Med Law Blog

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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CMS recently modified its website to include a new page called Frequently Asked Questions and just added twelve questions and responses under the Physician Self-Referral page. Access the FAQs. at http://www.cms.hhs.gov/PhysicianSelfReferral/05a_FAQs.asp#TopOfPage.

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On December 28, 2007, the Department of Health and Human Services Office of Inspector General (OIG) issued two advisory opinions approving gainsharing arrangements. Advisory Opinion 07-21 deals with cardiac surgeons and Advisory Opinion 07-22 with anesthesiologists. Consistent with prior gainsharing approvals

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2008 MEDICARE PHYSICIAN FEE SCHEDULE DELAYS STARK RULES

CMS announced in the 2008 Medicare Physician Fee Schedule final rule that the following proposed revisions will not be finalized until the future publication of a final rule:

§                     burden of proof;

§                     obstetrical malpractice insurance subsidies;

§                     unit of service (per click);

§                     payments in lease arrangements;

§                     the period of this allowance for noncompliant financial relationships;

§                     ownership or investment interest in retirement plans;

§                     set in advance and percentage based compensation arrangements;

§                     "stand in the shoes" provisions;

§                     alternative criteria for satisfying certain exceptions; and

§                     services furnished under arrangements.

The changes to reassignment and physician self-referral rules relating to diagnostic tests, i.e., the anti-markup provisions, will become final effective January 1, 2008 then will be addressed in a later post on the Med-Law blog.

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The Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) has issued its fiscal year 2008 Work Plan, identifying investigation projects for the coming fiscal year relating to the Medicare and Medicaid programs. Following is a copy of pages 3 through 13 of the 2008 OIG Work Plan, which identify the investigation projects for hospitals and physicians.

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MORE STARK III CHANGES:

PHYSICIAN RECRUITMENT

There have been a number of definitional or technical changes to the physician recruitment exception.

·        The definition of the hospital’s geographic service area, which was previously the area composed of these contiguous zip codes from which the hospital drew 75% of its inpatients, has been tweaked to exclude from that definition any zip code from which the hospital draws no inpatients so long as that zip code is totally surrounded by zip codes from which the hospital does draw patients.

·        If the hospital does not draw 75% of its patients from contiguous zip codes, then the service area will be composed of the contiguous zip codes from which the hospital does draw its patients, meaning that zip codes that are not contiguous but from which the hospital draws its patients will be available as relocation areas for recruited physicians.

·        There is also an optional definition for rural hospitals to allow them to use the contiguous zip codes from which they draw at least 90% of their patients, and to allow the hospital to include non-contiguous zip codes to their service area in decreasing order of the percentage of patients within those zip codes to be added.

·        The definition of physician as been defined to exclude residents and physicians who have been in practice for less than a year as long as those physicians establish a practice within the hospital service area. I assume the term residents will be interpreted broadly enough to include fellows.

·        The definition of allowable incremental costs that can be passed through in situations in which physicians have been recruited and are joining an existing rural practice has been broadened to include costs that are either the lower of actual, per capital, or 20% of the total costs.

·        Finally, hospitals may recruit physicians to prohibited rural areas with the approval of the Secretary.

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CMS ISSUES STARK ADVISORY OPINION PROHIBITING

 AMENDMENT OF RECRUITMENT AGREEMENT

On October 3, 2007, the Centers for Medicare and Medicaid Services (CMS) issued Advisory Opinion CMS - AO - 2007 - 01 denying permission to the hospital and physician to revise a physician recruitment agreement. The proposed amendment would have deleted and “excess receipts provision, which is a standard provision providing that physician or practice receipts in excess of the amount necessary to cover the expenses and compensation guarantee would be paid to the hospital to reduce the debt recreated by the arrangement.

The hospital, physician and medical practice entered into a recruitment agreement in 2004. That  recruitment agreement was later amended to comply with Stark II, which added a requirement that recruitment agreements could guarantee or reimburse physicians and medical practices only for the actual incremental expenses associated with the recruitment. The parties then sought to amend the existing agreement to eliminate the excess receipts provision. 

CMS concluded as follows:

“The purpose of the physician recruitment exception is to permit certain compensation arrangements to induce a physician to relocate his or her medical practice to the geographic area served by a hospital in order to become a member of the hospital’s medical staff. We do not believe that the parties should now be able to amend the arrangement to provide for additional (or potentially additional) compensation to the physician. Because the physician has already relocated his practice, the additional compensation is not for the purpose of inducing relocation and may directly or indirectly reflect the volume of value of the recruited physicians actual or potential referrals.”

