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The Week in Health Law — “Back to School” Podcast for Healthcare Lawyers

August 16, 2015 Leave a comment

Great podcast for healthcare attorneys and keeping current — The Week in Health Law.

“TWIHL presents its first Back to School Special. We asked some wonderful health lawyers what were the compelling additions to this Fall’s health law curriculum. The answers are diverse and fascinating. To hear their explanations look for episode 22 when you subscribe at iTunes, listen at Stitcher RadioTunein and Podbean, or search for The Week in Health Law in your favorite podcast app.”

OIG Fraud Alert on Physician Compensation — Why Is No One Listening?

July 11, 2015 1 comment

A few weeks ago, the OIG published another one of its fraud alerts.  This one was entitled, “Physician Compensation Arrangements May Result in Significant Liability.”

Everyone knows (don’t they?) that business arrangements in healthcare have to meet several legal requirements, including: (1) it cannot be based on the value or volume of referrals, (2) it must be at arms’ length, and (3) it must be commercially reasonable.  When a healthcare provider enters into a transaction that violates any of these three requirements, he may have violated the anti-kickback statute or physician self-referral/Stark law or both, and any claim arising from the transaction that is submitted to the federal government for payment may be a false claim.  Healthcare lawyers have long been warning their clients to be cautious about how they pay (and recruit) physician employees and contractors in order to avoid violations of the kickback, self-referral, and false claims laws. Violations carry stiff penalties and in some cases criminal sanctions.

There is nothing new in this recent Fraud Alert.  Many similar fraud alerts and OIG advisory opinions and actual court cases have passed on the same message.  And there is nothing surprising other than that the facts described in this Fraud Alert so obviously violate these healthcare laws that you have to ask, why is no one listening?

I have a three explanations:

  • The false claims act was passed during the Civil War and was aimed at stopping corruption in how defense contractors were paid.  The law made sense.  There was a direct relationship between the defense contractor and the government dollars received.  However, the false claims act makes no sense in healthcare — treating a patient is so separated from payment; the provider at the time of care may not know who is paying — government, commercial, the patient, or no one.
  • The healthcare laws are so contrary to the economic rules that apply to other businesses and so counter-intuitive as to make them offensively ridiculous and begging to be ignored (which they are).
  • As we move to a pay for performance, quality-based healthcare reimbursement system, these laws become even more irrelevant.  Case in point — Accountable Care Organizations — a critical foundation for healthcare reform under the Accountable Care Act.  ACOs could not operate unless waivers to these healthcare laws were implemented.  Every healthcare provider is not in an ACO, but many are developing clinically integrated networks and other arrangements to oversee quality and utilization in order to compete more effectively with large healthcare systems and negotiate with payors in keeping with the goals of healthcare reform.  They are forced to act as if the waivers applied to them also.  In fact many consultants advise that the waivers DO apply to non-ACO networks.

It is time for a thoughtful review (and repeal) of these antiquated and economically debilitating laws in how they apply to healthcare providers.  It is time to stop calling business sensible healthcare transactions fraudulent and punishing the participants.

These laws allow regulators to be lazy and stupid. Anyone can enforce laws based an strict liability or ones that have lines so faint that crossing them is unavoidable.

Seriously, who cares if someone pays a fee for referring a patient for care?  Liability should be based on the quality and necessity of the care.  Providing care not needed or charging for care not given — those actions should be punished.  But that’s harder for regulators, so we continue to vilify healthcare providers and impose burdens on them that are far tougher than the benefits derived.

Last Week’s Big Healthcare Law Stories

May 30, 2015 Leave a comment

As healthcare providers and their lawyers know, things happen fast in healthcare.  Business deals, enforcement activity, new inventions and discoveries.

Here are a few headlines from last week in no particular order:

