DAN MORALES

AlTORNEY GENERAL 

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@enerat &ate of QLexas July 8,1992

Honorable Rene Guerra Criminal District Attorney Opinion No.DM-138 Hidalgo County Courthouse Edinburg, Texas 78539 Re: Whether the Edinburg Hospital 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 161.091of 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 ongoingrelationship with a member ofthe active medical staffwho 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 amember ofthe medical staff. Section 161.091ofthe Health and Safety Code provides inpertinent part: (a) A person’ licensed, certified, or registered by a health care regulatory agency of this state commits an offense if the

‘TIIC Code t3nst~etion **Act** defmes the term “person” to include a ‘corporation, organization, government

or governmental subdivision or agency, business trust, estate, trust, partnership, associdon, and anyother legal entity.” Gov ’t Code 0311.005(2).

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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 solicitingpatients orpatronage.

. . . . (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 inMedicare and federally-funded state health care programs. Pursuant to its statutory authority, the Office ofthe Inspector General ofthe United States Department of Health (the “OK?“)has issued regulations which exempt certain payment practices from those criminal penalties. See42C.F.R. 00 1001.951, 1001.952. Those regulations provide that remuneration made by a principal to an agent as compensation for services ofthe agent isnot subject to aiminal liability, as

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long asthe foIhnvingsixstandards are met: (1)The agreement must be written and signedbythe parties; (2)the agreement must specifythe 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 lessthan one year; (5)the aggregate compensation paid to the agent over the term ofthe 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 forwhichpayment 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 involvethe 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 bythe physician; wiilspecifythe schedule for delivery ofsuch services; and willcover a period ofnot less than one year. You also state that the physicians wili be paid on a flat fee or per diem basis that wilireflect the fair market value for the services to he performed. Presumably, therefore, the contract wili not take into account the volume orvalue ofthe patients admitted tothe hospital. It isbeyond the purview ofthe opinion process to reviewparticular contracts and to determine whether they satisfy speciSc statutory requirements. Assuming, however, that the contracts are asyou describe them, and that they do not “involve the counseling or promotion ofabusiness arrangement or other activity that violates any state or federal law,”42C.F.R. 0 1001.952(d)(6).then persons making payments under suchcontracts 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 161.091of the Health and Safety Code by virtue of subsection (f) which provides that section 161.091“shallnotbc construed to prohibit anypayment..
.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 161.091by virtue of subsection (e) which provides that “[t]hissection 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, isconsistent with the fair market value ofthe services, and isnot based on

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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 Regulations, payments made under such contracts would not be prohibited bysection 161.091ofthe Health and SafetyCode.

DAN MORALES Attorney General ofTexas WILLPRYOR 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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