The complete text of the Advisory Opinion is available at the link below. Note that this is a CMS/Stark Advisory Opinion, of which only five have been issued since 1998, rather than an OIG Advisory Opinion on the fraud and abuse safe harbors, which are issued on a much more frequent basis.

http://www.cms.hhs.gov/PhysicianSelfReferral/07_advisory_opinions.asp

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OIG ADVISORY OPINION 07-10 APPROVES CALL PAY

On September 27, 2007, the Office of the Inspector General of the Department of Health and Human Services posted OIG Advisory Opinion No. 07-10 which approves a tax exempt hospital proposal for compensating physicians for on call coverage. While acknowledging that on call compensation potentially creates considerable risk that physicians may demand compensation as a condition of practicing and referring patients to a hospital, the OIG nevertheless concluded that, even though the personal service safe harbor may not apply because the compensation is not set in advance in accordance with those requirements, the arrangement nevertheless "presented a low risk of fraud and abuse". 

The hospital designed a call coverage program requiring basic physician obligations as part of a two (2) year service contract available to all physicians on the medical staff. The basic obligations and the arrangement include the following:

1. Participation in a monthly call rotation established on a monthly basis by the appropriate department or division chief or chair.

2. Continuing in-patient care and consultation obligations for patients seen in the emergency department and then later admitted to the hospital. 

3. Timely response requirements for emergency calls. 

4. Cooperation with risk management and quality assurance initiatives within the hospital.

5. Appropriate medical record completion. 

The hospital established per diem compensation rates for each day dedicated to on call coverage excluding the 1 ½ days that each physician was required to contribute monthly as a medical staff obligation, which per diem rates differed among specialties based on the following factors: 

1. Severity of illness typically encountered by that specialty in treating a patient presenting the Emergency Department;

2. Likelihood of having to respond when on call at the Emergency Department;

3. Likelihood of having to respond to a request for inpatient consultative services for an uninsured patient when on call;

4. Degree of inpatient care typically required of the specialty for patients that initially present to the Emergency Department.

The OIG noted in its opinion that the hospital had certified its belief that the compensation was legitimate or fair market value compensation and that a third party consultant had concluded that the compensation was within the fair market value range for services to be provided, although the OIG specifically caveated that it offered no opinion as to the legitimacy of the fair market valuation. You can access the text of the opinion at the link below to the OIG resource reading room.

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STARK III REGULATIONS TEXT

CMS issued the revised Stark III Regulations to be effective as of December 4, 2007. The text of the regulations is accessible at the link below, and the Med Law Blog will publish a number of short posts over the next two months highlighting certain changes prior to that effective date.

The subject of today’s post is the fair market value exception for compensation. CMS has eliminated the compensation survey provision for fair market value compensation. The use of national studies and attempts to define the fair market value compensation for relevant local market proved to be overly burdensome.

Future posts will deal with the changes for the definition of a physician group for the ancillary services exception, warnings regarding the use of shared facilities, and the allowable physician practice restrictions for recruiting arrangements.

http://www.medlawblog.com/Stark%20III.pdf

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CMS Issues Final Stark Phase III Regulations

Stark Phase III Regulations

On August 27, 2007, the Centers for Medicare and Medicaid Services (CMS) placed on display at the Office of the Federal Register a final rule on physician "self-referral" of Medicare beneficiaries for certain types of Medicare-covered services. The rule is commonly known as "Stark Phase III," named after the original sponsor of the legislation that became Section 1877 of the Social Security Act (42 U.S.C. § 1395nn) and being CMS' third final rule on the topic. With certain exceptions, "self-referral" is the practice of referring a patient to an entity in which a referring physician has an actual or deemed financial interest, either through an ownership or compensation arrangement.

Generally, the rule describes CMS' interpretation of the prohibitions and exceptions to the prohibitions laid out in Section 1877.

Among other changes, the rule:

·        Modifies physician recruitment restrictions;

·        Provides more flexibility in complying with non-monetary compensation limits;

·        Reduces the administrative burden of complying with some exceptions to the Stark limitations; and

·        "Clarifies" CMS' "interpretation of existing regulations."

