221 posts categorized "Regulatory"

October 30, 2013

Stolen laptop had patient information on it - Say hello to HIPAA

Another familiar HIPAA violation has struck again; pay attention people!!!!!!!!



October 28, 2013

Seven elements of a physician (or any healthcare entity) compliance plan

At some point, the Accountable Care Act will require all healthcare providers to have a written compliance plan in place. So now is a good time to get started on one if you are a physician medical practice. To get you started, here are the seven standard OIG (Office of Inspector General) recommendations for what should be included in a compliance plan:

1. Compliance policies and procedures, including standards of conduct;

2. Designation of a compliance officer and compliance committee;

3. Development of open lines of communication;

4. Appropriate training and teaching;

5. Internal monitoring and auditing;

6. Response to detected deficiencies; and

7. Enforcement of disciplinary standards.

October 17, 2013

OIG Advisory Opinion No. 13-10

On August 9, the U.S. Department of Health & Human Services, Office of Inspector General (OIG) issued a favorable Advisory Opinion, 13-10 [PDF], concerning an arrangement whereby a vendor (Vendor) that is a subsidiary of a pharmaceutical manufacturer would enter into service arrangements with hospitals to provide patients with certain diagnoses services after hospital discharge in order to reduce hospital readmissions (Proposed Arrangement). OIG examined the arrangement under both the Anti-Kickback Statute and the civil money penalty (CMP) provision prohibiting inducements to beneficiaries and determined that it would not impose sanctions under either provision based on the specific facts presented.

To read the full Opinion:



October 14, 2013

Hospital Ordered to Pay Millions for Stark and False Claims Act Violations

A Senior U.S. District Judge recently ordered the Tuomey Healthcare System to pay more than $237.5 million in False Claims Act (FCA) fines and Stark Law penalties. If you haven't been following this case, it was started by a physician whistleblower who refused to contract with the hospital on compensation terms similar to those in the physician agreements found problematic in the case. This order only reminds us again that the health care industry must remain vigilant on fraud and abuse issues.

After all that has been written and read about the Toumey case (and you should read about this case in great detail if you are involved in hospital/physician compensation transactions), it provides lessons for hospitals, health systems and physicians. Here is what I've learned:

1. Stark Law’s fair market value standard is not simply about a fair business deal. Stark has specific requirements that must be strictly followed. For example, physician compensation cannot take into account the volume or value of actual or anticipated referrals. Simply negotiating at arm’s-length will not provide protection if the DOJ or a whistleblower brings suit.

2. While hospitals and other health care providers can employ physicians, care must be taken to comply with all applicable state restrictions and also the Stark Law and the AKS. Stark and the AKS provide protection for arrangements that meet certain specific requirements. Failing to comply fully with the requirements of an applicable Stark exception or AKS safe harbor leaves health care providers open to potential claims and liability.

3. Since the AKS may be violated if even one purpose for entering into a deal is to induce or reward referrals, health care providers need to be careful not only in the structure of their deals but also regarding their reasons for considering financial arrangements. Tuomey entered the employment arrangements with physicians after Tuomey’s board discussed the potential lost revenue from such physicians’ referrals to other less costly facilities in the community. These board discussions were central to the DOJ’s allegations that Tuomey was considering potential referral volume in setting physician compensation.

4. Since anyone can bring a qui tam action, health care providers need to be aware that competitors as well as possible partners and current employees are potential plaintiffs in these cases. When a question is raised regarding whether a physician or other referral source arrangement complies with applicable law, it is important that the provider appropriately investigate such question and, where necessary, remedy any instances of noncompliance.

May 29, 2013

Lessons to be learned from Tuomey Hospital Stark case

From the Health Law Daily by Wolters Kluwer:

On May 22, 2013, the Department of Justice (DOJ) filed a motion with the U.S. District Court of South Carolina Court requesting $237 million in additional fines and penalties from Toumey Healthcare System in Sumter, S.C., on top of the $39 million in illegal payments determined by a jury trial on May 8. Tuomey went to trial over whether it violated the Stark Law in its contracts with outside physicians to provide surgery exclusively in its facilities and pay the physicians a bonus for productivity. This case is sending shock waves to the hospital sector.

The $237 million in fines and penalties on top of the $39 million already leveled was calculated as the minimum of treble of the $39 million plus the minimum of $5,500 per claim, for the more than 21,000 claims the jury determined were tainted. The hospital has two weeks to respond to this motion. The DOJ opened the door to mitigating its request by saying it would consider discussions to settle at a lower rate upon other concessions by the hospital, which likely would mean a change in its leadership.

