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Physician Law

Current news, updates, & useful tips relating to legal issues affecting physicians & non-institutional providers in their personal & professional lives

Tips for Evaluating Provider Network Arrangements

Posted in Billing & Reimbursement, Practice Management, Reimbursement

In response to the development of alternative payment systems, provider networks are forming at a frenetic pace. If you are like most of my physician clients, you have been or will shortly be presented with network participation agreements for review (or in many cases, signature with very little opportunity to review) and consideration. In evaluating potential network affiliations, consider these basic contract review pointers:

1. Although it may seem obvious, I often have to remind physicians that they should carefully read and understand each element of contracts presented to them before signing. Not surprisingly, given the volume of paperwork put in front of them on a daily basis, many physicians skip this most critical step on the assumption that they will have no bargaining power in any case. However, even if a contract cannot be negotiated, it is important to understand what you are signing.

2. Ask for and review all relevant supporting documentation. Many network agreements I have seen refer to policies, procedures and clinical protocols. Participating providers will be expected to abide by these documents so it is important to request and review them as part of the overall analysis of the affiliation. These supporting documents can impose material obligations on participating providers so if they have not yet been created at the time of presentation of the participation agreement, physicians should ensure that they have an opportunity to withdraw from the network without penalty once these documents are developed.

3. Pay close attention to the economic terms and be sure you understand how they will impact your practice. Physicians should request examples of how complex economic formulas would work and ideally should try to model the economic terms using real practice data.

4. Finally, chances are that more than one network will form in your market, and you could be faced with having to choose one over another. For this reason, it is important to evaluate whether a proposed affiliation requires exclusivity and how difficult it would be to withdraw (and take your patients with you) should you need to change affiliations.

Obviously, there are many other legal and business considerations that should go into the evaluation of potential network affiliations. However, doing some basic legwork on your own may help you to distinguish between those affiliations that are most likely to get off the ground, those not quite ready for prime time but worth keeping an eye on, and those that can or should be ignored.

 

Bill Limits Physician Dispensing Under Pennsylvania Workers’ Compensation Program

Posted in Pennsylvania Legislation

Physicians in Pennsylvania who have been dispensing and billing for prescription drugs under the Pennsylvania Workers’ Compensation program will be disappointed to learn that House Bill 1846 (which already passed the House) was approved by the Pennsylvania Senate yesterday, essentially clearing the way for the bill to be signed into law.  HB 1846, among other things, limits the amount a physician may charge for drugs under the Workers’ Compensation program to 110% of the Average Wholesale Price of the drugs.  The Bill also limits the amount of drugs a physician can dispense to a Workers’ Compensation patient to a 7-day supply for Schedule II and III drugs and to an initial 30-day supply for any other drug.  The final bill can be viewed here:  Pennsylvania House Bill 1846

Does Your Practice Need a Disruptive Physician Policy?

Posted in Practice Management

One of the most challenging  problems I encounter in representing physician practice is disruptive physician behavior.  This type of behavior usually manifests in a host of unpleasant ways such as outbursts in the office or hospital, inapropriate language with office staff or patients or, perhaps most insidious, passive aggressive undermining of other physicians in the practice.  It can occur for any number of reasons such as dissatisfaction with practice economics, personal issues at home, or a physician who simply never learned how to behave appropriately in a professional setting.

Whatever the reason, unless addressed promptly and effectively, disruptive physician behavior can destroy a medical practice.  This behavior can lead to a lawsuits among practice partners, employment liability from employees who feel mistreated and serious reputational damage to the practice and it’s physicians.

One way to deal with disruptive physician behavior is to preempt it by adopting a physician behavior policy.  Such a policy can outline a professional code of conduct within the office, establishing parameters for patient staff and professional interactions.  It should ideally tie in to existing office personnel policies as well such as anti-discrimination and anti-harassment policies.

Of course, to be effective, any practice policy must have teeth.  Accordingly, the behavior policy should spell out clearly the potential sanctions for breach.  Examples of possible sanctions could be reprimand by the practice’s governing body, a reduction in compensation, suspension or, ultimately, employment termination.  Because implementation of the policy and the sanction system can potentially create legal exposure for the practice and its officers/directors, it is important that practices works closely with legal counsel to develop and implement a behavior policy.

Even in the best practices, the possibility for disruptive physician behavior to develop exists. Consider whether this important management tool make sense for your practice.

