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

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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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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On July 29, 2008, the U.S. Complaint in Intervention was filed in the U.S. District Court for the Southern District of Ohio alleging a kickback scheme among The Christ Hospital and certain cardiology groups.  The complaint  arises out of a qui tam action brought in 2003, in which the government intervened in March.  It alleges that The Christ Hospital allocated reading panel time at the hospital's "Heart Station" diagnostic testing facility among cardiologists based on their relative percentage of referrals and revenues generated from certain coronary arterial bypass graph (CABG) and catheterization procedures. 

No direct payment from the hospital to the cardiologists is alleged.  Rather, the kickback is alleged to arise from the "lucrative assignment" to the Heart Station panel.  This assignment is described as lucrative both because of the reimbursement the cardiologists received for their personal services in providing the test interpretations and because of opportunities the panel time afforded for obtaining new patients. 

The tie between the referrals to the hospital and amount of panel time allocated to the cardiologists is stunningly clear as alleged in the complaint.  Specifically, the hospital is alleged to have allocated panel time in direct proportion to referrals and revenues generated - if a cardiology group generated 70% of the CABG and cath revenues, it was allocated 70% of the panel time.  Worksheets filed as exhibits to the complaint are offered as illustrations of this calculation method.  The complaint asserts that cardiologists who failed to generate sufficient revenues were not given panel time regardless of their qualifications.

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As this writer discussed in more detail in a recent presentation, the law governing hospital programs to align physician incentives to improve quality and reduce costs continues to evolve.  Most recently, the Centers for Medicare and Medicaid Services (“CMS”) proposed a new exception under the Stark Law for “incentive payment” programs to improve quality and “shared savings” programs in the calendar year 2009 Medicare Physician Fee Schedule proposed rule.

CMS acknowledges that the new exception it proposes is narrow, and indicates that while it seeks to provide flexibility, new exceptions must be crafted in a way that avoids any risk of program or patient abuse. CMS specifically notes concerns that the programs not be used to disguise payments for referrals or compromise quality in order to increase profits. As a result, the proposed regulation includes 16 numbered paragraphs with conditions for satisfying the exception, and additional requirements discussed in the preamble without regulatory text.

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In what seems to be becoming a new tradition, CMS's proposed Medicare Physician Fee Schedule ("PFS") for calendar year 2009 revises more than the fee schedule. Among other things (like gainsharing), it proposes further changes to last year's changes to the Anti-Markup Rule. If you have not been following the saga of CMS's changes to the Anti-Markup Rule, hopefully this Health Law Strategist article will help you catch up. 

At this point, the changes from the 2008 PFS are scheduled to be effective as of January 1, 2009. The proposed 2009 PFS presents two alternatives (though CMS reserves the right to choose neither). One option is the obvious one: to let the 2008 changes go into effect as planned, using a site-of-service-based approach, with certain much-needed clarifications.

The second option is a new non-site-based approach where the Anti-Markup Rule would apply if the PC or TC is either purchased from an outside supplier or performed or supervised by a physician who does not "share a practice" with the billing physician or physician organization. A physician does not "share a practice" if he or she is employed or contracted by more than one physician or physician organization. 

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The Department of Justice (DOJ) announced on April 24, 2008 that the parent of Memorial Health University Medical Center agreed to pay over $5 million to settle allegations that it violated the Stark Law in connection with its payment of compensation to physicians employed by its affiliate, Georgia Eye Institute. Memorial also entered into a Certification of Compliance Agreement with the Department of Health and Human Services Office of Inspector General. Memorial denied all allegations, and the settlement agreement specifies that it is not an admission of wrongdoing.

The qui tam complaint filed by Dr. Ryan Boland alleged both overpayment for acquisition of the physician practices and excessive compensation, but the DOJ press release only references the compensation issues. According to the initial complaint, some ophthalmologists were paid as much as $500,000 in compensation, and the relator believed there were emails indicating teaching stipend/indigent care payments were actually disguised payments for surgical referrals. The complaint alleges that the hospital formed a nonprofit ophthalmology practice and after transitioning compensation within the practice to a productivity model, provided the practice with teaching/indigent support payments that were funneled to a small number of the doctors in order to retain them. These doctors allegedly received compensation that was in excess of fair market value and that was not commercially reasonable because it did not take into account which doctors performed the teaching and indigent care services.

This settlement should serve as a reminder to hospitals pursuing physician employment strategies to carefully review their compensation methodologies, including the manner in which compensation is allocated among individual physicians in an affiliated practice. To comply with the Stark Law, employed physicians’ compensation must be consistent with fair market value and may not take into account the volume or value of referrals made by the physician. The arrangement with the employed physicians also must be commercially reasonable.

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The 2008 report to the President from the Corporate Fraud Task Force is now available.

