The Stark Law Regulations: A Review

The Stark Regs (1) forbid doctors and their immediate family members from referring their patients to businesses they own which provide “designated health services,” and (2) contains a long list of permitted financial relationships between health care providers.  The list of what constitutes a “designated health service” (DHS) includes PT, rehab, diagnostic imaging, clinical lab, DME, and home health.  A “physician” means an M.D., D.O., chiropractor, podiatrist, optometrist or dentist.  An “immediate family member” is a husband or wife; birth or adoptive parent, child, or sibling; stepparent, stepchild, stepbrother, or stepsister; father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law; grandparent or grandchild; and spouse of a grandparent or grandchild.  In short, if you or your family member owns a DHS, don’t refer to it.  Unless of course your situation falls within one or more of the gazillion exceptions.

A few key changes from the third set of revisions (so called Stark III) which affect physicians are helpful to keep in mind.  For instance, the way fair market value of physician compensation is determined  in the Stark II regs has been simplified and now depends on an amorphous consideration of the transaction, its location and other factors.  The clear formulas contained in Stark II was dropped and this makes the need for an expert FMV study even more compelling.Continue reading

Discounted Fee Organizations Have Surprising Regulation

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[contact-form subject='[Jeffrey L Cohen%26#039;s Blog’][contact-field label=’Name’ type=’name’ required=’1’/][contact-field label=’Email’ type=’email’ required=’1’/][contact-field label=’Website’ type=’url’/][contact-field label=’Comment’ type=’textarea’ required=’1’/][/contact-form] percentageThe idea of an organization which provides discounted fees to patients is not a new concept.  Organizations like independent physician associations (IPAs), even accountable care organizations (ACOs) and simpler discounted fee plans will be surprised to know that Florida may require them to be licensed by the  Office of Insurance Regulation (OIR), even though they do not handle pre payments and do not collect premiums.  That’s perhaps the most startling aspect of the regulations—there is no financial risk involved, and yet Florida law seems to require regulation.

Pursuant to Fla. Stat. 636.202(2), a “discounted medical plan organization” means an entity which, in exchange for fees, dues, charges, or other consideration, provides access for plan members to providers of medical services and the right to receive medical services from those providers at a discount.  A “discount medical plan” means a business arrangement or contract in which a person, in exchange for fees, dues, charges, or other consideration, provides access for plan members to providers of medical services and the right to receive medical services from those providers at a discount.  Fla. Stat. 636.202(1).  A discount medical plan does not include any product regulated under chapter 627, chapter 641, or part I of chapter 636 (governing Prepaid Limited Health Service Organization).  Fla. Stat. 636.202(1), which of course is no comfort to providers looking to garner or protect market share by discounting services or by creating a collection of discount services providers, which is typical of IPAs and “networks.”

Before doing business in Florida as a DMPO, an entity must be legally organized in a compliant way and must be licensed by the OIR as a discount medical plan organization or be licensed by the office pursuant to chapter 624 [Florida Insurance Code], part I of this chapter [Prepaid Limited Health Service Organization], or chapter 641 [HMO, Prepaid Health Clinic]. Fla. Stat. 636.204(1) emphasis added.  Each discount medical plan organization must at all times maintain a net worth of at least $150,000.

Providers looking to provide discounted fee arrangements in a simple and effective manner many be surprised to know how complex that endeavor in fact is.  Moreover, the discounts will likely (and ironically) have to be reduced in order to bear the state licensure and financial viability fees.  Go figure!

OIG Shoots Down Physician Owned Distributorships (PODS)

Physician owned distributorships (PODs) have been the source of considerable controversy for years.  A couple years ago, they caught the attention of Congress.  Now, the Office of Inspector General of the Department of Health and Human Services (“OIG”) has issued a Fraud Alert making clear their dislike of PODs and sending a clear shot across the bow of those who are in that industry.

