Healthcare Law Blog

New Stark Law Exception Breathes Life into Primary Care, Especially in Underserved Areas

With the recent and significant shortages of primary care providers, the Centers for Medicare & Medicaid Services (“CMS”) recently created a rather important exception to the Stark Law as a means to expand access to primary care and mental health care through incentives for non-physician practitioners.  The Stark Law prohibits referrals for Medicare and Medicaid services from physicians to other entities if the physician has a financial relationship with that entity, such as ownership, investment or a structured compensation arrangement. Under the new exception, hospitals, federally qualified health centers (“FQHCs”) and rural health clinics (“RHCs”) may give financial assistance to a physician or a physician practice to hire a non-physician provider (“NPP”), and this relief opens the door for expanded practices in primary care and mental health at a time when the need is critical. More >

CMS Sends a Lifeline on Stark after Tuomey Affirmed: What Health Providers Should Know

In July, the Court of Appeals for the Fourth Circuit upheld a record verdict of $237 million against Tuomey Healthcare Systems in the case of U.S. ex rel. Drakeford v. Tuomey Healthcare System, Inc. for violations of the False Claims Act and the Stark Law. Tuomey allegedly violated these laws in over 21,000 claims, submitting bills to Medicare worth $39 million. The False Claims Act allows up to triple damages per claim, as well as a penalty of up to $11,000 per violation. Perhaps in light of such a verdict, the Center for Medicare & Medicaid Services (“CMS”) issued a set of proposed changes and clarifications to the Stark Law that should help healthcare providers to breathe a sigh of relief. More >

Structuring Healthcare Provider Agreements for Compliance

On June 23^rd, the Healthcare Law Blog discussed the Fraud Alert recently issued by the Office of Inspector General of the United States Department of Health and Human Services regarding physician compensation arrangements which telegraphed the Office of Inspector General’s intention to increase scrutiny of financial arrangements between physicians and providers to whom physicians make referrals. In today’s post, we examine the steps physicians and other healthcare providers should take to ensure that any financial relationships are in compliance with federal statutes and regulations. More >

OIG Fraud Alert Targets Physician Compensation Arrangements

It bears repeating so much that even the Office of Inspector General of the Department of Health and Human Services just issued a Fraud Alert on it – physician compensation arrangements are fraught with potential violations of the Anti-Kickback Statute (“AKS”) as well as the Stark Statute and regulations. The AKS is a large enough trap that it catches even the most above-board agreements in its net, and physicians should be wary of the implications. Likewise, the Stark Statute and regulations are broad and are strict liability laws: if you do not meet a Stark exception, the referral and the resulting claim are tainted and the money received based upon the tainted claim must be repaid to the government. More >

The Sun is Not Setting on the EHR Safe Harbor

The Centers for Medicare & Medicaid Services (“CMS”) and the U.S. Department of Health & Human Services Office of the Inspector General (“OIG”) recently announced that the regulation allowing certain health care entities to donate electronic health records (with the entity subsiding up to 85% of the donor’s costs) to physicians has been extended to December 31, 2021. The regulation, which provided a safe harbor from the Stark Law and Anti-kickback statute, was set to expire on December 31, 2013. More >

Top Ten Health Law Issues for Physicians, Health Systems and Providers in 2014

Change is the one constant that physicians, health systems and other providers face in 2014 as the ACA and its myriad regulations become effective along with increasing review and scrutiny from not just state and federal regulators, but also private companies with state and federal contracts to review and audit claims, cost reports, and billing practices.  So, listed below are the top ten areas that physicians and other providers should watch in 2014. More >

OIG Updates Self-Disclosure Protocol, But Discourages Action, cont.

On Tuesday, the changes to eligibility and disclosure requirements for the OIG’s Self-Disclosure Protocol (“SDP”) were discussed. Now, let’s take a look at certain disclosures and what has changed from the ’98 version.

Disclosures Involving Excluded Persons

Many SDP disclosures involve violations of employing or contracting with individuals who are on OIG’s List of Excluded Individuals and Entities (“LEIE”).  With the update, OIG has specified what is needed for a complete disclosure of this violation. A disclosure must include, among other things, biographical information on the excluded party, description of the disclosing party’s screening process, and a description of how the conduct was discovered.  The disclosing party must also screen all current employees and contractors against the LEIE.

OIG has also provided guidance on calculating damages for this disclosure. For direct providers who bill separately, the disclosing party must provide the total amounts claimed and paid by federal health care programs for the items or services. If items or services are not billed separately, a formula will be used based on the excluded party’s total cost of employment or contracting. This amount will be multiplied by the disclosing party’s federal program payor mix.

Disclosures Involving Anti-Kickback and Stark Law

Since the 2009 Open Letter, conduct involving only potential violations of the Stark Law is not eligible for SDP. To qualify, violations must potentially involve both the AKS and Stark Law. It is the disclosing party’s responsibility to describe each disclosed arrangement and determine on their own why each arrangement may violate the AKS and, if applicable, the Stark Law.

