HealthSouth case offers lessons

HealthSouth Corp. and two physicians will pay $14.9 million to settle allegations that the company gave the government false claims and paid illegal kickbacks to physicians who referred patients to its ambulatory surgery centers and hospitals, as well as its outpatient rehabilitation clinics, according to the Department of Justice (DOJ). HealthSouth was one of the nation's largest providers of ambulatory surgery services until it sold that line of business in 2007.

The HealthSouth settlement also resolves allegations that the company paid kickbacks to, and entered into improper financial relationships with, other physicians, in what the government said was an attempt to induce the referral of patients. The DOJ is continuing to investigate other physicians.

"Just from the fact that the company agrees to pay $14.2 million suggests that HealthSouth may have believed that they had some potential liability," says Thomas J. Pliura, MD, JD, physician and attorney at law in LeRoy, IL.

To avoid liability in your program, consider these suggestions:

• Document business arrangements and have them reviewed.

Surgeons can take steps to protect themselves from illegal kickback situations by carefully considering their business arrangements, says Jan Crocker, MSA, RHIA, CCS, CHP, senior manager of the performance group of Crowe, Chizek, and Co., a South Bend, IN-based CPA and consulting firm. Any arrangements should be documented in a contract or agreement that is signed by both parties, she says. It should specify the time frame, the services, and the compensation.

"The compensation must be set in advance, be consistent with fair market value, and not determined based on the referral volume, value of referrals from the physician, or other business generated by the referring physician," she says. "Agreements or contracts should be reviewed by health care attorneys who can advise surgeons on avoiding arrangements that may result in noncompliance with the anti-kickback statutes." Be sure to use attorneys' experience in health care law, particularly in billing and insurance claim issues, experts advise.

Surgery programs should follow similar steps, she says. "If a surgery center is reimbursing a surgeon for services or items, a written contract is essential, as is review by a health care attorney," Crocker says. The surgery center must be able to demonstrate that the terms of the contract, such as the services agreed to, are being fulfilled, she says. "Therefore, using time sheets, work schedules, or some way to document physician time spent completing services is important," she says.

• Avoid providing anything that resembles a kickback.

Pliura emphasizes that you should avoid offering anything that could be construed as a kickback. "Time and time again, the state and federal governments say you cannot give tickets to a football game, no below-market rent, and you can't pay extra money for a medical director's fee when the work isn't in any way commensurate to what they're doing," Pliura says. "It's a bribe to induce them to bring cases."

• Make full disclosure to patients.

Physician owners should make patients aware of the fact that they can choose to have the procedure done anywhere the physicians have privileges, Pliura says.

"Making full disclosure to your patients is protection, meaning disclosing the fact that you may be a physician doing surgery there as owner or investor, and the patient has no obligation to have surgery there," he says.