Duane Morris Health Law

September 5, 2018 by Amy E. McCracken

What’s on the federal regulatory horizon for nursing homes?

The federal government cannot agree on whether to increase or decrease regulatory burdens on nursing facilities. Yesterday, the United States House Committee on Ways and Means and the Subcommittee on Health wrote to the Centers for Medicare and Medicaid Services urging further reduction of regulatory burdens on health systems, hospitals, and nursing homes. Tomorrow, the House Committee on Energy and Commerce Subcommittee on Oversight and Investigations will hold a hearing examining federal efforts to ensure quality of care and resident safety in nursing homes.

The Ways and Means Committee’s letter noted that providers with post-acute care beds devote 8.1 full-time employees to compliance with regulatory requirements. Over half of those employees are clinical staff who could otherwise be caring for residents. The letter applauded recent efforts to reduce the regulatory burden and urged further reductions.

In contrast, the Committee on Energy and Commerce suggests that CMS isn’t doing enough to ensure quality care in the nation’s nursing homes. The Committee’s background report recites a number of news reports in which seniors died or were abused in nursing homes. Three witnesses have been invited to testify: Kate Goodrich, M.D., Chief Medical Officer of CMS; Ruth Ann Dorrill, Regional Inspector General, HHS OIG; and John Dicken, Director, Health Care GAO. Topics to be addressed include efforts made to ensure that nursing homes are meeting the federal regulatory standards and CMS’ oversight of state agencies that work with CMS to inspect nursing homes. The undertone of the Committee’s background report is that CMS needs to increase enforcement, including higher civil money penalties and exclusion from participation in federal health care programs.

It is hard to see how higher monetary penalties will improve quality care as it further reduces the resources available to care for residents.

July 30, 2018July 30, 2018 by Duane Morris

Settlement of the Osteopathic Physicians Class Action Against the American Osteopathic Association

Duane Morris is very pleased to announce the settlement of the Osteopathic Physicians Class Action against the American Osteopathic Association, Talone, et. al v. American Osteopathic Association. The Court has granted preliminary approval of the settlement, and members of the class and sub-classes will be receiving notice of the settlement in the coming weeks.

The settlement is a resolution of the claims the class representatives asserted against the AOA that was negotiated over a period of approximately four months, and that provides a range of benefits to tens of thousands of DOs. Those benefits are estimated in value to be worth significantly more than $35,000,000.

Please see our announcement for more information.

July 16, 2018 by Patricia S. Hofstra

Payer Audits and False Claims Actions Challenging Medical Necessary on the Rise

We’re seeing a substantial increase in payer audits and false claims causes of action based on allegations that procedures and charges were not medically necessary.

Historically, courts have been deferential to a physician’s medical judgment in false claims causes of action. However, a federal appeals court recently found that a physician’s medical judgment could be false or fraudulent leading to a cause of action under the False Claims Act. The appellate court ruling overturned a lower court decision which had granted the physician’s motion to dismiss, finding that treatment decisions based on medical judgment could not be considered false under the False Claims Act. This shift in deferential treatment with respect to a physician’s medical judgment could dramatically increase false claims causes of action against physicians.

In addition, clinical laboratories are getting more and more requests for medical records and facing an increasing number of payment denials based on lack of medical necessity. Prepayment review is more common than ever. The combination of having to respond to medical record requests, payer audits and prepayment reviews on each and every lab test can be cost prohibitive. There is no easy fix.

I recently spoke at a webinar hosted by Karen Zupko and Associates on preparing for a payment audit and tactical strategies for defense. My best advice on tactical strategies for defending a payment audit is to be prepared. Have a compliance program in place and conduct regular self- audits. If a concern is identified during a self- audit, get experienced health care legal counsel involved immediately to preserve privilege and get guidance. A link to the webinar I did with Karen is attached.

http://iplayerhd.com/player/video/e7f7423f-9c31-403b-b56c-90053bb38754/share

May 30, 2018May 30, 2018 by Duane Morris

CMS Retreats on Jurisdiction for Medicare Provider Reimbursement Appeals of Self-Disallowed Items, But How Far?

