13.6% of amount paid to physician Akerman | 44 NPPs: Risks 1. Scope of Practice Violations 2. Improper Supervision 3. Improper Billing 4. Upcoding 5. Medical Necessity 6. Documentation Issues 7. Anti-Kickback Statute 8. Stark Law Akerman | 45 NPPs: Risks Scope of Practice Violations - Performing services outside state scope of practice - Failure to adhere to protocols or supervision requirements Improper Supervision - Lack of availability of supervising physician - Failure to properly review/countersign charts Improper Billing

1. Healthcare
Compliance in
2014
Don’t let compliance keep you
up at night!

2. Your Presenters:
Adam Maingot
adam.maingot@akerman.com
813.209.5098
Joe Rugg
joseph.rugg@akerman.com
813.209.5008
Betsy Hodge
elizabeth.hodge@akerman.com
813.209.5052
Akerman | 2

3. Where we are headed:
Staying Off of the Radar:
 Federal Fraud and Abuse Activity: National Trends
 The 2014 Office of Inspector General (OIG) Work Plan
 Physician Extender Risk
The Dos and Don'ts of Deal Making:
 Legal and tax dimensions in healthcare business transactions
Making the Case for Compliance:
 Why physicians need a compliance plan
 The seven elements of effective compliance programs
 Recent developments: HIPAA, EHRs, and the ADA
Akerman | 3

4. Staying Off the
Radar:
Fraud and Abuse

5. Fraud and Abuse Basics
The Big Three:
Federal Anti-Kickback Statue (AKS)
Stark Law (Stark)
Civil False Claims Act (FCA and Reverse FCA)
Want to learn more? See: Baumann, Linda, Health Care Fraud and Abuse: Practical
Perspectives, 3d Ed. Bloomberg BNA (2013)
Akerman | 5

6. Fraud and Abuse Activity
FY 2013 BY THE NUMBERS:
False Claims Act Recoveries:
$3.8 B
()
Health Care Fraud Recoveries
$2.6 B
()
Whistleblower Lawsuits :
752
()
Whistleblower Judgments:
$2.9 B
()
Whistleblower payouts:
$345 M
()
DOJ Intervention Rate
22%
()
Akerman | 6

7. F&A Activity: Initiatives
HEAT: Health Care Fraud Prevention and
Enforcement Action Team (CRIMINAL FOCUS)
Established May 2009
Expanded Data Sharing, Training and Analytics
Medicare HEAT (2007 – 2012)
724 Cases, 1,476 defendants, > $4.6B Medicare
Key areas of prosecution include
DME & PT
$223 M in false billing found
Akerman | 7

8. F&A Activity: Recent Cases
Kyphoplasty Overbilling
To admit or not to admit?
Hospitals - $34 M to settle
$75 M previously paid
Medtronic – $75 M settlement (2008)
“Alleged Improper Promotion”
Who has vetted your device billing
documentation?
Akerman | 8

9. F&A Activity: Recent Cases
Double Agent Risk: New breed of whistleblower?
Third party billing consultant
Retained pursuant to internal audit RFP
Consultant turned to the feds
Hospital paid DOJ $26 M to settle case
What’s an employer to do?
http://www.healthlawyers.org/Members/PracticeGroups/FA/EmailAlerts/Doc
uments/130930_MemorandumandOpinion.pdf
Akerman | 9

10. F&A Activity: Recent Cases
Internal Audit: Time is of the Essence
Group performed internal audit, discovered errors
Errors tracked to challenging internal process
Remediation efforts delayed by the day-to-day
Former employee saw a meal ticket
United States and Wisconsin ex rel. Keltner v. Lakeshore
Medical Clinic, 2013 WL 1307013 (E.D. WI 2013)
Akerman | 10

11. F&A Activity: Recent Cases
The Government: Hammer or Saw
Company used non-Medicare physician supervisors
Billed (falsely) using Care eligible NPI
Adverse Judgment: $11.1 M…Tossed!
Court: “Because [billing] regulations are not a condition
of payment, they do not [implicate] the FCA, [but] are
instead addressable by the administrative sanctions
available … including suspension and expulsion
from the Medicare program‖
U.S. ex rel. Hobbs v. Medquest Associates, 711 F.3d 707 (6th Cir. April 1, 2013)
Akerman | 11

12. F&A Activity: Recent Cases
Kickback Cases:
Settlements on the rise related to drug and device
entity’s payment to physicians.
Many cases individually implicate the healthcare
provider.
United States v. Jafari, (Doctor convicted of receiving
cash kickbacks for diagnostic testing referrals).
Ask yourself – Would I be comfortable explaining my
actions or payments to a jury of my peers?
Akerman | 12

13. F&A Activity: Recent Cases
Stark: Still Cooking
Tuomey
 Physician admission of patient for personally
performed services considered a referral (BAD)
 Compensation arrangements that factor in anticipated
referrals implicate the Stark “volume or value”
standard (BAD)
See US ex rel Drakeford v. Tuomey, 675 F.3d 394 (4th Cir. 2012)
Akerman | 13

14. F&A Activity: Recent Cases
Halifax: What happened
6 Physicians
678 Bed Hospital
The Problem:
Physician bonuses based on % of operating margin
Operating margin varied with the volume and value of
referrals
See United States ex rel. Baklid-Kunz v. Halifax Med. Ctr., Order, no. 6:09–
cv–1002–Orl–31DaB, 2012 wL 921147, at *1, *3 (M.D. Fla. Mar. 29, 2012).
Akerman | 14

