Med Law Blog

The April 30, 2008 Press Release, Executive Summary and 2007 Annual Report are available at the link below.

 http://www.psa.state.pa.us/psa/lib/psa/annual_reports/annual_report_pr_2007_043008.pdf

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Lawmakers concerned about Medicare's competitive bidding program.

The Wall Street Journal (5/6, A4, Mathews) reports that on Tuesday, the U.S. House Ways and Means Health Subcommittee will hold a hearing on the Centers for Medicare and Medicaid Services' (CMS) proposed "plan to use competitive bidding for products such as wheelchairs and walkers." Rep. Pete Stark (D-Calif.) and other members of Congress have expressed concern about the program. Opponents "in Congress and elsewhere say service for the elderly will suffer if the bidding system drives some operators out of business." Under the current system, "companies receive a government-set fee to distribute such equipment for patients' home use." However, under the proposed "competitive system, companies bid on how low a fee they would be willing to accept. Medicare then limits distribution rights for a particular geographic area to several low bidders."

Lobbyists seek to exempt certain medical equipment from Medicare competitive bidding program. The Hill (5/6, Young) reports, "Influential corporate interests, especially wheelchair and oxygen suppliers like Invacare, are furiously working to get Congress to postpone the program." Representatives from the medical-equipment industry allege that the CMS "is mishandling the program, that the pay rates are too low to cover the cost of providing the supplies, and that patients are going to be stuck with poor service from suppliers that low-balled their bids to win market share."

But, CMS Acting Administrator Kerry Weems "said Monday that complaints about flaws in the bidding process were unfounded, and that he sent three CMS employees to review the work of the contractor that conducted the selection process for the competitive bidding program," Congressional Quarterly (5/6, Carey) notes. Weems said that no problems could be found "[i]n a review of a sample of the 100 cases in which allegations were made."

As reported by AHLA News.

| Posted By Michael Cassidy In Reimbursement | 0 Comments | Permalink

Bipolar Physician Has ADA Standing to Sue for Medical Staff Privileges

In Haas v. Wyoming Valley Healthcare System, the U.S. District Court for the Middle District of Pennsylvania concluded that a physician had standing under Title III of the Americans with Disabilities Act (ADA) and Section 5.04 of the Rehabilitation Act concluded that an independent contractor physician had standing to sue for denial of medical staff privileges, but also concluded that the physician did not satisfy the "otherwise qualified" conditions for protection. 

In an interesting twist, the Trial Court rejected the jury decision awarding Dr. Haas $250,000.00, entered judgment as a matter of law on behalf of the hospital, and denied the physician's motion for attorney's fees based upon the jury verdict as moot.

Facts:

Dr. Haas was diagnosed with bipolar disorder in 1994 during his residency. He underwent treatment, completed his training, and obtained privileges at Wyoming Valley Health System in 2000. Dr. Haas suffered an episode during surgery in 2001 which resulted in his taking a leave of absence and seeking additional treatment. Dr. Haas applied for reinstatement, which application was granted by the hospital on the condition that Dr. Haas essentially utilize a "co-surgeon" during his operations. Dr. Haas' request that this condition be eliminated was rejected and he filed suit against he hospital. The text of the opinion appears below.

Analysis:

There are two basic legal issues, i.e. whether Dr. Haas had standing as an independent contractor to seek protection under the ADA and the Rehabilitation Act and whether Dr. Haas satisfied the conditions of those statutes.

The court concluded that Title III of the ADA and Section 5.04 of the Rehabilitation Act applied to individuals, regardless of their employee or independent contractor status, unlike Title I of the ADA which applies to employment situations.

Granting standing, the court then analyzed whether Dr. Haas was entitled to the benefits of these public accommodations because his disability could be reasonably accommodated. The court agreed with the hospital that the only reasonable accommodation would be that imposed by the hospital, i.e. a orthopedic co-surgeon to oversee and assume responsibility of the case in the event of any problem. Otherwise, the court agreed with the hospital that Dr. Haas posed a direct threat to patient care. 

