Overview of Health Care Legal Issues Bruce D. Armon, Esq., Partner Business Department Saul Ewing LLP Telephone: 215-972-7985 1-800-355-7777, ext. 7985.

Overview of Health CareLegal Issues

Bruce D. Armon, Esq., PartnerBusiness Department

Saul Ewing LLPTelephone: 215-972-79851-800-355-7777, ext. 7985Email: [email protected]

March 18, 2008

Bruce D. Armon, Esq.

HEALTH LAW SUBJECTS

Regulation of health care providers Credentialing of health care providers Reimbursement issues Fraud and abuse Antitrust Tort law

Bruce D. Armon, Esq.

FRAUD AND ABUSE

The Government's war

Anti-Kickback statute

Stark statute

Criminal prosecutions and civil investigations

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ANTI-KICKBACK STATUTE

Basic prohibition – knowing and willful solicitation or receipt of any remuneration in return for referring persons or arranging for acquisition of goods or services

Penalties: Criminal and Civil

Safe Harbors

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ESSENCE OF MEDICARE/MEDICAID ANTI-FRAUD AND ABUSE STATUTE

Prohibits remuneration to induce referrals

“Remuneration” is broadly defined – e.g., opportunity to make money, kickback, bribe, rebate, anything of value

Statutory Exceptions

Judicial Interpretations

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SAFE HARBORS

Common Theme -- FMV; 1+ year contracts; full disclosure

Intended to protect non-abusive business arrangements

If it does not fit, it is not necessarily illegal

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SAFE HARBORS Investment interests Space rental Equipment rental Personal services and

management contracts Sale of Practice Referral Services Warranties Discounts Employees Group purchasing organizations Waiver of beneficiary

coinsurance and deductible amounts

Increased coverage, reduced cost-sharing amounts, or reduced premium amounts offered by health plans

Price reductions offered to health plans

Practitioner recruitment Obstetrical malpractice

insurance subsidies Investment in group practices Cooperative hospital service

organizations Ambulatory surgical centers Referral agreements for

specialty services Price reductions offered to

eligible managed care organizations

Price reductions offered by contractors with substantial financial risk to managed care organizations.

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OTHER INTERPRETATIVE RESOURCES

OIG Fraud Alerts Advisory Opinions

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STARK STATUTE If a physician (or family member) has a financial

relationship with an entity:

(1) physician may not "make a referral to the entity for the furnishing of designated health services" for which payment may be made under Medicare or Medicaid; and

(2) the entity may not bill for designated health services furnished pursuant to such referral

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WHAT IS A FINANCIAL RELATIONSHIP?

An ownership or investment interest in the entity Such interest “may be through equity,

debt, or other means” An indirect ownership interest is still

an ownership interest A compensation arrangement, with

certain exceptions

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WHAT ARE THE DESIGNATED HEALTH

SERVICES?

Durable medical equipment and supplies

Parenteral and enteral nutrients, equipment and supplies

Prosthetics, orthotics, and prosthetic devices

Home health services and supplies

Outpatient prescription drugs

Inpatient and outpatient hospital services

Clinical laboratory services

Physical therapy services

Occupational therapy services

Radiology, including MRI, CT scans, and ultrasound services

Radiation therapy services and supplies

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ARE THERE EXCEPTIONS TO STARK?

These are the most important part of the analysis to a health care lawyer, and for our physician-clients.

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CATEGORY OF EXCEPTIONS

Ownership only Ownership and compensation Compensation only

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EXAMPLES OF STARK EXCEPTIONS

Physician group practices

Personal service arrangements

Remuneration not related to the provision of designated health services

Physician recruitment

Rental of office space Equipment leases Bona fide employment

relationships Isolated financial

transactions Certain group practice

arrangements with a hospital

Payments by a physician for items and services

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STARK PENALTIES

Denial of payment by Medicare Required refunds of payments

made by individuals Civil money penalties and possible

exclusion from Medicare and Medicaid

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STARK VS. ANTI-KICKBACK

No proof of intent Applies to physicians Improper unless

exception

Unlawful intent Any person or

entity Technicalities

may not be penalized

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HIPAAWhat Is This About?