15. F&A Activity: Recent Cases
Halifax: Why the case is significant - Medicaid
New Theory:
Halifax caused the Florida Medicaid Program to submit
false claims to the federal government (in violation of the
False Claims Act)
The FCA is used as a door into Stark.
Therefore Halifax caused a Stark violation.
Akerman | 15

16. F&A Activity: New OIG
Guidance Suspect Under AKS
PODS – Inherently
What is a POD?
 Any physician-owned entity
 that derives revenue from selling, or arranging the
sale of, implantable medical devices
 including a physician owned entity that designs or
manufactures its own medical devices or
instrumentation.
Akerman | 16

17. F&A Activity: New OIG
Guidance
PODS – Concerns
(1) corruption of medical judgment;
(2) overutilization;
(3) increased costs to federal health care programs and
beneficiaries; and
(4) unfair competition.
See “Surgeons Eyed Over Deals with Medical-Device Makers” WSJ
7/25/13
http://online.wsj.com/news/articles/SB100014241278873242634045786159
71483271856
See Also, Special Fraud Alert: Physician-Owned Entities, OIG,
http://oig.hhs.gov/fraud/docs/alertsandbulletins/2013/POD_Special_Fraud_
Alert.pdf
Akerman | 17

18. F&A Activity: New OIG
Guidance Bulletin on Effect of Exclusion
Special Advisory
 NO payments by federal programs
 for items and services
 furnished/directed/prescribed by excluded individual
(“EI”)
Providers face civil money penalties (BAD)
https://oig.hhs.gov/exclusions/files/sab-05092013.pdf
See https://oig.hhs.gov/exclusions/index.asp
Akerman | 18

19. F&A Activity: New OIG
Guidance Bulletin on Effect of Exclusion
Special Advisory
Scope Broadened
 No EIs in executive or leadership roles
 EIs cannot perform individually unbillable support
functions either, including preparation of surgical
trays, ambulances dispatching, etc.
 Good rule of thumb, check the exclusions database
for every employee, every time.
https://oig.hhs.gov/exclusions/exclusions_list.asp
Akerman | 19

20. Reading the Radar:
The 2014 OIG Work Plan

21. What is the Workplan?

Describes the OIG’s new and ongoing audit and
enforcement priorities for the upcoming year

Helps you identify corporate compliance risk areas

Helps focus your annual compliance goals, audits, etc.
http://oig.hhs.gov/reports-and-publications/archives/workplan/2014/Work-Plan2014.pdf
Akerman | 21

22. Goals for 2014
 Ensure Payment Accuracy
 Enhance Eligibility Controls
 Provide Contracting Oversight
 Address Privacy and Security Issues
 Minimize Fraud, Waste and Abuse
 Increase Quality, Safety and Value
 Secure the future of DHHS
Akerman | 22

23. Workplan: New Items
Hospital Topics that affect Physicians
Two Midnight Rule (New) - physicians are
instructed to admit patients for inpatient care
when those patients are expected to require
care that crosses at least two midnights
Defective Medical Devices (New) - OIG will
review Medicare claims to identify the costs
resulting from additional utilization of medical
services due to defective medical device
Akerman | 23

24. Workplan:
Hospital Topics that affect Physicians
Provider Based Facility Billing - Provider-based status
allows a subordinate facility to bill as part of the main
provider. Provider-based status can result in additional
Medicare payments for services furnished at providerbased facilities and may increase beneficiaries’
coinsurance liabilities.
Provider Based Clinic Billing – OIG will review and
compare Medicare payments for physician office visits in
provider-based clinics and free-standing clinics to
determine the difference in payments made to the clinics
for similar procedures.
Akerman | 24

25. Workplan:
Hospital Topics that affect Physicians
Analysis of salaries included in hospital cost
reports- OIG will review data from Medicare cost reports
and hospitals to identify salary amounts included in
operating costs reported to and reimbursed by Medicare.
Hospital Privileging – OIG will examine how hospitals
assess medical staff candidates prior to granting initial
privileges, including verification of credentials and review
of the National Practitioner Databank.
Inpatient Rehabilitation Facilities – Adverse Incident
Focus
Akerman | 25

26. Workplan:
Medical Equipment: Items that affect Physicians
DME: Folding walkers, transcutaneous electrical nerve
stimulators (TENS), and Power Mobility Devices.
Lower Limb Prosthetics – OIG will review Medicare
Part B payments for claims submitted by medical
equipment suppliers for lower limb prosthetics to
determine whether the requirements of CMS’s Benefits
Policy Manual, Pub. No. 100-02, ch. 15, § 120, were
met.
Akerman | 26

27. Workplan:
Ambulatory surgical centers (ASCs)
OIG will review the appropriateness of Medicare’s
methodology for setting ASC payment rates under the
revised payment system.
OIG will also determine whether a payment disparity
exists between the ASC and hospital outpatient
department payment rates for similar surgical
procedures provided in both settings.
Akerman | 27

28. Workplan:
Related Practices
Anesthesia Service - OIG will review Medicare Part B
claims for personally performed (“AA” modifier)
anesthesia services for proper billing.
Chiropractors – There is increased chiropractic billing
practices. Specific areas of concern relate to manual
manipulation to correct subluxation and maintenance
therapy (which is not covered under Medicare)
Outpatient physical therapy – focus is on independent
therapists who have a high utilization rate for outpatient
physical therapy services
Akerman | 28