The Report says DOJ has obtained nearly 1,300 corporate fraud convictions since July 2002.  This includes convictions of more than 200 chief executive officers and corporate presidents, more than 120 corporate vice-presidents, and more than 50 chief financial officers.  Some of the significant criminal cases are described in detail in the Report, including the National Century Financial Enterprises, Inc. case.  This case was prosecuted in Columbus, Ohio by the U.S. Attorney for the Southern District of Ohio and the DOJ's Criminal Division.  The Report describes the case as "one of the largest fraud investigations involving a privately held corporation ever conducted by the FBI."

Of course, the Corporate Fraud Task Force prosecutes "significant financial crimes," not  health care fraud offenses.  Thus, the Report's statistics do not include all the convictions of individuals and entities for health care fraud.  Because prosecuting fraud - health care, financial or otherwise -is never unpopular with the voters, expect more of the same in the future.

 

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CMS issued an advisory opinion concluding, based on the facts certified, that physician owners of a diagnostic center located in a micropolitan statistical area may refer patients to the center for designated health services (DHS) without violating the Federal physician self-referral (Stark) regulations because the arrangement would satisfy the "rural provider" exception.  The rural provider exception, which applies only to ownership or investment interests in DHS entities, requires that (a) the DHS is furnished in a rural area; and (b) substantially all of the DHS furnished by the entity (not less than 75%) must be furnished to residents of a rural area.  "Rural area" means an area that is not an urban area.  "Urban area" is defined at 42 C.F.R. 412.62(f)(1)(ii) to include Metropolitan Statistical Areas and New England County Metropolitan Areas (as defined by the Office of Management Budget) or certain specified New England counties.

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Medicaid providers who learn their employees, agents or owners are under investigation for health care fraud can't afford to wait for the criminal process to take its course before mounting a defense.  The indictment  alone of an employee, agent, or owner could be a financial death sentence for the provider.

The Ohio Department of Job and Family Services  ("ODJFS") has always been required to terminate a Medicaid provider agreement if the provider is convicted of certain criminal offenses.  As of September 27, 2007, ODJFS is now required to suspend a provider agreement based only on an indictment for certain offenses.  The statute applies to "noninstitutional providers," which means any person or entity with a Medicaid provider agreement other than a hospital, nursing facility, or intermediate care facility for the mentally retarded.  The indictment can be against the provider, as well as an owner, officer, authorized agent, associate, manager, or even employee of the provider. The suspension continues until the proceedings in the criminal case are completed through conviction, dismissal of the indictment, plea, or finding of not guilty.  In addition to suspending the provider agreement, ODJFS must terminate Medicaid reimbursement to the provider for services rendered.

The statute permits the provider to request a reconsideration of the suspension.  The grounds for requesting reconsideration are limited.  The important ground is whether the provider, owner, or owners can demonstrate that they did not directly or indirectly sanction the action of the authorized agent, associate, manager, or employee that resulted in the indictment.

The statute is particularly troublesome for providers because the indictment of an employee or agent  triggers the suspension.  The provider is then forced to demonstrate to ODJFS that it did not directly or indirectly sanction the illegal conduct. All the while, Medicaid reimbursement has stopped.  In addition, the Medicaid suspension may result in the suspension or termination of other third-party payer agreements.  Unless the suspension is lifted, the provider may be out of business by the time the criminal case concludes.

The statute is Ohio Revised Code Section 5111.031 and the corresponding regulation is Ohio Administrative Code Section 5101:3-1-17.5. 

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According to its Semiannual Report to Congress, the Department of Health and Human Services Office of Inspector General ("OIG") is expected to recover $2.2 billion for the first half of fiscal year 2008.  Also for this period, the OIG reported exclusions of 1,291 individuals and organizations for fraud or abuse of federal health care programs; 293 criminal actions against individuals or organizations; and 142 civil actions such as False Claims Act cases, Civil Monetary Penalties Law settlements, and other administrative recoveries.  The report was issued on June 12, 2008.

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DOJ Press Release -  On May 29, 2008, the U.S. Attorney for the Northern District of Ohio announced the indictment of seven individuals on various offenses in connection with the transportation of Medicaid beneficiaries in vehicles called ambulettes.  The charges include mail fraud, wire fraud, health care fraud, and conspiracy.  According to the press releases, ambulette services contract with the Ohio Medicaid program to transport patients in vehicles known as ambulettes.  An ambulette is a specially equipped van designed for wheelchair passengers.  Medicaid pays ambulette operators for driving Medicaid beneficiaries to and from Medicaid-covered appointments, so long as:  (1) the patient rides in a wheelchair; (2) a medical doctor certifies the need for the wheelchair and ambulette; and (3) the ambulette itself otherwise meets safety specifications.  The defendants are charged with scheming to defraud Medicaid by charging Medicaid for rides of patients who did not use wheelchairs or require the need for wheelchairs.

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