Problems with comanagement contracts

Can an ophthalmologist and an optometrist have a formal agreement to refer patients to each other?

Facts

An ophthalmologist is approached by an optometrist with a very large patient base. The optometrist proposes that they enter into a formal comanagement relationship in which the optometrist will agree to refer all of his cataract and refractive surgery patients to the ophthalmologist if the ophthalmologist agrees to refer all of those patients back to the optometrist for postoperative care. Under the arrangement, the ophthalmologist will collect all of the fees for the services rendered and will pay the optometrist for the optometrist’s services. They agree that the optome-trist will be paid 20% of the surgical fee in the case of cataract surgery and 40% of the surgical fee for refractive procedures. In order to be certain that there is no misunderstanding, they decide to put their agreements in writing.

Is it appropriate for an ophthalmologist and an optometrist to have a formal comanagement agreement?

Alan E. Reider

The proposed arrangement has several problems. As a general matter, there never should be an agreement between an ophthalmologist and an optometrist to refer patients to each other, whether that agreement is written or oral. Comanagement must be determined to be in the patient’s best interest and, most importantly, must be undertaken only when the patient chooses to participate in a co-management arrangement.

The “terms” of the proposed agreement reflect problems as well. With respect to Medicare patients, if the optometrist performs a service, the optometrist must bill for the service. Medicare reassignment rules prohibit the ophthalmologist from billing for services performed by an optometrist in another practice. The 80%-20% split for surgery vs. postoperative care reflects the Medicare prescribed amount, presuming the optometrist performs postoperative care for the full 90-day period.

The 60%-40% split for refractive surgery may or may not present a problem. The obvious question is whether the amount received by the optometrist reflects the fair market value of services performed by the optometrist. If the answer is yes, then the arrangement is defensible. If not, the strong suggestion will be that the amount above the fair market value reflects a payment for the referral.

Both ophthalmologists and optometrists must be cautious with comanagement relationships relating to refractive surgery. There is frequently a belief that since such services are not paid for by Medicare or Medicaid, the traditional fraud and abuse analysis does not apply. This view is incorrect. Many states have anti-kickback laws that are similar to the federal law, and those that do not have specific anti-kickback laws are likely to have provisions in the state licensing acts that are sufficiently broad to prohibit conduct that could be characterized to constitute a kickback. In this case, however, even if there were no state anti-kickback law at issue, the optometrist had agreed to refer cataract surgery cases covered by Medicare. This could cause the Federal Anti-Kickback statute to be triggered as the result of a higher-than-appropriate payment for the optometrist in connection with the refractive surgery referrals.

• Alan E. Reider, JD, can be reached at Arent Fox Kintner Plotkin & Kahn, PLLC, 1050 Connecticut Ave. NW, Washington, DC 20036; 202-857-6462; fax: 202-857-6395; e-mail: reidera@arentfox.com.