News and Insights
Visit regularly for up-to-date information on relevant news, firm announcements and additions to our AZ Health Law Blog.
The use of electronic health records (EHRs) by physicians, hospitals, and other providers has dramatically increased in recent years. The federal government reports that 78% of office-based physicians are now using some type of EHR, up from only 18% in 2001. Additionally, while only 9% of hospitals had adopted EHRs in 2008, more than 80% are now meaningfully using the technology.
 Hsiao CJ, Hing E. ”Use and characteristics of electronic health record systems among office-based practices: United States, 2001-2013.” NCHS data brief, no 143. Hyattsville, MD: National Center for Health Statistics. 2014.
 Press Release, United States Department of Health & Human Services, “Doctors and hospitals’ use of health IT more than doubles since 2012.” (May 22, 2013).
by Emily D. Armstrong
Are you or providers sending patient information via text? Are you or providers communicating about patients via text? If the answer to either of these questions is “yes,” beware this could result in fines and legal violations.
The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) is a Federal law that addresses, in part, the security and privacy of health data. The law requires the Department of Health and Human Services (“HHS”) to establish rules for the handling of protected health information (“PHI”).
 42 U.S.C. § 1320d et seq.
By Ken Briggs, originally published by American Health Lawyers Association, Fraud and Abuse Practice Group (April 18, 2013)
On April 17, the U.S. Department of Health & Human Services, Office of Inspector General (OIG) issued an update of the Provider Self-Disclosure Protocol (SDP). This update is in response to OIG’s solicitation of comments issued in June 2012. It is intended to supersede and replace the SDP OIG originally issued in 1998, as well as the Open Letters OIG issued to provide additional guidance on the SDP to the healthcare community.
All individuals or entities subject to OIG’s civil monetary penalty (CMP) authority are eligible to use the SDP to resolve liability arising from the potential violation of federal criminal, civil, or administrative laws for which CMPs are authorized. Conduct for which CMPs are not authorized, e.g., simple overpayments or errors, are not eligible for resolution through the SDP. Importantly, matters involving only potential liability under the Physician Self-Referral (Stark) Law still are not eligible for resolution under the SDP, and should be disclosed to the Centers for Medicare & Medicaid Services under its Self-Referral Disclosure Protocol.
The update clarified the necessary elements of a disclosure:
- The identifying information of the disclosing party, including a description of the organization of the disclosing party;
- A concise statement of all details relevant to the conduct disclosed;
- A statement of the federal laws that are potentially violated by the disclosed conduct;
- The federal healthcare programs affected by the disclosed conduct;
- An estimate of the damages or a certification that the estimate will be completed and submitted to OIG within 90 days of the date of submission;
- A description of the disclosing party’s corrective action upon discovery of the conduct;
- A statement of whether the disclosing party has knowledge that the matter is under current inquiry by a government agency or contractor;
- The name of an individual authorized to enter into a settlement agreement on behalf of the disclosing party; and
- A certification statement.
For disclosures involving false billing, OIG stated that the disclosing party must conduct a review to estimate the improper amount paid by the federal healthcare programs. The damages estimate may be derived from the actual claims submitted or from a sample. Where the disclosing party uses a sample, the sample size must include at least 100 items. The damages report must describe the:
- Review objective;
- Population sources of data;
- Qualifications of personnel that conducted the review; and
- Characteristics measured.
Additional elements are required where the damage estimate was derived from a sample.
For disclosures involving excluded persons, OIG clarified that the disclosing party should describe:
- The identity, job of the excluded individual, and dates of employment;
- The disclosing party’s screening and background check procedures;
- How the conduct was discovered; and
- Any corrective action taken.
Before making the disclosure, the disclosing party must screen all current employees and contractors against OIG’s List of Excluded Individuals and Entities. The SDP provides guidance on how to estimate damages related to excluded individuals.
For disclosures relating to potential liability under both the Anti-Kickback Statute and the Stark Law, OIG reiterated the requirement that the disclosing party clearly acknowledges that the disclosed arrangements constitute potential violations of the laws, as applicable. OIG requests that the disclosing party describe the total amount of remuneration involved without regard to whether a lawful purpose existed for the arrangement. However, the disclosing party may explain why it believes OIG should not consider a portion of the remuneration in determining the settlement amount.
