RECOVERY AUDIT CONTRACTOR (RAC)
We have extensive experience with RAC audits and appeals, working directly with healthcare entities subject to RAC audits.
STARK ANDANTI-KICKBACK
We have represented Independent Diagnostic Testing Facilities (“IDTFs”), mobile leasing entities, radiology group practices, and other imaging providers.
STAFF PRIVILEGES & LICENSING MATTERS
We provide assistance and guidance through the legal process focused on the goal of resolving your matter successfully and efficiently.

Articles Posted in Stark and Anti-Kickback

Published on:

New rules published on June 30th, 2016 in the Federal Register could dramatically change the regulatory enforcement landscape for healthcare providers, with fraud penalties nearly doubling under the False Claims Act and the Anti-Kickback Act.

The False Claims Act (which in pertinent part imposes penalties on healthcare providers for submitting false claims to a government program) has had a penalty range of $5,500 to $11,000 per claim since 1996, but such penalties will increase to a range of $10,781 to $21,563 per claim. Penalties for violations of the Anti-Kickback Act (which prohibits physicians from referring Medicare beneficiaries to an entity in which they have a financial relationship for designated health services) will correlatively be substantially enhanced, from $11,000 per violation to $21,563 per violation.

The basis for these adjustments is the Federal Civil Monetary Penalties Inflation Adjustment Act of 1990, which requires that civil monetary penalties be adjusted regularly in order to account for inflation. These changes are set to take effect on August 1st, 2016. Public comments on the changes can be submitted to the Justice Department until August 29th, 2016.

Published on:

Please join The Health Law Partners, P.C., in congratulating Adrienne Dresevic (a Founding Shareholder), and Clinton Mikel (a Partner), for earning what has been described as the “Pulitzer Prize of Legal Writing”.

The Burton Award for Distinguished Legal Writing, which is run in association with the Library of Congress and co-sponsored by the American Bar Association, is earned each year by 35 exceptional authors nationwide.

Submissions for the Distinguished Legal Writing Award are extremely competitive. The award is generally selected by professors from Harvard Law School, Yale Law School, Stanford Law School, and Columbia Law School, among others.

Published on:

In U.S. ex rel. Wall v. Circle C. Construction, Case #14-6150, 2016 WL 423750 (6th Cir. Feb. 4, 2016), the 6th Circuit Court held that damages in false certification cases should be based on the difference between the value of the items or services the government should have received and the value of the items or services the government actually received. The holding, which arose in the non-healthcare context of a construction contract, arguably applies in healthcare matters where medically necessary items or services were furnished pursuant to referrals that violated AKS or Stark laws and thus the government did not sustain any actual damages. A court could then find that the treble damage provision under the False Claims Act is not applicable and the government’s damage recovery is limited to the $5,500-11,000 per claim penalty.
Continue reading →

Published on:

On November 2, 2015 the President signed The Bipartisan Budget Act of 2015, requiring that civil monetary penalties must be raised to account for inflation, followed by an annual review for further increases. Providers accused of False Claims Act (FCA) violations are likely to see an increase as high as 40% over the current penalty ranging from $5,500 to $11,000. Higher penalties may add up quickly in FCA cases, which generally involve hundreds of alleged tainted claims.

This could potentially have a negative impact on providers that have earmarked monies for quality of care improvement efforts who must now spend the money on paying higher penalties. The threat of higher penalties might also influence a provider’s decision to settle FCA cases due to the risk of astronomical penalties that may be imposed.

Budget Deal Raises Stakes for False Claims, Civil Monetary Penalties [link]
Continue reading →

Published on:

In July, we blogged about the major Stark Law provisions in the 2016 Proposed Medicare Physician Fee Schedule (the “Proposed Rule“). On October 29, 2015, the Centers for Medicare & Medicaid Services (“CMS“) released the final 2016 Medicare Physician Fee Schedule (the “Final Rule“) (available here), with few changes between the proposed rule and final rule as it related to the Stark provisions. The Final Rule will be published in the Federal Register on November 5, 2015. These are the first major changes to the Physician Self-Referral Rule (Stark Law) since 2009.

