Stark law – Prohibitions – Penalties – Safe harbors Applying Stark to common situations Responding to potential Stark problems – Self-Referral Disclosure Protocol Action items
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
1
Ethics in Patient Referrals Act (“Stark”)Kim C. Stanger
(7/13)
Background
Drakeford v. Tuomey Healthcare (Dist. S.C. 2013)– Tuomey entered part-time employment agreements with
19 physicians. 10 year terms. Required physicians to perform outpatient Required physicians to perform outpatient
procedures at hospital.– Jury verdict of $39 million for Stark violations– Government may seek additional penalties up to $357
million for False Claims Act violations Other Stark settlements
– $4 million to $30 million
Overview
Stark law– Prohibitions– Penalties– Safe harbors
Applying Stark to common situations Responding to potential Stark problems
Government study:– physician’s financial interest in entity
physician referrals. Government concerned that allowing physicians
to refer to entities in which the physician had a to refer to entities in which the physician had a financial interest would:– Improperly influence medical judgment.– Promote overutilization.– Increase cost to Medicare/Medicaid.
Cannot bill or receive payment for services for prohibited referrals during the “period of disallowance.”– Begins when financial relationship fails to satisfy
one of the safe harborsone of the safe harbors.– Ends when:Relationship brought into compliance, andAmounts overpaid or underpaid are repaid.
• Prospective compliance alone does not end the period of noncompliance.
(42 CFR 411.353(c)(1))
Penalties
No payment for services rendered per improper referral.
Must repay money received from improper referrals within 60 days.e e a s t 60 days
Civil monetary penalty. – Up to $15,000 for each claim improperly
submitted for payment.– Up to $100,000 for each scheme.
(42 CFR 411.353; 1001.102(a)(5) and 10; 1001.103(b))
Penalties
May violate False Claims Act.– $5,500 to $11,000 per improper claim– 3x damages– Qui tam litigation– Exclusion from Medicare and Medicaid
May violate Anti-Kickback Statute.– Felony– Up to $25,000 fine per violation– Up to 5 years in prison– Automatic violation of False Claims Act– Exclusion from Medicare and Medicaid
Physician cannot refer and DHS provider cannot bill for DHS unless transaction fits in safe harbor.
Referrals for DHS
Designated Health Services
Stark only applies to referrals for designated health services (“DHS”) payable in whole or part by Medicare.– Inpatient and outpatient hospital services– Outpatient prescription drugs– Clinical laboratory services– Physical occupational or speech therapyPhysical, occupational, or speech therapy– Home health services– Radiology and certain imaging services– Radiation therapy and supplies– Durable medical equipment and supplies– Parenteral and enteral nutrients, equipment, and supplies– Prosthetics and orthotics
With limited exceptions, DHS do not include services that are reimbursed by Medicare as part of a composite rate, e.g.,– Skilled nursing facility Part A payments.– ASC services identified in 42 CFR 416.164.SC se ces de t ed C 6 6
(411.351, definition of “designated health services”)
Applies to referrals by a physician to entities with which physician (or their family member) has a financial relationship.– MDs– DOsDOs– Oral surgeons– Dentists– Podiatrists– Optometrists– Chiropractors
(42 CFR 411.351)
Family Members
Also applies to referrals by physician to entities with which physician’s family member has financial relationship.
Family member =– SpouseSpouse– Parent, child– Sibling– Stepparent, stepchild, stepsibling– Grandparent, grandchild– In-law
(42 CFR 411.351)
Referral
Applies to referrals (orders, requests, plan of care, certification) by physician for DHS performed by others.– Other providers or facilities.– Others in physician’s own group.– Other employees or contractors.
D t l t i th h i i ll Does not apply to services the physician personally performs.– Physician may perform his own DHS.– Beware ancillary, technical, facility fees.
Does not apply to many services performed by radiologists or pathologists since they usually do not make “referrals”.
Applies to referrals by physician to entities with which physician (or their family member) has financial relationship.– Direct relationship.– Indirect relationship (e.g., through ownership in
th tit )another entity). Financial relationship =
– Ownership or investment: stocks, bonds, partnership, membership shares, secured loans, securities, etc.
– Compensation: employment, contract, lease, payments, gifts, free or discounted items, and virtually any other exchange of remuneration.
(42 CFR 411.351 and .354)
No Intent Required
Stark does not require intent to violate statute.– No “good faith” compliance.
To comply with Stark, transaction must either:– Fall outside statute, i.e., no “financial
relationship” or “referral” orrelationship or referral , or– Fit within regulatory safe harbor.
Exception: Entity may bill for prohibited services rendered per improper referral if entity did not know and did not act in reckless disregard or deliberate indifference concerning the identity of the referring physician.
