Physician Law

Another Record Fraud Bust

Todd Rodriguez — Thu, 03 May 2012 07:54:20 -0500

When it comes to record-breaking Medicare fraud busts, the hits keep coming. The feds announced today another nationwide takedown of physicians and other healthcare providers for Medicare fraud totaling in excess of $450 million. All told, 107 people have been charged in this week's bust for, among other things, submitting false claims to the Medicare program. Read more about it here.

While these headline-grabbing takedowns usually involve some pretty egregious billing practices, law-abiding physicians and other providers should still take note as it is inevitable that the government's increased efforts to identify fraud will also identify billing errors and inadvertent overpayments. If you are not regularly having your charts and billings audited by an independent auditor under attorney-client privilege, it is highly advisable to begin doing that regularly as the basis of a practice compliance program. For more information on developing a cost-effective practice compliance program, click here.

Anatomy of a Healthcare Fraud Bust

Todd Rodriguez — Tue, 24 Apr 2012 13:25:03 -0500

If you read this blog with any regularity (or even if you read healthcare related news from time to time), you should be aware of the emphasis that federal and state enforcement authorities are placing on healthcare fraud and abuse enforcement. Despite these intensive fraud and abuse enforcement activities, however, many physicians and healthcare providers are still not devoting meaningful resources to compliance planning. I suspect that one of the main reasons for this is the fact that most physicians do not feel as though they have the economic or manpower resources to devote to compliance. I suspect as well, however, that many physicians simply do not appreciate the seriousness or implications of a fraud investigation/action.

The Office of Inspector Gen. (OIG) of the Department of Health and Human Services has published on its website a document which offers an intriguing glimpse into the process the OIG follows when investigating and prosecuting a fraud action. Specifically, the OIG has published testimony given by Daniel R. Levinson, the Inspector General, in a hearing today before the U.S. Senate Committee on Finance in which he describes the anatomy of a fraud action from investigation to conviction. Those interested in maintaining fraud and abuse compliance and understanding the process will find this to be very worthwhile reading.

OIG Alert Encourages Physicians To Use Care When Reassigning Medicare Payments

Dave Restaino — Mon, 09 Apr 2012 10:41:48 -0500

Physicians who reassign their right to bill the Medicare program can still be liable for false claims submitted by the entities who obtained that reassignment, as discussed in a recent "Alert" issued by the Office of Inspector General (OIG). [PDF].

OIG also referenced settlements it reached with eight physicians who had reassigned their payments to physical medicine companies in exchange for Medical Directorship positions -- when those companies subsequently billed Medicare for services that the physicians had not actually performed.

This OIG Alert highlights the ability of physicians to monitor all services billed using their reassigned provider numbers, and strongly urges physicians to do so. If not, physicians face liability for false claims asserted under their provider numbers.

Physician Employment Agreements: Defining the Scope of Employment

Todd Rodriguez — Wed, 28 Mar 2012 13:10:47 -0500

More and more physicians are considering hospital employment as an alternative to private practice. Whether you are considering becoming a hospital employee or joining a private group practice, however, there are a number of considerations that should be taken into account when structuring your employment agreement. In the coming days and weeks, I hope to blog about some of these important issues -- the first of which is defining the scope of employment.

As professionals, full-time employed physicians are generally expected to work the hours and provide the services required to ensure the prompt and necessary care of practice or hospital patients. This does not mean however that the employment agreement cannot provide at least the general parameters of the employment commitment including the type of services the physician will be required to render, where he or she will be required to work, the normal work hours and the physician's on-call obligations. For example, if you are being hired to work or concentrate in a specific subspecialty, the employment agreement should state that fact. You do not want to show up for employment as an electrophysiologist and find out that you will be expected to practice general cardiology.

Similarly, if the employer has multiple service sites, unless you’re willing to rotate among those sites or be assigned to sites in your employer’s discretion, consider specifying your primary practice location in the employment agreement so that you cannot be reassigned without your prior consent. Also, the agreement should specify when you will be required to work. If the expectation is that you will work office hours on the weekend, you should know this upfront.

Finally, if you will have on-call responsibilities, you should try to have the agreement specify your maximum on-call obligations or at least that call will be shared equally among the similarly-situated physicians in the practice.

