Mid-Atlantic Health Law TOPICS
Maryland Attorney General Ventures into the Muddy Waters of Fraud and Abuse
At the request of a member of Maryland's General Assembly, the Maryland Attorney General recently ventured into the various State and federal laws that comprise the murky waters of health care fraud and abuse law.
Specifically, the Attorney General applied the federal anti-kickback prohibition and self-referral law, as well as Maryland's self-referral law and fee-splitting prohibition, to a very complicated set of facts. The facts involved payment schemes and acquisitions among primary care physicians, specialists, hospitals, physician management companies and physician hospital organizations, better known as PHOs.
Not surprisingly to health care lawyers, the Maryland Attorney General concluded that precise conclusions in the fraud and abuse area are hard to draw, and that these issues are intensively fact-driven.
The Attorney General also correctly cautioned that other agencies having prosecutorial power in these areas would not be bound by an Opinion of the Maryland Attorney General.
Nevertheless, several of the analytical points made by the Attorney General are instructive with regard to the way in which the State of Maryland, and perhaps federal agencies, may choose to interpret the fraud and abuse laws. Perhaps the most interesting of these observations are the following:
1. A physician management fee could be viewed as impermissible "fee-splitting," where the physician is paid on a fee-for-service basis, and the management fee exceeds the "value" of the services provided.
2. Physician "employees" may really be "independent contractors," based upon certain facts, and that, therefore, employee-related exemptions and safe harbors in this area may not be available to protect particular arrangements.
3. Maryland's General Assembly should add an "isolated transactions" exemption to the state's self-referral law, because the current law appears to prohibit all subsequent referrals from sellers of practices to buyers of practices.
4. Finally, Maryland's General Assembly may also wish to exempt referrals of enrollees in Medicaid-approved managed care arrangements from Maryland's self-referral law, because the present exemption only applies to HMO enrollees.
December 21, 1998