29. Workplan:
Diagnostic Testing
―High-Cost Diagnostic Radiology Tests” (inferred
MRIs, CTs, PETs, etc.) reviews will focus on medical
necessity and increased utilization.
Electrodiagnostic Testing– Needle electromyographs
and the nerve conduction studies are under the
microscope to evaluate if utilization rates differ by
provider specialty (uh, physiatry maybe?), diagnosis,
and geographic area
Akerman | 29

30. Workplan:
Diagnostic Testing
Imaging Services – Payments for practice expenses
are being reviewed for reasonableness.
Portable X-ray Equipment – OIG will review
transportation and set up costs, qualifications of the
technologists who performed the services, and ordering
practitioner
Akerman | 30

31. Workplan:
Physicians
The Mainstay: E/M Services – Medicare contractors
have noted an increased frequency of medical records
with identical documentation across services.
(Ahem… Betsy)
Noncompliance with assignment rules and
excessive billing of beneficiaries
Physicians—Place-of-service coding errors – OIG
will review physicians’ coding on Medicare Part B claims
for services
Idle Physician Review - CMS may deactivate
physicians’ billing privileges if they do not submit claims
for 12 consecutive months.
Akerman | 31

32. Workplan:
Errata:
Provider Eligibility. OIG will review providers and
suppliers that received Medicare payments after CMS
referred them to the Department of the Treasury for
failing to return overpayments
Secondary Payor Review. General Review
Medicaid Credit Balances - We will review providers’
patient accounts to determine whether there are
Medicaid overpayments in accounts with credit
balances. (Reverse False Claims Act)
Medicaid NCCI – OIG will review selected States’
implementation of the NCCI edits for Medicaid claims.
Akerman | 32

33. Mid-level Providers/
Non-physician Practitioners

34. NPPs: Basics
What You Care About
State Statutes
Legislative History (look at Staff Analysis)
State Administrative Code (Agency Rules)
Agency Declaratory Opinions/Statements
Agency Administrative Orders or ALJ Rulings
Medicare / Medicaid Reimbursement Manuals
State Case Law
Federal Case Law
Akerman | 34

35. NPPs: Basics
NPP Practice is primarily governed by each
individual state’s scope of practice restrictions.
PAs:
http://www.aapa.org/the_pa_profession/federal_and_
state_affairs/resources/item.aspx?id=755
Akerman | 35

36. NPPs: Basics
NPs:
http://www.aanp.org/component/content/article/66legislation-regulation/state-practiceenvironment/1380-state-practice-by-type
Akerman | 36

37. NPPs: PA Services
Medicare Eligibility - PA must have:

Graduated from an accredited Commission on
Accreditation of Allied Health Education Programs

Passed the National Commission on Certification of
Physician Assistants national certification examination
that

Possess state licensure
Akerman | 37

38. NPPs: PA Services
Medicare Coverage - Svcs:

Would be “Phy Svcs” if rendered by MD/DO

Performed under general supervision of Phy



Supervising Phy must be immediately available
Not physically present (unless state law)
Svcs not otherwise excluded from coverage (by
statute)
Akerman | 38

39. NPPs: PA Services
Billing - PA must have:

PA must have own NPI

Cannot collect direct from Medicare (contra NP)

Svcs billed by PA’s employer using PA NPI

PA can own interest in employer/practice

PA can be officer of employer/practice

PAs may not organize/incorporate to bill direct

Leasing Agency/Staffing Agency not qualified
employer
Akerman | 39

40. NPPs: PA Services
Payment –

Claims are made on an assignment basis

to a qualified W-2 employer;

as a 1099 independent contractor
 Claims are paid the lesser of :
 80% of the actual charge OR
 85% of the physician Medicare fee schedule
 Assistant at Surgery (More than ancillary services)
 13.6% of amount paid to physician
Akerman | 40

41. NPPs: NP Services
Medicare Coverage - Svcs:

Performed in collaboration with Phy (protocols?)



Within scope of professional expertise
direction & supervision provided
Physician does not need to be present**

**Subject to state law
Akerman | 41

42. NPPs: NP Services
Medicare Eligibility - NP must :

Be a registered professional nurse

Possess state licensure
AND Satisfy (1) of the following: Obtained Care Privileges

After 1/1/03



Certified as a NP by National Certifying Body +
Master or Doctor of Nursing
Before 1/1/03


Certified as a NP by National Certifying Body
Before 1/1/01
Akerman | 42

43. NPPs: NP Services
Billing - NP must have:

NP must have own NPI

Can collect direct from Medicare (contra PA)

Svcs billed by NP or NP’s employer using NP NP
Akerman | 43

44. NPPs: NP Services
Payment –
 Claims are paid the lesser of :
 80% of the actual charge OR
 85% of the physician Medicare fee schedule
 When services furnished to hospital
inpatients/outpatient are billed NP direct, they are
unbundled and made direct to the NP
 Assistant at Surgery (More than ancillary services)
 13.6% of amount paid to physician
Akerman | 44

45. DOS AND DON’TS
OF DEAL MAKING
Keeping your healthcare
transaction healthy
Joseph W.N. Rugg
28214455.pptx

46. What do we mean by “Deals”?
Deals can take place in many ways and in many
forms, from the simple and routine to the complex.

