Compliance, Stark and Fraud and Abuse
False claims liability has typically turned on financial behaviors -- upcoding, submitting claims pursuant to Stark or anti-kickback violations, and other financial arrangements, activities and transactions. Rarely considered are the increasingly new liabilities associated with what Alice calls “quality fraud.” These are improper clinical behaviors including wasteful services, medical errors, over-use, under-use, failed medical necessity and violation of basic requirements for payment that turn on clinical compliance. In addition, with the advent of value-based purchasing and significantly more reporting about quality, inaccurate or false reporting can create exposure as well. In “Quality Fraud: Gathering The Threads” Alice elucidates the multiple bases for quality fraud, what such fraud looks like as action, penalties associated with misbehaviors, the guidance the government has offered on point, and suggestions for avoiding these risks. Most providers-- including hospitals and physicians -- will have to update their compliance programs to address effectively these augmented perils.
Continuing her theme on the need for vigilance in billing company relationships, a second circuit Court of Appeals case [Retina Grp of New England PC v Dynasty Healthcare LLC, No 21-1622-cv (2dCir, July 7, 2023] rejected a medical billing company’s claims against a Medicare Administrative Contractor,(MAC) who misclassified the billing company’s client as non-participating when they intended to enroll as participating. The MAC never notified the billing company of the classification, but paid some claims at the lower rate for non-participating physicians. The problem was discovered a year after the relationship between the biller and client ended. The client sued the biller for negligence, breach of contract and fraud. The court found it had no jurisdiction because the biller neglected to exhaust its administrative remedies before suing the MAC. But the real story in this case is that the rate at which a physician practice is paid is one of the most essential responsibilities of a billing company. The failure of the biller to confirm the proper enrollment of its client is unfathomable. The client’s reliance on the billing company with little oversight of what was being paid and at what rate is also problematic and underscores Alice’s advice regarding the need for clients to monitoring billing even when the activity is outsourced.
It is widely believed that false claims liability attaches only to claims submitted to federal payment programs. This is wrong. An 11th Circuit case, recently upheld the criminal conviction of a physician assistant for submitting faked physical therapy claims with visits charged as well, for patients who were also paid kickbacks for coming to the clinic offices to use their Blue Cross Blue Shield coverage. While the facts were egregious, the point of highlighting this case is to underscore that all compliance programs should include attention to commercial claims submission as well. Besides criminal exposure, more likely is the use of mail fraud and false claims act charges, including cases instigated by whistleblowers, where the claims submitted were to commercial payers.
Alice takes on an in depth untangling of confounding issues under the Stark statute in The Stark Statute: Parsed, Probed and Panned -- from whether it even works, to such basics as the definitions of referral, a consultation, and a group practice, none of which is actually straightforward. She moves on to the quagmires of supervision where the law sweeps into its ambit the issues of personal supervision, direct supervision and incident to—used without reference to their long-standing presence in Medicare prior to Stark. Shifting to pure financial issues, she addresses the distinctions between fair market value vs. commercially reasonable vs. the fair market value exception. Additional nuance arises with respect to the differences among indirect compensation arrangements vs. under arrangements vs. stand in the shoes concepts, as well as shared facilities by contrast with timeshare arrangements. She also considers permitted directed referrals vs value-based arrangements. She ends with a consideration of the dilemma created by how the drafters addressed Medicaid. She chose these specific issues, which are hardly all that can be said about this travesty of a statute, because the law is both vague and ambiguous on these points.
The OIG has published Model Compliance Guidance over the years and in some cases has updated them. This is not the case for the guidances both to small physician practices or billing agents. Those have not been updated it more than twenty years. The risk areas they identify are not complete given the inexorable enforcement by the OIG in the years since. In late 2023, the OIG published an entirely new document, General Compliance Program Guidance, which is not limited to any specific sector of the health care industry. It is actually a useful document to provide guidance to physician groups and billing companies to update existing compliance programs. Maintaining a compliance program is still voluntary for these sectors, but to not have one in this day and age is just foolhardy. A good plan and program are dynamic and change over time. We recommend (1) reviewing this OIG document which does not have to be read in detail to draw value from it; and (2) revisiting the vitality of your compliance program.
For many years we have advised our clients, do not pay sales commission to independent contractor sales reps. We have frequently been met with, “but everyone does that.” In 2024, the OIG entered into a settlement of multiple thousands of dollars with a company in multiple thousands of dollars for precisely that activity. The government claimed the practice violated the civil money penalties law. There are other ways that independent contractor reps can be compensated, but commission payments from federal doollars is not one of them. This prohibition does not pertain to bona fide employees.
