A Broader Definition of “Referral” for Anti-Kickback Violations

In U.S. v. Patel, whether a violation of the Anti-Kickback Statute was present depended on the United States Court of Appeals for the Seventh Circuit’s interpretation of the term “referring,” a term not specifically defined in the statute.  2015 WL 527549 (7th Cir. 2/10/15). The Seventh Circuit considered whether Dr. Kamal Patel had “referred” patients to a home health care provider in violation of the Anti-Kickback statute when Dr. Patel signed Form 485 certifications and recertifications for his patients, though did not recommend a specific home health care provider, in exchange for cash.

The court first acknowledged that the Anti-Kickback Statute was designed to “protect the Medicare and Medicaid programs from increased costs and abusive practices resulting from provider decisions that are based on self-interest rather than cost, quality or care or necessity of services,” and also to “protect patients from doctors whose medical judgments might be clouded by improper financial considerations.”  Then, the court entered into a detailed discussion of the meaning of the term “refer” under the Anti-Kickback Statute. Dr. Patel argued that “refer” should be construed to mean to “personally recommend to a patient that he seek care from a particular entity.” Dr. Patel’s argument followed common interpretations of the term which assert that “a physician does not refer a patient when the patient, with no input from the physician, independently chooses a provider.” By all accounts, Dr. Patel had not personally referred any patients to the home health care provider implicated.

Yet, the court instead utilized a broader interpretation of the term. In contrast to Dr. Patel’s position, the court found that “referral” should also be construed to mean “a doctor’s authorization to receive medical care, even when the doctor is not the one choosing the provider of that care,” thus equating the term “referral” with the doctor’s “authorization.” To support their finding, the court discussed the regulations interpreting the term “referral” found in the Stark Act. The court saw a doctor “as a gatekeeper to federally-reimbursed care,” who thus could be susceptible to kickbacks and bribery to authorize those funds. Therefore, under the Patel decision, a doctor that either directs a patient to a particular provider or exercises an authorization to allow the patient to receive care from that provider could violate the Anti-Kickback statute if compensation is received in return.

The Patel decision represents a staunch battle of statutory interpretation that could have far-reaching implications for providers. While there is no doubt that the actions of Dr. Patel were immoral, as he received $400 for every patient that chose the implicated home health care provider, it is questionable whether the Anti-Kickback statute was meant to be interpreted as broadly as it was by the United States Court of Appeals for the Seventh Circuit. An application of the broader definition of referral will lead to more behaviors being covered under the Anti-Kickback statute, regardless of whether the patient’s choice of provider or quality of care was actually impacted.

Written by: Danielle L. Borel

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