Many medical groups have difficulty developing a succession plan for practice leadership. Some practices do not even have a formal governance structure in place (though they should), but even those that do may find it challenging to identify and train new leaders to assume responsibility when senior physician leaders step down.

Having a leadership succession plan in place is critical for a number of reasons. In practices where leadership is handled by one physician or concentrated in a small group of physicians, it will inevitably take time for new leaders to learn the nuances of the practice. Introducing future practice leaders to key aspects of practice management early-on will enable them to gain institutional knowledge so that they are better prepared to step into the leadership roles if and when the need arises.

Changes in leadership can occur unexpectedly in the event of catastrophic events for example. Where this occurs, having knowledgeable and willing physicians to step into the leadership roles will help to minimize the disruption caused by such an event. Here are a few things to consider in developing a leadership succession plan:

–Develop job descriptions for existing leadership roles. These should identify the key functions and responsibilities of each position;
Identify physicians within the practice with leadership potential. Practice leaders should ideally demonstrate leadership skills and business acumen (or an ability to develop it) and should also be interested in and willing to participate in leadership;

–Develop opportunities to involve future leaders in practice management on a limited basis. For example, future leaders may be charged with exploring new practice initiatives or other “special projects” and reporting back to practice leadership;

–Finally, senior practice leaders should look for opportunities to actively teach leadership skills and practice management to potential future leaders. This can be done through regular meetings to discuss practice finances, human resources issues, new business opportunities and the like.

There are big changes coming to the Medicare incentive programs as we know them.  Beginning on January 1, 2017, the new Quality Payment Program (the “Program”) will replace all existing Medicare incentive programs with a comprehensive incentive model.  The Program will involve a modified set of EHR Meaningful Use requirements, new quality of care metrics, new cost efficiency goals and “clinical practice improvement activities” (for which physicians will be rewarded for care coordination, beneficiary engagement and patient safety).  The Program will also have a separate track for incentive payments associated with participation in Advanced Alternative Payment Models (such as Accountable Care Organizations) (“APMs“).

Congress provided for the development of the Program in the 2015 Medicare Access and CHIP Reauthorization Act (the “MACRA”).  Under the MACRA, the Program must be “budget-neutral” each year.  In other words, the rewards paid by Medicare to well-performing physicians and practices must be equally offset by the penalties levied against poor-performing providers.  The rewards will continue to take the form of payment adjustments to the Medicare Physician Fee Schedule.  The first year of payment adjustments will be 2019, based on data from the 2017 reporting year.  For 2019, the reward paid to (or penalty levied against) any provider may not exceed a 4% adjustment to the Medicare Physician Fee Schedule.  However, in subsequent years, the limits are set to increase, reaching a maximum of 9% in 2022.

The potential for substantial penalties under the Program has led to concerns that the Program will make it difficult for smaller practices with higher numbers of Medicare patients to be financially viable.  Foreseeing these economic issues, Congress earmarked $100 million over five years to help small practices successfully participate in the Program.

In June, the U.S. Department of Health and Human Services (“HHS”) announced that the first $20 million of these earmarked funds will be awarded by the end of 2016.  The recipients of the funding will be organizations that provide education, training and consultation on the Program to small practices.  In particular, these organizations will assist small practices in understanding what quality measures, EHR options and clinical practice improvement activities are most appropriate for their practices.  The organizations will also help small practices evaluate their options for joining an APM.  HHS has not announced when the organizations will begin training and educating small practices.

While the intention behind such training and education is laudable, it does not lay to rest the concern that small practices serving substantial Medicare populations will be under greater pressure and financial strain to continue to operate independently.  After all, the Program itself must remain budget-neutral.  If practices improve their compliance and quality of care metrics, payment adjustments will have to be reduced or compliance standards raised.  In the long-term, this may lead to small practices being forced to join an APM in order to continue to serve Medicare patients.

Stay tuned for updates on the Program from CMS, including details on the final regulations for the Program.  If you have specific questions about how the Program may affect your practice, be sure to contact a knowledgeable healthcare attorney.