The rule is scheduled to be published in the September 5, 2007, edition of the Federal Register.

Thanks to The RAP Practice Group of AHLA for posting this information.

Read the press release :

http://www.cms.hhs.gov/apps/media/press/release.asp?Counter=2417

or download the display version of the rule:

http://www.cms.hhs.gov/PhysicianSelfReferral/Downloads/CMS-1810-F.pdf

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Congressman Pete Stark has proposed a new piece to the Stark legislation which would eliminate the existing “whole hospital” exception for a physician ownership by inserting a provision into H.R. 3162, the Children’s Health and Medicare Protection Act, which would impose new hospital disclosure requirements and new physician ownership limitations. The text of the provision follows below. 

The physician ownership restriction would prohibit ownership by physicians of more than 40% of the total value of the investment interest held in the hospital and prohibit any individual physician ownership of more than 2%, while also prohibiting hospital assistance in financing the investment by the physicians.

The disclosure requirements would mandate that hospitals submit annual disclosure reports to the Secretary of Health and Human Services disclosing physician ownership and that the hospitals’ implement procedures that would require any referring physician owner to disclose to the referred patient the existence and extent of the referring physician ownership interest in the hospital.

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

SEC. 651. LIMITATION ON EXCEPTION TO THE PROHIBITION ON CERTAIN PHYSICIAN REFERRALS FOR HOSPITALS.

(a) IN GENERAL.—Section 1877 of the Social Security Act (42 U.S.C. 1395) is amended

(1) in subsection (d)(2)—

(A)    in subparagraph (A), by striking "and" at the end;

(B)    in subparagraph (B), by striking the period at the end and inserting "; and"; and

(C)    by adding at the end the following new subparagraph:

"(C) if the entity is a hospital, the hospital meets the requirements of paragraph (3)(D).";

(2) in subsection (d)(3)

(A)      in subparagraph (B), by striking "and" at the end;

(B)      in subparagraph (C), by striking the period at the end and inserting "; and"; and

(C)      by adding at the end the following new subparagraph:

"(D) the hospital meets the requirements described in subsection (i)(1) not later than 18 months after the date of the enactment of this subparagraph."; and

(3) by adding at the end the following new subsection:

"(i) REQUIREMENTS FOR HOSPITALS TO QUALIFY FOR HOSPITAL EXCEPTION TO OWNERSHIP OR INVESTMENT PROHIBITION.

"(1) REQUIREMENTS DESCRIBED. For purposes of paragraphs subsection (d)(3)(D), the requirements described in this paragraph for a hospital are as follows:

"(A) PROVIDER AGREEMENT.—The hospital had a provider agreement under section 1866 in effect on July 24, 2007.

"(B) PROHIBITION OF EXPANSION OF FACILITY CAPACITY. The number of operating rooms and beds of the hospital at any time on or after the date of the enactment of this subsection are no greater than the number of operating rooms and beds as of such date.

"(C) PREVENTING CONFLICTS OF INTEREST.—

"(i) The hospital submits to the Secretary an annual report containing a detailed description of

"(I)    the identity of each physician owner and any other owners of the hospital; and

"(II)     the nature and extent of all ownership interests in the hospital.

"(ii) The hospital has procedures in place to require that any referring physician owner discloses to the patient being referred, by a time that permits the patient to make a meaningful decision regarding the receipt of care, as determined by the Secretary,

"(I)    the ownership interest of such referring physician in the hospital; and

"(II)     if applicable, any such ownership interest of the treating physician.

"(iii) The hospital does not condition any physician ownership interests either directly or indirectly on the physician owner making or influencing referrals to the hospital or otherwise generating business for the hospital.

"(D) ENSURING BONA FIDE INVESTMENT.—

"(i)    Physician owners in the aggregate do not own more than 40 percent of the total value of the investment interests held in the hospital or in an entity whose assets include the hospital.

"(ii)     The investment interest of any individual physician owner does not exceed 2 percent of the total value of the investment interests held in the hospital or in an entity whose assets include the hospital.

"(iii)    Any ownership or investment interests that the hospital offers to a physician owner are not offered on more favorable terms than the terms offered to a person who is not a physician owner.

"(iv)    The hospital does not directly or indirectly provide loans or financing for any physician owner investments in the hospital.

