Anti Kickback Statute Update By Meredith Williams

Transcription

1 Kickback and Stark Law Developments HCCA 20 th Annual Compliance Institute April 17 20, 2016 Meredith Williams Senior Counsel Office of Inspector General, DHHS Washington, DC Robert A. Wade Partner Krieg DeVault LLP 4101 Edison Lakes Pkwy, Ste. 100 Mishawaka, IN Charles B. Oppenheim Principal Hooper, Lundy & Bookman, PC 1875 Century Park East, Ste Los Angeles, CA Anti Kickback Statute Update By Meredith Williams 2 AKS Safe Harbor Proposed Rule 79 Fed. Reg. 59,717, Oct. 2, 2014 Proposed to modify 42 CFR by (1) adding safe harbors to the anti kickback statute that would provide new protections or codify existing statutory protections and (2) modifying certain existing safe harbors Proposed to amend the definition of remuneration in the Civil Monetary Penalties Law regulations at 42 CFR 1003 by adding the exceptions to that definition that are set forth in Affordable Care Act of 2010 Received significant comments regarding free local transportation 3 1

2 OIG Alert on Information Blocking If a donor, or someone on the donor s behalf, takes any action to limit or restrict the use, compatibility, or interoperability of the donated items or services with other electronic prescribing or EHR systems, the donation arrangement would not receive safe harbor protection and would be suspect under the Federal antikickback statute OIG Policy Reminder: Information Blocking and the Federal Anti Kickback Statute, Oct. 6, 2015, available at reminder pdf 4 OIG Advisory Opinions OIG Advisory Opinion No : proposal to offer free van shuttle service to certain medical facilities in an integrated health system Modification of all independent charity patient assistance program advisory opinions 5 Assures hospitals that they will not be subject to OIG administrative sanctions for discounting or waiving amounts beneficiaries may owe for selfadministered drugs they may receive in outpatient settings when those drugs are not covered by Medicare Part B, subject to the conditions specified in the statement OIG Policy Statement OIG Policy Statement Regarding Hospitals That Discount or Waive Amounts Owed by Medicare Beneficiaries for Self Administered Drugs Dispensed in Outpatient Settings, Oct. 29, 2015, available at pdf 6 2

3 MACRA and Payment Reform Initiatives Patient Assessment Instruments/Value Based Programs/MACRA MIPS and APMs/MACRA LAN PPT.pdf10 7 Fraud and Abuse Waivers for Select CMS Models and Programs and Abuse/PhysicianSelfReferral/Fraud and Abuse Waivers.html 8 Stark Law Update By Bob Wade and Charles Oppenheim 9 3

4 New Regulations: List of Key Changes (October 30, 2015) Leniency on written agreement and one year term requirements New exception for recruitment of mid level clinicians New exception for timeshare arrangements Extensions on permitted holdover arrangements More latitude on missing signatures 10 How The Rules Have Changed Written Agreement/Term Depending on the facts and circumstances, a collection of documents, e.g., e mails, drafts, invoices, cancelled checks, timesheets, etc. can constitute a written agreement The one year term requirement can be satisfied if the arrangement lasted one year, even if the written agreement does not specify a term These are both clarifications of existing law, meaning that they apply retroactively too 11 How The Rules Have Changed Recruiting Mid Levels Previously, there was just a physician recruitment exception Now, hospitals (and FQHC/RHC) can recruit mid levels to provide primary care or mental health services to a physician s practice Covers PAs, NPs, clinical nurse, specialists, certified nurse, midwives, LCSWs and psychologists Up to 50% of compensation, once every 3 years (and other restrictions apply) What about 501(c)(3) hospitals? Effective as of January 1,

5 How The Rules Have Changed Timeshare Arrangements Protects certain timeshare arrangements (not leases, which are subject to a different exception) between hospital or physician organization and a physician or medical group Space, equipment and other items are predominantly for evaluation and management (E/M) visits Any equipment is in the same building as E/M visits and used for diagnostic imaging only if incidental to E/M visit, and not used advanced imaging, radiation therapy or clinical laboratory services (other than CLIA waived tests) Could this be used in hospital licensed or provider based space? Effective as of January 1, How The Rules Have Changed Holdovers The old rule allowed expired leases and personal services arrangements to continue after expiration on the same terms for up to 6 months, if exception otherwise satisfied Their new rule extends the 6 months to an unlimited period of time But, beware of fair market value issues and changes in services and/or compensation Effective as of January 1, How The Rules Have Changed Signatures The old rule allowed arrangements where only a signature was missing, for up to 90 days if inadvertent and 30 days if advertent Now, all arrangements are allowed, when only a signature is missing, for up to 90 days This grace period is still limited to once per physician every 3 years Effective as of January 1,

