Health Law Blog - Healthcare Legal Issues

Archive for February, 2014

Fair Market Value Appraisal Judgment

Tuesday, February 18th, 2014

Fair Market Value Compliance – The Exercise of Appraisal Judgment

fair market value physician compensation appraisalAssessing Whether an agreement complies with fair market value is one of the most difficult compliance functions that exists.  Other issues have relatively clear answers; either something was billed correctly or it was not; adequate documentation to support the services that are billed either exists or it does not.  But fair market value determinations are largely a subjective determination.  Fair market value appraisals, particularly in the health care industry, involve more of an out than a science.

Looking at fair market value survey data is fairly easy.  Valuation gets much more difficult in situations where there is no true comparable.  Oftentimes, this is the case in remote areas, HPSAs, and other rural areas.  There is no benchmark data that provides a good comparable for the small hospital physician who does everything from delivering babies, treating nursing home patients to performing surgery and treating trauma patients.  These “jack of all trades” are often undervalued due to inappropriately limiting their value by not making appropriate adjustments to “comparables.”

Survey data is skewed against “small hospital” physicians.  Appraisers who are not familiar with the unique value that is provided by these physicians will often inappropriately assign benchmark amounts based only upon primary care.  This overlooks the true practice mix of these providers.  These providers are often longtime fixtures in the community.  They are the real face of the local health care community.  Often these physicians have practiced in the community for 20 plus years.

At some point someone may suggest (quite appropriately I may add) that the physician’s salary be reviewed based on fair market value screens.  If appropriate judgments of true value are not made, these valuable physicians will almost inevitably be found to be compensated above fair market value.  Is this because these physicians are paid too much or are out of compliance with the Stark Law?  I would argue vociferously that this is not the case.  Sure, there could be some instances where the physician is engaged in an ongoing referral scheme.  In most cases however, you would expect that these physicians would be well paid based on their longevity, experience, diverse services, expanded role, and importance to the community.  If you add to this mix the fact that it may be nearly impossible to replace the physician because of this remote or rural nature of the area that is served, justification for compensation well over the highest benchmark percentage is often very justifiable.

Appraisers who apply an overly strict adherence to benchmark data without making appropriate adjustments to reflect the reality of the overall situation do a great disservice to both the physicians and the hospital.  Appraisals that do not consider all factors can lead to the hospital inappropriately making a self disclosure when the compensation paid to the physician is quite justifiable when all circumstances are appropriately considered.  Once self disclosure is made, there is no turning back.  The self disclosure process is not a form for the objective determination of fair market value.  Rather, the self disclosure is an admission of wrongdoing.  The only issue involved is how the institution that provides the designated health service will settle the case.  The temptation in these cases is strong to throw the communities most crucial health care resource “under the bus.”

The medical appraisal business is not easy.  Sometimes it is even more difficult because of the need to deviate from benchmarks and use judgment to arrive at a result that would accurately reflect value.  Appraisers are paid for the appropriate exercise of their judgment.  If the process was based simply on the calculation of compensation based on strict conformity to benchmark data, there would be no real need to pay for an appraisal.  Fair market value would simply be a matter of math.  Appraisers are not trained in the skills of math.  It is assumed that they have the necessary basic math skills.  Physician compensation appraisers are paid for the appropriate exercise of their judgment.  This judgment requires a weighing of all necessary factors and a subjective placement of value on these factors.

Physician Compliance Programs

Friday, February 14th, 2014

Designing Physician Practice Compliance Programs That You Can Use

Physician compliance ProgramsThere is currently a lot of hype out there about the need for physicians to establish compliance programs.  I agree that each practice should have a compliance program in place.  However, I do not agree that the compliance program necessarily needs to be lengthy or complicated.  In fact, I believe that it is most important to be focused in on the key elements that are applicable to your practice and that can be followed given the resources that are available.  Simply adopting precanned policies will do little more than create a roadmap of items that you cannot possibly achieve.

So what should be included in your compliance program?  Your program should certainly include reference to the seven basic elements that are commonly identified as being required in a compliance program.  You should describe the steps that you will take to assure that each of the seven elements are achieved.  You will also want to prepare a basic code of conduct that reflects your commitment to creating a culture of compliance.