"(v)      The hospital does not directly or indirectly guarantee a loan, make a payment toward a loan, or otherwise subsidize a loan, for any individual physician owner or group of physician owners that is related to acquiring any ownership interest in the hospital.

"(vi)       Investment returns are distributed to investors in the hospital in an amount that is directly proportional to the investment of capital by the physician owner in the hospital.

"(vii)     Physician owners do not receive, directly or indirectly, any guaranteed receipt of or right to purchase other business interests related to the hospital, including the purchase or lease of any property under the control of other investors in the hospital or located near the premises of the hospital.

"(viii)    The hospital does not offer a physician owner the opportunity to purchase or lease any property

under the control of the hospital or any other investor in the hospital on more favorable terms than the terms offered to an individual who is not a physician owner.

"(E) PATIENT SAFETY.?

"(i) Insofar as the hospital admits a patient and does not have any physician available on the premises to provide services during all hours in which the hospital is providing services to such patient, before admitting the patient:

"(I)    the hospital discloses such fact to a patient; and

"(II)     following such disclosure, the hospital receives from the patient a signed acknowledgment that the patient understands such fact.

"(ii) The hospital has the capacity to:

"(I)      provide assessment and initial treatment for patients; and

"(II)     refer and transfer patients to hospitals with the capability to treat the needs of the patient involved.

"(2)     PUBLICATION OF INFORMATION REPORTED.—The Secretary shall publish, and update on an annual basis, the information submitted by hospitals under paragraph (1)(A)(i) on the public Internet website of the Centers for Medicare & Medicaid Services.

"(3)     COLLECTION OF OWNERSHIP AND INVESTMENT INFORMATION.—For purposes of clauses (i) and (ii) of paragraph (1)(D), the Secretary shall collect physician ownership and investment information for each hospital as it existed on the date of the enactment of this subsection.

"(4)     PHYSICIAN OWNER DEFINED.—For purposes of this subsection, the term 'physician owner' means a physician (or an immediate family member of such physician) with a direct or an indirect ownership interest in the hospital.".

(b) ENFORCEMENT.

(1)       ENSURING COMPLIANCE.—The Secretary of Health and Human Services shall establish policies and procedures to ensure compliance with the requirements described in such section 1877(i)(1) of the Social Security Act, as added by subsection (a)(3), beginning on the date such requirements first apply. Such policies and procedures may include unannounced site reviews of hospitals.

(2)     AUDITS.—Beginning not later than 18 months after the date of the enactment of this Act, the Secretary of Health and Human Services shall conduct audits to determine if hospitals violate the requirements referred to in paragraph (1).

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CMS has issued regulations within the intent of closing what it perceives to be loopholes in the Stark regulations. The major initiatives are as follows:

1.         The definition of the term “entity” will be expanded to include both sole practitioners as well as other types of entities. The definition will state that an entity will include a physician’s sole practice or a practice of multiple physicians or any other person, sole proprietorship, public or private agency or trust, corporation, partnership, limited liability company, foundation, non-profit corporation or unincorporated association that furnishes DHS. An entity will not include the referring physician himself or herself, but does include his or her medical practice.

2.         In order for compensation to be considered as “set in advance” and compliant, it may not be based on any percentage of revenue other than compensation based on revenues directly resulting from personally performed physician services. Compensation will be considered “set in advance” if the aggregate compensation, a time-based or per unit of service based (whether per use or per service) amount, or a specific formula for calculating the compensation is set in an agreement between the parties before the furnishing of the items or services for which the compensation is to be paid. The formula for determining the compensation must be set forth in sufficient detail so that it can be objectively verified, and the formula may not be changed to modify during the course of the agreement in any manner that reflects the volume or value of referrals or other business generated by the referring physician.

3.         Per unit, rental arrangements will not be allowed to the extent that such charges reflect services provided to the patients referred by the lessor to the lessee. 

4.         The burden of proof on billing arrangements will be shifted to the billing entity. The proposed regulations will require that, when payment for a designated health service is denied on the basis that the service was furnished pursuant to a prohibited referral, the burden will be on the entity submitting the claim to establish that the service was not furnished pursuant to a prohibited referral.

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The United States Court of Appeals has decided that the Renal Physicians Association (RPA), a national professional association, does not have legal standing to challenge the legality of the Stark Regulations.

