🚨 California Doctors Face $2.4M Reminder About Kickbacks 🚨

Credit: Jeff Cohen

Backlink to: https://www.justice.gov/usao-edca/pr/fresno-doctors-agree-pay-24-million-resolve-kickback-allegations

Two California doctors recently found themselves in hot water over an “arrangement” with mail-order pharmacies that resulted in $2.4 million in settlements. Here’s what happened—and why healthcare professionals and businesses should take notice.

The doctors invested in management services organizations (MSOs) with financial returns labeled as “investment returns.” While these seemed to resemble “real” investments, the U.S. Attorney’s investigation pointed to a troubling connection—the higher the scripts sent to the pharmacies, the more financial returns the doctors received.

Key takeaways from the case:

  • Alarming Pattern: Investments “paid off” multiple times the original capital, and prescribing physicians were offered new opportunities to invest in profit-making MSOs.
  • Kickback Red Flags: One representative stated, “If he doesn’t write, he can’t have shares,” highlighting the clear linkage between prescribing volume and financial rewards.
  • Critical Compliance Reminder: Regardless of appearances, no investment or arrangement can involve referral-based incentives, particularly when state or federally funded healthcare programs (like TriCare, Medicare, or Medi-Cal) are involved.

💡 For Healthcare Professionals

Never exchange anything of value—whether direct payments, investment returns, or other financial incentives—for referrals or orders. Even arrangements that appear to comply with “safe harbor” rules can come under intense scrutiny if there’s a financial link to prescribing behavior.

This case serves as a stark reminder that healthcare compliance goes beyond legal advice or documentation—it requires ensuring every action prioritizes ethical care and keeps patient trust intact.

Have questions about maintaining compliance? Share your thoughts below 👇 or connect with me for a deeper conversation.

Understanding the Federal Anti-Kickback Statute

By: Jeff Cohen

The federal Anti-Kickback Statute (AKS) is a crucial law in the healthcare industry. It criminalizes the act of paying someone to refer patients or generate business when any form of state or federal healthcare program funds—such as Medicare, Medicaid, CHAMPUS, and TriCare—are involved. Many states have their own versions of this law. While it seems straightforward, many physicians and healthcare businesses find it challenging to comply with this foundational healthcare regulation.

Case Study: A Warning from North Carolina

Consider the case of a medical practice in North Carolina. The practice routinely sent patients’ blood work to a lab—a common procedure in the medical field. However, issues arose because the practice:

  1. Billed Medicare for phlebotomy services,
  2. Received space rental payments from the lab, and
  3. Leased a chemistry analyzer from the lab and submitted false claims to Medicare.

All the financial transactions between the lab and the practice were deemed kickbacks. While none of the practice’s physicians or managers went to prison, the settlement cost the practice a staggering $625,000.

Stay Compliant and Informed

Healthcare professionals and providers must be vigilant. If you receive anything of value—be it money, tickets, or otherwise—from an entity paid for healthcare items or services, consult your healthcare regulatory lawyer without delay. Compliance with the AKS is not just about understanding the law but also about safeguarding your practice from severe financial penalties.

Understanding the Fraud Risk of Contractual Joint Ventures in Medical Practices

Jeff Cohen 

Contractual Joint Ventures (CJVs), often referred to as “plug and play” arrangements, are becoming increasingly popular in the medical practice world. They provide a tempting proposition for practices looking to introduce new services and revenue streams without the need to staff up, buy equipment, or undergo training. Essentially, the service is “plugged” in, and the billing begins. However, these arrangements come with inherent risks, primarily related to kickbacks and regulatory scrutiny.

What is a Contractual Joint Venture?

A CJV involves a provider “partnering” with a medical practice to integrate a new service. The allure is clear—minimal effort for potentially significant financial gain. The term “plug and play” reflects the simplicity with which these services can be implemented, but it also highlights a critical concern. Regulators are wary of practices that add services without substantial business risk or investment, often perceiving such ventures as attempts to defraud government programs like Medicare.

