Many business people involved in some aspect of the recovery business world (e.g. IOPs, PHPs, Detox) are not aware of the punishing laws that apply to their marketing arrangements. Simply paying someone a commission based sales compensation without fully appreciate the applicable laws is dangerous and costly.
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.
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
Durable medical equipment is commonly sold through sales leads generated through telephone and/or internet contact. These leads often begin with a seemingly innocuous internet survey or an application for something unrelated to DME. This “raw” lead may be as basic as a person’s name, telephone number or email address, and age. The lead is then further developed and “qualified” by obtaining more details about the subject; such as: whether and by whom the subject is insured, what (if any) medical issues does the subject suffer from, the name of the subject’s physician. Ultimately, the lead is sold to a DME vendor who uses the lead to accomplish the sale of medical equipment or supplies. In the course of a lead’s birth and life, it is handled by a chain of companies, some of whom purchase the lead, add a level of detail to it, and sell it for a higher price. In the past year or so, several lead generation companies from the “middle of the chain” have come to me asking me whether their business model gives rise to an illegal kickback. After a bit of research, I gave the lawyerly answer: “It depends.”
The Federal anti-kickback statute provides that it is a felony for a person or entity to knowingly and willfully offer or pay any remuneration to induce a person to refer an individual for the furnishing or arranging for the furnishing of any item for which payment may be made under a Federal health care program, or the purchase or lease or the recommendation of the purchase or lease of any item for which payment may be made under a Federal health care program.[1] Florida’s corollary to this Federal law is the Florida Patient Brokering Act, but the Florida statute applies to all health care services, regardless of whether paid for by a Federal program.[2] The Federal law creates criminal liability, and includes a knowledge requirement. Congress recognized that business models exist that may appear as willfully paying remuneration in exchange for a referral, but which have more innocent motivations, and are less likely to result in abuse to the health care program at issue. In order to give the health care industry a measure of comfort, Congress created several “safe harbors.” If a business model fits within a safe harbor, then it is deemed to not be an illegal kickback under Federal and Florida law.
The Department of Health and Human Services Office of the Inspector General (“OIG”) is the agency charged with enforcing the Federal anti-kickback statute. In November 2008 the OIG considered a situation in which an advertising company created a website that would give prospective patients contact information for a list of chiropractors in their area, in response to a zip code entered by the prospect. The prospect paid nothing for the service, but the chiropractors paid the advertiser a fee for each call or contact from the website that lasted over thirty seconds, regardless of whether the contact resulted in a prospect becoming a patient. This scenario is as close as the OIG has come to opining on a typical DME lead generation.
The OIG found that the chiropractors’ advertising service was not a prohibited kickback, and cited four factors as convincing: (i) the advertising company is not a health care provider or supplier, and is only affiliated with the health care industry through the arrangement at issue; (ii) the advertising program did not target Federal health care program beneficiaries; (iii) the fees paid by the health care practitioners did not depend upon whether the prospect actually became a patient; and (iv) the advertising program did not steer patients to a particular chiropractor.
When applied to the DME context, the OIG opinion and the anti-kickback statutes suggest that leads can be sold for a per-lead fee as long as the leads are not priced, and do not contain information so detailed, such that the purchaser can cherry-pick those leads it wants to purchase based on the likelihood that the lead will result in an actual sale of covered DME. For example, a “raw” lead comprised simply of a prospect’s name, contact information, and interest in speaking with a DME supplier is probably the sort of lead that could be sold for a per-lead fee without running afoul of the anti-kickback prohibitions. As more and more information is added to the lead, such as the type of DME products of interest to the prospect, information regarding the prospect’s insurer and plan coverage, the purchaser will be better able to determine whether the lead is likely to result in a sale of DME (a “qualified” lead). At a certain level of detail, a lead morphs from lead that can be sold on a per-lead basis, to a referral that cannot.
A lead generation company can sell highly detailed qualified leads if that sales relationship fits within the safe harbor for “Personal Services and Management Contracts.”[3] That safe harbor requires that: (a) the aggregate compensation to be paid under the contract must be fixed in advance; (b) the compensation must be consistent with fair market value in an arm’s-length transaction; and (c) the compensation must not be determined in a manner that takes into account the volume or value of any referrals or business otherwise generated between the parties for which payment may be made by a Federal health care program. The requirement that the compensation be fixed in advance does not tolerate a per-lead fee. Fixed in advance would be a weekly, hourly, annual fee.