CMS stated that the Stark Law updates are meant to accommodate health care delivery/payment system reform, reduce burdens, facilitate compliance, clarify certain applications of the Stark Law, and issue new Stark exceptions. Below is a brief summary of the provisions adopted in the Final Rule:

(a) CMS adopted the proposed Stark exception for recruitment assistance and retention payments from hospitals, federally-qualified health centers (FQHCs), and rural hospital clinics (RHCs) to physicians to assist with employing non-physician practitioners (NPPs) in their geographical area. The only change from the Proposed Rule is the addition of a definition for the geographical area serviced by the FQHCs and RHCs, which is:

The “geographic area served” by a federally qualified health center or a rural health clinic is the area composed of the lowest number of contiguous or noncontiguous zip codes from which the federally qualified health center or rural health clinic draws at least 90 percent of its patients, as determined on an encounter basis. The geographic area served by the federally qualified health center or rural health clinic may include one or more zip codes from which the federally qualified health center or rural health clinic draws no patients, provided that such zip codes are entirely surrounded by zip codes in the geographic area described above from which the federally qualified health center or rural health clinic draws at least 90 percent of its patients.

(b) CMS standardized the various terms used for the principle of “takes into account” referrals (e.g., variations include “based on” or “without regard to”). CMS settled on standardizing the language to “takes into account” the volume or value of referrals.

(c) CMS clarified that the regulations in 42 CFR 411.357(t) regarding retention payments in underserved areas is correct. The Final Rule clarifies that the retention payment must not exceed the lesser of an amount equal to 25 percent of the physician’s current annual income averaged over the previous 24 months.

(d) CMS clarified that the Stark exception requiring that a lease arrangement be set out in writing does not require a single formal contract, but a collection of documents may satisfy the “writing” requirement. CMS did so by replacing the term “agreement” with the term “lease arrangement” throughout the regulation.

(e) CMS extended the “holdover” lease arrangement provision from six months to indefinitely (as opposed to a definite, but longer than six-month period as contemplated in the Proposed Rule). The new holdover lease language is applicable so long as the lease arrangement met the conditions of the exception prior to its expiration, the holdover is on the same terms and conditions as the immediately preceding arrangement, and that the holdover continues to satisfy the requirements of the exception.

(f) CMS revised the language of the exception to the definition of “remuneration” for items/devices/supplies that are used solely for one or more of the six purposes (i.e., collection, transportation, processing, storing, ordering, or communicating the specimen/results). The revision clarifies that the item can be used for more than one of the six purposes, so long as it is used solely for one or more of those purposes.

(g) CMS adopted the language in the Proposed Rule with regard to the clarification that employees or independent contractors do not “stand in the shoes” of their physician organization’s arrangements “unless they voluntarily stand in the shoes of the physician organization as permitted under 42 CFR 411.354(c)(1)(iii) or (c)(2)(iv)(B).

(h) CMS expanded the exception for ownership of publicly traded securities with the language from the Proposed Rule to include protection for “trading on an electronic stock market or over-the-counter quotation system in which quotations are published on a daily basis and trades are standardized and publicly transparent.”

(i) CMS added a new exception for timeshare lease arrangements between a physician and a hospital or unrelated physician organization for the use of premises, equipment, personnel, items, supplies, or services if certain conditions are met. The exception does not apply to advanced imaging, radiation therapy, or clinical/pathology laboratory equipment (other than equipment used to perform CLIA-waived laboratory testing).

(j) CMS added language to clarify that the physician-owned hospital disclosure requirements are not met by posting the ownership interest disclosure on a social media website, electronic patient payment portal, electronic patient care portal, or an electronic health information exchange.
Continue reading →

Published on:

On August 6, 2015, the Office of Inspector General (“OIG”) issued Advisory Opinion No. 15-12 (available here) regarding a home health provider (the “Requester”) offering free introductory visits to patients who have chosen it for home health care. The OIG concluded that this arrangement does not violate the federal Anti-Kickback Statute (“AKS”).
Under the proposed arrangement, the Requester does not have any involvement in the patient’s home health selection process. Instead, a physician, another health care professional, or discharge planner/case manager presents the patient with a list of home health providers from which to choose. If the patient selects the Requester as its home health provider, then the Requester contacts the patient to schedule a free introductory visit with one of its liaisons. The purpose of the introductory visit is to provide the patient with: (1) an overview of the home health experience; (2) contact lists for the Requester’s administrative and clinical staff; and (3) pictures of the patient’s care team.
In reaching the conclusion that the arrangement does not generate prohibited remuneration under the AKS, the OIG considered the following facts:
• The Requester does not pay or offer any remuneration to the physicians or other individuals involved in the patient’s provider selection process;
• The introductory visit does not involve any diagnostic or therapeutic services reimbursed by federal health care programs or by third-party payors, and the services provided by the liaison during the introductory visit do not require clinical training;
• The liaison does not contact the patient until after receiving notice that the patient has chosen the Requester as his or her home health provider; and • The Requestor does not submit claims for or claim costs associated with the introductory visit.
The OIG reasoned that any benefits received by the patient during the introductory visit were for the primary purpose of facilitating the patient’s transition to home health care, and the intangible worth to patients does not implicate the AKS. The OIG emphasized that when analyzing whether a service has economic value to patients, “the absence of a paying market for such service is not dispositive.” According to the OIG, such an absence may be the result of factors other than the service having little or no value, including because: (1) the service is still new and emerging in the marketplace; or (2) the market has been distorted by the availability of free services. The key takeaway here is that AKS liability is not avoided simply because the service is not reimbursable.
Continue reading →

