Physician Law : Pennsylvania Health Law Lawyer & Attorney : Fox Rothschild LLP : serving Philadelphia, Pittsburgh, Allentown, Erie, Upper Darby Twp

If you read this blog with any regularity (or even if you read healthcare related news from time to time), you should be aware of the emphasis that federal and state enforcement authorities are placing on healthcare fraud and abuse enforcement.  Despite these intensive fraud and abuse enforcement activities, however, many physicians and healthcare providers are still not devoting meaningful resources to compliance planning.  I suspect that one of the main reasons for this is the fact that most physicians do not feel as though they have the economic or manpower resources to devote to compliance.  I suspect as well, however, that many physicians simply do not appreciate the seriousness or implications of a fraud investigation/action.

The Office of Inspector Gen. (OIG) of the Department of Health and Human Services has published on its website a document which offers an intriguing glimpse into the process the OIG follows when investigating and prosecuting a fraud action.  Specifically, the OIG has published testimony given by Daniel R. Levinson, the Inspector General, in a hearing today before the U.S. Senate Committee on Finance in which he describes the anatomy of a fraud action from investigation to conviction.  Those interested in maintaining fraud and abuse compliance and understanding the process will find this to be very worthwhile reading.

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Physicians who reassign their right to bill the Medicare program can still be liable for false claims submitted by the entities who obtained that reassignment, as discussed in a recent "Alert" issued by the Office of Inspector General (OIG). [PDF].

OIG also referenced settlements it reached with eight physicians who had reassigned their payments to physical medicine companies in exchange for Medical Directorship positions -- when those companies subsequently billed Medicare for services that the physicians had not actually performed.

This OIG Alert highlights the ability of physicians to monitor all services billed using their reassigned provider numbers, and strongly urges physicians to do so. If not, physicians face liability for false claims asserted under their provider numbers.

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More and more physicians are considering hospital employment as an alternative to private practice.  Whether you are considering becoming a hospital employee or joining a private group practice, however, there are a number of considerations that should be taken into account when structuring your employment agreement.  In the coming days and weeks, I hope to blog about some of these important issues -- the first of which is defining the scope of employment.

As professionals, full-time employed physicians are generally expected to work the hours and provide the services required to ensure the prompt and necessary care of practice or hospital patients. This does not mean however that the employment agreement cannot provide at least the general parameters of the employment commitment including the type of services the physician will be required to render, where he or she will be required to work, the normal work hours and the physician's on-call obligations. For example, if you are being hired to work or concentrate in a specific subspecialty, the employment agreement should state that fact. You do not want to show up for employment as an electrophysiologist and find out that you will be expected to practice general cardiology.

Similarly, if the employer has multiple service sites, unless you’re willing to rotate among those sites or be assigned to sites in your employer’s discretion, consider specifying your primary practice location in the employment agreement so that you cannot be reassigned without your prior consent. Also, the agreement should specify when you will be required to work. If the expectation is that you will work office hours on the weekend, you should know this upfront.

Finally, if you will have on-call responsibilities, you should try to have the agreement specify your maximum on-call obligations or at least that call will be shared equally among the similarly-situated physicians in the practice.
 

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Last week, the Pennsylvania Board of Medicine published proposed regulations amending the physician controlled substances prescribing regulations to, among other things, expand the regs to include butalbital, carisoprodol and tramadol hydrochloride. 

Under the proposed regulations, these drugs would now be subject to the same requirements applicable in Pennsylvania to physician office prescribing of controlled substances, including that an initial medical history and physical exam be performed before a drug may be prescribed unless emergency circumstances justify otherwise, and that patients receive appropriate counseling regarding the patient’s condition and the drug dispensed.

In addition, among other things, each time a drug is prescribed, administered or dispensed, the medical record must be updated to include the name of the drug, its strength, the quantity and the date it was prescribed, administered or dispensed. For the initial visit when the drug is prescribed, administered or dispensed, the medical record documentation must also include the patient's symptoms, the diagnosis and the instructions given to the patient for the use of the drug. If the same drug is repeatedly prescribed, administered or dispensed, the medical record must also reflect changes in the symptoms, diagnosis and instructions given.

The proposed regulations have been published for public comment. If you're interested in submitting written comments on the regulations you can submit your comments, suggestions or objections to Teresa Lazo, Assistant Counsel, Department of State, P. O. Box 2649, Harrisburg, PA 17105-2649, st-medicine@state.pa.us within 30 days of March 3, 2012. Commenters should reference No. 16A-4933 (Prescribing) when submitting comments.
 

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I have been speaking with physicians for years about the importance of developing effective fraud and abuse compliance programs in their practices and I often still get the same response:  The government is only interested in the big fish like pharmaceutical manufacturers and hospitals -physicians are under the radar. 

Well, contrary to popular belief, it appears that there are some pretty big fish in the physician community when it comes to fraud enforcement.  The Department of Justice announced this week the largest Medicare fraud bust by dollar amount of a single physician ever. Dr. Jacques Roy of Texas was accused on Tuesday of a fraud scheme which resulted in improper payments from the Medicare and Medicaid programs totaling in excess of $375 million and spanning more than half a decade.