The background on this case is that Tuomey entered into exclusive part-time employment negotiations with affiliated specialist physicians to prevent these physicians from moving their outpatient business out of Tuomey’s ambulatory surgery center and into lower cost competing locations, some of which would be owned by the physicians themselves. The physicians agreed to enter into exclusive part-time employment agreements with Tuomey, thus keeping all of their outpatient business at Tuomey, in exchange for very favorable compensation arrangements.

A key issue in this case was that, under exclusive part-time employment agreements, Tuomey agreed to pay the physicians 131 percent of their net revenues collected (or 31 percent over the amount that the physicians actually generated in revenues) in return for their services and a noncompetition agreement. In developing the arrangement, Tuomey, through its legal counsel, obtained and relied upon the fair market value (FMV) opinion of an “expert” that agreed the rates being offered were at FMV and the compensation was unlikely to violate the Stark Law. One physician, an orthopedic surgeon, became the relator (i.e. “whistleblower”) in the federal government’s case against Tuomey. He concluded, and the government agreed, that the Tuomey employment agreements exceeded FMV, were commercially unreasonable, and took into account the volume or value of referrals all in contravention of the Stark Law. Ultimately, the jury agreed, as well.

There are a number of lessons to be learned from this case:

1. This case was built on the Stark Law, not Anti-Kickback Statute (AKS). This case was not coupled with the AKS and underscores the government’s continuing interest in Stark Law enforcement. This is significant in that the OIG recently downplayed its involvement with the AKS, stating its interests would be aroused only if it was coupled with the AKS. Also, the Tuomey case precedent will open doors to other prosecutions following the same legal arguments.

2. Many view the Stark Law as a checklist that has to be followed in the relation of agreements. This case dramatically makes it clear that the government does not view only the “four corners” of the document, but encompasses all the surrounding facts and evidence. The evidence at the trial focused on those surrounding factors.

3. Compensation for a referring physician for the services that he or she provides must be at FMV and the arrangement must be commercially reasonable. Both these standards must be supportable in the record. This includes any and all arrangements and understandings with the physician, written or verbal. It will be the total record that determines whether these standards were properly met, not just the written agreement.

4. Another key issue of note is that just finding someone who claims to be a FMV expert who will give the hospital whatever it wants in an arrangement is not sufficient to guard against violation of the law. You cannot buy a self-proclaimed expert and expect to have somehow have blocked the government on this issue. The government may have given wide latitude to hospitals developing a FMV determination, but any such efforts by recognized experts still need to be supported in a reasonable fashion along with the data they rely upon in generating their opinion.

5. This case underscores the importance of ongoing monitoring and auditing of all existing arrangement with referring physicians to ensure they comply with both the AKS and Stark Law standards, most particularly FMV and commercial reasonableness. The review should extend beyond the written agreement to the facts and circumstance surrounding its development, including the selection of, and methodology employed by, FMV experts.

This article was written by Richard P. Kusserow, who was the DHHS Inspector General for over eleven years. He is the founder and CEO of Strategic Management, a firm that provides specialized compliance advisory services. Richard can be contacted at rkusserow@strategicm.com.

April 22, 2013

Updated OIG guidelines for evaluating state false claims acts



February 20, 2013

Florida dermatologist pays $26.1M to settle False Claim Act allegations

One of the largest settlements with an individual under the False Claims Act (FCA) in U.S. history has been announced by the Department of Justice (DOJ). A Florida dermatologist, Steven J. Wasserman, M.D., has agreed to pay $26.1 million to resolve allegations that he violated the FCA by accepting illegal kickbacks from Tampa Pathology Laboratory (TPL), a clinical laboratory in Tampa, Florida, and billing the Medicare program for medically unnecessary services, according to the announcement. In addition, Dr. Wasserman is being excluded from participation in Medicare, Medicaid, and all other federal health care programs. The United States previously settled with TPL and Dr. José SuarezHoyos, a pathologist and the owner of TPL, for $950,000 to resolve the allegations asserted against them in the same lawsuit.

