Archive for Legal Watch

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regardless of appeal status), experienced a payment suspension, been excluded, or had its billing privileges denied or rescinded (regardless of the basis).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.

Posted in: Legal Watch, Medicaid, Medicare, Members

Leave a Comment (0) →

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.

Posted in: Legal Watch

Leave a Comment (0) →

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.

Posted in: Legal Watch, Members

Leave a Comment (0) →

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.

Posted in: Legal Watch

Leave a Comment (0) →

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).

Posted in: Legal Watch

Leave a Comment (0) →

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.

Posted in: Legal Watch

Leave a Comment (0) →

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.

Posted in: Legal Watch

Leave a Comment (0) →

Is Your Corporate Compliance Plan Up-to-Date?

Is Your Corporate Compliance Plan Up-to-Date?

As 2019 kicks off, it is wise to review various aspects of your practice to ensure everything is up to date and continues to operate in compliance with applicable laws. One area of focus for such review is your corporate compliance plan.

Compliance plans are written policies and procedures, adopted by a health care provider, to assist in its day-to-day compliance with applicable laws and business policies. Health care providers who participate in a federal health care program are required to implement a corporate compliance plan.

A compliance plan that is drafted without further review, revision, or implementation carries the same effect as having no compliance plan at all. Thus, to be effective and beneficial, all compliance plans should be periodically reviewed and revised to address changes in the law, operational changes, and past experiences.

As you revise your corporate compliance plan consider the following:

  • The Office of Inspector General (“OIG”) has published guidance on effective compliance plans for many types of healthcare providers, including physician practices. While the OIG allows flexibility in developing a compliance plan, this guidance provides a good insight into the various areas and topics that might be included in an effective compliance plan. The OIG compliance plan guidance can be accessed at https://oig.hhs.gov/compliance/compliance-guidance/index.asp.
  • A main component of a corporate compliance plan is the written policies and procedures that set forth the day-to-day compliance expectations of the provider. Among other things, the policies should include a review of the applicable laws and regulations (g., Stark, Anti-Kickback, False Claims Act, Civil Monetary Penalties, etc.), what is expected in terms of complying with such laws, the consequences of noncompliance, and ways to report non-compliance.
  • Compliance plans should address the risks associated with a particular practice. Risk areas common to physician practices include coding and billing, medically necessary services, proper documentation, record retention, fraud and abuse concerns, and conflicts of interest.
  • Compliance plans should address monitoring and auditing processes that detect compliance violations and ways to respond to such violations. Among other things, there should be a mechanism for reporting compliance plan violations, investigating such reports, correcting compliance plan violations, and imposing disciplinary action.
  • An effective compliance plan should include a training component, pursuant to which employees and contractors are periodically educated and trained on the various elements of the plan. Training should occur both when an employee or contractor is hired and periodically thereafter (g., every year or every six months). Many providers have found monthly “reminders”, whether at a staff meeting or via e-mail distribution, to be effective.
  • The corporate compliance plan should be made available to all employees and contractors to which it applies. If your compliance plan is lengthy, you may want to consider also having a summary available that hits the main points of the plan.
  • Any revisions you make to the compliance plan as a result of your review should be formally adopted by the practice’s Board of Directors or similar Governing Body. Employees and contractors should be promptly updated on any revisions.

Kelli Fleming practices with Burr & Forman LLP and works exclusively within the firms Health Care Industry Group. Burr & Forman LLP is a partner with the Medical Association. 

Posted in: Legal Watch

Leave a Comment (0) →

Can I Get a Witness? Do You Use Chaperones in the Exam Room?

Can I Get a Witness? Do You Use Chaperones in the Exam Room?

In 2018, the world of sports was rocked with the revelation that Larry Nassar, a physician for USA Gymnastics, used medical examinations as a pretext to molest nearly three hundred female gymnasts over a twenty-year period. Many of these young athletes were abused while their parents were in the examination room. News coverage of the scandal caused many physicians to reexamine the professional safeguards that exist to protect a patient during one of his or her most intimate and vulnerable experiences, the physical examination.