Physician Employment Agreements: For Cause or Not-For-Cause

Posted in Practice Management

As a health care attorney, I am called upon quite frequently to draft and/or review .  One of the recurring discussions I have with physicians about such arrangements revolves around the issue of contract termination.  Many physicians, understandably, are hopeful of securing an “iron-clad” employment agreement that cannot be terminated without some distinct finding of cause such as the physician’s conviction of a felony or loss of license.  However, when negotiating an employment agreement, both parties to the arrangement should consider the risk that the employment relationship may not work out for a variety of reasons – including clinical performance.

If the relationship becomes untenable for the employer and the only way the agreement can be terminated is for cause, the employer will likely scrutinize the employed physician’s performance very closely for a reason to terminate the agreement.  Terminating a physician’s employment for cause without a firm basis for doing so can create legal exposure for the employer since, for example, a physician whose clniical skills have been called in to question could sue.  On the other hand, a disgruntled physician employee can have a very disruptive impact in an office, with patients and on valuable referral relationships but he could face a breach of contract claim if he leaves employment before the end of the term.

For the above reasons, I often suggest that physician employment agreements afford both parties the opportunity to terminate the relationship without cause on a certain number of days’ notice.  Such a provision can allow for an easy way out without exposing the employer to a wrongful termination lawsuit or exposing the employed physician to the stigma of having been terminated for cause.  And, in my experience, after spending time and money to recruit/interview and negotiate the contract, parties rarely end such an arrangement without having a pretty good reason, so the risk of an “out of the blue” termination is usually not as great as many physicians initially fear.

Physicians Can Review and Correct Reported Data under the Sunshine Act

Posted in Health Reform, Medicare

Many physicians recently received a notice from the Centers for Medicare and Medicaid Services (CMS) notifying them of the opportunity to register with the CMS “Open Payments” system and review financial data reported about them by drug and device manufacturers under the federal Physician Payments Sunshine Act (“Sunshine Act”).  This had led to some confusion among physicians as to what, if any, obligation they have under the Sunshine Act.

The Sunshine Act requires “applicable manufacturers” of drugs, medical devices and biologicals covered under Medicare, Medicaid and CHIP to report certain payments and items of value given to physicians.  This information is collected by CMS and is to be made public on a searchable online database by September 30, 2014. Under the law, an “applicable manufacturer” is limited to an entity operating in the United States that is either: An entity engaged in the production, preparation, propagation, compounding, or conversion of a covered product; or  An entity under common ownership with an “applicable manufacturer” that provides assistance or support with respect to the production, preparation, propagation, compounding, conversion, marketing, promotion, sale, or distribution of a covered product.   The reporting requirement is the manufacturers’ obligation.  Physicians who receive payments from applicable manufacturers have no reporting obligation. 

Physicians do have a right, however, to dispute reported payments.  Specifically, before CMS posts the collected information to the public website, physicians have 45 days to review and correct the information.  The reporting manufacturers will have an additional 15 days to correct the erroneous information before submitting and attesting to the updated information to finalize the data submission. More information on the Sunshine Act can be found on the CMS website here: http://www.cms.gov/Regulations-and-Guidance/Legislation/National-Physician-Payment-Transparency-Program/index.html

Pennsylvania gets Federal Approval for Medicaid Expansion

Posted in Pennsylvania Legislation

The Centers for Medicare and Medicaid Services (CMS) has agreed to permit Pennsylvania to expand its Medicaid program under the federal Affordable Care Act to cover low income adults whose incomes exceed the federal poverty level.  Pennsylvania will join 26 other states in expanding its Medicaid program under the statute.  With the expansion, the Pennsylvania Medical Assistance Program benefits will cover an additional 500,000 people starting in 2015.  Beginning in 2016, individuals whose incomes exceed the federal poverty level may be required to pay a modest premium for the coverage.  More information on the program, which is call the Health PA Plan, can be found on the plan website at healthypa.com.

It’s Official (at least for now): ICD-10 Implementation Date is Now October 1, 2015

Posted in Medicare

According to a final rule published by the Centers for Medicare and Medicaid Services on August 4, 2014, providers will be required to use  the International Classification of Diseases, 10th Revision for diagnosis coding starting on October 1, 2015.  Until then providers are to continue using the 9th Revision (ICD-9).

Given the winding path that ICD-10 has taken thus far, whether this new compliance date will stick remains to be seen.   The Department of Health and Human Services (HHS) announced in 2009 that ICD-10 would be the standard code set (required by HIPAA) to replace ICD-9.  The original implementation date was to be October 1, 2013.  However, citing a lack of resources and readiness to implement ICD-10, in 2012, HHS extended the complianc deadline to October 1, 2014.  But, the Protecting Access to Medicare Act of 2014 (PAMA), which was adopted on April 1, 2014, prohibited HHS from implementing ICD-10 before October 1, 2015 — hence the new “official” compliance date.

