Health Law Blog - Healthcare Legal Issues

Archive for December, 2013

EHR Donation Program Extended Through 2021 – Clinical Laboratory Companies Excluded

Monday, December 30th, 2013

Electronic Health System Donation RulesElectronic Health Record Donation – Final Rules Issued By CMS and OIG

Qualified Donations Extended Through 2021

Clinical Laboratory Companies Excluded As Donors

Just before the current rule was due to expire, the Center for Medicare and Medicaid Services released final regulations on donation of electronic health record donations.  The existing rule, which was set to expire on December 31, 2013, permitted hospitals and other providers of Stark Law “designated health services” to make donations of electronic health records software that meets certain requirements, to physicians and physician groups.  The new final rule was released on December 27, 2013.  A similar rule was released by the Office of Inspector General addressing the Anti-kickback issues presented by donation arrangements.

The final rule adopts most of the changes that were proposed in draft rules that had been previously released in April 2013.  For example, the rule extends the expiration of date of the EHR donation exception from December 31, 2013, to December 31, 2021.  The final rule also removes some of the previous requirements that qualifying software contain electronic prescribing capacity.  The proposed regulations in April raised the possibility of excluding certain types of designated health service providers from qualification to offer EHR donations to physicians.  Comments were solicited on whether providers such as clinical laboratories and durable medical equipment providers should be permitted to offer donations to referring providers.  In the final rules, only clinical laboratory companies are excluded from the ability to offer EHR donations under the exception.

The reversed rule also clarifies some issues regarding restrictions on the use, compatibility, and/or interoperability of donated items.  Since 2006, there has been an exception to the Stark Law protecting certain arrangements involving inter-operable electronic health records software or information technology and training services (the ‘‘Donation Exception”).  The Donation Exception provides an exception from the physician self referral laws for certain arrangements involving inter-operable electronic health records software or information technology and training services.  Absent such an exception, the value of qualifying technology that is donated by a hospital or other provider of “designated health services” would create a compensation arrangement that would trigger a violation of the Stark Law.


Clinical Integration Elements – FTC Actions

Monday, December 16th, 2013

clinical integration structuresElements of Clinical Integration

Identified in FTC Reviews; No Action Letters


With the release by the FTC of the Norman PHO letter, I thought it would be appropriate to summarize some of the key factors relevant to clinical integration decisions.  This list is not necessarily exhaustive.  Additionally, it is worth pointing out that clinical integration factors are slightly different as applied to Accountable Care Organizations.  The Norman PHO letter was released about 9 months ago.  It involved a physician-hospital organization that had historically operated as a messenger model contracting mechanism for its providers.  The PHO wanted to implement higher levels of clinical integration and sought an opinion from the FTC as to whether its structure raised risk under the antitrust laws.  The resulting opinion from the FTC is perhaps the most complete iteration to date of the various factors that the FTC considers when examining levels of clinical integration.

 Clinical Integration factors include:

1.         The organization is accountable for the quality and cost of services.

2.         Accountability for overall care of patients.

3.         Strong primary care component (sufficient to support specialty network).

4.         Central governance, leadership and management of system.

5.         Central clinical and administrative systems.

6.         Ability to report on outcomes, quality, utilization, and clinical process.

7.         Actively promotes evidence-based medicine through continual process.

8.         Coordinates care across system.

9.         Information technology and central data analysis.

10.       Financial investment or financial risk by members.

11.       Degree of exclusivity.  Exclusivity begins to indicate clinical integration.

12.       Joint contracting is required to meet system goals and create efficiencies.

13.       Systems are in place to enforce member obligations to comply.

Factors taken from Norman PHO, Tri-State, GRIPA, MedSouth and treatises on clinical integration.  Also uses factors required of ACOs as guidance although ACO requirements differ.

Wisconsin Law Changes Informed Consent Standard

Monday, December 16th, 2013

Wisconsin Informed Consent – Governor Signs Bill

informed consent wisconsin lawGovernor Walker has signed into law Assembly Bill 139.  The law changes physicians’ obligations to provide informed consent prior to providing medical treatment.

