Key Lessons Related to Stark Compliant EHR Donation Arrangements

February 26, 2014 By

Is your entity thinking about engaging in a Stark/AKS Compliant EHR Donation Arrangement?  If so, check out this list of top 5 issues to consider as you are assessing your options and your health IT alignment strategy.

1.  An EHR donation arrangement is an effective way for hospitals to align with their physicians.

In the world of health information exchange, having the technological ability to seamlessly communicate with a hospital or referring physician is crucial to effective patient care.  It enables physicians and hospitals alike to efficiently obtain patient information and to exchange this information as needed to ensure quality patient care.

2.  There are specific rules – and significant consequences for breaking those rules.

Be careful not to run afoul of the Stark or Anti-Kickback rules.  Ensure that your contracts are compliant with both Stark and Anti-Kickback and that the arrangement is not designed at rewarding referring physicians.  

3.  What is the hospital taking on when it becomes an EHR vendor?  

What are the consequences for a physician practice if the local hospital is also its EHR vendor?  In many arrangements the hospital is the contracting party with the EHR software vendor (i.e. Epic, Cerner, etc.) and owns the relationship.  Physician groups will look to the hospital to obtain necessary service, updates, modules and when the system malfunctions.  The hospital should evaluate if it is able to take on this role.

4.  Physicians need to know what to expect as recipients of an EHR donation.

Often times the physician group is giving up its autonomy in choosing the EHR vendor, configuration or customization and must often defer to the hospital to make appropriate purchase, upgrade and service decisions.  In addition, even though the hospital may be picking up the majority of the costs (no more than 85%) the investment may still be expensive (and will likely exceed the meaningful use incentive dollars).  Items such as hardware, storage, and operating system software are excluded from the donation.    

5.  Before you align, be clear about who will get the “record collection” if things don’t turn out.

Before entering into a donation arrangement the parties should have a clear understanding of what happens if the relationship goes awry.  How will the records be divided, extracted, or migrated into a new system?  Will the physician group be able to maintain a relationship with the software vendor independently?  What are the ramifications of changing vendors and separating from the hospital EHR?

Special thanks to ECG’s Michelle Holmes and OMW attorney David Schoolcraft for composing this list based on their HIMSS14 presentation “Using Stark/Anti-Kickback to Support Hospital/Physician IT Alignment Strategies.

For more information on designing Stark/Anti-Kickback compliant donation arrangements please see the previous posts describing the exception requirements and the 2013 updates.  For assistance in creating a donation arrangement please contact Elana Zana, Michelle Holmes or David Schoolcraft.

 

Filed Under: Anti-Kickback/Stark, Compliance, EHR, Health Information Technology, Stark Tagged With: , ,

Understanding Stark/Anti-Kickback Compliant EHR Donation Arrangements

February 25, 2014 By

In 2006 and extended in December 2013, CMS issued Stark and Anti-Kickback exceptions/safe harbors permitting EHR technology donation arrangements between hospitals (and other organizations) and physician groups.  This exception permitted hospitals to aid physician groups, who may be referral sources, in acquiring and implementing EHR and other health information technology.  Originally, hospitals had a seven-year window in which to engage in these donation arrangements, though in December 2013 CMS extended the donation arrangements for an additional 7 years through December 31, 2021.

The arrangement may include the non-monetary donation of “items or services in the form of software or information technology and training services.”  Key components of the exception/safe harbor include:

  • The donation is provided from an entity to a physician.
    • Change in 2013 rules, this entity cannot be a lab.
  • The software is interoperable
    • Change in  2013 rules, software is deemed interoperable if it has been certified as “certified EHR technology” as that term is used by the ONC for the meaningful use/EHR Incentive Program.
  • Donor cannot restrict or limit the use or interoperability of the technology with other eRx or EHR systems.
    • Change in 2013 rules, CMS interprets this rule more broadly by providing a non-exclusive list of the types of technologies that are included in this restriction: “health information technology applications, products, or services.”
  • Physician must pay at least 15% of the costs for the technology (which amount cannot be financed by the hospital).
  • Neither the physician nor the physician’s practice makes the receipt of the technology a condition of doing business with the donor.
  • Neither eligibility of the physician nor the amount or nature of the donation is determined in a manner that takes into account the volume or value of referrals or other business generated between the parties.
  • The donation is set forth in writing, signed by the parties, specifies the items to be provided, the donor’s costs and the physician’s contribution, and covers all EHR items and services to be provided by the donor.
  • The donor cannot have knowledge of or disregard the fact that the physician already possesses equivalent items or services.
  • The donor cannot restrict or limit the physician’s right to use the software for any patient.
  • The donation cannot include staffing of physician offices and cannot be used to primarily conduct personal business or business unrelated to the physician’s medical practice.
    • Note the donation may also include other “software and functionality directly related to the care and treatment of individual patients (for example, patient administration, scheduling functions, billing, clinical support software, etc.” (71 FR 45152).
  • The donation arrangement does not violate the Anti-Kickback statute.
  • The exception expires December 31, 2021.

