Transcript Slide 1

A Regulatory Overview
Rachel Abramovitz, Esq., LL.B., LL.M.C.
www.abramovitzlaw.com
This presentation is for informational purposes only and is not intended to be
legal advice. Receipt of this material does not establish an attorney-client
relationship.
What is Fraud and Abuse anyway?
 Medicare fraud is typically characterized by:
 Knowingly submitting false statements or making
misrepresentations of fact to obtain a federal health care
payment for which no entitlement would otherwise
exist;
 Knowingly soliciting, paying, and/or accepting
remuneration to induce or reward referrals for items or
services reimbursed by Federal health care programs; or
 Making prohibited referrals for certain designated
health services.
What is Fraud and Abuse anyway?
 Medicare abuse
 Practices that, either directly or indirectly, result in
unnecessary costs to the Medicare Program
 Any practice that is not consistent with the goals of
providing patients with services that are medically
necessary, meet professionally recognized standards,
and priced fairly
 Examples:
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Billing for services that were not medically necessary
Charging excessively for services or supplies; and
Misusing codes on a claim, such as upcoding or unbundling
codes.
What is Fraud and Abuse anyway?
 Prohibition on Self Referrals
 Strict liability law, does not require intent
 Our focus for today – F&A in physician contracts:
 The Anti-Kick Back Statute [42 U.S.C. § 1320a-7b(b)]
 Anti-Kick Back safe harbors [42 CFR § 1001.952(a)-(u)]
 Physician Self-Referral Law (Stark) [42 U.S.C. § 1395nn]
 Stark safe harbors
 Exclusion Statute [42 U.S.C. § 1320a-7]
 Useful links
 https://oig.hhs.gov/compliance/safe-harbor-regulations/
 https://oig.hhs.gov/compliance/provider-compliancetraining/files/StarkandAKSChartHandout508.pdf
 https://oig.hhs.gov/fraud/enforcement/cmp/kickback.asp
The Anti-Kickback Statute
 A criminal law
 Prohibits “kickbacks”
 the knowing and willful payment of “remuneration” to induce or
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reward patient referrals or the generation of business involving any
item or services payable by the Federal health care programs
(Medicare or Medicaid)
Remuneration includes anything of value (free rent, expensive hotel
stays and meals)
The payer and the recipient alike are both in violation of the statute if
they knowingly and willfully made or received a kickback
Criminal penalties include fines, jail terms and exclusion from
participation in Federal health care programs.
Fines can be up to $50k per kickback, plus three times the amount of
the remuneration
The Anti-Kickback Personal services
safe harbor
 The safe harbor for personal services applies to physician contracts
 To be protected by the safe harbor the arrangement must fit “squarely”
within the safe harbor
 Remuneration does not include any payment made by a principal to an
agent as compensation for the services of the agent, as long as the
following 7 standards are met:
 Written agreement signed by the parties
 Agreement covers all services the agent provides to the principal for the
term and specifies what those services are
 If the agreement is for periodic/sporadic or part-time services, agreement
must specify exactly the schedule of such intervals, their precise length and
the exact charge for such intervals
 Term of at least 1 year
The Anti-Kickback Personal
Services safe harbor (cont’d)
 Aggregate compensation over the term paid to agent is set in
advance, is consistent with fair market value in an arms-length
transaction and is not determined in a manner that takes into
account the volume or value of any referrals or business otherwise
generated between the parties for which payment made by made in
whole or in part under Medicare, Medicaid or other Federal health
care programs.
 Services do not involve counseling or promotion of a business
arrangement or activity that violates State of Federal law
 Aggregate services contracted for do not exceed those which are
reasonably necessary to accomplish the commercially reasonably
business purpose of the services.
The Anti-Kickback Personal
Services safe harbor (cont’d)
 OIG Advisory Opinion No. 09-05:
“… kickbacks might take the form of payments that exceed fair market value for
services rendered or payments for on-call coverage not actually provided. …
problematic compensation structures that might disguise kickback payments
could include, by way of example:
 (i) “lost opportunity” or … payments that do not reflect bona fide lost
income;
 (ii) payment structures that compensate physicians when no identifiable
services are provided;
 (iii) aggregate on-call payments that are disproportionately high compared
to the physician’s regular medical practice income; or
 (iv) payment structures that compensate the on-call physician for
professional services for which he or she receives separate reimbursement
from insurers or patients, resulting in the physician essentially being paid
twice for the same service.”