So, if you are in the lead generation business, your liability for buying or selling health care referrals probably depends upon how detailed and “qualified” the lead is at the time of your transaction. The safe tack is to structure your transactions so that they fit within the safe harbor for Personal Services and Management Contracts so that just in case your leads are qualified enough to constitute “referrals.”
This article focuses on anti-kickback liability associated with DME leads, but there is also liability attached to how the lead is originated, and how the prospect is contacted. Lead generation companies are often well-served by committing their relationships to written agreements with advice from appropriate counsel.
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 !!!
By: David W. Hirshfeld
As reimbursement from third-party payors shrunk, the uninsured accident victim emerged as a financially attractive patient. Surgeons, surgery centers, and therapists became armchair personal injury attorneys. They learned to identify and sign-up uninsured patients who had been injured as the result of negligence, and who were likely to be successful in the lawsuits arising from their accidents.
A popular model evolved in which a surgery practice leases an ambulatory surgery center for a very competitive rate, performs the surgery, charges the patient a reasonable and customary fee for the technical and professional component of the surgery, and agrees not to seek payment from the patient if his attorney and he agree, through a “Letter of Protection,” that the surgery practice will be paid from the proceeds of the negligence lawsuit. These days, ASCs are leasing themselves out for very competitive rates because the surgery practice guarantees payment immediately upon completing the surgery, or even in advance of the surgery, and because many ASCs currently have excess capacity. The surgery practice often has to wait twelve to thirty-six months to be paid for its services; but when the lawsuit is resolved and they are paid, there is a healthy margin between the surgery practice’s cost for the ASC and the amount the practice is paid as technical component. Remember, other than reasonable and customary, there is no fee schedule applicable in this context. The model is currently so lucrative, that it has attracted lenders who help finance the surgery practices while they await payment on the Letters of Protection. Not incidentally, this model may become less lucrative as more and more people are covered by health insurance as a result of the Patient Protection and Affordable Care Act.
The proceeds of negligence lawsuits are paid by property and casualty insurance companies, who employ professional claim adjusters, some of whom are very savvy. Surgery practices in this model may face the argument that the insurer will only pay the surgery practice what the surgery practice paid the ASC, without mark-up. In order to help avoid this sort of inquiry, we suggest that the surgery practice, as part of its arrangement with the ASC, receive a detailed inventory of every aspect of space, equipment, supplies and services provided by the ASC with respect to each procedure performed on each patient of the surgery practice. Beside each item on the inventory, the ASC should list its reasonable and customary charges for that item. This inventory can be used to support the payment secured through the Letter of Protection, and can be used by the plaintiff’s attorney when (s)he is proving damages in the negligence lawsuit.
It is very important that nobody refer to the inventory as a “bill” that was or will actually be paid to the ASC; those sorts of references may lead to an accusation of fraud since the ASC has already accepted a lesser amount as payment in full. If and when asked, the surgery practice could justify its markup over what it actually paid the ASC as reimbursement for having to finance the surgery for many months, and as reimbursement for the risk of nonpayment.
This model can be lucrative, but it is fraught with potential problems. The ASC inventory described above is just one noteworthy aspect of how to work the model. Any surgery practice seeking to focus on treating negligence victims and taking Letters of Protection, should get advice from a trusted personal injury attorney and from a bona fide health care attorney.
(Delray Beach, FL) June 21st, 2012 – The Florida Healthcare Law Firm, one of Florida’s leading healthcare law firms, today announced a major increase in their legal practice capabilities with the official launch of the National Healthcare Law Firm, a d/b/a and new portal of the firm. The expansion to a national platform providing healthcare legal services to physicians and healthcare businesses is one that significantly increases resources for clients who lack qualified local healthcare counsel. While the Florida Healthcare Law Firm has for years assisted clients outside the state of Florida*, this new development further cements the firm’s commitment to providing ethical legal counsel in the healthcare industry.“We are very excited about it. The fact that we serve clients all over the country has been a small secret for a while but we realized there’s a huge demand and decided to just go for it,” said Jeffrey L. Cohen, Esq. Founder and President of Florida Healthcare Law Firm.
According to Cohen, “It’s just a strange area of the law. Nearly everything in healthcare business is regulated; leases, employment agreements, compensation. Things you wouldn’t think are regulated are strongly regulated. And there are large fines and criminal penalties for getting it wrong! Our clients understand that healthcare business of any kind has serious legal risks and that they need uniquely qualified help.”
