Health Law Attorney Blog

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 January 22, 2010, the St. Mary Medical Center of Long Beach, California paid nearly $500,000 for allegedly violating the CMP statute for paying remunerations in the form of administrative services and leased space.

- 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" »

One of HLP's founding partners, Adrienne Dresevic, Esq., who specializes in Stark and fraud & abuse analysis, published a new article in the latest issue of the RBMA Bulletin, a publication of the Radiology Business Management Association. Adrienne's article, entitled "Key Regulations Impacting Marketing: Entertainment and Gifts," explains the regulatory limitations placed on health care professionals when marketing, and is a must-read for physicians and other providers trying to expand their business.

Continue reading "HLP Attorney Dresevic Published on Stark and AKS in RBMA Bulletin" »

Shortly before the holidays, Boston Scientific agreed to pay $22 million to resolve allegations that its subsidiary, Guidant, paid kickbacks to physicians to induce them to use Guidant pacemakers and defibrillators, in addition to a previous agreement to pay a $296 million fine resulting from a criminal investigation relating to defective defibrillators. On December 23, 2009, Boston Scientific entered into a separate civil kickback settlement due to allegations that Guidant paid between $1,000 and $1,500 to cardiologists and electrophysiologists to participate in post-marketing studies. As part of this settlement, Boston Scientific must publish the names of the physicians involved and payment amounts on the CIA's website by June 2011.

Continue reading "Kickback Settlement Includes Publishing Names of and Payments to Physicians" »

Alleging False Claims Act, Stark Law, and Anti-Kickback violations, the University of Medicine and Dentistry of New Jersey (UMDNJ) settled with the Department of Justice (DOJ) and the Department of Health and Human Services (HHS) for $8.3 million--double what Medicare paid for the allegedly improper referrals. UMDNJ is licensed as a Level I Trauma Center. For UMDNJ to maintain its Level I license, it is required to meet a threshold of cardiac procedures it performs. According to the government, because UMDNJ fell below this threshold in 1995, it entered into agreements with cardiologists that involved inducing those cardiologists to refer their cardiac procedures to UMDNJ. Additionally, the DOJ settled with nine other cardiologists involved in the alleged scheme, two of who plead guilty to criminal embezzlement charges.

Chairman of the UMDNJ Board of Trustees describes the settlement as a "significant next step" in UMDNJ's evolution toward operating "under the highest ethical standards."

The Department of Justice issued a Press Release regarding this settlement.

Continue reading "$8.3 Million Settlement between University of Medicine and Dentistry of New Jersey Alleging Stark and Anti-Kickback Violations" »

Centers for Medicare and Medicaid Services (CMS) noted that consignment closets (also known as stock and bill arrangements) have not complied with durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) supplier standards. As a result, CMS issued a Change Request (CR) affecting physicians and DMEPOS suppliers, which allows for consignment closets only when all of the following are met:

1. When the DMEPOS is furnished to the patient, the title is transferred to the physician;
2. The physician bills for the DMEPOS using his or her own DMEPOS billing number;
3. Services related to the DMEPOS are performed by those associated with the physician (as opposed to a DMEPOS supplier); and
4. When patients are having complications with the DMEPOS, they are instructed to contact the physician and not the DMEPOS supplier.

CMS cautions, however, even if a physician satisfies the aforementioned requirements, he or she must also be aware of the limitations of Stark. In general, Stark prohibits physicians from "self-referring" for "designated health services," which include DME. There is an exception from this general Stark prohibition for the in-office furnishing of certain limited items of DME by physicians (i.e., canes, crutches, walkers and folding manual wheelchairs, and blood glucose monitors), all of which are subject to certain specified requirements, as well as infusion pumps that constitute DME. Physicians may not furnish or bill Medicare for any other items of DME except in certain special circumstances (e.g., rural providers).

The CR impacts consignment closet arrangements with physicians only. Arrangements with hospitals and other facilities are, at least as of now, not affected by these recent changes.

Continue reading "DME CONSIGNMENT CLOSETS LIMITED" »

OIG issued Advisory Opinion 09-10 permitting "network hospitals to discount the Medicare inpatient deductible for the Requestors' policyholders...." Requestors are offer Medigap policies in a majority of US states. The Arrangement would allow for the Medigap policyholders to receive a 100% discount on Medicare Part A, inpatient deductibles received at participating hospitals and preferred provider organizations (PPOs). "Each Requestor's Medigap policy would pay the PPO a fee for administrative services each time one of its insureds receives this discount." Then, the Requestors would return a portion of the savings from this Arrangement and give it back to the policyholder as a $100 credit for the following year's premium.

