Health Law Attorney Blog

On July 30, the OIG released advisory opinion no 10-11 (the "Opinion") which favorably reviewed a company's proposal to encourage health care providers to use its online program for scheduling meetings with manufacturer representatives by offering the health care provider an opportunity to select a public charity to which the company would make a monetary, charitable contribution in the health care provider's name.

Under the proposed arrangement, the company is not a health care provider or supplier but offers marketing services to pharmaceutical, medical, and diagnostic product manufacturers. According to the Opinion, the company has developed an online scheduling website, which pharmaceutical, medical, and diagnostic product manufacturers can use to schedule time with health care providers to educate them about new products. Under the proposed plan, manufacturers would pay a fee to enroll in the program and a fee for every five minute intervals of time scheduled with each health care provider. The company would then encourage health care providers to participate in its scheduling program by offering them the opportunity to designate a public charity to which the corporation would make a charitable contribution "in the name of" the health care provider. Further, under the proposed program, the health care provider would not be entitled to a tax deduction as a result of the donation.

The Opinion recognized the importance of charitable contributions from health care providers and suppliers and expressed caution in the exercise of enforcement in this area. However, the OIG also listed several examples of potentially problematic contributions (e.g., contributions to charities that provide free or below market value rate office space to a referral source) which are nothing more than disguised kickbacks intended to induce referrals. With respect to the proposed arrangement, however, the OIG found that the program was not problematic as it was structured to prevent health care providers from receiving any actual or expected economic benefit from the charitable donations (i.e., the donations would be made directly to the public charities), the health care providers would not be entitled to tax deductions, the charities would be 501(c)(3) organizations that are public charities, and would meet the public support test under section 509 (a) of the IRC, the charity would have sole discretion in the use of the donated funds, the funds would not be restricted or earmarked, and the health care providers would have to provide certificates that they (or an immediate family member) are not employees or board members of the charity. Additionally, the company's proposed arrangement would not be determined by a health care provider's prescribing choices, thus preventing any potential link between the selected charity and health care provider's referrals.

Accordingly, the OIG concluded that the charitable contributions would not constitute prohibited "remuneration . . . directly or indirectly . . . in cash or in kind" to the health care providers within the meaning of the anti-kickback statute.

Continue reading "OIG Advisory Opinion No. 10-11: The OIG Favorably Reviews a Company's Proposal to Encourage Health Care Providers to Use its Online Program to Schedule Meetings by Providing Charitable Donations in the Health Care Providers' Names " »

On July 23, CMS published a notice in the Federal Register, soliciting proposals in a new imaging demonstration created under the Medicare Improvements for Patients and Providers Act of 2008.

The two-year Medicare Imaging Demonstration (MID) will test whether the use of decision supports systems (DSSs) can improve quality of care and reduce unnecessary radiation exposure and utilization by promoting appropriate ordering of advanced imaging services.

CMS would like to use "conveners" to reach eligible physicians interested in participating in the demonstrations. Conveners will be responsible for recruiting physician practices, deploying a DSS that incorporates medical specialty society guidelines for the selected procedures, ensuring the DSS remains current with those guidelines, collecting and transmitting data, and distributing payments to practices for reporting data. Accordingly CMS specifically would like the proposals from conveners to involve a diverse mix of physician practice sizes and types, medical specialties, and geographic areas. Applications to participate are due to CMS by September 21.

Continue reading "CMS Solicits Proposals For Participation In Medicare Imaging Demo " »

The OIG for the Department of Health and Human Services entered into a Civil Monetary Penalty (CMP) settlement agreement for $7.3 million with United Shockwave Services, United Prostate Centers, and United Urology Centers (collectively, United), all of which are based in the Chicago, Illinois area.

This agreement settles charges by OIG alleging that United, and certain of its physician-owners, leveraged patient referrals to obtain contract business from hospitals in Illinois, Indiana, and Iowa, therefore violating Federal anti-kickback laws. OIG also alleged that United caused certain hospitals to submit claims for designated health services that resulted from prohibited referrals in violation of the Physician Self-Referral Law (Stark law).

Along with the $7.3 million settlement, United entered into a 5-year Corporate Integrity Agreement (CIA), which requires United to hire an Independent Review Organization that will monitor United and any hospital in Illinois, Indiana or Iowa that recieves referrals from United or its physician investors. Further, United is also required to create a comprehensive training program to educate its employees and corporate members on Stark law and kickback issues.

