Pharmacy staffed by pharmacist provided by an employee leasing agency is a provider as defined by Section 109 of the Act. When a physician has ownership interest in said pharmacy, a referral to the pharmacy violates the Act’s self-referral prohibition.

In this case, 700 Pharmacy filed five Fee Review Applications for prescriptions for the claimant. The Hearing Officer dismissed all of the applications on the grounds of an illegal self-referral. The Hearing Officer did find that the pharmacy had standing to file for Fee Review as a “provider” under the Act. Both the pharmacy and the insurer filed cross appeals with the Commonwealth Court.

On appeal, the insurer argued that the pharmacy did not have provider status under the Act. According to the insurer, the pharmacist was employed by an employee leasing agent, and because leasing agent companies are not providers under Section 109 of the Act, the pharmacy could not be considered a provider. The Commonwealth Court disagreed and held that Section 109 does not limit its definition of “provider” to entities employing professionals in a particular fashion, nor to professionals having a specific type of employment relationship with an entity. The court noted that Section 109 specifically includes agents of a provider within the definition of provider. According to the court, the Hearing Officer did not err in finding that the agency and its billing team were acting on behalf of, and as agents of, the pharmacy.

The court further rejected the pharmacy’s argument that the anti self-referral provisions of the Act apply only to those entities specifically listed in the Act and, because Section 306(f.1)(3)(iii) does not specifically list pharmacies or pharmaceuticals, the anti-referral provision does not apply to them. According to the court, the Act specifies that it is unlawful for a provider to refer a person for goods or services and, although the Act does not define goods, drugs are goods for the purposes of the anti-referral provision. Accordingly, the court held that the Hearing Officer properly denied and dismissed the applications on the basis that they originated from a prohibited self-referral.  

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