AHLA. CC. Cutting Edge Stark Issues. Julie E. Kass OBER KALER Washington, DC. David E. Matyas Epstein Becker & Green PC Washington, DC

Transcription

1 AHLA CC. Cutting Edge Stark Issues Julie E. Kass OBER KALER Washington, DC David E. Matyas Epstein Becker & Green PC Washington, DC Institute on Medicare and Medicaid Payment Issues March 26-28, 2014

2 Advanced Stark Julie Kass OberKaler David Matyas EpsteinBeckerGreen Agenda Hospital-Physician Relationships Lessons Learned from Halifax and Tuomey Group Practice Distributions What Physician Practices are Missing Application of Stark to Medicaid Shared Risk and ACO-like Arrangements Stark Self-Disclosures Advisory Opinions Q and A 2 1

3 Hospital-Physician Relationships Lessons Learned from Halifax and Tuomey U.S. ex rel. Drakeford v. Tuomey Healthcare System, Inc. Facts Tuomey employed surgeons on a part-time basis through a new wholly-owned LLC to provide surgery at Tuomey s new outpatient surgery center. Agreements were ten years in length, and required the employed surgeons to exclusively perform outpatient surgery at the Tuomey outpatient surgery center. Surgeons were paid as employees for the surgeries performed at the Tuomey surgery center, but otherwise remained in their own private practices. Tuomey likely entered into the contracts in response to the opening of a competing surgery center in the community feared that these surgeons would redirect their patients away from Tuomey to the new surgery center

4 5 U.S. ex rel. Drakeford v. Tuomey Healthcare System, Inc. Legal Arguments Relator/DOJ -- FCA case alleged Hospital entered into part-time employment arrangements with local physicians to perform outpatient procedures at Hospital outpatient surgery center that violated Stark Defendant -- Hospital argued that Stark Law does not apply b/c the compensation was FMV and did not vary or take into account referrals. 5 U.S. ex rel. Drakeford v. Tuomey Healthcare System, Inc. Outcome: District Court Jury returned a split verdict on March 29, 2010 Employment agreements violated Stark law but did not violate FCA Tuomey ordered to repay $45 million for Stark law violations Court ordered a new trial on FCA allegations due to a mistake in excluding certain testimony 6 3

5 7 U.S. ex rel. Drakeford v. Tuomey Healthcare System, Inc. Outcome: Fourth Circuit District Court verdict in favor of U.S. violated Tuomey s 7 th Amendment right to a jury trial Vacated and remanded In the interests of judicial economy, offered guidance on two issues on Stark law Is a shadow facility fee generated by a personally performed service a referral? Does the volume or value standard include anticipated referrals? 7 U.S. ex rel. Drakeford v. Tuomey, 675 F.3d 394 (4th Cir. 2012) The 4th Circuit found that: The hospital charge generated by a personally performed service is a referral. The 4th Circuit found that the volume or value standard is implicated by anticipated referrals or business Physicians should be compensated for the services performed and not for referrals Issue is whether the contracts on their face took into account v/v of referrals Intent alone does not create a violation. 8 4

6 9 U.S. ex rel. Baklid-Kunz v. Halifax FACTS In June 2009 when Complaint was filed, Relator was Director of Physician Services Complaint alleges: Admission criteria not met Failure to establish medical necessity Repetitive up-coding and under-coding Improper billing of services performed by RNs Violations of the Stark law through financial incentives to staff physicians, including oncologists and urologists Payment of excessive compensation to neurosurgeons greatly in excess of FMV in violation of Stark law Payment of excessive compensation for medical directorships without legitimate services Other allegations 9 10 U.S. ex rel. Baklid-Kunz v. Halifax Legal Arguments Relator/DOJ: Internal review reveals over-billing, improper admissions Payments to physicians were not commercially reasonable and accounted for volume and value of referrals Defendant No evidence of improper billings or fraud Salaries were commercially reasonable and reflected FMV 10 5

