Little Health Law Blog

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.
Continue reading ›

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.
Continue reading ›

Five Keys to Negotiate and Properly Memorialize Physician Employment Agreements

June 8, 2014 | Little Health Law

The trend in the United States toward physician employment by hospital systems, large medical practices, and other health care employers is continuing. Physicians should not make the mistake of failing to negotiate fair terms and good language in their physician employment agreements.

Atlanta Physician Employment Agreement Law Firm

The excitement of a new career opportunity may cause some physicians to forget that for the employer, the employment of doctors is business and nothing more. Employers invest considerable financial resources and take on significant business risks by employing doctors and, understandably, must protect themselves. That employers protect themselves with proper legal representation and documents drawn in strongly in their favor should never be a surprise.

What is surprising is that many doctors either take the particular language used in a hospital’s template physician employment agreement for granted altogether or, if they carefully study it, incorrectly assume it is written in stone and non-negotiable. It is always a mistake to not to carefully evaluate the terms of employment, how language is used to memorialize the terms, and the possibility of proposing some changes. While all provisions of a physician employment agreement should be carefully evaluated, the following five steps are essential to proper negotiation and drafting of physician employment contracts.

1. Know what you want

Methodically breaking down a particular job opportunity into attributes that you like, dislike or would improve is an important first step to prepare for the inevitable give-and-take of the contract negotiation process. To negotiate effectively, you must know what you want and what does not really matter to you. For example, for some doctors, family circumstances may render a particular schedule or the absence of call time a critical part of a contract; for another doctor who evaluates the same job, the particular schedule may not matter so much or call time may actually be desired. The same form contract may be presented to both doctors. Employers like to use their template contract forms (at least as a starting point) for all physician contracts. In negotiating terms or language, typically it is advantageous to leave alone points or issues that do not make a material difference to you since the more you change terms the greater the chance that you will sour the deal. To help properly limit how much change you broach with the employer, you must first determine what matters to you — what terms you really want or do not want. Make a list, then ask yourself whether the contract accurately states your intentions as to the material terms of the contract.

2. Do not assume a term or particular language is non-negotiable

Too often physicians assume that just because the employer is large and has counsel prepare a form agreement every word of the contract is a take-it-or-leave it proposition. While the flexibility employers have about their form physician employment agreements will vary from employer to employer, if the employer is reasonable and acting in good faith, rarely is any terminology written in stone. To the contrary, more often than not, the input of the physician and his lawyer about how contract language can be improved can make the agreement more fairly stated to the benefit of both sides. All contract language should be stated in a mutually fair, precise and accurate way that reflects the true meeting of the minds. Signing anything that does not achieve that basic objective can be a large mistake.
Continue reading ›

Overcoming Compliance Hurdles for Direct Pay (a/k/a “Conceirge”) Medical Practices

May 31, 2014 | Little Health Law

More than ever, physician innovation is needed in business models for medical practices to deal with problems associated with our cumbersome third party payer healthcare system. Our Atlanta health care law firm supports direct pay practice medicine as a positive trend. Many doctors are now setting up direct pay (a/k/a “concierge”) medical practices. This practice model in its purest form eliminates third party payers, and the patient-“member” of the concierge plan pays a fixed, prepaid fee for a menu of physician services that typically offer the patient greater access to the doctor. Varying hybrid concierge models exist that include some limited use of insurance plans. Direct Pay practices will likely continue to emerge and flourish as doctors seek smart business alternatives to deliver care in spite of a challenging regulatory and third-party payer healthcare environment.

For patients, belonging to a concierge practice usually means more access to and time with a doctor who really gets to know them and increasingly with flexible, affordable financial options to suit individual needs. For doctors, direct pay practice models can offer handsome compensation and desired relief from the medical hamster wheel of having to see a patient every six minutes to make reimbursement numbers work, with all the red tape and other burdens that attend having to spend too much time dealing with insurance companies. So what is the downside to a direct pay practice?

