Face Challenges Confidently

Employee Liaisons

Tuesday, November 3rd, 2015

(September 2012)

In a 2008 Advisory Opinion, the OIG addressed a proposed arrangement in which a DMEPOS company would have personnel on-site at hospitals to train and educate patients that had been prescribed a product and had selected the company as his or her supplier.[ OIG Advisory Opinion No. 08-20.] The hospitals would provide a desk and phone to the employee liaison for no charge, and the employee liaison would not provide any other services to the patients or have any contact with the patients prior to the patients’ selection of the company as his or her supplier. The OIG highlighted the following combination of factors in determining that the arrangement would not constitute a violation of the Medicare/Medicaid anti-kickback statute:

  • The free desks and telephones (i.e., remuneration) “run the same way” as the referrals;
  • The DME company was in no discernible position to be a referral source for the hospitals;
  • The employee liaisons would only provide those services necessary for the DME company to comply with the Quality Standards; and
  • The employee liaisons would not provide any services that the hospitals were otherwise obligated to provide, nor would the services provided by the employee liaisons serve as any kind of substitute for services currently provided by the hospitals at their own expense.


Based on this guidance, ABC Medical Equipment, Inc. (ABC) may designate an employee to be on a hospital’s premises for a certain number of hours each week. The ABC employee may educate the hospital staff regarding medical equipment to be used in the home by patients and related services. The ABC employee may also work with a patient, after a referral is made to ABC but before the patient is discharged, in order for there to be a smooth transition when the patient goes home. The employee liaison may not assume responsibilities that the hospital is required to fulfill. Doing so will save the hospital money, which will likely constitute a violation of the Medicare anti-kickback statute. Therefore, the ABC employee liaison should not be the person performing discharge services and handling the patient choice process. These are functions the hospital should be performing. This will reduce the risk of kickback violations as well as violations of patient choice requirements. It is worth noting that if the liaison performs the set-up and patient education at the hospital, there is a risk that the NSC could assert that ABC is using the hospital as a supplier location and that ABC must have a Part B supplier number at the hospital.

In addition to ensuring the procedures above are followed in order to avoid kickback and patient choice violations, ABC and the hospital must consider federal and state patient information privacy laws. HIPAA permits a covered entity, such as a hospital, to use or disclose protected health information without authorization for the treatment activities of a health care provider.[ 45 C.F.R. § 164.506(c)(2).] The term “treatment” is defined as “the provision, coordination, or management of health care and related services by one or more health care providers, including the coordination or management of health care by a health care provider with a third party; consultation between health care providers relating to a patient; or the referral of a patient for health care from one health care provider to another.”[ Id. at § 164.501.]

Because the provision of DME appears to be included in the definition of “health care,” and those that provide DME should qualify as “health care providers,” the sharing of patient information to coordinate a patient’s health care and arrange a patient referral should be acceptable.[ See 42 U.S.C. § 17921(7); 45 C.F.R. § 160.103; 42 U.S.C. § 1395x(s)(6), 1395(x)(n). ] Again, a patient’s information should not be shared with ABC until the patient has chosen ABC as its supplier. If information is shared with ABC prior to that point, the disclosure would not be for treatment purposes according to the HIPAA privacy regulations. Because execution of a HIPAA compliant Business Associate Agreement (“BAA”) indicates that one entity is performing a service for another entity, it would not be advisable for ABC and the hospital to enter into BAAs. By entering into a BAA, ABC and the hospital would be conceding that ABC is performing a service that is the hospital’s responsibility, and these services could be seen as remuneration provided for referrals (i.e., kickbacks). Further, the standard outlining when a BAA is required does not apply “With respect to disclosures by a covered entity to a health care provider concerning the treatment of the individual . . . .”[ 45 C.F.R. § 164.502(e)(ii)(A).] Based on this, a BAA should not be necessary because the information shared with ABC would be as part of a patient’s treatment.

This monograph is not intended to be legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general information purposes only. The law pertaining to this monograph may have changed following the date of the monograph. The reader should consult his or her own attorney for legal advice concerning the contents of this monograph. Except where noted, attorneys are not certified by the Texas Board of Legal Specialization.

Prepared by:

Health Care Group
Brown & Fortunato
P.O. Box 9418
Amarillo, Texas 79105-9418
(806) 345-6300
(806) 345-6363 (fax)

© Brown & Fortunato


OIG Advisory Opinion No. 08-20.
45 C.F.R. § 164.506(c)(2).
Id. at § 164.501.
See 42 U.S.C. § 17921(7); 45 C.F.R. § 160.103; 42 U.S.C. § 1395x(s)(6), 1395(x)(n).
45 C.F.R. § 164.502(e)(ii)(A).