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HIPAA Overview

The Health Insurance Portability and Accountability Act of 1996 (P.L. 104-191) (HIPAA) became law on August 21, 1996. At the time it was commonly referred to as “Kennedy-Kassebaum” (after Senators Ted Kennedy (D-MA) and Nancy Kassebaum (R-KS) who were instrumental in its passage.)

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HIPAA Key Provisions Insurance reform - improve portability and continuity

of health insurance for groups and individuals. Extend fraud and abuse prevention measures to all

types of insurers (not just Medicare/Medicaid), and dedicate additional resources to fraud and abuse enforcement.

Administrative simplification - create a framework for the standardization of electronic data interchange (EDI) in health care, including protections for the privacy and security of individually identifiable health information.

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Administrative Simplification

Electronic Transactions and Code Sets Standards Privacy Standards Security Standards Electronic Signature Standards Identifier Standards

Employer Identifier StandardProvider Identifier StandardHealth Plan Identifier StandardIndividual Identifier Standard

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Final Rule published December 28, 2000 (65 FR 82462 et seq.)

Effective Date - April 14, 2003

Final Rule, Version II, published August 14, 2002 (67 FR 53182 et seq.)

Privacy Standards

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Privacy Standards

Is created or received by a health care provider, health plan, public health authority, employer, life insurer, school or university, or health care clearinghouse; and

Relates to the past, present, or future physical or mental health or condition of an individual, the provision of health care to an individual, or the past, present, or future payment for the provision of health care to an individual.

“Health information” is any information, whether oral or recorded in any form or medium, that:

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Individually Identifiable Health Information

Individually Identifiable Health Information (IIHI) is health information that identifies an individual or there is a reasonable basis to believe could be used to identify an individual.

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Protected Health Information

The focus of the Privacy Rule is Protected Health Information (PHI). PHI is IIHI that is transmitted or maintained in electronic or any other form or medium.

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Applicability

Health Plans Health Care Clearinghouses Health Care Providers

Privacy Rule applies to covered entities:

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Health Care Providers

Health care providers include any individual or entity that is covered as a provider under Medicare or any other person or organization that provides medical or other services or who furnishes, bills or is paid for health services or supplies in the normal course of business.

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Uses and Disclosures of PHI

When PHI is to be disclosed for purposes of

Treatment Payment Health Care Operations

an individual’s consent is not required pursuant to the Final Rule, Version II

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Administrative Requirements

Privacy official Contact person for complaints Training Safeguards Complaints Sanctions Mitigation

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Administrative Requirements (cont’d)

Intimidating or retaliatory acts Waiver of Rights Policies and procedures Documentation

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Business AssociateBusiness Associate means with respect to a Covered Entity (other than as a member of the workforce) an entity that performs or assists

In the performance of a function or activity involving the use or disclosure of individually identifiable health information, including claims processing or administration, data analysis, process or administration, utilization review, quality assurance, billing, benefit management, practice management and repricing, or any other function covered by these regulations.

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Preemption of State Law

General preemption rule. A requirement or other provision of the HHS Privacy Rule that is contrary to a provision of state law preempts the state law provision unless an exception applies.

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DECIDING WHERE TO PRACTICE

Institutional

Private practice

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EVALUATING A PRACTICE OPPORTUNITY

Developing your checklist

Identify priorities

Determine deal-breakers

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THE FIRST INTERVIEW

Establishing a rapport

Identifying the “nuts” and “bolts” of the practice

Asking the right questions

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THE MAJOR ISSUES Compensation --

not just salary!

Term and termination

Be aware of the Agreement’s details

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COMPENSATION

Possible salary formulas Base salary Base salary PLUS

production or collections

Production less overhead

Income Guarantee

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NON-SALARY BENEFITS Salary is only part

of the equation

Ascertain employer’s potential flexibility

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TERM AND TERMINATION

Term

How long is the initial term?

Automatic renewals and notice provisions

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TERM AND TERMINATION

Termination

For cause Without cause Timelines for termination Effects on benefits

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MOVING ON

Non-competition provisions

Access to patient records and confidentiality

Settling disputes -- arbitration or litigation?

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SYNOPSIS FOR NEGOTIATING EMPLOYMENT AGREEMENTS

Don’t rely on a handshake

The devil is in the details Don’t be afraid to ask for

changes Enjoy your first

professional practice opportunity (even though it might seem far away)!