Safe harbors are regulations that protect people or businesses from legal problems that could result from their actions, provided they meet certain conditions.
For optometry, safe harbor first referred to protection from legal action that could result from surgical comanagement issues.
However, this form of safe harbor no longer exists. Many believe its demise began in 1992 when Medicare implemented a global fee for cataract surgery. This amendment led the Office of the Inspector General (OIG) to remove the safe harbor on comanagement in November 1999.
Safe harbors are really geared towards areas that show that no fee-splitting is taking place, says attorney Lance Plunkett, counsel for the AOA. When Medicare implemented that global fee, the OIG was faced with a real dilemma because a global fee is inherently fee-splitting.
As a result, the federal organization decided to look at comanagement on a case-by-case basis.
Also, the OIG established eight fraud and abuse safe harbors. These include rules for avoiding problems under the federal Anti-Kickback Statute, which are particularly relevant to eye care.
As part of Review of Optometrys 10th Annual Comanagement Report, we will examine these rules below.
Surgical Comanagement
In February 2000, the American Academy of Ophthalmology (AAO) and the American Society of Cataract and Refractive Surgery (ASCRS) released a joint position paper that denounced surgical comanagement except when the surgeon is not available or when the patient cant visit the surgeon due to distance or illness.
The OIGs decision to remove cataract comanagement from safe harbor protection was the impetus for the AAO/ASCRS position paper.
In cases in which comanagement is necessary, the AAO and ASCRS state that:1
Fees must be set at a fair market value for the service rendered.
There should be no policy of routine comanagement.
Access should be provided to the surgeon during the postoperative period.
The patient should be informed of the financial implications of the
comanagement arrangement.
The surgeon should obtain informed written consent from the patient regarding prearranged post-operative management plans.
Care should only be transferred when clinically appropriate and in the best interest of the patient.
The surgeon should obtain confirmation that the comanaging practitioner is qualified both legally and professionally.
Forging Relationships
Although blanket surgical comanagement is no longer within safe harbor, you can still ethically and legally forge relationships with other doctors and practices. Thats where the OIGs anti-kickback safe harbors come in.
The anti-kickback provisions relate to federal medical programs, such as Medicare for example, and encompass safe harbors on: publicly traded securities, space rental, equipment rental, personal services and management contracts, sales of physician practices, physician recruitment, employees, physician investments in their own practices, in-office ancillary services, managed care arrangements and ambulatory surgical centers.2,3
All of the safe harbors are predicated, from a policy perspective, on the assumption that all of the parties to the contractual relationship are taking financial risk by agreeing to fix the financial terms for 12-month periods, says Jim Petsche, J.D., of the law firm Cooper Levenson, of Cherry Hill and Atlantic City, N.J. Because of the financial risk taken by the parties, the OIG affords the contractual relationship the protection of a safe harbor, he says.
Here, we will examine the three anti-kickback provisions that are the most common to optometry.
Because of an increased demand for refractive surgery and other ophthalmic procedures, several optometrists have opted to rent office space to ophthalmologists. Other optometrists practice in small and rural towns in which there is no ophthalmologist, so an ophthalmologist travels once or twice a month to the optometrists practice to see patients, says attorney Dana Holtz, of the law firm Wade, Goldstein, Landau and Abruzzo in Berwyn, Pa.
In order to rent space to an ophthalmologist (or other doctor) both legally and ethically, you must meet the following six OIG standards:2,3
The lease must be in writing.
The lease must specify the premises covered by the lease. It must cover all the premises leased between the parties for the term of the lease.
Terms for any periodic intervals (time spent at the practice that is not a full-time arrangement) must be specified. This means, for instance, that if the renting physician is going to be at your practice three times a week instead of full-time, you must specify both the days and hours she is going to be there.
The term of the lease may not be less than one year. The lease may follow for cause termination before the year is up but must prohibit renegotiation for the one-year term.
