Doctors aren't the only ones scrutinizing physician practice management company fees. HHS' inspector general's office is checking to see whether such fees violate federal anti-kickback standards.
The OIG's first report on PPM fees, issued April 15, could be bad news for companies that use incentive-based plans, or try to build up a network of physicians that can refer patients to one another.
A Florida-based PPM, whose name was not revealed, asked the OIG whether a plan in which the company is reimbursed for its costs and pays a percentage of net revenue would constitute illegal remuneration.
Specifically, the agreement involved a PPM setting up a deal with a family-practice physician whose practice would then have been folded into a larger clinic. The physician would have had to pay the PPM 17.372% of the initial cost of capital assets; pay fair-market value, which was not defined, for the company's operating services; and send back to the PPM 20% of monthly net revenues.
In exchange, the PPM would cover all physician compensation and benefits, furnish initial capital for a new office, handle operating services such as billing and accounting, and provide marketing and management services, including negotiation of payer contracts. Also, the PPM would set up provider networks, to which the physician would refer patients.
In its advisory opinion letter, the OIG wrote that the plan contains no safeguards against overutilization and "appears to contain no limitations, requirements or controls that would minimize any fraud or abuse." The OIG says the proposed arrangement may include financial incentives to increase patient referrals and encourage abusive billing practices.
Though the opinion letter applies only to the specific company under review, healthcare attorneys say it may have the effect of putting PPMs on notice to review their management fee plans to avoid OIG scrutiny.