Which Is It: Self-Referral or Gainsharing?

A series of fines have been levied in New Jersey for various fraudulent practices that might have a chilling impact on the way hospital systems do business:

The doctors -- Ravindra Patel of Scotch Plains, Jasjit Walia of Edison and Rakesh Sahni of Rumson -- agreed to pay a combined $960,000, representing twice the annual salaries they received from the University of Medicine and Dentistry of New Jersey, according to Ralph J. Marra, acting U.S. attorney for New Jersey.

Lawyers for the cardiologists were unavailable for comment last night.

Federal law prohibits doctors from accepting payments in exchange for referring patients. Beginning in 1996, authorities say University Hospital began trying to increase the number of cardiac procedures it performed by offering salaries to doctors in private practices in exchange for referrals.

A criminal inquiry into the program began after a federal monitor -- former U.S. Attorney Herbert J. Stern -- charged many of the doctors were given no-show faculty jobs. Most had few if any research credentials, and few actually taught, authorities said.

Many hospital systems pay non-employed specialist physicians from the surrounding community as "directors" of various specialty departments. In the case of cardiologists or gastroenterologists, one such role might be as "Director of the Catheterization Laboratory" or "Director of the GI Laboratory." Such directors reportedly play a role in assuring proper staffing, scheduling, or as training resources for nurses or technicians. But if no work actually occurs by the contracted physician in kind, then the government can move in. It appears this was the case in New Jersey.

But an even more perplexing problem is posed if there are competing groups vying for the services of one lucrative hospital laboratory, these same "directors" may be perceived as skewing the availability of lab time toward their groups, creating a source of friction for their competition. The defense of such a case can get very expensive for a hospital system.

But just when it appears doctors are starting to get the message about such arrangements, comes a new form of legal kickback: "gain-sharing." Gosh, I don't know why all of this is confusing, do you?

Could this be part of the government's upcoming strategy to save "$500 billion" in Medicare fraud costs? If so, it appears figuring out what is legal and what's not will continue to be next to impossible for physicians, and when there's a need for cash, well, it appears the side with the larger bankroll will win.

But if there's one takeaway from all of this: doctors and hospitals might want to carefully scruitinize their current consulting/employment arrangements.

After all, the government's a little short of cash right now.

-Wes