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Top 4 Dos and Don’ts For Audits and Investigations

Top 4 Dos and Don’ts For Audits and Investigations

In the spirit of college football season and the inevitable argument about which four college football teams are in the college football playoffs, this article addresses the undisputed top 4 dos and don’ts that physicians should follow during an audit or investigation.  I have represented countless medical practices and individual physicians with a variety of federal payor audits, false claims investigations and DEA investigations.  The following top 4 dos and don’ts are the top issues I see frequently repeated, oftentimes to the detriment of the provider under investigation.

# 4 – Keep an Exact Copy of Everything Produced or Viewed Most of the time I am not retained until after the practice has turned over the requested documents and, in some cases, has also turned over non-requested documents. The usual response by the practice, when asked why it did not keep a copy of what was released, is something along the lines of “we did nothing wrong” or “we know what we turned over and can make a copy if needed.”  However, when I ask for the documents produced, the practice oftentimes cannot replicate what was produced. This puts the practice at a competitive disadvantage from the start. It also makes citing to a particular document extremely difficult when legal counsel does not know (1) if a particular document was actually produced, or (2) if it was produced, where in the mountain of records the document is located. Defending the practice’s conduct or fighting a recoupment becomes challenging without a copy of the documents. Thus, the practice should go ahead and make an exact copy of what is produced and maintain the copy until the practice is reasonably sure nothing will come from the audit or investigation. It is also recommended that the practice hire legal counsel before producing records, so as to ensure that only responsive documents are produced.

# 3 – Review All of the Medical Records Before Producing.  While this seems like a no brainer, I cannot state the number of times a medical practice has printed what it believes to be the entire medical record only to learn when receiving a recoupment demand or allegation of false claims that the entire medical record was not produced.  Another common issue in this age of electronic medical records (“EMR”) is that the printed record looks substantially different than the electronic record.  Some EMR systems will print a paper copy differently if the “print” function is used versus the “print screen” function.  I have experienced numerous occasions when the paper copy looks suspicious or incomplete, particularly the patient’s history or prescription records, because of the way the EMR prints the record.  On a related note, if the practice wishes to use a consultant to conduct a simulated audit, it is important to make sure that the consultant either has access to the EMR or that the printed paper records are complete and identical to the electronic records.

# 2 – Maintain Signature Logs of Alabama Medicaid Patients.  The Alabama Medicaid Agency requires that providers maintain evidence that the patient actually attended the appointment.  It does this by requiring providers to keep a signature on file to prove the patient’s attendance at each appointment. I have represented quite a few physicians and practices in Medicaid audits, and I do not recall an audit that did not request copies of the patients’ signatures.  However, the signature requirement is not well known by Alabama providers, as many of my clients are unaware of the requirement and fail to keep a copy of the signatures. While there are other ways to prove that a patient attended the visit, it is very simple to satisfy the signature requirement and avoid having to gather other forms of proof–simply use the removable signature logs and paste the patient’s signature into the record for that particular visit.

#1 Never, Ever, Ever Voluntarily Surrender A License/Permit/Participation Without First Obtaining Advice of Counsel.  Without question, the undisputed defending champion and current #1 is never ever voluntarily surrender a license, permit or participation in a payor’s program without first obtaining advice of counsel. I have heard on multiple occasions that a particular investigator says something along the lines of the following to a licensee “Things will go much easier if you voluntarily surrender your license.”  I have never in my experience seen where things have gone easier for the physician when he/she has voluntarily surrendered his/her license. However, it does is make things easier for the licensing body, so the statement above is true as phrased. The voluntary surrender substantially compromises the physician’s ability to defend his/her case, as the physician has lost any leverage he/she may have had – the agency already has what it wants – the physician’s license.  Most licensing agencies have due process requirements that must be followed before it can revoke, suspend, or take any adverse action on a license.  One of the most important due process requirements is giving the physician the right to a hearing where the physician can be represented by counsel and present evidence. The hearing process affords the physician the ability to test the agency’s evidence and interpretation of its regulations, which are oftentimes flawed.  The hearing process also gives the physician the ability to reach a compromised resolution of the matter, oftentimes allowing the physician to keep his/her license.  By voluntarily surrendering a license, the physician loses such rights and ability.


Jim Hoover practices with Burr & Forman LLP and works exclusively within the firm’s Health Care Industry Group. Jim primarily handles healthcare litigation and compliance matters.

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Changes Coming to AKS, Stark and CMP Laws

Changes Coming to AKS, Stark and CMP Laws

On October 9, 2019, the Office of Inspector General (“OIG”) and the Centers for Medicare and Medicaid Services (“CMS”) published proposed rules to revise the Stark Law, Anti-Kickback Statute and Civil Monetary Penalty Statute.  These statutes create criminal and civil penalties for certain financial arrangements involving providers. According to OIG and CMS, the goal of the proposed rules is to address barriers created by the rules that interfere with care coordination.  The additional safe harbors were necessary to allow for coordination of patient care among providers because of the increased focus on value-based care. Value-based programs reward healthcare providers with incentive payments for quality of care. Examples of these programs include Hospital Value-Based Purchasing, Hospital Readmission Reduction Program and Hospital Acquired Conditions Reduction Program.

