Little Health Law Blog

Health Care Fraud Report: OIG Alert Regarding Laboratory Payments to Referring Physicians

September 16, 2014 | Little Health Law

Clinical laboratory payments to physicians in excess of the fair market value of services provided or that correlate to the volume or value of referrals can constitute health care fraud and trigger very serious civil and criminal penalties. The Department of Health and Human Services’ Office of Inspector General (OIG) recently issued a Special Fraud Alert (the “Alert”) addressing lab compensation to referring doctors and medical practices for blood specimen collection, processing and packaging, and for submitting patient data to a registry or database. Our Georgia health care law firm endeavors to follow updates in health care laws and regulations that impact providers, particularly Stark law and the federal Anti-Kickback Statute (AKS). This OIG Alert warrants caution and careful evaluation of any applicable financial arrangements by affected physicians and medical practices to ensure compliance with federal law.

Labs and physicians: BEWARE of Stark Law and the Anti-Kickback Statute
At the heart of Stark Law and the AKS is the notion that (unlike most other industries) health care business referrals may, under some circumstances, be a bad thing. Kickbacks that corrupt medical judgment about the medical necessity of services, result in the overutilization of medical products and services, increase the cost of federal programs, or that cause unfair competition, are of great interest to the Federal Government and are the intended targets of Stark Law and the AKS.

The AKS, unlike Stark, is a criminal statute, a violation of which requires evidence of criminal intent. However, the OIG may find evidence of such intent even by mere characteristics of a particular financial arrangement, including legal structure, the absence of safeguards, and, of course, actual conduct of the parties regarding the arrangement.
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Affordable Care Act Expansion of Community Health Centers: Endeavoring to Ensure Insurance “Coverage” Equates to Health Care “Access”

August 29, 2014 | Little Health Law

A premise of the Affordable Care Act (ACA) is to provide “affordable coverage” to more Americans with the idea being that newly insured individuals and families will have enhanced “access” to quality health care. Whitehouse Policy Snapshot. Particularly important is access to primary care, the means by which millions of Americans can obtain preventive care and better wellness as a way to avoid more expensive health care treatment in, for example, an emergency room. Following enactment of the ACA, there has been a strong push for previously uninsured Americans to obtain insurance via the new Health Insurance Market Place.

Atlanta and Augusta, Georgia Health Care Law Firm

That push appears to have succeeded to some extent. According to the White House, by virtue of the ACA, 8 million people have signed up for private insurance in the new Health Insurance Market Place, 3 million young adults have been able to stay on their parents’ health plan, and 3 million more people were enrolled in Medicaid and CHIP (as of February 2014) compared to before the Health Insurance Market Place opened. See FACT SHEET: Affordable Care Act by the Numbers. But being “covered” under insurance may not always equate to real access – or timely access — to health care. One reason for this reality is that as the numbers of enrolled insureds have increased under the ACA, the shortage of primary care physicians appears to have increased. According to Kaiser Health News (citing HRSA), about 20 percent of Americans now reside where there is an inadequate presence of primary care doctors to meet their health care needs. HRSA provides detailed demographic information demonstrating what areas/populations are medically underserved. Citing a report by the Association of American Medical Colleges, KHN reports that absent changes, there will be a shortage of 45,000 primary care doctors in this Country by 2020. And many doctors are leaving primary care practice due to the strains of diminishing reimbursement rates and an overbearing regulatory environment in which they ply their trade. So, with millions of new insureds needing the promised access to primary care, and an insufficient number of primary care doctors to deliver the care, how will the promised heath care “access” be obtained?
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Health Care Fraud Report: Recent Federal Indictment of Cardiologist for Alleged Overbilling of Medicare

August 23, 2014 | Little Health Law

On August 21, 2014, the United States Attorney for the Northern District of Ohio, Stephen D. Dettelbach, together with representatives of the FBI and OIG, announced the indictment of a Westlake, Ohio Cardiologist for alleged health care fraud. The cardiologist is alleged to have overbilled Medicare and private insurers by approximately $7.2 million. About $1.5 million of the alleged overbillings was actually paid.

Alleged Medicare Fraud

The indictment alleges that Dr. Harold Persaud, board certified in internal medicine and cardiovascular disease, maintained a private medical practice in Westlake and had hospital privileges at St. John’s Medical Center, Fairview Hospital, and Southwest General Hospital, and used inaccurate coding to obtain reimbursement for services more costly than what was actually performed, performed medical tests that were not medically necessary, falsely recorded the existence and extent of blockage shown by cardiac catheterizations, recorded false symptoms to justify tests and procedures, and inserted stents on patients who did not have 70% or more blockage. An indictment is a charge, not evidence, and a defendant is entitled to defend himself and require the government to prove its case.

The indictment further alleges that Dr. Persaud ordered or performed other procedures that were not medically necessary, including aortograms and renal angiograms and placing a stent in an artery of one patient who had a functioning bypass, endangering the patient’s life.

