Westwood’s proposal

Westwood’s proposal

Westwood’s proposal of providing physicians with leased diagnostic equipment is illegal. The scheme is prohibited by the stark laws which ban physician self-referral, particularly the referral by the physician of Medicare or the patient covered under the Medicaid program to a facility offering designated services. The imaging services provided by the Westwood fall under the designated services which are prohibited under the law. The stark laws also forbid referrals made by the physicians or Medicaid patients to the entity if there is a financial relationship with the facility. Therefore, the proposal by the Westwood to lease diagnostic equipment to the physicians is illegal, and it violates the provision of stark laws. The scheme involves a financial relationship where the facility will reward the physician for every referral made the physician. The economic relationship in Westwood’s proposal makes the scheme illegal. Stark laws state that there should not be any financial relationship amidst the facility offering designated services and the physicians. The law requires that Westwood should not bill for the referred imaging services; however, their proposal would result in imaging of the services. Hence it would breach the law, thus rendering the scheme illegal.

The case presents an ethical issue of theft to the third-party payer who pays medical claims on behave of the patients under medical coverage. The proposal would contribute to theft when it is executed. It would make the third-party providers incur a higher cost for the designated services due to lack of knowledge on the arrangement between the physicians and Westwood. For example, the physician would bill the charges offered by Westwood to the third-party payers. Hence, it will make the third party incur higher fees than the general cost of imaging services. The practice is not ethical since it causes financial harm to the entities reimbursing the healthcare providers for the healthcare services offered to the insured patients.

Similarly, the case presents a moral issue of malpractice. Medical malpractice occurs when the healthcare professional neglect to provide appropriate services, thus resulting to harm, injury or death of the patient. Engagement of the physicians in the referral activities would hinder the physicians from offering necessary healthcare services to the patients at their respective healthcare facilities. They would opt to refer the patients to Westwood to acquire financial benefit instead of attending to the patient using the imaging equipment in their facility. Therefore, they may neglect to attend to the patients with a critical condition, thus exposing the patients to the risk of injury and even death in extreme cases. Ignoring to attend to the patients in need of imaging services would amount to medical malpractice.

Given the opportunity to act as the ultimate authority in the situation, I would ban the proposal because it violates the stark laws. Also, harsh penalties and fines would be imposed on both the physicians and Westwood should they execute the proposal without following the law. The severe penalties would discourage the entity from offering designated imaging services and the physician from enforcing the lease agreement. Thus, it would help in saving the third-party payers from incurring extra charges caused by the financial relationship between the physicians and Westwood for the imaging services.