CAMLAW: Complementary and Alternative Medicine Law Blog

Mobile medicine apps are the future: legal issues remain

Michael H. Cohen — Tue, 27 Mar 2012 20:40:16 -0500

Mobile medicine apps are the future, as we move increasingly into digital, virtual communication; yet FDA medical device and other legal issues remain.

Recently it was reported that everything in medicine in going mobile:

Cardiologist Eric J. Topol, MD, was on a cross-country flight when an attendant made an announcement asking if there was a doctor on board.

Dr. Topol, chief academic officer for Scripps Health, responded and was brought to a man who was in obvious trouble. Only a year or two ago, Dr. Topol would have had to make an educated guess and hope he could take care of the patient until the plane landed.

This time, though, he pulled out his iPhone, and with an app that produces an electrocardiogram, he determined that the patient was having a heart attack. The plane made an emergency landing while paramedics waited on the ground to take the patient directly to surgery to open the blocked arteries causing the attack.

Though the story is an extreme example, it illustrates why mobile technology was such a big focus of the 2012 annual meeting of the Healthcare Information and Management Systems Society, where Dr. Topol shared the story. With each passing day, mobile technology is giving physicians more opportunities to practice medicine from anywhere, at any time....

Mobile technology is bringing the patient’s bedside to the physician’s smartphone or tablet computer.....

Just a few years ago, physicians with patients in hospitals either had to be at the patient’s bedside to get a complete view of what was going on or rely on a floor nurse’s interpretation of what the patient’s monitoring devices showed.

Mobile technology has made it possible to bring the patient’s bedside to the physician’s smartphone or tablet.

Applications can send a physician real-time updates on a patient’s condition regardless of where the physician is. A doctor can monitor the wave-forms of cardiac monitors, contraction and fetal monitors, ventilators, and a host of other bedside monitors. A dashboard displays a patient’s vitals and lab values, and all the information from the patient’s electronic health record can be accessed from a device small enough to fit in a pants pocket.

If you are fan of Ray Kurzweil, who wrote The Age of Spiritual Machines and The Singularity Is Near, you'll recognize this scenario: from Web to mobile to implants in our bodies - tiny nano robots that monitor our health and give us instantaneous boosts and repair. The emphasis on mobile medical technology is a way-station to that reality.

FDA and other legal and regulatory issues, however loom.

Recently, for example, the FDA announced that when cellphones are used as medical devices, they are subject to legal rules and regulation governing medical devices. Smart phone? Smart FDA.

Telemedicine and legal rules governing corporate practice of medicine and unlicensed medical practice also may apply. For example, see:

Intellectual property concerns, including copyright, trademark, and patent, also will be important.

If you are developing a mobile medical application (app) or a device for e-health, be sure to consult with an attorney familiar with Food and Drug Administration laws governing medical devices, Federal Trade Commission rules governing advertising, state medical licensing and telemedicine rules, and other areas of law and regulation.

Is my product a medical device, a drug, a cosmetic, a biologic, or otherwise FDA-regulated?

Fri, 23 Mar 2012 17:16:41 -0500

Many entrepreneurs want to know whether their invention is a medical device, a drug, a cosmetic, a biologic, or otherwise FDA-regulated.

Cosmetics v. Drugs

Let's start with some basic definitions:

The Federal Food, Drug, and Cosmetic Act (FD&C Act) and the federal Food and Drug Administration (FDA) define products by their intended use.

Cosmetics are "articles intended to be rubbed, poured, sprinkled, or sprayed on, introduced into, or otherwise applied to the human body...for cleansing, beautifying, promoting attractiveness, or altering the appearance" [FD&C Act, sec. 201(i)]. According to the FDA, among the products included in this definition are skin moisturizers, perfumes, lipsticks, fingernail polishes, eye and facial makeup preparations, shampoos, permanent waves, hair colors, toothpastes, and deodorants, as well as any material intended for use as a component of a cosmetic product.
The FD&C Act defines drugs, in part, by their intended use, as "articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease" and "articles (other than food) intended to affect the structure or any function of the body of man or other animals" [FD&C Act, sec. 201(g)(1)].

The FDA states:

Some products meet the definitions of both cosmetics and drugs. This may happen when a product has two intended uses. For example, a shampoo is a cosmetic because its intended use is to cleanse the hair. An antidandruff treatment is a drug because its intended use is to treat dandruff. Consequently, an antidandruff shampoo is both a cosmetic and a drug. Among other cosmetic/drug combinations are toothpastes that contain fluoride, deodorants that are also antiperspirants, and moisturizers and makeup marketed with sun-protection claims. Such products must comply with the requirements for both cosmetics and drugs.

According to the FDA, intended use can be shown by:

Claims stated on the product labeling, in advertising, on the Internet, or in other promotional materials.
Consumer perception, which may be established through the product's reputation.
Ingredients that may cause a product to be considered a drug because they have a well known (to the public and industry) therapeutic use.

Thus, certain claims "may cause a product to be considered a drug, even if the product is marketed as if it were a cosmetic....Some examples are claims that products will restore hair growth, reduce cellulite, treat varicose veins, or revitalize cells."

An example where ingredients cause the product to be considered a drug, is fluoride in toothpaste.

The FDA has different labeling requirements for drugs and cosmetics.

Approval requirements for drugs vs. cosmetics: there is no premarket approval system for cosmetic products or ingredients (with the exception of color additives).
Drugs usually must receive premarket approval by the FDA or conform to final regulations that specify conditions where they are generally recognized as safe and effective,but not misbranded. (There are separate rules for over-the-counter (OTC) drugs).
Good manufacturing practices (GMPs) are different: there are strict GMP requirements for drugs and none for cosmetics (other than ensuring that the products are neither adulterated nor misbranded. However, no regulations set forth specific GMP requirements for cosmetics.
FDA maintains the Voluntary Cosmetic Registration Program⁷, or VCRP, for cosmetic establishments and formulations [21 CFR 710 and 720]. As its name indicates, this program is voluntary. In contrast, it is mandatory for drug firms to register their establishments and list their drug products with FDA [FD&C Act, sec. 510; 21 CFR 207].
Labeling requirements are different. The FDA has a Cosmetic Labeling Manual for guidance on cosmetic labeling. OTC drugs must be labeled according to OTC drug regulations, including the "Drug Facts" labeling, as described in 21 CFR 201.63. Combination OTC drug/cosmetic products must have combination OTC drug/cosmetic labeling. For example, the drug ingredients must be listed alphabetically as "Active Ingredients," followed by cosmetic ingredients, listed in order of predominance as "Inactive Ingredients."

The FDA has a webpage that serves as a portal for regulatory information regarding FDA regulation of drugs.

Included is information about drug applications for over-the-counter (OTC) drugs. The FDA states:

Because there are over 300,000 marketed OTC drug products, FDA reviews the active ingredients and the labeling of over 80 therapeutic classes of drugs, for example analgesics or antacids, instead of individual drug products. For each category, an OTC drug monograph is developed and published in the Federal Register. OTC drug monographs are a kind of "recipe book" covering acceptable ingredients, doses, formulations, and labeling. Many of these monographs are found in section 300 of the Code of Federal Regulations¹. Once a final monograph is implemented, companies can make and market an OTC product without the need for FDA pre-approval. New prescription drugs, on the other hand, require pre-approval before they can go on the market. These monographs define the safety, effectiveness, and labeling of all marketing OTC active ingredients. New products that conform to a final monograph may be marketed without further FDA review. Those that do not conform must be reviewed by the New Drug Application² process. A drug company may also petition to change a final monograph to include additional ingredients or to modify labeling.

According to the FDA, 6 out of 10 drugs are OTC drugs.

Medical Devices

The first thing is to determine if you have a medical device. The FDA notes that the definition of medical devices is very broad:

Medical devices range from simple tongue depressors and bedpans to complex programmable pacemakers with micro-chip technology and laser surgical devices. In addition, medical devices include in vitro diagnostic products, such as general purpose lab equipment, reagents, and test kits, which may include monoclonal antibody technology. Certain electronic radiation emitting products³ with medical application and claims meet the definition of medical device. Examples include diagnostic ultrasound products, x-ray machines and medical lasers. If a product is labeled, promoted or used in a manner that meets the following definition in section 201(h) of the Federal Food Drug & Cosmetic (FD&C) Act it will be regulated by the Food and Drug Administration as a medical device and is subject to premarketing and postmarketing regulatory controls.

A medical device is "an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including a component part, or accessory which is:

recognized in the official National Formulary, or the United States Pharmacopoeia, or any supplement to them,
intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals, or
intended to affect the structure or any function of the body of man or other animals, and which does not achieve any of it's primary intended purposes through chemical action within or on the body of man or other animals and which is not dependent upon being metabolized for the achievement of any of its primary intended purposes."

The FDA has a wealth of information to consider before marketing a medical device on its FDA webpage dedicated to medical device regulation.

Medical Device v. Drug

The FDA notes that the difference between a medical device is its intended use: if the intended use is through chemical action or being metabolized by the body, the product is usually a drug.

Note that the FDA regulates drugs through its Center for Drug Evaluation and Research (CDER), but regulates biological products and blood banking equipment through its Center for Biologics Evaluation and Research, and veterinary products through its Center fo Veterinary Medicine (CVM).

If you have a medical device, the next thing is to determine its device classification (i.e., whether it is Class I, Class II or Class III), and whether your device is "substantially equivalent" (SE) to an already legally marketed medical device that is not subject to premarket approval (PMA). You determine this by filing a 510(k) submission to the the FDA to demonstrate substantial equivalence.

There are two powerful ways to begin to research substantial equivalence, in preparation for the 510(k) submission:

Search the 510(k) Medical Device Classification Database

Search the Device Classification Panels in the Code of Federal Regulations (CFR)

Devices are organized in 21 CFR, Parts 862-892 into 16 medical specialty panels, such as anesthesiology, cardiovascular, chemistry, dental, ear nose and throat, gastroenterology and urology, general and plastic surgery, immunology, microbiology, and so on.

For Class I devices exempt from [510(k)] the submission of a [510(k)] and marketing clearance from FDA is not required. If your Class I (or certain class II) device is exempt, subject to the limitations on exemptions, from the 510(k) process, this will be stated in the classification regulation. However, other General Controls such as registration and listing, labeling, and good manufacturing practices apply. If you have a Class III device requiring premarket approval (PMA) the FDA has guidance on obtaining a PMA.

Dietary Supplements

The term "dietary supplement" was defined in the Dietary Supplement Health and Education Act (DSHEA) of 1994. The FDA states the definition for consumers as follows:

A dietary supplement is a product taken by mouth that contains a "dietary ingredient" intended to supplement the diet. The "dietary ingredients" in these products may include: vitamins, minerals, herbs or other botanicals, amino acids, and substances such as enzymes, organ tissues, glandulars, and metabolites. Dietary supplements can also be extracts or concentrates, and may be found in many forms such as tablets, capsules, softgels, gelcaps, liquids, or powders. They can also be in other forms, such as a bar, but if they are, information on their label must not represent the product as a conventional food or a sole item of a meal or diet. Whatever their form may be, DSHEA places dietary supplements in a special category under the general umbrella of "foods," not drugs, and requires that every supplement be labeled a dietary supplement.

The FDA provides several guidance documents for industry professionals seeking assistance with labeling, claims, substantiation, and other regulatory issues.

If you have a product and are unsure whether it might be regulated by the FDA as a cosmetic, drug, medical device, dietary supplement (or food), biological, or otherwise, the FDA website is a good place to start. You should also contact an experience FDA attorney to help you create legally compliant labeling, advertising, and marketing materials for your product. Our law firm has FDA expertise and can help provide legal guidance for you from concept to market.

