Referral Payments Targeted in New Special Fraud Alert

A Special Fraud Alert has been issued by the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG), warning that certain marketing arrangements relating to Medicare Advantage beneficiary referrals could potentially result in “abusive arrangements.” Jon Zucker explains.

U.S. government agencies — including HHS-OIG — have shown an increased interest in Medicare Advantage plan activity and provider marketing arrangements. We have seen a growing wave of government enforcement activity under the False Claims Act involving the Medicare Advantage industry, in particular, relating to arrangements involving payment for referrals of Medicare Advantage beneficiaries.

Special Fraud Alerts are rarely issued by HHS-OIG, so publication of this alert last month [December] indicates a particularly heightened enforcement risk around payments for Medicare Advantage referrals. The alert focuses on two types of suspect arrangements which the HSS-OIG has identified through its enforcement activity.

The first involves payments by Medicare Advantage Organizations (MAOs) to healthcare professionals (HCPs) or their staff — for example, “gift cards or in-kind payments” — in exchange for referrals of patients to the MAOs’ plans. HHS-OIG warned that MAOs could potentially be using such payments to selectively target enrollees.

The second type of suspect arrangement identified by the Special Fraud Alert involves payments from an HCP — either an individual physician or a physician group — to Medicare Advantage plan agents and brokers. Such payments might potentially be made in exchange for referring Medicare Advantage enrollees to the HCP, in most cases, to serve as the enrollees’ primary care physician. However, notably absent from the Special Fraud Alert was any reference to referral payments directly from MAOs to agents and brokers, probably because such payments are specifically authorized, in at least certain forms, by regulation from the Centers for Medicare & Medicaid (CMS) services.

In relation to enrollees, HHS-OIG states that agents and brokers are in a “position of trust” with respect to Medicare beneficiaries and that the HHS-OIG fears that such arrangements could provide them with the opportunity to act based on financial incentives rather than on the identification of the proper Medicare Advantage plan.  HHS-OIG further clarifies that although HCPs may engage in “limited” marketing on behalf of an MAO, CMS regulations prohibit HCPs from accepting compensation from MAOs for such activities.

MAOs, HCPs, and agents and brokers that operate in the Medicare Advantage space should therefore consider reviewing their arrangements, keeping in mind the following five suspect arrangements characteristics identified by the HHS-OIG:

  1. Remuneration for Referrals. Offering or paying remuneration (including bonuses or gift cards) in exchange for referring or recommending patients to a particular MAO or Medicare Advantage plan.
  2. Remuneration Disguised as Legitimate Payments. Offering or paying remuneration which is disguised as payment for legitimate services but which  is actually intended to be payment for referrals to a particular Medicare Advantage plan.
  3. Remuneration for Patient Information. Offering or paying remuneration in exchange for sharing patient information that may be used by MAOs to market to potential enrollees.
  4. Remuneration Based on Patient Status. Offering or paying remuneration that varies based on the demographics or health status of individuals enrolled in or referred for enrollment in a Medicare Advantage plan.
  5. Remuneration Based on Volume or Value of Referrals. Offering or paying remuneration that varies based on the number of individuals referred for enrollment in a Medicare Advantage plan.

 

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.