Improving Your Practice

FQHC Section 340B Audit Readiness: A Pound of Prevention

January 25, 2015 | Little Health Law

For Federally Qualified Health Centers and other eligible safety net health care centers, proper utilization of the federal Section 340B Drug Discount Program can offer enormous financial advantages to facilitate delivery of high quality primary health care services to their communities. The Section 340B Program, created in 1992, requires drug manufacturers to provide outpatient drugs to qualifying health care centers and organizations at reduced prices. The purpose of the Section 340B Program is to provide a financial advantage that supports FQHCs and other safety net providers, enabling them to stretch scarce federal resources as far as possible to the benefit of their patients.

Georgia FQHC Law Firm

The federal Health Resources and Services Administration (HRSA), which regulates and supervises the Section 340B Program, has legal authority to audit Section 340B Program covered entities. Alternatively, HRSA may authorize a drug manufacturer to audit a covered entity under particular circumstances and according to HRSA’s protocol. An audit is for the purpose of assessing covered entity compliance with HRSA regulations and protocol governing the Section 340B program and, in particular, to identify and remedy diversion of Section 340B drugs or duplicate discounts.

Program Integrity Audits, as they are known, were first initiated in 2012 and have increased each year. Audit results can be reviewed on the HRSA website. A covered entity’s failure to pass audit scrutiny can result in very adverse financial consequences, including having to refund discounts to a drug manufacturer and/or exclusion from the Section 340B Program. Through Fall 2014, approximately 240 audits have been performed. More audits are expected in 2015, as HRSA continues to ramp up its oversight and scrutiny of the Section 340 participants. Many hundreds of FQHCs will be the subject of upcoming audits.

For FQHCs and other covered entities that potentially subject to an audit, the financial stakes are so high that audit readiness should be a top priority. Fortunately, HRSA provides contract pharmacy guidelines that, if properly followed, can reduce the risk of being audited and of a bad audit outcome. For every Section 340B participant, following HRSA guidelines is therefore a must.
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Michigan Bill Would Benefit Direct Primary Care Doctors

September 30, 2014 | Little Health Law

A Michigan legislator’s bill, SB 1033, sponsored by Senator Patrick Colbeck, would benefit direct primary care doctors in that State, and the idea may warrant consideration in other States. The purpose of the bill is to provide physicians who convert their practice to a direct primary care model with the assurance that their medical practice will not be treated as an insurer regulated under state insurance regulations.

Atlanta and Augusta, Georgia Physician Practice Law Firm

Among other legal hurdles some physicians may face in developing a direct primary (or concierge) care practice model is avoiding the creation of an insurance product. This can be a central legal issue for such practices. A distinguishing feature of the direct primary care model is that the patient, sometimes referred to as a “member” or “enrollee,” receives medical care without paying anything other than a predetermined periodic fee, sometimes referred to as a “medical retainer.” The theory behind the insurance issue is that by accepting a set, predetermined fee in advance of the medical services, the physician or medical practice is, in effect, underwriting an insurance risk. The consequences of a state insurance regulator determining that a medical practice is operating as an insurance company can be severe.

Senator Colbeck’s bill is intended to avoid such problems in Michigan. The bill provides, in part, as follows:

(1) A medical retainer agreement is not insurance and is not subject to this act. Entering into a medical retainer agreement is not the business of insurance and is not subject to this act.
(2) A health care provider or agent of a health care provider is not required to obtain a certificate of authority or license under this act to market, sell, or offer to sell a medical retainer agreement.
(3) To be considered a medical retainer agreement for the purposes of this section, the agreement must meet all of the following requirements:

(a) Be in writing.
(b) Be signed by the health care provider or agent of the health care provider and the individual patient or his or her legal representative.
(c) Allow either party to terminate the agreement on written notice to the other party.
(d) Describe the specific routine health care services that are included in the agreement.
(e) Specify the fee for the agreement.
(f) Specify the period of time under the agreement.
(g) Prominently state in writing that the agreement is not health insurance.
(h) Prohibit the health care provider, but not the patient, from billing an insurer or other third party payer for the services provided under the agreement.

