SZD Health Law Scan : Health Care Lawyers & Attorneys : Schottenstein Zox & Dunn Law Firm : Strategic Planning, Managed Care, Insurance : Columbus, Cleveland, Cincinnati, Central Ohio

Ohio HealthCare Simplification Act creates a new Chapter 3963 in Ohio Revised Code.  ORC 3963.04 is the provision governing material amendments to a health care contract.  Under ORC 3963.04, if an amendment to a health care contract is not a material amendment, the contracting entity is only required to give providers a notice of amendment at least 15 days prior to the effective date of the amendment.   

For a material amendment, the contracting entity must provide the participating provider the material amendment in writing at least 90 days prior to the effective date of the material amendment. The notice shall be conspicuously entitled “Notice of Material Amendment to Contract.” 

The provider must object within 15 days if it does not accept the material amendment. If the parties cannot resolve the objection, either party may terminate the health care contract.  If the participating provider does not object to the material amendment in the manner described above, the material amendment shall be effective. 

The issue is whether the material amendment will become effective if the parties cannot reach a resolution on the provider’s objection. 

Some payors have taken the position that if the parties cannot resolve their differences, the proposed material amendment becomes effective.  

This has caused confusion to some providers. In some cases, it has even taken away the benefit of providers' original contract provision.  Nor is it clear if this interpretation is consistent with the legislative intent of ORC 3963.04.   Many in the industry agree that this issue would benefit from clarification from the Ohio Department of Insurance.

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The Department of Justice announced changes to its corporate charging guidelines for federal prosecutors.  The new guidance revises the Department's Principles of Federal Prosecution of Business Organizations, which governs how federal prosecutors investigate, charge, and prosecute corporate crime.  The changes address issues concerning the attorney-client privilege and cooperation credit. 

First, the revised guidelines state that credit for cooperation will not depend on the corporation's waiver of the attorney-client privilege or attorney work product protection.  Rather, credit will depend on a corporation's timely disclosure of relevant facts.  Corporations that timely disclose relevant facts may receive due credit for cooperation, regardless of whether they waive attorney-client privilege or work product protection in the process.

Second, prosecutors are instructed not to consider a corporation's advancement of attorneys' fees to employees when evaluating cooperativeness.  In addition, the mere participation in a joint defense agreement will not render a corporation ineligible for cooperation credit. 

The revised guidelines are located here.

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The American Health Lawyers Association recently released the results of its Voluntary Disclosure Survey.  The Survey provides data and observations regarding the experience of healthcare organizations with the government voluntary disclosure process.  There were 195 respondents.  Some of the important findings include:

• 71% of respondents had been involved in a voluntary disclosure to the government.
• 70% of the disclosures involved overpayment or billing/coding errors and 28% involved Kickback or Stark violations
• 70% of the disclosures were made by outside counsel.
• Most of the disclosures were made to OIG, followed by government contractors (e.g., fiscal intermediaries) and U.S. Attoney's Offices.
• Almost half (49%) of the disclosures were resolved within a year of the disclosure.
• 46% of the disclosures were resolved with a full overpayment refund; 12% resulted in a corporate integrity agreement.

The complete survey results are located here.

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An interesting Government Accountability Office report was posted recently regarding the problems that CMS and the SSA (Social Security Administration) have had with implementing systems to withhold Medicare Advantage ("MA") and Part D Plan ("PDP") premiums from social security checks. 

Amidst a chronicling of the difficulties and problems encountered, and the efforts of the government to address them, are the executive recommendations.  One of the GAO's suggestions is that CMS consider allowing plans to bill beneficiaries directly until the premium withholdings are processed.  If this suggestion is implemented, it could have a significant impact on managed care providers operating MA or PDP plans.

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Advisory Opinion 08-10, posted by the OIG on August 26, addresses a proposal for a physician group practice to provide space, equipment and personnel to another physician group practice through a block lease, and concludes that there is a "significant risk" that the arrangement would be an improper contractual joint venture that would reward the leasing group for referrals.

The opinion addresses a block lease of space, personnel  and equipment from oncologists to urologists for IMRT, combined with use of contracted radiologists to supervise the procedures.   The urologists bill all payers for the services, including Medicare.  The  OIG's rationale is that of its 2003 contractual joint venture advisory bulletin, but it is notable that in the arrangement discussed in this Advisory Opinion, the blocks of time are fixed, as is the compensation, and there is a one-year term.  Thus, although the OIG refuses to address the question, it appears that all of the components may have been designed to satisfy a safe harbor.  The OIG doesn't address the safe harbor issue because the remuneration it is concerned about is the opportunity for the urologists to make a profit.  The OIG emphasizes that the oncology group is agreeing to provide services it could provide in its own right for less than the available reimbursement. 

A key point that may distinguish this from many physician block leases is that the urologists do not participate in performing the IMRT, but contract out substantially all the services, including the professional services.   The opinion states that the urologists contract with individual radiologists (who also provide services to the oncologists) to supervise the IMRT procedures.  Thus, the OIG goes on to note that the urologists commit little financial, capital or human resources. 

Like the recent changes to the Stark Law regulations, this opinion provides indication of continually increasing government scrutiny of physician ventures.

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The Internal Revenue Service (IRS) has completed its revision of the Form Instructions for its newly redesigned Form 990 and posted them, along with various background materials explaining the new 990 and its revisions, here.  The IRS extensively revised the format and content of the 990 based on three guiding principles: enhancing transparency, promoting tax compliance, and minimizing burden on the filing organization.  While transparency and compliance are likely outcomes of the new 990, the extent to which the extensive, detail probing document will minimize an organization's burden remains to be seen.

Some of the major features of the new form include a new summary of activities and finances page, a new governance section, enhanced reporting of executive and key employee compensation, and an organization's relationship with insiders and other organizations.  Of significance to tax-exempt hospitals is the new Schedule H to the 990, which requires substantial detail with regard regarding the community benefit the hospital provides and the facilities it operates.  For tax year 2008, however, hospitals will only have to complete the portion of the Schedule H relating to their facilities.  Thereafter, all portions of Schedule H will have to be completed.

To prepare for completing the new 990 for the 2008 tax year, the IRS recommends the following: (i) identifying "related" organizations required to be listed on Schedule R; (ii) identifying key employees and the organization's five highest compensated employees; (iii) reviewing the new governance questions on the 990, which must be answered based on policies and practices in place on or before the last day of the 2008 tax year; and (iv) identifying the schedules the organization will be required to complete.

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Beth Kastner and I recently authored an article for Compliance Today discussing compliance-related issues in relationships between hospices and nursing homes.

Shortly after we sent the article to the editors, CMS released the revised conditions of participation (COPs) for hospices, which includes a final COP for hospices that provide hospice care to residents of a SNF/NF or ICF/MR.

Fortunately, we were able to update the article in time to reference this final COP.  The CMS preamble discussion on this COP is another starting point worthy of review in analyzing these types of relationships.

Thanks to the folks at the Health Care Compliance Association for granting us permission to link to the article on this website.

The article, published in the August 2008 issue of Compliance Today, appears here with permission from the Health Care Compliance Association.  Call HCCA at 888/580-8373 with reprint requests.

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