The Anti-Kickback Personal
Services safe harbor (cont’d)
 OIG Advisory Opinion No. 12-15:
“… improperly structured payments for on-call coverage could be used to
disguise unlawful remuneration. … kickbacks might take the form of payments
that exceed fair market value for services rendered or payments for on-call
coverage not actually provided. … compensation structures that might disguise
kickbacks could include, by way of example:
(i) “lost opportunity” or similarly designed payments that do not reflect bona
fide lost income;
(ii) payment structures that compensate physicians when no identifiable
services are provided;
(iii) aggregate on-call payments that are disproportionately high compared to
the physician’s regular medical practice income; or
(iv) payment structures that compensate the on-call physician for professional
services for which he or she receives separate reimbursement from insurers or
patients, resulting in the physician essentially being paid twice for the same
service.”
The Anti-Kickback Space Rental
safe harbor
 Remuneration does not include any payment made by a lessee to a lessor for
use of premises, as long as all of the following 6 standards are met:
 Written lease agreement, signed by the parties
 Lease covers all of the premises leased between the parties for the term and
specifies which premises are covered
 If lease is intended to provide lessee with access to the premises for
periodic intervals rather than full time, lease specifies exactly the schedule
of such intervals, their precise length and exact rent for such intervals
 Term is for at least 1 year
 Aggregate rental charge set in advance, consistent with fair market value in
arms length transactions, not determined in a manner that takes into
account the volume or value of any referrals or business otherwise
generated between the parties for which payment made be made in whole
or in part under Medicare, Medicaid, or other Federal health care programs.
The Anti-Kickback Space Rental
safe harbor (cont’d)
 Aggregate space rented does not exceed that which is reasonably necessary
to accomplish the commercially reasonable business purpose of the rental
 Fair market value means
 the value of the rental property for general commercial purposes
 Cannot be adjusted to reflect the additional value that a party
would attribute to the property as a result of its proximity to
convenience to sources of referrals or business otherwise generated
for which payment may be made in whole or in part under
Medicare, Medicaid and all other Federal health care programs
The Anti-Kickback Sale of Practice
safe harbor
 No comparable Stark safe harbor
 In a sale by one practitioner to another practitioner,
both of the following standards must be met:
 Period from date of first agreement to completion of sale
not more than 1 year
 Seller not in a position to make referrals to or otherwise
generate business for the buyer under Medicare or a
State health care program after 1 year from date of first
agreement
The Anti-Kickback Sale of Practice
safe harbor (cont’d)
 In a sale by a practitioner to a hospital or other entity, the
following 4 standards must be met:
 Period from date of first agreement to completion of sale, not
more than 3 years
 Seller will not be in a professional position after completion of
the sale to make or influence referrals to, or otherwise
generated business for, the purchasing hospital or entity for
which payment may be made in whole or in part under
Medicare, Medicaid or other Federal health care programs
 Acquired practice must be located in a Health Professional
Shortage Area (HPSA) for the seller’s specialty area
 As of time of first agreement, purchasing entity must diligent
and in good faith engage in recruitment activities to hire a
new practitioner to take over the seller’s practice
The Anti-Kickback Practitioner
Recruitment safe harbor
 Remuneration does not include any payment of exchange
of anything of value by purchaser to induce practitioner
practicing within her current specialty for less than 1 year
to locate, or to induce any other practitioner to relocate her
primary place of practice into a HPSA for her specialty area,
as long as the following 9 standards are met:
 Written agreement signed by the parties, specifying benefits
provided by purchaser, terms of benefits and obligations of
each party
 If practitioner leaving established practice, at least 75% of
revenues of new practice must be generated from new
patients not previously seen by practitioner at her former
practice
The Anti-Kickback Practitioner
Recruitment safe harbor (cont’d)
 Benefits to be provided for not more than 3 years, terms cannot be
substantially re-negotiated during the 3 year period, unless HPSA
ceases to be a HPSA
 No requirement that practitioner made referrals, be in a position to
make or influence referrals or otherwise generate business for the
purchaser as a condition for receiving benefits; except that
purchaser may require that practitioner maintain staff privileges at
purchaser
 Practitioner not restricted from establishing staff privileges at,
referring any service to, or otherwise generating any business for
any other entity of her choosing
The Anti-Kickback Practitioner
Recruitment safe harbor (cont’d)
 Amount or value of benefits provided by purchaser may not vary, be
adjusted or renegotiated in any manner based on volume or value of any
expected referrals to or business otherwise generated for the purchaser by
practitioner for which payment may be made in whole or in part under