By Christopher L. Crosswhite

On April 23, 2018, the Administrator of the Centers for Medicare and Medicaid Services (“CMS”) adopted a new ruling conceding the jurisdiction of the Provider Reimbursement Review Board (“PRRB”) in certain circumstances over costs or items “self-disallowed” by the provider. In Ruling No. CMS-1727-R (the “Ruling”), the Administrator announced that the PRRB has jurisdiction over a provider’s appeal regarding Medicare payment for an item that the provider did not include in its cost report when the following circumstances exist:

The appeal is pending on or after April 23, 2018, or was initiated on or after that date; and
The cost reporting period under appeal ended on or after December 31, 2008, and began before January 1, 2016; and
The provider had a good faith belief that the item was not allowable under Medicare regulations or payment policy.

This Ruling represents a retreat from regulations adopted in 2008, which required that in order to appeal an item to the PRRB, a provider must either claim Medicare payment for the item in its cost report or include the item as a protested amount in the cost report. CMS took the position that a provider could not be “dissatisfied” with the Medicare contractor’s determination of Medicare reimbursement, as required by the statute for a PRRB appeal, if the contractor made no determination on the item because it was not included in the cost report, even if reimbursement was prohibited under Medicare policy. The Ruling indicates that CMS is retreating from this position because of the 2016 decision of the U.S. District Court for the District of Columbia in Banner Heart Hospital v. Burwell, which held that the PRRB had jurisdiction over the hospitals’ challenge to Medicare outlier payment regulations despite the hospitals’ failure to claim protested amounts related to their challenge. The district court found that a cost report claim for additional outlier payments would have been futile because the Medicare contractor had no authority or discretion under the outlier payment regulations to make payment as sought by the hospitals. The Ruling states that CMS has decided to apply the holding in Banner Heart in similar administrative appeals.

The Ruling does not entirely do away with the requirement of including an item in the cost report in order to pursue Medicare reimbursement for it in a subsequent appeal. First, the Ruling applies only if the cost reporting period under appeal began before January 1, 2016. This end date is not coincidental—for periods beginning on or after January 1, 2016, CMS has simply shifted the requirement that an item be included in the cost report from being a prerequisite for PRRB jurisdiction to being a so-called “general substantive requirement” for Medicare payment. Second, the Ruling applies only where the provider had a good faith belief that the item was not allowable. The Ruling indicates that “a provider would rarely be able to demonstrate a good faith belief that an item is not allowable when that item is actually allowable under a Medicare payment regulation or other policy.”

Unfortunately, the Ruling may muddy the waters regarding the use of protested amounts in the Medicare cost report. The Ruling acknowledges that providers sometimes claim items through protested amounts “out of concern that a cost report claim for reimbursement of an item deemed non-allowable might raise program integrity questions.” Notwithstanding the Ruling, “a provider still may elect to self-disallow a specific item deemed non-allowable by filing the pertinent parts of its cost report under protest.” But the Ruling then states as follows:

“However, if the PRRB… were to determine that, despite the provider’s self-disallowance of the specific item under appeal, the Medicare contractor actually had the authority or discretion to make payment for the specific item at issue in the manner sought by the provider on appeal and the provider did not demonstrate a good faith belief that such item is not allowable, then the [PRRB] shall apply the Third implementation step for this Ruling.”

Under the third implementation step, the provider’s appeal of the item is to be dismissed for failure to meet the “dissatisfaction” requirement for jurisdiction. One problem with this statement is that providers sometimes claim items as protested amounts where the Medicare contractor has disallowed the item in previous cost report audits for lack of sufficient documentation. The adequacy of documentation to support reimbursement is one area where the Medicare contractor would seem to have discretion to allow payment. Why would CMS want to discourage providers from taking a cautious approach in claiming items in the cost report that have been disallowed in previous audits?

Christopher L. Crosswhite practices in the area of healthcare law, concentrating on Medicare and Medicaid law and regulations, Medicare reimbursement controversies and appeals, and healthcare fraud and abuse provisions.