Lease of rental space or equipment

Employment and independent contractor arrangements

Removing or adding a partner in a medical practice

Selling, buying, or merging a medical practice

Managing a medical practice

Serving as a medical director of a outpatient clinic,
hospital department, lab, surgery center, etc.
Akerman | 46

47. What do we mean by “Deals”?
(cont.)

Selling or buying supplies, equipment, software, etc.

Marketing healthcare services

Borrowing or lending money

Joint venturing to perform medical services or own a
medical facility
Akerman | 47

48. Increased Deal Making in Healthcare
Physicians are being pushed more and more to
explore and enter into different types of transactions
in order to respond and survive:

Declining physician incomes, reduced reimbursement
and other payment reforms (e.g., bundled payments,
performance-based payments)

Need to add revenue sources

Increased overhead (including purchasing and/or
replacing EHR systems and malpractice insurance
costs)
Akerman | 48

49. Increased Deal Making in Healthcare
(cont.)

Need for improved practice management

Need to recruit quality physicians and NPPs

Need to develop exit strategy and practice transition
(succession planning)
Akerman | 49

50. Future of Orthopaedics
Question from Becker’s Hospital Review: Is it possible for
orthopedic surgeons to stay in a solo or small group
practice these days?
Nicholas Janiga, Manager at HealthCare Appraisers :
Given the regulatory environment and significant level of
fixed costs necessary to run a physician practice. A small
practice is very uncommon these days. They must
implement electronic health records, have the appropriate
staffing levels, consider the cost of in-office diagnostic
imaging, etc. All of those expenses involve significant
economies of scale, likely leading the solo physician to join
a larger independent physician practice or seek hospital
employment.
(Similar concerns were discussed at the 2012 Fall Meeting of the AAOS Board
of Councilors.)
Akerman | 50

51. 10 Recent Deals in Orthopaedics
 Cleveland Clinic, The CORE Institute, OrthoCarolina, and Rothman
Institute (Ohio 2013) formed the clinically integrated Orthopedic PHO.
 Evangelical Community Hospital (Pennsylvania 2013) acquired SUN
Orthopaedic Group, Inc., the region’s premier bone and joint
specialists.
 Mercy Health (Ohio 2013) added 18 orthopaedic and sports medicine
physicians to its team.
 The Cardinal Orthopaedic Institute and Ohio Orthopedic Center of
Excellence (Ohio 2013) merged their physician practices.
 Appalachian Orthopedic Center (Pennsylvania 2014) merged its
practice with the Orthopedic Institute of Pennsylvania.
Akerman | 51

52. 10 Recent Deals in Orthopaedics
 Danbury Orthopedics (Connecticut 2013) merged with New Milford
Orthopedic Associates.
 Pennsylvania Orthopaedic Center (Pennsylvania 2013) merged with
Premier Orthopaedic and Sports Medicine Associates.
 Nebraska Orthopaedic Associates (Nebraska 2014) merged with
OrthoWest Orthopaedic & Sports Medicine Specialists.
 Centers for Advanced Orthopaedics (Virginia, D.C., Maryland,
Pennsylvania 2013) resulted from the combination of 25 independent
practices.
 Regent Surgical Health (Colorado 2013) entered into an ASC joint
venture partnership with the physician partners of Loveland Surgery
Center.
Akerman | 52

53. OIG’s Interest in Healthcare Deals
Akerman | 53

54. OIG Roadmap – Medical Directorships
Two orthopaedic surgeons had medical directorships with
a company that operated a diagnostic imaging center, a
rehabilitation facility, and an ambulatory surgery center.
Under their medical directorship agreements, the
company provided the physicians with valuable
compensation, including free use of the corporate jet,,
which required the physicians to render limited services in
return. The agreements with the physicians called for
redundant or unnecessary services and served to
encourage the physicians to refer their patients to the
facilities operated by the company.
The physicians paid $450,000 and $250,000 to settle
the cases.
Akerman | 54

55. OIG Roadmap – Consulting Fees
Four orthopaedic device manufacturers paid $311 million
to settle kickback and false claims allegations that the
companies bribed surgeons to recommend their hip and
knee surgical implant products. The companies awarded
physicians with vacations, gifts, and annual “consulting
fees” as high as $200,000 in return for the physicians’
endorsements of their implants or use of them in
operations.
Many of the individual orthopaedic surgeons at the
receiving end of the kickbacks became the subject of
ongoing investigations by the Government. One
orthopedic surgeon recently paid $650,000 to resolve
allegations that the physician accepted payments from
device manufacturers to use their hip and knee
implants.
Akerman | 55

56. Doing Deals with Hospitals
Types of physician-hospital deals:
 Hospital acquisition of practice and employment of the
physicians by hospital or hospital-controlled entity
 Employment without practice acquisition
 Co-management, specialty service, and medical director
engagements with hospitals, pursuant to which
physicians remain independent
 Formation of a physician-hospital ACO or other network,
pursuant to which physicians remain independent
 Joint venture arrangements (e.g., ASC development)
Akerman | 56

57. Doing Deals with Other Physicians
Types of physician-physician deals:
 Acquisition/merger of practices (single and multi-
specialty)
 Employment without practice acquisition
 Joint venture arrangements for specialized services
(e.g., ASCs, IDTFs, real estate)
 Formation of a physician-based ACO or other types of
provider networks
Akerman | 57

58. Doing Deals with Other Third Parties
Types of physician-third party deals:
 Sale of all or part or practice with management
arrangement (e.g., PPM companies, cath lab
development)
 Investment/partnership in ancillary or specialty health
services (e.g., DME, compounding pharmacy, MSOs,
ALFs, urgent care centers)
 Consulting and Medical Director relationships
 Other business opportunities (e.g., medical property real
estate development, employee leasing, joint branding of
products)
Akerman | 58

