AHLA. Fundamentals of the Stark Law and Anti-Kickback Statute. Asha B. Scielzo Pillsbury Winthrop Shaw Pittman LLP Washington, DC

Transcription

1 AHLA Fundamentals of the Stark Law and Anti-Kickback Statute Asha B. Scielzo Pillsbury Winthrop Shaw Pittman LLP Washington, DC Fundamentals of Health Law November 12-14, 2014

2 Fundamentals of the Stark Law and Anti-Kickback Statute American Health Lawyers Association Fundamentals of Health Law Conference November 13, 2014 Asha Scielzo Pillsbury Winthrop Shaw Pittman LLP Agenda I. Anti-Kickback Statute Overview, Penalties Elements Exceptions and Safe Harbors OIG Guidance Disclosure II. Stark Law Overview, Penalties Elements Exceptions CMS Guidance Disclosure III. Comparing and Contrasting the Two Laws IV. Practical Applications and Hypotheticals 1

3 Plenty of Headlines 2

4 Fraud Enforcement Recovery Figures $4.3 billion in FY 2013, up from $4.2 billion in FY 2012 Fifth consecutive year of increasing recoveries $19.2 billion recovered over the last five years (twice amount recovered during prior five-year period) In 2013, DOJ opened 1,013 criminal health care fraud investigations and 1,083 civil health care fraud investigations For every $1 spent on investigations in the last three years, the government has recovered $8.10 Since passage of the Affordable Care Act, CMS has revoked the ability of approximately 15,000 providers and suppliers to bill the Medicare program ANTI-KICKBACK STATUTE OVERVIEW, PENALTIES 3

5 The Anti-Kickback Statute (42 U.S.C. 1320a-7b(b)) Prohibits knowingly and willfully soliciting or receiving, offering or paying: Any remuneration (including any kickback, bribe or rebate) directly or indirectly, overtly or covertly, in cash or in kind To induce or reward the referral, purchase, order, lease or recommendation of Any item or service that may be paid for under a federal healthcare program Key Points Broad application Physicians, Hospitals, Vendors, Consultants, Group Purchasing Organizations, Medical Device/ Pharmaceutical Companies Intent & One purpose rule Voluntary Safe Harbors Facts & Circumstances Analysis 4

6 Penalties Severe Penalties/ Criminal Offense (Felony) $25,000 per violation Civil Money Penalties may be assessed Up to 5 years imprisonment Exclusion (Conviction results in mandatory exclusion from participation in federal health care programs. Absent a conviction, individuals who violate the Anti-Kickback Statute may still face exclusion from federal health care programs at the discretion of the Secretary DHHS) No private right of action Predicate for False Claims Act ANTI-KICKBACK STATUTE - ELEMENTS 5

7 Broad Language Offers, pays, solicits, receives Payment need not actually be made for the law to be violated; an offer or solicitation is enough Both sides of a transaction can be in violation of the statute For referring an individual For purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing, or ordering Even traditional marketing activities or price discounts have been interpreted to be within the scope of the statute Remuneration Court interpretations of remuneration in the AKS Anything of value and broad interpretation of remuneration Independent value to the physician Whether the recipient paid fair market value for the item or service received Whether the motivation for providing something of value was a proper institutional goal If a party pays anything other than fair market value (whether more or less), this raises an inference that some part of the payment is intended to influence referrals 6

8 Remuneration Items and services OIG has concluded are not remuneration In-office Phlebotomists Billing and reimbursement support services Providing patient health care information Written radiology reports Pharmaceuticals to free clinics Electronic questionnaire kiosks Vaccination reminders (to patients and parents of patients) Remuneration Items and services OIG has concluded may constitute remuneration, depending on the facts and circumstances Free computers Free biopsy needles Chart review and infection control services for nursing homes Pharmacy employees Hospice services in a nursing home Compliance program guidance to pharmaceutical manufacturers Reimbursement consulting services Labeling of test tubes and collection containers Vaccine reminders (to physicians) Lodging and transportation assistance 7

