State health fraud laws proliferate

According to Laura Keidan Martin, a health care attorney with Katten Muchin in Chicago, there are a number of state laws that form the basis for the current private payer initiatives into health care fraud. "These laws vary quite a bit from state to state," she adds. They include:

  • Anti-kickback laws/patient brokering prohibitions. Several state anti-kickback laws are broadly worded to bar any remuneration for referrals. "Unlike the federal anti-kickback statute, these statutes apply regardless of payment source," Martin says. Other state kickback laws apply regardless of payer but only to certain types of payment practices, while other states bar kickbacks only under state Medicaid programs. Some of these laws are criminal, while others are found in medical practice acts and make acceptance of kickbacks grounds for physician discipline.
  • Fee-splitting prohibitions. In many states, the fee-split prohibition is part and parcel of the kickback prohibition and bars a provider from dividing professional fees in return for referrals. Martin says many state licensing statutes bar physicians and often other providers from splitting professional fees in return for referrals except within a lawfully organized group practice.
  • Self-referral prohibitions. Several states have adopted self-referral prohibitions for designated health services if the practitioner has an investment interest of financial relationship with the entity, she says. Other state statues apply to all health care services and would bar providers from making referrals to any entity for any health care services outside their group practice unless they personally are involved in the patient’s care.
  • Corporate practice of medicine prohibitions. In many states, it is unlawful for a layperson to employ a physician or to own a physician practice. Some states expressly bar the practice of telemedicine across state lines without a state medical license or special permit, unless a specified exception applies. Virtually all other states have interpreted their general prohibitions on the unlicensed practice of medicine to bar the practice of medicine across state lines unless a "consultant" or other limited exception applies, she says.