PODs distribute various things, most commonly surgical implants and devices, that are reimbursed by insurers.  A patient needs a spinal rod, a surgical implant/device company makes it and a distributor rep distributes it.  Device/implant companies usually contract with distributorships to sell their products.  Distributorships contract with reps who are paid commissions for sales.  Surgeons who actually order the devices sometimes think “Since I’m the one doing the surgery and ordering all this stuff, why can’t I earn something from that?  I’m not ordering anything I don’t need or that I don’t think is good for the patient.”  PODs are one way for physicians to financially benefit from the sales of devices and items their patients need, but they have never been more controversial than now.Continue reading

Hospital Physician Recruitment on the Rise Again

In an effort to stay competitive, hospital physician recruitment deals are on the rise.  These arrangements are permitted under applicable federal law (the Stark Law) and are a core tool in hospitals’ tool chest.  These arrangements generally involve the hospital “loaning” to the physician or to a practice employing the doctor the costs associated with that doctor joining.  Since the ramp up costs associated with hiring or a physician just relocating to a new community can be steep (especially as payer contracts can take many months to set in place), hospital financial assistance can be critical.  How do they work?  Simple—

1.The hospital guarantees, based in part on MGMA salary surveys and other cost data sources, that the physician will collect at least $X each month for a period of normally up to 12 months;

2.The doctor agrees to remain in the hospital’s service area for 2-3 years, during which time, the amount loaned by the hospital is forgiven.

Though it may sound too good to be true, there are drawbacks, including:

1.There are pretty severe limitations placed on noncompetes for hospital recruited physicians which can be daunting to practices hiring them;

2.Unless carefully worded and negotiated, recruited physicians may find themselves with high expectations and little delivered in terms of the marketing and other support required to create a successful practice.  Not being financially successful is no defense to the requirement of staying in the hospital community for several years to write off the loan;

3. Some hospitals offset their business risk by taking any excess earnings (the collections exceeding the guaranteed amount) for months after the 12 month guarantee period, a period when collections should be substantially higher than during the early phases of the recruitment.

Practices entering into a hospital recruitment arrangement need to be careful in their physician contracts to pass as much financial risk as possible to the recruited doctor.  A recruited doctor that decides he or she no longer likes the new community can leave the practice holding the bag for a huge amount of money which has not yet been forgiven.

Recruited physicians need to be careful about the risk passed off to them in their employment contracts if they are joining an existing practice, since the practices typically benefit by receiving enough money to cover all of the new physician’s salary, benefits and overhead.

Split-Fee Soup: A Recipe for Disaster

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Cauldron-psd74325By: David Hirshfeld

When people ask me what I do, I used to say “I’m a transactional health care attorney.  I represent health care practitioners in their business deals.  I don’t do malpractice.”  That response does little to wipe the blank stare off my questioner’s face, and even I have to stifle the urge to yawn.  My new and improved response is that “I spend a lot of time advising health care practitioners how they can share fees with people who refer them patients.”  Now I get invited to all sorts of cocktail parties !!!

Practitioners split fees with one another for a variety of reasons; and they very often do not realize that a particular arrangement involves a split-fee arrangement, or that split-fee arrangements are often illegal in Florida.  The purpose of this article is to provide practitioners with a general overview of the concepts underlying the prohibition against split-fee arrangements in Florida, in the context of three common business arrangements.Continue reading

South Florida Drug, Alcohol & Rehab Business: Big Business, Bigger Rules

The drug and alcohol rehab business is especially abundant in South Florida, yet few entrepreneurs are aware of the many laws that apply.  The recovery business is a highly regulated one, with great intricacy in terms of the options and also the applicable laws.

Substance abuse services in Florida are broadly regulated by Chapter 397, Florida Statutes.  The applicable regulations, however, drill down with remarkable granularity.  For instance—

The broadly crafted Client Rights listed in Section 397.501, like the ones applied to nursing home residents, are very open ended (requiring things like the “Right to Individual Dignity”) and yet create the basis of a lawsuit!  That said, people acting “in good faith, and without negligence” can rest assured they will not be found liable.

Though some may intuitively understand the specificity and seriousness of the regulations dealing with medical detox, residential treatment and Partial Hospitalization Programs (PHPs), including the staffing, service and supervision requirements, it may not be as readily apparent with the lower intensity of service options, like Intensive Outpatient Programs (IOPs).

Even PHP requirements can, however, be confusing.  For instance, it is well known that PHPs are not for people who require 24/7 residential treatment.  They stand somewhere between residential inpatient and intensive outpatient programs.  What is less known is that the staffing requirements are particularly detailed.  For instance, each PHP has to have a paid, awake employee on premises at all times when even one client is on the premises and also must have a paid employee on call when clients are at the community housing location.