Against the backdrop of its typically restrictive views of rewarding the referral of federal business, in an Advisory Opinion in 2023 the OGI approved a program where a physician consulting company would pay a $25 gift card to its physician customers for each potential additional physician customer the physician group referred, and further payment of $50 for each referred customer who signed with them. The consulting company advised on a range of issues some of which might increase a physician’s incentive payments under MIPS. Nonetheless the OIG took the position that these were not payments to refer federal business, they were not paid out of federal business payments and that the whole arrangement was outside the scope of their jurisdiction. We have many clients who seek to find ways to reward referrals to them. This Opinion offers some guidance on the restrictions that must be in place for such a program be compliant.
While we do not often comment on Advisory Opinions of the OIG under the Anti-kickback statute, a recent negative opinion is noteworthy because (1) the facts described were so obviously violative; and (2) while trumped up in new clothing, they represent a throw-back to joint ventures the OIG first rejected and wrote a Special Fraud Alert about in 1994!! In Advisory Opinion No. 21-18, the OIG considered an arrangement where a contract therapy services company, already providing services to long term care facilities owned by LTCco, would enter into a joint venture with an entity owned by LTCco to provide the same therapy services to the company's affiliated facilities. The valuation of LTCco's investment would turn in part on the expected business to be provided by the LTC facilities. LTCco would not be involved in the company's operations; and the joint venture would do what the partner therapy company was already doing. What rock were these people living under? This, as the OIG noted, is a classic prohibited contractual joint venture. Since it is possible to withdraw an advisory opinion request if it looks like the answer will not be favorable, one can only conclude that someone wanted the negative opinion. Without any background, it might well have been the therapy company itself who didn't want to share profits with their primary source of business. Back in the early 80s, there were many proposed joint ventures between hospitals and either DME companies or home health agencies to which they would refer. Almost all were illegitimate. So was the proposed arrangement here. For those who might want to see what a negative advisory opinion looks like, this one's facts are so obvious it's a good one to start with!
As we have noted previously, the EKRA statute was passed as part of the opioid legislation and, among other things, provides for stiff penalties for remuneration for referrals to any laboratory. It is far broader than Stark or the anti-kickback statute. While there have been settlements for bad behavior under its provisions we have, now, the first court opinion, S&G Labs Hawaii, LLC v Graves (2021 WL 4847430) interpreting that part of the statute that appeared to prohibit commission payments to employed salesmen. In this case, the court found that commission payments were legitimate where they were to a salesman who introduced to the lab physicians, counseling centers and other entities who would refer to the lab. He had no contact with any individuals whose own specimens would be tested. The law prohibits remuneration for the referral of "an individual." The commission sales payment under the employment agreement was upheld. Clients have asked and we have cautioned that this opinion is extremely narrow in its implications. EKRA remains a thorny problem for all laboratories and those who refer to them.
Among the designated health services (DHS) which are the subject of the Stark law restrictions are outpatient prescription drugs. When the Stark statute was enacted, Part D of Medicare didn't even exist; so, while it was obvious that drugs paid for under Part B, (many of which are provided in physician offices in infusions and otherwise) were covered, the answer was not so clear for drugs paid for by Part D, which may come from pharmacies, including physician owned pharmacies in some places. In fact, there is a specific regulation which sweeps Part D drugs into the ambit of Stark DHS. Physician groups which own pharmacies need to take this into account in their compensation and profit-sharing formulas.
The Medicare enrollment system represents an ongoing, high-stakes administrative headache for Medicare Part-B providers. Keeping enrollment data current is a complex, detail-oriented process, but the price for failure is the potential loss of Medicare billing privileges. In his article, “The Medicare Part-B Enrollment Obstacle Course: It Hasn’t Gotten Any Easier,” Daniel Shay revisits the complexities of the Medicare enrollment system, looking at what has and hasn’t changed in the past eight years. He examines real-world examples of Part-B providers running afoul of Medicare’s enrollment requirements, and their largely unsuccessful attempts to challenge their subsequent loss of billing privileges. Finally, he offers practical strategies for maintaining accurate enrollment data to avoid problems in the first place.
