Healthcare Marketing: It Ain’t What It Used to Be

By: Jeff Cohen

When it comes to healthcare marketing there is no shortage of people who claim to be able to generate business for healthcare professionals and businesses.  The business of healthcare is like none other in its abhorrence of anything that even smells like payment for patient referrals, so professionals and businesses alike have to be extremely cautious and well advised in crafting marketing and related business-enhancing relationships.

The key here is to realize that, while the laws haven’t changed, what regulators are doing with them has!  The environment of healthcare marketing has never been more treacherous than it is today.  So what’s changed?  How about:

  1. Commission based marketing and sales involving federal or state payers, even those that arguably comply with the personal services arrangement and management contract safe harbor, are detested by federal regulators;
  2. The regulators will look to pierce any enterprise, including those consisting of multiple tax ID entities, in hopes of making the case that commercial based marketing payments were in exchange for even one drop of federal/state payer money;
  3. Both health insurers and large providers (e.g. labs, pharmacies) work hand in hand with federal regulators to pursue suspicious activity, the result of which is to support the large provider; and
  4. Targets of enforcement activity who have obtained good legal advice often pay just to put an end to the enforcement because there’s a risk of losing and “winning” can feel like losing when one considers the enormous defense costs.

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Physician Compensation Targeted by the Department of Justice

healthcare business change in ownershipBy: Jeff Cohen

The DOJ reported on August 5th a settlement with a South Carolina hospital concerning physician compensation.  Though certainly not the first or the biggest case of its kind (e.g. note the Halifax Hospital and North Broward Hospital District cases, which generated settlements of over $100M and $60M respectively), it’s attention grabbing nonetheless.

The SC case was brought by a whistleblower, a neurologist formerly employed by the hospital.  The doctor alleged that the seven year employment agreements violated Stark and the Anti Kickback Statute because the compensation was more than what was legally permissible and was also based in part on ancillary services ordered by the employed doctors.  Seasoned readers will understand that the concept of “fair market value” (FMV) is at the heart of regulatory compliance and also that compensation surveys of organizations like the Medical Group Management Association (MGMA) are important guides in term of what is/is not FMV.  In the SC hospital case, compensation met or exceeded the top 10% of similarly qualified physicians in the area, which is very interestingly noted by the DOJ (because some of the comp levels were still within the MGMA surveys).  In other words, the trend here is for the Feds to push back against comp levels on the high end of the FMV spectrum.Continue reading

Healthcare Change of Ownership in Business

healthcare change in ownershipBy: Jacqueline Bain

The amount of regulation imposed upon those entering into the healthcare business arena can be staggering even for a highly experienced businessman. In the business world, buying and selling businesses is often accompanied by lawyers, documents and consultants.  In the healthcare business world, buying into and selling healthcare businesses, or any portion of health care businesses, requires all of that support and much more.

Diving into a healthcare business requires many considerations that are unique to other areas of business. First, appropriate licensing bodies must be notified and/or approve any such purchase or sale. For instance, in the State of Florida:

  • the Department of Children and Families must be notified every time a new owner becomes a part of a licensed substance abuse treatment center and prior to taking ownership, must either submit to a level 2 background screen or provide proof of compliance with the level 2 background screening requirements.
  • the Agency for Health Care Administration must be notified sixty days prior to any change in ownership and will run a background check on new owners.
  • the Agency for Health Care Administration must be notified every time a new owner is added to an entity holding a Health Care Clinic License. Additionally, AHCA must approve any owner of more than 5% of the Health Care Clinic prior to such person becoming an owner.

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Act or React? Rehab Industry Transformation

florida healthcare lawyerBy: Jeff Cohen

By now, it’s not news in Florida that drug and alcohol recovery providers are staring devastation in the face as payers continue to mount non-payment offensives.  As payers one by one march on the industry and starve providers of cash flow for operations, many providers can be expected to shut down.  To make matters worse, as the popular media continues to act as a conduit for gross misrepresentations of industry providers, the public’s affection for the industry can’t be expected to improve.  This makes the future look especially bleak for the industry, and yet the silence and stillness of providers is baffling.

Given the breadth of the payer problem (many simply aren’t paying providers), why are we not seeing a slew of lawsuits filed by providers?  In nearly 30 years as a Florida healthcare lawyer, I’ve never seen a healthcare sector so hammered by insurance companies.  And I’ve never seen it unanswered in court.Continue reading

Tuomey Court Has A Lot to Say

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By: Jeff Cohen

The Tuomey decision, U.S. Court of Appeals case out of South Carolina, contains important lessons for physicians, especially as it relates to (1) compensation arrangements with hospitals, (2) proper compensation arising in connection with the provision of designated health services (“DHS”), and (3) the advice of counsel defense.

The concept of DHS arises largely in the context of the federal Stark Law, which in pertinent part (1) forbids physicians from owning and referring to providers of DHS (e.g. PT, rehab, diagnostic imaging, home health, DME, clinical laboratory, inpatient and outpatient hospital services), (2) describes how medical practices can provide DHS to their own patients, and (3) forbids even physicians within a practice from allocating DHS profits on the basis of who ordered or referred to them.

