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.
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.
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:
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.
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.
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.
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.
Kathleen Sebelius, Secretary of the Department of Human Services, recently announced during a press conference that HHS will as of July 1, 2011 be rolling out a $77 million computer program designed to prospectively identify potentially fraudulent Medicare claims by collecting and analyzing patterns in large numbers of submitted claims. According to a recent article in the Philadelphia Inquirer, the technology to be used by HHS is known as “predictive-modeling” software and is similar to technology used by banking and telecommunications companies in the private sector to identify fraud. The price tag for the new system will be paid through funding under The Patient Protection and Affordable Care Act of 2010. In the same press conference, Attorney General Eric Holder announced that in the last two years alone, the Federal Government has collected nearly $8 billion in judgments, settlements, fines, restitution and forfeitures related to healthcare fraud and improper Medicare payments.
It is apparent that the federal government is in fact putting its money where its mouth is when it comes to fraud and abuse enforcement. Physicians and other healthcare providers who have put their internal compliance efforts on the backburner in the last several years are well advised to redouble their compliance efforts – particularly with regard to periodic coding, documentation and claims review – to identify patterns and deficiencies which may raise red flags for the government and other third party payer programs. Auditing should be targeted, focusing on problem or high risk areas specific to practice specialty or service area. In addition, to be effective, auditing should be conducted at least annually and should be done under the supervision of legal counsel to preserve attorney client privilege of audit results. An experienced health care attorney can also help providers design audits and counsel on how to rectify identified deficiencies. Of course, deficiencies should be corrected (which may include refunding monies to Medicare or the third party payer programs) and providers and billing personnel should be appropriately educated based on audit findings. For more information on designing an effective compliance program, providers can visit the OIG’s website.
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.
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.
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.
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.
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)
- 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.
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.
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.
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.
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.
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.
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.
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).
The Appeals Court found that the arrangement between the hospital and the anesthesia group implicated the Stark prohibitions because the anesthesia group received remuneration from the hospital in the form of, among other things, free rent and administrative services, and because the pain physicians referred patients to the hospital for diagnostic testing and other Stark services. The Court further found that the arrangement did not satisfy the Stark personal service exception because, among other things, the exclusive contract did not contemplate the pain management services when it was originally signed and it was not subsequently amended to address the pain management services. The case was remanded to the District Court for further proceedings.
What should physicians take away from this case?
(1) If you have a financial relationship of any kind with your hospital, it should be reflected in a signed written agreement;
(2) Make sure your agreements with your hospital meet an applicable Stark exception; and
(3) Regularly review and update your agreements to be sure they are in effect and accurately reflect the terms of the relationship.
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.
3. Per Click and Percentage-Based Compensation – The Stark regulations now expressly prohibit the use of “per service/per click” and percentage-based rent arrangements under space and equipment leases between physicians and entities to which they refer for Stark services. Percentage compensation arrangements are still permissible under Stark for personal services arrangements however. This change will take effect on October 1, 2009.
The Stark regulations continue to grow increasingly complex. Because Stark is a strict liability statute (which means even inadvertant violations can result in substantial liability), physicians are encouraged to examine their existing financial relationships (ownership and compensation relationships) for compliance with these rules. If you would like assistance in doing such an analysis or for assistance with any of your Stark questions, please contact Todd Rodriguez.
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.