Category: Physicians Practice

In last week’s installment, we covered how the troubles of Lance Armstrong relate to the Amgen “fraud-on-the- market” case currently pending before the U. S. Supreme Court. This week, let’s talk about the ethics involved.

The late 1980s marked the beginning of the “Golden Era” of what amounted to a medical technological gold rush. Small biotech companies and university research facilities funded by the National Institute of Health were able to license new drugs to major pharmaceutical companies – and Wall Street went nuts.

Marketing departments unleashed an army of drug reps bent on signing contracts with hospitals, clinics, and individual physicians with promises of free drugs, hidden discounts, and other kickback schemes. The federal response to all of this fraud has been legendary. Today, the major firms have gotten the message. It is much less likely a physician will be presented with a scheme from a major pharmaceutical company which is patently illegal (It’s the smaller operations you must watch out for.)

While federal anti-kickback regulations can be confusing, all you really need to know is contained in AMA Ethics Opinion 8.06. Follow these guidelines, and you should be in compliance with federal law.

Opinion 8.06 – Prescribing and Dispensing Drugs and Devices

(1) Physicians should prescribe drugs, devices, and other treatments based solely upon medical considerations and patient need and reasonable expectations of the effectiveness of the drug, device, or other treatment for the particular patient.

(2) Physicians may not accept any kind of payment or compensation from a drug company or device manufacturer for prescribing its products. Furthermore, physicians should not be influenced in the prescribing of drugs, devices, or appliances by a direct or indirect financial interest in a firm or other supplier, regardless of whether the firm is a manufacturer, distributor, wholesaler, or repackager of the products involved.                                                                  . . .

(3) A third party’s offer to indemnify a physician for lawsuits arising from the physician’s prescription or use of the third party’s drug, device, or other product, introduces inappropriate incentives into medical decision making. Such offers, regardless of their limitations, therefore constitute unacceptable gifts. This does not address contractual assignments of liability between employers or in research arrangements, nor does it address government indemnification plans.

For the most part, as a physician, you can “feel it in your bones” when someone is trying to buy patronage. Some of the schemes, however, contain hidden kickbacks.

Next week, this three-part series will conclude with a discussion of federal regulations derived from fee-splitting ethics opinions, together with a discussion of the types of reported cases involving hidden kickbacks (those which involve “in-kind” as opposed to cash payments.)

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This week, Lance Armstrong desperately fought to preserve his “Livestrong” Foundation after details emerged of an illegal blood-doping scheme, which resulted in the erasure of his seven Tour de France championships.

Lance Armstrong’s downfall, though tragic, provides an excellent starting point for a three-part series studying the ethics of gift-giving schemes and the consequences under federal, civil, and criminal law, in the event your practice should consider accepting illegal gifts from drug companies, medical device manufacturers, home health companies, and others.

Exactly how do Lance Armstrong’s blood- doping problems relate to your practice? The answer as it turns out, is “quite a bit more than you might think.”

In the 2011 documentary novel by Kathleen Sharp, “Blood Feud: The Man Who Blew the Whistle on One of the Deadliest Prescription Drugs Ever,” (New York: Penguin Group Publishing) the book’s author exposes the dark side of pharmaceutical marketing. “Blood Feud” is a behind-the-scenes true account told from the perspective of Mark Duxbury, a fresh Johnson & Johnson drug representative who was given the task of selling the new anemia drug “Procrit” to physicians and hospitals in the Pacific Northwest.

Sharp details how in 1981 the tiny biotech firm, Applied Molecular Genetics (Amgen), isolated and synthesized human erythropoietin (epo) – a hormone naturally produced by the kidney which stimulates the production of red blood cells. Although according to Sharp, Amgen had created the world’s first big genetically engineered drug, Amgen was also strapped for cash from the lengthy FDA approval process. In 1989, Amgen practically gave the patent away when it sold a huge (but ill-defined) share of the marketing rights to Johnson & Johnson.

Because market share in the simple five-page contract was poorly worded, a battle for market share ensued between partners who were selling identical drugs: J & J’s “Procrit,” and Amgen’s “Epogen.” Sharp describes how Druxbury’s bosses soon demanded that he steal Amgen’s clients, by offering illegal (but cleverly hidden) 8 percent kickbacks and thinly disguised “research” grants to physicians and hospitals, which were designed to win patronage through perverse incentives. Sharp then details how much to the surprise of both Amgen and J & J, professional bicycle racers (apparently including Lance Armstrong) began acquiring illegal supplies of Procrit and Epogen to cheat in bicycle races.

If the story isn’t seedy enough, it gets much worse. Sharp also recounts Duxbury’s shock at the realization that veterinarians had begun writing J & J to claim an 8 percent bonus for injecting race horses and dogs with Procrit. In order to understand just how bad this is, we need to unpack this. Veterinarians were: 1.) illegally injecting animals with human epo hormone; 2.) allowing criminals to illegally cheat on; 3.) gambling activities; then 4.) were claiming the illegal 8 percent kickback for illegally prescribing a human drug to animals, in order to illegally cheat on racing.

Amgen, for its part, allegedly had a much more clever way of offering kickbacks to physicians. Amgen allegedly began overfilling single-dose vials of its drug, then encouraged doctors to harvest the overfill. Amgen internal marketing documents show that the company encouraged doctors to bill the government as if the doctors had actually paid for the harvested dose (which would be a form of kickback.)

Although Amgen recently set aside nearly $1 billion to settle state and federal whistleblower lawsuits, it has appealed the whistleblower cases to the United States Supreme Court. An excellent brief

(written in opposition to Amgen by a retirement fund in support of the plaintiffs) details the systemic fraud allegedly perpetrated by the pharmaceutical industry.

