There are a myriad of laws that prohibit, in one way or another, a Maryland health care provider from earning a profit from the provider's ability to refer a patient for needed health care services.
A. Federal Law
The federal anti-kickback statute prohibits a person from soliciting or receiving any remuneration in return for referring an individual for an item or service reimbursable under a federal health care program. This prohibition not only has statutory exemptions, but there are also safe harbor regulations that identify arrangements that do not violate the prohibition.
Other federal legislation, the so-called Stark law, prohibits physicians from referring Medicare patients for certain designated health services to an entity with which the physician has a financial relationship. There are, however, both statutory and regulatory exemptions to this prohibition.
B. Maryland Law
In addition to the two federal statutes, Maryland has its own broader version of Stark that prohibits all Maryland licensed health care practitioners from making any referrals of any services, whether or not reimbursed by Medicare, to health care entities with which the practitioners have a financial relationship. Although there are numerous statutory exemptions to this Maryland prohibition, there are Stark exemptions with no Maryland counterparts, Maryland exemptions with no Stark counterparts, as well as Stark and Maryland exemptions that are similar, but not exactly parallel.
Maryland's disciplinary codes for licensed health care providers also contain additional prohibitions against paying or accepting fees for a referral, or otherwise splitting fees among health care providers.
Unlike other areas of the law where federal rules preempt state rules, Maryland referral arrangements must pass all of the federal statutory tests and pass all of the Maryland statutory tests. If an arrangement is illegal under even one of the statutes, it is illegal, subjecting the participants to serious consequences, including fines, the return of fees paid, banishment from the Medicare program, loss of license and jail, depending upon the circumstances and the statute violated.
C. The Challenge
Accordingly, when a Maryland attorney is faced with giving advice as to whether a particular arrangement violates any of these statutory provisions, the attorney usually meticulously tests the arrangement seriatim against each of the statutes and all of the applicable exceptions. This process is tedious, and especially confusing, because the statutes are both similar and subtly dissimilar. The result for the attorney is usually a migraine.
Instead of taking an aspirin, however, the cure may be an analytical shortcut. Rather than testing the arrangement against each of the statutes separately, perhaps the attorney should first focus on those exceptions that are common to all of the statutes. In fact, if the arrangement can be structured so that it meets an exception that is common to all of the prohibitions, then the arrangement is more than likely legal.
D. The Common Exceptions
What are the common exceptions to all of the prohibitions? They are:
1. It is always better to establish an arrangement between two health care providers where one is the employee of the other;
2. It is always better to establish an arrangement among health care providers where the health care providers are all providing services through the same entity, and not separate entities;
3. Health care providers should always pay and be paid a market value for legitimate services that they are providing;
4. Payments within a group practice should never track, or be based upon, the Stark designated health services that may be provided by a group practice, namely: (a) clinical laboratory services; (b) physical therapy, occupational therapy and speech-language pathology services; (c) radiology and certain other imaging services; (d) radiation therapy services and supplies; (e) certain limited durable medical equipment such as infusion pumps and other items that a patient requires in ambulating; (f) prosthetics, orthotics, and prosthetic devices and supplies; and (g) outpatient prescription drugs; and
5. Payments between providers who are not in the same group should never track, or be based upon, the volume or value of referrals.
E. Certain Caveats
Notwithstanding the suggested analytical shortcut, painstakingly applying each statute to a particular arrangement cannot be entirely avoided. First, detailed analysis is still required so that an attorney can advise a client as to any risks that arise by reason of the specific wording of the different laws and regulations.
Second, although most arrangements that violate the five common principles outlined above will be illegal, some will not, and the identification of the odd, but legal, arrangement still requires detailed analysis.
Third, there are a few statutory and regulatory exceptions pertaining to special situations or special types of entities, e.g., hospitals or managed care plans, that should be consulted where applicable.
Finally, even when one employs the suggested shortcut, and concludes that an arrangement is likely legal, subsequent detailed analysis is still needed, to verify the conclusion, and to dot certain i's and to cross certain t's. For example, certain arrangements must be memorialized in writing and have a term of one year or more.