The greatest legal threat facing medical care practitioners, hospitals, and
managed care organizations (MCOs) is prosecution for fraud under the
Medicare- Medicaid self- referral laws, [42 U.S.C. § 1395nn. This section
prohibits any arrangements that encourage the referral of patients to a specific
medical facility:
“…if a physician…has a financial relationship with an entity…then—(A)
the physician may not make a referral to the entity for the furnishing of
designated health services for which payment otherwise may be made
under this subchapter, and(B) the entity may not present or cause to be
presented a claim under this subchapter or bill to any individual, third
party payor, or other entity for designated health services furnished
pursuant to a referral prohibited under subparagraph (A).”] the False
Claims Act (FCA), [31 U.S.C. §§ 3729, et seq. (1997).] or the
Kassebaum- Kennedy bill. [
These acts include substantial civil penalties, which have resulted in total
settlements in excess of a billion dollars, so far, and the imprisonment of many
medical care practitioners and administrators. Many medical care practitioners
are unaware of the reach of these laws. This confusion arises because these
laws criminalize conduct that is not generally illegal when it only involves
private pay patients. For example, assume that a hospital has an incentive
program for the medical staff to encourage hospital admissions. The three
physicians with the highest total of patient admission days get a free trip to
Jamaica. If the hospital only treats private pay patients, then this program is
legal, assuming that it does not violate any contractual agreements with the
patient’s insurance plans, or any specific state laws. If the hospital treats any
Medicare patients, then the incentive program is a prohibited kick-back.
[
United States v. Greber, 760 F.2d 68 (3d Cir. 1985)
.]