The core issue with CJVs is the potential for fraud, particularly when there’s little documented medical necessity for the services rendered. Regulators assume that practices engaging in these ventures may prioritize financial gain over patient care. This assumption leads to heightened scrutiny and the risk of audits, especially when services show a sudden increase in utilization. Such spikes are red flags for payers, prompting them to investigate whether the underlying motive is financial greed.

A noteworthy example is a Florida ophthalmology practice involved in a CJV with a mobile transcranial doppler ultrasound (TCD) provider. The arrangement resulted in numerous patients receiving TCDs with little medical necessity, leading to a Medicare payout of approximately $1.3 million. This case underscores the potential financial and legal consequences of poorly managed CJVs.

For medical practices considering a CJV, understanding the legal implications is paramount. Even when there is documented medical necessity, the risk of legal repercussions remains if the practice doesn’t adhere to regulations. This risk extends beyond Medicare to include commercial insurers, who also track utilization closely.

To mitigate these risks, practices should:

  • Thoroughly document clinical necessity for all services provided under a CJV.
  • Stay informed about relevant laws and regulations.
  • Consider obtaining legal advice in writing to understand the options and associated risks.
  • Implement a low-risk strategy when adding a line of service with an external provider by ensuring transparency and compliance with all legal requirements.

While Contractual Joint Ventures offer an attractive means of expanding medical services and revenue, they come with significant regulatory risks. Practices must be proactive in understanding these risks and take steps to ensure compliance and transparency in their operations. By doing so, they can avoid the pitfalls of being perceived as engaging in fraudulent activities and protect their financial and professional integrity.

How to Audit Billing and Collection Company

In the complex world of healthcare, accurate billing and efficient collections are critical to ensuring the financial health of your practice. Florida Healthcare Law Firm specializes in providing comprehensive legal support to healthcare providers and businesses, offering unparalleled expertise in navigating audits and related challenges. This blog will guide you on how to audit billing and collection companies, ensuring compliance, minimizing risks, and optimizing revenue cycles.

Understanding the Importance of Audits

Auditing billing and collection companies isn’t just a regulatory requirement; it’s a strategic step to protect your practice’s financial integrity. Whether it’s a third-party payor audit or internal review, identifying discrepancies early can prevent costly errors, penalties, and reputational damage. Our team at Florida Healthcare Law Firm has vast experience assisting healthcare providers in conducting thorough and effective audits.

Steps to Audit Billing and Collection Companies

  1. Define the Scope of the Audit Start by identifying the objectives of your audit. Are you reviewing compliance with third-party payor requirements, ensuring adherence to contracts, or identifying inefficiencies in collections? Defining the scope ensures a focused and effective audit process.
  2. Review Contracts and Agreements Analyze agreements with the billing and collection company to ensure all terms are being met. Pay particular attention to clauses related to collections, reporting, and fee structures.
  3. Examine Billing Practices Evaluate the billing company’s adherence to coding standards and billing regulations. Our expertise in handling retro review audit attorney cases enables us to provide actionable insights to ensure accuracy and compliance.
  4. Analyze Collections Data Assess the company’s performance by reviewing collection rates, aging reports, and payment trends. Benchmark their results against industry standards to identify potential red flags.
  5. Conduct a Compliance Check Ensure the billing and collection company complies with HIPAA, CMS regulations, and state-specific healthcare laws. For Florida providers, staying prepared for a Florida ZPIC audit is essential to avoid severe penalties.
  6. Implement Corrective Actions After identifying areas for improvement, collaborate with your billing and collection company to address issues. Establish clear timelines and monitoring processes to ensure corrective actions are effective.