Although the federal regulations on accepting gifts can be quite confusing, physicians may fairly well steer clear of all federal offenses by simply adhering to a few rules contained in the AMA Code of Medical Ethics.

Next week, we will discuss what those rules are.

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A poll published Thursday by The Kaiser Foundation revealed that 9 out of 10 seniors are very satisfied with their Medicare coverage.

“Fifty million Americans are relying on the program and they’re very satisfied with it,” said pollster Rebecca Ray. “They like the current version. They like the version they’re receiving now.”

CMS is currently conducting pilot programs which change the way Medicare pays for physician services. Accountable care organizations (ACOs) are very similar to the old HMO models which ration care under a capitation, or per-person basis. If the ACO saves the government money, the group of physicians who formed the HMO earn a bonus.

In 1965, Congress brought to seniors a package of Medicare benefits, backed by the full faith and credit of the U.S. Treasury. Congress did it again in 2003.  Much like the Wizard of Oz, Congress seemingly had the power to grant wishes as if all things are magically possible. Medicare Part D added a drug benefit to the package.

But even in the Land of Oz, all things are not magically possible. There is this curtain, you see.  And if you pull it back, things get ugly. We can’t pay for all those benefits. Back in 1965, physicians were promised two things: one, the government would pay 80 percent of the usual and customary fee for services; and two, the government would not seek volume discounts from physicians. Over time, the government reneged on these promises. CMS has literally tried everything to bring down the costs of Medicare, from fee schedules, all-inclusive rates, mandatory bundling, and payments to hospitals based upon diagnosis – and we still can’t afford to keep Medicare solvent.

According to a recent Forbes Magazine article, by 2019, further cuts in physician fee schedules will be “so draconian that payments become even lower than Medicaid, a system by which doctors already lose money and most refuse to accept patients.”

ACOs are a tricky subject both in the halls of Congress and medical industry groups. Seniors like the system the way it is. It is thought to be political suicide to threaten to limit benefits. It is not clear how CMS plans to encourage seniors to sign up to trade freedom of choice, for what is essentially an HMO. Medical associations are naturally wary of any promise made by Washington, D.C.  

Historically, the government has sold a new program by making the initial deal too good to pass up. With ACOs, however, even in the beginning the carrot frankly doesn’t sound all that tempting. In fact, the greatest selling point for physicians may be the fear of being left out of an ACO, with a fee-for-service schedule lower than current Medicaid levels.

At this point, it is difficult to even know the right questions to ask. Fortunately, the American Academy of Family Physicians (AAFP) has published an excellent list of frequently asked questions about ACOs, subtitled “Everything you need to know about Accountable Care Organizations (in plain English).”  

Here, the AAFP answers many questions, such as: 1.) whether you should sell your practice to an ACO, or be left out; 2.) whether the monetary incentives are sufficient to transform practice patterns, or if ACOs are just a passing fad; and 3.) what actions you can take immediately. As with any time of great transition, education and careful investigation of your options can be the greatest investment of your time to ensure you make the decision which is right for you. 

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It is the holiday season, and that means two things: I must avoid shopping malls and my office will be inundated with calls from physicians and vendors wondering if it is permissible to give or accept gifts. The short answer: If the gift is cash, or anything like cash, (such as a Visa gift card redeemable for cash,) just say ‘no.”

As the credit card tagline goes, “for everything else,” there’s a regulation.  First, anything of value directly or indirectly provided to a physician (or their family members and office staff) may implicate the federal law prohibiting certain referrals by physicians, 42 U.S.C. § 1395nn (the “Stark Law”) and the federal anti-kickback statute, 42 U.S.C. § 1320 a-7b (b) (the “Antikickback Statute”). Hospitals organized under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code” or the “IRC”) are also subject to certain restrictions and reporting obligations in connection with such gifts and incidental benefits (the “Federal Tax Requirements”).

Second, effective January 2012, the Sunshine Act required that pharmaceutical companies and durable medical equipments suppliers report gifts to physicians in excess of $25. But CMS was bombarded with comments following the release of draft regulations. CMS now says it will not begin collecting data until 2013. This delay, however, should not be read to mean that until 2013, you can accept a gift certificate to Pebble Beach Golf Resort “just this once.” The delay simply means the vendor need not report a gift to the government. Stark Law and Anti- Kickback Statute regulations remain in full effect.

Stark Law and the Anti- Kickback Statute consider “gifts” a form of “compensation” arrangement. Stark Law regulations published in 2007 contain a Safe Harbor for non-monetary compensation. The aggregate limit was $300, and has been adjusted for inflation each year. Today the limit is in the range of $330. Medical staff gifts have a limit of $25 per gift, adjusted each year, with no aggregate limit.

In addition, the gift may not be solicited by the physician or your staff. There are a few other rules: (a) amount of the gift cannot be determined in a manner that takes into account the volume or value of referrals; (b) the gift must not violate the Anti- Kickback Statute; and (c) cash and cash equivalents are strictly prohibited, as are gifts or free items offered to group practices (e.g., medical equipment), even if the thresholds are not exceeded in the aggregate.

Particularly suspect are gifts which are given after each referral, or after a particularly successful referral.

The AMA, addressed vendor gifts in Ethical Opinion 8.061, “Gifts to Physicians from Industry.” Although the AMA recognizes that gifts given to physicians by companies in the pharmaceutical, device, and medical equipment industries often serve an important and beneficial function, the AMA Ethical Opinion recommends that certain guidelines be followed (click on the link above), including that any gifts accepted by physicians should primarily entail a benefit to patients and should not be of substantial value.

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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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