Physician Practices: Recent Survey Reviews the Effects of Expanded Patient Access

September 24, 2014 | Little Health Law

A well-intended objective of the Affordable Care Act (ACA) is to improve patient access to doctors. Sometimes this objective is artfully stated as “better” access to care, rather than “increased” access to care, perhaps to acknowledge the reality that as more patients become insured via the ACA, there may actually be less access to physicians. “Better” access may therefore be an argument that, even as an existing physician shortage worsens, new alternatives under the ACA nonetheless improve access to care for the population as a whole. For sure, millions of Americans have enrolled in new insurance coverage via the ACA health insurance exchanges. In any event, whether it will be easier for most Americans to actually see a doctor remains to be seen according to a recent national survey.

The survey, by The Physicians Foundation, concluded that patients are likely to face increased difficulties in finding true access to care if current health care reform trends continue. More than 20,000 doctors nationwide were surveyed by the Foundation, and its findings are detailed and compelling. Among other things, the survey indicates that: 81 percent of doctors believe they are over-extended or at full capacity; only 19 percent of doctors think they have time to see additional patients; and 44 percent of doctors are now planning steps that would reduce patient access to their services (e.g., cutting back on patients seen, retiring, going part-time, closing their practice).
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Health Care Fraud Report: OIG Alert Regarding Laboratory Payments to Referring Physicians

September 16, 2014 | Little Health Law

Clinical laboratory payments to physicians in excess of the fair market value of services provided or that correlate to the volume or value of referrals can constitute health care fraud and trigger very serious civil and criminal penalties. The Department of Health and Human Services’ Office of Inspector General (OIG) recently issued a Special Fraud Alert (the “Alert”) addressing lab compensation to referring doctors and medical practices for blood specimen collection, processing and packaging, and for submitting patient data to a registry or database. Our Georgia health care law firm endeavors to follow updates in health care laws and regulations that impact providers, particularly Stark law and the federal Anti-Kickback Statute (AKS). This OIG Alert warrants caution and careful evaluation of any applicable financial arrangements by affected physicians and medical practices to ensure compliance with federal law.

Labs and physicians: BEWARE of Stark Law and the Anti-Kickback Statute
At the heart of Stark Law and the AKS is the notion that (unlike most other industries) health care business referrals may, under some circumstances, be a bad thing. Kickbacks that corrupt medical judgment about the medical necessity of services, result in the overutilization of medical products and services, increase the cost of federal programs, or that cause unfair competition, are of great interest to the Federal Government and are the intended targets of Stark Law and the AKS.

The AKS, unlike Stark, is a criminal statute, a violation of which requires evidence of criminal intent. However, the OIG may find evidence of such intent even by mere characteristics of a particular financial arrangement, including legal structure, the absence of safeguards, and, of course, actual conduct of the parties regarding the arrangement.
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Negotiating Professional Liability Insurance Protection in Physician Employment Agreements

July 10, 2014 | Little Health Law

In our practice as an Atlanta and Augusta health care law firm, we see varying options regarding professional liability insurance coverage made to physicians in their employment agreements. All doctors apprehend in general that there are financial risks associated with potential malpractice claims. While the need to obtain liability insurance is obvious, the right coverage for particular circumstances and how coverage works can be less obvious. Understanding the type of professional liability coverage proposed in a physician employment agreement and how the coverage mechanics work is an essential first step for physicians who desire a physician employment agreement that will truly protect their long-term financial interests.

The first type of coverage is “occurrence-based” professional liability insurance. Occurrence-based coverage provides lifetime coverage for incidents that occurred during the insurance policy period. This means that even if the policy lapses or is terminated, if a claim is made concerning an incident that occurred while the policy was in force, the claim is covered under the policy. Generally speaking, professional liability policies will define “occurrence” as the actual act or omission of the physician, not the injury of the patient.

A “claims-made” policy, on the other hand, only covers incidents that occurred and were reported during the policy period. If a claims-made policy is dropped or expires, any claims asserted thereafter are not covered, even if the incident occurred during the policy period. Where a physician’s professional liability policy is a claims-made policy, the physician (or his employer) may purchase an “extended reporting” endorsement, otherwise known as “tail” coverage, to cover claims asserted after the policy period.
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HIPAA’s Teeth

July 1, 2014 | Little Health Law

Although most health care providers understand in the abstract that they must comply with The Health Insurance Portability and Accountability Act of 1996 (HIPAA), many may not fully appreciate the legal and financial significance of noncompliance. More and more, the federal government utilizes HIPAA enforcement options to protect the public interest in security, including the following strong incentives for HIPAA compliance.

