Physician Lease Arrangements: New Rules

Transcription

1 Physician Lease Arrangements: New Rules Presented by: Roger Clayton Peoria Office Greg Rastatter Peoria Office Tyler Robinson Springfield Office 2016 ICAHN Annual Conference November 10, 2016

2 Stark Law Regulates referrals for certain designated health services (DHS) from physicians to health care entities Prohibits a physician from making referrals for certain DHS payable by Medicare to a health care entity with which he/she (or an immediate family member) has a financial relationship, unless an exception applies Prohibits health care entities from presenting or causing to be presented claims to Medicare for the referred DHS

3 Stark Law Strict liability No intent is required Even an inadvertent mistake is a violation Penalties include the following: Denial of DHS claims for reimbursement; Refund of reimbursement received for past DHS claims; Fines of $15,000 per past DHS claim; Penalties up to $100,000; and, Exclusion from Medicare and Medicaid programs

4 Anti-Kickback Statute The AKS prohibits the knowing and willful solicitation, offer, or receipt of any remuneration, whether direct or indirect either to: Induce, or in exchange for, a referral of a person for services Induce, or in exchange for, the purchase of an item or service Paid in whole or in part under any federal health program Remuneration generally means anything of value, including: Cash Discounts off of fair market value

5 Anti-Kickback Statute Intent must be proven (knowing and willful) Criminal Penalties: Monetary fines ($25,000 per AKS violation) Up to a 5 year prison term per AKS violation Civil Penalties: False Claims Act liability Civil monetary penalties of $50,000 per violation Medicare/Medicaid exclusion Civil penalty of up to 3x amount of kickback

6 Stark Law vs. Anti-Kickback Statute AKS is broader in scope than the Stark Law AKS applies to referrals from anyone for any items or services Stark Law applies only to physician referrals for certain DHS The AKS is more difficult to prove than the Stark Law AKS requires proof of intent; Stark Law is strict liability Both AKS and the Stark Law expose health care entities to qui tam lawsuits filed pursuant to the False Claims Act Damages up to 3x single damages $5,500 to $11,000 per violation

7 Rental of Office Space Exception Both the AKS and the Stark Law contain a lease exception: Written Agreement Signed by Both Parties Identifies the Leased Premises Lease Term at Least One Year Rent Must Be Fair Market Value Rent Must be Set in Advance Must be for a Commercially Reasonable Business Purpose

8 Limitations of Office Space Exception General limitations of Office Space Exception includes: Requirement of formal lease that provides for exclusive use Generally not permitted to share space or equipment during the term of lease Cannot be on an as needed or part-time basis

9 Timeshare Exception for Stark Law New exception for Stark Law effective January 1, 2016 Arrangements between physicians and hospitals under which the right to use premises, equipment, personnel, items, supplies, or services for purposes of E/M services is granted to the physician It is common for a hospital or local physician practice to make available to the visiting independent physician on a timeshare basis the space, equipment and services necessary to treat patients. Timeshare arrangements also may be attractive to a relocating physician whose prior medical practice office lease has not expired or to a new physician establishing his or her medical practice. 80 FR 71325

10 Timeshare Exception Requirements (1) The arrangement must be set out in writing, signed by the parties, and specifies the premises, equipment, personnel, items, supplies, and services covered by the arrangement Note recent amendments to writing and signature requirements (2) The arrangement must be between a physician (or physician s group in whose shoes the physician stands) and a hospital (or physician organization of which the physician is not an owner/employee/contractor) ONLY applies to physicians, physician groups/organizations, and hospitals Does NOT protect arrangements with other DHS entities, such as laboratories or independent diagnostic testing facilities

11 Timeshare Exception Requirements (3) The premises, equipment, personnel, items, supplies, and services covered by the arrangement are used predominantly for evaluation and management (E/M) services to patients and on the same schedule CMS did not define predominantly Predominantly can be measured by any objective, reasonable means, such as the volume of patients seen, the number of patient encounters, the types of CPT-codes billed, or the amount of time spent using the space Cannot be solely or primarily to furnish DHS to patients

12 Timeshare Exception Requirements (4) The equipment covered by the arrangement is: (a) located in the same building where E/M services furnished (b) Not used to furnish DHS other than those incidental to E/M services furnished at time of E/M visit (c) Not advanced imaging equipment, radiation therapy equipment, or clinical or pathology laboratory equipment

13 Timeshare Exception Requirements (5) The arrangement is not conditioned on the referral of patients by the physician who is a party to the arrangement to the hospital or physician organization of which the physician is not an owner, employee, or contractor

14 Timeshare Exception Requirements (6) The payment arrangement is set in advance, consistent with FMV, and not determined: In a manner that takes into account (directly/indirectly) the volume or value of referrals or other business generated between the parties; Using a formula based on: Percentage of the revenue raised/collected Per-unit service fees that are not time-based Must be flat-fee or time-based formula, such as per-hour, per-half/full day Avoid fees that are not time-based and either take into account services provided to patients referred to the hospital or % of revenue

15 Timeshare Exception Requirements (7) The arrangement would be commercially reasonable even if no referrals were made between the parties (8) The arrangement does not violate the AKS or any federal or state law or regulation governing billing or claims submission (9) The arrangement does not convey a possessory leasehold interest in the space that is subject to the arrangement

16 Timeshare Exception for Stark Law Difference between Timeshare and Lease: Possession: Lease conveys exclusive possessory rights Timeshare conveys right to use on a limited basis Length: Lease requires a minimum of one year Timeshare has no length requirements Exclusivity Lease requires exclusive use of space Timeshare requires non-exclusive of space

17 Timeshare Exception for Stark Law Timeshare exception designed for visiting physicians to pay hospitals or physician organizations for the right to use office space, equipment, and personnel on a periodic, part-time basis Very common in rural areas where specialists are unable to offer a full-time clinic CMS utilized terms licensor and licensee to showcase the difference from the Rental of Office Space exception Timeshare merely grants privilege to act on another s property Lease transfers dominion and control over the property and exclusive rights Do not have to use licensor and licensee terms in arrangement

18 If a Potential Stark or AKS Issue Is Identified; Report! Reversal and reconciliation under the new 60-Day Overpayment Rules CMS Self Referral Disclosure Protocol Available only for Stark Law violations Stays the return component of the 60-Day Overpayment rules (must report) Look-Back Period of 4 years (best practice 6 years) Settlements: 2011: 3 disclosures settled in the aggregate of $709, : 14 disclosures settled in the aggregate of $1,236, : 24 disclosures settled in the aggregate of $2,468, : 41 disclosures settled in the aggregate of $5,175, : 49 disclosures settled in the aggregate of $6,706,458

19 If a Potential Stark or AKS Issue Is Identified; Report! OIG Self-Disclosure Protocol Not available for pure Stark Law violations Available for parties who believe they have potentially violated federal criminal, civil, or administrative laws for which Civil Monetary Penalties are authorized Look-Back Period of 6 years General practice of a minimum 1.5x multiplier to single damages Settlements: In 2016, approximately 50 settled OIG disclosures in the aggregate of over $23 million

20 Investigations and Attorney-Client Privilege Maintain Confidentiality Upjohn Warnings Control group test under Illinois law Remedial Conduct (Self-Policing) Considerations for internal versus third-party audit Identifying compliance program issues, education, and training Develop and implement compliance plan of action Seek board involvement and approval throughout process

21 Questions??