59. Healthcare Laws Affecting Deals
 Anti-Kickback Statute
 Physician Self-Referral/Stark Statute
 Antitrust Laws
 Income Tax Laws
*
Always look to see whether there are similar state laws.
Akerman | 59

60. Deal Related Compliance Issues
Anti-Kickback Statute
 Must make the analysis if money or other consideration is
changing hands and patient referrals are involved that are
reimbursed by Medicare, Medicaid, or other specified
state of federal programs.
 Applies to both sides of a transaction.
 OIG Fraud Alerts and Advisory Opinions
 Safe Harbors (e.g., investment, compensation, leases)
 Examples of possible kickback violations:




Renting unneeded space from a referral source or paying a greater than
FMV rent
Paying a marketing person a percentage of business generated
Allowing a referral source to invest in a deal at a discount or providing
financing
Entering into a joint venture or other contractual arrangement in order to
provide new services that result in sharing revenues generated by one’s
referrals
Akerman | 60

61. Deal Related Compliance Issues
Stark Law
Must make the analysis if money or other consideration is
changing hands and patient referrals are involved that are
reimbursed by Medicare, Medicaid, or other specified state
or federal programs.
 Applies to the physician and the DHS entity.
 Exceptions (group practice, employment and lease
agreements, recruitment, isolated transactions, etc.)
 Examples of possible Stark violations:





A referring physician’s spouse having an ownership interest in a DHS
entity.
Hospital renting space to a referring physician at a discount.
Intra-medical group referrals when physicians do not constitute a group
Hospital reimbursing too much for recruiting new physician
Paying for purchased practice over time
Akerman | 61

62. Deal Related Compliance Issues
Antitrust Laws
 Must make the analysis if physicians and/or other
healthcare providers enter into a transaction that may
have the effect of reducing (or threatening to reduce)
competition.
 Applies to everyone involved in the deal.
 FTC/DOJ Statements of Enforcement Policy and
Analytical Principles Relating to Healthcare
 “Per se” and “rule of reason” analysis
 Safety Zones Exceptions (clinically integrated and
financial risk sharing networks)
Akerman | 62

63. Deal Related Compliance Issues
Antitrust Laws (Cont.)
 Examples of possible antitrust violations:

IPA members sharing price info and/or negotiating reimbursement
directly.

Networks having more than 20%/30% of specialists for a given market

Physicians unionizing
Akerman | 63

64. Deal Related Compliance Issues
Income Tax Laws
 Must make the analysis if one of the parties to a
transaction is a tax exempt entity and a non-tax exempt
person is being paid or otherwise benefits from the tax
exempt entity. Avoid inurement to private individuals.
 Applies to the tax exempt entity (typically a hospital)
 Revenue Ruling 98-15; Tax Exempt Audit Guidelines
 Examples of possible violations:

Purchases a physician practice or pays to recruit new physician.

Enters into joint venture with for-profit entity to operate an ASC.

Enters into an exclusive provider agreement to manage a hospital’s
department with a term greater than three years.

Enters into arrangement with a for-profit entity to do a business venture
unrelated to healthcare.
Akerman | 64

65. Deal Related Compliance Issues
State Laws
 Must always make the analysis.
 Applies to all parties.
 Examples of possible state law issues/violations:

Failure to meet change of ownership, CON, or other licensing
requirements.

Engaging in the corporate practice of medicine.

Fee splitting.

Patient self-referral, kickback, restraint of trade requirements.

Tax exempt requirements.

Professional practice statutes and regulations.
Akerman | 65

66. Rules of Thumb for Healthcare Deals
RULE #1: Just because a proposed deal makes sense
and would be appropriate in a business other than
healthcare, doesn’t mean it’s legal. (Corollary -- Just
because everyone is doing it, doesn’t mean it’s legal.)
RULE #2: Determining the legality of a healthcare deal
can be complicated, time consuming, expensive, and
inconclusive.
RULE #3: The risks of doing an illegal healthcare deal far
outweigh the benefits.
RULE #4: Get professional help early in the deal.
Akerman | 66

67. Steps in Doing a Deal (Correctly)
Step 1 – Describe and Understand the Deal
 Why?
 What is it that is hoped to be accomplished?
 Why is that a good outcome?
 Does it make sense? I.e., is it commercially reasonable?
 Is the deal more than just about referrals and money?
 What happens if a regulator “follows the money”?
 How will the deal affect others – patients, employees,
physicians, competitors, the community, etc.?
 What are the tax effects?
Akerman | 67

68. Steps in Doing a Deal (Correctly)
Step 1 – Describe and Understand the Deal
(continued)
Engage legal, accounting, valuation, and other
professional consultants early in the process to review the
proposed deal.
Akerman | 68

69. Steps in Doing a Deal (Correctly)
Step 2 – Identify the parties to the deal
 Who is involved (medical professionals, background)?
 Why are they involved?
 What do they bring to the deal?
 When did they get involved?
 Who got them involved?
 What does each party hope to achieve?
 Are the goals reasonable?
 Are the goals legal and ethical?
Akerman | 69

