There are two case scenarios below. You are a healthcare consultant/administrator advising the client/employer in each scenario. Read both scenarios and then answer each of the questions as if you were advising your client/employer in writing. Make sure to explain your answers. Use the course reading to answer the questions. You may also add additional research.
This is an individual assignment. You may not discuss your answers with your classmates.
The report should be at least 2 full pages double spaced, 1 inch margins. DO NOT REPEAT THE SCENARIO IN YOUR ANSWER.
Scenario #1: Your client/employer ABC hospital enters into an agreement with Novarmints pharma company to participate in a drug study. To conduct the study at the hospital, ABC asks physician Dr. No to serve as the principal investigator to conduct the pharma study for ABC. Dr. No is not a hospital employee but is on staff at the hospital. As part of the contract negotiations his contract negotiations with the hospital, Dr. No asks the hospital to pass along to him 50% of the contract fees that Novarmints has promised to ABC for conducting the study. Would Dr. No’s proposed split be lawful under the Stark law? Explain your answer.If not, explain the potential consequences of a violation.
Scenario #2: Dr. No is invited by Novarmints to take part in a study involving a recently FDA-approved drug that it is in the process of marketing to the public. Dr. No would be required to prescribe the drug for his patients and thencomplete a brief questionnaire about each patient’s experience with the drug. The questionnaire for each patient is expected to take about 20 minutes to complete. Novarmintswill pay Dr. No $3,000 for each completed questionnaire. Dr. No sees this as “easy money” and a great way to increase practice revenues. Would this arrangement be lawful under the Anti-kickback statute? Explain your answer.If not, explain the potential consequences of a violation. Hint: Is this a real drug study?
You are a healthcare consultant/administrator advising the client/employer in each scenario
**Scenario #1:**
Dr. No’s proposed split of 50% of the contract fees from Novarmints Pharma Company would likely not be lawful under the Stark law. The Stark law, also known as the Physician Self-Referral Law, prohibits physicians from referring Medicare or Medicaid patients for certain designated health services to entities with which the physician or an immediate family member has a financial relationship, unless an exception applies. In this case, Dr. No’s request for 50% of the contract fees would create a financial relationship between him and Novarmints, potentially influencing his referrals of patients for the drug study, which could include designated health services.
If ABC hospital were to agree to Dr. No’s proposed split, it could face severe consequences for violating the Stark law. Penalties for Stark law violations include denial of payment for designated health services, repayment of amounts received from improperly billed services, civil monetary penalties, and exclusion from Medicare and Medicaid programs. Additionally, violations of the Stark law may also trigger False Claims Act liability if claims submitted to Medicare or Medicaid are found to be false or fraudulent.
**Scenario #2:**
Dr. No’s arrangement with Novarmints to receive $3,000 for each completed questionnaire about the recently FDA-approved drug raises concerns under the Anti-kickback statute. The Anti-kickback statute prohibits offering, paying, soliciting, or receiving remuneration in exchange for referrals or for generating business reimbursed under federal healthcare programs. In this case, the payment of $3,000 per completed questionnaire could be seen as remuneration for Dr. No’s prescribing decisions, potentially incentivizing him to prescribe the drug to his patients.
Even if the drug study itself is legitimate, the arrangement between Dr. No and Novarmints may still violate the Anti-kickback statute if the payment for completing the questionnaire is deemed to be an inducement for prescribing the drug. Participation in a legitimate drug study should focus on gathering scientific data and advancing medical knowledge rather than financial incentives for prescribing decisions. If found to be in violation of the Anti-kickback statute, Dr. No could face criminal penalties, civil monetary penalties, and exclusion from federal healthcare programs, while Novarmints could face similar penalties and fines. Additionally, violating the Anti-kickback statute may also trigger False Claims Act liability if claims submitted to Medicare or Medicaid are found to be false or fraudulent.
