Category: Physicians Practice

Last week, I detailed recent case law regarding medical practice leases and avoiding big trouble from the federal government. Now let’s look at what you can do to stay safe:

Step One: Is Medicare/Medicaid involved? Are you accepting Medicare and Medicaid patients which you may refer to your landlord for treatment? If the answer is “no,” federal law is not implicated.

Step Two: Understand, the law. You are required to know it. In fact the OIG takes the position that below-market office space rental is offered for the purpose of inducing referrals.

Step Three: Do not assume every business lawyer, medical malpractice defense lawyer, or real estate professional does know the law. I have personally spoken with many malpractice lawyers who ask, “What’s a Stark Law?”

Step Four: Do your “due diligence.” During negotiations, you must find out what fair market value is for office space in your location. This may require the retention of a Health Lawyer or a fair-market-value expert who specializes in hospital lease negotiations. While this is a pain, if you haven’t already, you must think of “compliance” as simply a cost of doing business.

Step Five: Haggle (and document the haggling). The hallmark of a “sweetheart deal” would be that an offer is made to you, and you replied, “Wow, that is too good a deal to pass up.” This isn’t always a bad thing – is simply could be. The offer of office space should start with a proposal per square foot, with provisions for finish out. The rate per square foot should be in line with other rates for comparable space. Naturally, finish out allowance will depend upon whether or not the landlord must pay to make the space suitable. If the space was vacated by a prior tenant and nearly perfect “as is,” then you should get a lower rate per square foot.

Step Six: Document the Safe Harbors in the lease. Recall that a violation of the False Claims Act or the Civil Monetary Penalties Statute law usually requires some showing of a “Knowing” violation. It is therefore important to show in the lease that “compliance” was top of mind. This will not be a problem if your landlord is a hospital. The hospital will certainly include this language in the contract. But if your lease is with a smaller practice, either a single doctor or a small group, you may be handed a standard real estate lease form. Put an addendum on it which complies with Stark and Anti-Kickback Statute Safe Harbors.

Understand, none of these steps will absolutely guarantee you won’t be sued. You cannot control whistleblowers. You can only control your actions. Adopting and implementing good compliance practices simply offers your best chance that a whistleblower law firm will decline to accept the case, or that an OIG agent will elect to quietly pass you by.

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Since 1863, the False Claims Act has made it illegal to “lie” to the government in order to get paid for services which were clearly unnecessary, or never performed. Because it was difficult to prove that a patient really didn’t need the services once he appears in a doctor’s office, Congress began looking for other ways to limit payment for services. The “answer,” was in how the patient arrived in the doctor’s office or hospital for treatment in the first place.

The AMA Code of Medical Ethics has always prohibited kickbacks and referrals where there existed a conflict of interest. See Opinions 4.02-04 and 8.032. Trouble was, no one was being prosecuted at the state level. As federal spending on Medicare doubled, then tripled, over the decade between the 70s and 80s, the federal government took matters into their own hands and converted sections 4.02-04 and 8.032 of the AMA Code of ethics into federal offenses known as Stark Law and the Anti-Kickback Statute, which made ethics enforceable under the FCA.

Stark Law outlaws referrals, if a prohibited “relationship” exists, the AKS outlaws kickbacks for referrals. Both of which are pure “facts,” as to how the patient arrived at the doctor’s office or hospital admissions. Or, are they? Certainly the payment of money for referrals is always bad. The trouble comes with the concept of “in-kind” payments, (a term borrowed from the tax code.)

Office space leases are a prime example. Suppose, instead of giving you $5,000 to refer patients, a hospital were to give you free rent. Clearly this kind of “in-kind” payment is no different than writing you a check in the same amount. But what if the hospital charges you some amount for rent? How do you know the hospital is charging enough? That’s where the “Safe Harbors” come into play. The Safe Harbors for “space rental” under the Anti-kickback Statute are located at 42 C.F.R. §1001.952(b) which are identical to the safe harbor under Stark Law, 42 U.S.C. 1395nn. In addition to the requirement that an office lease be in writing, for a term of at least one year, at a rate set in advance, which does not take into account the value of referrals or the proximity of the space to the hospital, the provision which causes the most trouble is the requirement that the amount be at “Fair Market Value.”

The trouble lies in the fact that “Fair Market Value” is itself nothing more than an “opinion,” or at least mixed questions of “fact” and “opinion.” How do you know your lease is safe?

