Fraud and Abuse in the Form of Free Discharge Planning Services

  • By: VALA
  • On: 03/25/2021 12:33:29
  • In: Law
  • Comments: 0
The following article is about kickbacks in the form of free discharge planning services.

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Elizabeth E. Hogue, Esq.
(877) 871-4062
Hospitals are required to provide discharge planning services. Case managers who provide these types of services and providers that receive referrals from hospitals must be aware of a possible type of fraud and abuse in the form of free discharge planning services. Specifically, there is a federal statute that governs illegal remuneration in the Medicare, Medicaid and other federal and state health care programs. This statute is often called the anti-kickback statute or AKS. 
The statute generally says that anyone who either offers to give or actually gives anything to anyone in order to induce referrals has engaged in criminal conduct. Possible penalties for violation of this statute include imprisonment, fines, suspension and exclusion from participation in the Medicare, Medicaid and other state and federal health care programs and civil money penalties. The stakes are, therefore, extremely high!
The Office of the Inspector General (OIG) of the U.S. Department of Health and Human Services is the primary enforcer of fraud and abuse prohibitions. The OIG stated in a Special Fraud Alert, published in August of 1995, that the activities of coordinators and liaisons supplied by providers who want referrals cannot supplant the services of discharge planners. When coordinators and liaisons perform services that discharge planners are supposed to perform, enforcers may view these services as kickbacks to referral sources in the form of free discharge planning services.
Discharge planners/case managers at hospitals and long-term care facilities may want to in enter into written agreements with post-acute providers; such as home care agencies, home medical equipment (HME) suppliers and hospices; to provide coordinators and liaisons. Although written agreements for the provision of coordinators/liaisons are not required, they may be acceptable if appropriately drafted. 
Specifically, these agreements, whether written or verbal, must be structured in order to avoid possible kickbacks. Below are some of the potential pitfalls of such agreements that should be avoided:
  • Agreements should not require providers to keep a coordinator/liaison in the facility on a full-time basis unless the number of referrals clearly justifies the commitment of an employee for this amount of time. Otherwise, this requirement may reinforce the likelihood that this arrangement will be viewed by the OIG as an impermissible kickback or rebate. If the liaisons/coordinators do not provide discharge planning services, there is no need for them to be on the premises on a full-time basis. Rather, an agreement for legitimate coordinator/liaison activities would require them to be available to receive referrals on an as-needed basis only. If providers supply liaisons and coordinators under the proposed agreements on a full-time basis, but do not receive enough referrals to justify assignment of personnel on a full-time basis, it reinforces a conclusion that liaisons and coordinators are really supplying discharge planning services in exchange for referrals.
  • Agreements to provide coordinators/liaisons should not require them to "develop" and/or "implement an appropriate discharge plan" or to document these activities in patients' charts. Medicare Conditions of Participation (COP's) for hospitals make it quite clear that it is the job of discharge planners to develop and implement appropriate discharge plans.  
  • Agreements regarding liaisons and coordinators should not include a requirement that they must be registered nurses (RN's). It is common practice in post-acute care industries to utilize coordinators and liaisons who are not licensed professionals who perform very effectively in these positions. A reasonable interpretation of this requirement is that liaisons and coordinators must be RN's because they will, in essence, be providing discharge planning services.
  • Discharge planners/case managers should not propose written agreements for use of coordinators and liaisons that include indemnification provisions. If no free discharge planning services are being provided, there is no need for indemnification.
  • Hospitals that elect to have written agreements with providers who supply coordinators and liaisons must also be careful to handle compliance with HIPAA privacy requirements appropriately. Specifically, providers who supply coordinators and liaisons should not be required to sign business associate agreements. The Privacy Rule generally defines a business associate as an entity that performs a service on behalf of a covered entity. The OIG is likely to conclude that the services performed by providers as business associates on behalf of hospitals are discharge planning services. The Privacy Rule and related materials also make it clear that providers who receive referrals from other providers are not business associates of referring providers. Such referrals, including information shared in order to make referrals, is part of treatment, payment and healthcare operations of covered entities that do not require consent of patients to disclose.
Providers and case managers/discharge planners are in the proverbial "hot seat" with regard to marketing and enforcement activities by the OIG. They must keep up-to-date on these issues.
©2021 Elizabeth E. Hogue, Esq. All rights reserved.
No portion of this material may be reproduced in any form without the advance written permission of the author.


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