Safe Sales Rep Compensation
Payment of incentive compensation to marketers is standard practice in the home care, private duty, home medical equipment (HME) and hospice industries. The federal statute prohibiting illegal remuneration or the anti-kickback statute seems to permit payment of incentive compensation to employees. The statute says, in part, as follows:
(1) Whoever knowingly and willfully solicits or receives any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind—
(A)in return for referring an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under this subchapter, or
(B)in return for purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing or ordering any good, facility, service, or item for which payment may be made in whole or in part under this subchapter,
shall be guilty of a felony and upon conviction thereof, shall be fined not more than $25,000 or imprisoned for not more than five years, or both.
(2) Whoever knowingly and willfully offers or pays any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind to any person to induce such person
to refer an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under this subchapter, or
to purchase, lease, order, or arrange for or recommend purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under this subchapter,
shall be guilty of a felony and upon conviction thereof, shall be fined not more than $25,000 or imprisoned for not more than five years, or both.
There are also several exceptions included in the anti-kickback statute, including the following:
(3) Paragraphs (1) and (2) shall not apply to—
….(B) any amount paid by an employer to an employee (who has a bona fide employment relationship with such employer) for employment in the provision of covered items or services…
Consequently, it seems clear that, as long members of the staff are bona fide employees, providers may pay incentive compensation without violating applicable prohibitions regarding payment for referrals.
In addition, on July 29, 1991, the Office of the Inspector General (OIG) of the U.S. Department of Health and Human Services published exceptions to the kickback and rebate statute in the form of safe harbors. These exceptions or safe harbors include the following:
(i) Employees. As used in section 1128B of the Act, “remuneration” does not include any amount paid by an employer to an employee, who has a bona fide employment relationship with the employer, for employment in the furnishing of any item or service for which payment may be made in whole or in part under Medicare or a State health care program…
So far, so good!
Providers must be able to show, however, that marketers are bona fide employees.
A key court decision on this issue is United States v. Aids Healthcare Found., Inc; 262 F. Supp. 3d 1353 (S.D. Fla. 2017); decided June 9, 2017. In this case, the Court pointed to the facts that staff members filled out various employment-related forms, underwent background checks and acknowledged reading employment policies to support a conclusion that they were bona fide employees. The Court also pointed to the fact that documents described staff members as “full time, regular,” and “at will.” Both the employer and the staff members in this case confirmed that they viewed the relationship as that of employer-employee. Staff members also worked on the premises of the Foundation using its supplies, and the Foundation deducted taxes from paychecks and provided tax forms.
Consequently, it is clear that home care providers that want to rely on the exceptions described above to pay incentive compensation to marketers must be able to demonstrate that marketers are employees using the above criteria.
Elizabeth E. Hogue, Esq.
Office: 877-871-4062
Fax: 877-871-9739
E-mail: ElizabethHogue@ElizabethHogue.net
Twitter: @HogueHomecare