  • OIG Mid-Year 2015 Work Plan Mid-Year Update — The OIG published its 86 page mid-year update to its 2015 Work Plan. “This edition of the Work Plan, effective as of May 2015, describes OIG audits, evaluations, and certain legal and investigative initiatives that are ongoing. In response to adjustments made to our Work Plan, this mid-year update removes items that have been completed, postponed, or canceled and includes new items that have been started since October 2014. The word “new” before a project title indicates that the project did not appear in the previous Work Plan. For each project, we include the subject, primary objective, and criteria related to the topic. At the end of each description, we provide the internal identification code for the review (if a number has been assigned) and the year in which we expect one or more reports to be issued as a result of the review. This edition also forecasts areas for which OIG anticipates planning and/or beginning work in the upcoming fiscal year and beyond. Typically, these broader areas of focus are based on the results of OIG’s risk assessments and have been identified as significant management and performance challenges facing HHS. In FY 2015 and beyond, we will continue to focus on emerging payment, eligibility, management, and information technology systems security vulnerabilities in health care reform programs, such as the health insurance marketplaces. OIG plans to add to its portfolio of work on care quality and access in Medicare and Medicaid, as well as on public health and human services programs. OIG’s examination of the appropriateness of Medicare and Medicaid payments will continue, with possible additional work on the efficiency and effectiveness of payment policies and practices in inpatient and outpatient settings, for prescription drugs, and in managed care. Other areas under consideration for new work include, for example, the integrity of the food, drug, and medical device supply chains; the security of electronic data; the use and exchange of health information technology; and emergency preparedness and response efforts.”
  • CMS Proposes New Rule for Medicaid Managed Care — “This proposed rule would modernize the Medicaid managed care regulations to reflect changes in the usage of managed care delivery systems. The proposed rule would align the rules governing Medicaid managed care with those of other major sources of coverage, including coverage through Qualified Health Plans and Medicare Advantage plans; implement statutory provisions; strengthen actuarial soundness payment provisions to promote the accountability of Medicaid managed care program rates; and promote the quality of care and strengthen efforts to reform delivery systems that serve Medicaid and CHIP beneficiaries. It would also ensure appropriate beneficiary protections and enhance policies related to program integrity. This proposed rule would also require states to establish comprehensive quality strategies for their Medicaid and CHIP programs regardless of how services are provided to beneficiaries. This proposed rule would also implement provisions of the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA) and addresses third party liability for trauma codes.”
  • Florida Senate Tweaks Health Exchange Plan For Fast Action — “The new Senate plan would jettison an initial proposal to expand Medicaid this summer, but instead would still rely on federal money linked to President Barack Obama’s health care overhaul. Low-income Floridians would be eligible to purchase coverage through a new state-run exchange, but they would have to pay premiums and they would be required to work. The new health coverage plan would require federal approval and would not kick in until January.  It would also allow consumers who are currently getting insurance through the federal exchange to continue doing so instead being bumped to an expanded Medicaid program — something the House criticized in the initial proposal.”
  • New York Assembly Passes Universal Health Care Bill — The New York Assembly passed the New York Health Act, which is seen largely as a symbolic gesture and not likely to be passed by the Republican New York Senate.  The bill’s Economic Analysis stated “This report analyzes the economic effects of the New York Health Act …, which would establish a comprehensive, universal health insurance program for all New Yorkers. The Act would replace the current multi-payer system of employer-based insurance, individually acquired insurance, and federally sponsored programs (e.g., Medicare and Medicaid) with a single billing pipeline funded by broad-based progressively graduated assessments collected by the State and based on income and ability to pay, thereby reducing administrative bloat and monopolistic pricing and dramatically reducing the cost of health care to New Yorkers even while extending and improving the provision of care.”
  • 21st Century Cures Act: A Call to Action — “The House Energy and Commerce Committee recently approved the 21st Century Cures Act with a vote of 51-0. The nonpartisan legislation will help to modernize and personalize health care, encourage greater innovation, support research, and streamline the system to deliver better, faster cures to more patients.”
  • FTC Commissioner Calls For War On Hospital Construction Laws — Law360 reported yesterday that “Federal Trade Commissioner Maureen K. Ohlhausen on Friday urged the antitrust agency to put pressure on state legislatures around the country to scrap laws requiring state approval for the construction of new hospitals, saying the laws are ‘anti-competitive’ in nature and create barriers for new market entrants.”
  • Two Cardiologists To Pay Over $3.6 Million For Fraud — “Jasjit Walia and Preet Randhawa and their New Jersey-based cardiology practice Garden State Cardiovascular Specialists will pay the amount to resolve allegations that they submitted claims to federal insurance program Medicare for various cardiology diagnostic tests and procedures. The tests included stress tests, cardiac catheterizations and external counterpulsation, which were not medically necessary, US Attorney Paul Fishman for the District of New Jersey said.”
  • Florida’s Medical Marijuana Rules Upheld — “Florida Administrative Hearings Judge David Watkins rejected claims by an Orange County nursery that the state’s proposed rules and regulations were unfairly developed to give advantage to bigger, politically connected nurseries to win the five regional medical-marijuana-growing licenses the law allows. … Florida may now start creating a statewide medical-marijuana program that so far has only been proposed. The program, as written, allows five companies to grow low-THC marijuana, extract an oil and sell it as medicine for people who suffer from intractable epilepsy and several other debilitating conditions.”