If a disclosure is limited solely to the Stark Law, this potential violation should be disclosed to the Centers for Medicare and Medicaid Services (“CMS”) through their Self-Referral Disclosure Protocol (“SRDP”). Providers should be prepared for the possibility that OIG and CMS will work together.

A disclosing party must include the total remuneration provided through the agreement, but a party may explain why portions of the remuneration should not be considered by the OIG when determining the settlement amount.

Disclosures Involving False Billings

For potential improper claim disclosures, a disclosing party must estimate the total financial impact to government health care programs. To do this, a party can either disclose all claims with specific information or use a sample size. When using the latter method, a party must use a statistically valid sample of, at minimum, 100 claims and use the mean point estimate for calculating the effect. The ’98 version only required 30 claims and called for a “minimum precision level.”

The updated SDP does offer a short list of benefits for disclosing parties. Resolution will continue to occur in most matters without a corporate integrity agreement. This has been the general policy since the 2008 Open Letter. OIG will maintain its general practice to require a minimum multiplier of 1.5 times the single damages for many instances. Lastly, there will be a suspension of the obligation to report and return overpayments to the federal health care programs while the SDP is pending.

In evaluating the pros and cons of the updated SDP, the scales weigh heavily in favor of OIG and against self-disclosure. Entry into the SDP should be carefully considered. The new version offers only minor benefits while posing significant risks to a disclosing party who is seeking to come forth with potential violations.

Christopher J. Shaughnessy is a member at McBrayer law.  Mr. Shaughnessy concentrates his practice area in healthcare law and is located in the firm’s Lexington office.  He can be reached at cshaughnessy@mcbrayerfirm.com or at (859) 231-8780, ext. 1251. 

Services may be performed by others.

This article does not constitute legal advice.

OIG Updates Self-Disclosure Protocol, But Discourages Action

On April 17, 2013, the Office of Inspector General (“OIG”) issued an updated Provider Self-Disclosure Protocol (“SDP”). The initial protocol was created in 1998 (“’98 version”) with the goal of having providers voluntarily identify and disclose potential federal health care program fraud and work with the OIG to resolve the identified abuses. Specifically, the SDP offered guidance to providers (both individuals and entities) on how to investigate conduct, quantify damages, mitigate potential penalties, and report to OIG.  Further guidance came in a series of OIG Open Letters to the health care industry in 2006, 2008, and 2009. The updated SDP provisions supersede both the original version and the subsequent Open Letters. More >

Get Ready to Negotiate: OIG Authorizes Hospitals to Pay Physicians for Call Coverage

Since the enactment of EMTALA in 1986, hospitals have struggled with providing sufficient call coverage to meet federal requirements as physicians have been increasingly hesitant to take on the added responsibility, cost, and risk of responding to emergency department requests for consultation.  With patients often presenting in increasingly acute conditions with no health insurance coverage, physicians understandably find themselves between a rock and a hard place as utilization of hospital emergency departments has skyrocketed, particularly in Eastern Kentucky.  And, it is becoming increasingly difficult to see these patients in the hospital emergency departments without also seeing the patients for follow-up in private physician offices often without payment. Thus, the movement for hospitals to pay for physician call services started amid a tangled web of intricate financial relationships, power struggles between hospitals and medical staff, and a statutory and regulatory maze of the Stark Law and Anti-kickback Statutes.  Finally, good news is on the horizon as a result of a series of recent Department of Health and Human Services Office of Inspector General’s Advisory Opinions, which essentially give the okay for a hospital to pay a per diem fee to specialists providing unrestricted on-call coverage for hospital emergency departments within certain parameters.  For physicians, these OIG Opinions give clear guidance and should be a tool to negotiate payment for call within the parameters of fair market value. More >

The Doctor’s Doctor: Professional Courtesy in an Age of Healthcare Regulation

For over 200 years, professional courtesy has been a hallmark of physician practice, a symbol of collegiality among doctors.  Historians describe its 18^th century beginnings as physicians providing charity care for the families of their deceased colleagues—an early form of health insurance for doctors’ widows and children.  Over the years, the concept of collegial care also became the preferred alternative to physicians treating themselves or their own family members.  In fact, the American Medical Association’s (“AMA”) first code of medical ethics created an obligation among doctors to reciprocate medical care and to extend the courtesy to physician family members as well. Today, the AMA recognizes professional courtesy as a “long-standing tradition” but not an ethical requirement.[1]  The federal government’s commentary about “the provision of free or discounted health care items or services to a physician or his or her immediate family members or office staff,” however, is far more cautious than nostalgic. [2]   The Department of Health and Human Services Office of Inspector General’s advice that physicians “consult with an attorney” before extending professional courtesy warns that certain arrangements for free or discounted medical care run afoul of fraud and abuse laws.[3] More >