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

What’s Hot on the OIG’s Workplan for 2013

 It’s that time again, when the OIG publishes its annual Work Plan for the coming year, providing insight and a proverbial “heads up” on the areas where potential concern and program integrity efforts are being focused.  Many of the focus areas are ongoing or have been the subject of previous Work Plans, and come as no surprise.  Nevertheless, it is important for practitioners to familiarize or reacquaint themselves with the 2013 Work Plan projects in order to recognize and prioritize compliance areas currently on the OIG’s radar.

Of particular interest for practitioners are the various OIG review projects involving ancillary services.  For example, the OIG is looking at outpatient therapy services by independent therapists, and will focus on high utilization of physical therapy to determine if claims were reasonable, medically necessary and properly documented.  Similarly, high-cost diagnostic radiological tests ordered by primary care and specialty physicians are being reviewed to determine whether utilization rates match industry practices.  The OIG also will review Part B payments for imaging services with an eye towards determining if utilization rates reflect industry practices and if practice expenses components within payment rates are commensurate with costs incurred.  Electrodiagnostic testing (needle electromyogram and never conduction) is a new area under review, particularly with respect to utilization rates by specialty, the concern being that such services are vulnerable to abuse and inappropriate financial gain.

Errors in billing and claims administration are also the subject of OIG review, with perennially recurring projects directed at incident-to services, place of service coding and E/M services.  A 2009 OIG review of prior claims found that non-physician practitioners often were not properly supervised or that unqualified non-physician practitioners performed services, in each case, resulting in payments that were not compensable.  Since Medicare payment for services in a non-facility setting, like a physician’s office, is often higher than in the rate that applies in other service locations, there is also concern over whether claims for Part B services performed in ASCs and Hospital outpatient departments were coded with the proper place of service.  Another, more recent area of focus involves the documentation supporting E/M services and questions whether Electronic Medical Record documentation processes may result in “cloned” entries (and potentially improper claims) rather than a deliberate process of selecting proper codes based on content of actual service.   Part B payment for chiropractic services are also being reviewed, with this area being the subject of ongoing OIG concern since chiropractic maintenance therapy being considered not medically necessary.

Apparently echoing a series of fairly recent OIG Advisory opinions, the 2013 Work Plan also identifies Polysomnography and Sleep Disorder Clinics as areas of potentially questionable billing patterns and possible overutilization.  High utilization rates have also raised questions regarding whether services are duplicative of diagnostic testing performed previously by attending physicians.  Another ongoing and increasing focus of OIG scrutiny is physician-owned distributors (POD) of high utilization orthopedic implant devices.  The Work Plan for 2013 specifically identifies PODs which provide hospitals with spinal fusion implant devices as being under OIG review to determine if such arrangements are associated with high utilization.

These are just some of the many areas of OIG review with which practitioners and facilities alike should become familiar in order to remain current with the health care regulatory compliance curve.

The Florida Healthcare Law Firm Goes National

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 !!!

The Florida Healthcare Law Firm Announces National Expansion

(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

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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.

OIG Approves Healthcare Coupon Website

The economy has heated up the marketing activity of many healthcare businesses, including physicians. Marketing devices like Groupon have become commonplace, but raise some significant legal issues. So.one such business requested guidance from the Office of the Inspector General of the Department of Health and Human Services and got a nice response.

The requestor operates a website that includes coupons for healthcare items and services and also advertising on behalf of individuals and businesses in the healthcare industry. The healthcare professionals and business people would post coupons on the website, which would give discounts, including discounts on items and services that are covered by Medicare and other state or federal healthcare programs. The website business would have different levels of membership and would charge flat fees for each level of membership. Additionally, the requestor would sell advertising on the website.

The arrangement had certain limitations, including:

1. The providers would not advertise free services, only discounted services; and
2. The providers would be required to give the same discount to any third party payer or insurance carrier, not just to the patient.

