What Can Providers Give to Patients, Pt 2

by Elizabeth E. Hogue, Esq.

Provider Kickbacks

Exceptions

Providers, including marketers, are tempted to give patients and potential patients free items and services. While providers usually have good intentions, they must comply with applicable requirements. As Part 1 of this series indicates, there are two applicable federal statutes: the anti-kickback statute and the civil monetary penalties law. Part 1 also makes it clear that there are a number of exceptions or “safe harbors. If providers can meet the requirements of an applicable safe harbor or exception, they can give patients and potential patients free items and services that would otherwise violate applicable requirements. 

Limit Increase

The Office of Inspector General (OIG) of the U.S. Department of Health and Human Services, the primary enforcer of fraud and abuse prohibitions, announced that; effective on December 7, 2016; the limits on free items and services given to beneficiaries increased. Specifically, according to the OIG, items and services of nominal value may be given to patients or potential patients that have a retail value of no more than $15 per item or $75 in the aggregate per patient on an annual basis. The previous limits were $10 per item or $50 in the aggregate per patient on an annual basis.

Undue Influence

Under section 1128A(a)(5) of the Social Security Act, persons who offer or transfer to Medicare and/or Medicaid beneficiaries any remuneration that they know or should know is likely to influence beneficiaries’ selection of particular providers or suppliers of items or services payable by the Medicare or Medicaid Programs may be liable for thousands of dollars in civil money penalties for each wrongful act. “Remuneration” includes waivers of copayments and deductibles, and transfers of items or services for free or for other than fair market value.

In the Conference Committee report that accompanied the enactment of these requirements, Congress expressed a clear intent to permit inexpensive gifts of nominal value given by providers to beneficiaries. In 2000, the OIG initially interpreted “inexpensive” or “nominal value” to mean a retail value of no more than $10 per item or $50 in the aggregate per patient an annual basis.

Kickbacks for Referrals

Needed Items, not Cash

Provider Kickbacks

The OIG also expressed a willingness to periodically review these limits and adjust them based on inflation. Consequently, effective on December 7, 2016, the OIG increased the limits of items and services of nominal value that may be given by providers and suppliers to beneficiaries to a retail value of no more than $15 per item or $75 in the aggregate per patient on an annual basis.

 Providers may not, however, give cash or cash equivalents.

 These amounts may still seem paltry to many providers. According to the OIG, providers who see that patients need items worth more than these limits should establish relationships with charitable organizations that can provide items and/or services that are not subject to these limits. In other words, work together to meet the needs of patients!

Final Thoughts

With time and the emotional context inherent in home health and hospice, clinicians may want to offer gifts to their clients. Low reimbursement rates and workforce shortage may cause HHAs to consider gifts and incentives as a way to keep clients and get referrals to new ones. If you find yourself in this situation, make sure you’re staying under the legal threshold, and engage 3rd parties to fill larger needs.

This is part 2 of a 4-part series. Come back next week for the third installment.

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Elizabeth E. Hogue, Esq.
Elizabeth E. Hogue, Esq.

Elizabeth Hogue is an attorney in private practice with extensive experience in health care. She represents clients across the U.S., including professional associations, managed care providers, hospitals, long-term care facilities, home health agencies, durable medical equipment companies, and hospices.

©2025 Elizabeth E. Hogue, Esq. All rights reserved.

No portion of this material may be reproduced in any form without the advance written permission of the author.

©2025 by The Rowan Report, Peoria, AZ. All rights reserved. 

What Can Providers Give to Patients, Pt 1

by Elizabeth E. Hogue, Esq.

Providers Kickbacks

Keeping it Clean

Providers, including marketers, are tempted to give patients free items and services. But be careful! These activities may violate laws prohibiting providers that participate in state and federal health programs from giving free items and services to patients. Private insurers often impose the same prohibitions. This means that private duty agencies are not exempt from these fraud and abuse prohibitions if they participate in any state healthcare programs, such as Medicaid or Medicaid waiver programs, or accept payments from private insurers.

Provider Prohibitions

The government generally prohibits providers from giving free items and services to patients because it is concerned that such activities may:

  • Result in overutilization of services
  • Produce decisions concerning care that are not objective
  • Increase costs to the Medicare and Medicaid Programs and other state and federal healthcare programs

Consequences of Provider Kickbacks

Provider Kickbacks
Providers who violate prohibitions on what may be given to patients face criminal fines, civil money penalties, suspension or exclusion from the Medicare and Medicaid Programs and other state and federal healthcare programs, and jail time.