THE MEDICARE ACCESS AND CHIP REAUTHORIZATION ACT (a/k/a the Repeal of the SGR)

April 15, 2015 Leave a comment

There is great celebration in the healthcare community about the repeal of the Medicare Sustainable Growth Rate (“SGR”).  All the healthcare-related and other media are abuzz reporting on the jubilation:

among others.

In fact, the only comparable celebration that I can recall occurred on the death of the Wicked Witch in the Wizard of Oz. Actually, the repeal of the SGR and the witch’s death are more alike than different.

For years, the SGR has terrorized physicians.  Every December and into the following new year, physicians had to wait to see whether their reimbursement from Medicare would be reduced by some double-digit percentage.  Recently, physicians have been pawns for Democrats and Republicans trying to make points (perhaps “ping pong balls” is the better metaphor), with their livelihoods held hostage until some form of political rationality prevailed.

According to the summary/analysis of MACRA prepared by the Staffs of the House Energy and Commerce and Ways and Means Committees:

The legislation repeals the flawed Sustainable Growth Rate (SGR) formula and replaces it with the bicameral, bipartisan agreement to return stability to Medicare physician payments. The SGR formula is a cap on aggregate spending on physicians’ services where exceeding the cap resulted in punitive recoupments in subsequent years. The formula was passed into law in the Balanced Budget Act of 1997 to control physician spending, but it has failed to work. Since 2003, Congress has spent nearly $170 billion in short-term patches to avoid unsustainable cuts imposed by the flawed SGR. The most recent patch will expire on March 31st. Based on H.R. 1470, the bicameral, bipartisan unified Committee bill to replace the SGR, this policy removes the imminent threat of draconian cuts to Medicare providers and ensures a 5-year period of stable annual updates of 0.5 percent to transition to a new system. The new system moves Medicare away from a volume-based system towards one that rewards value, improving the quality of care for seniors.

The Medicare Access and CHIP Reauthorization Act, or MACRA for short, has been praised by President Obama who has  promised to sign it.  The 324-page Congressional print of MACRA does a lot of things in addition to repealing the SGR, including the following:

  • Extension of the Children’s Health Insurance Program (“CHIP”) for two years
  • Development of “alternative payment models” away from fee for service and toward quality of care
  • Strengthening of Medicare’s ability to fight fraud and build on existing program integrity policies
  • Additional $7.2 billion for community health centers
  • Increasing Medicare premiums for some seniors and elimination of Medigap policies starting in 2020 from covering Medicare deductibles for new beneficiaries

Do we need the Stark and Anti-Kickback Laws? Yes, unfortunately. Here’s another reason why.

April 12, 2015 Leave a comment

Thank goodness that most of us do not have to scrutinize every business deal we do to make sure that it is fully compliant with self-referral and kickback prohibitions.  In the healthcare arena, compliance with these counter-intuitive and overly punitive restrictions adds much unreimbursable administrative costs to the delivery of healthcare. Hopefully, shifting payment from procedures to quality of care will reduce the artificial inducements to violate these restrictions.

And while I advocate the repeal of these outdated self-referral and kickback laws which have unfairly burdened physicians in this country for decades, there is always another example of why the laws are still needed.

Benchmark Reporter has this story today:

2 U.S. organizations have been fined with a whopping $48.5 million in charges of conducting unnecessary medical tests linked with doctors who are responsible for referring patients to them for commission. These scamming corporations are Health Diagnostics Laboratory (HDL) and Singulex, both are well-known cardiovascular disease screening labs.

The Benchmark story is based on the Thursday announcement from the Department of Justice.  According to the DOJ  announcement, this is what the Labs did:

As alleged in the lawsuits, HDL, Singulex and Berkeley induced physicians to refer patients to them for blood tests by paying them processing and handling fees of between $10 and $17 per referral and by routinely waiving patient co-pays and deductibles. In addition, HDL and Singulex allegedly conspired with BlueWave to offer these inducements on behalf of HDL and Singulex. As a result, physicians allegedly referred patients to HDL, Singulex and Berkeley for medically unnecessary tests, which were then billed to federal health care programs, including Medicare.