According to the DOJ, Dr. Roy allegedly certified or directed the certification of more than 11,000 individual patients from more than 500 home health agencies over the past five years. Between 2006 and 2011, Dr. Roy's medical-practice allegedly certified more Medicare beneficiary for home health services and any other practice in the country. 

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In June of 2011, I reported on this blog about a software program being launched by the federal Department of Health and Human Services to use a technology called predictive modeling to identify fraudulent and abusive billing practices on a prepayment basis.  The program, known as the Fraud Prevention System, was funded through the The Patient Protection and Affordable Care Act of 2010 and carried an initial price tag of $77 million.  According to the Associated Press, initial results are back on use of the Fraud Prevention System and they are pretty disappointing.  Specifically, according to a recent article published by the AP, the program identified only a single case of fraud which resulted in him him him him him him him Medicare savings totaling $7,591. 

Medicare officials say it's too early to judge the system's effectiveness and, on its blog, the White House stated on Friday that "predictive modeling has identified 2,500 leads for further investigation, 600 preliminary law enforcement cases under review and resulted in 400 direct interviews with providers who would not have otherwise been contacted."   Clearly there are some bugs in the system to be worked out but it appears that HHS is not yet ready to pull the plug on the program.

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A recent U.S. Department of Justice (DOJ) settlement with a medical device manufacturer highlights the need for physicians to pay close attention to their dealings with medical device companies.

The settlement, announced in December, calls for the payment of $23.5 million to resolve allegations that a medical device manufacturer was manipulating post-market studies to improve the results and to encourage doctors to increase usage of the company’s products. [www.justice.gov/opa/pr/2011/December/11-civ-1623.html; wwwp.medtronic.com/Newsroom/NewsReleaseDetails.do] Specifically, the company was allegedly paying per-patient kickbacks of $1,000 to $2,000 to doctors in order to encourage the use of company medical devices in lieu of competitors’ devices. Because the fees were payable only when the company’s devices were used, the DOJ was concerned that the ultimate goal was to discourage the use of other devices. 

Because the law imposes criminal liability upon both sides of a situation involving illegal kickbacks [See Section 1128B of the Social Security Act, 42 U.S.C. § 1320a-7b; www.ssa.gov/OP_Home/ssact/title11/1128B.htm] the consequences are enormous, and can include:

● A felony conviction;
● Criminal fines and civil penalties;
● Prison; and
● Exclusion from federal health care programs. 

Although there are regulatory “safe harbors” that specify certain acceptable situations, it is nevertheless imperative that medical professionals monitor their practice to ensure that all physicians avoid situations where the use of medical devices is essentially conducted on a “pay-to-play” basis.

Finally, keep in mind that the DOJ investigation was triggered by company whistleblowers, which serves as an ever-present reminder that internal compliance programs are an essential tool in the fight against fraud.

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Well, another interesting article this week regarding the exodus of physicians from private practice.  This time, it's the Philadelphia Inquirer reporting on "Why Heart Doctors are Leaving Private Practice"  Only time will tell if this a merely a fad or a real change in the way healthcare will be delivered going forward.  We have seen this "trend" before, however, and it didn't really work out that well for many physicians or hospitals. 

In my experience, those transactions that are based upon each party's short-term gains/protection are unlikely to take hold for the long-term.  Striking a deal that works adequately for an initial three-year employment term is not that difficult.  The real trick is in building a model that will last well beyond the first three or six years.  If the employment model (think "goverance and compensation") doesn't foster and reward collaborative success, employed physicians end-up feeling disenfranchised, and unfortunately disenfranchised employees usually don't care that much about the success of their employer.   There is certainly an opportunity for forward-thinking physicians and hospitals to use the current climate as a catalyst to build a truly integrated delivery model but it will require both parties to check some heavy baggage at the door.  

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Most medical practices in Pennsylvania are aware that Pennsylvania imposes a sales and use tax on various items and services purchased by medical practices.  However, physicians are not always clear on exactly the items and services to which the tax applies.  For example, the tax applies to secretarial/administrative services purchased from a third party vendor.  This includes transcription services.  If your vendor is not charging a sales tax or you are not reporting a use tax in connection with your outside transcription services, you may have an issue.  The Pennsylvania Medical Society has published a helpful guide entitled How to Comply with State Sales and Use Taxes.  If you're not sure whether or how Pennsylvania's sales and use tax applies, I recommend that you give your accountant or attorney a call since the Pennsylvania Department of Treasury is currently conducting sales and use tax audits of physician practices.

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There's an interesting piece in the Miami Herald today regarding hospitals once again acquiring physician practices. The article raises some good questions regarding the motivations underlying this growing (recurring) trend and suggests that it might be more about control than preparing for a "reformed" health care system. The article also questions whether hospitals will be any more successful this go-round in managing the acquired practices than they were in previous attempts.