6 Recent Cases and Settlements How should Compliance/Legal Respond? 16 Varying Based Upon Volume or Value: What does this mean? Two standards: i) cannot vary with the volume or value, and ii) cannot be based upon volume or value. Four levels of volume and value: i. Paying a doctor for each referral of designated health services. Clearly prohibited. ii. Creation of a bonus pool that varies with either the gross revenue or net margin of a service line. Division of bonus pool based upon each physician s referrals of DHS. Clearly prohibited. iii. Creation of a bonus pool that varies with either the gross revenue or net margin of a service line. Division of bonus pool based upon percentage of work RVUs in comparison with aggregate wrvus of all applicable physicians. Halifax case, but unlitigated. iv. Fixed bonus pool or bonus based upon overall success of AMC, both financially and based upon quality metrics. Unlitigated. 17 Exceptions Requiring Commercial Reasonableness Rental of office space Rental of equipment Personal services FMV compensation Indirect compensation Isolated transactions 18 6

7 Commercial Reasonableness CMS (1998) 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. 1659, 1700 (Jan. 9, 1998). 19 Commercial Reasonableness CMS (2004) 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 not potential DHS [designated health services] referrals. 69 Fed. Reg , (March 26, 2004). 20 Fair Market Value for Physician Relationships Understanding data is imperative Published benchmarks do not always present information consistently Market data might not be comparable Apply data correctly All physicians cannot earn the 75 th percentile compensation per work RVU Operating margin, gross margin, net margin, etc. are not all the same Paying for quality, efficiency, and patient satisfaction 21 7

8 United States ex rel. Barker v. Columbus Regional Healthcare System, et al., Case No. 4:12-cv-108 (M.D. Ga.) Columbus Regional Healthcare System ( CRHS ) is located in Columbus, Georgia. Richard Barker, the former top administrator of the John B. Amos Cancer Center, filed a wideranging and detailed complaint under the Federal False Claims Act in May The whistleblower alleged that CRHS compensated Andrew Pippas, M.D., in excess of fair market value, and in excess of the revenue received on services the doctor had personally performed. Barker argued that the compensation only made sense if CRHS factored in the financial benefit of Dr. Pippas referrals. The physician s work relative value unit-based compensation model also encouraged Dr. Pippas to document higher level visits than were necessary and allowed him to increase his compensation by improperly billing for services he did not personally perform. 22 Columbus Regional September 4, 2015, the Department of Justice announced a settlement with CRHS for up to $35 million. CRHS also entered into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services, Office of Inspector General. Settlement was also made with Dr. Pippas for $425,000 to resolve allegations of FCA and Stark Law violations. 23 United States ex rel. Reilly v. North Broward Hospital District, et al., Case No (S.D. Fla.) North Broward Hospital District ("NBHD") is located in Broward County, Florida. In 2010, Dr. Michael Reilly, a Fort Lauderdale orthopedic surgeon employed by NBHD, sued NBHD under the False Claims Act. Dr. Reilly alleged that Broward engaged in a scheme of overcompensating physicians to generate significant losses, which were offset by profits received from those physicians referrals. 24 8

9 North Broward Dr. Reilly based these allegations in part on the fact that Broward weighed the volume and value of anticipated referrals when setting physician compensation. Dr. Reilly further argued that Broward s Contribution Margin Reports, which continually tracked referral profits, further demonstrated that Broward deliberately implemented such a scheme. September 15, 2015 the Department of Justice announced a $69.5 million FCA settlement with Broward. 25 United States ex rel. Payne, et al. v. Adventist Health System/Sunbelt, Inc., et al. (W.D.N.C) Adventist Health System ("AHS") is a Florida-based system, which includes 44 hospital campuses in 10 states. In 2012, two lawsuits filed under the qui tam provisions of the False Claims Act respectively by whistleblowers: Michael Payne, Melissa Church, and Gloria Pryor, who worked at Adventist's hospital in Hendersonville, North Carolina Sherry Dorsey who worked at Adventist's corporate office AHS self-reported non-compliant hospital/physician arrangements 26 Adventist Allegations: Adventist-owned hospitals paid doctors' bonuses based on the number of test and procedures they ordered. As part of its corporate policy, Adventist told its hospitals to purchase physician practices and group practices or employ nearby physicians so it could control all patient referrals in those areas. Up-coded Medicare claims for patients in nursing and assisted-living facilities. Unbundled services and submitted them as separate claims to get larger reimbursements from the government. Submitted claims for services that weren't documented in patients' medical records. 27 9

