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EKRA Affects Marketing Relationships with Labs and Addiction Treatment Businesses

January 15th, 2019 by

By: Jeff Cohen

For those following the federal legislative developments on the issue of compensating marketing people who market the services of labs and addiction treatment facilities there is a new update to take note of. Congress passed on October 24, 2018 the “Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act.”  Yes, that’s a real name!  Part of the law is the Eliminating Kickbacks in Recovery Act of 2018 (“EKRA”).

The core aspect of EKRA has to do with how to properly compensate marketing personnel who market the services of labs, addiction treatment facilities and recovery homes.   For those of you already familiar with existing federal law pertaining to compensation arrangements (e.g. the bona fide employee exception (the “BFE”) and the personal services arrangement and management contract safe harbor (the “PSA”)), the EKRA provisions will look familiar!  Key aspects of this law (which has to be read together with similar existing laws) include— read more

Healthcare Transactions Today: Selling a Medical Practice to Private Equity Buyers

November 12th, 2018 by

private equityBy: Jeff Cohen

Private money (e.g. private equity) is in full swing purchasing medical practices with large profit margins (e.g. dermatology). This is NOT the same thing as when physician practice management companies (PPMCs) bought practices the 90s.  Back then, the stimulus for the seller was (a) uncertainty re practice profits in the future, and (b) the stock price.  Selling practices got some or all of the purchase price in stock, with the hopes the purchasing company stock would far exceed the multiplier applied to practice “earnings” (the “multiple”).  Buyers promised to stabilize and even enhance revenues with better management and better payer contracting.  If the optimism of the acquiring company and selling doctors was on target, everyone won because the large stock price made money for both the buyer and seller. The private equity “play” today is a little different.

Today’s sellers are approaching the private equity opportunity the same way they did with PPMCs, except for the stock focus since most private equity purchases don’t involve selling doctors obtaining stock.  Sellers hope their current practice earnings will equate to a large “purchase price.”  And they hope the buyer have better front and back office management that will result in more stable and even enhanced earnings.  And for this, the private equity buyer takes a “management fee,” which they typically promise (though not in writing) to offset with enhanced practice earnings.     read more

State Court Ruling on Patient Brokering Act Threatens Healthcare Facilities and Providers

July 25th, 2018 by

patient brokering actA recent ruling by a state trial court handling the Palm Beach County Sober Home Task Force prosecutions against providers of addiction treatment and sober home services is creating lots of confusion and alarm around the state and could have very far reaching consequences for the entire healthcare industry well beyond addiction treatment.

The issue presented by the prosecution focuses on whether a person charged with violating the state’s Patient Brokering Act (PBA) can be found guilty even if he/she didn’t know what he was doing was unlawful. The PBA broadly prohibits paying someone for patient referrals, very much like the federal Anti-Kickback statute.  If allowed, the client would have gotten legal advice, paid for it, followed it, and still not be able to show a judge or jury that, despite all their best efforts, they simply followed the law as instructed.

Can a healthcare facility or provider be guilty of violating a criminal law [the PBA] if they’d gotten legal advice and followed it?  Traditionally, the answer would be a clear “no.”  The argument against the State’s position would be something like “How can someone intend to violate a criminal law if they got legal advice regarding how to comply with it and then followed that advice?”  The argument of the state might look something like “We don’t even think the judge or jury ought to be able to hear that the person got legal advice and followed it.”  The court punted the issue to the appellate court. read more

Real Medical Malpractice Defense

November 2nd, 2017 by

malpractice defenseBy: Jeff Cohen

Florida has long been a hot spot for medical malpractice lawsuits.  Professionals debate the causes frequently, but the fact remains:  Florida is a place where medicine has to be practiced defensively.  And it’s likely to get worse because the Florida Supreme Court recently tossed out the state cap on non-economic damages.

Since the cap was found to be unconstitutional, the risk of expensive med mal suits is expected to rise.  And the secondary effect will almost certainly be increased med mal insurance premiums.  If the upcoming premium rise is like any from the past (this is a cyclic phenomenon), it’s a sure thing that more physicians will decide to self-insure (not carry professional liability insurance). The State of Florida doesn’t require physicians to carry professional liability insurance provided that they have adequate financial backing or provide necessary patient notices         read more

Resurgence of Medical Practice Acquisitions in Private Equity

October 5th, 2017 by

medical practice saleBy: Jeff Cohen

Private money (e.g. private equity) is back chasing those selling medical practices and medical business acquisitions.  This time around it is very different from similar activity in the 90s.  Back then, the movement was public companies aggregating gross income dollars, which for a time drove stock prices.  Today’s private money buyers are looking to maximize profitability through achieving efficiency and aggregating large groups for leverage and the development of new income streams.  Though stock (in the form of warrants and options or stock itself) if often on the table, it doesn’t have to be.  Buyers are doing all cash deals, albeit to some degree on an earnings basis.  If you want the full price, you have to remain involved and do what you can to maintain revenues and perhaps even drive them up.

Physicians especially have to know what they’re dealing with and then have at least a basic understanding of the issues that will drive these deals.  To begin with, “private equity” simply means private investors (typically a group that pools their capital) that buy a portion or all of a company.  Their investments are usually much larger than venture capital firm deals.  They are not publicly traded entities.  What do they want?  To invest money in mature businesses, grow a company’s profitability and then “flip” their ownership to another buyer, typically in three to five years form their launch date.  In contrast, venture capital firms usually invest in start-ups, buy 100% of the company and require control. read more

Clinical Research & Healthcare Regulatory Compliance

August 17th, 2017 by

clinical research organizationBy: Jeff Cohen

Doctors often consider the idea of clinical research to be an easy “add on” to their practices.  The usual idea is “I already have the patients.  This’ll be easy.”  But that’s not the case when you start to look at the healthcare regulatory compliance issues!

