26 AE Spring 2012

OIG Issues Limited Guidance Patient Co-Management byOphthalmologists and Optometrists

Running the Practice Legal

Christina A. Hughes, JD, MPH, and Robert M. Portman, JD, MPP

Co-management arrangements are not per se illegalunder the federal healthcare fraud and abuse laws,but they raise many red flags that need to be carefully considered by physicians involved in sucharrangements or contemplating entering into them.

AE Spring 2012 27

Co-management ofpatients is a commonpractice for manyophthalmologists andoptometrists. Sucharrangements, whereophthalmologists and

optometrists share patient careresponsibilities according to apatient’s needs for both specializedand more general eyecare, can bene-fit the patient and the medical pro-fessionals involved. These arrange-ments, however, can also implicatefederal healthcare laws and regula-tions concerning the financial rela-tionships between healthcare profes-sionals, including the prohibition onphysician self-referral (commonlyreferred to as the Stark law) and theanti-kickback statute.

Basic provisionsThe Stark law prohibits physiciansfrom referring patients for certain“designated healthcare services”(DHS), including outpatient hospitalservices and post-cataract eyewear, toany entity or individual with whichthat physician has a financial rela-tionship. Because the statute is basedon strict liability—meaning that themere presence of a prohibited rela-tionship is illegal regardless of theparties’ intent—all co-managementarrangements that include provisionsfor payment between an ophthalmol-ogist and optometrist fall under thislaw. Therefore, the only way to avoidpenalties for self-referral in such situa-tions is to meet one of the statutoryor regulatory exceptions to the Starklaw. However, because of an excep-tion for post-cataract eyewear thatASCRS•ASOA was able to securemany years ago, Stark does not applyto the referral of eyeglasses or con-tacts following cataract surgery.

The anti-kickback statute, how-ever, does apply to cataract surgery,as well as any other procedures cov-ered by Medicare or Medicaid. Theanti-kickback statute prohibits the

offer, solicitation, or receipt of“remuneration” in exchange forreferring patients. “Remuneration”includes the transfer of anything ofvalue, including the opportunity tobill. Where co-management arrange-ments involve payments betweenophthalmologists and optometrists,or where referrals are requiredbetween the professionals, the anti-kickback statute may violate this law.

Unlike the Stark law, however,the anti-kickback statute requiresthat the parties intend to inducereferrals before the arrangement isdeemed illegal. Still, if even one pur-pose of the arrangement is to inducereferrals, the requirement for intentis satisfied. Such instances are exam-ined on a case-by-case basis, withrespect to the facts and circum-stances of each arrangement.Statutory and regulatory safe harborsexist to insulate arrangements frompotential investigation, but unlikewith the Stark law, arrangements arenot required to fit within a safe har-bor to be legal.

Assessing complianceBoth the Centers for Medicare andMedicaid Services (CMS, which over-sees Stark law compliance) and theOffice of the Inspector General (OIG)for the Department of Health andHuman Services (which administerspenalties for violations of the anti-kickback statute) offer processeswhereby healthcare professionalsand entities can obtain advisoryopinions regarding a particulararrangement’s compliance with fed-eral laws and regulations. Recently,the OIG issued an advisory opinionregarding an arrangement involvingophthalmologist and optometrist co-management of cataract surgerypatients and the arrangement’s com-pliance with the anti-kickbackstatute.

OIG Advisory Opinion 11-14was issued on September 30, 2011.Under the arrangement in question,

a group practice of ophthalmologistswished to enter into an understand-ing with external optometrists inwhich the optometrists could resumemanagement of the patients theyoriginally referred to the ophthal-mologists for cataract surgery follow-ing the surgery. For Medicarepatients, this could potentially resultin a split fee, where the ophthalmol-ogist received payment for the sur-gery and the optometrist receivedpayment for post-op management.Specifically, the proposed arrange-ment involved cataract surgeries inwhich premium intraocular lenses(IOLs) were used. The arrangementresults in additional billing opportu-nities for both the physician doingthe surgery and the optometristoverseeing the post-op recovery.Thus, remuneration could beinvolved in the form of theoptometrist’s opportunity to earn afee in the event that he or she takesover post-op management of cataractsurgery patients.