10 Adventist The complaints stated that overall physician compensation was above fair market value, as evidenced by Adventist s substantial and consistent losses on their physician practices, which were tolerated only because Adventist recovered those losses and profited by capturing referrals. In 2015 Adventist agreed to pay $115 million based on: Hospital/Physician Compensation Arrangements Miscoding claims 28 United States ex rel. Baklid-Kunz v. Halifax Medical Center (M.D. Fla.) Halifax Hospital is in Daytona Beach, Florida In 2014, paid $86 million to settle alleged Stark Law and Anti- Kickback violations, brought by a qui tam Relator. The Relator was a Halifax compliance employee (not compliance officer) turned whistleblower. Hospital/Physician Compensation Arrangements The government alleged that the prohibited referrals resulted in the submission of 74,838 claims and overpayment of $105,366, Halifax Health Executed contracts with six medical oncologists that included an incentive bonus that (allegedly) improperly included the value of prescription drugs and tests that the oncologists ordered and Halifax billed to Medicare. Bonus Pool = 15% of Halifax Hospital's "operating margin" from outpatient medical oncology services (i.e., pool includes revenue from "designated health services" referred by oncologists) Does not comply with exception for bona fide employment arrangements because: (1) FMV and (2) volume/value referral prohibition Share of pool paid to individual oncologists is based on each individual physician's personal productivity, not referrals However, pool includes "profits" from services referred, but not personally performed by oncologists

11 Halifax Health Complaint alleged that Halifax paid three neurosurgeons more than fair market value for their work. Bonus = 100% of collections after covering base salary, no expense sharing Total Compensation = as much as double neurosurgeons at 90 th percentile AMGA 90 th MGMA 90 th Dr. R. K. Dr. WK. Dr. FMV. $844,703 $1,200,051 $1,725,302 1,160,163 1,897, How the Money & Referrals Flowed Halifax Hospital Medical Center Referrals Halifax Staffing, Inc. (Payroll Service Provider) Referrals Three Neurosurgeons Six Oncologists 32 Losses on Physician Services OK? DOJ asserts that paying physicians more than the professional collections they generate exceeds FMV, is not commercially reasonable, and takes referrals into account: Given 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 neurosurgical services or were commercially reasonable. But, there is no requirement that providing physician services must be profitable: If compensation is FMV and is not adjusted for referrals, it should satisfy the Stark Law Some service lines have unprofitable payor mixes or low demand CMS recognizes the legitimacy of subsidizing physician compensation, e.g. in the E.D. Likewise, call coverage and hospitalist services often require subsidies 33 11

12 Halifax Health Takeaways How are bonuses structured and calculated? Do you have a fair market value (FMV) opinion? If physician compensation exceeds collections: Do you have a commercial reasonableness analysis? Do you have buy-in from legal and compliance? 34 Tuomey October 16, 2015, Tuomey agreed to settle with the government for $72.4 million less than a third of the $237 million that a federal appeals court said it would have to pay for illegal compensation arrangements with doctors. The sum required by the verdict would otherwise have been the largest levied against a community hospital and would have exceeded the Sumter, S.C., system's annual revenue. As part of the settlement, Tuomey will also be sold to Palmetto Health, a system based in Columbia, S.C. Tuomey previously signaled it planned to partner with Palmetto. 35 Contract Analysis 10 year terms Tuomey Part time employment for only outpatient procedures Exclusive use requirement all outpatient surgeries at Tuomey Yearly salary based on previous year s net collections Bonus 80% of net collections of professional fees Additional 7% of productivity bonus for other factors Agreement not to compete prohibited physicians from performing surgeries elsewhere within 30 miles of the hospital (during and post two years) Full time benefits: Including health insurance, malpractice premiums (covered physicians for office and inpatient services), cell phones, journals, CME 36 12

13 Tuomey Cejka, a valuation firm evaluated the contracts for purposes of the fair market value requirement at inception. Analysis indicated productivity levels of physician s were between the 50 th and 75 th percentiles Compensation level exceeded the 90 th percentile Evaluation did not include full time benefits Government expert analyzed the contracts at trial. Impossible to ever make profit on these contracts Full time benefits for minimal hours per week Cejka showed that certain physicians, across the country, received between 49% and 63% of net collections, but Tuomey paid, on average, 131% of net collections Non Compete Agreement locked in referrals Reactive to competing ambulatory surgery center and physician groups informing Tuomey they may perform surgeries in their own offices rather than at Tuomey. 37 Tuomey Takeaways Virtually all FCA cases are resolved through settlement agreements due to potential ramifications of losing unusual that this case went to trial Some cases settle after motions to dismiss are heard Physician employment does not necessarily insulate agreements from Stark liability If a proposed arrangement appears to have been developed in response to the fear of losing a referral stream, the government may look closely at issues of commercial reasonableness Long-term arrangements should be reviewed periodically for compliance Providers cannot blindly follow a fair market value or commercial reasonableness determination