Anti-Kickback 

The proposed changes in the published rule include three new safe harbors for certain remuneration exchanged between or among participants in a value-based arrangement intended to foster better coordinated patient care.  These include:

  1. Care Coordination Arrangements to Improve Quality Health Outcomes and Efficiency,
  2. Value-Based Arrangements with Substantial Downside Financial Risk, and
  3. Value-Based Arrangements with Full Financial Risk.

The proposed rule also offers a new safe harbor for certain tools and support furnished to patients to improve health quality outcomes and efficiency, such as health-related technology or patient health-related monitoring tools.  Additionally, a new safe harbor is proposed for remuneration provided in connection with a CMS sponsored innovation model, which is intended to reduce the need for separate and distinct fraud and abuse waivers.

There is a proposed safe harbor for donations of cybersecurity technology and services as well as modifications to the existing safe harbor for electronic health records and services to add protections for certain related cybersecurity technology, to update provisions regarding intra-operability, and to remove the sunset date that previously existed.

The rule proposes a positive change to the Personal Services and Management Contracts safe harbor, by eliminating the requirement that periodic or part-time services be on a specific schedule or interval. Additionally, the safe harbor adds a provision for “outcome-based payments.”  Outcome-based payments are those payments that reward the provider for improving patient or population health by achieving one or more outcome measures or that reduce payor costs while improving or maintaining the improved quality of care for patients.

Another existing provision related to warranties is updated to revise the definition of warranty and provide protection for bundled warranties for one or more items of related services.  Local transportation is covered by an existing safe harbor, but the proposed change expands and modifies mileage limits for rural areas and for transportation for patients discharged from inpatient facilities.

Lastly, the Accountable Care Organization Incentive Program is added to the exception of the definition of “remuneration.”

Stark Law

The physician self-referral law, known as the Stark Law, has not been significantly updated since its enactment in 1989.  The proposed changes seek to reduce the burden on physicians and allow for coordination of care.

Like the new safe harbors under the AKS, the proposed changes to the Stark Law include value-based arrangements.  A value-based arrangement is defined as an arrangement for the provision of at least one value-based activity for a target patient population between or among the value-based enterprise (“VBE”) and one or more VBE participants or VBE participants in the same value-based activity.

Another update to the Stark Law includes a proposed change clarifying the existing provision that allows a physician in a group practice to be paid a share of the overall profits of the group that is indirectly related to the volume or value of the physician’s referrals.  Additionally, there are changes to how the law treats productivity bonuses for physicians.

According to CMS, the intent of the proposed changes is to alleviate the fear physicians may have in entering into legitimate relationships to coordinate and improve care of patients.

CMP

There is only one proposed change for the Civil Monetary Penalty statute, and it adds a new statutory exception to the prohibition on beneficiary inducements for telehealth technologies furnished to certain in-home dialysis patients.

For all the proposed rules, OIG and CMS are seeking public comments, which are due December 31, 2019.  For more information on the proposed rules visit https://oig.hhs.gov/compliance/safe-harbor-regulations/index.asp and https://www.cms.gov/newsroom/fact-sheets/modernizing-and-clarifying-physician-self-referral-regulations-proposed-rule.


Article contributed by Angie C. Smith, Esq. with Burr Forman.

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Fraud and Abuse Facelift: Proposed Changes to Stark, AKS, and Beneficiary Inducements CMP

Fraud and Abuse Facelift: Proposed Changes to Stark, AKS, and Beneficiary Inducements CMP

As part of its “Regulatory Sprint to Coordinated Care,” the Centers for Medicare and Medicaid Services (“CMS”) and the Health and Human Services Office of Inspector General (“OIG”) released proposals to modernize the Medicare Physician Self-Referral Law (“Stark Law”), Anti-Kickback Statute (“AKS”), and Beneficiary Inducements Civil Money Penalty (“CMP”) (collectively, the “Proposed Rules”). The Proposed Rules add five new Stark Law exceptions, seven new AKS safe harbors, and an additional exception to the definition of “remuneration” under the CMP. Several of the new Stark exceptions and AKS safe harbors relate to value-based arrangements and largely mirror each other. Other new exceptions and safe harbors relate to the donation or use of cybersecurity items and beneficiary incentives in the coordination of patient care. These proposals are by no means final (stakeholders have until December 31, 2019 to comment on them), but if finalized, they may provide more flexibility for physicians and other providers to pursue value-based arrangements, as well as greater clarity with respect to existing Stark Law requirements.

 

Value-Based Arrangements under Stark and AKS

Three new Stark exceptions and four new AKS safe harbors relate to value-based arrangements in which one or more participants in a value-based enterprise (“VBE”) pursue one or more value-based activities and purposes. Value-based purposes include coordinating and managing care, improving quality, reducing costs or growth of expenditures (without reducing quality), and transitioning from fee-for-service care to quality care for a target patient population. Value-based activities include providing items or services (not including a referral), taking an action, or refraining from taking an action, in furtherance of a value-based purpose.