Related Posts

Labeling dietary supplements - FDA industry regulation

FDA Guidance Regarding Structure-Function Claims for Dietary Supplements

Legal action pushes FDA on its response to qualified health claims

FDA regulates electric toothbrushes as medical devices

FDA warns consumers about grapefruit juice

Dietary supplements regulations make IRS rules read like Hemingway

Medical device manufacturer executives sentenced for rogue clinical trials

HCG - FDA drug approval / legal issues for weight loss

Drugs Dietary Supplements and Structure-Function Claims

FDA Guidance Regarding Structure-Function Claims for Dietary Supplements

Legal action pushes FDA on its response to qualified health claims

Michael H. Cohen — Tue, 20 Mar 2012 17:29:52 -0500

A federal judge recently held that the disclaimer required by the FDA for a qualified health claim about green tea and the risk of cancer is so strongly worded that it “effectively negates” the manufacturer’s claim.

Note that the case involves a qualified health claim (QHC) and not the typical structure / function claim that people at Whole Foods or other health food stores typically see on the dietary supplement label. The QHC is different in that:

QHCs enable companies to make a health claim about a substance in relation to a disease or condition when the supporting science fails to meet the FDA’s “significant scientific agreement” standard, so long as that health claim is “qualified” in such a way as to not mislead consumers....

In practice, however, FDA rarely approves QHCs: the agency approved only twelve QHCs between 1999 and September 2010—and when they did, they usually created disclaimers that completely reversed the meaning of the claim. It was because of this that ANH-USA sued the FDA over its treatment of the QHC for selenium and cancer. And we were successful in creating a precedent that restricts FDA’s ability to infringe on the right to free speech, a right that is at least in part provided by QHCs.

Fleminger, Inc., sells green tea at TeaForHealth.com and discusses the science of antioxidants and the research on green tea’s anti-cancer properties. Fleminger first submitted a health claim petition to FDA in 2004. A year later, the FDA proposed two disclaimers that stated, in part, “FDA concludes that it is highly unlikely that green tea reduces the risk” of breast cancer or prostate cancer. Fleminger petitioned for an administrative review but it was denied.

In 2010, FDA sent a warning letter to Fleminger threatening to seize its products and insisting it use the exact language set forth in its qualified health claims. Shortly thereafter, however, FDA proposed a revised claim: “Green tea may reduce the risk of breast or prostate cancer. FDA does not agree that green tea may reduce the risk because there is very little scientific evidence for the claim.” This prompted Fleminger’s suit in the US District Court, asserting that FDA was making Fleminger “choose between speaking exactly as [FDA] wishes, remaining silent, or risking adverse action for its own commercial speech in violation of the First Amendment.”

Judge Bryant agreed with Fleminger: The FDA’s language “effectively negates the substance–disease relationship claim altogether….There are less burdensome ways in which the FDA could indicate in a short, succinct and accurate disclaimer that it has not approved the claim without nullifying the claim altogether.”

According to a U.S. GAO document entitled Food Labeling: FDA Needs to Reassess Its Approach to Protecting Consumers from False or Misleading Claims -

FDA is responsible for ensuring the proper labeling of food, and the use of structure/function claims is subject to the general statutory requirement that labeling not be false or misleading. However, FDA has not given companies guidance on the scientific support needed to prevent false or misleading information in a structure/function claim for food. FDA has guidance for the dietary supplements industry on the scientific support needed to prevent false or misleading information for a structure/function claim for dietary supplements...

The GAO compares FDA and FTC authority to the regulatory system used in the European Union:

Unlike FTC, which may require companies to provide the evidence to support their advertising claims, FDA bears the burden of proving that a structure/function claim is false or misleading without having the authority to compel companies at the investigation stage to produce the evidence that the companies assert as support for their advertising claims. According to senior attorneys in FDA’s Office of the Chief Counsel, FDA’s efforts to meet that burden are hampered by the lack of access to the evidence that a company relies on to make such a claim. In particular, while FDA may ask a company to provide its evidence, FDA does not have express legal authority to compel the company to provide information. To support an action, FDA may need to review the scientific literature to determine whether the literature supports a claim—an effort that may be time consuming and labor intensive. FDA may also need to establish through research how consumers perceive the claim. If the structure/function claim, or any claim for that matter, is one for which there is little publicly available information, it can be difficult for FDA to develop the evidence needed to support an enforcement action. It also can be difficult to evaluate the support for a structure/function claim when the functions, such as “immunity” or “attention,” do not have generally established measures for the claimed benefit. For example, it is not necessarily clear what outcome measures would be a valid means of assessing whether a food “improves vitality.”

Furthermore, in contrast to the United States, the EU follows a different course: EU Commission officials told us the responsible EU food agency must preapprove the type of food claims that FDA calls structure/function claims before they can be used. EU Commission officials also stated that their scientific review agency rejected 85 percent of structure/function claims companies have submitted because of the lack of scientific support. Canada is also reviewing structure/function claims food companies have submitted by developing a list of approved claims; it too has rejected most claims, including some found on labels in the United States, according to a Canadian official. To protect the public from false or misleading claims, the Canadian food labeling agency is working with the Canadian agency that regulates advertising to develop a framework for regulating structure/function claims.

The above is positive in terms of pushback against the FDA from a free speech perspective, though again, it deals with qualified health claims and not structure/function claims.

Qualified health claims are health claims that characterize the relationship of a food component to a disease or health-related condition, as modified with a disclaimer or otherwise qualified by FDA to characterize the strengths and limitations of the scientific support to address the claim’s potentially misleading nature. For example, the following is a qualified health claim allowed by FDA characterizing the relationship between the consumption of tomatoes and the risk of gastric cancer:1 “Four studies did not show that tomato intake reduces the risk of gastric cancer, but three studies suggest that tomato intake may reduce this risk. Based on these studies, FDA concludes that it is unlikely that tomatoes reduce the risk of gastric cancer.” Qualified health claims for food are not provided for in statute. Instead, they came about as a consequence of FDA’s decisions following a 1999 federal appeals court ruling (Pearson v. Shalala). The court held that the First Amendment does not permit FDA to prohibit a potentially misleading health claim on a dietary supplement label unless FDA considers whether qualifying language on the label could negate the potentially misleading nature of the claim. (Dietary supplements are products that contain certain dietary ingredients such as vitamins, minerals, or herbs, intended to supplement the diet, and are labeled as dietary supplements.)

Notes one commentator:

The FDA still has authority to regulate structure / function claims and may treat them as disease claims if they reference an underlying disease or condition (such as obesity or diabetes, for example). Note that there are also FDA and FTC substantiation requirements with regard to structure / function claims, even though not as strict as for QHCs.

If you are involved in manufacturing or distributing dietary supplements or other natural products, be sure to contact an experienced health care lawyer who is familiar with the Food and Drug Administration (FDA) and Federal Trade Commission (FTC) review of dietary supplement claims and labels.

Contact our legal team today.

FDA regulates electric toothbrushes as medical devices

Michael H. Cohen — Tue, 13 Mar 2012 12:06:04 -0500

You might be surprised to learn that electric toothbrushes are regulated as medical devices.

That's because they are intended to prevent tooth decay. The FDA provides a succinct definition of a medical device as follows:

Medical devices range from simple tongue depressors and bedpans to complex programmable pacemakers with micro-chip technology and laser surgical devices. In addition, medical devices include in vitro diagnostic products, such as general purpose lab equipment, reagents, and test kits, which may include monoclonal antibody technology. Certain electronic radiation emitting products with medical application and claims meet the definition of medical device. Examples include diagnostic ultrasound products, x-ray machines and medical lasers. If a product is labeled, promoted or used in a manner that meets the following definition in section 201(h) of the Federal Food Drug & Cosmetic (FD&C) Act it will be regulated by the Food and Drug Administration (FDA) as a medical device and is subject to premarketing and postmarketing regulatory controls. A device is:

"an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including a component part, or accessory which is:

recognized in the official National Formulary, or the United States Pharmacopoeia, or any supplement to them,

intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals, or

intended to affect the structure or any function of the body of man or other animals, and which does not achieve any of it's primary intended purposes through chemical action within or on the body of man or other animals and which is not dependent upon being metabolized for the achievement of any of its primary intended purposes."

This definition provides a clear distinction between a medical device and other FDA regulated products such as drugs. If the primary intended use of the product is achieved through chemical action or by being metabolized by the body, the product is usually a drug.

Recently the FDA issued this consumer alert:

When using your electric toothbrush, you don’t expect parts of the device to pop off and chip your tooth, fly into your eyes or get stuck in your throat.

But that’s exactly what has happened to some users of the battery-powered Arm & Hammer Spinbrush—or the Crest Spinbrush, as it was called before 2009.

“It’s important that consumers know how to avoid the risks associated with using the Spinbrush,” says Shumaya Ali, M.P.H., a consumer safety officer at the Food and Drug Administration. “We’ve had reports in which parts of the toothbrush broke off during use and were released into the mouth with great speed, causing broken teeth and presenting a choking hazard.”

FDA regulates toothbrushes—whether manual or electric—as medical devices that are intended to help prevent tooth decay. Safety precautions should be taken with all kinds of electric toothbrushes.

“Electric toothbrushes can be very effective in removing dental plaque, and so they can help prevent dental decay and gum disease,” says Susan Runner, D.D.S., chief of FDA’s dental devices branch. “At the same time, it’s important to supervise children when they use these brushes, and to look out for any malfunctions of the toothbrush that might cause an injury.”

Injuries reported from using the Spinbrush powered toothbrush include

chipped or broken teeth

cuts to the mouth and gums

swallowing and choking on broken pieces

injury to the face and eyes

FDA is alerting the public about the potential for injury while using the following models of Spinbrush:

Spinbrush ProClean

Spinbrush ProClean Recharge

Spinbrush Pro Whitening

Spinbrush SONIC

Spinbrush SONIC Recharge

Spinbrush Swirl

Spinbrush Classic Clean

Spinbrush For Kids

Spinbrush Replacement Heads

The Spinbrush handle contains batteries and a motor that operates the brushes, which are attached to a brush head. In the models of Spinbrush made for adults, the brush head is removable and can be replaced.

But the brush head should not pop off during normal use, says Ali. “In some cases, the brush head popped off to expose metal pieces underneath that can—and have—poked individuals in the cheek and areas near the eyes, causing injuries.”

The “Spinbrush for Kids” models, which have different handle designs, such as Spiderman and Thomas & Friends, do not have removable brush heads. Nonetheless, problems with the Spinbrush for Kids have also been reported, such as cut lips, burns from the batteries, and bristles falling off and lodging in a child’s tonsils.

“FDA’s concern is that the unexpected release of any part of this battery-powered toothbrush during use poses a risk of injury,” says Steven Silverman, director of the Office of Compliance in FDA’s Center for Devices and Radiological Health. “And the risk is higher in children or adults who may need assistance but are not supervised while using the toothbrush.”

If you have a product intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, then you may have a medical device or a drug regulated by the FDA.

Even if you think you a dietary supplement, once you make a claim about treating, preventing or curing a disease, you may fall into the drug category.

If you have a product, consult a skilled lawyer who understands FDA law relating to foods, drugs, cosmetics, dietary supplements, and medical devices.

FDA warns consumers about grapefruit juice

Michael H. Cohen — Tue, 13 Mar 2012 11:55:09 -0500

Grapefruit juice and fresh grapefruit can interfere with the action of some prescription drugs, FDA warns consumers.

FDA warns that grapefruit juice may be dangerous:

Grapefruit juice and fresh grapefruit can interfere with the action of some prescription drugs, as well as a few non-prescription drugs.

