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

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.

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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.

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Recent press releases provide notice of activities that draw the government's ire -- and result in serious criminal consequences.  Focusing on these issues is a helpful exercise for any physician trying to stay within the law.  The cases include:

*    An Illinois physician ordered medically unnecessary tests for patients, used false diagnosis codes to justify the tests, and then submitted claims for government reimbursement.  The government's evidence included testimony that the defendant administered EEGs, EKGs and other tests for an unusually high number of patients, which was perhaps the trigger to a more detailed government review of his practice.  For his efforts, the defendant was given a 2-½ year prison sentence. 

*    Two Mississippi residents plead guilty to charges of billing Medicare for chemotherapy services that were never performed.  The defendants were caught when the services billed exceeded the volume of chemotherapy drugs actually purchased from suppliers, and the activities were made worse by efforts to cover up the fraud in advance of a scheduled audit.  The defendants will be sentenced in October, and face up to 20 years in prison. 

*    A 31-year old physician assistant in Texas plead guilty to his part in a scheme involving pre-signed prescriptions that the assistant then issued to patients -- without the physician having participated in the consultation or the decision to prescribe medicines.  The fraud took the form of false representations that the physician was involved because the services would have been ineligible for government reimbursement absent the doctor's involvement. The defendant faces a maximum sentence of five years in prison. 

*    A Rhode Island physician's assistant was convicted of taking kickbacks in a scheme involving payments from a medical device company in exchange for prescriptions that ordered the use of that company’s devices. This violated the Anti-Kickback Law.  He was sentenced to one year in prison, and ordered to pay a fine -- with his sentence having been upgraded because he lied to a grand jury and a government investigator.  The investigation with respect to others is ongoing.

*    A New Jersey doctor was convicted of accepting cash kickbacks in exchange for referring patients to a medical diagnostic facility, and was caught when he accepted payments from a cooperating government witness. 

*    Finally, this month's special award goes to a California physician who was sentenced to six years in prison for medical services provided by a health clinic.  Unfortunately, the clinic provided no services.   Instead, the mostly non-English speaking visitors to the clinic were paid $100 per visit for their Medicare eligibility, which the clinic then used to create false charts for tests that were never conducted -- and submitted these as claims to Medicare.  Compounding the problem, the defendant tried to flee to Canada with cash, a fake passport and a bottle of hair dye.  Needless to say, the sentencing judge did not find her sympathetic.  In fact, the judge made a point of emphasizing the defendant's exemplary education, finding a lack-of-knowledge defense ridiculous.  (Other participants in the conspiracy received extended prison time or still await sentencing). 

These cases provide lessons for practicing physicians.  First, assume the government will be reviewing records of the tests administered to patients, and ensure that all tests are medically necessary.  Next, it also may be advisable to periodically compare the quantity of drugs utilized to the services rendered to ensure that there is a reasonably relationship between the two.  Third, any offer to provide remuneration in exchange for services or referrals should be a "red flag" for fraud.  Finally, and perhaps most importantly, any activities that are handled by others should be periodically examined -- preferably without advance notice lest a criminal actor hide his/her tracks -- to make sure that others are not submitting false claims without approval.  Otherwise, you might be the next physician whose education renders a lack-of-knowledge claim incredible.

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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.
 

Following a recent study in which the Centers for Medicare and Medicaid services (CMS) determined that residents were getting inadequate training on fraud and abuse laws, the Office of Inspector General (OIG) recently published a document entitled “A Roadmap for New Physicians Avoiding Medicare and Medicaid Fraud and Abuse”.  The document serves as a good primer on the various fraud and abuse laws which apply to medical practice under the Medicare program. Physicians are well-advised to not only review the document themselves but to have key office personnel including administrators, office managers and key billing personnel review the document as part of their regular compliance training.  Although this basic document cannot take the place of competent legal counsel, it will give physicians and their employees a fundamental understanding of the regulatory framework that applies to their daily practice and enough knowledge to know when to get health care legal counsel involved.
 

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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.

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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.

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