Mid-Atlantic Health Law TOPICS

If anything is certain in health care regula­tion, it is the constant evolution of the law involving referrals between health care providers. For example, the following are some of the newest Maryland and federal develop­ments in the area.

A. Maryland

Maryland has conformed its patient referral law to be consistent with the federal patient referral law, known as the "Stark" law, by adding new exemptions for (1) payments made to a referral source for the rental or lease of equip­ment, and (2) payments made to a referral source for the sale of property or a health care practice, so long as the payments are at fair market value, are in accordance with an arm's length transaction, and the remuneration is provided in accordance with an agreement that would be commercially reasonable even if no referrals were made.

Also, Maryland's referral prohibitions no longer apply to a health care practitioner who refers patients to a hospital in which the practi­tioner has a beneficial interest if the practitioner is authorized to perform services at the hospital, and the ownership or investment interest is in the hospital itself, and not solely in a subdivision of the hospital.

In addition, the Maryland Secretary of Health and Mental Hygiene has proposed new regula­tions to govern exemptions from Maryland's prohibitions on practitioners referring patients to health care entities in which they own an interest. Ultimately, these new regulations may prove of little applicability as they center around a practitioner's ability to show that the health care entity would not be able to exist but for the practitioner's investment.

B. Federal

The Department of Health and Human Ser­vices (DHHS) has proposed two new safe harbors under the federal anti-kickback statute designed to protect certain arrangements involving hospitals that replenish drugs and medical supplies used by ambulance providers that transport emergency patients to the hospitals.

The first new proposed safe harbor would protect replenishing arrangements where an ambulance provider pays the hospital fair market value. The second safe harbor protects replenishment even if done for free or at reduced prices; provided that seven conditions are met, including the restocking of all ambu­lance companies on the same basis, the monitor­ing of the program by some regional oversight entity, and the safeguarding of Medicare against paying for the restocking.

Robin J. Siegel
(410) 576-4166 • rsiegel@gfrlaw.com