In a unanimous (!) and yet hardly clear false claims case last year – the infamous Escobar case -- , the Supreme Court of the United States drew one of the murkiest lines ever written. In determining whether the failed licensure of people providing behavioral health services under Medicaid, could render a claim as false, they addressed the notion of ‘implied false claims.” The case turned on whether implied statements in a claim (e.g., all the individuals rendering services were licensed, the facility met all the conditions of participation when the services were rendered) as opposed to explicit statements on the CMS-1500 (e.g., that the services were medically necessary or the level of CPT code was accurate) could render a claim false. Of the Court’s two pronged test, perhaps most importantly the court said the implied statement had to be ‘material’ to the falsity of the claim. The health law bar is now watching with interest as courts apply the Escobar standard. In a case in Pennsylvania, Us ex rel Emanuele v. Medicor Associates, ED Pa No 10-cv-245, the District Court rules that at least two medical directorship agreements violated the Stark law which could lead to false claims liability. The real problem was the absence of current and updated documentation of the physician-hospital agreements. The defendants argued these were mere technicalities and not material. CMS itself has liberalized its rules on what constitutes a proper writing to create a contract (see our AGG Note of July 2016). Before the case could go to trial it was settled with the parties paying $20.75 million. The court’s findings would have been one of many interpretations of what is material versus technical. The message here is the safest course is to dot all i’s and cross all t’s, when whistleblowers lurk in unknown places. We will be watching and reporting on what is found to be material and not by various courts around the country in order to advise our clients. The best approach is to get is right so no whistleblower has a claim. Check out our Fraud and Abuse Compliance Plan Development Protocol as well as our simplified and shortened version of the HCCA-OIG suggestions regarding how to measure if your compliance program is working.
In the big focus on the opioid crisis, kickbacks that occur in the drug treatment arena have become the target of a little discussed Federal law enacted in February of 2018. The Eliminating Kickbacks in Recovery Act (EKRA) has provided stiff penalties (up to $200,000 and up to 10 years in jail or both) for paying or soliciting kickbacks in the recovery area to provide or refer for provision of care by a recovery home, clinical treatment facility or laboratory. There are a few exceptions for properly disclosed discounts, employment relationships, management contracts and other safe harbors similar to those under the Anti-kickback statute; and, this new law also applies to any federal health care benefit program. Although the targeted facilities are a narrow range of entities providing care in the drug treatment space, the definition of “laboratory” is as broad as that under the Public Health Service Act, which reaches most clinical laboratories in America. While treatment facilities and recovery centers have reason to pay attention, the implications for all laboratories are broader and the penalties twice as harsh as those under AKS.
Medicare has the right to recoup Medicare overpayments, pending a provider’s appeal through the byzantine appeals process. Here we address two cases on recoupment: one refusing relief from recoupment pending review – the traditional response to these complaints – and, one forestalling recoupment by issuing a TRO. Since the paralysis of the Administrative Law Judge review process, which has stalled appeals for two years and more despite Federal court orders to move things along, the courts have approached the recoupment issue variably. A Federal court in Ohio refused to enjoin the recoupment of almost $11 million dollars from a home health agency based on extrapolation of a review of 30 records after an initial overpayment determined the year before found about $60,000 in overpayment. Accident Injury and Rehabilitation PC et al v. Azar (C/A No4:18-Cv-02173-DCC). Even though the agency argued that it would be irreparably harmed before it could exhaust its appeal rights, the court found the agency’s success on review was unlikely and that the agency could not show it was deprived of a due process right. By contrast, a SC Federal Court found that a chiropractic practice, from which Palmetto GBA had withheld $1.8 million in response to an AdvanceMed ZPIC audit, was entitled to a temporary restraining order against the recoupment, PHHC, LLC v. Azar, No1:18CV1824 (ND Ohio) since exhaustion of administrative remedies would harm the practice in a way that could not be recompensed, despite what the traditional law requires. The court found that the ALJ process was the most important step in the appeals gauntlet, since new evidence can be introduced there. Since ALJ’s overturn lower decisions 60% of the time (!), this court found the likelihood of success on appeal was great. The TRO was issued. These decisions highlight the types of arguments that can succeed when the government’s appeal process is broken. It has been virtually impossible in the past to get any relief from recoupment pending appeal. There is some light now in this tunnel of process.
