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Vascular Access Centers: A Complex Picture
Physicians are under a lot of pressure to improve their bottom line. In office procedures as described in this blog, as well as investments in surgery centers and other business ventures, all bring levels of needed regulatory compliance and increased regulatory scrutiny. From the business side, there are many stories of corporate partners from Hell! Before getting involved in any of these “opportunities,” physicians should work closely with their legal and financial advisors. An ounce of legal prevention is worth a pound of very expensive legal cure.
By: Jeff Cohen
Vascular access centers are a common ancillary service offered by a variety of physicians, mostly nephrologists. They provide a unique setting for patients requiring interventional vascular services in connection with things like oncology, dialysis, nutritional delivery, wound healing, pain management and more. Unlike many surgical services, however, they are typically not provided via a surgery center, but rather as part of (and inside) the physician’s practices.
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Ohio Cardiologist Indicted for Performing Unnecessay Medical Procedures
“The charges in this case are deeply troubling,” U.S. Attorney Dettelbach said. “Inflating Medicare billings alone would be bad enough. Falsifying cardiac care records, making an unnecessary referral for open heart surgery and performing needless and sometimes invasive heart tests and procedures is inconsistent with not only federal law but a doctor’s basic duty to his patients.”
“This doctor violated the sacred trust between doctor and patient by ordering unnecessary tests, procedures and surgeries to line his pockets,” Special Agent Anthony said. “He ripped off taxpayers and put patients’ lives at risk.”
Just another case where greed coupled with disregard for his patients’ welfare led a physician to commit fraud on the government and commercial insurers and to forsake his Hippocratic oath to do no harm. Here, the physician not only ordered unnecessary and more invasive procedures than the patient needed but also falsified nuclear test results to justify the unnecessary procedures.
While there is no way to prevent greed like this (other than locking the bastards up), I have predicted in other posts that the migration of medical reimbursement from procedure based to quality of care of the patient will reduce the incentive to perform unnecessary tests and hopefully reduce this kind of fraudulent activity.
New OIG Special Fraud Alert Aimed at Laboratory Payments to Referring Physicians
Two of my partners, Michael Gennett and Elizabeth Hodge, and I authored the following post for Akerman’s Healthcare Blog:
On June 25, 2014, the U.S. Department of Health and Human Services Office of Inspector General (OIG) issued a Special Fraud Alert entitled “Laboratory Payments to Referring Physicians.” While the Alert breaks no new ground (see, e.g., its 1994 Special Fraud Alert), it demonstrates the OIG’s continuing concerns about clinical laboratories’ offering inducements to referring physicians.
The Alert provides an in-depth discussion of laboratories’ paying referring physicians for collecting specimens and paying physicians for submitting patient data to a registry or database. The Alert explains that physicians who prepare specimens for transfer from the office to a laboratory have a CPT code (99000) to bill Medicare for a nominal charge. Where laboratories are separately paying the same physician for specimen collection, the double billing is evidence to the OIG of an obvious intent to induce referrals. Similarly, with respect to physicians submitting patient data for a database, even if the project has legitimate underpinnings, it may still be illegal if an intent is to induce referral. The Alert contains a detailed list of characteristics of specimen processing and data registry arrangements that it finds suspect.
The OIG ‘s concerns are not lessened in referral arrangements that “carve out” Medicare and other federal programs and focus only on commercial insurance. The OIG takes the position that, because physicians refer to a limited number of labs, inducements with respect to commercial insurance are likely intended to induce Medicare referrals also. Equally important, inducements for commercial insurance referrals may violate applicable state laws (for example, Florida’s Patient Brokering law).
Physicians should review their financial arrangements with outside clinical labs. The question to be asked always is whether one of the reasons for the arrangement is to induce referrals of patients for lab services. Although the Alert focuses on specimen processing and data registry arrangements, that does not mean that other arrangements are OK. The fraud and abuse concerns set forth in the Alert extend to any arrangement that provides some sort of financial benefit to physicians with the intent to induce referrals of patients for lab services.
