Stay out of the regulatory storm

Penalties for violating Stark and anti-kickback laws are substantial, so be sure you’re on the right side of the law.

By René Luthe, Senior Associate Editor

Are you sure your practice is in compliance with anti-kickback laws and Stark, as well as the web of new Medicare billing rules? Absolutely sure? You may want to check again, just to be on the safe side. Health-care attorneys report that between whistleblowers, a flurry of new regulations, plus new auditors to enforce them, physicians risk being caught in a perfect litigation storm. Fortunately, health-care attorneys say, avoiding such a predicament is fairly simple, though not easy. Here are their guidelines — plus some excellent incentive to follow them.

CLOUDY WITH A CHANCE OF LAWSUIT

There’s a new sheriff in town

Or several, actually. Alice Gosfield, JD, a Philadelphia attorney who advises physicians on structuring their practices, notes, “It used to be the only auditor you had to worry about was your carrier, and, if you were an egregious actor, the office of the Inspector General. Now we have program safeguard contractors, zone program integrity contractors, recovery audit contractors, your former carrier, now referred to as Medicare Administrative contractor — all of them out to ferret out fraud, abuse and waste.”

And while no new services relevant to ophthalmology have been added to the list of those designated for Stark, you probably have a few additional obstacles you could stumble over. “Medicare rules are ever-changing and very complex,” says Jerry J. Sokol, JD, of McDermott Will & Emery LLP, Miami.

Further, “When Congress enacted the ACA, they said any monies received pursuant to violative transactions under Stark and anti-kickback, if not repaid voluntarily within 60 days of discovery, convert to false claims,” says Ms. Gosfield.

Beware the whipped-up whistleblowers

All of this incentivizes whistleblowers. Mr. Sokol reports a “tremendous uptick” in qui tam actions triggering government investigations. “I’ve been practicing for almost 25 years, basically since Stark came out, and I’ve not seen this level of activity before.”

In qui tam actions, Mr. Sokol notes, the whistleblower can receive up to 30% of any monies the government recovers as a result of the investigation — incentive, indeed.

“Whistleblowers, I am told by prosecutors, are generally speaking, disgruntled ex-employees, disgruntled competitors, and disgruntled ex-lovers and spouses,” Ms. Gosfield says. “And the last group is more enthusiastic than the other two.”

Penalties that mean business

For those found in violation of anti-kickback, Stark or Medicare rules, penalties “can be quite draconian,” says Mr. Sokol. Fines can range from dollar amounts per claim to treble damages. Ms. Gosfield notes that false claims can cost the violator up to $11,000 per claim — plus treble damages. “And for violations of anti-kickback, penalties can include exclusion from the Medicare program, which is tantamount to the death penalty,” says Mr. Sokol.

AVOID THESE MINEFIELDS

At the practice

Where are ophthalmologists apt to make the sorts of mistakes that could bring down the wrath of government? Here are Stark and anti-kickback guidelines for both practice and surgery center.

￭ Stark: Fortunately for practices, few of the “designated health services” specified by Stark and Stark II in their regulation of referrals pertain to ophthalmology. As Mark Kropiewnicki, JD, LLM, president of the HealthCare Group in Plymouth Meeting, Pa., points out, as of Jan. 1 this year, only 14 CPT codes indicate designated health services for ophthalmology, and some of these are rarely performed anyway.

Types of imaging are also on the list and are common in ophthalmology, but physicians seldom refer these services outside their practices.

On the other hand, Stark can become a stumbling block within a practice when it comes to income division, notes Mr. Kropiewnicki. While a practice’s doctors benefit from the income from the tests they provide, because it’s the same group practice, it usually doesn’t create much of a problem. Mr. Kropiewnicki recommends, though, that when it comes to determining one doctor’s production versus another’s, that only the technical component of the tests be taken into account.

“For these kinds of services, technically two things are being paid for,” he explains. “There’s the professional component for the doctor to interpret the test, and the technical component of paying for equipment and the tech who does the work. With the technical component, we don’t normally see many practices breaking it down for any particular purpose. But for the most part, we say we don’t take into account the technical component of ‘designated health services’ in working up our practice income division arrangements from the standpoint of productivity, for example.”

Mr. Sokol agrees that income division is an area where practices may bungle Stark. Practices should avoid “giving physicians direct attribution for the Stark services they are ordering for their patients.” It’s a problem that sometimes arises among medical practices. “They just need to make sure that whatever compensation methodology they are utilizing is blessed by an expert in healthcare law,” Mr. Sokol says.

￭ Anti-kickback: An area where ophthalmologists may easily run afoul of antikickback is the renting or leasing of space, equipment or staff. The typical situation, Mr. Kropiewnicki explains, is when an ophthalmologist or retina specialist wants to go into another ophthalmologist’s office, or perhaps into an optometrist’s office, and provide services there for that doctor. “You can’t go in and say you’re going to rent one day a week, but pay $5,000 a day. That’s probably not fair market value!” What it does look like is a kickback.

