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Health Care Law
University of Mississippi School of Law
Gilchrist, Katie

 
Healthcare Law
Gilchrist
Spring 2013
 
 
STARK and AKS
·         Stark is triggered when:
o   Physician refers federally funded patients for designated health services to an entity where the physician or an immediate family member has a financial relationship with the entity
o   STARK makes it unlawful for a physician to refer federally funded patients for designated health services if the physician has a financial relationship with the entity
§  The Stark Law is found at 42 USC 1395nn
§  Applies to physicians only, NOT nurse practitioners
§  Referral = a request by a physician for an item or service for which payment may be made under Medicare part B
§  Federally funded patients = Medicare or Medicaid patients
§  Designated health services include:
·         Clinical lab services
·         Physical therapy
·         Occupational therapy
·         Speech therapy
·         Radiology services
·         Imaging services
·         Radiation therapy services
·         DME (durable medical equipment—wheelchairs, glasses, etc)
·         Parenteral (nutrients through an IV—vein) and interal nutrients (nutrients through a tube), equipments, and supplies
·         Home health services
·         Outpatient prescription drugs
·         Inpatient and outpatient hospital services (Performing an operation in the hospital)
§  Entity = clinic, hospital, nursing home (long term care facility), Durable Medical Equipment provider, lab, HMO
o   Remember, Stark is a strict liability à no intent is required
o   When client wants to enter into an arrangement that constitutes a Stark violation, you have 3 options:
§  Find an exception (there are 33) (each exception has multiple parts that require all of the parts to fit perfectly)
§  Don’t do it
§  Change it so that STARK doesn’t apply or it fits within an exception
o   Penalties if Stark is violated; (timely repayment—60 days OR civil monetary penalties may be imposed)
§  Fee of $15,000 per occurrence + 2x the reimbursement that was claimed for the tainted services
§  $100,000 for a knowing violation
§  Can lose participation in the Medicare program (lose your billing number)
§  Will have to pay back all reimbursements that resulted from tainted referrals or face a possible reverse false claim
§  Medicare will say we aren’t paying that when there is a violation, but if they do pay you have to identify and report and repay
o   Financial relationship = anything of value
§  There are 2 types of financial relationships:
·         Compensation (more than just salary)
o   Any type of employment
o   Any type of remuneration for services etc
o   20 exceptions apply only to compensation relationships
§  Space
§  Equipment
§  Nonmonetary compensation
§  Physician recruitment
§  Bona fide employment
§  Incidental benefits
§  Personal services and management agreements (medical directorships)
·         Ownership and investment
o   4 exceptions that apply only to ownership and investment relationships
§  In-office ancillary services
·         9 exceptions that apply to both compensation and ownership and investment relationships
 
o   Billing and Repayment issues under STARK
§  A physician’s acts (referrals or furnishing of services) are NOT imputed to a practice group
·         BUT practice group’s acts MAY be imputed to an individual physician
§  Must not bill Medicare/Medicaid for services occasioned by tainted referrals
§  Payment will be denied if bill for services occasioned by tainted referrals
§  Obligation to repay
·         If provider is reimbursed for services that provider KNOWS was occasioned by tainted referrals (KNOW you have a STARK violation), provider must pay these reimbursements back in a timely manner
o   Timely manner = 60 days of when become knowing
·         If provider doesn’t pay back the tainted referrals, civil monetary penalties may be imposed
o   (May be a reverse false claim)
 
·         Stark Definitions
o   Investment interest and compensation arrangement
§  Direct ownership or investment interest includes:
·         Stock
·         Partnership shares
·         Limited liability company memberships
·         Loans, bonds, other debt secured with an entity’s property or revenue
·         Does NOT include
o   Interest in an entity that arises from a retirement plan offered by that entity to the physician or family member through the physician’s employment with that entity
o   Stock options received as compensation until the stock options are exercised or the convertible securities are converted to equity
o   An unsecured loan subordinated to a credit facility
o   An under arrangements contract
o   A security interest held by a physician in equipment sold by the physician to a hospital
§  Compensation arrangement
·         Any arrangement involving remuneration between a physician or a member of physician’s immediate family and an entity
§  Indirect ownership or investment interest exists between referring physician and entity if:
·         There is an unbroken chain of persons or entities having ownership or investment interests AND
·         Entity furnishing DHS knows or acts in deliberate ignorance or reckless disregard of that chain (furnishes DHS to federally funded patients referred to the entity by a physician in that ownership chain)
o   AND Doesn’t matter if entity furnishing DHS doesn’t know the exact ownership chain
·         This means à It is the doctor’s responsibility to know about these chains of interest/compensation
o   Physician organization (term of art)
§  Includes
·         Physician
·         Physician practice
·         Or a group practice as defined in 411.352 (term of art)
o   Referral (defined on page 459)
§  Does NOT include personally performed services
o   Services performed by: (does not include)
§  The physician
§  Physician’s employee
§  Independent contractor of physician or
§  Group practice mem

the practice (75% of everything each doctor does as a physician has to be for the group practice)
§  Can measure this by time or by any other reasonable means (example à number of patients seen)
·         Amounts received for services provided through the group (75% of the physicians medical work) must be treated as group receipts (everything the group bills, the doctor does not get to keep them personally)
·         BUT substantially all test does NOT apply if the WHOLE group is located in a HPSA
o   If group practice is located outside HPSA, but provides SOME services in a HPSA, time spent in HPSA does NOT count toward calculation of substantially all test
·         When group forms initially, they have 12 months to comply with the substantially all test (during start up period, must make a good faith effort to comply with substantially all test by end of first 12 months of business)
·         New physician member who relocates under recruitment agreement and the addition of that doctor takes the group out of compliance with the substantially all test, the group has 12 months to get back into compliance IF the rest of the group would still be compliant if not factoring in the new doctor
·         If you are a new doctor with an existing patient base, you have to immediately meet all of the requirements—recruitment requires meeting the relocation definition
o   What does it mean to “relocate” under the recruitment safe harbor:
§  relocated” means either:
·         has moved medical practice from outside service area to inside service area and at least 25 miles OR
·         less than 25 miles, but at least 75% of doctor’s revenues will come from new patients (still have to move from outside to inside the service area)
o   5) Income and expenses must be distributed in a predetermined manner
§  Shall be no physician compensation directly or indirectly based on volume or value of referrals of DHS (compensation MUST be set in advance)
o   6) Must have UNIFIED BUSINESS OPERATIONS (centralized, decision-making body that makes administrative and management decisions about compensation, salary etc)
§  Must also have consolidated billing services
o   7) Profit-sharing (profits from the provision of DHS)
§  Can divide per capita (if you have 10 people, divide it by 10)—everyone gets the same
§  Can divide based on the way income derived from non-DHS services is distributed)