The OIG noted that this would implicate anti-kickback and civil monetary penalties (CMP) as "[t]he law is clear that prohibited remuneration under the anti-kickback statute may include waivers of Medicare cost-sharing amounts...[t]he safe harbor regulation for waivers of inpatient deductibles specifically excludes such waivers when they are part of an agreement with an insurer, such as the Requestors." However, for the following reasons, the OIG concluded that the Arrangement would not implicate OIG sanctions:

- the waivers would leave the per service Medicare payments unaffected;
- the discounts would make no difference to patients (because those patients affected had already purchased a supplemental insurance plan to cover those costs);
- any hospital may participate, thus eliminating unfair competition between the hospitals;
- the physicians will not receive a remuneration; and
- the Arrangement could, potentially, "lower Medigap costs for the Requestors' policy holders who select network hospitals."

Continue reading "OIG Permits Hospitals to Discount Medicare Inpatient Deductibles" »

OIG issued Advisory Opinion 09-08 allowing Requestor--"a pharmaceutical and healthcare company that develops, manufactures, and markets pharmaceutical products--to develop a Program "that will make available at no charge certain of its drug products to indigent patients without prescription drug coverage." The OIG determined that the Program falls under the umbrella of a Bulk Replacement Model, in which healthcare facilities can apply for pharmaceuticals in bulk rather than individually, maximizing efficiency and practicality.

The OIG stated that its central concern with this model is "whether the Program may be a vehicle through which Requestor offers or pays remuneration to Participating Hospitals either: (1) to induce Participating Hospitals to purchase or order (or arrange for, or recommend, the purchasing or ordering of) the Requestor's products that are payable by a Federal health care program; or (2) to influence the prescribing patterns of physicians at Participating Hospitals with respect to the Requestor's products that are payable by a Federal health care program." For the following reasons, the OIG determined that the risk of violating the anti-kickback statute and imposing civil monetary penalties (CMP) are low or non-existent:

1. because the Requestor will be admitting hospitals based on the hospital's size and disproportionate share (DSH) percentage rankings, the Requestor can ensure that the hospitals with the greatest number of indigent patients will be served with the Program;
2. because the Program involves outpatient drugs and the Requestor will ship the drugs out each quarter based on the drugs dispensed during the previous quarter, the Participating Hospitals will not obtain excess drugs;
3. the Participating Hospitals will not receive any fees for participating in the Program;
4. the physicians at the Participating Hospitals will not receive any fees for prescribing Program Drugs;
5. the Program's transparency where "the terms [are] documented in a written, signed agreement between Requestor and each Participating Hospital that covers all of the Program Drugs to be provided;"
6. those who receive the Program Drugs do not have prescription drug coverage and are among the financially needy; and
7. because Requestor is not a provider, practitioner, or supplier, CMP is not implicated.

Thus, for the foregoing reasons, the Program would not receive OIG scrutiny.

Continue reading "OIG Allows Pharmaceutical Manufacturer to Create Free Physician Assistance Program" »

OIG permitted joint venture of Ambulatory Surgery Center (ASC) by a hospital and LLC. In its Advisory Opinion 09-09 released yesterday, the Office of Inspector General (OIG) analyzed a situation in which a Hospital and an LLC (Surgeon LLC), owned by seven orthopedic surgeons (Surgeon Investors), would jointly own a company that will own and operate an ASC (Hospital-Surgeon ASC). Among other considerations, the OIG considered whether this arrangement posed a violation to the Federal anti-kickback statute. The OIG concluded that it did not and thus, the OIG "would not impose administrative sanctions on...the 'Requestors.'"

While the anti-kickback statute does have "a safe harbor for investment income from ASCs jointly-owned by physicians and hospitals," the OIG considered reasons why the proposed arrangement would not be protected under the safe harbor and how the proposed arrangement would pose "a minimal risk under the anti-kickback statute."