OIG clarified its general practice for calculating settlement amounts, stating it typically requires a minimum multiplier of 1.5 times the single damages, but will determine whether a higher multiplier is appropriate depending on the facts. OIG reiterated that a minimum $50,000 settlement is required for kickback-related disclosures. For other matters accepted into the SDP, OIG requires a minimum $10,000 settlement. In the “unusual instance” where OIG does not find potential liability, it will refer the matter to the appropriate payor for resolution. If a disclosing party is unable to pay the anticipated settlement amount, it should promptly notify OIG so that OIG can review the disclosing party’s financial information to determine an appropriate resolution.
The Office of Inspector General (OIG) released a Special Fraud Alert for physician-owned distributorships, or “PODs,” on March 26, 2013. The alert concerns physician-owned entities that make money by selling implantable devices ordered by physician-owners. These entities remain inherently suspect under the anti-kickback statute.
The OIG reiterated its previous guidance that the opportunity for a referring physician to earn a profit, including through an ownership interest, could constitute remuneration prohibited by the anti-kickback statute. The OIG discussed questionable methods by which PODs select physician-owners and allocate investment interest among the owners, including:
(1) selecting investors because they are in a position to generate substantial business for the entity;
(2) requiring investors who cease practicing in the service area to divest their ownership interests; and
(3) distributing extraordinary returns on investment compared to the level of risk involved.
The OIG is concerned that financial incentives arising out of POD ownership by ordering physicians could lead to corrupted medical judgment, overutilization, increased health care costs, and unfair competition. Specifically, the OIG is concerned about “the presence of such financial incentives in the implantable medical device context because such devices typically are ‘physician preference items.’” These concerns are magnified when (1) there are few physician-owners, suggesting a closer connection between the physician’s referrals and the return on investment, and (2) physician-owners change their medical practice habits shortly before or after obtaining ownership interest in a POD.
The alert describes specific characteristics of PODs, generally relating to how a POD interacts with its physician-owners, that draw increased OIG scrutiny. The extent to which PODs comply with the anti-kickback statute depends on the intent of the parties, which may be evidenced by characteristics such as legal structure and operational safeguards. Actual conduct of investors, management entities, suppliers, and customers during implementation and operation of the POD could evidence intent in violation of the anti-kickback statute.
The guidance issued by the OIG in connection with the ambulatory surgical center safe harbor also applies to PODs in that prior notification to patients of a physician’s interest in the POD will not sufficiently minimize abuse.
The alert reiterates the OIG’s concern about the proliferation of PODs. The OIG clarified that PODs are inherently suspect arrangements, and that hospitals or ambulatory surgical centers that enter into arrangements with PODs may also incur liability under the anti-kickback statute. Parties seeking clarification about whether a POD structure is compliant with the anti-kickback statute are encouraged to obtain an advisory opinion.
The deal approved by Congress and President Obama on January 2, 2013, to avoid the “fiscal cliff” brings temporary relief and permanent grief to physicians.
First, Congress extended the Medicare physician payment rate for a one-year period, which is based upon the program’s Sustainable Growth Rate formula. Had this extension not been granted, Medicare payments to physicians would have been cut by 26.5%. Physician and hospital groups have been calling for the repeal of this formula, arguing that it will lead to a reduced number of providers willing to take on Medicare patients.
The fiscal cliff legislation also delays a pending two percent reduction to physician payment rates and an eight percent reduction to medical education programs for two months, each of which are mandated by the Budget Control Act. Congress is being urged to address these issues as it grapples with the upcoming round of budget measures.
Second, the fiscal cliff legislation also includes a provision, titled “Removing Obstacles to Collection of Overpayments,” that increased the amount of time for which the government may recoup no-fault overpayments to providers from three years to five years. This change comes at the recommendation of the Office of Inspector General, which reported that nearly $500 million of identified nonfraudulent overpayments (e.g., data entry error) could not be recouped from Medicare providers because of the three-year statute of limitation. The extended limitations period means that if the government identifies an overpayment within five years after the payment is made, and the overpayment was not made due to fraud or abuse by the provider, subsequent payments to that provider may be reduced to recoup the overpayment. If the government does suspect that fraud or abuse was involved in the overpayment, then the government has other avenues of recoupment, which are not bound by the five year limitations period.
For more information, see generally the American Taxpayer Relief Act of 2012