Under the proposed arrange-ment that was the subject of theadvisory opinion, the ophthalmolo-gists would not enter into writtenagreements for post-op managementby the optometrists. In addition,transfer of any patient’s post-op carewould only be done at the patient’srequest and only if clinically appro-priate. Patients would be notified ofthe potential for the optometrists tocharge additional fees for the post-opservices. The OIG considered each ofthese factors in determining whetherthe arrangement involved prohibitedremuneration. After also noting thatthe increased costs associated withthe cataract surgeries and post-opmanagement of patients receivingpremium IOLs would not be borneby the Medicare program, the OIGdetermined that the arrangement didnot violate the anti-kickback statute.The OIG made this determinationwithout the application of a safe

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28 AE Spring 2012

order for the arrangement to be per-missible. For ophthalmologists, themost common DHS are post-cataracteyewear, outpatient hospital services,and A-scans and B-scans. As notedabove, there is an exception underStark for post-cataract eyewear thatexempts the referral of eyeglasses orcontact lenses following cataract sur-gery. For referrals of other DHS, theco-management arrangement may beable to fit within the Stark personalservices exception, which requires(among other things) a signed writ-ten agreement, minimum 1-yearterm, and compensation that is setin advance that does not take intoaccount the volume or value of refer-rals or other business generatedbetween the parties.

As indicated by OIG’s stronginterest in this area, co-managementarrangements are more likely toimplicate the anti-kickback statute.While it is not a requirement forsuch arrangements to fit within asafe harbor, a safe harbor analogousto the Stark personal service arrange-ments exception does exist. That safe harbor has many of the samerequirements but also requires anexact schedule be established for theservices to be rendered, somethinglikely to prove challenging for co-management arrangements struc-tured around the specific medicalneeds of patients. And, as previouslynoted, OIG has deliberately struc-tured other potentially applicablesafe harbors to exclude arrangementswhere the reimbursement fromMedicare is shared through fee split-ting. Nonetheless, each arrangementmust be analyzed individually todetermine whether it in fact violatesthe anti-kickback statute by havingat least one purpose be the trading ofsomething of value (e.g., money,items, opportunities to earn a fee) forreferrals.

harbor, based solely on the lack ofprohibited transfer of value between the ophthalmologists and optometrists in exchange forreferrals.

AnalysisAdvisory Opinion 11-14 deals with afairly narrow and conservative co-management arrangement. The pro-posed arrangement has no require-ment for referrals between the oph-thalmologists and the optometristsand involves no payments betweenthe physicians, although theoptometrists gained the opportunityto bill Medicare and the patients forthe post-op care provided. Othermore formalized arrangements forco-management may create muchmore risk of compliance issues underthe anti-kickback statute, as well asthe Stark law.

In fact, the OIG has alreadyflagged ophthalmologist/optometristco-management arrangements aspotentially abusive. While discussinga new safe harbor covering referralagreements for specialty services, theOIG indicated that co-managementarrangements involving splitting ofMedicare reimbursement were prob-lematic, and it took steps to explicit-ly exclude such arrangements fromthe new safe harbor’s protection. TheOIG went on to say, however, that“[b]y limiting the safe harbor, we donot mean to suggest that all specialtyreferral arrangements involving split-ting of global fees are illegal underthe antikickback statute.”

Turning first to compliance con-cerns related to the Stark law, anypayments or agreements for the pro-vision of services or compensation(monetary or in-kind) between anophthalmologist and optometristwho refer DHS to each other impli-cate the prohibition on physicianself-referral, with the Stark lawrequiring an exception to be met in

Running the Practice Legal

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Evaluating riskWhile OIG has recently deemed oneco-management arrangement to notviolate the anti-kickback statute, thatarrangement was narrow and rela-tively benign. Ophthalmologists andoptometrists involved in co-manage-ment arrangements should be veryaware of the potential compliancerisks such arrangements raise. Careshould be exercised to make certainthe co-management arrangementssatisfy at least one of the Stark lawexceptions when there is a financialrelationship between the physiciansand at least one of them is renderingDHS. In addition, care must be exercised to avoid structuring thearrangements as exchanges of valuefor referrals between the physicians.Co-management arrangements arenot per se illegal under the federalhealthcare fraud and abuse laws, butthey raise many red flags that needto be carefully considered by physi-cians involved in such arrangementsor contemplating entering intothem. To this end, ophthalmologistsare encouraged to review joint co-management guidelines issued byASCRS•ASOA and the Academy forways of structuring lawful co-management arrangements. Thoseguidelines are available in theGovernment section of the ASOAwebsite (www.ASOA.org) under “Co-Management.” AE

Christina A. Hughes, JD, MPH,and Robert M. Portman, JD,MPP, are healthcare attorneyswith Powers Pyles Sutter &Verville in Washington, D.C.Portman is also outside gener-al counsel for ASCRS•ASOA.