This settlement underscores the importance of taking proactive measures to have health care business relationships analyzed for compliance with the myriad of fraud abuse laws and regulations prior to the initiation of any government audit or investigation and to seek experienced, learned health care legal counsel upon receipt of any inquiry by the government or any third party payor into business relationships to attempt to avoid the matter escalating into a civil or even criminal matter.

Continue reading "OIG Enters Into $7.3 Million Civil Monetary Penalty Settlement With Physician-Owned Enterprise" »

CMS has released their proposed disclosure requirements for In-Office Ancillary Services (IOAS) Exception. Section 1877 of the Act or the physician self-referral law (Stark) prohibits a physician from making referrals for certain "designated health services" (DHS) payable by Medicare to an entity with which he or she has a financial relationship, unless an exception applies. Stark also prohibits the entity from filing claims with Medicare for those DHS rendered as a result of a prohibited referral. However, Stark sets forth the exception that permits a physician in a solo or group practice to order and provide DHS in the office of the physician or group practice, provided that certain specific criteria are met.

Section 6003 of the Patient Protection and Affordable Care Act (PPACA) amends Stark by creating a new disclosure requirement, with respect to referrals for magnetic resonance imaging (MRI), computed tomography (CT), positron emission tomography (PET), and any other DHS specified under Stark, which requires that the physician inform a patient in writing at the time of the referral that the patient may obtain the service from a person other than the referring physician or someone in the physician's group practice and provide the patient with a list of suppliers who furnish the service in the area in which the patient resides.

CMS is proposing to implement section 6003 of the PPACA by amending §411.355(b) to add new paragraph (b)(7). This new proposed provision, would expand the disclosure requirement to other radiology and imaging services under the DHS category specified in Stark. CMS is currently soliciting comments regarding which other radiology and imaging services that fall under Stark should be included in the disclosure requirement.

Additionally, CMS is proposing that the disclosure notice under §411.355(b)(7), should be written in a sufficient manner to be more reasonably understood by all patients. It is mandatory that the notice indicate to the patient that the services may be obtained from a person other than the referring physician or his or her group practice and should include a list of other suppliers who provide the service being referred. Additionally, in order for the disclosure requirement to be satisfied, CMS proposes that a record of the patient's signature on the disclosure notification must be maintained as an element of the patient's medical record.

Section 6003(a) of the PPACA specifies that the referring physician must provide a written list of "suppliers as defined in section 1861(d). Section 1861(d) of the Act defines supplier as "a physician or other practitioner, a facility, or other entity that furnishes items or services under this title." CMS is proposing that only suppliers be included on the written list. However, CMS is not proposing to permit or require the list to include "providers of services", which is defined in section 1861(u) of the Act to include hospitals and critical access hospitals, among other facilities.

Additionally, Section 6003(a) of the PPACA also requires that the alternate suppliers specified in the notice provided to the patient must provide the relevant services "in the area in which [the patient] resides." CMS is therefore proposing that the suppliers included in this notice should be located within a 25-mile radius of the physician's office location at the time of the referral.

In order to help the patient make an informed decision regarding the physician referral, CMS proposes that the written list include no fewer than 10 suppliers. An exception to this rule is made if there are fewer than 10 other suppliers in the proposed 25-mile-radius. When this occurs, the physician is no longer required to provide a list of alternative suppliers, though, the physician is still required to disclose to his or her patients that the patients may receive the imaging services from another supplier.

With regard to the information on the list, CMS would like to make it mandatory that the physician provide certain information about the listed suppliers, including the name, address, phone number, and distance from the physician's office location at the time of the referral. However, CMS is not requiring the disclosure requirement for MRI, CT, or PET services furnished on an emergency or time-sensitive basis.

It is important to note that these provisions are not final. CMS is soliciting comments by physicians on all IOAS proposals listed. The new disclosure requirement of section 6003 must be promulgated by regulation. Therefore, CMS is proposing that the new disclosure requirement shall apply only to services furnished on or after the effective date of the final regulation. CMS is proposing that the effective date will be January 1, 2011.