The deadline for providers to file a hardship exception application to the electronic health record (EHR) meaningful use requirements for the 2015 reporting period is July 1, 2016.

If you have any concern that your practice or certain eligible professionals in your practice may have been unable to meet the meaningful use requirements for the 2015 reporting period, it may be appropriate for the applicable provider to file a hardship exception application with CMS to avoid future payment adjustments.  Note also that certain provider types may automatically qualify for a hardship exception for the 2015 reporting period without the need to file an application.

For more information, please see the Health Law Practice Alert recently published by Fox Rothschild LLP on this topic, accessible at this link:  Fox Rothschild LLP Health Law Practice Alert – Hardship Exception (June 17, 2016).

In a recent Advisory Opinion (No. 16-02), the OIG concluded that it would not seek sanctions against a state-run hospital (the “Hospital”) under the federal anti-kickback statute or the civil monetary penalty law for two arrangements under which the Hospital provides transportation aid and short-term lodging to pregnant women covered by federal health care programs.  Although the OIG stressed that the unique factors of the arrangements led to its decision, the OIG’s analysis offers some insight into its concerns regarding the provision of transportation and other aid to patients by a provider.

The Hospital is a state academic medical center that operates 11 Hospital-based clinics providing prenatal care (the “Clinics”).  The patients are primarily low-income women, and each is presented with the Hospital as a potential location for the delivery of her child.  In 2014, 97% of the Clinics’ patients who delivered at the Hospital had high-risk pregnancies.

Under the first arrangement, Hospital employees offer transportation aid to any Clinic patient with a high-risk pregnancy who expresses concern about the cost and distance of traveling to the Hospital for delivery.  The aid is offered in the form of mileage reimbursement or fare reimbursement (for public transportation).

Under the second arrangement, the Hospital offers a Clinic patient and her companions free lodging at an apartment building near the Hospital under certain circumstances.  The apartments have simple living accommodations and are staffed by an on-call nurse.  To be offered lodging, the patient must have a physician’s order justifying the stay.  As a result, the majority of the patients who receive free lodging under this arrangement have high-risk pregnancies requiring frequent monitoring.  Patients without high-risk pregnancies may be offered lodging only if they are experiencing contractions or are scheduled for induction of labor or delivery the following day.  All patients receiving free lodging also receive free transportation to the Hospital for delivery.

The Hospital stated that the purpose of the above-described arrangements is to allow Clinic patients to benefit from specialty and continuing care at the Hospital when close to the end of their pregnancies.  In its Advisory Opinion, the OIG acknowledged the Hospital’s legitimate purpose and concluded that it would not pursue sanctions against the Hospital under the federal anti-kickback statute or civil monetary penalties law, even though, in the OIG’s opinion, these arrangements implicated both laws.  The OIG emphasized that its decision was influenced by the unique circumstances of the arrangements, and that no individual factor (or any combination of factors other than all of them) would necessarily result in the same decision.  Nonetheless, the OIG’s concerns provide some insight into how the OIG would view similar arrangements in the future.

The OIG’s analysis rested on the following key factors of the arrangements:

  • The arrangements were beneficial to the patients because they provided continuity of care, access to specialty care, and focused on patients who lack sufficient financial means of delivering at the Hospital.
  • The aid given to the patients would be “modest” in nature and available only in limited circumstances.  Specifically, (i) the transportation aid would be available only if a patient expressed concern about her ability to afford the cost of traveling to the Hospital for delivery, and (ii) the lodging aid would be available only if the patient has a high-risk pregnancy or is scheduled for delivery the following day, and the patient receives a physician’s order justifying the stay.
  • The aid would not be advertised by the Hospital or the Clinics, and would be offered only to existing patients.  As a result, the OIG did not view this arrangement as being designed to serve as an inducement for patients to seek care at a Clinic or the Hospital over other providers.
  • Eligibility for the aid would not be limited to patients on the basis of their health insurance coverage.
  • The cost of the aid would not be claimed as bad debt or otherwise shifted to Medicare, Medicaid or another federal health care program.
  • The aid would be part of a program of care operated by a state-run academic medical center for the benefit of a large number of Medicaid and CHIP beneficiaries.  As a result, the OIG stated that it would expect the State to promote the integrity of the arrangements.

