WASHINGTON--The Health and Human Services (HHS) Office of the Inspector General (OIG) has published a final rule that implements a civil monetary penalty for physicians who refer patients to radiology, laboratory, and other facilities in which they, or a member of their immediate family, have a financial interest.
The rule states that assessments can be made "against any person who presents, or causes to be presented, a bill or claim the person knows or should know is for a service unlawfully referred under section 1877(a)(1)(A) of the Social Security Act, or has not refunded amounts inappropriately collected for a prohibited referral." (See below.)
In addition, OIG can impose penalties if a physician or entity enters into an arrangement or "circumvention" scheme in which he or she knows, or should have known, that the principal purpose is to assure referrals which, if they were made directly, would violate the Omnibus Budget Reconciliation Act (OBRA).
An example would be a cross-referral arrangement in which physician owners of two different facilities refer patients to each other's facility (see below).
The Omnibus act, which bars physicians from referring Medicare patients to a laboratory, x-ray or other medical facility in which they have a financial interest, went into effect in 1989. OBRA 1993 expanded these restrictions to include additional health services and made the law applicable to Medicaid as well as Medicare billings.
HCFA has long maintained that preventing inappropriate utilization by prohibiting self-referral is a major component in its continuing efort to fight fraud and abuse. Now the OIG rule allows the imposition of stiff money penalties.
OIG Regulations Officer Joel Schaer said that although his office performs periodic payment audits, "we find out about offenders most often through our toll-free hot line. Callers, who can remain anonymous if they choose, let us know about physicians who arw making these illegal arrangements, and we investigate.