Category: Physicians Practice

This week I was having lunch with Sarah Wirskye, my friend and “go-to” white-collar defense lawyer, when the topic came up of “obstruction of Justice” in healthcare cases. Sarah agreed to share her experience with us in the following interview (Turns out, it’s not what you think.):

Merritt: “Obstruction of justice” is what cops threaten on Law & Order to get the witness to talk – right?

Wirskye: No. “Obstruction” in healthcare investigations usually means interfering with a government agency’s work in one of three categories: 1.) statements and actions toward the government; 2.) statements and actions toward third parties; and 3.) deleting, altering, or failing to produce documents. We are seeing a sharp rise in cases where the healthcare provider really didn’t think he or she was doing anything wrong.

Merritt: How can a person accidentally “obstruct justice?”

Wirskye: In the healthcare context, the offense does not involve what all of us would view as “obstruction” – for example, bribing a juror – but rather more obscure obstructive conduct. For example, an innocent misstatement, adding or removing helpful information in documents, or inadvertently failing to produce a responsive document may be viewed as obstruction by the government. Obstruction is usually easier for the government to prove than explaining complex healthcare fraud schemes to the jury. Martha Stewart’s trial is a great example of the force of the obstruction statutes. She was criminally convicted of obstruction for covering up actions, not the underlying crime.

Merritt: Are there special rules in the healthcare context?

Wirskye: In 1996, as a part of HIPAA, Congress added a new criminal statute which provides “[w]hoever willfully prevents, obstructs, misleads, delays or attempts to prevent, obstruct, mislead, or delay the communication of information or records relating to a violation of a federal health care offense to a criminal investigator shall be fined under this title or imprisoned not more than 5 years, or both.”

However prosecutors often use other obstruction statues which may be easier to prove. For example, section 1519, part of the Sarbanes-Oxley act, was highly controversial when enacted because it removes certain key proof burdens. Significantly, the government does not have to prove which specific “pending proceeding” the accused attempted to obstruct. Prosecutors must however, still establish the following: 1.) the accused knowingly directed the obstructive act to affect an issue or matter within the jurisdiction of any United States department or agency; and 2.) the accused acted at least “in relation to” or “in contemplation” of such issue or matter.

Merritt: Can you give us some examples?

Wirskye: There are three primary areas in which healthcare providers potentially violate the obstruction statutes:

Government Interviews of the Provider: While an intentional or blatant lie to an investigator is likely an easy obstruction case for the government to prove (if the other elements of the statute are satisfied), even an innocent misstatement may be construed as obstruction of justice.

Government Interviews of Third Parties: This sometimes occurs when a healthcare provider is under investigation, and he or she tells the employees not to talk about certain topics or not to talk to the government. I have seen cases in which the instruction to not speak to the government may be for the “protection of the employee” so the employee does not become “scared.” Again, these actions were characterized as obstruction by the government.

Documents: Destroying, failing to produce, or altering incriminating information in documents is a fairly easy obstruction case for the government to prove if the other elements of the statute are satisfied. However, merely “cleaning up the files” before production may be construed as obstruction of justice. You should never do this. In the event that any additional notes must be made (which I do not recommend), those notes should be dated with the present date so that it is clear this information was added after the document request. Finally, something as simple as deleting an e-mail may also be construed as obstruction.

Merritt: Any final thoughts?

Wirskye: Overall, if you are under administrative, civil, and certainly a criminal investigation, it is helpful to have counsel to guide you through the process of interacting with the government and potential witnesses so there are no allegations of obstruction.

Sarah Wirskye is a partner with the Dallas law firm of Meadows, Collier, Reed, Cousins, Crouch & Ungerman, L.L.P.

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Digital photocopiers, scanners, and telefax machines are essential to modern medical office. They are also potential HIPAA liability time bombs. An investigative report by CBS News reveals that nearly every printer, copier, scanner and telefax machine built since 2002 contain hard drives which capture images of every document processed.

In order to see how widespread the problem might be, CBS followed John Juntunen, COO and founder of Digital Copier Security, in Sacramento, Calif., as he purchased four copiers based upon price and number of copies printed. In less than two hours, he bought four machines for about $300 each.

Using forensic software available for free on the Internet, he was able to download images captured from all four machines. Shockingly, one was from a New York insurance company and contained copies of medical records, including a diagnosis of cancer, blood test results and drug prescriptions.

The Federal Trade Commission, Bureau of Consumer Protection Business Center offers a publication, “Copier Data Security: A Guide for Businesses.” According to the FTC, when you buy or lease a copier, evaluate your options for securing the data on the device. Most manufacturers offer data security features with their copiers, either as standard equipment or as optional add-on kits. Typically, these features involve encryption and overwriting.