On July 12, 2012 an opinion was handed down in UNITED STATES OF AMERICA, ex rel., MARC OSHEROFF v. Tenent, which should give every physician cause for concern. In Osheroff, Tenet’s hospitals do in fact take patient referrals from physicians who lease space from Defendants. Some of these patients were Medicaid and Medicare patients, which implicates Stark Law and the AKS. There is nothing wrong with this practice, as long as provisions of the Safe Harbor are met. (This is the very reason the Safe Harbor exists, to permit physicians to office very close to the hospital.)

Tenent hired a real estate firm to blast e-mails to 3,300 potential tenants, inviting them to visit the website, which advertised office lease rates. (Full disclosure: While Tenent is based in Dallas, and I am personally acquainted with many Tenent in-house counsel, I do not represent any party in this case, and only know of the facts from reading the opinion.) What I can tell you is this: Normally, no hospital chain on Earth would think of advertising rates on a website, without first running the whole affair through the legal department. I can therefore only guess, that probably Tenet did not think it was doing anything wrong.

But here is where the matter gets messy. “Fair Market Value” for office space rental is not a “number,” it is a range of numbers which depends upon several factors: 1.) what are others charging; 2.) what is the finish-out allowance; and 3.) what miscellaneous amenities are included?

The whistleblower’s complaint in Osheroff detailed allegations of what he believed were below-market rental rates in two substantially similar buildings, understating the size of the premises, charging higher rental rates to non-referral tenants, providing excessive tenant finish out allowances. Although the court dismissed the case on technical grounds, the court left open the possibility the whistleblower could have stated a case.

If the whistleblower was correct, everyone involved, including all the physician tenants could be in big trouble. If the allegations of a knowing violation proved true, both the hospital and each physician involved could be liable for between $11,000 and $50,000 under the False Claims Act and the Civil Monetary Penalties Statute for each claim submitted. The question remains: “How do you protect yourself?”

Next week, I’ll outline six steps on how you can protect yourself from avoiding similar trouble.

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As a physician, you are aware of the confusing and complex world of medical coding. There are over 9,000 Current Procedural Terminology (CPT) codes – one for every type of healthcare service provided by healthcare practitioners or facilities. There are another 13,500 ICD-9 codes for medical diagnoses, plus more codes for medical supplies and for various health care settings. ICD-10 promises to further complicate matters, with an additional 5,000 codes.

If you assign a code for service which calls for too high a reimbursement, this is termed, “upcoding.” Assigning separate codes for services which are required to be billed under a comprehensive code is termed “unbundling.” Either mistake can land you in serious trouble. It is perhaps for this reason, many physicians err on the side of caution, deliberately “down coding” as a hedge against benefits review audit scrutiny, and fraud/abuse enforcement activity.

But according to Dallas-based health lawyer, Cynthia Stamer, who recently discussed the topic with the North Texas Health Care Compliance Professionals Association, “getting the coding right is only half the battle.” According to Stamer, “it used to be that medical decision-making would be clearly reflected in the patient’s chart.” However, “because we have moved to a complex system of CPT and ICD-9 codes, many physicians fall into the rut of believing coding replaces proper charting of medical decision-making.”

What happens, when auditors review the chart” Stamer said, “is that there is no back-up documentation to support the chosen code. Even though the physician may have total recall of the patient and the medical decisions, physicians are victimized by the old adage, ‘if it didn’t’ get written down, it didn’t happen.’”

According to Stamer, this is where a skilled physician assistant can be invaluable. As medical coding becomes more and more specific, it is important to have a fresh set of eyes to ensure the basis for a physician’s decision makes its way into the chart. The irony seems to be, the more expert physicians become at coding, the less attention they pay to documenting the reasons for the chosen code.

Now, more than ever, it is imperative that patient charts reflect physician decision-making. Proper assignment of CPT and ICD-9 codes is only half the battle. The chart should reflect why the code was assigned. Kristy Welker is an independent medical coding consultant in San Diego who advises:

Practice Pointer #1: Do it right away. Aim to chart the medical decision-making process while it is fresh in your mind.

Practice Pointer #2: Make it legible. Writing it down won’t help, if no one can read it.

Practice Pointer #3: Beware of EHR “charting by exception.” EHRs often solve the legibility problem, but lead to another problem. Electronic recording is often set up to chart normal findings by default, and the physician is supposed to chart the abnormal findings. It is very easy for a physician get caught up in treating the patient, and forget to change the findings from “normal” to “abnormal.” Thus, a patient could be admitted because of chest pain, but the chart continues to reflect normal findings.

