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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

What is Your Strategic Plan?

Posted in Practice Management

This is the second in a series of posts on practical and legal considerations for physicians in deciding whether to sell, merge or stay the same. Before making any major practice decision along those lines, physicians should engage in some careful strategic planning. Simply put, before you can know which or whether one of these transactions will help you to achieve your goals, you must first know what those goals are.

From a practice standpoint, here are some basic “strategic planning” questions you should try to answer:

1. What are the greatest short term and long term challenges faced by your medical practice?

2. What are the greatest opportunities available to your practice?

3. If you were able to overcome your practice challenges and take advantage of your practice opportunities without selling, merging or affiliating with any third party, would your practice be where you want it to be from a financial and lifestyle perspective?

4. What are your options for overcoming your practice challenges and taking advantage of your practice opportunities and could you do that without selling, merging or affiliating with a third-party?

5. If you determine that sale, merger or affiliation is necessary to overcome your practice challenges and take advantage of your practice opportunities, which of these options is readily available and would enable you to achieve your professional, financial and lifestyle goals with the least amount of expense and disruption?

Answering these questions may not be so simple. Effective strategic planning often involves gathering and analysis of data regarding the practice and your specific market. Among other things, you should have a firm grasp on your income and expenses over the last several years to know how they are trending and why they might be trending that way. Similarly, you should understand your practice utilization and referral patterns (including the number of referrals in and out, what those referrals are for, where they come from and where they go). Finally you should have an understanding of what is happening in your market, who your competitors are, what your competitors are doing, who your allies are and how you can improve those relationships.

The above represent only a few of the important considerations for developing a strategic plan for your practice. Even if sale, merger or affiliation is not on your radar screen at present, one way to help ensure that you are prepared for change is to develop a three-year strategic plan and revisit it annually to see whether modifications are necessary and to evaluate whether you are fulfilling that plan.

Practice Planning in Uncertain Times

Posted in Health Reform, Practice Management

These are uncertain times for physicians.  The future of healthcare is uncertain for everyone involved, from payors to providers to consumers.  In fact, there may be only one universal certainty about the future of healthcare: things are changing and are going to continue to change.

The federal Affordable Care Act (ACA) has sent shivers of panic through all levels of the industry.  Payors are scrambling to find ways to control burgeoning premium and provider costs.  Their stated goal is to transition reimbursement from fee-for-service to models based on quality and performance metrics (though no one has really figured out how to accomplish that goal).

Hospitals and other providers are racing to form Accountable Care Organizations (ACOs) and other networks to try to take advantage of these promised “new reimbursement models”.  Unfortunately, developing a network that can effectively control costs and performance across a continuum of care is virtually impossible without knowing what criteria payors will pay for, how those criteria will be measured and how they will be incentivized/rewarded.  As a result, most of the provider networks  I have encountered in the last couple of years are suffering “all hat, no cattle syndrome” — which is to say that they have big plans for managing care but don’t yet have any payor contracts that will pay them for doing so.

For many physicians, particularly those in private practice, the lack of certainty and the resulting panic in the marketplace can be maddening.   Looking for any kind of certainty, many physicians have sold or are considering selling out to a hospital.  Unfortunately, as noted above, hospitals generally have no better idea of what the future of healthcare will look like than anyone else.  Not surprisingly then, most hospital-physician employment agreements have a term of no more than three years, and more and more often, hospitals are building mechanisms into their employment agreements to permit them to reevaluate compensation even before the end of the agreement term.

What will make the most sense for a particular physician or practice will depend on a variety of factors, many of which will be subjective.  While there can likely never be any guaranty that a particular decision in this regard will result in success, the chances of making the right decision will be greatly improved with some careful self-evaluation and planning.

The next several posts on this blog will explore some of the big practice planning decisions physicians are being faced with and the various practical and legal considerations  that physicians should evaluate in making those decisions.  Topics to be covered will include whether to sell, merge or stay the same, identifying the right “partners”, optimizing practice performance to adapt to change and contracting for successful relationships.