In fact, the medical community addressed this concern long before the Larry Nassar scandal brought the issue into the public consciousness. The American Medical Association promotes the use of chaperones to provide a comfortable and considerate atmosphere for the patient and physician to respect a patient’s dignity.  Am. Med. Ass’n Code of Med. Ethics, Op. 1.2.4 (1998). While Alabama has yet to act legislatively to require the use of chaperones during a physical examination, many states have. For instance, Georgia’s Composite Medical Board defines “unprofessional conduct” to include “conducting a physical examination of the breast and/or genitalia of a patient of the opposite sex without a chaperone present.” Ga. Comp. R. & Regs. 360-3-.02(12). While adopting a chaperone policy in your practice is not yet obligatory in Alabama, there are many reasons why doing so is in the physician’s best interest.

First, the presence of a chaperone during a sensitive examination can help put the patient at ease. Patients who have had very few interactions with a physician may not yet fully trust the physician. Offering the patient a chaperone may ease any patient anxiety arising from unfamiliarity with the physician and helps demonstrate the physician’s respect for cultural or personal sensitivities.

Second, a chaperone may serve as a deterrent to improper patient behavior. The presence of a disinterested third party can help prevent false claims of sexual assault by the patient. In some cases, boundary violations may be initiated by patients. For example, patients may initiate boundary violations in order to gain an advantage over the physician. The manipulative patient may use the threat of a medical board complaint or a lawsuit to demand controlled substances or other special treatment. Thus, having a chaperone present can help protect the physician and other medical staff by discouraging abusive patient behavior.

Third, a chaperone serves as a witness to events occurring during the patient interaction. As a defendant in a malpractice suit, the physician will benefit from an additional witness to the physician-patient exchange. The chaperone can serve to corroborate the physician’s testimony, rendering the physician’s version of events more believable to a jury.

Before undertaking any sensitive examination or procedure, the physician should explain the specific components of the physical exam, and offer the patient the option of having a trained chaperone of the gender of the patient’s choice present. Document clearly in the patient’s chart whether the patient consented to the examination, and whether he or she elected to have a chaperone present. Write a note in the chart identifying all individuals present during the exam. Ideally, a practice should train at least one male and one female staff member to serve as a chaperone; however, patients often decline a chaperone when the physician and patient are of the same gender. As the Nassar scandal revealed, lay chaperones such as family members are not trained to observe the examination in a way that best protects the physician and the patient. Additionally, it may be awkward and uncomfortable for a patient to have a family member present during a physical exam. Thus, the presence of a trained, uninterested observer is the most effective means of ensuring a safe and respectful physical examination.

Occasionally, it will not be possible to accommodate a patient’s desire to have a chaperone present. If your practice does not have a chaperone available on the date of the examination, consider rescheduling the patient’s routine physical examination for a date when a chaperone will be available. If your practice lacks the capability to accommodate the patient’s chaperone request, discuss transferring the patient’s care to a physician better suited to make those accommodations.

Physician boundary violations portrayed in the media are increasing calls for mandatory use of chaperones. Rather than viewing this procedure as an unnecessary regulatory response to a few bad actors, physicians should embrace the protections provided by a chaperone policy. An effectively implemented chaperone policy helps physicians to become more responsive to patients’ sensitivities, ultimately strengthening the physician-patient relationship.

Article by William T. Ashley, III, JD, Risk Resource Advisor, ProAssurance. ProAssurance is an official partner of the Medical Association.

Posted in: Legal Watch

Leave a Comment (0) →

Two-Minute Primer on Electronic Prescription of Controlled Substances

Two-Minute Primer on Electronic Prescription of Controlled Substances

The contents of a recent Drug Enforcement Administration policy statement on electronic prescriptions for controlled substances sound simple enough—you can use a mobile device for EPCS if it meets the latest Federal Information Processing Standards security requirements (FIPS 140-2), and you can use it as a “hard token” if it is separate from the device used to create the EPCS. But what does that mean? Are there any more limitations?

The Controlled Substances Act regulates drugs and other substances that have a potential for abuse and psychological and physical dependence, i.e., “controlled substances.” Controlled substances are organized into five schedules. Schedule I drugs have a high risk of abuse and no current accepted medical uses in the United States. Drugs in Schedules II through IV have currently accepted medical uses, but they also have a high potential for abuse. Drugs in Schedule II can only be issued pursuant to a written prescription, whereas drugs in Schedules III and IV may be issued pursuant to written or oral prescriptions.[1] The written prescription may be an electronic one, if it satisfies certain requirements.