(42 CFR 411.353)
Safe Harbors
Stark contains numerous safe harbors.– Applicable to both ownership/investment and
compensation arrangements.– Applicable to only ownership/investment
arrangements.a a ge e ts– Applicable to only compensation
arrangements. No liability if comply with all the requirements of
an applicable safe harbor. Need only comply with one safe harbor for each
Physician services rendered by another physician in same group practice* or under such physician’s supervision.
In-office ancillary services provided through group practice*. Prepaid health plans. Certain services furnished in academic medical center. Implants in ASC. Preventive screening tests, immunizations, and vaccines. EPO and other dialysis-related drugs. Eyeglasses and contact lenses following cataract surgery. Intra-family rural referrals.(42 CFR 411.355)* Must qualify as “group practice” under 42 CFR 411.352.
Exceptions for OnlyOwnership or InvestmentsOwnership or investment interests in: Rural providers. The whole hospital, not a part of the hospital.
– Subject to limits in 42 CFR 411.362. Publicly traded securitiesPublicly traded securities. Large, regulated mutual funds.(42 CFR 411.356)
Exceptions for OnlyCompensation Arrangements Bona fide employment relationships. Personal services contracts. Office space or equipment rental. Physician recruitment. Physician retention. Remuneration unrelated to DHS. Fair market value. Non-monetary compensation up to $300. Medical staff incidental benefits. Compliance training. Community-wide health information system. Professional courtesy. Certain payments by a physician for items or services at FMV. Others.(42 CFR 411.357)
Stark contemplates requiring entities to report financial relationships with physicians, but we do not have the implementing regulations yet.
(42 CFR 411.361)
Stark Analysis
1. Is there a financial relationship between the DHS provider and the physician or their family member? Direct or indirect relationship? Ownership or investment interest? Compensation arrangement?p g
2. Does the physician make or has she made referrals to the entity for DHS payable by Medicare?
3. Does a safe harbor apply?4. Has the entity billed for items/services pursuant to
improper referral, and if so, did the entity have knowledge of physician’s identity?
As we consider these, ask yourself:–Do we have such financial
relationships?–Do our relationships fit the
requirements of the applicable safe harbor?
Employment Agreements
* Remember: this applies to agreements with physicians or their family members.
Employment is for identifiable services. Compensation is:
– Consistent with fair market value (“FMV”)Consistent with fair market value ( FMV ).– Not determined based on volume or value of referrals.– Commercially reasonable even if no referrals made.
May pay productivity bonus for personally performed services.– Not ancillary or “incident to” services.
(42 CFR 411.357(c))* Remember Tuomey case…
Services Agreements (Independent Contractors)
Written current contract signed by parties. Specify services provided. No revisions during first year, especially compensation. Services are reasonable and necessary for legitimate
business purposes. Compensation is:
– Consistent with FMV.– Set in advance.– Does not take into account volume or value of referrals
or other business generated between the parties. May pay based on personally performed services.
– Not ancillary or “incident to” services.(42 CFR 411.357(d), (l))
Written current lease signed by parties. Specifies the space or equipment. Term at least 1 year. May terminate early, but can’t change
compensation terms within first year. Reasonable and necessary for legitimate business purpose. Commercially reasonable even if no referrals between parties Lessee has exclusive use during term except common areas. Rent is FMV, set in advance, and not based on referrals or
other business generated between the parties. Generally cannot use rent formula based on:
– % of revenue received, billed, generated, etc.– Per-unit of service referred by lessor.– On-demand lease.
Beware short term lease.(42 CFR 411.357(a)-(b))
Isolated Transactions (e.g., Sale of Practice)
Isolated financial transaction such as one-time sale of practice.
Remuneration is:– Consistent with FMV.– Does not take into account the volume or value ofDoes not take into account the volume or value of
referrals or other business generated by parties. Agreement is commercially reasonable even if physician
made no referrals. No additional transactions within 6 months except:
– reasonable post-closing adjustments, and – transactions that meet another Stark safe harbor.
(42 CFR 411.357(f))
Recruitment
Written contract signed by parties. Physician relocates from at least 25 miles away into
hospital’s service area. Not conditioned on referrals to hospital. If recruit physician into an existing group:
– Cannot subsidize group.– Hospital payments to group must be: Directly passed on to recruited physician. Reimburse group for recruitment expenses. Income guaranty limited to additional incremental
expenses attributable to adding physician.(42 CFR 411.357(e))
To qualify as “group practice”, must satisfy criteria, including: Operate as a single group. Perform and bill 75% of services through group. Method of distributing income and expenses determined in
advance. Compensation not based on referrals for DHSCompensation not based on referrals for DHS.
– May pay per capita sharing of profits. Not based on pods of less than 5 physicians. Limits ability to use separate cost or profit centers.
– May pay for productivity based on personally performed services and “incident to” services. Not based on ancillary services.
