Discussion: Stark Law Rulings

Discussion: Stark Law Rulings ORDER NOW FOR CUSTOMIZED AND ORIGINAL ESSAY PAPERS ON Discussion: Stark Law Rulings Can you help me understand this Health & Medical question? Complete the questions on the worksheet using information found within the Stark Law article attched. Discussion: Stark Law Rulings stark_law_article.pdf stark_law_rulings_worksheet.docx SETTLEMENTS NATALIE LAPORTA Two Significant Stark Law Rulings from the Middle District of Florida Rulings, which Address Physician Compensation Arrangements, Could Have Significant Impact T wo recent cases brought before the U.S. District Court for the Middle District of Florida have addressed physician compensation arrangements. In each case, the Court concluded that (1) the bona fide employment exception1 to the federal physician selfreferral law (“Stark law”)2 did not protect the arrangement at issue, and (2) referrals of Medicaid beneficiaries that would violate the Stark law if the individuals were Medicare beneficiaries may violate the federal civil False Claims Act (FCA). COMPENSATION ARRANGEMENTS Natalie LaPorta is a member of the Health and Life Sciences practice in Dentons’ Chicago office. Her practice focuses on health care transactional, regulatory, and finance matters. She assists a broad range of health care organizations, including hospitals, health systems, physician groups, retail and specialty pharmacies, community health centers, and managed care plans with structuring and negotiating transactions, general corporate matters, and regulatory matters arising under various federal and state health care laws and regulations. She can be reached at 312/876-2859 or by email at [email protected]. In United States v. Halifax Hospital Medical Center,3 a whistleblower action brought under the FCA, the Court reviewed an arrangement pursuant to which certain physicians receive some of their employment compensation out of an incentive pool that consisted of an amount equal to 15 percent of the operating margin of Halifax Hospital’s medical oncology program. This operating margin, in turn, resulted (at least in part) from revenues generated by the furnishing of outpatient medical oncology services, including pharmacy charges. The relator took the position that this compensation arrangement created a “financial relationship” between the hospital and the physicians for Stark law purposes and that this relationship did not qualify for protection under the law’s employment exception. In United States v. All Children’s Health System, Inc.,4 also an FCA action brought by a private whistleblower, the relator was the director of operations for Pediatric Physicians Services, Inc. (PPS) (an entity which is wholly owned and operated by All Children’s Health System, Inc. and which manages physician staffing of All Children’s Hospital and is responsible for bringing on newly hired physicians and practice groups). As the director of operations, the relator was responsible Journal of Health Care Compliance — March – April 2014 51 Settlements for developing a new compensation plan for physicians working at All Children’s Hospital. The relator alleged that she drew from three nationwide salary surveys to determine a fair market value salary range for certain pediatric subspecialists. She further alleged that (1) she was unable to find any data that would support exceeding the 75th percentile of this range, (2) her compensation plan reflected this, and (3) her plan was approved by PPS’ board of directors. Notwithstanding, relator alleged, agreements were entered into with the physicians at issue that provided for compensation that exceeded the 75th percentile. As in Halifax, the relator took the position that these arrangements created a financial relationship between the hospital and the physicians for Stark law purposes and that this relationship would not qualify for protection under the employment exception. EMPLOYMENT EXCEPTION The Stark law’s employment exception protects compensation from an employer to an employee if: 1. the employment is for identifiable services; 2. the amount of remuneration under the employment is consistent with fair market value for the services and not determined in a manner that takes into account (directly or indirectly) the volume or value of any referrals by the referring physician; 3. the remuneration is provided pursuant to an agreement which would be commercially reasonable even if no referrals were made to the employer; and 4. the employment meets such other requirements as the Secretary may impose by regulation as needed to protect against program or patient abuse. In Halifax, the Court concluded that the compensation arrangement did not satisfy the second requirement above because the dollar amount/value of the 52 incentive pool did, in fact, vary based on the level of physician referrals to the hospital for non-personally performed designated health services (e.g., outpatient prescription drugs). In All Children’s, the Court concluded that the compensation paid to the physicians was in excess of fair market value and, as such, also did not satisfy the second requirement of the employment exception. Discussion: Stark Law Rulings This aspect of these rulings points to the continued importance of ensuring that hospital-physician employment arrangements do not provide for compensation that either exceeds fair market value or that varies — directly or indirectly — based on the volume or value of hospital inpatient or outpatient services that are ordered by physician-employees. MEDICAID In both Halifax and All Children’s, the Court concluded that where (1) a physician has a financial relationship with a hospital, (2) this financial relationship does not qualify for protection under any Stark law exception, (3) the physician refers a Medicaid beneficiary to the hospital, (4) the hospital furnishes inpatient or outpatient services to that patient, and (5) the hospital then bills the state Medicaid agency for these services, the FCA may be violated. According to