FMVs are at the heart of healthcare regulatory compliance when money or anything of value changes hands in a healthcare business setting. Why? Two reasons:
Healthcare laws (Stark, the Anti Kickback Statute and the Patient Brokering Act) all target money changing hands in the healthcare business space; and
There are clear exemptions and exceptions that have as an essential ingredient that the compensation (or pricing) is consistent with “fair market value.”
How it Goes—A Six Part Process
Locking down an externally performed FMV (part of the “gold standard” in regulatory compliance) is a process. Here’s what it should look like:
Step 1. The healthcare business person or his/her advisors (often accountants) find someone who specializes in performing FMVs for the specific matter (e.g. compensation, price of a business to be acquired);
Step 2. The LAWYER for the healthcare business is immediately involved in the process BEFORE the FMV firm is engaged;
Step 3. The LAWYER engages the FMV firm on behalf of the healthcare business client;
Step 4. The parties (including the lawyer) get on the phone or in a meeting with the “FMV guy” and has a very extensive conversation re the project;
Step 5. Once the FMV process done, a DRAFT FMV study is prepared and discussed interactively with the healthcare business and the lawyer;
Step 6. Once finalized, an execution copy is prepared and provided to the lawyer.
Those in the practice of dentistry today have many options when it comes to building a practice. Should you work for an employer? Build your own? What about buy a practice? More and more, we see young dentists wishing to avoid private equity and buying out a retiring dentist’s practice. The amount of regulation imposed upon those entering into the dental practice arena can be staggering. Further, buying a dental practice requires many considerations that are unique to other areas of business. Understanding the purchase process will help protect your investment and could keep you from experiencing any unnecessary liability.
First, organize a team of specialized dental experts, such as a dental CPA, Professional Practice Lender, dental law attorney, and a practice consultant. Having a team of professionals guide you through all aspects of the deal will keep you on track, avoid potential issues, accomplish specific task items, and properly comply with any legal considerations.
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—
Regulatory compliance is a mandatory investment for any healthcare business owner looking to stay out of serious and personal legal peril, let alone one hoping to keep their company viable.
Yet there is seemingly an onslaught of providers that blatantly run afoul of many of these regulations, knowingly or not, or those that believe they may have found a loophole.
Concerning the latter, there is an important mantra that such DME and pharmacy providers should remember and live by: “[W]hat a provider cannot do directly, it cannot do indirectly through an intermediary.”
Marketing for DME – What exactly am I talking about?
DME providers enrolled with CMS (should) know they cannot solicit or ‘cold call’ Medicare Part B beneficiaries, per the Federal Anti-Solicitation Statute, and that they cannot offer anything of value to a potential patient that could induce them to utilize them as a provider, in accordance with the Beneficiary Inducement Statute.
The Office of Inspector General (OIG) announced the launch of a new tool on its website titled the “Fraud Risk Indicator”. The OIG has stated that the purpose for the tool is to provide guidance on how it has evaluated risk in settling False Claims Act (FCA) cases and to publicize information about where FCA defendants fall on the OIG’s risk spectrum. This tool can benefit patients, healthcare industry professionals and other individuals who may find this information relevant. This tool will also benefit the public with information about providers charged under the FCA that are at high risk for committing healthcare fraud. The Indicator shows the Risk Spectrum from Highest Risk to Lower Risk.
In giving consideration to whether healthcare regulations apply to a proposed course of conduct it’s absolutely vital for a pharmacy to know its payor! This is especially so in the context of patient marketing and the various regulatory prohibitions on paying for healthcare referrals. Unfortunately, some pharmacy owners remain a bit mixed up about who the ultimate payor is for the medications they dispense, and, depending on that pharmacy’s billing operations, such mistakes can have devastating consequences.
A large part of this confusion might be attributed to the fact that in most instances, a pharmacy is not billing the ultimate payor directly (unlike a DMEPOS provider that may be directly submitting claims to Medicare Part B), but rather, the pharmacy is billing an intermediary entity called a Pharmacy Benefit Manager (“PBM”), which is usually a commercially run entity (non-government owned) that manages and adjudicates claims on behalf of health insurance plans that cover pharmacy benefits.
There are two criminal cases pending in Palm Beach County that threaten to put a bullet in the heart of healthcare professionals and businesses and also the law practices that advise them. Both State v. Simeone and State v. Kigar have a motion from the State pending before them to block any testimony that the defendants received legal advice concerning a contract entered into by an addiction treatment facility and a sober home. The State alleges that the contract violates the state Patient Brokering Act (PBA) because it was essentially a ruse whereby the addiction treatment facility was just paying for the sober home to refer patients. Now the State wants to make sure that the entire issue of the defendants being advised by counsel never sees the light of day.
How is this possible? How can it be that a client can seek legal counsel, get advise (and presumably follow it), and then be blocked from presenting that evidence? The State argues that the PBA has no wording that requires them to prove intent. And if intent isn’t an element to be proven, the argument goes, then evidence of the client intending not to violate the law by getting advice beforehand is inadmissible!
Healthcare marketing arrangements that violate the Anti-Kickback Statute (AKS) can lead to serious financial and criminal consequences. Understanding the types of marketing arrangements that courts have found to be in violation of the statute and the potential implications are critical for marketers to know in order to operate in the healthcare industry.
Under the AKS, it is a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce referrals of items or services reimbursable by the Federal health care programs. Where remuneration is paid purposefully to induce referrals of items or services paid for by a Federal health care program, the AKS is violated. By its terms, the AKS ascribes criminal liability to parties on both sides of an impermissible transaction. An example of a highly scrutinized arrangement involves percentage compensation. For regulators, percentage compensation arrangements provide financial incentives that may encourage overutilization and increase program costs.
One healthcare employer’s compensation arrangement with its employees just got much needed support from the 11th Circuit Court of Appeals. The employer there, which provided AIDS patients certain healthcare related services, paid its employees a bonus of $100 per patient. The case was brought on the argument that the compensation arrangement constituted an illegal kickback under the federal Anti- Kickback Statute. The court, however, disagreed because the employees who received the bonuses were “bona fide employees.”
The court’s focus on the plain language of the safe harbor for bona fide employees was refreshingly clear, notably that “any amount paid by an employer to an employee (who has a bona fide employment relationship with such an employer) for employment in the furnishing or any item or service.” Essentially, any amount paid by an employer to a bona fide employee is not considered to be “remuneration” under the Anti-Kickback Statute.
A 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.
Health law is the federal, state, and local law, rules, regulations and other jurisprudence among providers, payers and vendors to the healthcare industry and its patient and delivery of health care services; all with an emphasis on operations, regulatory and transactional legal issues.