An EPCS may be created with input and data entry from the DEA registrant (the prescribing practitioner) or his or her agent, provided that only the registrant can actually sign the prescription using the EPCS application.[2] To sign the application, however, the registrant has to complete a two-factor authentication process while at the same time viewing certain information about the EPCS (date of issuance; full name of patient; drug name; dosage strength and form, quantity prescribed, and directions for use; number of refills authorized; earliest date on which a pharmacy may fill each prescription; name, address and DEA number of the registrant)[3] and a statement of acknowledgement[4] regarding the EPCS, as prescribed by regulation. The provider’s completion of the two-factor authentication process in the EPCS application is the equivalent of signing a hard-copy paper prescription.[5]

The two-factor authentication process includes the use of two of the following authentication factors: (1) something only the practitioner knows (e.g., a password or response to a challenge question); (2) biometric data (e.g., a fingerprint or iris scan); or (3) a device, known as a hard token, which is separate from the computer or other device used to access the EPCS application (i.e., the hard token could be your phone, as long as you are not electronically prescribing the EPCS through an EPCS application on your phone).[6] The hard token is subject to FIPS 140-2 Security Level 1 requirements,[7] and the system used to validate biometric data must comply with other regulatory requirements,[8] all of which are beyond the scope of this article and beyond this author’s expertise.[9] Whichever factors are used in the two-factor authentication process, the prescribing practitioner/registrant must not share the authentication factors with any other person or allow it to be used to electronically sign an EPCS.[10] Additionally, if a practitioner/registrant loses his or her hard token (if applicable), he must notify the appropriate access control managers for the EPCS application (either in his/her individual practice or through an institutional provider such as a hospital) within one business day of the discovery, or he or she may be held responsible for any controlled substances written using his or her two-factor authentication credential.[11]

In addition to the requirements above and the responsibilities the practitioner normally has when issuing paper or oral prescriptions for controlled substances, there are more practitioner responsibilities when it comes to EPCS.[12] To the extent an EPCS is not successfully delivered, the practitioner must ensure that any paper or oral prescription issued as a replacement for a failed EPCS indicates that the prescription was originally transmitted electronically to a particular pharmacy and that the transmission failed. The practitioner must also exercise certain reasonable precautions to ensure that the EPCS application complies with all applicable regulatory requirements, especially if the practitioner is on notice that the EPCS system may not meet all the requirements.[13]

An exhaustive discussion of all the applicable requirements for EPCS is beyond the scope of this article. However, practitioners should be thinking about the vendors they are using for their EPCS system, the system’s capabilities and process control limitations, and the information security or physical safeguards they must maintain to ensure their two-factor authentication credentials are secure. In addition, it should be noted that EPCS are subject to other laws, such as the Ryan Haight Online Pharmacy Consumer Protection Act of 2008, which generally requires a practitioner to conduct at least one in-person medical examination for a patient if they are prescribing controlled substances for the patient.[14]

From a process standpoint, EPCS may be easier to work with, but it implicates substantial compliance concerns with a variety of laws. Practitioners should carefully consider the volume of legal and regulatory requirements applicable to EPCS and ensure their operations conform to all applicable requirements.

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

 

Resources

[1] Drugs in Schedule V may only be distributed or dispensed for medical purposes, but are not grouped in with either Schedule II or Schedules III and IV for purposes of the prescription requirements. See 31 U.S.C. § 829.

[2] 21 C.F.R. § 1311.135.

[3] 21 C.F.R. § 1311.120(b)(9).

[4] “By completing the two-factor authentication protocol at this time, you are legally signing the prescription(s) and authorizing the transmission of the above information to the pharmacy for dispensing. The two-factor authentication protocol may only be completed by the practitioner whose name and DEA registration number appear above.” 21 C.F.R. § 1311.140(a)(3).

[5] 21 C.F.R. § 1311.140(a)(5).

[6] 21 C.F.R. § 1311.115.

[7] Incorporated by reference in 21 C.F.R. § 1311.08.

[8] See 21 C.F.R. § 1311.116.

[9] This author suggests consulting with information technology experts in order to verify applications meet regulatory requirements, or at least include in agreements with vendors that the service they are providing complies with the applicable regulatory requirements.

[10] 21 C.F.R. § 1311.102(a).

[11] 21 C.F.R. § 1311.102(b).

[12] See 21 C.F.R. § 1311.102.

[13] 21 C.F.R. § 1311.102.

[14] See 21 U.S.C. § 829(e).

Posted in: Legal Watch

Leave a Comment (0) →
Page 1 of 4 1234