Compliance Perspective
Issue
The Anti‑Kickback Statute prohibits offering or paying remuneration to induce the referral of items or services covered by Medicare, Medicaid, and other federally funded healthcare programs. Under federal and state anti-kickback statutes, you may not knowingly and willfully offer, pay, solicit, or receive anything of value to induce or reward for referrals of federal or state healthcare program business. The prohibition against kickbacks applies to those who pay for referrals and to those who receive them. Kickbacks can take various forms, such as bribes or rebates. They can be given in cash or in kind. Failure to promptly report a kickback can result in lawsuits, fines, and other sanctions.
Discussion Points
- Review policies and procedures for preventing and reporting an anti-kickback violation. Update your policies and procedures as needed.
- Train all staff on federal and state anti-kickback statutes and what can be considered a kickback. Include information on how to report concerns and suspected violations, and make sure staff know that prompt reporting is mandatory. Document that the trainings occurred and place in each employee’s education file.
- Periodically audit staff understanding to ensure that they are aware of what should be done if they suspect an illegal kickback has occurred, whether intentionally or unintentionally. Conduct audits of documentation and billing routinely to prevent and detect errors before they progress to a false claim. Review your Medical Director contract to ensure it complies with all safe harbor requirements set forth under the Medicare/Medicaid Anti-Kickback Statute. A program titled Medical Director Contracts in a Nursing Facility is available in Med-Net Academy in the Fraud, Waste, and Abuse Category that can be accessed by all clients.
*This news alert has been prepared by Med-Net Concepts, LLC for informational purposes only and is not intended to provide legal advice.*