Therefore, the court concluded that it was not discriminatory treatment to require Dr. Haas to satisfy the additional conditions of his appointment, which Dr. Haas was unable to do. 

http://op.bna.com/hl.nsf/id/psts-7djm83/$File/haas.pdf

| Posted By Michael Cassidy In Credentialing | 0 Comments | Permalink

Prior to legislation adopted in 2001, the Pennsylvania State Board of Physical Therapy regulated athletic trainers. Under Acts 92 and 93, the regulations promulgated pursuant to the Pennsylvania Physical Therapy Practice Act were to continue to govern the activities of athletic trainers until the State Boards of Medicine and Osteopathic Medicine adopted Final-Form Regulations. These Final-Form Regulations were adopted July 14, 2007 and are available at http://www.pabulletin.com/secure/data/vol37/37-28/1232.html Thereafter, the regulations of the State Board of Physical Therapy governing athletic trainers were rescinded effective April 19, 2008. The order rescinding the regulations is available at http://www.pabulletin.com/secure/data/vol38/38-16/727.html   

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TUCKER ARENSBERG HEALTH PLAN SUBROGATION SERVICES

Aggressive Subrogation Saves on Health Plan Costs. 
An aggressive subrogation program can save your business money on health plan costs.     Tucker Arensberg has handled subrogation for employer health  plans for many years.  We like to tell the story about how one year, one subrogation recovery alone paid for all the technical employee benefits work for the client for the entire year.   Although this result is not typical, we do our very best to make sure we help our clients control their health plan costs.

Typically self-insured plans will let the plan's third party administrator (TPA) handle subrogation.   What this means in many cases is that the TPA will hire outside lawyers, unknown to you and your company, to handle subrogation recoveries for the company's plan.  These lawyers typically keep a percentage of the recovery. Sometimes the TPA will also keep a percentage that is in addition to the administrative fee they already receive. The company  may not be aware of  how much of the health plan's recoveries are being retained by these parties.  And  the fiduciaries of the company's health plan have a duty to understand how much is not being returned to the plan.

Why Use Tucker Arensberg?
We think there is no better lawyer to handle subrogation for your company's health plan  than a lawyer who advises employer plans on a routine basis.   Not only do we at Tucker advise on the technical employee benefits laws that govern health plans, but we routinely handle subrogation recoveries for plans.    Our involvement with your company's  health plan assures you that your subrogation rights will be vigorously pursued and protected.    And, we work with you directly in keeping you informed and keeping you in control of the recoveries for the plan. 

 For more information on Tucker's subrogation services  please contact
 Joni Landy at: 412-594-3945;  jlandy@tuckerlaw.com.

| Posted By Michael Cassidy In Employee Benefits | 0 Comments | Permalink

On April 21, 2008 the Centers for Medicare and Medicaid Services ("CMS") released a proposed rule regarding the Fiscal Year 2009 Inpatient Rehabilitation Facility Prospective Payment System. The proposed rule discusses changes to the 75% rule and requires a freeze on inpatient rehabilitation facility rates from April 1, 2008 through September 30, 2009. The proposed rule also discusses lowering the compliance threshold for certain cost reporting periods. Comments to CMS are being accepted through June 20, 2008. Under the Social Security Act, the final rule will be published on or before August 1. The proposed rule can be found in its entirety at http://www.cms.hhs.gov/InpatientRehabFacPPS/downloads/cms-1554-p-display.pdf

Paul J. Welk
412-594-5536
pwelk@tuckerlaw.com

| Posted By Michael Cassidy In Reimbursement | 0 Comments | Permalink

Form 990 Redesign for Tax Year 2008

The IRS currently requires every charitable organization, and every similar tax-exempt organization, with gross receipts of at least $100,000 or assets of at least $250,000 to file an annual return on Form 990. On December 20, 2007, the IRS published major changes to its Form 990. Certain of the changes are intended to encourage charities and other tax-exempt organizations to improve their internal governance. Because of these changes, tax-exempt organizations should review their written internal governance procedures and make changes where necessary. 

Perhaps the most significant change made by the IRS to Form 990 is the addition of an entirely new section entitled "Governance Management and Disclosure". The new section contains questions about the internal governance of the organization. The IRS added these questions to encourage tax-exempt organizations to re-examine their internal governance structure. Also, since the Form 990 is a publicly available document, the IRS hopes to use public pressure to improve the corporate governance of tax-exempt organizations. Many tax-exempt organizations obtain much of their funds from the public. Unlike personal tax returns, a charity's annual return on Form 990 is normally available to the public. Any hint that a public charity does not have adequate internal governance could hurt its ability to obtain contributions.

