Key Stark Law Developments: What Every Compliance Officer Needs to Know

Charles B. Oppenheim, Partner at Hooper, Lundy & Bookman PC
Benjamin Durie, Associate at Hooper, Lundy & Bookman PC

The Tuomey Healthcare case is one which shows documenting FMV is not the end all of physician compensation compliance. In cases of compliance infractions, courts consider all the relevant facts in including commercial reasonableness of an arrangement and whether or not an organization made a good faith effort to comply.

Tuomey Healthcare created part-time employment agreements with 19 physicians to ensure that they would continue to perform surgeries at the hospital, instead of performing them at an ASC. The part-time arrangements included all the benefits of full-time employment including the opportunity to earn large productivity and incentive bonuses. Despite Tuomey’s FMV documentation, they were still hit with a $237 million fine.

The court ultimately found that the amount of physician collections was not enough to sustain the contracted physician compensation without the additional incentive benefits. The deficit indicated that despite the FMV documentation, the arrangement was not commercially reasonable and was therefore out of compliance. Furthermore, the proceedings revealed that an initial Stark expert brought in to evaluate the program advised against the proposed arrangements. Tuomey leadership then brought in a second valuation firm who wrote up the FMV documentation without including the employee benefits and bonuses portion of the arrangement. These additional facts strongly contributed to the size of the penalty. Ultimately, a demonstrable, good faith effort of FMV documentation paired with consideration of commercial reasonableness are what guide the judgments of less than compliant situations and should be the standard.


HCCA 2016: DOJ and OIG Focus on Physician Compensation

Winston Chan, Partner, Gibson, Dunn & Crutcher LLP
William J. Harrington, Partner, Goodwin Procter LLP
Jeffrey Marcus, Founder, Marcus Neiman & Rashbaum LLP

A theme throughout the Compliance Institute was that shopping for FMV valuations conflicts with FMV being based on an “independent third party opinion”. There is no hard bright line for what FMV is, but the OIG and DOJ do provide us some guidance.

While there has always been an emphasis on not paying for volume, but now there are questions about productivity. The government is beginning to call into question whether financial relationships which are set up depending on how many hours the physicians work.

Recent Stark and Anti-Kickback settlements have brought to light the fact that when a hospital is losing money year after year in a particular arrangement; it should be a red flag.

The Yates Memo has put a lot of focus on individuals and their role in violations. Not only does this mean that physicians are being held accountable for agreements that are in violation of the regulations, but also that hospital executives may be held responsible. There are been criticism that executives are “too big to jail” and have not been held accountable. In the coming year, we will see more evidence as to how the Yates Memo will be enforced.

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HCCA 2016: Updates from the OIG and DOJ

Dan Levinson, Inspector General, Department of Health & Human Services
Leslie Caldwell, Assistant Attorney General, Criminal Division, DOJ


Each year, Dan Levinson provides HCCA’s attendees with a glimpse into what the OIG has occurred within the OIG recently and what they will be focusing on over the next year.

The Inspector General noted that making mistakes is only human however, going back and correcting them is important and that’s where compliance plays a role. The strong institutions of compliance are:

  • Quality care
  • Enhances morale
  • Builds trust, reputation
  • Reduces costly mistakes
  • Self-corrects

Enforcement of healthcare regulations remains a challenging business, with evolving risks and additional regulations. The OIG’s role is to:

  • Reduce vulnerabilities
  • Reduce improper payments
  • Promote safety and security
  • Promote quality of care
  • Hold wrongdoers accountable


The DOJ has devoted increased resources and additional people to healthcare fraud than ever before. With a particular eye on the importance of compliance, the DOJ has hired a compliance professional in the fraud division. With the ability to use data to drive their actions, the DOJ has started to move from being a purely reactive department, to being able to move more quickly and proactively.

The DOJ has put specific emphasis on billing categories that a rife with fraud as well as cities where fraud commonly occurs including:

  • Miami
  • Tampa
  • Baton Rouge
  • Dallas
  • Brooklyn
  • Detroit
  • Chicago
  • Los Angeles

It is always a treat to hear directly from the OIG and DOJ where their successes have occurred and what areas they are focusing on going forward.