There are separate exceptions and safe harbors for value-based arrangements involving: (i) full financial risk, (ii) meaningful/substantial downside financial risk, and (iii) remuneration for improving quality, health outcomes, and efficiency. Full financial risk means that the VBE is prospectively financially responsible for the cost of all patient care items and services covered by the applicable payor for each patient in a target patient population over a specified period of time. Meaningful/substantial financial downside risk means that a physician is responsible to the VBE for specified percentages of the value of the remuneration paid to the physician or is responsible on a prospective basis for the cost of all or a defined set of patient care items and services for each patient in the target patient population over a specified period of time. For value-based arrangements incentivizing improvements in quality, health outcomes, and efficiency, the proposed Stark exception would allow both financial and in-kind remuneration related to value-based activities and meeting objective and measurable quality and performance targets. By contrast, the similar proposed AKS safe harbors focus more on in-kind remuneration, including anything of value given either to VBE participants to help coordinate and manage patient care and patient engagement tools and supports given to patients to address social determinants of health and incentivize the patient’s participation in their health care. In addition to the mirror exceptions and safe harbors generally described above, the AKS Proposed Rule sets forth an additional safe harbor for remuneration exchanged between participants in a CMS-sponsored model, such as an ACO or bundled payment model.

There are common requirements for each of the exceptions and safe harbors listed above. For instance, the VBE must generally set forth in a signed writing the terms of the value-based arrangement, including a description of the nature and extent of the risk assumed under the arrangement, the value-based activities involved, the target patient population, and the type and cost of the remuneration involved. Additionally, the VBE or VBE participant offering remuneration under a value-based arrangement must not take into account the volume or value of referrals or otherwise condition the remuneration on referrals of patients who are not a part of the target patient population or business not covered by the value-based arrangement.

 

Other Stark Additions and Clarifications

The Stark Proposed Rule contains an additional exception for nominal payments to physicians ($3,500 annually, indexed for inflation) for the provision of items and services to an entity. The new exception applies even if there is no written agreement, provided the compensation does not relate to the volume or value of referrals or other business generated by the physician, does not exceed fair market value, and is commercially reasonable, among other requirements. The Stark Proposal also modifies certain existing Stark exceptions and clarifies a number of definitions. For instance, it adds flexibility to the “Electronic health records items and services” exception to include nonmonetary remuneration in the form of cybersecurity software and services. It also purports to clarify the meaning of “fair market value” and “commercially reasonable.” Although additional clarification of these terms would probably be useful, the Stark Proposed Rule at least clarifies that an arrangement does not have to result in a profit for one or more of the parties in order to be commercially reasonable.

 

Beneficiary Inducements

The Proposed Rules provide additional protection for remuneration to beneficiaries under AKS and the CMP. Under a new AKS safe harbor, beneficiary incentive payments to beneficiaries assigned to an Accountable Care Organization (“ACO”) under the Medicare Shared Savings Program (“MSSP”) would not constitute “remuneration” for purposes of AKS, if they meet the ACO beneficiary incentive requirements under MSSP. Somewhat similarly, the provision of telehealth technologies to patients with end-stage renal disease (“ESRD”) is not considered “remuneration” for purposes of the CMP if the technologies contribute to the provision of telehealth services related to the patient’s ESRD, is not of excessive value, and meets other requirements.

 

Conclusion

This article simply provides a high-level overview of the concepts addressed in the Proposed Rule. A more in-depth review of the Proposed Rules reveals additional requirements and subtle differences in the rules that will be material to parties trying to navigate them successfully.  Again, these rules are far from final. However, they indicate an intentional shift toward value-based care and relaxed regulatory requirements to help foster such care. Physicians and other providers have an opportunity to provide feedback on these proposals and hopefully refine them to workable exceptions that will enable the further adoption of value-based arrangements which are being promoted by current payment policy.

Article submitted by Christopher L. Richard, Esq. with Gilpin Givhan, PC in Montgomery, AL.

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CMS Is Expanding Its Enforcement Ability

CMS Is Expanding Its Enforcement Ability

Pursuant to a new rule, entitled Program Integrity Enhancements to the Provider Enrollment Process, the Centers for Medicare & Medicaid Services (“CMS”) is expanding its ability to combat fraud and abuse within the healthcare industry.

Under the new rule, CMS will be able to identify individuals and entities that pose a fraud and abuse risk solely based on “affiliations” with other entities that have been sanctioned by CMS. CMS can then take steps to prevent such identified individuals and entities from participating in the Medicare program. At the request of CMS, enrolling providers will disclose
any current or previous “affiliation” with an organization that has uncollected debt (regardless of amount and regardless of appeal status), experienced a payment suspension, been excluded, or had its billing privileges denied or rescinded (regardless of the basis). As used within the new rule, “affiliation” would include, among other things, an individual with 5% or greater indirect or direct ownership interest, officer, director, individual with operational or managerial control, or any reassignment relationship.

The provider community has expressed a number of concerns with this new rule, as the new rule gives a large amount of discretion to CMS without comparable notice or remedy to the provider. Consequently, in light of this new rule, Medicare providers and suppliers need to carefully and thoroughly examine any individual with whom it has an “affiliation” relationship to
avoid negative consequences.

The rule takes effect on November 4, 2019.

Kelli Fleming is a Partner at Burr & Forman LLP practicing exclusively in the firm’s healthcare industry group.

