Stark Law and Physician Contracting

1

Stark Law and Physician Contracting A MD Ranger On-Demand Webinar

2

Objectives

•  Stark Law basics •  Review penalties for non-compliance •  Strategic and tactical best practices for building Stark

compliance into physician contracting

First thing’s first: call your attorney

•  MD Ranger doesn’t give legal advice •  Stark Law is complicated •  All matters regarding potential Stark violations (or

questions) should go to your counsel under privilege •  Intent is irrelevant

3

Twenty-some years ago…

4

The government needs to protect itself from fraud and abuse

•  Physician Self Referral Law, commonly referred to as “Stark Law” enacted

•  Section 1877 of the Social Security Act, 42 U.S.C. 1395.nn •  Consists of original statute (Phase I, 1989) •  Phase II into effect in 1996 •  Phase III throughout the 2000’s

5

Stark Law in a “nutshell”

•  Restricts physician referrals •  A physician (or a physician’s immediate family

member) who has a direct or indirect financial relationship with an entity that provides “Designated Health Services” (DHS), cannot refer patients (Medicare/Medicaid) to that entity for DHS, and the entity cannot submit a claim for services unless the financial relationship is within a Stark exception.

6

There’s a lot going on there!

•  What’s immediate family? •  What’s a direct financial relationship? What’s an

indirect financial relationship? •  What qualifies as DHS? •  What are Stark Law exceptions?

7

All in the family (literally)

•  Defined as immediate, which is: •  Spouse •  Parent •  Child •  Sibling •  Stepparent •  Stepchild •  Stepsiblings •  In-laws (parents and siblings) •  Grandparents •  Grandchildren •  Spouse of grandparents and grandchildren

8

Defining financial relationships

•  Any type of investment, ownership, or compensation arrangement between the referring physician and the DHS entity is a financial relationship under Stark

•  Includes stock ownership, partnership interest, rentals, personal services contract, salary, etc.

9

More examples of financial relationships

•  Professional services agreements •  Call coverage arrangements •  Medical directorships •  Medical staff officers payments •  GME programs •  Uncompensated care •  Leases •  Risk-sharing •  ACO’s

10

What’s DHS?

•  Inpatient services •  Lab •  Physical therapy •  Occupational therapy •  Radiology and imaging •  Medical equipment •  Medical supplies •  Prosthetics •  Home health and other outpatient services •  Prescription drugs

11

Surely there’s an exception….

•  Personal services arrangements •  AMC arrangements •  Medical staff incidental benefits (must be provided to

all) •  Physician recruitment •  Non-monetary compensation up to $372 ($390 in ‘15) •  Employment (legitimate) •  Office spaces leases •  Hospital ownership (must be greater than 50%) •  Compliance training

12

Remember

•  Not an exhaustive list •  Work with your attorney •  Each exception has very specific elements that must

be met and documented. Play safe.

13

And, don’t forget

•  Strict liability statute •  Intent to violate the law doesn’t have to be proven •  Technical violations of the law are still violations

14

How much are we talking?

•  No payment for claims •  Civil monetary penalties for each service ($15,000)

plus an assessment of up to three times the claim •  Penalties up to $100,000 for “circumvention

schemes” •  Physicians and entities could be excluded from

participating in CMS programs

15

How is it different from AKS?

•  AKS prohibits the exchange or offer to exchange anything of value in an effort to induce the referral of health care services (any items) from any person or provider

•  Much more broad than Stark •  Applies to all federal health care programs •  Intent must be proven

16

Stark Law and the False Claims Act

•  Enacted during the Civil War, the law imposes liability on people/organizations who defraud government programs

•  Payments to a hospital for services that violate Stark could be subject to penalties because they defraud the government

•  Allows whistle-blowers to bring qui tam lawsuits and sue on behalf of federal government for Stark violations

•  Yikes! 17

Challenge: maintain key physician relationships

•  Strong physician relationships key to a successful organization and to promote clinical excellence

•  Compensation decisions impact physicians immensely: be deliberate, thoughtful and consistent

•  Remember that all physician financial relationships, even non-monetary compensation, should have a contract and FMV documentation

18

Best practices for protecting your organization and physicians

19

Check out MD Ranger resources

•  Compliance checklists •  Structuring physician contracting programs •  How to identify risky contracts •  And more

www.mdranger.com/resources

20

Have a written and signed contract

•  Stark requires written contracts for physician services with payment terms set in advance!

•  Both the hospital and the physician must sign the agreement

•  Though this step is obvious, sometimes it can be quite challenging to determine if a contract exists.

•  No money exchanged for the service? STILL CREATE A CONTRACT

21

Document non-monetary compensation

•  Are you providing non-monetary payments to independent physicians (that you aren’t providing to the entire medical staff) that exceed the cap? •  Parking spaces? •  Meals? •  Electronic health records? •  Overhead from charity events involving doctors? •  Joint marketing? •  Office artwork? •  Technology? •  Infrastructure? •  ….?

22

Be specific about the service

•  The services to be provided must be described in detail in the contract.

•  Don’t forget important details, like number of hours in administrative agreements

•  Record keeping for time and performance of duties •  Periodic ‘audits’ of time cards to see if they are

accurate, meetings attended, reports filed, etc.

23

Set rates at fair market value •  Check the fair market value documentation with the agreement

to ensure that methods/data are sufficient •  If documentation or methods are questionable, look up market

data for the service •  If no documentation exists and payment rates were determined

by something other than fair market value, flag the contract for follow up

24

Don’t pay for referrals! Period.

•  Paying for referrals or bribing physicians in any way is illegal

•  Due diligence is required when reviewing contracts to ensure that the payments are not for referrals; lack of documentation leaves you vulnerable to technical Stark violations

•  Remember: the government doesn’t have to prove intent for Stark violations

25

Compliance is mandatory

•  Ensure that the hospital is paying the appropriate rates as per the agreement (AP is great for this)

•  Check physician documentation is up to standard, medical directorship hours especially

•  Read through the description of the service and ensure it is not only being adhered to, but also if the service is still needed

•  Check up on ‘special deals’ that didn’t follow standard procedures or legacy contracts that haven’t changed in years

26

Audit your contracts

•  Review the entire auditing process and document this discussion or meeting in full

•  Create a file or document to capture your internal process. Include: •  Memos written by responsible executive or leader •  Minutes from meetings •  Flags and notes •  List of follow up items in one place, as collected from above

documents, notes, memos, and emails

27

Stark questions?

MD Ranger, Inc. 650-692-8873 [email protected]

28