June 27, 2024

Is there any evidence that offering free trips or other freebies to a physician induces that physician to order the product sold by the person or entity that offered the freebie?

The federal government thinks so and so did the jury in a recent case.

In a qui tam case that was brought against the Cameron-Ehlen Group, Inc., d/b/a Precision Lens (“Precision Lens”), and its owner Paul Ehlen, the qui tam relator, and ultimately the federal government, alleged that Precision Lens and Mr. Ehlen provided kickbacks to ophthalmologists in various forms, including travel and entertainment, to induce those physicians to order Precision Lens’ Intraocular Lens (“IOLs”).

The unlawful “remuneration” in this case was alleged to consist of Precision Lens and Mr. Ehlen transporting certain physicians who had a history of using Precision Lens’ IOLs to luxury vacation destinations on a private jet – which was typically flown by Mr. Ehlen. The alleged remuneration included multiple trips, high-end skiing, fishing, golfing, hunting, sporting, and entertainment vacations, often to exclusive destinations such as New York City to see a Broadway musical, the College Football National Championship Game in Miami, and the Masters golf tournament in Augusta, Georgia.

Mr. Ehlen claimed that he was personal friends with these physicians and that the trips were gifts from one friend to another.  Mr. Ehlen and Precision Lens argued that the Antikickback Statute (AKS) does not prohibit a friend from providing a gift to another friend, even if the friends happen to do business with each other. Armed with this “friends” defense, Mr. Ehlen and Precision Lens rolled the dice, and risked a jury trial.

Unfortunately for Precision Lens and Mr. Ehlen, the government was able to convince a jury that the various “gifts” that Precision Lens, and its owner, Mr. Ehlen provided to the ophthalmic surgeons constituted unlawful remuneration that was intended to induce the physicians to order Precision Lens’ IOLs in cataract surgeries that were reimbursed by Medicare. It didn’t help that the government was also able to prove that Precision Lens maintained a fund, referred to internally at Precision Lens as a secret fund or slush fund, that was used to finance many of these multiple physician trips.

Another interesting aspect of this case that helps to explain the jury’s verdict was the government’s expert witness.  In order to convince the jury that the intent of the free trips was to induce the physicians to order Precisions Lens’ IOLs rather than IOLs manufactured by another company, the government presented a medical device marketing expert who provided testimony on how companies use gifts and incentives to influence physicians to use their products.  The expert witness provided research that showed that gifts and other incentives trigger the impulse to reciprocate, even if it was just subconsciously, and even at levels disproportionate to the gift.

This expert also testified that although doctors generally claim that their medical decisions are not influenced by the financial benefits they receive from product manufacturers, these benefits do in fact have a strong influence on medical decision making.

Apparently, the jury believed this expert witness along with the other evidence presented by the government because the jury concluded that the free trips were unlawful kickbacks provided to the ophthalmic surgeons with the intent to induce their use of the Precision Lens’ IOLs in cataract surgeries reimbursed by Medicare.  The jury then entered a judgment against Precision Lens and Mr. Ehlen in the amount of $487,048,705.13, which in early 2024 was reduced to a mere $216.7 million.

The OIG and DOJ believe that the fraud and abuse laws level the playing field for all competitors. They argue that a company such as Precision Lens should be competing with the manufacturers of similar products, on price and quality, not by giving the physicians who order their products lavish gifts.  The expert testimony in this case supported this argument.  That expert testimony should be kept in mind any time a referral source considers providing something of value to a referring physician.

If you have a quick question about this, e-mail Henry Casale at hcasale@hortyspringer.com.

If you want to learn more about the OIG, the Anti-Kickback Statute, the Stark Law, the False Claims Act, exclusive agreements, the recent FTC regulations on noncompete agreements, and much more, check out our latest episode of The Kickback Chronicles podcast and also join us at the Hospital-Physician Contracts and Compliance Clinic Seminar in Las Vegas from November 14-16, 2024!

June 20, 2024

We liked those tips for running an effective meeting that you gave two weeks ago. Do you have any more tips for running an effective meeting?

Sure, let’s get right to them!

The first tip deals with post-meeting tasks.  The meeting attendees should have clear goals and assigned tasks after leaving the meeting.  For example, does research need to be done?  Be clear on the specific issue that is to be researched, how it is to be presented (a memo?  Oral report?), when it is due (one week prior to the next meeting?  At the next meeting?) and to whom the results are to be reported (the chair?  Everyone on the committee?).