According to court documents, the government alleged that around 1997, Dr. Wasserman entered into an illegal kickback arrangement with TPL and Dr. SuarezHoyos under which they submitted tens of thousands of false claims to Medicare for biopsies, slide preparations, and slide readings. Under that agreement, Dr. Wasserman allegedly sent biopsy specimens for Medicare beneficiaries to TPL for testing and diagnosis. In return, to increase Dr. Wasserman’s referrals to TPL, TPL allowed Wasserman to bill Medicare for the professional component for the specimen even though TPL had performed the diagnostic work. TPL allegedly provided Dr. Wasserman a diagnosis on a pathology report that included a signature line for Dr. Wasserman to make it appear to Medicare that he had performed the diagnostic work that TPL had performed. Dr. Wasserman then billed the Medicare program for TPL’s work, passing it off as his own, for which he received more than $6 million in Medicare payments.

In addition, the government alleged that Dr. Wasserman substantially increased the number of skin biopsies he performed on Medicare patients, thus increasing the referral business for TPL. Dr. Wasserman also allegedly falsely billed Medicare for patient office visits and unnecessary skin surgeries referred to as adjacent issue transfers on Medicare beneficiaries.


February 18, 2013

FTC Will Not Challenge Proposed Clinically Integrated Health Network

The Federal Trade Commission (FTC) said February 13 that it will not take any enforcement action against Norman Physician Hospital Organization (Norman PHO) in relation to its proposed formation or operation of a clinically integrated healthcare network.
FTC said in a staff opinion letter that the network’s proposed activities “appear unlikely to unreasonably restrain trade.” Instead, the letter concluded the “proposed clinical integration program offers the potential to create a high degree of interdependence and cooperation among its participating physicians and to generate significant efficiencies in the provision of physician services.” 
Norman’s network includes approximately 280 participating physicians and hospitals but the proposal contemplates horizontal combinations or pricing agreements only in the provision of physician services.
Norman represented that the network’s “operations will not involve horizontal agreements among competing providers of inpatient hospital services, or outpatient hospital and ambulatory care services, because Norman Regional Health System is the only provider of such services that will participate in the network.”
Because FTC concluded the proposed joint contracting “appears to be subordinate” to the network’s effort to improve efficiency and quality through the clinical integration of its participating physicians, the agency analyzed the proposal using a rule-of-reason analysis, rather than subjecting it to a per se bar under the antitrust laws.
The letter noted concerns about market power are mitigated by Norman PHO’s representations that it will not attempt to force payors to contract with it, and payors who do not want to contract with the network for any reason may bypass the network and contract individually with the participating providers, either directly or through other networks, and without interference from Norman PHO.


November 27, 2012

2013 OIG Work Plan - What is directed at physicians?

The U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) Work Plan for Fiscal Year 2013 (Work Plan) summarizes new and ongoing reviews and activities that OIG plans to pursue with respect to HHS programs and operations during the next fiscal year (FY) and beyond. The following are items in the Work Plan directed towards physicians and physician practices:

Non-Hospital-Owned Physician Practices Billing Medicare as Provider- Based Physician Practices

The OIG will determine the impact of non-hospital-owned physician practices billing Medicare as provider-based physician practices. Also, the OIG will determine whether practices using the provider-based status meet the CMS billing requirements. Additional Medicare payments are paid for services furnished at provider-based facilities, so the OIG has an interest in making sure that those claiming provider-based status are accurate.
Physicians Encountering Beneficiaries Face-to-Face When Certifying Them for Medicare Home Health Services

This item focuses on a requirement of the Affordable Care Act that physicians who certify beneficiaries as eligible for Medicare home health services have face-to-face encounters with the beneficiaries. The OIG will examine current practices. The statute dictates that the encounters must occur within the 90 days before the beneficiary starts home health care or up to 30 days after care begins.
Physicians’ Improper Use of Commercial Mailboxes

In this item, the OIG directs attention to physicians’ use of commercial mailboxes. The OIG will determine the extent to which Medicare Part B providers and suppliers had practice locations matching commercial mailbox addresses in 2011. These types of mailboxes are forbidden, and the OIG believes that physicians were using commercial mailboxes in order to defraud Medicare.
Physicians Failing to Refund Overpayments Will Have Recent Medicare Payments Reviewed

The OIG will review providers and suppliers that have failed to refund their overpayments. Physicians begin to bill Medicare under a different provider number after overpayments are found on their first number. CMS may deny a physician’s enrollment in the Medicare program if he or she has an overpayment outstanding at the time of filing an enrollment application. Thus, the OIG is interested in knowing how many physicians are abusing Medicare by billing under a new provider number that he or she should not have.
Questionable Billing By Ophthalmologists