Continue reading "Disclosure Requirements for In-Office Ancillary Services Exception to the Prohibition on Physician Self-Referral for Certain Imaging Services" »

CMS has released the proposed physician fee schedule and other Medicare Part B payment policies to ensure their payment systems reflect the changes in medical practice and relative value services. This update also addresses certain provisions of both the Affordable Care Act and Medicare Improvements for Patients and Providers Act of 2008. Additionally, the proposed rule discusses payments under the Ambulance Fee Schedule, Clinical Laboratory Fee Schedule, payments to ESRD facilities, and payments for Part B drugs. Finally, the proposed rule includes a discussion regarding the Chiropractic Services Demonstration program, the Competitive Bidding Program for Durable Medical Equipment and Provider and Supplier Enrollment Issues associated with Air Ambulances.

Continue reading "CMS has Released the Proposed Physician Fee Schedule " »

The Medicare Payment Advisory Council (MEDPAC) recently delivered its 2010 report to Congress. The report entitled "Report to the Congress: Aligning Incentives in Medicare," addressed the in-office ancillary services (IOAS) exception to the Stark Law, which allows physicians to provide most DHS services to patients in their own offices under certain conditions.

In recent years, many physicians have expanded their practices to provide diagnostic imaging, clinical laboratory testing, physical therapy, and radiation therapy. The IOAS exception has enabled physicians to make rapid diagnoses and initiate treatment during a patient's office visit. This has helped improve care coordination, encourage patients to comply with their physicians treatment recommendations and enhance patients' convenience.

Continue reading "MEDPAC Report on In-Office Ancillary Services" »

By letter dated June 16, 2010, the American Society of Anesthesiologists ("ASA") continued its efforts to request that the OIG intervene to issue a Special Advisory Bulletin prohibiting what is called the anesthesia "company model." The ASA originally made the request to the OIG in March of 2009; however, to date, the OIG has not responded. Given that the company model has been gaining traction among ambulatory surgery center ("ASC") owners, the ASA renewed its request and also attached an article published in March of 2010 specifically discussing the risks and concerns presented by the company model. The anesthesia company model involves the creation of a separate anesthesia company by the same or similar owners of the ASC. The establishment of this company essentially allows the owners of the ASC to share in the profits earned through the provision of anesthesia services at the ASC. The anesthesia company employs the anesthesia providers and bills for the professional anesthesia services. The same anesthesiologists who once held a professional service contract to provide anesthesia at the ASC and bill for those services are now required to be employed by the anesthesia company in order to continue to provide anesthesia services for facility patients. The ASA asserts that the company model is designed to incentivize over-utilization for anesthesia services since the owners of the ASC also own the anesthesia company and have a stake in the profits generated from anesthesia billing. The ASA notes that this problem leads to increases in the cost of care and may subject patients to unnecessary services. Moreover, the ASA takes the position that the company model results in anesthesia providers essentially being required to pay remuneration to the facility for the ability to provide anesthesia at the facility. Conversely, ASC owners respond that they have structured these arrangements to comply with the Anti-Kickback Statute.

As ASC owners continue to evaluate ways in which to increase revenues, it is unlikely that the company model and similar arrangements will go away anytime soon. ASC owners and anesthesiologists will clearly be monitoring the OIG actions as this issue heats up around the country. For more information on this topic, feel free to contact Abby Pendleton, Esq. or Carey F. Kalmowitz, Esq. of The Health Law Partners at (248) 996-8510 or (212) 734-0128.

A False Claims Act lawsuit, sparked by a whistle-blower suit in 2003 filed against the Health Alliance of Greater Cincinnati and then-member Christ Hospital, has been settled, with the Health Alliance and hospital agreeing to pay the government $108 million, despite continuing to deny the allegations of the suit.

The U.S. Justice Department joined the suit in 2008, and charged that between 1997 and 2004, cardiologists at the hospital were scheduled based on the amount of business, through referrals, that the doctors brought to the hospital. Essentially, DOJ argued, this arrangement, which created the opportunity for the cardiologists to bill for diagnostic services and pick up new patients for follow-up appointments, constituted an illegal kickback scheme.

