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© 2009 Hodgson Russ LLP 2
OVERVIEW
Legal Constraints In Structuring Federal State
Recent Developments 15 Favorable OIG Advisory Opinions Proposed Stark Exception
What Can You Do Now? Federal Health Reform???
© 2009 Hodgson Russ LLP 3
FEDERAL LAWS
Civil Monetary Penalty Law (CMPL) Anti-Kickback Statute (AKS) Physician Self-Referral Law (Stark) Tax Exemption Laws Managed Care
© 2009 Hodgson Russ LLP 4
CIVIL MONETARY PENALTY LAW
Prohibits: Hospitals Knowingly Making A Payment To A Physician To Induce A Reduction Or Limitation In Services To Medicare/Medicaid FFS Beneficiaries
Applies Even If Pay To Reduce Services That Are Not “Medically Necessary”
OIG Enforces, Issues Advisory Opinions
© 2009 Hodgson Russ LLP 5
ANTI-KICKBACK STATUTE
Prohibits: Knowingly/Willfully Paying Or Receiving Remuneration To Induce Referrals Of Services Covered By Federal Health Programs
No Safe Harbor On Gainsharing – To Date OIG Enforces, Issues Advisory Opinions
© 2009 Hodgson Russ LLP 6
STARK STATUTE : PHYSICIAN SELF-REFERRAL LAW
Prohibits: Physicians Referring Medicare & Medicaid Patients To Hospital For Inpatient And Outpatient Services If Financial Relationship With Hospital, Unless Within Exception
Proposed CMS Exception CMS Enforces, No Advisory Opinions
© 2009 Hodgson Russ LLP 7
TAX EXEMPTION LAWS
Tax Exempt Hospitals May Not Pay Physicians If Would Constitute: Private Inurement Private Benefit Or Excess Benefit Transaction
IRS Guidance: Generally OK If “Reasonable Compensation”
© 2009 Hodgson Russ LLP 8
MANAGED CARE
CMPL Is Not Applicable To Managed Care Medicare/Medicaid Managed Care Risk-
Based Payors Are Covered By Different Statutes
Allows “Physician Incentive Plans” If They Do Not Reduce “Medically Necessary” Services
© 2009 Hodgson Russ LLP 9
MANAGED CARE, cont.
Stark Is Applicable (If Serve Medicare/Medicaid Enrollees)
Stark Exceptions: 42 CFR 411.355(c) – Protects Services Provided To
Enrollees Of Medicare/Medicaid MCOs 42 CFR 411.357(n) – Protects Risk-Sharing
Compensation Arrangements Between MCOs And Physicians, If No AKS Violation
© 2009 Hodgson Russ LLP 10
MANAGED CARE, cont.
If Commercial Insurer, Flexibility In Structuring Unless: Induce Changes Re Medicare/Medicaid FFS
PatientsMeasure/Pay Based On All Patients Involve Dually Eligible Patients
See OIG Advisory Opinion No. 08-16.
© 2009 Hodgson Russ LLP 11
STATE LAWS
Some States Have Laws That Apply To All Payors Including Medicare And Medicaid Managed
Care Payors/Beneficiaries Many State Statutes Have Different
Exceptions From Stark If Your Hospital Operates In A State With
An All-Payor Statute, Structure Carefully
© 2009 Hodgson Russ LLP 12
WAIVER AUTHORITY
General CMS Authority: Waives Stark, But Not AKS or CMPL. See Robert Wood Johnson University Hospital v.
Thompson, 2004 U.S. Dist. LEXIS 8498 (D.N.J. Apr. 15, 2004)
Statutory Demonstration Projects: Waive Stark, AKS and CMPL: MMA of 2003 § 646 Deficit Reduction Act of 2005 § 5007
© 2009 Hodgson Russ LLP 13
OIG GUIDANCE
Addresses CMPL And AKS Does Not Address Stark, Because OIG
Lacks Jurisdiction
© 2009 Hodgson Russ LLP 14
OIG SPECIAL ADVISORY BULLETIN (1999) All Gainsharing Programs Violate CMPL No Authority To Issue Exception To CMPL Declines To Issue Advisory Opinions Has Since Issued 14 Favorable Opinions AHA/AAMC Recently Asked OIG To
Retract
© 2009 Hodgson Russ LLP 15
OIG CONCERNS
“Stinting” On Patient Care “Cherry-Picking” Healthy Patients “Steering” Sicker Patients To Hospitals
Not In Program Disguised Payments for Referrals
© 2009 Hodgson Russ LLP 16
OIG ADVISORY OPINIONS
15 Favorable Advisory Opinions 14 Shared Savings Programs 1 Pay For Performance Program
Shared Savings Programs: Product Standardization Or Substitution Use As Needed
All Contain Similar Elements OIG Finds CMPL Implicated, But Declines To Prosecute Due To Safeguards
© 2009 Hodgson Russ LLP 17
CMPL SAFEGUARDS
Credible Medical Evidence Supports Each Performance Measure/Target
Targets Based On Hospital’s Patient Population Compared To Regional/National Norms
All Supplies/Devices Remain Available If Needed For Particular Patient
Floors Below Which Cannot Earn Incentive Independent Review; Termination Of Physicians Written Disclosure To Patients
© 2009 Hodgson Russ LLP 18
AKS SAFEGUARDS
Pools Of 5 Or More Physicians On Active Medical Staff Per Capita Payment Limits On Amounts To Be Earned Re-Basing If Multi-Year Limited Duration (1-3 Years) Monitor Admissions For Changes
© 2009 Hodgson Russ LLP 19
OIG ADVISORY OPINION 08-16PAY-FOR-PERFORMANCE Private Insurer Pays Bonus To Hospital Hospital Pays 50% of Bonus To Physicians
2 Data Reporting Targets 4 Quality Targets – CMS Specifications Manual For
Nat’l Hospital Quality Measures CMPL Implicated Because Measure
Performance Using All Inpatients OIG Issues Favorable Opinion Due To
Safeguards
© 2009 Hodgson Russ LLP 20
PROPOSED STARK EXCEPTION
Proposed 7/7/08 In MPFS 2009 Shared Savings & Incentive Payment Programs 16 Sections, Over 40 Requirements Requirements Similar To OIG Advisory Opinion
Elements CMS Reopened Comment Period to 2/17/09
Sought Comments On 55 Issues One vs Two New Exceptions?