RPA had asserted that certain of the Stark regulations defining fair market value and personal service arrangements for purposes of establishing exceptions to the statutory  prohibition of referrals to financially related entities were not properly promulgated, and that the regulations were harming its members who had medical director agreements with dialysis facilities. The United States District Court, the trial court below in this matter, had granted the motion of the United States Department of Health and Human Services (HHS) seeking dismissal of the Complaint for lack of standing, i.e., the assertion that RPA by itself had not suffered any direct harm, regardless of any harm to its members, and, therefore, had no legal “standing” to bring this litigation. In upholding the decision of the District Court, the Court of Appeals wrote that standing on behalf of RPA would require that the regulations could be shown to be illegal or that the action requested by RPA had the potential of redressing the harm asserted. The Court concluded that neither element was present, concluding that redress was not available because, even if the action requested by RPA was granted, i.e., the retraction of the regulations, members of RPA would still be confronted with the statutory language of the Stark Act declaring that referrals were prohibited unless one of the statutory acceptance was available.

The case is Renal Physicians Association vs. U.S. Department of Health and Human Services, and it was decided by the United States Court of Appeals for the District of Columbia on June 12, 2007 (No. 06-5133). 

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The Office of Inspector General (OIG) has issued advisory opinion number 07-05 concluding that a proposal by a group of physicians owning an ambulatory surgery center to sell 40% of the ambulatory surgery center to a hospital has the potential to generate unlawful remuneration and is therefore not eligible for a safe harbor advisory opinion. The ASC is owned by a group of physicians consisting of the following:

·        3 Orthopedic Surgeons own 94%

·        2 Gastroenologists and 2 Anesthologistscollectively own an additional 6%

The Orthopedic Surgeons propose to personally sell sufficient units in the LLC to give the hospital a 40% interest at a price higher than the Orthopedic Surgeons' initial investment, thereby guaranteeing an additional personal return on their investment. 

The OIG concluded that the potential for unlawful remuneration exists for the following reasons: 

1.      Since the investment return to all of the owners, including the hospital, following the transaction would be based upon ownership, the selling physicians would effectively receive a higher return on their investment than the other investors because of the profit built into this transaction;

2.      units in the LLC were not offered to any other third party investor, raising the spectre that the purchases, remuneration and exchange for referrals to the hospital;  

3.      only the Orthopedic Surgeons shares were proposed to be sold and not the other physician investors. 

The text of the advisory opinion is available at the following link:

http://oig.hhs.gov/fraud/docs/advisoryopinions/2007/AdvOpn07-05C.pdf

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The California Department of Insurance and the Orange County District Attorney’s Office have arrested three doctors in what they are describing  as the largest medical fraud prosecution in the nation. Some stories are so abhorrent  they taint entire professions. In Orange County, three physicians and a group of ambulatory surgery center developers, some of whom have already pled guilty and  been sentenced to prison, arranged with patient recruiters, known as “cappers,” to recruit patients on whom unnecessary surgery would be performed in exchange for cash or cosmetic surgery. The District Attorney’s Office alleges the performance of more than 1,000 bogus procedures. Following is the link to the May 16, 2007 press release by the Office of the District Attorney of Orange County explaining the case in greater detail:

http://www.orangecountyda.com/home/index.asp?page=8&recordid=583&returnurl=index%2Easp%3Fpage%3D8

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Two former employees of East Tennessee Heart Consultants, a forty physician cardiology practice in Tennessee, tipped off federal prosecutors, who then filed a qui tam claim alleging the cardiology practice had a policy of retaining overpayments for services provided unless refunds were specifically requested, and that the practice maintained its billing records to conceal the credit balances.

Under the terms of the settlement agreement, the cardiology practice will pay $1.5 million to the federal government, $200,000 to the State of Tennessee, $44,000 to Blue Cross Blue Shield, $123,000 to private insurers, and $1 million to thousands of patients. East Tennessee Heart Consultants has also entered into a 5-year corporate integrity agreement with the Office of Inspector General, the terms of which can be viewed on the OIG website accessible through the health law links on this Blog.

