CALIFORNIA HEALTHCARE LAW

How do you structure a physician’s lease when the physician is leasing
from a medical provider? Why does it matter?

Leases between medical providers often involve state and
federal rules and regulations relating to referrals.  As a general rule, if the lease is being
provided for anything other than fair market value, there may be an issue.  For example, an owner of a building that runs
a specialty such as urology may rent to a general practitioner at below market
rate with the expectation that the general practitioner will provide
referrals.  In order to avoid the
Anti-kickback statutes or Stark rules, most leases should have rent set in
advance, at market rate, and without change dependent on volume of business or
referrals back and forth.

There are other rules for diagnostic facilities.  Federal laws may provide exceptions, but
state law may not.  The only solution is
to be proactive.  Make sure your lease is
reviewed by a lawyer who understands this area of the law.  The last thing a physician wants is to be
visited by Medicare with accusations about kick-back schemes.

Post by Matthew L. Kinley, Esq.

Many contracts between medical providers and physicians
describe the physician as an independent contractor.  As a result, the
physician receives a 1099 instead of a W-2, and the medical provider does not
have the responsibility of paying benefits or deducting certain taxes.
Those responsibilities shift to the physician.

In many cases, physicians are not independent contractors.
Medical providers want stringent quality control procedures and policies and
they usually provide in their contracts that physicians comply with all
procedures and policies.  While this is favorable for the provider and the
patient, this can work to undermine the status of the physician as an
independent contractor.  Does the provider have senior physicians “look
over the shoulder” of junior physicians?  Does the physician rely on the
provider for patients, equipment, and other aspects of their practice?
Medical providers that exercise control over their physicians are unlikely to
be able to fight IRS claims that in fact, such physicians are employees.

There are additional issues for physicians when they are
categorized as independent contractors, some positive and some negative.
On the positive side, there is more mobility for physicians who are independent
contractors.  Most emergency room physicians are independent contractors,
allowing them to be flexible in the amount of hours they work, the number of
hospitals they work at, and the ability to change hospitals.  There are
also some tax advantages for independent contractors.  While you do have
to keep track of your own finances and pay quarterly payments to the IRS, you
are able to deduct more of your expenses if you form a corporation.

A few negative concerns.  First, the status of
independent contractor is very difficult to defend in an IRS audit, or if there
is any issue in a civil court.  Second, you may not enjoy the same protections
under the law as an employee, such as discrimination laws or other laws
designed to protect employees.  Third, you must pay for your own health
insurance and pension, and you generally do not have access to the provider’s
401k plan.  Fourth, an independent contractor has some concerns with
regard to the Anti-Kickback statutes and Stark rules for referral of
patients.

Ethics in Patient Referrals Act (“Stark”).  Under
Stark, if a physician or a member of the physician’s family has a contract or
other financial relationship with a hospital or other health care provider, the
physician may not refer patients to the provider for certain designated health
services payable by Medicare, and the provider may not bill Medicare for such
services, unless the arrangement is structured to fit within a regulatory safe
harbor. Stark is a strict liability statute: even technical violations require
repayments.  It is therefore imperative to structure and maintain
contracts consistent with a regulatory safe harbor.

In order to lessen the risks and downsides of being an
independent contractor physician, you should make sure you have a written
contract and that the contract is current.  Contract performance may morph
over time so the contract must accurately document the physician’s
performance.  The contract should specify the services and compensation,
and the compensation should be clearly set forth in advance.

Always assure that the independent contractor is paid fair
market value for their services. This is the single most important factor in
evaluating a physician contract.  Most compensation can be based on
relevant surveys, however, differences in geographic location, specialty,
services provided, productivity, hours worked, and similar factors effect fair
market value. Parties often overestimate fair market value at the outset of a
contract: actual productivity may not justify the compensation promised.
Incorporating an appropriate productivity-based compensation formula can reduce
the regulatory risk and ensure the long-term viability of the arrangement.

Finally, payment should not, in any way, be based on
referrals. Physicians may be paid a set salary or a fee per hour for services
rendered.

Written by Matthew Kinley

The Affordable Care Act does not require businesses to provide health benefits to their workers, but larger employers face penalties starting in 2014 if they don't make affordable coverage available. This simple flowchart illustrates how those employer responsibilities work.

