OIG Issues Roadmap on Avoiding Medicare and Medicaid Fraud and Abuse for New Physicians

The U.S. Department of Health and Human Services, Office of Inspector General (OIG) has issued a resource and educational guide for new physicians to help them better understand the key Federal fraud and abuse laws.

As a health care attorney who often deals with physicians on fraud and abuse related matters, I applaud the OIG's effort to provide educational information to help raise the level of understanding on these issues and increase the transparency of these federal laws. This guide won't just be useful for "new" physician but for all physicians to gain a better understanding of the very complex legal/regulatory structure of fraud and abuse laws in the United States.

The new OIG document is titled, "Roadmap for New Physicians: Avoiding Medicare and Medicaid Fraud and Abuse." The physician education roadmap document summarized the five main Federal fraud and abuse laws, including the False Claims Act, the Anti-Kickback Statute, the Stark Law, the Exclusion Statute, and the Civil Monetary Penalties Law. The roadmap document provides tips to physicians on how they should comply with these laws in their relationships with payers (like the Medicare and Medicaid programs), relationships with vendors (like drug, biologic, and medical device companies), and relationships with fellow providers (like hospitals, nursing homes, and physician colleagues).

The roadmap guide was developed as a result of a survey conducted by OIG of medical school deans and designated institutional officials at institutions that sponsor residencies and fellowships to learn what types of instruction medical students, residents, and fellows receive on Medicare and Medicaid fraud, waste, and abuse. Nearly all respondents (92% of deans and 90% of designated institutional officials) reported they would like OIG to provide educational materials they can use. The complete survey, "Medicare and Medicaid Fraud and Abuse Training in Medical Education," was recently issued in October, 2010.

You can view online or download a PDF version of the roadmap guidance materials. I plan to include a copy of this as a part of my hand out materials when I talk to physicians and other health care providers on fraud and abuse issues.

AHLA Public Interest Committee Publishes Stark Law White Paper

The American Health Lawyers Association's Public Interest Committee recently published a new white paper on on the federal self-referral law also known as the "Stark Law" which looks at and considers what, if any, changes to the Stark Law might be beneficial under the current health care system and the proposed reform efforts.

The white paper is entitled, A Public Policy Discussion: Taking the Measure of the Stark Law. The white paper was written as a result of the Committee's Convener on Stark Law, held in Washington, DC on April 24 and June 30, 2009.

OIG Issues Modified Position on Stark Self Disclosure Protocol

Yesterday the Office of the Inspector General (OIG) issued an Open Letter to Health Care Providers making several changes to the Self-Dislcosure Protocol relating to the physician self referral law or Stark Law.

The OIG indicates in the letter that they are no longer going to accept under the self disclosure protocol pure Stark related liability issues. Instead the disclosure must have some type of colorable anti-kickback violation associated with the disclosure. Also, the OIG has established a new floor of $50,000 for settlement of kickback related submissions.

The letter indicates that the OIG is realigning its resources to go after larger violators of the Stark and anti-kickback laws. Inferences can be drawn from the letter that the OIG is not concerned with pure Stark related violations - but the OIG adds caution by stating that providers are not to draw any inferences about the Government's approach to enforcement of the physician self-referral law."

For more information check out the OIG's fraud prevention and detection resources.

Below is a complete copy of the text of the March 24, 2009 Open Letter to Health Care Providers:

An Open Letter to Health Care Providers
March 24, 2009

This Open Letter refines the OIG’s Self-Disclosure Protocol (SDP) to build upon the initiative announced in my April 24, 2006, Open Letter. The 2006 Open Letter promoted the use of the SDP to resolve matters giving rise to civil monetary penalty (CMP) liability under both the anti-kickback statute and the physician self-referral (“Stark”) law. As part of our ongoing efforts to evaluate and prioritize our work, these refinements aim to focus our resources on kickbacks intended to induce or reward a physician’s referrals. Kickbacks pose a serious risk to the integrity of the health care system, and deterring kickbacks remains a high priority for OIG.

To more effectively fulfill our mission and allocate our resources, we are narrowing the SDP’s scope regarding the physician self-referral law. OIG will no longer accept disclosure of a matter that involves only liability under the physician self-referral law in the absence of a colorable anti-kickback statute violation. We will continue to accept providers into the SDP when the disclosed conduct involves colorable violations of the anti-kickback statute, whether or not it also involves colorable violations of the physician self-referral law. Although we are narrowing the scope of the SDP for resources purposes, we urge providers not to draw any inferences about the Government’s approach to enforcement of the physician self-referral law.

To better allocate provider and OIG resources in addressing kickback issues through the SDP, we are also establishing a minimum settlement amount. For kickback-related submissions accepted into the SDP following the date of this letter, we will require a minimum $50,000 settlement amount to resolve the matter. This minimum settlement amount is consistent with OIG’s statutory authority to impose a penalty of up to $50,000 for each kickback and an assessment of up to three times the total remuneration. See 42 U.S.C. § 1320a-7a(a)(7). We will continue to analyze the facts and circumstances of each disclosure to determine the appropriate settlement amount consistent with our practice, stated in the 2006 Open Letter, of generally resolving the matter near the lower end of the damages continuum, i.e., a multiplier of the value of the financial benefit conferred.

