The call for generating more value in the delivery of and payment for health care has encompassed a long-standing criticism of the fee for service payment model that has traditionally applied to physicians. How to compensate physicians, whether as a physician group or health system employer, is an on-going bulwark to those efforts.  In "Coping with Merging Streams: Legal Issues in Physician Compensation", Alice reviews multiple new forms of revenue from payment for physician services including – 6 forms of commercial payment along with the challenges of the new evaluation and management codes, 5 federal programs and another 4 vehicles often associated with different payment.  She considers their relative effects and the compliance issues each generates, as well as contractual pitfalls they present. Then she examines the practical impact these programs have had on the physicians they are intended to motivate, taking into account as well the widespread consolidation of physicians with health systems. Against that background, including the advent of the value-based enterprise exceptions and safe harbors, she explicates issues in physician compensation presented by the 2022 Stark rules on physician productivity and profit-sharing within a group.  She includes the need to account for external audits and voluntary repayments and offers contract guidance. The complexity of these sources of revenue combined with the restrictions of Stark present a major challenge in physician compensation relationships and agreements.

Social determinants of health have risen to the forefront of changes in payment to acknowledge that factors such as food, housing and other environmental issues can have a direct impact on the health of people for whom the government (and private payers) pay for care.  Both government and private payors traditionally have not offered any payment for services that address social determinants of health directly.  That, however, is changing in the new health care environment.  In “Finding an Oasis in the Food Desert: Legal Issues in One Social Determinant of Health”, Dan Shay explores the new payments and programs that are available to support people with diabetes, hypertension and other conditions affected by nutrition and food availability.  In addition to new payment potentials, both for providers and patients in Medicare and Medicaid, there are a range of legal issues that can arise in providing or arranging for food support, from compliance risks associated with beneficiary inducements, to Medicare enrollment, to HIPAA, to documentation issues and more. Dan considers all of these, as well as practical issues that health care providers may face, clarifying a rapidly developing area of both social and health care policy combined, which should be of interest to those who represent a wide range of providers.

Following promulgation of two sets of interim final regulations (IFRs) by the Departments of Labor, Treasury, and Health and Human Services, we now have regulations for the No Surprises Act of 2021 which addressed balance billing prohibitions for some providers and transparency issues for all providers.  In our AGG Note, “The No Surprises Act Regulations,” we explain both sets of requirements.  They are both detailed in some ways and vague in others.  What a surprise!

The split/shared rule is back with a few alterations.  The original rule was promulgated through CMS’ manual system, and dates back to the Carrier’s Manual.  CMS has now implemented the rule as a regulation (42 CFR § 415.140), liberalizing several aspects and restricting different aspects.  The new rule expands available settings to include SNFs and nursing facilities, and may now also be applied to new patients instead of just established patients.  In our AGG Note, “Split/Shared Visit Revisions,” we explain the requirements around what constitutes the “substantive portion” of the visit which determines who can bill for the service.  Two methods are available in 2022: component-based or time-based.  For 2023 and beyond, the “substantive portion” can only be time-based.  The split/shared visit rules will form the basis for overpayments and false claims if physicians and their NPPs fail to comply with the rules.

Many of our clients have struggled over the years with the effect of Local Coverage Determinations (LCDs) issued by their local Medicare Administrative Contractor (MAC) in Transmittals, FAQs and newsletters.  They can be found on each MAC's website, but they don't always cover the same topics, MAC to MAC; and they sometimes seem inconsistent with National Coverage Determinations (NCDs) which are available in the NCD manual. In 2019 the Supreme Court said in Azar v. Allina Health Services, that the government, in Medicare, must use a formal notice and comment period to issue a rule that creates a 'substantive legal standard', as for coverage. The controversy since has been what types of decisions fall into that category.  For example, when the split/shared visit rules were first published, they were not in regulation and after the Allina case, were withdrawn. (See AGG Note) The determination of what qualifies as a substantive legal standard is relevant not just to reimbursement and payment issues, but also in false claims cases.  The common wisdom had been that the government could not rely on sub-regulatory guidance for enforcement of its programs. The 9th Circuit in Agendia v. Becerra (July 2021), acknowledging Allina, has staked out a position that LCDs need not be published pursuant to notice and comment if they do not establish a substantive legal standard. The standard in the LCD at issue was that the services be 'reasonable and medically necessary'. The MAC uniformly refused to pay for Agendia's diagnostic testing because it did not meet that standard.  Interestingly, the statute itself sets forth the reasonable and medically necessary standard. But, the MACs have a lot of room for interpretation there. Taken together, this means LCDs can be imposed on providers without having been formally published subject to comments. These cases have also changed the way we do legal research. We now look for MedLearn Matters articles, newsletters, FAQs and other informal publications to inform our guidance. We suggest our clients do the same.

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!

Many of the issues we, and other lawyers, address for our clients entail unsettled law or areas where the risks range from pearl gray to charcoal grey without being illegal per se.  In an 11th Circuit opinion in 2021, in Reynolds v. Mintz, Levin, a disgruntled laboratory's bankruptcy trustee sued a prominent health law firm for legal malpractice because the firm did not affirmatively instruct the client to stop paying physicians processing and handling fees. When the client sought advice regarding a competitor's behavior in paying high fees, Mintz Levin offered several options including reporting the competitor to the government, while advising regarding the risk in doing so, given their own practice of paying such fees.  The lab went bankrupt, but was also sued for $25 million by a whistleblower for the payment of the handling fees. The court found that the law was unsettled at the time the law firm's advice was given; so there was no obligation on the law firm to advise the client to stop what it was doing. What this means for many of our clients seeking guidance is that there is often no settled law on point; and the business decision belongs to the client. Not us.  Unlike informed consent in medicine where there is often data regarding risk of complications, we often have zero data available and must rely only on our own judgment.  One of the values in using a health law focused firm like us is that our judgment comes from long-standing reviews of a wide variety of transactions.  That said, there is, still, often no clear answer.  Welcome to health care!

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.