Referrals and the trouble they can cause in healthcare

In some industries, it’s not only legal to reward someone who refers business, it’s considered good form to do so. Healthcare is not one of those industries, however. It’s a crime for healthcare practitioners to take anything of value in return for a referral, order or prescription when the goods or services are paid for by Medicare, Medicaid or any other part of the federal government.

Beaumont Health settlement

Many Detroit-area healthcare providers undoubtedly recall that in 2019, Beaumont Health agreed to settle allegations that it violated the Anti-Kickback Statute by making payments to physicians who made referrals to its William Beaumont Hospital in Royal Oak.

The health system was also accused of violating the Stark Law, or self-referral law, which prohibits hospitals from billing Medicare for services referred by physicians with whom the hospital has a financial relationship.

Beaumont Health agreed to pay $82.74 million to the federal government and another $1.76 million to the state of Michigan.

EHS-related case

Another application of the Anti-Kickback law can be found in the recent settlement of the CareCloud Health case. The Florida-based developer of EHR (electronic health records) “agreed to pay $3,806,966.70 to resolve allegations that it paid unlawful kickbacks to generate sales of its EHR products,” the Department of Justice announced.

The company apparently provided cash bonuses, cash-equivalent credit and other inducements to existing clients who participated in its “Champions Program” marketing program by recommending its EHR products to prospective customers.

Eliminating negativity

Champions Program participants had to sign agreements prohibiting them from saying anything negative about CareCloud to prospective customers – and they also couldn’t tell them about the referral arrangement or the agreement banning negative comments.

In addition to violating the Anti-Kickback Statute, CareCloud was accused by federal prosecutors of violating the “False Claims Act because the kickback payments rendered false the claims submitted by CareCloud for federal incentive payments under the Medicare and Medicaid Electronic Health Records Incentive Programs.”

Those with concerns about the Anti-Kickback Statute, Stark Law and False Claims Act can confidentially discuss matters with a skilled legal professional.