7 11 U.S. ex rel. Baklid-Kunz v. Halifax Outcome In progress On March 3, 2014 Halifax and the government settled the Stark issues for $85 million Paid over five years Corporate Integrity Agreement Case continuing with respect to billing issues Infirmary Health System Inc. August 7 th DOJ Intervened in case against Infirmary Health System and Diagnostics Physician Group, PC Cardiologist is relator Allegations of anti-kickback and Stark violations Infirmary paid for overhead of clinic in which physicians provided services as independent contractors Physicians compensation included revenues generated by personnel employed by Infirmary; physicians paid Stark bonuses related to volume and value of referrals Infirmary failed to follow valuation 12 6

8 Where do we go from here? Stark employment exception requires comp Consistent with the fair market value of the services; and Is not determined in a manner that takes into account (directly or indirectly) the volume or value of any referrals by the referring physician All other exceptions add or other business generated. Plain language means that at a minimum, employer may consider commercial business No AKS issue b/c of employment exception 13 Commercial Reasonableness Most compensation exceptions, including employment, contain the requirement that the arrangement be commercially reasonable even if no referrals were made. Commercially reasonable is not defined. Note the dichotomy between this and FMV which must be determined withed without regard to the volume or value of referrals or other business generated between the parties. 14 7

9 CMS Preamble Language re Commercial Reasonableness We are interpreting commercially reasonable to mean that an arrangement appears to be a sensible, prudent business agreement, from the perspective of the particular parties involved, even in the absence of any potential referrals. 63 Fed. Reg (Jan. 9, 1998) 15 CMS Preamble Language re Commercial Reasonableness An arrangement will be considered commercially reasonable in the absence of referrals if the arrangement would make commercial sense if entered into by a reasonable entity of similar type and size and a reasonable physician (or family member or group practice) of similar scope and specialty, even if there were no potential DHS referrals. 69 Fed. Reg (Mar. 26, 2004) 16 8

10 Government Litigation Positions In Halifax [g]iven that each neurosurgeon was paid total compensation that exceeded the collections received for neurosurgical physician services, Defendants could not reasonably have concluded that the compensation arrangements in those contracts were fair market value for the neurosurgeons services or were commercially reasonable. United States Complaint in Intervention, pp (filed by the United States on Nov. 4, 2011) (emphasis added). 17 Government Litigation Positions In Tuomey Tuomey CFO Paul Johnson conceded that although the physician contracts resulted in losses, in turn, Tuomey obtained tens of millions of dollars of facility fees from Medicare, private insurance companies and patients.... This evidence demonstrated that the compensation plans were financially sustainable for the hospital only by taking into account the volume or value of the physicians referrals and thus were not commercially reasonable in the absence of those referrals.... Brief for Appellee United States of America, pp (filed by the United States on April 1, 2011). 18 9

11 Group Practice Distributions What Physician Practices are Missing 20 Group Practice Definition Group of 2 or more physicians organized as a legal entity Through which each member provides substantially the full range of their patient care services Substantially all of the members services are furnished and billed through the group Expenses and revenues distributed by predetermined methods ( unified business test) Members not compensated based on volume or value of referrals (except for permitted profit or productivity distributions) Group members conduct 75% of all patient encounters 20 10

12 Group Practice Definition-Regulatory Gloss Single Legal Entity Any legal form recognized Primary purpose must be physician group Need not have a physician owner as long as at least two physicians employed Hospital employed physicians are not a group practice unless part of a separate legal entity Can include a solo practitioner organized as a legal entity if a second full-time physician employed Can be two entities in contiguous states if there is identical ownership, governance and operation and state licensing laws Group Practice Definition-Regulatory Gloss (cont d) Members of Group Shareholders and employees are members Leased employees are members if bona fide employee under IRS rules Locum tenens and on-call physicians are members Independent contractors and leased employees are not members but are in the group for Profit-sharing and productivity bonuses Supervision purposes

13 Group Practice Definition-Regulatory Gloss (cont d) Full range of patient care services Includes any physician task that address the medical needs of specific patients, patients in general or that benefit the practice If physician practices exclusively in one group practice, all services deemed covered If physician practices in and out of the group, services to group s patients must be comparable in scope to those outside the group Group Practice Definition-Regulatory Gloss (cont d) Substantially all test 75% of member s patient care services furnished and billed through the group Default measure: actual time spent Alternate measures: Reasonable Fixed in advance Uniformly applied Verifiable/documented What if physicians have other ventures (urgent care centers where they may not practice, but have an ownership interest?

