goldfarb randolph ppt...2016 bna health care fraud report advisory board -top 10 issues include: 1....

2/28/2016

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Hot Topics: New Stark

Rules and Recent

Enforcement Activity

HCCA St. Louis

Regional Annual

Conference

March 4, 2016

Evan Raskas Goldfarb

Christina Z. Randolph

Presentation Agenda

� Importance of Compliance with the Stark Law

� Overview of Stark Law

� Key Stark Law Concepts

� CMS Clarification to Existing Policy

� New Stark Regulations

� Recent Stark Law: Cases and Settlements

� Red Flags and Takeaways From Recent Settlements

� The Future of the Stark Law

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Importance of Compliance with the Stark

Law

2016 BNA Health Care Fraud Report Advisory Board - Top 10 issues include:

1. Increase in FCA cases involving Stark and AKS issues

2. Increase in prosecutions of health care executives and management

3. Release of the final 60-day repayment rule

4. Release of new regulations revising fraud and abuse laws

5. Increased civil monetary penalty enforcement.

* Source: BNA’s Health Care Fraud Report 1/15/16

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Importance of Compliance with the Stark

Law

6. Focus on specialty pharmacy fraud

7. Aligning alternate payment models with the Stark law and the Anti-Kickback Statute

8. Use of statistical sampling to support False Claims Act cases

9. Kickbacks to pharmaceutical and medical device manufacturers

10. Attention on defective medical devices

* Source: BNA’s Health Care Fraud Report 1/15/16

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Amounts Recovered in False Claims Act

Cases by DOJ (Amounts in Billions)

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$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

2015 2014 2013 2012 2011 2010 2009 2008

All FCA Cases

Health Care FCA Cases

* Source: Annual DOJ press release (note numbers are approximates

as reported by DOJ)

Total Amount of Relators’ Payments

(Health Care)

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2008 2009 2010 2011 2012 2013 2014

843 886 942 977 885 1,083 782

Source: Annual Report of the Departments of

Health and Human Services and Justice (note

numbers are approximates)

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Detecting and Addressing Stark Law

Issues

Discovery:• Internal audits• Compliance Hotline• Whistleblowers • Government request for information/subpoena• Transactions/Due Diligence

If noncompliance: • Corrective action/change in process• Voluntary Repayment to MAC• Disclosure via CMS SRDP• Disclosure via OIG SDP• Disclosure to DOJ

• 60 day repayment obligation

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Overview of Stark Law

Who is Pete Stark?

• Member of the U.S. House of Representatives representing

the 13th District of California (1975 to 2013)

• Known primarily for his interest in fiscal and health care

issues

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� Legislation – 42 U.S.C. §1395nn• Stark I (November 1989) ( limited to referrals for laboratory services)

• Stark II (January 1995) (expanded to cover “designated health services”)

� Regulations – 42 C.F.R. §§411.350 – 411.357• Stark I Regulations (August 1995)

• Stark II Regulations� Phase I (Published January 4, 2001; Effective January 4, 2002) - 66 FR 856

� Phase II (Published March 26, 2004; Effective July 26, 2004) – 69 FR 16054

� Phase III (Published September 5, 2007; Effective December 4, 2007) 72 FR 51012

� Additional Regulations (Published August 19, 2008; Effective October 1, 2008 and October 1, 2009 - 73 FR 48434

� Additional Regulations published November 16, 2015 – 80 FR 70886; Effective January 1, 2016 and January 1, 2017 (change to 42 CFR 411.362(a))

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� Strict Liability Law = Intent to Violate Stark Law is Not Required

• Denial of payment

• Obligation to repay all amounts collected

• Civil monetary penalty = up to $15,000 for each service

• Civil monetary penalty = up to $100,000 for circumvention schemes

• Civil assessment = up to three times the amount claimed

• False Claims Act liability

• Exclusion

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Key Stark Law Concepts

If a physician (or immediate family member)

has a financial relationship with an entity, the

physician cannot refer any designated health

services (DHS) payable by Medicare and

Medicaid to the entity and the entity cannot bill

for the DHS unless an exception applies

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Key Stark Law Definitions: “Physician”

and “Immediate Family Member”

“Physician” - a doctor of medicine or osteopathy, a doctor of dental surgery or dental medicine, a doctor of podiatric medicine, a doctor of optometry or chiropractor