These refinements to OIG’s SDP are part of our ongoing efforts to develop the SDP as an efficient and fair mechanism for providers to work with OIG collaboratively. Further information about our SDP can be found at: http://oig.hhs.gov/fraud/selfdisclosure.asp. I look forward to continuing our joint efforts to promote compliance and protect the Federal health care programs and their beneficiaries.

Sincerely,
/Daniel R. Levinson/
Daniel R. Levinson Inspector General

CMS Releases New Physician Self Referral (Stark) FAQs

The Centers for Medicare & Medicaid Services (CMS) recently modified its website and included a new Frequently Asked Questions (FAQ) section under the Physician Self Referral (Stark) section. CMS added 12 new Stark FAQs on January 31, 2008. A number of these new FAQs relate to the new Stark III regulations.

CMS Stark III Regulations Now Available

Today CMS released the final Stark III physician self-referral rule available on the Physician Self Referral section of the CMS website and will be published in the September 5 Federal Register. 516 pages of light health care regulatory reading for the Labor Day Holiday.

The Phase III Stark Final Rule (CMS-1810-F) is officially titled, "Medicare Program; Physicians' Referrals to Health Care Entities With Which They Have Financial Relationships (Phase III)". The regulations will be effective 90 days after the publication date which is expected to be September 5, 2007. Read the CMS press release.

UPDATE: CMS has also provided an unofficial redline version of the Stark regulations showing the existing regulations and incorporating in the new Stark III changes.

UPDATE (7/5/07): The official version was published in the Federal Register on September 5, 2007. A complete copy of the regulations can be found here. The effective date of Phase III Final Rule is December 4, 2007.

UPDATE (11/11/07): David Harlow reports that certain provisions of Stark III will be delayed for up to a year (December 4, 2008).

Below is a copy of the rule summary and the table of contents directly from the final rule:

Summary: This final rule is the third phase (Phase III) of a final rulemaking amending our regulations regarding the physician self-referral prohibition in section 1877 of the Social Security Act (the Act). Specifically, this rule finalizes, and responds to public comments regarding, the Phase II interim final rule with comment period published on March 26, 2004, which set forth the self-referral prohibition and applicable definitions, interpreted various statutory exceptions to the prohibition, and created additional regulatory exceptions for arrangements that do not pose a risk of program or patient abuse (69 FR 16054).

In general, in response to public comments, in this Phase III final rule, we have reduced the regulatory burden on the health care industry through the interpretation of statutory exceptions and modification of the exceptions that were created using the Secretary’s discretionary authority under section 1877(b)(4) of the Act to promulgate exceptions for financial relationships that pose no risk of program or patient abuse.

I. Background
II. General Comments
A. General
B. Compliance with the Anti-kickback Statute
III. Definitions--§411.351
A. Employee
B. Entity
C. Fair Market Value
D. “Incident to” Services
E. Physician in the Group Practice
F. Radiology and Certain Other Imaging Services and Radiation Therapy
G. Referral
H. Rural Area
IV. Group Practice--§411.352
V. Prohibition on Certain Referrals by Physicians and Limitations on Billing--§411.353
VI. Financial Relationship, Compensation, and Ownership or
Investment Interest--§411.354
A. Ownership
B. Compensation
C. Special Rules on Compensation
VII. General Exceptions to the Referral Prohibition Related
to Both Ownership/Investment and Compensation--
§411.355
A. Physician Services
B. In-office Ancillary Services
C. Services Furnished by an Organization (or Its Contractors or Subcontractors) to Enrollees
D. Reserved
E. Academic Medical Centers
F. Implants Furnished by an Ambulatory Surgical Center
G. EPO and Other Dialysis-related Drugs Furnished in or by an End-Stage Renal Dialysis Facility
H. Preventive Screening Tests, Immunizations, and Vaccines
I. Eyeglasses and Contact Lenses Following Cataract Surgery
J. Intra-family Rural Referrals
VIII. Exceptions to the Referral Prohibition Related to
Ownership or Investment Interests--§411.356
A. Publicly-traded Securities and Mutual Funds
B. Hospitals Located in Puerto Rico
C. Rural Providers
D. Ownership Interest in a Whole Hospital
IX. Exceptions to the Referral Prohibition Related to
Compensation Arrangements--§411.357
A. Rental of Office Space
B. Rental of Equipment
C. Bona Fide Employment Relationships
D. Personal Service Arrangements
E. Physician Recruitment
F. Isolated Transactions
G. Remuneration Unrelated to Designated Health Services
H. Group Practice Arrangements with a Hospital
I. Payments by a Physician
J. Charitable Donations by a Physician
K. Nonmonetary Compensation
L. Fair Market Value Compensation
M. Medical Staff Incidental Benefits
N. Risk-sharing Arrangements
O. Compliance Training
P. Indirect Compensation Arrangements
Q. Referral Services
R. Obstetrical Malpractice Insurance Subsidies
S. Professional Courtesy
T. Retention Payments in Underserved Areas
U. Community-wide Health Information Systems
X. Reporting Requirements--§411.361
XI. Miscellaneous (Other)
XII. Provisions of the Final Rule
XIII. Technical Corrections
XIV. Collection of Information Requirements
XV. Regulatory Impact Analysis
A. Overall Impact
B. Anticipated Effects
C. Alternatives Considered

Comments on the new regulations:

• Brian Peterson at his West Virginia Legal Weblog provides insight into the new regulations clarification of physician recruitment agreements and restrictive covenants in physician employment agreements.
  

Thanks to the AHLA Stark Law listserve for the tip on the final rule.