top of page
Search

Physicians Must Exercise Caution when Entering Medical Laboratory Arrangements

The Department of Justice (DOJ) news page features several noteworthy settlements related to individual physicians involved in alleged medical laboratory kickback schemes. Enforcement action is likely to continue in the medical lab industry, which is upward of $250.9 billion in size and still growing.[1] Physicians who are key to this growth may not realize the extent of their exposure to prosecution in arrangements that seem like win-wins. However, common threads throughout the DOJ settlements help to highlight specific areas where physicians would do well to scrutinize the details before entering into transactions with medical laboratories.


Recent DOJ actions have focused on alleged kickbacks paid by labs to physicians that the government believed were either masked as marketing services, shares in sham management companies, or as unnecessary diagnostic testing. Other relevant cases involved above-fair market value payments and inducements structured as:

·       Office space rent

·       Phlebotomy and toxicology payments

·       Clinical staffing

·       Consulting

·       Medical director stipends

 

Accepting payment or services of value for less than fair market value, or being relieved from financial obligations physicians would otherwise incur, creates substantial risk for those physicians. These settlements reinforce the importance of ensuring that any remuneration accepted by physicians is fair market value, commercially reasonable for necessary services and time worked, well-documented, and entirely free from any expectation of referral quid pro quo.

 

According to CMS, it's important for physicians to note[2]:

 

Regarding the Anti-Kickback Statute (AKS):

The Government does not need to prove patient harm or financial loss to the programs to show that a physician violated the AKS. A physician can be guilty of violating the AKS even if the physician actually rendered the service and the service was medically necessary. Taking money or gifts from a drug or device company or a durable medical equipment (DME) supplier is not justified by the argument that you would have prescribed that drug or ordered that wheelchair even without a kickback.

 

Regarding the Physician Self-Referral Law (Stark Law):

The Stark law is a strict liability statute, which means proof of specific intent to violate the law is not required. The Stark law prohibits the submission, or causing the submission, of claims in violation of the law’s restrictions on referrals. Penalties for physicians who violate the Stark law include fines as well as exclusion from participation in the Federal health care programs.

 

Valuation Takeaway

Once again, ongoing litigation and settlements serve to remind us of the scrutiny of the medical laboratory industry and underscore the importance of ensuring that compensation paid to physicians is commercially reasonable, fair market value, and entirely free from any expectation of referrals. It's important to monitor and examine arrangements to ensure that physician services are only purchased when a legitimate business purpose, not related to referrals, exists for buying them. In these arrangements, there is substantial risk to both buyers and sellers, i.e., those who may be perceived as either offering or receiving kickbacks.

 

BFMV is experienced in reviewing and designing fair market value and commercially reasonable healthcare arrangements that meet the volume or value standard. Contact us for hourly consulting or FMV opinion engagements.




Comments

Commenting on this post isn't available anymore. Contact the site owner for more info.
Featured Posts
Recent Posts
Search By Tags
Archive
bottom of page