The second one deals with how a chair keeps order at a meeting.  By strict adherence to Robert’s Rules of Order?  No!  We recommend that Robert’s Rules be looked to for guidance, but not be binding, and that the chair reserve the power to make all definitive procedural rulings.  Why?  Because if there is a parliamentarian on the committee, he or she can dominate the discussion just because he or she knows Robert’s Rules inside and out.  Also, it’s impractical to expect everyone on the committee to know all of the rules, and we don’t want to put them at a disadvantage during meetings.  So, don’t get bogged down in Robert’s Rules – think fundamental fairness.

The last one deals with how to record what happened at a meeting.  You should have someone take notes to prepare the minutes of the meeting.  The minutes record the decisions of the committee.  We’ll save what should be in minutes, and what should be left out of minutes, in a future Question of the Week, which hopefully, won’t be in two weeks.

If you have a quick question about this, e-mail Nick Calabrese at ncalabrese@hortyspringer.com.

June 13, 2024

We have several clinical departments that have either weak chairs or chairs who are there entirely by “default” and really seem to have very little interest in the position.  Our support staff then have to spend a significant amount of their time chasing down these chairs for the documentation and other input they are required to provide into our processes – which takes these folks away from their own functions.  Department chairs are relied upon to perform a really important role.  How can we get stronger leaders interested?

In many hospitals, it has been traditional to rotate the department chair position so that everyone gets (or is forced to take?) their turn.  However, not every physician, quite frankly, has an aptitude for, or interest in, medical staff leadership.  One answer might be to develop stronger qualifications for serving in medical staff leadership roles, including officers and department chairs, and to provide compensation for these roles.  Another question to ask is if there are too many departments.  Consider consolidating departments.  By having fewer positions to fill, you then have a larger pool of qualified people who want to serve.

That said, one of the biggest changes that we have seen in medical staff leadership in the recent past (and one which we now recommend strongly!) is to eliminate the use of “ad hoc” nominating committees for identifying medical staff leaders – whether they be officers, department chairs, or committee chairs – and the movement toward a standing committee dedicated to leadership development and succession planning that meets throughout the year.  Having a standing committee in place allows the leadership to take a more comprehensive look at the medical staff, identifying new members who might make good leaders in the future – giving them time for training, education, and development.

June 6, 2024

Our chair runs the most horrible meeting ever.  The problem with that is that I’m the chair!  Do you have any tips that could help me?

Do we ever.  The chair is the presiding officer and being the chair is hard work, so here are some tips for the chairs, or anyone, to have an efficient meeting:

Tip #1. Start on time.  If a meeting isn’t started on time, chances are it won’t end on time.  Starting on time shows that the chair has expectations for his or her meeting.  If the chair is taking the meeting seriously, the participants will more than likely take it seriously, and not treat it as a weekly, monthly, etc., casual get‑together.

Also, if a meeting always starts on time, the participants will more than likely be there on time.  No one likes to walk into a meeting late.  But, if the meeting never starts on time, the participants may start thinking “Well, it’s 15 minutes past the start time, so the meeting probably didn’t start, but if it did, I’m not going to be that late.”  Or, being late becomes a joke “I can believe you started already – it’s only 15 minutes past the start time!  What happened, did everyone synchronize their watches?”

Being late to a meeting disrupts the meeting.  The participant who is late may not pick up on the discussion, or if the chair summarizes what has already been discussed for the late-comer, the chair may “lose” those who were there on time.

So, start on time, no matter who is in the room, don’t summarize for late-comers – that can be done after the meeting, and no excuses for being late.  It sounds rigid, but when the word gets around that you start on time, that’s one building block in running an efficient and effective meeting.

Tip #2. Encourage participation.  The chair should get every attendee involved.  Some attendees may not speak because he or she may be shy, or feel intimidated, but the chair should draw those attendees in to get multiple points of view.

Tip #3. Limit the conversation.  This doesn’t mean that the chair should not hear from everyone who wants to contribute their point of view.  The purpose of a meeting is to get different points of view, then make a decision.  What “limit the conversation” means is that if a couple of people in the room are making the same point, over and over again, that’s unproductive, so the chair should step in and say “Ok, any other points of view that we haven’t discussed yet?”  Also, if a discussion “drifts,” the chair should step in and restate the purpose of the discussion.  This can be hard to do, because chairs don’t want to be seen as dictators, but it is a skill that needs to be developed.  Otherwise, the participants start thinking the meeting is a waste of time, and the downward spiral begins.