HIPAA Civil Penalties

Caps on penalties for HIPAA violations by covered entities were increased in 2009 by the enactment of the HITECH Act. Covered entity civil penalties are “tiered” as follows:

No knowledge of HIPAA violation – $100-$50,000 for each violation, up to a maximum of $1.5 million during a calendar year.
A reasonable cause of the HIPAA violation exists – $1,000-$50,000 for each violation, up to a maximum of $1.5 million during a calendar year.
The HIPAA violation was caused by willful neglect but timely corrected – $10,000-$50,000 for each violation, up to a maximum of $1.5 million during a calendar year.
The HIPAA violation was caused by willful neglect but not timely corrected – $50,000 or more for each violation, up to a maximum of $1.5 million during a calendar year

The HITECH Act also offers benefits to encourage patients to report HIPAA violations similar to those offered in qui-tam cases. This allows patients who have been impacted by HIPAA violations to collect a portion of the civil monetary penalty that is imposed against a violator. However, there are three very important exceptions to collecting on this penalty:

The offense is punishable under HIPAA criminal provisions;
The violator did not know and, by exercising reasonable diligence, would not have known of the violation; or
The failure to comply is caused by “reasonable cause” rather than “willful neglect” and the alleged violator takes action to cure the failure during the first 30 days following actual knowledge of the noncompliance or when the person should have known of the noncompliance.

HIPAA Criminal Penalties

Although the DHHS Office for Civil Rights enforces the civil penalties for HIPAA violations, the Department of Justice is the agency in charge of enforcing HIPAA’s criminal penalties. As with the civil penalties, the nature of the HIPAA violation determines the severity of the penalty in regards to criminal sanctions:

If a person knowingly and, in violation of the Privacy Rule, discloses PHI to another individual, they face a base penalty of up to $50,000 in fines and up to a year in prison, or both;
if the offense is committed under false pretenses, they can be fined up to $100,000 and face up to five years in jail, or both;
if the offense is committed with an intent to sell or otherwise use PHI for commercial advantage, personal gain or malicious harm, they can be fined up to $250,000 and face up to 10 years in jail, or both.

Physician Servicing and Consulting Agreements and Transparency

June 21, 2014 | Little Health Law

Medical device companies, pharmaceutical companies or other health care related companies or vendors often seek consulting or personal services from doctors. Physicians should be cautious in such arrangements to avoid legal issues under federal law. Where fair market value compensation is paid for such services, there may be no issue under, for example, the federal Anti-Kickback Statute (AKS). However, arrangements that involve excessive compensation can lead to legal problems and reporting issues.

Physician personal service arrangements may fall within the AKS safe harbor found in 42 C.F.R. § 1001.952(d). Such services provided by the physician must be legitimate and necessary and must meet the following requirements:

1. A written agreement states the specific services and compensation for the services;
2. The term of the agreement must be at least one year; and 3. The compensation must be for fair market value and not fluctuate based on volume or value of the business generated
Transparency in many such arrangements is required by law. The Physician Payment Sunshine Act (PPSA) was enacted pursuant to the Patient Protection and Affordable Care Act of 2009 (ACA). The PPSA requires manufacturers of medical supplies, devices and drugs paid for by certain government programs (e.g. Medicare) to report to the federal government payments made to health care providers, including physicians, that exceed $10 or aggregate payments over $100 annually. Payments covered include consulting fees, royalties, stock options, gifts, entertainment, and other items of value or forms of consideration, subject to a fine of $10,000 per failure to report.
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Possible Delay of the Affordable Care Act’s Individual Mandate

March 12, 2014 | Little Health Law

House Republicans gained the support of 27 Democrats and passed The Suspending the Individual Mandate Penalty Law Equals Simple (SIMPLE) Fairness Act (H.R. 4118), a bill that would delay for one year the Affordable Care Act (ACA) individual mandate penalty tax for those failing to buy health insurance before the deadline this month. As reported recently in the Washington Post, while destined to fail in the Democratic-controlled Senate, this Bill nonetheless underscores mounting pressure upon the Administration and Democrats in an election year, as the troubled healthcare law struggles to get traction in its implementation and with voters. Republicans want mileage in November from increasing public confusion and disenchantment about the ACA. They seize upon much publicized trouble spots of ACA implementation, such as the disastrous rollout of the website, cancelled policies, patients unable to stay with the doctor they prefer, and higher insurance premiums.

