Faculty. Legal Issues Impacting CME Webinar Series THESTARK TRUTH 5/27/2009. Arnold I. Friede, JD Counsel McDermott Will & Emory LLC Washington, DC

Transcription

1 Legal Issues Impacting CME Webinar Series THESTARK TRUTH Thursday, May 28, :00 3:00 PM EDT Faculty Arnold I. Friede, JD Counsel McDermott Will & Emory LLC Washington, DC Barbara Huffman, MEd, FACME CME Manager Carle Foundation Hospital Urbana, IL 1

2 STARK LAW - A PRIMER Arnold I. Friede, JD Counsel McDermott Will & Emery LLP Washington, DC Agenda What is it? Where is it? How to do a Stark Analysis The Exceptions Disclosure Requirements Sanctions 2

3 What is it? It s a Medicare payment rule Prohibits Medicare payment for 10 designated categories of health care services ( DHS ) when furnished pursuant to a prohibited referral Administered by Centers for Medicare and Medicaid Services ( CMS ), not the DHHS, Office of Inspector General ( OIG ) It s a fraud and abuse rule OIG civil monetary penalties (administrative fines) DoJ & Qui tam relators (whistleblowers) civil False Claims Act cases The Two Stark Prohibitions The First Prohibition If a physician (or an immediate family member) Has a financial relationship with an entity The physician may not make a referral to that entity For Medicare-covered designated health services (DHS) Unless an exception applies 3

4 The Two Stark Prohibitions The Second Prohibition An entity may not bill Medicare For DHS Rendered pursuant to a prohibited referral How to do a Stark Analysis Question 1 Is there a physician involved? Doctor Dentist Podiatrist Optometrist Chiropractor Not NP, PA, psychologist 4

5 How to do a Stark Analysis Question 2 Is Medicare-covered DHS involved? Lab (clinical and pathology) Radiology (includes nuclear medicine, not cardiac cath or interventional radiology) Radiation therapy (includes stereotactic radiosurgery) PT/OT DME (wheel chairs, oxygen tanks/supplies, glucose monitors) Parenteral and enteral nutrients, equipment and supplies Prosthetics (e.g., knee and hip replacements); orthotics (e.g., braces) and prosthetic devices and supplies (e.g., eye glasses, pedicle screws) Home health (skilled nursing; rehab) Outpatient prescription drugs (covered by Medicare Part B, e.g., chemotherapy, and Part D, e.g. anti-depressants, blood pressure medicine) Hospital services, inpatient or outpatient Both technical and professional components How to do a Stark Analysis Question 3 Is there a referral for Medicare-covered DHS? Referral = Actual and Imputed Actual Referrals = Request for, order of, plan of care that includes, certifying or recertifying need for, DHS Imputed Referrals = Referrals made by individuals at the direction of or under the control of a physician Referrals made by a consulted physician are imputed to the physician requesting the consult Exception for radiologists, radiation oncologists and pathologists per a consultation requested by another physician, and supervised by the physician or another physician in the same group practice 5

6 How to do a Stark Analysis Question 4 Is there a financial relationship between the physician and the DHS entity? Ownership, direct or indirect Compensation, direct or indirect Entity Which entity is the DHS entity? The entity Medicare pays or the entity that performed the DHS? Current Stark rule: Both How to do a Stark Analysis What Constitutes an Ownership/Investment Interest? Direct or indirect Equity, debt or other means Debt is not ownership/investment unless secured by the property or revenues of the debtor Stock options or warrants do not create investment interest until exercised Indirect Unbroken chain of ownership or investment interests running from the referring physician to the DHS entity; arrows must run in one direction from the doc Note: Any other chain of financial relationships cannot create an indirect ownership interest, but consider indirect compensation arrangement DHS entity must know or should know of the indirect ownership interest 6

7 How to do a Stark Analysis What Constitutes a Compensation Arrangement? Any economic benefit (some exceptions) Direct or Indirect Direct compensation no intermediary entity Indirect Compensation Arrangement - 3-step definition How to do a Stark Analysis Stand in the Shoes (Phase III) A physician owner/investor of a physician organization ( PO ) stands in the shoes of his or her PO, unless the DHS qualifies for the AMC exception Non-owner physicians can opt to stand in the shoes of their PO on a case-by-case basis PO = sole shareholder PC, group practice, physician practice Not a hospital, medical school or university that employs physicians CMS means a conventional medical practice Applies to both direct and indirect compensation analyses If a direct compensation arrangement with a DHS entity is created by standing in the shoes, look to a direct exception If an entity is between the PO and the DHS entity, do an indirect compensation analysis (discussed below) 7

8 How to do a Stark Analysis Question # 1 Is there a physician involved? Question # 2 Is Medicare-covered DHS involved? Question # 3 Is there a referral of Medicare-covered DHS? Question # 4 - Is there a financial relationship between the physician and the DHS entity? If the answer to any of the above questions is no, then Stark does not apply. If the answer to every question is yes, then Question #5 Does the DHS or the financial relationship qualify for an exception? Types of Exceptions DHS exceptions Ownership/investment exceptions Compensation exceptions 8