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Following publication of the Alert, the OIG published a study entitled “Questionable Billing for Medicare Part B Clinical Laboratory Services.” In the Study, the OIG found that “[a]lmost half of the labs that exceeded the thresholds for five or more measures of questionable billing—compared to 13 percent of all labs—were located in California and Florida, areas known to be vulnerable to Medicare fraud.” The OIG’s recommended that it “[r]eview the labs identified as having questionable billing and take appropriate action” and also “[r]eview existing program integrity strategies to determine whether these strategies are effectively identifying program vulnerabilities associated with lab services.” As a result, clinical labs and physicians should exercise great vigilance in reviewing their financial and referral relationships with each other to insure that they comply with applicable federal (and state) fraud and abuse and other healthcare laws.
Physician Joint Ventured Pharmacies Require Guidance
The pressure is intense on physicians to find additional sources of revenues to balance their losses as a result of reduced reimbursement and other moves to reduce healthcare costs.
In return, physicians are pressuring compounding pharmacies and other healthcare providers for ways to participate in the income stream that physicians and their scripts and referrals produce. There are those who want to put their hands in the pockets of others, and the result is a perfect storm that must be carefully monitored by the legal advisers to physicians and to compounding pharmacies to make sure that EVERYONE complies with the regulatory requirements.
And this is a very fluid environment — what may be acceptable today may not be tomorrow — the OIG’s concerns with PODs and the company-model for anesthesia in ASCs are instructive to physician owned pharmacies..
Florida physicians are being approached to become owners of pharmacies to which they may refer, often compounding pharmacies, but may be unaware of the regulatory issues involved. Physicians need to be aware of the core laws that apply, which include the Florida Patient Self Referral Act (FPSRA), the Florida
Anti Kickback Statute
, the Patient Brokering Act and the Federal Investment Interest Safe Harbor.
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Tampa pill mill pharmacist tells court his attorneys didn’t get it right
TAMPA — Disgraced pharmacist Christopher Switlyk shows no love for the attorneys who defended him over his key role in a Tampa pill mill ring.
When you break the law and can’t get off after turning others into addicts, I suppose it’s a good time to blame the lawyers.
See on www.tampabay.com
Steps 3, 4, 5, 6, and 7 in Doing a Healthcare Deal (Correctly)
Step 3 – Identify the governmental agencies that have authority over the deal
- Are there any notices or approvals required?
- What are the licensing requirements?
- Will a change in control occur?
- Is a new provider application/number needed?
- Is a CON needed? An inspection?
- What effects will the deal have on any accreditation needed by the parties?
- What is the timing of agency requirements vs. closing the deal?
Step 4 – Identify the third party payors that will be involved
- Are the services to be performed as a result of the deal reimbursed by Medicare?
- Medicaid?
- Other federal or state programs?
- Commercial payors?
- What credentialing/provider applications are needed?
- Do any payors have special requirements that must be satisfied before closing the deal?
Step 5 – Identify the due diligence requirements
Remember that a healthcare deal starts like any other deal, and the parties must do their basic due diligence about each other
- Entity organization and ownership
- Legal authority
- Financial statements, assets and liabilities, liens
- Contracts and commitments, leases
- Employees and benefit plans
- Taxes
- Insurance
- Litigation
Step 6 – Identify the healthcare due diligence requirements
- Licenses and requirements applying to transaction
- Equipment and inventories
- Cost reports, inspections, regulatory correspondence
- Quality of care, malpractice claims/insurance
- Patients records, EHR compatibility, billing software
- Managed care/provider agreements, liability, assignability
- Subcontractors/suppliers
- Stae law requirements
- Fair market value
- Commercial reasonablenessFair market value and Commercial Reasonableness — These are the critical underpinnings of every healthcare deal. What is being given, what is being received, and is it commercially reasonable?Get an opinion from a qualified healthcare valuation expert to support the FMV.
Step 7 – Document the Deal
- Documentation is a critical step in protecting the parties, achieving the goals of the deal, and meeting compliance requirements. Stark Exceptions and Anti-Kickback Safe Harbors impose specific requirements on deal documentation.
- Should the parties enter into a nonbinding letter of intent/memorandum of understanding?
- Pros – helps the parties determine whether there has been a meeting of the minds prior to devoting substantial time and expense and helps manage expectations and reduce surprises.