Insurers and proponents of the ACA view the individual mandate as critical to the financial mechanics of the health insurance reform intended by the ACA, namely expansion of insurance coverage to most Americans irrespective of health conditions and without lifetime or annual caps on benefits. With the new law’s imposition upon insurers of a requirement that they insure all Americans — even the most high-cost patients — it is important that the young and healthy, whether they need insurance or not, pay insurance premiums to help fund the insurers’ cost of paying for the health care of unhealthy Americans. Hence the law’s controversial individual mandate that everyone obtain coverage and pay insurance premiums or, alternatively, pay a penalty tax based on household income. The penalty is to begin this year, phased in at 1 percent of taxable income, then 2 percent in 2015, and 2.5 percent in 2016.
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Medical Practice Compliance 101

February 18, 2014 | Little Health Law

Patients tend to see physicians only as providers of care — meeting their medical needs. The reality is that a physician’s efforts to stay compliant with regulations and laws may consume as much or more time than actually rendering care. With consequences for regulatory violations ranging from financial to criminal, compliance is a subject of the utmost importance for any physician practice.

The best way to avoid penalties is to have a serious compliance program in place to prevent, detect, and respond to any possible violation. With regulations always changing on both a federal and state level, especially now with the implementation of the Affordable Care Act (ACA), having a compliance program in place is critical. The benefits of creating an effective compliance program range from better sleep, higher ethical standards, satisfying government auditors and regulators’ requirements, and ensuring that business operations align with proper legal protocol. Given all the possible problems that may derive from doing otherwise, the absence of a strong compliance program invites problems.

To create an effective compliance program, physicians must first understand that there is no one-size-fits-all model. Compliance programs must be adaptable to each practice’s unique structure, services, and personnel. An experienced consultant and/or healthcare attorney should be considered to help set up or review the program and minimize particular risks applicable to your specific type of practice. You must also keep in mind that an effective compliance program will require time and resources to set it up properly and to modify it as needed to adapt to changes in our regulatory environment.
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An Ounce of Prevention: Identify and Mitigate HIPAA Compliance Issues to Avoid Costly HIPAA Penalties

December 31, 2013 | Little Health Law

An unencrypted thumb drive cost a dermatology practice $150,000. On December 26, 2013, the U.S. Department of Health & Human Services (HHS) announced a settlement with Adult & Pediatric Dermatology, P.C. of Concord, Massachusetts (APD) of alleged violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA). APD, a “covered entity” for HIPAA purposes, has offices in Concord, Westford, Marlborough, and Ayer, Massachusetts, and Wolfeboro, New Hampshire.

The thumb drive contained unsecured electronic protected health information (ePHI) relating to the performance of Mohs surgery for about 2,200 patients. The thumb drive was stolen from the vehicle of one of APD’s employees. APD informed its patients of the theft of the thumb drive and provided a media notice.

HHS investigated and determined that APD did not timely conduct an accurate and thorough analysis of the risks associated with potential exposure of the ePHI. HHS also determined that APD did not fully comply with the administrative requirements of HIPAA’s breach notification requirements to have written policies and procedures and train employees regarding breach notification requirements. HHS also determined that APD disclosed ePHI in violation of HIPAA by the access gained to it when APD did not reasonable safeguard an unencrypted thumb drive.

HHS fined APD $150,000 and required APD’s execution of a Corrective Action Plan. The Corrective Action Plan requires APD to develop a comprehensive risk analysis and risk management plan to ensure future compliance with HIPAA and to periodically report to HHS the status of APD’s implementation of the plan. HHS released its right to take further action against APD, conditioned upon full compliance by APD with the Corrective Action Plan. See HHS Resolution Agreement.
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