70. Steps in Doing a Deal (Correctly)
Step 3 – Identify the governmental agencies that have
authority over the deal
 Are there any notices or approvals required?
 What are the licensing requirements?
 Will a change in control occur?
 Is a new provider application/number needed?
 Is a CON needed? An inspection?
 What effects will the deal have on any accreditation
needed by the parties?
 What is the timing of agency requirements vs. closing
the deal?
Akerman | 70

71. Steps in Doing a Deal (Correctly)
Step 4 – Identify the third party payors that will be
involved
 Are the services to be performed as a result of the deal
reimbursed by Medicare?
 Medicaid?
 Other federal or state programs?
 Commercial payors?
 What credentialing/provider applications are needed?
 Do any payors have special requirements that must be
satisfied before closing the deal?
Akerman | 71

72. Steps in Doing a Deal (Correctly)
Step 5 – Identify the due diligence requirements
Remember that a healthcare deal starts like any other
deal, and the parties must do their basic due diligence
about each other
 Entity organization and ownership
 Legal authority
 Financial statements, assets and liabilities, liens
 Contracts and commitments, leases
 Employees and benefit plans
 Taxes
 Insurance
 Litigation
Akerman | 72

73. Steps in Doing a Deal (Correctly)
Step 6 – Identify the healthcare due diligence
requirements
 What other items items of due diligence are required by
the applicable healthcare laws and regulations?
 Licenses and requirements applying to transaction
 Equipment and inventories
 Cost reports, inspections, regulatory correspondence
 Quality of care, malpractice claims/insurance
 Patients records, EHR compatibility, billing software
 Managed care/provider agreements, liability, assignability
 Subcontractors/suppliers
Akerman | 73

74. Steps in Doing a Deal (Correctly)
Step 6 – Identify the healthcare due diligence
requirements (continued)
 Fair market value
 Commercial reasonableness
These are the critical underpinnings of every healthcare
deal. What is being given, what is being received, and is it
commercially reasonable?
Get an opinion from a qualified healthcare valuation expert
to support the FMV.
Akerman | 74

75. Steps in Doing a Deal (Correctly)
Step 7 – Document the Deal
 Documentation is a critical step in protecting the parties,
achieving the goals of the deal, and meeting compliance
requirements.
 Should the parties enter into a nonbinding letter of
intent/memorandum of understanding?
 Pros – helps the parties determine whether there has been a
meeting of the minds prior to devoting substantial time and
expense and helps manage expectations and reduce surprises.
 Cons – can consume an inordinate amount of time prior to due
diligence being completed and lock the parties into unrealistic
positions.
Akerman | 75

76. How to Screw up the Deal
There are many ways to screw up a deal. Here are just a few:
 Not putting together the right team
 Not understanding the emotional buy-in necessary
 Not getting the critical deal breakers on the table
 Letting the wrong people dominate the discussions
 Being a hog
 Never stop negotiating
 Not getting the right advisors involved early enough
 Changing the deal without discussing the change first
 Not managing expectations
 Failing to disclose important facts in due diligence
Akerman | 76

77. How to Screw up the Deal
 Not paying attention to the letter of intent
 Relying on others to deal with the details
 Not having the right people involved in the due diligence process
 Not keeping your team informed
 Not listening
 Not talking to critical third parties until too late
 Over committing and establishing unreasonable deadlines
 Not evaluating the tax effects
 Not understanding the compliance requirements or ignoring them
Akerman | 77

78. WHY DO I NEED
A COMPLIANCE
PLAN?
ELIZABETH F. HODGE
28214455.pptx

79. Why do I need a compliance plan?
ANSWER:

It’s the right thing to do.

The Federal Sentencing Guidelines provide for reduced penalties
for medical practices with “an effective program to prevent and
detect violations of law.”

The Patient Protection and Affordable Care Act requires physicians
who treat Medicare and Medicaid patients to establish a
compliance program (2010).
Akerman | 79

80. Fraud, Waste and Abuse
 Fraud
 Waste
includes the obtaining of something of value
through intentional misrepresentation or
concealment of material facts
includes the incurring of unnecessary costs
as a result of deficient management,
practices, systems, or controls
 Abuse
includes any practice that is not consistent
with the goals of providing patients with
services that (1) are medically necessary, (2)
meet professionally recognized standards,
and (3) are fairly priced
Akerman | 80

81. Federal Fraud and Abuse Laws
 The False Claims Act
 The Anti-Kickback Statute
 The Physician Self-Referral Statute (“Stark”)
 The Exclusion Authorities
 The Civil Monetary Penalties Law
*
But don’t forget about similar state laws.
Akerman | 81

82. 7 Components of an Effective Compliance
Program
1. Conduct internal auditing and monitoring.
2. Implement compliance and practice
standards.
3. Designate a compliance officer or contact.
4. Conduct appropriate training and education.
Akerman | 82

83. 7 Components of an Effective Compliance
Program
5. Respond appropriately to detected offenses
and develop corrective action.
6. Develop open lines of communication.
7. Enforce disciplinary standards through well-
publicized guidelines.
Akerman | 83

84. OIG Compliance Program for Small Group
Practices
 Issued in 2000 but still relevant today
 Step by step approach to implementing voluntary
compliance plan
65 Federal Register 59434 (Oct. 5, 2000)
http://org-hhs.gov/authorities/docs/physician.pdf
Akerman | 84

85. Auditing and Monitoring
 Periodically review practice’s standards and
procedures.
 Claims submission audit to review bills and medical
records for compliance with coding, billing, band
documentation requirements.
o baseline audit with periodic audits thereafter
 Appropriately respond if audit identifies issue
Akerman | 85