April 27, 2018July 7, 2021 by Duane Morris

PA Supreme Court Significantly Narrows Application of State’s Peer Review Protection Act

By Lisa Clark and Samantha Dalmass

On March 27, 2018, the Pennsylvania Supreme Court held in a 4-3 decision that the Pennsylvania Peer Review Protection Act (“PRPA”) would not prevent the disclosure of certain physician performance review files in an ongoing medical malpractice lawsuit despite arguments that the files in question were precisely the kind of peer review documents that the PRPA was intended to protect. This controversial decision limits the protection available to healthcare providers under the narrow PRPA evidentiary privilege and may significantly affect the manner in which Pennsylvania hospitals conduct peer review activities.

The underlying lawsuit was brought in 2012 after plaintiff Eleanor Reginelli suffered a heart attack several days after being treated by Dr. Marcellus Boggs in the emergency room at Monongahela Valley Hospital (“MVH”) for gastric discomfort. The plaintiff alleged that Dr. Boggs failed to diagnose and properly treat an underlying and emergent heart condition before discharging her from MVH. She and her husband filed a four-count complaint in 2012, asserting claims against Dr. Boggs, MVH and UPMC Emergency Medicine, Inc. (“ERMI”), which provides staffing and administrative services for the MVH emergency room.

Dr. Boggs and the other physicians in the MVH emergency department, including Dr. Brenda Walther, were members of the medical staff at MVH and employed by ERMI. Dr. Walther served as the director of the MVH emergency department and supervised the ERMI-employed emergency department physicians working at MVH. When she was deposed during the discovery phase, Dr. Walther revealed that she had prepared and maintained a performance file on Dr. Boggs as part of her regular practice of reviewing randomly selected charts associated with ERMI-employed emergency department physicians. The Reginellis responded by filing discovery requests directed at MVH, seeking production of the complete performance review file for Dr. Boggs.

MVH opposed the motion to compel and argued that the requested items fell squarely under the protection of the PRPA because they had been created and used for the purpose of reviewing the services rendered in the MVH emergency room. This argument was subsequently rejected by the trial court, and the plaintiffs’ motion to compel was granted. At this point, ERMI and Dr. Boggs entered the discovery proceedings and filed a motion for a protective order, asserting entitlement to claim protection under the PRPA for the peer review work performed by an ERMI employee. ERMI argued that the performance file on Dr. Boggs fell outside of the peer review responsibilities that ERMI performed for MVH and that Dr. Walther had created and maintained the file solely on ERMI’s behalf. However, this was not consistent with the motion for reconsideration filed by MVH in which the hospital alleged that Dr. Walther conducted the peer review work on behalf of both ERMI and MVH. Then, before the trial court could rule on the motions filed by MVH and ERMI, both entities appealed the trial court’s decision to compel production to the Superior Court.

The relationship between ERMI and MVH and the inconsistent claims regarding the performance review files were critical on appeal, and the Superior Court upheld the trial court decision that neither ERMI nor MVH were entitled to the evidentiary privilege. The lower court found that ERMI was acting as an independent contractor and, therefore, did not qualify as an entity enumerated in the PRPA as protected by peer review privilege. It also held that MVH could not claim privilege based on the finding that MVH had neither generated nor maintained the performance file for Dr. Boggs.

Both ERMI and MVH appealed the decision, but in the 26-page opinion written by Justice Donahue, the Pennsylvania Supreme Court held that neither entity was in a position to claim the PRPA’s evidentiary privilege.

The Pennsylvania Supreme Court first considered whether ERMI could claim entitlement to protections under the PRPA. The PRPA defines “peer review” as the “procedure for evaluation by professional health care providers of the quality and efficiency of services ordered or performed by other professional health care providers.” The court’s analysis hinged on whether ERMI could hold itself out as a “professional health care provider,” which is defined under the PRPA as “individuals or organizations who are approved, licensed or otherwise regulated to practice or operate in the health care field under the laws of the Commonwealth of Pennsylvania.” There are 12 types of entities enumerated in the statutory definition, including hospitals and physicians. The court said that although it described itself as a “physician organization comprised of hundreds of individual emergency medical physicians… that exists specifically to provide emergency medical services,” ERMI could not claim to be any of the 12 listed entities set forth in the statutory definition. The court said ERMI was not a “professional health care provider” because it was not approved, licensed or otherwise regulated to practice or operate in the healthcare field in Pennsylvania, and it did not become one merely because one of the professional healthcare providers it employed conducted an evaluation of another.

