Lewis Morris, Chief Counsel to the Inspector General, who issued the opinion on electronic referral systems.
On May 20, the Office of the Inspector General (OIG) released an advisory opinion that calls into question discharge referral systems currently in popular use by hospitals and home care agencies. Automated, electronic referral systems have recently grown in popularity. Hospital discharge planners use these systems to input the details of a patient being discharged with post-acute care needs. The details are then electronically distributed to post-acute care providers such as home health, home care, hospice, rehab facilities, assisted living facilities, etc. Many hospitals award the referral to the first post-acute provider indicating acceptance of the referral.
An unnamed entity requested an advisory opinion from the OIG regarding this business arrangement. The OIG’s advisory opinion against the arrangement is based solely on the information provided by the requester and relevant law. The requester stated that post-acute providers such as home health care agencies must pay fees for inclusion in the system, and that some home health agencies find the fees unaffordable. The requester stated that the system could fax referral information to agencies not paying for access to the electronic referral system. The requester also stated that post-acute care providers paying for access to the electronic referral system would receive information much more quickly and would have a much greater likelihood of being the first to respond.
The OIG Advisory Opinion No. 11-06 found that such a system would present more than a minimal risk under the anti-kickback statute. Referred-to-entities may not pay for preferential treatment from referral sources – even if such payments go to a third party.
The Anti-Kickback Statute & Safe Harbor
The anti-kickback statute makes it a criminal offense to knowingly and willfully pay to induce referrals for services reimbursable by a federal health program. Criminal liability applies to all parties involved in an anti-kickback violation (i.e. the referral source, the referral recipient, and the software vendor). Violation of the statue constitutes a felony punishable by a maximum fine of $25,000 and five years imprisonment. Conviction leads to automatic exclusion from federal healthcare programs including Medicare and Medicaid.
Referral systems such as the type described above are not automatically illegal. In fact, the law contains a safe harbor from the anti-kickback statute to allow referral systems under certain conditions (42 C.F.R. subsection 1001.952). Among those conditions are requirements that referral fees be assessed uniformly against all participants, be based only on the cost of operating the referral service, and not vary with the volume or value of referrals of Federal health care program business. However, the recent OIG advisory opinion seems to say that referral systems allowing members to pay for better access to referral sources are illegal.
Providers of Electronic Referral Systems
Automated referral system companies include AllScripts, Curasspan / eDischarge, and Total Living Choices. Of the three, Total Living Choices (www.corp.tlcchoices.com) claims to operate an “open-access” system wherein they do not require providers to pay a fee to be included in electronic discharge systems. We have learned that the requester of the OIG advisory opinion was Total Living Choices. Curaspan president, Thomas Ferry states that he has double checked with their law firm Choate, Hall & Stewart, LLP, and that he believes the OIG advisory opinion is not applicable to Curaspan (http://connect.curaspan.com/). On May 23, Ferry made a written response to the OIG opinion [click here]. In short, Ferry has stated that the Curaspan system lists profiles for both paying members and non-members. Non-members may update their profiles free of charge. It is up to the discharge planners to show choices to patients and help patients make informed decisions about post-acute care. This would suggest that in the Curaspan system, patients choose a home health agency while at the hospital and a referral is made. Ferry’s written response goes on to state that the Curaspan system sends faxes to non-members in a timely fashion. Ferry explains that discharge planners must “verify” fax numbers before they can send the faxes, but the extent to which this barrier prevents non-members from getting announcements is unclear. Curaspan’s discussion of faxes alludes to the fastest-response-gets-the-referral system described in the OIG opinion, and suggests that Curaspan users may conduct referral placement this way as well. The question of legality would seem to hinge on whether the system truly puts non-members on an equal footing with paying members in terms of being able to respond quickly to hospital announcements and whether the system is bought or sold with the intent of giving paying members an advantage in garnering extra referrals. We could not find a public statement from AllScripts, and we are presently requesting additional information from them.
What home health agencies and other post-acute care providers should do now:
- Connect with Total Living Choices [click here] and Curaspan [click here] since both companies seem to be saying that you can update your profiles with them for free.
- If you are paying subscription fees to referral systems, review the terms under which you subscribed to those systems. Make sure there is no suggestion that you subscribe to systems for the purpose of paying for greater access to hospitals. The OIG opinion seems to suggest that the only valid reason to participate in electronic referral systems to is to gain the internal efficiencies associated with electronic health records / electronic care coordination.
Hospitals and other providers using electronic systems to send referrals need to review procedures to make sure they are not party to violations of anti-kickback statutes. Fastest-response-gets-the-referral systems should only be used if paying and non-paying providers have an equal chance of responding to your announcements.
Download the full OIG Advisory Opinion No. 11-06 here: http://oig.hhs.gov/fraud/docs/advisoryopinions/2011/AdvOpn11-06.pdf
