Basic Physician Legal Issues
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Transcript Basic Physician Legal Issues
Physician
Fundamentals
Conrad Meyer JD/MHA
Chaffe McCall
Presentation Overview
Psychology of Physician Representation (Who is this client?)
An Overview of Regulatory Issues Affecting Physicians
Anti-Kickback and Stark Law
Mechanics of Compensation and Reimbursement
Practical Issues Affecting Physicians
Employment
Physician Recruiting
Managed Care Contracting
Physician Group Practice Issues
Litigation and Other Adversarial Representations
Medical Licensure
Medical Staff Issues
Payor Credentialing and Other Disputes
Representation Takeaways and Rules of Thumb
Physicians’ Human Condition
Years of school
High expectations for income and status
Difficult job
Sick, worried, ungrateful patients
Long hours
Essentially piece workers
Reduced reimbursement
Increased costs
“Do As I Say, Not as I Do” Phenomenon
Physician clients often try to self-diagnose
They will often have something short of the
complete clinical (factual and legal) picture
They often solicit informal cocktail party
diagnoses/treatment
They do not always get themselves to the
correct specialist
4
“Do As I Say, Not as I Do” Phenomenon
Physicians will often use someone else’s
“medication”
Get information from others, but don’t rely on it as
authority
Physicians often do not do their homework
Physicians do not practice preventive legal
medicine
They will commonly wait to ask for help until
they are in emergency room on a weekend
5
6
6
Issues Affecting
Physicians and Group
Practices
7
Regulatory Issues
Anti-kickback
Stark I, II, and III
Antitrust
Medicare reassignment rules
Other Medicare rules
State kickback and self-referral statutes
State corporate practice of medicine
State fee-splitting
Reimbursement/Compensation issues
8
Additional Issues Relevant to
Physician Representation
Employment
Real
Estate
Tax
Benefits
Corporate
Securities
9
Where does Anti-kickback Law
and Stark come into play?
Basically, anytime money or something of value
flows between healthcare providers
Examples include
Leases among healthcare providers
Equipment rentals among healthcare providers
Contractual services arrangements among
healthcare providers
Investment interests by healthcare providers
Compensation arrangements for healthcare
providers
Corporate structure of healthcare providers
Relationships between healthcare providers and
non-healthcare providers
Revenue diversification strategies for healthcare
providers
10
Federal Anti-kickback Statute
Anti-kickback Statute
Anyone
Gives or receives
Anything of value
In return for referral (ordering, arranging for,
recommending)
Items or services covered by Medicare,
Medicaid or CHAMPUS
Statute: 42 U.S.C. § 1320a-7b
Regulations: 42 C.F.R. § 1001.952
12
Patients
Anyone
Anyone
$$$
13
Examples
Hospital gives surgeons free office space
Hospital pays physician admitter a Medical
Directorship
Clinical laboratory pays John Doe a
“runner’s fee”
Radiology group provides professional
component services to orthopaedic group,
which global bills, capturing the differential
14
Penalties
Criminal
Fine ($2,500 +)
Jail (5 year +)
Civil
$5,000 or $10,000 per claim
Plus treble damages
$5,000 or $10,000 per claim
Plus treble damages
Exclusion from Medicare/Medicaid
15
16
Safe Harbors
Investment interests
Space rentals
Equipment rentals
Personal services and management
contracts
Sale of practice
Referral services
Warranties
Discounts
Employment
17
Safe Harbors (cont.)
Group purchasing organizations
ASCs
Physician recruitment
OB malpractice subsidies
Cooperative hospital services organizations
Waiver of beneficiary coinsurance deductible
amounts
Ambulance restocking
Increased coverage/reduced cost-sharing
amounts offered by certain health plans to
enrollees
18
Important Reminders About
Safe Harbors
If parties do not meet all the requirements of a
safe harbor, the arrangement will not fail, but the
enforcement authorities will look to the intent of the
parties
If any one purpose of the arrangement is to
solicit or receive referrals, the arrangement will be
illegal (U.S. v. Greber, 760 F.2d 68 (3d Cir.), cert.
denied, 474 U.S. 988, 106 S.Ct. 396 (1985).)