This interaction can be dangerous, says Shiew Mei Huang, acting director of the Food and Drug Administration’s Office of Clinical Pharmacology. With most drugs that interact with grapefruit juice, “the juice increases the absorption of the drug into the bloodstream,” she says. “When there is a higher concentration of a drug, you tend to have more adverse events.”

For example, if you drink a lot of grapefruit juice while taking certain statin drugs to lower cholesterol, too much of the drug may stay in your body, increasing your risk for liver damage and muscle breakdown that can lead to kidney failure.

Drinking grapefruit juice several hours before or several hours after you take your medicine may still be dangerous, says Huang, so it’s best to avoid or limit consuming grapefruit juice or fresh grapefruit when taking certain drugs.

Examples of some types of drugs that grapefruit juice can interact with are:

some statin drugs to lower cholesterol, such as Zocor (simvastatin), Lipitor (atorvastatin) and Pravachol (pravastatin)
some blood pressure-lowering drugs, such as Nifediac and Afeditab (both nifedipine)
some organ transplant rejection drugs, such as Sandimmune and Neoral (both cyclosporine)
some anti-anxiety drugs, such as BuSpar (buspirone)
some anti-arrhythmia drugs, such as Cordarone and Nexterone (both amiodarone)
some antihistamines, such as Allegra (fexofenadine)

Grapefruit juice does not affect all the drugs in the categories above. Ask your pharmacist or other health care professional to find out if your specific drug is affected.

Too High or Too Low Drug Levels

Many drugs are broken down (metabolized) with the help of a vital enzyme called CYP3A4 in the small intestine. Certain substances in grapefruit juice block the action of CYP3A4, so instead of being metabolized, more of the drug enters the bloodstream and stays in the body longer. The result: potentially dangerous levels of the drug in your body.

The amount of the CYP3A4 enzyme in the intestine varies from one person to another, says Huang. Some people have a lot, and others have just a little—so grapefruit juice may affect people differently when they take the same drug.

While scientists have known for several decades that grapefruit juice can cause a potentially toxic level of certain drugs in the body, Huang says more recent studies have found that the juice has the opposite effect on a few other drugs.

“Grapefruit juice reduces the absorption of fexofenadine,” says Huang, decreasing the effectiveness of the drug. Fexofenadine (brand name Allegra) is available in both prescription and non-prescription forms to relieve symptoms of seasonal allergies. Fexofenadine may also be less effective if taken with orange or apple juice, so the drug label states “do not take with fruit juices.”

Why this opposite effect?

It involves the transportation of drugs within the body rather than their metabolism, explains Huang. Proteins in the body known as drug transporters help move a drug into cells for absorption.

Substances in grapefruit juice block the action of a specific group of transporters. As a result, less of the drug is absorbed and it may be ineffective, Huang says.

When a drug sponsor applies to FDA for approval of a drug, the sponsor submits data on how its drug is absorbed, metabolized and transported says Huang. “Then we can decide how to label the drug.”

FDA has required some prescription drugs to carry labels that warn against consuming grapefruit juice or fresh grapefruit while using the drug, says Huang. And the agency’s current research into drug and grapefruit juice interaction may result in label changes for other drugs as well.

FDA advises:

Ask your pharmacist or other health care professional if you can have fresh grapefruit or grapefruit juice while using your medication. If you can’t, you may want to ask if you can have other juices with the medicine.
Read the Medication Guide or patient information sheet that comes with your prescription medicine to find out if it could interact with grapefruit juice. Some may advise not to take the drug with grapefruit juice. If it’s OK to have grapefruit juice, there will be no mention of it in the guide or information sheet.
Read the Drug Facts label on your non-prescription medicine, which will let you know if you shouldn’t have grapefruit or other fruit juices with it.
If you must avoid grapefruit juice with your medicine, check the label of bottles of fruit juice or drinks flavored with fruit juice to make sure they don’t contain grapefruit juice.
Seville oranges (often used to make orange marmalade) and tangelos (a cross between tangerines and grapefruit) affect the same enzyme as grapefruit juice, so avoid these fruits as well if your medicine interacts with grapefruit juice.

Although many people in the natural foods and dietary supplement industry see the FDA as the proverbial 800-pound gorilla, the FDA actually provides a public service by delivering good information to consumers.

No doubt the area of federal food and drug law regarding claims and labeling (as well as substantiation) can be filled with difficulty. Navigating structure / functions claims, particularly for dietary supplements that aim to address serious conditions, without making illegal disease claims, can be tricky. Be sure to consult an experienced FDA lawyer for regulatory and legal assistance in drafting any dietary supplement claims and before marketing dietary supplements, in order to ensure compliance with all applicable laws and food and drug regulations.

Integrative Mental Health Care Experts Launch

Michael H. Cohen — Thu, 08 Mar 2012 19:09:48 -0500

Consumers, mental healthcare professionals, researchers and public health advocates can now access comprehensive information on all aspects of integrative mental healthcare.

The new informational site was launched by the International Network of Integrative Mental Health (INIMH).

Founded in Phoenix, Arizona, in 2010, the International Network of Integrative Mental Health was established to provide a global resource for research, education and practice in the field of evidence-based, "whole person" mental health care.

Statistics indicate that people are increasingly turning to non-traditional resources for help with a vast array of health and mental health conditions, often combining non-traditional therapies with mainstream medical treatments.

Health care providers who use and rely on conventional approaches such as prescribed medications and psychotherapy are also incorporating evidence-based, non-traditional therapeutics such as acupuncture, herbal and nutritional medicine, dietary modifications, meditations and spirituality in their practice.

Yet until now, there has been no comprehensive source of information for health care professionals or the public on how to improve their mental health through the use of conventional and non-conventional interventions.

There is growing evidence that healthcare providers and patients believe that both conventional and non-conventional therapies are legitimate treatment choices. However there is little agreement on how healthcare providers should recommend -- or patients should choose -- safe, evidence-based, non-conventional or integrative treatment strategies to address mental health needs.

Through the establishment of their organization, members of INIMH will grow a global network of social and professional support for the integrative mental health care community while providing a vital source of reliable information for the public.

The INIMH board is comprised of mental health experts including physicians, complementary and alternative practitioners, and academic and public health advocates from several nations who are committed to building a worldwide network dedicated to the transformation of mental healthcare through integrative practice.

The organization's groundbreaking website (http://www.inimh.org) offers clinicians, researchers and consumers easy online access to a comprehensive, searchable library on all areas of integrative mental healthcare, as well as expert-hosted forums, links to additional resources and networking connections between healthcare practitioners and the public.

International Network of Integrative Mental Health members include physicians, therapists, researchers and many other healthcare professionals who are united in their commitment to "whole person" healthcare, taking an integrative approach to the biological, psychological, and sociological components of mental illness.

Members of the International Network of Integrative Mental Health are committed to creating a more balanced, more inclusive and more compassionate model for mental health care around the globe.

The International Network of Integrative Mental Health mission includes:

Advance a global vision for an integrated whole person approach to mental health care via education, research, networking and advocacy, by bringing together the wisdom of world healing traditions and modern science.
Re-animate the mental health field with energy, spirit, compassion and joy. We are committed to serving the worthy goal of working towards the cessation of human suffering.
Create community and opportunities for nurturing personal and professional connections. We honor and respect the unique backgrounds and skills that each person brings to this work, and wish to promote meaningful relationships and connection to a global integrative mental health network.
Promote evidence-based CAM therapies and the judicious use of modern pharmacotherapies for the betterment of mental healthcare.
Contribute to the emerging bio-psycho-socio-spiritual paradigm addressing mind, body, and spirit by promoting effective and safe clinical practices. We acknowledge the fundamental importance of an ecological perspective and believe that environmental and transpersonal factors have profound effects on wellbeing and healing.
Educate, support and inspire integrative practitioners and trainees, at all levels of their careers and in all world regions. Our philosophy is based upon blending the best practices from traditional and modern healing systems. Our focus is on safety and positive outcomes while honoring our patients’ unique needs, beliefs, wisdom, and advocacy for therapeutic choices and relationships with practitioners that empower them.
Facilitate collaborative efforts between researchers and clinicians that extend beyond limited conventional understandings of mental healthcare as it pertains to care of individuals with psychological or psychiatric disorders, to a broader perspective that includes the range of psychosocial, cultural and spiritual factors that impact on health, well-being, immune functioning, and physiological integrity.

The establishment of the organization has been made possible by a generous grant from the Ted and Roberta Mann Foundation, a longstanding champion of health care reform.

Dietary supplements regulations make IRS rules read like Hemingway

Michael H. Cohen — Mon, 13 Feb 2012 21:41:45 -0500

Dietary supplement regulation requires companies to seek careful legal guidance before bringing products to market.

Even though there is no requirement of premarket approval (unlike the case for drugs, which require FDA approval for safety and effectiveness), dietary supplements are in fact subject to a maze of regulation. This includes both FDA (Food and Drug Administration) and FTC (Federal Trade Commission) rules to ensure that dietary supplements:

have proper claims (for example, structure-function and not disease claims)
where claims are properly substantiated (by competent and reliable scientific evidence)
and consumers are not given false or misleading statements
endorsements and testimonials must comply with FTC rules
claims can be implied as well as express
marketers must respect rules concerning third-party literature

In Consumer Justice Center v Olympian Labs, Inc, 99 Cal.App.4th 1056 (Ct. App., 4th Dist., 2002), the California Court of Appeal bluntly stated that a particular section of the DSHEA (codified at 21 USC section 343(r)):

is not the clearest legislation ever written. To be truthful, it is a nightmare of internal cross-references which makes parts of the Internal Revenue Code read like Hemingway in comparison.

As an example, the Court quoted the following:

“A statement of the type required by paragraph (q) of this section that appears as part of the nutrition information required or permitted by such paragraph is not a claim which is subject to this paragraph and a claim subject to clause (A) is not subject to clause (B).”

Typically, a legal consult involving dietary supplement labeling focuses on three important legal issues: the claims being made; the labeling; and substantiation.

Be sure to seek an attorney who is well-versed in all aspects of FDA and FTC laws and regulations before bringing new dietary supplement products to market.

***

Michael H. Cohen is a thought leader in health care law, pioneering legal strategies and solutions for business law clients in traditional and emerging healthcare. wellness, and lifestyle markets. As a corporate and regulatory attorney who has also handled litigation matters, Michael H. Cohen represents conscious business leaders in a transformational era. Clients seek Michael H. Cohen's legal expertise on business structure and entity formation (corporations, partnerships, LLCs); health care licensing matters; employment contracts and independent contractor agreements; dispute resolution; e-commerce; intellectual property issues; informed consent and malpractice liability issues; HIPAA and confidentiality and privacy issues; Stark, self-referral, anti-kickback, patient brokering, and fee-splitting questions; dietary supplement labeling; medical device and FDA matters; insurance reimbursement and Medicare issues; website disclaimers; concierge medicine legal advice; telemedicine; and other business law and health care regulatory compliance arenas. Whether advising start-ups or established companies, he brings his entrepreneurial spirit and caring insight to cutting-edge legal and regulatory challenges. Attorney Michael H. Cohen is admitted to practice law in California, Massachusetts New York, and Washington, D.C. Contact our attorneys firm today.

Incredible India - Tamil Nadu

Sun, 05 Feb 2012 08:52:09 -0500

A week-long mystical journey in Tamil Nadu, India: transformation of physical, emotional, mental, and spiritual.

A week ago I did not know I was coming to India to celebrate my birthday. I went down to Scripps to give a talk on Legal Issues in Integrative Medicine: Dietary Supplements. After the talk, I received an invitation to join a group of physicians, nurses, and healers to visit Velore where some powerful exchanges are occurring.

