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

On March 26, 2013, the Office of Inspector General published much-awaited guidance on physician-owned medical device distributorships (commonly known as "PODs") in the form of a Special Fraud Alert.  The OIG makes no bones about where it stands on PODs which it describes as "physician-owned entities that derive revenue from selling, or arranging for the sale of, implantable medical devices ordered by their physician-owners for use in procedures the physician-owners perform on their own patients at hospitals or ambulatory surgical centers." 

The Fraud Alert describes a number of characteristics which, according to the OIG, make POD arrangements potentially suspect under the federal anti-kickback statute.  These include the following:

1.            Selection of investors because they are in a position to generate substantial business for the entity. 

2.            Requiring investors who cease practicing in the service area to divest their ownership interests.

3.            Distributing extraordinary returns on investment compared to the level of risk involved.

4.            Choice of brand and the type of device may be made or strongly influenced by the physician.

5.            The size of the investment offered to each physician varies with the expected or actual volume or value of devices used by the physician.

6.            Distributions are not made in proportion to ownership interest, or physician-owners pay different prices for their ownership interests, because of the expected or actual volume or value of devices used by the physicians.

7.            Physician-owners condition their referrals to hospitals or ASCs on their purchase of the POD’s devices through coercion or promises, for example, by stating or implying they will perform surgeries or refer patients elsewhere if a hospital or an ASC does not purchase devices from the POD, by promising or implying they will move surgeries to the hospital or ASC if it purchases devices from the POD, or by requiring a hospital or an ASC to enter into an exclusive purchase arrangement with the POD.

8.            Physician-owners are required, pressured, or actively encouraged to refer, recommend, or arrange for the purchase of the devices sold by the POD or, conversely, are threatened with, or experience, negative repercussions (e.g., decreased distributions, required divestiture) for failing to use the POD’s devices for their patients.

9.            The POD retains the right to repurchase a physician-owner’s interest for the physician’s failure or inability (through relocation, retirement, or otherwise) to refer, recommend, or arrange for the purchase of the POD’s devices.

10.          The POD is a shell entity that does not conduct appropriate product evaluations, maintain or manage sufficient inventory in its own facility, or employ or otherwise contract with personnel necessary for operations.

11.          The POD does not maintain continuous oversight of all distribution functions.

12.          When a hospital or an ASC requires physicians to disclose conflicts of interest, the POD’s physician-owners either fail to inform the hospital or ASC of, or actively conceal through misrepresentations, their ownership interest in the POD.

13.          POD exclusively serves its physician-owners’ patient base.

14.          Physician-owners are few in number, such that the volume or value of a particular physician-owner’s recommendations or referrals closely correlates to that physician-owner’s return on investment. 

15.          Physician-owners alter their medical practice after or shortly before investing in the POD.

Although the OIG notes that not all PODs will necessarily be illegal under the statute, it believes they are "inherently suspect".

• Print
• Comments
• Trackbacks
• Share Link

In what would undoubtedly be a devastating blow to many medical practices that rely on the Stark in-office ancillary services exception (which allows physicians to refer within their practices for Stark services), President Obama's proposed FY 2014 would seek to eliminate the exception for physical therapy, radiation therapy and advanced imaging such as CT and MRI.  The budget suggests that the exception may still apply for those providers that meet certain "accountability standards" established by the Secretary of the Department of Health and Human Services.  The proposed budget offers no further detail on what these accountability standards might be. 

Although passing budgets has not been much of a priority in Washington for the last few years, this proposal clearly demonstrates that these services in the physician office setting are targeted for extinction.  Practices that offer these services should begin making contingency plans now to divest or restructure in the event that the exception is eliminated.

• Print
• Comments
• Trackbacks
• Share Link

Yesterday the U.S. Department of Justice announced that it has entered into a $26M False Claims settlement with a dermatologist in Florida.  According to the DOJ, this is one of the largest False Claims settlements against an individual in history.  The physician was accused of allegedly accepting kickbacks from a pathology lab and billing for medically unnecessary services. 

• Print
• Comments
• Trackbacks
• Share Link

The Obama administration announced today that as a result of increased federal health care fraud and abuse enforcement efforts, the federal government recovered $4.2 billion in 2012, setting a new record.  According to the Department of Health and Human Services, for every $1 spent on enforcement efforts, they recouped $7.90.  For more on the topic see "U.S. recovers $4.2 billion from healthcare fraud probes: report" on reuters.com.
 

• Print
• Comments
• Trackbacks
• Share Link

Today I am focusing on the self-referral ban under the federal Stark laws. In particular, a recent case – Fresenius Medical Care Holdings, Inc. v. Tucker (Dkt. No. 4:03-cv-00411-SPM-GRJ (Jan. 10, 2013, 11^th Cir.)) – discussed the interplay between those laws and a State’s attempt to impose more stringent requirements. 

The court first focused on two exceptions to the Stark laws’ ban on physician self-referrals. These exemptions concern clinical lab services for end-stage renal disease (ESRD), as well as certain lab services performed by a company with stockholder equity in excess of $75 million. 

A Florida statute subsequently narrowed these exemptions, and that statutory change impacted a Florida business’ ability to make referrals. 

The plaintiff argued that Congress had crafted the Stark laws’ exemptions in order to benefit Medicare and Medicaid recipients and, as such, intended to provided explicit benefits. That argument was rejected. 

The circuit court found that federal law permitted State laws to be more stringent, and that this was such a situation. Moreover, the court was not convinced that the plaintiff’s business was stifled by the State rules and, instead, found that the impact to the business was marginal. 

It remains to be seen whether or not this ruling will encourage States to enact more stringent restrictions and make it even more difficult for businesses to comply with a non-uniform set of rules.

• Print
• Comments
• Trackbacks
• Share Link

This week the Office of Inspector General published an interesting Advisory Opinion (AO 12-22) dealing with a cardiology co-management agreement between a hospital and a private cardiology group practice.

Under the arrangement, the hospital would compensate the physicians for certain management, oversight, strategic planning and medical direction services in connection with the hospital’s four catheterization labs.

The Compensation payable to the physicians would consist of a fixed guaranteed amount and potential performance bonuses based on achieving specific patient satisfaction, quality and cost-saving targets.

Based on a number of safeguards within the arrangement, including that the bonus criteria were developed by a committee including providers outside the cardiology group and that the group's performance and compensation would be reviewed by an independent consultant, the OIG stated that it would not impose sanctions on the requesting parties.

Although the Advisory Opinion is fact specific, as one of the first opinions dealing with co-management arrangements, it offers providers significant insight into how the OIG is likely to view these types of arrangements going forward.
 

• Print
• Comments
• Trackbacks
• Share Link

Now that the new year is upon us, today’s post will look at the Department of Health and Human Services’ Office of Inspector General (OIG), in particular, OIG’s priorities for 2013.   According to OIG’s Fiscal Year 2013 Work Plan, it will be focusing upon a number of topics of interest – including some items not addressed last year.

OIG’s planned reviews of Medicare Part A and Part B will include:

● Billing patterns for nursing home stays.

● Accreditation of medical equipment suppliers, with a particular focus on quality standards.

● Claims submitted by medical equipment suppliers for lower limb prosthetics, power mobility devices and vacuum erection systems.

● Replacement of medical equipment, especially the frequency and necessity of that replacement.

● Independent physical therapists’ claims and whether the claims are reasonable, medically necessary and properly documented.

● Billing for electrodiagnostic testing.

● Ensuring that payments are not made for alien beneficiaries who were unlawfully present in the United States.

● Reviewing payments for Part A and Part B services to avoid claims starting after a beneficiary has died. 

 

Special attention should be paid to these areas in the coming year given OIG's additional scrutiny.

 

• Print
• Comments
• Trackbacks
• Share Link

Physicians in private practice are increasingly relying upon their local hospitals for assistance in making the transition to full-fledged electronic medical records. The Office of Inspector General (OIG) of the Department of Health and Human Services recently gave the nod to a proposed arrangement which would enhance electronic communication between private practices and a community hospital. Specifically, the OIG issued a favorable advisory opinion on December 12, 2012 (Advisory Opinion 12-20) regarding a hospital’s proposal to give physicians free access to an electronic interface which would permit the physicians to electronically transmit test orders and receive results from the hospital.

Because hospitals are in a position to benefit from physician referrals for diagnostic tests, giving free items or services to referring physicians to facilitate such referrals could run afoul of the federal anti-kickback statute. However, in arriving at the favorable opinion, the OIG cited its longstanding position that free items and services that are integrally related to a provider’s services and which cannot be used for purposes unrelated to the those services generally do not have independent value and therefore are unlikely to implicate the prohibitions of the anti-kickback statute. The OIG found that the proposed interface was integrally related to the diagnostic services offered by the hospital and as such did not have independent value to the referring physicians.
 

• Print
• Comments
• Trackbacks
• Share Link

This week the Office of Inspector General of the Department of Health and Human Services published Advisory Opinion 12-15 in which it blessed an on-call compensation arrangement between a hospital and specialist physicians on its staff.  In finding that it would not prosecute the arrangement, the OIG pointed to several "safeguards" which it felt would adequately protect against a violation of the anti-kickback statute.  Among others, these included the following protections:

1. Based on an independent valuation, the per diem payment amounts were stipulated to be commercially reasonable, within the range of fair market value for actual and necessary services provided without regard to referrals or other business generated between the parties;

2. The hospital allocates funds for call coverage for each participating specialty and calculates the per diem annually, in advance, without regard to the individual Participating Physician’s referrals to the hospital;

3. Participating Physicians provide actual and necessary services, for which they are not otherwise compensated, including that Participating Physicians must respond within 30 minutes to a request from the hospital’s emergency department and, in some cases, must provide follow-up care.