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MEDICARE FACT SHEET

For Immediate release

CMS Office of Media Affairs August 1, 2006

Physician Self-Referral Exceptions for Electronic Prescribing and Electronic Health Records Technology

BACKGROUND: Section 1877 of the Social Security Act (the Act), commonly referred to as the "Stark" law, prohibits a physician from making referrals for certain "designated health services" (DHS) payable by Medicare to an entity with which the physician (or an immediate family member of the physician) has a financial relationship, unless an exception applies. Section 1877 of the Act also prohibits the entity from submitting claims to Medicare or anyone else for Medicare DHS that are furnished as a result of a prohibited referral. Violations of the statute are punishable by denial of payment for all DHS claims, refund of amounts collected for DHS claims, and civil money penalties for knowing violations of the prohibition.

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) amended the Act to establish a prescription drug benefit in the Medicare program. As part of the new benefit, the Congress directed the Secretary to establish standards for electronic prescribing with the objective of improving patient safety, quality of care, and efficiency in the delivery of care. Because the donation of electronic prescribing technology may create a financial relationship that is subject to the physician self-referral prohibition, the MMA directed the Secretary, in consultation with the Attorney General, to create an exception to the physician self-referral prohibition to permit certain entities to provide non-monetary assistance to physicians to encourage their use of electronic prescribing technology. This final rule (CMS-1303-F) sets forth the terms and conditions of the MMA-mandated physician self-referral electronic prescribing exception and also sets forth the conditions for a new regulatory exception for arrangements involving the donation of electronic health records software or information technology and training services. The MMA mandated a similar safe harbor under the anti-kickback statute for donations of electronic prescribing technology made to physicians and certain other entities. The HHS Office of Inspector General (OIG) is simultaneously issuing a final rule regarding the MMA-mandated anti-kickback statute safe harbor for certain electronic prescribing arrangements, as well as a safe harbor for the donation of electronic health records software or information technology and training services. Information about the OIG regulations can be found on the OIG website at www.oig.hhs.gov.

Exception for Electronic Prescribing Arrangements

To qualify for the physician self-referral exception regarding donations of electronic prescribing technology and training services, the following criteria must be satisfied, as fully set forth at 42 CFR § 411.357(v):

§     

§      The items and services must be provided by a hospital to a physician who is a member of its medical staff; by a group practice to a physician who is a member of the group; or by a prescription drug plan sponsor or Medicare Advantage organization to a prescribing physician; and

§      The items and services are provided as part of, or are used to access, an electronic prescription drug program that meets applicable standards under Medicare Part D at the time the items and services are provided.

§      The donor (or any person on the donor's behalf) does not take any action to limit or restrict the use or compatibility of the items or services with other electronic prescribing or electronic health records systems;

§      For items or services that are of the type that can be used for any patient without regard to payor status, the donor does not restrict, or take any action to limit, the physician's right or ability to use the items or services for any patient;

§      Neither the physician nor the physician's practice (including employees and staff members) makes the receipt of items or services, or the amount or nature of the items or services, a condition of doing business with the donor.

§      Neither the eligibility of a physician for the items and services, nor the amount or nature of the items or services, is determined in a manner that takes into account the volume or value of referrals or other business generated between the parties;

§      The arrangement is in writing, is signed by the parties, specifies the items and services being provided, identifies the cost to the donor of the items and services, and covers all of the electronic prescribing items and services to be provided by the donor. This requirement will be met if all separate agreements between the donor and the physician (and the donor and any family members of the physician) incorporate each other by reference or if they cross-reference a master list of agreements that is maintained and

§      updated centrally and is available for review by the Secretary upon request. The master list should be maintained in a manner that preserves the historical record of agreements.

§      The donor does not have actual knowledge of, and does not act in reckless disregard or deliberate ignorance of, the fact that the physician possesses or has obtained items or services equivalent to those provided by the donor.

Exception for Electronic Health Records Arrangements

To qualify for the physician self-referral exception regarding donations of electronic health records software or information technology and training services, the arrangement is required to satisfy the following criteria, as fully set forth at 42 CFR § 411.357(w):

§      The software and training services must be necessary and used predominantly to create, maintain, transmit, or receive electronic health records;

§      The items and services are provided to a physician by a hospital or other entity that furnishes designated health care services;

§      The software is interoperable (as defined at §411.351) at the time it is provided to the physician. For purposes of the exception, "interoperable" means that the software is able to (i) communicate and exchange data accurately, effectively, securely, and consistently with different information technology systems, software applications, and networks, in various settings, and (ii) exchange data

§      The donor (or any person on the donor's behalf) does not take any action to limit or restrict the use, compatibility, or interoperability of the items or services with other electronic prescribing or electronic health records systems;

§      Before receipt of the items and services, the physician pays 15 percent of the donor's cost for the items and services. The donor (or any party related to the donor) does not finance the physician's payment or loan funds to be used by the physician to pay for the items and services.

