AHLA A. Stark Law Primer Troy A. Barsky Crowell & Moring LLP Washington, DC Joan P. Dailey Office of the General Counsel US Department of Health and Human Services Washington, DC Fraud and Compliance Forum September 27-29, 2015
AHLA FRAUD AND COMPLIANCE FORUM STARK LAW PRIMER SEPTEMBER 17, 2015 Joan P. Dailey HHS Office of the General Counsel Washington, D.C. joan.dailey@hhs.gov Troy A. Barsky Crowell & Moring Washington, DC tbarsky@crowell.com 202-624-2890 DISCUSSION TOPICS Basics Important Definitions and Concepts Exceptions Enforcement Comparison to Anti-Kickback Statute Practice Tips 2 1
INTRODUCTION Program Concerns Overutilization Increased program costs Corruption of medical decision-making Unfair competition Systemic corruption 3 THE STARK STATUTE If a physician has a financial relationship with a DHS entity, the physician cannot refer Medicare DHS to the entity and the entity cannot bill for the Medicare DHS, unless an exception applies. Applicable to Medicaid? 4 2
STARK SANCTIONS Nonpayment of claims Refund amounts received for claims CMPs for knowing violations Program exclusion FCA liability 5 HOW TO ANALYZE A STARK ISSUE (Get out your crayons and eyeglasses) 3
BREAK IT DOWN First, draw a diagram! Ask yourself three questions Analyze five key concepts Get into the weeds with reg text & preambles Remember Stark is just the beginning Don t forget other applicable laws, like AKS THREE QUESTIONS Is there a referral by a physician for a designated health service payable by Medicare? Does the physician have a financial relationship with the entity furnishing the DHS? Does the financial relationship fit in an exception? If not, there s a violation 8 4
KEY STARK CONCEPTS Physician referral Designated health services (DHS) Entity Financial relationship Exceptions 9 WHAT IS A REFERRAL? (You had to ask ) 5
PHYSICIAN REFERRAL Any request or order for DHS A request for a consultation with another physician and any DHS ordered by the physician-consultant Referrals made by nonphysicians can be imputed to a physician Facts and circumstances test Degree of control or influence exerted by physician on NPP 11 WHAT IS A REFERRAL TO AN ENTITY? Anything reasonably intended to result in patient receiving service from the entity Need not be in writing or absolute Directing/steering referrals Innocent entity exception ( 411.353(e)) For indirect and oral referrals Protects DHS entities that do not know identity of referring physician 6
WHAT IS NOT A REFERRAL? (Brace yourself for the irony ) WHAT S NOT A REFERRAL Personally performed services The work of your own two hands NOT incident to services Certain requests made by pathologists, radiologists, and radiation oncologists 7
PRACTICE TIP: Can have multiple referring physicians for the same DHS Do a separate 3-Question Analysis for each physician s referrals 1877(h)(5) 411.351 Definitions RESOURCES Physician Referral Referring Physician Phase I Preamble (2001), pp. 871-75 Phase II Preamble (2004), pp. 16063-66 Phase III Preamble (2007), pp. 51019-21 8
DESIGNATED HEALTH SERVICES (Not everything about Stark is complicated.) DHS CATEGORIES Clinical laboratory services* PT/OT/SLP* Radiology & certain other imaging services* Radiation therapy services* DME and home health Parenteral and enteral nutrients, etc. Prosthetics, orthotics, prosthetic devices Outpatient prescription drugs Inpatient and outpatient hospital services 18 9
GENERAL RULES Code List is determinative DHS bundled into a composite rate payment is not DHS unless the service package itself is a DHS (e.g., inpatient hospital services) DHS paid as stand-alone service is DHS Exception (eff. 1/1/08): radiology and drugs furnished in an ASC that qualify as covered ancillary services per 416.164(b). ENTITY (So many entities, so little time ) 10
THE DHS ENTITY Current Rule (10/1/2009): A person/entity furnishes DHS if it has Billed for the DHS, or Performed services billed as DHS Entity does not perform DHS if it only: Leases or sells space/equipment Furnishes supplies Provides management or billing services; or Provides personnel 21 THE DHS ENTITY Must do separate Stark analysis for referrals to each DHS entity Definition will prohibit the physician owner of an entity that performs DHS services under arrangements from referring to that entity, unless arrangement satisfies an exception (i.e., rural provider) 22 11
FINANCIAL RELATIONSHIPS (Follow the money. ) FINANCIAL RELATIONSHIP Ownership or Investment Interests Direct or indirect Debt, equity Compensation Arrangements Direct or indirect Look for any remuneration (with limited exceptions) 24 12