Encryption is the scrambling of data using a secret code that can be read only by particular software. Digital copiers that offer encryption encode the data stored on the hard drive so that it cannot be retrieved even if the hard drive is removed from the machine.

Overwriting – also known as file wiping or shredding – changes the values of the bits on the disk that make up a file by overwriting existing data with random characters. By overwriting the disk space that the file occupied, its traces are removed, and the file can’t be reconstructed as easily.

Depending on the copier, the overwriting feature may allow a user to overwrite after every job run, periodically to clean out the memory, or on a preset schedule. Users may be able to set the number of times data is overwritten. Generally, the more times the data is overwritten, the safer it is from being retrieved. However, for speed and convenience, some printers let you save documents (for example, a personnel leave slip) and print them straight from the printer hard drive without having to retrieve the file from your computer. For copiers that offer this feature, the memory is not overwritten with the rest of the memory. Users should be aware that these documents are still available.

Overwriting is different from deleting or reformatting. Deleting data or reformatting the hard drive doesn’t actually alter or remove the data, but rather alters how the hard drive finds the data and combines it to make files: The data remains and may be recovered through a variety of utility software programs.

Yet another layer of security that can be added involves the ability to lock the hard drives using a passcode; this means that the data is protected, even if the drive is removed from the machine.

While the website for HHS’ Office of Civil Rights, (which is responsible for HIPAA enforcement) does not contain a specific publication on the use of photocopiers in the medical setting, the site does provide a link to the above FTC publication under the reference title: “Safeguarding Electronic Protected Health Information on Digital Copiers.”  This indicates the OCR expects medical offices to educate themselves about the potential hazards and risks posed by modern photocopier hard drives.

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“Spring cleaning” is the perfect time to clean up your act at home. Professionally, in an era where healthcare compliance liability lurks around every corner and lax billing practices can cost you thousands, why not make a commitment to review your medical practice policies as the New Year begins?

It all starts with a list, and to help with this, I caught up with Angela Miller, CHC, CMC, president of Dallas-based, Medical Auditing Solutions LLC for some pointers.

“The start of the new year is time for a fresh start   – to be proactive and stay in compliance,” Miller says.  “Here are a few proactive tips I advise my clients follow, to prevent ‘headaches’ and ‘wallet aches’ later.”

1. A compliance program is required as of March 2013 by any provider including dental that bills Medicare, Medicaid, and/or programs funded by federal or state governments. “Compliance program” in these terms relates to HHS’ Office of the Inspector General’s (OIG) compliance guidance on billing, coding, contracts, and relationships which is now required under the Affordable Care Act. There are approximately 40 policies, that include screening all employees monthly against state and federal exclusion databases.

2. Ensure a healthcare attorney reviews any joint venture, employment work contracts, and possibly leases for potential Stark and Anti-Kickback violations. OIG will be reviewing contractual relationships as part of the compliance work plan.

3. HIPAA is more than the privacy notice provided to patients. All providers – no matter the insurance – must comply with HIPAA and the HITECH Act. The days of using the family member who dabbles in IT/computer work are over, unfortunately. HIPAA and HITECH cover the security of all protected health information (PHI) both paper and electronic, so you must have policies and procedures , a responsible party, and an external IT security audit at least annually.

4. The external audit company should have experience in healthcare or banking because the banks have had these security requirements for years. The penalties are too steep to risk this audit to just any IT company.

5. Now for the fun topic: cash flow management. Providers are concerned with getting business, but rarely inspect billing and collections until it is a crisis.

a. The mail must be opened daily. Medicare has response requirements and if you miss those, you can have your number revoked and might not get it back for two years.

b. Do not have the same person open mail, post cash, and make deposits.

c. Do not hire the cheapest billing person. Check references. Do not hire someone without physician billing experience. Ask them to code scenarios for you or quiz them on their knowledge. Too many medical practices end up in a cash crunch or in trouble because the billing person does not bill correctly. If the person bills incorrectly, because she is told to do so by the provider, take a cautionary note this will eventually come back to haunt the practice.

d. Ensure that your billing person keeps up with the billing rules/changes.

e. Ensure your staff known when it is appropriate to bill “incident-to” the physician and when to bill under the mid-level. This has been a huge audit item for Medicare and commercial plans.

f. Chart documentation will either help you or kill you. It must be legible by three people to be considered valid. The documentation must warrant the billable services submitted. Every office visit is not a level 3-4-5 service. If you have high-risk cases, then use appropriate diagnosis coding to indicate previous or history of miscarriage, abortion, hypertension, etc.

g. Meet at least monthly with your biller or billing/practice management company to review summary reports of revenue, accounts receivable aging by payer, write offs, and denials.

Thanks to Angela for these important tips for a safe and successful 2013.