If you or your practice is interested in guidance on providing aid or other benefits to patients, be sure to consult experienced legal counsel.

The full text of the Advisory Opinion is available here:

Called by some the “King of Nursing Homes” for his many low-income nursing home patients in northeast Illinois, Dr. Venkateswara Kuchipudi was recently convicted for referring patients to Sacred Heart Hospital in Chicago in exchange for kickbacks.  Kuchipudi became the fifth physician and tenth defendant to be convicted for a massive Medicare and Medicaid fraud scheme that led to the closure of Sacred Heart Hospital.

Kuchipudi’s arrangement was not overly complicated.  He struck a deal with the Owner and CEO of Sacred Heart Hospital (who was recently sentenced to 4.5 years in prison) to refer all of his Medicare patients requiring hospital care to Sacred Heart in exchange for the Hospital’s assignment of an exclusive team of health care practitioners to treat Kuchipudi’s patients both inside and outside the Hospital.  In some instances, Kuchipudi referred patients to Sacred Heart for admission, despite the fact that other hospitals were closer in distance to the patients’ nursing homes and had better staffing and access to routine procedures, such as x-rays and lab work.

The arrangement allowed Sacred Heart Hospital to greatly increase its collections, netting the hospital owner upwards of $29 million over three years, while Kuchipudi was able to bill Medicare approximately $1.6 million for services provided by his exclusive team of Sacred Heart professionals.

Kuchipudi argued that his goal was to improve patient care and that he had no idea the arrangement could be construed as involving kickbacks for referrals.  The government countered by arguing that the anti-kickback statute is violated as long as at least one of the purposes of the arrangement is to induce referrals.  The jury sided with the government on 10 of the 12 charges.

Kuchipudi was convicted of one count of conspiracy to defraud the United States and nine counts of illegally soliciting or receiving benefits in return for referrals of patients covered under a federal health care program.  He was acquitted of two counts involving mileage reimbursements paid by the Hospital to one of the physician assistants assigned to treat Kuchipudi’s patients at nursing homes.

This case is another example of the federal government’s crackdown on fraud, waste and abuse in federal health care programs, and shows that violations of the federal anti-kickback statute can involve kickbacks in a form other than direct payment for referrals.  It underscores the need for physicians to carefully review their hospital and other provider relationships to be sure such arrangements do not – even inadvertently – run afoul of these complicated statutes.

Alexandra Sobol writes:

A recent Weill Cornell Medicine study is breathing new life into the expression, “time is money.” The study, which was published in the March issue of Health Affairs, reveals that physician practices in the United States in four specialties — orthopedics, cardiology, family care, and internal medicine — spend 15 hours a week, or an astounding $15 billion annually, reporting data to private insurance companies, Medicare, and Medicaid.

The data is being used by insurance providers as a metric for assessing physicians’ performances and as a basis for awarding those physicians who score well on the quality care measures.

Of the 15 total hours spent each week by physicians and their staff, physicians were independently found to have spent 2.6 hours providing data to insurers, which, as lead investigator Dr. Lawrence P. Casalino noted, could amount to each of these physicians seeing “about nine additional patients in that time, which is not trivial.”

Notably, 81 percent of the 394 practices surveyed indicated that they spend more time reporting quality metrics now than they did three years ago, which Dr. Casalino indicated is most likely attributable to the Affordable Care Act and its emphasis on quality measures. The bad news is that insurance providers have already begun to indicate that physician reimbursements will be even more closely correlated with their performance on these quality metrics in the future.

Time is precious, so what can be done to address this costly problem? The investigators suggest that streamlining the data that insurance providers are collecting would save a great deal of time, money, and inconvenience. Moreover, another potential solution would be to program electronic health records to routinely gather and send data to insurance companies.

