The Anti-Kickback statute forbids a doctor from receiving payment in return for making referrals. A recent Seventh Circuit case interpreting the law focused entirely on the definition of the term “referral,” and the ruling may have important consequences going forward. The Court held that a doctor makes a “referral” to a home health care provider when that doctor “certifies” or “recertifies” that the patient needs home health services, even where the doctor plays no role in the patient’s selection of the provider.
Background
Dr. Kamal Patel is a Chicago internal medicine specialist who, during the period in question, treated about twenty elderly patients per day, and prescribed home health care services to about ten patients per month. One of the approximately 10-20 home health care providers used by Patel’s patients was a place called Grand Home Health Care, Inc. The opinion states that Grand was losing physician referral business to competing companies and began offering to pay doctors for referrals of Medicare patients.
Maria Buendia and Nixon Encinares, the owners of Grand, were charged with providing more than a million dollars in cash kickbacks to doctors and nurses. Buendia and Encinares agreed to help the government bring their case against alleged kickback recipients, including Patel. In September 2011, the Department of Justice indicted Patel along with several others for participating in the kickback scheme. They charged that “from in or about May 2006 through in or about February 2011, defendants ENCINARES and BUENDIA paid defendant PATEL at least approximately $28,500 in cash kickbacks in exchange for the referral of Medicare-eligible patients to Grand.”
Certifications = Referrals
During his initial trial, Patel argued that he had not “referred” any patients to Grand because the patients independently chose Grand as their provider after Patel prescribed home health care. The district court rejected this argument, and Patel appealed to the Seventh Circuit.
The Circuit Court again analyzed what it means for a physician to “refer” patients in detail.
When Dr. Patel recommended home care, he did not discuss with his patients which providers to use. Rather, a member of his staff provided the patient with 10-20 home health care company brochures, and the patient independently chose one of those providers. Dr. Patel then “certified” the patient for 60 days of home care – and “recertified” if longer care was needed – by signing a Form 485, Medicare’s form that certifies that care is medically necessary and outlines a patient’s treatment plans.
Form 485, in pertinent part:
If a patient selected Grand as his or her home care provider, Grand would send a nurse to assess the patient, and fill out most of Form CMS-485. Grand’s co-owner Encinares met with Patel on a monthly basis to have him sign the forms. During these meetings, Encinares would pay Dr. Patel $400 in cash per certification and $300 per recertification. Buendia kept track of Patel’s patients and the company’s total payments to Patel. The Court noted that on at least one occasion, Patel indicated that “he was not ready to sign the forms for patients who selected Grand until Encinares was able to bring cash along with the forms.”
The government contended that by signing Form CMS-485, Dr. Patel effectively referred patients within the meaning of the Anti-Kickback statute. Patel, however, argued that to “refer” means to identify and recommend a patient use a particular provider.
Patel’s definition of refer is what one imagines when they think of a “traditional” kickback arrangement. The court decided to take a more expansive view, though, stating that “it does not matter who first identifies the care provider; what matters is whether the doctor facilitates or authorizes that choice.” The Court likened Patel to a “gatekeeper,” where “without his approval, the patient could not receive treatment from the provider the patient had selected.”
The Court concluded that “[e]xercising this gatekeeping role is one way that doctors refer their patients to a specific provider” and “[w]ithout [Patel’s] permission, his patients’ independent choices were meaningless.”
Patel also set forth an interesting argument:
Patel argues that, even if he “referred” his patients to Grand when he signed their Form 485s, there was insufficient evidence to demonstrate that he received money from Grand in return for signing those forms, as required by the statute. Rather, Patel argues, Grand paid Patel to induce him to recommend to his patients that they choose Grand as their home health care provider. In other words, Patel says that he was paid for one type of referral (a recommendation), but gave Grand an entirely different type (a certification); he thus was not paid “in return for” the referral he actually gave.
The court didn’t buy that argument, stating:
Even accepting Patel’s premise that the government had to prove he was paid specifically for his signatures, there was sufficient evidence such that a reasonable factfinder could conclude that Grand paid him for that reason. The payments were literally exchanged for these signatures and the payment amount was calculated based on the number and type of Patel’s authorizations.
“[T]he fact Patel was paid for recertifications—in addition to initial certifications—strongly suggests that Grand was paying him for his signatures, not for patient recommendations. If Grand wanted to pay Patel for recommendations, why pay him for both certifications and recertifications?
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This case makes clear that any certification or recertification of care for a Medicare patient is a “referral,” under the Anti-Kickback statute.
Despite the court’s insistence that Patel’s actions would clearly be covered under the statute, there is no denying this “kickback transaction” was much more attenuated than you generally see in government settlements–perhaps why this one went to trial and was then appealed. Based on the facts, it seems almost like happenstance as to when a patient would choose Grand as opposed to another home health care provider. Only once the patient voluntarily chose that specific provider (which, by chance, paid Patel a few hundred dollars each time), would Patel be in a position to certify them for care.
The court does raise a good point though:
“[C]onsider a patient who goes to his physician seeking authorization to visit a certain provider. If that physician will receive a kickback for a certification to that provider, he will have an incentive to certify the patient even if he thinks that the care is unnecessary or believes that the patient-chosen provider is substandard.”
Avoiding such a situation seems to follow the spirit of the Anti-Kickback statute. Going forward, the Court’s decision underscores the importance of evaluating arrangements where a physician is in any way a “gatekeeper” to a patient’s receiving health care services.