Med Law Blog

The Illinois Attorney General has filed price fixing charges against the two largest physician groups in Champaign County, Illinois, charging them with boycotting Medicaid patients in order to raise prices. Carle Clinic Associates, P.C. has 300 physicians, 200 of which are in Champaign County, Illinois, representing a 60% market share. Christie Clinic, P.C. has 100 physicians, all which are in the Champaign County, representing a 30% market share.

The Attorney General alleges that the clinics agreed to boycott new Medicaid patients in order to increase effective Medicaid reimbursement rates and to accelerate reimbursement payments.

The case raises interesting legal and factual questions. From a factual standpoint, the Attorney General is alleging the existence of an agreement arising out of alleged continual contacts since early 2003 resulting in the clinics implementing similar policies regarding new Medicaid patients. It remains to be seen whether this is an agreement, conscious parallelism or coincidental independent action.

The Illinois Antitrust Act prohibits concerted action to fix, control or maintain prices and concerted action to fix, control or maintain the supply of a commodity or service. Since the prices, i.e., reimbursement rates, are established by the state government, the price fixing argument has weaknesses. On the other hand, if true, the physician groups are apparently limiting the supply of physician services to new Medicaid patients.

The case presents interesting legal issues:

1.         Can the government compel private businesses to provide services to government programs at unacceptable rates, since this is not a tax-exempt situation where the clinics have charitable mission obligations required to qualify for tax exempt status, nor is it a situation similar to Hill-Burton funds, where hospital’s are required to participate in federal programs in order to receive federal funding?

2.         Can the government compel private businesses to provide services to people in a certain economic status in the same manner they compel private businesses with whom meet certain jurisdictional requirements to comply with Americans With Disabilities Act?

Note that neither of these underlying issues is an issue in the case, which just alleges a group boycott on conspiracy that violates the statute.

The press release of the Illinois Attorney General and a copy of the Complaint are available at the link below:

http://www.illinoisattorneygeneral.gov/pressroom/2007_06/20070614b.html

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The Internal Revenue Service issued a directive on May 11, 2007 confirming that the provision of hardware and software components of electronic health records (EHR) will not constitute private inurement jeopardizing the tax exempt status of non-profit hospitals. This directive is another step forward in facilitating hospital subsidized EHR for private practice physicians.

The Centers for Medicare and Medicaid Services (CMS) and the Office of Inspector General (OIG) previously issued safe harbor regulations and Stark exceptions stating that a hospital’s provision of EHR would not be considered remuneration for fraud and abuse purposes, providing the EHR program satisfied the conditions of their rules, which included a requirement that a physician pay at least 15% of the cost of that benefit.

However, CMS and OIG rules left open the issue of whether the value of that benefit would be prohibited private inurement, i.e., benefits provided by tax exempt entities to private individuals, or excess benefits that would be subject to the intermediate sanction rules of Internal Revenue Code Section 4958, both of which are IRS issues.

The IRS directive makes it clear that the program would not jeopardize the tax exempt status of non-profit hospitals. The directive does not resolve the question of whether the value of the EHR benefit provided to private practice physicians would constitute income taxation. While commentators are making few predictions with respect to whether that value would be taxable, one can see how making that benefit taxable would raise the host of additional issues, such as the value of hospital equipment, OR space, etc., provided to private practice physicians, which would jeopardize the entire structure of private practice medical staffs.

The text of the IRS directive can be obtained as the following link:

http://op.bna.com/hl.nsf/r?Open=psts-734nqv.

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CMS has issued interpretive guidelines regarding informed consent relating to the conditions of participation requirements for patient rights, informed consent for surgical services, and the appropriate contents of medical records. The guidelines were released on April 13, 2007 and can be found at the following link:

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HHS Launches New Web site on HIPAA Privacy Compliance and Enforcement

To coincide with the fourth anniversary of the enforcement of the HIPAA Privacy Rule, the Department of Health and Human Services (HHS) announced today the launch of an enhanced Web site that will make it easier for consumers, health care providers and others to get information about how the Department enforces health information privacy rights and standards. In launching the website, Winston Wilkinson, the Director of the HHS Office for Civil Rights, noted: "HHS has obtained significant change in the privacy practices of covered entities through its enforcement program. Corrective actions obtained by HHS from these entities have resulted in change that is systemic and affects all the individuals they serve."

