Nursing Facility Operator Pays $3 Million to Settle Allegations of Illegal Swapping Arrangements with Ambulance Providers

Nursing facilities and their vendors are equally at risk when entering into swapping arrangements, which provide nursing facilities a discounted rate on services provided to Medicare Part A residents, in exchange for the facility’s referral of Medicare Part B business to the vendor.

Nursing facilities must remain cautious of arrangements where pricing is “too good to be true,” and be diligent in having arrangements reviewed for potential Anti-Kickback Statute violations to avoid large Anti-Kickback Statute penalties.

Regent Management Services L.P., a Texas company that operates 12 nursing facilities, has agreed to pay over $3 million to the government to settle allegations that it received kickbacks from various ambulance companies in exchange for rights to Regent’s Medicare and Medicaid transport referrals. The settlement is significant as it is believed to be the first in the nation to hold nursing facilities (rather than ambulance companies) accountable for these kind of ambulance “swapping” arrangements.

The Anti-Kickback Statute prohibits alleged “swapping” arrangements, which can occur between ambulance companies and nursing facilities whenever the ambulance company agrees to offer transportation services to the nursing facility at low or below-cost rates for those nursing facility residents that are the facility’s responsibility to bill for (Medicare Part A residents), in exchange for the facility’s either implicit or explicit agreement to refer other more profitable transportation business to the ambulance provider (Medicare Part B transfers). Swapping arrangements can occur not just between nursing facilities and ambulance providers, but any time there is a link between a price offered to a nursing facility for PPS-covered services and referrals of other business billable directly to Federal healthcare program payors (e.g., arrangements between nursing facilities and clinical laboratories or DME suppliers).

The above-described settlement with Regent Management Services should serve as a reminder to all nursing facilities to be wary of deals “too good to be true,” the importance of having all agreements where services are paid for either in all or in part by Federal healthcare program payors reviewed by competent counsel, and the importance of reevaluating existing arrangements bearing in mind that government authorities will look skeptically whenever facilities are provided benefits and the potential for referrals exists.

If you have any questions about this recent settlement, or Anti-Kickback or “swapping” matters in general, please contact Aric Martin (Martin@ROLFLaw.com) or Jacqueline Anderson (Anderson@ROLFLaw.com) or at 866-495-5608.

Please note that this alert is intended to be informational only, and is not intended to be nor should it be relied upon as legal advice. Rolf Goffman Martin Lang LLP will not be responsible for any actions taken or arrangements structured based upon this alert. The receipt of this alert by an organization that is not a current client of Rolf Goffman Martin Lang LLP does not create an attorney-client relationship between the recipient and the law firm.