The OIG on Medical Director Payments

The Office of the Inspector General recently issued a fraud alert regarding physician relationships with providers.  In case you don’t know any criminals, the Office of the Inspector General (OIG) is that government agency which prosecutes Medicare fraud and abuse and a lot of other things.  They are the ones who dispatch the FBI and other investigative agencies to catch bad guys.  It is never a good idea to get on the bad side of the OIG.

Now that everyone understands that it is foolhardy and dangerous to mess with the OIG, perhaps the recent warning regarding physician relationships, found here, will be of interest to you.

The essence of the alert is that you can only pay medical directors ‘fair market value’ for work they actually do for your agency.  You cannot simply agree to pay a doctor a flat sum each month to be your medical director.  The physician must work for the money and payment must be reasonable for the work done.  Fair market value differs for each community and a healthcare accountant might be a good place to start when determining the fair market value for your area.   Hint:  Most doctors do not make $1,250.00 per hour and two hours of work over lunch does not satisfy a Medical Director’s contractual responsibilities towards the agency.

The alert goes on to say that an agreement may violate the anti-kickback statute if ‘even one purpose of the arrangement is to compensate a physician for his or her past or future referrals’.  That’s right, folks.  You heard it here, first.  Any and all medical director agreements are to be entered into regardless of where the physician sends his patients.   It does not prohibit a physician from sending patients to an agency where he or she serves as a Medical Director but no part of the agreement should be contingent upon referrals.

There’s more!  The OIG is very clear that they have recently reached settlements with 12 physicians who entered into questionable agreements.  This works for me.  We have had over a million phone calls from clients and other agencies complaining because their physicians just don’t get why they have to do things as medical directors.  These phone calls usually are an attempt to get us to contradict what their lawyers have told them about entrance fees for golf tournaments or the new hunting rifle given as a Christmas present.  We never do.

There have been recent cases where jury convictions have been based upon ‘sham’ agreements where the list of services listed in a contract for a Medical Director were never really performed nor did the provider expect them to be performed.  Employees have been placed on the stand and asked about the frequency in which the medical directors were seen at a nursing home.

The Executive Director of a home health agency in Lexington, KY agreed to pay $1,000,000.00 back to Medicare for an ongoing fraud case involving kickbacks.  Note that the Executive Director is paying back the money – the case against the agency is ongoing.

The kickbacks in the Kentucky case are not what you might imagine.  The agency was a corporate sponsor of Kentucky football and physicians were given tickets to Kentucky football games.  Some were given bottles of tequila, as well, and tickets to see Journey play in concert.  This is not the type of financial exchange that many of us associate with ‘bribes’ and ‘kickbacks’.    In the South, football tickets tend to be a currency of their own.

Now would be a good time to have all of your contracts reviewed by a healthcare lawyer.  We can certainly recite the contents of the OIG fraud alert and news articles but we are not qualified to answer questions regarding nuances of the law and your specific contracts.   There are varying degrees of cost in these gifts and the specific conditions upon which a gift was given matters.

If you are too cheap to get your contracts reviewed by a qualified lawyer who specializes in healthcare, a good rule of thumb is to give nothing at all.  We cannot support any exchange of cash or kind without a healthcare lawyer blessing your contracts.  We have worked with several and will be glad to give you a name upon request.

Please remember that your cash will be cut off before you actually go to jail or write 7 figure checks.  As such, your coders and consultants will not be paid.   That’s completely unacceptable.

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