The first concern was whether or not the Hospital would be able to minimize its influence over referrals. Because the Hospital would go to great lengths to ensure there were no internal referrals (for instance, the employees of the hospital will not refer to the Hospital-Surgeon ASC and the Hospital will not track referrals), the OIG determined that "the ability of the Hospital to direct or influence referrals to the Hospital-Surgeon ASC or to its Surgeon investors is significantly constrained." The second concern was whether having a "pass through" entity (i.e., using the Surgeon LLC to own a Company that owns and operates the Hospital-Surgeon ASC) to hold the investment interests in the ASC would increase a risk of fraud and abuse. The OIG determined that this arrangement is no different than each Surgeon Investor directly owning part of the Hospital-Surgeon ASC (which is the method under the anti-kickback safe harbor) and is, thus, permissible. Finally, the OIG considered whether "obtaining appraisals of the tangible assets of the ASCs at the time of their merger, with either party (the Surgeon LLC or the Hospital) contributing cash, if necessary to equalize the value of their respective contributions" is an adequate method of giving the investors returns on their investments. The OIG concluded that there is a low risk of abuse associated with this method.

Concluding that the aforementioned concerns posed a low-minimum risk of fraud and abuse, the OIG determined that the proposed arrangement probably would not result in administrative sanctions from the OIG.

Continue reading "OIG Allows Joint Venture of Ambulatory Surgery Center by a Hospital and LLC" »

This article is the second part of a 2 part series addressing recent federal regulatory action targeting diagnostic imaging arrangements. Part 1 (published in the January/February 2009 issue of Radiology Management) focused solely on some of the more significant changes to the federal Stark regulations. Part 2 will summarize some of the significant regulatory actions contained in the 2009 Medicare Final Physician Fee Schedule addressing the Medicare antimarkup provisions and issues relating to independent diagnostic testing facilities (IDTFs). Additionally, this article will address anticipated Medicare audit activity for diagnostic imaging providers in connection with the Medicare Recovery Audit Contractor Program. Industry stakeholders should anticipate, and be attentive to, further regulatory action addressing imaging arrangements. On October 30, 2008, CMS displayed the 2009 Medicare Final Physician Fee Schedule (2009 MFPFS). This article summarizes the anti-markup provisions and the IDTF enrollment requirements contained in the 2009 MFPFS.

Continue reading "Recent Developments and Key Legal Issues Impacting Diagnostic Imaging Services, Part 2" »

In recent years, the diagnostic imaging services industry has been intensively scrutinized by the federal government, as evidenced by heightened regulatory action targeting certain diagnostic imaging arrangements, such as changes to the federal Stark Law (that restrict the flexibility of structuring diagnostic imaging arrangements), expansion of the federal anti-markup prohibition, changes to the independent diagnostic testing facility (IDTF) performance standards, and implementation of payment changes related to the way imaging services are paid under the physician fee schedule. Industry stakeholders should anticipate, and be attentive to, future regulatory changes, as the Centers for Medicare and Medicaid Services (CMS) is expected to continue to focus on areas such as diagnostic imaging, which it believes are vulnerable to patient and program abuse, and which is among the fastest growing set of services paid for under Medicare Part B physician fee schedule.

To read the remainder of this article, click here.

Continue reading "Recent Developments and Key Legal Issues Impacting Diagnostic Imaging Services, Part 1" »

Recent legislative initiatives to restrict (or eliminate) the Stark Law's In-Office Ancillary Services Exception (IOASE) are by no means a new phenomenon. Rather, over the last few years, the Centers for Medicare and Medicaid Services (CMS) has introduced several significant proposals targeting the provision of diagnostic imaging (and other ancillary services) in the physician office setting, through proposed changes to the Stark regulations, independent diagnostic testing facility (IDTF) regulations, and other Medicare reimbursement regulations (such as the Medicare Anti-Markup Rule [AMR]). Despite these proposals, however, the IOASE remains intact and the prospect of a near-term wholesale elimination of the IOASE appears remote. This article provides a brief overview of the IOASE and examines some recent CMS legislative initiatives directed at diagnostic imaging arrangements. Finally, this article discusses the current status of the IOASE, which permits (and, we expect, will continue to permit) appropriately structured diagnostic imaging arrangements in the physician office setting.

To read the remainder of this article, click here.