• Other independent providers are not “physicians” (e.g., advanced practice nurses, physician assistants, psychologists, physical therapists)

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Key Stark Law Definitions: “Physician”

and “Immediate Family Member”

“Immediate family member” - physician’s

spouse, birth or adoptive parent, child, sibling,

grandparent or grandchild, spouse of a

grandparent or grandchild, stepparent, stepchild,

stepbrother, or stepsister, in laws (father, mother,

brother, sister)

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Key Stark Law Definitions: “Referral”

“Referral”� Technical Definition

� Generally includes “orders” by the physician for a DHS

� Limited exceptions to “Referral”

�DHS personally performed by a physician

�Request by a pathologist for clinical diagnostic lab tests

and pathological exams

�Request by a radiologist for diagnostic radiology

services, or

�Request by a radiation oncologist for radiation therapy

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Key Stark Law Definitions: “Designated

Health Services”

Designated Health Services (“DHS”) are those services payable by Medicare and Medicaid

• List of DHS – some services are defined by CPT/HCPCS

• Clinical laboratory services

• Physical therapy, occupational therapy

and speech-language pathology services

• Radiology and certain other imaging services

• Radiation therapy services and supplies

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Key Stark Law Definitions: “Designated

Health Services”

No reference to the CMS CPT/HCPCS Code List

• Durable medical equipment and supplies

• Parenteral and enteral nutrients, equipment and

supplies

• Prosthetics, orthotics and prosthetic devices and

supplies

• Home health services

• Outpatient prescription drugs

• Inpatient and outpatient hospital services

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Key Stark Law Definitions: “DHS Entity”

“DHS Entity”

• Entity that presents a claim to Medicare for DHS

service, or

• Entity that performs the services that are billed as

DHS

Examples: hospitals, imaging centers, clinical labs,

therapy service providers, physician practices

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Key Stark Law Definitions: “Financial

Relationship”

Financial Relationship Includes:

1. Ownership or Investment Interest through

equity, debt, or other means

• Direct or Indirect

2. Compensation Arrangement = any arrangement

involving remuneration, direct or indirect,

between a physician (or a member of a

physician's immediate family) and an entity

• Includes arrangements with entities that

employ or contract with physicians (e.g., group

practices)

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Key Stark Law Definitions: “Financial

Relationship”

Remuneration = any payment, in cash or in kind • Salaries

• Payment for services

• Payments for office support services

• Lease payments for space and equipment

• Recruitment assistance

• Loan forgiveness

• Gifts

• Free meals, lab coats, parking

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Stark Law Exceptions: Basic Framework

Three Categories of Stark Exceptions:1. Applicable to Ownership/Investment Interests and

Compensation Arrangements (42 C.F.R. §411.355)

2. Applicable to Ownership/Investment Interests Only (42 C.F.R. §411.356)

3. Applicable to Compensation Arrangements Only (42 C.F.R. §411.357)

� Compliance with all Stark Law exception elements is mandatory�Being Close Enough = Is Not Enough

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Exceptions For Both Ownership and Investment

Interests and Compensation Arrangements

� Physician Services

� In-Offices Ancillary Services

� Services Furnished by an Organization (or its Contractors) to Enrollees

� Academic Medical Centers

� Implants Furnished by an Ambulatory Surgery Center

� EPO and Other Dialysis-Related Drugs

� Preventive Screening Tests, Immunizations and Vaccines

� Eyeglasses and Contact Lens following Cataract Surgery

� Intra-Family Rural Referrals

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Exceptions Applicable only to Ownership

and Investment Interests

� Publicly-Traded Securities

� Mutual Funds

� Ownership of a Rural Provider

� Ownership of a Hospital In Puerto Rico

� Ownership of a Hospital in the United States

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Exceptions Applicable Only to

Compensation Arrangements

24 Exceptions – including the 2 New Exceptions

� Rental of Office Space

� Rental of Equipment

� Bona Fide Employment Relationships

� Personal Services Arrangements

� Physician Recruitment

� Isolated Transactions

� Certain Arrangements with Hospitals

� Group Practice Arrangements with a Hospital

� Payments by a Physician

� Nonmonetary Compensation

� Fair Market Value Compensation

� Medical Staff Incidental Benefits

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Exceptions Applicable Only to