On one level, we are exchanging knowledge. We visited the Sri Narayani College and School of Nursing and taught Healing Touch (a technique taught by the American Holistic Nursing Association), and are sharing information about integrative medicine and how we incorporate the best of information about nutrition and wellness care with ancient healing technologies. But of course since we are in India, it is a mystical trip.

Here are some quick notes:

Meditation: golden light everywhere.
We did a fire ceremony last night - chanting the Vedas with the priests, shirtless and in a doti, pouring rice into the fire. Whatever suffering was left got poured into the fire. What emerged were the primordial deities. See them as archetypes or as forms of the divine, it doesn't matter. Pure love is the answer to everything. The journey to that state of consciousness is the ultimate purpose of life.
Chanting purifies the heart. It is by constantly immersing ourselves in that state of unbounded love that we create. Through service and not through ego.
I am somewhat recovered though with a bronchial infection. Too bad because I will probably miss doing energy healing at the hospital tomorrow. I just felt overwhelmed with people and dust and vehicles and cows and dogs.
Sri Ramana Mararishi was said to be realized. I visited his ashram and they opened the little room where he "attained Nirvana." That is a holy moment, merger with the Absolute. My own mind thought of death on a white blanket. I imagine he was at peace and completed his soul's journey - big-time. And wondered whether my thoughts should have been on Self-Realization which he attained right there. But then, it's so India. A peacock was crowing and my travel companion was concerned that her flip flops had been stolen, so she had to return to our dormitory barefoot. Plus I was hungry and the back of my throat was raw. All I could think of was LIFE, living fully, all the things I have yet to do to experience fulfillment in this plane of reality..
When we become Love, we don't need to find love, we are that and intoxicate everyone we meet. I think that's why the Nitayanadas and Ammas come to this plane. To teach us that.
I have connected to that great energy that this being is bringing forth, through all these temples and ceremonies. And I've met some wonderful people who are living out a very fulfilling mission and mandate in bringing their knowledge, influence, wealth, and dedication to the people of India and to helping the kind of health care in which I believe to flourish on multiple continents.

Conflict of interest rulings affect medical doctors

Michael H. Cohen — Tue, 17 Jan 2012 13:13:28 -0500

New conflicts of interest disclosures will broaden physicians' reporting obligations.

Medical doctors face conflict of interest rules when they recommend dietary supplements to patients and profit from in-office sales of nutritional products. (When Integrative Medicine Physicians Sell Dietary Supplements: Legal Issues).

But conflict of interest rules also apply to payments made to doctors for research, as well as for travel, consulting and speaking, and in other contexts. New rules are likely to increase physicians' disclosure obligations.

According to recent reports,

Officials said the disclosures increased the likelihood that doctors would make decisions in the best interests of patients, without regard to the doctors’ financial interests.
Large numbers of doctors receive payments from drug and device companies every year — sometimes into the hundreds of thousands or millions of dollars — in exchange for providing advice and giving lectures.

... Under the new standards, if a company has just one product covered by Medicare or Medicaid, it will have to disclose all its payments to doctors other than its own employees. The federal government will post the payment data on a Web site where it will be available to the public.

Manufacturers of prescription drugs and devices will have to report if they pay a doctor to help develop, assess and promote new products — or if, for example, a pharmaceutical sales agent delivers $25 worth of bagels and coffee to a doctor’s office for a meeting. Royalty payments to doctors, for inventions or discoveries, and payments to teaching hospitals for research or other activities will also have to be reported.

Calls for increased transparency are part of health care reform:

The "Physician Payment Sunshine" provisions of the Affordable Care Act (ACA), require that drug, medical device, biologic, and medical equipment manufacturers that produce any products covered by Medicare or Medicaid or the Children's Health Insurance Program must report all payments made to doctors and hospitals.

The government will post the financial relationship information on a public website where patients and anyone else can check what ties to the medical industry a given doctor has....

The law requires disclosure of payments for food, entertainment, gifts, consulting fees, honoraria, research funding or grants, education or conference funding, royalties or licenses, and charitable contributions.

Medical companies, as well as group purchasing organizations (GPOs), will also have to report stock ownership and investments held by doctors.

There are already existing legal obligations governing physician referrals to medical entities in which they have a financial interest. The new rules add to these established self-referral and anti-kickback rules and also operate whether or not a referral is involved.

***

Coordinated government efforts target health care fraud and abuse

Michael H. Cohen — Sat, 14 Jan 2012 18:36:11 -0500

Coordinated government enforcement targets fee-splitting, Stark and kickback fraud and abuse in health care.

Each day there are new reports of health care fraud enforcement actions, both under Medicare and state law. It is much easier to find and go after health care fraud and abuse than ever:

... in 1996, the federal government broadened the Health Insurance Portability and Accountability Act of 1996 [HIPAA] to extend criminal penalties to inducements to refer to any federal healthcare insurance program, including insurers and providers. Congress enacted Title 18, United States Code, Section 1347, which, for the first time, specifically criminalized any scheme to defraud a healthcare benefit program. By 1998, DOJ began to establish both criminal and civil healthcare fraud coordinators in all ninety-four U.S. Attorneys’ offices, beginning the trend to unify and standardize national healthcare investigations and prosecutions.

After a modest increase in healthcare costs in the mid-1990s, from 1999 through the first ten years of the twenty-first century, healthcare costs doubled in addition to growing again at twice the GDP.7 Again, much attention was focused on eliminating fraud from the national healthcare system. This time, with the underlying legal fabric in place, federal law enforcement established a unified, focused team of investigators and prosecutors to combat the problem. This tactic was new to healthcare prosecution, but had been effective in many other areas.

Modern computerized methods make it ever easier to conduct health care fraud investigations:

The philosophy was simple: analyze current billing data to find outliers—providers who were billing Medicare such exorbitant amounts that the only legitimate explanation was a fraudulent one... The data comes in many forms including provider claims, cost reports, prescription data, US. Securities and Exchange Commission, nonprofit, and UCC filings, among a myriad of other sources. Investigators analyze it in many ways through data queries, correlations, and trend analysis (by provider type, CPT code, locations, etc.). They perform peer comparisons, statistical sampling, and conduct “impossible days” analyses—where providers billed for more than twenty-four hours of work in one day. They look for double billing and upcoding (billing for a more expensive service when a less expensive one was actually performed). These analyses help determine whether fraud is evident and if an investigation is warranted.

(P. Katz, Medicare Strike Force).

So it is no surprise that our law office is increasingly inundated with calls from various health care practitioners under investigation for various forms of health care fraud and abuse. Some are medical doctors and osteopaths, while others are dentists, psychologists, nurses, or other kinds of health care professionals.

Practitioners are often unaware of how they have come to the attention of enforcement authorities or what they might have done to trigger an investigation.

We also receive calls about Stark / self-referral, fee-splitting, and anti-kickback concerns from healthcare providers, institutions, and corporate entities as well as from entrepreneurs interested in launching multidisciplinary or other joint ventures. For example, we represent physicians who want to contract with chiropractors in professional medical corporations; practitioners of acupuncture and traditional oriental medicine; massage therapists; naturopathic doctors and naturopaths; herbalists; practitioners of homeopathy and physician homeopaths; healers; and others who want to know whether they could be engaging in illegal splitting or can find more legitimate ways of structuring their businesses.

All this enforcement activity also is increasing in the areas of unlicensed practice and scope of practice. Boards of medicine, nursing, psychology, and nutrition in particular are looking to investigate practitioners for unlicensed practice of medicine, unlicensed practice of psychology, and unlicensed practice of nutrition. Practitioners who use touch but do not have a massage therapy license can also be at risk of unlicensed practice charges.

And because the legal definitions of "diagnosis" and "treatment" are often interpreted so broadly, even licensed practitioners often find themselves under investigation by an enforcement agency for crossing the line into practice of medicine without a license, which is usually defined as a criminal activity.

More recently, we have represented clients under investigation for violation of laws relating to licensing of laboratories and laboratory tests. Many are unaware of the federal Clinical Laboratory Improvements Act (CLIA) and of the need for CLIA certification or a CLIA waiver - particularly as these legal rules affect tests that are considered complementary or alternative to more accepted medical tests; or of state laws that track CLIA in terms of establishing parallel compliance parameters.

It is important to seek legal advice from a healthcare lawyer who knows the legal and regulatory enforcement landscape. Federal law as well as state law can apply and the penalties can be severe. In many cases, there are coordinated enforcement efforts across agencies.

In addition, aiding and abetting charges can be brought to those who are helping practitioners engage in unlicensed practice. Sometimes the activity might be thought of as innocent, but the practitioner or entrepreneur must understand that simply 'splitting the fee' and pocketing the difference can have legal consequences, as can hiring a practitioner who is trying to fit under a legal umbrella for non-licensed practice but engages in methods that can cross legal lines.

If you have questions about regulatory enforcement activities concerning multidisciplinary practices or healthcare enterprises involving a variety of disciplines, you may wish to consult our video resources or other materials, including legal references on this blog.

***

Medical device manufacturer executives sentenced for rogue clinical trials

Michael H. Cohen — Sun, 18 Dec 2011 22:37:16 -0500

Several medical device manufacturer executives were given long terms for rogue clinical trials.

Four executives in total were sentenced - they each had pleaded guilty to one misdemeanor count of shipping adulterated and misbranded Norian XR in interstate commerce.

Bohner is the last of four executives to be sentenced in the case....On November 21, 2011, Bohner’s former colleagues Thomas Higgins and Michael Huggins received sentences of nine months in prison while former executive John Walsh received a sentence of five months. The defendants, including Bohner, approved rogue clinical trials using the bone void fillers Norian SRS and Norian XR to treat vertebral compression fractures of the spine (“VCFs”) in elderly patients, without the permission of the FDA. Despite known and serious safety concerns that the products could cause fatal blood clots, and despite a warning on the label of XR that the product was not intended for treatment of VCFs, Synthes did not stop the illegal testing until after a third patient had died on the operating table during the space of one year. During a follow-up FDA inspection in May and June 2004, three of the executives – including Bohner – also lied to the FDA investigator.

The district judge apparently told one defendant: "you failed."

Under Section 301(a) of the FDCA, the “introduction or delivery for introduction into interstate commerce of any food, drug, device, or cosmetic that is adulterated or misbranded” violates the FDCA. Under Section 301(k) of the FDCA, misbranding also includes: “the alteration, mutilation, destruction, obliteration, or removal of the whole or any part of the labeling of, or the doing of any other act with respect to, a food, drug, device, or cosmetic, if such act is done while such article is held for sale (whether or not the first sale) after shipment in interstate commerce and results in such article being adulterated or misbranded.

In the latter case, the government must establish two separate elements: (1) that the act in question occurred while the drug was “held for sale after shipment in interstate commerce;” and (2) that the act resulted in the article being misbranded.

Enforcement actions against manufacturers for misbranding have resulted in substantial civil and criminal penalties.

This includes an agreement by Otsuka Pharmaceutical to pay over $4 million in fines to resolve allegations of off-label marketing (drug approved to treat adult schizophrenia and bi-polar disorder, marketed for geriatric patients suffering from dementia-related psychosis), an agreement by Cephalon to pay $425 million for off-label drug marketing (narcotic drug approved for ppioid-tolerant cancer patients, marketed for migraines, sickle-cell pain crises, injuries, and other uses), a $1.415 billion settlement by Eli Lilly for off-label drug marketing (approved anti-psychotic drug marketed to doctors for patients with sleep orders and dementia), and a $600 million settlement by Allergan for marketing Botox® for headaches and pains.

Anyone involved with a potential "medical device" under the federal Food, Drug & Cosmetic Act should consult an experienced FDA attorney for appropriate food and drug law advice.