Although there is nowhere near as much substance to the 2019 MPFS Stark issues, the regulators have confirmed that they will permit a lease arrangement or personal service arrangement to continue indefinitely beyond the stated expiration of the written documentation under certain circumstances as set forth in existing regulatory provisions. With regard to compensation arrangements, the concept of the relationship being documented in writing is reconfirmed to allow a collection of documents, including contemporaneous documents evidencing the course of conduct between the parties. Both of these issues were supported by subsequent statutory language. Similarly, with regard to the non-compliance of a transaction with the regulatory exceptions, with respect to missing signatures, not later than 90 days following the date on which the arrangement became non-compliant the parties must obtain the signatures. Because of statutory requirements, the applicable signature requirement is not limited to specific exceptions and entities nor is it any longer limited to being used only once every three years with respect to the same referring physician.
A recent 11th Circuit Court of Appeals case has finally put to rest any remaining controversy over whether employers may incentivize and pay bona fide employees for referrals. In that case, an AIDS foundation paid its employees to refer additional patients to it. The court had no difficulty finding that the payment was legal under the antikickback statute.
It should go without saying in this day and age, that any entity which bills federal payers without having in place a robust compliance program is simply playing with fire. Too many physician practices and other entities adopt a plan and then simply let it languish. We have had to update our Compliance Plan Development Protocol multiple times to be sure we have captured developing risk areas. Likely we will have to do it again soon. However, if anyone had doubts about the need to review their compliance plan, update it and then comply with its direction, in April 2019 the US Department of Justice Criminal Division (!) published a document on how they think prosecutors should conduct Evaluation of Corporate Compliance Programs. Whether a program is truly effective is directly relevant to whether there might be mitigating or aggravating factors to lower or raise the criminal penalties associated with violating behavior. But the real import of the guidance is that all entities subject to federal law ought to take this opportunity to revamp and amp up their compliance programs. In our AGG Note, we have taken the DOJ generic guidance and recast it in the context of the clients we represent – physician practices, IDTFs, health systems, pharmacies, DME providers, practice managers, billing companies and the like. We have identified a simple ten point list of things to revise in upgrading a compliance program. We also advise our readers that the point of a good compliance program is not to offer defenses or mitigation to prosecutors; the point is to prevent problems in the first place.
For most of her career, Alice has had to call on and be called on by valuators and accountants to meet the needs of her clients. She has worked extensively with David Glusman of Marcum LLP and in September 2019, he interviewed her about her views on forthcoming government efforts regarding enforcement of matters involving fraud and abuse, fair market value and the like.
We have written extensively on the voluntary repayment rules and Dan has added to that with his new publication “Key Questions and Answers for Medicare Voluntary Repayments,”. Alice focuses on a specific unappreciated trap lurking in the audit process as it relates to voluntary repayments in “Heightened Peril From Physician Audits” because an external audit by one of the myriad federal contractors is prima facie credible evidence there is something to be looked at. It is more important today than ever to approach an audit properly in order to come out with a positive result. Internal audits create their own separate obligations to take action. Physician practices and anyone else paid under Parts A and B would do well to take heed.
While we previously noted the arrival of the draconian EKRA statute, passed in dark of night, enforcement has begun. Among the earliest settlements announced by the Department of Justice was a conspiracy to broker patients to recovery centers. While we don't think our clients would engage in such activities, the point of reporting these settlements and guilty pleas is that the government will enforce and whistleblowers are likely to pay attention to the less scandalous challenges this law presents to otherwise law abiding providers.
The use of off shore services and personnel to contribute to the delivery of health care has a long standing presence in health care. Yet, state law, federal reimbursement principles and other federal laws create barriers to the use of overseas personnel, resources, information technology and more in the delivery of health care. Issues of whether supervision can be rendered from afar, licensure requirements, HIPAA restrictions and Medicare reimbursement prohibitions create a challenging context to make these arrangements work. Dan Shay explores all of this and offers practical contractual language to use in any of these undertakings in his article "The Lure of Foreign Shores: Outsourcing of Overseas Health Care Functions" in the 2021 edition of the Health Law Handbook.
The role of the billing function in physician practices is critical-- so critical that many groups do not trust themselves to do it effectively. They outsource this role. Hospitals are increasingly doing the same thing. The billing function is also essential in emerging transactions such as leasing a practice to a health system, private equity management contracts, MSOs and more. In her article "Billing Company Contracts: Accountability and Pitfalls" Alice elucidates who does this work, explores and challenges the traditional compensation model for these tasks and offers an alternative approach. She addresses performance metrics to be considered, and then dissects the allocation of responsibilities to be set forth in these agreements. She further assesses the implications of the Medicare reassignment rules, the OIG's Model Compliance Guidance and its import, and then presents information on what happens when things go wrong. This little addressed area of the law merits significantly more attention than it has gotten to date.