There are many legal and business issues unique to health care that confine doctors in how they set up a medical practice. These issues must be carefully evaluated to ensure medical compliance and avoid unpleasant business issues down the road. Although policy makers have not created direct restrictions prohibiting the concierge practice model, for those physicians who want to start or convert to this model, many legal considerations warrant caution and special care in setting up the business. Medicare presents a strong example. Doctors that accept Medicare reimbursement can either accept assignment and bill Medicare directly for their services or seek payment from the patient (who, in turn, seeks reimbursement from Medicare). Physicians can execute “participation agreements” with Medicare and receive greater reimbursement (5%). However, Medicare participating doctors cannot charge more than what is allowed by the Medicare fee schedules. Non-participating doctors who do not accept assignment cannot charge more than 115% of applicable amounts in the Medicare fee schedules. Violations of Medicare assignment rules can be prosecuted under the federal False Claims act.
Continue reading ›

The Affordable Care Act & Qui TamWhistleblower Claims

May 20, 2014 | Little Health Law

Controlling healthcare costs is essential to the economic security of the United States. Total healthcare spending in the U.S., already an astronomical $3 trillion dollars in 2013, is expected to grow almost 6% annually through 2022.¹ Spiraling healthcare costs is an obvious problem on many levels, including the fact that, through Medicare, the federal government is the single largest purchaser of healthcare in our third party payer system. Total Medicare spending is expected to increase from $523 billion in 2010 to $932 billion by 2020.²

The Patient Protection and Affordable Care Act, commonly known as the Affordable Care Act (ACA) or “Obamacare,” has frequently been in the spotlight for website issues and intense political debate over the law. However, a less publicized – but critical – aspect of the ACA is its intended role of curbing the rise in our nation’s healthcare costs.³
Continue reading ›

A New Prospective Payment System for Federally Qualified Health Centers

May 13, 2014 | Little Health Law

Medicare payments to community health centers are expected to increase by as much as $1.3 billion over the next five years, according to Bloomberg News, based on a new prospective payment system. On April 30, 2014, the U.S. Department of Health and Human Services’ Centers for Medicare & Medicaid Services (CMS) rendered a Final Rule that, among other things, implements methodology and payment rates for a prospective payment system (PPS) for federally qualified health centers (FQHC), effective October 1, 2014. The Final Rule stems from the Affordable Care Act’s (ACA) provisions to establish a new payment system for FQHC services under Medicare Part B (supplemental medical insurance) based on prospectively set rates.
Continue reading ›

Primer on Whistleblowing in Healthcare

May 5, 2014 | Little Health Law

What are whistleblower lawsuits?

Whistleblower lawsuits and settlements are on the rise and in the news. From January 2009 through September 2013, the federal government recovered $17 billion in false claims alone. Of course, most healthcare providers are honest and work diligently to improve the health of their patients and contribute to the lawful operation of a healthcare business. It is in the best financial interests of physicians and other healthcare providers who comply with the law that fraudulent schemes to unlawfully obtain government funds be deterred and remedied. The federal and many state governments have determined that a crucial means of combatting healthcare fraud is by incentivizing those who are aware of fraud to report it as a “whistleblower.”¹ In light of spiraling healthcare costs and with state and federal governments’ roles as third party payors, healthcare whistleblowing protects law-abiding taxpayers, healthcare professionals and consumers.

As this article explains, many federal and state whistleblower laws provide legal causes of actions for employees, officials and others who suspect or discover violations of law, waste or abuse within government or fraudulent practices by companies doing business with government. A person with knowledge of a violation or fraud, known as a whistleblower or “relator,” may bring a lawsuit to expose the fraud or abuse and recover damages on the government’s behalf. In many cases, whistleblowers are entitled to a percentage of the recovery for their efforts in uncovering fraud and assisting in the recovery.
Continue reading ›

Price Transparency In Healthcare: What Am I Paying For?

April 28, 2014 | Little Health Law

Shopping savvy largely derives from the discomfort of parting with money. If health insurance pays all (or most) of the bill for healthcare services, why should the patient care what the cost of the healthcare is, how such cost is calculated, or how cost might be reduced? But as a patient begins to spend money out-of-pocket for healthcare, his attention to cost and his interest in how cost is determined and what alternatives might save money quickly increase. When his money is spent, he tends to want to know more about his medical bills, what the details are and, ultimately, how price is calculated. Historically, how healthcare is priced has been all but impossible for consumers to ascertain. Now, there is a push in the healthcare industry toward greater pricing transparency, which may dovetail well with increasing financial responsibility placed upon patients for their healthcare costs. Many experts argue that greater price transparency will lead to more intelligent “shopping” by patients for their healthcare, which in turn may (at least theoretically) put downward pressure on healthcare costs.
Continue reading ›

April 23, 2014, Article co-authored by Kevin Little and Jay Brownstein, Primer on WhistleBlowing in healthcare, Published by The Ambulatory M&A Advisor.

April 23, 2014 | Little Health Law

Article co-authored by Kevin Little and Jay Brownstein, Primer on WhistleBlowing in healthcare, Published by The Ambulatory M&A Advisor.