Published on:

On July 8, 2015, the Centers for Medicare & Medicaid Services (CMS) released a proposed rule containing major provisions relating to the Physician Self-Referral Law (i.e., the Stark Law) and its exceptions. CMS states that the purpose of the Stark proposals is: “to accommodate delivery and payment system reform, to reduce burden, and to facilitate compliance,” as well as to “expand access to needed health care services.” CMS also states that it realizes that “additional clarification” of Stark would help.

Below is a brief summary of the proposals affecting the Stark Law:

a) Proposes new Stark exception for recruitment assistance and retention payments from hospitals, federally-qualified health centers (FQHCs), and rural hospital clinics (RHCs to physicians to assist them in employing non-physician practitioners (NPPs) in the geographical area served by the hospital, FQHC, or RHC providing the remuneration.
• The exception would not apply to remuneration flowing to a group practice or other type of physician practice (i.e., physician organizations). But, the exception would protect physicians from being considered to be “standing in the shoes of the physician organization” when determining a direct compensation arrangement.
• The exception would only apply where the NPP is a bona fide employee of the physician (or physician’s practice).
• The exception would only apply to NPP services that are primary care services (i.e., family practice, internal medicine, pediatrics, geriatrics, and OB-GYN).
• Additional proposals seek to limit or “cap” the remuneration allowed under this exception.

b) Proposes adding a definition of the geographical area served by FQHs and RHCs under 42 CFR 411.357(e).

c) Proposes to standardize the various terms (e.g., “based on” or “without regard to”) used for the principle of “takes into account” referrals to clarify that there are not different volume or value of referral standards in the Stark exceptions.

d) Proposes revisions to clarify that the policy stated in the Stark Phase III regulations regarding retention payments in underserved areas (42 CFR 411.357(t)) is correct and remains CMS’s policy.

e) Proposes revisions to clarify that the Stark exceptions requiring that a lease or arrangement be set out in writing do not require a single formal contract. Rather, “a collection of documents, including contemporaneous documents evidencing the course of conduct between the parties, may satisfy the writing requirement.” Additionally, the proposed rule clarifies that the one-year term requirement is satisfied “as long as the arrangement clearly establishes a business relationship that will last for at least 1 year.”

f) Proposes to extend the “holdover” arrangements permitted by 42 CFR 411.357(a), (b) and (d) from six months to indefinitely (or, alternatively, a longer but definite period), provided that the holdover continues on the same terms and conditions and that it meets the fair market value requirements. Additionally, CMS proposes to revise the fair market value compensation exception “to permit renewals of arrangements of any length of time, including arrangements for 1 year or greater.”

g) Proposes to revise the definition of remuneration to clarify that if one of the six statutory exceptions to remuneration applies, then the term “used solely” does not mean that the exception does not apply if the item, device or supply is used for more than one of the six statutorily allowed purposes.

h) CMS clarifies that employees or independent contractors do not “stand in the shoes” of their physician organization’s arrangements “unless they voluntarily stand in the shoes of the physician organization as permitted under 42 CFR 411.354(c)(1)(iii) or (c)(2)(iv)(B). Additionally, CMS proposes to remove the phrase “stands in the shoes” from the definition of “locum tenens physician.”

i) Proposes to expand the exception for ownership of publicly traded securities to include protection for “trading on an electronic stock market or OTC quotation system in which quotations are published on a daily basis and trades are standardized and publicly transparent.”

j) Proposes a new exception for timeshare leasing “that would protect timeshare arrangements that meet certain criteria,” including, but not limited to, that “the arrangement is between a hospital or physician organization (licensor) and a physician (licensee) for the use of the licensor’s premises, equipment, personnel, items, supplies, or services…used predominantly to furnish evaluation and management services.” This exception would not apply to independent diagnostic testing facilities or clinical laboratories.

k) CMS provides further guidance to physician-owned hospitals on the disclosure of its ownership interests, including that social media websites are not considered to be public websites for the hospital.

l) CMS also solicits comments on the affect that the Stark Law may have on Accountable Care Organizations.