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HCCA 2016: Physician Arrangement Integrity

John Steiner, Chief Compliance and Privacy Officer, and Associate General Counsel, Cancer Treatment Centers of America
Gail Peace, President, Ludi
Jerry Burgess, Chief Corporate Responsibility Officer, AMITA Health

Stark Law has recently hit the healthcare spotlight and is often framed as fraud. Though fraudulent arrangements do exist, Stark also leaves no margin for simple error due to structure as an exception statute. Rather than specifying the exclusion, Stark enacts a blanket prohibition unless specifically indicated exceptions are accommodated. Prosecution for Stark does not require intent on the offending party and technical violations missing one or more elements of stated safe harbors are all too frequent.

When it comes to contracting and Stark, the front end deals with actually setting up an initial contract while and the back end is concerned with the ongoing execution of a contract. Compliance with the original negotiation deals with proper notation of expected duties and commercial reasonableness and FMV documentation. Once the upfront work is done of satisfying safe harbor requirements, it is important to remain vigilant for compliance risks inherent in the execution and maintenance of a contract. In this regard, the speakers shared a few pitfalls to look out for:

  • Process risks, such as when a contract ends and a physician continues to perform duties and receive payments, when duties are not actually checked against time logs, or when illegible or late time logs are compensated, among others.
  • Agreement parameters are unclear, such as when duties aren’t clearly outlined, incorrect information is recorded, or duplication in agreements for the same physician, among others.
  • FMV is breached, such as when a payment maximum is exceeded, calculations are incorrect or too complex to follow, or when layering of agreements leads to duplication, among others.

As you can see, the risks for a technical Stark violation are many. From here, the speakers turned to sharing their best practices for active management of contracts. It is not only key to have a process, but equally critical for that process to designed in such a way that maximizes the efficiency and success of its administration. Best practices include:

  • Removing steps that don’t add value. Your process can have 10 steps or it can have 50 steps. What is important is that is you ask the right questions within a manageable time frame.
  • Collect time logs for all non patient care activities for both employed and independent physicians.
  • Standardize and streamline duties. It is time consuming to check outlined duties against each month’s time log. Errors are far more likely when every contract has uniquely written duties; instead, consider using a template of duties for each type of contract with room for a few unique duties tailor to the role.
  • Approvers should be trained and have clear accountability. Expectations should be set with every approver and there should be a consistent review process for every type of contract.
  • Mind the math with every payment. Every time you make a payment, you must make sure that payment falls within FMV. Paying physicians for hours over their monthly or annual maximum or pay for duties not included in their contract all constitute a breach of FMV.


HCCA 2016: Physician Compensation Under the Microscope: Lessons Learned from Recent Settlements

Charity Elmer, Senior Vice President and General Counsel, Legal Department, Cox Health
Anna Grizzle, Partner, Bass, Berry, Sims PLC
Tizgel K.S. High, Vice President, Associate General Counsel, Legal, LifePoint Health

In looking at numerous recent settlements, we can see that physician compensation is a hot topic for hospitals. Recent settlements and cases show themes of:

  • Non-FMV payment rates
  • Contracts not being commercially reasonable
  • Direction from senior management to gain referrals
  • A, often secretive, system for tracking referrals after the agreement was signed

To avoid these pitfalls, develop a process for creating and negotiating contracts:

Contract management

In an electronic or paper system, track every arrangement and where payments are being made. Establish a centralized process for consistent review and approval of all contracts. Once contracts are signed, quickly enter them into the contract management system.

Template contracts

By developing contract templates for contract types which are frequently entered into, you save time by not recreating the wheel. Additionally, you can be sure that legal approves of the contract templates at the outset which streamlines the process of getting the contracts in place.


Of course, you should confirm the proposed payment rate in the contract in FMV. Be sure you aren’t shopping around for opinions because this could come back to haunt you if you are investigated.

Business justification

When entering into a physician arrangement, it is a good idea to carefully document the business case for the position. If referrals have anything to do with the business case, rethink the arrangement immediately. By documenting the justification behind the arrangement, you at least partially address the issue of commercial reasonableness.

Compensation structure

If your organization can agree on a handful of standard and simple compensation structures, it reduces the confusion internally and with physicians.

Consistent process

Allow the process to fit most situations with variance only when clearly and absolutely necessary and even then, keep it to a minimum.


If the process is consistent and simple, the arrangements should be auditable by any auditor in the organization. Contracting should not be so complicated that only one or two people fully understand it.