86. Establish Practice Standards and
Procedures Risk Areas
Identify Specific
 coding and billing
 reasonable and necessary services
 documentation
 improper inducements, kickbacks and self-
referrals
Retention of Records
 look to Medicare requirements
 look to state law
Akerman | 86

87. Designation of a Compliance Officer/Contact(s)
 In-house Compliance officer
 In-house compliance contacts
 Outsource compliance function
Akerman | 87

88. Conducting Appropriate Training and Education
1.
Compliance Training
2.
Coding and Billing Training
3.
Format of Training
4.
Continuing Education
Akerman | 88

89. Responding to Detected Offenses and Developing
Corrective Action Initiatives
 Establish monitors and warning indicators
 Include steps for prompt referral or disclosure to
appropriate Government authority or law enforcement
agency – AFTER consulting your lawyer
 Full internal assessment of all reports of detected
violations
 Provisions to ensure that violation is not compounded
once discovered
 Periodically review and modify compliance program
Akerman | 89

90. Developing Open Lines of Communication
 Prevent and Discuss - why did problem happen?
 Implement clear “open door” policy between
physicians, compliance personal and employees
 Use less formal communication techniques:
• Conspicuous notice in common areas
• Compliance bulletin board where everyone in
practice can receive up-to-date compliance
information
• Post HHS-OIG Hotline telephone # (1-800-HHS- -
TIPS)
 No retribution against those reporting erroneous or
fraudulent conduct
Akerman | 90

91. Enforcement Through Well-Publicized Guidelines
 Incorporate measures to ensure that practice employees
understand the consequences for non-compliant
behavior
• enforcement and discipline procedures for violations
• add credibility and integrity to compliance program
 Consistent and appropriate sanctions, including
termination
 Flexibility for mitigating or aggravating circumstances
 Include disciplinary guidelines in in-house training
 Remember the List of Excluded Individuals and Entities
(LEIE)
Akerman | 91

92. Enforcement Through Well-Publicized Guidelines
Excellent Resources:
CMS Roadmap booklet, roadmap powerpoint and roadmap speaker notes
http://oig.hhs.gov/compliance/physician-education/index.asp
Compliance Plan Guidance for Small Group Practices:
http://oig.hhs.gov/compliance/compliance-guidance/index.asp
Akerman | 92

93. Hot Right Now…
Americans with Disabilities Act
HIPAA
Electronic Health Records

94. Americans with Disabilities Act
 Requires access to medical care services and
the facilities where the services are provided
 Medical offices and private hospitals are
covered as places of public accommodation
 Public hospitals and clinics and medical
offices operated by state and local
governments are covered as programs of
public entities
Akerman | 94

95. Americans with Disabilities Act
(ADA) may not discriminate on the basis of
 Providers
disability in the full and equal enjoyment
goods, services, facilities, privileges,
advantages and accommodations
 Discrimination includes failing to take
necessary steps to prevent exclusion, denied
services, segregation, or varied treatment of
disabled persons due to the absence of
auxiliary aids and required services
Akerman | 95

96. Barner-Free Health Care
 Stepped up ADA enforcement
Initiative
 Government agencies pursuing providers who:
• fail to provide adequate services or access to
persons with disabilities – especially those who are
deaf/hard of hearing and those with HIV/AIDS
• Fail to provide adequate services to those who are
not proficient in the English language
http://www.ada.gov/usao-agreements.htm
Akerman | 96

97. Settlements Under Barner-Free Health Care
Initiative
 Twenty-one settlements since 2012
• Nine involve physician practices
• Other settlements involve hospitals, skilled nursing
facilities, pharmacies, alcohol treatment program
 April 5, 2013 settlement with orthopedic practice over
failure to provide auxiliary aids and services, including
sign language interpreters
• agreement not to discriminate against persons with
disabilities
• provide persons who are deaf with auxiliary aids
and services, including sign language interpreters,
where necessary to ensure effective
communication free of charge to patient
Akerman | 97

98. Settlements Under Barner-Free Health Care
Initiative
 April 5, 2013 settlement …
• establish list of qualified sign language
interpreters
• conduct training for all employees
• keep log of all request for auxiliary
aids and services
• post notice that auxiliary aids and
services are available
• pay $15,000 damages
Akerman | 98

99. HIPAA

100. WHY SHOULD I CARE ABOUT
HIPAA? civil penalties under Omnibus Rule
1. Increased
• minimum $100/violation if did not know
• maximum $50,000/violation
• annual cap of $1.5 million for identical violations
2. Reputational harm
• HHS office for Civil Rights (“OCR”) Wall of Shame
• media exposure
Akerman | 100

101. WHY SHOULD I CARE ABOUT
HIPAA?
3. Cost to investigate, mitigate damages, provide notice
• recent Ponemon Institute calculated that a breach
costs healthcare providers $233 per lost record
4. Increased enforcement activity by HHS Office for Civil
Rights, State Attorneys General, and the Federal Trade
Commission
5. Potential lawsuits over failing to protect PHI
Akerman | 101

102. HIPAA ENFORCEMENT
 Dermatology Practice - $150,000 Settlement,
Corrective Action Plan
• OCR investigated following theft of
unencrypted thumb drive containing e-PHI
of 2,200 patients
• No Security Rule Risk Assessment, no
policies and procedures in place to address
breach notification
Akerman | 102