Pennsylvania Board of Medicine Proposes Rewrite of Prescribing Regulations

Todd Rodriguez — Mon, 26 Mar 2012 13:29:06 -0500

Last week, the Pennsylvania Board of Medicine published proposed regulations amending the physician controlled substances prescribing regulations to, among other things, expand the regs to include butalbital, carisoprodol and tramadol hydrochloride.

Under the proposed regulations, these drugs would now be subject to the same requirements applicable in Pennsylvania to physician office prescribing of controlled substances, including that an initial medical history and physical exam be performed before a drug may be prescribed unless emergency circumstances justify otherwise, and that patients receive appropriate counseling regarding the patient’s condition and the drug dispensed.

In addition, among other things, each time a drug is prescribed, administered or dispensed, the medical record must be updated to include the name of the drug, its strength, the quantity and the date it was prescribed, administered or dispensed. For the initial visit when the drug is prescribed, administered or dispensed, the medical record documentation must also include the patient's symptoms, the diagnosis and the instructions given to the patient for the use of the drug. If the same drug is repeatedly prescribed, administered or dispensed, the medical record must also reflect changes in the symptoms, diagnosis and instructions given.

The proposed regulations have been published for public comment. If you're interested in submitting written comments on the regulations you can submit your comments, suggestions or objections to Teresa Lazo, Assistant Counsel, Department of State, P. O. Box 2649, Harrisburg, PA 17105-2649, st-medicine@state.pa.us within 30 days of March 3, 2012. Commenters should reference No. 16A-4933 (Prescribing) when submitting comments.

Feds Announce Largest Single Physician Medicare Fraud Bust

Todd Rodriguez — Wed, 29 Feb 2012 18:56:02 -0500

I have been speaking with physicians for years about the importance of developing effective fraud and abuse compliance programs in their practices and I often still get the same response: The government is only interested in the big fish like pharmaceutical manufacturers and hospitals -physicians are under the radar.

Well, contrary to popular belief, it appears that there are some pretty big fish in the physician community when it comes to fraud enforcement. The Department of Justice announced this week the largest Medicare fraud bust by dollar amount of a single physician ever. Dr. Jacques Roy of Texas was accused on Tuesday of a fraud scheme which resulted in improper payments from the Medicare and Medicaid programs totaling in excess of $375 million and spanning more than half a decade.

According to the DOJ, Dr. Roy allegedly certified or directed the certification of more than 11,000 individual patients from more than 500 home health agencies over the past five years. Between 2006 and 2011, Dr. Roy's medical-practice allegedly certified more Medicare beneficiary for home health services and any other practice in the country.

Fizzle But Not Much Bang: Medicare Fraud Prevention System Early Results Not Great

Todd Rodriguez — Mon, 27 Feb 2012 17:28:51 -0500

In June of 2011, I reported on this blog about a software program being launched by the federal Department of Health and Human Services to use a technology called predictive modeling to identify fraudulent and abusive billing practices on a prepayment basis. The program, known as the Fraud Prevention System, was funded through the The Patient Protection and Affordable Care Act of 2010 and carried an initial price tag of $77 million. According to the Associated Press, initial results are back on use of the Fraud Prevention System and they are pretty disappointing. Specifically, according to a recent article published by the AP, the program identified only a single case of fraud which resulted in him him him him him him him Medicare savings totaling $7,591.

Medicare officials say it's too early to judge the system's effectiveness and, on its blog, the White House stated on Friday that "predictive modeling has identified 2,500 leads for further investigation, 600 preliminary law enforcement cases under review and resulted in 400 direct interviews with providers who would not have otherwise been contacted." Clearly there are some bugs in the system to be worked out but it appears that HHS is not yet ready to pull the plug on the program.

Physicians Forewarned - The Impact of Medical Device Fraud on Physicians' Practices

Dave Restaino — Fri, 03 Feb 2012 14:03:07 -0500

A recent U.S. Department of Justice (DOJ) settlement with a medical device manufacturer highlights the need for physicians to pay close attention to their dealings with medical device companies.

