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Intended to address perceived abuse of Medicare and Medicaid spending,these statutes and their regulations keep growing in scope and in disclosurerequirements as public officials strive to address different varieties ofhealthcare fraud. Regulatory agencies estimate that fraud and self-dealingcould be costing Medicare and Medicaid as much as $200 billion per year.
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Additionally, last September regulators announced a newinformation-collection program requiring about 500 hospitals to filecomprehensive reports on their contractual relationships with physicians. Thetiming of this requirement is still unknown.
To help clarify the issue, the Deloitte Forensic Center released anoutline of the federal anti-kickback and physician self-referral statutes thathave generated a number of government investigations. Gary Keilty, aprincipal in Deloitte Financial Advisory Services LLP, explained, "Even thoughmost physicians maintain careful, arm's-length relationships with hospitals,they are still the main 'gatekeepers' into the U.S. health system, so theyremain the focus of regulators' attention. This latest round of rule changesand enforcement initiatives are just a reflection of that."
The new information-collection program announced in September imposesstiff penalties ($10,000 per day) for late filings. There will be much morescrutiny on the contractual relationships that physicians have with hospitals,other health systems, imaging centers, durable medical equipment suppliers,and other health professionals. Figuring out whether their physicianrelationships -- from recruiting through medical directorships -- will takemuch more careful effort on the part of hospitals and their senior management.
Why Monitoring Hospital-Physician Relationships Is Getting Harder
Two federal laws address hospital-physician relationships: an anti-kickback statute with criminal penalties, and a physician "self-referral"statute (the "Stark Law"), with civil penalties. The Office of the InspectorGeneral (OIG) has been enforcing these statutes aggressively, with more than adozen settlements with hospitals or health systems in the last three years.
Hospital employees have an incentive to report violations: "Whistleblower"statutes can result in rewards of up to 30 percent of any penalties thegovernment collects. With millions of dollars at stake, these incentives canbe very powerful.
According to Jack Gilbertson, senior manager in Deloitte & Touche LLP'sRegulatory and Capital Markets practice, "The OIG's 'hot' enforcement areasfor 2008 include services provided by non-physicians 'incident to' physicianservices, business relationships that include imaging services, billing forindependent diagnostic and ultrasound services, and fraud related toreassignment of a physician's right to Medicare payments."
If a hospital uncovers a problem and wants to disclose it, the OIG has a"Self-Disclosure Protocol" that can lead to less painful settlements andpenalties. This process can also mitigate the pain of ongoing compliancesanctions.
A hospital doing its own internal investigation should focus on potentialproblem areas such as (a) physician office space leases, (b) medicaldirectorships and on-call agreements; (c) recruiting agreements; and (d) jointventures and other partnerships that include physicians.