Pennsylvania Health Care Name Badge Law

Posted in Pennsylvania Legislation

A new provision in the Pennsylvania Health Care Facilities Act will take effect on June 1, 2015 requiring healthcare facility personnel, physicians in private practice and their employees to wear name badges while treating patients.  Specifically, the rule applies to the following categories of practitioners and personnel:

  • Employees and physicians working at health care facilities licensed by the Department who provide direct care to patients or consumers;
  • Employees and physicians working at the private practice of physicians who provide direct care to patients or consumers; and
  • Employees and physicians working at an employment agency who provide direct care to patients and consumers.

The badges must include:

  • A recent photograph of the employee
  • The employee’s name
  • The employee’s title
  • The name of the employee’s health care facility or employment agency

The title of the employee shall be as large as possible in block type and shall occupy a 1/2-inch tall strip as close as practicable to the bottom edge of the badge.

  • Medical Doctors and Doctors of Osteopathy must use the title ”Physician”.
  • Registered Nurses must use the title ”Registered Nurse” and Licensed Practical Nurses must use ”Licensed Practical Nurse”.

For more information, see the May 16, 2015 Pennsylvania Bulletin.

Fix to the Medicare Physician Fee Schedule Delayed

Posted in Medicare

According to usatoday.com, The U.S. Senate will not act on legislation to fix the 21% pay cut under the Medicare Physician Fee Schedule before it goes into effect on April 1.  Although the House passed legislation earlier this week which would permanently fix the Sustainable Growth Rate formula which causes this pay cut panic every year, Senator Mitch McConnell has indicated that the Senate intends to take the matter up  when it returns from break after April 13, 2015.

CMS Prepares for Physician Fee Schedule Cut

Posted in Medicare, Reimbursement

As of today’s date, Congress has not yet fixed or even patched the expected 21% cut to the Medicare Physician Fee Schedule.  A eNews alert sent out today by the Centers for Medicare and Medicaid Services notifies physicians of the following:

The negative update of 21% under current law for the Medicare Physician Fee Schedule is scheduled to take effect on April 1, 2015. Medicare Physician Fee Schedule claims for services rendered on or before March 31, 2015, are unaffected by the payment cut and will be processed and paid under normal procedures and time frames. The Administration urges Congress to take action to ensure these cuts do not take effect. However, until that happens, CMS must take steps to implement the negative update. Under current law, electronic claims are not paid sooner than 14 calendar days (29 days for paper claims) after the date of receipt. CMS will notify you on or before April 11, 2015, with more information about the status of Congressional action to avert the negative update and next steps.” (CMS Medicare Learning Network)

Physicians should keep a close on how this issue develops as it could impact practice cash flow even it a fix is put in place.

Pennsylvania Senate Bill would Limit Retroactive Denials

Posted in Pennsylvania Legislation, Reimbursement

These days, more often than not, physicians and up on the short end of the stick when it comes to new health care legislation. However, last month a bill was introduced by Senator David Argall which, if passed, would give physicians and other healthcare providers important protection against retroactive insurance denials. Specifically, Senate Bill No. 554 would limit the period during which insurance companies could retroactively deny payment to 12 months after the date of the original payment. This would mean that if a payor makes payment on a claim, it would have only 12 months to later seek to recoup that payment if coverage is retroactively denied. The only time this rule would not apply as if the claim is fraudulent or improperly coded. The bill, which has been referred to the Banking and Insurance Committee can be viewed on the Pennsylvania Senate website.

