Asking post-acute providers for free services

You may set them up for charges of fraud.

When patients do not have a payer source for the post-acute services they need, you may be putting providers at risk of fraud if you work with them to provide free or voluntary services, warns Elizabeth E. Hogue, Esq.

"Case managers or discharge planners may be tempted to urge post-acute providers to render services to patients who can't pay. These good intentions and fine motivations must be acknowledged. However, in today's health care environment, the bottom line is that the provision of free services is problematic and should be avoided," says Hogue, a Washington, DC, attorney specializing in health care issues.

When providers give free services to a patient, particularly if they have the expectation of providing additional services for that patient or other patients, they run the risk of engaging in fraudulent conduct, she says.

"The Office of the Inspector General [OIG] of the U.S. Department of Health and Human Services has clearly stately that the provision of free services to beneficiaries may constitute a violation of Medicare/Medicaid fraud and abuse prohibitions, particularly the federal anti-kickback statute," Hogue states.

The OIG is a primary source of enforcement activities in the case of Medicare or Medicaid fraud and abuse.

Violations may occur if the post-acute provider is influenced to provide services to patients who can't pay in return for receiving additional referrals for patients who can pay, Hogue says.

In other cases, free or voluntary services may be perceived as an inducement to the patient to initiate, continue, or re-initiate services with particular providers, she adds.

Providers are limited to giving patients only non-cash items of nominal value that may not exceed $10 in value each time and cannot exceed a total of $50 in value during a calendar year, according to the OIG regulations. The restrictions also apply to free services, Hogue says.

"Most post-acute services, including even one visit to a patient's home, clearly exceed these limits," Hogue adds.

In today's health care environment, when case managers and discharge planners are being urged to prevent unnecessary costs, this position may seem confusing and perhaps contradictory, Hogue adds.

"Since the point of enforcement is to prevent unnecessary costs, shouldn't the government welcome the provision of free services to beneficiaries by providers when they save money since they are free? Nonetheless, the government's point of view is that, when free services result in additional utilization of services, there is a potential fraud problem," Hogue says.

The question of whether beneficiaries who receive free services would be induced to utilize additional services paid for by Medicare, Medicaid, or other state- and federally funded health care programs is a tricky one, Hogue says.

For instance, when providers arrange for free transportation for patients who will use their services, this may constitute a violation of the Medicare/Medicaid fraud and abuse prohibitions, she says.

"In the current environment of hypersensitivity to fraud and abuse, the best course of action for post-acute providers is likely to completely avoid the provision of free services to patients," she says.

Hogue recommends that providers implement a policy that permits the provision of "charity care" after the requirements of the policy have been met. At a minimum, such policies should require providers to bill patients three times before writing off the services they provided as "charity care," she adds.

"This practice is likely to help shield providers from allegations for fraud," she says.

For their part, case managers should try to obtain needed services for their patients through governmental and social services programs, rather than through providers that normally charge for the service, she adds.