A hospital, Beds R Us, entered into the following three arrangements with various healthcare providers:

First, Beds R Us had a five-year contract with a physician, I.M. Cure, to serve as a part-time Medical Director on an independent contractor basis. The contract specified the number of hours Dr. Cure was to work as well as the hourly rate he was to receive, which was consistent with fair market value and was commercially reasonable. At the time Dr. Cure originally signed the five-year contract, he was referring approximately 50 Medicare patients a month for outpatient services to Beds R Us. Six months into the contract, however, his Medicare referrals dropped to about 10 patients per month, at which point Beds R Us advised Dr. Cure that if he did not increase his Medicare referrals to his prior level, Beds R Us would not renew his contract. Dr. Cure never increased his referrals beyond 10 patients per month, and as promised, Beds R Us did not renew his contract.

Second, Beds R Us had an arrangement with an orthopedist, Pai Mee. When Dr. Mee had a Medicaid patient requiring physical therapy, Dr. Mee provided the patient with a plan of care and a list of hospitals providing physical therapy services. Dr. Mee never told a patient to choose any particular hospital. Under its arrangement with Dr. Mee, Beds R Us nevertheless paid Dr. Mee a fixed sum whenever one of his patients selected Beds R Us for physical therapy services.

Third, Beds R Us had an agreement with Mix Up, a pharmaceutical company, to buy its disfavored painkiller in exchange for a 50 percent discount on its highly touted cancer drug. The drugs were billed only to private pay plans. None of the claims or charges submitted to these plans disclosed the existence of the discount arrangement.

For each of the foregoing three arrangements, explain whether the arrangement violates the Anti-Kickback Statute, and if so, why. If you determine that any of the arrangements violate the Anti-Kickback Statute, explain what the potential criminal, civil, and administrative consequences would be for any such violation.

Answer rating: 100% (QA)

Arrangement with Physician IM Cure Dr Cures contract initially appeared to comply with fair market v... View the full answer