The OIG approved the proposal and noted the following key things:

1. The requestor is not a healthcare provider;
2. Payments from providers and advertisers are a set fee, are consistent with fair market value and don’t depend on customers (patients) using coupons or buying services;
3. Advertising would only be received by customers that elected to receive it; and
4. The business structure is not likely to increase utilization.

In short, the OIG thought the requestor was serving only as a conduit of advertising and was not paying anyone to influence any patient’s choice of a provider or supplier.

10 Lesser Known Effects of Healthcare Reform Law

This is a great article published by CNN this morning.

View it in it’s entirety Here

(CNN) — On Monday, the U.S. Supreme Court takes on a political, social, economic and medical hot potato: the health care reform law that was signed into law two years ago.

For six hours during each of the next three days, attorneys will argue and justices will consider legal questions about the constitutionality of the Affordable Care Act’s individual mandate and issues surrounding federal versus state powers.

Read a transcript of Monday’s Supreme Court arguments

Many of the law’s major aspects have been the topic of much discussion. But are you aware that deep within the sweeping law’s 2,700 pages are many lesser known changes that could affect your life in unexpected ways?

CNN Explains: Health care reform

1. How many goodies your doctors get

Is your doctor prescribing you certain drugs because those are the best for your condition or because of a pharmaceutical company’s influence? Here’s one way you can find out.

The Physician Payment Sunshine Act under health care reform requires drug, device or medical supply companies to report annually certain payments or things of value that they’ve given physicians and teaching hospitals. This could be speaking fees, consulting fees, meals and travel. So, you can find out which and how much companies pay doctors or health care workers. The companies are obligated to report annually about physician ownership and their financial investments.

Continue Reading Here

Supreme Court Weighing Healthcare Reform Law

So many questions, so few answers. But the answers are coming! Here are some of our favorite stories out right now:

Via Yahoo News, Liz Goodwin, The Lookout

Could President Obama’s sweeping health care reform law survive if the court strikes down the requirement that all Americans buy insurance?

The short answer is yes — but insurance companies certainly won’t be happy about it.

Both Justice Department lawyers and their challengers agree that the individual mandate is not “separable” from the rest of the law, which means the rest of the law can’t survive if the individual mandate is surgically removed by the court.

The lower courts have been split on the question, but one of them, the 11th Circuit Court of Appeals, ruled in August that only the mandate should be struck down, leaving the rest of the law’s provisions — including an expansion of Medicaid to cover all low-income people and federal subsidies for lower-income and middle-class people to buy insurance — in place.

That decision no doubt sent shivers down the spines of some insurance executives. Striking down the mandate could be a nightmare scenario for the health insurance industry, since the rest of the law compels them to accept sick customers and to not charge higher premiums based on a customer’s health, age or gender. Sick customers would flood the insurance market and drive up costs, while young, healthy uninsured people would take their chances and not buy coverage, in what insurers worry would be a “death spiral” of rising costs.

Via The Associated Press, Boston Herald 

DONALD B. VERRILLI JR.

Verrilli is solicitor general of the United States, the government’s official representative in front of the Supreme Court. He was confirmed to his position last June as the replacement for Justice Elena Kagan after serving as associate deputy attorney general and an associate White House counsel in the Obama administration. A graduate Columbia Law School, where he served as editor-in-chief of the Columbia Law Review, he was a law clerk for Justice William J. Brennan, Jr. and a partner at Jenner & Block, where he co-chaired the firm’s Supreme Court practice. He has argued more than a dozen times before the Supreme Court, and worked as an adjunct professor at Georgetown University Law School from 1992 through 2008. In 1994, as special counsel to President Bill Clinton, he assisted in the confirmation process for Justice Stephen Breyer.