Tip #4. Take an issue off-line.  There are times when a meeting is getting bogged down because no one has the information needed to make a decision.  For example, is the bylaws revision being discussed a Joint Commission Standard?  A Medicare Condition of Participation?  A best practice?  If no one knows for sure, further discussion will not help the committee make a decision, so that issue should be taken off the agenda until the next meeting, to research the issue.

Another reason to take an issue off the agenda is because there are so many conflicting points of view that won’t be able to be resolved at the meeting.  The chair should be able to recognize that no matter how much more discussion there is, the issue won’t be resolved.  So, at that point, the chair should stop the discussion, and maybe appoint a small group to investigate or research the issue, then bring the results back to the committee.

Tip #5. End on time.  If a meeting is to end at 8:30 a.m., end the meeting.  Although some attendees don’t mind going over, the majority will start thinking about work that needs to be done, or another meeting to go to, or an appointment to make.  A meeting that runs on and on and on isn’t efficient and becomes much less effective as time goes on.  The chair should remember that he or she is dealing with attendees who have volunteered their time to participate on this committee and be at this meeting, so respect their time.

Also, not ending on time affects meeting attendance.  If an attendee knows that the meeting always goes over, he or she is less likely to attend the meeting.

It’s just a fact that sometimes agendas are just too full, or there may have been too much discussion on one issue, etc. – that happens.  But, instead of plowing on through with more and more disinterested attendees as each minute ticks by, just end the meeting, and hold those agenda items over for the next meeting.  The exception is if the issue is of critical importance, but that will be few and far between.

Final Tip: Introduce visitors.  The chair should introduce visitors, or participants who are attending their first meeting and may not know everyone in the room.  This will make them feel welcome, and keep everyone focused on the meeting instead of asking, or thinking “Who is that, and why are they here?”

If you have a quick question about this, e-mail Nick Calabrese at ncalabrese@hortyspringer.com.

May 30, 2024

Are provider-based services performed in a mobile unit in an off-campus location covered by the site neutrality rules passed in 2016?

No.  Just like “grandfathered” services and off‑campus dedicated emergency departments, hospital services provided in an off-campus location through a mobile facility or portable unit are excepted from that rule and are reimbursed at the full hospital outpatient rate.

Section 603 of the Bipartisan Budget Act of 2015 generally eliminated reimbursement under the Medicare outpatient prospective payment system for items and services furnished in off-campus hospital outpatient provider‑based departments established on or after November 2, 2015. Instead, hospitals would be reimbursed at the lower Medicare physician fee schedule rate.  CMS promulgated rules implementing this law in 2016, and since then the site neutrality rules have been expanded from time to time.

The key exceptions to this rule are services performed in on-campus facilities (within 200 yards of the main hospital building), dedicated emergency departments, off-campus facilities that were in operation or “mid-build” on the date the law was enacted, or a “remote location of the hospital” (a facility furnishing inpatient hospital services under the name, ownership, and financial and administrative control of the main provider hospital). But services performed through a mobile facility and/or portable unit are excepted as well and paid at the full OPPS rate. See CMS Transmittal 2394 (November 15, 2019).

Mobile facilities and portable units are services that require medical equipment which is provided in a vehicle or the equipment for the service is transported to multiple locations within a geographic area. The most common types of mobile facilities/portable units are mobile diagnostic testing facilities, portable X‑ray units, portable mammography units and mobile clinics. But the equipment must travel around.  A hospital can’t just park a mobile facility or leave a portable unit permanently in a off-site provider-based location and then get paid at the full OPPS rate.

Also, physical therapists and other practitioners (e.g., physicians, nurse practitioners, physician assistants) who perform services at multiple locations (e.g., house calls, assisted living facilities) are not considered to be mobile facilities/portable units.  They’re people.

On the other hand, physician services performed on mobile units are reimbursed by Medicare Part B as if they were performed in a freestanding office rather that in a hospital as they normally would be in a provider-based facility.  That is, they are reimbursed at the full physician fee schedule rate. See Medicare Claims Processing Manual 20.4.2 – Use Place of Service Code 15.

If you are still awake after that spiel and have a quick question about this topic, e‑mail Dan Mulholland at dmulholland@hortyspringer.com.

May 23, 2024

Recently, as part of our routine peer review process, a physician was asked to provide a written response to a behavioral concern that had been reported by one of our nurses.  The physician now wants to know who filed the report.  Should we disclose the identity of the nurse?

No.  At this stage in the peer review process, we strongly recommend protecting the identity of any individual willing to come forward and raise a concern.