9 Knowingly & Willfully Intent element criminal statute One Purpose Most circuits adopt the one purpose test : even if there are other legitimate reasons for the payment, if any one purpose is to induce referrals, it is illegal under the Anti-Kickback Statute (United States vs. Greber, 760 F.2d 68 (3d Cir. 1985)) Intent requirement relaxed under Health Reform PPACA amends the Anti-Kickback Statute to provide that a person need not have actual knowledge of this section or specific intent to commit a violation of this section. This amendment is likely to eliminate the Hanlester defense, which interpreted the Anti-Kickback Statute to require proof that the defendant had specific knowledge of the law and engaged in prohibited conduct with the specific intent do disobey the law. (Hanlester Network v. Shalala, 51 F.3d 1390 (9th Circ. 1995)). To Induce Not defined in the Statute or implementing regulations Hanlester Something between an agreement to refer and mere encouragement An intent to exercise influence over the reason or judgment of another in an effort to cause the referral of program-related business. See also United States v. Anderson, 85 F.Supp.2d 1047, 1068 (D.Kan. 1999) (overturned on a different issue) - The government must prove that remuneration and patients are somehow linked. 8

10 ANTI-KICKBACK STATUTE EXCEPTIONS AND SAFE HARBORS Statutory Exceptions and Safe Harbors Certain types of payments are excluded from consideration by statute (referred to as statutory exceptions) In addition, the OIG has adopted safe harbors to protect specifically identified business and financial practices from prosecution Compliance with safe harbors is voluntary, but recommended If a provider fully complies with a safe harbor, the practices in question are not unlawful Compliance with the narrow and detailed requirements is difficult If a transaction does not fit within the safe harbor, it is not necessarily illegal. It must be analyzed on a case by case basis utilizing a facts and circumstances analysis. 9

11 Statutory Exceptions Discounts Employer/employees Group purchasing Part B co-insurance waivers Risk-sharing arrangements Managed care plans Pharmacy waivers or Part D cost-sharing Discounts furnished under the Medicare coverage gap discount program FQHC and Medicare Advantage organization Regulatory Safe Harbors Investments in publicly traded and small entities Referral services Discounts Employees Warranties Space Rentals Equipment Rentals Personal services/management agreements Group purchasing Co insurance waivers Sale of professional practices E-prescribing, EHRs Increased coverage, reduced cost-sharing, or reduced premiums offered by health plans Price reductions offered to health plans, eligible managed care organizations Practitioner recruitment Obstetrical malpractice insurance subsidies Investments in group practices Cooperative hospital service organizations Ambulatory surgical centers Ambulance replenishing 10

12 Employment Safe Harbor (42 U.S.C. 1320a- 7b(b)(3)(B); 42 C.F.R (i)) Paid by employer to employee Employee has bona fide employment relationship with employer Employment is for furnishing of any item or service reimbursable under Medicare, Medicaid, or other Federal health care programs Rental of Office Space Safe Harbor (42 C.F.R (b)) Set out in writing Signed by both parties Lease covers all premises leased and specifies covered premises If lease is for less than full-time use, specifies exact schedule of intervals of use, their length, and precise rent for each interval Term not less than one year Rental charge is: Set in advance Consistent with fair market value Does not take into account any business generated between parties for which payment may be made by a Federal health care program Space is reasonable and necessary for business purpose 11

13 Personal Services Safe Harbor (42 C.F.R (d)) Set out in writing and signed by both parties Covers all services agent provides over term of agreement and specifies services (and services are reasonable and necessary to accomplish their business purpose If less than full-time, specifies exact schedule of intervals of service, precise length of intervals, and exact charge for each interval Term not less than one year Compensation is: Set in advance Consistent with fair market value Does not take into account any business generated between parties for which payment may be made by a Federal health care program Services do not involve counseling or promotion of activity that violates law Practitioner Recruitment Safe Harbor (42 C.F.R (n)) Remuneration to induce practitioner to relocate primary place of practice into a shortage area for his or her specialty area Set out in writing Signed by both parties Specifies benefits provided by entity, terms, and obligations of each party If leaving established practice, at least 75% of revenues of new practice must be from new patients Benefits provided for period no longer than 3 years and terms not substantially renegotiated No referral requirements 12