Compensation Defined Basically, anything of value. Examples: Salaries Payment for services rendered Malpractice insurance subsidies Loan forgiveness Free meals INDIRECT COMPENSATION DOCTOR COMPANY DHS ENTITY 26 13
INDIRECT COMPENSATION Definition (411.354(c)) Unbroken chain of 3+ persons/entities; Aggregate compensation to physician varies with or takes into account referrals or other business for DHS entity; and DHS entity knows or should know nature of physician s compensation Intended to capture potentially abusive arrangements 27 Indirect Compensation Exception Requires compensation to be FMV not taking into account referrals or other business generated Does not look to aggregate compensation Apply special rules at 411.354(d)(2),(3) Intended to immunize subset of arrangements captured by the definition E.g., certain nonabusive per-unit compensation 28 14
STAND IN THE SHOES Physician Owners (aka, when an unbroken chain of 3 is a direct comp arrangement) Physician Group DHS ENTITY 29 STAND IN THE SHOES Result: Some arrangements must satisfy an exception for a direct compensation arrangement In evaluating whether compensation varies with or takes into account referrals, the relevant referrals are those made by all physicians in the PO, not just those of the physician who SITS of the PO 30 15
PRACTICE TIP Analyze arrangements under the law in effect at the relevant time It could make the difference between compliance and noncompliance! 31 EXCEPTIONS (The devil is in the details.) 16
STARK EXCEPTIONS Three types of exceptions: Ownership/investment only Ownership & comp ( service-based exceptions ) Compensation only Compliance with all criteria is mandatory close enough won t work 33 OWNERSHIP EXCEPTIONS Publicly-traded securities/mutual funds Rural provider exception Whole hospital exception Modified by ACA to prohibit physician ownership of new hospitals and limit expansion of facility capacity at existing physician-owned hospitals. 34 17
SERVICE-BASED EXCEPTIONS Physician services In-office ancillary services Supervision Location Billing Academic Medical Center (AMC) services Others 35 PERMITTED OWNERSHIP Non-DHS entities Rural area providers Hospitals ASCs (unless ancillary DHS) Mutual funds and public securities 36 18
PERMITTED OWNERSHIP In-office ancillary services Supervision, location, billing rules Radiologists, radiation oncologists, and pathologists can often own their own facilities (see defn of referral ) Permitted ownership under Stark may still implicate the anti-kickback statute 37 COMPENSATION EXCEPTIONS Rental of Office Space & Equipment Employment Personal Service Arrangements Physician Recruitment Isolated Transactions Remuneration Unrelated to DHS 38 19
COMPENSATION EXCEPTIONS Non-Monetary Compensation FMV Compensation Medical Staff Incidental Benefits Risk Sharing Arrangements Indirect Compensation Physician Retention Payments in Underserved Areas Health Information Technology exceptions 39 COMPENSATION EXCEPTIONS Rule of thumb: FMV is key Set in advance Volume or value of referrals Commercial reasonableness Many exceptions are one directional Beware percentage comp and per click fees in leases But see Council for Urological Interests v. Burwell, 790 F.3d 212 (6/125/15) 40 20
PRACTICE TIP Look for the hallmarks of prohibited compensation Windfalls to physicians Inflated or distorted compensation Compensation reflecting referrals Commercially unreasonable deals Kickbacks Undocumented deals 41 PRACTICE TIP Look for the hallmarks of prohibited compensation Part-time, off-site rentals of DHS Joint recruiting that confers a benefit on an existing physician practice Deals that don t match the paperwork 42 21
PRACTICE TIP Stark in a Nutshell No physician ownership of DHS entity Any compensation must be FMV Get it in writing and make it evergreen! Lots of mandatory technical requirements Most managed care is excepted Arrangements permitted under Stark may still implicate the anti-kickback statute 43 PRACTICE TIP Know the difference between Stark and Kickback What types of referrals count Who can be liable Necessary intent Nature of exceptions and sanctions Who enforces 44 22
Types of Referrals Stark AKS Physicians only Any person or entity DHS only Any federal health care program services 45 Who Can Be Liable? Stark AKS DHS entities Any person or entity Referring physician (for CMP only) 46 23
