Carve Outs as Kickbacks in the Hospital Setting


Entrepreneurial medical practices are constantly seeking ways to expand their business and their profit.

I’m all in favor of that and I’m sure you are, too – of course, as long as it’s done legally. Demands for kickbacks are quite another thing.

You probably think of kickback demands from referring physicians in one or both of the two most popular, “disguised,” flavors: the company model and the management fee type demand.

Those types of kickbacks generally occur in the context of services at ambulatory surgery centers, at other free-standing facilities, and at doctors’ offices.

But disguised kickbacks can also take place within the hospital setting.

For example, a carve out of what would otherwise be services performed by a certain class of specialists in favor of a referring practice or group of independent physicians may be a disguised kickback for their referrals.  Consider the case in which a subset of services is carved out of an anesthesia agreement in favor of the practice of a high referring office based physician. Or the case in which a radiology exclusive contract is amended to permit cardiologists to perform and interpret cardiac CT scans.

Violation of the Federal Anti-Kickback Statue turns on intent — intent that can be inferred from the facts. Violation of the AKS is, therefore, highly fact specific.

But, those facts may be clearly evident where you are least likely to be looking for them: at the hospital, not at the ASC.

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