We recommend to our health care audience a thoughtful article by our colleague in Labor and Employment, Felix C. Wade, entitled The Employee Free Choice Act - Effective Planning for Hospitals.
The U.S. Court of Appeals for the Third Circuit recently reversed summary judgment granted by the U.S. District Court for the Middle District of Pennsylvania in favor of a hospital and its anesthesia providers who asserted protection under the "personal services" exemption to Federal Stark Law ("Stark") and the Federal Anti-Kickback Statute ("AKS"). United States ex rel. Kosenske v. Carlisle HMA, Inc., No. 07-4616 (3rd Cir. 2009).
The Plaintiff in the Qui Tam action was a member of the anesthesiology group, Blue Mountain Anesthesia Associates, PC ("the Group") which entered into a written contract with Carlisle Hospital and Health Services ("CHHS") for the exclusive right to provide anesthesiology services at the hospital. Pursuant to this exclusive service arrangement, CHHS agreed to provide office space, supplies, equipment and personnel for the Group's use at no charge when the Group was providing anesthesiology services to patients at the hospital. The contract contemplated that the Group would administer pain management services in addition to its more traditional anesthesia-related responsibilities, although, importantly, no pain management services were being provided when the contract was executed in 1992.
In 1998, CHHS built a new stand-alone facility containing an outpatient ambulatory surgery center and a pain clinic, located about three miles from the hospital. From the day of its opening, the Group provided pain management services to patients in the pain clinic and, in exchange, was given rent-free space and equipment in the pain clinic and support personnel at no charge. As with the anesthesia services, the Group's member physicians submitted claims to Medicare for the professional services performed during these visits, and CHHS submitted claims for the facility and technical component of the visits. The parties did not amend the 1992 agreement to include this additional facility or new range of responsibility.
CHHS sold the hospital, surgery center, and other assets to Carlisle HMA ("Carlisle") in 2001. In furtherance of the sale, Carlisle and the Group conducted the business relationship as if the agreement with CHHS remained in effect. Both entities continued to submit claims to Medicare for their respective costs.
Plaintiff discontinued his practice with the Group and filed suit in 2005 alleging that Carlisle was noncompliant with Stark and the AKS, even though when submitting its claims for facilities costs to Medicare it had certified that it was in compliance. The Third Circuit agreed, making several important holdings:
(1) The office space, medical equipment and personnel provided by Carlisle to the Group at no charge constituted remuneration in-kind and evidenced a financial relationship arrangement under the Stark Law;
(2) No written agreement set forth the pain management relationship because the pain clinic was substantively different from inpatient anesthesia services addressed by the 1992 contract; and
(3) Even if the 1992 contract was construed to apply to the pain management relationship, the agreement did not contemplate the provision of free office space, equipment and staff provided at the pain center. Therefore, the 1992 agreement did not specify the compensation to be paid over the term of the arrangement, as required by the personal services exception.
The Court acknowledged that, although arrangements between anesthesiologists and hospitals typically do not raise Stark or AKS concerns because anesthesiologists do not refer patients to the hospital, physicians seeing patients in a pain management clinic may refer patients to the hospital for tests or other procedures. After the Group expanded into providing pain management services, its members developed their own clientele capable of being referred to the hospital; thus, the Group was no longer a simple efficiency, but a referral source with a compensation relationship with the hospital.
Kosenske serves as a reminder of the importance of adequately documenting all relationships between hospitals and physicians and the need to keep such documentation current. This case also highlights that supplying space, equipment and personnel by a hospital to its hospital-based service provider is not per se illegal; rather, the value of the space, equipment and personnel must be factored into an analysis of whether the overall arrangement is consistent with fair market value.
Barrack Obama has now signed into law the “American Recovery and Reinvestment Act of 2009.” Deep within the pages of this massive legislation are the “Health Information Technology for Economic and Clinical Health Act” and other provisions that support one of President Obama’s major policy priorities… to encourage investment in health information and related technologies that will help lower the overall cost of health care in the United States. The Act is premised on spending that will lead to cost savings as well as spur economic growth. For years, focus groups and other think tanks have been studying and reviewing health information issues and preparing for the day when health information initiatives would move forward. Many efforts have stalled in the past due to lack of funding, as quantifying the return on investment for health information initiatives has been elusive.
This new law, however, will provide funding for various public and private efforts to advance the development, implementation and professional training related to the adoption of health information technology and electronic health records. Some of the funding will be competitive, typically through a grant process with federal and state agencies and organizations. Beginning in 2011, additional funding will be paid to all qualifying physicians, hospitals and several other types of health care providers that participate in the Medicare and Medicaid programs. Theses incentives are truly designed with a “carrot and a stick approach” in mind as the funding will be phased out beginning in 2015, and, at that time, Medicare and Medicaid providers who have not adopted electronic health records will be subject to financial penalties.