© 2009 Hodgson Russ LLP 21
COMMENTS BY AHA/AAMC
Proposed Exception Is Too Complex, Burdensome, Narrow, Inflexible
Instead, Adopt Broad Principles:Credible Medical Evidence Supports TargetsMonitoring Inappropriate ActionsReward Individual Physician’s ContributionsMaintain Documentation Of Design/PaymentsLegally Binding Written Agreement
© 2009 Hodgson Russ LLP 22
Proposed Exception Too Narrow Instead: Restructure To Address
Programs Designed To Reduce Operational
Bottlenecks Responsible Physicians Direct Protections for Quality of Care and
Against Self-Referral vs Micromanagement
COMMENTS BY NJHA
© 2009 Hodgson Russ LLP 23
COST FINDING
CMS: Current Cost Less Acquisition Cost Problem: CMS Proposal Doesn’t Work
For Programs Targeting Operational Improvements Or Quality
Alternative: Use APR DRGs With Severity Of Illness Adjustment
© 2009 Hodgson Russ LLP 24
PHYSICIANS/PAYMENT
CMS: Requires Pool Of At Least 5 Physicians And Per Capita Payment
Problem: Artificial Groups; Diffuses Incentive Alternative: Pay Individual Physicians
Responsible For Managing A Case To Reward Individual Performance; Address Concerns Relating To Abuse Directly Rather Than Indirectly
© 2009 Hodgson Russ LLP 25
RE-BASING TARGETS
CMS: If Multi-Year Program, Must Re-Base Targets At End Of Year To Avoid “Duplicate” Payment/Disguised Payment For Referral
Alternative: Reward Maintaining Good Performance As Well As Improvement; Important To Incentivize Physicians To Spend Time On Non-Billable Activities Such as Discharge Planning
© 2009 Hodgson Russ LLP 26
QUALITY PROTECTIONS
CMS: Micromanagement, such as requiring access to same supplies/devices available before program and no limits on new technology
Alternatives: Add Severity Of Illness Adjustment Best Practice Norms Based On Community Practice
Compared To Regional Data Committee Monitors “Outliers”; Can Withhold
Incentives Or Terminate Physician
© 2009 Hodgson Russ LLP 27
SELF-REFERRAL PROTECTIONS
CMS: Currently On Medical Staff, plus Many Indirect Protections
Alternative: Direct Protections Such AsMust Have 10+ Admissions At Par Hospital If Dual Privileges, Cap Incentives At Prior
Year Volume At Participating Hospital, Adjusted for Normal Practice Growth
© 2009 Hodgson Russ LLP 28
CURRENT OPTIONS
If No Medicare/Medicaid FFS BeneficiariesFlexibility In Structuring A ProgramDetermine Whether To Include Managed Care
BeneficiariesDetermine Whether State Laws Apply
© 2009 Hodgson Russ LLP 29
CURRENT OPTIONS
If Medicare/Medicaid FFS BeneficiariesUse Existing Safe Harbors/ExceptionsFollow Design Features Approved In OIG
Advisory OpinionsParticipate In CMS Demonstration Project
© 2009 Hodgson Russ LLP 30
THE FUTURE
CMPL: Will Congress modify to allow incentive programs allowed by Managed Care statute?
Stark: New Exceptions May Be Added & Existing Exceptions May Be Modified AKS: Will HHS Heed The Call Of The
AHA/AAMC To Issue A Regulatory Exception? Demonstration Projects: Reports To
Congress Due Soon; Will They Prompt Changes?
Federal Healthcare Reform:???