4. The hospital offers the opportunity to participate in the arrangement to all specialists on its staff who are required by its bylaws to take unrestricted call and the method of scheduling on-call coverage is governed by a uniform equitable policy that does not take referrals into account.
 

Although an OIG Advisory Opinion may only be relied upon by the parties requesting it, this Advisory Opinion may provide useful guidance to hospitals and physicians in ensuring that their on-call arrangements are compliant.

• Print
• Comments
• Trackbacks
• Share Link

Many physicians were once content (and a few still are) to let their coders select their codes for billing purposes.  At a time when enforcement authorities have some heavy-duty technological weapons for identifying improper billing, physicians can no longer avoid learning the billing rules applicable to their services.  Consider this recent settlement related to the improper use of Modifier 25. 

We all know that billing and coding rules are complicated but learning them is not nearly as difficult as, say, getting though medical school.  Ultimately, if your name is on the claim, you are responsible for the other information on the claim as well.  Does your documentation support your codes?  Do your diagnosis codes support your procedure codes?  Are the modifiers correct?  If you're a physician and you don't know the answers to these questions, take the time to learn this stuff.  Everyone makes mistakes but disregarding rules that you should know could ultimately be deemed abusive or even fraudulent billing.

• Print
• Comments
• Trackbacks
• Share Link

In my experience, many healthcare providers fail to take seriously the importance of fair market value in their business arrangements.  In fact, one of the most important means of ensuring compliance with federal and state fraud and abuse laws such as the federal anti-kickback and Stark is to ensure that financial arrangements - particularly where there are referrals relationships -are consistent with fair market value.  As an example of the consequences of failing to pay adequate attention to the issue of fair market value, consider this recent Department of Justice Settlement as reported by CBSnews.com.  Fair market value really does matter.

• Print
• Comments
• Trackbacks
• Share Link

Continue Reading...

• Print
• Comments
• Trackbacks
• Share Link

The 7^th Circuit Court of Appeals recently issued a decision of interest to physicians and teaching hospitals. It concerns the method of rotating teaching physicians between multiple surgeries and billing Medicare for those services.  

The case involves so-called "qui tam" claims (essentially, a whistleblower case) against a teaching hospital, by which a successful claimant gets to keep a portion of the penalties recovered.  Basically, the Medicare program pays teaching hospitals for work by residents that is supervised by teaching physicians.  Here, however, a hospital was alleged to have made its teaching physicians simultaneously supervise multiple surgeries -- and then submit fee-for-service bills to the Medicare program for certain unsupervised work.  

 

After addressing legal issues concerning claimants' right to sue when the facts were generally in the public domain by way of government reports (those reports were not specific to this hospital), the suit was allowed to continue for now.  

Note to physicians: The Court emphasized that a teaching hospital does nothing wrong if the teaching physicians are "immediately available" during all parts of the surgeries even if making a circuit between multiple operating theaters.  The breadth of that holding, and whether it would apply to other circumstances, is not clear.  Nevertheless, hospitals who bill Medicare for activities supervised by teaching physicians, and the physicians themselves, must pay special attention to these activities to stay within the law.

• Print
• Comments
• Trackbacks
• Share Link

Health care fraud and abuse enforcement activity is at an all-time high yet many physicians and other providers lack a basic understanding of the key healthcare fraud and abuse statutes that apply to them.  Although each state may have its own fraud and abuse laws, any healthcare provider that receives federal funds should be familiar with three significant federal fraud and abuse statutes: the anti-antikickback statute, the federal false claims act and the physician self-referral law (also known as the Stark law). 

Each of the statutes imposes a different set of prohibitions on healthcare providers and each carries separate but significant penalties for violation. For an introductory overview to each of these statutes, consider listening to the brief podcasts produced by physicianspractice.com at the following links:

http://www.physicianspractice.com/podcasts/content/article/1462168/2048688

http://www.physicianspractice.com/podcasts/content/article/1462168/2048678

http://www.physicianspractice.com/podcasts/content/article/1462168/2048188

 

• Print
• Comments
• Trackbacks
• Share Link

When it comes to record-breaking Medicare fraud busts, the hits keep coming.  The feds announced today another nationwide takedown of physicians and other healthcare providers for Medicare fraud totaling in excess of $450 million.  All told, 107 people have been charged in this week's bust for, among other things, submitting false claims to the Medicare program.  Read more about it here.  

While these headline-grabbing takedowns usually involve some pretty egregious billing practices, law-abiding physicians and other providers should still take note as it is inevitable that the government's increased efforts to identify fraud will also identify billing errors and inadvertent overpayments.  If you are not regularly having your charts and billings audited by an independent auditor under attorney-client privilege, it is highly advisable to begin doing that regularly as the basis of a practice compliance program.  For more information on developing a cost-effective  practice compliance program, click here.

• Print
• Comments
• Trackbacks
• Share Link

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.

• Print
• Comments
• Trackbacks
• Share Link

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.

• Print
• Comments
• Trackbacks
• Share Link

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. 

• Print
• Comments
• Trackbacks
• Share Link

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.

• Print
• Comments
• Trackbacks
• Share Link

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.

• Print
• Comments
• Trackbacks
• Share Link

By David Restaino, Esquire

Federal prosecutors continue to focus their efforts on preventing health care fraud, as evidenced by a recent case arising in Texas. Earlier this year, a Houston doctor (Dr. Christina Clardy) was convicted of three counts of mail fraud, 14 counts of health care fraud and one count of conspiracy to commit health care fraud – all relating to over $45 million in false billings to Medicare and Texas’ Medicaid programs. In particular, the scheme involved a nursing service having billed over $25 million in physical therapy services under Dr. Clardy’s physician provider numbers.

The documents produced at trial included a letter from the doctor showing her knowledge of the fraudulent activities, specifically, requiring her employer’s owner to immediately cease all billing under her number or she would notify the authorities – which she never did even though the billings continued. The evidence against Dr. Clardy was compounded by her receipt of large cash payments from the owner soon after her letter was sent.

The Court recently announced its sentence against Dr. Clardy. The sentence serves as a clear warning to physicians who are tempted by the illegal profits to be made from defrauding Medicare and Medicaid: Dr. Clardy will be spending 135 months in federal prison and must personally pay over $15 million in restitution. This sentence is in addition to the separate sentences handed out against two other convicted defendants involved in the scheme; a fourth person will be sentenced this month.
 

• Print
• Comments
• Trackbacks
• Share Link

By David Restaino

The Department of Health and Human Services’ (HHS) Office of Inspector General (OIG) has been busy combating fraud and abuse over the last few years – the monies it has recovered more than doubled from 2006 to 2010, topping $4 billion in fiscal year 2010 alone. And OIG’s enforcement efforts will undoubtedly increase because of the balanced budget pressure in Washington.

With this in mind, the OIG’s recently released Work Plan for Fiscal Year 2012 provides the regulated community with a roadmap of the areas that will receive additional scrutiny from OIG. These include:

● Payment systems controls that identify high cumulative Part B payments made to physicians;
● Claim submission practices of, and private contracts entered into by, physicians who have opted out of Medicare;
● Physicians’ coding on Part B claims, for services performed in ambulatory surgical centers and hospital outpatient departments;
● Providers’ compliance with assignment rules relating to billings that exceed Medicare-allowable amounts; and
● Part B payments for chiropractic services.

This list only skims the surface of those “new” areas of OIG focus, and does not take into account its existing areas of investigation.

Moreover, these priorities also extend beyond fines and penalties and also cover exclusion of individuals from participation in federal health care programs. For instance, in fiscal year 2010, over 3,300 individuals and entities were excluded from such participation. A recent Government Accountability Office (GAO) report criticized HHS and suggested that it should be paying greater attention to its suspension and debarment programs, by perfecting its use of staff and developing guidance to implement these programs. Assuming HHS follows even some of these recommendations, we can also expect to see more suspensions and debarments in the coming year. 
 

• Print
• Comments
• Trackbacks
• Share Link

Physicians are feeling the economic burn of the down economy perhaps more than the average American. Not surprisingly, creative physician joint ventures are proliferating in the healthcare industry as a means of stabilizing revenue streams and referral patterns. Unfortunately, many of these arrangements may raise questions under applicable fraud and abuse laws. One such proposed arrangement was the subject of the most recent (and negative) Advisory Opinion issued by the Office of Inspector General (OIG) of the Department of Health and Human Services.

The arrangement involved a proposed management services agreement for pathology services pursuant to which a physician-owned management company would provide pathology laboratory management services to a pathology lab. Under the management services agreement, the management company would provide all pathology services, utilities, furniture, fixtures, space and laboratory equipment. In addition, the management company would provide both marketing and billing services. For all of these services, the pathology lab would pay the management company a "usage" fee based on a percentage of the lab's revenue. Moreover, the management company would offer ownership interests to physicians in a position to refer to the pathology lab.

Noting that the arrangement could not meet any of the available safe harbors under the federal anti-kickback statute and citing the fact that the management fee would fluctuate with the volume or value of services performed by the pathology lab, the OIG found that the arrangement would pose a substantial risk of fraud and abuse and, therefore, refused to bless it.

When revenue is flat and costs are increasing, it is hard to blame physicians for at least considering potentially lucrative joint venture proposals. Of course, many such arrangements may be perfectly legal and may even be eligible for safe harbor protection under the various healthcare laws. That being said, physicians must always be mindful that penalties for violating federal and state laws can be catastrophic. For example, violation of the federal anti-kickback statute is a felony a felony, punishable by a fine of up to $25,000, up to five years in jail, or both as well as potential false claims liability. Therefore, when it comes to joint venture arrangements, the best course is to proceed with caution.
 