***

Michael H. Cohen is a thought leader in health care law, pioneering legal strategies and solutions for business law clients in traditional and emerging healthcare. wellness, and lifestyle markets. As a corporate and regulatory attorney who has also handled litigation matters, Michael H. Cohen represents conscious business leaders in a transformational era. Clients seek Michael H. Cohen's legal expertise on business structure and entity formation (corporations, partnerships, LLCs); health care licensing matters; employment contracts and independent contractor agreements; dispute resolution; e-commerce; intellectual property issues; informed consent and malpractice liability issues; HIPAA and confidentiality and privacy issues; Stark, self-referral, anti-kickback, patient brokering, and fee-splitting questions; dietary supplement labeling; medical device and FDA matters; insurance reimbursement and Medicare issues; website disclaimers; concierge medicine legal advice; telemedicine; and other business law and health care regulatory compliance arenas. Whether advising start-ups or established companies, he brings his entrepreneurial spirit and caring insight to cutting-edge legal and regulatory challenges. Attorney Michael H. Cohen is admitted to practice in California, Massachusetts New York, and Washington, D.C. Contact attorneys at our Beverly Hills, California law firm today.

OIG Unfavorably Reviews a Laboratory Management Company's Proposed Provision of Allergy Testing and Related Services in Exchange for a Percentage of Gross Collections

Michael H. Cohen — Mon, 28 Nov 2011 17:36:04 -0500

A new OIG fraud and abuse Advisory Opinion sheds makes percentage-based MSO arrangements questionable, where Medicare is involved.

In Advisory Opinion 11-17, the Office of Inspector General ("OIG") of the Department of Health and Human Services reviewed an arrangement in which the "Requestor," a laboratory services management company:

Under the Proposed Arrangement, Requestor proposes to provide allergy testing and immunotherapy laboratory services and related items to primary care physicians and physician practices ("Physicians") within the Physicians' medical offices. Specifically, Requestor would enter into exclusive contracts with the Physicians to operate an allergy testing laboratory on the Physicians' behalf.

Requestor would provide all of the necessary laboratory personnel (including laboratory technicians), equipment, supplies, training, and billing and collection services to Physicians on an as-needed basis. Additionally, Requestor would assist the Physicians with marketing allergy services to patients by providing patient education materials and reviewing patient files to identify candidates for [Requestor's] allergy laboratory services. [The OIG did not comment on HIPAA or federal and state privacy and confidentiality laws.]

The Physicians would provide: (1) space within their offices to operate the laboratory; (2) administrative staff for patient scheduling and other administrative tasks; (3) general medical office supplies and furniture; (4) general liability and malpractice insurance; and (5) physician supervision and interpretation of laboratory results.

The Physicians would bill Federal health care programs and third-party payors for the laboratory items and services provided under the Proposed Arrangement under the Physicians’ provider identification numbers. Requestor would provide billing and collection services on behalf of the Physicians for the allergy testing services.

In consideration for Requestor's services, under the Proposed Arrangement, Physicians would pay Requestor a fee equal to 60% of the Physicians' gross collections from the testing and services, a fee that Requestor stated as equal to fair market value (FMV).

The Physicians would agree to use Requestor as their exclusive provider of antigen-based immunotherapy laboratory services and as the sole allergy testing unit for the Physician’s patients.

The OIG review the federal anti-kickback statute (not Stark, which was not implicated here). The OIG noted that the anti-kickback statute (“AKS”) “ascribes criminal liability to parties on both sides of an impermissible ‘kickback’ transaction.”

The OIG next noted that the safe harbors for equipment leases and personal services and management contracts were potentially applicable (42 CFR 1001.952(c) and (d)). These safe harbors provide:

(c) Equipment rental. As used in section 1128B of the Act, “remuneration” does not include any payment made by a lessee of equipment to the lessor of the equipment for the use of the equipment, as long as all of the following six standards are met—

(1) The lease agreement is set out in writing and signed by the parties.

(2) The lease covers all of the equipment leased between the parties for the term of the lease and specifies the equipment covered by the lease.

(3) If the lease is intended to provide the lessee with use of the equipment for periodic intervals of time, rather than on a full-time basis for the term of the lease, the lease specifies exactly the schedule of such intervals, their precise length, and the exact rent for such interval.

(4) The term of the lease is for not less than one year.

(5) The aggregate rental charge is set in advance, is consistent with fair market value in arms-length transactions and is not determined in a manner that takes into account the volume or value of any referrals or business otherwise generated between the parties for which payment may be made in whole or in part under Medicare, Medicaid or all other Federal health care programs.

(6) The aggregate equipment rental does not exceed that which is reasonably necessary to accomplish the commercially reasonable business purpose of the rental. Note that for purposes of paragraph (c) of this section, the term fair market value means that the value of the equipment when obtained from a manufacturer or professional distributor, but shall not be adjusted to reflect the additional value one party (either the prospective lessee or lessor) would attribute to the equipment as a result of its proximity or convenience to sources of referrals or business otherwise generated for which payment may be made in whole or in part under Medicare, Medicaid or other Federal health care programs.

(d) Personal services and management contracts. As used in section 1128B of the Act, “remuneration” does not include any payment made by a principal to an agent as compensation for the services of the agent, as long as all of the following seven standards are met—

(1) The agency agreement is set out in writing and signed by the parties.

(2) The agency agreement covers all of the services the agent provides to the principal for the term of the agreement and specifies the services to be provided by the agent.

(3) If the agency agreement is intended to provide for the services of the agent on a periodic, sporadic or part-time basis, rather than on a full-time basis for the term of the agreement, the agreement specifies exactly the schedule of such intervals, their precise length, and the exact charge for such intervals.

(4) The term of the agreement is for not less than one year.

(5) The aggregate compensation paid to the agent over the term of the agreement is set in advance, is consistent with fair market value in arms-length transactions and is not determined in a manner that takes into account the volume or value of any referrals or business otherwise generated between the parties for which payment may be made in whole or in part under Medicare, Medicaid or other Federal health care programs.

(6) The services performed under the agreement do not involve the counselling or promotion of a business arrangement or other activity that violates any State or Federal law.

(7) The aggregate services contracted for do not exceed those which are reasonably necessary to accomplish the commercially reasonable business purpose of the services.

For purposes of paragraph (d) of this section, an agent of a principal is any person, other than a bona fide employee of the principal, who has an agreement to perform services for, or on behalf of, the principal.

The OIG concluded that the Proposed Arrangement would not quality for safe harbor protection under the anti-kickback laws for two reasons:

First, the services would be provided on an as-needed basis; the agreement therefore would not specify the schedule of intervals, the precise interval length, or the charge for such intervals.

Second, the relevant safe harbors provide that aggregate compensation to be paid under the contract must be set in advance and cannot be determined in a manner that takes into account the volume or value of any business generated between the parties that is payable by a federal health care program (such as Medicare). Significantly, here:

Because the Physicians would pay Requestor a percentage of their gross collections from allergy tests and immunotherapy items and services under their Proposed Arrangement, the aggregate charges would not be set in advance, and they would be based, in part, on the volume or value of Federal health care program business.

This portion of the OIG Advisory Opinion stands as a warning for those would try to rely on the equipment lease and personal services and management contracts safe harbor where entering into a percentage-based arrangement. This is of particular concern to those entering into an MSO (medical services organization) arrangement that attempts to rely on these safe harbors yet uses percentage of revenues for compensating the MSO.

Note that California law handles this differently (Business & Professions Code, sections 650(a) versus 650(b)). However, OIG advisory opinions can be influential to state medical fraud and abuse enforcement authorities.

Per usual, the OIG noted that the fact that the Proposed Arrangement does not fit into a safe harbor is not the end of the analysis; rather, the OIG must examine “the totality of the facts and circumstances to determine the extent of the risk posed by the Proposed Arrangement” with respect to inducements to refer.

Examining the facts and circumstances, for the following reasons, the OIG determined that the Proposed Arrangement would not be afforded protection:

First, the Requestor's fee would not be tied to actual and necessary services provided by Requestor to Physicians; instead, the Requestor's fee would be based upon a percentage of gross collections for the allergy testing and immunotherapy services. The OIG repeated its earlier observation that: “Percentage compensation arrangements are inherently problematic under the anti-kickback statute, because they relate to the volume and value of business generated between the parties, rather than the fair market value of the services provided.”

Second, the Requestor's review of patient files to identify candidates for its services would be "a suspect marketing activity." The OIG stated:

We are concerned that this type of marketing activity could encourage Physicians to order medically unnecessary tests that could pose a risk of patient harm.

The OIG noted that its concern was “magnified” because the Physicians, “who may not have significant, specialized allergen immunotherapy experience, may be influenced by Requestor, a non-physician, to order unnecessary services.” The OIG added that this created a risk of overutilization.

The OIG noted that it was not analyzing the “in-office ancillary services” exception to the Stark law. The OIG stated: "Even if some features of the Proposed Arrangement were to comply with the Stark Law, such compliance would not affect our analysis under the anti-kickback statute." In other words, Stark and AKS must be separately analyzed.

***

Michael H. Cohen is a thought leader in health care law, pioneering legal strategies and solutions for business law clients in traditional and emerging healthcare. wellness, and lifestyle markets. As a corporate and regulatory attorney who has also handled litigation matters, Michael H. Cohen represents conscious business leaders in a transformational era. Clients seek Michael H. Cohen's legal expertise on business structure and entity formation (corporations, partnerships, LLCs); health care licensing matters; employment contracts and independent contractor agreements; dispute resolution; e-commerce; intellectual property issues; informed consent and malpractice liability issues; HIPAA and confidentiality and privacy issues; Stark, self-referral, anti-kickback, patient brokering, and fee-splitting questions; dietary supplement labeling; medical device and FDA matters; insurance reimbursement and Medicare issues; website disclaimers; concierge medicine legal advice; telemedicine; and other business law and health care regulatory compliance arenas. Whether advising start-ups or established companies, he brings his entrepreneurial spirit and caring insight to cutting-edge legal and regulatory challenges. Attorney Michael H. Cohen is admitted to practice in California, Massachusetts New York, and Washington, D.C. Contact attorneys at our Beverly Hills, California law firm today.

11:11:11 to the 11:11:11th power

Michael H. Cohen — Sat, 12 Nov 2011 17:10:03 -0500

11:11:11 came in with prosperity blessings as the transformational shift awaited for centuries....

I spent the evening doing a meditation and healing with Aiden Chase, also known as Hollywood's Healer.

Aiden led a meditation in which we dropped everything we had been carrying, and entered into the portal that was opening. Aiden said this day had been anticipated and talked about for over 2,500 years, and that it marked a shift from the Piscean to the Aquarian Age.

We had to thank the "hippies" for bringing our attention to the Age of Aquarius, marked by peace and understanding ,and as well, the feminine, over the harsher energies of greed and severity.

The evening before I meditated on the FULL moon, and received this message: "The struggle is over."

So many people I know have had histories of struggles, but this felt like the great cleansing. From now on, positive people, positive associations, opportunities, appreciation. These are the new mantras.

The next thing that happened was I became a beam of light, catapulting from space down onto Earth.

As if navigating through the portal into a new assignment.

During the evening my energy field was way out to the room, then out to the planet, and I did not identify myself with this body or with an eye. An "I." I was with a friend, and jokingly referred to myself as "this one," or "this vessel"--as in, "this one would like to eat a power bar now;" but it was only partially joking, and we know that beings beyond the physical body have a wonderful sense of humor, and enjoy wordplay.

