Looser health care rules might open door to kick­backs

Star-Telegram (Sunday) - - News - BY ROBERT PEAR New York Times

The Trump ad­min­is­tra­tion has la­bored zeal­ously to cut fed­eral reg­u­la­tions, but its lat­est move has still as­ton­ished some ex­perts on health care: It has asked for rec­om­men­da­tions to re­lax rules that pro­hibit kick­backs and other pay­ments in­tended to in­flu­ence care for peo­ple on Medi­care or Med­i­caid.

The goal is to open path­ways for doc­tors and hos­pi­tals to work to­gether to im­prove care and save money. The chal­lenge will be to ac­com­plish that without also in­creas­ing the risk of fraud.

With its re­quest for ad­vice, the ad­min­is­tra­tion has touched off a lob­by­ing frenzy. Health care providers of all types are urg­ing of­fi­cials to waive or roll back the re­quire­ments of fed­eral fraud and abuse laws so they can join forces and co­or­di­nate care, shar­ing cost re­duc­tions and prof­its in ways that would not oth­er­wise be al­lowed.

From hun­dreds of let­ters sent to the gov­ern­ment by health care ex­ec­u­tives and lob­by­ists in the past few weeks, some themes emerge: Fed­eral laws pre­vent in­sur­ers from re­ward­ing Medi­care pa­tients who lose weight or take medicines as pre­scribed. And they create le­gal risks for any ar­range­ment in which a hos­pi­tal pays a bonus to doc­tors for cut­ting costs or achiev­ing clin­i­cal goals.

The ex­ist­ing rules are aimed at pre­vent­ing im­proper in­flu­ence over choices of doc­tors, hos­pi­tals and pre­scrip­tion drugs for Medi­care and Med­i­caid ben­e­fi­cia­ries. The two pro­grams cover more than 100 mil­lion Amer­i­cans and ac­count for more than one-third of all health spend­ing, so even small changes in law en­force­ment pri­or­i­ties can have big im­pli­ca­tions.

Fed­eral health of­fi­cials are re­view­ing the pro­pos­als for what they call a “reg­u­la­tory sprint to co­or­di­nated care” even as the Jus­tice Depart­ment and other law en­force­ment agen­cies crack down on health care fraud, con­tin­u­ally ex­pos­ing schemes to bilk gov­ern­ment health pro­grams.

“The ad­min­is­tra­tion is invit­ing com­pa­nies in the health care in­dus­try to write a ‘get out of jail free card’ for them­selves, which they can use if they are in­ves­ti­gated or pros­e­cuted,” said James Pep­per, a lawyer out­side Philadel­phia who has rep­re­sented many whistle­blow­ers in the in­dus­try.

Fed­eral laws make it a crime to of­fer or pay any “re­mu­ner­a­tion” in re­turn for the re­fer­ral of Medi­care or Med­i­caid pa­tients, and they limit doc­tors’ abil­ity to re­fer pa­tients to med­i­cal busi­nesses in which the doc­tors have a fi­nan­cial in­ter­est, a prac­tice known as self-re­fer­ral.

These laws “im­pose un­due bur­dens on physi­cians and serve as ob­sta­cles to co­or­di­nated care,” said Dr. James Madara, CEO of the Amer­i­can Med­i­cal As­so­ci­a­tion. The laws, he said, were en­acted decades ago “in a feefor-ser­vice world that paid for ser­vices on a piece­meal ba­sis.”

Melinda Hat­ton, se­nior vice pres­i­dent and gen­eral coun­sel of the Amer­i­can Hos­pi­tal As­so­ci­a­tion, said the laws sti­fle “many in­nocu­ous or ben­e­fi­cial ar­range­ments” that could pro­vide pa­tients with bet­ter care at lower cost.

Hos­pi­tals of­ten say they want to re­ward doc­tors who meet cer­tain goals for im­prov­ing the health of pa­tients, re­duc­ing the length of hos­pi­tal stays and pre­vent­ing read­mis­sions. But fed­eral courts have held that the anti-kick­back statute can be vi­o­lated if even one pur­pose of the re­mu­ner­a­tion is to in­duce re­fer­rals or gen­er­ate busi­ness for the hos­pi­tal.

The premise of the kick­back and self-re­fer­ral laws is that health care providers should make med­i­cal de­ci­sions based on the needs of pa­tients, not on the fi­nan­cial in­ter­ests of doc­tors or other providers.

Health care providers can be fined if they of­fer fi­nan­cial in­cen­tives to Medi­care or Med­i­caid pa­tients to use their ser­vices or prod­ucts. Drug com­pa­nies have been found to vi­o­late the law when they give kick­backs to phar­ma­cies in re­turn for rec­om­mend­ing their drugs to pa­tients. Hos­pi­tals can also be fined if they make pay­ments to a doc­tor “as an in­duce­ment to re­duce or limit ser­vices” pro­vided to a Medi­care or Med­i­caid ben­e­fi­ciary.

Doc­tors, hos­pi­tals and drug com­pa­nies are urg­ing the Trump ad­min­is­tra­tion to pro­vide broad le­gal pro­tec­tion – a “safe har­bor” – for ar­range­ments that pro­mote co­or­di­nated, “val­ue­based care.” In so­lic­it­ing ad­vice, the Trump ad­min­is­tra­tion said it wanted to hear about the pos­si­ble need for “a new ex­cep­tion to the physi­cian self-re­fer­ral law” and “ex­cep­tions to the def­i­ni­tion of re­mu­ner­a­tion.”

Al­most ev­ery week the Jus­tice Depart­ment files an­other case against health care providers. Many of the cases were brought to the gov­ern­ment’s at­ten­tion by peo­ple who say they saw the bad be­hav­ior while work­ing in the in­dus­try.

A health care provider who vi­o­lates the an­ti­kick­back or self-re­fer­ral law may face busi­ness­crip­pling fines un­der the False Claims Act and can be ex­cluded from Medi­care and Med­i­caid, a penalty tan­ta­mount to a pro­fes­sional death sen­tence for some providers.


The Trump ad­min­is­tra­tion wants to open path­ways for hos­pi­tals and doc­tors to work to­gether to im­prove care and save money, but the chal­lenge will be to ac­com­plish that without also in­creas­ing the risk of fraud.

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