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As dollars became scarcer in the 1990s, health insurance companies increasingly employed “post-claims underwriting” as a basis for denying claims or rescinding policies. Some relief is expected from the Affordable Care Act’s elimination of “pre-existing conditions” as a basis for denial of claims.

But the reform law does not put an end to denials based upon medical necessity, or a refusal to pay because the service or DME is “experimental.” Equally alarming is the practice of “pay-then-pull-back” recoupment audits, which can devastate the finances of providers of all sizes. Now, providers are fighting back.

In Tri3 Enterprises v. Aetna, the U.S. Department of Labor (DOL) has filed a November 30, 2012, amicus brief in the Third Circuit Court of Appeals in the appeal of a New Jersey federal district court ruling against a provider who filed a federal case against Aetna. In cases where only a provider agreement governs, (the policy is not an employee benefit) it is easier for insurers to cease payments and demand overpayment refunds, because such actions are often sanctioned by state anti-fraud laws. But when an ERISA plan also exists, (the plan is an employee benefit) adopting such an aggressive stance might not be so simple. In this case, Aetna authorized and paid Tri3 for non-segmented pneumatic compressors, i.e., medical devices, but then retroactively sought to recoup the payments after and audit by the ominously named Special Investigations Unit (SIU) determined the equipment to be “experimental.”

Aetna allegedly refused to treat its decision as a “claims denial” and refused to provide the procedural protections accorded under ERISA and its regulations to such decisions. Tri3 argues that under authority of ERISA, the DOL adopted rules protecting both insured individuals as well as providers who have accepted assignment of the claim from the insured. Tri3 claims in addition to the fact that the medical devices had been previously approved in other cases, and approved for payment in the instant case, it has a right to challenge the reversal and demand for recoupment under ERISA’s administrative claims review process. The trial court disagreed, dismissing the case for failure to state a claim ruling, “it is clear from the complaint that the central issue of the dispute is Aetna’s allegation that Tri3 had misrepresented to Aetna the nature of the medical device that had been supplied to insureds.” The DOL has filed a brief on appeal favoring the provider’s position and arguing for a reversal of the trial court. The outcome will likely hinge upon whether the Third Circuit views Aetna’s action as an attempt to recover from fraud and abuse, (i.e., Tri3 misrepresented the nature or use of the devices) or whether the matter is more accurately characterized as a coverage dispute which might fall within ERISA appeals process.

As to slow payments, medical providers are using technology to fight back in a different way: enlisting the aid of former foes in the plaintiff’s bar to go after carriers who delay payments for covered treatment. Texas powerhouse lawyer Mikal Watts of Watts Guerra Craft LLP says his firm has “built up a solid docket of over 500 medical providers, representing hospitals, large doctor groups, and pharmacies seeking to enforce Texas’ Medical Provider Prompt Pay laws.” According to Watts, “the problem in the past for medical providers is that there was no efficient way to enforce prompt pay laws for small claims.” Watts uses sophisticated computer models from medically knowledgeable data analysis companies to identify patterns and initiate legal proceedings on a cost-effective contingency fee basis. “In total, we have identified hundreds of millions of dollars due our clients,” says Watts.

Historically, ERISA had been an impediment for individuals whose claims have been denied. ERISA preempts state law remedies, including an award of attorney’s fees to the successful party. Most employees could not afford to pay out of pocket for an attorney to pursue the claim under their group plan. Watts points out that Texas, and many other states, carefully drafted “slow pay” statutes with an eye toward avoiding ERISA’s limiting provisions.

As with any legal issue, you should consult an experienced health attorney if you have specific questions about your rights under assignment of benefits agreements or “slow pay” laws in your state or jurisdiction.

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I recently interviewed Rachel Rose, a lawyer in Houston. Rachel has worked both on Capitol Hill and in private practice and kindly shared her knowledge about the problems physicians face from Recovery Audit Contractor (RAC) audits.

MM: What is the history of the Recovery Audit Contractor Program?    

RR: Adopted as part of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA) in an effort to protect the fiscal integrity of the Medicare program, the RAC Program began a three-year demonstration period.

Congress subsequently made the RAC program permanent and mandated nationwide adoption by 2010.  

MM: How does Medicare define medical necessity and what impact does it have on a provider’s reimbursement and audit exposure?

RR: The Medicare definition of medical necessity under Title XVIII of the Social Security Act, section 1862 (a)(1)(a) states: Notwithstanding any other provisions of this title, no payment
may be made under Part A or Part B for any expenses incurred for items or services, which are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.