Of course, the irony, as Dr. Casalino acknowledged, is that “while this data is meant to help physicians do a better job, the amount of time spent by medical practices collecting and reporting it costs time and money that could be used for treating patients.”

At the end of the day, for physicians, caring for patients is, and should always be, the priority.

The Affordable Care Act (ACA) requires Medicare providers to return overpayments within 60 days of the date they are identified in order to avoid liability under the False Claims Act.  Four years ago, CMS issued a proposed rule to implement this statutory requirement that would have placed a substantial burden on providers to identify and return overpayments within the 60-day period.  Last week, CMS issued its long-awaited “final rule” on the matter. The final rule is substantially less burdensome than the proposed rule would have been and offers providers a clearer view of their obligations to investigate and report overpayments.

Here are five key aspects of the final 60-Day Overpayment Rule that physicians and medical practices should keep in mind:

  1. What It Means to Identify an Overpayment

CMS clarifies that identifying an overpayment requires reasonable diligence and quantification of the overpayment.  Specifically, a provider has “identified” an overpayment when the provider “has or should have, through the exercise of reasonable diligence, determined that it has received an overpayment and can quantify the amount of the overpayment.”  In contrast, the proposed rule would have held providers to a “deliberate ignorance” or knowledge standard regarding the existence of an overpayment and would have included no leeway for quantification of the overpayment.

  1. The New Timeframe In Which Providers Must Identify Overpayments

One of the biggest questions that arose from the proposed rule was: “When does the 60-day clock to identify overpayments start ticking?”  The proposed rule called for providers to act with “all deliberate speed” to identify overpayments once they became aware of a possible billing error.  In its final rule, CMS provides a clearer answer to the question.  Providers will have up to 6 months to investigate a possible overpayment before the 60-day reporting period begins.

  1. The “Look-Back Period” Is Shortened

Part of a provider’s obligation with respect to overpayments under the ACA is to search through past records for overpayments after a provider identifies that it has received at least one overpayment.  CMS originally proposed a requirement that providers “look back” 10 years in their records for other overpayments in order to comply with this rule.  Acknowledging the unreasonable burden such a time period would impose on providers (both in effort and cost), in the final rule CMS has reduced the duration of the look-back period to 6 years.

  1. Documentation of Reasonable Diligence Is Advisable

In prefatory comments to the rule, CMS stated that it is “certainly advisable” for providers to document their diligence in investigating possible overpayments.  While documenting an investigation may not make a provider’s diligence “reasonable” per se, it may provide strong evidence of the provider’s efforts.

  1. Proactive Compliance

CMS emphasizes in the final rule that “reasonable diligence” requires not only reactive activities, such as a good faith investigation of potential overpayments by qualified individuals, but also “proactive compliance activities conducted in good faith by qualified individuals to monitor for the receipt of overpayments.”

The full text of the final rule may be accessed here:

Be sure to consult experienced legal counsel if you would like further guidance on the Medicare 60-Day Overpayment Rule, including what steps your practice should take to proactively and reactively address potential overpayments.

Previously on the Fox Rothschild Physician Law Blog, we reported on the July 2015 amendments to the PA Child Protective Services Law.  See our August 31, 2015 post here:  What You Need to Know about PA’s Child Protective Services Law.  In particular, we noted that the PA Medical Society interpreted the amendments to the Law as requiring all health care practitioners and practice staff having direct contact with children to obtain child abuse clearances.

After further review of the Law and consultation with the PA Department of Human Services (DHS), the PA Medical Society issued a retraction of its prior statement.  On December 1, 2015, the PA Medical Society reported that it had confirmed with the DHS that physicians and other employees of a medical practice or hospital (including administrative employees) are not required to obtain child abuse clearances under the Law.  See the PA Medical Society’s Clarification here:  PA Medical Society Child Abuse Clearances Clarification.

Although the Law used to require physicians (and other health care practitioners) to obtain child abuse clearances, the July amendments to the Law limited the clearance requirement to certain programs, activities and services.  As a result, a long-standing rule that physicians must obtain child abuse clearances appears to have been eliminated.