Beyond crafting a donation arrangement that satisfies both the Stark law exception and Anti-Kickback safe harbor, hospitals and physicians should assess overall technology alignment strategies and the goals and framework for such donation arrangements.  Making sure that clear expectations are set in advance, including understanding implementation, roll out and support, data ownership and extraction, and utilizing the EHR technology for government incentive programs, such as meaningful use, are important topics that should be addressed by the arrangement.

For those interested in learning more about this topic and are currently attending HIMSS14, David Schoolcraft, attorney at Ogden Murphy Wallace, and Michelle Holmes, principal at ECG Management Consultants, are presenting on Wednesday at 10 AM on Using Stark/Anti-Kickback To Support Hospital/Physician IT Alignment Strategies.  For further information about designing a compliant arrangement please contact Elana Zana or Dave Schoolcraft.

 

Filed Under: Anti-Kickback/Stark, Compliance, EHR, Hospitals, OIG, Stark Tagged With: , ,

OIG Issues Unfavorable Advisory Opinion Related to Fee Arrangement

November 15, 2013 By

Earlier this week the OIG issued an unfavorable Advisory Opinion concerning the relationship between an Anesthesiology Group (defined as the “Requester” in the OIG opinion), a Psychiatry Group and a Hospital.  The Psychiatry Group performed electroconvulsive therapy (ECT) services at the Hospital, requiring related anesthesia services.  The Requester had an exclusive contract with the Hospital for the provision of anesthesia services.  The specific arrangements reviewed by the OIG dealt with the Hospital’s pressure on the Requester to carve out exceptions to its exclusive contract that would have the effect of allowing the Psychiatry Group to have access to a new anesthesia revenue stream.  Ultimately, the OIG determined that the Proposed Arrangement could potentially generate prohibited remuneration under the anti-kickback statute.

The Proposed Arrangement stemmed from negotiations between the Hospital and the Anesthesiology Group, which had held an 18 year exclusive relationship with the Hospital until 2011.  In late 2010 the Psychiatry Group relocated its practice, which centers around ECT services, to the Hospital; a member of the Psychiatry Group included an anesthesiologist.  In 2011 negotiations with the Anesthesia Group, the Hospital modified the exclusive relationship to allow the Psychiatry Group’s anesthesiologist to perform ECT anesthesia services, and to request the Anesthesiology Group’s coverage while he was not available.  In 2012, the Psychiatry Group requested a provision allowing it to bring in a part time anesthesiologist if the Psychiatry Group and the Anesthesiology Group could not agree on terms for those additional services.  After the 2012 contract went into effect, the Psychiatry Group notified the Anesthesiology Group that it wanted to bring in the additional anesthesiologist and asked the Anesthesiology Group to enter into the Proposed Arrangement.

The Proposed Arrangement provided that the Anesthesiology Group would provide the ECT anesthesia coverage services that were needed and would reassign all billing rights to Psychiatry Group.  In exchange the Anesthesiology Group would receive a per diem rate which the Anesthesiology Group asserts was less than fair market value and below what it would receive if it billed directly for the anesthesia services.  The Psychiatry Group would retain the difference between the amount collected and the per diem rate.  The OIG unequivocally rejected this Proposed Arrangement, finding that the per diem payment made to the Anesthesiology Group did not fall under the personal services and management contract safe harbor of the anti-kickback statute because it was not set in advance nor consistent with fair market value.  Further, the OIG determined that the fee generated for the Psychiatry Group was a door to solicit compensation for its patient referrals for ECT services:

