Legal: Ensure relationships are compliant

Q. What laws should I be aware of when contracting with others to market my HME business?  

A. In most industries, it is commonplace for one party to compensate another in exchange for a referral. In the health care space, this can be considered a felony. 

HME providers are not dealing in widgets, but rather patient lives. Accordingly, there are myriad federal and state regulations governing their interactions with prospective and current patients, as well as referral sources. The exact laws applicable to your operations will depend on the specific payers involved and the jurisdictions where business is conducted. All HME providers should be educated in health care marketing compliance to understand the regulations that apply to their operations.  

In general, the federal Anti-Kickback Statute makes it a felony for whoever pays or receives any remuneration in exchange for referring an individual for the furnishing of any item/service for which payment may be made under a federal health care program. Many states have “all payor” anti-kickback laws, which expand beyond the federal counterpart.  

While the connotation of a “kickback” usually invokes imagery of a bag of cash being left at a doctor’s office, the reach of these regulations extends beyond the prescriber to any referral sources. 

So, how does anyone in the health care space engage with referral sources without risking committing a felony? Thankfully, certain acceptable business practices have been written into the federal Anti-Kickback Statute as exceptions and “safe harbors,” which if adhered to are not considered violations, and many states with anti-kickback laws defer to these federal exceptions and safe harbors. The most common exceptions and safe harbors applicable to an HME provider’s interactions with marketers and referral sources are (i) the Bona Fide Employee Exception; and (ii) the Personal Services and Management Contract Safe Harbor.  

HME providers will want to ensure that relationships with any compensated referral sources meet such exception or safe harbor, as applicable, to ensure they are compliant.  

Michael Silverman, Esq., is with Silverman Bain, LLP. Reach him at michael@silvermanbain.com.