Diagnostic testing in Medicare is a thorny, complicated subject that touches on multiple different regulatory schemes, requirements, and prohibitions. Many physicians and their managers are confused by the interplay of Stark, anti-kickback, incident-to, and supervision rules. If not managed effectively, this issue can lead to overpayments, denied claims, and false claims liability. Dan explores these issues in two articles. In “Stark, Diagnostic Testing, and Group Compensation,” Dan examines how diagnostic testing can affect a physician group’s compliance with Stark, especially with regards to how the group pays its physicians. In “Navigating Spaghetti Junction: The Intersection of Medicare’s Diagnostic Testing Rules,” Dan takes a much deeper dive into the topic and explores a broader range of Medicare regulations and how they intersect in diagnostic testing. The article offers both legal analysis, and touches on real-world experiences our clients have had in this area.
As the concept has unfolded from an article in Health Affairs in December 2006, we have expressed skepticism about the implementation of Medicare Accountable Care Organizations (ACOs). The proposed regulations were met with resounding criticism throughout the industry from almost all sides; and the supporting statements, by the Federal Trade Commission on antitrust and the OIG on fraud and abuse, derided both as too restrictive and too lenient. Many forget that this program enacted as part of health reform was never intended to be applicable to most provider groups. At its best, CMS has estimated that 75-100 provider entities will be approved as ACOs.
We firmly believe this is a considerable over-estimate even if there is a complete revamping of the regulations. We are not alone. In “Onerous Regs Put ACOs on the Ropes” Alice and Jeff Goldsmith are the principal interviewees explaining why of the 5800 hospitals and more than 780,000 physicians in America, very few will find themselves in Medicare ACOs. That said, the pressures to be accountable for care and what that will require are an entirely different proposition. In “ACOs vs. Accountable Care: Is There A Difference?”, Alice further describes the problems with the Medicare approach, but elucidates the essential activities that are necessary to be accountable for care; and they are activities that providers should be engaged in even if no one pays them differently.
While specialists are seeking employment by health systems, health systems are forming multi-specialty groups and the billiard balls are repositioning themselves throughout the country, the illusion that health system employment of physicians will solve alignment problems going forward is unfortunately far too simplistic for the current state of affairs. In her new HEALTH LAW HANDBOOK chapter, “Avoiding Marriage: Hospital and Physician Non-Acquisition Financial Strategies” Alice examines these issues in greater depth than was presented in her teleconference. She explores the phenomenon of enthusiasm for full merger business strategies and offers a range of other techniques by which physicians and hospitals may bond more tightly while physicians remain independent---all with particular emphasis on improving healthcare value and quality.
Under the Stark statute and regulations, there are significant restrictions on how hospitals may pay physicians or provide financial benefit to them. In today’s environment of increased demand for quality performance, paying physicians for their contribution to hospital quality performance is increasingly a sought after technique. In the proposed update to the 2009 Medicare Physician Fee Schedule (MPFS), CMS asked for comments on how they should approach gainsharing (“shared savings programs”) and quality performance payments (“incentive payment plans”). Alice responded with comments on the quality payments. We do not believe gainsharing programs are about quality. They are about saving hospitals money. They have a short shelf life, distract physicians from work they should be doing, and are not sustainable as a business model. We do not comment on them to the government, although we do advise clients who choose to implement them. Most of the programs which have been greenlighted by the OIG are so overloaded with safeguards and protections that they have relatively little utility, other than to the consultants whom the OIG apparently thinks are a protection in their structuring and review of these programs. Unfortunately, in their proposed regulations, the government failed to understand the very significant policy and operational differences between programs that pay physicians a portion of shared savings and programs which pay physicians for contributing to improved hospital quality performance as measured on nationally recognized bases.
When the time came to actually publish an exception that would address these issues, the regulators waffled. Instead they posed 55 specific questions about how to regulate these programs. There are many ways in which the Stark program is out of control and this is one of them. Admitting their lack of familiarity with quality measurement or improvement techniques, they called for answers to their questions, leaving the comment period open another ninety days into February. Alice has provided a 16 page response addressing quality performance payment programs, setting forth the minimal regulation that is necessary here to safeguard patients and protect against rewarding referrals. The government has to stop using the Stark statute as a vehicle for basic regulation of issues that are highly regulated already in other contexts.
