Subscriptions to referral management software by home health agencies may result in prohibited kickbacks, according to a recent advisory.
The negative opinion, released in late June by the Department of Health and Human Services’ Office of Inspector General, focuses only on the specific facts in one case. However, it may also apply to other home health agencies’ referral arrangements.
The opinion is essentially a warning to health care providers and technology providers that use pay-to-play transfer systems and could constitute a violation of a federal law if the requisite intent is present, said Carén Oliver, an associate at Barnes & Thornburg.
The referral system provides hospitals with a list containing all HHAs in a given region, regardless of their subscription status. However, subscribers to the recommendation system have an advantage. You can receive and accept referral requests electronically directly through the software. Non-subscribers are believed to have to rely on alternative forms of communication such as email, phone calls and faxes to accept a referral.
Due to delays in response times through alternative routes and the first-come, first-served nature of patient discharge, non-subscribers may be effectively excluded from referrals.
“The ability to receive and respond to referrals electronically through the software provided a significant competitive advantage over the HHAs that had not opted in,” Oliver said McKnight’s Home Care Daily Pulse. “Patients are referred to HHAs based on their willingness and ability to pay, rather than the quality of care they provide.”
In addition to unfair competition, the current structure could also lead to overutilization of federal health programs. Companies could face financial pressure to recoup costs and bill for unnecessary medical services, leading to overutilization of programs like Medicare and Medicaid, Oliver said.
The opinion found that the arrangement between home health agencies and the referral systems violated the Federal Anti-Kickback Statute. The law, in part, prohibits knowingly and intentionally receiving anything of value in exchange for a referral of items or services eligible for reimbursement under federal health care programs, Oliver explained.
“The purpose of the law is essentially to prevent financial incentives from influencing medical decision-making,” Oliver said. “The concern is that if providers can be paid for referrals, patients may receive care based on profit rather than medical necessity.”
Although there are some exceptions to the Federal Anti-Kickback Statute, also known as the safe harbor, this agreement’s fee structure does not meet the necessary requirements.
Requirements for Safe Harbor qualification include offering the same price to providers, and the price must reflect the cost of providing the service.
The agreement set out in the opinion violated several requirements. Prices varied depending on geographic location or number of facilities, and costs did not reflect operating costs.
In general, penalties for violations of the Federal Anti-Kickback Statute can include up to 10 years in prison, a $100,000 fine for each violation and exclusion from federal health care programs, Oliver said. She added that both the paying and receiving parties could be held liable.
Oliver says healthcare providers should seek legal advice before entering into a referral agreement. While the totality of circumstances is analyzed when evaluating arrangements, fee structures that vary or result in unfair competition can still trigger an anti-kickback review, she said.
https://www.mcknightshomecare.com/news/oig-home-health-agencys-referral-software-subscription-is-unlawful/