Federal Fraud and Abuse Laws Apply to Medicare Advantage Too

Posted in Fraud and Abuse, Medicare

Many physicians mistakenly believe that federal healthcare fraud and abuse statutes only apply to the Medicare fee-for-service program. However, physicians need to be aware that many federal healthcare statutes apply to any program or plan funded, in whole or in part, with federal dollars. One such example is the Medicare Advantage program. Although these plans are implemented by private insurance companies, they are funded with Medicare dollars. As such, they are generally subject to federal healthcare fraud and abuse laws including, without limitation, the federal Health Care Fraud statute and the False Claims Act.
In February 2015, a Florida physician and his medical practice were indicted by a federal grand jury for allegedly engaging in a scheme to defraud the Medicare program through a Humana Medicare Advantage plan. Specifically, the physician and clinic in question are alleged to have submitted fraudulent diagnoses to Humana which resulted in the Medicare program making larger Medicare Advantage capitated payments to Humana. The physician and clinic, in turn, received a larger monthly payment from Humana under the Medicare Advantage Program. Although healthcare fraud cases arising under the Medicare Advantage program are not yet commonplace, this case demonstrates the potential pitfalls associated with federally funded health care programs that all physicians need to be aware of. For more on the indictment, see “Delray Beach Doctor Charged with Health Care Fraud”.

A Physician May Violate Anti-Kickback Laws Even Without Steering Patients To A Specific Provider.

Posted in Fraud and Abuse, Uncategorized

By J. Benjamin Nevius

The United States Court of Appeals for the Seventh Circuit recently issued an interesting decision concerning the definition of “referral” in the context of federal anti-kickback laws. See U.S. v. Patel, No. 14–2607, 2015 WL 527549 (7th Cir. 2015).  In the Patel matter, the United States charged a Chicago-area physician with violating and conspiring to violate the Anti–Kickback Statute, 42 U.S.C. § 1320a–7b (the “Statute”), alleging that the physician received undisclosed payments from a home health services provider for referring patients.

The referral process at issue is summarized below:

“First, [physicians] made the initial determination that the patient required home health care services. This initial decision is not at issue in this case – it is undisputed that all of Patel’s patients who were treated by [home health provider] needed home health care. After this initial determination was made, a provider needed to be chosen. [Physician] did not personally discuss the selection of providers with patients or their family members, either as an initial matter or as part of recertification. Rather, his patients discussed home health care options with [physician’s] medical assistant . . . [Physician] did not tell [medical assistant] which provider to recommend. [Medical assistant] gave patients an array of 10-20 brochures from various providers. The brochures were given to [physician’s] office by the providers, but it is unclear whether [medical assistant] and [physician] included every brochure that they were offered. One of the brochures provided by [medical assistant] was [home health provider], but the government does not contend that it was included in the array because [home health provider] had offered [physician] kick-backs. Each patient independently chose a provider from those in the array. After a provider was selected, [medical assistant] called or faxed the provider with the name of the patient, his diagnosis, and his Medicare number. The fax cover pages from [physician’s] office bore the subject line ‘new referral’ and the body of the faxes contained prescriptions for home health care signed by [physician] or by [medical assistant], with [physician’s] authorization.”

The physician received $400 from the home health provider for each new patient, and $300 for each recertification. The government did not allege that any patient received treatment when it was not needed. Further, the government did not allege that the physician actively steered any patients to the home health provider. In fact, many of the physician’s patients chose other providers when given the option. The government nevertheless argued that the exchange of money itself constituted a “referral” under the Statute and the District Court agreed. The physician appealed his conviction and eight-month sentence to the Seventh Circuit Court of Appeals.

In affirming the conviction, the Seventh Circuit focused on the definition of “referral” in the context of the Statute and other laws governing Medicare and Medicaid fraud, such as the Stark Act, 42 U.S.C. § 1395nn. The physician argued that the traditional definition of “referral” in the medical context is a doctor’s recommendation that a patient see a particular provider, and that this is the behavior that Congress targeted when it enacted the Statute. The physician argued, among other things, that because (a) he did not steer patients to the home health provider, and (b) the government could not demonstrate any harm, the physician did not violate the Statute.

