A word to the wise should be sufficient.

In recent weeks, the Office of the Inspector General has released a fraud alert on physician compensation arrangements and updated guidance for healthcare governing boards.

Michelle B. Marsh, partner at nationally ranked healthcare firm Waller Lansden Dortch & Davis, said all such communiqués from the OIG deserve special attention. Marsh, who is the practice leader for Waller’s Healthcare Compliance & Operations group, said the June 9 alert reiterated the need to make sure physicians are being paid only for work they are actually doing and at a rate that reflects fair market value.

Red flags, Marsh noted, include “paying physicians as medical directors when they didn’t really provide the services, or when services weren’t necessary, or where payment was not related to the value of their services but to the volume of referrals.”

She continued, “Not that this is breaking news … these arrangements were always wrong.” However, Marsh added, the difference is that the OIG has previously appeared to focus most of their attention on the non-physician partner in these cases. It hasn’t been unusual, for example, for a lab company incorrectly paying a physician to be the target of an OIG fraud investigation. This latest alert highlights the agency’s willingness also to go after the physician.

“Physicians should keep in mind it’s a violation of anti-kickback laws to receive a payment for referrals, as well as to make a payment for referrals, so it’s both the payer and the recipient,” Marsh said. “Both sides of a transaction subject to kickback scrutiny are at risk … not just one side. The alert shows nobody is getting a free pass.”

Inappropriate arrangements extend past the major red flags, Marsh added, of other, more subtle infractions. The June alert noted the agency “recently reached settlements with 12 individual physicians who entered into questionable medical directorship and office staff arrangements.”

Continuing with the example of a physician-lab agreement, Marsh said it is perfectly appropriate for the lab company to have someone at a physician office to draw or pick up samples. However, that lab employee cannot answer phones at the practice or provide general office work at no charge to the physician. When an affiliated healthcare entity pays salaries for the physician’s front office staff, the OIG said it relieves that physician of the financial burden they would normally incur and therefore constitutes improper remuneration to the physician.

If deemed guilty of committing fraud, both the physician and affiliated health entity are subject to possible civil, criminal and administrative sanctions. However, Marsh added, “The other thing the OIG highlighted in that fraud alert is the resources the OIG and others are making available to help with compliance.”

Marsh said the OIG does a good job of providing compliance education on this and other issues through their site at oig.hhs.gov. Specific to this issue, the fraud alert directed physicians to their “Compliance Program Guidance for Individual and Small Group Physician Practices,” which is available at oig.hhs.gov/authorities/docs/physician.pdf.

Finally, Marsh underscored the need to document actions in any type of compensation arrangement. A physician and partner could be found guilty of fraud despite appropriate compensation if actions performed were not supported by written data. “The rule in healthcare is if it wasn’t documented, it wasn’t done,” stated Marsh. “It’s important to accurately document any arrangement and then act in accordance. You can appear to be crossing the line if you don’t document … even if the services were provided.”

The OIG released another piece of news earlier this spring providing updated guidance for healthcare governing boards on compliance oversight.

“If you’re accepting a board position, we would certainly recommend you look at this guidance and that you are comfortable with all the responsibilities,” Marsh said of her firm’s advice.

It’s a mistake, she explained, to think of a board appointment as an honorary title rather than as an executive leadership position. “In particular,” she continued of the guidance document, “it discusses the expectations that the board be involved in identifying and monitoring risk areas and that the board is expected to pull together many different functions within the organization including quality, compliance, audits, legal and human resources.

“It’s clear the OIG’s expectations for the board is that it is responsible for making sure all the pieces come together and that the compliance program, as a whole, addresses those risk areas at an appropriate level for the organization. Ultimately, the compliance of the organization all rolls up to the board,” Marsh concluded.

RELATED LINKS:

OIG Roadmap for avoiding Medicare & Medicaid fraud and abuse: http://oig.hhs.gov/compliance/physician-education/roadmap_web_version.pdf

June 9 Physician Compensation Fraud Alert: https://oig.hhs.gov/compliance/alerts/guidance/Fraud_Alert_Physician_Compensation_06092015.pdf

Practical Guide for Health Care Governing Boards on Compliance Oversight: https://oig.hhs.gov/compliance/compliance-guidance/compliance-resource-material.asp