Archive for February, 2013

Supreme Court Upholds FTC Disapproval of Hospital Merger

February 24, 2013 Leave a comment


From Akerman’s Health Law Rx Blog:


In a decision issued on February 19, 2013, the U.S. Supreme Court upheld the Federal Trade Commission’s efforts to prohibit a hospital merger which would substantially reduce competition.  Federal Trade Commission v. Phoebe Putney Health System, Inc. involved the acquisition by a public hospital in Georgia of the only other hospital in the county.  The FTC alleged that the transaction would substantially reduce competition in the market for acute care hospital services and sought to prohibit the transaction as being in violation of Federal antitrust laws.

The lower court dismissed the FTC’s claim, holding that, because the acquisition was effected pursuant to Georgia’s Hospital Authorities Law, the acquisition was immune from Federal antitrust law under the state action doctrine.  Under the state action doctrine, certain anti-competitive actions taken or authorized by state government or an agency of state government are immune from Federal antitrust prosecution.  The Georgia Hospital Authorities Law authorized political subdivisions of the state of Georgia to create hospital authorities as special purpose entities, with the power to acquire, lease and operate hospitals and other healthcare facilities.   The hospital system successfully argued in the lower court that the power to acquire hospitals granted to it by the Hospital Authorities Law immunized the acquisition of the competing hospital from Federal antitrust law under the state action doctrine.

The Supreme Court reversed the holding of the lower court, ruling that the state action doctrine protects anti-competitive behavior taken or authorized by state government only if the anti-competitive actions are undertaken pursuant to a “clearly articulated and affirmatively expressed” state policy to displace competition.  The Supreme Court found that, although the Georgia Hospital Authorities Law granted public hospital authorities the power to acquire hospitals, there was no evidence in the Law that the Georgia Legislature affirmatively contemplated granting hospital authorities the power to substantially reduce or displace competition for hospital services in a particular market.

From a healthcare policy perspective, the case demonstrates support for competition among providers as a positive value that should be protected, absent a very specific indication of state intent to limit competition.  From a more general jurisprudential perspective, the case is a surprising example of the Roberts Court, in a unanimous decision, limiting the authority of the states and supporting and expanding Federal antitrust powers.

Overcoming Obstacles to Better Health Care

February 24, 2013 Leave a comment

Transforming the American health care system could include offering safe harbor from malpractice suits for doctors who demonstrate high-quality care.  See on

Meaningful healthcare reform needs tort reform so that healthcare providers can spend less time (and less insurer’s money) on defensive medicine and more time (and arguably less insurer’s money) on preventive medicine and thereby achieve more accountable medicine.

Actually, Mr. Brill, Fixing Healthcare Is Kinda Simple | Wired Science |

February 24, 2013 Leave a comment

When you need health care, you enter not a market but a con game in which you’re first a guarantor and source of profit, and second a patient. Wired Science blogger David Dobbs explains why the government needs to step up.  See on

Patients have no clout in so-called market driven healthcare because of its fragmented delivery and billing systems.  Having insurance further mystifies the process and hides the information necessary to make market decisions. Something like a patients union is needed to equalize the playing field.  For now, Obamacare is all that patients have to give them some protection against the two Titans in healthcare who have all the market power.


Christensen, Flier and Vijayaraghavan: The Coming Failure of ‘Accountable Care’

February 24, 2013 Leave a comment

In The Wall Street Journal, Clayton Christensen, Jeffrey Flier and Vineeta Vijayaraghavan say that the Affordable Care Act’s updated versions of HMOs are based on flawed assumptions about doctor and patient behavior.  See on

Beware the nay sayers. ACOs and other accountable care measures can only succeed if there IS a change in physician behavior. Changing the way healthcare is done in this country is the basis (and only workable basis) for meaningful improvement in healthcare while controlling costs at the same time. No one ever thought it would be easy or quick.  

Primary care doctors becoming more involved in mental health care

February 24, 2013 Leave a comment

Don’t be surprised if your family doctor seems as interested in your brain as in your body. (RT @BeneficentGuild: Primary care doctors becoming more involved in mental health care – The Observer-Dispatch, Utica, N.Y.  See on

This is not a new situation.  The AMA reported on this trend in 2010, as resulting largely from increased focus on depressions and other mental health issues and the lack of psychiatrists for treatment.