The Court rejected the physician’s proposed definition of “referral,” opting for a more expansive interpretation, stating: “[o]ften, people use the word ‘referral’ to describe a doctor’s authorization to receive medical care, even when the doctor is not the one choosing the provider of that care.” The Court determined that the Statute was designed to prevent Medicare and Medicaid fraud, and that a narrow definition of the term would defeat the central purpose of the Statute. Further, the Court determined that it was irrelevant that the government could not demonstrate any harm arising from the alleged pay arrangement.

Under the Court’s interpretation, criminal liability may exist even if a physician takes no action to encourage his patients to select one provider over another and the Centers for Medicare & Medicaid Services (“CMS”) suffers no harm. Doctors should review their compensation arrangements to determine if these types of payments exist and, if so, seek competent counsel to navigate potential risk.

CMS Releases Physician Value Modifier Payment Data

Posted in Health Reform, Medicare, Uncategorized

Many physicians are aware of the push by the Medicare program to move away from a fee for service physician payment model to one which recognizes higher quality and lower cost care.  However, few physicians have a good understanding of how such payment models would work and how their practices would fair under them.  This week, the Centers for Medicare and Medicaid Services (CMS) released some important  data regarding one of these value-based payment programs: the Value Modifier program.

The Value Modifier program seeks to reward physicians who provide high quality and low cost care by increasing their reimbursement by a “value modifier”.  Physicians who do not score favorably under the program will, in turn, be subject to a downward payment adjustment.  This week, CMS published a summary of the results of the first year of the program which initially applied only to physician groups of 100 or more.

In the initial year of the program, groups subject to the Value Modifier had the option to participate in a tiering program (which will be mandatory starting in 2016).  Under this program, depending on their cost and quality scores, groups would either be subject to an upward payment adjustment, a neutral payment adjustment or a downward adjustment.  Of 691 group practices subject to the Value Modifier, only 127 initially elected to participate in the tiering program.  Of these 127 groups, only 106 submitted sufficient data to receive both cost and quality scores for tiering purposes.  According to the published results, 14 groups will receive an upward adjustment; 11 groups will receive a downward adjustment and 81 groups will have a neutral adjustment (i.e., no adjustment ).  None of the groups earned the highest modifier adjustment available for quality and low cost.

The Value Modifier program will apply to all physician groups and solo practitioners beginning in 2016.  Physicians need to be paying careful attention to this and other value-based payment programs as it is clear that CMS is serious about shifting payment arrangements in this direction.

Excluded Physician Not Precluded from Collecting Pre-Exclusion Receivables According to OIG Advisory Opinion

Posted in Fraud and Abuse, Medicare

A physician who was excluded from the Medicare program is not precluded from receiving payment for services rendered prior to the exclusion according to Advisory Opinion 15-02 published by the HHS Office of Inspector General (OIG) earlier this month.  The Advisory Opinion was requested by a physician who was excluded for 20 years from Medicare participation as part of a a criminal plea and settlement of a civil False Claims Act settlement.  The excluded physician was required as part of the settlement to sell his medical practice and as part of the proposed sale, the buyer would collect the pre-exclusion receivables and pay them to the excluded physician.

Under the federal Social Security Act, no payment may be made by Medicare, Medicaid, or any other Federal health care program for any item or service furnished by an excluded individual on or after the effective date of the exclusion.  Because the receivables in questions related only to services performed prior to the exclusion, the OIG concluded that the proposed arrangement would not be prohibited.

While this Advisory Opinion required only a straightforward reading of the statutory language, physicians and other providers should nevertheless be exceedingly careful when dealing with individuals and entities who are or have in the past been excluded from Medicare or other payor programs as even straightforward financial arrangements with such parties can result in severe sanctions under the federal civil money penalties law of the Social Security Act.  Practices and providers should, as part of their compliance activities, regularly check the Exclusions Database for existing employees and contractors as well as part of a pre-hire screening process.