By: Zach Simpson
Since the beginning of the COVID pandemic many healthcare businesses are exploring various ways to increase their referrals, and although exchanging fees and gifts in return for referrals may sound like an easy way to obtain additional business, there are state and federal laws that strictly prohibit such activities that are discussed in greater detail below.
Two of the most important laws that all physical therapists should be aware of are the Anti-Kickback Statute and the Stark Law which are used to ensure that medical decisions are not made based on financial incentives. However, each of the laws do have distinctions that you need to be aware of.
Federal Anti-Kickback Statute
Prohibiting individuals and entities from offering anything of value whether cash, gifts, or anything of monetary value in exchange for any federal healthcare program business is governed by the Federal Anti-Kickback Statute. Federal healthcare programs include, Medicare, Medicaid, Tricare, and any other federal payer.
What this statute means is that a physician or medical provider cannot refer a patient covered by a federal healthcare program to your physical therapy practice in exchange for money or monetary gifts from you, your staff, or practice. In addition, this same regulation applies to your practice, meaning that your practice cannot refer a patient covered by a federal healthcare program to a medical practice in exchange for money or monetary gifts.
Although many practices are trying to compensate for the reduced patient volume during the previous months be mindful that any violations of the Anti-Kickback Statute can result in civil fines, criminal penalties, and issues with the licensing board.
The Stark Law also known as the Physician Self-Referral Law prohibits physicians from referring patients covered by Medicare or Medicaid for designated health services, such as physical therapy services, to practices with which the physician or the physician’s immediate family member has a financial relationship unless a safe harbor exception is met. Spouses, parents, children, siblings, stepsiblings, in-laws, grandparents, and grandchildren are all deemed immediate family members.
A key item to note about the Stark Law is that it is a strict liability statute, which means that you do not have to intentionally violate the statute to be found in violation. Therefore, if you were not aware of what you were doing violated the statute you will still be found in violation which could result in civil fines.
As you seek to expand your market presence and attract new patients, it will be tempting to mimic the marketing tactics used in a variety of other industries. However, always remember that the healthcare industry is highly regulated with severe penalties in the event laws and regulations are violated. Therefore, it is imperative that you speak with a healthcare attorney prior to drafting employment agreements for marketers, and before you enter into any marketing business transactions.
If you have any questions about how either statute applies to your physical therapy practice, or if you believe you may have violated one of the following statutes, an experienced healthcare attorney can guide you.