Medicare, Medicaid or any other Federal health care programs
 Practitioner agrees to treat patients receiving medical benefits or assistance
under any Federal health care program in a nondiscriminatory manner
 At least 75% of the revenues of the new practices must be generated from
patients residing in a HPSA or a Medically Underserved Area, or part of a
Medically Underserved Population
 Payment or exchange of anything of value may not directly or indirectly
benefit any person (other than practitioner) or entity in a position to make
or influence referrals to the recruiting entity or benefits of items or services
payable by a Federal health care program
The Stark Law
 Section 1877 of the Social Security Act, commonly referred to as the
Stark Law
 Prohibits physicians from referring patients to an entity for receipt
of “designated health services” payable by Medicare or Medicaid, if
the physician or an immediate family member has a financial
relationship with the entity, unless an exception applies
 “Financial relationship”
 direct or indirect ownership or investment interest in an entity through
equity, debt or other means, or
 a direct or indirect compensation arrangement with an entity
 “Physician”
 a doctor of medicine or osteopathy, doctor of dental surgery or dental
medicine, doctor of podiatric medicine, doctor of optometry or a
chiropractor
The Stark Law (cont’d)
 “Immediate family member”
 husband or wife; birth or adoptive parent; child or sibling; stepparent,
stepchild, stepbrother/sister; father-in-law, mother-in-law, son-in-law,
daughter-in-law, brother-in-law, sister-in-law; grandparent or
grandchild, spouse of a grandparent or grandchild
 “Referral”
 a request by a physician for an item or service payable under Medicare
or Medicaid (including the request by a physician for consultation with
another physician and any test or procedure ordered or performed by
such other physician), or
 a request by a physician for the establishment of a plan of care that
includes the provision of DHS
 does not include service personally performed by a referring/ordering
physician.
The Stark Law (cont’d)
 “Designated health services” are:
 Clinical laboratory services
 Physical therapy, occupational therapy, and outpatient
speech-language pathology services
 Radiology and certain other imaging services
 Radiation therapy services and supplies
 DME and supplies
 Parenteral and enteral nutrients, equipment and supplies
 Prosthetics, orthotics and prosthetic devices and supplies
 Home health services
 Outpatient prescription drugs; and
 Inpatient and outpatient hospital services
The Stark Law (cont’d)
 All physician contracts must comply
 physician employment / independent contractor arrangements
 administrative services (e.g. medical director)
 recruiting arrangements/agreements, practice acquisitions
 organizational and operational structures of “group practices”
 group practice compensation, including profit distribution
 group practice ancillary services arrangements
 space and equipment leases
 office sharing and timesharing agreements
 economic relationships between physicians and hospitals
(designated health service referrals, loan agreements, hospital
guaranties of physician obligations)
The Stark Law (cont’d)
 “Group Practice” means
 single legal entity that bills under a single Medicare number
 has at least two “member” physicians providing medical services
 each member must provide the group the full range of services that the
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physician routinely provides
at least 75% of the aggregate services that the member physicians provide,
must be provided through the group practice
members must personally conduct at least 75% of the physician-patient
encounters
subject to applicable local law, may be owned by physicians or another
operating medical practice and may own and operate subsidiary entities
the method of payment of overhead and distribution of income must be
determined in advance
the group must be governed by a centralized body, e.g. Board of Directors
The Stark Law (cont’d)
 Strict liability statute
 Prohibits the submission, or causing the submission, of claims in
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violation of the law
proof of specific intent to violate the law not required
denial of payment
refund obligation
Civil Monetary Penalties and program exclusion only for knowing
violations
Civil monetary penalties up to $15k for each service
Potential False Claims Act liability
Exclusion from Medicare/Medicaid programs
The Stark Law (cont’d)
 Exceptions (42 CFR 411.355) include referrals for:
 Physician services within the same group practice
 In-office ancillary services
 Services furnished by an organization (or its contractors or
subcontract0rs) to enrollees in pre-paid health plans
 Services by an academic medical centers
 Certain implants furnished by Ambulatory Services Centers
 Certain EPO and other dialysis-related drugs
 Certain preventive screening tests, immunizations and
vaccines
 Eyeglasses and contact lenses following cataract surgery
 Intra-family rural referrals
 Exceptions require strict compliance with every element
The Stark Law (cont’d)
 Practice restrictions and non-competes
 When a hospital medical practice recruits a physician, the
employment agreement between the medical practice and the
physician may contain practice restrictions, as long as they do
not “unreasonably restrict the physician’s ability to practice
medicine within the recruiting hospital’s service area.”