After holding that EMRI could not claim the evidentiary privilege because it did not qualify as a “professional health care provider,” the court addressed whether the PRPA was available to MVH. Although MVH clearly met the statutory definition of “professional health care provider,” the court declined to afford it protection under the PRPA on the grounds that Dr. Walther had not been established as member of the hospital’s peer review committee and the PRPA’s evidentiary privilege is reserved only for the proceedings and documents of a review committee. MVH had previously stated that Dr. Walther acted as a “separate” peer review committee for the ERMI-supplied emergency department physicians, which led the court to conclude that Dr. Walther had conducted peer review activities as an individual. Based on the majority’s interpretation of the PRPA, individuals conducting peer review may qualify as a “review organization” but not as a “review committee” engaging in peer review.

Notably, the court further explained that the PRPA does not extend its grant of the evidentiary privilege to the category of review organization enumerated in the second sentence of the statutory definition of “review organization.” This category includes “any hospital board, committee or individual reviewing the professional qualifications or activities of its medical staff or applicants for admission hereto.” The court expressly identified credentials review as falling outside the scope of peer review privilege under the PRPA.

The court then addressed the argument that the performance files were entitled to peer review protection because the hospital had contracted with ERMI to perform its peer review activities. MVH pointed out that this type of relationship was very common, and hospitals would struggle to survive if they were not able to contract with outside entities like ERMI to fulfill peer review responsibilities. MVH argued that ERMI was contractually bound to perform peer review activities on its behalf. However, the court found this argument lacked merit because it was inconsistent with earlier arguments made by ERMI and unverifiable since neither MVH nor ERMI had thought to include the emergency services contract in the record. Although the Court recognized that no statutory provision exists to preclude a hospital from entering into a contact with a staffing and administrative services entity to conduct peer review services for the hospital’s peer review committee, it refused to consider the issue without conclusive documentary evidence.

In a dissenting opinion, Justice Wecht found the conclusions made by the lower courts and the majority to be at odds with the intent of the legislature in creating the peer review privilege. The dissent found that ERMI did, in fact, qualify as a professional healthcare provider and went on to say that “the majority’s contrary interpretation guts the privilege, given that such contractual staffing and administrative agreements are commonplace.” Justice Wecht also expresses concern about the destabilizing effect of the majority’s reliance on “less than clear” statutory definitions.

This decision has significant implications for healthcare providers in Pennsylvania, especially hospitals and physician groups that contract with outside entities to perform peer review activities. The Supreme Court left the question open as to whether such relationships are permitted and whether the PRPA would apply to peer review documents produced by an outside peer review entity on a provider’s behalf. Therefore, hospitals should carefully evaluate any contracts related to peer review services to make sure that the provisions clearly spell out that such services are performed on the hospital’s behalf. Hospitals may also want to evaluate policies and procedures relating to credentials review as the majority opinion seems to have eliminated the evidentiary privilege for such review activities, finding them to be outside of the scope of peer review protection.

Lisa Clark is a partner in Duane Morris’ Healthcare Law practice with specific focuses in health information technology, regulatory compliance and reimbursement matters for hospitals, physicians and other healthcare providers; software developers and investors in HIT and healthcare products and services; and subcontractors and vendors providing services to the healthcare industry.

Samantha Dalmass is a law clerk at Duane Morris, currently pursuing her J.D. and a Master of Public Health at Drexel University.

April 18, 2018 by Patricia S. Hofstra

Courts Continue to Erode Peer Review Privilege

The Pennsylvania Supreme Court recently ruled that a state law, establishing confidentiality for medical provider peer review proceedings, did not apply to a contractor staffing a hospital’s emergency department. The hospital, the contractor and the physician face a lawsuit from the patient and her husband, alleging that the physician failed to diagnose an emergent, underlying heart problem during an emergency room visit and that the patient suffered a heart attack just days after she was discharged without treatment. In the course of litigation discovery the patient was seeking the physician’s performance review, which the contractor and the hospital argued was protected from discovery under the Pennsylvania Peer Review Protection Act (the “Act”). In a 4-3 decision, the Supreme Court affirmed a finding by the state’s Superior Court that the Act did not shield the hospital or the contractor staffing the hospital’s emergency department from discovery of the physician’s performance reviews.

