As the health care industry becomes increasingly globalized, hospitals around the world are finding themselves under mounting legal and political scrutiny over rising costs and decreasing profits.1 In an effort to offset declining profit margins and ever-growing competition, hospitals have striven to come up with innovative ways to attract and retain patients. In the vast majority of situations this means convincing physicians that the best avenue of treatment for their patients lies with a particular hospital and its package of tertiary care services.
However, myriad state and federal laws regulate just how hospitals in the United States may attract physicians and thus, those physicians' patients. In general, hospitals are prohibited from offering any type of remuneration to physicians to encourage referrals to a particular hospital if payment for those patients' procedures comes from federal health care programs.2 This puts hospitals in the precarious position of attempting to induce physicians to practice in their facilities without crossing the line into illegal remuneration.3
As the globalization of health care continues, however, American-based hospitals are finding that international markets are one, as of yet, untapped source of physician and patient referrals.4 Nonetheless, a perplexing issue remains as to whether or not American anti-kickback and anti-referral regulations apply to American hospitals' relationships with foreign entities and individuals. Does it violate American law for an American health care entity to pay a foreign affiliate to refer a patient to an American hospital for treatment if the transaction is fully within the other country's laws? How do quality-of-care issues come into play in the context of financially able patients who want to travel to the United States for medical treatment, thus freeing up sometimes limited facilities for their compatriots?
These issues and many others stemming from interactions and transactions with foreign entities and individuals have come to the forefront of the health care industry as hospitals are pressed increasingly to find ways to boost profits in a saturated domestic market. Hospitals are torn between economic pressures to find more patients more quickly while trying to stay within the boundaries of somewhat dubious standards with regard to international transactions. As of yet, there are no clear cut judicial or statutory standards regarding this type of transaction, although it is only a matter of time before this issue comes before the American courts. Until that time, hospitals are forced to take the situation as they find it and hope for the best in terms of staying within the guidelines of American anti-referral and fraud laws. Only time will tell which hospitals have made the right decision and which will fall victim to domestic anti-kickback regulations.
This paper will address the application of domestic federal laws involving Medicare and Medicaid kickbacks and referrals, the anti-bribery and books and records provisions of the Foreign Corrupt Practices Act (FCPA),5 and the laws of selected other countries regarding these types of transactions. State-level regulations will not be discussed here; rather, since various states approach this issue differently,6 practitioners should consult their local state regulations before entering into a transaction of this nature. It should be emphasized that many states prohibit any type of payment for patient referrals, not just those referrals that implicate federal funding, so transactions well within the scope of the national and international laws discussed here may still run afoul of state regulations.
After examining the applicable domestic laws and the laws of other countries regarding health care referrals and payments for such, it will be clear that there is no violation of federal domestic or international law in a transaction such as …