Little Health Law Blog

FQHCs AND HOSPITALS: EXPECT MORE SECTION 340B AUDITS THIS YEAR

February 2, 2015 | Little Health Law

While various types of regulatory and insurance “audits” are on the radar of any prudent Federally Qualified Health Center (FQHC) or hospital, as health care providers, Section 340B audits are a relatively new and unknown animal. The Section 340B Program, whereby qualified covered entities can benefit from substantial discounts on certain patient drugs, has existed since 1992. Section 340B audits, however, began less than three years ago. The U.S. Department of Health and Human Services, through the Health Resources and Services Administration (HRSA) authorized the first Section 340B Audits in 2012. Since then, the number of Section 340B Audits has been on the rise. In 2014, HRSA audited 99 health care providers and has forecasted doubling that number this year. Increasingly, these audits present serious financial and business risks for Section 340B Program participants.

Presently there are two categories of Section 340B audits: audits conducted by HRSA and audits conducted by the drug manufacturer. Results of HRSA-conducted Section 340B audits are publically available. All Section 340B audits are geared toward requiring and facilitating Section 340B “covered entities” (i.e., the FQHC or hospital that participates in the program) to ensure Section 340B program integrity and accurate record keeping. Requirements are set forth in 42 U.S.C. § 256b, which authorizes Section 340B compliance audits.
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FQHC Section 340B Audit Readiness: A Pound of Prevention

January 25, 2015 | Little Health Law

For Federally Qualified Health Centers and other eligible safety net health care centers, proper utilization of the federal Section 340B Drug Discount Program can offer enormous financial advantages to facilitate delivery of high quality primary health care services to their communities. The Section 340B Program, created in 1992, requires drug manufacturers to provide outpatient drugs to qualifying health care centers and organizations at reduced prices. The purpose of the Section 340B Program is to provide a financial advantage that supports FQHCs and other safety net providers, enabling them to stretch scarce federal resources as far as possible to the benefit of their patients.

Georgia FQHC Law Firm

The federal Health Resources and Services Administration (HRSA), which regulates and supervises the Section 340B Program, has legal authority to audit Section 340B Program covered entities. Alternatively, HRSA may authorize a drug manufacturer to audit a covered entity under particular circumstances and according to HRSA’s protocol. An audit is for the purpose of assessing covered entity compliance with HRSA regulations and protocol governing the Section 340B program and, in particular, to identify and remedy diversion of Section 340B drugs or duplicate discounts.

Program Integrity Audits, as they are known, were first initiated in 2012 and have increased each year. Audit results can be reviewed on the HRSA website. A covered entity’s failure to pass audit scrutiny can result in very adverse financial consequences, including having to refund discounts to a drug manufacturer and/or exclusion from the Section 340B Program. Through Fall 2014, approximately 240 audits have been performed. More audits are expected in 2015, as HRSA continues to ramp up its oversight and scrutiny of the Section 340 participants. Many hundreds of FQHCs will be the subject of upcoming audits.

For FQHCs and other covered entities that potentially subject to an audit, the financial stakes are so high that audit readiness should be a top priority. Fortunately, HRSA provides contract pharmacy guidelines that, if properly followed, can reduce the risk of being audited and of a bad audit outcome. For every Section 340B participant, following HRSA guidelines is therefore a must.
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Physician Practice: Are Physician Non-Compete Agreements Enforceable?

January 16, 2015 | Little Health Law

Hospital employment among doctors is increasing. According to Jackson Health’s 2014 Survey, the trend of physician employment is gaining speed. Rapid changes in health care industry fueled by the Affordable Care Act, more insured patients and increasing demands on doctors, decreasing reimbursement, and the growing cost and headaches of owning and running a medical practice are causing more and more doctors to view employment as a preferred career option.

Atlanta and Augusta, Georgia Business and Health Care Law Firm
Inevitably, the termination of some physician employment relationships will trigger issues and some disputes under non-compete agreements contained in physician employment contracts. Although non-competition agreements are not in every physician employment contract, most have them. Many physicians who decide to accept employment are unable to avoid signing a non-compete agreement.

For a hospital or other health care business that employs a physician, the essential advantage of a non-compete agreement is self-evident. The business can expand its medical practice with less risk that a new doctor seeking to build a patient base will depart employment with a large patient base. For the doctor, the disadvantage of a non-compete agreement is that it can limit, often severely, job or career options when the employment relationship ends.