Here is a summary of the most important questions included in the new "Governance Management and Disclosure" section of the new Form 990:

1. Does the organization have a written conflict-of-interest policy? Does it monitor the policy by soliciting information from officers and directors annually?

2. Does the organization have a whistleblower policy?

3. Does it have a document retention and destruction policy?

4. Does the process for review of officers' compensation involve an independent director or directors? Is there a set procedure for reviewing and approving officers' compensation?

5. Does the organization make its financial statements, conflict of interest policy and governing documents available to the public?

6. How many members of the organization's board of directors are independent?

7. Does any director or officer have a family or business relationship with any other officer or director?

8. Does the organization have members? If so, what appointments and decisions must the members approve?

9. Does the organization keep minutes of its board meetings and its committee meetings?

10. If the organization has local chapters, does it have written policies governing its local chapters?

In order to answer these questions, each organization must make a thorough review of its internal governance documents and procedures, and make changes where appropriate. The answers to the Form 990 questions must be precise. An authorized officer signing a Form 990 states that all of the information on the return is accurate, under penalties of perjury.

Our attorneys can help you evaluate your internal documents and make the necessary changes to assure that your answers to the above questions put your organization in the best possible public light.

The revised form must be used by large tax-exempt organizations (with gross receipts over $1,000,000 or total assets over $2,500,000) for the 2008 year and beyond. It must be used by tax-exempt organizations with gross receipts over $500,000 or total assets over $1,250,000 for the 2009 tax year and beyond. All organizations having at least $200,000 in gross receipts or $500,000 in assets must file the new From 990 for years beginning in 2010.

Following is a link to the IRS website "Form 990 Redesign for Tax Year 2008" containing much of the IRS Guidance in this issue: 

http://www.irs.gov/charities/article/0,,id=176613,00.html

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Gainsharing is generally defined as an arrangement between physicians and hospitals to share cost reductions, which can be narrowly targeted projects such as standardization of hospital equipment and supplies or broadly targeted projects such as average cost per case. Gainsharing is an attempt to align financial incentives in an environment where the existing incentives are actually opposite, i.e. physicians are typically paid on a fee for service basis and hospitals generally have DRG or case rate restrictions.

The alignment strategies are complicated by the statutes prohibiting certain financial arrangements, as follows:

1.          The Stark Act prohibits referrals by physicians to financial entities with which those physicians have financial relationships, and a gainsharing arrangement can easily be a financial relationship triggering the application of the Act;

2.          The Civil Money Penalty Act, i.e. Sections 1128A(b)(1) and (b)(2) prohibit hospital payments to physicians to reduce care; and

3.          The pervasive Anti-Kickback Statute (AKS). i.e. Social Security Act Section 1128, prohibits any type of payments in exchange for referrals of covered services. 

Although the OIG has a history of being wary of gainsharing arrangements, there is also a stream of OIG advisory opinions allowing gainsharing arrangements that typically require safeguards in the following areas:

1.          Transparent arrangements providing accountability for the parties;

2.          Adequate quality control;

3.          Control and monitoring of any payments that can be received as a payments for  referrals.

MedPac recommended in a 2005 report that gainsharing be permitted. CMS has also established a number of demonstration projects regarding gainsharing arrangements.

CMS recognizes the potential effectiveness of gainsharing arrangements in the healthcare reimbursement environment and is soliciting comments on a proposal to establish guidelines for gainsharing arrangements. CMS stated in the recent proposed Inpatient Prospective Payment System Rules, issued on April 14, 2008, as follows:

"Notwithstanding our general concern with arrangements that involve the use of a percentage based compensation formula (other than payment to a physician for work personally performed by the physician), we recognize the value to the Medicare program and its beneficiaries where the alignment of hospital and physician incentives result in improvements in quality of care. Therefore, we are considering whether to issue an exception specific to gainsharing

arrangements. . . At this time, we decline to issue a specific proposal concerning an exception for gainsharing arrangements, but rather are soliciting comments as to whether we should establish an exception to gainsharing arrangements, and, if so, what safeguards should be included in the exceptions. Specifically, we are interested in receiving comments on:

(1)        What types of requirements and safeguards should be included in any exception for gainsharing arrangements; and

(2)        Whether certain services, clinical protocols, or other arrangements should not qualify for the exception."