The Health Information Privacy Web site provides comprehensive information about the Privacy Rule, which creates important federal rights and requirements to protect the privacy of personal health information. The enhanced Web site, http://www.hhs.gov/ocr/privacy/enforcement provides information for consumers, health care providers, health plans and others in the health care industry about HHS’s compliance and enforcement efforts. The new information describes HHS activities in enforcing the Privacy Rule, the results of those enforcement activities, and statistics showing which types of complaints are received most frequently and the types of entities most often required to take corrective as a result of consumer complaints. The other information on the Web site covers consumers’ rights to access their health information and significantly control how their personal health information is used and disclosed, as well as guidance about how to submit complaints about possible violations of the law and extensive guidance for entities who must comply with the rule.

HHS issued the patient privacy protections pursuant to the Health Insurance Portability and Accountability Act of 1996 (HIPAA). The first and only comprehensive federal privacy standards to protect patients' medical records and other health information provided to health plans, doctors, hospitals and other health care providers took effect on April 14, 2003. Developed by HHS, these standards provide patients with access to their medical records and more control over how their personal health information is used and disclosed. The regulation covers health plans, health care clearinghouses, and those health care providers who conduct certain financial and administrative transactions (e.g., enrollment, billing and eligibility verification) electronically. HHS has conducted extensive outreach and provided guidance and technical assistance to providers and businesses to help them to implement the new privacy protections. These materials are available at http://www.hhs.gov/ocr/hipaa.

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The first criminal HIPAA verdict was entered in January of 2007, and HIPAA privacy rule enforcement statistics were reported at the 14^th National HIPPA Summit.

In U.S. v. Ferrer, in the Cleveland Clinic case, a Florida jury found the Defendant, Mr. Fernando Ferrer, Jr. guilty of one count of wrongful disclosure of individually identifiable health information, five counts of aggravated identity theft, one count of computer fraud and one count of conspiring to defraud the United States. Mr. Ferrer was the owner of a healthcare claims administration company at the time and misappropriated the personal data of more than 1,100 patients of the Cleveland Clinic, using a cousin who was an employee of Cleveland Clinic to assist him in this effort. The misappropriated information was used to submit more than $7,000,000 of fraudulent Medicare claims, which netted about $2,500,000 in payments to providers and suppliers.

The following is a summary of the enforcement activities reported at the National HIPAA Summit, listing total complaints, closed cases and cases in which corrective action was taken or which were referred to the Department of Justice for prosecution.

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There has been an explosion in the Qui Tam litigation in the healthcare industry, as well as other industries dependent upon government payment. Qui Tam litigation allows private parties, frequently disgruntled employees (and more frequently disgruntled ex-employees) or competitors to file suit to recover damages on behalf of the government. The complaints are filed under seal and disclosed to the government with the hope that the government will assume the investigation and prosecution of the suit. Under the False Claims Act, private citizens may qualify for a portion of the eventual recovery if the following conditions exist:

1.   The private citizens (known as "relators") made a pre-filing disclosure of the allegations to the government; and

2.   The relator is the original source of the allegations in the event the allegations through transactions are ultimately publicly disclosed, with the purpose of this requirement being that the relator be the initial reason that the suit is being pursued. 

Unfortunately, these rules and procedures were often used by private citizens to present "kitchen sink" charges or allegations for government review, with the hope that something would stick.

In Rockwell International Corp. v. United States (a non-healthcare but nevertheless a government contracting case) the US Supreme Court clarified these rules and limits the "kitchen sink" technique by holding that the relators not the original source simply because the relator might have been the original source as to some claims which were investigated but not pursued by the government.

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Coincidentally, just a few days after the Office of Inspector General announced the $3 million settlement of the credit balance case with the Tennessee cardiology practice, Highmark Medicare Services issued a bulletin reminding providers of their obligation to file the Medicare Credit Balance Detail Report 838. Let me remind you that part of the basis for the Tennessee settlement was that the provider groups maintain their records to conceal the credit balances. Hopefully, your internal records will agree with the Medicare Credit Balance Detail Report. The Highmark Medicare Services reminder can be accessed at:

http://www.highmarkmedicareservices.com/bulletins/parta/news/credit-balance-qe-123106.