– Other methodology unrelated to referrals for DHS.(42 CFR 411.352)
Intragroup Referrals for Physician Services
May refer for DHS that is furnished:– By a physician who is a member of the referring
physician’s group, or– Under the supervision of a physician with the
referring physician’s group.• Must qualify as a “group practice” under 42 CFR
411.352.(42 CFR 411.355(a))
In-Office Ancillary Services
May refer to others within group to perform ancillary services (including certain DME) if the services are:– Furnished by a member of the group or under the
supervision of a group member;– Furnished in the “same building” or “centralized g
building” where the group regularly provides services; and
– Billed by the referring physician or the group. For MRI, CPT, and PET, must give patient written notice of
at least 5 other suppliers within 25 miles who may provide such services.
DHS furnished in a “rural area”, i.e., outside a metropolitan statistical area (“MSA”), and
Entity furnishes at least 75% of the DHS that it furnishes to residents of a rural area.
If entity is a hospital in which physicians or family members y p p y yhave ownership or investment interest, hospital must satisfy additional requirements applicable to physician-owned hospitals in 42 CFR 411.362.
(42 CFR 411.356(c)(1))
Ownership in Hospital (e.g., Specialty Hospital)
Physician or family member has ownership or investment in the whole hospital, not a department or distinct part.
Status established as of 12/31/10.– Physician had interests as of 12/31/10.– No addition of operating rooms procedure rooms orNo addition of operating rooms, procedure rooms, or
beds unless exception granted through reg process.– No increase in the percentage of physician ownership.
Compensation does not depend on referrals. Returns based on investment, not referrals. Cannot loan money for investment. Investment offered on same terms to non-physicians.(42 CFR 411.356(c)(3) and .362)
Ownership in Hospital (cont.)
Must disclose conflict of interest.– Hospital must submit annual report regarding physician
investors.– Physicians must provide written notice of ownership
interest to patients the physician refers to the hospital.p p y p– Hospital must disclose on website and in advertising that
hospital is owned by physicians. If no physician present 24/7, must provide written notice to
patient and obtain acknowledgement. Must have ability to assess, provide initial treatment, and
transfer all patients.(42 CFR 411.356(c)(3) and .362)
Items or services (not cash or cash equivalents) by hospital to medical staff .
Used on hospital campus. Offered to all medical staff members in same specialty. Not based on the volume or value of referrals or other
business generated between the parties.g p Provided while physician is making rounds or engaged in
services benefiting hospital or patients. Reasonably related to patient care at hospital. Low value, i.e., less than $25.(42 CFR 411.357(m))
Referrals to Family Members in Rural Areas
Stark generally applies to referrals to:– Family members.– Entity with which family member has financial
relationship unless that financial relationship fits a Stark safe harbor (e g employment servicesa Stark safe harbor (e.g., employment, services contract, etc.).
Exception– patient resides in rural area.– no other person is available to furnish services
May require employees and contractors to make referrals if. Contract contains requirement to make referrals; Compensation is FMV and does not take into account
volume or value of referrals; and Referrals relate solely to physician’s services under theReferrals relate solely to physician s services under the
contract and are necessary to effectuate intent of contract.Cannot require referrals if: Patient prefers to go to a different provider; Insurer determines the provider; or Physician determines referral to the required provider is not
in patient’s best medical interests.(42 CFR 411.354(d)(4))
Additional Safe Harbors
Compliance training. Obstetrical malpractice insurance. Physician retention in underserved area. Community-wide health information systems.y y Electronic prescribing items and services. Electronic health records items and services. Charitable donations by physician.(42 CFR 411.357)
Remember: Stark Analysis1. Is there a financial relationship between the DHS
provider and the physician or their family member? Ownership or investment interest? Compensation arrangement?
2. Does the physician make or has she made referrals p yto the entity for DHS payable by Medicare?
3. Does a safe harbor apply?4. Has the entity billed for items/services pursuant to
improper referral, and if so, did the entity have knowledge of physician’s identity?
If you think you have a Stark problem… Don’t ignore it or attempt to sweep under rug.
– Remember the False Claims Act penalties? Don’t submit claims for DHS until situation resolved. If possible, suspend remuneration to physician until resolved. Evaluate the situation carefully.
C fi f– Confirm facts.– Review Stark for possible exceptions.– As necessary, seek qualified expert advice.– May consider Advisory Opinion, but rare…
As necessary, revise the arrangement going forward. May be necessary to make or recover over- or underpayments
to terminate period of disallowance. If necessary, repay CMS…
Repayment Obligation
Must repay payments received in violation of Stark. Stark: must repay improper payment within 60 days;
failure to repay = $15,000 per improper claim. False Claims Act: must report and repay “overpayment”
within 60 days; knowing failure to repay =– Violation of False Claims Act $5,500 to $11,000 per claim 3x damages
– Violation of Civil Monetary Penalties Law $10,000 per claim
Self-Referral Disclosure Protocol (“SRDP”) Voluntary program
– For confirmed Stark violations.– If you submit, assume you are going to pay.