Practice Pointer #4: Be careful when making changes. Keep in mind that the medical record is a legal document and should never be altered. If you need to change or add to a patient record, write an addendum with the date of the revision.

Never write over an original entry or make it unreadable. Instead, if there is an error in a chart, draw a single line through the portion you’re correcting, keeping the original entry legible.

Sign and date the deletion, and state the reason for making the correction above or in the margin. Document the correct information on the next line or space with the current date and time, referring back to the original entry.

When correcting electronic records, follow the same principles: Track both the original entry and the correction with the current date, time and reason for the change. Any corrected record you submit must make clear the specific change made, the date of the change and the identity of the person making the entry.

Complete and accurate medical records improve the quality and efficiency of medical care and lower costs. Paying attention to charting basics not only protects your patients’ interests, but your own.

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Although I am constantly writing and speaking on Stark Law, every so often, it is a good idea to listen to what others are saying. I decided to pull two opposing views, and then analyze what I took away from the two points of view.

First, we will hear from Daniel O. Jamison, chair of the Health Law Practice Group at Dowling, Aaron & Keeler Inc., in Fresno, Calif., writing for the Bakersfield Californian.

Second, are excerpts from a Q&A interview with OIG Inspector General Daniel Levinson by Joe Carlson in Modern Healthcare.

Let’s begin with remarks from Jamison, writing on behalf of doctors and hospitals:

“The consequences of violating the Stark Law are shocking. If the hospital leased an office to a doctor where the government deemed the rent to have been too low, the hospital and doctor can be liable to refund the amount Medicare paid on all patients referred by the doctor to the hospital during the term of the lease, plus a $15,000 penalty for each paid billing. They can both also be kicked out of the Medicare program. What’s more, the government has used the False Claims Act, enacted during the Civil War to curb fraud in military procurement, to assert that each bill falsely represented it complied with the law, exposing the hospital and doctor to three times the amount of the bill and between $5,500 and $11,000 in penalty per ‘bad bill.’ Health ‘reform’ has made these laws more difficult to comply with.

“Never mind that the referred services were medically necessary and helped the patient. Never mind that the law unjustly assumes all health-care providers would ignore their ethical and legal duty not to recommend unnecessary treatment. Never mind that there already was a federal criminal law that made it a felony to offer or receive a kickback for a referral to be paid for by Medicare. Never mind that post-service government-contracted audits, which involve a complex regulatory scheme and are arguably skewed against the provider, have been implemented.

“Doctors normally will not have a lawyer on their office staff, but physician- and hospital-compliance costs have skyrocketed. By 2004, Johns Hopkins’ initial three-year compliance cost for HIPAA alone was between $4.3 million and $7.4 million and was projected to rise to $10 million annually, depleting a $30 million operating margin. These costs become part of the rising cost of health care for all. Meanwhile, taxpayers fund the bureaucracy that expands to write and enforce the regulations. Those dollars are lost for basic government responsibilities like infrastructure. They cannot be used to increase the number of family doctors for Medicaid patients to see in place of the expensive emergency department.”

Second, let’s hear from Inspector General Levinson:

Q: One of the things I hear a lot from providers is that the Stark law is simply too complicated.

Levinson: Unfortunately, I’m not in charge of deciding what the law should be when it comes to healthcare compliance. We have an array of statutes of which Stark is a very important part. And our job in the IG’s office is to enforce all the laws that we are empowered to enforce.

Q: So you’re enforcing the law as it is, you’re not making the law?

Levinson: That’s the job of the inspector general’s office when it comes to not only the Stark law, the False Claims Act, all the five laws I mentioned (the anti-kickback statute, the civil monetary penalties law, and the exclusions statute). We take our obligation, our responsibility that is given to us by lawmakers, very seriously, and we enforce those laws aggressively but fairly.

Q: Is the Stark law too punitive? Does it penalize things that are sort of minor, in a major way?

Levinson: You know, I understand the reasons for the Stark law, and we enforce that law as it is, in a way that we try to do justice to what was intended by it.

Q: Anything else you think is important to bring out?

Levinson: I think the fact that we have 2,700 people attending this conference [the Health Care Compliance Association’s annual Compliance Institute] is a positive indication that the world of compliance is getting bigger. And from the informal conversations I have had, is getting more sophisticated. It is drawing more impressive talent, as the stakes get larger and more people are understanding that where we are headed with coordinated care and this emphasis on quality means a larger and more strategic role that compliance officials might play in the futures of their organizations.