The settlement, announced in December, calls for the payment of $23.5 million to resolve allegations that a medical device manufacturer was manipulating post-market studies to improve the results and to encourage doctors to increase usage of the company’s products. [www.justice.gov/opa/pr/2011/December/11-civ-1623.html; wwwp.medtronic.com/Newsroom/NewsReleaseDetails.do] Specifically, the company was allegedly paying per-patient kickbacks of $1,000 to $2,000 to doctors in order to encourage the use of company medical devices in lieu of competitors’ devices. Because the fees were payable only when the company’s devices were used, the DOJ was concerned that the ultimate goal was to discourage the use of other devices.

Because the law imposes criminal liability upon both sides of a situation involving illegal kickbacks [See Section 1128B of the Social Security Act, 42 U.S.C. § 1320a-7b; www.ssa.gov/OP_Home/ssact/title11/1128B.htm] the consequences are enormous, and can include:

● A felony conviction;
● Criminal fines and civil penalties;
● Prison; and
● Exclusion from federal health care programs.

Although there are regulatory “safe harbors” that specify certain acceptable situations, it is nevertheless imperative that medical professionals monitor their practice to ensure that all physicians avoid situations where the use of medical devices is essentially conducted on a “pay-to-play” basis.

Finally, keep in mind that the DOJ investigation was triggered by company whistleblowers, which serves as an ever-present reminder that internal compliance programs are an essential tool in the fight against fraud.

Mainstream Media Reports on Physicians Leaving Private Practice

Todd Rodriguez — Tue, 31 Jan 2012 11:44:18 -0500

Well, another interesting article this week regarding the exodus of physicians from private practice. This time, it's the Philadelphia Inquirer reporting on "Why Heart Doctors are Leaving Private Practice" Only time will tell if this a merely a fad or a real change in the way healthcare will be delivered going forward. We have seen this "trend" before, however, and it didn't really work out that well for many physicians or hospitals.

In my experience, those transactions that are based upon each party's short-term gains/protection are unlikely to take hold for the long-term. Striking a deal that works adequately for an initial three-year employment term is not that difficult. The real trick is in building a model that will last well beyond the first three or six years. If the employment model (think "goverance and compensation") doesn't foster and reward collaborative success, employed physicians end-up feeling disenfranchised, and unfortunately disenfranchised employees usually don't care that much about the success of their employer. There is certainly an opportunity for forward-thinking physicians and hospitals to use the current climate as a catalyst to build a truly integrated delivery model but it will require both parties to check some heavy baggage at the door.

Physicians: Be Aware of the Pennsylvania Sales and Use Tax

Todd Rodriguez — Mon, 30 Jan 2012 10:58:05 -0500

Most medical practices in Pennsylvania are aware that Pennsylvania imposes a sales and use tax on various items and services purchased by medical practices. However, physicians are not always clear on exactly the items and services to which the tax applies. For example, the tax applies to secretarial/administrative services purchased from a third party vendor. This includes transcription services. If your vendor is not charging a sales tax or you are not reporting a use tax in connection with your outside transcription services, you may have an issue. The Pennsylvania Medical Society has published a helpful guide entitled How to Comply with State Sales and Use Taxes. If you're not sure whether or how Pennsylvania's sales and use tax applies, I recommend that you give your accountant or attorney a call since the Pennsylvania Department of Treasury is currently conducting sales and use tax audits of physician practices.

Selling Your Practice to a Hospital? Know Where You Want to End Up

Todd Rodriguez — Wed, 25 Jan 2012 16:16:54 -0500

There's an interesting piece in the Miami Herald today regarding hospitals once again acquiring physician practices. The article raises some good questions regarding the motivations underlying this growing (recurring) trend and suggests that it might be more about control than preparing for a "reformed" health care system. The article also questions whether hospitals will be any more successful this go-round in managing the acquired practices than they were in previous attempts.

I frequently represent both hospitals and physicians in practice acquisition transactions. In my experience, only a handful of hospitals and health systems have a true plan for how they will integrate the practices they are acquiring in a manner that will improve the delivery of healthcare. To be sure, how best to integrate providers to improve care is not an easy question to answer. I find, however, that the "smart" hospitals and health systems are willing to acknowledge that physicians should be involved in the development process and that they (the hospitals) do not necessarily have all the answers for how best to accomplish that goal.

If you are considering selling your practice to a hospital, or you are a hospital looking to integrate the physicians in a thoughtful way, consider whether it makes sense to begin the process with a dialogue about where each party envisions the relationship to be several years in the future. If you can reach consensus on where you want to end up, you can then structure a transaction which is specifically designed to get you there.

