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Physician Referral Programs Hold Revenue Potential and Pitfalls

Karen Minich-Pourshadi, for HealthLeaders Media, May 7, 2012

"In most of our service lines that we are supporting, we are seeing growth," says Marzullo. "To accomplish this, I spent a very large amount of time introducing myself, my team, and our program to leaders of all levels throughout the organization. Despite the travel time, I did this and continue to do this in person. We also developed a sophisticated activity report that we share each month with a large audience, demonstrating that we work in a very transparent, accountable way. I think that has helped us develop trust."

With the blossoming of medical homes and accountable care organizations, the need to create a strong referral network has never been more essential, but that doesn't preclude it from legal scrutiny. In seeking to boost referrals, financial leaders need to be sure the organization treads lightly so as not to violate any self-referral laws.

Each year the Office of Inspector General at the U.S. Department of Health & Human Services looks into numerous violations of the self-referral laws, most of which are self-reported by healthcare organizations. The financial consequences for missteps with referrals can be costly; settlement amounts grow with each count and the degree of severity.

Hospital–physician practice dealings that violate Stark I, Stark II, the Anti-Kickback Laws, or the False Claims Act can wind up costing the bottom line rather than boosting it. If a hospital or practice is found in violation of these laws, it must return all proceeds of Medicare and Medicaid claims arising from all referrals of patients for designated health services at the hospital made by physicians at the practice in question.

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