 Parties to an arrangement may seek an advisory opinion from
CMS whether the arrangement constitutes a “financial
relationship” and/or whether any exceptions apply
 CMS 2011 advisory opinion / OIG permitted a one year
noncompete clause because it did not “unreasonably restrict
the doctor’s ability to practice in the recruiting hospital’s
service area.”
The Stark Law (cont’d)
 Practice restrictions and non-competes (cont’d)
 Use of non-competes may be restricted by applicable state law
 AMA Opinion 9.02 - restrictive covenants unethical if they
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are excessive in geographic scope or duration in the circumstances
presented, or
if they fail to make reasonable accommodation of patients’ choice of
physician
 State law may determine ownership of patient’s medical records
 AMA Opinion 7.01 – everything that can reasonably and lawfully be
done to serve the interest of the patient, including making a
patient’s medical records “promptly available on request to another
physician presently treatment the patient
 Provide access to/copies of medical records of physician’s patients
upon authorization of patient
 Allow physician to continue treating a patient for acute illness after
termination
The Stark Law (cont’d)
 Practice restrictions and non-competes (cont’d)
 Valuation or volume of referrals should not be
considered in determining fair market value
when purchasing a physician practice or hiring
a physician that was formerly running her own
practice
 Alternatives would be a fair market value of
compensation analysis (how much would the
physician earn if she remained independent)
Stark Personal Services safe harbor
 Arrangement is in writing; signed by the parties
 Specifies the services covered and covers all services to be furnished by
the physician (or her immediate family member)
 all separate arrangements between the entity and the physician / family
members may incorporate each other by reference by cross-referencing the
master list of contracts maintained by the Secretary of HHS
 Services may be furnished through employees hired by the physician /
family member; through a wholly owned entity; through “locum tenens
physicians, i.e. a substitute physician
 Aggregate services contracted for do not exceed those that are
reasonable and necessary for the legitimate business purpose of the
arrangement
Stark Personal Services safe harbor
(cont’d)
 Term of at least 1 year
 If arrangement terminated during the term without cause, the parties may
not enter into the same or substantially the same arrangement during the
first year of the original term
 Compensation is
 set in advance
 does not exceed fair market value
 Except in the case of a physician incentive plan (42 CFR 411.351), is not determined in
a manner that takes into account the volume or value of referrals or other business
generated between the parties
 Services do not involve counseling or promotion of a business arrangement
that violates any Federal or State law
 A holdover personal service arrangement for up to 6 months following
expiration under the same terms is OK
Exclusion Statute
 Exclusion Statute [42 U.S.C. § 1320a-7]
 The OIG (Office of the Inspector General) is required to
exclude from participation in all Federal health care programs
individuals and entities convicted of Medicare or Medicaid
fraud, and has discretion to exclude individuals and entities
on other grounds, including engaging in unlawful kickback
arrangements
 Excluded physicians may not bill directly for treatment
Medicare and Medicaid patient, nor may their services be
billed indirectly through an employer or a group practice.
Prescriptions written by an excluded physician will not be
reimbursable by any Federal healthcare program
Exclusion Statute (cont’d)
 Exclusion Statute [42 U.S.C. § 1320a-7] (cont’d)
 Healthcare providers are responsible for ensuring that
they do not employ or contract with excluded
individuals or entities
 All current and prospective employees and contractors
must be screened against OIG’s list of excluded
individuals and entities
Fraud and Abuse – recent cases
 10-24-2014 - a Newark, NJ gastroenterologist entered into a settlement
agreement with the OIG for $104,950.00. The OIG alleged that the
doctor received remuneration from an imaging facility in Orange, NJ,
in exchange for patient referrals.