 “The Proposed Arrangement appears to be designed to permit the Psychiatry Group to do indirectly what it cannot do directly; that is, to receive compensation, in the form of a portion of Requestor’s anesthesia services revenues, in return for the Psychiatry Group’s referrals of ECT patients to Requestor for anesthesia services. The Additional Anesthesiologist Provision gave the Psychiatry Group the ability to solicit this remuneration for its ECT patient referrals by allowing the Psychiatry Group to contract with an anesthesiologist other than Requestor if Requestor and the Psychiatry Group were not successful in negotiating the terms of an agreement for Requestor to provide ECT anesthesia services. The Proposed Arrangement therefore presents the significant risk that the remuneration Requestor would provide to the Psychiatry Group—i.e., the opportunity to generate a fee equal to the difference between the amounts the Psychiatry Group would bill and collect for Requestor’s anesthesia services, and the per diem amounts the Psychiatry Group would pay to Requestor—would be in return for the Psychiatry Group’s anesthesia referrals to Requestor. We discern no safeguards in the Proposed Arrangement that would minimize this risk.”

What perhaps might be the most interesting part of the opinion, are the OIG’s comments in concluding the opinion. Although not asked to opine on the Hospital’s relationships with the Psychiatry Group and Requester, the OIG commented in a footnote about the potential improprieties of the Hospital’s relationship with those parties:

“Although we have not been asked to opine on, and express no opinion regarding, any aspect of Requestor’s relationship with the Hospital, including the 2012 Contract or the Additional Anesthesiologist Provision, we cannot exclude the possibility that: (i) the Hospital agreed to negotiate for the Additional Anesthesiologist Provision in exchange for, or to reward, the Psychiatry Group’s continued referral of patients to the Hospital for ECT procedures; (ii) the Hospital leveraged its control over its large base of anesthesia referrals to induce Requestor to agree to the Additional Anesthesiologist Provision; and (iii) Requestor agreed to the Additional Anesthesiologist Provision in exchange for access to the Hospital’s stream of anesthesia referrals.”

This OIG opinion highlights the OIG’s continued concern regarding arrangements that allow referring providers access to new revenue streams in a manner that may be connected to the providers referrals.  Parties desiring to enter into these types of arrangements should take care to include as many safeguards (using the OIG’s language) to ensure that the payments are not related to referrals.  In the absence of such safeguards, it is pretty clear that the OIG will not look favorably upon the arrangement.

For more information about this particular OIG Opinion or the anti-kickback statute in general please contact Elana Zana or Don Black.

 

Filed Under: Anti-Kickback/Stark, Compliance, OIG Tagged With:

OIG Okays Provision of Free Services to Uninsured and Underinsured Patients

October 21, 2013 By

On October 15, 2013, the Office of Inspector General (OIG) released an Advisory Opinion concerning a community health services organization’s provision of free dental care to financially needy uninsured and underinsured patients that are not covered by Medicaid.

The organization was concerned that the free services violated two aspects of the Medicaid law: (1) the Social Security Act prohibits providers from billing Medicaid charges for items or services substantially in excess of the provider’s “usual charges,” and (2) the Anti-Kickback Statute prohibits providers from offering remuneration to Medicaid patients to induce them to receive services from the provider.

In the Advisory Opinion, the OIG stated that when a provider calculates its “usual charges,” it need not consider free or substantially reduced charges to uninsured or underinsured patients with financial need.  Therefore, the OIG would not seek to exclude a provider from the Medicaid program for providing discounts to financially needy uninsured and underinsured patients.

The OIG also stated that the organization’s provision of free services to financially needy uninsured or underinsured patients does not violate the Anti-Kickback Statute because the free services will not be provided to Medicaid patients.  The Anti-Kickback Statute would only be implicated if a provider used the free services as a means to induce Medicaid patients to order additional services that could be billed to the Medicaid program.

The bottom line is that providers may offer free services to uninsured or underinsured patients with financial hardship.  With that said, it is critical that providers have uniform eligibility criteria to determine whether such patients actually are financially needy.  In separate guidance released in 2004  the OIG outlined factors that providers should consider in determining financial need, including:

  • The local cost of living;
  • A patient’s income, assets, and expenses;
  • A patient’s family size; and
  • The scope and extent of a patient’s medical bills.