On 11/11/11, I heard the word "contactee." About a year ago, someone presented to me the new edition of John Mack's book, Passport to the Cosmos. I remember reading the introduction, and thinking things: (1) this is well-written, and (2) surely, this person (even though he writes from a more global, academic perspective about experiences) is an "experiencer." Then, with a jolt, I realized the author was me.

Last week I was in Florida speaking on "Legal Issues in Integrative Medicine" to physicians, at a conference co-organized by Scripps and by the American Board of Integrative and Holistic Medicine (ABIHM). Someone had a cartoon slide in which the secretary hands the physician a note on a telephone message pad, and says, "Doctor, several paradigms shifted while you were out to lunch." I realized that the paradigm had seriously shifted since my days at Harvard only 6 years ago. Integrative health care is here, and here to stay. The battles were fought by pioneers, but the newbies at the conference were simply there to gain knowledge, and marks and scratches of the alien wars against Klingons (or, well, .... many different versions of this) were invisible, the ship was brightly buffed, and it was all content-rich and pure.

Another message I received on 11/11/11 was about the Galactic 12. I'm not sure what this means, although 12 apparently has meaning on many levels .....

there was a message about a certain candidate becoming President, and then building up a secret campaign to expand military presence in space .... this could become the very early beginnings of interstellar travel for our species.

Anyway, back to Aiden who said that one meaning of 11/11/11 is that the 5th dimension is opening up to us, as we pass through the 4th, and that the veil between worlds is becoming even thinner. Not for everyone. Some people will remain stuck where they are. But those who choose to ascend can experience these different aspects of our universality, and this means a shift into a world of more texture, meaning, symbology, fascination, depth, wisdom, and love.

As I opened to these different aspects of awakening within myself, I remain grounded in left-brain, mundane, power tasks that are daily bread. Being a lawyer is a good profession. It can help protect people so they can plan mighty things. Even here, I was told by my guides, there is a certain influence that comes from the stars. Even talking about things like statutes and regulations, certain transmissions can occur.

Peace out for now.

Professional Medical Corporation or LLC? Fictitious Name Permit?

Michael H. Cohen — Tue, 08 Nov 2011 13:50:14 -0500

When physicians try to "partner" with non-physicians, they often confront challenges under the corporate practice of medicine rule.

This article discusses some of the key legal issues you will need to address if trying to create a business that includes physicians and non-physicians in critical roles. These legal nuances are important whether the business involves a medical spa, day spa, integrative medicine center, multidisciplinary professional practice (i.e., including physicians, chiropractors, psychologists, nurses, and other practitioners), or a company that provides medical services or equipment to physician or other health professional practices.

Corporate Practice of Medicine

The corporate practice of medicine doctrine imposes strict rules on contractual arrangements between physicians and non-physicians. One of the purposes of the corporate practice of medicine doctrine is to separate medical from business decision-making.

Under this doctrine, neither non-physicians nor lay corporations (corporations that are not medical professional corporations) may contract to provide medical services. Nor may they contract with a physician to have the physician provide medical services, either as an employee or an independent contractor. In addition, California law places limits on the activities of non-medical corporations managing health care practices. Other states may have similar limits.

New York, for example, has a strong corporate practice of medicine doctrine and requires clear separation of professional from non-clinical, management or medical services activities.

For this reason, laypersons often form a management company (or medical services organization) that contracts with a professional medical corporation to provide administrative and management services. As discussed elsewhere on this blog, such a structure can help alleviate concerns regarding anti-kickback, fee-splitting, Stark, and self-referral laws, so long as properly structured and with relevant exceptions and safe harbors to the relevant laws and regulations in mind. MSOs can often serve as billing and collecting agents for a medical practice.

However, medical boards are closely watching the MSO structure, as they are increasingly concerned that physicians will abuse such contractual arrangements and create disguised kickbacks, where laypersons are in fact exercising too much control over clinical practice by virtue of the decision-making inherent in the model. For this reason, it is critical to have any business model reviewed by an attorney experienced in Stark, self-referral, anti-kickback, fee-splitting, and corporate practice of medicine laws; as well, the attorney should be able to provide guidance on the differences between a corporation, an LLC (limited liability), and a professional corporation, as well as on rules regarding naming conventions and licensing of names and other intellectual property.

Professional Medical Corporation

Every state has laws governing formation of professional corporations. This article focuses on formation of a professional medical corporation and emphasizes California law. There can be subtle differences among states which an experienced attorney can point out, as statutes and regulations can be highly detailed and nuanced.

In California, the Moscone-Knox Professional Corporation Act regulates professional corporations, including the professional medical corporation (“professional medical corporation”). For those who want legal citations, see Calif. Corp. Code §§13400-13410.

· Section 13404 requires the Articles to specify that the corporation is a professional corporation within the meaning of the statute.

· See also 16 CCR §1343 (Requirements for Professional Corporations), which is a citation to the California Code of Regulations.

· Under Section 13401.5(a) of the Moscone-Knox Professional Corporation Act, certain enumerated, licensed health care professionals other than physicians may be “shareholders, officers, directors, or professional employees” of the professional medical corporation, so long as the sum of shares these non-physician, licensed professionals own does not exceed 49% of the total.

· In addition, Section 13406(a) provides that only a licensed person in the jurisdiction may be issued shares in the professional corporation.

For a professional medical corporation, the list includes:

· licensed doctors of podiatric medicine

· licensed psychologists, registered nurses

· licensed optometrists, licensed marriage and family therapists

· licensed social workers

· licensed physician assistants

· licensed chiropractors

· licensed acupuncturists

· naturopathic doctors.

The physician or physicians must own 51% or more of the total shares.

· California Labor Code section 3209.3 defines “physician” to include “physicians and surgeons holding an M.D. or D.O. degree.”

· “’Professional services’ means any type of professional services that may be lawfully rendered only pursuant to a license, certification, or registration authorized by the Business and Professions Code, the Chiropractic Act, or the Osteopathic Act.” Calif. Corp. Code §13401(a).

· "’Licensed person’ means any natural person who is duly licensed under the provisions of the Business and Professions Code, the Chiropractic Act, or the Osteopathic Act to render the same professional services as are or will be rendered by the professional corporation or foreign professional corporation of which he or she is or intends to become, an officer, director, shareholder, or employee.” Id. §13401(d).

With regard to employees, although Section 13401.5(a) refers to “professional employees,” which implies licensed health care professionals, Section 13405 provides that the professional corporation may render professional services through employees who are licensed persons, and may employ “persons not so licensed;” the latter “shall “not render any professional services rendered or to be rendered by that corporation in this state.” In other words, in the case of a professional medical corporation, such employees would have to be limited to non-clinical tasks, so as to respect the corporate practice of medicine doctrine.

o Section 13405 further states that a professional corporation may render services outside California, “but only through employees who are licensed to render the same professional services in the jurisdiction in which the person practices.” There are additional laws governing a telemedicine presence.

o Section 13408.5 provides that no professional corporation may be formed to cause any violation of law, including rules and regulations relating to “fee splitting, kickbacks, or other similar practices by physicians and surgeons or psychologists, including, but not limited to, Section 650 or subdivision (e) of Section 2960 of the Business and Professions Code.”

Fictitious Name

Once a physician forms a professional medical corporation, the practice might apply for a fictitious name. This is like a dba but for medical corporations. In California, there is a fictitious name permit application which must be approved by the relevant Board.

California currently has a number of legal rules applicable to naming conventions, including:

· “A professional corporation may adopt any name permitted by a law expressly applicable to the profession in which such corporation is engaged or by a rule or regulation of the governmental agency regulating such profession.”

· “The use of any fictitious, false, or assumed name, or any name other than his or her own by a licensee either alone, in conjunction with a partnership or group, or as the name of a professional corporation, in any public communication, advertisement, sign, or announcement of his or her practice without a fictitious-name permit obtained pursuant to Section 2415 constitutes unprofessional conduct.”

· “Any physician and surgeon or any doctor of podiatric medicine, as the case may be, who as a sole proprietor, or in a partnership, group, or professional corporation, desires to practice under any name that would otherwise be a violation of Section 2285 may practice under that name if the proprietor, partnership, group, or corporation obtains and maintains in current status a fictitious-name permit issued by the Division of Licensing, or, in the case of doctors of podiatric medicine, the California Board of Podiatric Medicine, under the provisions of this section.”

· “Unless a fictitious name permit is obtained, the name of a professional medical corporation shall be restricted to the name or surname of one or more of the present prospective or former shareholders who are physicians or podiatrists, as the case may be, for a medical or podiatry corporation.”

· “When the applicant uses any fictitious, false or assumed name or any name other than the name or surname of one or more of the present, prospective or former shareholders, or any other words or names in addition to those of the shareholders, it shall obtain a permit pursuant to Section 2415 of the code.”

· “No licensed person shall render professional services using a fictitious, false or assumed name or any name other than his or her own unless and until a fictitious name permit has been issued by the division.”

· “A group or clinic containing both a corporate and noncorporate entity or a partnership of corporations shall not use wording or abbreviations denoting corporate existence.”

· “The division shall not issue a fictitious name permit for a name-style which (1) May be a violation of Section 17500 of the [Business & Professions C]ode; (2) Is so similar to a name currently authorized as to be deceptive, misleading or subject to confusion.”

· “(a) The purpose of a fictitious name is to allow an individual, a partnership, a group, or a professional corporation to use a name in advertising and in practice other than his or her own personal family name. (b) No licensed person shall render professional services using a fictitious, false, or assumed name or any name other than his or her own unless and until a fictitious name permit has been issued by the Board. (c) A fictitious name permit may be suspended or revoked for failure to comply with the provisions of Code Section 2415 and this article or may be revoked after the individual license has been revoked.”

· In terms of naming style:

(a) Any fictitious name shall contain the designation "medical group," "medical clinic," "medical corporation," "medical associates," "medical center," or "medical office." Such designation shall be contiguous in the name style and not separated by intervening words. This requirement also applies to those applicants who are sole practitioners.

(b) A group or clinic containing both a corporate and non-corporate entity or a partnership of corporations shall not use wording or abbreviations denoting corporate existence. When a professional corporation is an applicant, it shall use in its fictitious name style one of the word(s) or abbreviation(s) denoting corporate existence as required by these regulations.

(c) The Board shall not issue a fictitious name permit for a name style which is false or misleading or which is so similar to a name previously authorized in the same geographical area as to be deceptive, misleading, or subject an individual consumer to confusion with a previously permitted fictitious name.

(d) The use of word(s) or abbreviation(s) following a licensed person's name denoting affiliation with a professional medical society or association shall not create a fictitious name; however, the use of any word(s) or abbreviation(s) which denotes a particular specialty in medical practice which is advertised or disseminated in public in connection with that practice shall require a fictitious name permit.

The California Medical Board describes some of the above legal rules on its webpage for FNPs.

The Board states that an FNP is not needed if

only the name or surname (last name) of the physician or podiatrist is used, followed by Medical Doctor, M.D., Podiatrist, Doctor of Podiatric Medicine, D.P.M., Medical Corporation, Medical Corp., Podiatry Corporation, Podiatry Corp., Professional Corporation, Prof. Corp., Corporation, Corp., Incorporated or Inc. Examples: "John Doe Medical Corporation" or "John Doe, M.D. Inc." would not require a fictitious name permit as long as John Doe matches the legal name on the physician's medical license.

The Board also notes that as long as the names are different from each other, and separate applications are filed there is no limit as to how many FNPs a physician or professional medical corporation may be issued.

Note that the above quoted rules can change so be sure that your lawyer checks the most recent health care and professional corporation statutes and regulations.