Have Policies for Collecting Patient Balances

Todd Rodriguez — Mon, 09 Jan 2012 11:19:24 -0500

A recent article on CNNMoney discusses the not-so-new news story about the financial struggles of private medical practices. However, buried within the article is an important financial issue that many physicians overlook: collection of patient balances. According to one of the experts cited in the article, private practices lose 10% to 15% of their profits in uncollected patient balance revenue.

I've worked with many medical practices over the years on dealing with this issue and understand why physicians are reluctant to pursue aggressive patient balance collection efforts. Perhaps chief among their concerns is that physicians are afraid unhappy patients will sue or file a complaint with the Board of Medicine. Given the ease with which patients can file complaints with medical boards or, even more easily, post negative feedback on the Internet, this line of thinking is not without merit. However, having strong collection policies and making your patients aware of them upfront can go a long way to improving your bottom line and improving your patient relationships. Here are a couple of tips for developing collections policies within your practice:

It should be a standing policy that, with only an occasional exception, patients should pay their balances at the time of service. When staff send follow-up appointment reminders, they should also remind patients to bring payment at the time of service or they will need to be rescheduled. Obviously, exceptions may need to be made to this policy where a patient's health may be jeopardized by a delay in being seen.
Office staff who deal with patients at scheduling and check out should be trained on the collections policies so that they know what to tell patients and what procedures they must follow to ensure payment.
Patients should be made aware of the practice's collection policies. It's a good idea to post notices your office regarding collections policies. That way patients know what is expected of them and can't claim ignorance.
If you use a collections agency, be sure you have a clear understanding with the agency regarding the procedures they will use to collect patient balances. Among other things, you should review and approve the language in collection letters to be sure that the language is professional and not overly harsh.
Be sure to check applicable law and your third-party payors contracts to be sure your collection policies are compliant.

New Payment Models (Opportunities) Coming Sooner Than You Think

Todd Rodriguez — Thu, 29 Dec 2011 16:17:17 -0500

Many physicians I work with are talking about the possibility of new payment models such as bundled payments, episode-of-care payments and Accountable Care Organization (ACO) payment models. However, few medical practices have given much thought to how such payment models might actually work for them. Many physicians are still mired in the "fee-for-service" mindset and "productivity" is still a key buzzword among physician partners in most private practices. But, as evidenced by a recent article published by AISHealth, these new payment models (which could be fantastic opportunities for the right practices) are closer than you might think. According to the AISHealth article, Horizon Blue Cross Blue Shield of New Jersey is set to begin a pilot program with five orthopedic practices for bundled total-joint replacement payments.

The payors in your market may not yet be ready to start offering these types of payment programs, but the smart money will on those practices that have given some thought to what payors are looking for and how they would respond if the opportunities are presented. Even smarter money will bet on the practices that have figured out how they can save payors money and are actively seeking to create alternative payment opportunities with their payors. If you haven't already done so, consider establishing a physician committee within your practice to begin exploring ways in which you might take advantage of these coming opportunities. They will be here before you know it.

Why Should Payers Treat You Any Differently?

Todd Rodriguez — Tue, 27 Dec 2011 12:36:18 -0500

My physician clients often ask me for advice on how best to negotiate with managed care payers for improved reimbursement. My advice is typically the same: if you want them to pay you more than your competitors, you have to offer them something more than your competitors do. Simply being good at what you do is not enough. You have to be better than the competition because just like you, the competition is undoubtedly asking for more money too.

And, being better alone is also not enough. In order to get the payers to take notice, you must be able to demonstrate that you are better. This means that you need to be able to show them that your services are either of a higher quality, are more convenient or less expensive than the competition. Consider a recent article published by Amednews.com which cites a growing interest by third-party payors in driving down the “unit” cost of a health care visit. According to the article, payers are beginning to recognize that the number of patient visits is not the only driver of cost and that savings can be found in pushing down the cost of each one of those visits.

Unfortunately, many physicians have no idea of their "per unit" visit costs, and if you don't know what your costs are, it's pretty hard to try to manage them. The first step in negotiating managed care contracts, therefore, really should be to take a hard look at your practice, the services you offer, the cost of those services and what you do better (or should be doing better) than your competition. With that information in hand, you can develop a presentation for your important payers which demonstrates why your practice is deserving of special consideration.