• Print
• Comments
• Trackbacks
• Share Link

Federal health care fraud enforcement authorities announced last week that they successfully carried out another major national health care fraud sting which they say is the largest of its kind. According to a Press Release by the Department of Justice, efforts by the joint Medicare Fraud Strike Force have resulted in the arrest of 91 defendants for allegedly submitting a collective $295 million in fraudulent Medicare claims. The arrests involve a broad range of health care businesses -- including physicians. Some of the charges identified in the Press Release include:

-A doctor in Detroit allegedly billed Medicare for performing psychotherapy treatments more than 24 hours per day and providing services to dead beneficiaries.

-The owner of a healthcare referral business in Houston is being charged with recruiting, in exchange for kickbacks, Medicare beneficiaries for approximately 100 different home healthcare agencies.

-A supervisor at a community mental health center in Miami is being charged with submitting over $50 million in fraudulent billings to Medicare and allegedly threatening to evict residents of a boarding house he also managed, unless they attended the center. A registered nurse, mental health counselors, and other healthcare professionals are being charged with participating in the same scheme.

This is just more evidence that the Obama administration intends to make good on its promise to crackdown on Medicare waste, fraud and abuse. Enforcement is and will continue to be a regular component of the delivery of health care services that providers must come to grips with. The only effective insurance against a catastrophic refund or investigation is to have an effective compliance program. Unfortunately, physicians who are still not taking compliance seriously (and there are many) are likely in for a rude awakening at some point – probably in the not so distant -- future.
 

• Print
• Comments
• Trackbacks
• Share Link

For the last couple of years I have been telling my physician and provider clients that they should expect to see a dramatic rise in healthcare health fraud investigations and prosecutions. According to a recent article published by USA Today citing statistics released by the Transactional Records Access Clearing House, my prediction (albeit a fairly easy one) is proving to be true. According to the USA Today article, federal healthcare prosecutions for 2011 are on track to increase 85% over 2010, and fraud prosecutions have gone up 71% from five years ago. In addition, according to Justice Department statistics, there have already been more Medicare fraud trial convictions in the first eight months of 2011 than there were in 2010.

The spike in fraud investigations and prosecutions should come as no surprise given that the Obama administration has placed heavy emphasis on fraud, waste and abuse recoupment as a means of funding new healthcare reform legislation. On top of this, healthcare enforcement authorities are using new and more advanced means (e.g., enhanced technology and cooperative task force operations) to identify fraud and abuse. And, frankly, there is still plenty of fraud, waste and abuse in the system. It is often said that desperate times lead to desperate measures and as the economics of healthcare delivery get tighter, I expect we will see healthcare providers more willing to enter into riskier arrangements than they might in better economic times. All of these factors of course spell a potential “perfect storm” from a healthcare compliance perspective, so physicians and providers should take careful stock of there compliance efforts, including regular documentation and billing audits and a regular review of contractual arrangements to ensure compliance with applicable federal and state fraud and abuse legislation.
 

• Print
• Comments
• Trackbacks
• Share Link

Over the last several years, a cottage industry of businesses known as “Physician Owned Distributorships” (“PODs”) has taken root in the medical device world and according to a recent article in the American Medical News is now coming under scrutiny by federal authorities. PODs are typically companies organized by individuals, some or all of whom are physicians who utilize medical devices, to purchase and resell medical devices to end users such as hospitals and surgery centers. By purchasing devices directly from the manufacturer at a wholesale discount and reselling to a hospital at a markup, the PODs are typically able to offer their investors a healthy investment return. However, a bipartisan group of U.S. Senators has expressed concern that physician investors who are also in a position to influence the selection of medical devices by the hospitals where they are on staff, for example, may raise issues under federal fraud and abuse laws. According to the AMA article, the Senators have written letters to both the Centers for Medicare and Medicaid Services and the Department of Health and Human Services asking for the agencies to review the propriety of POD arrangements under the Federal anti-kickback statute.

PODs are only one of the many "investment opportunities" currently available to physicians.  Because of their unique ability to direct patients and influence the use of medical products, physicians are often highly sought after as investors in both legitimate and questionable medically-related ventures.  While many physician investment opportunities are legitimate and can be properly structured within federal and state fraud and abuse laws, physicians should be wary of investment opportunities which allow them to profit from their own referrals or their ability to influence product or service selection. Arrangements which create financial relationships between physicians and the entities to which they refer or from which they receive referrals may implicate the federal Stark statute, the federal anti-kickback statute and a number of other serious federal and state laws. Accordingly, before committing to healthcare investment, physicians should carefully review the proposed arrangements and seek legal guidance to ensure that they do not run afoul of these complex laws.
 

• Print
• Comments
• Trackbacks
• Share Link

• Print
• Comments
• Trackbacks
• Share Link

We spend a great deal of time on this blog recounting stories of physicians and other providers who have run afoul of the various federal and state abuse laws applicable to the practice of medicine.  However, in my travels in working with physicians and group practices, it is apparent that many physicians still lack a basic understanding of the complex legal and regulatory framework within which they practice every day.  Many physicians operate under the mistaken belief that their greatest area of legal exposure is professional (malpractice) liability.  But, unlike fraud and abuse exposure, most physicians carry significant insurance against catastrophic malpractice claims.  Too few physicians appreciate the fact that running afoul of Medicare billing and coding requirements or entering into an arrangement which is a violation of the federal stark or anti-kickback statutes could result in significant overpayments which must be refunded to the Medicare program or even worse, massive civil money penalties or false claims liability.
 

Continue Reading...

• Print
• Comments
• Trackbacks
• Share Link

Too many physicians still believe that federal and state fraud authorities are only interested in large health systems and pharmaceutical companies. As clear evidence to the contrary, however, the U.S. Department of Justice announced this week that Dr. Fred Dweck, a retired Miami physician, has been sentenced to 24 months in prison and 3 years of supervised release for his role in a scheme to receive kickbacks from home health agencies in exchange for referrals for unnecessary Medicare services. According to the release, during a three year period, Dr. Dweck referred more than 800 patients for unnecessary homecare and physical therapy services. In addition to his prison sentence, Dr. Dweck has been ordered to pay $22 million in restitution jointly and severally with his co-defendants and co-conspirators to the Medicare program.

While Dr. Dweck's punishment reflects the egregious nature of the scheme with which he was charged, physicians who treat Medicare patients and order/certify services covered by Medicare should take care to ensure that those services meet applicable medical necessity guidelines and further, that medical necessity is clearly documented in the record.  Billing for medically unnecessary services can result in overpayments and worse, allegations of fraudulent or abusive billing.  It's also a good idea to have your documentation, coding and billing reviewed on a periodic basis by an independent billing/coding expert (engaged by legal counsel) to ensure compliance with Medicare and commercial payor rules and standards. 

• Print
• Comments
• Trackbacks
• Share Link

With what is likely to be one of the largest Medicare fraud take downs of its kind, the Federal Bureau of Investigation (FBI) announced yesterday that the Medicare Fraud Strike Force charged 111 defendants in nine cities for their alleged participation in Medicare Fraud schemes involving more than $225,000,000 in improper billing to the Medicare program. The defendants included doctors, nurses and health care company owners and executives. According to an FBI Press Release, more than 700 law enforcement agents from the FBI and the Department of Health and Human Services and State Medicaid Fraud Control Units were involved in Thursdays arrest. The arrests took place in cities the Strike Force has deemed to be fraud “hotspots” including Brooklyn, Houston, Los Angeles and Chicago.

• Print
• Comments
• Trackbacks
• Share Link

The Office of Inspector General (OIG) of the Department of Health and Human Services is hosting six free OIG compliance training sessions for local health care providers, compliance professionals, and their legal counsel. According to the OIG, the sessions are designed to help attendees:

1. understand the law and the consequences of violating it.
2. Cultivate a culture of compliance within your health care organization; and 
3. Learn what to do when a compliance issue arises.
    

The sessions will be held over the next few months in Houston, Tampa, Kansas City, Baton Rouge, Denver, and Washington, D.C. Space at each training session is limited. More information (including how to enroll for one of the sessions) can be found on the OIG’s website http://compliance.oig.hhs.gov/.

• Print
• Comments
• Trackbacks
• Share Link

As proof that no fish is too small for the wide health care fraud nets being cast by government authorities, a Columbus, Ohio internist has pleaded guilty to health care fraud and tax evasion arising out of health care services billed out of his medical practice between 2005 and 2007. According to Department f Justice press release, Dr. Rajiv Yakhmi will could serve up to 10 years in prison and pay a fine of up to $250,000 in connection with one count of health care fraud and filing a false tax return. In addition, he will forfeit and/or abandon approximately $1 million as restitution.

The health care fraud charge stems from almost $600,000 in claims billed to Medicare, the Medical Assistance programs and other insurers for services which were either not performed or were overcharged, improperly coded, or medically unnecessary. Dr. Yakhmi also failed to report approximately $800,000 cash receipts received from patients during a period when he was not participating with the Medicare program.
 

• Print
• Comments
• Trackbacks
• Share Link

The United States Attorney’s Office for the District of Maryland has announced that St. Joseph Medical Center in Towson Maryland will pay $22 million to settle allegations that it violated the federal False Claims Act, the federal anti-kickback statute and Stark by entering into several improper professional services contracts with a cardiology group, MidAtlantic Cardiovascular Associates that involved the payment of illegal remuneration.