19
Guidance
Advisory Opinions
Fraud Alerts, Bulletins & Reports
Work Plan
Semi-Annual Report
Compliance Plan Guidance
Enforcement Actions
Corporate Integrity Agreements
http://www.oig.hhs.gov/
20
Stark Law
Physician Self-Referral Law
aka Stark I, II, and III
A Physician may not refer patients
covered by Medicare, Medicaid or
CHAMPUS for “Designated Health
Services” to an entity with which the
physician has a financial relationship
Statute: 42 U.S.C. §1395nn
Regulations: 42 C.F.R. §411.351
22
Patients for
DHS
Physician
Entity
23
Financial Relationship
▪ Ownership Interest
▪ Compensation Agreement
24
Designated Health Services
Clinical laboratory services
Physical therapy, occupational therapy, and
speech-language pathology services
Radiology and certain other imaging services
Radiation therapy services and supplies
Durable medical equipment and supplies
Parenteral and enteral nutrients, equipment, and
supplies
Prosthetics, orthotics, and prosthetic devices and
supplies
Home health services
Outpatient prescription drugs
Inpatient and outpatient hospital services
25
Examples
Physician refers patient for lab
tests to a clinical lab that the
physician owns
Physician receives bonus based on
number of DHS referred to his
group practice
Physician refers patients to hospital
for inpatient services where
physician has a services
agreement with the hospital
26
Penalties
▪
Civil
▪
▪
$15,000 per claim
Assessment 2x amount of
claim
Nonpayment or recovery
Exclusion from
Medicare/Medicaid
27
Exceptions
▪
Physician services
▪
In-office ancillary services
▪
Space rental
▪
Equipment rental
▪
Bona fide employment
▪
Personal services contracts
▪
Physician recruitment
▪
Isolated transaction
▪
Payment from hospital to MDs for non-DHS
28
Exceptions (cont.)
▪
Group practice arrangements
▪
Payments by MDs to entity for items or
services Charitable donations by physician
▪
Non-monetary compensation up to $300
▪
Fair market value compensation
▪
Medical staff incidental benefits
▪
Risk sharing arrangements
▪
Compliance training
▪
Indirect compensation arrangements
▪
Referral services
29
Exceptions (cont.)
▪
Professional courtesy
▪
Retention payments
▪
Community-wide health
information systems
▪
DHS by rural hospitals
▪
Investment interests
30
Important Reminder About
Exceptions
Do
have to meet all the
requirements of the exception
or the arrangement will fail
Stark’s penalties are civil vs.
criminal
31
Guidance Regarding Stark
CMS expects attorneys to be well-versed in
Stark I, II, and III
Best tutorial is the commentary to each set of
regulations
http://www.cms.hhs.gov/PhysicianSelfReferral/Dow
nloads/66FR856.pdf
http://www.cms.hhs.gov/PhysicianSelfReferral/Dow
nloads/69FR16054.pdf
http://a257.g.akamaitech.net/7/257/2422/01jan2007
1800/edocket.access.gpo.gov/2007/pdf/07-4252.pdf
Sign up for
http://www.cms.hhs.gov/AboutWebsite/EmailUpdates/li
st.asp
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Mechanics of
Compensation and
Reimbursement
33
Changes in Compensation and Production for
Primary Care Physicians 1992-2002
12.00%
11.33%
11.04%
10.00%
8.00% 7.47%
Com pensation
6.00%
5.18%
4.67%
4.46%
4.00%
3.36%
2.92%
2.00%
2.70%
3.39%
2.83%
2.56% 2.54%
2.27%
1.42%
1.34%
0.57%
Production
1.21%
0.42%
0.40%
0.00%
92-93
93-94
94-95
95-96
96-97
97-98
98-99
99-00
00-01
01-02
Source: Medical Group Management Association Physician Compensation and Production Survey: 2003 Report Based on 2002 Data
Changes in Compensation and Production for
Specialty Care Physicians 1992-2002
12.00%
10.61%
10.00%
7.67%
8.00%
6.51%
6.01%
5.59%
6.00%
5.22%
4.83%
4.30%
4.67%
3.97%
5.20%
5.50%
4.32%
4.00%
2.64%
2.58%
2.34%
1.79%
2.00%
0.00%
-2.00%
92-93
-0.75%
-1.28%
93-94
94-95
95-96
96-97
-0.48%
97-98
98-99
99-00
00-01
01-02
Source: Medical Group Management Association Physician Compensation and Production Survey: 2003 Report Based on 2002 Data
Malpractice Costs
Increase*
*MGMA
2001-2002
36.38%
2002-2003
53.15%
Why Should You Care?
