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DAN MORALES                                    July 8,1992
 AlTORNEY
       GENERAL


     Honorable Rene Guerra                              Opinion No. DM-138
     Criminal District Attorney
     Hidalgo County Courthouse                          Re: Whether the Edinburg Hospital
     Edinburg, Texas 78539                              Authority may pay physicians a flat fee or
                                                        per diem to be on call to admit
                                                        emergency room patients to the hospital
                                                        without violating section 161.091 of the
                                                        Health and Safety Code, which prohibits
                                                        remuneration for securing or soliciting
                                                        patients (RQ-301)

     Dear Mr. Guerra:

             You ask whether the Rdinburg Hospital Authority (the “hospital”) may pay
     physicians on a flat fee or per diem basis to be on call to admit emergency room
     patients to the hospital without violating section 161.091 of the Health and Safety
     Code which prohibits health care professionals from accepting remuneration for
     securing or soliciting patients or patronage. You explain that the hospital has
     contracted with a local medical firm to provide physicians to staff the emergency
     room. These physicians are not on the hospital’s active medical staff and are
     therefore unable to admit patients to the hospital. Although some emergency room
     patients have an ongoing relationship with a member of the active medical staff who
     can admit them to the hospital, other patients do not. As a result, the hospital must
     recruit physicians from its active medical staff to be available at the emergency
     room for the sole purpose of admitting those patients who have no ongoing
     relationship with a member of the medical staff.

             Section 161.091 of the Health and Safety Code provides in pertinent part:

                    (a) A person’ licensed, certified, or registered by a health
                care regulatory agency of this state commits an offense if the

             ‘TIICCode t3nst~etion Act defmes the term “person”to include a ‘corporation, organization,
     governmentor    governmental subdivision or agency, business trust, estate, trust, partnership,
     associdon, and any other legal entity.” Gov’t Code 0 311.005(2).


                                                   p.     713
Honorable Rene Guerra - Page 2           (DM-138)




          person intentionally or knowingly offers to pay or agrees to
          accept any remuneration directly or indirectly, overtly or
          covertly, in cash or in kind to or from any person, firm.
          association of persons, partnership, or corporation for securiq
          or soliciting patients or patronage.

              .. . .


              (e) This section shall not be construed to prohibit
          remuneration for adverbsing, marketing, or other services that
          are provided for the purpose of securiq or soliciting patients
          provided the remuneration is set in advance, is consistent with
          the fair market value of the services, and is not based on the
          volume or value of any patient referrals or business otherwise
          generated between the parties.

              (f) This section shag not be construed to prohibit any
          payment, business arrangements, or payments practice not
          prohibited by 42 U.S.C. Section 132Oa-7b(b) or any regulations
          promulgated pursuant theretof [Footnotes added.]

        Section 1320a-7b(b) of title 42 of the United States Code generally
  . .    .
cnmmahs       kickbacks in Medicare and federally-funded state health care programs.
Pursuant to its statutory authority, the Office of the Inspector General of the United
States Department of Health (the “OK?“) has issued regulations which exempt
certain payment practices from those criminal penalties. See 42 C.F.R. 00 1001.951,
1001.952. Those regulations provide that remuneration made by a principal to an
agent as compensation for services of the agent is not subject to aiminal liability, as




                                        p.   714
Honorable Rene Guerra - Page 3           (DM-138)




long as the foIhnving six standards are met: (1) The agreement must be written and
signed by the parties; (2) the agreement must specify the services to be provided by
the agent; (3) the agreement must specify the enact schedule of the time intervals
for which services are to be provided and the charges therefor; (4) the term of the
agreement must be for not less than one year; (5) the aggregate compensation paid
to the agent over the term of the agreement must be set in advance, be consistent
with fair market value in arms-length tmmactions, and not be determined in a
manner which takes into account the volume or value of any referrals or business
otherwise generated between the parties for which payment may be made in whole
or in part under Medicare or a federa&-funded state health care program; and
(6) the services performed under the agreement must not involve the counseling or
promotion of a business arrangement or other activity that violates any state or
federal law. Id. 0 1001.952(d).

       You state that the hospital’s personal service contracts with the physicians
willbesetoutinmitingandsignedbytheparties;willspecifytheservicestobe
provided by the physician; wiil specify the schedule for delivery of such services; and
will cover a period of not less than one year. You also state that the physicians wili
be paid on a flat fee or per diem basis that wili reflect the fair market value for the
services to he performed. Presumably, therefore, the contract wili not take into
account the volume or value of the patients admitted to the hospital.

        It is beyond the purview of the opinion process to review particular contracts
and to determine whether they satisfy speciSc statutory requirements. Assuming,
however, that the contracts are as you describe them, and that they do not “involve
the counseling or promotion of a business arrangement or other activity that violates
any state or federal law,”42 C.F.R. 0 1001.952(d)(6). then persons making payments
under such contracts are exempted from crimimd liability under section 132&+7b(b)
of title 42 of the United States Code by the regulations promulgated by the OIG.
Therefore, the payments made pursuant to such contracts are also exempted from
section 161.091 of the Health and Safety Code by virtue of subsection (f) which
provides that section 161.091 “shall not bc construed to prohibit any payment.. . not
prohibited by 42 U.S.C. Section 132Oa-7b(b) or any regulations promulgated
pursuant thereto.” We also conclude that such payments would be exempted from
section 161.091 by virtue of subsection (e) which provides that “[t]his section shah
not be construed to prohibit remuneration for.. . services that are provided for the
purpose of seeming or soliciting patients provided the remuneration is set in
adance, is consistent with the fair market value of the services, and is not based on



                                         p.   715
Honorable Rene Guerra - Page 4         (DM-138)




the volume or value of any patient referrals or business otherwise generated
between the parties.”

                                   SUMMARY

              Assumhg that the Edinburg Hospital Authority’s contracts
         with physicians for the purposes of admitting emergency room
         patients to the hospital confomt with the criteria set forth in
         section 1001.952(d) of title 42 of the Code of Federal Regula-
         tions, payments made under such contracts would not be
         prohibited by section 161.091 of the Health and Safety Code.




                                                   DAN      MORALES
                                                   Attorney General of Texas

WILL PRYOR
First Assistant Attorney General

MARY KELLER
Deputy Assistant Attorney General

RENEAHIcKs
Special Assistant Attorney General

MADELEINE B. JOHNSON
Chair, Opinion Committee

Prepared by Mary R. Grouter
Assistant Attorney General




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