The DOJ alleged that St. Joseph paid kickbacks to the cardiology group through sham professional services agreements between 1996 and 2006. Specifically, the parties had entered into 11 professional services agreements which involved payments above fair market value, and/or payments for services that were either not rendered or not commercially reasonable.

Importantly, the settlement was the result of a qui tam whistleblower lawsuit brought by a group of cardiac surgeons who alleged that the service agreements were in violation of federal law. 

This settlement underscores the importance of ensuring that all financial relationships between physicians and hospitals to which they refer, including medical directorships, call coverage arrangements, rental arrangements and the like are for legitimate and necessary items/services and that payments are consistent with fair market value. 

 

 

• Print
• Comments
• Trackbacks
• Share Link

 

HHS Secretary Kathleen Sebelius addressed the New York Health Care Fraud Prevention Summit on November 5 in Brooklyn and updated attendees on the government’s efforts to rein in health care fraud. Significantly, she also indicated that CMS intends to squeeze out some of the excessive profit that is currently available to certain suppliers under Medicare. Her remarks are available here.

Appearing with Attorney General Eric Holder, Sec. Sebelius described the efforts to launch the Health Care Fraud Prevention and Enforcement Action Team, (HEAT), a joint effort between HHS and and the Justice Department to share information, spot trends, coordinate strategy, and develop new fraud prevention tools. In the past year, the two departments have hosted a National Health Care Fraud Summit  in DC and regional summits in South Florida and Los Angeles, with another planned for Detroit and more on the horizon.

She noted the creation of the a new center for Program Integrity at the Centers for Medicare and Medicaid Services and described the  Affordable Care Act, as “secretly one of the strongest fraud prevention laws in American history “ due to its provisions creating a single searchable database for all Medicare-paid claims.

She also noted the feds’ efforts to control the costs of certain DME, citing the fact that Medicare currently pays three to four times the amount paid by commercial insurers for certain medical supplies.

“As a consequence of outdated government fee schedules, Medicare spends $3,600 for a power wheelchair that costs the supplier about $1,000. We pay $6,200 in rent over 36 months for an oxygen concentrator that costs the supplier less than $600.

So the Centers for Medicare and Medicaid Services is aggressively moving forward with a program that establishes competitive bidding among medical equipment suppliers. In the first round, businesses in nine areas around the country that want to work with Medicare beneficiaries must submit bids that  Medicare will use to set the amounts it pays for certain durable medical equipment, prosthetics, orthotics and supplies.”

Finally, she noted television outreach efforts asking everyone to stay wary and watchful, ask questions, and keep track of their medical bills and payments, and highlighted a $9 million grant recently announced to fund  expansion of the Senior Medicare Patrol.

• Print
• Comments
• Trackbacks
• Share Link

Two recent Advisory Opinions by the Office of Inspector General (OIG) shed some much needed light of the OIG's view of marketing by health care providers.  Last week the OIG published Advisory Opinions 10-23 and 10-24, both concerning a proposed arrangement between a sleep testing provider and a hospital.  The facts in both Opinions were very similar: the hospital contracted with a sleep testing company to provide certain sleep testing equipment and services.  Among other things, the sleep testing company would provide marketing services for the hospital's sleep center.  

In Opinion 10-23 the OIG concluded that the arrangement could potentially generate prohibited remuneration under the anti-kickback statute and that the OIG could potentially impose administrative sanctions if the parties proceeded with the arrangement.  In opinion 10-24, however, 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 OIG would not impose sanctions on the parties because the arrangement included sufficient safeguards against the risks if improper inducement.

In both proposed arrangements, the parties stipulated that the compensation to be paid to the sleep testing company was consistent with fair market value.  However, in Opinion 10-23, the compensation was on a per test basis (sleep company was paid each time a patient was tested) and in Opinion 10-24, the sleep company was paid a fixed amount regardless of the number of patients seen or tested.  Although Advisory Opinions may generally only be relied upon by the parties requesting them, these two contrasting opinions suggest that marketing as an element of an independent service agreement is not fatal to the arrangement under the kickback statute as long as the compensation is fixed in advance, does not fluctuate with the volume or value of services and is consistent with fair market value.

 

• Print
• Comments
• Trackbacks
• Share Link

Responding to input from medical school deans and residency program directors in a recent survey, the OIG has published a plain-English compliance summary for new physicians entitled Roadmap for New Physicians: Avoiding Medicare and Medicaid Fraud and Abuse.  This 31-page document covers the following topics in a manner designed to educate new physicians in the basics of compliance and to sensitize them to the potential risks they will encounter in practice settings:

• Fraud & Abuse Laws (False Claims Act, Anti-Kickback statute, Stark physician self-referral statute, Medicare/Medicaid exclusion authority, Civil Monetary Penalties statute)
  • I. Physician Relationships with Payers
  • II. Physisican Relationships with Fellow Providers
  • III. Physician Relationships with Vendors
• Compliance Programs for Physicians
• Where To Go for Help
• What To Do If You Think You Have a Problem

The online version of the publication includes links to the various primary resources on the OIG web site, including the safe harbor regulations, advisory bulletins, compliance guidance, advisory opinions, and other useful links.

This document, which is downloadable for free at http://oig.hhs.gov/fraud/PhysicianEducation, can be used as the framework for compliance education for new and veteran physicians, and is a good starting point for the "newbie" to understand the legal landscape in the area of fraud and abuse.

• Print
• Comments
• Trackbacks
• Share Link

The recently enacted health reform law has ignited a great deal of public interest in rising health care costs and the underlying reasons for them.  Not surprisingly, fraud, waste and abuse in the system is a recurring theme.   Although of late the third party insurance companies and "corporate fatcats" have drawn most of the criticism in these cost discussions, at least one recent Wall Street Journal article suggests that abusive billing practices and fraud on the part of the Nation's physicians may be largely to blame.  The article states that this information can be gleaned from a Medicare database (The Carrier Standard Analytic File) which shows how much physicians are paid each year by Medicare.  The only problem according to the article is that the identies of the physicians in the database are protected from disclosure.  This right to privacy has been challenged and upheld in federal court, so there is little reason to believe that the physician information will be made public.  Nevertheless, physicians will no doubt be very disturbed by the unflattering light in which this article casts them and should be wary of the direction in which the health care cost discussion appears, at least according to the WSJ article, to be going.

• Print
• Comments
• Trackbacks
• Share Link

Physicians and other Part B providers should be aware that the Office of Inspector General of the Department of Health and Human Services has released its Work Plan for Fiscal year 2011. The Work Plan describes those area the OIG intends to review in the coming fiscal year and is a key tool for determining what “risk areas” to focus on from a compliance standpoint. A partial list of the Part B review areas in the 2011 Work Plan is as follows:

Place‐of‐Service Errors. Will review physician coding of place of service on Medicare Part B claims for services performed in ambulatory surgical centers (ASC) and hospital outpatient departments.

Coding of Evaluation and Management Services. Will review evaluation and management (E&M) claims to identify trends in the coding of E&M services, the extent of potentially inappropriate payments for E&M services and the consistency of E&M medical review determinations, and industry practices related to the number of E&M services provided by physicians and reimbursed as part of the global surgery fee.

Medicare Payments for Part B Imaging Services. Will review Medicare payments for Part B imaging services focusing on the practice expense components to determine whether Medicare payments reflect the expenses incurred and whether the utilization rates reflect industry practices.

Billing of Portable X‐Ray Suppliers. Will review providers of portable x‐ray services with unusual claims patterns and identify Medicare claims that are questionable.

Questionable Billing for Medicare Outpatient Therapy Services. Will review paid claims data for Medicare outpatient therapy services from 2009 and identify questionable billing patterns.

Appropriateness of Medicare Payments for Polysomnography. Will review the appropriateness of Medicare payments for sleep studies.

Excessive Payments for Diagnostic Tests. Will review Medicare payments for high‐cost diagnostic tests to determine whether they were medically necessary.

Independent Diagnostic Testing Facilities’ Compliance With Medicare Standards. Will review selected IDTFs enrolled in Medicare to determine the extent to which they comply with selected Medicare standards.

More information on the Work Plan can be found here.
 

• Print
• Comments
• Trackbacks
• Share Link

Unfortunately, many physicians believe their activities are “under the radar” when it comes to fraud and abuse enforcement. A recent settlement announcement by the Office of Inspector General (OIG) of the Department of Health and Human Services illustrates that this is not the case. According to the press release, the OIG has entered into a $7.3 million settlement with three physician-owned entities, United Shockwave Services, United Prostate Centers, and United Urology Centers, for allegedly soliciting and receiving payments in violation of the federal anti-kickback statute.

Among other things, the OIG alleged that certain of the physician investors in the entities had suggested to hospital administrators that if the hospitals did not enter into contractual arrangements to utilize the entities’ services, the physicians would take their cases to other hospitals. In addition to the $7.3 million settlement, the entities also agreed to a five-year corporate integrity agreement under which an independent reviewer will monitor all of the contractual arrangements between the entities and any hospital in Illinois, Iowa and Indiana.

This recent settlement underscores the need for physicians and physician organizations to get serious about their compliance efforts.  All indications are that we will be seeing more and more enforcement actions against physicians in the months to come.

• Print
• Comments
• Trackbacks
• Share Link

As further indication that health care fraud enforcement efforts are heating up in a big way, on Friday July 16, 2010, the Department of Justice announced the largest health care fraud crackdown in history.  According to Attorney General Eric Holder, raids were simultaneously conducted in multiple states including New York, Florida, Louisiana and Detroit.  The crackdown resulted in the indictment and/or arrest of 94 people in connection with alleged schemes to submit false claims to Medicare in excess of $250 Million.  The crackdown was lead by by the Medicare Fraud Strike Force -- the joint initiative between the Departments of Justice and Health and Human Services -- involved more than 360 law enforcement agents.  According to the DOJ comments, among those arrested were physicians, medical assistants, and health care company owners and executives.  