OIG Publishes Fraud Alert on Physician Lab Arrangements

Posted in Fraud and Abuse, Medicare

Physician ancillary service joint ventures continue to proliferate and not surprisingly, federal and state regulators are on the lookout for arrangements which may violate fraud and abuse laws .  In its recent “Special Fraud Alert: Laboratory Payments to Referring Physicians”, the Office of Inspector General (OIG) has (once again) expressed concern over financial arrangement between physicians and clinical laboratories to which they may refer.  In the alert, the OIG focus on two types of financial arrangements which they believe raise substantial risk under the anti-kickback statute:

1.            Payments by clinical laboratories to physicians to collect, process, and package patients’ specimens; and

2.            Payments by clinical laboratories to physicians to report patient data to “registries” established by the clinical laboratories.

With regard to specimen collection arrangements, the OIG cites the following characteristics as potentially problematic:

  • Payments that exceed fair market value for services actually rendered by the physician;
  • Payment for services for which payment is also made by a third party, such as Medicare;
  • Payments made directly to the ordering physician rather than to the ordering physician’s group practice, which may bear the cost of collecting and processing the specimen;
  • Payments made on a per-specimen basis for more than one specimen collected during a single patient encounter or on a per-test, per-patient, or other basis that takes into account the volume or value of referrals;
  • Payments offered on the condition that the physician order either a specified volume or type of tests or test panel, especially if the panel includes duplicative tests;
  • Payments made to the physician or the physician’s group practice, despite the fact that the specimen processing is actually being performed by a phlebotomist placed in the physician’s office by the laboratory or a third party.

With regard to registry arrangements, the OIG cites, among other things, the following characteristics of concern:

  • The laboratory requires, encourages, or recommends that physicians who enter into Registry Arrangements perform the tests with a stated frequency (e.g., four times per year) to be eligible to receive, or to not receive a reduction in, compensation;
  • The laboratory collects comparative data for the Registry from, and bills for, multiple tests that may be duplicative or that otherwise are not reasonable and necessary;
  • Compensation paid to physicians on a per-patient or other basis that takes into account the value or volume of referrals;
  • Compensation paid to physicians which is not fair market value for the physicians’ efforts in collecting and reporting patient data; and
  • Compensation paid to physicians that is not supported by timely documentation memorializing the physicians’ efforts.

Physicians considering entering in to financial arrangements with clinical labs should review their arrangements carefully for compliance with not only the federal anti-kickback statute but other federal and state fraud and abuse laws.

Pennsylvania Department of Health Clarifies Clinical Laboratory Law

Posted in Ancillary Services, Pennsylvania Legislation

On December 18, 2013, Pennsylvania Act 122 amended the Pennsylvania Clinical Laboratory Act to, among other things, impose licensure requirements on out of state clinical laboratories and to place certain prohibitions on physician financial arrangements with labs.  Among other things, Act 122 prohibits the payment or receipt of commissions, bonuses, kickbacks or fee-splitting arrangements and prohibits laboratories from leasing office space, shelves or equipment within a physician’s office.  The Department of Health has now issued two rounds of “Frequently Asked Questions” regarding clinical laboratories and Act 122.  These FAQs can be found on the Department’s website here.  Physicians in Pennsylvania who have financial/contractual arrangements with clinical laboratories, whether those labs are located in Pennsylvania or in another state, should carefully review Act 122 and the FAQs to ensure that their arrangements are in compliance with these new requirements.

Medicare Rolls Out 5-Star Rating System for Providers/Physicians

Posted in Medicare

Are you and your practice ready to be rated by Medicare?  If not, you should probably get ready.

According to a CMS blog post by Dr. Patrick Conway, CMS Deputy Administrator for Innovation and Quality and Chief Medical Officer, the Medicare program is getting ready to role out a five-star rating system for three provider-types including hospitals, dialysis facilities and home health providers.  These will be in addition to the five-star rating systems already being implemented for nursing homes and, to a limited extent, for physician practices.

According to Dr. Conway, the ratings will be based on “established scientific standards of rigor and accuracy” and are designed to help patients make informed decisions based on quality.  These rating systems are (or will) be available on the Medicare.gov “compare” websites at the follwoing links: Hospital Compare, Dialysis Facility Compare, Home Health Compare, Nursing Home Compare, and Physician Compare.

According to the Physician Compare website, at the present time, the site can only be used to compare physician group practices but patients will be able to compare individual physicians in the future.  The site also encourages physicians to keep their data up to date to be sure that patients are using current data when making comparisons.  If you are not yet familiar with the Medicare Compare websites, it’s a good idea to review them, get an understanding of the rating data and see how you and your practice measure up.