But is a physician non-compete agreement enforceable?

A question for every non-compete agreement is whether it is legally enforceable. While typically enforceable during employment (“moonlighting”), often the legality of physician non-compete agreements prohibiting activities after employment can be challenged. Whether a physician non-compete is legally enforceable is a matter of state law. Some states have statutes that render physician non-compete agreements illegal or severely curtail them (including, Alabama, California, Colorado, North Dakota, South Dakota, Louisiana and Montana). Most states do not have such statutes; but instead state common law dictates the parameters of a legal non-compete agreement. In those states, answering the question “is it enforceable?” is not really possible with any certainty before a non-compete agreement is reviewed by a court.
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January 14, 2015, Kevin Little speaks to American Osteopathic Association physician members on Physician Employment Agreements.

January 14, 2015 | Little Health Law

Kevin Little speaks to American Osteopathic Association physician members on Physician Employment Agreements.

New Medicare Rules Strengthen Regulatory Oversight of Medicare Providers and Increase CMS’ Ability to Remove Providers from Medicare

December 31, 2014 | Little Health Law

Earlier this month, the Centers for Medicare and Medicaid Services (CMS) announced implementation of a Final Rule intended to increase oversight of Medicare providers and enable recoveries from those health care providers that commit fraud and violate Medicare rules. According to the press release, Marilyn Tavenner, the CMS Administrator, stated that the new rules “are common-sense safeguards to preserve Medicare for generations to come” and that “[t]he Administration is committed to using all appropriate tools as part of its comprehensive program integrity strategy shaped by the Affordable Care Act [ACA].”

Georgia Medicare Fraud Law Firm

Our Atlanta and Augusta, Georgia health care law firm has reviewed the Final Rule. The Final Rule’s new provisions are intended to preclude doctors and other health care providers with unpaid Medicare debt from re-entering the Medicare program, remove health care providers who engage in abusive Medicare billing, and authorize other provisions that will save more than $327 million annually. The Final Rule makes certain changes to the provider enrollment provisions of 42 CFR part 424, subpart P.

CMS has removed about 25,000 health care providers from the Medicare program. The new rules are designed to “stop bad actors from coming back in as we continue to protect our patients,” according to Ms. Tavenner. Under the ACA, CMS has increased ability to fight Medicare fraud, waste and abuse. CMS believes that removing providers from Medicare has a substantial positive impact on savings, contending that such removals have prevented $81 million in payments from being made.
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HHS 2015 Quality Improvement Awards for FQHC recipients: HHS Awards $36.3 Million in Affordable Care Act Funding for FQHCs and Other Health Centers

December 17, 2014 | Little Health Law

On December 9, 2014, the U.S. Department of Health & Human Services (HHS) announced substantial financial awards for numerous Federally Qualified Health Centers (FQHCs) and other health centers nationwide. Our Atlanta, Georgia business and health care law firm represents FQHCs and health centers. We learned from HHS’ press release that it awarded $36.3 million in Affordable Care Act funding for the purpose of rewarding and expanding the quality of care in FQHCs.

FQHCs and other HRSA-supported health centers are designed to provide comprehensive, high quality primary care services to the medically underserved communities of the United States. These health centers are sometimes referred to as “safety net providers.” FQHCs are community-based facilities that serve populations with less access to health care. Grant-supported FQHCs are public or private non-profit healthcare entities that meet particular qualifications under Section 330 of the Public Health Services Act. Non-grant-supported health centers, also referred to as “look-alikes,” are healthcare entities that HRSA and the Centers for Medicare and Medicaid Services have determined meet the definition of “health center” under Section 330 of the Public Health Services Act, but do not receive grant funding under Section 330.
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Physician Practice: The 2014 Physicians Compensation Survey

November 29, 2014 | Little Health Law

Physician compensation as a whole has continued to stagnate during 2014, according to Physician Practice’s 2014 Physician Compensation Survey. As compensation models morph and develop with the new emphasis upon value-based care, it remains to be seen how physician compensation will change in the coming years. This very important healthcare industry issue affects all of us. It also involves interesting irony in the enactment and implementation of the Affordable Care Act, touted by proponents as geared to improve patient “access” to health care (or “coverage” under an insurance plan), yet perpetuating (according to the analysis of some opponents) pressures that contribute to the current primary care physician shortage by increasing the administrative frustrations of practicing medicine and creating strong downward pressure on reimbursement.