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The United States Court of Appeals for the Eleventh Circuit Issues Helpful Ruling For Providers Concerning Fair Market Value in Space Rental Agreements

The United States Court of Appeals for the Eleventh Circuit Issues Helpful Ruling For Providers Concerning Fair Market Value in Space Rental Agreements

By Jim Hoover

On July 31, 2019, the United States Court of Appeals for the Eleventh Circuit issued a ruling that provides clarity and helps healthcare providers with space lease agreements.  The ruling in Bingham v. HCA, Inc., Case No. 1:13-cv-23671 (11th Cir. 2019) provides that a relator or whistleblower in a false claims/qui tam case has an affirmative burden of proving that the rental rate charged in the lease agreement was below fair market value (FMV), which is an essential element to establishing the existence of remuneration. Equally as important from a litigation procedural view point, the Eleventh Circuit also held that a relator cannot rely upon information obtained in discovery to satisfy the Federal Rule of Civil Procedure Rule 9(b)’s pleading requirements.

In Bingham v. HCA, Inc, the Relator alleged that HCA, Inc. violated the False Claims Act (FCA) due to improper arrangements with physicians who rented space at HCA facilities. Specifically, the Relator’s claims related to leases for medical office building space between HCA-hired developers and physicians who had the ability to refer patients to HCA hospitals. The Relator alleged that HCA provided subsidies to the developers, which the developers then used to provide physician-tenants with “benefits” such as free marketing, office improvements, low initial lease rates, restricted use waivers, and cash flow participation agreements for tenants who signed long-term leases. In return for these “benefits,” the Relator alleged the physician-tenants referred patients to HCA hospitals. Thus, according to the Relator, these arrangements violated the Anti-Kickback Statute (AKS) and led to Stark Law and FCA violations.

Relator argued that the arrangements violated the AKS and Stark Law despite HCA having received fair market value opinions that the rental rates offered were consistent with FMV. The Eleventh Circuit disagreed with Relator and affirmed the district court’s granting of summary judgment because Relator had not established that the alleged “benefits” to the physicians were in excess of fair market value. Significantly, the court ruled that the issue of fair market value is not limited to a healthcare provider’s safe harbor defense, but is something the Relator must affirmatively prove in order to show that a defendant offered or paid remuneration to physician-tenants. The court reached this conclusion by analyzing the definition of “remuneration,” an essential element of an AKS violation. Based on the dictionaries the court consulted, remuneration requires that a benefit be conferred; thus, “[i]n a business transaction like those at issue in this case, the value of a benefit can only be quantified by reference to its fair market value.” The civil monetary penalties statute, 42 U.S.C. § 1320a-7a(i)(6), corroborated this conclusion, according to the court, because the statute defines remuneration to include the “transfer of items or services for free or for other than fair market value.” Although the physicians did receive financial benefits as part of the lease agreements, Relator had not presented evidence that these benefits were outside of the range of fair market value benefits for physicians signing the type of long-term leases used in the arrangements.

The important AKS takeaway from this case is that there is no “remuneration” for AKS purposes unless a benefit is conferred that is other than the FMV. Stated another way, as long as compensation, which includes the value of benefits, to/from a referral source is consistent with fair market value, the AKS is not implicated.

Relating to the Stark Law allegations, the Court found that there was no genuine factual dispute over whether a prohibited indirect compensation arrangement under the Stark Statute existed because it plainly did not. First, any relationship between HCA and the physician-tenants could only be indirect because remuneration flowed through the developers. Second, the Stark Law defines an indirect compensation arrangement to require “that compensation received by a referring physician ‘varies with, or takes into account, the volume or value of referrals or other business generated by the referring physician.’” Finally, because HCA showed that there was no correlation between the physician tenants’ space leases and their referrals to HCA and Relator failed to show that the rental rates or other benefits allegedly given by HCA physician-tenants were at all correlated with the volume or value of referrals from the physician-tenant, Relator failed to create a genuine factual dispute as to whether an indirect financial relationship existed and implicated the Stark Law’s prohibitions.

Also an important ruling on a procedural point when defending a false claims/qui tam case, the federal district court initially allowed the Relator to survive a motion to dismiss and proceed with discovery. The Relator subsequently amended the allegations in the complaint after discovery had begun. HCA filed a subsequent motion to dismiss, which the federal court granted, refusing to allow the Relator to use information gained through discovery as the basis to amend the complaint.  The 11th Circuit affirmed the district court’s ruling and explained that although courts should freely grant leave to amend pleadings, the amendments that include information obtained during discovery may not be appropriate in cases in which the heightened specificity pleading standard of Rule 9(b) applies if the amendment would allow the Relator to circumvent the purpose of Rule 9(b). The Circuit Court, therefore, affirmed the lower court’s decision to grant HCA’s motion to strike information in the amended complaint that was obtained through discovery. The Court then affirmed the dismissals of the related claims because, absent information learned in discovery, the Relator did not satisfy the pleading requirements of Rule 9(b) because “Relator does not provide specific details or evidence to support his claims that long-term ground leases were grossly undervalued or included overly generous terms.”

These holdings should be welcomed by defendants of alleged AKS, Stark Law, and False Claims Act violations. This case is especially welcomed since the ruling was issued by The United States Court of Appeals for the Eleventh Circuit. Accordingly, the federal district courts in the Eleventh Circuit, such as all of the federal district courts in Alabama, must follow the Eleventh Circuit’s ruling.

Jim Hoover is a Partner at Burr & Forman LLP practicing in the Health Care Industry Group.