(OMB # 0938-1106)
Benefits– CMS may reduce penalties if fully disclose and
cooperate.– May preclude qui tam lawsuits.– Participation in SRDP suspends obligation under False
Claims Act repayment rule.– May cut off liability and allows finality for pending Stark
problems.
SRDP
Risks– No guarantee that CMS will reduce penalties.– CMS may broaden investigation.– Failure to fully disclose or cooperate may result in
additional penalties.p– CMS may report to other government agencies.– Participation is fairly burdensome, but not as bad as
OIG SDP.– Reopening periods run from date of initial disclosure.– Waiver of appeal rights concerning any overpayment.– Likely will waive privileges.– Info may become public.
– Hard copy submission to CMS.– See SRDP for required information.
CMS verification. Settlement. May withdraw, but unlikely.
SRDP
Repayment limited to 4-year lookback period. “A disclosing party will satisfy … the SRDP by submitting a
financial analysis setting forth the total amount actually or potentially due and owing for claims improperly submitted and paid within the time frame established for reopening determinations at 42 CFR 405 980(b) ” (CMS FAQ6089)determinations at 42 CFR 405.980(b). (CMS FAQ6089)
“[U]ntil the proposed [repayment] rule is finalized, providers and suppliers of services disclosing actual or potential violations of the physician self-referral law under the [SRDP] may perform the financial analyses required under … the SRDP using the applicable time frame and requirements for reopenings established in the existing reopening regulations at 42 CFR 405.980(b).” (CMS Stark FAQ6093)
SRDP
“The disclosing party’s diligent and good faith cooperation throughout the entire process is essential…. CMS expects to receive documents and information from the disclosing party that relate to the disclosed matter without the need to resort to compulsory methods. If a disclosing party fails to work in good faith with CMS to resolve the disclosed matter, that lack of cooperation will be considered when CMS assesses the appropriate resolution of the matter. Similarly, the intentional submission of false or otherwise untruthful information, as well as the intentional omission of relevant information, will be referred to DOJ or other Federal agencies and could, in itself, result in criminal and/or civil sanctions, as well as exclusion from participation in the Federal health care programs.” (SRDP)
Provider may be expelled from SRDP if fails to cooperate.
Factors considered in reducing amounts owed:– Nature and extent of improper or illegal practice.– Timeliness of self-disclosure.– Cooperation in providing additional information related
to the disclosureto the disclosure.– Litigation risk associated with the matter disclosed.– Financial position of the disclosing party.
“While CMS may consider these factors…., CMS is not obligated to reduce any amounts due and owing.”
SRDP
“Sanctions for violating [Stark] are often severe and sometimes lead to disproportionately large damage amounts compared to the severity of the violation… The statute’s overpayment sanction creates a significant potential financial burden on health care providers.”
“CMS [is] using the authority granted by Congress to reduce disclosed overpayments in a manner that is proportional to the nature of the disclosed violations….”
(SRDP Report to Congress (2012))
Reported SRDP Settlements
Violation Exposure SRDP Settlement
Failed regulatory requirements
$14,500,000* $579,000
Have limited information regarding SRDP settlements
Identify existing financial relationships with physicians, physician-owned entities, or family members of physicians.– Contracts (employment, independent contractors,
medical directors, on-call coverage, management, etc.).– Leases (space, equipment, etc.).( p , q p , )– Subsidies or loans.– Group compensation arrangements.– Joint ventures or partnerships.– Free or discounted items or services (e.g., use of space,
equipment, personnel or resources; professional courtesies; insurance; gifts or perks; advertising; etc.).
Review relationships for compliance, including:– Written contract that is current and signed by parties.– Compliance with terms of contract. Physician providing required services. Performance has not changed from terms in contract Performance has not changed from terms in contract. Documentation confirming that services provided.
– Fair market value.– Compensation not based on volume or value of
referrals.– Arrangement is commercially reasonable and serves
legitimate business purpose.
Action Items
Implement method to track and monitor physician relationships for compliance.– Central repository for contracts.– Method to track contract termination dates.– Process for obtaining confirmation of compliance beforeProcess for obtaining confirmation of compliance before
payments to physicians.– Require review and approval by compliance officer,
attorney or other qualified individual. Contracts. Joint transactions with physicians. Physician benefits or perks. Marketing or advertising.
Action Items
Ensure your compliance policies address Stark.– See, e.g., OIG Supplemental Hospital Compliance
Program Guidance, 70 FR 4858 (2005). Train key personnel regarding Stark compliance.
– Administration.– Compliance officers and committees.– Human resources.– Physician relations and medical staff officers.– Marketing / public relations.– Governing board members.– Accounts payable.