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Kendall Kickbacks & Stark Billing Lawyers

Kendall Kickbacks & Stark Billing Lawyers: An In-Depth Look

Physician self-referral, also known as self-dealing or Stark Law violations, occur when doctors refer patients to other healthcare providers in which they have a financial interest. This is problematic because it incentivizes physicians to order unnecessary tests and procedures from entities in which they have a stake, driving up healthcare costs. The federal physician self-referral law, known as the Stark Law, prohibits doctors from referring Medicare patients for certain designated health services to entities with which the physician or an immediate family member has a financial relationship. But navigating Stark Law compliance can be tricky for physicians and healthcare entities. That’s where experienced Stark billing lawyers can help.

What are Kendall Kickbacks?

Kendall kickbacks refer to a type of Medicare fraud scheme involving violations of the federal Anti-Kickback Statute. This law prohibits offering, paying, soliciting, or receiving anything of value in exchange for referrals of federal healthcare program business. Kendall kickbacks got their name from a case involving payments from a Florida hospital to doctors with large practices in exchange for patient referrals.

In these schemes, hospitals or other providers essentially pay kickbacks to physicians in exchange for sending Medicare patients their way. The term “Kendall” kickback is now used to describe any arrangement where providers pay for referrals, which violates the Anti-Kickback Statute.

How Kendall Kickbacks Intersect with Stark Law

There is considerable overlap between Kendall kickbacks and Stark Law violations. In both situations, physicians are receiving compensation in exchange for patient referrals to healthcare providers in which they have a financial interest. The key difference is that the Anti-Kickback Statute prohibits any remuneration for referrals, while the Stark Law focuses specifically on referrals of Medicare patients for designated health services to entities with which the physician has a financial relationship.

Some key features of how these two laws intersect:

• Kendall kickbacks are considered a form of Medicare fraud through violation of the Anti-Kickback Statute. Stark Law violations focus specifically on self-referrals.
• The Stark Law includes exceptions for things like employment relationships and personal services that the Anti-Kickback Statute does not.
• Violations of either law can result in serious penalties including repayment of claims, fines, and exclusion from federal healthcare programs.
• Arrangements that implicate both laws are subject to scrutiny under both statutes.

So while Kendall kickbacks and Stark Law violations have some differences, they both address the core issue of improper financial incentives driving referrals in healthcare.

Common Stark Law Violation Red Flags

There are a number of common red flags that can indicate a physician practice or healthcare entity may be violating the Stark Law:

• Percentage-based compensation arrangements – Agreements where the physician is paid based on the percentage of revenue they generate through referrals are inherently problematic under Stark.
• Profit-sharing agreements – When physicians share in the profits of a healthcare entity to which they make referrals, it likely implicates the Stark Law.
• Productivity bonuses – Bonus compensation tied directly to the physician’s referrals likely violates Stark.
• Unfair market value arrangements – Compensation that exceeds fair market value for items or services can be a red flag for unlawful incentives.
• Under arrangements – Referrals made “under arrangements” between physicians and entities with which they have financial ties are subject to scrutiny.
• Lack of signed written agreements – Formal contracts help prove arrangements are not intended to induce referrals.
• No Stark Law exception – Self-referral arrangements should fit squarely within a regulatory exception, which must be documented.

Navigating Stark Law Exceptions

The Stark Law does contain various exceptions that can protect certain physician self-referral arrangements. But the exceptions are complex and highly technical. Some key exceptions include:

• Bona fide employment relationships – Physicians may refer to their employer so long as the employment is for identifiable services and meets fair market value standards.
• Personal services arrangements – Physicians providing certain designated health services to an entity may refer there if requirements like fair market value compensation are met.
• Physician recruitment – Hospitals may provide assistance to recruit a physician so long as the remuneration does not violate the Anti-Kickback Statute.
• Isolated transactions – Certain one-time sales or leases of property may qualify as an exception.
• Ownership or investment interests – Referrals may be permitted if the physician’s ownership or investment interest fully complies with the exception.
• Group practice arrangements – Physicians in the same group practice may refer to one another so long as compensation is not tied to referrals.

The key is ensuring arrangements fully comply with an exception’s requirements, which is where an experienced healthcare attorney can help.