Continue reading "Ohio Hospital Settles False Claims Act Suit for $108 Million" »

As reported in the May 14th HLP blog, the Departments of Justice (DOJ) and Health and Human Services (HHS) recently released the Health Care Fraud and Abuse Control Program (HCFAC) Annual Report for Fiscal Year 2009, which reflects that $2.51 billion was deposited to the Medicare Trust Fund in 2009, as a result of more intensive efforts to fight fraud and abuse. U.S. Attorney General Eric Holder announced that the 2009 recovery amount represented an increase of more than half a billion dollars over the 2008 total. Evidencing the heightened scrutiny that we, at THE HEALTH LAW PARTNERS, have been discussing with our clients during this past year, more than 1,000 new criminal health care fraud investigations were opened in 2009, 1,621 investigations were pending, and 583 convictions for health care fraud-related crimes were obtained. In addition, federal prosecutors filed criminal charges in 481 cases involving 803 defendants which, according to Holder, constitutes an "all-time high" in the number of health care fraud defendants charged. In addition, DOJ opened 886 new civil health care fraud investigations and had 1,155 civil health care fraud matters pending. Holder also noted that, in 2009, the DOJ and HHS established the Health Care Fraud Prevention & Enforcement Action Team (HEAT), which has operated with noteworthy efficacy in, among other places, two of the States with HLP offices - New York (Brooklyn) and Michigan (Detroit). In sum, the Annual Report speaks to the successes that the Government's deployment of additional resources has enabled it to achieve in connection with its goal of reducing health care fraud - and this success likely presages the Government dedicating even-greater resources towards health care enforcement in the coming years.

Continue reading "Precipitous Increase in Fraud And Abuse Recoveries To Medicare Trust Fund " »

On May 6, 2010 the Office of Inspector General (the "OIG") posted Advisory Opinion 10-04, which approved a program conducted by several imaging centers to provide free pre-authorization services to patients and referring physicians (the "Pre-Authorization Arrangement"). This approval was somewhat unexpected in light of the OIG's prior issuance of several advisory opinions and other guidance articulating concerns involving the provision of free items or services to referring physicians. Nonetheless, the OIG's position in Advisory Opinion 10-04 is likely to be favorably received by the significant number of imaging providers who have been trying to bridge the tension between advancing their business prospects in an increasingly more competitive landscape, while simultaneously seeking to engage in conduct that could be viewed as impermissible under the Anti-kickback Statute (the "AKS").

A full analysis of the implications will be forthcoming in the June issue of "Regulatory Review," the monthly column in AHRA Link authored by Adrienne Dresevic, Esq. and Carey F. Kalmowitz, Esq.

The U.S. Department of Health and Human Services Office of Inspector General ("HHS-OIG") has revealed a new section to its website dedicated to the state Medicaid Fraud Control Units ("MCFUs"). MCFUs are intended "to investigate and prosecute fraud by Medicaid providers as well as patient abuse and neglect." While MCFUs are administered by the states, the majority of their funding comes from the federal government.

The new site explains:

The MFCUs' authority to investigate patient abuse and neglect extends to Medicaid-funded facilities as well as to "board and care" facilities that do not receive Medicaid funding. MFCUs may, in certain circumstances, also investigate program fraud involving Medicare or other Federal programs, upon the approval of the Department of Health & Human Services Office of Inspector General (HHS/OIG) or another relevant agency Inspector General.

The site includes a growing archive of state enforcement actions, policy transmittals, and other helpful links.

Continue reading "HHS-OIG Adds MCFUs Section to Website" »

The New York state attorney general's office announced yesterday that it recovered more than $283 million and obtained a record of 148 Medicaid fraud convictions in 2009. This information is detailed in an Annual Report submitted to the Secretary of the U.S. Department of Health and Human Services. The report highlights the cases, settlements, and convictions of the AG's office, including civil settlements with licensed home health care services and certified home health care agencies totaling $51.7 million and 25 criminal convictions; settlements with pharmaceutical companies for off-label marketing, kickbacks, misreporting prices, and other fraud; and a $15.6 million judgment against two dentists who operated a mobile dentist business and who knowingly employed an individual with a prior felony conviction.

Continue reading "New York AG's Office Recovers More Than $283 Million In Medicaid Fraud" »

Pursuant to the healthcare reform bill that was signed into law by President Obama on March 23, 2010 ("the Patient Protection and Affordable Care Act" or "the Act"), physicians who furnish MRI, CT or PET tests within their practices for their patients are now required to provide their patients with a written disclosure at the time of the referral.