Official biography: http://www.justice.gov/osg/meet-osg.html

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PAUL CLEMENT

Clement is a former solicitor general, having served in that position for President George W. Bush. When confirmed, he was the youngest solicitor general in 115 years at age 38. Clement graduated magna cum laude from Harvard Law School one year behind Obama, and clerked for Justice Antonin Scalia. He has argued more than 55 cases at the Supreme Court, and served as the chief counsel of the U.S. Senate Subcommittee on the Constitution, Federalism and Property Rights. A partner at Bancroft PLLC, he is a Georgetown University law professor and a former partner at King & Spalding. He resigned from there after the firm decided not to continue its representation of the U.S. House of Representatives in its attempt to defend the Defense of Marriage Act. Clement was one of the lawyers who made the successful argument in front of the 11th U.S. Circuit Court of Appeals in Atlanta that would strike down the law’s core requirement that individuals carry health insurance or pay a penalty

Official biography: http://www.bancroftpllc.com/professionals/paul-d-clement/

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MICHAEL A. CARVIN

Another former Justice Department official, Carvin’s most famous argument was delivered to the Florida Supreme Court on behalf of soon-to-be President George W. Bush in the Florida recount controversy during the 2000 presidential election. A graduate of George Washington University’s law school in 1982, Carvin has worked as deputy assistant attorney general in the Justice Department’s Office of Legal Counsel, which is responsible for legal opinions that are binding on the Executive Branch, deputy assistant attorney general and special assistant to the assistant attorney general in the department’s civil rights division. He will be representing the National Federation of Independent Businesses, which was a party to the lawsuit in the 11th U.S. Circuit Court of Appeals in Atlanta that struck down the law’s core requirement that individuals buy health insurance or pay a penalty.

Official biography: http://www.jonesday.com/macarvin

Richard Wolf, USA Today, via the Pensacola News Journal

WASHINGTON — Health coverage for more than 30 million people. The power of Congress to regulate interstate commerce. President Obama’s re-election chances. The reputation of the Supreme Court and the legacy of its chief justice.

And to hear some tell it: liberty.

All that and more could be at stake today when the Supreme Court begins a historic three days of oral arguments on the 2010 health care law that has become a symbol of the nation’s deep political divide.

All that and more could be at stake today when the Supreme Court begins a historic three days of oral arguments on the 2010 health care law that has become a symbol of the nation’s deep political divide.

Not since the court confirmed George W. Bush’s election in December 2000 — before 9/11, Afghanistan and Iraq, Wall Street’s dive and Obama’s rise — has one case carried such sweeping implications for nearly every American.

STAY TUNED!

OIG SLAMS TRUSTING DOCTORS WHO LET OTHERS BILL FOR THEIR SERVICES

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.


Noncompetes Are Once Again Relevant For Recruited Doctors

When the Stark II (Phase III) regulations were released in August, 2007, they clarified that when a hospital recruits a physician to a medical practice, the employment agreement between the medical practice and the newly recruited physician may contain practice restrictions as long as they do not “unreasonably restrict the recruited physician’s ability to practice medicine within the recruiting hospital’s service area. This stymied many medical practices which were reluctant to hire a new physician without a noncompete and nonsolicitation provision. A 2011 CMS Advisory Opinion (No. CMS-AO-2011-01) changed this.

The Advisory Opinion involved a pediatric orthopedist who was recruited by a hospital to a medical practice. The medical practice wanted to hire the new doctor, but was not willing to do so without a noncompetition provision and other restrictive covenants. The practice asked CMS for guidance because the Stark regs suggested that perhaps a noncompete could not be contained in the employment agreement of a physician recruited by a hospital to join a local medical practice. In fact, a prior version of the Stark regs was clear that noncompetes were not permitted in the employment agreements of physicians recruited by hospitals.

Hospital recruitment transactions involve bringing a physician into a new area and funding the start up period (usually a year). The nice thing for a medical practice is that the dollars given by the hospital to the practice (the difference between salary and benefits and collections) can run into the hundreds of thousands of dollars! The down side was that the medical practice could not tie the recruited physician’s hands with a noncompete or other similar restriction. The Advisory Opinion is, however, a game changer because it allowed the medical practice to impose a noncompete on the recruited physician.