Significance of Stark Billing Audits

Stark billing audits by Medicare contractors play a huge role in enforcing the Stark Law. These audits aim to identify and recoup improper payments where providers violated the Stark Law’s referral prohibitions. Physician practices and healthcare entities are required to fully refund any Medicare claims paid in connection with an unlawful self-referral.

Stark audits typically involve a review of:

• Ownership and compensation arrangements between physicians and entities
• Documentation of fair market value and commercial reasonableness
• Consistency of actual compensation with written agreements
• Evidence of signed written agreements outlining compensation methodology
• Attestations from parties regarding compliance with Stark
• Materials related to any relevant Stark Law exceptions

Surviving a Stark billing audit requires having your ducks in a row in terms of thorough, accurate documentation showing compliance. This is another area where healthcare lawyers can help Stark-sensitive entities proactively prepare.

Using Stark Billing Lawyers to Mitigate Risk

For physicians and healthcare entities concerned about Stark Law compliance, consulting with experienced Stark billing lawyers is crucial for mitigating risk. Here are some key reasons to engage legal counsel:

• Reviewing financial arrangements – Lawyers help structure agreements to comply with Stark and document proper fair market value compensation.
• Assessing applicability of exceptions – Counsel can analyze arrangements to determine whether a Stark Law exception applies.
• Creating compliance plans – Lawyers work to develop comprehensive Stark compliance programs tailored to the entity’s operations.
• Conducting internal audits – Attorneys can perform mock audits to identify and remedy potential areas of noncompliance.
• Guiding disclosure – If a violation occurs, lawyers manage the process of self-disclosure to the government to try to minimize penalties.
• Defending audits – During actual Stark billing audits and investigations, lawyers advocate for the entity and negotiate with regulators.
• Appealing overpayment determinations – Counsel can appeal unfavorable audit findings that result in repayment demands.

Having an experienced Stark billing attorney helps healthcare entities avoid noncompliance pitfalls and vigorously defend their interests if issues arise.

Stark Law Violations Can Carry Serious Penalties

The consequences of running afoul of the Stark Law’s complex requirements can be severe. Potential penalties for Stark Law violations include:

• Treble damages – Providers may face having to repay Medicare up to three times the amount of any improper claims.
• Civil monetary penalties – Fines of up to $25,000 per improper claim submitted can be assessed.
• False Claims Act liability – If intent to violate Stark can be shown, penalties can be even higher under the FCA.
• Payment suspension – Medicare payments may be suspended pending investigation of credible Stark violation allegations.
• Program exclusion – Doctors or entities can be temporarily or permanently barred from treating Medicare patients.
• Loss of reimbursement – Even if a referral relationship is permissible, failing to document it properly can lead to nonpayment.

Given the potentially enormous financial consequences and damage to business operations, it is critical for healthcare entities to ensure Stark Law compliance at every turn.

Best Practices for Stark Law Compliance

Here are some best practices physicians and healthcare entities should follow to help maintain Stark Law compliance:

• Carefully structure compensation – Base pay on fair market value, not percentage of revenue or referrals. Avoid productivity bonuses.
• Review agreements annually – Have counsel examine compensation arrangements yearly to catch any compliance issues.
• Document fair market value – Obtain independent valuations to substantiate compensation represents FMV.
• Sign formal contracts – Maintain signed writings clearly outlining terms of financial relationships.
• Verify Stark exception applicability – With counsel review financial ties to ensure a Stark exception legitimately applies.
• Perform regular internal audits – Conduct self-audits to identify and correct areas of concern proactively.
• Implement a Stark compliance program – Have a formal program with designated staff responsible for oversight.
• Train physicians and staff regularly – Educate all parties on requirements and get signed attestations.
• Disclose fully to CMS – If issues arise, use counsel to disclose to CMS transparently to show good faith.

With sound legal guidance and continuing vigilance, physicians and healthcare entities can reduce risk and demonstrate Stark Law compliance.

The Bottom Line

While the Stark Law’s prohibitions on physician self-referral are complex, the underlying goal is simple – to remove financial incentives from medical decision-making. Physicians should not profit from referrals, which can influence them to order unnecessary services. By being aware of common Stark Law violations like Kendall kickbacks and working closely with experienced healthcare lawyers, providers can help avoid running afoul of this strict liability statute. With robust compliance efforts and legal counsel’s assistance defending audits, healthcare entities can mitigate their Stark Law risks.