103. HIPAA ENFORCEMENT
 Pathology Practices - $140,000 Settlement
• Massachusetts Attorney General fine due to
improper disposal of paper medical records
of 67,000 residents
• Failed to have appropriate safeguards in
place to protect PHI provided to Business
Associate; no BAA
Akerman | 103

104. HIPAA ENFORCEMENT
 Eye and Ear Practice: $1.5 million settlement;
Corrective Action Plan
• OCR investigated following theft of
unencrypted personal laptop containing ePHI of patients and research subjects
• No Security Rule Risk Assessment; failure
to implement security measures to ensure
confidentiality of e-PHI; failure to implement
policies and procedures
Akerman | 104

105. HIPAA ENFORCEMENT
 Cardiology Practice: $100,000 Settlement;
Corrective Action Plan
• OCR investigated after report that practice
was posting clinical and surgical
appointments on publicly accessible
Internet-based calendar
• No Security Rule Risk Assessment; failure
to implement policies and procedures;
failure to conduct and document employee
training; failure to identify security officer;
failure to obtain business associate
agreements
Akerman | 105

106. Phoenix Cardiac Surgery, P.C.

Physician practice agreed to pay $100,000 and take corrective
action
• owned by 2 physicians (not limited to the big guys)

Physician practice was posting clinical and surgical appointments
for patients on an Internet-based calendar that was publicly
accessible

Office for Civil Rights (OCR) found practice had implemented few
policies and procedures to comply with HIPAA Privacy and
Security Rules
•
also found practice had limited safeguards in place to protect
patients’ e-PHI
•
did not have Security Officer
•
did not train employees
•
did not have Business Associate Agreements in place
Akerman | 106

107. Phoenix Cardiac Surgery, PC. – Corrective Action Plan
 Develop, maintain and revise written policies and
procedures that are consistent with HIPAA Privacy and
Security Rules
 Provide the policies and procedures to OCR for review
and make any recommended changes within 30 days
 Implement policies and procedures within 30 days of
OCR approval
 Distribute policies to all workforce members and obtain
written certification from every employee
 Assess, update, and revise, as necessary, the policies
and procedures at least annually
Akerman | 107

108. Phoenix Cardiac Surgery, P.C. – Corrective Action Plan
New Policies and procedures must include:
 an accurate and thorough risk assessment of potential risks and
vulnerabilities to the confidentiality, integrity, and availability of electronic
PHI
 risk management plan that implements security measures sufficient to
reduce risks and vulnerabilities to electronic PHI to a reasonable and
appropriate level
 identification of security official
 satisfactory assurances that each business associate that receives,
transmits, maintains or stores PHI will appropriately safeguard e-PHI
 technical safeguards to limit access to those with access rights
 encryption or other adequate safeguard for e-PHI being transmitted to or
from portable device
 training of workforce members
Akerman | 108

109. HIPAA RESOURCES
http://www.hhs.gov/ocr/privacy/
http://www.hhs.gov/ocr/privacy/hipaa/enforcement/examples/index.html
(information on settlements)
http://www.hhs.gov/ocr/privacy/hipaa/understanding/training/index.html
(training materials)
http://www.hhs.gov/ocr/privacy/hipaa/administrtive/breachnotificationrule/breachtool.html
(the “Wall of Shame”)
Akerman | 109

110. HIPAA Compliance Takeaways
1.
Conduct Security Rule Risk Assessment

identify where e-PHI lives and potential exposures/threats
2.
Implement risk management policies and procedures based on risk
assessment
3.
Repeat #1 and #2 at least annually
4.
Develop plan to respond to breach before breach occurs
5.
Encrypt e-PHI whenever possible
6.
Control use of portable devices
7.
Read new HIPAA resolution agreements to learn what OCR is requiring
in Corrective Action Plan
Akerman | 110

111. Electronic Health
Records

112. Electronic Health Records
Audits to determine compliance with attestation for
incentive payments:
• current Medicare and Medicaid incentive payments
being audited
• repayment of incentive payments
In 2014, HHS OIG will audit covered entities receiving
EHR incentive payments and their business associates to
determine whether they adequately protect e-PHI created
or maintained by certified EHR technology
• audit will include cloud service providers and other
downstream service providers
Akerman | 112

113. Electronic Health Records
 Audits to determine compliance with attestation for
incentive payments
• Medicare and Medicaid incentive payments being
audited
• repayment of incentive payments
• denial or incentive payment if pre-payment review
 Increased focus on documentation issues with EHRs
• OIG is investigating the increased frequency of
medical records with identical documentation across
services (2014 OIG Workplan)
• concern with upcoding as a result of use of EHRs
• CMS may issue guidance on use of copy-paste
function
Akerman | 113

114. EHR Documentation
Two recent reports by OIG highlight potential issues with
EHR documentation that could make it easier to commit
fraud:
1. Copy-pasting (cloning)
• inaccurate information may enter patient record
• inappropriate charges may be billed
• need to review information each time to be sure it is
current and correct
Akerman | 114

115. EHR Documentation
Two recent OIG reports…
2. Over documentation
• inserting false or irrelevant documentation to create
appearance of support for billing higher level
services
• beware of “auto-populate”
Akerman | 115

116. Steps to Prepare for EHR Incentive Payment
Audit
 Take screen shots to document compliance on
the date of attestation
 Maintain screen shots for at least 6 years
 Complete the EHR Technology and Security
Plan for Safeguarding Technology and Patient
Information
 Work with compliance counsel to have
compliance program pre-audited
Akerman | 116