The Supreme Court confirmed the Superior Court’s conclusion that the document was not entitled to protection under the Act because the performance review had been drafted by the physician’s supervisor, and not by an employee of the hospital itself. The Court also found that a business entity, like the contractor emergency medicine group, was not contemplated under the peer review protection statutes and therefore could not claim the privilege itself.

In another recent case eroding peer review privilege, an Illinois hospital claimed that certain of its documents were confidential and that the court should not have ordered the hospital to produce the records during discovery in a civil case. The hospital argued that the Illinois Medical Studies Act protects those documents from disclosure. Specifically, the hospital contended that its peer-review policy provides that, if certain indicators are met (such as the death of a patient and a concern raised about that death), then an investigation begins. The hospital insisted that because the peer-review policy authorized the investigation, everything that was discovered through that investigation is privileged under the Medical Studies Act. However, the appellate court agreed with the trial court and said that all of the documents at issue should be produced stating that the Medical Studies Act does not protect against disclosure of information generated before the peer-review process began and that the hospital’s argument was contrary to over 20 years of precedent establishing that the Medical Studies Act cannot be used to conceal relevant evidence that was created before a quality-assurance committee or its designee authorized an investigation into a specific incident.

The takeaway here is that courts are strictly construing peer review protection statutes. Providers cannot be assured that their peer review records are protected unless the peer review records are created in full compliance with legal and regulatory requirements.

March 22, 2018March 22, 2018 by Patricia S. Hofstra

Private Equity Beware!

According to a Department of Justice press release, the United States has filed a complaint against a compounding pharmacy, alleging that the pharmacy paid illegal kickbacks to induce prescriptions for compounded drugs reimbursed by TRICARE. The government’s claim also charges two pharmacy executives, and a private equity firm which manages both the pharmacy and the private equity fund that owns the pharmacy, for their involvement in the alleged kickback scheme.

The private equity firm allegedly invested in the pharmacy company in 2012 with the goal of increasing the company’s value and then selling it for a profit in 5 years. The private equity firm allegedly “managed and controlled” the pharmacy company through two of its partners who served as “officers and/or directors” of the company. During its investment, the private equity firm was allegedly actively involved in developing and implementing the company’s business strategy around maximizing reimbursement so as to enhance the value of the company, prior to selling its interest.

The complaint describes statements in e-mails sent by the private equity firm principals, about opportunities to capitalize on ‘the extraordinarily high profitability’ which could result in a ‘quick and dramatic payback’ on its investment.” According to the U.S. Attorney, the private equity firm acknowledged in emails that “‘overcharging the product’ in its ‘pain management business’ risked ‘cross[ing] the line from an ethics standpoint.’”

The take away from this complaint is that private equity investors are not immune from prosecution for health care fraud. Private equity investors need to consider the risks associated with managing and controlling their health care investments.

March 20, 2018 by Patricia S. Hofstra

Telemedicine/Telehealth What is the Difference?

Telemedicine generally refers to the use of information technologies and electronic communications to provide remote clinical services to patients. Examples of telemedicine are the transmission of medical imaging and video consultations with patients and specialists. Telemedicine is the first generation description of the clinical application of technology to medicine.

As the application of technology to health care has evolved, the term “telehealth” has become the second generation of terminology and describes the evolution of health care technology beyond the delivery of clinical services using remote means. Telehealth encompasses a broader collection of means or methods to enhance care delivery and education. While the terms are often used interchangeably, telemedicine and telehealth are not precisely the same thing.

In 2014, the Department of Health & Human Services Department sought to clarify the two terms in a post on HealthIT.gov:

“Telehealth is different from telemedicine because it refers to a broader scope of remote healthcare services than telemedicine. While telemedicine refers specifically to remote clinical services, telehealth can refer to remote non-clinical services, such as provider training, administrative meetings, and continuing medical education, in addition to clinical services.”

The Health Resources and Services Administration (HRSA) of the U.S. Department of Health and Human Services defines telehealth as the use of electronic information and telecommunications technologies to support and promote long-distance clinical health care, patient and professional health-related education, public health and health administration. Technologies include videoconferencing, the internet, store-and-forward imaging, streaming media, and terrestrial and wireless communications.