As mentioned, the practice would not hire the recruited physician without the noncompete. The noncompete had a 25 mile radius, and the Opinion cited the following relevant facts:

1.The recruited doctor would remain on one of five hospitals within the 25 mile zone;
2.The recruiting hospital’s service area extended beyond the 25 mile zone, in which there were at least three other hospitals within a one hour driving range;
3.The noncompete complied with applicable state law.

Based on these facts, the OIG permitted a one year noncompete because it did not “unreasonably restrict the doctor’s ability to practice in the recruiting hospital’s service area. Certainly, many other medical practices can be sure to follow suit.

Physicians interested in nocompetes must be familiar with state law. Getting to the bone of the issue, noncompetes are enforceable in Florida if:

1.The geographic zone in the noncompete is reasonable. This depends on where the practice draws its patients. If patients come to the practice from just down the street, a ten mile radius is probably overbroad;

2.The duration is two years or less (though it can be longer in some limited circumstances);

3.The employer has complied with all of the terms of the employment agreement. If the employer has breached the contract that contains the noncompete, most courts will reject a claim to enforce it;

4.The employer does the type of thing that the departing employee does. If the employee is the only person performing toe surgery for instance, and the practice will not provide toe surgery services once the employee leaves, the practice probably does not have a legitimate business interest to protect by enforcing the noncompete; and

5.Stopping the ex employee from practicing in the geographic zone does not create a healthcare crisis or shortage. This is tough. Very few practice areas are in such dire straits that the departure of one doctor will adversely affect the provision of such services in the area.

Physicians should also be familiar with the practical aspects involved in noncompetes.

Mistake #1 – Racing to litigation

Going to court is a crap shoot. Once litigation begins, it takes on a life of its own and costs can be nuts, sometimes in the hundreds of thousands of dollars. You may think it’s a simple noncompete case. There rarely is such a thing. And if you sue someone on a noncompete breach, they may turn around and sue you in the same lawsuit for something. And….insurance does not cover any such claims. That means you are paying out of pocket for a lawsuit, the certainty of which can never be guaranteed and which will seem endless once you run out of patience or money for the process. Often, the reality is that noncompete litigation involves the strategy or seeing which party can outspend the other one.

If you are an employer, ask yourself the following two questions before commencing litigation:
1.Does it make good economic sense to enforce the noncompete? Is the former employee a business threat?

2.Is there a way to work out a deal with the employee, short of litigation?

In some situations, it makes no business sense to pursue a noncompete. For instance, if the employee has been employed for several months and if the patients are all referred by the employer, then the employee may not be a competitive threat to the employer. The employer will find a replacement doctor at some point and refer the business to the new doctor. Case closed.

It is also possible to work out settlements before going to court. For instance, you might avoid litigation by lowering the geographic zone or the duration. You might also negotiate a buy out of the noncompete.

If you are an employee who wants out of the noncompete, sit down with the employer and see if you can agree on a way out, so that both of you can have peace and move on.

Mistake #2 – Doing it Yourself

Noncompetes are governed by state law. There are both statutes and cases that inform lawyers about what types of noncompetes are enforceable and which are not. Do not work off of an old contract to create a new noncompete, since the laws (and the cases that construe them) change often. Do not use a friend’s noncompete, since you will not be able to tell if it will be enforceable at this time or under the circumstances that apply to you. The enforceability of noncompetes is extremely fact specific. Since noncompetes are strictly construed by courts, drafting them requires a trained eye.

The Advisory Opinion marks a significant development in the area of noncompetes for physicians recruited to medical practices by hospitals. Though some states do not allow noncompetes to be applied to physicians, many states do, including Florida. Finding a way to satisfy both the federal and state authorities will be essential for ensuring an effective and enforceable noncompete.