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“Swapping” Arrangements—Now a Sword That Cuts Both Ways

on Monday, 21 December 2015 in Health Law Alert: Erin E. Busch, Editor

On November 30, 2015, the OIG posted an announcement of a settlement agreement with a skilled nursing facility company, Regent Management Services, L.P. The settlement amounted to approximately $3.199 million in order to resolve allegations that Regent received kickbacks from various ambulance companies in exchange for referrals of Medicare and Medicaid business.

Regent, headquartered in Galveston, Texas, manages twelve nursing facilities under contract with independent owners and operators. Eleven of the facilities are located in Texas. The allegation was that patients at Regent-managed facilities received free or deeply discounted ambulance transportation from various ambulance services in exchange for (swapping of) Medicare and Medicaid transport referrals. The arrangement would not have been commercially reasonable for the ambulance services in the absence of Regent’s referrals because Regent would otherwise have been financially responsible for such transport.

This settlement is significant because it is believed to be the first that directed allegations of anti-kickback violations to the institutions (hospitals and nursing facilities) instead of the ambulance companies in this type of swapping arrangement. Gregory Demske, Chief Counsel to the Inspector General of the U.S. Department of Health and Human Services–Office of Inspector General commented: “This settlement sends a message to the health care industry that both sides of a swapping arrangement can be held responsible for their improper actions, not just the entity that actually bills Medicare or Medicaid for the services. Any company or individual considering entering such schemes should understand that their actions may have serious legal and financial consequences.”

Regent has also entered a Corporate Integrity Agreement with the OIG that requires compliance reforms and monitoring over the next five years.

The investigation of this matter was conducted by the Health Care Fraud prevention and Enforcement Action Team Initiative, a partnership between the OIG and the Attorney General first initiated in 2009.

Julie A. Knutson

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