Continue reading "The Continued Relevance of the Stark Law's IOASE: In-Office Imaging Arrangements Remain Viable" »

According to the 2010 Proposed Physician Fee Schedule (PPFS), as of January 1, 2012, the Center for Medicare and Medicaid Services (CMS) proposes that Medicare payment be made only for the technical component (TC) of advanced diagnostic imaging services to suppliers who have met the accreditation requirements set forth by the Secretary. According to CMs, the new rule will set forth the criteria for designating organizations to accredit suppliers furnishing the technical component. Additionally, the new rule would ensure that the criteria used by an accreditation organization meet minimum standards for each imaging modality. "Advanced diagnostic imaging services" is defined in the PPFS as "diagnostic magnetic resonance imaging, computed tomography, nuclear medicine, and positron emission tomography."
The proposed regulation requires medical directors and supervising physicians to have a number of qualifications including having proper training in advanced imaging services through a residency program; having the expertise to be a medical director or supervising physician; having completed continuing medical education courses pertaining to advanced imaging services; and any other requirements the Secretary deems appropriate. Additionally, suppliers have a number of requirements, including implementing a quality control program ensuring "the technical quality of diagnostic images produced by the supplier;" ensuring the equipment meets performance specifications; and ensuring the safety of personnel.
To become an accredited supplier, the independent accreditation organization must submit an application to CMS including, but not limited to, the following information:
- A detailed description of how the organization's accreditation criteria satisfy the statutory standards;
- An agreement conforming the accreditation requirements with any statutory Medicare changes;
- A description of the organization's knowledge and experience in the advanced diagnostic imaging field; and
- Any other requirements designated by CMS.
Once an application has been sent, CMS will send a notification stating whether or not the organization's application has been accepted or denied. For denied applications, applicants have an opportunity to ask for reconsideration, resubmit the application, or withdraw the application.
For those organizations that have been accredited, CMS will conduct validation audits to ensure that those organizations maintain the criteria and follow the procedures necessary for an entity supplying advanced diagnostic imaging. The audits will be conducted on a representative sample of accredited suppliers. If an organization is determined to fail the audit, its accreditation will be revoked.
Following audits, CMS will be alerted to entities that display the following:
- A 10% rate of disparity between findings by the accreditation organization and findings by CMS or its contractor on standards that did not constitute immediate jeopardy to patient health and safety if not met;
- Any disparity between findings by the accreditation organization and findings by CMS or its contractor on standards that constitute immediate jeopardy to patient health and safety if not met; or
- Widespread or systematic problems in the organization's accreditation process such that the accreditation no longer provided assurance that suppliers met or exceeded the Medicare requirements, irrespective of the rate disparity.
After further review of the organizations displaying any of these signs, those organizations will be evaluated and will be subject to having their approval withdrawn if they display any of the following:
- The organization no longer provides sufficient assurance that the suppliers meet the requirements of the Act;
- Anything that constitutes a significant hazard to public health; or
- The organization failed to meet is application or reapplication procedures.
For organizations that fail the audit, CMS will send a notice of intent to withdraw approval. Those organizations may ask for reconsideration.

Continue reading "2010 Proposed Physician Fee Schedule - Advanced Imaging Updates" »

An Office of Inspector General (OIG) Advisory Opinion, OIG Advisory Opinion No. 09-06, was released addressing the issue of whether or not "expanding an existing program that provides free oral nutritional supplements to malnourished end-stage renal disease patients who are on dialysis" would violate the civil monetary penalty provision or the anti-kickback statute.

The Requestor (the individual(s) requesting the opinion) operates dialysis facilities serving patients with end-stage renal disease (ESRD). Many of these patients, as a result of their ESRD, suffer from malnutrition. When ESRD patients consume oral nutritional supplements, it has shown improved health including "decreased risks of hospitalization, infection, and mortality." Unfortunately, according to Requestor, many of these patients will not take the supplements on their own, even if the physician recommends it, because they do not taste good. The Requestor currently conducts a small-scale program that provides a three-month supply of the nutritional supplements per year per patient. The Requestor wants to expand this program on a larger scale taking into account the following considerations:
- The patient would only be eligible for the program if s/he met certain requirements set by the Requestor;
- The Requestor would only provide the nutritional supplements upon the patient's physician's request , when medically necessary;
- The Requestor would deliver the dose to the patient with certain conditions including taking the dose at dialysis facility and consuming the dose within a certain time frame of the dialysis treatment;
- Once the patient is ineligible, the nutritional supplements would no longer be provided to the patient;
- There would be not advertising of the nutritional supplements to anyone; and
- Nobody would claim the cost of the nutritional supplements on the Federal health care program cost report in any way.