To request a service list or for any other firm information, call Autumn Piccolo at 888-455-7702 or visit the firm’s website at www.nationalhealthcarelawfirm.com or www.floridahealthcarelawfirm.com
* * *
Acknowledged throughout the country for its service and excellence, Florida Healthcare Law Firm is one of the nation’s leading providers of healthcare legal services. Founded by Jeffrey L. Cohen, Esq and headquartered in South Florida, FHLF provides legal services to physicians and healthcare businesses with the right pricing responsiveness and ethics. From healthcare clinic regulation, home health agency representation and physician contracting to medical practice formation/representation and federal and state compliance matters, the Florida Healthcare Law Firm is committed to bringing knowledge and experience to a diverse group of clients.
Super groups are in vogue as physicians do their best to reduce costs and enhance revenues. A “super group” is essentially a collection of previously separate competitors who have joined a single legal entity in order to achieve certain advantages. Those advantages tend to be (1) reducing overhead expense associated with economies of scale. Buying insurance for a group of 100 doctors should be far less expensive per doctor than a group of three doctors; (2) gaining leverage in managed care contracting. 20 groups of five physicians each cannot contract with a payer with “one voice” due to the antitrust restrictions, but a single group of 100 doctors can; and (3) finding new revenue sources. Small groups and solo practices cannot afford revenue producing services like surgery centers, imaging services and such. When practices combine, they have a greater patient base, which makes the development of new revenue sources feasible.
Physicians join super groups with terrific promise and hope. They are clearly a good idea, especially if they have solid operations. That said, physicians who rush to form them rarely consider the risks associated with a physician departing the group. They need to!
When a doctor joins a super group, she stops billing through her old practice (the “P.A.”) and starts billing through a new group (the “LLC”). The LLC has a tax ID number and a Medicare group number. And the LLC enters into lots of managed care payer agreements. Simply put, the doctor puts all of her eggs in the LLC basket. So what’s the risk?
When physicians depart super groups, they have to confront difficult facts, like:
Super groups exist to benefit physicians. It makes no sense that they would be used to harm them, which is precisely what can happen (and sometimes does happen) if physicians do not pay good attention to the “back end” as well as they do to the “front.” That means things like—
Super group arrangements continue to grow. Some of them even develop into fully integrated and sophisticated businesses. Physicians who join them have to consider all “angles,” not just how good it will be or can be when they join.
Physicians who allow other people or entities to bill for their services are taking a risk. Settlements with eight physicians whose provider numbers were used unlawfully by entities they worked for prompted the OIG to issue an Alert on February 8th. The Alert basically says that physicians who assign to others (e.g. 855R) the right to bill for the services of the physicians will be responsible for the wrongful actions of those using the doctors’ provider numbers. Ignorance will likely not be a good excuse any longer.
What does all this mean to doctors? Simple: VERIFY REGULARLY. If you assign to any person or entity the right to bill for your services, you MUST routinely check to see if they are billing correctly. The fact that some person or entity may bill wrongfully, even fraudulently, without your direct knowledge, will not protect you from liability. Make sure (1) you have written agreements for all arrangements that involve any person or entity billing for your services, and (2) those contracts contain indemnification provisions in case you have to hire a lawyer or pay anything to the government for their wrongdoing.
Investigations and successful prosecutions for violation of laws like the Anti Kickback Statute (“AKS”), the Stark Law and the False Claims Act were dramatically up in 2011 and are expected to climb still higher in 2012. For instance 13 doctors were charged in December, 2011 with violating the AKS by receiving payment for referring patients to an MRI center. Physicians and other healthcare business people MUST have any suspect arrangement closely scrutinized by highly qualified counsel. A “suspect arrangement” is any arrangement between providers of healthcare services that involve, to any degree, the exchange or payment of anything of value, including money. The AKS is a criminal statute; and the risks of enforcement are now huge.
Business and arrangements which are designed at all to lock in physician referrals carry particularly large risks and require close scrutiny. For instance, surgery centers that received referrals from non-owner physicians viewed that as a great thing. Now, referrals from unaffiliated physicians are viewed as inherently suspect. “What,” the regulator thinks, “is driving this referral? What wrongful conduct is being engaged in here?” This is especially so with any marketing arrangement as well.
Physicians and other healthcare business people would do well to recall that if even “one purpose” of the arrangement is to compensate (cash or anything of value) someone for a patient referral, the AKS is triggered. Moreover, where Safe Harbor Act compliance was recommended, many now find it necessary.