By way of brief background, the Stark Law prohibits physicians from referring Medicare patients for certain "designated health services" (including MRI, CT, and PET) to an entity with whom the referring physician (or any of his/her immediate family members) has a direct or indirect financial relationship, unless an exception is met. Physicians and entities who furnish designated health services within their practices typically rely upon Stark's In-Office Ancillary Services Exception (the "IOASE") in order to avoid running afoul of the Stark Law.

Notably, Section 6003 of the Act adds a requirement that physicians who furnish MRI, CT or PET testing services for their Medicare patients in reliance on the IOASE inform the patient in writing at the time of the referral that the patient may obtain the MRI, CT or PET test from other suppliers of the services. Physicians are also required to provide a written list of suppliers who furnish those services in the area where the patient resides. Section 6003 allows the Secretary of Health and Human Services to require similar notices for other categories of imaging services that fit within the definition of designated health services.

This new disclosure provision of the Act applies to services furnished on or after January 1, 2010 (but the disclosure requirement appears to have taken effect on March 23, 2010, the date President Obama signed the bill into law). Section 6003 of the Act contemplates that regulations will be issued which implement the new disclosure requirement.

However, physicians who furnish MRI, CT, or PET tests pursuant to the IOASE, should immediately begin to provide the required written disclosure to their Medicare patients.

Continue reading "Physicians Providing MRI/CT/PET Services In-office Must Provide Written Disclosure to Medicare Patients" »

The Office of Inspector General (OIG) has continued to indict, prosecute, and convict members of the healthcare community for allegedly violating the Civil Monetary Penalty (CMP) statue and the False Claims statute. Some notable prosecutions are below:

- On February 2, 2010, Maria Aloise, the president and owner of Atenas Medical Equipment, Inc. (Atenas), was convicted on ten counts of healthcare fraud. Between the summer of 2006 and spring of 2007, Aloise submitted nearly $1.5 million in fraudulent claims to Medicare seeking reimbursement for DMEs by using forged prescriptions, certificates of medical necessity, and delivery receipts.

- On February 4, 2010, Yasmanny Benavides of Lacary Medical Services Equipment, Inc. (Lacary Medical) of Miami, Florida was found guilty by a federal jury for committing healthcare fraud and conspiracy to commit healthcare fraud. Lacary Medical provides durable medical equipment (DME) to Medicare beneficiaries. Between July and December of 2003, Lacary Medical submitted almost $5 million worth of false and fraudulent claims seeking reimbursement for DME items and services not prescribed by physicians. Further, Benavides controlled and operated Lily Orthopedic, Inc. (Lily Orthopedic), which also provided DMEs to Medicare beneficiaries in Miami. Between December 2003 and August 2004, Benavides and her co-conspirator Reinaldo Guerro, on behalf of Lily Orthopedic, caused for almost $15 million in false and fraudulent claims to be submitted to Medicare seeking reimbursement for DME items and services not prescribed by physicians.

- On February 8, 2010, Garden State Imaging (GSI) of New Jersey paid over $80,000 for allegedly violating the CMP statute for verbally agreeing to split the proceeds of mobile diagnostic imaging services provided to patients at a medical center between GSI and the owners of the medical center.

- On February 16, 2010, Dr. Harvey Montijo of Florida paid $650,000 for allegedly violating the CMP statute for soliciting and receiving remunerations "in the form of consulting payments from two medical device manufacturers in exchange for using their orthopedic hip and knee products.

This should be a reminder to everyone that the OIG continues to highly enforce and scrutinize healthcare professionals for violations of federal statutes. Please be sure to revisit your compliance programs and polices to ensure that they align with the most recent laws.

Continue reading "OIG Cracks Down First Months of 2010" »

Yesterday House Speaker Nancy Pelosi selected Congressman Pete Stark of California to head the powerful Ways and Means Committee, replacing New York Congressman Charlie Rangel, who has stepped aside temporarily amid ethics investigations. Stark is best known in health care for first proposing what is now known as "the Stark law," which regulates physician self-referral, in 1988. The first version of the Stark law was passed in 1989.

Continue reading "Pete Stark Replaces Charlie Rangel on House Ways and Means Committee" »