14 25 Group Practice Definition-Regulatory Gloss (cont d) Substantially all test All services inside and outside the practice must be aggregated Free clinic services and certain academic medical services provided by physicians in group count towards services provided by group (Phase II) Start-up groups and addition of newly recruited physician: one year grace period Not applicable to groups in HPSAs Group Practice Definition-Regulatory Gloss (cont d) Unified business Test Centralized decision-making by a representative body Consolidated billing, accounting and financial reporting Phase II eliminates centralized utilization review Cost center and location-based accounting permitted Multiple payment methodologies permitted 26 13

15 How much is enough? Is the group made up of a conglomerate of former separate group practices? Is a single corporation, partnership, etc. plus a single provider number enough? What else does the group need to have? Can each formerly separate entity continue to own its own assets? Who employs the physicians and other staff? 27 Group Practice Definition-Regulatory Gloss (cont d) Physician-Patient encounters Members must provide at least 75% of the group s patient encounters Measured per capita, not by time Independent contractors not members ; as of Phase II, leased employees meeting IRS bona fide employee requirements can be members Be careful with how many independent contractors provide services Where are the independent contractors when providing the services Note that the in-office ancillary services exception requires services to be performed in group space

16 Group Practice Definition-Regulatory Gloss (cont d) Compensation Physicians may not be compensated directly or indirectly based on the volume or value of referrals by that physician, except: Productivity bonus Profit sharing Group Practice Definition-Regulatory Gloss (cont d) Bonus/profit sharing permitted based on services personally performed or services incident to such services Supervision requirements May not be directly related to volume or value of referrals of DHS (unless meets criteria above) Can segregate DHS revenue Profits can be based on entire group or any subgroup of at least 5 physicians Phase II clarifies that any combination of 5 is acceptable Can physicians be in multiple pods? 30 15

17 Group Practice Definition-Regulatory Gloss (cont d) Profit-sharing deemed not to relate directly to volume or value Per-capita profit split % of DHS revenue based on % of non-dhs revenue Any method if DHS < 5% of total revenue and < 5% of any physician s compensation Any other method if: Reasonable and verifiable Not directly related to referrals of DHS Set in advance Group Practice Definition-Regulatory Gloss (cont d) Productivity bonus deemed not to relate directly to volume or value: Total patient encounters or RVUs % compensation based on non-dhs Any method if DHS < 5% of total revenue and < 5% of any physician s compensation Any other method if: Reasonable and verifiable Not directly related to referrals of DHS Set in advance Can you combine WRVUs and pay group bonuses?

18 Pitfalls for Physician Bonuses Independent physician groups less likely to know/understand the rules Can you take into account mid-level provider services for physician compensation Counting services that aren t incident to for docs WRVUs how to handle mid-levels Ownership in urgent care centers that are enrolled as group practices 33 Additional Issues When Groups Owned by Hospital FMV Compensation based on WRVUs how do make sure that WRVUs are accurate EMRs make this harder Want to incentivize physicians to use mid-levels Harder than it seems Can you distribute profit pool or productivity bonus when practice is not profitable? Can hospital require physician to refer to hospital or within hospital system? 34 17

19 Application of Stark to Medicaid Stark Statutory Language re: Medicaid... no payment shall be made to a State for expenditures for a designated health service furnished to an individual on the basis of a referral that would result in the denial of payment for the service under [Medicare], and subsections (f) and (g)(5) of [the Stark reporting provisions] shall apply to a provider of such a designated health service. 42 U.S.C. 1396b(s) 18