The Office of Inspector General published guidance for physician practice compliance programs in October of 2000.  You should read those guidelines and integrate the aspects of the guidance that applies to your practice.  The OIG guidance also includes a description of the seven basic compliance program elements.  The seven basic elements of a compliance program include:

1.         Internal auditing and monitoring,

2.         Compliance processes and standards,

3.         Appointing a compliance officer or compliance responsible individual,

4.         Providing education and training to your staff,

5.         Responding to compliance issues in an appropriate fashion and taking corrective action,

6.         Creating an open system of communication of compliance issues, and

7.         Taking appropriate disciplinary action with respect to compliance infractions.

You will also want to adopt policies to implement some of these general areas.  For example, it is crucial that your compliance program include a strong anti-retaliation policy and a system that permits employees to register anonymous complaints.  Your compliance policies should also be integrated into your employment and disciplinary procedures so that employees are made aware that non-compliant behavior will not be tolerated.  Your policies need to be uniformly applied, from the top to the bottom of your organization.

Applicable guidelines recognize that your compliance program may be scaled to the size of your organization.  However, scalability does not permit you to ignore or overlook specific areas that present risk to your business.  Your program, regardless of its size or the number of words that are used to convey your standards, must be uniformly and consistently followed and can under no circumstances be left on the shelf collecting dust.

False Claims Act Basics – Health Care False Claims

Thursday, February 6th, 2014

False Claims Act Basics

Overpayment Repayment 60 Day RuleThe False Claims Act (“FCA”) provides a very strong enforcement tool to the federal government.  The FCA also provides the opportunity for whistleblowers to bring “qui tam” cases and collect a portion of the recovery where false claims are proved against the federal government.

FCA recovery was originally intended to provide a remedy against unscrupulous civil war profiteers.  Penalties were enhanced when the FCA was dragged off the shelf in the 1980s in reaction to some of the overpricing of government contracts selling supplies to the federal government.

Recently, the FCA has become one of the government’s prime enforcement tools t o deter fraud in the federal health care programs.  Historically, the FCA has been available when a health care provider falsely bills for covered services.  Triple damages and an $11,000 per claim penalty provide a strong deterrent in an industry that may make hundreds of claims per day.

Recent legislation has expanded FCA liability to claims that the provider knows resulted in an overpayment if the provider does not make repayment within 60 days of obtaining knowledge of the wrongfully billed amount.  Some of the potential applications of this that makes a simple overpayment a false claim has generated much discussion among health care lawyers and compliance officers alike.  When an organization is deemed to have knowledge of the overpayment has been the subject of much speculation due to the ambiguities that exist in the new rule.

It may be helpful to frame this discussion by touching on the general requirements that must be met in order to prove any claim under the Federal False Claims Act.  The three general elements that must be proved include:

1.         The submission of a claim to the federal government.  In the health care context, the claim will normally be submitted to a government health program.

2.         The claim must be false.

3.         The claim must have been submitted knowingly.  Actual knowledge that the claim was false will always prove the knowledge requirement.  However, a FCA case can also be built around the submission of a claim with “reckless disregard” for its truth or falsity.

Recent health care legislation, in particular the Fraud Enforcement Recovery Act of 2009, greatly expanded the scope of the FCA.  The FCA is now applicable to a wide variety of situations that would not have previously been covered.  For example, the failure to return an identified overpayment now becomes a false claim.  The potential remedies that a provider may face for not promptly repaying known overpayments creates a strong incentive for health care providers to monitor and audit their claims and set up processes that will catch improper billing that could ripen into the FCA.

Reckless disregard or hiding your head in the sand like an ostrich is no longer a way to avoid massive potential FCA liability.

Compliance programs need to be amended appropriately to address the new potential legal and financial risk presented by these new penalties.

Personal Care Service Providers and Wisconsin Medicaid

Thursday, February 6th, 2014

Personal Care Service Providers – Wisconsin Medical Assistance

Wisconsin Statute § 49.45(42)(d)3 describes the types of organizations that qualify to receive Medicaid reimbursement for “personal care services.”  Qualified entities include licensed home health agencies and other entities that are certified under section (2)(a)(11) to provide personal care services under section 49.46(2)(b)6j.  The DHS does not appear to have implemented regulations that specifically describe the criteria that “other entities” must meet in order to become qualified to receive reimbursement from Medicaid for the provision of personal care services.

The applicable provisions of section 49.45(2)(a)(11) do not contain specific criteria that “other entities” must meet but simply refers to the requirement that DHS promulgate rules establishing qualifications of providers.  The referenced statutory provision does not refer specifically to the requirements that “other entities” must meet in order to qualify to receive reimbursement for personal care services.

The requirements that must be met in order to become a licensed home health are more extensive than the personal care services entity.  However, becoming licensed as a home health agency will qualify you to provide and bill for personal care services directly.  It would also permit you to bill private pay patients for skilled nursing and other home health services and would provide the foundation for you to receive CMS certification as a home health agency.

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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