Examining the board’s intention in the light of applicable federal regulations relating to kickbacks and safe harbor regulations, the board of directors intention for the proposed joint venture agreement was to seek patients’ referral. If this is the case, or if it violates any statute or laws governing the Medicare and hospital practice, I will not push the joint venture agreement
One of the statutes dealing with kickbacks is the Medicare Anti-Kickback Statute. Under this statute, giving a referring physician a gift with the intention to encourage the physician to refer more patient to the hospital is a criminal offense and liable for criminal prosecution. Statute 42 U.S.C. &$167; 1320a-7b states that it is unlawful to consciously and willfully solicit or receive anything of value in cash or in kind as a reward for referring any person for which payment will be made.
Based on this statute, the instruction of the board of directors to offer privileges to the physician owners as well as monthly bonuses arrangements is illegal and a criminal act. Wolper (2004) pointed out that the goal behind this statute “is to eliminate the prospect of financial inducements as a factor in the referral of patients and the ordering of goods or services paid for, in whole or in part, by federal health programs” (p. 110).
Another law governing anti-kickback and Medicare regulations is The Self-Referral Act or the Stark Law which, like the Medicare Anti-Kickback Statue, its objective is to criminalize receiving any gift in cash or in kind in return for referring a patient to the hospital.
2. Using the applicable statutes, the Feldstein case and other relevant cases from your individual research discuss the proposed scenario
Based on the applicable statutes, the Feldstein case and other relevant cases, it is quite clear to me that what the board of directors wanted me to do will soon lead to seeking patient referrals from these physicians to recover its expenses for such incentives, to sustain it, and to gain some profits from it. Apparently, the intention of the board of directors is to share with the Central Park Medical Group’s patient population consisting mostly of Medicare patients. While the board did not categorically directed me to seduce the physician owners to agree on a joint venture agreement, the message was clear, make sure they sign a joint venture agreement at all cost.
The underlying motive behind this transaction is to lure these physicians to refer Medicare patients to Sundown Community Hospital. This is exactly against anti-Kickback statute and other applicable laws because the board of directors has consciously and willfully intended the joint venture agreement for this sole purpose of seeking referrals. Under these applicable laws, this kind of transaction is illegal and liable for criminal prosecution.
Recommendations in light of the applicable statutory and case law
In the light of statutory law such as the Medicare anti-Kickback law, the Feldstein case, the Stark law, and other applicable laws, I recommend to the board of directors of the Sundown Community Hospital to make a clear proposal to the Central Park Medical Group regarding their intention to have a joint venture agreement.
The bonuses and incentives offered by the board will become legitimate especially if the provisions of the Feldstein case and other statutory law dealing with kickbacks such as whether the employees who will be receiving such bonuses are bona fide and regular employees, are fully satisfied. Clear business proposal will surely avoid any conflict with the existing applicable laws. Included in this proposal is to create well structured financial arrangements that will satisfy the requirements of safe-harbor regulations to avoid prosecution by the DOJ.
Wolper, L.F. (2004) Health Care Administration USA: Jones & Bartlett Publisher