Preparing for Third-Party Payor and ZPIC Audits

Healthcare providers often face third-party payor audits and Florida ZPIC audits, which can be challenging without the right legal support. Florida Healthcare Law Firm specializes in defending healthcare businesses during audits, ensuring compliance and mitigating risks. Our proactive approach includes:

  • Conducting pre-audit assessments to identify vulnerabilities.
  • Guiding documentation reviews to ensure readiness.
  • Providing representation during audit proceedings.

Benefits of Partnering with Florida Healthcare Law Firm

When it comes to navigating audits and ensuring compliance, the Florida Healthcare Law Firm stands out as a trusted partner. Our deep industry experience allows us to provide tailored legal strategies to healthcare providers, billing companies, and collection firms. Clients who work with us benefit from:

  • Specialized expertise in healthcare law.
  • Proactive risk management strategies.
  • Comprehensive support for audits, contracts, and compliance.

Conclusion

Auditing your billing and collection company is an essential part of maintaining financial and regulatory health. With the support of Florida Healthcare Law Firm, you can confidently navigate the complexities of audits, from third-party payor audits to Florida ZPIC audits, ensuring compliance and success.

If you’re looking for expert legal guidance on how to audit billing and collection companies, contact Florida Healthcare Law Firm today. Our attorneys are dedicated to protecting your practice and helping you thrive in a competitive healthcare landscape.

Industry Alert: Increased Scrutiny on Amniotic Skin Grafts by CMS

By Carlos and Sinead

Attention all plastic surgeons and wound care specialists—there’s an urgent development you need to be aware of regarding the use of amniotic skin grafts in wound care. The Centers for Medicare & Medicaid Services (CMS) have heightened their oversight and enforcement activities, specifically targeting reimbursement protocols. This move has significant implications for your practice and could impact your financial stability.

What’s Happening?

Various MACs have been sending out notification letters to practices involved in providing amniotic skin grafts, alerting them to potential reimbursement recoupments. This escalation involves in-person audits where medical records are scrutinized and physician interviews are conducted. The focus is on identifying cases of overutilization and examining the medical necessity of procedures conducted.

Key concerns involve:

  • Reimbursement Recoupment: Practices may be required to return funds previously received if their procedures are found to be unjustified.
  • In-Person Audits: CMS auditors are requesting comprehensive medical records, and physicians may be required to participate in interviews.
  • Clawbacks and Fraudulent Billing Charges: Providers found guilty of excessive billing or lacking sufficient medical justification could face clawbacks and, in severe cases, charges of fraudulent billing.

Protecting Your Practice

Proactive measures are essential to mitigate risks and safeguard your practice against these intensified audits. Here’s what you should focus on:

1. Rigorous Record Keeping

Ensure that your documentation is thorough and accurate. Every procedure should have a clearly documented rationale that demonstrates its medical necessity. 

2. Extensive Documentation

Accurate and comprehensive documentation is vital. Your records should include patient assessments, case notes, and detailed explanations for choosing amniotic skin grafts over alternative treatments that CMS may argue was a viable option for your patient.

3. Establishing Clear Policies

Develop internal best practices for determining when it’s appropriate to utilize amniotic skin grafts with the understanding of how your local MAC is currently analyzing medical necessity of this procedure. Ensure all staff members are trained and fully understand these guidelines. Documentation of this type is vital when defending future audits or recoupments to show intent of the practice in complying with Medicare requirements. 

Action Steps

To ensure compliance and protect your practice, consider the following actions:

  • Conduct Internal Audits: Regularly review your patients’ medical records to ensure complete and accurate documentation.
  • Update Policies and Procedures: If necessary, update your office protocols regarding the use of amniotic skin grafts and ensure all staff are informed and trained to identify who may be a candidate for this treatment.
  • Seek Legal and Compliance Advice: Consult with legal and compliance experts who can provide specific guidance tailored to your practice and ensure you’re adhering to CMS requirements. These requirements change frequently when dealing with areas of rapid expansion of utilization, as with amniotic skin grafts.
  • Engage in Professional Development: Attend workshops and seminars focused on compliance and effective documentation practices to stay informed about best practices and regulatory changes.