 

• Print
• Comments
• Trackbacks
• Share Link

According to a recent article in the Chicago Tribune, a group of orthopedic surgeons and Rush University Medical Center have been sued in a federal whistleblower lawsuit.  The lawsuit alleges that the physicians and the medical center caused claims to be submitted to Medicare for surgeries performed by residents that failed to meet the Medicare teaching physician supervision rules.  The Medicare teaching physician rules require that the teaching physician be present during the critical portions of the procedure and immediately available to furnish services during the entire service.

The "qui tam" or whistleblower provisions of the federal false claims act permit private citizens to file a civil suit against parties believed to have submitted false claims to the federal government.  The federal government may then elect to intervene in the lawsuit if it believes the suit has merit.  Importantly, according to the article, the federal government has declined to intervene in the Rush case.

• Print
• Comments
• Trackbacks
• Share Link

Five California physicians are among the eleven individuals indicted by a federal grand jury on May 20, 2010 for Medicare fraud. The scheme allegedly involved runners who were paid by the number of patients brought to the clinics, claims in excess of $5 million for nonexistent or medically unnecessary services, payments to "patients" for the use of their Medicare numbers, claims for services rendered to deceased beneficiaries, and fabrication of test results, sometimes from tests staffers performed on each other. Two of the conspirators have already entered guilty pleas, including a physician who admitted he had never set foot in the facility where he purportedly performed procedures.   For details, see the Department of Justice press release here. 

 

 

• Print
• Comments
• Trackbacks
• Share Link

Among its many provisions, the newly signed Patient Protection and Affordable Care Act has imposed a new requirement on physicians who rely on the Stark "In-Office Ancillary Services" exception.  Physicians who refer patients for CT, MRI or PET (or other Stark services as designated by the Secretary of HHS) that will be provided by the referring physician's practice under the Stark In-Office Ancillary Services exception must now inform the patient in writing at the time of the referral that the individual may obtain the services for which the individual is being referred from a person other than the referring physician's practice, and provide the patient with a written list of suppliers (who furnish such services in the area in which such individual resides.

The provision in the new law has an effective date of January 1, 2010, so absent clarification from Congress or HHS, the above requirement is effective immediately. 

 

 

• Print
• Comments
• Trackbacks
• Share Link

According to an article in the Philadelphia Inquirer over the weekend, a total of 83 in the Philadelphia area have been charged in connection with an alleged scheme to stage automobile accidents and file false claims for insurance benefits. The latest people charged include a Philadelphia chiropractor and an attorney. The charges come as a result of a federal and state investigation which started three years ago after the FBI received a tip about alleged health-care fraud. The chiropractor has been charged with 23 counts of mail fraud in connection with allegedly falsifying medical records and submitting claims for services that were never rendered.

• Print
• Comments
• Trackbacks
• Share Link

According to a PR Newswire article today, the White House intends to significantly increase efforts to curb health care fraud and abuse.  At the National Summit on Health Care Fraud this week, Secretary of Health and Human Services, Kathleen Sebelius announced that President Obama's FY 2011 Budget is expected to include historic support for anti-fraud efforts focusing on programs that have successful in preventing fraud and reducing payment errors.  For physicians, this is just one more warning that it's is time to get your compliance efforts in order. 
 

• Print
• Comments
• Trackbacks
• Share Link

According to a Department of Justice Press Release, a Texas Hospital has agreed to pay the federal government close to a million dollars in settlement of allegations that the hospital violated the federal False Claims Act. Specifically, Arlington Memorial Hospital has agreed to pay the U.S. $990,509.50 to resolve allegations that it improperly submitted claims to Medicare for services ordered by physicians who were allegedly being paid by the hospital to perform unnecessary services. The DOJ alleged that the hospital paid a physician group for blood gas lab study interpretations even though such tests no longer required any professional interpretation, and then failed to correct such arrangement after learning of it (and self-disclosing it to the government).

• Print
• Comments
• Trackbacks
• Share Link

According to a report issued by the Office of Management and Budget (OMB) of the White House, the Federal government made $54 billion in improper payments in 2009 from the Medicare and Medicaid programs.  The OMB reports that in response, President Obama is expected to sign an Executive Order this week designed to boost inter-agency transparency, hold agencies accountable, and create incentives for compliance.  This is just another indication that fraud, waste and abuse enforcement efforts will likely spike considerably in the coming months and years, and physicians and other providers need to be sure they are devoting adequate resources compliance efforts. 

• Print
• Comments
• Trackbacks
• Share Link

While all eyes are on the health care reform debate, a new Senate bill would give the government improved tools for investigating and prosecuting fraud and abuse in both federal and private health insurance programs. One of the most significant proposed changes would authorize a qui tam whistleblower action under the False Claims Act based solely on allegations of a violation of the Anti-Kickback law.

Senator Ted Kaufman (D-DE) introduced the Health Care Fraud Enforcement Act of 2009, co-sponsored by Committee Chairman Patrick Leahy (D-VT) and Committee members Arlen Specter (D-PA), Herb Kohl (D-WI), Chuck Schumer (D-NY) and Amy Klobuchar (D-MN).

Kaufman’s proposed legislation would modify federal sentencing guidelines, health care fraud statutes, and forfeiture, money laundering, and obstruction statutes, including:

Sentencing increases: The bill directs the Sentencing Commission to increase the guidelines range for health care fraud offenses and clarifies that the full potential scope of the fraud should be considered at sentencing.

Redefining “health care fraud offense”: The bill includes all health care crimes within the definition of “health care fraud offense,” regardless of where they are codified. (ERISA, drug marketing, and kickback crimes are currently not included) This change will make available to law enforcement the full range of antifraud tools, including criminal forfeiture and obstruction penalties, to combat these offenses.

 

Continue Reading...

• Print
• Comments
• Trackbacks
• Share Link

For more information regarding this settlement agreement, please contact William H. Maruca.

• Print
• Comments
• Trackbacks
• Share Link

According to an article in the News Tribune, the long arm of the federal government has tracked a Washington state doctor to Madagascar and brought him back to the U.S. to face fraud charges.  The doctor, who operated four clinics in Washington, will be charged with conspiracy to commit health care fraud following an audit of the doctor's Medicaid billing practices.  According to the article, undercover agents posing as patients visited the practice and claims were allegedly submitted for higher levels of service than were actually provided and/or for services not rendered.

• Print
• Comments
• Trackbacks
• Share Link

In the recently released OIG Advisory Opinion No. 09-16, the OIG found that participation by chiropractors in a referral network would not run afoul of the federal antikickback statute.  In AO 09-16, the OIG reviewed a proposed arrangement whereby chiropractors who are members of an association would each pay $200 per month to participate in a "network" that would advertise chiropractic services through internet, print, radio, or television advertising and provide referrals for such services.  A prospective patient who contacts the network for a chiropractor referral would be asked to provide a zip code. The network would then provide contact information for a participating chiropractor who practices in that zip code or, if no participating chiropractor practices in that zip code, in a nearby zip code. If more than one participating chiropractor is in the particular zip code, a name would be provided in sequence from a rotating list.  The network would pay the chiropractic association $10 for each chiropractor that participated in the network.

Although the compensation paid by the network to the association would vary with the number of chiropractors who join the network, the OIG stated that it would not prosecute the arrangement because (1) the network itself would not provide any items or services payable by Federal health care programs, (2) the participation fee would not vary on the basis of referrals of Federally payable business, (3) referral of potential patients to participating chiropractors would be on a rotating basis, by geographic area, and (4) the referral service would be open to participation by any chiropractor licensed to practice in the state, and participating chiropractors would receive referrals on an equal basis, would not be influenced by the variation in fees paid by participants.

 

• Print
• Comments
• Trackbacks
• Share Link

In case you somehow missed the news, effective October 1, 2009 (that's right, tomorrow), 'under arrangements' ventures involving Stark services are no longer permissible.  An under arrangements venture usually involves provision of a diagnostic or therapeutic service on a turn-key basis by an outside supplier (often a physician office) on behalf of a hospital.  The hospital then bills for the service to Medicare as if the service was performed by the hospital pays the under arrangements provider a fee for performing the service.  In the 2009 Inpatient Prospective Payment System Regulations, CMS revised the definition of a designate health service "entity" for purpose of the Stark law to include not only the entity that submits the claim and receives payment from the Medicare program for the service (i.e., the hospital) but also the entity that performs the service (i.e., the under arrangements physician office).   As a result of this change, physician practice will, as of tomorrow, no longer be able to provide services under arrangements to hospitals to which they refer Medicare patients.   If for some reason you have not terminated or corrected any of your under arrangements contracts, you need to act quickly to avoid on-going Stark liability.  

• Print
• Comments
• Trackbacks
• Share Link

The number of physicians seeking employment with hospitals seems once again to be on the rise and not surprisingly, physicians negotiating those arrangements will do their best to ensure that they are paid fairly for their services.  In light of the recent settlement of a federal False Claims case, however, physicians should be careful to ensure that their compensation - even as W-2 employees of a hospital - is consistent with fair market value and commercially reasonable. 