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Guidance on Practice and Ethical Issues

Guidance on Practice and Ethical Issues

The Medical Association’s Office of General Counsel can help guide members on certain practice and ethical issues.  The Office is comprised of the General Counsel, Cheairs Porter, and Paralegal, Angela Barentine.  The General Counsel is the chief legal advisor to the Board of Censors, and provides legal advice daily to the Executive Director.

Mr. Porter, a Montgomery native, started as General Counsel of the Medical Association in December 2012.  He currently has over 23 years of related legal experience, including an advanced legal degree in health law and substantial practice in regulatory health care matters.

Ms. Barentine, a Milbrook native, graduated Magna Cum Laude in 2002 with a B.S. from Auburn University.  She began work with the Medical Association in April 2015.  She has a Master of Public Administration with a concentration in Health Care, and a Certificate in Non-Profit Management and Leadership.  Ms. Barentine has 20 years of related experience.

While the Office is very busy handling a wide mix of contracts, business issues, legislative, administrative law (agency) matters and matters coming from various departments, as well as staffing the Council on Medical Services, it also can provide general guidance on the law in particular areas, such as:

  • Separation from a practice;
  • Starting a practice;
  • Medical records policy;
  • HIPAA issues;
  • Certain prescription drug matters;
  • Overpayments;
  • Ethics;
  • Medicaid; and
  • Some billing and charging issues.

If you are searching for general guidance, please feel free to contact Cheairs Porter at (334) 954-2540 or Angela Barentine at (334) 954-2541 for assistance.

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Employee vs. Independent Contractor: What’s the Difference and Why’s it Important?

Employee vs. Independent Contractor: What’s the Difference and Why’s it Important?

If you are reading this article, then you likely own or administer a health care practice. It may include workers of many stripes:  some may be treated as employees and others as independent contractors. But do you know why they are treated that way? If the IRS or the Alabama Department of Revenue audits your practice, you will need to know.

Many companies use independent contractors whenever possible. Why? Employees are much more expensive than independent contractors. Employees cast many burdens on their employers: health care benefits, minimum wage limitations, fringe benefit costs. None of these issues arise with independent contractors. In addition to administrative burdens, employees also cost their employers more in employment tax than independent contractors. All employers must generally pay employment taxes (Social Security and Medicare) of 7.65% of each employee’s salary/wages. There is no similar requirement related to independent contractors; they are responsible for their own employment taxes. Based on a salary of $43,000, an average employee costs its employer approximately $3,700 more than an independent contractor in tax-related costs alone. Thus, all other things being equal, businesses that treat their workers as independent contractors have a competitive advantage over those treating similar workers as employees.

But what makes one worker an employee and another an independent contractor? In a word: control. If a company has control over how a worker performs his or her job, then that worker is most likely an employee. The substance of the worker/employer relationship therefore determines the worker’s classification, no matter how the employer and the worker decide to define the relationship. That is, you cannot simply label your worker an independent contractor and expect the IRS or other government agency to take your word for it.

Since 1987, the IRS has used a “20 Factor Test” to analyze worker classification matters. Each factor indicates control or a lack of control, and, in turn, either employee or independent contractor status. For example, if you require your workers to attend formal training, then your control indicates employee status. Control is also evident if a worker must work set hours, gets paid by the hour, or can be terminated at any time. On the other hand, if a worker gets paid on a per-task basis, does the same type of work for other companies, and provides his/her own tools and equipment, then there may be insufficient control to trigger employee status.

Improperly classifying a worker as an independent contractor, when in fact the individual is an employee, can create significant withholding and tax exposure. That exposure could include liability for failing to withhold the employee’s unpaid income (around 28% of the employee’s salary) and employment taxes (7.65% of salary), in addition to the employer’s employment tax share (7.65% of salary) mentioned above. A range of penalties – from failure-to-file (25% of the tax due), failure-to-deposit (15%), accuracy (20%), to even fraud (75%) – as well as accrued interest may drastically increase the exposure.

Practices can prepare for government scrutiny by reviewing their compliance procedures and contracts with independent contractors. You may be able to avoid costly penalties by disclosing past missteps to the IRS before an audit, or the practice can clarify its relationship with the individual based on IRS guidance to better document the individual’s independent contractor status.

Article contributed by Allen Sullivan, partner with Burr & Forman LLP practicing in the firm’s Corporate and Tax Group. Burr & Forman LLP is an official partner with the Medical Association.

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What Does 2019 Hold for Telehealth and Related Services?

What Does 2019 Hold for Telehealth and Related Services?

Historically, payment for Medicare “telehealth services” has been constrained by a number of geographic and other limitations, but there are several new reimbursement opportunities for physicians and other health care practitioners beginning this year. Here we explore the expansion of traditional Medicare “telehealth services” under the Bipartisan Budget Act of 2018 (“BBA 2018”)1 and the SUPPORT for Patients and Communities Act (the “SUPPORT Act”)2, certain newly recognized and separately payable communication technology-based services (which look like telemedicine3 but do not constitute Medicare “telehealth services”), and how Blue Cross and Blue Shield of Alabama (“BCBSAL”) telemedicine policies stack up against Medicare’s new policies for 2019.