§      Neither the physician nor the physician's practice (including employees and staff members) makes the receipt of items or services, or the amount or nature of the items or services, a condition of doing business with the donor.

§      Neither the eligibility of a physician for the items and services, nor the amount or nature of the items and services, is determined in a manner that directly takes into account the

§      volume or value of referrals or other business generated between the parties. For purposes of this requirement, the determination is deemed not to directly take into account the volume or value of referrals or other business generated between the parties if any one of the following conditions is met:

(i)                  The determination is based on the total number of prescriptions written by the physician (but not the volume or value of prescriptions dispensed or paid by the donor or billed to the program);

(ii)                The determination is based on the size of the physician's medical practice (for example, total patients, total patient encounters, or total relative value units);

(iii)               The determination is based on the total number of hours that the physician practices medicine;

(iv)              The determination is based on the physician's overall use of automated technology in his or her medical practice (without specific reference to the use of technology in connection with referrals made to the donor);

(v)                The determination is based on whether the physician is a member of the donor's medical staff, if the donor has a formal medical staff;

(vi)              The determination is based on the level of uncompensated care provided by the physician; or

(vii)             The determination is made in any reasonable and verifiable manner that does not directly take into account the volume or value of referrals or other business generated between the parties.

§      The arrangement is in writing; is signed by the parties; specifies the items and services being provided, the cost to the donor of the items and services, and the amount of the physician's contribution; and covers all of the electronic health records items and services to be provided by the donor. This requirement will be met if all separate agreements between the donor and the physician (and the donor and any family members of the physician) incorporate each other by reference or if they cross-reference a master list of agreements that is maintained and updated centrally and is available for review by the Secretary upon request. The master list should be maintained in a manner that preserves the historical record of agreements.

§      The donor does not have actual knowledge of, and does not act in reckless

§      For items or services that are of a type that can be used for any patient without regard to payor status, the donor does not restrict, or take any action to limit, the physician's right or ability to use the items or services for any patient;

§      The items and services do not include staffing of physician offices and are not used primarily to conduct personal business or business unrelated to the physician's medical practice;

§      The electronic health records software contains electronic prescribing capability, either through an electronic prescribing component or the ability to interface with the physician's existing electronic prescribing system, that meets the applicable standards under Medicare Part D at the time the items and services are provided;

§      The arrangement does not violate the anti-kickback statute or any Federal or State law or regulation governing billing or claims submission; and

§      The transfer of the items or services occurs on or before December 31, 2013.

| Posted By Michael Cassidy In Fraud - Stark | 0 Comments | Permalink

The U.S. District Court from the District of Columbia ruled on March 7, 2006 that the Renal Physicians Association (RPA), a national non-profit specialty society of dialysis facility medical directors, lacked standing to challenge the Stark regulations regarding fair market value compensation.

| Posted By Michael Cassidy In Fraud - Stark | 0 Comments | Permalink

For those who doubt the possibility of OIG enforcement regarding fraud and abuse violations, the OIG Semi-Annual Report lists the following enforcement results:

$2.8 billion on audit and investigative receivables;

3,806 individual and entity; receivables;

537 criminal actions; and

262 civil actions

The report is accessible on the OIG Web site.

| Posted By Michael Cassidy In Fraud - Stark | 0 Comments | Permalink

The final rule from the Medicare Physician Fee Schedule revises the Stark definition of designated health services (DHS) to include diagnostic and therapeutic nuclear medicine services. Since this change will impact existing relationships, this portion of the rule has a delayed effect date, i.e. January 1, 2007.

Fee Schedule: Nuclear Medicine: DHS (CMS's discussion on page 676)

| Posted By Michael Cassidy In Fraud - Stark | 0 Comments | Permalink

CMS Issues Stark Advisory Opinion Stating That Stock Interest In Non-Profit Practice Organization Is Not A Stark Financial Interest

CMS has determined that stock held by physician shareholders in a 700 physician non-profit group medical practice does not constitute a financial interest for purposes of Stark, so that it would not prohibit referrals by the physicians to that group.

| Posted By Michael Cassidy In Fraud - Stark | 0 Comments | Permalink