9 DHS Exceptions 8 DHS Exceptions Physician services In-office ancillary services Implants furnished by an ASC EPO and other dialysis-related drugs (on a list of CPT/HCPCS codes) Preventative screening tests, immunizations and vaccines Eyeglasses and contact lenses following cataract surgery Intra-family rural referrals Academic medical center Ownership Exceptions Ownership Exceptions Publicly-traded securities ($75M in stockholder equity) Mutual funds ($75M in total assets) Rural provider Rural means an area outside of a metropolitan statistical area ( MSA ) or New England County Metropolitan Area (as defined by the OMB), and certain additional New England Counties DHS must be furnished outside of a MSA At least 75% of the DHS must be furnished to patients that reside in an MSA Hospital in Puerto Rico Whole Hospital exception Investment in the whole hospital, not a distinct unit or department; Physicians hold clinical privileges at the hospital 9

10 Ownership Exceptions Fun Facts: Most traditional equity joint ventures of DHS have no exception Exceptions: Specialty hospitals (whole hospital exception) Rural clinical joint ventures (rural provider exception) Radiologist ownership of imaging center ( referral exception) Radiation oncologist ownership of radiation therapy centers ( referral exception) Surgeon ownership of ASCs (not DHS and surgical implant exception) Cardiologist ownership of cath labs (not DHS) Nephrologist ownership of ESRD facility (not DHS and EPO/dialysis drugs exception) Direct Compensation Exceptions 23 direct compensation exceptions Compensation exceptions most frequently used by hospitals with financial relationships with medical staff members Employment Personal Services Space & Equipment Lease Fair Market Value Physician Recruitment Incidental Medical Staff Benefits ($25 per occurrence (indexed)) Non-monetary Compensation ($300 per calendar year (indexed)) Indirect compensation analysis 10

11 Direct Compensation Exceptions Common Requirements A signed writing (except employment exception) At least a one-year term (except employment exception) Early termination ok, but no new agreement until one year has passed Specifying the services and/or items Agreement must be commercially reasonable Set in advance (except employment) Fair market value Volume/value standard compensation not determined in a manner that takes into account volume or value of referrals or other business (i.e., Medicare/aid non-dhs referrals and non- Medicare/aid referrals) generated by the physician Set in advance Means that the aggregate compensation, per unit of time, per-unit of service, or per use compensation, or a specific formula for calculating the compensation, e.g., percentage of collections is set in an agreement before the services or items are furnished Does not mean that the aggregate compensation to be paid over the term of the arrangement must be fixed (to the penny) 11

12 Set in advance Can the compensation terms be amended during the term? CMS says ok, if: Prospective in effect The change does not take into account the volume or value of referrals or other business generated by the physician; and The modified compensation remains in effect for a term of at least one year Note: Changing the quantity of time, services, or items to be paid on a unit, percentage or other formulaic basis that was determined at the beginning of the agreement does not constitute a change to the compensation based on an informal discussion w/ CMS Fair Market Value No particular methodology prescribed or approved by CMS (any longer) Defined as the price that would be paid for an asset, or that compensation that would be paid for services, as a result of bona fide bargaining between wellinformed parties who are not in a position to generate business for the other party Timing: at the time of the sale or services agreement 12

13 Volume/Value Standard Compensation cannot be determined in a manner that takes into account the volume or value of referrals or other business (i.e., Medicare/aid non-dhs referrals and non- Medicare/aid referrals) generated by the physician UNLESS the compensation is a per-unit of time, per-unit or service, or per use fee, or a fee determined by a specific formula, e.g., percentage, that is: Consistent with fair market value; and Does not vary during the course of the compensation arrangement in a manner that takes into account the volume or value of referrals or other business generated by the physician Volume/Value Standard Effective October 1, 2009, no compensation for the rental of office space or equipment may be determined using a formula based on: a percentage of the revenue earned, billed, collected, or otherwise attributable to the services performed or business generated in the office space or through the use of the equipment; or per-unit of service rental charges, to the extent such charges reflect services provided to patients referred between the parties. 13

14 Some Thoughts on Physician Compensation Set in advance Fair market value Commercially reasonable Volume/value Of referrals Of other business generated (not employee exception) Do professional surgical fees take into account referrals to the hospital? System bonuses to employed physicians and physician administrators Fixing Stark Problems No writing Leases and services agreements allow 6 month holdover 90 day temporary noncompliance beyond the control of the entity 30/90 day grace period for lack of signature only Extend existing agreement? Retroactive effective date under state law? Group indirect analysis? Not after Phase III! Give back the money To the DHS entity To the Medicare program Self-disclose (4/24/06 OIG Open Letter to Health Care Providers) 14

