The problem of physician self-referral under the Medicare and Medicaid antikickback statute. The Hanlester Network case and the safe harbor regulation
T. S. Crane
Office of General Counsel, US Department of Health and Human Services, Washington, DC.
Dramatic changes have taken place in the legal and ethical status of
physician self-referral. In July 1991, the US Department of Health and
Human Services issued the "safe harbor" regulation, which permits
self-referral only under very narrow constraints. In September 1991, the
Department of Health and Human Services Departmental Appeals Board ruled in
the landmark Hanlester Network case that joint venture profit distributions
are illegal under the antikickback statute when intended to influence
investors' reason or judgment in referring Medicare or Medicaid patients.
Following this principle on remand in March 1992, the Administrative Law
Judge precedentially held that profit distributions violated the statute.
Before this remand decision, the Departmental Appeals Board ruling and the
safe harbor regulation started the pendulum swinging against self-referral
as seen, for example, in the December 1991 revised American Medical
Association ethical guidelines. To help providers operate in this new legal
and ethical climate, legislation is needed to authorize case-by-case safe
harbors.