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

On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act of 2009 (Recovery Act), which, among other things, created financial incentives for physicians and other providers to adopt and utilize electronic health records (EHR) and penalties for those physicians who do not.  The provisions addressing the incentives are known as the Health Information Technology for Economic and Clinical Health Act or the "HITECH Act".  Many physicians remain uncertain about the details of the incentives so CMS has now published a Fact Sheet which is intended to shed some light on the HITECH payment incentives. 

Here are some of the key points from the Fact Sheet:

• Financial incentives will begin in January 2011 for eligible professionals (EPs) who are meaningful EHR users.
• Beginning in 2015, payment adjustments will be imposed on EPs who are not meaningful EHR users by that date.
• Hospital-based physicians who substantially furnish their services in a hospital setting are not eligible for incentive payments.
• Incentive payments will equal to 75 percent of Medicare allowable charges for covered services furnished by the EP in a year, subject to a maximum payment in the first, second, third, fourth, and fifth years of $15,000; $12,000; $8,000; $4000; and $2,000, respectively.
• For early adopters whose first payment year is 2011 or 2012, the maximum payment is $18,000 in the first year.
• There will be no payments for meaningful EHR use after 2016.
• The Medicare fee schedule amount for professional services provided by an EP who was not a meaningful EHR user for the year would be reduced by 1 percent in 2015, by 2 percent in 2016, by 3 percent for 2017 and by between 3 to 5 percent in subsequent years.
• For 2018 and thereafter, if the Secretary finds that the proportion of EPs who are meaningful EHR users is less than 75 percent, then the reductions will be increased by 1 percentage point each year, but by not more than 5 percent overall.

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According to a statement by Secretary of HHS Catherine Sebelius in a June 24 HHS Press Release, "the Obama Administration is committed to turning up the heat on Medicare fraud..."  As evidence of this commitment, the Press Release announced the indictment of 53 individuals, including physicians and health care executives, accused of various Medicare fraud offenses ranging from conspiracy to defraud the Medicare program, false claims anti-kickback statute violations.  Among other things, the indictments allege that the individuals conspired to submit claims for medically unnecessary services and services not rendered as well as to pay kickbacks to beneficiaries to attest that they received the services.  The Press Release can be viewed here.

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According to a June 2, 2009 letter from President Obama to key Democrat Congressman, the President is pushing for major health care reform legislation by October 2009. Given that this is only a few months away, it is remarkable how little detail exists with regard to the President’s plan for reform. Here are some key quotes and a few take away thoughts that might be gleaned from the President’s letter:

“I strongly believe that Americans should have the choice of a public health insurance option operating alongside private plans”. Based on this quote it would appear that there will indeed be an expanded national health insurance program. If the Medicare program is any indicator, this is going to mean a lot more regulation.

“I am committed to working with the Congress to fully offset the cost of health care reform by … strengthening Medicare and Medicaid payment accuracy by cutting waste, fraud and abuse; improving care for Medicare patients after hospitalizations; and encouraging physicians to form "accountable care organizations" to improve the quality of care for Medicare patients.” I’m guessing this means more fraud and abuse enforcement and more physician accountability although the President’s definition of an “accountable care organization” remains elusive.

“I am committed to working with the Congress to fully offset the cost of health care reform by reducing Medicare and Medicaid spending by another $200 to $300 billion over the next 10 years, and by enacting appropriate proposals to generate additional revenues.” More taxes?

“These savings will come not only by adopting new technologies and addressing the vastly different costs of care, but from going after the key drivers of skyrocketing health care costs, including unmanaged chronic diseases, duplicated tests, and unnecessary hospital readmissions.” Though it’s pretty vague, this could mean greater rationing of care through mechanisms such as pre-authorization requirements for diagnostic testing.
 

If President Obama has his way, big changes will be coming very soon.  Stay tuned!

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On Nov. 9, 2007, The Federal Trade Commission (FTC) created the Red Flags Rule requiring creditors to develop and implement written identity theft prevention programs within their organizations. The rule defines a “Creditor” any person who regularly extends, renews, or continues credit; any person who regularly arranges for the extension, renewal or continuation of credit. Because physicians do not generally collect payment in full at the time of service, The FTC has informally indicated that the Red Flag Rule requirements will likely apply to physician practices. Although some physician advocate groups such as the AMA have challenged this assertion, at present the FTC has not exempted physicians from the definition of Creditors. The compliance date in the regulations was originally November 1, 2008 but has been extended to August 1, 2009. Accordingly, physicians need to begin familiarizing themselves with the Red Flag Rule and should plan on becoming compliant by August 1.

Among other things, the Red Flag Rule requires “Creditors” to implement a written identity theft prevention program which includes reasonable policies and procedures to: (i) identify relevant red flags and incorporate those red flags into the program; (ii) detect red flags that have been incorporated into the program; (iii) respond appropriately to any red flags that are detected to prevent and mitigate identity theft; and (iv) ensure the program is updated periodically to reflect changes in the risks of identity theft. Although the regulations are fairly complex, implementing a workable program should not be overly burdensome for most practices. As the Red Flag Rule compliance date approaches, we at Fox Rothschild LLP will be developing cost effective resources to assist practices in developing compliant identity theft prevention programs. In the meantime, if you have questions regarding the Rule, please contact us here. 
 

