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1 Physician Arrangements Compliance Programs Steve Ortquist, Managing Director Aegis Compliance & Ethics Center, LLP Quick Test Test your Stark knowledge: Start with presumption that if we pay or give ANYTHING of value to a physician or her family members, we are prohibited from billing Medicare for services ordered or referred by the physician Remuneration triggers the Stark law prohibitions EXCEPTIONS: We might be able to accept referrals and bill Medicare if we meet a Stark exception There is NO guarantee that an exception is available Often can t save arrangements after the fact planning is key Lack of bad intent is IRRELEVANT under the Stark law A single problem with Stark compliance can cost an organization $millions 2 Halifax Health, Daytona Beach, FL March 3, Halifax Health Medical Center (582 bed tax-assisted hospital) -Allegations employed physician s bonuses varied with volume or value of referrals to the hospital -Possible damages near $1 Billion -Hospital settles for $85 Million -One of the largest settlement to date (may be largest for a single hospital) 3 1

2 Toumey Healthcare, Sumpter, SC Toumey - sole community hospital, 266 beds Part-time employment arrangements with 19 physicians Allegations that compensation was not FMV and not commercially reasonable 3/2010: Judgment for $45M 10/3/13: Judgment for $237M 4 Additional 2013 Settlements Jan 24 Cooper Health (NJ) - $12.5M Consulting and compensation arrangements Mar 5 Benn Hill County (GA) - $50K Free use of hospital space April 3 Intermountain (UT) - $25.5M Lease issues; bonus comp issues May 1 St. Vincent (MT) - $3.95M Including DHS in incentive formula May 3 - Adventist Health (CA) - $14.1M Supplies < FMV; compensation > FMV June 24 Westerly Hosp. (RI) - $500K Lease & leadership arrangements July 10 Infirmary Health System (AL) - Pending Including DHS in incentive formula Sept 13 Molina Health (FL) - $257K Increased capitation rate for referrals 5 Additional 2013 Settlements Sept 26 St. Vincent s (AL) - $50K Purchases of DME from physicians Sept 27 Mercy Medical Cntr (MD) - $50K JV for physician office building Oct 2 United General (WA) - $74K Excess compensation for services Nov 5 Freeman Health Sys (MO) - $9.3M Including DHS in incentive formula Nov 15 Helen Newberry Hospital (MI) - $221K Lease, call, physician supervision & leadership Dec 3 Kishwaukee Comm Hosp (IL) - $230K Collection guarantee; loan forgiveness; recruitment Dec 23 - Havasu Regional MC (AZ) - $510K Space lease < FMV Dec 31 St. James (Montana) - $3.85M JV to operate a medical office building 6 2

3 Anti-Kickback Statute Unlawful to: Knowingly and willfully Offer, give, solicit or receive Any remuneration (directly or indirectly, overtly or covertly, in cash or kind) In return for referring for any item or service reimbursable by Federal health care programs, or purchasing, leasing, ordering or arranging for (or recommending any of the same) any good, facility or service reimbursable by Federal health care programs 7 What Does the AKS Prohibit? U.S. v. Anderson, 85 F.Supp.2d 1047 (Kan 1999) 8 Definition-Remuneration REMUNERATION (note same for Stark) For purposes of the anti-kickback statute, remuneration includes the transfer of anything of value, in cash or in-kind, directly or indirectly, covertly or overtly. OIG Advisory Opinion 01-10, July 26, No de-minimis exception 9 3

4 STARK - Plain Language If a Physician (or immediate family member) has a direct or indirect Financial Relationship with an Entity, unless an exception applies: the Physician may not Refer any Designated Health Services ( DHS ) to the Entity, the Entity may not bill for any DHS referred by the physician, no Medicare payments may be made for DHS referred by the physician, and the Entity must refund all moneys collected for DHS referred by the physician (unless no actual knowledge or reckless disregard re: the physician s identity) 10 Definitions PHYSICIAN Doctor of Medicine; Doctor of Osteopathy; Dentist; Dental Surgeon; Doctor of Podiatric Medicine; Doctor of Optometry; or a Chiropractor. ALSO: IMMEDIATE FAMILY MEMBER - husband or wife; birth or adoptive parent, child or sibling; stepchild; stepparent; stepbrother or stepsister; in-laws (mother, father, son, daughter, sister, brother); grandparent, grandchildren and the spouses of either. 11 Definitions Financial Relationship Compensation any remuneration (payment or benefit, directly or indirectly, overtly or covertly, in cash or in kind) between a physician (or immediate family member) and an entity. Includes Indirect Compensation an unbroken chain of either compensation or ownership/ investment interests between Physician and Entity Ownership/Investment (direct or indirect) Includes equity, debt or other means Stock, options, partnership, bonds, loans, etc. NOT retirement plan interest, options received as compensation until exercised 12 4