Do you want your child’s pediatrician to earn
$80,000/year?
Do you want an unhappy cardiologist doing
your heart cath?
Do you want an orthopedist who must do ten
surgeries a day in order to make a living to
perform your hip replacement?
Compensation
Physician source revenue
Salary – new physicians
Compensation formula
Revenue minus expenses
How to allocate expenses
How to allocate revenue
Dollars collected
RVUs
Compensation
Ancillary Income
Stark Prohibition
Cannot allocate on volume or value of referrals
Per capita
Same basis as non-DHS revenue
Other
40
Reassignment Rules
Generally: A provider is not entitled to payment for services
that he/she/it did not perform
“Exceptions”
Payments to employers
Payments to healthcare delivery systems
Payments to government agencies/entities
Payments through court order
Payments to agent for billing & collection
Payments pursuant to a contract
Joint and several liability
Provider has unrestricted access to claims submitted by entity
Purchaser or Supplier Test
42 C.F.R. §424.80; Medicare Modernization Act §952; Medicare Carriers
Manual §30.2.1
41
Medicare Generally
Federal Program
For Elderly and Disabled
Others who buy into program
regardless of age
Originally “Fee-For-Service” – But
Now …
42
Medicare Part B: Physician
Services
Resource-Based
Relative Value Scale
(RBRVS) – 1992
80% of lesser of actual
charge or fee schedule
Patient pays 20% as
coinsurance +
deductible
43
Top Reimbursement Issues for
Physicians in 2008
Medicare Physician Fee Schedule
(MPFS) Issues
Physician Quality Reporting
Initiative
Anti-Markup Rule
IDTFs
Continued Shift to Practice Expense
RVUs
44
Reimbursement Realities for
the Physician
No
matter how good the physician,
or the system, chances are, you will
have to deal with the following
processes:
Audits
Investigations
Recoupment
Appeals
45
Practical Issues
Affecting Physicians
Employment and Organizational
Issues
Employment and Contracting
Employment Issues
Who is the employer?
Medical Groups
Hospitals
Ancillary income
Support payments
Others
Corporate Practice Prohibitions
Employment Issues
Termination
For cause immediately
Grounds
Time to cure
Without cause
Notice
Implications
Severance
Non-compete
When can physician terminate
Employment Agreements
Restrictive Covenants
State law driven
Geographical and time limitations
Exceptions
Termination without cause
Buy-out amount
Physician Recruitment
Agreements
Stark Restrictions
Net Income Guarantee
Guarantee expenses plus salary
Collections offset payment
One- to two-year term
Debt at end of term
Forgiven if doctor stays after guarantee
terminated
Physician Recruitment
Agreements
Payment to group
Additional incremental expenses only
No non-compete, but group can assess a
penalty for leaving group
Managed Care Contracting
Lack of leverage
State protections
Prompt pay
Terminations
Appeals
Notice
Communications to patients
Balance billing
Managed Care
Fee-for-service
Capitation or risk contracts
Modification of contract
Termination
Incompatible patients
Limiting panel
Retainer medicine
Group Practice Issues
Organizing Physicians
Hard to organize
Buy-ins
Don’t want it to discourage new partners
Cost
Possible future buy-outs
Pay for it by profit in first years
Ancillary profits are buy-in
Organizing Physicians
Buy-out
Great potential for conflict
Is there any value
Practice revenue
Ancillaries
Impractical
Mergers and Acquisitions
Mergers of Equal Groups
Many difficult issues
Compensation differences
Retirement differences
Cost structure
Equalization of assets – hard assets vs. ARs
Buy-outs
Allocations of ancillary income
Non-compete provisions
Mergers and Acquisitions
Into Large Group
Much simpler
Purchase of hard assets
Employment agreements
Escape provision for physicians
Physician “Divorces”
Typically result from issues of money or
control
Can be the most time intensive/expensive
part of physician representation
Usually at a minimum involve $100K in fees
Need to communicate clearly with client about
results and expectations
Highlights the importance of careful drafting
in corporate documents
At the end of the day, there are no winners
Caveat: It may take the process to get the
matter to resolution
60
Litigation and QuasiLitigation Matters
61
Litigation and Quasi-Litigation
Medical Licensure
Medical Staff Hearings
Payor Credentialing & Other
Disputes
Physician “Divorces”
Reimbursement audits,
investigations, and appeals
62
Medical License Issues
Medical Licensure
Matter of State Law, each State has
Medical Practice Act (MPA)
Federation of State Medical Board has
information on all States
o www.fsmb.org
MPA includes all aspects of medical
practice from initial licensure, standards,
involves investigations, interviews, hearings
and appeals
64
Medical Licensure
Typically
a specialized, political process
requiring affiliation of local counsel
Often Medical Practice Act will prohibit
representation by out-of-state lawyer
Procedures are very agency and rule
specific
Boards have very specific deadlines for the
provision of materials to be considered by
the Board panel
Client needs to be prepared to participate
heavily in process
65
Medical Licensure
Important considerations
When does a physician involve a lawyer in
process?
