AVOIDING THE PROHIBITION AGAINST NON-PHYSICIAN OWNERSHIP OF MEDICAL ORGANIZATIONS
A management services organization (“MSO”) is an entity which would contract with a physician or a medical corporation owned and operated by physicians. The MSO could be owned by non-physicians. The physician or medical corporation can pay the MSO for everything. Employees would work for the MSO; the MSO would pay for the lease. The MSO would pay for all significant expenses and receive a fee for its services.
The Corporate Practice Medicine Doctrine (CPOM) is strong in California. Under this doctrine, physicians must control clinical decisions. The concern is that if business entities owned by non-physicians are permitted to control the rendering of care, they will subordinate clinical care to commercial considerations and profits. The objective, therefore, is to prevent non-physicians and non-physician-owned business entities from influencing treatment decisions.
This presents a significant constraint to physician business ventures. Specifically, if physicians or other clinical personnel work for entities other than professional medical corporations, they may be exposed to disciplinary risks, as well as to forfeiture of revenues.. For non-physician business partners, violating the CPOM may also bring both civil and, in extreme cases, potential criminal liability for engaging in medical practice without a license.
In California, the solution for avoiding violations of the CPOM in business ventures in which physicians work with businesses owned by unlicensed persons is a contractual relationship between the physician entity and the unlicensed business entity, or a “management services organization (MSO).” This is a business vehicle that permits unlicensed persons to provide services to physicians and their professional medical corporations. In its simplest form, an MSO provides basic practice support services to physicians and professional medical corporations via a contractual relationship, commonly known as a management services agreement. These services frequently include activities such as billing and collection, administrative support in certain areas, and electronic data interchange (e.g. electronic billing). Some MSO’s provide a broader set of services: the MSO may purchase many of the assets in a medical practice, such as office space or equipment. MSO’s can employ office support staff, and assist with a wide range of non-clinical functions. MSO’s can also assist in functions such as marketing. Often, MSO’s can reduce costs by bringing economies of scale and professional management experience into physician practices, thereby improving operational efficiency and reducing overhead costs.
the MSO must be carefully considered and constructed. Review and application of relevant laws and regulations is a must.
By Matt Kinley, Esq. of the Kinley Law Practice
10 RED FLAGS
Under current law, physicians are required to maintain an effective, comprehensive compliance program to detect, correct and prevent incidences of non-compliance with state and federal regulatory law. Goals of a comprehensive compliance program is to prevent the significant criminal and civil penalties that might come with a violation of the False Claims Act, Stark, the Anti-Kickback Statutes, HIPAA and state law equivalents. Failure to comply might lead to exclusion from health payments. Here is a summary of the core components of a complete compliance plan:
#1 MISSING OR INCOMPLETE WRITTTEN POLICIES, PROCEDURES AND STANDARDS OF CONDUCT
#2 PEOPLE: NO COMPLIANCE OFFICER OR COMPLIANCE COMMITTEE
#3 TRAINING: THE FACILITY LACKS EFFECTIVE TRAINING AND EDUCATION
#4. COMMUNICATION: THE FACILITY LACKS
#5. PERSONEL: FAILURE TO PUBLISH DISCIPLINARY STANDARDS & TO EFFECTIVELY DISCIPLINE VIOLATORS
#6. NO SYSTEM TO AUDIT AND MONITOR ORGANIZATION COMPLIANCE AND COMPLIANCE RISKS
#7 FAILURE TO CREATE PROCEDURES TO PROMPTLY RESPOND TO IDENTIFIED ISSUES AND SELF DISCLOSURE OBLIGATIONS
#8. LACK OF SUPPORT FROM PHYSICIANS AND LEADERSHIP OF THE ORGANIZATION
#9. FAILURE TO INSTITUTE PRIVATE HEALTH INFORMATION POLICIES
#10. FAILURE TO MONITOR NEW LAW AND UPDATE COMPLIANCE ACCORDINGLY
By Matt Kinley,Esq., LLM, CHC
Matt Kinley Speaks to Los Angeles County Medical Association on March 23, 2016. Contact Mr. Kinley at firstname.lastname@example.org if your interested in attending.
Posted in Accountable Care Act, Anti-kickback, Current Affairs, Healthcare Regulatory Matters, Medical Insurance, Medicare, Physician, Physician Assistant, physician compensation, telehealth, Uncategorized
Make Sure Your Medical Directorship is Legal
HHS’s Office of Inspector General’s Fraud Alert issued in June of this year puts an often-used tool for compensating physicians in the regulatory cross hairs. “Medical directorships,” or the payment of a physician for overseeing clinics or other medical services, will violate the Federal and state Anti-Kickback statutes if “even one purpose of the arrangement is to compensate a physician for his or her past or future referrals.”
Compensation arrangements between hospitals, physician groups and other medical providers that contemplate management or directorships by a physician should be carefully evaluated by competent counsel. OIG has said that it will be reviewing such arrangements with particular interest. If a violation is found, the result could include criminal, civil and regulatory fines, and exclusion from federal health care payment systems.
Some of the elements of an appropriate directorship or management position for a physician might include a written contract for at least a year with a salary that constitutes a fair market value for services actually provided. Such an agreement should be backed up by salary surveys or other documentation that the compensation is based on similar positions within the community.