the Court, the Stark law applies to Medicaid pursuant to 42 U.S.C. §1396b(s), which generally prohibits federal financial participation (FFP) payments to states if the designated health service was provided on the basis of a referral that would result in the denial of payment for the service under Medicare.5 “In other words,” the Court concluded, “CMS cannot pay FFP for services provided under Medicaid if the payment would be prohibited under Medicare due to an illegal referral in violation of the Stark [law].” Thus, the Court continued, “[c]ertifying compliance with the Stark [law] to ensure CONTINUED Journal of Health Care Compliance — March – April 2014 ON PAGE 72 supports the conclusion that the patient’s life expectancy is six months or less and that the services are medically necessary. The determination of life expectancy is not a precise determination, and hospices may have patients that are appropriate for hospice, but who, for various reasons, have lived longer than expected. This means a patient may have been on service longer than six months but is still appropriate for hospice. Similarly, a beneficiary may have a non-specific diagnosis and still be clinically appropriate for hospice care. In these cases, the patient’s chart should clearly document the patient’s condition and whether he or she has a terminal illness. An auditor will not know the provider’s patients, and the record should clearly establish the patient’s eligibility. Often providers leave out key details because they are very familiar with the patient, and unfortunately, this may lead to recoveries. Providers also should scrutinize bonus programs and marketing materials. Many providers have found that their marketing incentives programs, which often incentivize admissions, lead to marketers cutting corners to admit patients. Bonus programs should never incentivize based upon length of stay; this is a practice to which the OIG has specifically objected. Marketing materials also should be reviewed to ensure they clearly state Medicare eligibility requirements. CONCLUSION Hospice utilization and spending has been growing rapidly for many years. The government has noticed this trend and become concerned about the expansion of the benefit and has begun to focus efforts on 72 monitoring hospice utilization. Providers need to recognize they are under scrutiny and increase their compliance efforts. SETTLEMENTS CONTINUED FROM 52 that CMS pays FFP for Medicaid claims that violate the Stark Amendment would be a violation of the False Claims Act in the same manner that certifying compliance for full reimbursement under Medicare would be.”6 This conclusion is significant, as until recently, the focus of Stark law violations has been the recovery of federal Medicare dollars. If these rulings stand, and are applied in other jurisdictions, the liability emanating from a Stark law violation will increase significantly. Endnotes: 1. Social Security Act, § 1877, 42 U.S.C.A. § 1395nn(2013). 2. 42 U.S.C. § 1395nn(e)(2). 3. United States v. Halifax Hospital Medical Center, 09-1002, 2013 WL 6017329 (M.D. Fla. Nov. 13, 2013). 4. United States v. All Children’s Health System, Inc., 11-01687, 2013 WL 6054803 (M.D. Fla. Nov. 15, 2013). 5. Specifically, the section provides that “no payment shall be made to a State under this section for expenditures for medical assistance under the State plan consisting of a designated health service (as defined in subsection (h)(6) of section 1395nn of this title) furnished to an individual on the basis of a referral that would result in the denial of payment for the service under subchapter XVIII of this chapter if such subchapter provided for coverage of such service to the same extent and under the same terms and conditions as under the State plan, and subsections (f ) and (g)(5) of such section shall apply to a provider of such a designated health service for which payment may be made under this subchapter in the same manner as such subsections apply to a provider of such a service for which payment may be made under such subchapter.”Discussion: Stark Law Rulings 6. All Children’s, 09-1002 at 7. Journal of Health Care Compliance — March – April 2014 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Module 02 Assignment – Stark Law Rulings Article Title – Two Significant Stark Law Rulings from Middle District Florida Questions Provide your answer(s) beneath each question as indicated. 1. In the Halifax case, the whistleblower action took place under the FCA and claimed that physician’s received some of their compensation from an __________ pool. Answer(s): 2. The Relator felt this created a __________ __________ between the hospital and the physicians. Answer(s): 3. In the All Children’s case, the Relator was from Pediatric Physician Services – they were responsible for bringing on newly __________ physicians. Answer(s): 4. Agreements there were entered into with physician that provided compensation that exceeded the __________ percentile. Answer(s): 5. In the Stark Law Employment Exception, compensation amount is consistent with fair market values and is not determined in a manner that takes into account the __________ of __________. Answer(s): 6. In both the Halifax and All Children’s cases, __________ compensation was in question and served as the primary issue. Answer(s): 7. To evidence life expectancy in the hospice cases, the __________ __________ should clearly document the patient’s condition and whether or not he or she has a terminal illness. Answer(s): 8. Marketing materials should also be reviewed to ensure that they clearly state __________ __________ __________. Answer(s): 9. Providers need to recognize that they are under __________ and should increase their __________ efforts. Answer(s): Acronyms, Abbreviations, and Vocabulary 10. This is a private individual that brings a lawsuit in the name of the attorney general, typically in fraud and abuse cases. __________ Answer(s): … Get a 10 % discount on an order above $ 100 Use the following coupon code : NURSING10