The fraud and abuse liabilities which lurk in inadequate quality performance have been highlighted on this website since 2003 with an AGG Note and later Alice's article in The Journal of Health Care Compliance, “Doing What Matters.” From Jim Sheehan’s first public statements on his priorities regarding quality enforcement, to the first OIG settlement based on quality failures, to Sheehan’s 2006 PowerPoint enumerating the many ways in which quality will be the foundation for fraud enforcement, the weight of punitive attention is increasing. Now, with the OIG's published statements regarding Board responsibility for quality in hospital, and a major initiative on nursing home quality performance beginning with a joint publication with the Health Care Compliance Association the pace of the inexorable moves in this direction has quickened considerably. Those who ignore the risks do so at their own peril.
First convened in December 2004 as a disparate group of experts intending to design a new payment model, PROMETHEUS Payment® Inc., was awarded a $6.4 million grant from the Robert Wood Johnson Foundation, to develop a scorecard, refine the concepts and most importantly test the program in four pilot sites across the country. Having modeled its first Evidence-informed Case Rates™ for actual implementation beginning in 2009, the results are quite stunning. In her plain language article, “Making PROMETHEUS Payment® Rates Real: Ya’Gotta’ Start Somewhere” Alice explains the methodology of constructing the rates. First, she elucidates how the Design Team took into account its clear understanding that physicians would be suspicious of rates built on claims data. There are five specific financial cushions built into the rates. The result is that the care for a controlled non-insulin dependent diabetic, whose care comes primarily from a physician office, would be paid based just on the claims data at $311 a year; but, under the PROMETHEUS system, the same patient’s care would be eligible for $2329 to the physician!!! At the same time, what is most remarkable, is that this approach to the broad problem of delivering science based diabetes care would save the system represented in just the database we are using and this one condition, more than $340 million. This is a very powerful reason to move to the PROMETHEUS Payment® model. Similar results are emerging for the other conditions we will address initially as well. The more important hidden message in the article, though, is whether our specific program is implemented is not the issue. Throughout the American healthcare system, we are spending extraordinary amounts of money on potentially avoidable complications, while we are not paying providers enough to do what needs to be done to prevent those complications in the first place. Exploring which services the PROMETHEUS model considers to be potentially avoidable, and then analyzing how to avoid them, is a good way to think about how to organize clinical service delivery for better results with greater efficiency.
A case decided in the Commonwealth Court of Pennsylvania has taken the quality-payment nexus further without any “never event”, or a finding of fraud, or even a bad outcome to the patients involved. In Pinnacle Health System v. Department of Public Welfare (2008 WL 140985) the hospital appealed from payment denials affirmed by the Bureau of Hearings and Appeals. The Medicaid agency denied payment for psychiatric hospitalizations where the patients were not seen by a psychiatrist on a daily basis. The hospital argued there was no regulation requiring it. The agency argued that this failure caused care to fall below the regulatory requirement that care be rendered in accordance with "accepted medical treatment standards." Both sides had experts -- the hospital's testifying to the fact that daily visits were not medically necessary, the agency's that daily visits were the standard of care. While the standard of judicial review for administrative purposes was whether the determination by the agency was supported by substantial evidence, the court held that even though the standard of ‘accepted medical treatment standards’ was general, it was not improperly vague and did put providers on notice of what was expected of them.
Considering (1) standard managed care contract language regarding treatment in accordance with accepted standards of care, (2) the burgeoning expectations that American health care should be provided at higher levels than it is, (3) increasing fraud and abuse liability for quality failures and (4) that malpractice caselaw which addresses the standard of care has imposed as the standard of care treatment regimens not widely applied, the Pinnacle case offers a tightening view of the quality imperative. Without a finding of malpractice, fraud, or a “never event” payment denial for failure to deliver services properly is a new reason to do the right thing at the right time in the right way.
Pay for performance programs show no signs of abating in popularity, yet their impact remains equivocal. Whether quality would be better if physicians within groups also paid themselves based on quality performance is unknown. If the incentives of P4P are to have impact, how are those monies distributed to the individual physicians once the group gets paid? There is virtually nothing in the literature on point. In “Physician Compensation for Quality: Behind The Group’s Green Door,” Alice looks at the data on P4P programs, the basics of traditional compensation within groups and then presents the findings from a unique survey which was sent out on her behalf by the AMGA producing responses from 14 groups around the country who are variably paying for quality as part of physician compensation. Some report significant improvement in quality performance too. Alice then looks at the payment reform models on the horizon and concludes that traditional notions of productivity, on which most current group compensation models turn, will not reward what the new systems, and most particularly the PROMETHEUS Payment® model (www.prometheuspayment.org) is designed to generate. She examines whether the Stark rules on compensation will be a barrier to changed, creative approaches, concludes that it will not, and then looks at what employment contracts will have to accommodate to make physician compensation for quality within groups real and of value to both patients and physicians.