It is not clear that in actual practice and enforcement, boards are entirely congruent with the naming conventions and other rules that are promulgated. It is important to get legal advice from an attorney familiar with legal rules applicable to multi-disciplinary practices, and who advise on business models that involve both physicians and non-physicians, and analyze corporates practice of medicine, Stark and self-referral, anti-kickback and fee-splitting, and laws applicable to professional corporations.

Clients seek Michael H. Cohen's legal expertise on business structure and entity formation (corporations, partnerships, LLCs); health care licensing matters; employment contracts and independent contractor agreements; dispute resolution; e-commerce; intellectual property issues; informed consent and malpractice liability issues; HIPAA and confidentiality and privacy issues; Stark, self-referral, anti-kickback, patient brokering, and fee-splitting questions; dietary supplement labeling; medical device and FDA matters; insurance reimbursement and Medicare issues; website disclaimers; concierge medicine legal advice; telemedicine; and other business law and health care regulatory compliance arenas. Whether advising start-ups or established companies, he brings his entrepreneurial spirit and caring insight to cutting-edge legal and regulatory challenges.

Attorney Michael H. Cohen is admitted to practice in California, Massachusetts New York, and Washington, D.C. Contact attorneys at our Beverly Hills, California law firm today.

Medicare Options for Physicians: Participation, Non-Participation, or Opt Out

Michael H. Cohen — Tue, 08 Nov 2011 01:30:36 -0500

Physicians sometimes unwittingly run afoul of Medicare legal rules by not knowing the difference between non-participation, their default status short of participation, and opting out, which requires doctors to take specific action steps.

This article summarizes participation (par), non-participation (non-par status), opting out, and the difference between these three situations for physicians in the Medicare system.

As a caveat, note that Medicare rules are complex and constantly changing, so this should only be a preliminary guide. For specific questions relevant to your situation, contact a healthcare law attorney familiar with the latest Medicare legal updates.

Medicare Stopgap Legislation

At present, about 38% of Medicare Part B’s budget pays for physician’s services.

Many physicians are choosing to “Opt out” of Medicare Part B altogether because of the complex reimbursement rates and governmental oversight.

Most Medicare payments are simply adjusted for inflation annually, but not Part B physician payments. As in past years, annual stopgap legislation to prevent cuts in physician reimbursement is on the table again this year. Without new legislation, Part B physician reimbursement will drop by almost 30% on January 1^st. This can shock a practice’s revenue flow for treating Medicare patients.

In past years, Congress has extended the stopgaps at the 11^th hour, but the ultimate size of the Medicare budget is always in contention.

When treating Medicare beneficiaries, physicians have three options available at this time, each one with different requirements and revenue consequences for their practice.

So what does it mean to be Participating, Non-Participating, and Opted Out?

Here’s a quick overview of the three options.

PARTICIPATION: Accepting Assignment for all Services.

By participating in the Medicare program, you (the physician) agree to ‘accept assignment’ for all services furnished to Medicare patients. Put another way, participating (PAR) physicians agree to ‘accept assignment’ of 100% of Medicare’s allowed charges as total payment in full for all of their Medicare patients’ claims.

Accepting assignment also means Medicare or its contracted carrier will pay the physician directly for the assigned claim.

Specifically, Medicare will reimburse the physician directly for 80% of the allowed amount, and 20% coinsurance must be collected from the beneficiary or their insurance plan.

Assignment is an agreement by the doctor, provider or supplier to be paid directly by Medicare, to accept the payment amount that Medicare approves for the service, and not to bill the patient for any more than the Medicare deductible and coinsurance (if applicable).

Practical tip: Obviously, your collection of the 20% coinsurance is key to your revenue stream. This system allows the physician greater discretion and control in managing revenue.

Medicare beneficiaries are advised that utilizing physicians who accept assignment will reduce their out-of-pocket costs. This means that patients are asking their physicians: ‘Do you accept assignment?" And they expect their doctors to have an answer.

Benefits: Accepting Medicare assignment can ensure a solid patient base with insurance to pay at least 80% of Medicare’s allowed amount. The unknown here is whether the allowed amount will be sufficient to sustain your practice.

Note: Some states require you to accept assignment to maintain your medical license.

NON-PARTICIPATION: Accepting Assignment on a Case-by-Case Basis.

Non-Participating (Non-Par) physicians may choose to ‘accept assignment’ on a case-by-case basis. In other words, they can accept or refuse assignment depending on the patient.

As a disincentive to non-participation, Medicare reduces the Non-PAR allowed charges by 5%, to a total of 95%; effectively, this means that Medicare will pay you 80% of the allowed amount a PAR physician receives (i.e., 80% of 95% of the PAR rate).

If you plan to open a private practice but are already on the staff of a local hospital, have an academic medical affiliation, or have affiliation with other physician groups and practices, then before assuming that you are non-par, be sure that your contractual arrangements with hospitals and other entities do not require you to participate. Otherwise, you may be surprised as to your Medicare status and obligations!

When a Non-Par physician ‘accepts assignment’, Medicare will pay that physician directly (i.e., 80% of 95%), and 20% coinsurance (i.e., 20% of 95%) must be collected from the beneficiary or their insurance plan.

The choice between par and non-par can have revenue consequences. The chart below provides a helpful example of how the practice revenue can change depending on a doctor's Medicare status.

When a Non-Par physician does not ‘accept assignment,’ the total patient charge is called an 'unassigned claim.' In this case, you bill the patient for the full amount and file the claim with the Medicare carrier. Medicare then reimburses the patient for it share of charges.

The good news is you may bill the patient up to 115% of the Medicare allowed charges (115% of 95%). The 115% limit is also referred to as the “Limiting Charge.” In other words, you may not bill for more than the Limiting Charge. The limiting charge applies to certain services and not to some supplies and durable medical equipment.

As to the financial consequences, your practice may need to collect the full limiting charge amount for more than 35 percent of services billed, in order to exceed the revenue of PAR physicians.

Here is an example from AMA of physician payment for a Medicare $100 allowed charge, for PAR, Non-Par Assigned, and Non-Par Unassigned claims.
Payment Arrangement	Total Payment Rate	Amount from Medicare	Payment Amount from Patient
PAR (Physician/always accepts assignment)	100% Medicare –Fee Schedule = $100	$80 (80%) carrier direct to physician	$20 (20%) paid by patient or supplemental insurance
Non-Par/assigned claim	95% Medicare fee schedule = $95	$76 (80%) carrier direct to physician	$19 (20%) paid by patient or supplemental insurance
Non-Par/unassigned claim	Limiting charge of 115% of 95% Medicare fee schedule (effectively 109.25%) = $109.25	$0	$76 (80%) paid by carrier to patient + $19 (20%) paid by patient or supplemental insurance + $14.25 balance bill paid by patient

OPT – OUT (or Private Contract Physician): Never Accepting Assignment.

Physicians who have opted out of Medicare cannot submit a claim for their services to Medicare for any of their patients for two years** (Click here to see specialties and services that may not opt out). **The only exception is for emergency services provided to a patient that has not entered into a private contract with the physician.

Opt-Out physicians may enter into Private Contracts with Medicare patients for their services. Regarding private contracts with patients, federal regulations establish detailed rules regarding the necessary provisions.

The private contract requirements are governed by Subsection 40 of the Medicare Benefits Policy Manual and Code of Federal Regulations 42 405.400. The AMA has created a sample Medicare Private Contract (click here).

The Opted-Out physician may refer or certify Medicare beneficiaries for Medicare-covered items or services for which the physician is not paid directly or indirectly, such as lab services or hospitalization. An Opted-Out physician must have a National Provider Identifier (NPI) in order to refer, certify, or receive reimbursement for emergency services provided. (When you refer a patient for Medicare-covered medically necessary services, you must provide an NPI for that claim.)

Consequences of Failing to Opt Out

Unfortunately, unless properly opted out, a physician who provides covered services to Medicare beneficiaries is considered a non-participating provider even if he or she has never submitted an enrollment application.

Properly opting out has several legal requirements. These include submitting an appropriate affidavit to the local Medicare carrier(s), as well as signing an appropriate private contract (as discussed above) with each Medicare patient.

To Opt Out of Medicare, follow the guidelines provided by the Medicare Part B contractor that is responsible for your State. As noted, some states require you to accept assignment to maintain your medical license. Be sure that your contractual arrangements with hospitals and other entities do not require you to participate. (And some providers, such as chiropractors, may not opt out).

For California, the contractor responsible is Palmetto GBA, LLC. Click here for the instructions from Palmetto GBA, LLC. These instructions specify that the opt-out request should be sent to Palmetto GBA, LLC at the following address: J1 MAC - Palmetto GBA, Provider Enrollment, P.O. Box 1508, Augusta, GA 30903-1508; and that the provider should submit a valid affidavit form (click here for the form).

Once you receive confirmation from the carrier that you are opted out, inform patients regarding your new Medicare status. For example: “Physician has opted out of Medicare and provides services to Medicare patients under a private agreement. Medicare will not be billed for services, and patient is responsible for the entire fee charged by physician.”

Opt Out vs. ABN

Be sure not to confuse opting out of Medicare, with requirements relating to giving Medicare beneficiaries an Advanced Beneficiary Notice (ABN) for non-covered services.

Physicians providing complementary and alternative medical therapies or integrative medicine may be required to present an ABN to their patients for some of these medical services.

Attorney Michael H. Cohen is admitted to practice in California, Massachusetts New York, and Washington, D.C. Contact attorneys at our Beverly Hills, California law firm today.

HCG - FDA drug approval / legal issues for weight loss

Michael H. Cohen — Mon, 31 Oct 2011 11:12:41 -0500

Texas has told weight loss clinics to stop marketing HCG for weight loss.

According to the Texas Attorney General:

Multiple Texas Weight-Loss Clinics Agree To Stop Marketing Prescription Drugs Improperly

Six purveyors of “hCG” to change promotional messages

AUSTIN – Under agreements negotiated by the Texas Attorney General’s Office, several weight-loss clinics and a distributor of a weight loss product in Texas must significantly alter the way they market their services and/or products. The clinics all advertised chorionic gonadatropin (hCG), a prescription hormone, for weight loss – despite the fact that hCG has never been approved by the U.S. Food and Drug Administration (FDA) as a weight loss drug. The distributor advertised and sold a homeopathic version of hCG as a weight loss product, which also is not FDA-approved.

The FDA has never approved the marketing of hCG for human weight loss – and actually requires a “black box” warning on prescription labels clearly stating that it is not approved for weight loss. Although physicians are generally allowed to prescribe products for non-FDA-approved purposes, drugs cannot be marketed or advertised for a medical use unless that purpose has been approved by the FDA. As a result, physicians and weight-loss clinics may not advertise hCG for weight loss in part because the FDA has stated there is no substantial evidence indicating that hCG leads to weight loss, beyond that which stems from severe dieting. There are no approved homeopathic or over-the-counter hCG products. The drug’s FDA-approved uses are primarily for testicular or ovarian abnormalities.

The following businesses have agreed to stop advertising hCG for weight loss: Biohealth of Texas, LLC, which operated in at least a dozen north Texas cities; Weight Control of Texas, Inc., based in San Antonio; Gulf Coast Plastic Surgery, P.A. of Houston; Dragon’s Breath Massage of Keller; and Optimum Health Care, LLC of Pantego. Professional Health Products Southwest of Arlington agreed to stop advertising and distributing homeopathic hCG.

Thanks to My Loving Works for bring this news flash to light.

Clients seek Michael H. Cohen's specialized legal expertise on business structure and entity formation (corporations, partnerships, LLCs); health care licensing matters; employment contracts and independent contractor agreements; dispute resolution; e-commerce; intellectual property issues; informed consent and malpractice liability issues; HIPAA and confidentiality and privacy issues; Stark, self-referral, anti-kickback, patient brokering, and fee-splitting questions; dietary supplement labeling; medical device and FDA matters; insurance reimbursement and Medicare issues; website disclaimers; concierge medicine legal advice; telemedicine; and other business law and health care regulatory compliance arenas. Whether advising start-ups or established companies, he brings his entrepreneurial spirit and caring insight to cutting-edge legal and regulatory challenges.