Medicare “Telehealth Service” Limitations; Expansion Under BBA 2018 and the SUPPORT Act

Medicare recognizes payment for certain “telehealth services” provided through interactive audio and video communications in certain situations where the service would otherwise ordinarily be furnished in-person (e.g., an evaluation and management or “E/M” visit). Medicare “telehealth services” are limited to beneficiaries located in rural areas, must be performed from certain originating sites (physician/practitioner office, hospital, skilled nursing facility, rural health clinic, etc.4), and may only be performed by certain practitioners (physicians, physician assistants, nurse practitioners, clinical psychologists, etc.5). The pervasiveness of conditions such as acute stroke and substance use disorders and the suitability of treating such conditions through telemedicine recently led to a statutory reduction of many restrictions on the provision of Medicare “telehealth services” in an effort to better control these health conditions at lower costs. Several of these changes resulted from the BBA 2018 and the SUPPORT Act.

The BBA 2018 expanded the availability of reimbursement for telehealth services, especially for end-stage renal disease (“ESRD”) and stroke patients. Specifically, ESRD patients may now receive monthly ESRD-related clinical assessments via telehealth, provided they receive a face-to-face (non-telehealth) visit/assessment at least monthly during the initial three months of home dialysis treatment and at least once every three months thereafter. The BBA 2018 also includes non-hospital-related renal dialysis facilities, and the patient’s home as eligible originating sites and removes the geographic location (i.e., rural area) requirements for monthly ESRD-related clinical assessments provided via telehealth services at the foregoing originating sites.

Medicare “telehealth services” provided “for purposes of diagnosis, evaluation, or treatment of symptoms of an acute stroke” (“acute stroke telehealth services”) are now subject to special (and less restrictive) rules implemented pursuant to the BBA 2018. CMS added mobile stroke units to the list of eligible originating sites for providing acute stroke telehealth services and removed geographic limitation (i.e., rural area) for acute stroke telehealth services.6 Similarly, under the SUPPORT Act, the geographic limitation (i.e., rural area) is removed and the patient’s home is added as an eligible originating site for purposes of treating individuals diagnosed with a substance use disorder or a co-occurring mental health disorder.

For any of the foregoing Medicare “telehealth services,” it should be noted that no facility fee will be paid where the patient’s home is the originating site. In addition, practitioners will be limited to providing services, which are on the approved list of Medicare “telehealth services,” and must decide whether it is clinically appropriate to treat the underlying condition via “telehealth services.” However, the Centers for Medicare and Medicaid Services (“CMS”) has also expanded opportunities for some services that look like telemedicine but are not classified as Medicare “telehealth services.”

New Communication Technology-Based Services

In the 2019 Physician Fee Schedule Final Rule7, CMS defined a new set of separately reimbursable communication technology-based services, including virtual check-ins, remote evaluation of pre-recorded patient information, and interprofessional internet consultations. CMS does not consider these services to be Medicare “telehealth services” because the services typically would not otherwise be performed at an in-person visit, and therefore, they are not subject to the same geographic, provider-type, and originating site requirements for Medicare “telehealth services.”

Virtual Check-Ins. Until this year, CMS considered any routine non-face-to-face communication that occurs before or after an in-person visit to be bundled into the payment for the visit itself. Starting in 2019, CMS will separately reimburse for “virtual check-ins” (new HCPCS code G2012) used to determine whether an office visit or other service is warranted for an established patient.8 A virtual check-in should include five to 10 minutes of medical discussion and must be provided by a physician or other practitioner who could bill for an E/M service.9 The virtual check-in may be provided by audio-only telephone encounters10, but there must be real-time interaction with the patient. CMS emphasized the importance of obtaining patient consent for virtual check-in services and noted patients are expected to initiate virtual check-ins. Patient consent may be verbal but must be documented in the medical record for each billed service. Practitioners must document the virtual check-in is medically reasonable and necessary, but otherwise, CMS is not imposing any service-specific documentation requirements for the virtual check-in service. CMS is not limiting the frequency with which practitioners may provide and bill for virtual check-in services. However, virtual check-ins that result from a related E/M service in the previous seven days or that lead to an E/M service by the same practitioner or other qualified health care professional in the next 24 hours will be bundled in with the related service instead of being reimbursed separately.

Remote Evaluation of Pre-Recorded Patient Information. CMS has also provided separate reimbursement, starting in 2019, when a physician uses pre-recorded video or images11 captured by a patient to evaluate an established patient’s condition and determine whether an office visit or other service is necessary (new HCPCS code G2010). It is expected the practitioner will review the video or images and follow up with the patient within 24 business hours (verbally via phone call or audio/video communication, or through secure text messaging, email, or secure patient portal). However, if the video or images are of insufficient quality for the practitioner to assess whether an office visit or service is necessary, the practitioner could not bill for the service. Similar to the virtual check-in, if the remote evaluation results from a related service in the previous seven days or leads to an E/M service in the next 24 hours, it will be considered bundled with the related service and will not be reimbursed separately.