According to The Center for Connected Health Policy, “telemedicine” often refers to traditional clinical diagnosis and monitoring that is delivered by technology, while “telehealth” describes the wide range of diagnosis and management, education and other related fields of healthcare.

In 2014, the journal Telemedicine and e-Health published a study that found seven different definitions of telehealth in use in federal agencies alone.

“Although many definitions are similar, there are nuanced differences that reflect each organization’s legislative intent and the population they serve,” the study concluded. “These definitions affect how telemedicine has been or is being applied across the healthcare landscape, reflecting the U.S. government’s widespread and influential role in healthcare access and service delivery. The evidence base suggests that a common nomenclature for defining telemedicine may benefit efforts to advance the use of this technology to address the changing nature of healthcare and new demands for services expected as a result of health reform.”

Telemedicine is a component part of telehealth, but telehealth goes beyond traditional telemedicine. For now, in most cases, the context in which the terms “telehealth” and “telemedicine” are used will be the key to understanding the intent of the word. Usage of the terms will continue to evolve and I predict that the broadest possible term defining the application of technology to health care will survive the test of time.

March 20, 2018 by Patricia S. Hofstra

Practice Departures and Breakups: Costly, Painful and Tumultuous

Physician practices break up in one form or another as often as physician marriages breakup and the breakup of a physician practice can be as costly, tumultuous and painful as the breakup of a marriage. The best advice is to plan ahead and develop a “pre-nuptial” type arrangement or exit plan, when the practice is set up and when new providers are brought into the practice. Unfortunately, many physician practices have no exit plan for practice departures or breakups and suffer unnecessarily as a result.

Even those practices with an exit plan, often encounter rough waters as they work through issues. The biggest disputes seem to be over competition and post termination compensation. The practice may or may not have a non-compete provision in its physician contracts, if there is a contractual non-compete, it may or may not be enforceable. Even with an enforceable non-compete, the departing provider may choose to ignore the non-compete and poach patients and referral sources.

With respect to post-termination compensation, practices may need to hold back some money to account for payer audits, recoupments, fines, penalties, practice debt, contractual obligations, limited liquidity and other miscellaneous costs. It is important to protect the remaining providers and make sure they are not saddled with the departing provider’s expenses and debt.

In addition to the big picture issues, there are a myriad of other issues associated with practice breakups. Patient notification can be a sticky issue. For instance, an academic medical center practice was forced to pay a penalty for violating HIPAA, when the medical center provided protected health information to a departing provider without first obtaining authorization from patients. Conversely, practices have also been penalized for not notifying patients about departing providers.

With respect to practice departures and breakups, the best defense is a good offense. Plan ahead working with experienced health care counsel.

March 20, 2018 by Patricia S. Hofstra

Can a Physician Be Too Old to Practice Medicine?

We know that the Americans with Disabilities Act (ADA) restricts the ability to make age-related decisions, unless it can be established that age is a “bona fide occupational qualification”. A bona fide occupational qualification generally means that the individual has a trait that precludes safe and efficient job performance. Under certain circumstances, the courts have allowed some industries to force the retirement of a class of individuals (pilots for example) at a certain age, based on the belief that it is too complicated to deal with such individuals on an individualized bases.

So, is a physician’s age a factor that precludes safe and efficient job performance? To my knowledge, no court has approved a mandatory retirement age for physicians and no credentialing or licensing body has set a firm mandatory retirement date for physicians. However, some credentialing bodies have established age related policies, mandating an evaluation process for physicians of a certain age.

Because physicians’ duties vary widely by practice area, a one size fits all policy doesn’t work. For example, the physical and other skills required to practice orthopaedic surgery are vastly different than the physical and other skills required to practice psychiatry. Even within orthopaedics, the physical and other skills required for joint replacement are vastly different than the skills required for sports medicine. Credentialing and licensing entities need to focus on the individual physician and his or her fitness to safely provide patient care, not age.

Every medical staff should have a medical staff health committee to receive and investigate reports relating to a physician’s fitness for clinical privileges, health, physical and mental disorders, chemical dependency and well-being, etc. Age alone should not be the basis for reviewing and evaluating a physician’s fitness to safely provide patient care. And, it should never be assumed that youth assures that a physician is able to safely provide patient care.