HCA Holdings 2011 Annual Report Download - page 25

immediate family members have a financial relationship, if these entities provide certain “designated health
services” reimbursable by Medicare or Medicaid unless an exception applies. The Stark Law also prohibits
entities that provide designated health services reimbursable by Medicare and Medicaid from billing the
Medicare and Medicaid programs for any items or services that result from a prohibited referral and requires the
entities to refund amounts received for items or services provided pursuant to the prohibited referral. “Designated
health services” include inpatient and outpatient hospital services, clinical laboratory services and radiology
services. Sanctions for violating the Stark Law include denial of payment, civil monetary penalties of up to
$15,000 per claim submitted and exclusion from the federal health care programs. The statute also provides for a
penalty of up to $100,000 for a circumvention scheme. There are exceptions to the self-referral prohibition for
many of the customary financial arrangements between physicians and providers, including employment
contracts, leases and recruitment agreements. Unlike safe harbors under the Anti-kickback Statute with which
compliance is voluntary, an arrangement must comply with every requirement of a Stark Law exception or the
arrangement is in violation of the Stark Law. Although there is an exception for a physician’s ownership interest
in an entire hospital, the Health Reform Law prohibits newly created physician-owned hospitals from billing for
Medicare patients referred by their physician owners. As a result, the law effectively prevents the formation of
new physician-owned hospitals after December 31, 2010. While the Health Reform Law grandfathers existing
physician-owned hospitals, it does not allow these hospitals to increase the percentage of physician ownership
and significantly restricts their ability to expand services.
Through a series of rulemakings, CMS has issued final regulations implementing the Stark Law. Additional
changes to these regulations, which became effective October 1, 2009, further restrict the types of arrangements
facilities and physicians may enter, including additional restrictions on certain leases, percentage compensation
arrangements, and agreements under which a hospital purchases services “under arrangements.” While these
regulations were intended to clarify the requirements of the exceptions to the Stark Law, it is unclear how the
government will interpret many of these exceptions for enforcement purposes. Further, we do not always have
the benefit of significant regulatory or judicial interpretation of the Stark Law and its implementing regulations.
We attempt to structure our relationships to meet an exception to the Stark Law, but the regulations
implementing the exceptions are detailed and complex, and we cannot assure that every relationship complies
fully with the Stark Law.
Similar State Laws
Many states in which we operate also have laws similar to the Anti-kickback Statute that prohibit payments
to physicians for patient referrals and laws similar to the Stark Law that prohibit certain self-referrals. The scope
of these state laws is broad, since they can often apply regardless of the source of payment for care, and little
precedent exists for their interpretation or enforcement. These statutes typically provide for criminal and civil
penalties, as well as loss of facility licensure.
Other Fraud and Abuse Provisions
HIPAA broadened the scope of certain fraud and abuse laws by adding several criminal provisions for
health care fraud offenses that apply to all health benefit programs. The Social Security Act also imposes
criminal and civil penalties for making false claims and statements to Medicare and Medicaid. False claims
include, but are not limited to, billing for services not rendered or for misrepresenting actual services rendered in
order to obtain higher reimbursement, billing for unnecessary goods and services and cost report fraud. Federal
enforcement officials have the ability to exclude from Medicare and Medicaid any investors, officers and
managing employees associated with business entities that have committed health care fraud, even if the officer
or managing employee had no knowledge of the fraud. Criminal and civil penalties may be imposed for a number
of other prohibited activities, including failure to return known overpayments, certain gainsharing arrangements,
billing Medicare amounts that are substantially in excess of a provider’s usual charges, offering remuneration to
influence a Medicare or Medicaid beneficiary’s selection of a health care provider, contracting with an individual
or entity known to be excluded from a federal health care program, making or accepting a payment to induce a
physician to reduce or limit services, and soliciting or receiving any remuneration in return for referring an
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