Professional Compensation

Healthcare_148231933The Office of Inspector General (OIG) for the U.S. Department of Health & Human Services (HHS) issued a fraud alert on June 9, 2015, targeting physician compensation agreements that potentially violate the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b). The Anti-Kickback Statute prohibits remuneration of payment in exchange for referrals of patients receiving aid from federally funded healthcare programs (i.e. Medicare and Medicaid). The OIG alert references 12 recent settlements with individual physicians who entered into “questionable” medical directorship and office staff arrangements. The key concern in those cases centered on individual physicians entering into arrangements where the compensation did not “reflect [the] fair market value for bona fide services the physicians actually provide[d].” Continue Reading OIG fraud alert regarding compensation agreements for physicians

money-closeup122486570The U.S. Department of Health & Human Services Office of Inspector General (OIG) issued a special fraud alert on June 9, 2015, stating that physician compensation arrangements may result in significant liability. Hopefully this is not a surprise to any physician or entity that treats federal health plan beneficiaries. However, given that, historically, OIG regulatory actions largely (although not exclusively) focused on the entity from which a physician received compensation, such as hospitals, laboratories, durable medical equipment suppliers, pharmacies, etc., the June 9, 2015, fraud alert highlights the potential for physician liability in these arrangements. Continue Reading Physician compensation caution

dollar-signiStock_000013001848_LargeThe DOL’s self-imposed February deadline for announcing new FLSA regulations redefining “white collar” exemptions has come and gone with without any action from the DOL. No new deadline has been announced; however, the DOL’s website suggests that it still hopes to release the new regulations soon. Stayed tuned, and we will report back when the regulations are released or when any other information is given.

dollar-signiStock_000013001848_LargeIn March 2014, President Obama directed the Secretary of Labor to prepare and propose new FLSA regulations. These new rules were to be announced late last year, but have been repeatedly delayed. Now it appears the new rules will be announced later this month. While the scope of the changes is unknown, it is anticipated the changes will reduce the number of employees who qualify for exempt status. Continue Reading Changes coming to FLSA regulations – Time to get ready

Brian G. Flood of Husch Blackwell LLP‘s Austin office participated in a recent forum on “Managing Fraud and Bribery Risks in the Healthcare Sector.”

The Q&A Forum forms part of a Special Report on Corporate Fraud & Corruption, which appears in the February 2015 issue of Financier Worldwide magazine.

For the Q&A Forum, Financier Worldwide moderated a discussion between Flood and other attorneys from Cooley LLP, KPMG LLP, and Skadden, Arps, Slate, Meagher & Flom LLP.

As an accredited healthcare fraud investigator, Flood offers a unique perspective as a former prosecutor, as a regulator, and as a consultant to both the government and to the healthcare industry.  Flood is certified in health care compliance and is a certified inspector general.

The complete Q&A Forum is available to read on the Financier Worldwide website.

Are you wondering how much to pay your pediatric cardiologist?  Or perhaps whether the compensation another pediatric subspecialty is demanding is justifiable?  A recent article in the In-House Counselor, a publication of the American Health Lawyers Association, may provide guidance.

The article, which was written by Tom Schnack of Seim Johnson and was edited by our own Cori Turner, discusses factors that distinguish fair market value determinations for compensation arrangements for pediatric providers from a typical FMV analysis.  These factors include fewer compensation survey responses, lack of subspecialists in certain markets and “parts and pieces” types of arrangements.

To read the article, click here.

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

On Thursday, February 6, 2013, three congressional committees—the Senate Finance, House Ways and Means and House Energy and Commerce—introduced collaborative bipartisan legislation to repeal the sustainable growth rate (SGR), Medicare’s controversial physician payment formula, and replace it a system based on value versus volume of care. Although the committees agreed on policy, the lawmakers did not agree on who will pay the cost, which is about $126 billion over 10 years, according to a Congressional Budget Office report. If the legislation passes, Medicare-participating physicians would avert the 23.7% payment cut scheduled to occur on April 1.

If enacted, the SGR Repeal and Medicare Provider Payment Modernization Act will sufficiently change Medicare Part B payments. Below is a summary of some of the significant proposals.

  1. Repeal the SGR
    • The legislation would permanently repeal the SGR and provide an annual update of 0.5% from 2014 through 2018. The 2018 payment rates would be maintained through 2023 so physicians have time to receive additional payments through a merit-based incentive payment system.
  2. Establish a Merit Based Payment System
    • In 2018, payments will be based upon the new Merit-Based Incentive Payment System (MIPS) which consolidates the Physician Quality Reporting System (PQRS), Value-Based Modifier, and “meaningful use” program for electronic health records (EHRs). The MIPS would apply to doctors of medicine or osteopathy, dental surgery or dental medicine, podiatric medicine, chiropractors, physician assistants, nurse practitioners, clinical nurse specialists and certified registered nurse anesthetists. Other professionals who are paid under the physician fee schedule may be included starting in 2020 if viable performance metrics are available.
    • Under the MIPS, payments are based upon quality, resource use, meaningful use and clinical practice improvements. Under that system, penalties for underperformers are capped at 4% in 2018, 5% in 2019, 7% in 2020 and 9% in 2021. Rewards for exceptional performers are capped at $500 million per year from 2018 through 2023.
  3.  Push to Alternative Payment Models
    • Physicians who receive a significant percentage of Medicare revenue from an alternative payment model such as an accountable care organization will receive a 5% bonus starting in 2018. The payment model must involve a certain amount of risk for financial losses and include a quality measurement component. However, patient-centered medical homes are exempt from the financial risk obligation if the model works in the Medicare population. In addition, alternative payment models from private payers and Medicaid will be taken into consideration if no Medicare model exists in a provider’s area. Providers who participate in an alternative payment model will be exempt from the MIPS. CMS would also create a Technical Advisory Committee to study physician-focused alternative payment model proposals. Continue Reading Congress Proposes SGR Repeal and Medicare “Fix”

