Relieving Referral Sources of Administrative Burdens


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By Adrienne Dresevic, Esq. and Leslie Rojas, Esq., of The Health Law Partners, P.C. 

On December 21, 2015, the Office of Inspector General (OIG) issued an advisory opinion regarding a hospital’s proposal to bill a radiology group for transcription of the group’s imaging reports for patients who were seen at a third-party clinic (OIG Advisory Opinion 15-15). The advisory opinion highlights an interesting aspect of the Anti-Kickback Statute (AKS) that may go unnoticed by some providers. That is, how the AKS may be implicated when a party who is in a position to benefit from the referrals of another party provides remuneration to the referring party – even if the remuneration simply involves the relief of administrative burdens. Considering the breadth of the OIG’s interpretation of the term “remuneration,” it is critical that imaging providers review their relationships with referral sources to determine if any benefit at all passes to the referral source.

The facts involved in this advisory opinion are somewhat convoluted. As explained more fully below, the facts involve a hospital’s transcription services provided to a radiology practice for the practice’s imaging reports that were ultimately sent to the clinic where the technical component (TC) of the imaging services were performed. The issue was whether the transcription expense associated with the imaging report should be attributable to the radiology practice (who performed the professional component [PC]) or the clinic (who performed the TC). For the reasons stated below, the OIG found that the proposal did not result in unlawful remuneration under the AKS.

 

The Facts: 

The parties involved in this advisory opinion include: (i) an acute care hospital located in an underpopulated area; (ii) a family-practice clinic that provides imaging services in-house; and (iii) a radiology practice that is the only such practice within a 100-mile radius of the hospital or clinic. The key relationships between the three parties are as follows:

  • The clinic uses the radiology practice for the PC of the imaging services it provides;
  • The clinic bills the TC and the radiology practice bills the PC;
  • For the radiology practice’s professional services provided to the clinic, the radiology practice physicians dictate their imaging reports and use the hospital’s (not the clinic’s) transcription services to transcribe the dictated reports;
  • Once the radiology practice receives the transcribed reports from the hospital, they send them to the clinic;
  • The hospital bills the radiology practice a fair-market value, flat-rate, per-line fee for the transcription services; and
  • There are a number of referral relationships between the parties, including: (i) the clinic orders diagnostic testing from, and refers patients to, the hospital; (ii) the hospital contracts with the radiology practice to supervise all of its radiology services and to perform the PC of all of its radiologic imaging tests; (iii) the radiologists have the ability to influence referrals to the hospital for diagnostic and interventional radiology services; and (iv) the clinic refers the PC of imaging tests to the radiology practice.

 

The OIG’s Opinion:

In determining whether this arrangement violates the AKS, the OIG first looked to CMS’ payment policies. CMS guidance provides that the professional interpretation of a diagnostic procedure includes a written report. Additionally, the transcription of reports are considered to be indirect, non-clinical administrative expenses that are included in the fees associated with both the PC and TC of the service. The OIG advised that, according to CMS, when the PC and TC are provided by different entities, the entities may negotiate who will pay for the transcription costs.

The OIG opined that, since the hospital provided transcription services to the radiology practice, it is logical that the hospital would be entitled to payment from the radiology practice for these services. The OIG found that no remuneration passed from the hospital to the clinic by virtue of the hospital’s transcription of reports that were ultimately sent to the clinic.

Additionally, the OIG opined that no remuneration passed from the radiology practice to the clinic because, for CMS payment purposes, a condition of payment for the PC of the imaging service (the portion of the service performed by the radiology practice) is the preparation of a written report. In reaching this conclusion, the OIG had to navigate the fact that, under CMS payment policy, the transcription costs are accounted for in the fees paid for both the TC (ie, attributable to the clinic’s services) and the PC (ie, attributable to the radiology practice’s services). So, both the clinic (through the fee for the TC) and the radiology practice (through the fee for the PC) are reimbursed by Medicare for costs associated with the transcription of the imaging report.

Although there is the possibility of remuneration passing between two parties when they are reimbursed for the same expense but only one party bares the cost of that expense, the OIG found that remuneration was not present due to the radiology practice’s obligation to produce a written report in order to be paid by Medicare for the professional interpretation.

 

Key Takeaways:

This advisory opinion is limited to the specific facts of the proposed arrangement, but is instructive for imaging providers who have relationships with referral sources that involve administrative services. The key takeaway here is that the AKS analysis is extremely fact specific. Although this was a positive advisory opinion (in the context of transcription services for imaging reports only), imaging providers should note that when two parties receive Medicare reimbursement for the same expense, but only one party bares the cost of that expense, there may be unlawful remuneration.

Additionally, had CMS payment policies differed in this scenario such that the cost associated with the transcription of the imaging reports were included in the fees for the TC only (ie, attributable to the clinic’s services only), then the fact that the radiology practice bore the expense of the transcription costs would likely result in unlawful remuneration from the radiology practice to the clinic.

As a reminder, remuneration means any benefit at all – including relieving a party of administrative work that they would otherwise have to complete themselves. It is important to consult with with healthcare legal counsel to determine if your relationships with referral sources include the transfer of any unlawful benefits.


Adrienne Dresevic, Esq. is a Founding Shareholder of The Health Law Partners, P.C., a nationally recognized healthcare law firm with offices in Michigan and New York.Practicing in all areas of healthcare law, she devotes a substantial portion of her practiceto providing clients with counsel and analysis regarding compliance, Stark Law, Anti-Kickback Statute, and compliance related issues. Ms. Dresevic serves on the American Bar Association Health Law Section’s Council, which serves as the voice of the national health law bar within the ABA. Ms. Dresevic also serves as the ABA Health Law Section’s Co-Chair of the Physicians Legal Issues Conference Committee, Vice Chair of the Programs Committee (Executive Leadership), and Vice Chair of the Sponsorship Committee. She is licensed to practice law in Michigan and New York, and can be contacted at adresevic@thehlp.com.

Leslie A. Rojas, Esq., is an associate with The Health Law Partners, P.C., a nationally recognized healthcare law firm with offices in Michigan and New York. Ms. Rojas’ healthcare practice focuses on compliance with federal and state healthcare regulations; fraud and abuse issues, including the Stark Law and the Anti-Kickback Statute; HIPAA and health information privacy issues; and transactional and corporate aspects of healthcare. Ms. Rojas is licensed to practice law in Michigan and Illinois, and can be contacted at lrojas@thehlp.com.

The authors are members of The Health Law Partners, P.C. and may be reached at (248) 996-8510 or (212) 734-0128, or at www.thehlp.com.


For more regulatory news, visit www.ahraonline.org/news.

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