Moving Forward

While this increased scrutiny might seem daunting, staying informed and prepared is your best defense. By implementing these precautionary steps now, you can reduce the risk of negative repercussions and maintain your practice’s standing.

For further assistance or questions regarding CMS protocols and compliance, feel free to reach out to the [Name of Professional Association or Regulatory Body] for support. Stay proactive and vigilant to protect your practice and patients.

Navigating the Franchise Maze in the Wellness Industry

Jeff Cohen 

Entering the realm of franchising can be both exhilarating and daunting. For entrepreneurs and investors eyeing the booming wellness sector, which includes hormone replacement therapy (HRT), regenerative medicine, aesthetics (MedSpas), and IV hydration, understanding the intricacies of franchising is crucial. The wellness market presents a myriad of opportunities; however, potential franchisees find themselves overwhelmed by the stack of documents and decisions ahead. Here’s what you need to know to make informed choices and steer your franchise venture toward success.

Why Choose a Franchisor Over Going Solo?

One of the first questions that arise is why not simply start your own business? The answer largely boils down to brand name recognition and effective marketing. While it’s true that setting up the logistics—like sourcing labs, pharmacies, and ensuring compliance with standards such as uniflow hoods and 797 compliance—is challenging, these are hurdles that can be overcome. However, building a brand from scratch takes immense time and resources.

A franchisor offers the benefit of established brand awareness and marketing strategies that have been refined through experience. A successful franchise comes from a franchisor who has:

  1. Built a strong brand name over time.
  2. Invested in marketing strategies, learning what works and what doesn’t.

But remember, even the best brand and marketing can only do so much if the franchisee cannot convert traffic into business. Sales skills and customer engagement are critical components for achieving success in any franchise endeavor.

Deciphering Franchise Documents

Franchise agreements can be intimidating. They often communicate two stark realities:

  1. You might lose your investment.
  2. You may not make a profit.

Why this harsh message? Because franchisors need to protect themselves legally from making false promises. Therefore, well-crafted franchise documents are filled with disclosures, refrain from making guarantees, and push compliance responsibilities onto the franchisee. It’s a way of saying, “It’s your business, your risk.”

The Negotiability of Franchise Agreements

Prospective franchisees often wonder if they can negotiate the terms of their agreements. The key is getting independent legal advice before signing anything. Lawyers typically provide three types of feedback:

  1. Observational comments to raise awareness.
  2. Suggestions for changes that could benefit the client.
  3. Red alert comments if there’s a legal or regulatory concern.

While initial contracts might be more flexible, especially if you’re an early franchisee, established franchisors are less likely to agree to modifications unless necessary due to compliance issues.

Understanding Franchise Fees

Franchise fees can also be perplexing. They come in two types:

  • Upfront Fees: These might include the Unit Franchise fee.
  • Continuing Fees: These ongoing fees, such as royalty fees, branding fees, advertising fees, technology fees, and EMR fees, are where franchisors truly benefit.

The franchisor’s long-term income depends on the success of the franchisees. It’s a precision game, not a numbers game. Franchisors seek well-qualified franchisees with business acumen rather than large numbers of inexperienced ones because their ongoing income relies on the franchisee’s performance.

Building a Successful Franchise Relationship

Franchisor relationships, like well-tuned orchestras, are harmonious and productive when all parties are in sync. To ensure this harmony, consider the following steps:

  1. Engage an Experienced Lawyer: A good lawyer will help you understand the intricate nature of the franchise relationship and identify potential issues in the documents.
  1. Talk to Existing Franchisees: Gain insights into how their relationships with the franchisor are working.
  2. Self-evaluate Your Business Expertise: If you lack business experience, bring in expertise. Learning as you go is costly and time-consuming.