The text of the regulations are posted in the Healthcare Links section of the Blog.

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Malpractice Plaintiff Obtains Peer Review Records

A United States District Court has decided that malpractice plaintiffs seeking recovery pursuant to the Federal Tort Claims Act are entitled to obtain hospital peer review records, regardless of state immunity laws. In Vezina vs. United States of America, the Plaintiff brought suit for personal injuries, allegedly suffered while being treated by a physician employed by the Department of Health and Human Services and the Southwest Louisiana Center Health Services Clinic, and Women's and Children's Hospital. The Plaintiff sought discovery of the hospital's peer review records and the hospital filed a motion to quash. The court concluded that, since the action was founded upon the Federal Tort Claims Act and federal common law would apply, which recognizes no peer review privilege, that the requested peer review records should be produced pursuant to a protective order.

The court held that the Louisiana State peer review immunity and confidentiality statute did not apply to actions brought pursuant to the Federal Tort Claims Act.

The hospital had also asserted that confidentiality pursuant to the Healthcare Quality Improvement Act ("HCQIA") and HIPAA, the court, citing earlier decisions named in the text of the opinion, concluded that HCQIA provides immunity for production of peer review records and confidentiality protection for the reports submitted to the National Practitioners' Data Bank, but otherwise provided no additional confidentiality protection. With respect to HIPAA, a court concluded that HIPAA did not protect or prevent the production of non-party patient information so long as the information was provided in accordance with the protective order as required by HIPAA. 

Although the holding of the case is limited to malpractice claims brought pursuant to the Federal Tort Claims Act, the preemption of the state confidentiality and peer review protection acts by federal common law in federal causes of action should be meaningful in other cases founded upon federal statutes. 

http://op.bna.com/hl.nsf/id/psts-7dbmvk/$File/vez.pdf

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STARK: "STAND IN SHOES" REGULATIONS

The original proposed physician "Stand in Shoes" regulations provide that any physician would stand in the shoes of any other doctor in the following circumstances:

1.      Another physician who employs the referring physician;

2.      His or her wholly owned professional corporation;

3.      A physician's medical practice that employs or contracts with the referring physician or in which the physician has an ownership interest; or

4.      A group practice of which the referring physician is a member or independent contractor.

Following these proposals, institutional providers, i.e. academic medical centers, integrated delivery systems, etc., were concerned that support payments to a physician organization, which previously might have satisfied the indirect compensation arrangement exceptions, would no longer be available because the support payments are typically not expressly linked or tied to fair market value for identifiable services. Because of this concern, CMS announced a 12 month delay on November 15, 2007.

CMS has stated that it believes the institutional concerns are justifiable, but they also do not wish to suggest that support payments are totally without risk. Therefore, they are proposing two alternatives for the former "Stand in Shoes" regulations. First will be a multifaceted approach to the "Stand in Shoes" regulations to provide specific guidance, and second will be a universal exception for non-abusive relationships. 

The first proposal would amend the "Stand in Shoes" regulations to provide that a physician does not stand in the shoes of a physician or entity that already meets an existing exception, i.e. bona fide employment, personal service arrangement, or fair market value compensation. The second component of that new exception would be to protect academic medical center payments that meet the graduate medical education requirements.

The second proposal is conceptual only; there are no specific proposals at this point. That global exception would be to protect mission support payments to physician components of integrated delivery systems. CMS is seeking comments on this concept because of the wide and non-specific scope of the term "integrated delivery system". CMS would like to define a sufficient degree of integration so that this exception will not simply be the universal escape hatch.

Coupled with the refinement of the physician "Stand in Shoes" regulations, CMS would like to clarify the entity "Stand in Shoes" regulations, so that Section 411.354(a) would be revised to provide that an entity that furnishes DHS would be deemed to stand in the shoes of an organization in which it has 100% ownership interest and would be deemed to have the same compensation arrangements with the same parties and on the same terms as does the organization that it owns. 

The text of the CMS proposal can be accessed through the 04/17/08 post or in the Healthcare Links section of the MedLaw Blog.

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