Can we learn something from America – Accountable Care Organisations

February 24, 2013 Leave a comment

It has become de rigueur on the left to regard the US healthcare system as the very incarnation of evil and therefore a country from which nothing of value can be learned for improving our NHS.  This might be about to change. There is now growing interest in the notion of the ‘Accountable Care Organisation’ (ACO) – or as it is tending to be termed over here, the Accountable Integrated Care System.

The Accountable Care Organisation concept is gathering pace in the US following the 2010 Patient Protection and Affordable Care Act, which included a pilot programme to explore ACO structures and processes. Under the new law, an ACO would agree to manage all of the healthcare needs of a minimum of 5,000 Medicare beneficiaries for at least three years. The ACO can gain extra money through sharing savings (with Medicare) resulting from collaborative efforts to provide care cost-effectively. Stringent governance conditions must be met, along with transparency and quality performance – Medicare ACOs will report on 33 different quality metrics.

In his recent ‘Green Paper’ speech on future Labour Party health policy, Andy Burnham spoke of the need for  “one service co-ordinating all of one person’s needs“, with the district general hospital “evolving over time into an integrated care provider from home to hospital“. Indeed, he went on to say:

“If we look to the US the best providers are working on that highly integrated basis, co-ordinating physical, mental and social care from home to hospital. We have got to take the best of that approach and universalise it here.”   See on

From the Socialist Health Association of Scotland. I don’t want to think about the ramifications of having an important part of Obamacare endorsed by a socialist health organization. However, labels aside the ability to provide coordination of care in a private setting is a good thing, which is why ACOs are so critical to meaningful healthcare reform.


Your EHR needs a population health management system

February 24, 2013 Leave a comment

Office-based medical practice is changing fast. The government is providing incentives to those practices that use electronic prescribing and electronic records systems and will soon penalize those that don’t. Health reform will shortly deliver many newly insured patients to your office. A host of new patient care models aimed at making healthcare more team-based are emerging. Reimbursement tied to outcomes will demand a greater level of patient management and engagement in the care process.

Often, though, an EHR alone cannot provide the functionality necessary to manage a specific population of patients.

There are many reasons a practice may need to identify and proactively work with a defined group of patients. Primarily, it’s to insure they are receiving care according to the evidenced-based standards agreed upon by the practice.  See on

Many physicians are re-evaluating their first choice of EHR and are changing to others as they learn how they work and what is needed for their medical practices.  This is just one more instanceof making saure your EHR is robust enough to add new important components as the need develops.


The New Imperative Of Patient Engagement For Hospitals And Health Systems

February 15, 2013 Leave a comment

Currently, most hospitals and health systems focus on patient engagement because of their mission to deliver patient-centric care. These efforts are pursued despite the neutral or even negative economic consequences to these organizations, which operate within the fragmented, fee-for-service payment system. For example, care coordination attendant to patient engagement efforts will, at times, reduce demand for services and, thereby, reduce fee-for-service payments to providers.

As public and private sector health care purchasers shift payment models towards value and as demographic changes result in more chronically ill patients entering the health care system, patient engagement efforts will become increasingly important to the financial sustainability and clinical success of these hospitals and health systems.

New patient engagement efforts shift focus from the inpatient core of hospitals to ambulatory care settings and to the integration of care into the homes and communities of patients. To succeed at these efforts, organizations must build longitudinal partnerships with patients to drive ongoing management of chronic conditions and utilization of preventive care services to drive long-term quality and cost outcomes.

See more on

Court Determines Whether Marketing Rep Was Really a Bona Fide Employee

February 15, 2013 Leave a comment


From Akerman’s Health Law Rx Blog:


In January, a Federal District Court in Oklahoma issued a ruling in favor of a former marketing representative of a medical equipment distributor.  The Court determined that Gary Weaver was, in fact, engaged on an independent contractor basis, not as an employee, and therefore his employment agreement with Joint Technology, Inc. was an unenforceable illegal contract under the Federal Anti-Kickback Statute.  Mr. Weaver was being sued by the company in order to enforce the terms on a non-compete provision in his employment agreement. 

Health care providers often take advantage of the “bona fide employee” exception to the Federal Anti-Kickback Statute in order to engage marketing representatives and incentivize them to create business by paying bonuses and commissions. In addition, many states also have similar “mini” anti-kickback statutes that apply whether or not reimbursement is from Medicare or Medicaid. These exceptions allow employers to incentivize employees by paying them a portion of the business generated – something employers could not do legally with persons engaged as independent contractors. 