By Matt Kinley,Esq., LLM, CHC
Physician Compensation Arrangements Under Scrutiny
On June 9, 2015, the Office of Inspector General issued a special Fraud Alert warning physicians that compensation arrangements (such as medical directorships) must ensure that the arrangement reflects fair market value. Such arrangements “may violate the anti-kickback statute even if one purpose of the arrangement is to compensation a physician for his or her past or future referrals of Federal health care program business.”
California statures and rules can be even stricter.
In this era of merger and consolidation, medical providers must be careful to create appropriate compensation arrangements. They must carefully document attempts at establishing fair market value, or be subject to regulatory prosecution.
This alert comes after the OIG recently reached settlements with 12 physicians who entered into medical directorships and other arrangements, which the OIG concluded violated the Federal Anti-Kickback Statute. In those cases, the arrangements appeared to be illegal for one or more of the following reasons:
• The payments to the physicians took into account the physicians’ volume or value of referrals.
• The payments did not reflect fair market value for the physicians’ services.
• The physicians did not actually provide the services required under the agreements.
• The entities contracting the physicians paid the salaries of the physicians’ front office staff.
Certain physician compensation arrangements – and particularly medical director arrangements – are perceived as risk areas for Anti-Kickback Statute violations. Facilities and physicians entering into such arrangements should review existing and new arrangements for compliance in light of this Fraud Alert and should seek the expertise of health care legal counsel.
By Matt Kinley,Esq., LLM, CHC
Compliance in Physician Offices
Compliance guidance for physician practices was issued by the Office of Inspector General in 2000. Since that time, many physician practices, especially more complex specialty practices, have developed some sort of compliance plan. Compliance covers many areas of a healthcare practice.
Although compliance plans have not previously been mandatory, they have become “industry standard” as a way to minimize risks associated with health care regulations such as the Health Insurance Portability and Accountability Act of 1996, the Medicare and Medicaid Fraud and Abuse Laws, Anti- kickback Statute, Civil Monetary Laws, False Claims Act, the Clinical Laboratory Improvement Act and all other state and federal statutes, regulations and directives that apply to the operation of a complex physician’s practice.
The Patient Protection and Affordable Care Act of 2010, in section 6401, requires Health and Human Services and the Office of Inspector General to promulgate regulations that require most healthcare providers and suppliers to establish compliance programs. The compliance programs are intended to be “effective in preventing and detecting criminal, civil, and administrative violations” under the Medicare and Medicaid laws and other laws that govern operations.
Under the Affordable Care Act, physicians and group practices, will be required to establish compliance programs as a condition of enrollment in the Medicare program.HHS is required to issue regulations creating a timetable and basic core compliance program requirement.
Physician groups should begin the process of establishing compliance programs as soon as possible and not wait for final regulations. Compliance programs are a good way for physician practices to reduce risk associated with fraud and abuse and other legal matters that present risk to their operations. It makes sense for physicians to begin development now to provide ample time for creation of appropriately scaled policies and input from various personnel in the group.
It will not be sufficient to adopt pre-written compliance policies. Rather, physician offices must establish a continuing system of review for their office. Practices may need to be modified based upon their specialization. The seven core elements of effective compliance programs have been released by the Office of Inspector General, including the Physician Practice Guidelines.
A compliance program requires the physician to perform a risk assessment in their organization and document the outcomes of that assessment. The risk assessment could take many forms. Compliance professionals talk about a “gap analysis” which is an approach to help determine the vulnerabilities of your organization. Areas of risk provide emphasis to appropriate areas of risk that are identified through your risk assessment.
The seven areas of emphasis include:
1. Adoption of written guidelines and policies to promote the organization’s commitment to compliance;
2. Identification and appointment of a high ranking individual within the organization to serve as compliance officer;
3. Establishment of anonymous reporting systems, preferably through multiple pathways, to encourage individuals to make complaints regarding compliance items without fear of retaliation;
4. Effective education and training programs for all levels of employees and others with close relationships to the organization;
5. Ongoing auditing systems to assess the effectiveness of the compliance program and to provide input into areas that require additional emphasis;
6. Mechanisms to enforce the requirements of the compliance program and to discipline employees for violations of the organization’s commitment to compliance; and
7. An ongoing system of program modification based upon audit, feedback and experience that can further adapt the compliance policies to the specific issues faced by the organization.
By Matt Kinley, Esq
Payment for patients can land you in the federal penitentiary.
Home health care companies are facing more and more scrutiny from federal and state regulators. Such companies, particularly if they bill Medicare, are subject to all the laws, rules and regulations as are all health care providers.
In a case just reported by the Justice Department, an 64-year old owner of such a healthcare company pleaded guilty to violation of the Anti-Kickback laws for billing for services that were unnecessary and in some cases not even provided. He also paid recruiters which provided the company with patients. The owner was fined over $6.5 million, 75-months in prison and sentenced to three years supervised release. The case was investigated and brought as part of the Medicare Fraud Strike Force. However, such cases can be brought by state investigators or even by whistle blowers who are paid a percentage of recovery for reporting the health care provider, even if the whistle blower was part of the fraud.
The ramifications of even technical Medicare rules can be catastrophic a person’s life or business. Home health care companies should have competent legal representation to make sure their business plans are appropriate. Home health companies will soon be under rules that require compliance plans. Legal counsel should be engaged to help put in place an appropriate plan.
By: Matt Kinley, Esq. You can contact Mr. Kinley @ (562)715-5557.