In most cases, who raised the concern is irrelevant.  For clinical concerns, the matter will be evaluated based on what is in the medical record, so whoever reported the matter is unrelated to the concern.  For behavioral concerns, assuming that witnesses are interviewed, and they corroborate the original reported concern, the individual’s identity is also irrelevant.

However, even if you do not disclose the identity of the nurse, that does not mean that the physician under review cannot guess who filed the report.  Accordingly, it is useful to gently remind physicians to avoid any action that could be perceived as retaliatory, even if retaliation isn’t the intent.

Depending on how far into the peer review process this matter gets, it is possible that you will eventually disclose the reporter’s identity.  For instance, if you get to the point that a Medical Staff hearing is going to be held to consider restricting the physician’s clinical privileges, the physician should be provided access to the same documents considered by the hearing committee.

If you have a quick question about this, e-mail Hala Mouzaffar at hmouzaffar@hortyspringer.com.

May 16, 2024

We’re a hospital located in Pennsylvania and want to enter into a services agreement with a company in South Carolina.  The company has a good reputation, but has filed lawsuits against a few hospitals for breach of contract.  One of our concerns is that if the relationship doesn’t go well, it would be extremely expensive and disruptive to defend a lawsuit in South Carolina. What can we do?

You should make sure the agreement contains a “Choice of Law and Venue” provision that favors the hospital.  This provision states where a lawsuit is to be filed (venue), and which state’s law applies.  If the hospital drafts the agreement, it should give itself the home field advantage by stating that Pennsylvania law applies and any lawsuit is to be filed in courts having jurisdiction over the county in which the hospital is located.  If the company drafts the agreement, it will most likely give itself the advantage.  However, even if the company drafts the agreement, you can still try to negotiate with it so that the hospital has the advantage.  How the negotiations turn out is, of course, about leverage.

Home field advantage is huge too – the party that has it knows the state’s law, knows the judges, and knows the courtroom.  Also, the party with the advantage does not have to find local counsel to work with its in-house lawyers, or incur costs for itself and/or its lawyers by traveling to and from the location of the lawsuit (which can be an enormous cost and inconvenience in the case of extended litigation).

If you have a quick question about this, e-mail Nick Calabrese at ncalabrese@hortyspringer.com.

May 9, 2024

Why the concerns with private equity groups acquiring and/or managing physician practices?

Concerns have been voiced by many observers about private equity acquisition of physician groups and other health care providers. A number of studies have concluded that private equity acquisitions lead to:  decreased quality of patient care and increased patient safety risk, higher costs for patients, taxpayers, and payers;understaffing and high employment turnover in hospitals, as well as anti‑competitive practices and possible fraud and abuse.  Additionally, according to one recent study private equity accounted for about one-fifth of the bankruptcies of healthcare companies that were filed in 2023 (a trend that is projected to continue).

One particular area of concern is anti-competitive practices involving hospital-based physicians.  Hospitals have historically entered into exclusive contracts with hospital-based physician groups to provide anesthesia, radiology, pathology and emergency medicine services.  Both the FTC and the courts have long recognized that exclusive contracts with hospital-based physicians can be pro-competitive. See, e.g., Jefferson Parish Hospital District No. 2 v. Hyde, 466 U.S. 2 (1984); In re Burnham Hospital, 101 F.T.C. 991 (1983).  In almost every case where exclusive physician contracts with hospitals have been challenged, they have been upheld.

Recently, private equity groups have been acquiring hospital-based physician groups with the express purpose of obtaining market dominance and leverage in payer negotiations.  Some have been so bold as to boast about this business model to investors and capital sources, saying that their objective is to gain critical mass in markets to gain negotiating leverage with hospitals and payers.  National physician management companies first acquire hospital-based physician groups that have exclusive contracts with a number of hospitals in a given market.  They then bind the physicians and other providers in the group to non-compete covenants.  This locks the physicians into their current positions since leaving the employ of the group would require them to relocate.  This in turn tends to suppress wages for the physicians due to their lack of alternative employers and leads to staffing shortages due to the suppressed wages.  This business model also leaves the hospitals with little alternative but to stay with the private-equity owned group, since the group’s restrictive covenants with providers would prevent the hospital from hiring the providers after the contract with the group expires. This further adversely affects competition since the hospital would be barred from directly contracting with the providers employed by the exclusive group, as would other physician groups that might be interested in bidding for a new exclusive contract when the existing one expires.

Private equity owned groups have also used the threat of litigation to get their way in states where non-compete covenants with physicians have been banned or restricted by statute or court decisions.  Whether they rely on creative interpretations of the law or the shear in terrorem effect of litigation on individual physicians, this tactic is likely to continue notwithstanding the FTC’s recent final rule on noncompete agreements absent specific enforcement actions targeting these practices.