According to a US Department of Justice Press Release, Covenant Medical Center in Iowa has agreed to pay the United States $4.5 million to resolve allegations that it violated the False Claims Act by paying employed physicians compensation in excess of fair market value in violation of the federal Stark statute.  While there is an exception under the Stark law for compensation paid to a W-2 employee, the compensation must (1) be consistent with the fair market value of the services; (2) may not be determined in a manner that takes into account (directly or indirectly) the volume or value of any referrals by the referring physician; and (3) be pursuant to an agreement that would be commercially reasonable even if no referrals were made to the employer.

According to the Press Release, the compensation to the 5 physicians in question far exceeded fair market value, and in fact, the physicians were among the highest paid hospital-employed physicians in the entire United States.

• Print
• Comments
• Trackbacks
• Share Link

Physician/Medical Device financial arrangements continue to draw scrutiny by regulators. According to an article in the New York Times, Senator Charles Grassley has instituted an inquiry into payments between device-maker Medtronic and Dr. David Polly that Grassley says were not disclosed by Dr. Polly when he testified before Senate Panel in 2006. Specifically, Dr. Polly allegedly failed to disclose during his testimony that Medtronic was paying him $6,000 for his appearance before the committee.

Although the amount not disclosed is small, documents released by Senator Grassley show that between 2003 and 2007, Medtronic paid Dr. Polly in excess of $1.14 million in consulting fees and expenses from Medtronic. The lesson for physicians: As medical costs and quality emerge as the buzzwords for health care reform, financial arrangements which create or which give the appearance of conflicts of interest are increasingly likely to come under scrutiny by regulators and enforcement authorities. Physician contemplating these arrangements must carefully evaluate the benefit of the arrangements and the potential pitfalls.

• Print
• Comments
• Trackbacks
• Share Link

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.

 

• Print
• Comments
• Trackbacks
• Share Link

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.
 

• Print
• Comments
• Trackbacks
• Share Link

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.

• Print
• Comments
• Trackbacks
• Share Link

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.

• Print
• Comments
• Trackbacks
• Share Link

A recent whistleblower case out of the federal 3rd Circuit in Pennsylvania highlights some of the dangers in not properly documenting financial relationships between physicians and hospitals. Specifically, in US ex. rel. Kosenske v. Carlisle HMA, Inc., a Qui Tam lawsuit brought by the former member of an anesthesia group, the 3rd Circuit Court of Appeals reversed a US District Court’s summary judgment in favor of the defendant hospital and anesthesia group.

The anesthesia group in question had a written exclusive contract with the hospital for anesthesia services but, subsequent to entering into the exclusive agreement, began providing pain management services at the hospital’s freestanding pain center. The hospital did not charge the anesthesia group rent for use of the space in the pain center and the qui tam relator claimed that the arrangements failed to meet the Stark exception for personal service arrangements (and therefore that claims for services referred by the anesthesia group’s physicians to the hospital were in violation of the federal False Claim Act).

 

Continue Reading...

• Print
• Comments
• Trackbacks
• Share Link

Massachusetts has joined the small but growing list of states regulating gifts and payments by pharmaceutical and device manufacturers to physicians.  According to a Boston Globe article, Massachusetts regulators have adopted regulations banning gifts to physician and mandating disclosure of consulting/speaking payments to doctors in excess of $50. The regulations apply to any pharmaceutical and device company doing business in Massachusetts and take effect July 1, 2009.

This is yet another indication that the landscape surrounding physician-industry relationships is undergoing major changes.  As regulators push for greater transparency, physicians must be careful to avoid arrangements with pharma and device companies which might not only violate state or federal laws (including the federal anti-kickback statute) but which could attract unwanted public attention and scrutiny. 

 

• Print
• Comments
• Trackbacks
• Share Link

As yet another warning to physicians and the medical device industry, the Department of Justice has entered into a Deferred Prosecution Agreement with medical device maker Neuromtrix in connection with an alleged kickback arrangement with referring physicians.  

According to a press release by the US Attorney's Office for the District of Massachusetts, the settlement has to do with a medical device used in physicians’ offices to assist in the diagnosis of neuropathies in peripheral nerves.  Physicians using the device are required to purchase disposable biosensors.  Accordingly to the press release, Neurometrix allegedly paid physicians in the form of free boxes of disposable biosensors to induce them to recommend purchase of the device to their colleagues. 

Under the Deferred Prosecution Agreement, Neurometrix has agreed to pay a criminal penalty of $1.2 million.  Neurometrix also agreed to pay $2,498,337 in civil damages and penalties for allegedly causing physicians to bill nerve conduction studies to Medicare using a higher code than was actually performed by the physicians.  The press release does not mention whether any action is being taken against the physicians in question.

It is apparent from this latest case that physician and device manufacturers are still willing to enter into questionable financial arrangements despite the numerous high-profile cases over the last few years.  Physicians considering entering into these relationships must be aware that where the devices in question are reimbursed by the Medicare or any other federal program or involve the submission of claims for services to those programs, any payment, in cash or anything else of value, may implicate the federal anti-kickback statute.  Violations of the anti-kickback statute are punishable by a fines of up to $25,000 per violation, up to five years in jail, or both, as well as civil money penalties of $50,000 for each violation.

Even where the arrangements do not involve federal payor programs, comparable state kickback laws may apply.  It is critical therefore that physicians carefully evaluate these arrangements and consult with experienced health care counsel before entering into them.

 

 

• Print
• Comments
• Trackbacks
• Share Link

Those of us in the health care industry are, by now, quite used to reading about major prosecutions and settlements by the federal government against drug and device companies for improper relationships with physicians.  It is far less common, however, to read about the physicians on the receiving end of those relationships.  This, according to an article in the New York Times, is likely about to change. 

According to the Times article, authorities are frustrated by what they perceive to be on-going abusive relationships between physicians and industry despite the many high profile actions that have been brought against drug and device companies.  To strengthen that message, authorities are now turning their attention to physicians who receive payments from industry.  In fact, according to the article, in the coming months the feds intend to file civil and criminal complaints against a number surgeons believed to have demanded lucrative consulting arrangements from device companies.

As relationships between physicians and industry become more transparent (some major drug and device manufacturers are now publishing on the web the names of physicians they pay), physicians should expect that their arrangements may come under scrutiny and should exercise an abundance of caution when considering entering into these relationships.

• Print
• Comments
• Trackbacks
• Share Link

Medtronic Inc. announced this week that beginning in 2011, it will start disclosing payments of more than $5,000 per year to physicians for consulting fees, royalties or honoraria.  According to an article by the Associated Press, Medtronic's decision comes in response to pressure from federal legislators to disclose the information.  Medtronic now joins Eli Lilly & Co. and Pfizer Inc. in making these voluntary disclosures.

Transparency will clearly be a major component of physician-industry financial relationships going forward.  Physicians who have or are entertaining these kinds of relationships should be mindful of the implications of these disclosures and, to the extent possible, try to exercise some control (through the underlying service/royalty agreements) over the content of disclosures.  

• Print
• Comments
• Trackbacks
• Share Link

The Office of Inspector General of the Department of Health and Human Services (OIG) published a notice today seeking proposals and recommendations for developing new and modifying existing safe harbor provisions under the Federal anti-kickback statute and for developing new OIG Special Fraud Alerts.  To be considered, public comments must be delivered to the OIG by 5 p.m. on February 17, 2009 and can be sent by mail, electronically or by hand delivery.  For more information on how to submit comments, see the Federal Register notice here. 

• Print
• Comments
• Trackbacks
• Share Link

In response to an unusually straightforward fact pattern, the OIG today released an advisory opinion blessing certain part-time physician employment arrangements. The advisory opinion comes in response to a nonprofit, tax-exempt corporation’s proposal to employ two physicians on a part-time basis to perform endoscopies on the requestor’s own premises. Each of the physician employees would maintain separate medical practices, at separate premises, at outside of the part-time employment relationship with the requestor. The requestor certified that the physician employees would be bona fide employees in accordance with the employment safe harbor under the anti-kickback statute and that each physician employee would be a salary based on the fair market value of the professional services that he or she personally provides. Based on the facts presented, the OIG concluded that the proposed arrangement would not generate prohibited remuneration under the anti-kickback statute and would fall within the applicable employment safe harbor. The OIG did not opine on the issue of whether the employees would in fact be bona fide employees or on the issue of fair market value of the compensation in question. See Advisory Opinion 08-22

• Print
• Comments (1)
• Trackbacks
• Share Link

Physicians, Do you have financial relationships (think joint venture, medical director stipends, lease arrangements, AS&T agreements) with a hospital? If so, your referrals to that hospital for inpatient and outpatient services may violate the federal Stark self referral law unless they fall within one of the exceptions to Stark.  You need to make sure your arrangements meet an exception!  Even if you originally structured those arrangements to fit within a Stark exception, if you have not reviewed those arrangements for Stark compliance for awhile, I strongly recommend that you review your arrangements for compliance now. 

Why the urgency? Because in the coming months, CMS will be auditing hospital/physician financial relationships for compliance with Stark. Specifically, CMS will be sending out “Disclosure of Financial Relationship” information requests to 500 hospitals across the Country soliciting specific information about the relationships the hospitals have with their physicians.  If yours is one of those hospitals, CMS will be looking at your arrangements.    

What should you be looking for? You need to identify your hospital financial relationships and then figure out which exception applies. If you have a contract, you need to be sure the contract meets the specific requirements of the applicable exception and that it is signed and currently in effect.  Remember, Stark is a strict liability statute so if you don’t meet all of the requirements of an exception, you likely have a violation of the statute and the penalties are draconian.

What if you’re not compliant? The Stark regulations do offer some ability to correct non-compliant arrangements but they are very limited. Generally a refund is required and penalties for violating Stark include a $15,000 civil money penalty for each tainted referral and for each claim submitted pursuant to a tainted referral, as well as potential false claims liability.