14 Practitioner Recruitment Safe Harbor (42 C.F.R (n)) Practitioner not restricted from establishing staff privileges at other entities Benefits may not vary based on business generated for the entity for which payment may be made by Federal health care program Practitioner agrees to treat patients receiving Federal health care program benefits in a nondiscriminatory manner At least 75% of new practice revenues must be from patients residing in a shortage area, medically underserved area, or part of medically underserved population Remuneration may not benefit any other person who may influence referrals to the entity ANTI-KICKBACK STATUTE OIG GUIDANCE 13

15 OIG Advisory Opinions OIG issues Advisory Opinions about the application of OIG's fraud and abuse authorities to the requesting party's existing or proposed business arrangement. Advisory Opinions are made available to the public on the OIG Website. OIG redacts specific information regarding the requestor and certain privileged, confidential, or financial information associated with the individual or entity Advisory Opinions are binding and may legally be relied upon only by the requestor (not third parties) but are often referred to for guidance as to OIG s analysis/thinking) 10 issued in 2014 so far Other OIG Guidance Periodically, the OIG issues Special Alerts and Bulletins addressing relationships or conduct that the OIG has identified as a potential source of fraud and abuse Recent 6/25/2014 Special Fraud Alert on the subject of Laboratory Payments to Referring Physicians The OIG also occasionally issues Open Letters to health care providers alerting them to OIG policies and processes; inviting them to engage in anti-fraud initiatives; and updating them on ongoing projects The OIG has also issued a series of compliance guidances to assist the industry in development of compliance programs 14

16 ANTI-KICKBACK STATUTE - DISCLOSURE OIG Provider Self-Disclosure Protocol Providers who wish to voluntarily disclose self-discovered evidence of potential fraud to OIG may do so under the Provider Self-Disclosure Protocol (SDP) Not available: For a matter that does not involve potential violations of Federal criminal, civil, or administrative law for which CMPs are authorized(such as one exclusively involving overpayments or errors) To request an opinion from OIG regarding whether an actual or potential violation has occurred For disclosure of an arrangement that involves only liability under the Stark Law The disclosing party is expected to conduct an internal investigation and report its findings to OIG in its submission. 15

17 Stand in the Shoes: Effect How are you feeling? Before SITS After SITS Physician Organization Physician Organization STARK LAW OVERVIEW, PENALTIES 16

18 Overview of Stark Law 42 U.S.C. 1395nn If a physician (or an immediate family member of such physician) has a financial relationship with an entity..., then the physician may not make a referral to the entity for the furnishing of designated health services for which payment otherwise may be made under Medicare. The entity may not present or cause to be presented a claim to Medicare or bill to any individual, third party payor, or other entity for designated health services furnished pursuant to a prohibited referral. If a person collects amounts billed in violation of this prohibition, that person must refund those amounts on a timely basis. UNLESS an exception applies Key Points Mechanical thinking If then approach Most key terms are defined No intent requirement Strict liability All elements of an exception must be met Long history of rulemaking; relatively stable now 17

19 Penalties Automatic overpayment or disallowance Strict Liability DHS entity, not referring physician Knowing violation can result in CMP liability of up to $15,000 per violation plus treble damages and/or $100,000 per circumvention scheme Potential exclusion from Federal Programs Potential predicate for False Claims Act STARK LAW - ELEMENTS 18

20 Six Key Elements In order to implicate the Stark Law s referral and billing prohibitions, there must be A PHYSICIAN who Makes a REFERRAL For DHS Payable by MEDICARE To an ENTITY With which the physician (or an immediate family member) has a FINANCIAL RELATIONSHIP IMPORTANT: don t think about the exceptions and their requirements until you have analyzed whether the Stark law prohibition applies Physician/Immediate Family Member Physician: Doctor of Medicine or Osteopathy DDS/DMD Podiatrist Doctor of Optometry Chiropractor Not a psychologist 19

21 Physician/Immediate Family Member Immediate Family Member: husband or wife natural or adoptive parent child or sibling step relative (parent, child, brother, sister) in-laws (father, mother, son, daughter, brother, sister) grandparent or grandchild and spouse of a grandparent or grandchild Designated Health Services Clinical Laboratory Services Physical Therapy Services, Occupational Therapy Services, and Speech Pathology Services Radiology Services, including MRI, CT Scan, PET, Ultrasounds, Includes Nuclear Medicine Radiation Therapy Services and Supplies Durable Medical Equipment and Supplies Parenteral and Enteral Nutrients, Equipment and Supplies Prosthetics, Orthotics, Prosthetic Devices, and Supplies Home Health Services Outpatient Prescription Drugs Inpatient and Outpatient Hospital Services 20