Compensation Arrangements

� Risk-Sharing Arrangements

� Compliance Training

� Indirect Compensation Arrangements

� Referral Services

� Obstetrical Malpractice Insurance Subsidies

� Professional Courtesy

� Retention Payments in Underserved Areas

� Community Wide Health Information Systems

� Electronic Prescribing Devices and Services

� Electronic Health Records Items and Services

� Assistance to compensate a nonphysician practitioner

� Timeshare arrangements

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Key Elements to the Compensation

Arrangement Exceptions

� Writing

� Signed by both parties

� Term of at least 1 year

� FMV Compensation

� Commercially-Reasonable arrangement even

if no referrals were made

� Holdover period

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Update on New Stark Regulations

� New Stark Regulations published November 16,

2015

� Effective January 1, 2016 (but update to 411. 362

effective January 1, 2017)

� Significant changes to Stark Regulations

• Clarifications of existing CMS policy

• Two new exceptions – NPP and Timeshare

• Technical revisions

• Changes to physician owned hospital requirements

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CMS Clarification to Existing Policy: Writing &

Signature Requirements

� What is “an arrangement” and when is it“in writing”

� TEST: The relevant inquiry is whether the available contemporaneous documentation would permit a reasonable person to verify compliance with the applicable exception at the time that a referral is made

(80 FR 71315)

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CMS Clarification to Existing Policy: Writing &

Signature Requirements

Reliance on CMS Clarification of Existing

Policy:

� No single “formal contract” requirements

� Parties may apply this guidance for

arrangements that predate the

publication of CMS clarification

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CMS Clarification to Existing Policy:

Writing & Signature Requirements

Examples:� Board minutes or other documents authorizing payments

for specified services

� Written communications between the parties – hard copyand electronic communications

� Standard fee schedules for specified services

� Check requests/invoices identifying items or servicesprovided, dates and compensation

� Time sheets/Call-coverage schedules

� Accounts payable or receivable records documenting thedate and rate of payment and the reason for payment

� Checks issued for items, services, or rent and identified assuch

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CMS Clarification to Existing Policy:

Writing & Signature Requirements

Signature requirement as applied to a

collection of documents:

� Each party must sign at least one of the

contemporaneous writings which document

the arrangement

� New Rule: Parties have 90 days to obtain the

required signatures, regardless of whether

failure to obtain the signatures was

inadvertent

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CMS Clarification of Existing Policy:

Term of 1 Year

For exceptions requiring a term for at least 1

year:

� The 1 year term does not have to be

established by a formal written agreement

� Arrangements lasting for at least 1 year as a

matter of fact are considered to meet the 1

year term requirement

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CMS New Rule:

Indefinite Holdover

� New Rule: Indefinite holdover period is permitted for office leases, equipment leases and personal services arrangements

• Parties can rely on expired contract to meet the writing requirement for the holdover period

• Arrangement must continue on the same terms and conditions

�Cannot change the compensation, services, etc.

• Must comply with FMV requirement during holdover

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CMS New Exception: NPP Recruitment

Remuneration by a Hospital, FQHC or RHC to a

physician to compensate a nonphysician

practitioner (NPP) to provide patient care

services:

� NPP = PA, NP, CNS, CSW, certified nurse-

midwife and clinical psychologist

� NPP has a compensation arrangement with

the physician (e.g., employee or independent

contractor)

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� Substantially all of the services that NPP furnishes

to patients of the physician’s practice are primary

care services or mental health care services

� Primary care = family medicine, internal medicine,

pediatrics, geriatrics, Ob/gyn

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� Recruitment support payment to the physician does

not exceed 50% of the NPP’s actual compensation,

signing bonus, and benefits (all of which must by

FMV)

� Recruitment support payment may only be made in

the first 2 consecutive years of the arrangement

between the physician and NPP

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� NPP must be new to the “geographic area” (1 year)

which includes not being engaged to provide services

by a physician/physician organization that has a

medical practice site located in the geographic area

served by the hospital, regardless of whether the

NPP provided services at that site

� Physician can’t impose unreasonable practice

restrictions which limit the NPP’s ability to practice in

the geographic area

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� Recruitment arrangement is in writing, signed by all of the

parties – including the NPP

� Arrangement does not violate Antikickback Law or laws on

billing

� Arrangement isn’t conditioned on referrals from the NPP or

physician

� Record keeping requirements

� This exception may be used by a hospital, FQHC or RHC only

once every 3 years with respect to the same referring

physician

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CMS New Exception:

Timeshare Arrangements

� Promote access to primary and specialty care

� Covers only “use” arrangements and not

traditional office lease

� No possessory leasehold interest in the office

space

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CMS New Exception:


� Arrangement is in writing/signed by the

parties

� Limited to arrangements between a

physician/physician organization and a

hospital or a separate, independent

physician organization

� No 1 year term requirement

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CMS New Exception:


� Arrangement specifies the use of

premises, equipment, personnel, items,

supplies or services

� No exclusivity requirement regarding use

of the space/equipment

• Multiple users can be located in the same

space using the same equipment

• No 4-hour time block requirement

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CMS New Exception:


� Limitations on Equipment include:• Located in the same building where the E&M

services are furnished;

• Only used to furnish DHS which is incidental to the E&M services furnished at the time of the patient’s E&M visit; and

• Not advanced imaging equipment, radiation therapy equipment, or clinical or pathology laboratory equipment (other than equipment used to perform CLIA-waived lab tests)

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CMS New Exception: Timeshare

Arrangements

� Compensation is FMV, set in advance, not

determined in a manner that takes into

account (directly or indirectly) the volume or

value of referrals or other business generated

between the parties

• No percentage of revenue formulas

• No per-unit of service payments

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CMS New Exception: Timeshare

Arrangements

� Permissible Compensation Formula include:

• Time-Based payments

• No requirement to have a fixed, monthly payment

� Arrangement is commercially reasonable even

if no referrals were made between the parties

� Arrangement does not violate the Anti-

Kickback Statute or laws on claim submission

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Recent Stark Law: Cases and Settlements

� Government increasingly aggressive in challenging physician deals

� More cases litigated

� More settlements

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Columbus Regional Healthcare

System/Dr. Andrew Pippas Settlement

9/4/2015 DOJ Settlement: Columbus Regional to pay $35M and Dr. Pippas to pay $425,000 (Relator’s share – not yet determined)

Allegations:

� Columbus Regional paid excessive compensation to Dr. Pippas in violation of Stark and Antikickback Laws

� Dr. Pippas’ compensation:� Was above 90th percentile of oncologists nationally

� Twice the amount of collections for personally performed services

� Included compensation for wRVUs generated by another physician

� Credited for wRVU purposes with work performed by nurse practitioner

� Included $300,000 per year for medical director stipends

� Determined by a valuation consultant to “exceed fair market value”

� Dr. Pippas subject to separate penalty = DOJ pursued penalty against responsible physician

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North Broward Hospital District

Settlement

9/15/15 DOJ Settlement: Broward to pay $69.5M (Relator, Dr. Reilly, toreceive $12M)

Allegations:

� Long term employment contracts (9 year contracts with orthopedic surgeons)

� Physician salaries above 90th percentile for same specialty

� Sham medical director agreements to boost compensation

� Physicians with high referrals permitted to increase RVU numbers

� Tracked inpatient/outpatient contribution margins from referrals

� Physicians pressured to make referrals

� Large losses on physician practices but offset by profit from referrals

� Excessive physician compensation = primary factor for net loss from employed physicians

� Compensation inflated to compensate physicians for ability to generate revenue

� Compensation arrangements violated Stark and Antikickback Laws

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Adventist Health System Settlement

9/21/15 DOJ Settlement: Adventist to pay $115M (Relators’ share not yetdetermined)

Allegations:

� Physicians employed to control hospital referrals and pressured to refer

� Physicians received excessive compensation - inflated salaries, bonuses not based on personally performed services, perks and kickbacks to induce referrals (salaries exceeded 90th percentile for comparably situated physicians)

� Hospitals tracked physician contribution margins = revenue from referrals to employing hospital for inpatient and outpatient ancillary services

� Hospitals lost money on physician practices but contribution margins offset the losses and resulted in net gains

� Hospitals paid bonuses to employed physicians based on all revenue paid to the hospital for their work - professional charges and facility fees

� Payment of facility fees = payment that takes into account volume or value of referrals and is not a bonus based on personally performed services

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U.S. ex rel. Drakeford v. Tuomey