To avoid paying over fair market value and arousing the government’s suspicions, CMS puts out a calculator that helps determine fair market value for these situations (CMS guidance: http://www.cms.gov/outreach-and-education/medicare-learning-network-mln/mlnproducts/downloads/avoiding_medicare_fanda_physicians_factsheet_905645.pdf).

Another no-no is paying or charging a percentage of the physician/renter’s earnings. “If you are generating $5,000 of business and only paying the optometrist whose office space you are leasing $500, the optometrist may decide that’s not right and demand a percentage of what you produce — 30% or 50%,” Mr. Kropiewnicki warns. “But giving a percentage of what you produce is classic kickback.”

That may be how the owner of a mall determines the rents of his tenant-stores, but it’s not a method practices can use. Or, as Ms. Gosfield puts it, “Recognize that you are in a highly regulated business; if it makes good business sense, such as paying a percentage of production, you are probably not allowed to do it.”

At the surgery center

Happily, Stark is not an issue for ambulatory surgery centers as they are viewed as extensions of doctors’ practices. When it comes to anti-kickback, however, ophthalmologists do need to exercise caution. Again, fair market value is an important concept to heed. “As long as you set everything up in accordance with fair market value, as long as you don’t make more money at the ASC because you refer more cases,” you will stay out of trouble, Mr. Kropiewnicki says.

Mr. Sokol cites another tricky area. In recent years, he has seen surgery centers enter arrangements that allowed its ophthalmologists to profit not just from the professional fees and the facility fees but also from a third component that is billed as part of a surgical procedure — anesthesia. “These arrangements have come under great scrutiny lately, including qui tam actions and government investigations,” he warns. Any arrangements through the surgery center that are intended to enable sharing in the anesthesia revenue should get guidance from a health-care attorney, Mr. Sokol says.

GIMME SHELTER

Safe harbors

Of course, the government provides safe harbors to accommodate certain arrangements in health-care facilities. The personal services safe harbor is probably the one most important to ophthalmologists, Ms. Gosfield notes, but others include the employment safe harbor, lease safe harbors and a safe harbor for ownership in the ambulatory surgery centers. However, one principle still applies, she says: “All of these are tempered by the requirement that the compensation may not take into account the volume or value of referrals or business generated between the parties.”

Narrowly crafted

Another reason for caution is that safe harbors to the anti-kickback statute are “very narrowly crafted,” says Mr. Sokol. Among other things, this means “failure to meet the safe harbor does not at all mean that a particular arrangement violates the law.” The practice should study the applicable safe harbor to ensure it can comply with the most important tenets of that safe harbor. How does one do that?

“For arrangements outside the safe harbor, you have to analyze the arrangement in light of the intent of the parties, the general prohibition of the law and the particular facts of the arrangement, as well as consider other guidance that may be out there,” Mr. Sokol explains.

In other words, be sure to run it by a health-care attorney.

A compliance plan is crucial

Essential for those who want to remain on the right side of the law is a compliance plan. Mr. Sokol finds that practices, particularly small ones, either don’t have one or don’t implement it. It’s a risky oversight in light of the penalties. “It really is important for practices to have a compliance plan that is actively administered, and not just sitting on the shelf,” Mr. Sokol says.

Those seeking guidance can consult medical societies such as the Medical Group Management Association or the American Academy of Ophthalmology. Ms. Gosfield offers aid on her website, gosfield.com. She recommends the article, “Compliance Plans: Now More than Ever.” Though she wrote it for dermatologists, she says it is also relevant to ophthalmologists.

“Dermatologists are a bit like ophthalmologists in that they perform procedures and are a small subspecialty. Dermatologists can get themselves into trouble because they have a lot of cash business that goes on on the cosmetics side, which ophthalmologists are sometimes doing as well,” Ms. Gosfield points out. A compliance program, she continues, should set up policies and principles about not violating Stark and antikickback laws, as well as address appropriate claim submission and what to do when you make a mistake.

“And you have to know what’s in the plan,” Ms. Gosfield emphasizes. “Don’t take a compliance plan from some other source and just copy it over. I reviewed compliance plans for anesthesia groups that downloaded and copied the American Society of Anesthesiology model, including typos with blanks throughout the document!”

Should an investigator come calling and ask to see your compliance plan, handing over one so obviously photocopied from another source will only worsen your situation, Ms. Gosfield says. “It would show that you knew you should have a compliance program, but didn’t bother to do it properly.”

Mr. Sokol advises seeking compliance plan guidance with health-care counsel. “I don’t want to be self-serving, but the truth is that your best source is healthcare regulatory attorneys.” Given the stakes, it’s better to be safe than sorry. OM