The Backpack Rule: Giving Gifts in Dentistry

Did you know there are specific rules from the Office of the Inspector General (OIG) regarding giving things of value (i.e. gifts) to solicit potential customers? In this episode of Talking with the Toothcop, Andrea and I talk about some of the specific rules on gifts and kickbacks. This is stuff that you need to be aware of so you don’t get hit with penalties and fines for breaking the law. 

Outline of This Episode

• [3:34] The OIG Backpack Rule
• [11:26] Texas Administrative Code Rule 108.58
• [15:25] The anti-kickback statute (42 U.S.C. 1320a-7b)
• [20:34] Section 259.008 Dental Practice Act
• [23:03] “But everyone is doing it”
• [28:08] Dental Compliance Bootcamp 2021

The OIG “Backpack” Rule

The OIG released a special bulletin entitled “Offering Gifts and Other Inducements to Beneficiaries.” This advisory from the OIG clarifies how the state interprets and applies the rules and statutes to giving things of value to Medicaid benefit recipients. 

While they understand the competitive market and desire of dental practices to differentiate themselves in the mind of potential patients, they must uphold the integrity and fairness of the Texas Medicaid program. Giving gifts may raise concerns among the community and other providers. 

The OIG reinforces Texas Administrative Code §371.1669, which prohibits a person “From transferring or offering any remuneration which the person knows or should know is likely to influence the beneficiary’s selection of a provider, practitioner or supplier of Medicaid payable items or services.”

The state of Texas has announced that they will enforce more stringent rules than the HHS OIG, including:

• Providers are prohibited from offering items or services to influence health care decisions. The OIG presumes that any items that do not exceed $10 per patient were not provided to influence their decisions.
• Likewise, anything offered to a patient must be directly related to dentistry (i.e. a toothbrush, toothpaste, floss, etc.). You are NOT allowed to give patients backpacks and school supplies, even if your intentions are good. We get that it’s back-to-school time and people like to give out back-to-school supplies. Dental providers cannot do that. 
• You may never offer patients cash or gift cards. 

Is it different for non-Medicaid providers? Non-Medicaid providers still have to adhere to the Texas Occupations Code Section 102: Solicitation of Patients, which includes rules about not giving gifts to patients (though it doesn’t explicitly call out backpacks). Can non-Medicaid providers give gifts or do giveaways for current patients? Listen to learn more about Texas Administrative Code Rule 108.58

The anti-kickback rule (42 U.S.C. 1320a-7b)

The Anti-Kickback Statute is a criminal law that prohibits the knowing and willful payment to reward patient referrals or the generation of business involving any item or service payable by the Federal healthcare programs (e.g., drugs, supplies, or health care services for Medicare or Medicaid patients).

This includes things like rent, hotel stays, meals, excessive compensation, paying referrals, etc. Physicians or dentists who accept or pay kickbacks will be penalized up to $50,000 per kickback plus three times the amount of the remuneration. Dentists make attractive targets for kickback schemes because you are a source of referrals. 

Kickbacks in healthcare can lead to overutilization, increased program costs, corruption of medical decision-making, patient steering, and unfair competition. I hear of offices that offer free or discounted dental care for parents if they bring their children on Medicaid to the practice—which is clearly a violation of Federal law. Taking a kickback can never be justified, even if the service rendered was medically necessary.

More of this is coerced in Texas Occupations Code Sec. 259.008 Unprofessional Conduct. 

When people say “But everyone is doing it”

Some dentists have pointed out to me that there is an unfair advantage because dentists in their community do these things. The temptation to get involved in a scheme like this is high because “everyone is already doing it.” Firstly, don’t do something that everyone else is doing. That’s not how you grow your business (especially with something illegal). 

Instead, find out what’s legal in your state (and federally) and then run tests to see what works. It can be as simple as focusing on giving your patients the greatest experience possible. You can make it a memorable and pleasurable experience. How can you take customer experience up a notch?

Lastly, if people in your community are doing illegal things, perhaps they aren’t aware. If you have the gumption, you can talk to them about it. 

We cover a lot in this episode. Listen to the whole thing for all the nitty-gritty details!

Resources & People Mentioned

• Learn more about protectIt dental at https://dentalcompliance.com/drugkit or call them at 888-878-8916 and tell them that the Toothcop sent you!
• Check out ProEdge Dental at https://proedgedental.com/toothcop! 
• Offering Gifts and other Inducements to Beneficiaries
• Texas Occupations Code Section 102: Solicitation of Patients
• Texas Administrative Code Rule 108.58
• 42 U.S.C. 1320a-7b - Criminal penalties for acts involving Federal health care programs
• Texas Occupations Code Sec. 259.008 Unprofessional Conduct
• Mark your calendar for Dental Compliance Bootcamp 2021

Connect With Duane

• https://www.dentalcompliance.com/
• toothcop(at)dentalcompliance.com
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