Given the broad definition, this gives a great deal of latitude for RAC contractors denying
claims, which can be both costly and time consuming to appeal. Moreover, and significantly for physicians, Connolly, Inc., who had previously been tasked with “reviewing past claims for physician and hospital services in 15 states will start scrutinizing the billing of office visits, claims that had previously been off-limits to Recovery Audit Contractors.” (Charles Fiegl, Medicare Auditor Targets E&M Services for Review, Oct. 1, 2012; available at www.ama-assn.org). Limiting reviews to the southeast and mid-Atlantic and utilizing statistical sampling, Connolly will determine how many incorrect payments occurred under the evaluation and management (E&M) code 99215. Ibid. Therefore, increasing a physician’s audit exposure and highlighting the need for substantiating the medical record.

MM: Who conducts the audits? (two types of audits – automated and complex; medical director is required by law).

RR: There are many types of contractors that conduct audits including: RACs, Medicare Audit Contractors (MACs) and Zone Program Integrity Contractors (ZPICs). RACs are required to post the areas they are reviewing on each contractor’s website, so providers have a semblance of what to focus on. Not surprisingly, medical necessity was at the top of the list.

MM: What is the maximum number of charts that can be requested for review?

RR: On March 15, 2012, additional guidance on documentation request limits was provided. Suppliers and physicians were not included. (CMS, Medicare Fee-for-Service Recovery Audit Program – Additional Documentation Limits for Medicare Providers; available at www.cms.gov)
Key takeaways include:

• Maximum request amount is per campus – meaning “one or more facilities under the same Tax Identification Number (TIN) located in the same area (the first three digits in a ZIP code). For example, Provider A has two physical locations in ZIP codes 12345 and 12356. These two locations count as a single campus unit because the first three digits of the ZIP code are the same. Provider B has two physical locations in ZIP codes 12345 and 21345. Because the first three digits are different, this counts as two campus units and the formula for the number of records which can be requested applies to both locations.

• A provider’s prior calendar year Medicare claims volume provides the basis for the number of records, which can be requested.

• The request limits may be exceeded in one of two ways: by CMS on its own initiative or by a recovery auditor (RA) requesting permission. Either way, a provider is notified in writing by either CMS or the RA.

MM: What is “pre-review” versus “post-review”?

RR: The RAC Program is typically classified as a “post-review.” That is, either the automated or the complex review occurs after the claim has been processed. In August 2012, the Prepayment Review Demonstration website was established. The purpose of the pre-review program, which runs from January 2012 through December 2014, is to lower the error rate and prevent improper payments on certain conditions. These are listed on the website. Initially, the program will apply to states HEAT [with high populations of fraud and errors] (CA, FL, IL, LA, MI, NY, and TX) plus MI, OH, NC, and PA.

Physicians should check this website and the respective RAC website frequently to mitigate the risk of an audit and appreciate highlighted areas of vulnerability.

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As I listened a few weeks ago to a presentation on the financial factors favoring expansion of Medicaid under the Affordable Care Act, a thought occurred to me which made the whole subject much more interesting: “Dear Lord, they are salting the mines!”

Although I have previously studied and written on most of the provisions of the reform law – complex numbers make my head hurt.  Given the 50/50 chance Mitt Romney would be elected, I selfishly had half a hope that I just might be able to skate altogether on how the federal government intended to convince states to buy into expanding Medicaid rolls. Alas, the fates were against my laziness. So it was a month after the election that I found myself crestfallen, listening to a lecture on complex numbers. Then, like a blue tick hound, my ears perked up.

I was born in the Smokey Mountains, and I know a “scam” when I hear one, and certainly know what “salting” is.   Salting occurs when a land owner, wishing to sell an essentially worthless gold mine, fills buckshot shells with solid gold. Then, he literally blasts gold into the walls of the mine. On the surface, the result looks like the veins in a genuine gold mine. It isn’t until the victim invests his money (and the seller is long gone) that the mine is revealed to be worthless.

Medicaid under Title XIX of the Social Security Act of 1965 has always been something of a “wedge” issue. Care for the poor had historically been a local matter, and in the South in no small way, there was a racial component. Care for poor minorities in many states fell woefully short; “separate but equal,” existing in name only.  In the mid-60s, state’s rights advocates conceding that change was inevitable, nonetheless wanted to keep the federal government out of the delivery of healthcare, and more importantly, did not want a huge new federal bureaucracy. If at all, conservatives felt the government should deliver block grants of money to the states to be administered as they saw fit.

After much debate (and arm-twisting), Congress decided that Medicare for the elderly would be the sole responsibility of the federal government. The states would administer Medicaid funds for the poor, with federal government picking up just over half of the tab. Simply being poor, however, did not make someone automatically eligible.  In most states, a person must be poor, plus some other qualifier such as pregnancy, disability, or being below the age of 18.