And a reminder of why kickbacks are bad (some people apparently need to be reminded):

“When health care companies pursue profits by paying kickbacks to doctors, they undermine a patient’s ability to trust that medical decisions are being made for scientific reasons, not financial ones,” said Acting U.S. Attorney Vincent H. Cohen Jr. of the District of Columbia. “Those kickbacks also harm the taxpayer because they drive up the cost of federal health care programs with medically unnecessary tests. This significant settlement shows our determination to work with whistleblowers and our federal partners to defend the integrity of the health care system from illegal agreements that hurt patients and taxpayers.”

If this were a blog about the Seven Deadly Sins, the key words might be Greed, Pride, Envy, and Sloth.

There is no easy way for physicians to make more money.  Working hard is not enough.  And the current state of financial health of  physicians in this country is appalling.

Nevertheless, there are  physicians who are good providers, who are devoted to their patients, and who follow the law.  I know this because I represent many of them. They resist the temptation from these Labs and others like them.  They spend a lot of money on attorneys and consultants to do things the right way.   When they see their colleagues benefit through illegal behavior, it is good that they also see them caught and punished.

Setting Value-Based Payment Goals — HHS Efforts to Improve U.S. Health Care — NEJM

February 1, 2015 Leave a comment

Setting Value-Based Payment Goals — HHS Efforts to Improve U.S. Health Care — NEJM

This article (reproduced in full below) in the New England Journal of Medicine, online January 26, 2015,  is by Sylva M. Burwell, Secretary of Health and Human Services.  It discusses the important concepts of efficiency, quality, waste, and rationing and their intersection with the delivery of healthcare.  References can be found at the online article.

* * * * * * * *

Now that the Affordable Care Act (ACA) has expanded health care coverage and made it affordable to many more Americans, we have the opportunity to shape the way care is delivered and improve the quality of care systemwide, while helping to reduce the growth of health care costs. Many efforts have already been initiated on these fronts, leveraging the ACA’s new tools. The Department of Health and Human Services (HHS) now intends to focus its energies on augmenting reform in three important and interdependent ways: using incentives to motivate higher-value care, by increasingly tying payment to value through alternative payment models; changing the way care is delivered through greater teamwork and integration, more effective coordination of providers across settings, and greater attention by providers to population health; and harnessing the power of information to improve care for patients.

As we work to build a health care system that delivers better care, that is smarter about how dollars are spent, and that makes people healthier, we are identifying metrics for managing and tracking our progress. A majority of Medicare fee-for-service payments already have a link to quality or value. Our goal is to have 85% of all Medicare fee-for-service payments tied to quality or value by 2016, and 90% by 2018. Perhaps even more important, our target is to have 30% of Medicare payments tied to quality or value through alternative payment models by the end of 2016, and 50% of payments by the end of 2018. Alternative payment models include accountable care organizations (ACOs) and bundled-payment arrangements under which health care providers are accountable for the quality and cost of the care they deliver to patients. This is the first time in the history of the program that explicit goals for alternative payment models and value-based payments have been set for Medicare. Changes assessed by these metrics will mark our progress in the near term, and we are engaging state Medicaid programs and private payers in efforts to make further progress toward value-based payment throughout the health care system. Through Healthy People 2020 and other initiatives, we will also track outcome measures that reflect changes in Americans’ health and health care.

To drive progress, we are focusing on three strategies. The first is incentives: a major thrust of our efforts is to create an environment in which hospitals, physicians, and other providers are rewarded for delivering high-quality health care and have the resources and flexibility they need to do so. The ACA creates a number of new institutions and payment arrangements intended to drive the health care system in this direction. These include alternative payment models such as ACOs, advanced primary care medical-home models, new models of bundling payments for episodes of care, and demonstration projects in integrated care for beneficiaries dually eligible for Medicare and Medicaid.

Looking ahead, we plan to develop and test new payment models for specialty care, starting with oncology care, and institute payments to providers for care coordination for patients with chronic conditions. Three years ago, Medicare made almost no payments through these alternative payment models,1 but today such payments represent approximately 20% of Medicare payments to providers, and as noted above, we aim to increase this percentage. As part of this work, we also recognize the need to continue to reach consensus on the quality measures used and address issues related to risk adjustment in these new models.

