Avoiding Legal Pitfalls of HME Referrals
The lifeblood of any successful business is innovative marketing and building referral networks. However, unlike non-healthcare industries, the federal government has set out a number of restrictive guidelines that HME companies must follow.
Under the Medicare anti-kickback statute (42 U.S.C. § 1320a-7b), it is a felony for a provider to knowingly or willfully offer or pay any remuneration to induce a person to refer a person for the furnishing or arranging for the furnishing of any item for which payment may be made under a federal health care program, or the purchase or lease or the recommendation of the purchase or lease of any item for which payment may be made under a federal health care program.
The beneficiary inducement statute (42 U.S.C. § 1320a-7a (a)), imposes civil monetary penalties upon a provider that offers or gives remuneration to any Medicare beneficiary that the offeror knows, or should know, is likely to influence the recipient to order an item for which payment may be made under a federal or state health care program. This statute does not prohibit the giving of incentives that are of “nominal value.” The OIG defines nominal value as no more than $10.00 per item or $50.00 in the aggregate to any one beneficiary on an annual basis. Nominal value is based on the retail purchase price of the item.
Under the telephone solicitation statute (42 U.S.C. § 1395m(a)(17)), a DME supplier may not contact a Medicare beneficiary by telephone regarding the furnishing of a covered item unless: 1) the beneficiary has given written permission for the contact; 2) a supplier has previously provided the covered item to the beneficiary and the supplier is contacting the beneficiary regarding the covered item, or; 3) if the telephone contact is regarding the furnishing of the covered item other than an item already furnished to the beneficiary, the supplier has furnished at least one covered item to the beneficiary during the preceding 15 months.
The Stark physician self-referral statute (42 U.S.C. § 1395nn)) provides that if a physician has a financial relationship with an entity providing designated health services (“DHS”), then the physician may not refer patients to the entity unless one of the statutory or regulatory exceptions applies. Designated health services include: 1) durable medical equipment; 2) parenteral and enteral nutrients; 3) prosthetics, orthotics and prosthetic devices and supplies, and; 4) outpatient prescription drugs, among others.