In addition to the above-noted Stark provisions, the proposed rule contains a number of other proposals, including provisions on appropriate use criteria for advanced imaging services, telehealth, self-referral disclosure protocol, and more. More information on these provisions will be coming soon.
Continue reading →

Published on:

On Thursday, August 1, 2013, Congresswoman Jackie Speier (D-CA-14) introduced the “Promoting Integrity in Medicare Act of 2013 (PIMA) in the United States House of Representatives. As the law stands, Stark Law prohibits physicians from referring Medicare patients for certain health care services in which they have a financial interest. However, there is an in-office ancillary service exception included in the Stark Law, which according to two recent reports issued by the United States Government Accountability Office (GAO), has led to the overutilization of self-referrals. The reports estimate that in 2010 alone, Medicare could have saved $109 million on advanced imaging and $69 million on anatomic pathology if self-referring physicians had referred the same number of procedures as non-self-referring physicians.

According to Congresswoman Speier’s press release, the proposed bill would eliminate diagnostic MRI, CT, PET, and other advanced diagnostic imaging services, anatomic pathology, radiation oncology, and physical therapy from the in-office exception because they are services that are rarely provided on the same day as the initial office visit. According to the release, “the goal of PIMA is to cut spending in Medicare by hundreds of millions annually without reducing the essential care that seniors rely on.”

On the same day that the bill was introduced in Congress, the Alliance for Integrity in Medicare (AIM) issued a joint statement that applauded the strong leadership of Congresswoman Speier and showed its support for PIMA. The statement explained that if PIMA is enacted, the ability of collaborative group practices to operate as they do today will be preserved and physicians will continue to be allowed to order x-rays and other routine clinical laboratory tests in order to diagnose and treat patients during office visits. The AIM reiterated that reforming the in-office exception through the passing of PIMA will ensure that Medicare patients will “receive the highest quality and safest health care most appropriate to their needs, and Medicare policy incentives are properly aligned saving billions of dollars, which is in the best interests of beneficiaries, providers, and our nation’s health system overall.”

To see the full text of the Promoting Integrity in Medicare Act of 2013, click here.

To see the full text of the two GAO reports analyzing the in-office exception, click here and here.

To see the full text of the AIM’s statement in support of the bill, click here.
Continue reading →

Published on:

On Thursday, April 11, 2013, the Obama Administration released its Budget Request for Fiscal Year 2014 (“FY 2014”) that begins at the beginning of October. If implemented, the Budget Proposal would include approximately $1.8 trillion in savings over the next ten years, enough to replace the automatic sequestration that took effect last month and was imposed as part of the Budget Control Act of 2011.

To achieve these savings, the Administration’s Budget Request includes nearly $401 billion in Healthcare reductions that would likely affect all providers. While it is nearly impossible that the budget will pass Congress, some of the proposals are likely to make it into law in one form or another.

One of the numerous proposals from the Centers for Medicare and Medicaid Services (“CMS”) is beginning in 2015, to exclude radiation therapy, outpatient therapy, and advanced imaging services from the Stark Law’s exception for In-Office Ancillary Services (“IOAS”) except in cases where a practice meets certain accountability standards, as defined by the Secretary. The IOAS exception to the Stark Law’s prohibition on physician self-referrals was intended to allow physicians to provide beneficiaries with certain services that were a natural extension of their core practices and to lawfully bill for such services; however, CMS takes the position that radiation therapy, outpatient therapy, and advanced imaging services, in a significant number of cases, do not fit within the rationale underlying the IOAS exception insofar as they are “rarely performed on the same day as the related office visit.” In addition, CMS cites evidence suggesting that allowing these services to fit the IOAS exception has led to overutilization and rapid growth of these services. By excluding the services from the exception, CMS believes that the government will save nearly $6.1 billion over the next 10 years.