 08-21-2014 - a former Florida-based distributor for Zimmer, Inc.
entered into a $123,000 settlement agreement with the OIG. The OIG
alleged that two ZDI independent contractors paid third parties to
recommend Zimmer, Inc. products to Florida-based physicians.
 05-21-2014 - a former owner of a Kearny, NJ, medical practice entered
into a settlement agreement with the OIG for $52,280. The OIG alleged
that the doctor received kickbacks from a diagnostic testing
facility, in exchange for patient referrals.
Fraud and Abuse – recent cases (cont’d)
 04-25-2014 - Harper's Hospice Care, Inc. agreed to pay $150,000. OIG
alleged that Harper's Hospice paid remuneration to a physician in the
form of medical directorship fees in exchange for the physician
referring patients to Harper's Hospice for hospice services and presinging blank prescription forms for patients treated by Harper's
Hospice.
 03-24-2014 - Ukiah Valley Medical Center (UVMC), California, agreed to
pay $1,692,588. OIG alleged that UVMC paid improper remuneration to
physicians who invested in a joint venture ambulatory surgical center with
UVMC.
 12-23-2013 - Havasu Regional Medical Center (Havasu), Arizona, agreed to
pay $510,179.44. OIG alleged that Havasu paid remuneration to a doctor
in the form of the allowed rental of usable space at a below-market
rental rate and the inappropriate provision of employee services.
Fraud and Abuse – recent cases (cont’d)
 12-03-2013 - Kishwaukee Community Hospital (Kishwaukee), Illinois,
agreed to pay $230,320. OIG alleged that Kishwaukee paid
remuneration to three medical group practices in the forms of a
cash collections guarantee, start-up expenses, and loan
forgiveness to subsidize the practices recruitment of a midwife, an
advanced practice nurse practitioner, and a certified nurse practitioner.
 11-15-2013 - Helen Newberry Joy Hospital (HNJH), Michigan, agreed to
pay $221,080.47. OIG alleged that HNJH entered into improper
financial relationships with a doctor involving the lease of space,
discounted internet service, professional liability and health
insurance, arrangement for office supplies and pharmaceuticals,
arrangement for back-up call coverage, physician supervision
and attendance at certain medical leadership meetings, and
failure to collect interest on an outstanding loan balance.
Fraud and Abuse – recent cases (cont’d)
 10-02-2013 - United General Hospital - Public Hospital District 304
(UGH), Washington, agreed to pay $74,067. The OIG alleged that UGH
paid remuneration to a physician in the form of excessive
compensation for services performed at its facility.
 09-13-2013 - Molina Healthcare of Florida, Inc. (Molina), agreed to pay
$257,111. The OIG alleged that Molina offered to increase the
capitation rates paid to four physicians in exchange for the
referral of their patients to Molina and did increase the capitation
rates of two of the four physicians.
 04-03-2013 - Paul Lux, M.D., Missouri, agreed to pay $63,900. The OIG
alleged that Dr. Lux received remuneration from a medical device
manufacturer in the form of payments made under a clinical
registry contract.
Fraud and Abuse – recent cases (cont’d)
 03-05-2013 - Hospital Authority of Benn Hill County, Georgia d/b/a
Dorminy Medical Center (Dorminy), agreed to pay $50,000. The OIG
alleged that Dorminy paid remuneration to a doctor in the form of free
use of hospital space for a period of time.
 11-02-2012 - ForTec Medical, Inc., ForTec Litho, LLC, ForTec Litho Florida,
LLC, ForTec Litho Central, LLC, and ForTec Litho NY, LLC (collectively,
ForTec), Illinois, agreed to pay $126,249.30. The OIG alleged that ForTec
provided customers (including physicians) an all-expense paid trip to
the Masters Golf Tournament. The OIG concluded that the trips were
intended to induce referrals.
 09-25-2012 - Carlsbad Medical Center, LLC (CMC), New Mexico, agreed to
pay $995,380. The OIG alleged that CMC paid remuneration to three
orthopedists in the form of improper payments for on-call coverage,
malpractice insurance, travel reimbursement, and overpayments
under an income guarantee agreement.