The Henry J. Kaiser Family Foundation provides this simple chart to figure out if you will pay a penalty for not providing healthcare coverage, or not providing the right healthcare coverage, for your employees. Generally, if you have fewer than 50 employees, you are generally exempt.

Physicians often ask about how to prepare their practice to
make it attractive for potential purchasers.  Given the current
environment in California, where hospitals are utilizing foundations to
“purchase” practices and other payers are looking for primary care
physicians.  This article from American Medical News gives excellent
pointers for building your practice.

When reviewing
the various new regulations concerning the Accountable Care Act and
particularly Accountable Care Organizations, it is clear that the Primary Care
Physician will be at the center of doctoring over the next several years. 
While there already is a shortage of good primary doctors, the shortage is
about to get worse. 

Here’s an article from Medscape Today:

ACA
Will Require 3% More Primary Care Physicians by 2025

Robert Lowes

Nov
12, 2012

 The Affordable
Care Act (ACA), experts predict, will only deepen a
shortage of primary care physicians brought on by a growing — and
aging — population.

But to what
extent? A new study
in the Annals of Family Medicine offers a hard number. It will take an
extra 8000 primary care physicians in 2025 just to treat patients who obtain
insurance coverage under the law, according to lead author Stephen Petterson,
PhD, and coauthors.

In all, they
write, the nation will need 52,000 more primary care physicians in 2025 than it
has now, a figure resembling estimates in other recent studies. Before Congress
enacted the ACA in 2010, the Association of American Medical Colleges had forecast a
shortfall of 46,000 primary care physicians by 2025.

In the Annals
of Family Medicine study, sheer population growth accounts for 33,000 of
the 52,000 extra physicians needed in 2025, according to Dr. Petterson, the
research director of the Robert Graham Center for Policy Studies in Family
Medicine and Primary Care, affiliated with the American Academy of Family
Physicians, and colleagues. Another 10,000 physicians of the total reflect the
higher level of services used by baby boomers on the rolls of Medicare.

The ACA will
extend insurance to roughly 30 million more Americans through 2019. The 8000
primary care physicians required by this expansion represent a 3% increase of
the current workforce.

As a baseline for
their projection, Dr. Petterson and co authors used the 246,090 primary care
physicians who were engaged in direct patient care in 2010 as reported by the
American Medical Association. They whittled down that number to almost 209,000
after excluding physicians who were retired, working as hospitalists, or
working in emergency departments and urgent-care centers.

To calculate how many
primary care physicians will be needed in 2025, the authors estimated the
number of primary care office visits that would occur that year and divided it
by the current number of annual visits per physician, which is 2237. According
to this math, the United States ought to have almost 261,000 primary care
physicians 13 years from now, a 25% increase over 2010.

Coauthor Andrew
Bazemore, MD, MPH, director of the Robert Graham Center, called the workforce
growth required by just the ACA "a surprisingly small proportion" of
the total.

Fielding an
additional 52,000 primary care physicians in 2025 is a daunting task, Dr.
Bazemore said, given long-term preferences of most medical students for other
specialties. However, in the last 2 to 3 years "we've seen an uptick in
the number of medical student seniors choosing family medicine," he said.
That trend, along with proposals to increase the number of residency training
slots and earmark more of them for primary care, justifies "a little more
optimism," he added.

At the same time,
the healthcare system needs to not only grow the primary care workforce, but
also do a better job allocating clinicians to underserved areas.

"You need to
find a way to get the doctors to where they're needed," Dr. Bazemore said.

The authors have
disclosed no relevant financial relationships.

Ann Fam Med. 2012;10:503-509.

There are several types of Accountable Care Organizations that a physician may be asked to sign a contract with, including the Medicare Shared Saving Program ACO, Pioneer ACO, and private insurance providers.

All ACO’s have certain attributes in common, including risk participation and assessment, patient participation, integrated care, evidence based care, utilization of non physician professionals (physician assistants, nursing assistants, etc.) data analysis and use of technology for improving communications and care.