CMS has also proposed to begin requiring prior authorization for advanced imaging services on the theory that the rapid growth in the number and intensity of services in the last decade is the result of inappropriate use of the services. In its summary of the proposal, CMS notes that this proposal would bring the program in line with private payers, which typically require prior authorization. Furthermore, the proposal satisfies a request from the Government Accountability Office (“GAO”) that CMS implement prior authorizations or attempt other methods to limit growth in spending for advanced imaging services. However, at this time, CMS does not believe this will have an effect on the budget.
Continue reading →

Published on:

On March 26, 2013, the Office of Inspector General (“OIG”) of the United States Department of Health and Human Services (“HHS”) issued a Special Fraud Alert (“SFA”) regarding the potential for Physician-Owned Distributorships (“PODs”) to violate the federal Anti-Kickback Statute (“AKS”). While the OIG has provided guidance previously on the potential for physician-owned entities to create AKS and other fraud and abuse issues, this SFA focuses on the “specific attributes of PODs” that the OIG believes makes these entities “inherently suspect under the anti-kickback statute. With the increase in prevalence of these types of entities, this is an important development that has even piqued the interest of the Wall Street Journal.

At the heart of the OIG’s new SFA is the agency’s belief that any “opportunity for a referring physician to earn a profit” could be unlawful remuneration under the AKS. Previously, the OIG’s has highlighted a number of questionable features for physician-owned entities, such as:

1. Selecting investors for their potential to generate business;
2. Requiring investors that retire or move from the service area to divest their ownership; and 3. Distributing outsized returns compared to the level of risk in the investment.

In particular, the OIG believes that physician-owned entities, particularly PODs, with these features may lead to issues including:

• Corruption of medical judgment;
• Overutilization;
• Increased costs to Federal and State Medical Programs; and • Unfair competition.

In this new SFA, the OIG, recognizing that whether an entity is lawful under the AKS is dependent on the intent of the parties involved, includes a number of features that the agency believes provide evidence of the intent to induce illegal remuneration.

• The size of the investment offered to each physician varies with the expected or actual volume or value of devices used by the physician.
• Distributions are not made in proportion to ownership interest, or physician-owners pay different prices for their ownership interests, because of the expected or actual volume or value of devices used by the physicians.
• Physician-owners condition their referrals to hospitals or ASCs on their purchase of the POD’s devices through coercion or promises, for example, by stating or implying they will perform surgeries or refer patients elsewhere if a hospital or an ASC does not purchase devices from the POD, by promising or implying they will move surgeries to the hospital or ASC if it purchases devices from the POD, or by requiring a hospital or an ASC to enter into an exclusive purchase arrangement with the POD.
• Physician-owners are required, pressured, or actively encouraged to refer, recommend, or arrange for the purchase of the devices sold by the POD or, conversely, are threatened with, or experience, negative repercussions (e.g., decreased distributions, required divestiture) for failing to use the POD’s devices for their patients.
• The POD retains the right to repurchase a physician-owner’s interest for the physician’s failure or inability (through relocation, retirement, or otherwise) to refer, recommend, or arrange for the purchase of the POD’s devices.
• The POD is a shell entity that does not conduct appropriate product evaluations, maintain or manage sufficient inventory in its own facility, or employ or otherwise contract with personnel necessary for operations.
• The POD does not maintain continuous oversight of all distribution functions.
• When a hospital or an ASC requires physicians to disclose conflicts of interest, the POD’s physician-owners either fail to inform the hospital or ASC of, or actively conceal through misrepresentations, their ownership interest in the POD.

While the OIG considers the factors above evidence of intent, the agency does not consider the list a “blueprint for how to structure a lawful POD” and other PODs without these characteristics may violate the AKS. In particular, the OIG mentions concerns with PODs that:

• Exclusively serve its physician-owners rather than a POD that also sells to Ambulatory Surgical Centers (“ASCs”) and Hospitals and • Purport to designs and sell their own devices, particularly when the physician-owners are the sole users of the device.
Because both sides of a transaction are liable for violations of the AKS, the SFA indicates Hospitals and ASCs that have arrangements with PODs to provide devices are also at risk if one purpose of the arrangement is to secure physician referrals to the facilities.

Following OIG’s release of this SFA, the Physician-owners, managers, and partners of existing PODs, as well as individuals and/or entities considering forming a new POD, should contact their legal counsel to begin to examine the structure of their entities in order to, at minimum, ensure the entities do not include any of the features the OIG highlight above. Likewise, hospitals and ASCs should examine agreements with PODs to ensure they are not structured to generate referrals from the physician-owners.
Continue reading →

Contact Information