By applying these factors uniformly at all times, providers can ensure that their provision of free or discounted services meets OIG requirements.

If you would like more information please contact Casey Moriarty.

Filed Under: Anti-Kickback/Stark, Compliance, Medicaid, OIG Tagged With: , ,

OIG Approves Venture Spawned by CMS Hospital Readmission Penalties

August 20, 2013 By

In a recent Advisory Opinion, the OIG approved a business venture intended to reduce preventable hospital readmissions by providing post-discharge services to patients.  The venture would sell a package of services to hospitals intended to better coordinate post-discharge care and to help patients adhere to their post-discharge plans of care.  The focus would initially be on those conditions CMS has identified as potentially triggering readmission payment penalties.

Hospitals would be charged a flat annual “set-up” fee and an additional “per patient” fee. Patients would have to elect to receive the services.  Under the service, the patient would have access to assistance 24 hours a day, seven days a week, either through a Patient Liaison or through a nurse hotline.

The OIG found a low risk of fraud or abuse under the anti-kickback law because, among other things, the program could potentially save federal money by decreasing excessive hospital readmissions.  The proposed program also was unlikely to interfere with clinical decision making since its purpose was to ensure such decision making was implemented for the benefit of the patient.

The OIG also found a low risk of any Civil Monetary Penalty violation.  The proposed program appeared to be intended to assist patients in the post-discharge period without influencing or limiting a patient’s choice of providers or suppliers.  If you have questions regarding this opinion please contact Greg Montgomery.

Filed Under: Anti-Kickback/Stark, Compliance, OIG

SRDP Settlement: Improper EHR Donation Arrangement Among Violations

August 8, 2013 By

Last month CMS settled several violations of the self-referral statute (aka Stark Law) with an Ohio hospital, including a failure to appropriately structure a donation arrangement for electronic health records (EHR) .  The hospital disclosed under the Self-Referral Disclosure Protocol that it may have violated the Stark Law with regard to several arrangements with certain physicians, including arrangements for EKG interpretations, medical director services, Vice-Chief of Staff services, and hospital services (no specifics provided in CMS release).  The settlement was for $265,565.  The SRDP, which was included in the ACA, was created as a mechanism for providers to self-report potential Stark law violations.

The EHR donation arrangement to the Stark and Anti-Kickback laws permits hospitals to enter into certain arrangements with physicians for the donation of EHR related software and services.  The donation arrangement exception is scheduled to expire on December 31, 2013, however CMS has proposed extending the exception through 2016.  If CMS does not extend the exception, existing donation arrangements will have to convert to fair market value for shared technology and services.

If you have questions regarding the SRDP or structuring a EHR donation arrangement please contact Elana Zana.

Filed Under: Anti-Kickback/Stark, EHR, Hospitals, SRDP Tagged With: , ,

US Intervenes In Whistleblower False Claims Act Lawsuit Alleging Submission of More Than $500 Million in Improper Claims

July 19, 2013 By

After the United States decided to intervene, a whistleblower lawsuit under the federal false claims act was unsealed.  The Amended Complaint alleges that over the period 2004 to 2010, the defendants submitted over $500 million in claims to Medicare, Tricare, and Medicaid that were the result of physician compensation schemes in violation of Stark and Anti-Kickback laws.

According to the Amended Complaint, a seventy-one (71) member physician group provided outpatient care and treatment for clinic patients under a services contract with the clinic.  Under the contract, the clinic billed and collected for the physician services and split the net proceeds with the physician group.

The Amended Complaint alleges that the physician group received two additional components of compensation intended to induce referrals to the clinic and increase the tests ordered at the clinic.  According to the Amended Complaint, the clinic furnished the physician group with office space, equipment, and a variety of services at below fair market value.  In addition the physicians in the group were allegedly paid a percentage of the technical fees charged and collected by the clinic for tests they ordered.

The whistleblower is an interventional cardiologist who was employed by the physician group from 2003 until he was fired in 2011.

Filed Under: Anti-Kickback/Stark, Compliance, False Claims Act

Urology Group Challenge to Stark Regulations Is Too Little Too Late

June 10, 2013 By

A recent federal district court decision granted summary judgment to the government in a lawsuit by a urology group challenging the 2008 changes in Stark regulations affecting “under arrangement” services for hospital patients.  The decision illustrates the significant barriers to a successful challenge to these regulations.