Interprofessional Internet Consultation. CMS will also begin to reimburse for interprofessional internet consultations, represented by six newly-recognized CPT codes (99446, 99447, 99448, 99449, 99551 and 99452). The new consult codes recognize reimbursement for both the work of the treating/requesting physician in initiating the consult and the services of the consulting physician in providing consultative services and a verbal and/or written report (generally corresponding to the length of medical consultative discussion). The patient must first give verbal consent to the consultative services, which must include a discussion of applicable cost-sharing requirements, and the consent must be documented in the medical record. Allowing these interprofessional internet consultations should streamline patient care because a patient can receive consultative services without having to set up a separate appointment with the consulting physician, and the reimbursement also recognizes the services provided by both treating/referring physician and the consulting physician.

BCBSAL Telemedicine Policies

The telemedicine policies for BCBSAL are less restrictive than Medicare’s in some respects, but the policies have not been expanded to include the new types of communication technology-based services for which Medicare will provide reimbursement beginning this year. For instance, BCBSAL does not appear to limit telemedicine services to particular originating sites located in rural areas. However, it does require telemedicine services be provided via “two-way, real-time (synchronous), interactive, secured and HIPAA compliant, electronic audio and video telecommunications systems,” and the patient’s home is only approved as an originating site for behavioral health services.12 Practitioners must also obtain patient consent, including all information that pertains to routine office visits and a description of the potential risks, consequences, and benefits of telemedicine.

BCBSAL specifically notes a number of services not considered appropriate for telemedicine, including telephone conversations, video cell phone interactions, provider-to-provider consultations when the patient is not present, appointment scheduling, brief follow-up of a medical procedure to
confirm the stability of the patient’s condition, brief discussion to confirm the stability of the patient’s chronic condition, services that would not be charged during a regular office visit, requests for a referral, and information exchange leading to a subsequent face-to-face visit within 24 hours. As evidenced by this list (which is illustrative rather than exhaustive), BCBSAL arguably would not reimburse for the new communication technology-based services for which Medicare will now make payment, such as virtual check-in, remote evaluation of pre-recorded patient information, and interprofessional internet consult. As has been the case in the past, BCBSAL may follow Medicare reimbursement policies on these communication technology-based services – or something relatively similar – upon a study of how they are implemented in the Medicare program. However, for now, practitioners must continue to maintain and follow two separate policies (at least for billing and reimbursement purposes) for telemedicine services provided to Medicare and BCBSAL beneficiaries.

Conclusion

There are a number of new opportunities to provide patient care services through telemedicine and related means that will be reimbursable under the Medicare program. However, practitioners should note this new menu of services will be scrutinized by CMS in the coming years to ensure services are reasonable and necessary and are not being overutilized. It should also be noted other payors (e.g., BCBSAL) will not necessarily adopt similar payment policies. Practitioners should have policies and procedures to ensure proper use of these services for each applicable payor. If you have additional questions about the scope of telemedicine services reimbursable in your practice, please contact your counsel for assistance.

Article contributed by Christopher L. Richard with Gilpin Givhan, P.C. Gilpin Givhan, P.C., is an official partner with the Medical Association.

References

  1. Pub. L. 115-123 (Feb. 9, 2018).
  2. Pub. L. 115-271 (Oct. 24, 2018).
  3. It is important to note the difference between the general conception of telemedicine and the narrower subset of telemedicine services which constitute Medicare “telehealth services” and are subject to more extensive restrictions.
  4. The full list of eligible originating sites includes: physician/practitioner office, critical access hospital (“CAH”), rural health clinic, Federally qualified health center, hospital, hospital-based or CAH-based renal dialysis center, skilled nursing facility, and community mental health center. Social Security Act, Section 1834(m)(4)(C)(ii) (42 U.S.C. § 1395m(m)(4)(C)(ii)).
  5. The full list of practitioners who may provide Medicare “telehealth services” includes: physicians, physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, certified nurse-midwives, clinical social workers, clinical psychologists, and registered dieticians or nutrition professionals. Social Security Act, Section 1834(m) (42 U.S.C. § 1395m(m)).
  6. CMS will require practitioners to bill a new modifier to indicate that the services provided are acute stroke telehealth services.
  7. 83 Fed. Reg. 59452 (Nov. 23, 2018), available at https://www.govinfo.gov/content/pkg/FR-2018-11-23/pdf/2018-24170.pdf.
  8. CMS determined it would not allow payment for a virtual check-in for a new patient. An established patient is one who has received professional services from the health care practitioner or another health care practitioner in the exact same specialty or subspecialty who belongs to the same group practice, within the past three years.
  9. CMS specifically noted a virtual check-in could not be billed if performed by clinical or billing staff only (and did not involve a physician or other health care practitioner who can bill for E/M services).
  10. Communications technology involving both audio and video components can be used as well, but the payment rate will not vary based on the additional video component.
  11. CMS specifically excluded evaluation of other types of patient-generated information, such as information from heart rate monitors or other devices, because these services could potentially be reported with CPT codes describing remote patient monitoring.
  12. BlueCross BlueShield of Alabama, Telemedicine Policy (last updated Nov. 2018).

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Do You Understand Due Diligence In Physician Practice Acquisitions?

Do You Understand Due Diligence In Physician Practice Acquisitions?

Often in the sale of a physician’s practice, the owner of the selling practice (the “Selling Practice”) may desire to structure the transaction as what some refer to as a “handshake deal” – using minimal documentation and providing minimal diligence for review. Although this may be advantageous for the Selling Practice and its owner (depending on the documentation), this is generally quite risky for the purchaser (the “Purchaser”) – as the Purchaser may purchase unwanted liabilities or pay for assets that the Selling Practice cannot transfer.