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.” Continue Reading The OIG Advisory Opinion with the Fascinating Footnote

The jury in the Tuomey case (U.S. ex rel. Drakeford v. Tuomey Healthcare Systems, Inc.) returned a verdict in favor of the government yesterday, May 8, 2013.  As is well known, this is the re-trial of a case centered on a series of employment agreements that Tuomey Healthcare entered to allegedly capture referrals from a number of physicians to the hospital’s ambulatory surgery center.  The jury found the hospital liable for violating both the Stark Law and the False Claims Act.  The jury further found that 21,730 claims were filed by the hospital in violation of the False Claims Act and the total monetary value of those claims was $39,313,065.  Under the False Claims Act, the federal government can recover from $5,500 up to $11,000 per false claim and up to 3 times the monetary value of those claims.  That results in potential liability for Tuomey ranging from $119,515,000 to $239,030,000 on the per claim penalty plus up to $117,939,195 under the treble damages provision.  In other words, Tuomey faces potential penalties of up to $356,969,195 on this verdict.  To put this in perspective, Tuomey Healthcare’s Form 990 for the fiscal year ending September 30, 2011 showed net assets of $123,540,611.

This verdict has significant implications not only for Tuomey Healthcare, but also for the entire healthcare industry.  Look for additional posts examining the details of the case and the implications of this decision in the coming weeks. For additional information, please contact David Pursell or Brian Bewley.

You can access the Jury Verdict Form here: Tuomey Verdict.

On February 1stthe long overdue final rule of the Sunshine Act was released.  The Act aims to increase transparency relating to payments and investments held by physicians and teaching hospitals.  For those many physicians who have entered into some type of contractual relationship with a manufacturer, taking the time to familiarize themselves with these new rules will be important in order to understand what information will be disclosed, and how it can be disputed.

As part of the Patient Protection and Affordable Care Act, drug and device manufacturers are required to annually disclose almost all payments and “transfers of value” made to physicians or to teaching hospitals.  The new disclosures are required to be made publicly available through a searchable online database.  Manufacturers will also be required to disclose the specific payments, not just the aggregate amount.  Manufacturers must begin collecting the required data by August 1 of this year and begin reporting it to CMS by March 31, 2014.

The rule does not apply to all manufacturers, but only those involved in the production, preparation, propagation, compounding or conversation of drugs, devices, biologics, or medical supplies that operated in the United States or any entity under common ownership with an entity that meets this definition.  However, entities that receive less than 10% of their gross annual revenue from payments relating to covered drugs, devices, biologics, or medical supplies, have to report the value transfers relating only to these covered products.  “Covered drug, device, biologic, or medical supplies” include those that may be covered by Medicaid, Medicare, and CHIP, and that require a prescription or premarket approval from the FDA.

Physicians are considered “covered recipients,” and payments or transfers must be reported, regardless of whether they are enrolled in Medicare.  Contracting through a legal entity does not avoid the reporting requirements.  However, physicians employed “in house” by a manufacturer doing the reporting are not considered “covered recipients.”  Anything with a value greater than $10 must be reported, with fourteen exceptions.  The most common exceptions will likely be: educational materials and items intended for use by or with patients, discounts and rebates, and samples (both devices and medical supplies) intended for patient use.  The final rule also establishes an exemption for certain payments related to speaking at accredited or certified CME programs.

For each payment or transfer, the manufacturer must submit the following:

  • The name and address of the recipient;
  • The amount and date of the payment or transfer;
  • A description of the form or nature of the payment or transfer;
  • Whether the payment or transfer is related to marketing, education, or research specific to a product; and
  • The physician’s NPI and specialty and the state and license number of at least one of the states in which the physician holds a license.

Manufacturers must also submit to CMS specific information regarding any ownership or investment interest (other than in a publicly traded security or mutual fund) held by a physician in the manufacturer during the preceding year, or an immediate family member of a physician in these entities.  Payments and transfers associated with research and development of new technologies, new applications of existing technology, or the development of new drugs, devices, biologics, or medical supplies, must also be reported.

Manufacturers are required to keep all books, records, documents, and other materials relating to payments, transfers, and ownership transfers for five years. The government may conduct audits and inspections in order to ensure proper reporting.  Manufacturers that unknowingly fail to report as required are subject to a penalty of $1,000 to $10,000 for each unreported payment, transfer, or ownership interest.

Physicians will have access to a CMS website to view reported information.  However, it is recommended that physicians inquire with the manufacturer ahead of time as to what information will be reported.  Physicians will have 45 days to contact a manufacturer to dispute reported information, and additional requirements govern how unresolved disputes will be handled.  While these rules focus on what information will need to be reported by the manufacturers, physicians should always be open with their patients when a financial relationship exists with a manufacturer or similar business.