The U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) released it’s 2014 Fiscal Year Work Plan. If you’ve got the stomach for the long version, click here. Around each fiscal year, the Department of Health and Human Services, Office of Inspector General publishes its annual Work Plan, which provides terrific insight into unique provider behavior and practices the OIG plans to target in 2014. Medicare providers should pay particular attention to the following targeted areas:
Drug and alcohol treatment centers are often faced with the business decision of whether to waive copay and deductible obligations. For many patients in one of the most vulnerable times of their lives, copay and deductible waiver can mean the difference between getting needed treatment or not! The well intentioned desire of the treatment center to lower this barrier to entry may, however, expose the center to serious legal liability.
Though many treatment centers do not accept governmental payment (e.g. Medicare, Medicaid, CHAMPUS and TriCare), some do and all need to understand the thinking of governmental regulators and private insurers on the issue. In 1994 the Office of the Inspector General of the Department of Health and Human Services (the “OIG”) issued a Special Fraud Alert stating, in essence, copayment waiver for any reason other than the patient’s demonstrated inability to pay is fraudulent!
Has your practice implemented a compliance program or considered improving an existing one? Is it really necessary? Prior to the Patient Protection and Affordable Care Act (ACA), the necessity for physician practices to develop compliance plans was merely voluntary. However, the ACA will now require physician practices to have a fraud and abuse compliance plan in place as a condition of continuing to participate in Medicare or Medicaid programs. Because the government first published guidelines in the year 2000 for the voluntary use of compliance plans in physician practices and has subsequently enacted a mandate in the ACA for compliance plans, many physician practices are proactively implementing them. While this compliance plan mandate may be viewed by physicians as yet another administrative burden and expense to the practice, it can have many benefits as well. Implementing an effective compliance program can have the result of not only reducing liability risks, but can also allow a practice to reap monetary benefits. In fact, it could be more costly for the practice not to have one!
Many business people involved in some aspect of the recovery business world (e.g. IOPs, PHPs, Detox) are not aware of the punishing laws that apply to their marketing arrangements. Simply paying someone a commission based sales compensation without fully appreciate the applicable laws is dangerous and costly.
It’s that time again, when the OIG publishes its annual Work Plan for the coming year, providing insight and a proverbial “heads up” on the areas where potential concern and program integrity efforts are being focused. Many of the focus areas are ongoing or have been the subject of previous Work Plans, and come as no surprise. Nevertheless, it is important for practitioners to familiarize or reacquaint themselves with the 2013 Work Plan projects in order to recognize and prioritize compliance areas currently on the OIG’s radar.
Of particular interest for practitioners are the various OIG review projects involving ancillary services. For example, the OIG is looking at outpatient therapy services by independent therapists, and will focus on high utilization of physical therapy to determine if claims were reasonable, medically necessary and properly documented. Similarly, high-cost diagnostic radiological tests ordered by primary care and specialty physicians are being reviewed to determine whether utilization rates match industry practices. The OIG also will review Part B payments for imaging services with an eye towards determining if utilization rates reflect industry practices and if practice expenses components within payment rates are commensurate with costs incurred. Electrodiagnostic testing (needle electromyogram and never conduction) is a new area under review, particularly with respect to utilization rates by specialty, the concern being that such services are vulnerable to abuse and inappropriate financial gain.
Errors in billing and claims administration are also the subject of OIG review, with perennially recurring projects directed at incident-to services, place of service coding and E/M services. A 2009 OIG review of prior claims found that non-physician practitioners often were not properly supervised or that unqualified non-physician practitioners performed services, in each case, resulting in payments that were not compensable. Since Medicare payment for services in a non-facility setting, like a physician’s office, is often higher than in the rate that applies in other service locations, there is also concern over whether claims for Part B services performed in ASCs and Hospital outpatient departments were coded with the proper place of service. Another, more recent area of focus involves the documentation supporting E/M services and questions whether Electronic Medical Record documentation processes may result in “cloned” entries (and potentially improper claims) rather than a deliberate process of selecting proper codes based on content of actual service. Part B payment for chiropractic services are also being reviewed, with this area being the subject of ongoing OIG concern since chiropractic maintenance therapy being considered not medically necessary.
Apparently echoing a series of fairly recent OIG Advisory opinions, the 2013 Work Plan also identifies Polysomnography and Sleep Disorder Clinics as areas of potentially questionable billing patterns and possible overutilization. High utilization rates have also raised questions regarding whether services are duplicative of diagnostic testing performed previously by attending physicians. Another ongoing and increasing focus of OIG scrutiny is physician-owned distributors (POD) of high utilization orthopedic implant devices. The Work Plan for 2013 specifically identifies PODs which provide hospitals with spinal fusion implant devices as being under OIG review to determine if such arrangements are associated with high utilization.