As a physician entering into any contract, but particularly a contract for an ACO, you should make sure you understand the contract. In most cases, if it’s not in the contract, it doesn’t exist. If you are promised some benefit from an ACO plan, like help with achieving meaningful use (technology), make sure it’s spelled out in the contract.

Here are some other things you should review In the contract:

1. Risk Participation: Shared Savings is a concept that has not been completely defined. Providers should understand how the billing works, and how the shared savings works. Some plans have penalties for physicians who do not meet benchmarks. This is an important part of the contract. Your payment should be clearly spelled out.

2. Exclusivity: Most plans require primary care physicians (including internists, general practitioners, family doctors, and geriatric doctors)to be exclusive with the ACO. Specialist can usually contract with several. Again, this should be clearly designated.

3. Corrective Action: What corrective action will take place if a physician does not meet benchmarks?

4. Benefits Provided: ACO’s need to provide infrastructure to help achieve cost savings. These include integrated care, behavior counseling, nurse phone availability, and improved technology. These benefits should be spelled out in the contract.

5. Regulatory Issues: Physicians have certain obligations under law to notify their patients about their medical plans and particularly for information sharing. A major goal of ACO’s is to review data for performance, but patients can opt out of sharing data. There should be a clear plan for complying with regulatory issues.

6. Payer Viability: If the payer fails, a clear exit strategy should be part of the contract.

All contracts have hidden agendas and concerns. Will there be an arbitration clause? Is there an attorney’s fee provision should there be litigation? Who exactly is contracting. ACO’s have particular issues that need special care so the contract should be carefully analyzed to make sure that all terms are carefully understood.

Submitted by Matthew L. Kinley

Healthcare providers, more than any other industry are
limited in how they may advertise. State and Federal laws, such as the
anti-kickback statutes and consumer protection laws restrict commission based
advertising, coupons or discounts, and the use of certain testimonials and
guarantees regarding the healthcare providers products or services.

The Anti-Kickback Statutes generally prohibit any payment
to any person who receives renumeration in exchange for a referral of a patient
to a healthcare provider. Penalties under this statute can be both financial and
criminal. In a typical commission
arrangement, a person is paid for providing customers.  For a doctor, it would include a person being
paid for referral of a patient. There are limited exceptions.  The exceptions require a set fee over a
period of time, unrelated to the number of patients referred.  Healthcare providers who wish to start a
program of advertising utilizing referrals should seek legal advice to assure
that the program doesn’t violate this law.

A recent
phenomenon  is utilization of website
discounts for medical services.  Groupon,
and other “daily deal” sites typically offer patients discounts on
cosmetic care, this can create fee splitting issues that implicate accusations
of providing unnecessary procedures because of the perceived obligation to
comply with a coupon. These issues will be dealt with by the state and federal
government in years to come.  Pay per
call or Pay per click arrangements may also implicate issues related to
anti-kickback issues.

Patient endorsements in advertisements can also be
problematical. First, they can be
reviewed for any dishonesty.
Statements must include all good and bad elements of treatment.  For cosmetic surgery, reference to an
“easy, outpatient procedure” that does not refer to anesthesia, may be
considered fraudulent.  Even the
implication that a procedure on one person will be the same for all patients is
also likely to be disallowed. Such ads can not look like news reports.

More and more healthcare providers are recognizing the
need to increase the number of patients actively seen by their practices.  Advertising may provide a method to increase
the medical business, but care must be exercised to make sure such
advertisement pass legal muster.

Submitted by Matthew L. Kinley

Join Us Next Monday evening.

• Background of the ACO
• Description of structure: including Alignment, Care Coordination Programs
• The benefits of belonging to an ACO including improvements to your practice and retaining patients for your practice
• Partnership with OCMA
• Physician involvement in ACO decisions
• Resources provided by the ACO
• Exclusivity
• Contract term

Date:
Monday, November 12, 2012

Time:
6:00 PM – Dinner
6:30 – 8:30 PM –

Presentation
Location:

OCMA Conference Center
17322 Murphy Ave.

Irvine, CA 92614

Price:
Free

RSVP:
http://acos.eventbrite.com

Questions:
Donna McPride
dmcpride @ocma.org
(949) 398-8100 ext. 107