The challenge focused on the 2008 regulatory changes that swept entities performing DHS into the definition of entities “furnishing” DHS and reversed CMS’ 2001 regulatory approval of “per click” lease agreements.  Several challenges to these changes were dismissed for not being raised within the six year limitation period applicable under the federal Administrative Procedures Act.

The arguments against these changes that survived the timeliness bar failed to convince the court that the changes were contrary to express Congressional intent stated in the legislation or were an impermissible interpretation of the legislation.  The court rejected an argument that the group practice exception for certain compensation arrangements constituted a Congressional expression of intent that the term “entity” was not intended to include entities that furnished DHS.  The court readily concluded that including entities that performed DHS within the definition of entities “furnishing” DHS was a permissible interpretation of the legislation.

As for the revision in the regulations to prohibit the previously permitted “per click” lease arrangements, the court noted that CMS is entitled to change its mind as long as there is a reasonable basis for the change.

“Thus, the agency remains free to reinterpret a statute in a way that varies greatly from its past interpretations so long as the agency provides a reasoned basis for its new interpretation.”

For more information regarding the Stark law or False Claims Act in general please contact Greg Montgomery.

 

Filed Under: Anti-Kickback/Stark, Compliance, False Claims Act, Medicare, OIG, Stark Tagged With: , ,

Whistleblowers Expected to Receive $2.8 Million in Settlement of Stark Based False Claims Act Lawsuit

May 7, 2013 By

The Department of Justice recently announced a settlement with Adventist Health System/West under which the Department of Justice and the state of California will collect $14.1 million in settlement of False Claims Act allegations.  The lawsuit was initially filed by private individuals as whistleblowers who will receive a significant portion of the settlement.  There was no determination or admission of liability.

According to the announcement, the lawsuit alleged that Adventist Health improperly compensated physicians at one of its facilities by transferring assets to the physicians at less than fair market value and by compensating physicians for teaching services at rates contended to be above fair market value.  These payments to physicians were alleged to violate the Stark law and anti-kickback laws.

In commenting on the settlement, a representative of the Office of Inspector General observed:

“Payouts by hospitals and clinics – as the government alleged in this case – raise substantial concerns about physician independence and objectivity.  Taxpayers and vulnerable patients rightfully expect such payments to be investigated and pursued.”

As part of its on-going quarterly lunch time webinar series, the Ogden Murphy Wallace Healthcare Practice Group will provide a presentation on self-disclosure options and avoidance of state and federal False Claims Act liability in its June 4, 2013 webinar (to register click here).  If you have questions regarding self-disclosure and overpayments in general please contact Greg Montgomery.

Filed Under: Anti-Kickback/Stark, Compliance, False Claims Act, Overpayment

False Claims Act Recoveries Top $14.2 Billion

May 2, 2013 By

On May 1, 2013, the  Department of Justice announced a settlement with two Montana hospitals that added $3.95 million to its recoveries under the False Claims Act.  According to the announcement, with this additional recovery,  the Department of Justice has used the False Claims Act to recover more than $14.2 billion in federal healthcare payments since January, 2009.

Once again, allegations of hospital-physician financial relationships that violated the Stark law prohibition against self-referral were the stated basis for the allegations of False Claims Act liability.  In this case, according to the announcement, it was alleged that the hospitals paid incentive compensation to certain physicians in a manner that took into consideration the value or volume of the referrals by the physicians to the hospital by improperly including certain designated health services in the formula for calculating physician incentive compensation.

This situation was voluntarily disclosed by the hospitals.  In this regard, an OIG representative was quoted as commenting:

 “There is an expectation that corporations providing services to Medicare and Medicaid beneficiaries adhere to the provisions of the Stark Law.  I applaud St. Vincent Healthcare and Holy Rosary Healthcare for recognizing their potential liability in this matter and making a disclosure”

As part of its on-going quarterly lunch time webinar series, the Ogden Murphy Wallace Healthcare Practice Group will provide a presentation on self-disclosure options and avoidance of state and federal false claims act liability in its June 4, 2013 webinar (to register click here).  If you have questions regarding self-disclosure and overpayments in general please contact Greg Montgomery.

Filed Under: Anti-Kickback/Stark, Compliance, False Claims Act, Hospitals, Medicare, Overpayment, Stark
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