20 United States ex rel. Baklid-Kunz v. Halifax Hosp. Med. Center The government argued that since the state was not entitled to claim FFP from the federal government based upon the allegedly prohibited referrals, Halifax had caused a false FFP claim to be submitted by the Medicaid program The Court agreed in the context of denying a Motion to Dismiss. No. 6:09-cv-1002-Orl-31DAB, 2012 WL United States ex rel. Schubert v. All Children s Health Sys. Allegations that all of claims submitted to Florida s Medicaid program, that were paid by the US government through FFP dollars, were false claims because the claims were the result of referrals by physicians in violation of Stark Court determined that Stark applies to Medicaid claims and can serve as the basis of a false claim under the FCA 38 19

21 Regulatory History [42 U.S.C. 1395nn(s)] does not, for the most part, make the provisions in [Stark] that govern the actions of Medicare physicians and providers of designated health services apply directly to Medicaid physicians and providers. As such, these individuals and entities are not precluded from referring Medicaid patients or from billing for designated health services. A state may pay for these services, but cannot receive FFP for them. 53 Fed. Reg. 1659, 1704 (January 9, 1998) (emphasis added). Regulatory History We had intended to address in this Phase II rulemaking section 1903(s) of the Act, which applies section 1877 of the Act to referrals for Medicaid covered services which we. However, in the interest of expediting publication of these rules, we are reserving the Medicaid issue for a future rulemaking. 69 Fed. Reg , (March 26, 2004). 20

22 What Now? Statutory language and regulatory history clearly indicate no Stark liability for Medicaid claims CMS Voluntary Disclosure Protocol does not request Medicaid payments What is the policy of the Department of Justice? Shared Risk and ACO-like Arrangements 21

23 ACO/Medicare Shared Savings Waivers 11/2/11 Interim Final Rule Four ACO Waivers apply to Stark ACO Pre-Participation Waiver ACO Participation Waiver Shared Savings Distribution Waiver Compliance with Stark Waiver 43 Bundled Payments and Shared Savings CMMI developed/developing 4 models Retrospective Acute Care Hospital Stay Only Retrospective Acute Care Hospital Stay PLUS Post Acute Retrospective Post Acute Only Acute Care Hospital Stay Only No Waivers in the form of Regulations/ Issuances; instead, waivers are in the form of notices related to the various model documents 44 22

24 Stark Self-Disclosures Self-Referral Disclosure Protocol CMS only accepts violations or potential violations of self-referral law. If additional violations or potential violations of other criminal, civil, and administrative laws send to OIG. Cannot submit disclosure concurrently under SRDP and OIG s Self- Disclosure Protocol. CMS coordinates with Law Enforcement. Relationship with Corporate Integrity Agreements. Protocol posted at: Abuse/PhysicianSelfReferral/Self_Referral_Disclosure_Protocol.html AHLA Practical Tips posted at: altipsonthestarkself-disclosureprotocol.aspx 46 23

25 Stark Self-Referral Disclosure Protocol Settlements 23 Settlements in 2013 under the SRDP 22 Hospitals 18 Acute Care 1 Non-Profit Acute Care 3 Other types (rehab, psychiatric, CAH) 1 Physician Group Total settlements approximately $2.07M Largest Settlement $318K Smallest Settlement $ Average Settlement $160K Median $76K Website states failure to satisfy applicable exception 47 Examples of Conduct Disclosed Not Satisfying An Exception Electrocardiogram interpretation services On call Physician ownership in hospital Utilization review and Case Management services Medical Direction Physician Recruitment Office space Failure to satisfy in-office ancillary services exception Donation of EHR Supervision of residency program 48 24

26 Reported OIG Voluntary Disclosures with Stark Issues 8 Settlements in 2013 under the OIG s Protocol 22 Hospitals 18 Acute Care 1 Non-Profit Acute Care 3 Other types (rehab, psychiatric, CAH) 1 Physician Group Total settlements approximately $1.44M Largest Settlement $510K Smallest Settlement $50K Average Settlement $180K Median $74K 49 Allegations related to Hospitals: Free (or below market) rent Purchase DME for inpatient services from the ordering physician Failing to collect moneys from physician-owned real estate company Increasing capitation in exchange for patients Paying excessive compensation for services performed Cash collections guarantee, start-up expenses, and loan forgiveness to subsidize recruitment efforts Discounted: internet services, professional liability and health insurance, office supplies and pharmaceuticals 50 25