The Affordable Care Act expands coverage in 2014 to anyone up to 133 percent of the federal poverty level for all states which participate. The U.S. Supreme Court upheld the reform law in National Federation of Independent Business v. Sebelius in part because participation in this new Medicaid expansion by the states is “voluntary.” Realizing that expansion of Medicaid would create new financial burdens and new administrative nightmares, one might reasonably ask, “Why would any state agree?”

This is where the “salting of the mines” comes into play.  The federal government front-loaded the deal with golden buckshot, and blasted it into the sides of the mine. “We will give you 100 percent of the funds to pay for the expansion,” the feds told the states. “It won’t cost you anything.” At least, that is, forthree years.

That’s when my ears perked up. The feds are up to something. Could it be what looks like a gold mine, will play out quite differently?  The way this works is simple, but takes a little thought.  The expansion of Medicaid would come as a great relief to both the poor and hospitals (who must treat emergencies without regard to ability to pay) alike. Although the poor are not politically powerful, hospital associations are. The federal government salts the mine with free dollars, counting on hospital groups to pressure states into buying in.

After three years, when the 100 percent subsidy begins to expire, the federal government is banking that it will be politically impossible for state-elected officials to take away an entitlement once the poor have gotten used to medical insurance as a welfare benefit. (Some also suspect that this is a Democratic master plan to give the poor a reason to vote.) Once the states have bought in, many fear the states are in for a rude awakening. The federal government will then “cost shift” to the states in the name of balancing the federal budget. 

How do doctor’s groups feel about this? According to a December 12 story by David Pittman, writing for MedPage Today, many state medical associations have kept a low profile on the topic. Although many governors, including Texas’ Rick Perry have vowed to refuse to expand Medicaid under the reform law, the Texas Medical Association hasn’t taken a stance on the issue. “We’re vetting the issue right now,” spokeswoman Pam Udall told MedPage Today. “We won’t have a firm position until late December.”

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“Atlas Shrugged,” the 1957 novel by Ayn Rand, explores a dystopian United States where many of society’s most productive citizens refuse to be exploited by increasing taxation and government regulations. The novel poses the question: What would happen if Atlas (representing the minds that drive society’s growth and productivity) grew tired of holding up the world, and simply “shrugged” instead? Rand poses that a world in which the individual is not free to create is doomed. That civilization cannot exist where every person is a slave to society and government, and that the destruction of the loss of profit motive leads to the collapse of society.

In a playful nod to Rand, “Atlas MD,” is a concierge medical practice which has indeed “shrugged.” Featured in the December 3, 2012 Bloomberg Businessweek cover story by Devind Leonard, “Atlas MD” is one of many of a growing number of “cash-only” practices, run by physicians Josh Umbehr and Doug Nunamaker which does not accept government or traditional insurance plans, (although two-thirds of their actually patients have insurance) .

While concierge practices used to refer only to high-end practices for the wealthy, more and more, “cash-only” practices provide affordable primary care at reasonable rates, which at the same time, provide a more holistic approach to care. This leads to a more satisfying practice for physicians, many of whom are tired of being exploited to prop up a failed insurance model.

In eschewing government and managed-care programs, “cash-only” practices have also shrugged off liability under Stark Law, the Anti-kickback Statute, the False Claims Act, the Civil Monetary Penalties Statute, and the Exclusionary Statute; no more RAC audits and no more sweating CPT Code chart documentation. Most importantly, no more endless phone trees waiting for approval, or second-guessing from medical students moonlighting as managed care “medical directors.” In fact, concierge primary-care physicians report the same level of income from seeing as few as 400 patients. While conventional practices require an average of four staffers to deal with insurance company headaches, “cash-only” practices require none.  

Leonard’s Bloomberg article reports, “There are 4,400 concierge doctors in the U.S., 30 percent more than there were last year, according to the American Academy of Private Physicians, their professional association. ‘This is all doctors want to talk about,’ says Jeff Goldsmith, a health-care industry analyst and trend spotter.” According to the article, more and more doctors report the sentiment, “I want to go off the grid. I’m done billing Blue Cross. I can’t deal with this anymore. It’s destroying my life and my relationship with my patients.”

Statistics support the frustration. According to Bloomberg and Leonard, “[i]n 2011, the average American medical practice spent $82,975 per doctor dealing with insurers …that same doctor has 3,281 active patients over a three-year period.” Further, the physician rarely has time to see them for more than a few minutes. The attraction of concierge medicine for the physician isn’t hard to fathom: They can winnow down their patient roster, spend more time with each, and do away with insurance-related headaches.

Critics worry that all isn’t well with the “cash-only” alternative. To many, there is something un-American about refusing to accept the governments’ below-cost reimbursement scheme. They argue “cash-only” practices will lead to a shortage of primary-care physicians, because the model “become[s] more enticing in 2014 when the Affordable Care Act’s individual mandate requires everyone to be insured,” Bloomberg reports. “The law will enable 30 million previously uninsured people to get coverage through an expansion of Medicaid. They’ll need primary care, but it’s not yet clear who will give it to them.”