The "Fix" That Saved Christmas

Todd Rodriguez — Fri, 23 Dec 2011 15:00:11 -0500

In a last ditch effort to salvage their Holiday vacation plans, the U. S. House of Representatives has approved legislation which will delay the 27% Sustainable Growth Rate (SGR) cut to the Medicare Physician Fee Schedule. The good news of course is that CMS will not need to put a hold on physician payments starting January 1 as they did last year. The bad news is that a two-month fix can hardly be considered a fix at all and any kind of permanent fix for the SGR does not even appear on Congress' radar screen. Hopefully Santa delivers some bipartisanship this weekend because it will be sorely needed in February.

Federal Prosecutors Continue Focus On Health Care Fraud

Todd Rodriguez — Thu, 01 Dec 2011 13:38:29 -0500

By David Restaino, Esquire

Federal prosecutors continue to focus their efforts on preventing health care fraud, as evidenced by a recent case arising in Texas. Earlier this year, a Houston doctor (Dr. Christina Clardy) was convicted of three counts of mail fraud, 14 counts of health care fraud and one count of conspiracy to commit health care fraud – all relating to over $45 million in false billings to Medicare and Texas’ Medicaid programs. In particular, the scheme involved a nursing service having billed over $25 million in physical therapy services under Dr. Clardy’s physician provider numbers.

The documents produced at trial included a letter from the doctor showing her knowledge of the fraudulent activities, specifically, requiring her employer’s owner to immediately cease all billing under her number or she would notify the authorities – which she never did even though the billings continued. The evidence against Dr. Clardy was compounded by her receipt of large cash payments from the owner soon after her letter was sent.

The Court recently announced its sentence against Dr. Clardy. The sentence serves as a clear warning to physicians who are tempted by the illegal profits to be made from defrauding Medicare and Medicaid: Dr. Clardy will be spending 135 months in federal prison and must personally pay over $15 million in restitution. This sentence is in addition to the separate sentences handed out against two other convicted defendants involved in the scheme; a fourth person will be sentenced this month.

HHS Office of Inspector General Releases Priorities for Fiscal Year 2012

Todd Rodriguez — Fri, 04 Nov 2011 12:06:58 -0500

By David Restaino

The Department of Health and Human Services’ (HHS) Office of Inspector General (OIG) has been busy combating fraud and abuse over the last few years – the monies it has recovered more than doubled from 2006 to 2010, topping $4 billion in fiscal year 2010 alone. And OIG’s enforcement efforts will undoubtedly increase because of the balanced budget pressure in Washington.

With this in mind, the OIG’s recently released Work Plan for Fiscal Year 2012 provides the regulated community with a roadmap of the areas that will receive additional scrutiny from OIG. These include:

● Payment systems controls that identify high cumulative Part B payments made to physicians;
● Claim submission practices of, and private contracts entered into by, physicians who have opted out of Medicare;
● Physicians’ coding on Part B claims, for services performed in ambulatory surgical centers and hospital outpatient departments;
● Providers’ compliance with assignment rules relating to billings that exceed Medicare-allowable amounts; and
● Part B payments for chiropractic services.

This list only skims the surface of those “new” areas of OIG focus, and does not take into account its existing areas of investigation.

Moreover, these priorities also extend beyond fines and penalties and also cover exclusion of individuals from participation in federal health care programs. For instance, in fiscal year 2010, over 3,300 individuals and entities were excluded from such participation. A recent Government Accountability Office (GAO) report criticized HHS and suggested that it should be paying greater attention to its suspension and debarment programs, by perfecting its use of staff and developing guidance to implement these programs. Assuming HHS follows even some of these recommendations, we can also expect to see more suspensions and debarments in the coming year.

"Narrow Network" HMOs -- An Emerging Trend Worth Watching

Todd Rodriguez — Thu, 03 Nov 2011 08:19:03 -0500

According to an article in the Arizona Republic posted on AZcentral.com, Health Net of Arizona has begun offering a new "narrow network" HMO product to employers in conjunction with Banner Health, a health system offering healthcare services in seven western states. Under the new plan, employers will receive premium discounts for limiting their network of providers to the newly formed "Banner Health Network". Presumably based on an ability to better manage care within an integrated network, Health Net believes the should offer a 20% savings over its traditional PPO products.

