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].”
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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.
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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

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.
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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

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

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.
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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.”
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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

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