Government Issues

In an unprecedented move, on April 8, 2014, the Office of the Inspector General (“OIG”) posted a notice of termination of one of its previously issued advisory opinions.  Specifically, the OIG issued a Final Notice of Termination of Advisory Opinion No. 11-18 (“Notice of Termination”).  The OIG issued Advisory Opinion 11-18 on November 30, 2011 (“Advisory Opinion”).  Under the proposed arrangement, the Requestor, a publicly traded company that provides web-based business services to physician practices, would provide a new service to its existing customers, called “Coordination Service,” to facilitate the exchange of information between the ordering (or referring) healthcare practitioners and providers (“Ordering Health Professionals”) and  receiving healthcare practitioners and providers.   Ordering Health Professionals could refer patients to other healthcare professionals who were existing subscribers of Requestor’s services (“Trade Partners”) or to healthcare professionals not currently receiving Requestor’s services (“Non-Trading Partner”).

This article was originally published by the American Health Lawyers Association. Copyright 2014, American Health Lawyers Association, Washington, DC.  Reprint permission granted.

Recently, the Obama Administration released its fiscal year 2015 budget proposal, which includes several proposals of special interest to children’s hospitals. The Budget proposes several new and strategic investments in the nation’s health care…

This morning, March 3, at what was to be the commencement of the jury trial in U.S. ex rel. Baklid-Kunz v. Halifax Hospital Medical Center (Case No: 6:09-cv-1002-Orl-31TBS), the parties informed the Court that they had reached a tentative settlement.  The parties were given until March 10, 2014 for file a Joint Motion to …

A recent OIG Advisory Opinion (Adv. Op. 13-15) is, to a certain degree, more interesting for one of its footnotes than the body of the opinion itself. The footnote addresses a hotly debated issue, originally raised in an OIG Management Advisory Report (MAR) in 1991. That MAR took the position that an agreement between a hospital and a hospital-based physician group was a “suspect arrangement” under the Anti-Kickback Statute because the physician group was essentially required to split its revenue with the hospital–including requiring the group to provide uncompensated services to the hospital.

The OIG modified this position somewhat in the Supplement Compliance Program Guidance for Hospitals in 2005. In that compliance guidance, the OIG stated that an exclusive arrangement that required a hospital-based physician group to provide “reasonable administrative or limited clinical duties directly related to the hospital-based profession services at no or a reduced charge” would be permissible. The Compliance Guidance cautioned, however, that uncompensated or below-market-rate services would still be subject to “close scrutiny.”

On November 13 and November 18, the federal district court handed down separate rulings on summary judgment motions in a Florida Stark Law case that many consider the new Tuomey–U.S. ex rel. Baklid-Kunz v. Halifax Medical Center. In the first decision, the Court granted the U.S. partial summary judgment on the Stark violation with respect to compensation paid to certain medical oncologists employed by the hospital. In the second decision, the Court denied the hospital’s motion for summary judgment with respect to certain neurosurgeons employed by the hospital. Both decisions tee up important hospital/physician employment issues for trial.

The case stems from a qui tam False Claims Act lawsuit filed in 2009 in which Elin Baklid-Kunz, the former compliance officer, made allegations regarding Halifax Hospital Medical Center (“Halifax Hospital”) and Halifax Staffing, Inc. (“Halifax Staffing”) (collectively, “Halifax”). The compliance officer alleged that Halifax:

  1. Had financial relationships with physicians that did not meet a Stark exception, and as a result the physicians inappropriately referred Medicare services to Halifax; and
  2. Inappropriately billed other services to Medicare.

The Department of Justice chose to intervene in the lawsuit in 2011 with respect to the Stark Law issues. Halifax filed a Motion for Summary Judgment and the U.S. filed a Motion for Partial Summary Judgment with respect to the Stark Law issues.

Ruling on the Government’s Motion for Partial Summary Judgment

Two different compensation arrangements were the subject of these decisions. In the first decision, the Court considered the Government’s motion for partial summary judgment with respect to compensation paid to the medical oncologist employed by Halifax and the resulting designated health service referrals from those physicians. The alleged Stark violations were the result of employment agreements entered into with six medical oncologists in 2005 that provided for an incentive bonus pool equal to 15% of the “operating margin for the Medial Oncology program” of the Hospital. Even though the physicians were permitted to divide that pool among themselves as they determined, which they did based on individual production, the Hospital admitted that the pool included revenue from services that were not personally performed by the medical oncologists, such as fees related to the administration of chemotherapy.

Last week, U.S. Senators warned hospitals that higher rates of back surgery may indicate a kickback if the purchase of spinal devices has increased as a result of physician ownership of device distributors.  Senators Orrin Hatch (R-Utah), Max Baucus (D-Mont.) and Chuck Grassley (R-Iowa) issued the bipartisan statement based on an HHS report that showed a direct correlation between…

As the government shutdown drags on, some CMS activities are grinding to a halt. CMS recently released a memo to State Survey Agency Directors regarding which CMS survey and certification activities will continue and which ones have been put on hold for providers of all types. According to the memo, complaints that are triaged as…

Some employers may have rejoiced when IRS Notice 2013-45 delayed until 2015 the implementation of the employer shared-responsibility penalties mandated by the Patient Protection and Affordable Care Act (ACA). Certainly, this delay is a win for employers; however, other healthcare reforms will demand the attention of health plan sponsors before January 1, 2014.  Husch Blackwell…

New rules by the Office of Federal Contract Compliance Programs (OFCCP) will require federal contractors and subcontractors to ask applicants and current employees whether they are individuals with disabilities.  These new rules are described in a recent alert by Husch Blackwell attorney Molly Kurt. 

While such an inquiry is otherwise prohibited by the Americans…

The time for SNFs to become more vigilant about self-auditing is now, according to the Report on Medicare Compliance.  Skilled Nursing Facilities (SNFs) should have began receiving the first round of PEPPER at the end of August.  “PEPPER” stands for Program for Evaluating Payment Patterns Electronic Reports.  These reports, which are a free compliance…