In conclusion, entering a franchise in the wellness sector requires careful consideration and diligence. By understanding the nuances of franchising—such as choosing a reputable franchisor, navigating legal documents, and ensuring you have or develop the necessary business skills—you can position yourself for success. Remember, a harmonious franchisor-franchisee relationship is the key to a thriving business. By taking these steps, you’ll be well-prepared to make your mark in the wellness industry.

Concerning New Challenge for Behavioral Healthcare Providers

By: Sinead Killeen

In the intricate world of behavioral healthcare, where reimbursement policies and insurance claims are critical to operational success, a new and concerning trend has emerged, potentially impacting how providers manage their financial operations. This silent contracting trend involves Florida Blue’s recent policy changes regarding laboratory service claims and their significant implications.

Florida Blue, a major payor in healthcare insurance, began denying all out-of-network (OON) laboratory claims in 2021, compelling providers to utilize Quest Diagnostics as the sole participating laboratory in Florida Blue’s network. This pivot meant behavioral healthcare providers had to adjust to using Quest for their lab services, expecting continuity in Florida Blue’s payment of lab services. 

However, after providers transitioned to Quest, Florida Blue began denying these lab claims, informing Quest and the providers that the rehab per diem rate now encompassed the lab services—a bundling approach that was not previously enumerated in its provider agreements and the shift in payment policy was never communicated to providers. This shift has resulted in providers facing substantial outstanding bills from Quest, as these labs were suddenly deemed part of an all-inclusive rate that was not increased to make up for the financial responsibility for lab bills.

For behavioral healthcare providers, this bundling trend has far-reaching implications:

  • Financial Strain: Providers are left with unexpected liabilities, as lab services they have to order as part of their treatment plans are no longer reimbursed separately, leading to financial strain.
  • Operational Disruption: Adjustments to billing processes are required, potentially leading to confusion and inefficiencies in managing claims. Further, providers will need to seek to renegotiate their Florida Blue network agreement to request a rate increase.
  • Legal Challenges: Providers may face legal battles, either in response to claims from laboratories like Quest or in seeking proper reimbursement from insurers like Florida Blue.

These developments underscore a potential systemic issue that could extend beyond Florida to impact behavioral healthcare providers nationwide. From a legal standpoint, this situation presents several potential avenues for challenge and resolution:

  • Class Action Opportunities: The inconsistent application of bundling policies by Florida Blue could be grounds for a class action lawsuit, potentially involving multiple affected providers across the state or even nationally.
  • Direct Action Against Insurers and Labs: Legal action against Florida Blue to compel payment for lab services, or against Quest for billing under disputed terms, may be viable strategies.

Attorney Sinead Killeen is currently defending a suit initiated by Quest against a significant behavioral health provider in Florida. She has significant experience in navigating complex reimbursement challenges such as these as well as expertise in optimizing reimbursement processes can be invaluable for providers facing similar challenges.

For behavioral healthcare providers, understanding this trend and its implications is crucial for maintaining financial stability and ensuring compliance. Engaging legal expertise through professionals like Sinead Killeen can help develop strategies tailored to your organization’s needs.

Next Steps:

  • Engage Key Stakeholders: Involve your CFO, billing director, and other critical team members who manage your revenue cycle to analyze whether this Florida Blue policy has impacted your facility. They should connect with legal experts to understand potential impacts and strategies.
  • Explore Legal Options: Consider reaching out for a consultation to assess your situation and explore potential legal actions. These consultations can help clarify your options without initial costs.
  • Review Contracts and Policies: Assess your current contracts and billing practices to ensure alignment with evolving policies and regulations.

In the face of these challenges, proactive engagement and strategic planning are essential. By understanding the trends and leveraging expert guidance, behavioral healthcare providers can safeguard their financial health and continue delivering essential services.

For further assistance and to schedule an exploratory consultation, reach out to Sinead Killeen, who specializes in these reimbursement issues across Florida and nationwide.