• Elizabeth Hogue, Esq

Marketers Must Be Employees

The Office of Inspector General (OIG) for the U.S. Department of Health and Human Services, the primary enforcer of fraud and abuse prohibitions, recently issued two press releases that once again call into question common practices in the home care industry. These press releases relate to payment of incentive compensation, which is standard practice in the home care, private duty, home medical equipment (HME) and hospice industries.

The federal statute prohibiting illegal remuneration seems to permit payment of incentive compensation to employees. Specifically, the statute states, in part, as follows:

(1) Whoever knowingly and willfully solicits or receives any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind—

(A)in return for referring an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under this subchapter, or

(B)in return for purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing or ordering any good, facility, service, or item for which payment may be made in whole or in part under this subchapter,

shall be guilty of a felony and upon conviction thereof, shall be fined not more than $25,000 or imprisoned for not more than five years, or both.

(2) Whoever knowingly and willfully offers or pays any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind to any person to induce such person

  1. to refer an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under this subchapter, or

  2. to purchase, lease, order, or arrange for or recommend purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under this subchapter,

shall be guilty of a felony and upon conviction thereof, shall be fined not more than $25,000 or imprisoned for not more than five years, or both.

There are, however, several exceptions included in the illegal remuneration statute, including the following:

(3) Paragraphs (1) and (2) shall not apply to—

….(B) any amount paid by an employer to an employee (who has a bona fide employment relationship with such employer) for employment in the provision of covered items or services…

Consequently, it seems clear that, as long members of the staff are bona fide employees, providers may pay incentive compensation without violating applicable prohibitions regarding payment for referrals.

In addition, on July 29, 1991, the Office of the Inspector General (OIG) of the U.S. Department of Health and Human Services published exceptions to the kickback and rebate statute in the form of safe harbors. These exceptions or safe harbors include the following:

…(i) Employees. As used in section 1128B of the Act, “remuneration” does not include any amount paid by an employer to an employee, who has a bona fide employment relationship with the employer, for employment in the furnishing of any item or service for which payment may be made in whole or in part under Medicare or a State health care program…

On August 28, 2015, however, the OIG issued a press release regarding enforcement action against owners and nurses of a home health agency located in Chicago. The press release indicates that enforcement action against the agency and its owners was based, in part, on payment of “kickbacks to employees” in exchange for referring patients to the agency. The OIG goes on to state that four “employees” of the agency and the owners were charged with “conspiracy to pay and receive healthcare kickbacks.” Based upon the information above, however, how can payments to bona fide “employees” be characterized as kickbacks?

Then on August 31, 2015, the OIG issued a press release involving a guilty plea from a Texas marketer who was “employed” by several home health agencies. As long as the marketer was a bona fide employee of the agencies, how can payments to the marketer be characterized as kickbacks?

In the first press release referenced above, the OIG says that many of the beneficiaries referred by employees were not qualified for home health services and some never received care. In the second press release, the OIG says that the patients referred did not need or qualify for home health services.

In light of the above, providers may conclude that the exception for amounts paid to bona fide employees described above does not apply to patients who do not meet applicable criteria of the Medicare Program. Clarification is certainly needed regarding this issue. Stay tuned!

Elizabeth E. Hogue, Esq.

Office: 877-871-4062

Fax: 877-871-9739

E-mail: ElizabethHogue@ElizabethHogue.net

Twitter: @HogueHomecare

Copyright, 2019.

Elizabeth E. Hogue, Esq.

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