In 2012, during a federal investigation relating to the subject matter of the indictment, the FBI seized numerous financial, patient and medical records and documents from Dr. Persaud’s office, according to reporting by Cleveland.com. On August 30, 2012, St. John Medical Center reported that it sent letters of apology to 23 patients, informing them that stents placed in their hearts by Dr. Persaud may not have been medically necessary, and that the hospital would pay for follow-up visits with a cardiologist of their choice. Dr. Persaud was an independent cardiologist not employed by the hospital. The hospital’s internal investigation, which led to the federal investigation, began when staff members in its cardiac catheterization lab informed the hospital’s cardiology department that Dr. Persaud’s methodology respecting stent procedures varied from protocol followed by other doctors.
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Medicare Issues for Direct Pay and Concierge Practices

August 14, 2014 | Little Health Law

The strain of health care reform and third-party-payer bureaucracy will likely continue to push physicians towards non-traditional business models for practicing medicine. This is especially true for non-specialists. As the trend of physicians to find viable practice model alternatives grows, it is widely expected that the number of direct pay and concierge physician practices will increase significantly.

Atlanta Medical Practice and Health Care Law Firm

Our health care law practice is particularly interested in direct pay and concierge medicine legal issues. While the particulars may vary, the typical concepts upon which such medical practices are built are fixed, affordable fees for patient “membership” in the direct pay/concierge program, 24/7 access to a physician, much more time and involvement in the physician-patient relationship, better preventive care and planning, and a more rewarding professional life for the physician without (or with reduced) headaches of a third party payer medical practice.

The legal and business issues raised by setting up such a practice, however, are important and must be carefully evaluated. For example, one such issue is whether the details of a particular direct pay or concierge model violate Medicare billing rules. The federal laws that govern Medicare patients and federal reimbursement can make it very risky for concierge practices to charge Medicare beneficiaries retainer fees for certain medical services. Medicare billing rules have heavy consequences for double billing of a Medicare covered procedure. The setup of the concierge practice model has the potential to trigger this issue, and some practitioners may be better off opting out of Medicare entirely. However, physicians also have the option of accepting or not accepting assignment, with their choice affecting who they bill for their services. Physicians accepting assignment will bill Medicare directly, while those not accepting assignment bill the patient, who in turn seeks reimbursement from Medicare.
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Medicare Fraud: Federal Strike Force Brings Nationwide Charge Against 90 Individuals

July 31, 2014 | Little Health Law

As part of the Centers for Medicare and Medicaid Services’ (CMS) continued efforts to combat Medicare fraud, federal charges were recently brought against 90 individuals across the nation for false billings to Medicare, totaling $260 million dollars. These charges were the result of a collective task force comprising federal, state, and local agencies and the use of data analysis and increased community awareness. This takedown marks the seventh national takedown conducted by the federal Medicare Fraud Strike Force. The goal of the Medicare Fraud Strike Force is to protect taxpayer resources and senior citizen rights by combating fraud and abuse in the Medicare system for personal gain. The 90 individuals charged in this takedown were out of Miami, Houston, Los Angeles, Detroit, Tampa and Brooklyn, and 27 of them are medical professionals.
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Healthcare Whistleblower Claims Based on Self-Referral Arrangements

July 17, 2014 | Little Health Law

Two federal laws regulate referrals and financial arrangements between healthcare providers and facilities – Stark Law and the Anti-Kickback Statute.¹ These laws have recently been at the center of important healthcare whistleblower fraud cases. While both serve the same essential purpose – to eliminate improper financial incentives that interfere with independent medical judgment and good patient care – they do so in slightly different ways and contexts.

Stark Law (also known as the “Ethics in Patient Referrals Act”) prohibits physician referrals of specified or “designated health services” for Medicare and Medicaid patients, where the physician or her immediate family member has a financial relationship with the referred entity.² A financial relationship can include ownership, investment interest, and direct or indirect compensation arrangements.³ A “referral” is broadly defined to include “the request by a physician for the item or service” (Medicare Part B services) and “the request or establishment of a plan of care by a physician which includes the provision of the designated health service” (all other services).⁴ Designated health services (DHS) include laboratory services, physical therapy and occupational services, radiology (including MRI, ultrasound, and computer tomography scan) services, radiation therapy services and supplies, durable medical equipment and supplies, prosthetics, orthotics, and prosthetic devices, home health services and supplies, outpatient prescription drugs, and inpatient and outpatient hospital services.⁵
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July 15, 2014, EfficiencyInPractice publishes article co-authored by Kevin S. Little and Jay D. Brownstein, The Affordable Care Act & Quit Tam Whistleblower Claims

July 15, 2014 | Little Health Law

EfficiencyInPractice publishes article co-authored by Kevin S. Little and Jay D. Brownstein, The Affordable Care Act & Quit Tam Whistleblower Claims

Negotiating Professional Liability Insurance Protection in Physician Employment Agreements

July 10, 2014 | Little Health Law

In our practice as an Atlanta and Augusta health care law firm, we see varying options regarding professional liability insurance coverage made to physicians in their employment agreements. All doctors apprehend in general that there are financial risks associated with potential malpractice claims. While the need to obtain liability insurance is obvious, the right coverage for particular circumstances and how coverage works can be less obvious. Understanding the type of professional liability coverage proposed in a physician employment agreement and how the coverage mechanics work is an essential first step for physicians who desire a physician employment agreement that will truly protect their long-term financial interests.