Attorney Michael H. Cohen is admitted to practice in California, Massachusetts New York, and Washington, D.C. Contact attorneys at our Beverly Hills, California law firm today.

Legal issues in use of HCG for weight loss

Michael H. Cohen — Thu, 15 Sep 2011 11:35:14 -0500

Use of HCG for weight loss is controversial in many states and prohibited in others, despite claims by proponents of its effectiveness.

A physician colleague sent me the Louisiana rules governing prescription, dispensation, and administration of medications. Subchapter A of Title 46, Chapter 69 is entitled, Medications used in the Treatment of Obesity.

Section 6095 reads:

A. Absolute Prohibitions. A physician shall not prescribe, dispense, administer, supply, sell, give, or otherwise use to or for any person for the purpose of weight control or weight reduction in the treatment of obesity any amphetamine, dextroamphetamine, methamphetamine, or phenmetrazine drug or compound; any Schedule II controlled substance; human chorionic gonadotropin (HCG); thyroid hormones; diuretic medications; or any drug, medication, compound, or substance which is not indicated for use in the treatment of exogenous obesity by express approval of the U.S. Food and Drug Administration (FDA).

The full subchapter is copied below.

Management services model for medical spas: legal issues

Michael H. Cohen — Sun, 04 Sep 2011 12:07:18 -0500

Medical spas and integrative care centers can often benefit from management services models to structure arrangements in light of Stark, anti-kickback and fee-splitting legal rules.

Our law firm has detailed some of these issues in posts including:

Managing Fee Splitting Issues in the Integrative Care Center or Medical Spa

Creating Legally Successful, Multidisciplinary Health Care Practices: Fee-Splitting, Kickbacks, Stark Analysis, Corporate Practice of Medicine, Unlicensed Practice, Employment, and Other Issues

Legal Issues in a Medical Spa or Integrative Care Center: Anti-kickback and Fee-Splitting Concerns - The Laws

Legal Issues in a Medical Spa or Integrative Care Center: Anti-kickback and Fee-Splitting Concerns - Structuring the Practice

Should a physician who contracts with an integrative care center or medical spa be classified as an employee or independent contractor - Corporate Practice of Medicine Concern

Employee v. Independent Contractor in the Medical Spa or Integrative Care Center

Should a physician who contracts with an integrative care center or medical spa be classified as an employee or independent contractor?

Federal Self-Referral (Stark) and Anti-Kickback Analysis for Integrative Care Centers

The Mall Model: A Legal Structure to Handle Anti-Kickback Concerns of Integrative Care Centers

The legal advice our attorneys render to clients is constantly changing depending on the changing map of laws, regulations, and regulatory enforcement priorities. Although the management services model is very common, and the above articles lay out some of the permutations in detail, there are some caveats. Our Stark and anti-kickback / fee-splitting lawyers have included some legal concerns of note in these articles:

Sham medical director agreements violate Stark laws

Use of lasers for body scuplting raises legal issues

Stark laws were violated as a matter of law, federal judge finds

Fair market value rules must be respected to mitigate kickback issues

Before entering into any compensation arrangement that could implicate Stark, anti-kickback or fee-splitting laws, be sure to consult experienced health care legal counsel.

Mr. Cohen is admitted to practice in California, Massachusetts New York, and Washington, D.C. Contact our attorneys at our Beverly Hills, California law firm today.

Sham medical director agreements violate Stark laws

Michael H. Cohen — Sun, 04 Sep 2011 11:42:02 -0500

Medical directors at medical spas should be concerned that, unless the arrangement is carefully structured with an eye to legal rules and anti-kickback risks, regulatory enforcement authorities might perceive their role as sham and fraudulent.

In U.S. v. Borrasi (7th Cir. 2011), a medical doctor, was convicted of Medicare fraud after he accepted a salary from a hospital in exchange for continually referring patients to the facility, a violation of 42 U.S.C. § 1320a-7b.

The medical doctor owned Integrated Health Centers, a corporate group of healthcare providers in Illinois, and was found to have conspired with Rock Creek Center, a licensed inpatient psychiatric hospital, to send a "stream of Medicare patient referrals" in exchange for "bribes."

The Court found that he was "placed on ... payroll, given false titles and faux job descriptions, and asked to submit false time sheets." Among other things, he was named Service Medical Director and required to be available at all times, yet was not expected to perform any duties listed in his job description. Although he occasionally attended meetingsat Rock Creek, this was sporadic and he did not perform the administrative duties he had been assigned (and was not expected to). Rock Creek paid his salary and lease payments for one of Integrated's offices, purportedly giving Rock Creek an outpatient clinic at the medical doctor's building.

In addition to jail time, each defendant in the case was ordered to pay almost half a million dollars in restitution.

Significantly, the Court declined to adopt the medical doctor's argument that if he could not be found guilty, if his "primary motivation" was to be compensated for bona fide services provided. Instead, the Court adopted the rule from other Circuits that "if part of the payment compensated past referrals or induced future referrals, that portion of the payment violates" the federal anti-kickback statute. Put another way, the jury only had to find, beyond a reasonable doubt, "that some amount was paid not pursuant to a bona fide employment relationship."

Note that if the medical doctor refers to an entity in which he or she has an ownership interest, this raises a Stark (self-referral) issue as well as an anti-kickback issue.

One significance of this case is that clients who want to establish a medical spa, integrative care center, or multidisciplinary wellness clinic sometimes regard the management services structure as somewhat pro forma. They feel that a structure alone should convince regulators that they have dotted the t's and crossed the i's. However, this is a legally risky view. The Borrasi case is crystal clear that enforcement authorities will penetrate past sham agreements.

Those structuring medical spas and integrative care centers should consult an attorney experienced in Stark, anti-kickback, and fee-splitting legal issues and drafting of management agreements. If:

services are provided at fair market value (and justified as such with a detailed spreadsheet)
compensation is being rendered without bona fide services being provided in exchange, and/or
at least one purpose of the arrangement is to induce referrals

then the parties should understand that regulators could find a sham arrangement or disguised kickback scheme.

To qualify this somewhat, note that in Borrasi there was testimony that the medical doctor "was not expected to perform any of the duties listed in his job description," and that he in fact did not perform such duties other than occasionally attend meetings. So in this case the testimony established that the parties contemplated inducement of referrals as a key purpose behind the arrangement - in other words, they desired that the medical doctor receive "free money" in exchange for referrals, which is precisely what the anti-kickback laws forbid.

Legal counsel is necessary not only at the contract drafting stage, but during discussions and negotiations of proposed arrangements, so that a proper anti-kickback analysis can be performed and the parties can be adequately informed as to various options and the legal risks behind various structures and arrangements.

Mr. Cohen is admitted to practice in California, Massachusetts New York, and Washington, D.C. Contact our attorneys at our Beverly Hills, California law firm today.

FDA regulates telemedicine on smart phones

Michael H. Cohen — Sun, 04 Sep 2011 10:47:47 -0500

Food and Drug Administration (FDA) has draft guidance on mobile medical applications for telemedicine health applications on smart phones.

The FDA's draft guidance document is entitled ``Mobile Medical Applications:''

FDA is issuing this draft guidance to inform manufacturers, distributors, and other entities about how the FDA intends to apply its regulatory authorities to select software applications intended for use on mobile platforms (mobile applications or ``mobile apps''). At this time, FDA intends to apply its regulatory requirements solely to a subset of mobile apps that the Agency is calling mobile medical applications (mobile medical apps). This draft guidance is not final nor is it in effect at this time

The FDA released this as 76 FR 43689 - Draft Guidance for Industry and Food and Drug Administration Staff; Mobile Medical Applications; Availability.

It seems odd that the FDA would reach to include mobile phones within its definition of devices. The FDA struggles to somewhat narrow the definition by explaining that "mobile medical apps" are a subset of apps, and only include an app that:

Is used as an accessory to a regulated medical device or
transforms a mobile platform into a regulated medical device.

Further, the FDA explains that this "narrowly-tailored approach focuses on a subset of mobile apps that either have traditionally been considered medical devices or affect the performance or functionality of a currently regulated medical device."

FDA noted a study that indicated that 500 million smartphone users will be using health care applications in the near future. The FDA indicated that it intended to regulate those applications that create great risk when they do not work as intended. An example of a device that would be regulated is a smart phone that is converted to an ECG heart monitor.(i.e. Smartheart, a self service heart monitor).

As one law firm explains in Is Your Smart Phone An FDA-Regulated Medical Device? - FDA Announces Plans To Regulate "Mobile Medical Applications:"

The FDA views handheld computers loaded with these apps to be medical "devices" subject to extensive FDA regulation. The FDA's draft guidance sets out its current thinking regarding when apps will trigger regulatory oversight, and how the FDA intends to enforce its regulations.

Since the FDA will be exercising its authority over industries that may be unaccustomed to FDA regulation, the affected companies are in danger of inadvertent regulatory violations. The FDA is focusing primarily on companies that write or design software for medical apps. But, depending on the circumstances, companies that manufacture or distribute the hardware also face regulatory risk. All companies in any way involved with handheld computers or their apps would be well advised to consult with regulatory counsel to determine how they may be affected by the FDA's device regulations.

The FDA is actively seeking input into its policies. Companies that want a say in the FDA's enforcement practices should promptly submit comments to the new "draft guidance." ...

The popularity of smart phones and other handheld computers has resulted in a profusion of software applications designed to run on the handheld computers. Some of these "apps" are designed for medical purposes. The FDA's recent draft guidance lists 34 types of apps that the FDA views as "mobile medical apps," including apps that permit the user to analyze medical data, screen patients for blood transfusions, control other medical devices, etc. According to the new draft guidance, a handheld computer loaded with such apps is a "device," as that word is used in the Food, Drug, and Cosmetics Act, and is therefore subject to the full range of device regulations....

The FDA does not view all applications with medical purposes as requiring regulatory supervision. The FDA intends to "exercise its discretion to decline to pursue enforcement actions" in connection with some classes of medical applications. Applications that will not be the subject of enforcement actions include electronic versions of medical reference works, apps relating to "maintaining general health and wellness," and apps used to perform general office functions (tailored to a medical office or otherwise). The boundary line appears to reflect whether the app is marketed for a "specific medical indication," or to analyze a specific patient.

Greg Piche of the Singularity Health Blog explains ways to differentiate what telemedicine applications the FDA will and will not regulate under its expanded definition of medical devices:

Smartphone apps existing and under development seem to fall under four main categories. First, there are the burgeoning apps that provide medical information like Medscape, Micromedex or Epocrates. Second, those that provide connectivity and access to important medical data like Fujifilm Synapse Mobility, which provides for access to 2D and 3D radiological film to treat and diagnose patients. Third, there are those that actually serve as diagnostic devices such as the Smartheart monitor. Fourth there are those apps. that provide for the storage or personal health information like Medflash personal health and wellness management. All four categories will be providing major contributions to the arc of health care quality improvement in the future.

If smartphones eventually become chips that fit inside our brains, as Ray Kurzweil predicts, will the FDA be regulating our very bodies as medical devices?

For now, FDA is justifying this jurisdictional expansion as logical extension of the legal definition of medical device. It does make the telemedicine legal landscape more challenging, as it continues to augment regulatory attention, and blur the lines between mere health information on one hand, and medical diagnosis and treatment targeted to a particular individual on the other.

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