Healthcare System

10/16/15 DOJ Settlement: Toumey to pay $72.4M (Relator, Dr. Drakeford to receive $18.1M)

10/2/15 4th Circuit Ct of Appeals: Judgment and civil penalties of $237,454,000: Physicians were compensated based on collections which included facility component fee – compensation varied with volume/value of referrals

� 10 year part-time employment contracts, with 2 year 30 mile non-competes� Physicians could maintain private practices but outpatient procedures had to be

performed at Tuomey

� Annual guaranteed base salaries – adjusted based on prior year collections

� Productivity bonuses = 80% of net collections and incentive bonus = up to 7% of

productivity bonus

� Tuomey paid for malpractice insurance, group’s share of employment taxes and

absorbed billing and collection costs

� Physician’s participated in health benefits offered to employees

� Tuomey lost $1-2M per year by compensating physicians above collections

•

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Red Flags of Improper Physician

Arrangements

� Deals that don’t match the paperwork

� Compensation varies with the volume or

value of DHS referrals

� Compensation above FMV

� Commercially unreasonable

arrangements

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Takeaways: Physician Arrangements

Documenting the Compensation Arrangement

� Signed writing accurately reflects entire compensation

arrangement, including any changes

� Executives responsible for implementing and managing

the arrangement need to understand how the

compensation arrangement is supposed to be

implemented

� Helpful Tip: Create processes designed to facilitate

coordination amongst the lawyers analyzing/drafting the

arrangement, the executives managing the relationship,

and finance team calculating and making the payments

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Identifying all of the Components of the Compensation

Arrangement:

� Each component of a physician’s compensation arrangement

must be identified and analyzed for compliance with the

applicable Stark Law exception

� Components can include any one or more of the following

types of remuneration:

• cash compensation which can be expressed in any number

of ways, such as an hourly rate, annual salary, per wRVU

payment, and/or compensation formula

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Identifying all of the Components of the Compensation

Arrangement:

• health, welfare, retirement benefits, payments for CME,

malpractice costs and other business-related expenses

• provision of fringe benefits, such as free meals and tickets

• as to independent contractors, the provision of space

and/or clinical personnel in support of the physician’s

practice

� Helpful Tip: Contract request forms are a great tool

for identifying all of the components of a proposed

compensation arrangement with a referring physician

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Specific Understanding of a Physician’s Compensation

Formula:

• Understand all of the data elements used in the

calculations

• One data element is “measurement of physician’s

services” – encounters, revenue, wRVUs, etc –

which may include DHS

� Helpful Tip: Create processes to identify DHS both

from the CMS CPT/HCPCS Code List and for the other

DHS which are not defined by this Code List

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Specific Understanding of a Physician’s Compensation

Formula:

• Certain Stark Law exceptions require that the compensation

for physician’s services is limited to “personally-performed

services”

• There are important differences between the employment

exception, exceptions for independent contractors, and

rules governing group practices as related to physician

compensation formula which include compensation for DHS

referrals

� Helpful Tip: Involve Stark Law legal counsel

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Compensation is within FMV and Commercially-

Reasonable:

• Comparison to benchmark data = one factor

• Important to evaluate compensation in its entirety

• Important to document business reasons for the

arrangement (e.g., increased access to care, increased

capability, need for medical specialty in the community)

• Compensation cannot be inflated based on volume or value

of referrals

� Helpful Tip: Engage an independent FMV consultant

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The Future of the Stark Law

� Evolving health care delivery and payment models requires close integration of health care providers and suppliers including physicians

• Improve care experience

• Improve population health

• Reduce per capita costs

� Conflict between achieving these goals under these alternative payment models and compensating physicians in a Stark-compliant manner

� ACO waivers

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The Future of the Stark Law

� DHHS Secretary is required to undertake two

studies relating to the promotion of alternative

payment models and to provide the Congress

with a gainsharing study and report

� Further revisions to the regulations regarding

permissible physician compensation

arrangements

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Questions and Contact Information

Evan Raskas Goldfarb

[email protected]

P: 314.552.6198

M: 314.602.6198

Christina Zassenhaus Randolph

[email protected]

P: 314.552.6539

M: 314.602.6539

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goldfarb randolph ppt...2016 bna health care fraud report advisory board -top 10 issues include: 1....

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