Other areas of concern include improperly directed referrals, abuse of the Stark in-office ancillary services exception, and management services agreements.  These are just a few examples of practices by private equity firms that have led to decreased competition and increased costs in the healthcare industry. As the HHS Office of Inspector General recently stated:

The growing prominence of private equity and other forms of private investment in health care raises concerns about the impact of ownership incentives (e.g., return on investment) on the delivery of high quality, efficient health care.  Health care entities, including their investors and governing bodies, should carefully scrutinize their operations and incentive structures to ensure compliance with the Federal fraud and abuse laws and that they are delivering high quality, safe care for patients.  An understanding of the laws applicable to the health care industry and the role of an effective compliance program is particularly important for investors that provide management services or a significant amount of operational oversight for and control in a health care entity.[1]

Federal agencies are being urged to look more closely at these abusive practices and bring enforcement actions where appropriate.

If you have a quick question about this, e-mail Henry Casale at hcasale@hortyspringer.com.

If you want to learn more about the OIG, the Anti-Kickback Statute, the Stark Law, the False Claims Act, exclusive agreements, the recent FTC regulations on noncompete agreements, and much more, check out our latest episode of the Kickback Chronicles podcast and also join us at the Hospital-Physician Contracts and Compliance Clinic Seminar in Las Vegas from November 14-16, 2024!

[1]  General Compliance Program Guidance, U.S. Department of Health and Human Services Office of Inspector General at pages 79-80 (Nov. 6, 2023) https://oig.hhs.gov/documents/compliance-guidance/1135/HHS-OIG-GCPG-2023.pdf.

May 2, 2024

May a physician be on call for more than one hospital at the same time (take “simultaneous call”) or perform elective surgeries while on call?  If so, is that physician required to identify a specific back-up physician who will take calls at our hospital if the original physician is called to another hospital or is in the middle of an elective surgery when called by our hospital?

CMS doesn’t specifically require that another physician be identified to take back-up call if the original on-call physician is performing elective surgery or is taking call at another hospital when the ED needs assistance.  Instead, CMS says that a “back-up plan” must be in place.  Per CMS, “some hospitals may employ the use of ‘jeopardy’ or back-up call schedules,” indicating that other hospitals may choose to not use back-up call schedules.  Here’s the full quote from the EMTALA Interpretive Guidelines (found in Appendix V of the Medicare State Operations Manual):

The [hospital’s] policies and procedures must also ensure that the hospital provides emergency services that meet the needs of an individual with an EMC if the hospital chooses to employ any of the on-call options permitted under the regulations, i.e., community call, simultaneous call, or elective procedures while on-call. In other words, there must be a back-up plan to these optional arrangements. For instance, some hospitals may employ the use of “jeopardy” or back-up call schedules to be used only under extreme circumstances. The hospital must be able to demonstrate that hospital staff is aware of and able to execute the back-up procedures. https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/som107ap_v_emerg.pdf

Of course, a hospital may decide that its On-Call Policy will not permit simultaneous call or elective surgeries while on call.  Or, a hospital’s policy may require on-call physicians to identify a specific individual to provide back-up coverage in such cases.  The key is to clearly identify the requirements in the hospital’s On-Call Policy.

If you have a quick question about this, e-mail Mary Paterni at MPaterni@hortyspringer.com.

April 25, 2024

We caught wind of the fact that one of our surgeons was cited for boating under the influence (or “BUI” – yes, this is a thing in our state) last weekend.  Does our Medical Staff leadership need to take any action, or do we only need to act if we’ve observed problems in the hospital?

A BUI or (more commonly) a DUI may reflect a momentary lapse in judgment or be the sign of a more significant problem.  Given this uncertainty and the potential risks to patients, we think it makes sense to speak with the individual about the BUI/DUI, gather any additional information that may be relevant, and decide if any further action is needed.  This approach should give you the information you need to make sure patients are kept safe.  It will also help you to determine if any steps should be taken in regard to your Medical Staff colleague.

Ideally, you have processes in place through your Medical Staff Bylaws and policies to help your physician leaders navigate these issues in a supportive, non-punitive manner.  If you do not, a practitioner health policy should be on your Medical Staff leadership’s “to do” list for this year, as impairment of all kinds (substance abuse, mental and physical health, disease, etc.) can occur at any time.

If you have a quick question about this, e-mail Ian Donaldson at IDonaldson@hortyspringer.com.