These are just some of the many areas of OIG review with which practitioners and facilities alike should become familiar in order to remain current with the health care regulatory compliance curve.
Durable medical equipment is commonly sold through sales leads generated through telephone and/or internet contact. These leads often begin with a seemingly innocuous internet survey or an application for something unrelated to DME. This “raw” lead may be as basic as a person’s name, telephone number or email address, and age. The lead is then further developed and “qualified” by obtaining more details about the subject; such as: whether and by whom the subject is insured, what (if any) medical issues does the subject suffer from, the name of the subject’s physician. Ultimately, the lead is sold to a DME vendor who uses the lead to accomplish the sale of medical equipment or supplies. In the course of a lead’s birth and life, it is handled by a chain of companies, some of whom purchase the lead, add a level of detail to it, and sell it for a higher price. In the past year or so, several lead generation companies from the “middle of the chain” have come to me asking me whether their business model gives rise to an illegal kickback. After a bit of research, I gave the lawyerly answer: “It depends.”
The Federal anti-kickback statute provides that it is a felony for a person or entity to knowingly and willfully offer or pay any remuneration to induce a person to refer an individual for the furnishing or arranging for the furnishing of any item for which payment may be made under a Federal health care program, or the purchase or lease or the recommendation of the purchase or lease of any item for which payment may be made under a Federal health care program. Florida’s corollary to this Federal law is the Florida Patient Brokering Act, but the Florida statute applies to all health care services, regardless of whether paid for by a Federal program. The Federal law creates criminal liability, and includes a knowledge requirement. Congress recognized that business models exist that may appear as willfully paying remuneration in exchange for a referral, but which have more innocent motivations, and are less likely to result in abuse to the health care program at issue. In order to give the health care industry a measure of comfort, Congress created several “safe harbors.” If a business model fits within a safe harbor, then it is deemed to not be an illegal kickback under Federal and Florida law.
The Department of Health and Human Services Office of the Inspector General (“OIG”) is the agency charged with enforcing the Federal anti-kickback statute. In November 2008 the OIG considered a situation in which an advertising company created a website that would give prospective patients contact information for a list of chiropractors in their area, in response to a zip code entered by the prospect. The prospect paid nothing for the service, but the chiropractors paid the advertiser a fee for each call or contact from the website that lasted over thirty seconds, regardless of whether the contact resulted in a prospect becoming a patient. This scenario is as close as the OIG has come to opining on a typical DME lead generation.
The OIG found that the chiropractors’ advertising service was not a prohibited kickback, and cited four factors as convincing: (i) the advertising company is not a health care provider or supplier, and is only affiliated with the health care industry through the arrangement at issue; (ii) the advertising program did not target Federal health care program beneficiaries; (iii) the fees paid by the health care practitioners did not depend upon whether the prospect actually became a patient; and (iv) the advertising program did not steer patients to a particular chiropractor.
When applied to the DME context, the OIG opinion and the anti-kickback statutes suggest that leads can be sold for a per-lead fee as long as the leads are not priced, and do not contain information so detailed, such that the purchaser can cherry-pick those leads it wants to purchase based on the likelihood that the lead will result in an actual sale of covered DME. For example, a “raw” lead comprised simply of a prospect’s name, contact information, and interest in speaking with a DME supplier is probably the sort of lead that could be sold for a per-lead fee without running afoul of the anti-kickback prohibitions. As more and more information is added to the lead, such as the type of DME products of interest to the prospect, information regarding the prospect’s insurer and plan coverage, the purchaser will be better able to determine whether the lead is likely to result in a sale of DME (a “qualified” lead). At a certain level of detail, a lead morphs from lead that can be sold on a per-lead basis, to a referral that cannot.
A lead generation company can sell highly detailed qualified leads if that sales relationship fits within the safe harbor for “Personal Services and Management Contracts.” That safe harbor requires that: (a) the aggregate compensation to be paid under the contract must be fixed in advance; (b) the compensation must be consistent with fair market value in an arm’s-length transaction; and (c) the compensation must not be determined in a manner that takes into account the volume or value of any referrals or business otherwise generated between the parties for which payment may be made by a Federal health care program. The requirement that the compensation be fixed in advance does not tolerate a per-lead fee. Fixed in advance would be a weekly, hourly, annual fee.
So, if you are in the lead generation business, your liability for buying or selling health care referrals probably depends upon how detailed and “qualified” the lead is at the time of your transaction. The safe tack is to structure your transactions so that they fit within the safe harbor for Personal Services and Management Contracts so that just in case your leads are qualified enough to constitute “referrals.”
