June 6, 2011

Seventh Circuit Accepts "One Purpose" Test Under Anti-kickback Statute

      The United States Court of Appeals for the Seventh Circuit, which has jurisdiction over Indiana, recently held that a physician was in violation of the Anti-kickback Statute (42 USC § 1320a-7b) even though only one purpose of the remuneration paid to him by a hospital was meant to induce referrals.  The Court joins four other Circuits in its adoption of the "one purpose" test as it declined to accept the defendant's argument that he did not violate the Anti-kickback Statute since his primary motivation for accepting payments from a psychiatric hospital was as compensation for bona fide services performed as a hospital employee.  Dr. Roland Borrasi, owner of Integrated Health Centers, S.C., was convicted in a Chicago federal court of violating the Anti-kickback Statute for accepting payments from Rock Creek Center, an inpatient psychiatric hospital.  Officials at the hospital admitted to creating false job titles and descriptions in order to compensate Borassi and other members of his medical group for referring Medicare patients to its facility.  Borassi was not expected to perform any actual duties in his position of "Service Medical Director," attended meetings only sporadically and was rarely seen by hospital employees, yet was paid over $647,000 in "salary" between 1999 and 2002.  Borassi made 484 referrals of Medicare patients to Rock Creek in 2001 alone.  On appeal, the Court declined to adopt Borassi's "primary motivation" test and instead held firm with other Circuit Courts in finding that because at least a part of the payments Borassi accepted was intended to induce him to make referrals to the hospital, the Anti-kickback statute was violated.  If you have any questions, please contact Margaret Emmert at (317) 236-2169 margaret.emmert@icemiller.com, or Kevin Woodhouse at (317) 236-2154 or  kevin.woodhouse@icemiller.com.

CMS Offers Jump Start to the Medicare ACO Program

      In an effort to hasten the formation of accountable care organizations (ACOs) by health care providers, the Centers for Medicare and Medicaid Services (CMS) has announced its Pioneer ACO Model.  CMS's goal is to enroll up to 30 organizations in the Pioneer program and will be looking for organizations who already have extensive experience in making systematic care improvements, and who already have, or are prepared to enter into, payment arrangements that include financial accountability and performance incentives.  Organizations ready to take the plunge into the world of ACOs must submit a letter of intent to CMS by June 10, 2011, and a completed application for participation in the Pioneer program no later than July 18, 2011.  Those organizations participating in the Pioneer ACO Model will not be eligible for participation in the Medicare Shared Savings Program, which CMS must implement prior to January 1, 2012.  Comments on the ACO proposed regulations, published by CMS on April 7, 2011 were due on May 20, 2011.  Many providers have critized the proposed regulations, citing that CMS's requirements for ACOs are overly burdensome and that it has severely underestimated the financial investment required by health care providers to create a compliant ACO.  To read more about the Pioneer ACO Model, go to the Medicare Innovations website at www.innovations.cms.gov or call Margaret Emmert at (317) 236-2169 margaret.emmert@icemiller.com, or Kevin Woodhouse at (317) 236-2154 kevin.woodhouse@icemiller.com.