But in a very real way, it is the very essence of American ingenuity to identify a problem, and come up with a free-market solution.

Finally, shrugging off Medicare isn’t as easy as simply deciding one day that you will no longer accept government patients. As with anything the government does, there are complex sets of rules, which we covered earlier this year in this blog.

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As a physician, it is important that you keep abreast of what is required of you under rapidly changing federal laws. But to follow the law, you must be able to find it in a sea of gibberish and the strange sets of numbers and abbreviations following the common names of laws. If you have ever been frustrated by this, let’s take away some of the mystery.

Federal health law normally comes from two sources: Congress and federal agencies. Only Congress makes statutes, while agencies make administrative regulations. Statutes are initially only found by using the common name (and abbreviations and numbers that follow common names) such as the Affordable Care Act, “Pub. L. 111-48, 124 Stat. 119.” Later, portions of some of these statutes will be cut and pasted into the appropriate United States Code, (such as 42 U.S.C. 1395nn.) Regulations adopted by agencies such as CMS, OIG, and HHS will be accompanied with the citation, “Code of Federal Regulations” (i.e.,42 C.F.R 411.350) and/or the Federal Register (i.e., 72 F.R. 51012). Let’s look at how these laws get these confusing abbreviations and numbers, and what they mean.

Acts of Congress
The Constitution grants to Congress the power “to make all Laws which shall be necessary and proper.”  Traditionally, these acts were printed on parchment. Congress will usually give the act a common name, such as the “Patient Protection and Affordable Care Act.”  (Although others, such as “Obamacare” may stick.)  Individual Acts of Congress, are numbered chronologically in the order in which they become law. (Public Law 111-48 is the 48^th law passed by the 111^th Congress.) At the end of the term of Congress, the various acts are placed in a sequential bound set of books called the “United States Statutes at Large,” (citations look like this: “64 Stat. 980”). But this only tells a part of the tale.                               

Acts of Congress are like grocery bags in that a single act often contains provisions for many different organizations who depend upon them – with a paragraph here on “defense,” and a section there on “taxes”- but with no organization.  Even when the acts are bound together in a volume of session laws, they are basically like bags on a shelf.  You can’t find anything – even if you know generally when the act was passed.  

How do these acts get organized so that we can find them? Simple. Somebody has to put the “groceries” away in an organized fashion. That’s where the Office of the Law Revision Counsel (LRC) of the U.S. House of Representatives springs into action and the United States Codes (U.S.C.) come into being.

The United States Code is divided into “titles” (based on overall topics) numbered 1 through 51. Title 42 contains Medicare and Medicaid statutes (for example, “Stark Law” was originally 42 USC §1395nn). The United States Code is actually a “revisionist’s history” in which the LCR editors take virtual scissors (and paste) to Acts of Congress, in an effort to carry out Congress’ intent of adding to, deleting, and modifying laws. Pieces of a single act may end up in many different volumes, and are usually completely renumbered to match the paragraphs of the U.S.C.  The Roman numerals are not important under the U.S.C. because the Code numbering system is unique, (there is only one 42 U.S.C. §1395nn, while there are many Title XVIIs used by Congress.)

While the U.S.C. is better organized for finding things than official acts or public laws, there are still problems. Until an act is placed into the U.S.C., it can be difficult for mere mortals to find something like the “Sunshine Act,” (because it is actually a small part of the ACA, not a free-standing law.)  

Adding to the misery, when Congress or an agency refer to, add to, take away, or amend a law (seemingly just to annoy us,) the government won’t use the simpler U.S.C. system. Instead, the government uses the original chapters, titles, and sections contained in the original loose-leaf “Pub. L” or “Stat.” version. (Example, the “Sunshine Act” in ACA was an Act to Amend Title XI of the Social Security Act – and not the United States Code Section where the amended statute could more easily be found.) Although necessary, this can drive a person crazy unless you actually work on Capitol Hill and cross-reference for a living.

“Alphabet Agency” Regulations
 Congress enacts major legislation, but may delegate day-to-day rule-making to what are commonly termed the “alphabet agencies,” which are actually part of the executive branch of government. CMS for example, is part of a department headed by the President’s Cabinet-level appointee, the Secretary of Health and Human Services (HHS.)  

Regulations of the alphabet agencies are first published in the federal register (see below) and in the C.F.R. volume matching the enabling statute or Act of Congress under the U.S.C. Thus, Medicare regulations are published in the multi-volume 42 C.F.R, which matches the volume number of Medicare statutes under 42 U.S.C. It is often difficult to know whether there are federal regulations in addition to a Congressional Statute. (For example, Stark Law is comprised of both Statutes 42 U.S.C. 1395nn. and three different versions of federal regulations under 42 C.F.R. 411.350 et seq.)