22 What are not DHS? Most physician services Services paid under SNF PPS Services paid under the ASC payment system Services paid under the ESRD composite rate Services that are specifically carved out from the definitions of certain types of DHS Pass-through items or supplies during ASC procedure Radiological procedures to confirm placement of an implant during a non-radiological procedure CT scans for purposes of radiation therapy guidance Lithotripsy Referral Two components to definition of referral For DHS for which payment may be made under Medicare Part B, a referral is: The request by a physician for any such DHS; The ordering of any such DHS; or The certifying or recertifying of the need for any such DHS. For DHS for which payment may be made under any part of Medicare, a referral is: A request by a physician that includes the provision of any such DHS; The establishment of a plan of care by a physician that includes the provision of any such DHS; or The certifying or recertifying of the need for any such DHS. 21

23 Referral Includes: A request for a consult and any tests or procedures ordered or performed pursuant to the consult Referrals made by others if directed or controlled by the physician Incident to services Does not include services personally performed by the referring physician Covered by Medicare Facially, Stark regulations only apply to Medicare What about Medicaid? In the context of FCA cases, DOJ has argued that Stark applies to referrals for DHS covered by Medicaid. U.S. v. All Children s Health System - $7 million settlement based on Medicaid claims allegedly submitted in violation of the Stark Law Federal government filed Statement of Interest concluding that the Stark Law applies to both Medicaid and Medicare referrals; court agreed CMS proposed but has not finalized regulations regarding Stark and Medicaid. 22

24 Entity An entity is the person or organization that furnishes DHS. A Person or entity is considered to be furnishing DHS if it Is the person or entity that has performed the services that are billed as DHS; or Is the person or entity that has presented a claim to Medicare for the DHS, including the person or entity to which the right to payment for the DHS has been reassigned Examples: Hospitals, Group Practices, Clinical Labs Does not include the referring physician but does include his or her medical practice Financial Relationship Financial Relationship Exists when the physician (or an immediate family member) has a direct ownership or investment interest in an entity indirect ownership or investment interest in an entity direct compensation arrangement with an entity indirect compensation arrangement with an entity 23

25 Financial Relationship Ownership or Investment Interest Includes interests through equity, debt, or other means and includes an interest in an entity that holds an ownership or investment interest in any entity that furnishes DHS Does not include Interest in a retirement plan Stock options earned as compensation until exercised Unsecured loans Under arrangements contracts Security interest held by a physician in equipment sold by the physician to a hospital (when financed through a loan to the hospital) Financial Relationship Direct ownership/investment interest exists between the referring physician (or a member of his or her immediate family) and the DHS entity if there are no intervening persons or entities between them Physician Owner DHS Entity 24

26 Financial Relationship Indirect ownership/investment interest Between the physician and the entity furnishing DHS, there exists an unbroken chain of any number ( 1) of persons or entities having ownership or investment interests in the next entity in the chain DHS entity has actual knowledge (or reckless disregard or deliberate ignorance) of the physician s ownership or investment interest The DHS entity need not know precise composition of chain Common ownership does not create indirect ownership interest B A C indirect ownership interest for B in C or vice versa Financial Relationship Compensation Arrangement Any arrangement involving remuneration, direct or indirect, between a physician (or a member of a physician s immediate family) and an entity. Remuneration means any payment or other benefit made directly or indirectly, overtly or covertly, in cash or in kind, except: Forgiveness of amounts owned for inaccurate or mistaken tests or procedures or correction of minor billing errors; Furnishing of items used solely to collect, transport, process or store specimens for the furnishing entity, or which are used solely to order or communicate results of tests or procedures for the furnishing entity; and Payments made by insurers to physicians to satisfy fee-for-service claims for the physician s furnishing of services to covered individuals. 25