Atlanta/Augusta Georgia Business and Health Care Law Firm

The challenging business and regulatory environment for doctors continues to drive physician consideration of employment by hospital systems. A recent report by Merritt Hawkins found that over 90% of new physician job openings will “feature employment by hospitals, medical groups, community health centers or other healthcare facilities” which “signal[s] the continued decline of physician private practice. Many physicians, though still preferring independence (see our blog November 25, 2014 post), continue to perceive employment opportunities as a way to reduce financial risks and soften the harsh requirements of a complex, regulatory business environment for the delivery of their services.
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Physician Practices: The Independent Physician Outlook Survey

November 25, 2014 | Little Health Law

The recently released 2015 Independent Physician Outlook Survey, entitled “Threats to Independence,” explores the state of independence in the medical field from the physician perspective. The survey covers an array of topics and was conducted and prepared by ProCare Systems, a medical practice management consultant company. The healthcare industry is the focus of our Atlanta/Augusta, Georgia business law firm.

In many business industries, the choice to be big versus small involves consideration of competing pros and cons. The healthcare industry is no exception. Physicians, as highly educated professionals, tend to be independent by nature and prefer to call their own shots. Yet the current regulatory and business environment for physicians makes independence more challenging than ever for many doctors. For some time, the healthcare industry has seen a trend toward value- and outcomes-based healthcare delivery models with many new administrative challenges and continuing downward pressures on reimbursement, necessarily involving many changes for physicians. The economic and regulatory pressures of healthcare reform are perpetuating frustration and financial strain for physician practices, pushing many doctors toward employment by larger health care systems. However, the ProCare report also shows that most doctors nonetheless continue to prefer independence and that many opportunities to reclaim independence will exist for smaller physician practices with agility and a greater ability to be innovative and efficient in the evolving regulatory environment.
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Health Care Fraud Report: DOJ Obtains $389M From DaVita Healthcare to Settle Medical Fraud Allegations

October 28, 2014 | Little Health Law

The Department of Justice (DOJ) announced on October 22, 2014 a resolution of claims that DaVita Healthcare Partners, Inc., a provider of dialysis services, engaged in a referral and kickback scheme that violated the False Claims Act (FCA). The DOJ announced that DaVita has agreed to pay $350 million to settle the government’s case. The Government’s case was not proven and was only alleged. Liability was not determined prior to the settlement and DaVita has not been shown to have engaged in wrong doing. Our Atlanta and Augusta, Georgia business and health care law firm represents health care providers and businesses and helps them avoid legal pitfalls.
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Blowing the Whistle in Court

October 21, 2014 | Little Health Law

The vast majority of physicians and other health care providers endeavor to provide services and bill for them in an ethical, legal manner. Trust is at the core of the federal government’s provider reimbursement scheme under Medicare and other federal health programs. The federal government relies upon health care providers submitting accurate and truthful claims. The fact that some health care providers have exploited federal health programs for illegal economic gain has resulted in laws intended to combat fraud and abuse, improve patient care and protect tax payer money. Currently, there is a strong push in federal law enforcement to aggressively enforce federal fraud and abuse laws.¹

The Federal False Claims Act (FCA)² makes it illegal for health care providers to submit claims for payment to Medicare that the provider knows, or should know, are false or fraudulent. The FCA contains a whistleblower provision that authorizes a private citizen or “relator” to file a lawsuit on behalf of the federal government, and entitles relators to a percentage of any recovery. FCA whistleblower cases often assert violations of other federal fraud and abuse laws, such as the Anti-Kickback Statute (AKS),³ the Physician Self-Referral Law (Stark Law),⁴ the Exclusion Authorities,⁵ and the Civil Monetary Penalties Law (CMPL).⁶

For relators, “blowing the whistle” becomes more than an abstract notion when it comes time to “plead,” or state, the claim in court. Assuming a claim has legal merit, getting it right in court is what determines success or failure. Following the law in reporting alleged wrongdoing is essential, including procedural law dictating how to properly plead a case. Rule 9(b) of the Federal Rules of Civil Procedure requires that “[t]he whistle must be blown not only loudly, but with Rule 9(b) particularity in the Complaint before the courts will listen.”⁷ The concept of “particularity” is important to a federal whistleblower’s opportunity for success. This means is that a whistleblower complaint must state “facts as to time, place, and substance” of the alleged wrongdoing, and that “an actual false claim for payment [was] made to the Government.”⁸
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