The Federal Register
Much like a cash register, the Federal Register is published daily and records everything the government does. The federal register is not good for finding things if you do not have the volume and page. It is said to be where the government “thinks out loud.” Anything can go into the Federal Register, including proposed rules for public comment, or public laws prior to codification. Because the Federal Register is published daily, it serves the useful purpose of providing an immediate volume and page number for government action (such as 72 F.R. 51012.)  However, because the Federal Register is only organized in chronological order, it does not match the U.S.C. or C.F.R. numbering system.  

So how do you find laws and regulations? Fortunately, we have the Internet. All of the statutes, codes, and regulations are published in full text on the Internet. To find them, it is often easiest to look up an article written by healthcare professional or lawyer that contains a hyperlink to the law discussed, then simply “click.” I can’t promise what you read will make sense, but at least you will understand what all the abbreviations and numbers mean.

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Independent Practice Associations (IPAs) can eliminate the isolation, headaches, risks, and expense associated with independent private practice, while preserving your independence. IPAs can eliminate much of the duplication of expenses, such as office management, EHR compliance, coordinated care systems, and case management systems, and certain IT hardware.

As state and federal governments seek to encourage cost savings measures which are equal parts “carrot” (shared savings plans or accountable care organizations) and “stick” (fraud and abuse enforcement) now more than ever, circling the wagons through the formation of IPAs would seem to be clearly indicated. There are several types of IPAs, with different characteristics and goals. Not all are created alike – so you will need to be aware of the differences.

The most common type of IPA in California and the West Coast, are those in which the IPA negotiates a managed care contract under a capitated HMO-style medical services agreement. These are also the type of existing IPAs which are most readily able to convert to an ACO model, because they are accustomed to capitated risk-sharing models.

In other areas of the country, (Texas, in particular) IPAs were initially thought to be a useful way to collectively bargain for higher payments under fee-for-service insurance plans. The idea was that physicians could band together and refuse to treat patients in a town unless the insurance plan agreed to meet the IPA members agreed upon minimum price. If enough physicians banded together, the insurance plan would have no choice but to meet the IPA’s terms. While this seemed like a great idea to the physicians, it is what the FTC termed in 2005, a text-book example of “wheel and spoke” criminal horizontal price fixing under the Sherman Anti-Trust Act. Here’s a very good summary of what the FTC considers illegal, beginning on page 21.

In part, because price fixing is illegal, IPAs in non-HMO country began to focus upon benefits of sharing of costs, and administrative overhead for independent physicians. Today, the government is pushing everyone toward HMO- style shared savings ACOs. IPAs which become clinically integrated could provide the very model for this change. Here’s an excellent article on this topic from Marisa Torrieri of Physicians Practice.

As a physician considering joining an IPA, before you sign anything, you should consult a healthcare attorney to review all documents. IPA agreements are notorious for being short and seemingly simple on the front end, while incorporating by reference many other documents which you agree you have read and understood, when you really haven’t, and you really don’t. (Under contract laws in most states, you are bound by anything you should have read before signing, but failed to do so.) An experienced a health lawyer can also ensure that Stark Law and Anti-Kickback Statute issues have been addressed in the contracts.

There will be much more in the coming months on the conversion of IPAs into ACOs in Physicians Practice.com.

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In this third installment of the series on gifts and payments from the industry to physicians, we will cover some of the more common issues under AMA Ethics Opinion 8.061, Stark Law and the Anti-Kickback Statute (AKS).

It all starts during internships and residency programs with three-foot-long subway sandwiches and pizza offered to exhausted doctors in training. Later, boxes of expensive gifts arrive in your established practice. You may be offered free educational trips, employment contracts, or research grants. Or, you may be offered free stuff to hand out to your patients. This is all designed to condition physicians to associate pharmaceutical detailers with “goodies,” and to condition the human response so well known to Madison Avenue’s “Mad Men.” If you give someone freebies, the gift triggers a human instinct to reciprocate; even if the reciprocation involves nothing more than giving the detail person a few moments of your time.  The more successful you become, (defined by how many prescriptions you write) pizza boxes are replaced by offers of free trips or contracts to serve as a “thought leader” who shapes opinions in your field, on the pharmaceutical company’s nickel.  And it works – studies are able to link spikes in prescription activity to pharmaceutical giveaways.

The government has also figured this out. Stark Law, 42 U.S.C 1395nn and the AKS 42 U.S.C §1320a-7b and the new Sunshine Act under the Affordable Care Act have fairly well put an end to the days of cash kickbacks and free or discounted product to be sold for profit, at least with major pharmaceutical companies.