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In its recent Advisory Opinion No. 09-05, the OIG reviewed a proposed arrangement whereby a hospital would compensate physicians for on-call services performed on behalf of the hospital’s uninsured patients. The OIG concluded that while the Proposed Arrangement could potentially generate prohibited remuneration under the anti-kickback statute, if the requisite intent to induce or reward referrals of Federal health care program business were present, the Office of Inspector General (“OIG”) would not impose administrative sanctions on the arrangement.

Under the proposed arrangement, the hospital would pay physicians for services provided during on-call periods to indigent patients. The proposal included four discount payment amounts/categories: (1) Emergency consultations: $100 flat fee; (2) Care of patients admitted as inpatients from the Emergency Department: $300 per admission. (3) Surgical procedure or procedures performed on a patient admitted from the Emergency Department: $350 flat fee; and (4) Endoscopy procedure or procedures performed on a patient admitted from the Emergency Department: $150 flat fee.

The OIG noted that while there is “substantial risk that improperly structured payments for on-call coverage could be used to disguise unlawful remuneration” under the anti-kickback statute, the proposed arrangement included adequate safeguards against such abuse including:

(1) The payment amounts were represented to be within the range of fair market value for services rendered;

(2) The hospital had a legitimate rationale for revising its on-call coverage policy (physicians were refusing to provide on-call services);

(3) The proposed arrangement would be offered uniformly to all physicians on staff, the method of scheduling on-call coverage would be governed by the hospital’s medical staff by-laws, would be uniform within each department or specialty, and would not be used to selectively reward the highest referrers; and

(4) The proposed arrangement would appear to create an equitable mechanism for the hospital to compensate physicians who actually provide care that the Hospital must furnish.

While the Advisory Opinion does not contain any surprises, it provides a very useful analysis at a time when on-call compensation arrangements are proliferating. Physician who have on-call compensation arrangements or who are considering entering into one are well-advised to review their arrangements in light of the OIG’s analysis.
 

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Major Medicare fraud and false claims settlements against large providers and pharmaceutical and device companies are reported in the news on a regular basis these days.  Unfortunately this trend may lead many physicians to believe that their billing and collection activities are under the radar of federal and state enforcement authorities.  According to an article in the Scranton Times-Tribune, when it comes to Medicare fraud, size doesn't matter. 

According to the article, a Scranton podiatrist was sentenced this week to two years of probation and ordered to pay $23,266 in restitution for submitting false claims to Medicare.  What is significant about this case is that the podiatrist reportedly only received between $10,000 and $30,000 in improper payments from the Medicare program.  So, if you still think your practice is too small to get noticed, think again. 

The prospect of developing a full-blown fraud and abuse compliance plan may seem overwhelming for many physicians but a compliance plan is really the only "insurance" you can put in place to help minimize legal exposure from improper billing.  Consider starting small.  An annual coding and documentation audit with the help of a health care attorney and billing consultant is hands-down one of the best things you can do from a compliance standpoint and it need not be expensive.  Most importantly, however, when if comes to compliance, doing something is far better than doing nothing.  For more information on developing a cost effective compliance plan, see the article "Compliance Planning on a Shoestring Budget"www.physiciansnews.com/law/1107rodriguez.html.

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Pennsylvania physicians need to be aware that legislation (House Bill 1405) has once again been introduced in the Pennsylvania House which would severely limit the ability of physicians to refer to entities in which they have investment interests. As drafted, this Bill would create an outright prohibition on the referral by a health care provider of any patient to an entity in which the health care provider is an investor or has an investment interest for a provision of “designated health services”. Designated health services are limited to:
 

(1) clinical laboratory services;

(2) physical therapy services;

(3) comprehensive rehabilitative services

(4) diagnostic imaging services; and

(5) radiation therapy services.

It would also prohibit health care providers from referring patients for any health care services (other than (designated health services) to an entity in which the health care provider is an investor or has an investment interest unless (1) the investment is in a publicly traded company with assets greater than $50 million, or (2) no more then 50% of the investment interests are owned by persons in a position to refer to the entity. 

Penalties for violations include a $15,000 penalty for each improper claim submitted, $100,000 for a “circumvention scheme” and possible disciplinary action.

As drafted, the Bill does not incorporate the federal anti-kickback safe harbors or Stark exceptions so if passed, it would be far more restrictive than the federal statutes. Similar legislation has been introduced in the past and has not passed. At present the Bill is before the Health and Human Services Committee.

Physicians opposed to this legislation should contact their State Representatives and join their medical societies in lobbying against it.

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Without a doubt, times are tough for physicians in private practice. Operating costs continue to rise at a staggering pace and reimbursements are simply not keeping up. Recruiting and retaining physician talent continues to be a challenge and as the regulatory landscape continues to change and become more complex, compliance is becoming ever-more important. On top of all of this, it is apparent that impending health care reform is going to place much greater emphasis on technology, quality and efficiency than ever before. With all of these challenges, many physicians are understandably considering whether selling their practice to a hospital makes sense.

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According to a statement by Governor Edward G. Rendell as reported by the PR Newsire, malpractice reform in Pennsylvania has been a dramatic success.  Governor Rendell noted that malpractice filings statewide declined by 41% between 2002 and 2008. The Governor also noted that over the past three years, the two largest commercial medical malpractice insurers have either decreased their base premiums or kept them flat each year in Pennsylvania. In light of the improved malpractice environment in the State, Governor Rendell intends to propose a phase-out of the Mcare program. The PR Newswire story can be viewed here.
 

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