Rent must be set in advance and must be consistent with the fair market value of the office space, not tied to referrals.
Lets say that the fair market cost of the space being rented is $1,000, but the surgeon pays the O.D. $5,000, which is based on 20 cataract patients that the optometrist referred to him, says optometrist Christopher J. Quinn, of Iselin, N.J. That would be deemed a kickback or fee-splitting, and that is illegal.
| Rent must be set in advance and must be consistent with the fair market value of the office space, not tied to referrals. |
The space must not exceed that which is reasonable and necessary to accomplish the commercially reasonable business purpose of the rental.
If the ophthalmologist rents 1,000 square feet, but only needs one exam room, then even if the ophthalmologist pays fair market value for the lease of 1,000 square feet, the payment could still be construed as a kickback because the ophthalmologist only needs to lease the one exam room, Ms. Holtz explains.
The OIG issued a Special Fraud Alert in February 2000 that offers guidelines for establishing space rental arrangements that fit within safe harbor regulations and for determining market value, she adds.
But how do you determine fair market value? Consider having an appraisal or valuation performed. Depending on the circumstances, financial terms that are less than or more than fair market value may become a regulatory issue, Mr. Petsche says. Should the OIG ever scrutinize a contractual relationship, an independent third-party assessment can show that the financial terms of the relationship were negotiated at arms length and the financial payment is fair market value for the services rendered.
Investments in Facilities
Physicians can receive returns on investments in single-specialty ambulatory surgical centers (ASCs), multi-specialty ASCs, physician/hospital-owned ASCs and sur- geon-owned ASCs as long as these standards are met: 2,3
Medicare must certify that the facility is an ASC.
The ASC must not provide loans to the investor for the purpose of investing.
The volume or value of referrals cannot be used for investment interest.
All ancillary services must be directly and integrally related to the primary procedures performed at the ASC. None of these primary procedures can be separately billed to Medicare or other federal health-care programs.
The physicians practicing at the ASC and the ASC itself cannot discriminate against beneficiaries of federal health care programs.
Furthermore, the OIG requires that the investor meet one of these standards:2,3
He or she must not provide items or services to the ASC or its other investors, cannot be employed by the ASC or any investor, and cannot be in a position to refer patients to the ASC or any of its other investors.
He or she must be a physician who can refer patients directly to the ASC and perform procedures on those patients.
He or she must be in a group practice that meets the requirements of the group practice safe harbor. The group practice must be entirely made up of physicians who can refer patients directly to the ASC and perform procedures on those patients.
An optometrist, who is in a position to refer, cannot have any investment interest in a Medicare-certified ASC and still meet the safe harbor. But, what if there are no Medicare payments to that facility? This is where many O.D.s can get into trouble.
Many O.D.s believe that as long as Medicare is not involved, they can structure their relationships with ophthalmologists any way they wish. However, that is not necessarily true, Ms. Holtz says. If an O.D. has an investment interest in a facility in which there is no Medicare, but also refers Medicare patients to ophthalmologists who are co-investors in such facility, then the investment interest could be construed as a kickback for the referral of the Medicare patients.
Even if there is no Medicare involvement, the arrangement may violate state law. Many states have civil or criminal prohibitions against kickbacks, Ms. Holtz says.
The most common means by which states prohibit or regulate kickbacks is through provider-specific prohibitions; that is, prohibiting payment from or to a health-care provider in exchange for or to induce referrals. Many of these prohibitions can be found in states licensing statutes, often under the definition of unprofessional conduct.
The OIG issued an advisory opinion about the profit distribution when an ASC is owned by a group practice. If an optometrist is part of a multi-specialty practice that has an ownership interest in an ASC, that practice must be very careful about how it distributes the profits from the ASC.
In essence, the OIG has taken the position that profits should not be distributed within a group practice to individuals who do not perform cases at the ambulatory surgery center but refer patients to those who do, says Mr. Petsche.