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Pennsylvania allows health care facilities or health care providers to charge fees for the reproduction of medical records. Below is the exact text of the announcement in the

December 2, 2006 Pennsylvania Bulletin (Vol. 36, No. 48, pages 7345 and 7346) announcing the approved fees for 2007:

Under 42 Pa. C.S. § § 6152 and 6155 (relating to subpoena of records; and rights of patients), the Secretary of Health (Secretary) is directed to adjust annually the amounts which may be charged by a health care facility or health care provider upon receipt of a request or subpoena for production of medical charts or records. These charges apply to any request for a copy of a medical chart or record except as follows:

(1) Flat fees (as listed in this notice) apply to amounts that may be charged by a health care facility or health care provider when copying medical charges or records either: a) for the purpose of supporting any claim or appeal under the Social Security Act or any Federal or State financial needs based program; or b) for a district attorney.

(2) An insurer shall not be required to pay for copies of medical records required to validate medical services for which reimbursement is sought under an insurance contract, except as provided in: (a) the Worker’s Compensation Act (77 P.S. § 1 et seq.) and the regulations promulgated thereunder; (b) 75 Pa. C.S. Chapter 17 (relating to financial responsibility) and the regulations promulgated thereunder; or (c) a contract between an insurer and any other party.

The charges listed in this notice do not apply to an x-ray film or any other portion of a medical record which is not susceptible to photostatic reproduction.

Under 42 Pa. C.S. § 6152.1 (relating to limit on charges), the Secretary is directed to make a similar adjustment to the flat fee which may be charged by a health care facility or health care provider for the expense of reproducing medical charts or records where the request is: (1) for the purpose of supporting a claim or appeal under the Social Security Act or any Federal or State financial needs based benefit program; or (2) made by a district attorney.

The Secretary is directed to base these adjustments on the most recent changes in the consumer price index reported annually by the Bureau of Labor Statistics of the United States Department of Labor. For the annual period of October 31, 2005, through October 31, 2006, the consumer price index was 1.3%.

Accordingly, the Secretary provides notice that, effective January 1, 2007, the following fees may be charged by a health care facility or health care provider for production of records in response to subpoena or request:

                                                                                                                        Not to Exceed

Amount charged per page for pages 1 - 20                                                      $  1.25

Amount charged per page for pages 21 - 60                                                    $    .93

Amount charged per page for pages 61 - END                                                $    .31

Amount charged per page for microfilm copies                                      $ 1.83

Flat fee for production of records to support any

   claim under Social Security                                                                            $23.49

Flat fee for supply records requested by a district attorney                                 $18.54

*Search and retrieval of records

*NOTE: Federal regulations enacted under the Health Insurance Portability and Accountability Act (HIPAA) at 45 CFR Parts 160-164 state that covered entities may charge a reasonable cost based fee that includes only the cost of copying, postage and summarizing the information (if the individual has agreed to receive a summary) when providing individuals access to their medical records. The Department of Health and Human Services has stated that the fees may not include costs associated with searching for and retrieving the requested information. For further clarification on this issue, inquiries should be directed to the Office of Civil Rights, United States Department of Health and Human Services, 200 Independence Avenue, S.W., Room 509F, HHH Building, Washington, DC 20201, (866) 627-7748, www.hhs.gov/ocr/hipaa.

In addition to the amounts listed previously, charges may also be assessed for the actual cost of postage, shipping and delivery of the requested charges.

The Department of Health is not authorized to enforce these charges.

Questions or inquiries concerning this notice should be sent to James T. Steele, Jr., Deputy Chief Counsel, Room 825 Health and Welfare Building, Harrisburg, PA 17120 or for speech and or hearing impaired persons, the Pennsylvania AT&T Relay Services at (800) 654-5984 (TT) or V/TT (717) 783-6514.

                                                            CALVIN B. JOHNSON, M.D., M.P.H.