AMA ethics opinions are the source material for many Stark Law and AKS rules.  Although the government may not expressly say so, it does seek to defer to, and reconcile Medicare and Medicaid Fraud and Abuse Laws with AMA Ethics Rules (See, AMA Ethics Opinion 8,061 “Gifts to Physicians from Industry.”)   

The question remains: What can you accept from the industry? First as AMA Opinion 8.061 (7) makes clear: “No gifts should be accepted if there are strings attached.” In governmental AKS parlance, you may not accept a gift or employment, if the idea is that you will write prescriptions in exchange for the consideration. Additionally, employment compensation must do no more than compensate you for the time spent. With that in mind, let’s start with the simple, less complex examples, and progress to more sophisticated (and expensive) giveaways. Think of “kickbacks” in terms of an accounting balance sheet. Anything given which adds to the “income” side, or gives away something you ordinarily must pay for on the “expenses” side, is suspect. Income for doing work should balance against the time you lost seeing patents while doing the work. Under the AKS, if what you gave for something is out of balance with what you received, you may have kickback issues. 

It’s Just Lunch

Can a pharmaceutical detail person still buy you or your staff a pizza? Probably. Especially where lunch is a forum for learning about a drug or device that may help you serve your patients. Do not accept cash or gifts cards redeemable anywhere. Although HHS has grumbled, there is a link between lunches and prescribing practices, the practice is still legal, to a point. See, HHS’ Roadmap to Physicians. The Roadmap notes, (as I wrote in “Stark Laws and Gifts Sent to Your Medical Practice,”) under the Sunshine Act, gifts will be reported. Additionally, you cannot ask for a free lunch, and you can’t, under the AKS, offer to write a prescription in exchange for a free meal. (That’s selling patronage to the highest bidder.) Currently, the occasional meal won’t likely land you on the OIG’s 10 most wanted list, even if HHS doesn’t like free lunches.   

Free Specimen Cups and More Expensive Glucometers

Because AMA Ethics Opinion 8.061 makes clear, “gifts to your practice from the industry should be of primary benefit to the patient,” pharmaceutical and device companies may offer everything from free specimen cups to more expensive free gulcometers to be given to insulin-dependent patients. It is one thing to accept a few specimen cups, pens, or writing pads to save a trip to the supply store; it is another to accept medical devices which have real value, with the intent they be given to patients. Remember, you may not ordinarily ethically give anything of value to a patient to induce the patient to come to you. This is because often, someone else is paying the bill, and the patient should be motivated solely by his medical needs. This is especially true if the patient is a government program beneficiary, it does not matter where you got the thing of value, nor does it matter that it did not cost you anything. It is a felony to offer freebies of significant value to get medicare/medicaid patients in your door.

Free Drug Samples

Everyone gives away free samples.  Particularly prior to Medicare Part D, it was somewhat understood that physicians might be able to identify those patients who could not afford a prescription, and distribute accordingly. What you may not do is sell free samples as though you paid for them. Further, it is the safest practice to give away no more than is necessary to start the patient on therapy, until he can get the prescription filled. In some states, such as Texas, the limit you may hand out is codified (72-hour supply). You must also have a system in place to separate free samples from those administered under Medicare Part B to ensure that free samples are not comingled with those for which reimbursement may be sought.

Trips

The basic ethics rule is that educational trips paid for by pharmaceutical and device manufacturers should not be “fun.” (Many False Claims Act cases involve trips to Scotland to play golf.) Trips ethically should be educational in nature, and should not be simply payment of a free trip to listen to a short infomercial. Certainly, the trip should not come with strings attached.

Employment

According to the HHS Roadmap for Physicians: “Some pharmaceutical and device companies have used sham consulting agreements and other arrangements to buy physician loyalty to their products. As a practicing physician, you may have opportunities to work as a consultant or promotional speaker for the drug or device industry. For every financial relationship offered to you, evaluate the link between the services you can provide and the compensation you will receive.”

The Roadmap for Physicians lists a series of questions which you should ask yourself before accepting employment. These questions might seem a bit ridiculous. I assure you, the OIG takes these very seriously. Further, employment agreements must meet the safe harbors under Stark Law and the AKS.

If you are paid $1,500 to write and deliver a speech, you are likely going to be fine, as long as you spend $1,500 in time writing and delivering the address. The larger the contract, or the greater the length of time you are retained as a consultant, the more likely you will wish to seek the advice of an experienced Stark Law attorney to ensure that the employment agreement meets the safe harbors.  

Finally, the Roadmap for Physicians lists a set of resources on page 9, under the “help” graphic.

Next week, I’ll take a look at Independent Practice Associations, or IPAs.

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