Question
Is there a violation or an appearance of a violation to the stark laws, a violation of the ethical practices guidelines, or an appearance of a conflict of interest when an Audiologist who owns their own business and who also has ownership in a buyers group within which that business is purchasing hearing aids, then sells the hearing aids through the participating business to the general public or to medicaid/medicare/3rd party insurance recipients? If the business owner files a claim and the invoice is required, would not the payout of profits from the buyers group lower the stated cost of goods?
Answer
I would be concerned that any purchase you make will have the taint of the 'kickback' in terms of the rebate. If you do not pass the discount on and document that you have done so, you can be in violation of the Antikickback Statute. The federal government has not looked kindly on buyers' cost reductions that have not been openly and fully passed on as discounts for billing purposes to the ultimate payor, in this case the federal government. It would be likely that you would favor those products under which you could receive a discount under the buyers group, hence this arrangement could be seen as payment for referrals. I'd also be concerned that if a physician is involved, you might be violating the Stark Laws that prohibit self-referral to entities in which the physician had a financial interest, but that would depend on what specifically was covered by the agreement and how the agreement is structured to involve the audiologist.
I'd also be concerned from an ethics point of view. Again, unless you fully disclose your discounts and pass them onto your patients -- particularly because you will be getting discounts on specific products that were negotiated by the buying group to the exclusion or possible exclusion of others -- there may be an appearance of impropriety that you are favoring the products that you are able to garner the discounts. Assuming you believe that you could be neutral in assessing what is best for your patients, which may or may not realistic, it would be very difficult for a reasonable third party, including your patients, to believe that such discounts would have no influence upon the care you recommend.
Finally, as usual, make sure you have any proposed arrangement reviewed by an attorney who knows both the federal laws and the state laws on these issues.
Bryan A. Liang, MD, PhD, JD, is Executive Director and Professor of Law, Institute of Health Law Studies, California Western School of Law, and Co-Director and Associate Professor of Anesthesiology, University of California, San Diego School of Medicine, San Diego, CA. His work focuses upon law and its interface with health care, including ethics and conflict of interest issues.