This article focuses on anti-kickback liability associated with DME leads, but there is also liability attached to how the lead is originated, and how the prospect is contacted. Lead generation companies are often well-served by committing their relationships to written agreements with advice from appropriate counsel.
The economy has heated up the marketing activity of many healthcare businesses, including physicians. Marketing devices like Groupon have become commonplace, but raise some significant legal issues. So.one such business requested guidance from the Office of the Inspector General of the Department of Health and Human Services and got a nice response.
The requestor operates a website that includes coupons for healthcare items and services and also advertising on behalf of individuals and businesses in the healthcare industry. The healthcare professionals and business people would post coupons on the website, which would give discounts, including discounts on items and services that are covered by Medicare and other state or federal healthcare programs. The website business would have different levels of membership and would charge flat fees for each level of membership. Additionally, the requestor would sell advertising on the website.
The arrangement had certain limitations, including:
1. The providers would not advertise free services, only discounted services; and
2. The providers would be required to give the same discount to any third party payer or insurance carrier, not just to the patient.
The OIG approved the proposal and noted the following key things:
1. The requestor is not a healthcare provider;
2. Payments from providers and advertisers are a set fee, are consistent with fair market value and don’t depend on customers (patients) using coupons or buying services;
3. Advertising would only be received by customers that elected to receive it; and
4. The business structure is not likely to increase utilization.
In short, the OIG thought the requestor was serving only as a conduit of advertising and was not paying anyone to influence any patient’s choice of a provider or supplier.
When the Stark II (Phase III) regulations were released in August, 2007, they clarified that when a hospital recruits a physician to a medical practice, the employment agreement between the medical practice and the newly recruited physician may contain practice restrictions as long as they do not “unreasonably restrict the recruited physician’s ability to practice medicine within the recruiting hospital’s service area. This stymied many medical practices which were reluctant to hire a new physician without a noncompete and nonsolicitation provision. A 2011 CMS Advisory Opinion (No. CMS-AO-2011-01) changed this.
The Advisory Opinion involved a pediatric orthopedist who was recruited by a hospital to a medical practice. The medical practice wanted to hire the new doctor, but was not willing to do so without a noncompetition provision and other restrictive covenants. The practice asked CMS for guidance because the Stark regs suggested that perhaps a noncompete could not be contained in the employment agreement of a physician recruited by a hospital to join a local medical practice. In fact, a prior version of the Stark regs was clear that noncompetes were not permitted in the employment agreements of physicians recruited by hospitals.
Hospital recruitment transactions involve bringing a physician into a new area and funding the start up period (usually a year). The nice thing for a medical practice is that the dollars given by the hospital to the practice (the difference between salary and benefits and collections) can run into the hundreds of thousands of dollars! The down side was that the medical practice could not tie the recruited physician’s hands with a noncompete or other similar restriction. The Advisory Opinion is, however, a game changer because it allowed the medical practice to impose a noncompete on the recruited physician.
As mentioned, the practice would not hire the recruited physician without the noncompete. The noncompete had a 25 mile radius, and the Opinion cited the following relevant facts:
1. The recruited doctor would remain on one of five hospitals within the 25 mile zone;
2. The recruiting hospital’s service area extended beyond the 25 mile zone, in which there were at least three other hospitals within a one hour driving range;
3. The noncompete complied with applicable state law.
Based on these facts, the OIG permitted a one year noncompete because it did not “unreasonably restrict the doctor’s ability to practice in the recruiting hospital’s service area. Certainly, many other medical practices can be sure to follow suit.
Physicians interested in nocompetes must be familiar with state law. Getting to the bone of the issue, noncompetes are enforceable in Florida if:
1. The geographic zone in the noncompete is reasonable. This depends on where the practice draws its patients. If patients come to the practice from just down the street, a ten mile radius is probably overbroad;
2. The duration is two years or less (though it can be longer in some limited circumstances);
3. The employer has complied with all of the terms of the employment agreement. If the employer has breached the contract that contains the noncompete, most courts will reject a claim to enforce it;
4. The employer does the type of thing that the departing employee does. If the employee is the only person performing toe surgery for instance, and the practice will not provide toe surgery services once the employee leaves, the practice probably does not have a legitimate business interest to protect by enforcing the noncompete; and
5. Stopping the ex employee from practicing in the geographic zone does not create a healthcare crisis or shortage. This is tough. Very few practice areas are in such dire straits that the departure of one doctor will adversely affect the provision of such services in the area.
Physicians should also be familiar with the practical aspects involved in noncompetes.
