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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.

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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.

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According to an article in the Arizona Republic posted on AZcentral.com, Health Net of Arizona has begun offering a new "narrow network" HMO product to employers in conjunction with Banner Health, a health system offering healthcare services in seven western states.  Under the new plan, employers will receive premium discounts for limiting their network of providers to the newly formed "Banner Health Network".  Presumably based on an ability to better manage care within an integrated network, Health Net believes the should offer a 20% savings over its traditional PPO products.

The emergence of narrow network HMO products is a trend worth watching for several reasons: first, it demonstrates that third party payers are aggressively seeking to better manage health care costs and are looking for innovative ways to do so; and, second, it is apparent that as new products are developed, those providers who are integrated (both horizontally and vertically) are most likely to be the players of choice, as they will presumably have a greater ability to control costs across the delivery continuum.  Physicians and other providers should take these developments to heart when developing their strategic plans for the coming year(s).

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One of the major trends in health care today is to allow greater patient access to health information.  In keeping with that, the Department of Health and Human Services has proposed amendments to the CLIA regulations which would require labs covered by the health Insurance Portability and Accountability Act (HIPAA) to provide test results directly to patients. According to HHS Secretary Kathleen Sebelius, the amendments are designed to cut down on the administrative delays currently experienced by many patients in getting their results from their doctors.  I wonder however whether patients will be able to effectively interpret their own lab results or, perhaps more importantly, whether they might be inclined skip a critical follow up visit because they think everything looks fine.  For more information, take a look at the following article from Reuters.

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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.
 

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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.

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

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

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

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

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

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

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

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

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

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

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

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

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

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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.
 

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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. 

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Yesterday President Obama signed the much touted stimulus bill into law.  Although not much is publicly being said about health care reform yet, sweeping changes to the health care system are quietly taking place. In fact, over $150 billion of the stimulus bill funds are earmarked for health care related projects. In no particular order, these include:

   • Comparative Effectiveness Research to compare treatment effectiveness ($1.1 billion)

   • Support for State Medicaid and Children's Health Insurance Program Programs ($87 billion) 

   • Investment in Health Information Technology ($19 billion) 

   • Medical Research Funding through the U.S. National Institutes of Health ($10 billion) 

   • Federal Support for COBRA ($25 billion)
 

Many of these change can be expected to have an impact on the way physicians practice medicine (and in particular the information technology provisions since they include incentives for physician compliance).  Accordingly Physicians need to keep a sharp eye on the changes that are taking place and should begin retooling to best take advantage of what will undoubtedly be a very different playing field in just a few short years.
 

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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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