Qualification for the funding will not be automatic, as the federal government through the Office of the National Coordinator for Health Information Technology (part of the Department of Health and Human Services) is responsible for developing implementation standards and other requirements, such as how to determine if you are a "meaningful user" of electronic health records. Some of these standards will undoubtedly require interoperability of systems, which will ultimately lead to a national grid. Quality and other data reporting to various stakeholders will also likely be required. In addition, the Act includes major revisions to the Health Insurance Portability and Accountability Act of 1996 (aka “HIPAA”). These new requirements will expand the reach of the privacy and security regulations as well as stiffen the penalties associated with non-compliance. Health information experts and attorneys are busy studying the impact of these changes, and more specific regulation from the agencies will be provided in the near future.
So the day for significant advancement of health information initiatives has finally arrived. Stakeholders, such as providers, payers, employers, citizen groups and governmental agencies, should take note and be prepared to move ahead consistent with the policy goals and objectives described in the new law. It is likely inevitable that some efforts will not work as advertised or planned, and funds will be expended without the desired result. Nevertheless, it appears the health information train is leaving the station, and there will be no turning back from this health information revolution that we will all watch and be a part of over the next several years.
President Obama wants to cut the deficit in half by 2013. How the president plans on doing this is still unclear, but stopping Medicare fraud and abuse is expected to be one of his proposals. He will submit a budget proposal on Thursday with more details. At this time, however, one thing seems certain - expect to see an increase in fraud and abuse investigations in the future, especially Medicare audits. Health care providers should review their compliance plans and be prepared for increased government scrutiny.
The recently passed economic stimulus bill will create a 15 person research council to compare the efficacy of different treatments for the same illness. According to an article in the New York Times published last week, the program "responds to growing concerns that doctors have little or no solid evidence of the value of many treatments." The inclusion of comparative effectiveness research in the stimulus bill should, according to supporters, curb the costs of health care in the long-run, as it will discourage patients and providers from using less effective, but very costly treatments. Reaction from major players in the life sciences community will surely be mixed. If the council is successful, its findings may result in a windfall for some companies, but may have the opposite effect for those companies whose treatments are dubbed "less effective."
Extending its string of positive advisory opinions involving gainsharing arrangements, over the past few months the OIG has issued three new, favorable gainsharing opinions. While the three gainsharing arrangements reviewed by the OIG in the recent opinions bear striking similarities to gainsharing arrangements that received favorable treatment in the past, there are some differences that suggest a broadening of the type of gainsharing arrangements that will receive OIG approval.
Continue Reading...As the media warn about the possibility of trade wars and protectionism, the international healthcare consumer has already set the stage for the globalization of what could become the world's largest industry.
The movement of goods, services and capital across international borders has been well-documented, and it is hard to dispute the impact this has had on the transfer of wealth and multinational interdependence. What is less understood is how people who seek better, more cost-effective healthcare in foreign countries are re-shaping the market for medical treatment. As the price of healthcare in the U.S. has skyrocketed, consumers have become more willing to travel great distances to obtain less expensive care. At the same time, U.S. hospitals have addressed their staffing shortages by recruiting qualified doctors, nurses and other professionals from other countries.
The dynamic that is steering this revolution is quite simple. In the absence of political or economic barriers, globalization shifts the production of goods and services to those locations that produce such offerings at the lowest possible cost. In the past two decades, this trend has been greatly accelerated by the availability of information about alternative sources on the internet and by demographic forces such as the aging of the American population including healthcare workers.
A recent study by the Society for Healthcare Strategy and Market Development and the American College of Healthcare Executives, entitled "Futurescan 2009 -Healthcare Trends and Implications 2009-2014" revealed that nearly two-thirds of survey respondents think it is likely that the number of persons traveling overseas for medical treatment will double by the year 2014; however, an equal percentage don't believe that health insurers will amend their policies to pay for such medical tourism. An additional 82 percent of respondents agree that existing and new forms of telemedicine will enable even greater degrees of "virtual" medical tourism. Apparently, the public is confident that technology will increasingly bridge the distances between patients and providers, even though the source of payment remains in doubt.
Which brings us to the crux of this commentary. Is the American legal system ready for such a fundamental restructuring of the healthcare delivery system? Will our current economic troubles and the Government's intense desire to put a lid on healthcare costs accelerate globalization beyond the ability of lawmakers, regulators and courts to figure out what our rights and responsibilities should be in this brave new world? These and other questions must be addressed as part of the greater debate about health care reform if we are to build a sustainable model for the 21st Century.
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