There are two applicable federal statutes:

  • The anti-kickback statute (AKS)
  • The civil monetary penalties law (CMPL)

Exceptions

The federal government says that providers have violated the federal False Claims Statute if referrals are obtained in a way that violates the AKS and providers submit claims for services provided to patients who were referred in violation of the AKS. Providers generally violate the False Claims Statute if they submit claims or cost reports to the government that include untrue information. When providers submit claims, they, according to enforcers, also promise that referrals were not received in ways that are prohibited. If referrals are received inappropriately by violating the anti-kickback statute, for example, then the claims are “false.” Giving free items or services to patients may also violate a federal statute: the civil money penalties law.

Promotions and Marketing

The CMPL prohibits providers from offering to give or actually giving items or services to patients or potential patients that are likely to influence receipt of services from particular providers. This prohibition is especially relevant to marketing activities. It applies to both direct and indirect promotional activities.

State-Specific Laws

Providers must also comply with applicable laws in all of the states in which they do business. State laws vary, of course, from state to state. Many states have anti-kickback statutes that are similar to the federal statute described above. State licensure statutes for physicians, nurses, therapists, social workers, and other types of providers may also include prohibitions on giving free or discounted items or services to patients, especially when they may induce patients to receive potentially unnecessary services.

Final Thoughts

Although providers may have good intentions when they give free items or services to patients and potential patients, before they are acted upon such intentions must be subjected to consideration of the prohibitions described above.

This is part 1 of a two-part series. Look for part 2 next week.

# # #

Elizabeth E. Hogue, Esq.
Elizabeth E. Hogue, Esq.

Elizabeth Hogue is an attorney in private practice with extensive experience in health care. She represents clients across the U.S., including professional associations, managed care providers, hospitals, long-term care facilities, home health agencies, durable medical equipment companies, and hospices.

©2025 Elizabeth E. Hogue, Esq. All rights reserved.

No portion of this material may be reproduced in any form without the advance written permission of the author.

©2025 by The Rowan Report, Peoria, AZ. All rights reserved. 

Monthly Stipends Not Allowed

by Elizabeth E. Hogue, Esq.

Medical Directors:

Monthly Stipends Not Allowed

Monthly stipends to Medical Directors for referrals of patients could cost you. Earlier this month, a hospice provider in Georgia settled claims of violation of the federal Anti-Kickback statute (AKS) and the federal False Claims Act (FCA) by agreeing to pay $9.2 million. The allegations include payments of kickbacks, including monthly stipends, to Medical Directors in exchange for referrals of patients. These practices resulted in three whistleblower lawsuits against the hospice by former employees. They will receive $1.5 million.

Marketing, not Monthly Stipends

In the meanwhile, marketing strategies utilized by post-acute providers are generating fierce competition for referrals, especially Medicare beneficiaries who need home health services! As a result, providers are appropriately committing more and more resources to marketing activities. Providers are, for example, entering into agreements with referring physicians to provide consulting services to their organizations. These legitimate relationships may easily be misunderstood by enforcers.

Consulting Physicians

First, it is important to acknowledge that providers of services in patients’ residences need consulting physicians’ services. Examples of services that are genuinely needed, from a business perspective, may include the following:

  • Consultation regarding clinically complex cases
  • Assistance with the development and maintenance of specialty programs
  • Communication with physicians who provide inappropriate orders for care, do not return signed orders on time, or are unresponsive to staff members who are seeking modifications to treatment plans

As providers know, however, these types of arrangements raise important legal issues related to potential violations of the AKS, the federal so-called Stark laws, the FCA, and state statutes that are probably similar to these federal statutes. 

Monthly Stipend Physician Consultation

Avoid Trouble with Specific Contracts

Providers are likely to avoid violations if they meet the requirements of the personal services “safe harbor” under the AKS and the contractual exception under the Stark laws. The safe harbor and exception generally require providers to pay consulting physicians who also make referrals to them based upon written agreements that require payments at fair market value for services actually rendered without regard to the volume or value of referrals received.