My Analysis

Are you kidding me!?!? These aren’t two voices lost, making their way in the wilderness — they aren’t even on the same planet. Speaking on behalf of doctors and hospitals, Jamison expresses heartfelt exasperation at an unfair system which makes no sense. The inspector general, on the other hand, seems somewhere between blithely indifferent, and in a total state of denial as to the suffering his office has caused — and who caused it.

Of course Stark law is insanely complicated, treating mistakes of opinion (i.e., as to Fair Market Value in a real estate lease) the same as deliberate fraud. Of course federal regulations are driving small practitioners out of business and into servitude under the protection of a larger corporate practice group (who can afford an in-house lawyer.) Of course the OIG took over writing the rules and regulations it enforces. (In the 1980s, Congress made the mistake of asking the OIG to write rules for what should not be prosecuted, the Safe Harbors. The OIG took off writing rules, by way of Special Fraud Alerts and other general pronouncements, and has never looked back. See, Bauman, Linda Ed., Health Care Fraud and Abuse, ABA Health Law Section (2002). To say that the OIG merely enforces the rules is like … like . . . . [I was going to finish this sentence, but my head cartoonishly exploded after redlining on hypocrisy.]

Most disheartening of all, are the final words of the inspector general which border upon megalomania. He could not be happier that his bureaucracy has grown massively over the years: that “the world of compliance is getting bigger. . .drawing more impressive talent [and resources which could be spent on care]. . . as the stakes get larger . . .which means a larger and more strategic role that compliance officials might play in the futures of their organizations.”

The only thing OIG chief Levinson didn’t say is . . . “and I control it all.”

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Now that flags have been waived, the confetti has been … (not sure there is a verb for confetti) and the two party convention halls have grown quiet, it is time to refocus on the major issue facing the healthcare industry — an affordable healthcare plan for everyone. The President’s plan under the Affordable Care Act (ACA) calls for universal coverage through an “individual mandate.” People with no insurance must purchase it. Insurance companies may not deny coverage on a “newly discovered policy defense,” after the beneficiary falls ill.

The Republican plan seems to involve balancing the budget through some form of voucher system, which would reduce the government’s obligation to pay for Medicare and Medicaid. It is unclear, however, if the Republican plan intends to addresses the problems created by the masses of uninsured, or protect those who thought they were insured, until they needed benefits. This is simply a problem too great to ignore.

Any capitalistic free market is supposed to act according to the laws of supply and demand, which should hold down costs, and increase efficiency. This is the heart of conservative ideology. But American healthcare is no more capitalistic than China’s economy is purely communistic. What we have is a mixture of social programs and free enterprise. While this works well in many cases, in the healthcare context, the laws of supply and demand get out of balance. This is because of the unique health-related behavior of three primary groups.

In the first group, are those whose very intense efforts affect market availability, cost, and utilization. This group includes both the supply side — doctors, hospitals — and the demand side, those who must purchase services — employers, individuals, and insurers. A second group consists of the consuming public, who are not in the market, and feel the goings on in the market do not matter to them. Then, the third group is comprised of those consumers who thought they were in the second group, and therefore did not choose to be in the market. Instead, members of this group were thrust into the market – either by unhappy (illness) or happy (a new baby) circumstance — with no ability to pay for their needs and no advance thought to what they might do I when the bill comes due. Obviously, this is going to create a problem (and a national embarrassment) if Americans are allowed to die from lack of life-saving care.

What can’t happen usually won’t, but what we did in response to the “uninsured” problem is nothing short of absurd. Think of a Rubik’s Cube. The problem facing you is that one of the colored squares doesn’t fit. Rather than make the problem go away, you could simply turn the problem to make it face someone else. This is exactly what the government did with the unfunded mandate, the Emergency Medical Treatment and Active Labor Act (EMTALA), in which hospitals with emergency rooms cannot turn away patients suffering from an “emergency medical condition” (42 U.S.C. 1395dd).. This gift to the masses might have been defensible in the early and middle years of Medicare and Medicaid. During the halcyon days of fee-for-service and reasonable hospital reimbursement rates, it seemed not too much to ask those making a fortune from government programs to pitch in. The problem came from the “dog pile” which followed.