Who should the physician involve for assistance?
Relationships can be important (colleagues,
experts, witnesses)
How does the lawyer present to the Board?
Must determine appropriate role of lawyer.
Depends on Board. Often just want to hear from
the physician
Not knowing the procedures can be very harmful
to the physician and process
Key to representation is extensive preparation of
client to present defenses
66
Medical Licensure
Important Considerations (contd.)
When to play ball and when to step off the field?
Leave any trial lawyer tendencies or affinities at
the door. More broad disclosure and sharing of
information expected and encouraged
Remember all proposed Board sanctions are
public and reported, with few exceptions
Remember implications of sanction on future
physician credentialing and applications (i.e.
National Practitioner Data Bank-www.npdbhipdb.com)
67
Medical Staff Matters
Medical Staff Matters
Importance of Medical Staff Bylaws
Generally
Contract/quasi-contract
MS 1.20
Medical Staff/Hospital Board agreement to
adopt or amend
Medical Staff of Community Memorial Hosp.
of San Buena Ventura v. Community
Memorial Hosp. of San Buena Ventura (Cal
Super. Ct.)(Settled 9/21/04)
69
Medical Staff Matters
Medical Staff Hearings & Due Process
National Practitioner Data Bank requirements
and immunities
HCQIA 42 U.S.C. §11101 et seq.
Exclusive Contracts
Lewisburg Cmty. Hosp., Inc. v. Alfredson, 805
S.W.2d 756, 759 (Tenn. 1991)
Satilla Regional Medical Center v. Bell, 280
Ga. App. 123 (2007)
70
Medical Staff Matters
Negligent Credentialing
Kadlec
Medical Cetr v.
Lakewview Anesthesia Assoc.,
2005 WL 130953 (May 19,
2005).
71
Medical Staff Matters
Economic
Credentialing
The use by a healthcare organization of
economic criteria unrelated to quality of care or
professional competence in determining a
physician’s qualifications for initial or
continuing hospital medical staff membership
or privileges
72
Payor Credentialing and
Other Disputes
Payor Credentialing & Other
Disputes
Denial of Application to Network
Termination from Network
Domino effect of other disciplinary actions
Reimbursement disputes
Timeliness of payment
Changes to fee schedule
Usual, customary & reasonable debate
www.hmosettlements.com
Audits, investigations, and recoupments
Importance of contract provisions &
negotiations
74
Representing
Physicians Takeaways
75
Representation
Considerations
One of the keys to physician representation is
understanding your client’s motivations and desires,
their frustrations, as well as the legal landscape
Based on the level of pressure on physicians
regarding reimbursement and regulatory
compliance, many great ideas on paper may be
difficult, if not impossible to implement under current
regulatory structure
“If it looks and sounds too good, it probably is illegal”
The physician came to you for reason, no matter
how much your client pushes, you must remind
them who is the lawyer and advise accordingly.
Rules of Thumb
Be upfront and unafraid to state the
cost for a project
Be explicitly clear about the work
product and expectations
Ask the client their goal(s)
Make every effort to try to
understand
Document, document, document
The lemming mentality
77
Questions?
Conrad Meyer JD/MHA
Health Care Section
Chaffe McCall, LLP
www.chaffe.com
(504) 585-7067