Home Health Agency Referrals: A Guide for Physicians

I represent a significant number of home health agencies (HHAs). If you have read the news lately, HHAs are being targeted by the federal government for involvement in healthcare fraud.

Most physicians, at some point, have referred a patient for home health services. It may have been a homebound patient who was chronically ill, or someone who required care after surgery. In most cases, the physician simply provides a list of HHAs in the area, without demonstrating any preference as to what agency is selected (unless the physician has had a positive or negative experience related to patient care). There are still other physicians who work with HHAs, perhaps serving as a medical director or in certifying patients for home healthcare services.

I think we can all agree that HHAs serve an important purpose, and it’s one that may be growing in the new era of healthcare reform. However, like most providers in the healthcare system, HHAs cannot survive financially without patient referrals, especially in urban areas where there are an abundance of HHAs competing to service the same patient population.

Given the tough competition, it’s not shocking that many HHAs have tried to find ways to encourage physicians and others in a position to refer (nurses, discharge staff, assisted living facilities, etc.) to refer to them, over others. This usually was achieved by payments of cash, gifts or other types of remuneration. While this activity has been insidious, recent investigations and indictments of physicians and agency owners for violation of the federal Anti-Kickback Statute is bring this practice (hopefully) to an end.

Although I guide my HHA clients on how to comply with the law, there are many HHAs that are ignorant or indifferent to the legal implications of their actions. Thus, when it comes to my physician clients, the following are my recommendations in working with HHAs:

(a) Do not provide specific referrals to any HHA. Provide patients with a list of agencies from which to choose. If you meet with an HHA to see if it’s one to which you might refer, ask about its marketing practices and compliance policies. Many of my HHA clients are using their compliance plans and copies of press releases detailing physician indictments as part of their marketing efforts to appeal to providers who seek to do business with compliant HHAs.

(b) Never accept gifts or cash from an HHA. Thinking “it’s just a small amount” or “everyone does it” is not going to protect you legally. Many of the HHAs whose owners/staff were indicted paid for referrals of new patients or recertification of patients as homebound. The “going rate” for such kickbacks varied, but generally ranged from $400 to $700 for each care cycle and approximately $100 to $300 for each recertification. If you need to increase your income, try talking to a health lawyer about legal ideas for growth instead.

(c) Physicians (or their immediate family members) should not own an HHA if they intend to refer to that HHA. Physicians need to remember that home health services are covered as “Designated Health Services” (DHS) under the Stark law. This means that physicians may not generally refer to an HHA with which they or an immediate family member have an ownership or compensation relationship.

Unfortunately, it is not uncommon for physicians to be on the receiving end of kickbacks for HHA referrals. I have encountered providers who collected thousands of dollars in kickbacks for referrals, and who will now face loss of their license and jail time. There are even providers who make it known they will not refer to HHAs (or other healthcare businesses) without payment.

While these physicians may not be the “norm,” this attitude is surprisingly pervasive, and we likely will hear of many more indictments in the future. If you have accepted any payments from an HHA, please contact counsel for legal advice before you become subject to an investigation. Otherwise, make sure you are taking steps to form compliant relationships with every business to which you refer - including HHAs.

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