15 Fixing Stark Problems (cont d) FMV issue One-year term Look to FMV exception Structural problems Nonmonetary compensation beyond annual limit No more than 150% of annual limit Return excess by end of year / within 180 days C an only be used every 3 years Sanctions Absolute requirement to repay all claims for Medicare services furnished pursuant to prohibited referral Civil monetary penalties of up to $15,000 per service Know or should know standard Exclusion from Federal programs False claims liability 15

16 Disclosure Requirements CMS to require 400 hospitals to complete a Disclosure of Financial Relationships Report ( DFRR ) DFRR will require detailed information and supporting documentation regarding most physician compensation arrangements and hospitalphysician joint ventures Stated purpose of the DFRR is to identity: Arrangements that potentially do not comply with the Stark law Examples and areas of non-compliance which will aid CMS in future rulemaking. Each hospital will have 60 days to return the DFRR, but CMS intends to accommodate reasonable requests for additional time Currently, CMS plans to distribute the DFRR as a one-time information collection effort (but periodic or regular information collection not foreclosed) CMS may begin to distribute the DFRRs as early as mid-january, 2009 Final Comments Stark is a strict liability statute (in contrast to the intentbased anti-kickback statute). Stark does not care whether a DHS entity s violation is intentional or willful. Stark does not care whether or to what extent a violation affected physician referral patterns, increased utilization and costs, corrupted clinical judgment, or impinged on patient choice. Stark simply demands compliance with an exception or a prompt refund of the Medicare payments. 16

17 A CME PROVIDER PERSPECTIVE ON STARK Barbara Huffman, MEd, FACME Carle Foundation Hospital, Urbana, Illinois Tertiary care hospital Teaching hospital university and Carle residency programs Accredited by ISMS One-man office -support by Foundation Education Why Should You Care? Responsibility to not expose your hospital/ organization to unnecessary legal risk Responsibility to follow Federal laws and operate your CME program in a lawful manner Respect for education 17

18 My Solution- Make a Form! Basic Stark Buckets Rule Exceptions to the rule Traditional On-Site CME Compliance Training Medical Staff Incidental Benefits Non-monetary Compensation Purchased for Fair Market Value Fee Based Education 18

19 Please take a moment to answer the poll question below. I know what Stark exceptions our activities meet. Yes, I am confident that I know which activities meet the expectations. No, I would only be guessing. Inventory of Carle CME Programs Carle Stark Exceptions Traditional Compliance Incidental Benefit Non Monetary Fee Based 19

20 Examples-Traditional, On-site Grand Rounds Case Conferences Teaching Conferences Cancer Conferences M & M Conferences Quality Reviews Patient Safety Courses* Risk Management* Privileges-Based Learning* Some criteria to use Topics relative to inpatient needs (vs outpatient) Held on-site (not at a restaurant) Traditional (interpreted broadly as instructor/student model, reflective, patient need based) Gray Area- what about computer based nontraditional courses? Examples- Compliance Training Local topics, such as Annual Corporate Compliance training, Safety training, OSHA, informed consent State required like HIV/AIDs or Child Abuse Federal required like VX Nerve Gas EMTALA HIPAA Surgical Fire Safety (Carle example) Some criteria to use Compliance (required by some body for some specific purpose; to comply) Held in the area (not skiing in Vail) Cannot be incidentally or tangentially related but specific to a requirement Best if supported by bylaws requirement or a formalized or statutory requirement 20

21 Examples- Incidental Benefits Orientation EMR Risk Mgt, JCAHO or Quality prompted courses Point of care software access Free parking, free meals, library access, etc. Some criteria to use Value at/under $30 Offered to medical staff Used at the hospital Time of day offered Examples- Non-monetary Compensation Grand rounds held offsite or distributed off-site (satellite or videoconference) Free seminars held in the region Free or discounted Symposium or training events Journal CME (free without a subscription) Some criteria to use Open/marketed to all physicians (not just your top 100 referring docs) Prohibits any side arrangements (can my office staff come) System to track the compensation 21

22 Examples- Fee Based Any certified activity with a registration fee i.e. symposia, life support classes like ATLS, ACLS, PALS, journals with a subscription, etc. Some criteria to use Priced at fair market value Fees paid regardless of referral relationships Gray Areas What about non-traditional education such as on-line courses, journal clubs, committee CME, PI CME, enduring materials? Who keeps the record of non-monetary compensation? Can I charge one price (discounted or free) for my medical staff and another for a non-medical staff referring physician? Can non-practicing MD s (retired for example) come for free? How do you distinguish between compliance required and compliance recommended courses? 22

23 Please take a moment to answer the poll question below. We have established a fair market value for an hour of certified CME in our institution. Yes No Maybe (i.e. not formalized) Best Practice Develop your own algorithm or plan Use deductive reasoning, if this then this. Have your administrator/legal department/corporate compliance office give you your boundaries (how big is the risk playground at your institution) Do your best Practice Ask others what they are doing Document your decisions 23

24 Q&A WE WELCOME YOUR QUESTIONS AND COMMENTS. Thank You! PLEASE TAKE A MOMENT TO COMPLETE THE BRIEF EVALUATION. WE APPRECIATE YOUR FEEDBACK! 24