27 Stark Self-Referral Disclosure Protocol Settlements Legal Analysis SRDP requires that parties identify the requirements of an exception with which their arrangement complies AND requirements with which it does not comply. Must provide CMS with your legal analysis. No guarantee that CMS will agree with your assessment. Consider all available exceptions and applicable rules before determining that you have a noncompliant arrangement. 51 Stark Self-Referral Disclosure Protocol Settlements Core Stark Compliance Analysis Is there remuneration? Is there a compensation arrangement? Direct? Indirect? Is there a referral for DHS? Is the organization furnishing the DHS an entity (as defined in the regulations)? Is Medicare the payor? 52 26

28 Stark Self-Referral Disclosure Protocol Settlements Core Stark Compliance Analysis Apply rules that were in effect during the various periods of the arrangement. The Stark rules, e.g. stand in the shoes, have changed a number of times and the analysis may be different during certain points in the arrangement. Give proper, but not excessive, weight to preamble language. Statutory and regulation text govern. 53 Stark Self-Referral Disclosure Protocol Exceptions to Consider: Temporary Noncompliance 42 C.F.R (f) Compensation Unrelated to DHS 42 C.F.R (g) Payments by a Physician 42 C.F.R (h) Grace Periods 42 C.F.R (g) Isolated Transactions 42 C.F.R (f) 54 27

29 Stark Self-Referral Disclosure Protocol Overpayment Calculation With respect to physician-hospital arrangements: Is the referring physician the admitting physician? Did furnishing the improperly referred DHS affect the DRG payment? Does this impact the amount of the overpayment? Consider the SRDP look back period Tied to reopening rules at 42 C.F.R (b) FAQ 6091 Which programs do you consider? Medicare FFS? Medicare Advantage? Medicaid FFS? Medicaid Managed Care? 55 Hypothetical Hospital requires services of a physician on its medical staff for weekends. Discussion and agreement of terms between physician and Hospital on Friday. Services are provided on Saturday-Sunday. Agreement is prepared on Monday and signed by both parties on Tuesday. Payment is made two weeks later. Stark issue? 56 28

30 Hypothetical Business Team and in-house counsel draft incentive plan documents for newly employed physician with clinical productivity measures based on collections for personally performed services. Two years later, a new financial analyst is computing incentive payment for physician. The new financial analyst uncovers that, in the prior year, the wrong report was used to calculate the prior year s incentive. In year one, the former financial analyst used all revenue generated by the physician, include DME revenue and extender services. 57 Hypothetical No one realized the mistake occurred in the calculation. The physician is willing and does pay back the incentive salary overpayment to employer and employer issues a revised W-2. Stark violation? Disclosure? 58 29

31 Hypothetical Hospital leases office space to several physician groups in a time share. Hospital property manager checks in on the unit. Property manager determines that one practice has been using a vacant time slot in addition to the time slot in lease agreement. Stark issue? Disclosure? 59 Hypothetical Hospital revises agreement and requires physician to lease a different office full-time for two years. Stark compliant agreement. At time of renewal, space is re-measured and there are 200 feet more than in initial lease. Stark issue? Disclosure? 60 30

32 Hypothetical Hospital wants to market its state of the art bariatric program. Hospital advertises on billboards and in local newspapers, using photographs and names of the private practice physicians in the advertisements. Physicians do not contribute to the advertising expense. Stark issue? Disclosure? 61 Advisory Opinions 31

33 Framework for AOs January 1998, Final Rule with Comment Period CMS will not (1) assess FMV; or (2) determine if individual is a bona fide employee Few advisory opinions over the years (except those during the moratorium on physician ownership in specialty hospitals) Advisory Opinions vs. Self-Disclosure 63 CMS Issued 3 Advisory Opinions in 2013 Providing liquid based pap smear specimen collection kits free of charge CMS conclusion - Would NOT result in remuneration Providing biopsy brushes free of charge CMS conclusion - WOULD result in remuneration (but do not explain if would meet an exception) Addition of beds to physician owned hospital CMS concluded - Would NOT violate limitation on expansion of facility 64 32