If you’d like assistance evaluating your hospital relationships for compliance with Stark (or handling non-compliant arrangements), please contact Todd Rodriguez.

• Print
• Comments
• Trackbacks
• Share Link

The Office of Inspector General (OIG) of the Dept of Health and Human Services released its FY2009 Workplan yesterday. The Workplan outlines the initiatives and audits that the OIG expects to undertake in the coming fiscal year.  Below are some of the key initiatives that the OIG expects to undertake with regard to physicians.  If you or your practice is engaged in any of these activities, now would be a great time to review whether you are complying with applicable Medicare rules.  If you need assistance reviewing any of your services for compliance with Medicare rules, please contact Todd Rodriguez.

Place of Service Errors
The OIG will review physician coding of place of service on Medicare Part B claims for services performed in ambulatory surgical centers (ASC) and hospital outpatient departments. The OIG will be looking to determine whether physicians properly coded the places of service on claims for services provided in ASCs and hospital outpatient departments.

Evaluation and Management Services During Global Surgery Periods
The OIG will review industry practices related to the number of evaluation and management (E&M) services provided by physicians and reimbursed as part of the global surgery fee. It will be looking determine whether industry practices related to the number of E&M services provided during the global surgery period have changed since the global surgery fee concept was developed in 1992.
 

Continue Reading...

• Print
• Comments
• Trackbacks
• Share Link

For those of you who have not been watching your Stark radar screen closely, be aware that CMS recently made a number of substantial changes to the Stark self-referral regulations that may affect your practice arrangements. Some of these changes will not take effect until October 1, 2009, but others changes will take effect on October 1, 2008. Key changes include (but are not limited to the following:

1.  “Stand-in-the shoes” Relationships – Under current regulations, physicians who refer to a Stark entity with which they have a financial relationship will be deemed to “stand in the shoes” (i.e., be treated as if they had the same compensation arrangements) of their physician organizations (e.g., their medical practice entity). CMS has clarified that, Effective October 1, 2008, this rule only applies to physicians who have an ownership interest in the physician organization – not physicians who are only employees, independent contractors or whose ownership interest is only titular.

2.  Services Furnished “Under Arrangements” -- CMS has in the past expressed concern over “under arrangements” ventures where a physician supplies items and services to a hospital for which the hospital bills the Medicare program and pays the physician fee. To address this concern, CMS has revised the definition of the term “entity” for purposes of the Stark prohibitions to the person or entity that actually performs a Stark services as well as the entity that causes a claim for the Stark service to be submitted to the Medicare program. This change will take effect on October 1, 2009.

 

Continue Reading...

• Print
• Comments (1)
• Trackbacks
• Share Link

Document, document, document! is the cry of health care attorneys and consultants across the Country when asked what physicians can do to protect their practices from fraud and abuse liability.  But what happens if you receive a Medicare audit request and you find out that your documentation isn't so good or even non-existent?  Many physicians when faced with this prospect are tempted to recreate or alter medical record documentation.  Beware, this is probably the worst thing you can do in this situation. 

Poor or even non-existent medical record documentation is not necessarily an indicator of fraud or abuse.  In many cases it is simply an indication of the need for documentation and coding education or better record keeping protocols.  In these circumstances, a physician may have to return some money to Medicare or other payors but will generally not be looking at civil or criminal penalties.  Recreating, altering or falsifying records, however can quickly turn a simple overpayment situation into a criminal case.  That's what has apparently happened to a podiatrist in New Jersey according to a recent article in the New Brunswick Home News Journal.  According to the article, in response to a request by a Medicare contractor for 25 medical records, the podiatrist re-wrote the records to enhance the Medicare claims under review and was charged with obstructing a federal audit.  The potential penalty for this: a maximum of five years in prison and as much as a $250,000 fine.

 So what can you do if your documentation falls short in the face  of an audit submission?  If the documentation exists but is simply illegible, you might include a typed transcription along with the original records.  If pieces of information are missing from a note, you can include an annotation explaining why the information is missing, but any such annotation should be signed and dated when made.  Back-dating is major a no-no.  Finally, when records are missing altogether, a letter to the auditor explaining the situation and offering to refund the amounts received may make sense.  In any of these circumstances, however, it is highly advisable to immediately consult with a knowledgeable health care attorney before doing anything.

• Print
• Comments (2)
• Trackbacks
• Share Link

It is no secret that the federal government is very interested in the connection between gifts and other remuneration from drug and device manufacturers and physician decision-making when it comes to ordering those items.  At least one Senator has gone so far as to introduce legislation which would require disclosure of these financial relationships.  According to a recent article in the Baltimore Sun, some doctors are voluntarily refusing to accept gifts from industry. 

While the legal ramifications of accepting remuneration from industry for goods and services covered by federal payor programs are quite severe under the federal anti-kickback statute, the line between what will be tolerated (e.g., low cost meals coupled with an educational program) and what will land a physician in hot water has become blurred.  This confusion is likley due, at least in part, to the pharmaceutical and device industries' efforts to self-police through their own codes of conduct which permit conduct not expressly permitted under the anti-kickback statute. 

As the Baltimore Sun article illustrates, some doctors are beginning to recognize that even if a compensation arrangement with industry is permissible -- or at least tolerated -- under federal law, there may still be negative consequences to particpating.  In particular, the public may be left with the perception -- right or wrong -- that a doctor with industry ties has a conflict of interest.  The legal implications are no doubt important, but doctors should remember that how something will look on the front page of the newspaper may be just as important.

• Print
• Comments
• Trackbacks
• Share Link

The federal government was apparently not kidding when it said it planned to take a closer look at physician/hospital arrangements.  According to a recent Department of Justice Press Release, the DOJ has elected to intervene in a whistle-blower lawsuit against Christ Hospital and the Ohio Heart Health Center, a large cardiology group in Ohio. The lawsuit alleges that the hospital and the cardiology group entered into an arrangement that provided the cardiologists improper financial incentives in exchange for generating revenue for the hospital through the hospital’s outpatient cardiology testing center. This suit was originally filed by a cardiologist who had provided services to Christ Hospital and Ohio Heart. The lawsuit alleges that cardiologists were allocated time at the Hospital’s heart station based on the number of cardiac services they generated for the Hospital in the prior year.

This is only one of what can expected to be a slew of these types of cases as enforcement authorities tune in to the creative ways in which hospitals and physicians have been teaming up over the last few years.  Physicians who have financial arrangements with their hospitals should take a close look at those arrangements for compliance with current regulatory requirements.

• Print
• Comments
• Trackbacks
• Share Link

Proving the theory that no good deed goes unpunished, according to a March 17, 2008 Department of Justice press release, Hardeman County Memorial Hospital in Texas agreed to pay the federal government a total of $398,230 to resolve allegations that it violated the federal False Claims Act by submitting improper claims for payment to the Medicare program for healthcare items and services that were provided as a result of improper physician referrals. Interestingly, the case was based on a 2005 self-disclosure by Hardeman to the Office of Inspector General of the Department of Health and Human Services that Hardeman had discovered a physician lease arrangement pursuant to which a referring physician had received free rent from Hardeman. The self-disclosure triggered an investigation which concluded in the settlement and Hardeman's entry into a 3-year Corporate Integrity Agreement.

• Print
• Comments
• Trackbacks
• Share Link

As previously reported on this blog, the Centers for Medicare and Medicaid Services (CMS) had announced in 2007 that they intended to send requests for information to all Medicare participating hospitals for details regarding the investment/ownership and compensation arrangements between those hospitals and physicians to determine whether the arrangements were in compliance with the federal Stark statute. However, according to an April 10, 2008 notice published by the Office of Management and Budget, CMS has now withdrawn the Request for Information survey with no indication as to whether a new survey will be issued in the future. Of course, physicians who have financial relationships with hospitals should not assume that this issue is dead and gone but rather should take this opportunity to review their existing hospital relationships to ensure compliance with the Stark statute and regulations.

• Print
• Comments (1)
• Trackbacks
• Share Link

Earlier this week, a number of major orthopedic medical device companies, as part of an anti-kickback settlement agreement, began posting on their websites the names of physicians to whom the companies have paid consulting fees.  Now, as a perfect example of why this "transparency" is a danger to all physicians, a Michigan newspaper is reporting that one of the companies, Smith and Nephew, incorrectly identified a physician on its website.  Apparently the physician in question does not and never had a consulting relationship with the company.  A spokesman for Smith & Nephew blamed the mix up on some kind of sorting error.    

• Print
• Comments
• Trackbacks
• Share Link

Several weeks ago I posted an entry on this blog about a major federal anti-kickback settlement agreement entered into by the five largest orthopedic device companies: Zimmer Inc., Depuy Orthopaedics, Inc., Smith & Nephew Inc., Biomet Orthopedics, Inc., and Stryker Orthopedics, Inc.  At the heart of the government's allegations in the case were consulting fees paid to physicians which the government alleged were kickbacks intended to induce the physicians to use the companies' products.  One of the key components of that settlement was that the companies are required to disclose the name of each consultant and what they have been paid on each company's website.  The companies have now begun posting this information and it is, to the say the least, quite interesting.

According to an article published today by the Center for Science in the Public Interest, almost 50 orthopedic surgeons each earned over $1 million a year in consulting fees and royalties from the five companies subject to the settlement, and many of the surgeons are affiliated with top institutions. 

