Safe Harbor

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Permissible Payments For Referrals Under The Federal Anti Kickback Statute

by admin on April 28, 2021 No comments

anti kickbackBy: Karen Davila

The term “payment for referral” strikes fear in the hearts of health care providers throughout the country because of the significant prohibitions under the federal Anti-Kickback Statute (AKS).  And, Florida’s Patient Brokering Act (PBA) casts an even bigger shadow over arrangements involving payment in exchange for referrals.  There are other statutory restrictions as well, which may apply depending upon the services for which a referral is being made.  Those include but are not limited to statutes prohibiting physician fee-splitting and the federal Eliminating Kickbacks in Recovery Act (EKRA) (applicable to referrals to recovery homes, clinical treatment facilities, or laboratories in an effort to stave off growing opioid-related fraud), and the potential collateral damage of a false claim under the federal False Claims Act (FCA) if any of the above statutes are violated.

So, is there any scenario where a payment may be made by a health care provider in exchange for referrals?  The answer is yes- there is a safe harbor under the AKS (42 U.S. C. §1320a-7b(b)) specifically for such arrangements.  This safe harbor is not commonly used and likely means revision to existing arrangements to come into compliance with its specific requirements.  But it may be worth considering if the referral (and payment for that referral) is not otherwise prohibited as noted above.

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Patient Brokering & Money Laundering: Bieda Arrests Raise Serious Issues

by admin on September 1, 2020 No comments

patient brokering arrest treatment center toxicology lab ownershipThree family members involved in owning an addiction treatment center and/or a toxicology lab were charged in July with patient brokering and money laundering in an alleged scheme involving roughly $2 Million.  The allegations arise out of a complex corporate enterprise involving at least four companies and some common ownership between the treatment center and lab.  While it’s premature to assume that the defendants did anything illegal, there are some interesting things in this case:

Complexity Invites Suspicion.  Every business owner in the addiction treatment and toxicology lab space knows three things:  (1) it’s extremely regulated, (2) law enforcement has an especially sharpened focus on these industries, and (3) insurance companies are very suspect of any situation involving either industry, especially when there is any common ownership.  So why then would one construct an enterprise that even “looks” complex or tricky?  It intensifies suspicion in an already highly scrutinized business space.  This is clearly one of the points of focus in this case.  There’s an old saying woven into the mind of every experienced healthcare lawyer:  if something can’t be done directly, it can’t be done indirectly.  Time will tell if anything in this case was wrong or if there are any good reasons for the corporate structure, but the complexity of the corporate structure certainly invites suspicion.

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Recovery Business Marketing 2.0

by admin on April 17, 2017 No comments

By: Jeff Cohen

Concepts that drive sober home relationships like Anti-Kickback Statute, Patient Brokering Act and Safe Harbor have become ingrained in the minds of nearly every addiction treatment provider’s thought process, especially in Florida with the development of the Sober Home Task Force.  Providers now seem to fully embrace ideas like–

  • There’s a federal law (the Anti-Kickback Statute, the “AKS”) that can bring criminal liability for marketing done incorrectly;
  • There’s a state law, the Florida Patient Brokering Act (“PBA”), that can do the same;
  • Complying with the federal safe harbors and the bona fide employee exception is important, even when there are no state or federal healthcare program dollars involved;
  • Paying anyone for marketing, not just on a commission based sales model, without fully appreciate the applicable laws is dangerous, costly and invites criminal inquiries and liability; and
  • Achieving compliance with applicable federal law should be part of any recovery business’ overall compliance plan.

Recovery providers must become familiar with not only the AKS and state restrictions like the PBA, but also the law’s permitted examples, so called “Safe Harbors,” which specify specifically permitted arrangements (42 CFR 1001.952).  The “personal services arrangement and management contract” Safe Harbor, for instance, has particular application in the area of marketing, as does the AKS exception for “bona fide employment arrangements,” which apply to “bona fide” W-2 employees (entailing direction, supervision and control), but not independent contractor relationships.

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Path Lab Proposal Shot Down by OIG

by admin on November 7, 2011 No comments

The Office of Inspector General of the Department of Health and Human Services recently (October 11, 2011) shook its head at a proposal involving a pathology lab management services business that was to be owned by physicians. The proposed arrangement had the following features:

1. A path lab management business (“Manager”) would be formed and the business would be owned by doctors;
2. The Manager would provide a list of management services to a path lab;
3. The path lab (“Lab”) would not be owned by the doctors that own the Manager;
4. The Manager would provide a fixed amount of hours of services each year and would receive a percentage of the Lab’s income (fixed percentage in advance) and that fee would approximate the Lab’s use of the Manager’s services for the year;
5. The physician Manager investors would be in a position to refer to the Lab;
6. The ownership interests of the physician investors in the Manager would exceed forty percent (40%);
7. More than forty percent (40%) of the Lab’s revenues would come from the physician investors.

The OIG decided that the proposed arrangement posed more than a minimal risk of violating the Anti Kickback statute. The OIG also said the manager cannot refer its own patients or generate business in connection with the proposed arrangement. The OIG focused on the following points in its advisory opinion:

1. The Manager’s “usage fees” to the Lab are percentage based and not flat and set in advance;
2. The ownership interests of the doctor investors in the Manager would exceed what is specified in the so called “small entity” Safe Harbor;
3. The physician owners of the Manager have no experience in managing a lab, but are in a position to generate referrals to it.

Though the regulatory Safe Harbors (to the Anti Kickback Statute) are illustrative of permissible arrangements, the OIG is clearly sticking very close to them. where federal or state healthcare program dollars are involved, physician investors would do well to make sure they are Safe Harbor compliant.


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