Intent Stark AKS Civil; No intent (strict liability) Criminal; knowing & willful standard Knows or should know standard for CMP 47 Exceptions & Sanctions Stark AKS Mandatory exceptions Voluntary safe harbors Nonpayment, CMPs, FCA, exclusion Jail, criminal fines, CMPs, exclusion, FCA 48 24
Enforcement Stark AKS CMS (claim denial) OIG, DOJ OIG (CMPs, exclusion) DOJ (FCA) 49 The Home Stretch (Is your head hurting yet?) 50 25
Practice Tip Sometimes, AKS and Stark are WAIVED! Waivers exist for certain arrangements Shared Savings Program (76 FR 67992) Pioneer ACOs, BPCI, CEC Not blanket waivers Be sure to comply with all waiver conditions 51 MSSP Waivers Four Waivers that Apply to Stark Pre-Participation Waiver Participation Waiver Shared Savings Distribution Waiver Compliance With Stark Waiver Important Standard: Reasonably related to the purposes of the Medicare Shared Savings Program New final regulation at OMB for review 52 26
BPCI WAIVERS Waiver of Stark, AKS and Gainsharing CMP for -- Contributions of internal cost savings to savings pool Incentive payments made from savings pool Gainsharing payments made by a group practice to its physicians, NPPs Waivers apply unless an awardee s agreement with CMS says otherwise. 53 SELF-DISCLOSURES ACA 6402: Duty to report and return overpayments Report & return within 60 days of later of Identification of overpayment, or Cost report is due date Consistent with long-standing gov t position Failure to comply FCA liability Proposed Rule: 77 Fed. Reg. 9179 (2/16/12) 54 27
STARK SELF-DISCLOSURES ACA 6409: Stark Self-Referral Disclosure Protocol (SRDP) For disclosure and resolution of actual or potential violations. Secretary is authorized to reduce amounts due and owing for all violations under Stark. 60-day repayment obligation tolled during SRDP Separate from the advisory opinion process 55 PRACTICE TIP Read the Preambles Preambles indicate agency s current and historical thoughts on particular issues Analyze issues with preambles at hand Word search pdf versions of preambles Mark table of contents with page numbers Never rely on your memory 56 28
PRACTICE TIP Keep up with the case law More Stark cases are being litigated Litigants and the courts are interpreting Stark Can have an impact on your advice 57 PRACTICE TIP Keep up with Congress Stark is a popular vehicle for industry change Unfair competition, overutilization It s a saver can help justify cost of other parts of a bill Potential changes Medicaid? Ancillary services? Alternative payment mechanisms? 58 29
PRACTICE TIP Don t forget state & other applicable laws State Stark & kickback laws Applicable CMP provisions Balance billing laws Physician ownership disclosures Medicaid reimbursement Other topics 59 PRACTICE TIP Consider whether your client is in the planning vs. implementation stage Clients in planning stages need more conservative advice. Creative arguments may be needed by FCA defendants Getting too creative with advice in the planning stages can result in liability for both client and YOU. 60 30
PRACTICE TIP Understand reimbursement You can t spot fraud and abuse if you can t follow the money You can t follow the money if you don t know how services are reimbursed 61 PRACTICE TIP Communicate clearly with OIG, CMS Remember that most CMS staffers are not attorneys Describe your problem in detail Don t hide the ball What s in it for CMS? (access to care, lower costs?) Patience is a virtue! 62 31
PRACTICE TIP Keep up with a changing industry Legal publications BNA products ABA Health Lawyer AHLA Health Lawyers Weekly Business publications WSJ and other general news media Modern Healthcare Kaiser reports (kaisernetwork.org), etc. 63 PRACTICE TIP Join some Listserves OIG, CMS listserves AHLA listserves (20) Compliance Reimbursement Tax FDA In-house Counsel Stark Law Part D HMO, Hospital, etc. 64 32
PRACTICE TIP Resources CMS website http://www.cms.hhs.gov/default.asp Manuals Medicare Coverage Database (NCDs, LCDs) Contact info for CMS carriers, FIs, etc. 65 PRACTICE TIP Resources CMS Stark webpage http://www.cms.hhs.gov/physicianselfreferral Statute, regs and preambles Advisory opinions SRDP materials and settlements DHS code updates FAQs 66 33
PRACTICE TIP Resources AHLA http://www.healthlawyers.org Health Law Archive Cross links to government and public websites 67 PRACTICE TIP Take advantage of training opportunities Conferences and teleconferences Webinars In-house training Write articles 68 34
PRACTICE TIP Keep Calm and Carry On! This is not rocket science Get all the facts from your client Don t ignore your instincts Develop a good working relationship with a more experienced attorney 69 35