27 Financial Relationship Direct Compensation Arrangements Any arrangement involving remuneration between a DHS entity and a referring physician (or immediate family member) No person or entity interposed between them Physician Remuneration DHS Entity Financial Relationship Deemed Direct Compensation Arrangements Stand in the Shoes Provisions Physician is deemed to have a direct compensation with a DHS entity if he or she has an ownership interest in his or her physician organization Does not apply to titular ownership The physician is deemed to have the same compensation arrangements (with the same parties and on the same terms) as the physician organization Physician Owner Physician Organization Remuneration DHS Entity 26

28 Financial Relationship Indirect Compensation Arrangements Between the referring physician and the DHS entity, there is an unbroken chain of any number of entities ( 1) that have financial relationships (either ownership/investment interests or compensation arrangements); Aggregate compensation to the physician from the closest link in the chain varies with or takes into account the volume or value of referrals to or other business generated by the physician for the entity providing DHS; AND Entity providing DHS has actual knowledge or acts in reckless disregard or deliberate ignorance of the existence of such aggregate compensation STARK LAW - EXCEPTIONS 27

29 Exceptions to the Stark Law Generally, there are three types of exceptions: For ownership/investment interests ( ) For compensation arrangements ( ) For certain services ( ) Rental of Office Space (42 C.F.R (a)) Set out in writing Signed by the parties Specifies the premises it covers. Term of agreement at least 1 year. If the agreement terminated during term with or without cause, parties may not enter a new agreement during first year of original term of agreement. Space does not exceed what is reasonable and necessary for the legitimate business purposes of lease or rental Space used exclusively by the lessee when being used by the lessee, except that lessee may make pro rata payments for use of space consisting of common areas. Shared space: Must be block leased because of the exclusive use requirement 28

30 Rental of Office Space (42 C.F.R (a)) Rental charges over term of the agreement are: Set in advance Consistent with fair market value Not determined in manner that takes into account volume or value of any referrals or other business generated between the parties Not determined using a formula based on Percentage of revenue raised, earned, billed, collected, or otherwise attributable to services performed in the office space; or Per-unit of service rental charges, to the extent that such charges reflect services provided to patients referred by the lessor to the lessee. Commercially reasonable even if no referrals were made between the lessee and the lessor. Holdover month-to-month rental for up to 6 months immediately following expiration of an agreement of at least 1 year that meets the other requirements of the exception may also satisfy the exception, provided that holdover rental is on same terms and conditions as the immediately preceding agreement. Bona Fide Employment (42 C.F.R (c)) The employment is for identifiable services. The amount of the remuneration under the employment is: Consistent with the fair market value of the services; and Is not determined in a manner that takes into account (directly or indirectly) the volume or value of any referrals by the referring physician, except for certain productivity bonuses (see below). The remuneration is provided under an agreement that would be commercially reasonable even if no referrals were made to the employer. Payment of remuneration in the form of a productivity bonus based on services performed personally by the physician (or immediate family member of the physician) is permissible. 29

31 Personal Service Arrangements (42 C.F.R (d)) Set out in writing Signed by the parties Specifies the services covered by the arrangement. Covers all services to be furnished by physician (or immediate family members) to entity. Can have separate arrangements between entity and physician (or any family members) if agreements incorporate each other by reference or cross-reference a master list of contracts maintained and updated centrally. Physician or family member can furnish services through employees whom they have hired for the purpose of performing the services; through a wholly-owned entity; or through locum tenens physicians Aggregate services do not exceed those that are reasonable and necessary for the legitimate business purposes of the arrangement(s). Personal Service Arrangements (42 C.F.R (d)) Term of arrangement is at least 1 year. If arrangement is terminated during term with or without cause, parties may not enter into same or substantially the same arrangement during first year of original term of the arrangement. Services to be furnished under each arrangement do not involve counseling or promotion of a business arrangement or other activity that violates any Federal or State law. Compensation is: set in advance does not exceed fair market value except in the case of a physician incentive plan, is not determined in manner that takes into account the volume or value of any referrals or other business generated between the parties. Holdover personal service arrangement for up to 6 months following the expiration of an agreement of at least 1 year that meets the other requirements of this exception may also satisfy this exception, provided that holdover personal service arrangement is on the same terms and conditions as the immediately preceding agreement. 30