The OIG will focus on 2011 and questionable billing for ophthalmological services during that year. The OIG is also interested in the geographic locations of providers exhibiting questionable billing.
Questionable Billing for Electrodiagnostic Testing

The OIG is interested in questionable billing for electrodiagnostic testing. In reviewing this billing, the OIG will also focus on provider specialty, diagnosis, and geographic area to see if these factors make a difference in the billing of electrodiagnostic testing.
Interest in Recent Increase of Medicare Payments for Polysomnography

OIG found that Medicare payments for polysomnography – a sleep study service – increased from $62 million in 2001 to $235 million in 2009. Sleep studies may be reimbursable for certain patients, but the OIG believes this increase in payments to be questionable. The OIG will review payments from 2009 through 2010.
Review of High Utilization of Sleep Testing Procedures

The OIG is interested in Medicare payments for high utilization of sleep testing procedures. Medicare will only pay for items and services that are "reasonable and necessary," and the OIG is skeptical as to the reasonableness and necessity of the high increase in sleep testing procedures. Medicare payments to physicians will be examined.
Orthopedic Implant Devices Used in Spinal Fusion Procedures

The OIG and Congress are giving increased focus to physician-owned distributors (POD) which provide devices to hospitals. Currently, PODs provide spinal implants, but the concern arises from growth into other areas. The OIG and Congress believe that PODs could create conflicts of interest and safety concerns for patients. Physicians that plan to enter such high-risk arrangements should seek qualified legal advice.
Safety and Quality of Surgery and Procedures in Ambulatory Surgical Centers and Hospital Outpatient Departments

The OIG is interested in the safety and quality of care provided by ambulatory surgical centers (ASC) and hospital outpatient departments (HOPD). Physicians perform certain procedures in ASCs and HOPDs when they do not require hospitalization, so they must be prepared for the OIG’s review of the safety and quality of such procedures for Medicare beneficiaries. The OIG will assess care in preparation for and provided during surgeries and procedures in both settings.
Medicare Payments for Practice Expenses Related to Part B Imaging Services

The OIG will review Medicare payments for practice expenses related to Part B imaging services. The OIG will also determine whether the utilization rates reflect industry practices.
Medical Necessity of High-Cost Tests for Diagnostic Radiology

The OIG will review payments made for high-cost diagnostic radiology tests. It plans to determine whether these tests are medically necessary. The OIG also is interested in determining the extent to which primary physicians and specialty physicians are ordering the tests for the same patient.
Noncompliance with Assignment Rules

The OIG is interested in the extent to which physicians and other suppliers fail to comply with assignment rules. The OIG intends to determine the extent of inappropriate billing in excess of amounts allowed by Medicare.
Incident-To Services

The OIG plans to review physician billing for "incident-to" services. Specifically, the OIG will look to see whether payment for such services had a higher error rate than that for non-incident-to services. The OIG is also interested in determining whether Medicare can monitor services that are billed as "incident-to."
Errors in Coding Based on Place-of-Service

Medicare pays a physician differently based on the location where the service is provided. The OIG is interested in errors in coding the place-of-service. Specifically, the OIG will review physicians’ coding on Medicare Part B claims for services performed in ambulatory surgical centers and hospital outpatient departments.
Appropriateness of Use of Claim Modifiers

The OIG will focus on the global surgery period in determining whether certain claims modifiers were correctly coded. The OIG is interested in this time period because prior OIG work found improper use of modifiers during the global surgery period.

November 26, 2012

Dear Physician: Don't get sloppy with your financial dealings with a hospital

I was reading the Whidbey Island Hospital District's Stark and Anti-Kickback civil monetary settlement with the government and it's a classic example of sloppiness. The Office of Inspector General contends the hospital had more than 100 violations stemming from its physician contracts and arrangements. Here are just a few of them and let this be a lesson to all physicians - even though the hospital is the one who got in to trouble, there are rumblings the government is eventually going to go after all participants in alleged compliance abuses:

1. Missing signatures on call-coverage contracts;

2. No contracts for medical staff leadership arrangements;

3. Office space lease that had a contract term for less than a year;

4. Missing signatures on hospitalist arrangements;

5. A housing allowance with no contract;

6. An equipment loan without a written agreement; and

7. Personal services agreement with term of less than a year.