Personal Services and Management Contracts
This anti-kickback safe harbor allows doctors to pay contractorsfor example, you bring another doctor into your practice to provide ancillary servicesas long as the contractor meets these standards:2,3
The agreement must be in writing and signed by both parties.
The agreement must cover all services and specify the services the contractor provides.
If the contractor is to work on a periodic, sporadic or part-time basis, the agreement must specify the exact schedule of the intervals, their precise length and the exact charge for the intervals.
The agreement between the two parties must be effective for at least a year.
The aggregate pay to the contractor over the agreement term must be set in advance, cant be linked to the volume of referrals or business generated between the parties covered by Medicare or Medicaid, and must be set according to the fair market value of the service.
The total of the services performed by the contractor cannot exceed what is reasonable for the commercial purpose of the services.
The services performed cannot promote a business arrangement or any other activity that is against the law.
Personal service contracts can be a troublesome spot. Suppose for example, an optometrist engages another optometrist as an independent contractor to provide vision therapy to his patients.
If the optometrist is paying that independent contractor less than fair market value for his or her services, the OIG may view the less than fair market value payment accepted by the independent contractor as a financial inducement for patient referrals, Mr. Petsche says.
Or, suppose an optometry practice hires a management company, negotiates a fixed fee for a 12-month period and two months later realizes that it is paying too much money for the management companys services.
Unfortunately, the optometry practice cannot re-negotiate the management fee mid-stream during the 12-month period, Mr. Petsche says. If they re-negotiated the fee, both the management company and optometry practice would lose the protection of the safe harbor and risk a potential violation of the anti-kickback statute.
An optometrist could also get into trouble if he pays a management company a percentage of fees collected, instead of a fixed fee, according to a 1998 OIG advisory opinion. A management company agreement that is outside of a safe harbor doesnt automatically mean that the anti-kickback statute has been violated. Mr. Petsche says. However, if the optometrist would like to play it completely safe and sleep soundly at night, all of the criteria of the safe harbor, including the fixed management fee, should be satisfied.
Safe harbor laws, especially those that relate to the federal Anti-Kickback Statute, are far from cut-and-dry. Also, they are not the only laws of which you should be aware. For example, the Federal Physician Self-Referral Law, also known as Stark I and Stark II, prevents a physician from referring a Medicare patient to any business in which the physician has a financial interest. There are also state self-referral, anti-fraud and anti-kickback laws of which you must be aware.
| Before you forge any relationships with fellow practitioners or practices, you need to consult both a lawyer and a CPA. |
This is a gray area, so before you forge any relationships with fellow practitioners or practices, you need to consult both a lawyer and a CPA and say, This is what Im considering. What do I need to be aware of? says optometrist and attorney Pamela J. Miller, of Highland, Calif. You want to be sure and do the proper research and go slowly, because in most instances, you really dont know youve violated the law until you get sued or investigated.
Those interviewed state that this article is to be deemed as an overview and not legal advice.
1. American Academy of Ophthalmic Executives: A Joint Position Paper of the American Academy of Cataract and Refractive Surgery. www.aao.org/aaoesite/promo/coding/ postoperative_care.cfm. (15 Feb. 2005).
2. HHS Office of Inspector General: Safe Harbor Regulations. 11/19/99: Final Rule: Clarification of the Initial OIG Safe Harbor Provisions and Establishment of additional Safe Harbor Provisions under the Anti-Kickback Statute. http:// oig.hhs.gov/fraud/dafeharborregulations.html. (15 Feb. 2005)
3. Withrow, McQuade & Olsen, LLP. Table A: Overlapping Anti-Kickback Safe Harbors and Stark General Exceptions. www.wmolaw.com/tablea.htm. (15 Feb. 2005).
4. Centers for Medicare & Medicaid Services: Physician Self-Referral Educational Resource Web Guide. www.cms.hhs. gov/medlearn/refphys.asp. (15 Feb. 2005)