On the other hand, typically the Purchaser wants to structure the transaction as an asset purchase (an “asset deal”), as opposed to acquiring ownership of the Selling Practice entity (a “stock deal”), so that the Purchaser can pick and choose which assets to purchase and which liabilities to assume (as opposed to taking everything in a stock deal). Regardless of the transaction structure, it is critical for the Purchaser to perform due diligence.

Provided below are a few examples of due diligence items that should be reviewed by the Purchaser (in the context of an asset deal):

  1. Corporate / Organizational – Even in asset deals, a Selling Practice’s governing documents should be reviewed to confirm which owners must approve (and what actions are needed to approve) the transaction, and who can sign on behalf of the Selling Practice. It is important to confirm that the governing documents do not provide any third parties a prior right to purchase the Selling Practice or its assets.
  2. Liens / Litigation – UCC searches should be conducted to ensure no third party has a security interest, lien, or other encumbrance on the assets. Litigation searches should be conducted to ensure no assets are the subject of any pending litigation.
  3. Contracts – Each contract should be reviewed to determine which, if any, contracts the Purchaser wants to assume, to confirm the federal Stark Law, federal Anti-Kickback Statute, and related state statutes are not violated, and to determine which contracts can be assigned. If the Purchaser wants to assume a contract under which assignment is restricted, consent to assignment will need to be obtained prior to closing. The Selling Practice will be left with any contracts the Purchaser does not assume.
  4. Governmental / Regulatory Matters – It should be confirmed the Selling Practice has all required licenses, provider numbers, permits, registrations and accreditations to conduct its business. Depending on the circumstances and the applicable legal framework, the Purchaser may obtain new licenses, provider numbers, permits and registrations.
  5. Employees / Independent Contractors – All employee and confidentiality agreements, non-compete and non-solicitation provisions, disciplinary actions, immigration status, garnishment actions, paid time off and benefit policies should be reviewed.  The Purchaser will need to analyze which employees it wants to hire and whether it wants to honor any “paid time off” and, if so, how much time will be honored (typically resulting in a corresponding reduction to the purchase price).

The above items are only a few of many examples. Other critical items such as real estate ownership/leases must also be reviewed.

Anthony Romano is a partner with Burr & Forman LLP practicing in the firm’s Health Care Industry Group. Burr & Forman LLP is an official preferred partner with the Medical Association of the State of Alabama.

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A New Anti-Kickback Law Targets Clinical Lab Marketing Arrangements

A New Anti-Kickback Law Targets Clinical Lab Marketing Arrangements

Some very important and potentially game-changing legislation was recently passed. On Oct. 24, 2018, Congress enacted the Eliminating Kickbacks in Recovery Act of 2018 (or EKRA) – a statute that potentially eliminates legal protections (i.e., “safe harbors”) used by clinical laboratories to market their services. EKRA is part of the “Support for Patients and Communities Act,” comprehensive legislation designed to address the opioid crisis. The Act is clearly aimed at the use/abuse of opioids and the business practices of recovery centers.

EKRA has several potentially game-changing provisions. The first big development is EKRA’s definition of “clinical labs.” The definition of clinical labs used by EKRA is the extremely broad definition contained in 42 USC 263a. Rather than confining the definition of “clinical lab” to toxicology labs, which would satisfy the legislative purpose of the opioid crisis and business practices of recovery centers, the definition covers ALL clinical labs.  Consequently, the reach of the definition of “laboratory” is significantly broader than the purpose of the Support for Patients and Communities Act.

Another important provision of EKRA is the statute is an “all-payor” statute. This means it applies to services that are paid by commercial insurers in addition to services paid by Medicare and Medicaid. Unlike the Anti-Kickback Statute (“AKS”) that only applies to federal payors, EKRA applies to commercial payors as well. This is obviously more expansive than the AKS and may require many clinical labs to examine their business practices as they relate to commercial payors if the labs have carved out arrangements specifically to commercial payors.

Finally and most substantively, EKRA prohibits certain business practices that some clinical labs currently use. EKRA defines payment practices that violate the statute to include compensation to employees or contractors that is based on: the number of individuals referred to a particular recovery home, clinical treatment facility or laboratory; the number of tests or procedures performed; or the amount billed to or received from, in part or in whole, the health care benefit program from the individuals referred to a particular recovery home, clinical treatment facility or laboratory.

This change is important because under the AKS, clinical laboratories and other providers are permitted to pay bona fide employees compensation based on revenues generated from their marketing activities. The OIG has even indicated in several Advisory Opinions that providers could pay independently-contracted sales agents percentage-based compensation so long as the arrangement contained adequate safeguards to address so-called “suspect factors.” The prohibition of paying an employee based on some type of formula that takes into account the amount of business generated by the employee should cause laboratories to review their compensation practices because these compensation arrangements used by any clinical laboratory may no longer be protected.

While there is a possibility the definition of clinical lab will be interpreted to apply only to toxicology labs, it is far from certain. Consequently, any/every clinical laboratory needs to be aware of the new legislation and examine its business practices immediately.

Jim Hoover is a partner at Burr & Forman LLP practicing in the Health Care Industry Group. Burr & Forman LLP is an official partner of the Medical Association.

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