Intensive inpatient programs are required to provide detailed services, to include 14 hours of counseling each week and 20 hours of “other structured activities.”  Like IOPs, staff coverage is very specific.  Nursing coverage must be available 24/7.  More specifically, an RN must supervise all nursing staff and an RN or LPN has to be physically present on site.  Finally, a physician has to be on call 24/7.

Outpatient programs have similarly detailed requirements, including the minimum counseling requirements and staffing client ratios.  Intensive Outpatient Programs (IOPs) of course have far greater service requirements (at least nine hours of services each week) and yet share the same staffing ratio as regular outpatient (50 clients per counselor).

One of the more vexing issues the recovery industry faces deals with marketing.  The industry is flush with commission based marketing professionals, and yet there are very detailed state and federal regulations that threaten that practice.  At the federal level, the Anti Kickback Statute, a criminal statute that criminalizes remuneration for patient referral, threatens these percentage based arrangements.  State laws also strike them hard.  For instance, the Florida Patient Brokering Act (PBA) is a criminal statute with serious consequences for violations.  While the PBA does have an exception for federal law compliance, many entrepreneurs may find themselves hard pressed to comply.

Though the term “recovery business” may seem like an oxymoron to some, it is an area of significant business opportunity that many have dug into.  Knowing the regulatory minefields of the industry is, however, an important step forward in both a successful business and a stable platform of care.

M.D./Chiropractor Organizations Face Licensure

Beginning January 1, 2013, healthcare organizations owned by both chiropractors and M.D.s (or D.O.s) will have to obtain a Florida Health Care Clinic License (HCCL) in order to take care of patients whose care is compensated by PIP.  These sort of “integrated practices” are clearly on the upswing, especially after the tough new PIP Clinic regulations were passed this year, which makes providing care to patients injured in motor vehicle accidents tricky.Continue reading

The Florida Healthcare Law Firm Goes National

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Followers & Friends – BIG Announcement coming out today! If you haven’t seen our new NATIONAL platform, check it out here at www.nationalhealthcarelawfirm.com and stay tuned for our #healthcare #legal news at 2pm EST !!!

Medicare Patient PT Supervision is Confusing

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 Physicians with Florida medical practices that provide physical therapy must feel at times they are playing “Whack a Mole,” given the many changes to the applicable rules and regulations, especially those that pertain to Medicare patients.  Is it ok for a physical therapy assistant (PTA) to provide the services?  Can the practice provide PT to people who are not patients of the practice?  Does a physician have to be on premises when PT is provided?  It’s just complex.

Let’s start with a couple fundamentals:  first, medical practices that comply with the so called “group practice” exceptions (under both state and federal law) are permitted to provide PT to their own patients.  They are more accurately known as the “In Office Ancillary Services Exception,” but most refer to them as described above.  These exceptions dictate, for instance, the form of the practice and how much time each physician has to spend practicing through the group.  For instance, if the practice does not have at least two of the following, it does not meet the group practice requirements:  physician owner; physician W-2 employee.  Second, PT falls under both the state and the federal definitions of “designated health service” (DHS).  DHS are services that are regulated by the Stark Law and also (at the state level) by the Florida Patient Self Referral Act of 1992 (FPSRA).  They are very similar laws, but with some key differences.  Where many physicians go wrong is to ensure compliance with federal laws but not state or vice versa.

Why is it important to know that this discussion is confined to Florida “group practices” providing PT to Medicare patients?  First, because the laws that apply to group practices are different that those that apply to reference PT businesses.  Businesses that only provide PT are not nearly as regulated as medical practices (especially those in Florida) that provide both medical services and PT to their own patients.  For instance, the issue of “outside referrals” does not arise with respect to reference PT businesses.  Second, because when Medicare patients are involved, both state and federal law come into play.  While state law applies to all services provided in Florida, federal law only comes into play when federal or state healthcare program dollars are involved.