Practically, Providers Should:

  • Pay physicians who also make referrals
    • on an hourly basis
    • not a set monthly amount of stipends
  • Develop standardized agreements and use them consistently with all referring physicians who receive consulting fees
    • Providers cannot afford to use a variety of different agreements that may not meet applicable requirements
    • Staff must understand that they can use only the standard approved agreement and cannot modify it without advance written approval from a designated, knowledgeable individual
  • Document services rendered and the amount of time spent on these activities.
    • Documentation is crucial
    • Providers should develop and implement policies and procedures that permit payments to physicians only after appropriate documentation to support payments has been received and reviewed

  • Avoid agreements for consulting services with physicians whose services they do not actually use
    • even if they make no payments to them
    • terminate these agreements if they do not need the services covered by them or it may appear that the only purpose for the agreements is to induce referrals as opposed to a documented need for services
  • Avoid having numerous consulting physicians/medical directors
    • Although there are usually no limits on the number of consulting physicians/medical directors that providers can have at any given time, a very large number is likely to invite scrutiny by regulators and should be avoided
    • How many is too many? The number should certainly bear some relationship to the size of the provider organization and the geographic area served.
    • Beyond this general guideline, common sense must prevail. The bottom line is: does the provider have legitimate work for every consulting physician?
  • Avoid asking consulting physicians to perform commercially reasonable services that are related to the volume and value of referrals made
    • Providers cannot, for example, ask referring physicians to assist with quality assurance activities that
      • Entail their review of charts of patients whom they referred to the provider
      • Ensure the more referrals made, the more money consulting physicians make

Final Thoughts

Providers are more likely to avoid enforcement activities when they follow these practical guidelines. Violations hurt providers and referral sources alike. In view of the possible adverse consequences, expenditures of financial and other resources are certainly justified to get it right.

# # #

Elizabeth E. Hogue, Esq.
Elizabeth E. Hogue, Esq.

Elizabeth Hogue is an attorney in private practice with extensive experience in health care. She represents clients across the U.S., including professional associations, managed care providers, hospitals, long-term care facilities, home health agencies, durable medical equipment companies, and hospices.

©2025 Elizabeth E. Hogue, Esq. All rights reserved.

No portion of this material may be reproduced in any form without the advance written permission of the author.

Kickbacks for Referrals are Costly…and Illegal

by Elizabeth E Hogue, Esq.

Kickback on Kickbacks

Three home health agencies and their parent company in Cincinnati, Ohio, must pay $4,496,330 to resolve alleged violations of the federal False Claims Act by providing kickbacks to assisted living facilities in exchange for referrals of Medicare patients. The settlement resolves allegations that, between 2013 and 2022, the companies provided lease payments and other valuable benefits; including wellness health services, sports tickets, and meals; to numerous ALFs and their residents. The companies then billed Medicare for the services provided to patients referred by the ALFs.

Referrals from ALFs

Getting more referrals from ALF’s and retirement communities seems to be a crucial piece of the puzzle for all types of providers. As the number of years in which they have been in business increases, ALF’s and retirement communities are more eager to assist their residents to “age in place.” This means that they often view availability of services from post-acute providers as essential to allow them to achieve this goal. 

While providers compete aggressively in the marketplace, they cannot, however, lose sight of the fact that the healthcare industry is highly regulated. With ever-increasing emphasis on fraud and abuse compliance, providers cannot afford to violate the law.

Kickbacks for Referrals

How can providers get more referrals from ALF’S and retirement communities? What are the potential legal pitfalls that providers must avoid? 

The most effective way to maximize referrals from these sources may be to take a multi-pronged approach that includes:

Assigning at least one coordinator/liaison to each referral source on at least a part-time basis

Use of coordinators/liaisons at ALF’s and retirement communities raises issues related to violation of the federal anti-kickback statute. This statute generally prohibits providers from either offering to give or actually giving anything to referral sources in order to induce referrals. Consequently, liaisons and coordinators must be scrupulous about avoiding the provision of free services to ALF’s and retirement communities and/or their residents. Possible violations include “staffing” an office with an RN who responds to requests from residents in their apartments or has “office hours” to address health conditions of residents.

Renting space for coordinators/liaisons to occupy so that providers have a frequent or continuous presence on the premises of referral sources to better serve patients

Renting space from referral sources also involves potential kickbacks, so providers must meet the requirements of the space rental exception or safe harbor. In order to do so, providers must enter into a written lease with the facility/community for a term of least one year. The lease must include the number of square feet providers are renting. Rent must be set in advance at fair market value and cannot take into account either the volume or value of referrals received. Finally, providers may rent only the amount of space that is commercially reasonable or that they actually need.  