Once everyone figured out the government would not let us die from lack of care, there was no need to plan for that contingency. A mass migration of sorts occurred in which it was suddenly safe to be in the second or even third group of Americans who made no plan whatsoever to pay for illness. Economically, this has been devastating. Hospitals struggle to meet obligations, by raising the sticker price on everyone, which leads insurance companies to engage in post-claims underwriting (wait until an insured needs coverage, then find a flaw in the application to justify denial of coverage.) We are left with a non-functioning system described in hyperbole, as a “war of all-against-all,” in which “[i]nsurers cheat patients and doctors; patients cheat doctors and insurers; doctors cheat insurers and patients; and all cheat the federal governments.” See, Bartlett, Donald; Steele, James, “Critical Condition– How Health Care in America Became Big Business and Bad Medicine,” New York: Doubleday (2004)

If we do not start demanding real solutions from our candidates to the problems created by EMTALA and the masses of uninsured, it seems clear we will not be able to avoid an eventual government takeover of the healthcare industry. This is because currently, there is nothing motivating people to take care of themselves. In fact, those who try to take care of their own needs, are often thrown back into the pile of uninsured, because they failed to disclose a sore throat, 10 years before a diagnosis of cancer.

This is a crisis of financing which transcends politics and traditional conservative and liberal ideology. This is our problem. Everyone needs care, and no one wants care delivered with the same enthusiasm as government employees at a department of motor vehicles. The best thing you can do is become active in your state’s medical association.

No matter who you vote for in November, find out what your association is doing, and how you can help ensure the survival of your industry.

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Medicare pays approximately 1.5 million doctors, hospitals, and providers each year, approximately $750 billion in claims. By some estimates, $65 million of this is “fraudulent.” The term “fraud” usually means malum in se fraud, (bad in itself, like stealing) but can include “abuse.” This means engaging in behavior which defines malum prohibitum (bad because the government told you “don’t do it.”). In cases of criminal fraud (the “stealing” kind) CMS and the Office of the Inspector General (OIG) have been widely criticized for a system of “pay, then chase.” Often, the worst abusers have been highly sophisticated, stealing or paying for Medicare claim numbers, and getting away with payments of massive amounts of money.

On August 22, National Public Radio discussed the new tools available to the government under the Affordable Care Act (ACA) with Peter Budetti, who oversees anti-fraud efforts at CMS. According to Budetti, “For a long time we were not in a position to keep up with the really sophisticated criminals …They’re not only smart, they’re extremely well-funded. And this is their full time job.”

Criminals use real patient IDs to bill for wheelchairs that were never delivered or exams never performed. Dishonest doctors — a small percentage of physicians, to be sure — charge for care they never deliver or perform unnecessary operations. In one scam, criminals bill Medicare and a private insurer for the same patient. The federal health law and other legislation directed the federal government to start using sophisticated anti-fraud computer systems. Budetti said the systems, which are being used first with Medicare, are similar to those used by credit card companies to detect suspicious purchases.

“We’re able to now verify whether a person was being treated by two different physicians in two different states on the same day or a variety of other possibilities,” he said. This permits the government to do what credit card issuers have done for years.

The computer program crawls around the heaps of Medicare claims — some 4 million a day — to look for outliers: spikes in prosthetics in Miami or heart stents in Missoula, for example. And for the first time, doctors and others who want to bill Medicare are being assessed based on their risk to commit fraud. Those who seem crooked are kept out.

What’s also new, under the ACA, is the ability of CMS and OIG to temporarily suspend payments upon a “credible report” of fraud. Hence, no more “pay, then chase.” According to a story by Kaiser Health News, the Obama Administration’s approach to fighting fraud has been more systematic than previous ones. Indeed, the number of so-called Medicare Strike Force teams operating around the country has quadrupled since 2009. Still, the mantra of the fraud fighters sounds a lot like a department store sale: The more you spend, the more you save.

In the meantime, those in charge of the government’s anti-fraud efforts say the new approach is working. The number of defendants facing fraud charges jumped sharply last year. At the end of September, Medicare is expected to report to Congress the number of new scams detected and the number of new cheats kept out of the program.

How does all of this affect the average physician’s practice?

The case of U.S. v. Krizek is familiar to anyone who has read a health law textbook. The case resulted in three appellate decisions, six federal opinions in total, and one appeal to the U.S. Supreme Court. The texts report how a Washington, D.C.-based psychiatrist was sued for $82 million in penalties, though he barely earned $125,000 a year, ultimately suffering judgment of $225,000. What you won’t see is the back story of how Dr. Krizek got in trouble in the first place.

Krizek didn’t understand CPT codes, and excessively used Code 90844. Code 90844 is the code for a one-hour therapy session. Krizek used it when his time spent working on a particular case reached one hour in the aggregate, not simply for face-to-face time. Krizek also did not realize, (which you should) excessive use of a particularly highly reimbursable CPT code is exactly what genuinely fraudulent criminals would do, if they wish to claim payment for treatment never given.