I frequently represent both hospitals and physicians in practice acquisition transactions. In my experience, only a handful of hospitals and health systems have a true plan for how they will integrate the practices they are acquiring in a manner that will improve the delivery of healthcare. To be sure, how best to integrate providers to improve care is not an easy question to answer. I find, however, that the "smart" hospitals and health systems are willing to acknowledge that physicians should be involved in the development process and that they (the hospitals) do not necessarily have all the answers for how best to accomplish that goal.

If you are considering selling your practice to a hospital, or you are a hospital looking to integrate the physicians in a thoughtful way, consider whether it makes sense to begin the process with a dialogue about where each party envisions the relationship to be several years in the future. If you can reach consensus on where you want to end up, you can then structure a transaction which is specifically designed to get you there.
 

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A recent article on CNNMoney discusses the not-so-new news story about the financial struggles of private medical practices. However, buried within the article is an important financial issue that many physicians overlook: collection of patient balances. According to one of the experts cited in the article, private practices lose 10% to 15% of their profits in uncollected patient balance revenue.

I've worked with many medical practices over the years on dealing with this issue and understand why physicians are reluctant to pursue aggressive patient balance collection efforts. Perhaps chief among their concerns is that physicians are afraid unhappy patients will sue or file a complaint with the Board of Medicine. Given the ease with which patients can file complaints with medical boards or, even more easily, post negative feedback on the Internet, this line of thinking is not without merit. However, having strong collection policies and making your patients aware of them upfront can go a long way to improving your bottom line and improving your patient relationships. Here are a couple of tips for developing collections policies within your practice:

• It should be a standing policy that, with only an occasional exception, patients should pay their balances at the time of service. When staff send follow-up appointment reminders, they should also remind patients to bring payment at the time of service or they will need to be rescheduled. Obviously, exceptions may need to be made to this policy where a patient's health may be jeopardized by a delay in being seen.
• Office staff who deal with patients at scheduling and check out should be trained on the collections policies so that they know what to tell patients and what procedures they must follow to ensure payment.
• Patients should be made aware of the practice's collection policies. It's a good idea to post notices your office regarding collections policies. That way patients know what is expected of them and can't claim ignorance.
• If you use a collections agency, be sure you have a clear understanding with the agency regarding the procedures they will use to collect patient balances. Among other things, you should review and approve the language in collection letters to be sure that the language is professional and not overly harsh.
• Be sure to check applicable law and your third-party payors contracts to be sure your collection policies are compliant. 

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Many physicians I work with are talking about the possibility of new payment models such as bundled payments, episode-of-care payments and Accountable Care Organization (ACO) payment models. However, few medical practices have given much thought to how such payment models might actually work for them. Many physicians are still mired in the "fee-for-service" mindset and "productivity" is still a key buzzword among physician partners in most private practices. But, as evidenced by a recent article published by AISHealth, these new payment models (which could be fantastic opportunities for the right practices) are closer than you might think. According to the AISHealth article, Horizon Blue Cross Blue Shield of New Jersey is set to begin a pilot program with five orthopedic practices for bundled total-joint replacement payments.

The payors in your market may not yet be ready to start offering these types of payment programs, but the smart money will on those practices that have given some thought to what payors are looking for and how they would respond if the opportunities are presented. Even smarter money will bet on the practices that have figured out how they can save payors money and are actively seeking to create alternative payment opportunities with their payors. If you haven't already done so, consider establishing a physician committee within your practice to begin exploring ways in which you might take advantage of these coming opportunities. They will be here before you know it.
 

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My physician clients often ask me for advice on how best to negotiate with managed care payers for improved reimbursement. My advice is typically the same: if you want them to pay you more than your competitors, you have to offer them something more than your competitors do. Simply being good at what you do is not enough. You have to be better than the competition because just like you, the competition is undoubtedly asking for more money too.

And, being better alone is also not enough. In order to get the payers to take notice, you must be able to demonstrate that you are better. This means that you need to be able to show them that your services are either of a higher quality, are more convenient or less expensive than the competition. Consider a recent article published by Amednews.com which cites a growing interest by third-party payors in driving down the “unit” cost of a health care visit. According to the article, payers are beginning to recognize that the number of patient visits is not the only driver of cost and that savings can be found in pushing down the cost of each one of those visits.

Unfortunately, many physicians have no idea of their "per unit" visit costs, and if you don't know what your costs are, it's pretty hard to try to manage them. The first step in negotiating managed care contracts, therefore, really should be to take a hard look at your practice, the services you offer, the cost of those services and what you do better (or should be doing better) than your competition. With that information in hand, you can develop a presentation for your important payers which demonstrates why your practice is deserving of special consideration.
 

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In a last ditch effort to salvage their Holiday vacation plans, the U.  S.  House of Representatives has approved legislation which will delay the 27% Sustainable Growth Rate (SGR) cut to the Medicare Physician Fee Schedule.  The good news of course is that CMS will not need to put a hold on physician payments starting January 1 as they did last year.  The bad news is that a two-month fix can hardly be considered a fix at all and any kind of permanent fix for the SGR does not even appear on Congress' radar screen.  Hopefully Santa delivers some bipartisanship this weekend because it will be sorely needed in February.

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