The Office of the Inspector General of the Department of Health and Human Services (OIG) issued Advisory Opinion No. 08-22 on Dec. 8, 2008. In the Advisory Opinion, the OIG analyzed a proposed arrangement under which a nonprofit, tax-exempt corporation (the "Corporation") would employ two physicians on a part-time basis to perform endoscopies on the premises of the Corporation (the Proposed Arrangement").
The Corporation requested the Advisory Opinion to determine whether the Proposed Arrangement would constitute improper remuneration in exchange for referrals under 42 U.S.C. §1320a-7b (the "Anti-Kickback Statute"). The OIG concluded that the Proposed Arrangement does not violate the Anti-Kickback Statute and would not be grounds for imposing sanctions.
The facts presented in the Advisory Opinion indicate that each of the two physician employees has a separate medical practice at a separate location from that of the Corporation. In addition, the Corporation certified that the physician employees will be bona fide employees, and that it would pay a salary to each of them based on fair market value for their professional services.
The Advisory Opinion does not, however, specify whether each salary will be paid on a fixed annual basis or on a per treatment basis. In addition, it does not analyze the criteria the Corporation used to determine whether the two physicians will be bona fide employees. Rather, the OIG relies on the Corporation's certification that the physician employees will be bona fide employees.
These two unanswered issues are of critical importance because some hospitals have paid "very" part-time (i.e., on a sporadic, when scheduled basis) independent surgeons professional fees for services on a per case basis to handle cases at their hospitals. Questions are often raised as to whether these are disguised efforts to purchase the referral of cases or truly a means to pay for services.
The Advisory Opinion also did not address the level of control providers must have over an individual for such a person to be considered a bona fide employee. This is important because hospitals and providers have much greater latitude under the Anti-Kickback Statute as to how they pay bona fide "employees" as opposed to independent contractors.
The Anti-Kickback Statute generally prohibits the knowing and willful offering, payment, solicitation or receipt of any remuneration to induce or reward referrals of items or services reimbursable by a Federal health care program. Remuneration includes the transfer of anything of value directly or indirectly, overtly or covertly, in cash or in kind, for such services.
However, the Anti-Kickback Statute contains exceptions for certain types of arrangements that do not constitute "remuneration" including "any amount paid by an employer to an employee who has a bona fide employment relationship with the employer for employment in the provision of covered items or services." The Department of Health & Human Services has defined this exception further by regulation at 42 CFR §1001.952(i).
The OIG concluded that the Proposed Arrangement meets the exception set forth in the Anti-Kickback Statue and at 42 CFR §1001.952(i). Thus the salary paid to the part-time physician employees would not constitute prohibited remuneration under the Anti-Kickback Statute. The OIG noted that its opinion is limited to an analysis of the Anti-Kickback Statute, and it did not offer an opinion regarding whether the Proposed Arrangement would violate the Physician Self-Referral Law (42 U.S.C. §1395nn, the "Stark Law").
Further, the OIG stated that the exception related to payments to employees under the Stark Law differs materially from that under the Anti-Kickback Statute. Specifically, the amount of remuneration paid to an employee by an employer must be at fair market value to meet the regulatory exception to the Stark Law related to payments to employees. This is not a requirement of the exception to the Anti-Kickback Statute. Therefore, providers should ensure that an analysis of such an arrangement includes an analysis of both the Anti-Kickback Statute and Stark Law, as the exceptions to both laws differ materially in regard to provider payments to part-time physician employees.