5 Definitions ENTITY Furnishes DHS Person or organization that performs DHS service billed to Medicare, or The person or organization that bills for the DHS service. May include a physician s sole practice (not the physician him or herself), a practice of multiple physicians, any other person, sole proprietorship, public or private agency or trust, corporation, partnership, LLC, foundation, not-for-profit corporation or unincorporated association. 13 Definitions Referral request (any form written, oral, electronic, other) by a physician for DHS ordering of DHS certifying or recertifying the need for, any DHS Includes DHS ordered by a consulting physician Does NOT include personally performed services of a physician (but ncident-to services are not personally performed) 14 Definitions Designated Health Services 1. Clinical Laboratory Services 2. Physical Therapy, Occupational Therapy and Speech-Language Pathology Services 3. Radiology and certain other imaging services 4. Radiation Therapy services and supplies 5. Durable medical equipment and supplies 6. Parenteral and enteral nutrients, equipment, and supplies 7. Prosthetics, orthotics, and prosthetic devices and supplies 8. Home health services 9. Outpatient prescription drugs 10. Inpatient and outpatient hospital services 15 5

6 STARK - Plain Language If a Physician (or immediate family member) has a direct or indirect Financial Relationship with an Entity, unless an exception applies: the Physician may not Refer any Designated Health Services ( DHS ) to the Entity, the Entity may not bill for any DHS referred by the physician, no Medicare payments may be made for DHS referred by the physician, and the Entity must refund all moneys collected for DHS referred by the physician (unless no actual knowledge or reckless disregard re: the physician s identity) 16 Key Exceptions Applies to both Comp/Ownership Physician services In-office ancillary services Services furnished to prepaid plan enrollees Eyeglasses, contact lenses following cataract surgery Academic medical centers Implants by an ASC EPO & other dialysis-related drugs Preventive screening tests; immunizations & vaccines Intra-family rural referrals (new) Publicly traded securities Mutual funds Rural providers Only Applies to Ownership Puerto Rican hospitals Whole-hospital exception 1 7 Only Applies to Compensation Rental office space/equipment Employment Personal services arrangements Physician recruitment Isolated transactions Unrelated hospital remuneration Physician fair market value payments Non-monetary compensation up to $300 Compliance training Professional courtesy Physician retention arrangements Obstetrical Malpractice premium subsidies Fair market value compensation Medical staff incidental benefits Temporary Non-compliance Community wide HIS/EMR/E- Prescribing Indirect compensation arrangements Exceptions and Issues Rental of Office Space/Equipment Personal Services Non-Monetary Compensation 18 6

7 Leases Rental of Office Space/Rental of Equipment Exceptions Covers payments by lessee to lessor for the use of office space Agreement in writing, signed by the parties, specifies the premises Term of at least one year Amount of space is reasonable and necessary for legitimate business purposes Space is used exclusively by lessee (except pro-rata share of common areas) Rent is set in advance and consistent with fair market value Rent not determined in a manner that considers volume or value of referrals Agreement is commercially reasonable even if no referrals Six month holdover allowed on same terms after a term of at least one year 19 Arrangements Compliance Programs WHAT SHOULD BE INCLUDED? 20 Entering New Arrangements with Physicians Review and Approval Process Management Checklists Legal Review Using Contract Templates Fair Market Value & Commercial Reasonableness Process Opinion vs. survey Remember overall compensation No Contract/No Pay Signatures 21 7

8 Contract Database Repository for all documentation related to the arrangement Assists with expiration/renewal process Required to meet personal services exception? Necessary for timely response to DFFR? No one size fits all 22 Payment Approval Process Is there a contract? Effective & not expired Specifies items/services in question Signed? Is the requested payment consistent with the contract? Rate (e.g., hourly rate) & limitations Is documentation adequate? Legible, sufficient to tell the story Who should be responsible? 23 Lease Management Commercially Reasonable Landlord Periodic review of space and space usage Rent collection (including CPI & other charges) and late fees The non-compliant tenant (collections & eviction) Use a commercial real estate firm to manage? 24 8

9 Non-Monetary Compensation Must have a policy Who may provide? Who must approve? What is fair game? How to cure problems. Link to gifts/gratuities & COI policies/processes? Must have a tracking system What should it accomplish? Periodic monitoring & cures 25 Compliance Program Elements Arrangements P&Ps Base on arrangement type (e.g., Physician Leases ), compliance process (e.g., Contract Review & Approval ) or both? Arrangements training Who should attend? 26 Arrangements Audits Initial baseline review Determining sample size How to review What to do with findings 27 9

10 Arrangements Monitoring Documented periodic process for confirming compliance Create a dashboard Keeps issues in front of management Who conducts? 28 What Causes Problems (Leases)? No lease agreement Change (move) in lease space w/o amendment Expired leases Unsigned leases/late signatures Failure to collect rent/rent increases Non-exclusive use Failure to enforce contract language Late charges, etc. Rent not FMV Rent doesn t include all services 29 What Causes Problems (personal services)? No contract Compensation/services different than contract allows Commercial reasonableness Duplicate payment for services Services not provided: inadequate physician documentation Missing/late signatures 30 10

11 What Causes Problems (employment arrangements)? identifiable services Fair market value compensation Including ancillaries in bonus/incentive calculations 31 What causes problems (Non- Monetary Compensation)? Not understanding exception and limits Not tacking and correcting overages Cash equivalents 32 Questions /Discussion 11