Mistake #1 – Racing to litigation
Going to court is a crap shoot. Once litigation begins, it takes on a life of its own and costs can be nuts, sometimes in the hundreds of thousands of dollars. You may think it’s a simple noncompete case. There rarely is such a thing. And if you sue someone on a noncompete breach, they may turn around and sue you in the same lawsuit for something. And….insurance does not cover any such claims. That means you are paying out of pocket for a lawsuit, the certainty of which can never be guaranteed and which will seem endless once you run out of patience or money for the process. Often, the reality is that noncompete litigation involves the strategy or seeing which party can outspend the other one.
If you are an employer, ask yourself the following two questions before commencing litigation:
1. Does it make good economic sense to enforce the noncompete? Is the former employee a business threat?
2. Is there a way to work out a deal with the employee, short of litigation?
In some situations, it makes no business sense to pursue a noncompete. For instance, if the employee has been employed for several months and if the patients are all referred by the employer, then the employee may not be a competitive threat to the employer. The employer will find a replacement doctor at some point and refer the business to the new doctor. Case closed.
It is also possible to work out settlements before going to court. For instance, you might avoid litigation by lowering the geographic zone or the duration. You might also negotiate a buy out of the noncompete.
If you are an employee who wants out of the noncompete, sit down with the employer and see if you can agree on a way out, so that both of you can have peace and move on.
Mistake #2 – Doing it Yourself
Noncompetes are governed by state law. There are both statutes and cases that inform lawyers about what types of noncompetes are enforceable and which are not. Do not work off of an old contract to create a new noncompete, since the laws (and the cases that construe them) change often. Do not use a friend’s noncompete, since you will not be able to tell if it will be enforceable at this time or under the circumstances that apply to you. The enforceability of noncompetes is extremely fact specific. Since noncompetes are strictly construed by courts, drafting them requires a trained eye.
The Advisory Opinion marks a significant development in the area of noncompetes for physicians recruited to medical practices by hospitals. Though some states do not allow noncompetes to be applied to physicians, many states do, including Florida. Finding a way to satisfy both the federal and state authorities will be essential for ensuring an effective and enforceable noncompete.
The Office of Inspector General of the Department of Health and Human Services recently (October 11, 2011) shook its head at a proposal involving a pathology lab management services business that was to be owned by physicians. The proposed arrangement had the following features:
1. A path lab management business (“Manager”) would be formed and the business would be owned by doctors;
2. The Manager would provide a list of management services to a path lab;
3. The path lab (“Lab”) would not be owned by the doctors that own the Manager;
4. The Manager would provide a fixed amount of hours of services each year and would receive a percentage of the Lab’s income (fixed percentage in advance) and that fee would approximate the Lab’s use of the Manager’s services for the year;
5. The physician Manager investors would be in a position to refer to the Lab;
6. The ownership interests of the physician investors in the Manager would exceed forty percent (40%);
7. More than forty percent (40%) of the Lab’s revenues would come from the physician investors.
The OIG decided that the proposed arrangement posed more than a minimal risk of violating the Anti Kickback statute. The OIG also said the manager cannot refer its own patients or generate business in connection with the proposed arrangement. The OIG focused on the following points in its advisory opinion:
1. The Manager’s “usage fees” to the Lab are percentage based and not flat and set in advance;
2. The ownership interests of the doctor investors in the Manager would exceed what is specified in the so called “small entity” Safe Harbor;
3. The physician owners of the Manager have no experience in managing a lab, but are in a position to generate referrals to it.
Though the regulatory Safe Harbors (to the Anti Kickback Statute) are illustrative of permissible arrangements, the OIG is clearly sticking very close to them. where federal or state healthcare program dollars are involved, physician investors would do well to make sure they are Safe Harbor compliant.
In the Office of Inspector General (“OIG”) Advisory Opinion 11-14, dated October 7, 2011, the OIG analyzes an arrangement in which Requestor is an opthalmic physician group practice that provides cataract surgeries and also employs optometrists. By way of brief background, generally, patients receiving cataract surgery may elect to have either a conventional intraocular lens (“Conventional IOL”) or a premium intraocular lens (“Premium IOL”) (Premium IOLs have the ability to correct preexisting refractive problems whereas Conventional IOLs do not). Medicare covers Conventional IOLs when reasonable and necessary, but only partially covers the professional and facility fees associated with Premium IOLs as Premium IOLs are significantly more expensive. When billing Medicare, cataract surgery is a global surgical procedure in which the physician is reimbursed one global fee covering the pre-operative care, the surgery and the post-operative care for the ninety (90) days following the surgery. If a physician transfers the patient to another healthcare professional during the “global surgical period,” the healthcare provider must use either modifier -54 (surgical care only) or -55 (post-operative management only).
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.