In our post, we also reported that the PA Department of Health (DOH), which licenses hospitals and other health care facilities, had continued to require such facilities to ensure that their health care practitioners obtained child abuse clearances, even after the amendments were passed.  The DOH has not yet confirmed its position on the Law after the recent clarification by the DHS.

While the Law appears not to require health care practitioners to obtain child abuse clearances in Pennsylvania, be sure to consult your legal counsel before making an administrative decision for your practice or health care facility.

The federal Affordable Care Act requires certain employers to provide employees with forms reporting offers of health coverage and coverage provided by the employer in 2015 by no later than February 1, 2016.  Employers then had to report that information to the IRS by February 29 (by paper) and March 31 (electronically).  According to a joint press release, the Treasury Department and the IRS have now extended these 2016 reporting deadlines.  Specifically, the February 1 is extended by two months and the February 29 and March 31 reporting deadlines are extended by three months.

Commercial payors are actively looking for ways to reduce payments to out-of-network providers.  One area of focus is discounts and waivers of patient copayments and deductibles by out-of-network providers.  In the eyes of these payors, coinsurance/copayments are essential to incentivizing patients to use in-network providers, and discounts on (or waivers of) coinsurance/copayments by out-of-network providers often result in higher costs to payors.

To challenge these discounts, some payors have denied reimbursement on claims where the patient’s copayment/coinsurance has been waived by an out-of-network provider.  Others have taken legal action, bringing cases for fraud and other claims, and arguing that they are not required to pay for items or services for which the patient is not billed.  There has been a special focus by some payors on instances where the provider “overstates” its charges in order to recoup the discounts or waivers of coinsurance/copayments it offers to patients.

The legal landscape is evolving on this issue; however, there are cases on the docket that may address certain aspects of this issue sooner rather than later.  Stay tuned to Fox Rothschild’s Physician Law Blog for updates.

In the interim, here are a few tips to keep in mind when considering whether to offer discounts on (or waivers of) coinsurance/copayments with respect to out-of-network plans:

  1. Consider offering the discounts solely in return for prompt payment by the patient. Under the federal Anti-Kickback Statute and other state anti-kickback laws, discounts could be considered remuneration to patients in exchange for purchasing of health care services.  However, the U.S. Office of Inspector General (OIG) has acknowledged that discounts for prompt payments of coinsurance/copayments may be permissible if they are not intended to induce purchases of services.  Note that the amount of such discounts should correspond to the savings in collection and billing costs of the Practice.
  1. Consider disclosing to payors your intent to offer the discounts to patients.  Based on recent case law, if a payor is aware of the out-of-network provider’s intent to offer discounts to patients, the payor is less likely to have a case for fraud against the provider.  See North Cypress Medical Center Operating Co. v. Cigna Healthcare, 781 F.3d 182, 205 (5th 2015) (available online here:  However, simply notifying payors of your intent to offer a discount would not address the risk of violating the federal anti-kickback statute and other state anti-kickback laws.  In addition, payors could deny your future claims based on the theory that the payor has no obligation to pay where the patient incurred no liability.  Therefore, payors should be notified only after discussing all options with your legal counsel.
  1. Avoid overstating charges for services provided.  If you offer discounts or waivers of coinsurance/copayments for services provided to patients of payors with which you are out-of-network, avoid charging the payors for the full cost of the services.  In addition, ensure that the charges reported to the payor reflect both the amount of coinsurance/copayment paid by the patient and any discount or waiver which you provide to the patient. Overcharging payors may be illegal under your state’s insurance laws, and, with respect to federal government payors, may lead to liability under the federal False Claims Act.
  1. Beware of “most-favored nation” clauses in your in-network provider contracts.   A most-favored nation clause requires a provider to charge a payor the lowest price it charges to any payor for a service.  If you charge payors with which you are out-of-network less to avoid overstating charges, you could also be required by your in-network payor contracts to charge the same rates for services billed in-network.

Finally, offering discounts or waivers of coinsurance/copayments is a complicated and unresolved legal issue.  You should consult a knowledgeable attorney to discuss the latest developments before taking any actions.