Medical practices in Florida that provide DHS (like PT) to their Medicare patients have to comply with both state and federal law.  And those laws are different.  For instance, while federal law allows up to 25% of the time of doctors in a group practice to be spent providing services outside the group, state law is not so clear.  For instance, federal law allows a practice to provide DHS to a certain amount of patients who are not patients of that group practice (“outside patients), but Florida law allows that sort of flexibility only for “diagnostic imaging services” (up to 15%).  If, for instance, a Medicare patient from Dr. Smith down the street comes to your office only to get the PT your practice provides to its patients (i.e. they are not a patient of your practice), that patient will be turned away.  Isn’t it ok for a Florida medical practice to provide just PT to someone else’s Medicare patient?  No, because state law does not allow it.

Similarly, under federal law, a physician complies with certain supervision requirements if he or she is in the building where the medical practice is located while a Medicare patient receives DHS.  In Florida, the physician in a group practice is required to be in the office (not just the building) when a Medicare (and every other) patient receives DHS in order to comply with the stricter “direct supervision” requirement applicable to patients in Florida that receive DHS (all DHS, not just PT) from a group practice.

Once a physician clears those regulatory hurdles, how can a doctor bill for PT?  Essentially, there are two ways:  under the provider number of the physical therapist or under the provider number of the supervising physician.  The situation gets even more complex when a physical therapy assistant (PTA) gets involved.

Can a Florida medical practice bill under the provider number of a supervising MD for PT provided by a PTA to a Medicare patient?  No.  While applicable law requires an MD or DO to be on premises when a Medicare patient receives PT from the group practice, services provided by a PTA are considered by CMS to be included as part of the covered service under Section 220 and 230 of the Medicare Benefit Policy, Chapter 15.  A Florida doctor may not lawfully supervise the services of a PTA, since PTAs (under federal law) that provide services in a medical practice must be directly supervised by an RPT.

There are also state laws that need to be followed, they differ based on physician specialty.  For instance, a PTA employed by a physician other than a board certified orthopedist, physiatrist or chiropractor certified in physiotherapy must be under the onsite supervision of an RPT.  Though inapplicable to Medicare, there is no provision in Florida law that allows a chiropractor to supervise a PTA.

What about if the PT services are provided by a registered physical therapist (RPT)?   Though CMS does not recognize the term RPT, it does allow the services of a “qualified professional,” which includes a licensed physical therapist, to be billed either under the physical therapist’s provider number or “incident to” the services of the supervising MD or DO.   “Incident to” services are services that are so integral to the services provided personally by the physician that they can be billed to Medicare as though the physician provided the service, even when the physician didn’t provide them.  To comply with the rule (and for the doctor to be able to bill for it as though he or she did provide the service), the services must be:

1.         An integral though incidental part of the physician’s service in diagnosing or treating an illness or injury,

2.         Commonly furnished without charge or included in the physician’s bill;

3.         Commonly furnished in a physician’s office or clinic;

4.         Furnished under the physician’s direct supervision (e.g. physical presence in the office);

5.         Furnished by the physician, practitioner with an incident to benefit or auxiliary personnel.

Though the incident to services rule is materially different from the Florida “direct supervision” requirement under the FPSRA, its effect is very similar:  an MD or DO must be physically present on the premises of the office when a patient receives DHS and it is billed under the provider number of the supervising physician.  One might argue that the PT’s services could be billed under the PT when the MD or DO is not on premises, but this conflicts with the direct supervision requirement of the FPSRA.

What’s the Analysis?

To comply with the State and Federal supervision requirements, group practices in Florida that provide PT to their Medicare patients must ask themselves at least the following questions:

1.         Does my practice comply with the state and federal “group practice” requirements? and

2.         Is an MD or DO in the office when the patient receives PT?  If not, the PT may not be provided at all, since all PT in Florida group practices require direct supervision by a physician.

What are the Penalties?

At the very least, doctors who fail to comply with the supervision requirements for DHS risk (1) AHCA licensure actions; (2) having to repay the money received when they did not comply; (3) having to pay stiff fines, and in some instances (4) criminal prosecution.  There have been many reported cases of physicians being investigated and fined for failing to meet the supervision requirements.  And there have been numerous instances of physicians being prosecuted for failing to meet the “incident to services” rule.

            If you provide PT to your patients, you must be clear about (1) the “group practice” exception provisions that allow you to provide DHS to your patients, and (2) the State and federal supervision requirements.  There is simply too much at stake not to.  Additionally, physicians ought to develop clear and easy to use written guidelines for compliance.

Download a Quick Guide to PT Supervision HERE