Physician consulting arrangements with pharmaceutical and device manufacturers are nothing new and are not necessarily illegal.  In fact, many of these arrangements are quite necessary to the development of new and innovative drugs and devices.  However, payments for "phantom" consulting services or which are in excess of fair market value for the consulting services may, if intended to induce the consultant to recommend and/or use the particular company's products, violate the federal anti-kickback statute.  

Continue Reading...

• Print
• Comments (1)
• Trackbacks
• Share Link

In a recent Stark law Advisory Opinion (CMS-AO-2007-01), the Centers for Medicare and Medicaid Services (CMS) found that a hospital could not change the terms of an existing physician recruitment assistance agreement where that change would effectively result in additional compensation to the recruited physician.  Specifically, the original recruitment assistance agreement between the hospital and the physician included an excess receipts provision which obligated the physician to remit to the hospital any collections in excess of the physicians' expenses and guaranteed compensation.   

The hospital sought CMS' opinion on whether (1) an excess receipts provision was required in recruitment assistance agreements by the Stark regulations, and (2) whether the hospital could delete the provision from the existing agreement.  CMS declined to opine on the first issue (although they did note that the recruitment assistance exception does not require such a provision) but found with respect to the second issue that deleting the excess receipts provision would have the effect of providing more compensation to the recruited physician than he would originally have been entitled to.  On this, CMS stated the following:  "Because the Physician has already relocated his medical practice, the additional compensation is not for the purpose of inducing relocation and may directly or indirectly reflect the volume or value of the recruited physician’s actual or potential referrals."

 

• Print
• Comments
• Trackbacks
• Share Link

According to a recent DOJ Press Release, five medical device companies (comprising approximately 95% of the hip and knee joint implant market) have settled kickback allegations relating to payments to surgeons by agreeing to pay a total of $311 million and entering into five-year Corporate Integrity Agreements.  The companies include Zimmer Inc., Depuy Orthopaedics, Inc., Smith & Nephew Inc., Biomet Orthopedics, Inc., and Stryker Orthopedics, Inc.  Physicians who deal with these and other implant manufacturers clearly need to take a close look at their device relationships to be sure they conform to the anti-kickback statute and other applicable laws.

• Print
• Comments
• Trackbacks
• Share Link

In accordance with the Deficit Reduction Act, the Department of Health and Human Services (“HHS”) is undertaking an initiative to require all hospitals participating in a Medicare program to provide information to HHS on a periodic basis concerning their investment and compensation relationships with physicians. As the initial step in this process, HHS will send a mandatory disclosure report form to 500 hospitals in September of this year, on which those hospitals will be required to disclose their investment and compensation arrangements with physicians. HHS will use the information gathered to analyze the relationships for compliance with applicable federal law, including the federal Stark statute. 

The HHS notice can be found by clicking here. The mandatory information request is authorized by federal regulations found at 42 CFR 411.361.

In addition to the obligation to return any amounts improperly collected from the Medicare program, penalties for violating the Stark statute include a $15,000 fine for each impermissible referral and for each claim submitted pursuant to an impermissible referral, as well as potential liability under the False Claims Act.

Continue Reading...

• Print
• Comments
• Trackbacks
• Share Link

As lucrative ancillary services continue shift from hospitals to outpatient sites, hospitals are anxious to find ways to keep they're hand in the mix.  Not surprisingly, physician-hospital joint ventures are all the rage.  While such ventures can be legally structured, the stakes of failing to comply with applicable legal requirements can be very high.  For important considerations in structuring joint ventures, see the following article in Physicians' News Digest: Structuring Contractual Joint Ventures. 

• Print
• Comments
• Trackbacks
• Share Link

The Medicare incident-to rules permit a physician to bill for the services of auxiliary personnel as if the physician performed those services himself.  You may already know that the incident-to rules require a physician to be present in the office suite and immediately available to assist while auxiliary personnel are performing incident-to services in the office.  But, did you know that you could be supervising incident-to services without even knowing it? 

In a recent federal District Court whistleblower case out of Hawaii, a court rejected a whistleblower physician's claim that he could not have been the supervising physician for incident-to services since he was not made aware by his group practice that the services would be billed to Medicare under his provider number.   Under the incident -to rules, any physician in a "physician directed clinic" may supervise incident-to services and the court agreed with the defense that a physician in a "physician directed clinic" need not have specific knowledge that he will be the supervising physician for billing purposes.  The court's opinion can be found here.

• Print
• Comments
• Trackbacks
• Share Link

The Centers for Medicare and Medicaid Services (CMS) announced today in the federal register that it will delay publication of the much anticipated Phase III final Stark self-referral regulations (which were due out by today) until March 23, 2008. According to CMS, the delay is necessary in order to allow time to review and consider the extensive public comments on the Interim Final regulations (Phase II) of the regulations which were published in 2004.  Until publication of Phase II, the Phase II rules will remain in place.  

• Print
• Comments
• Trackbacks
• Share Link

Think hanging on to insurance overpayments is no big deal?  Think again.  According to a press release by the U.S. Attorney for the Eastern District of Tennessee, one cardiology practice that neglected to refund overpayments to federal and private insurers and patients has learned a valuable ... and expensive lesson: if you have money you're not entitled to, give it back!  East Tennessee Heart Consultants has reportedly entered into a settlement with the US Attorney for $2.9 Million in connection with the alleged failure to refund overpayments.  For tips on investigating and refunding overpayments, click here.

• Print
• Comments
• Trackbacks
• Share Link

According to an audit report published by the Office of Inspector, doctors are not reporting the correct "Place of Service" codes when submitting claims.  Medicare payments for the same services may vary depending on the location where the services were rendered.  This is because Medicare has determined, among other things, that the cost to produce a service may be more or less in certain settings.  In addition, payment for a professional service which is rendered in a facility (where a facility fee applies) will typically be lower than if the same services is rendered in the office setting, since the facility expense in the office setting (known as the practice expense) is rolled into the professional fee and not paid separately.  Failing to correctly code the POS can result in a physician receiving an overpayment and could even result in false claims liability.

 

Continue Reading...

• Print
• Comments (1)
• Trackbacks
• Share Link

According to a Department of Justice press release the DOJ recovered a record $3.1 Billion in settlements and judgments in cases involving allegations of fraud against the government.  $1.3 billion of the recoveries were initiated by whistleblowers under the federal qui tam whistleblower statute.  Of the recoveries, 72% ($2.2 billion) were related to health care fraud. 

It is apparent from this development that false claims actions are on the rise, so physicians and other providers who have not yet developed compliance policies and procedures to prevent false claims and whistleblower actions by their employees are well advised to do so. 

• Print
• Comments
• Trackbacks
• Share Link

In November 2006 the Centers for Medicare & Medicaid Services (CMS) issued Advisory Opinion 2006-01 dealing with the Stark exception for physician recruitment arrangements.  Specifically, the Opinion addressed a proposed arrangement whereby a hospital and a medical practice would share the expense of recruiting a new physician into the hospital's service area and the hospital would provide certain forgivable loans to the physician. 

Although the recruited physician would either would move his or her practice at least 25 miles or would derive at least 75% of revenues from professional services furnished to patients not seen or treated by the Physician previously, as required by the recruitment exception, 10 to 20% of the recruited physician's time would be spent providing medical services at a practice location outside of the hospital’s geographic service area.  The parties seeking the advisory opinion sought clarification of whether a physician would be deemed to have relocated his practice to the a hospital's service area if the physician spends a percentage of his time practicing medicine outside of the hospital's service area.

Based on the fact that the recruitment exception includes no explicit requirement that the recruited physician spend 100% of his medical practice time in the geographic area served by the recruiting hospital, CMS concluded that the proposed arrangement would meet the recruitment exception.  However, CMS notes that it might reach a different conclusion if the time spent by the recruited
physician outside of the geographic service area was more substantial than under the proposed arrangement.

AO-206-01 is noteworthy in that it signals a willingness on the part of CMS to provide more meaningful guidance through the Advisory Opinion process than it has in the past.  It also serves as a reminder to physicians and counsel that CMS will apply a technical reading when applying the Stark exceptions.

• Print
• Comments
• Trackbacks
• Share Link

According to a press release by the U.S. Attorney for the Eastern District of Pennsylvania, Keystone Mercy Health Plan has agreed to pay $5 million to resolve civil liabilities under the federal False Claims Act and other federal and state statutes and common law principles.  According to the complaint filed by the U.S. Attorney, KMHP allegedly violated the federal False Claims Act by failing to remit to the Pennsylvania Department of Public Welfare overpayments recouped by KMHP from providers.  Of note is the fact that the case was initiated by a former employee of KMHP under the whistleblower provisions of the False Claims Act.  According to the complaint, the whistleblower stands to receive $780,000 from the settlement proceeds.

• Print
• Comments
• Trackbacks
• Share Link

Each fall, the Office of Inspector General (OIG) announces its enforcement priorities for the coming year in the form of a Work Plan. The 2007 Work Plan was released on September 26, 2006 and can be found here: http://oig.hhs.gov/publications/docs/workplan/2007/Work%20Plan%202007.pdf. As in past years, the Work Plan should be required reading for all compliance officers and others interested in getting an advance look at the feds' playbook. Continue Reading...

• Print
• Comments
• Trackbacks
• Share Link

According to a recent press release by the U.S. Attorney for the District of Colorado, Pediatrix Medical Group, Inc. has agreed to pay the government $25,078,918 to settle government claims of upcoding under the False Claims Act.  Specifically, the government alleged that Peiatrix billed for critical care services when patients were not critically ill.   This should serve as a strong reminder to physician groups of the importance of maintaining an effective compliance program.

• Print
• Comments
• Trackbacks
• Share Link