In Weaver’s case, this was not a particularly difficult conclusion to make. His “employment agreement” had a provision which specifically said that he would not be deemed an “employee”. He was also treated as an independent contractor for tax purposes. 

Whether or not someone is an independent contractor or an employee is determined by statutory and common law rules. The common law analysis is set out on the IRS’ website here. The test turns largely on control. Employers have the right to control where, when and how their employees work, whereas independent contractors control themselves. The issue is important for tax purposes (withholding, eligibility for retirement benefits, etc.), for enforcing the terms of engagement, as well as for making sure that payments to representatives are legal under the Anti-Kickback Statute.

In 1996, a Florida court came to a similar conclusion in the case of Medical Development Network, Inc. v. Professional Respiratory Care/Home Medical Equipment Services, Inc.  In that case, it was the marketing company suing for non-payment, and the medical equipment company defending under the theory that the agreement was illegal and unenforceable. The Court agreed with the defendant, and disagreed with the plaintiff’s argument that the Anti-Kickback Statute only applies to health care providers.  The Medical Development Network case remains good law and is a warning to healthcare providers in Florida not to pay their independent contractor marketers on a commission basis.

Recent Criminal and Civil Enforcement Actions

February 15, 2013 Leave a comment


From Akerman’s Health Law Rx Blog:


In 2009, the Health Care Fraud Prevention and Enforcement Action Team (“HEAT”) initiative was formed as a joint effort between the Departments of Justice and Health and Human Services, and combating health care fraud continues to be a major focus of federal and state authorities. The Office of Inspector General (“OIG”) publishes a list of the criminal and civil enforcement actions and the punishment that has been meted out to those convicted of some sort of healthcare fraud. Here are three examples from February listings where jail time or substantial fines or both have been imposed.

  • On February 1, a 50-year-old pharmacist who owned and operated 26 pharmacies in the Detroit area was sentenced to 17 years in prison. The evidence presented at trial showed that during 2006 through 2011 the pharmacies had billed Medicare and Medicaid more than $57 million, at least 25% of which billings were fraudulent as being either medically unnecessary or never actually dispensed. Similar fraudulent activities occurred with respect to commercial insurance. The pharmacist’s business model was to pay kickbacks to physicians in exchange for writing prescriptions for expensive medications or for controlled substances without regard to medical necessity. In addition to the jail time, the defendant was required to repay Medicare and Medicaid $17.3 million and commercial insurers $1.5 million.
  • On February 4, two patient recruiters for a Miami home healthcare company pleaded guilty for their participation in a $20 million home health Medicare fraud scheme. The recruiters admitted that during 2007 through 2009, they recruited patients for which the home health agency could bill Medicare, and the home health agency’s owners paid them kickbacks and bribes. Medicare was billed for home health care and therapy services that were either medically unnecessary or not provided. The recruiters face jail time and fines, and each of the two  home health agency’s owners have already been sentenced to over 6 years in jail.
  • On February 7, St. Joseph’s Medical Center, a hospital located in Towson, MD, agreed to pay $4.9 million in connection with its submission of false claims to Medicare, Medicaid, and other federal healthcare programs. The hospital stated that during 2007 through 2009 it admitted patients for short stays – typically one or two days – that were not warranted by the patient’s medical condition but which would result in larger insurance payments than was appropriate.

If you are aware of potentially fraudulent or even inadvertent noncompliant activities in your healthcare business, you need to seek assistance to fix those problems before they become the object of an investigation. Because former employees and business partners of healthcare providers are often the ones reporting the fraudulent activities to the authorities, problems cannot be ignored.

Since the the above blog was posted on the Akerman Health Law Rx Blog, the following was posted by the OIG:

Cardiologist admits taking cash kickbacks for patient referrals —  According to a February 14, 2013 press release from the Office of the U.S. Attorney, District of New Jersey:

Shashi Agarwal, 60, of Edison, N.J., who has his own cardiology practice in East Orange, N.J., pleaded guilty before U.S. District Judge Claire C. Cecchi in Newark federal court to an Information charging him with one count of soliciting and receiving more than $100,000 in cash kickbacks in violation of the federal health care anti-kickback statute.

Agarwal is the 10th person to plead guilty in the government’s investigation into the scheme to pay cash to health care providers who referred patients to Orange Community MRI, LLC (Orange MRI) in Orange N.J., for diagnostic testing.

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