32 Physician Recruitment (42 C.F.R (e)) Arrangement must be set out in writing Arrangement may not be conditioned on physician s referral of patients to the hospital Hospital may not determine amount of remuneration based on volume or value of actual or anticipated referrals or other business generated between the parties Physician must be allowed to establish staff privileges at any other hospitals and to refer business to other entities Physician Recruitment (42 C.F.R (e)) Payments made to induce physician to relocate to geographic area served by hospital and join the hospital s medical staff GSA defined as lowest number of contiguous zip codes drawing >75% of inpatients Physician must join hospital s medical staff (that is, no prior privileges, including courtesy) Relocation defined: recruited physician moves his/her practice location from outside hospital s service area into hospital s service area if: Moving at least 25 miles, or Deriving >75% of revenues from new patients during preceding 3 years. Significant, detailed requirements when recruited physician joins an existing (private) medical practice in the hospital s GSA 31

33 Recruitment: Payments to Group Practices Permits payments to be paid to the recruited physician by passing payments through the existing medical practice that he or she joins Except for actual costs incurred by the medical practice in recruiting the physician (which may be retained by the practice), all remuneration must be passed directly to the recruited physician Income Guarantee- guarantee against collections Practice costs allocated to the recruited physician may not exceed actual additional incremental costs for that physician Isolated Transactions (42 C.F.R (f)) Isolated transactions (such as one-time sale of property or practice) do not constitute financial relationships if: The amount of remuneration under the transaction is: Consistent with FMV; and Not determined in any manner that takes into account volume/value of referrals Agreement is commercially reasonable even without any referrals made No additional transactions between the parties for 6-months after the isolated transaction No writings, not set in advance 32

34 Nonmonetary Compensation (42 C.F.R (k)) What is nonmonetary compensation? Meals Tickets for sporting events, concerts, plays, etc. Transportation to events Flowers or plant sent to congratulate the physician on his or her new office, new home, or birth of a child Rounds of golf Birthday presents Use of entity-owned vacation home Cash and cash equivalents are not covered by the exception Gift certificates and gift cards are considered cash equivalents Exception applies only to items and services Nonmonetary Compensation (42 C.F.R (k)) Compensation from entity to physician in form of items or services (not including cash or cash equivalents) will not constitute a financial relationship if: Not determined in any manner that takes into account the volume or value of referrals or other business generated by the referring physician. May not be solicited by the physician or the physician's practice (including employees and staff members). Arrangement does not violate the anti-kickback statute (section 1128B(b) of the Act) or any Federal or State law or regulation governing billing or claims submission. Annual CPI Inflater For CY 2014, limit is $385 per physician; Calculated on a calendar year basis Calculated based on market value of item, not value to the physician Annual Medical Staff Event 33

35 Nonmonetary Compensation (42 C.F.R (k)) Where an entity has inadvertently provided nonmonetary compensation to a physician in excess of the limit, such compensation is deemed to be within the limit if The value of the excess nonmonetary compensation is no more than 50 percent of the limit; and The physician returns the excess nonmonetary compensation by the end of the calendar year in which it was received or within 180 consecutive calendar days following the date it was received, whichever is earlier. The ability to pay back excess nonmonetary compensation and remain in compliance with the exception may be used by an entity only once every 3 years with respect to the same referring physician. Medical Staff Incidental Benefits (42 C.F.R (m)) Items and services, but not cash or cash equivalents Free parking Meals while on-call Free computer/internet access Provided to all members of medical staff within same specialty Not based on volume/value of referrals Offered only during rounds or performance of duties that benefit the hospital/patients Provided and used only on hospital s campus Reasonably related to delivery of medical services at hospital Consistent with what other hospitals in region offer Less than $25 value for each occurrence (indexed) For CY 2014, must be less than $32 per occurrence Does not violate Anti-Kickback Statute 34

36 Fair Market Value Value in arms-length transactions consistent with the general market value The price that is the result of bona fide bargaining between wellinformed parties Fair market value is a key element in many Stark law exceptions Market comparables National benchmark sources (e.g., MGMA, Sullivan Cotter) Valuation experts (e.g., real estate appraisers) Services Exceptions Physician Services In-office Ancillary Services Services Furnished by an Organization (or its Contractors or Subcontractors) to Enrollees (prepaid health plans) Academic Medical Centers Implants Furnished by an ASC EPO and Other Dialysis-related Drugs Preventive Screening Tests, Immunizations, and Vaccines Eyeglasses and Contact Lenses Following Cataract Surgery Intra-family Rural Referrals 35