- Cons – can consume an inordinate amount of time prior to due diligence being completed and lock the parties into unrealistic positions.
Next time — How to screw up the deal that everyone wants.
Justice Department Hits Physician Owned Distributorships (PODS)
For the first time, the Department of Justice (DOJ) has fired a shot at a
physician owned distributorship
(POD). In the case, the DOJ suit claims that the ownership interest of a neurosurgeon in a spinal surgery device distributorship has caused him to perform unnecessary surgeries.
PODs have been the source of considerable controversy for years. A couple years ago, they caught the attention of Congress. The Office of Inspector General of the Department of Health and Human Services (“OIG”) has even issued a Fraud Alert making clear their dislike of PODs and sending a clear shot across the bow of those who are in that industry. In 2006, the Office of the Inspector General of HHS and CMS expressed major concerns about PODs, and cited concerns about “improper inducements.” At that time, the OIG stopped short of prohibiting them, but called for heightened scrutiny. CMS itself has stated…
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Steps 1 and 2 (of 7) in Doing a Healthcare Deal (Correctly)
Step 1 – Describe and Understand the Deal
- Why?
- What is it that is hoped to be accomplished?
- Why is that a good outcome?
- Does it make sense? I.e., is it commercially reasonable?
- Is the deal more than just about referrals and money?
- What happens if a regulator “follows the money”?
- How will the deal affect others – patients, employees, physicians, competitors, the community, etc.?
- What are the tax effects?
- Engage legal, accounting, valuation, and other professional consultants early in the process to review the proposed deal.
Step 2 – Identify the Parties to the Deal
- Who is involved (medical professionals, background)?
- Why are they involved?
- What do they bring to the deal?
- When did they get involved?
- Who got them involved?
- What does each party hope to achieve?
- Are the goals reasonable?
- Are the goals legal and ethical?
Dos and Donts of Deal Making in Healthcare
Last week, I presented at a webinar sponsored by the American Association of Orthopaedic Executives. The topic dealt was “2014 Healthcare Compliance.” You can access the entire PowerPoint presentation at SlideShare.
I spoke about the dos and don’ts of healthcare deal making. The focus was on deals with physicians, but the concepts are applicable to deals involving all types of healthcare providers. Below I summarize my Rules of Thumb for healthcare deals:
Rules of Thumb for Healthcare Deals
- RULE #1: Just because a proposed deal makes sense and would be appropriate in a business other than healthcare, doesn’t mean it’s legal. (Corollary — Just because everyone is doing it, doesn’t mean it’s legal.)
- RULE #2: Determining the legality of a healthcare deal can be complicated, time consuming, expensive, and inconclusive.
- RULE #3: The risks of doing an illegal healthcare deal far outweigh the benefits.
- RULE #4: Get professional help early in the deal.
In subsequent posts, I will discuss steps in the deal and ways to screw up the deal.
Physician Payment Sunshine Act
The vilification of physicians continues …
The Physician Payment Sunshine Act has been around for a while now, but things are getting ready to heat up. On August 1, the federal regulations implementing the Physician Payment Sunshine Act go into effect.
The regulations were finalized last February, to “implement the requirements in section 6002 of the Affordable Care Act … . That provision requires applicable manufacturers of drugs, devices, biologicals, or medical supplies covered under [Medicare or Medicaid or CHIP] to report annually to the Secretary certain payments or other transfers of value to physicians and teaching hospitals. [The Act] also requires applicable manufacturers and applicable group purchasing organizations to report certain information regarding the ownership or investment interests held by physicians or the immediate family members of physicians in such entities.”
Medical Economics published a very good summary of the Sunshine Act, “Sunshine Act: 7 things you need to know.” Manufacturers and GPOs on August 1 will start gathering data on physicians with whom they have made a specified payment or other transfers of value or who have investment or ownership interests in the manufacturers or GPOs. The nearly 80 triple-columned pages of regulations define the various terms and explain how the data is to be gathered and reported. The data will be reported to CMS electronically by March 31, 2014 and will be available online to patients and others.
In a related story, Medical Economics reported yesterday that there is now an app for physicians to track reports made regarding them pursuant to the Act.
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