The first type of coverage is “occurrence-based” professional liability insurance. Occurrence-based coverage provides lifetime coverage for incidents that occurred during the insurance policy period. This means that even if the policy lapses or is terminated, if a claim is made concerning an incident that occurred while the policy was in force, the claim is covered under the policy. Generally speaking, professional liability policies will define “occurrence” as the actual act or omission of the physician, not the injury of the patient.

A “claims-made” policy, on the other hand, only covers incidents that occurred and were reported during the policy period. If a claims-made policy is dropped or expires, any claims asserted thereafter are not covered, even if the incident occurred during the policy period. Where a physician’s professional liability policy is a claims-made policy, the physician (or his employer) may purchase an “extended reporting” endorsement, otherwise known as “tail” coverage, to cover claims asserted after the policy period.
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HIPAA’s Teeth

July 1, 2014 | Little Health Law

Although most health care providers understand in the abstract that they must comply with The Health Insurance Portability and Accountability Act of 1996 (HIPAA), many may not fully appreciate the legal and financial significance of noncompliance. More and more, the federal government utilizes HIPAA enforcement options to protect the public interest in security, including the following strong incentives for HIPAA compliance.

HIPAA Civil Penalties

Caps on penalties for HIPAA violations by covered entities were increased in 2009 by the enactment of the HITECH Act. Covered entity civil penalties are “tiered” as follows:

No knowledge of HIPAA violation – $100-$50,000 for each violation, up to a maximum of $1.5 million during a calendar year.
A reasonable cause of the HIPAA violation exists – $1,000-$50,000 for each violation, up to a maximum of $1.5 million during a calendar year.
The HIPAA violation was caused by willful neglect but timely corrected – $10,000-$50,000 for each violation, up to a maximum of $1.5 million during a calendar year.
The HIPAA violation was caused by willful neglect but not timely corrected – $50,000 or more for each violation, up to a maximum of $1.5 million during a calendar year

The HITECH Act also offers benefits to encourage patients to report HIPAA violations similar to those offered in qui-tam cases. This allows patients who have been impacted by HIPAA violations to collect a portion of the civil monetary penalty that is imposed against a violator. However, there are three very important exceptions to collecting on this penalty:

The offense is punishable under HIPAA criminal provisions;
The violator did not know and, by exercising reasonable diligence, would not have known of the violation; or
The failure to comply is caused by “reasonable cause” rather than “willful neglect” and the alleged violator takes action to cure the failure during the first 30 days following actual knowledge of the noncompliance or when the person should have known of the noncompliance.

HIPAA Criminal Penalties

Although the DHHS Office for Civil Rights enforces the civil penalties for HIPAA violations, the Department of Justice is the agency in charge of enforcing HIPAA’s criminal penalties. As with the civil penalties, the nature of the HIPAA violation determines the severity of the penalty in regards to criminal sanctions:

If a person knowingly and, in violation of the Privacy Rule, discloses PHI to another individual, they face a base penalty of up to $50,000 in fines and up to a year in prison, or both;
if the offense is committed under false pretenses, they can be fined up to $100,000 and face up to five years in jail, or both;
if the offense is committed with an intent to sell or otherwise use PHI for commercial advantage, personal gain or malicious harm, they can be fined up to $250,000 and face up to 10 years in jail, or both.

Physician Servicing and Consulting Agreements and Transparency

June 21, 2014 | Little Health Law

Medical device companies, pharmaceutical companies or other health care related companies or vendors often seek consulting or personal services from doctors. Physicians should be cautious in such arrangements to avoid legal issues under federal law. Where fair market value compensation is paid for such services, there may be no issue under, for example, the federal Anti-Kickback Statute (AKS). However, arrangements that involve excessive compensation can lead to legal problems and reporting issues.

Physician personal service arrangements may fall within the AKS safe harbor found in 42 C.F.R. § 1001.952(d). Such services provided by the physician must be legitimate and necessary and must meet the following requirements:

1. A written agreement states the specific services and compensation for the services;
2. The term of the agreement must be at least one year; and 3. The compensation must be for fair market value and not fluctuate based on volume or value of the business generated
Transparency in many such arrangements is required by law. The Physician Payment Sunshine Act (PPSA) was enacted pursuant to the Patient Protection and Affordable Care Act of 2009 (ACA). The PPSA requires manufacturers of medical supplies, devices and drugs paid for by certain government programs (e.g. Medicare) to report to the federal government payments made to health care providers, including physicians, that exceed $10 or aggregate payments over $100 annually. Payments covered include consulting fees, royalties, stock options, gifts, entertainment, and other items of value or forms of consideration, subject to a fine of $10,000 per failure to report.
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