37 In-office Ancillary Services Exception Only available for DHS provided by group practices (by definition at 42 C.F.R ) and physicians in solo practice First inquiry, are you a Group Practice? A single entity, with two or more physician members, legally organized as a partnership, professional corporation, foundation, not-for-profit corporation, faculty practice plan, or similar association Each physician who is a member of the group must provide substantially the full range of services of their practice as a member of the group Substantially all of the services of members of group must be provided through the group, billed in the name of the group, and treated as receipts of the group Group members must personally conduct no less than 75% of the physician-patient encounters of the group practice Overhead expenses and income distributed in accordance with previously determined methods (Continued.) Are you a Group Practice (continued) Must be a unified business with centralized decision-making by a body representative of the group practice and consolidated billing accounting, and financial reporting. No physician group member may be paid compensation based on the volume or value of his or her referrals, except as allowed under profit sharing and productivity bonus provisions. Group practices are permitted to pay profit shares and productivity bonuses to their physicians based on services personally performed or services incident to these personally performed services provided that the profit share or bonus is not determined in any manner that is directly related to the volume or value of the physician s referrals. Productivity bonuses: services personally performed or incident to Profit shares: share of overall profits of the group (pooling permitted if 5 or more physicians 36

38 In-office Ancillary Services Exception Includes all DHS except certain DME and PEN Three main requirements The services must be furnished by referring physician or another physician in the same group practice or someone supervised by either physician Location: centralized building or same building Billing: services must be billed by performing or supervising physician, his/her group, an entity wholly owned by any of the above, or a 3 rd party billing company as agent for any of the above Other Stark Law Concepts Temporary noncompliance Grace periods for signature requirements Referral requirements Waivers for entities participating in the Medicare Shared Savings Program 37

39 Temporary Non-Compliance (42 C.F.R (f)) The Stark regulations allow for a period of temporary noncompliance where: The arrangement was formerly in compliance for at least 180 days, The arrangement fell out of compliance for reasons beyond the entity s control, The entity promptly took steps to remedy the situation, and The period of non-compliance cannot exceed 90 days May only be used by an entity once every 3 years with respect to the same referring physician Grace Periods for Signature Requirements 42 C.F.R (g) Provided that all other requirements of an exception are satisfied, if the parties failed to obtain a signature at the commencement of the arrangement, the arrangement will be considered compliant from its commencement if the signature is obtained within 30 days if the failure was known 90 days if the failure was inadvertent The grace period may be used by an entity only once every 3 years with respect to the same referring physician 38

40 STARK LAW CMS GUIDANCE CMS Guidance Regulations (see Abuse/PhysicianSelfReferral/Law.html) Preamble Commentary FAQs (see Abuse/PhysicianSelfReferral/FAQs.html) Advisory Opinions (see Abuse/PhysicianSelfReferral/advisory_opinions.html) 39

41 STARK LAW - DISCLOSURE Self-Referral Disclosure Protocol CMS has published a Self-Referral Disclosure Protocol (SRDP) that sets forth a process to enable providers to self-disclose actual or potential violations of the physician self-referral statute. SRDP lists factors that CMS may consider in reducing the amounts owed by a disclosing party, but states: CMS is not obligated to reduce any amounts due and owing. Benefits of self-disclosure Possibility of reduced penalties Avoidance of exclusion as part of a settlement Potential protection from a viable qui tam whistleblower action 40

42 III. COMPARING AND CONTRASTING THE TWO LAWS Same Underlying Policy Concerns Overutilization and misutilization Increased program costs Financial incentives influencing medical decision-making Systemic corruption 41