According to Mrs. Krizek, even though she could prove the patients were genuine, the government was on the scent, and would not give up. The moral of the story is this: Now that the government has new tools for identifying excessive use of suspect codes, you must vigilantly keep abreast of what those codes are, lest you find the FBI in your practice lobby.

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Historically, aside from using common sense, no one really thought too much about protecting patient health information. Speaking with many physicians on the subject, the opinions seem unanimous: It is hard to believe the government doesn’t have anything better to worry about.

The American Recovery and Reinvestment Act of 2009, in Section 13411 of the HITECH Act, requires HHS to provide for periodic audits to ensure covered entities and business associates are complying with the HIPAA Privacy and Security Rules and Breach Notification standards. To implement this mandate, the Office of Civil Rights piloted a program to perform test audits of covered entities to assess privacy and security compliance. Audits conducted during the pilot phase began November 2011 and should conclude in December 2012. Here’s more information about the pilot program.

Yet, if it seems strange that the government should involve itself with physician/patient privacy, it seems stranger still that the Office of Civil Rights should be given the task of enforcement. Historically, federal civil rights statutes protect citizens from government (and in some cases, private) infringement upon rights protected by the bill of rights and the 13th and 14th Amendments. These are normally “citizenship” rights, which cannot be infringed upon by the government. As any Constitutional Law scholar can attest, however, there is no Constitutional right to physician/patient confidentiality. In fact, HIPAA confers no private cause of action of any kind, (hence, no rights, civil or otherwise) upon a citizen whose privacy expectations have been violated.

The HIPAA Privacy Rule, among other things, regulates the use and disclosure of Protected Health Information (PHI) held by “covered entities” (generally, healthcare clearinghouses, employer-sponsored health plans, health insurers, and medical service providers that engage in certain transactions.) By regulation, HHS extended the HIPAA privacy rule to independent contractors of covered entities who fit within the definition of “business associates.” PHI is any information held by a covered entity which concerns health status, provision of healthcare, or payment for healthcare that can be linked to an individual. This is interpreted rather broadly and includes any part of an individual’s medical record or payment history. Covered entities must disclose PHI to the individual within 30 days upon request. They also must disclose PHI when required to do so by law, such as reporting suspected child abuse to state child welfare agencies.

A covered entity may disclose PHI to facilitate treatment, payment, or healthcare operations without a patient’s express written authorization. Any other disclosures of PHI require the covered entity to obtain written authorization from the individual for the disclosure. However, when a covered entity discloses any PHI, it must make a reasonable effort to disclose only the minimum necessary information required to achieve its purpose.

Penalties for the non-compliant can be severe. In April, Phoenix Cardiac Surgery, P.C., of Phoenix and Prescott, Ariz., agreed to pay the HHS a $100,000 settlement amount after an Office of Civil Rights’ investigation found that the physician practice was posting clinical and surgical appointments for their patients on an Internet-based calendar that was publicly accessible. This follows a $1 million fine handed down in 2011 against Massachusetts General Hospital, after an employee inadvertently left 192 patient records on a subway train.

Yet, if “patient confidentiality” is not an historically protected right under the Constitution, why is the Office of Civil Rights involved in the first place in protecting patient records?

This is actually a two-part question, with the answer to the question “Why is the government involved in privacy?” making more practical sense than the answer to the question “Why is the Office of Civil Rights involved in something which isn’t a civil right?” The reason the government is involved at all, lies in the fact HHS decided it could save a great deal of money by switching to an expensive electronic system. Yet, a great deal of Congressional hand-wringing concerned the fear of public blow-back if all those binary “ones and zeros” ever got loose. So Congress decided upon a plan whereby the government would reap the financial savings from a new electronic system, but lay blame at the feet of providers if anything went wrong.

As to the question, “Why is the Office of Civil Rights involved?” apparently Americans are very protective of their civil rights — even nonexistent ones. If the government wanted to be taken seriously, (and in the beginning, no one did,) what better way to add cache, than to pretend that accidentally leaving records on a subway somehow is a matter for the Office of Civil Rights?

We know there is no civil rights violation, because HIPAA creates no private right to sue for a violation of HIPAA’s confidentiality provisions. (Anyone who has ever tried has been thrown out of court.) Any fines recovered for violations belong to the government — not the patient. Rather than a private right, a patient must file a written complaint with the HHS Secretary through the Office of Civil Rights. It is then within the secretary’s administrative discretion whether to investigate complaints and conduct compliance reviews to determine whether covered entities are in compliance. 45 C.F.R. §§ 160.306, 160.308 (2010). Therefore, any claim for invasion of privacy under HIPAA fails as a matter of law.