Second, improving the way care is delivered is central to our reform efforts. We have put in place policies to encourage greater integration within practice sites, greater coordination among providers, and greater attention to population health. Through the Partnership for Patients, we have engaged U.S. hospitals in learning networks to focus on high-priority risks to patient safety and have already seen significant improvement. There is now a national program to reduce hospital readmissions within 30 days after discharge, which encourages hospitals to improve transitional care and coordinate more effectively with ambulatory care providers. Readmission rates are decreasing nationwide.2 Through the Transforming Clinical Practice Initiative, we will invest up to $800 million in providing hands-on support to 150,000 physicians and other clinicians for developing the skills and tools needed to improve care delivery and transition to alternative payment models. New Medicaid health homes, patient-centered medical homes, and efforts to reorganize care for people eligible for both Medicare and Medicaid are all designed to foster greater integration and coordination.

Third, we aim to accelerate the availability of information to guide decision making. The Obama administration has led a major initiative in health information technology (IT), focusing on the adoption of electronic health records (EHRs) and their meaningful use as a central avenue for transforming care. The proportion of U.S. physicians using EHRs increased from 18% to 78% between 2001 and 2013, and 94% of hospitals now report use of certified EHRs.3 Ongoing efforts will advance interoperability through the alignment of health IT standards and practices with payment policy so that patients’ records are available when needed at the point of care to permit informed clinical decisions to be made in a timely fashion.  HHS has made a commitment to enhancing transparency in the health care market. For example, the Medicare website enables consumers to compare data on the costs and charges for hundreds of inpatient, outpatient, and physician services. Information is available on the quality of hospitals, physicians, nursing homes, and other providers, enabling consumers to make better-informed choices when selecting providers and health plans.

The ACA established the Patient-Centered Outcomes Research Institute (PCORI), dedicated to generating information that can guide doctors, other caregivers, and patients as they address important clinical decisions; PCORI is working with the Agency for Healthcare Research and Quality to disseminate this information. In the years ahead, the research findings from PCORI, disseminated in part through EHRs, can bring critical clinical information to providers and patients when they need it most, at the point of care.

Although we have much to celebrate regarding increased access and quality and reduced cost growth, much of the hard work of improving our health care system lies ahead of us. Care delivered in hospitals was much safer in 2013 than it was in 2010: there were 1.3 million fewer adverse events between 2011 and 2013 than there would have been if the rate of such events had remained unchanged, and an estimated 50,000 deaths were averted. Still, far too many hospitalized patients — nearly 1 in 10 — have adverse events while hospitalized, and many people do not receive care that they should receive, while others receive care that does not benefit them. Growth of health care spending is at historic lows: Medicare spending per beneficiary increased by approximately 2% per year from 2010 to 2014 — a rate far below both historical averages and the growth rate of the gross domestic product.4 Survey data show that more than 7 in 10 people who signed up for insurance in the new health insurance marketplace last year say the quality of their coverage is excellent or good.5 However, it will take additional effort to sustain and augment the positive changes we have seen so far.

We are dedicated to using incentives for higher-value care, fostering greater integration and coordination of care and attention to population health, and providing access to information that can enable clinicians and patients to make better-informed choices. We believe that, by working in partnership across the public and private sectors, we can accelerate these improvements and integrate them into the fabric of the U.S. health system.

South Shore Physicians Hospital Organization in Kickback Scheme — Did DOJ Get it Wrong?

February 1, 2015 Leave a comment

In its news release on January 20, the U.S. Attorney’s Office for the District of Massachusetts announced that that the South Shore Physician Hospital Organization in South Weymouth has agreed to pay $1.775 million to settle allegations of operating a recruitment grant program through which it paid kickbacks to its physician members in exchange for patient referrals.  The news release talks about false claims as if the care was not given, but the claims were only “false” because of the kickback taint.

There is great pressure on physicians and hospitals to form networks to capture patients, improve care, and reduce costs.

Without knowing, I am guessing that the grant program by SSPHO was intended to build the network and reward physicians who joined (and referrals were probably required to be made to the hospital and other physician network members). I can see how this could be construed to be a kickback, but we need these networks and I suspect that no harm was done to the Medicare or Medicaid programs.

Even if my guess about the SSPHO is wrong, it’s still time that we allowed healthcare innovators and entrepreneurs to act like real business people and recruit and reward participants in a sensible and straightforward manner — without calling it a kickback.

 

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