Hospitals & Health Systems

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.

New research shows that hospitals with higher nursing levels have fewer readmissions and lower penalties for excessive readmission rates.  A new study, which appeared in the October issue of Health Affairs, found that hospitals with higher staffing levels had a 25 percent lower chance of being penalized for readmission rates when compared to hospitals with lower staffing levels.…

When was the last time you thought about your compliance program? As we know, an effective compliance program is important for healthcare companies. It’s also important to review your compliance program periodically and update it according to the latest guidance. OIG guidance and recent Corporate Integrity Agreements (CIAs) are informative about what the OIG is…

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…

CMS continues to emphasize readmissions as a marker of quality.  CMS research shows that approximately 45% of hospital admissions among those receiving either Medicare skilled nursing services or Medicaid skilled nursing services could have been avoided.  Husch Blackwell attorneys Mark Chouteau and Michael Crowe recently authored an article in the October issue of AHLA Connections…

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…

In response to healthcare reform, terms such as “physician alignment strategies” and “physician integration” have resurfaced in our vocabulary as healthcare providers.  In our new healthcare environment, many experts advocate that only hospitals that are aligned, or integrated, with their physician providers will be able to organize delivery systems that are capable of meeting current and future demands for efficiency, quality, price and services expected from patients and payers.  As the demands on health care providers continue to escalate, will experts also someday advocate that only hospitals that are aligned with other hospitals, or other health systems, be positioned to meet the then-current and future expectations related to providing high-quality and cost-efficient health care?

As the future of hospital and physician alignment strategies continue to evolve, more physicians, hospitals and health systems are affiliating.  Even large organizations such hospitals and health systems are teaming together to form loose associations in order to better manage the demands for efficiency, quality, price and service being thrust upon all providers by health reform, payers and patients.

There are a number of recent examples of health systems and hospitals forming strategic alignments to better manage healthcare costs and patient care. 

Pursuant to the Affordable Care Act, the Centers for Medicare and Medicaid Services recently adopted a final rule implementing $1.1 billion in cuts to the Medicaid disproportionate share hospital (DSH) program in 2014 and 2015.  The new rule reduces Medicaid DSH payments by $500 million in 2014 and $600 million in 2015.　

There are several…

Adoption of EHR technologies has greatly increased as the result of the EHR Incentive Program. Touted as one of the necessary building blocks for creating integrated delivery systems, EHR is considered vital to improve health quality, efficiency and patient safety.  The EHR Incentive Program has been very successful and CMS has awarded over $10…