Naturally, the lack of a financial motive tends to dampen patient enthusiasm for vindication of their “civil rights;” the end result being, auditors are required — because no one else has really ever cared too much about protecting PHIs prior to HIPAA. Nevertheless, for the foreseeable future, all of this will surely mean more headaches, once the pilot audit program concludes, and the full wave of inspections begins.

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An accountable care organization (ACO) is the latest federal attempt to rescue Medicare from financial ruin. (The “Final Rule” can be found here.) Similar to the failed HMO model of the late 1990s, groups of providers may form relationships which tie provider reimbursements to quality metrics and reductions in the total cost of care for an assigned population of patients. Under the ACO model, physicians and providers are responsible for the care of at least 5,000 patients, and may earn incentive bonuses if costs savings are realized.

Because the formation of “relationships” and the payment of “incentives” implicate Stark Law, the Anti-Kickback Statute, and certain medical rules of ethics, HHS may be required to tweak current rules, prior to full implementation. Stark Law, 42 U.S.C. 1395nn, forbids physician self- referral, if the physician has any financial relationship with a provider to whom the patient is referred. Similarly, the Anti-kickback 42 U.S.C. §1320a-7b prohibits splitting fees between providers, similar to AMA Ethics Code 6.02-6.04.

On the ground, physicians are understandably uneasy. Not only is it expensive to form ACOs, but if the government now proposes allowing physicians and providers to enter contracts with one another, and accept “fee splitting” arrangements, authority must be absolutely clear.

The AMA Code of Medical Ethics does speak to the issue of HMO/ACO plans. (See, Opinions on “Conflicts of Interests Under Capitation,” (Opinion 8.051) and “Financial Incentives and the Practice of Medicine,” (Opinion 8.054)) These were added to the Stark Law Statute, but were more designed to satisfy concerns that a switch from fee-for-service to a capitation/incentive plan would lead to: 1.) under treatment to earn incentives; or 2.) the available funds under a capitation plan might run out, and lead to treatment without any compensation, or unsustainably low reimbursements.

According to AMA Opinion 8.054, for example, while a physician may consider the “availability of affordable care” needs of society as a whole, the “first obligation is to the patient . . .which must override consideration of reimbursement mechanism or specific financial incentives applied to a physician’s clinical practice.” Further, “Physicians …should evaluate financial incentives associated with participation in a health plan before contracting with the plan… to ensure that patient care is not compromised by unrealistic expectations for utilization [how much care is delivered] or by placing that physician’s payment for care at excessive risk [the risk that the money will run out and the physician will not be paid if appropriate care is delivered.].”

Because the new ACO Shared Savings Plans are optional and do not replace traditional fee-for-service models, physicians could be in a position to refer both ACO member/patients as well as those who are covered by traditional plans to the same hospital or clinic with whom the physician has an ACO relationship. The question under Stark Law and the Anti-Kickback Statute isn’t the referral or treatment of patients covered within the ACO. The question is the referral of everyone else. For example, if in a given year, the ACO does not meet its target, and in fact loses money, there may be incentive to refer other non-ACO patients between members. This is termed in government speak, to “capture a stream of referrals.”

What is missing from current Stark Law and Anti-Kickback regulations is express authority for physicians to enter ACO contracts and make referrals of everyone else, without fear of enforcement action. Clearly Congress or HHS will resolve this issue in the near future. Until clearer guidance is in place, however, the potential costs savings to the government under the ACO scheme may be frustrated.

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Last week, I discussed the six reasons physicians are opting-out of the Medicare program. This week, let’s talk about how it is done. First, the disclaimer: Before you make this decision, talk to your SPORE (Spouse, Priest or Rabbi, and Everyone else.) Second, you need a health lawyer of your own. Reading how to do something in a magazine, doesn’t count. However, if you wish to read more on the subject (who wouldn’t) one of the most ardent supporters of opting out is Timothy C. Kriss, M.D who published, “Opting Out Of Medicare: Practical Tips for Opting Out,” for the American Association of Physicians and Surgeons.