Wisconsin Assembly Bill 139 amended Wisconsin Statutes 448.30 to clarify the standard that a physician must meet when obtaining informed consent from a patient.  The Bill was introduced in reaction to the Wisconsin Supreme Court’s Jandre decision which employed a “reasonable patient standard” to determine whether a physician has fulfilled his or her duty to obtain informed consent.  Under the reasonable patient standard, a physician was required to disclose information necessary for a reasonable person in the patient’s position to make an intelligent decision with respect to the choices of treatment.

Assembly Bill 139 changed the focus of the informed consent standard under Wisconsin law from a “reasonable patient” standard to a “reasonable physician” standard.  The Bill provides that the reasonable physician standard requires the disclosure only of information that a reasonable physician in the same or a similar medical specialty would know and disclose under the circumstances.  The Bill also provides that the physician’s duty does not require the disclosure of information about alternate medical modes of treatment for conditions that the physician does not believe the patient has at the time the physician informs the patient.


Ambulatory Surgery Center Advisory Opinions

Saturday, December 7th, 2013

Ambulatory Surgery Center Advisory Opinions

Physician Ownership In Ambulatory Surgery Centers

ambulatory Surgery Center OIG Advisory Opinions

Some OIG Advisory Opinions provide useful guidance on the application of the Anti-Kickback Statute to physician ownership in ambulatory surgery centers.

In OIG Advisory Opinion 03-05, the OIG found that a joint venture between a multi-specialty physician group and a hospital to operate an ambulatory surgery center could violate the Anti-Kickback Statute.  The OIG noted that the investing physicians represented specialties that were likely sources of referrals to each other, and most did not meet either the one-third source of ASC income test or the test that one-third of their procedures would be performed at their ASC.  The OIG concluded that few of the investors would actually use the surgery center on a regular basis.

The OIG seemed to focus its concern in 03-05 on the possible cross referrals created by the investment.  Where providers perform only nominal amount so procedures but refer a significant number of cases to other providers who end up in the ASC, there can be an illegal referral incentive.  However, before basing a divesture decision on service levels, an ASC should examine referral patterns to determine whether the return on investment is a significant inducement.  If a physician investor makes relatively few referrals to other investors, the cross-referral inducement would not appear to create a significant justification necessitating divesture.

The request in OIG Advisory Opinion 07-05 asked the OIG to consider a hospital’s proposed investment in an existing ASC.  The hospital proposed to purchase the shares of stock from the orthopedic surgeons who owned the ASC.  The OIG expressed concern that over a number of aspects of this arrangement.

In OIG Advisory Opinion 07-13, the OIG determined that an arrangement among a hospital subsidiary, ophthalmologists and optometrists to own a single specialty ASC could potentially violate the Anti-Kickback Statute.  The optometrist investors in the ASC, unlike the ophthalmologist investors, performed no procedures in the ASC and were in a position to benefit from their referrals to the ophthalmologists in the form of profit distributions from the ASC.  The OIG noted in particular the lack of any “discernible safeguards to minimize the significant risk” of the optometrists’ receipt of payment for their referrals.  The OIG also noted that although the ASC was an extension of the ophthalmologists’ office practices, the same was not true for the optometrists who performed no procedures using ASC facilities.

OIG Advisory Opinion 08-08 presents a good example of a single-specialty ASC joint venture that did not meet the technical safe harbor requirements but was structured in a manner that reduced the risk of prohibited remuneration.  In that ruling, 14 of the orthopedic surgeon investors in the joint venture ASC were not affiliated with the hospital and met the one-third test because at least one-third of their income was earned by performing ASC-qualified surgical procedures.  The other four investing surgeons, however, did not meet the one-third test, because of the nature of the surgeries they performed required a hospital setting.


John H. Fisher

Health Care Counsel
Ruder Ware, L.L.S.C.
500 First Street, Suite 8000
P.O. Box 8050
Wausau, WI 54402-8050

Tel 715.845.4336
Fax 715.845.2718

Ruder Ware is a member of Meritas Law Firms Worldwide

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