Pharmaceutical companies (“Sponsors”) are often looking for resources for clinical research.  They usually turn to clinical research organizations (CROs) to find research centers (Sites) and to manage some of the healthcare regulatory compliance issues in a way that creates enough distance between the Sponsor and the Site in hopes that the metrics from the patients enrolled in the study will provide clarity re the efficacy of a tested drug.

Medical practices that think it’ll be easy to become a Site will be very surprised by some of the key challenges, which include– read more

Starting Healthcare Business: What to Consider

August 1st, 2017 by

By: Jeff Cohen

As a healthcare business lawyer, I’ve seen nearly everything entrepreneurs think might be a good idea.  They usually come to me when starting a healthcare business with questions like:

  1. Do you like an LLC better than an Inc., and if so why;
  2. Does the Stark Law (or the Anti-Kickback Statute) allow us to do this?;
  3. Is it ok to allocate ownership and profit distribution differently?;
  4. Will insurers pay for this?; and
  5. WWMT?  (What Would Medicare Think?).

These are great questions.  And they’re off base.  In fact, they’re not only off base. They’re also out of order.  Here’s one for you– read more

Impaired Practitioner Program: Greater Treatment Access for Impaired Physicians

July 5th, 2017 by

impaired practitioner programBy: Jeff Cohen

A new law passed by the Florida Legislature shaves off some of the sharp edges of Florida law that applies to physicians who are impaired by substance abuse or mental illness.  The hub of treatment referenced in the law is the Impaired Practitioner Program (IPP).  Over the years, the IPP (a quasi-governmental entity) has come under fire for being too aggressive in how it deals with impaired physicians, by acting more like law enforcement than a healthcare provider.  Allegations in the past include physicians feeling “hauled off” to treatment before the demonstrated need was clear and being directed to providers that were expensive or inconvenient with reasonable alternatives exist.

The new law rounds out the IPP operations in creating additional accountability through the appointment by the Department of Health (DOH) of one or more consultants.  It also:

  1. allows certain providers to report an impaired practitioner to a consultant instead of the DOH.  Some in the program felt they were being leveraged into cooperating when they felt it was counter-indicated.  This measure might help balance the issues by interposing an independent consultant that is not under the IPP;
  2. prevents the consultant from reporting to DOH a practitioner who is self referring for treatment, but keeps intact features of accountability to help ensure the practitioner completes treatment;
  3. requires the consultant to copy the patient and any legal representative on any information release; and
  4. protects the consultant by extending sovereign immunity to him/her.

Healthcare professionals interacting with the IPP need to know their rights and options.  The new law helps facilitate that.

Addiction Treatment Law Changes Management Relationships

July 3rd, 2017 by

healthcare regulatory complianceBy: Jeff Cohen

Passage of the new and comprehensive Florida addiction treatment industry legislation (CS/CS/HB 807) will send addiction treatment facility management relationships back to the drawing board.  Prior to the new law, some DCF licensed facilities were managed by management companies, some of which were owned by people who either did not qualify to be on the DCF license or who did not want to be visible on the license.

The new addiction treatment law requires all such arrangements to be reconsidered.  Here’s why:  There are several sections in the new law where management is the subject of intensive focus.   Newly created 397.410 requires DCF to establish minimum licensure requirements for each service component limited in part to the number and qualifications of all personnel, including management.  Newly created 397.415(1)(d)1 authorizes DCF to deny, suspend or revoke licensure of any license based on a “false representation of a material fact in the licensure application or omission of any material fact from the application.”  Finally, 397.415 creates an entire category of potentially punishing fines and, in some cases, exposure to criminal prosecution.

The new law will create heavy regulatory suspicion for any non-transparent management relationship, even a third party relationship.  Worse, it’s conceivable that any suspicious or arguably noncompliant relationship could form the basis for recoupment by insurers.  When the state Health Care Clinic Law was created some years ago, payers took advantage of situations where facilities that required a license but didn’t have one.  Under a threat of insurance fraud (e.g. an unlicensed healthcare facility receiving compensation for services), some payers were able to extract huge recoupments.

Any DCF licensed facility with a third party management relationship needs to reconsider it in light of the new addiction treatment law.  Moreover, all interested parties should pay close attention to (and monitor and participate in) the new law’s rulemaking process which began at the end of June.

CLICK HERE for: SUBSTANCE ABUSE MARKETING SERVICE PROVIDER LICENSE APPLICATION

Addiction Treatment Industry Becomes Familiar with Immunity

June 14th, 2017 by

I suppose it is tempting, if the only tool you have is a hammer,

to treat everything as if it were a nail

–Abraham Maslow, “Toward a Psychology of Being”

By: Jeff Cohen & Randy Goldberg

The dominant forces of change in the addiction treatment industry are law enforcement and insurance companies.  The focus and impact of insurers is currently focused on the argument that what treatment providers do isn’t medically necessary.  This rationale is undeniably misguided  and is the biggest threat to the survival of many health care providers, including those at the forefront of adapting to the demands by implementing meaningful legal regulatory compliance.  This focus of this article is a parallel intervening factor in the addiction treatment industry:  that of law enforcement, most notably in Palm Beach County, Florida.  Consequently, providers in the addiction treatment space and their employees are becoming increasingly familiar with the concept of immunity as they are deal with law enforcement on a routine basis.

We assume there are bad-actors in the addiction treatment space.  There are bad-actors in every industry and profession.  No one can appreciate that more than this article’s co-author, Randy Goldberg.  He is a retired Florida law enforcement professional, who spent a significant portion of his career investigating law enforcement officers for alleged criminal misconduct, having been deeply involved in the arrest and successful prosecution of law enforcement officers who abused their authority and strayed to the dark-side of the law.  read more