Part of the problem for physicians participating in the Medicare Part B program, is the convoluted prohibition on billing a beneficiary for services. A very good 17-page paper on the details and history of opting out was written by William Buczko Ph.D., and may be found on the CMS website. According to Buczko while it is possible to balance bill patients, most providers opt-in and receive payments directly from the government. The trade-off is that physicians who do not follow the protocol for opting-out, cannot contract directly with the Medicare beneficiary — even those willing to pay out of pocket for top-line care. Congress changed this with the Balanced Budget Amendment of 1997 for most providers, and added more with the Medicare Prescription Drug Improvement Act of 2003, which is covered in great detail in Buczko’s paper.

Mechanically, opting out involves three things: (1) informing Medicare that you are “opting- out” at the appropriate deadline (and by following opt-out procedure); (2) contracting with a beneficiary; and (3) following the rules in order that you do not lose your opt-out status.

First Step: Opting Out
Inform Medicare that you will be opting out. Here’s a guide from the AAPS to help.

You should notify your patients that you are opting out of Medicare, and file a copy of an affidavit with each carrier that has jurisdiction over the claims that the physician or practitioner would otherwise file with Medicare, no later than 10 days after entering into first private contract.

In the words of CMS, “Participating physicians and practitioners may opt out if they file an affidavit that meets the criteria and which is received by the carrier at least 30 days before the first day of the next calendar quarter showing an effective date of the first day in that quarter (i.e., January 1, April 1, July 1, October 1).” [From CMS Benefit Policy Manual (Rev. 147, 08-26-11) Sec. 40.17] Note that a participating physician must give his or her carrier 30-days’ prior notice by sending in the opt-out affidavit with an effective date of the beginning of the next quarter.

Second Step: Private Contracts
You will need a patient contract specifically tailored to Medicare Part B beneficiaries. Again, the above link contains a sample contract, which should clearly state that the patient agrees to be responsible, whether through insurance or otherwise, to make payment in full for the services, and acknowledges that physician will not submit a Medicare claim for the services and that no Medicare reimbursement will be provided.

Third Step: After You Opt-Out
Install procedures to ensure that your office never files a Medicare claim, and never provides information to a patient that enables him to file a Medicare claim. Mark your calendar to send in a new “opt out” affidavit every two years to maintain your status.

Finally, a process getting out from under Medicare’s immensely convoluted bureaucracy could never be complete without a complex set of rules published in a CMS manual defining what it means to “Fail to Maintain” opt-out status:

     Failure to Maintain Opt-Out Occurs if during the opt-out period:
     ? The physician/practitioner has filed an affidavit in accordance with §40.9 and has signed private contracts in accordance with §40.8 but, the physician/practitioner knowingly and willfully submits a claim for Medicare payment (except as provided in §40.28) or the physician/practitioner receives Medicare payment directly or indirectly for Medicare-covered services furnished to a Medicare beneficiary (except as provided in §40.28); (For specific information about Chapter 15, sections 8 and 28, refer to http://www.cms.hhs.gov/Manuals/downloads/bp102c15.pdf on the CMS website. The sections of Chapter 15 that are revised by CR6081 are attached to CR6081.)
     ? The physician/practitioner fails to enter into private contracts with Medicare beneficiaries for the purpose of furnishing items and services that would otherwise be covered by Medicare, or enters into private contracts that fail to meet the specifications of §40.8; or
     ? The physician/practitioner fails to comply with the provisions of §40.28 regarding billing for emergency care services or urgent care services; or
     ? The physician/practitioner fails to retain a copy of each private contract that the physician/practitioner has entered into for the duration of the opt-out period for which the contracts are applicable or fails to permit CMS to inspect them upon request.

To see the official instruction (CR6081) issued to your carrier or A/B MAC visit the CMS website.

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Practice Notes blogger and attorney Martin Merritt points out that September 1 is the current deadline for physicians who wish to opt out of Medicare. And he notes “record numbers are doing just that.”

Merritt provides six reasons physicians are dropping Medicare patients:

1. Forced Pay Cuts. By many estimates, Medicare reimbursement falls far below the cost of providing services.
2. Bureaucratic Nightmare. It’s difficult for physicians to document a patient file sufficiently to satisfy CMS.
3. RAC Auditors. Physicians must return payments, long after the claim has been paid, often because an auditor “with a financial interest in contradicting the physician overrules the doctor.”
4. Stark Law. No Medicare means no need to comply with Stark Law. As a result, physicians can engage in any free-enterprise arrangement, as long as it complies with medical ethics rules.
5. Whistleblowers. As with Stark Law, without Medicare there are no whistleblowers to deal with.
6. Criminal Prosecution. The OIG has redefined fraud to mean “anything the OIG doesn’t like, under the mantra ‘fraud, waste, and abuse.’”

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