As health plans and health systems have consolidated and fraud and abuse enforcement has intensified throughout healthcare, the natural business tendencies in any other industry for business partners to find ways to benefit each other economically in win-win strategies has been stifled in health care. Anxiety over fraud and abuse and antitrust risks, has gotten in the way of hospitals and physicians on one hand and health plans and physicians on the other working together for their mutual economic benefit with the purpose of improving quality. In a new chapter in the Health Law Handbook, Alice makes the argument that until the three principal drivers of the care that patients receive in this country take common ownership of the quality mission and stop thinking of themselves as disparate, adversarial stakeholders, quality will never advance to the levels we would like. "In Common Cause for Quality" she articulates a perspective on how to consider a business case for quality, sets forth the quality demands on hospitals and health plans which cannot be met without full cooperation of physicians and debunks the myths that the law impedes collaboration which benefits any party economically. She then enumerates 10 specific strategies by which hospitals and health plans can advance the physician's business case for quality through activities with direct beneficial financial impact on those physicians. She also presents 6 additional strategies through which physicians can and will have to help hospitals to optimize their quality efforts.
In "Enhancing Oncology's Business Case: How the Hospital Can Help" she presents a crisper version of these arguments in terms of how oncologists can safely look to their hospitals to help them with their own quality demands.
Prosecutors are becoming increasingly interested in how quality implicates the fraud and abuse statutes. From understaffing in hospitals, to care which does not meet professionally recognized standards, to over-utilization, new theories of false claims and flat out fraud based on the clinical care rendered are emerging. Initially used to force some 40 or more false claims settlements around the country with nursing homes, prosecutors have now made it clear they intend to use similar theories to prosecute hospitals. In the current environment of diminishing reimbursement and heightened attention to quality, the fraud and abuse risks from less than optimal clinical behavior can no longer be ignored. Unless these issues are addressed in compliance programs, those initiatives will remain mired in the narrow focus of the administrative minutiae of billing problems, leaving the health care enterprise vulnerable and their compliance staff isolated from the principal focus of the organization – delivering high quality care.
At the same time, how to set priorities for compliance activities is beginning to stymie those compliance programs that addressed initial, low hanging fruit with corrective, voluntary actions. Some of our clients are struggling with where to go next. Many of them seem to believe that the role of compliance is to forever search out errors to report and repay. We do not share this view. We believe compliance is about doing it right in the first place and cleaning up problems found. It is not about eternal internal inspection. Our new AGG Note, “The Quality/Compliance Nexus: Moving to Programmatic Integration” examines the developing enforcement environment, sets forth liabilities already on the books, and then discusses how using clinical practice guidelines in compliance can integrate its import into the fundamental mission of health care. The result can be to (1) enhance compliance itself by making it meaningful for those from whom compliance is sought, (2) save time for the clinicians, and (3) actually improve quality on an on-going basis.
The last five years have heard a relentless call for information technology dissemination to improve quality and lower costs in health care. Electronic health records (EHR) have been touted as the first and most important step to a real technology revolution. For physicians, though, the cost of EHR implementation has often proven prohibitive. The Stark and anti-kickback protections for donated medical records was expected to jumpstart this effort. Not so fast. In his consideration of downstreamed EHR licenses Dan Shay takes his primer on EHR license agreements a step further in explicating the special complications of tri-partite license agreements. What happens on termination is at least as important as what is entailed in implementation.
For quality to advance in this country, it is becoming increasingly clear that universal electronic medical records will be necessary. Proposed regulations to permit hospitals to provide record systems to their physicians have been published under Stark. Many physician practices are looking to obtain these programs. Whatever the source of an electronic health record system, it is certain there will have to be a license agreement by which the practice obtains access to the software, unless they build their own. In "A Primer on Electronic Health Records License Agreements", Daniel Shay reviews the context for these contracts, elucidates their common features, based on reviews of real-life documents, and points out pitfalls that physician practices should avoid in obtaining access to these vital practice accessories. In a practical, easily applied application of the deeper issues addressed in the primer, Daniel has also offered guidance on “Top Ten Questions To Ask When Looking At An EHR License Agreement.”
