Just Added

The issue of internal compensation formulae leading to enforcement under Stark has been underscored again by a primary care practice in South Carolina paying $2 million dollars in settlement for, in part, compensating their physicians a percentage of the value of laboratory and other claims they submitted to Medicare and TRICARE.  The CEO and laboratory director agreed not to be involved in managing the practice for five years.  The Stark rules are complicated; and their intersection with the anti-kickback statute and the anti-markup rules are complex.  It is essential for every practicinvolved with Stark services to review their compensation formula with sophisticated counsel.
The alignment between hospitals and physicians which is sought to produce better value –- improved outcomes at lower cost with a better patient experience of care --  takes a range of forms. These include new phenomena like accountable care organizations (ACOs), clinically integrated networks (CINs)-- a non-specific characterization of a range of provider networks-- bundled payment, gainsharing, pay for performance, and probably the most widely deployed: hospital employment of physicians.  As Alice reports, the latter has proven not only a profound failure – losing hospitals by many estimates $100,000 and more per physician, it has also now been shown to cost the Medicare program much more money on just four outpatient procedures alone.  A different model of leasing the physician practice to the health system or hospital has been little examined, analyzed or reviewed.  Alice has created a fair number of these transactions around the country, with different specialties.  She first presented a teleconference and wrote an initial article on the subject in 2012.  In 2017 she published another article, and presented a longer teleconference addressing both what makes this approach potentially better than hospital employment and the fundamental elements of the relationships.  Now, going far further,  in an in-depth presentation of a specific guide on how to structure such an arrangement in her article “Lessons Learned from Leasing: A Blueprint for Physician-Hospital Alignment", she presents the lessons she has learned from multiple transactions that have now been in effect long enough to have involved second negotiations.  These transactions can garner all the alignment the parties want allowing the physician group to retain its cohesion, while producing more value when they are founded on clinical integration principles. If they go wrong, the termination is far easier since it is merely the termination of a contract. These leasing arrangements deserve far more attention than they have received to date.

In a unanimous (!) and yet hardly clear false claims case last year – the infamous Escobar  case -- , the Supreme Court of the United States drew one of the murkiest lines ever written. In determining whether the failed licensure of people providing behavioral health services under Medicaid, could render a claim as false, they addressed the notion of ‘implied false claims.”  The case turned on whether implied statements in a claim (e.g., all the individuals rendering services were licensed, the facility met all the conditions of participation when the services were rendered) as opposed to explicit statements on the CMS-1500 (e.g., that the services were medically necessary or the level of CPT code was accurate) could render a claim false.  Of the Court’s two pronged test, perhaps most importantly the court said the implied statement had to be ‘material’ to the falsity of the claim. The health law bar is now watching with interest as courts apply the Escobar standard. In a case in Pennsylvania, Us ex rel Emanuele v. Medicor Associates, ED Pa No 10-cv-245, the District Court rules that at least two medical directorship agreements violated the Stark law which could lead to false claims liability.  The real problem was the absence of current and updated documentation of the physician-hospital agreements.  The defendants argued these were mere technicalities and not material. CMS itself has liberalized its rules on what constitutes a proper writing to create a contract (see our AGG Note of July 2016).  Before the case could go to trial it was settled with the parties paying $20.75 million.  The court’s findings would have been one of many interpretations of what is material versus technical.  The message here is the safest course is to dot all i’s and cross all t’s, when whistleblowers lurk in unknown places.  We will be watching and reporting on what is found to be material and not by various courts around the country in order to advise our clients.  The best approach is to get is right so no whistleblower has a claim. Check out our Fraud and Abuse Compliance Plan Development Protocol as well as our simplified and shortened version of the HCCA-OIG suggestions regarding how to measure if your compliance program is working.


Beginning in Dec 2004, as reported here and elsewhere, Alice was deeply involved in developing the PROMETHEUS Payment® bundled payment model and served as Chair of the Boards of the two organizations developing and implementing the program (PROMETHEUS Payment, Inc, and the Health Care Incentives Improvement Institute, Inc., (HCI3)) until she stepped down in 2013. Although it flies under the radar, the tools of the PROMETHEUS design are used by CIGNA and Anthem as part of their analytics and have been deployed statewide in Colorado, New York and Maryland to drive their price and quality transparency initiatives. The Altarum Institute, where the PROMETHEUS Payment® model now lives has now launched a comprehensive set of tools from its 80 Evidence-informed Case Rates® (ECRs), to tools to identify potentially avoidable complications, to include other analytical mechanisms comparing providers in a network, to finding low value services and more which are important to implement bundled payment in the real world.  There is now no reason why any group of collaborating providers with a willing payor cannot make bundled payment real. This program should spread far and wide and is much better than anything CMS had proposed.

Physician practices continue to struggle with legal and practical issues when they switch electronic health records (EHR) software systems.  These problems include the transfer of data between EHR systems (including what happens when such a transfer is not possible), the HIPAA implications of such switches, and concerns raised by physicians changing employers or practices merging.  Daniel has written in previous years about EHR license agreements, but now addresses these new concerns in his article “Physicians Switching EHRs”.  This article examines the spread of EHRs – including the history of the Federal government’s involvement in encouraging their adoption – and the impact that has had on physicians.  It also explores common reasons why physicians switch EHRs, including data from recent surveys of thousands of physicians on the subject.  From EHR vendors holding practice data “hostage,” to the HIPAA requirements to preserve access to records for patients, to former employers claiming ownership of patient records to which physicians need access, Dan addresses the legal and practical problems that arise, and offers practical guidance in navigating these issues.  As EHR software agesamid the continuing dynamism in health care generally, these problems are likely to persist. Physicians, be prepared!