The Tuomey case involves a whistleblower action filed against a not for profit hospital system.  The original jury in that case decided that the system didn’t violate the False Claims Act, but the appellate court set aside the verdict using facts and testimony that had be excluded from the jury trial, Tuomey Healthcare System was found to have knowingly submitted over 21,000 false claims to Medicare and the government was awarded over $237 Million (most of it in the form of punitive damages).  The government (which often advances the plaintiff’s—“relator” case in whistleblower cases) filed a motion for a new trial, which the trial court granted and the appellate court affirmed.

The case involves the following:Continue reading

Governing Boards in Healthcare Organizations – Making Compliance Your Priority

compliance plan

compliance manualBy: Jackie Bain

Does your healthcare entity have a governing Board? How involved is that Board in overseeing your business? Would your Board members be able to respond to questions about your business’ compliance-related activities? Recently, the Office of the Inspector General (“OIG”), in conjunction with a host of non-profit healthcare associations, released guidance on achieving compliance for healthcare governing boards. The guidance is not based on abstract principals of compliance, instead it points to applicable federal law, OIG guidance, case law, and sentencing guidelines.

Each and every healthcare organization, whether or not it accepts reimbursement from government payors, must have in place regulatory compliance measures designed to protect the population it serves, and the persons paying for and providing those services. All levels of a healthcare organization must be cognizant of their roles in the organization’s continuing commitment to compliance. Even Board members, who often do not experience the inner-workings of the entities they represent, have an obligation and duty to the organization to act in a manner that stressed compliance. Applicable federal and state laws, how they apply to an organization, and how the organization reacts to its obligations imposed by those laws, must be of paramount importance to a governing Board.

The OIG compliance guidance for healthcare Boards tracks 4 areas over which boards should have specific oversight:Continue reading

New OIG Advisory Opinion Frowns on Proposed Lab/Physician Arrangement

OIG crestMarch 25, 2015 Advisory Opinion No. 15-04 addresses a proposed arrangement involving a clinical/anatomic lab’s desire to position itself as the single lab recommended by practices.

The proposal arises in the context of the OIG Advisory Opinion process, which allows the OIG to opine on its view of how the federal anti-kickback statute might view a proposed arrangement.  Though Advisory Opinions are not “law,” they do provide good insight into prosecutorial intent.

Facts Presented

The clinical/anatomic lab (“Lab”) wanted to have agreements with physician practices to provide all their lab services.  To deal with the fact that some commercial insurers have exclusive arrangements with labs,  the Lab proposed that if a practice patient’s insurer required the patient to use another lab, the Lab would waive all fees for the affected practice patients and would not bill the patient, the medical practice or the patient.  The Lab would provide its services to these “exclusive patients” for free, while billing all other patients (and/or their insurers, including governmental payers) its fee scheduled or contracted rates.  The proposed arrangement would allegedly simplify things for the practices and keep lab results uniform.  A practice patient would be required to use the Lab.  The Lab’s services would simply be offered by the practices to their patients.  The Lab stated that the provision of free services to certain practice patients would not provide any financial benefit to the practices, although the lab would provide the practice a limited-use interface.  Samples would not be drawn in physician offices.Continue reading

Breaking Down Legal Buzzwords: Fair Market Value & Commercial Reasonableness

book-stacks-colorful.jpgBy: Jackie Bain

Federal fraud and abuse laws often require that arrangements between health care providers are “fair market value” and “commercially reasonable.” And while these terms look like legalese and are easy to overlook, in fact, they are important. For example, the Federal Stark law requires strict compliance with its terms. A physician may enter into a prohibited arrangement with the intention that it falls within an exception to the law. If, however, the arrangement is not fair market value, the physician’s arrangement would violate the law, subject the physician to fines and risk the physician’s ability to participate in Medicare. Continue reading

Vascular Access Centers: A Complex Picture

bcbs lawsuitBy: Jeff Cohen

Vascular access centers are a common ancillary service offered by a variety of physicians, mostly nephrologists.  They provide a unique setting for patients requiring interventional vascular services in connection with things like oncology, dialysis, nutritional delivery, wound healing, pain management and more.  Unlike many surgical services, however, they are typically not provided via a surgery center, but rather as part of (and inside) the physician’s practices.Continue reading

When is Marketing An Illegal Kickback?

kickbackHealthcare professionals and businesses are routinely barraged with people who claim to be able to generate business for them.  The business of healthcare is like none other in its abhorrence of anything that even smells like payment for patient referrals, so professionals and businesses alike have to be extremely cautious and well advised in crafting marketing and related business-enhancing relationships.

The federal Anti Kickback Statute (“AKS”) is a criminal law that arises in the context of individuals and entities that pay or receive anything of value in exchange for referring a patient whose care is compensated in any way by a state or federal healthcare program.  Violations of the statute are punishable by a maximum fine of $25,000 and/or imprisonment up to five years.  Federal courts have applied the statute to any arrangement where even one purpose of the arrangement was to obtain money for the referral of services or an attempt to induce additional referrals. Its exceptions (“Safe Harbors”) include permissible arrangements for independent contractors and employees, both of which are elusive because of the common requirement that the arrangement not vary based on the value or volume of business between the parties.  The “value or volume” aspect of the regulations flies in the face of percentage based compensation arrangements (which seem to be the rule in marketing relationships).Continue reading