43 Stark Law vs. Anti-Kickback Statute Stark Law Regulated by CMS Prohibits referrals where a financial relationship exists Civil penalties only Strict liability Applies only to physicians (and immediate family members) Mandatory Exceptions Anti-Kickback Statute Regulated by the OIG Prohibits payments intended to induce referrals Criminal + Civil penalties Intent element Applies to anyone who attempts, accepts, or gives kickbacks Voluntary Safe Harbors Stark Law vs. Anti-Kickback Statute Anti-Kickback focuses on facts and circumstances, Fair Market Value, and the intent of the parties. Stark focuses on meeting specific standards, such as writings, valuation, timing, geographic indicators, rural versus urban, location of buildings, contiguous zip codes, repayment terms, holdover clauses, per click services, level of supervision, how and when bonuses can be paid and for what, direct versus indirect financial relationships, ownership versus compensation, full time versus part time employment, financial relationships with family members, etc. 42

44 State Law Considerations Must also consider mini-stark state self-referral laws and state Anti- Kickback Statutes Every state is different and has nuances requiring state-specific research (e.g., what entities are covered, what activities are covered, and which payors are covered) Fraud and Abuse Waivers: ACOs Waiver from the Stark Law and the federal health care program Anti- Kickback Statute for: Shared savings paid by CMS to the ACO and then distributed to ACO participants, providers, and suppliers during the year shared savings were earned. Shared savings paid by CMS to the ACO and then distributed outside the ACO for activities necessary for or directly related to the ACO s participation in and operations under the MSSP. 43

45 IV. PRACTICAL APPLICATION AND HYPOTHETICALS Common Deficiencies Contracts with Physicians Not fully signed/executed No documentation of review and approval according to organization s policy Lack of review by health care counsel Modifications to standard forms/approved templates do not follow guidelines Legitimate business need or FMV not documented FMV data used is not current Terms modified during the first year Amendments not documented Multiple arrangements with physicians that exceed actual need Contracts not timely renewed Contracts stored in multiple locations and not easily retrieved 44

46 Common Deficiencies Payments to Physicians Payment made for service that is not properly described or included within the agreement Payment is made to a party other than the actual party to the agreement Payment is not accompanied by proper documentation regarding the provision of services (time records, on-call schedules, invoices) Payment does not incorporate the proper payroll withholdings Payments don t match contract terms Payments not made/received timely Payments made after the contract has expired Payments made prior to the existence of a fully executed contract Gifts or benefits to a physician exceed the Stark Law s cap Tracking Systems Tracking system for physician arrangements Tracks and notifies users of contracts that are about to expire Tracks remuneration to and from physicians Provides a knowledge bank of the organization s arrangements Enhances transparency and visibility Increases likelihood that arrangements will be subject to internal review and potential violations discovered proactively Allows organization to focus on compliance and contract performance 45

47 Hypothetical #1 Dr. Back is entering into a services arrangement with General Hospital. Dr. Back s lawyer doesn t believe that the Federal Stark law or Anti-Kickback Statute will apply to the arrangement since Dr. Back is a chiropractor and only refers Medicare patients to General for x- rays on very rare occasion. Hypothetical #2 Dr. Money Bags has a lot of spare cash lying around and would like to co-invest with some physician buddies in a local ambulatory surgery center. Rather than taking on all of the financial risk alone, they would like to structure it as a joint venture with Mytown Hospital. Dr. Money Bags is a close friend of the CEO of the hospital and feels certain that the hospital will give the physicians a good deal on the coinvestment. 46

48 Hypothetical #3 The CEO of Everytown Hospital recently took Dr. Wobbly, an orthopedic surgeon, and his wife to dinner and things got a bit out of control with the wine list. The dinner tab totaled $675. Dr. Drink has already received $275 in non-monetary compensation this year. What do you do? Can Everytown rely on the exception for certain arrangements involving temporary noncompliance found at 42 C.F.R (f)? Hypothetical #4 Memorial Hospital has a medical director agreement with Dr. Jones that expired three months ago, but otherwise met the Stark Law personal services exception. Memorial forgot to send a renewal agreement, but the parties continued to operate under the same arrangement except that the hourly compensation rate doubled. Issues? 47

49 Hypothetical #5 Drugs R Us pharmaceutical company is interested in hiring several physicians as consultants to assist in developing a marketing questionnaire and educational materials for patients for their new cholesterol lowering drug. The physicians will be paid an hourly rate, attend a weekend retreat and be reimbursed for attendance at one medical conference per year. They will also receive unlimited samples of the new drug for dissemination to their patients. 48