The emergence of narrow network HMO products is a trend worth watching for several reasons: first, it demonstrates that third party payers are aggressively seeking to better manage health care costs and are looking for innovative ways to do so; and, second, it is apparent that as new products are developed, those providers who are integrated (both horizontally and vertically) are most likely to be the players of choice, as they will presumably have a greater ability to control costs across the delivery continuum. Physicians and other providers should take these developments to heart when developing their strategic plans for the coming year(s).

Be Proactive About Negative Online Reviews

Todd Rodriguez — Tue, 25 Oct 2011 09:25:55 -0500

Have you or your practice been the subject of a negative online review? If not, there's a pretty good chance that you might be in the future. Online physician rating websites are proliferating and it is becoming increasingly common for disgruntled patients to vent their frustrations on the World Wide Web. Even worse is the fact that many of these websites permit anonymous posting, so you may not even know who your detractor is. It's finally, case law generally exempts rating websites from liability provided they are only facilitating publication of the personal opinions of posters. None of this however means that you must take a negative online review lying down. In fact, given that a physician's reputation is one of his or her most valuable professional assets, I would encourage you to proactively protect your online reputation. Here are a few things you can do:

• Regularly (at least monthly) do an online search of your name and your practice's name to see if comments have been posted. Some search engines allow you to set up an "alert" to notify you by e-mail if your name appears in a search.
• If you know who the poster is, consider calling them and trying to work through their concerns to see if they would be willing to retract their online comment.
• Review the website's “terms of use” to see if the posting is in compliance them. Some websites prohibit posters from personally naming or attacking an individual physician or claiming malpractice on the part of a physician. If you believe a posting does not conform to the terms of use, there is typically a mechanism to report the posting and often the website will remove a noncompliant posting.
• If you have patients with positive things to say about you or your practice, encourage them to post positive comments on one or more of the available rating websites. Not only does this counter any negative comments but it can also push negative comments further down in the list so that they are less prominent.
• Consider involving legal counsel to advise you on your options. Sometimes a well drafted letter from an attorney to either the website or the poster is enough to encourage them to take down the posting.

Is a Part-Time Physician Policy Right for Your Practice?

Todd Rodriguez — Mon, 24 Oct 2011 08:03:06 -0500

One of the common struggles I often come across in private medical practices is what to do when a senior physician wants to go part-time. In busy practices, this issue can be emotionally charged and I have even seen it lead to practice breakups.

Some practices simply take the position that either you work full-time, carry a full patient load, do surgery and take full on-call duties or there is no place for you in the practice. This can be a big mistake, especially if the senior physician seeking part-time status has a large patient or referring physician following.

In my experience, the key to successfully handling a physician’s transition to part-time status is having a clear documented policy in place well before the issue even arises. This takes the emotion out of the process and gives everyone fair notice of what to expect if and when they seek part-time status. Some of the key considerations that should go into a part-time policy are as follows:

• If the physician seeking part-time status is a shareholder or owner in the practice, consider whether going to part-time status should automatically require sale of his or her ownership interest back to the practice. Remember that being an owner in a business carries with it a lot of financial responsibility. Someone who is only part-time and eventually looking to move on to full retirement may be unwilling to accept these financial risks.

• The policy should spell out clearly the options for going to part-time status (e.g., no call, one last day in the office per week etc.), as well as the financial implications associated with that decision. The policy should address what will happen with the physician’s salary, bonus participation, benefits and other practice expenses such as malpractice insurance.

• The policy should spell out clearly that part-time status is of limited duration. Physicians should not have the expectation that they can drop to part-time status indefinitely; otherwise you could end up with a practice of all part-time physicians. Part-time status for senior physicians should be used as an interim step in the transition to full retirement. It is generally advisable to make termination of part-time status automatic at the end of a defined period of time so that the practice’s governing body is not forced to make a politically charged decision to either terminate part-time status or allow it to continue.

• Finally, it is critical to the success of any part-time policy that it be implemented consistently. While there can be some flexibility in implementation to account for practice needs at any given time, applying the policy in a discriminatory manner can create legal exposure for the practice and also undermine the policy’s effectiveness.