Transcript Basic Physician Legal Issues

Physician
Fundamentals
Conrad Meyer JD/MHA
Chaffe McCall
Presentation Overview
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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
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Years of school
High expectations for income and status
Difficult job
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Sick, worried, ungrateful patients
Long hours
Essentially piece workers
Reduced reimbursement
Increased costs
“Do As I Say, Not as I Do” Phenomenon
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Physician clients often try to self-diagnose
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They will often have something short of the
complete clinical (factual and legal) picture
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They often solicit informal cocktail party
diagnoses/treatment
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They do not always get themselves to the
correct specialist
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“Do As I Say, Not as I Do” Phenomenon
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Physicians will often use someone else’s
“medication”
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Get information from others, but don’t rely on it as
authority
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Physicians often do not do their homework
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Physicians do not practice preventive legal
medicine
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They will commonly wait to ask for help until
they are in emergency room on a weekend
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Issues Affecting
Physicians and Group
Practices
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Regulatory Issues
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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
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Additional Issues Relevant to
Physician Representation
 Employment
 Real
Estate
 Tax
 Benefits
 Corporate
 Securities
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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
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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
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Patients
Anyone
Anyone
$$$
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Examples
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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
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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
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Safe Harbors
Investment interests
 Space rentals
 Equipment rentals
 Personal services and management
contracts
 Sale of practice
 Referral services
 Warranties
 Discounts
 Employment
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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
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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
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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).)
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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/
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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
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Patients for
DHS
Physician
Entity
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Financial Relationship
▪ Ownership Interest
▪ Compensation Agreement
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Designated Health Services
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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
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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
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Penalties
▪
Civil
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$15,000 per claim
Assessment 2x amount of
claim
Nonpayment or recovery
Exclusion from
Medicare/Medicaid
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Exceptions
▪
Physician services
▪
In-office ancillary services
▪
Space rental
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Equipment rental
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Bona fide employment
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Personal services contracts
▪
Physician recruitment
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Isolated transaction
▪
Payment from hospital to MDs for non-DHS
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Exceptions (cont.)
▪
Group practice arrangements
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Payments by MDs to entity for items or
services Charitable donations by physician
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Non-monetary compensation up to $300
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Fair market value compensation
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Medical staff incidental benefits
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Risk sharing arrangements
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Compliance training
▪
Indirect compensation arrangements
▪
Referral services
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Exceptions (cont.)
▪
Professional courtesy
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Retention payments
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Community-wide health
information systems
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DHS by rural hospitals
▪
Investment interests
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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
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Guidance Regarding Stark
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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
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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?
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Do you want your child’s pediatrician to earn
$80,000/year?
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Do you want an unhappy cardiologist doing
your heart cath?
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Do you want an orthopedist who must do ten
surgeries a day in order to make a living to
perform your hip replacement?
Compensation
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Physician source revenue
Salary – new physicians
Compensation formula
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Revenue minus expenses
How to allocate expenses
How to allocate revenue
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Dollars collected
RVUs
Compensation
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Ancillary Income
Stark Prohibition
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Cannot allocate on volume or value of referrals
Per capita
Same basis as non-DHS revenue
Other
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Reassignment Rules
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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
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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
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Medicare Generally
Federal Program
 For Elderly and Disabled
 Others who buy into program
regardless of age
 Originally “Fee-For-Service” – But
Now …
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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
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Top Reimbursement Issues for
Physicians in 2008
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Medicare Physician Fee Schedule
(MPFS) Issues
Physician Quality Reporting
Initiative
Anti-Markup Rule
IDTFs
Continued Shift to Practice Expense
RVUs
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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
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Practical Issues
Affecting Physicians
Employment and Organizational
Issues
Employment and Contracting
Employment Issues
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Who is the employer?
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Medical Groups
Hospitals
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Ancillary income
Support payments
Others
Corporate Practice Prohibitions
Employment Issues
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Termination
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For cause immediately
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Grounds
Time to cure
Without cause
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Notice
Implications
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Severance
Non-compete
When can physician terminate
Employment Agreements
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Restrictive Covenants
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State law driven
Geographical and time limitations
Exceptions
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Termination without cause
Buy-out amount
Physician Recruitment
Agreements
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Stark Restrictions
Net Income Guarantee
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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
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Payment to group
Additional incremental expenses only
No non-compete, but group can assess a
penalty for leaving group
Managed Care Contracting
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Lack of leverage
State protections
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Prompt pay
Terminations
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Appeals
Notice
Communications to patients
Balance billing
Managed Care
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Fee-for-service
Capitation or risk contracts
Modification of contract
Termination
Incompatible patients
Limiting panel
Retainer medicine
Group Practice Issues
Organizing Physicians
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Hard to organize
Buy-ins
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Don’t want it to discourage new partners
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Cost
Possible future buy-outs
Pay for it by profit in first years
Ancillary profits are buy-in
Organizing Physicians
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Buy-out
Great potential for conflict
Is there any value
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Practice revenue
Ancillaries
Impractical
Mergers and Acquisitions
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Mergers of Equal Groups
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Many difficult issues
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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
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Into Large Group
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Much simpler
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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
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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
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Caveat: It may take the process to get the
matter to resolution
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Litigation and QuasiLitigation Matters
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Litigation and Quasi-Litigation
Medical Licensure
 Medical Staff Hearings
 Payor Credentialing & Other
Disputes
 Physician “Divorces”
 Reimbursement audits,
investigations, and appeals
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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
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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
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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
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Medical Licensure
Important Considerations (contd.)
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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)
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Medical Staff Matters
Medical Staff Matters
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Importance of Medical Staff Bylaws
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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)
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Medical Staff Matters
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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)
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Medical Staff Matters
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Negligent Credentialing
 Kadlec
Medical Cetr v.
Lakewview Anesthesia Assoc.,
2005 WL 130953 (May 19,
2005).
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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
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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
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Representing
Physicians Takeaways
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Representation
Considerations
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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
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Be upfront and unafraid to state the
cost for a project
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Be explicitly clear about the work
product and expectations
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Ask the client their goal(s)
Make every effort to try to
understand
Document, document, document
The lemming mentality
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Questions?
Conrad Meyer JD/MHA
Health Care Section
Chaffe McCall, LLP
www.chaffe.com
(504) 585-7067