                                                                                                            Secretary  

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Senator Bill Frist has launched a new healthcare Blog. MedicalMatter.org: a21st Century Discussion of Health Care Issues. According to the inaugural post, the blog is about "healthcare and the politics of healthcare", and will address issues such as electronic health records (EHR), stem cell research, health savings accounts (HSA), and many other topics.

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REGARDING SPECIALTY HOSPITALS

The Secretary of Health and Human Services, Michael O. Leavitt, has submitted an interim report to Congress entitled “Development of a Strategic Plan Regarding Physician Investment and Specialty Hospitals,” as required by Deficit Reduction Act of 2005 (DRA). HHS was required to develop and implement a strategic plan concerning whether physician investments in specialty hospitals should continue to be permitted, especially in light of the recently alleged quality of care concerns.

The interim report addresses several issues critical to the process of providing equitable reimbursement to hospitals and specialty hospitals as follows:

1. Addressing hospital DRG payments to adequately reflect severity of illnesses;

2. Increasing the number of procedures that can be performed in ambulatory surgery centers, but adjusting ambulatory surgery centers fees to adequately reflect relative complexity or severity for cases done in both ambulatory surgery centers and the hospitals;

3. Determining whether specialty hospitals are required to provide EMTALA services for cases falling within their specialty; and

4. Obtaining further data regarding physician investment and use of specialty hospitals.

This report is available on the CMS website and at Interim Report.

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The Centers for Medicare and Medicaid Services (CMS) has posted new and revised versions of its provider/suppliers/practitioner Medicare enrollment forms (855s). These new forms were issued immediately after the final regulations defining the requirements of the enrollment process were published on April 21, 2006, as noted April 27, 2006 on the Med Law Blog. The revised forms are effective April 30, 2006. The CMS forms emphasize that the application process should be directed through the appropriate physical intermediary (FI) or carrier, rather than CMS.

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On August 24, 2006, the Office of Inspector General issued an Open Letter to healthcare providers encouraging self-disclosure of violations of the federal healthcare programs.

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We have noticed significantly increased post-payment review audit activities on behalf of Highmark and HGSAdministrators, the Medicare side of Highmark.

When records are requested, it is critical that you do not respond cavalierly. The records you initially supply will be used to determine whether you will be subject to a refund request and further review.

If you have not been involved in this type of audit activity before, you should experienced counsel to assist you with your response. The potential for extrapolated refund requests is a serious threat.

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Robert Wood Johnson Foundation has completed “The Synthesis Project,” which is a project summarizing certain research on hospital consolidation over the last decade. Although the report qualifies its conclusion, the Synthesis Project suggests that hospital mergers increase prices, decrease quality and were only anecdotally related to the increase in managed care. The report is available at the Robert Wood Johnson Foundation Synthesis Project.

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The Commonwealth Court of Pennsylvania ruled on December 29, 2005 that a group of policyholders, subscribers, public interest groups and the City of Philadelphia did not have standing to challenge the Pennsylvania Insurance Department's approval of reserves and surpluses for the State's Blues plans, i.e., Capital Blue Cross, Highmark, Blue Cross of Northeastern Pennsylvania and Independence Blue Cross.

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The OSHA regulations applicable to the offices of medical professionals are aimed at creating a safe and healthy practice. Compliance creates a positive work environment and minimizes employee complaints. There are six OSHA general standards that apply to physician offices of all sizes and a seventh requirement that applies only to offices that offer X-ray services. We will discuss each in this article.

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The DHHS had issued guidance entitled “Guidance to Federal Financial Assistance Recipients Regarding Title VI Prohibition Against National Origin Discrimination Affecting Limited English Proficient Persons.” Several individual physicians and professional associations sought to enjoin the Guidance, but a federal district court ruled that the Guidance had not cause sufficient damage or injury nor threatened future damage or injury sufficient to make the case ripe for decision. The mere fact that the Guidance Document is not aligned with the organizations advocacy an litigation goals does not constitute a concrete and particularized injury or create a Article III case here. View the guidance on the DHHS Web site.
Colwell v. HHS, S.D. Cal. No. 04CV1748, 3/7/05.

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