In its analysis, the OIG was "particularly concerned that dialysis facilities might induce beneficiaries to obtain Federally payable items and services by offering them the [nutritional] [s]upplements when they are not, in fact, part of a targeted, properly structured, and clinically appropriate treatment modality." Noting the reasons why Congress restricted giveaways related to Medicare and Medicaid, the OIG concluded that the program "poses a low risk of fraud and abuse." Furthermore, the OIG mentions that the risk of abuse is "effectively minimize[d]" due to the aforementioned considerations.

As the OIG notes, the program could raise remuneration issues under the anti-kickback statute; however because of the aforementioned considerations and safeguards, the OIG concluded that the program would not result in the OIG imposing sanctions for violating the civil monetary penalty provision or the anti-kickback statute.

Continue reading "OIG Permits Giving Free Nutritional Supplements to End-Stage Renal Disease Patients" »

An Office of Inspector General (OIG) Advisory Opinion, OIG Advisory Opinion No. 09-06, was released addressing the issue of whether or not "an existing arrangement in which a hospital has agreed to share with a cardiology group, a vascular surgical group, and an interventional radiology group a percentage of the hospital's cost savings arising from the physicians' implementation of a number of cost-reduction measures in certain cardiac catheterization procedures (the "Arrangement") would violate the anti-kickback statute or impose civil monetary penalties for "a hospital's payment to a physician to induce the reduction or limitation of services to Medicare or Medicaid beneficiaries under the physician's direct care."

The Arrangement involved a hospital agreeing to pay a cardiology group, radiology group, and a vascular surgical group a "share of the cost savings directly attributable to specific changes in that particular [g]roup's cardiac catheterization procedures. " To develop the Arrangement, the Program Administrator conducted a study and identified 21 specific cost-saving opportunities with respect to cardiac catheterization procedures. After the groups and the hospital reviewed the opportunities, they adopted the recommendations and conclusions.

"The Arrangement contained several safeguards intended to protect against inappropriate reductions in services." The safeguards include, ensuring that the individual physicians made patient-by-patient determinations regarding the most appropriate device or supply to be used in the procedures; ensuring that the physicians could still access the same selection of devices and supplies; and ensuring that the money gained through the Arrangement was not a result of limiting the availability of devices and supplies. Additionally, to ensure the quality of care did not decrease, the Program Administrator monitored the performance of the covered cardiac catheterization procedures.

The Arrangement also contained three limitations on payment. Firstly, compared to the base year, if the number of cases that were payable by a Federal healthcare program increased, there would be no sharing of cost savings for the additional cases. Secondly, if there was an indication of significant changes in patient referrals to other hospitals, the physician would be terminated from participating in the Arrangement. Finally, groups would not receive more than 50% of that group's share of the "projected cost savings identified in the base year."
The Program Administrator found that there were "substantial cost-savings opportunities...without any adverse impact on the quality of patient care."
The OIG recognized that the Arrangement could be beneficial in many ways, but enumerated four concerns it had regarding the Arrangement:
1. Stinting on patient care;
2. "Cherry picking" health patients and steering sicker (and more costly) patients to hospitals that do not offer such arrangements;
3. Payments in exchange for patient referrals; and
4. Unfair competition (a "race to the bottom") among hospitals offering cost-savings programs to foster physician loyalty and to attract more referrals.
Furthermore, the OIG stated that the Arrangement implicates three Federal laws: the civil monetary penalty (§ 1128A(b)(1)-(2) of the Social Security Act), the anti-kickback statute (§ 1128BB(b)), and the physician self-referral law.

Regarding the civil monetary penalty, the OIG evaluated, and ultimately determined that, "the Arrangement induces physicians to reduce or limit items or services;" however, 'the Arrangement has several features that, in combination, provide sufficient safeguards so that we would not seek sanctions...."

Regarding the anti-kickback statute, the OIG determined that "[t]he safe harbor for personal services and management contracts...is potentially applicable to the Arrangement." Determining that the Arrangement does not exactly fit the exception because the groups received a percentage and not an aggregate compensation set in advance, the OIG determined that it would not impose sanctions; however, illegal remuneration could be possible, though the Arrangement poses a "low risk of fraud or abuse under the anti-kickback statute."

Thus, though this Arrangement is not perfect, the OIG determined that it contains sufficient safeguards to protect against OIG sanctions and, possibly, violations of federal law.

Continue reading "OIG Says OK to Paying Groups for Imposing Cost-Saving Opportunities" »