Although for most Medicare entities, the maintenance of an effective compliance program is not mandatory, the absence of an effective compliance program is foolhardy. Halfhearted attempts at compliance can also create liabilities. This was dramatically demonstrated in the case of United States and State of Wisconsin, ex. rel Keltner v. Lakeshore Medical Clinic, Limited. Here, the whistleblower former employee brought a suit against a large multispecialty medical group for false claims on a host of bases, many of which were dismissed. But her allegations on evaluation and management services survived. The predicate for her claim was that an annual internal audit of 25 claims per physician demonstrated that two physicians had each up-coded more than ten percent of their claims. The employee alleged that even though the medical group returned overpayments related to their specific claims found to have been up-coded, the non-audited claims were not reviewed. She further alleged that the medical group subsequently stopped engaging in review of E/M services codes. Neither the United States nor the State of Wisconsin chose to intervene in the action. Nonetheless, the court refused to dismiss the case, focusing on the group's ignoring audits which disclosed "a high rate of upcoding." The court went on to say, "These allegations plausibly suggest that the medical group acted with reckless disregard for the truth." While many physicians wonder what reckless disregard might mean, this is one of the few cases that has actually confronted the issue.
The case is noteworthy in that it focused around an organization that engaged in self-audits. This puts a premium on taking compliance seriously, as we have noted previously [See also links: #3; 51; 48; 45; 42; 33]. This case raises some significant issues with regard to how groups should interpret what they find on self-audits. With the new liability for false claims for failure to return overpayments within 60 days of their identification, more of these cases are likely to occur. It would also be important to focus on the OIG's Work Plan as we explain in our article, "May you never meet the OIG: The Work Plan." In updating your compliance plan, it is also time to include quality-based issues as Alice describes in "Quality fraud: Two pathways to trouble." While there are still no final regulations under the 60-day repayment rule, prudent practitioners will revisit their compliance programs and will seek legal counsel in evaluating the significance of what is learned on probe audits and more extensive self-audits.
Lawyers offer special expertise which health care providers need in order to function in their highly regulated contexts. In addition, the special liability problems faced by those providers who do not meet the standard of care, merit careful attention to risk management. But increasingly, we see hospitals who are held captive by attorneys who needlessly scare them about compliance and liability risk. There are increasing tensions in this regard in the new world of quality transparency. We see lawyers advising physicians in so restrictive a way as to impinge on their ability to function as business entities. We see lawyers who over-estimate the nature of compliance problems and recommend potentially more risky efforts to fix them. After 35 years of working in this area, Alice can say, without limitation, that older lawyers offer more seasoned and reasoned advice than younger ones. Young lawyers get hysterical and rigid about things which do not merit such anxiety. In addition, too many lawyers of all ages over-control the situation where, mostly, the risks are purely the client’s to take.
On the other hand, it is not well understood that lawyers advising health care providers, and particularly boards of trustees, have personal liability, not only for what they do, but increasingly for what their clients do. This cannot help but influence the way they give advice. Still further, the context for the relationship between attorney and client can also color the way advice is given. What is the lawyer’s liability and how do we take that into account? Does a member of the law firm sit on the board of the hospital? How important are we as a client to the firm advising us? How does that affect what we are hearing from them? How did the in-house counsel pick the attorney she is recommending for a technical issue? What kinds of information should clients ask to assess the advice they are getting? Finally, are there certain kinds of issues on which the lawyer should be taken more seriously than others? These matters are never discussed openly – at the board, between the client and attorney, or by attorneys themselves. Alice is taking this issue on in a new webinar that addresses “When Should You Listen to Your Lawyer?” Aimed at hospital trustees, the issues she poses are relevant to all clients in the health care industry.
The issue of how physicians can collaborate effectively when two specialties seek to perform the same services has presented increasing challenges in many contexts. A classic problem area with regard to this is the advent of coronary computerized tomographic angiography (CTAs) performed by cardiologists who generally do not read the full chest cavity. In contrast, radiologists frequently hold exclusive privileges at the hospitals at which they practice and are not as intensely focused on cardiac organs. The American College of Radiology asked us to provide them with a white paper elucidating potential reimbursement liabilities associated with splitting these interpretations. That white paper is now available addressing these issues, all of which would be obviated with the advent of PROMETHEUS Payment®.