The OIG has provided significant guidance about these requirements, which providers must master before they establish these types of relationships. Common pitfalls for providers is insistence by ALFs that providers must rent an entire apartment, whether or not they need it, and must pay an amount equal to the residents’ monthly rent, which includes food and other services. 

Entering into Preferred Provider Agreements

Preferred Provider Agreements may be verbal or in writing. There may be significant value in reducing these preferred provider relationships to writing. These types of relationships raise issues related to patients’ right to freedom of choice of providers. The common law or court decisions require providers of all types to honor patients’ right to freedom of choice. There are also federal statutes that guarantee this right to Medicare and Medicaid patients. In addition, states sometimes address these issues in applicable statutes and regulations. For this reason, providers should not attempt to use standard or “sample” Agreements, but must adhere to requirements in all of the states in which they use these types of Agreements.

Providing a full range of screenings and educational events for and about common chronic illnesses or community awareness activities

ALF’s and retirement communities often ask providers to conduct educational events and basic screenings for common chronic conditions. Generally, providers may do so if they walk a relatively fine line between engaging in community awareness activities and providing free skilled services to residents that exceed $15.00 in value at a time. At a minimum, such activities must be conducted consistent with a detailed policy and procedure that governs the provision of such services, so that providers do not violate the anti-kickback statute.

No kickbacks for referrals

Establishing relationships with ALF’s and retirement communities may result in numerous referrals to post-acute providers. Such relationships should be based on standard documents and comprehensive policies, as described above, in order to ensure compliance. Legal representation is essential for the development and implementation of these documents due to the complexity of the issues involved. 

Enforcement actions like those described above are avoidable.

Elizabeth E. Hogue, Esq.
Elizabeth E. Hogue, Esq.

Elizabeth Hogue is an attorney in private practice with extensive experience in health care. She represents clients across the U.S., including professional associations, managed care providers, hospitals, long-term care facilities, home health agencies, durable medical equipment companies, and hospices.

©2024 Elizabeth E. Hogue, Esq. All rights reserved.

No portion of this material may be reproduced in any form without the advance written permission of the author.

Ohio HHA Violated Anti-Kickback Statute

FOR IMMEDIATE RELEASE

Office of Public Affairs

July 1, 2024 — Guardian Health Care Inc., Gem City Home Care LLC and Care Connection of Cincinnati LLC, home health agencies operating in Texas, Ohio and Indiana, along with their owner Evolution Health LLC (together, the Companies), have agreed to pay $4,496,330 to resolve allegations that they violated the False Claims Act by knowingly providing illegal kickbacks to assisted living facilities and physicians in exchange for Medicare referrals.

This settlement resolves allegations that, from 2013 to 2022, Guardian Health Care, Gem City Home Care and Care Connection of Cincinnati provided lease payments and other valuable benefits, including wellness health services, sports tickets and meals, to numerous assisted living facilities and their residents, as well as certain health care providers, in exchange for referrals of Medicare beneficiaries. The home health agencies then billed Medicare for the home health services they provided to the referred patients.

The Anti-Kickback Statute prohibits the provision of remuneration with the intent to induce referrals of government health care program business. The Anti-Kickback Statute is intended to ensure that medical providers’ judgments are not compromised by improper financial incentives. Claims that are knowingly submitted in violation of the Anti-Kickback Statute are ineligible for payment and can violate the False Claims Act.

“It is imperative to ensure that improper financial incentives play no role in decisions regarding patient care,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “Today’s resolution demonstrates the department’s commitment to protecting the integrity of federal health care programs and the medical treatment received by their beneficiaries.”

The Companies received credit under the department’s guidelines for taking disclosure, cooperation and remediation into account in False Claims Act cases. Among other actions, the Companies disclosed the conduct to the government, identified the individuals involved and assisted in the determination of losses caused to Medicare.

The investigation and resolution of this matter illustrates the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).

Trial Attorney Elizabeth A. Strawn of the Civil Division’s Commercial Litigation Branch, Fraud Section and Assistant U.S. Attorney Brandi Stewart for the Southern District of Ohio handled the matter.

The claims resolved by the settlement are allegations only. And there has been no determination of liability.