Arrangement tracking

It is a good idea to periodically reevaluate FMV and commercial reasonableness across all contracts. FMV can change slightly over time, if you find that a contract to be a red flag, flag it for review.

Update arrangements

If a change in the relationship with a physician occurs, be sure to amend the contract or negotiate a new contract. For example, starting a service line is going to require many more hours of work than once the service line is up and running. Make sure the agreement reflects this.

Enforce tracking

Make sure that you are teaming up with accounts payable to pay only for appropriate services and within the payment structure outlined in the contract.

Is your organization at the front of the pack or are you missing some of these steps?

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HCCA 2016: CIAs: Tips on Avoiding, Complying and Negotiating Them

Michael Rosen, President, ProviderTrust Inc
Lisa S. Rivera, Member, Bass, Berry & Sims PLC
Susan Gillin, Deputy Branch Chief, Office of Inspector General-U.S. Department of Health and Human Services

Living under and in compliance with a Corporate Integrity Agreement (CIA) is no easy task. Not every violation results in a CIA, but when one becomes necessary there are a few things to consider. Negotiating the terms of a CIA usually addresses the following categories:

  1. Scope – addressing specific problems with demonstrable focus
  2. Degrees – compare previous protocols to those proposed or seen in other cases
  3. Prevention – indicate measures in place and successes
  4. Accountability – staff training and accountability measures
  5. Internal testing – probes, sample size, extrapolation
  6. Costs
  7. Compliance expert – independent advisor
  8. Independent Review Organizations (IRO) – paid for by provider but answers to OIG

Once a CIA is in place, your organization will need to develop a plan for compliance under it’s terms. A critical step is simple, but can be extremely difficult: get everyone on board. Depending on the compliance tone and program development, this can entail a major culture shift. It’s not realistic to expect change in a single day, but championing the effort and taking the CIA seriously from day one will start your organization in the right direction.

Implement the CIA provisions and report efforts to the OIG. Communicate details such as who will sign certifications of compliance, who will be responsible for implementation, systems and areas impacted, and any documents and electronic information impacted. You’ll want to develop a schedule or CIA compliance work plan and, importantly, test it.

The OIG publicly posts CIAs online, if you haven't, we recommend reading through one.


HCCA 2016: The Stark Trifecta: How Legal, Compliance, and Outside Counsel Work Together on Stark Compliance

Meaghan Moriarty, Senior Associate General Counsel, Allina Health
Thomas S. Schroeder, Partner, Faegre Baker Daniels
Tracey Stanich Witherow, Manager, Compliance & Regulatory Affairs, Allina Health

Our speakers pulled together a fun, scripted case study to demonstrate how internal legal, compliance, and outside counsel can successfully work together to handle Stark-related risks and issues. Compliance and legal activities around Stark falls into three general categories:

  1. Identifying the Risk
  2. Developing the Program
  3. Taking Action When Issue Arises

Identifying the Risk

Compliance operates primarily to prevent violations by developing processes that are comprehensive and geared towards establishing best practices across the organization. When concerns come up in compliance, it is their responsibility to consult with their counsel to properly determine next steps. Compliance should use legal as a close partner is determining what is a real issue and what situations are protected.

Developing the Program

Once a compliance program is put in place, it’s important to continuously listen to feedback from employees in order to continuously revise and improve. There should be a standard process established that is sufficient to process the majority of contracts and doesn’t require legal to participate. There should also be clear next steps for how to interact with legal when contracting deviates from the standard process for any reason.

Taking Action When an Issue Arises

Don’t be afraid to report and confront contracting issues, present or past, in your organization. Effectively burying your head in the sand will not serve your organization well. Internal and external counsel should work together to combine deep knowledge of hospital operations and broad legal experience, respectively, when an issue does arise. Utilize other partners, like accounts payable, to resolve ongoing risks. Compliance is stronger when multiple stakeholders have a vested interest and active participation in the processes that make it successful.


HCCA 2016: Compliance in the Country: Considerations for Critical Access and Rural Hospitals

Tomi Hagan, Senior Consultant, Compliance, Quorum Health Resources

For Critical Access Hospitals, the objective is always to accomplish more with fewer resources. While many Critical Access Hospitals can't afford to have a dedicated FTE as a compliance officer, it is important to stay in the know. When you are a smaller organization, you have fewer opportunities to identify issues, but it is important to stay in practice with compliance best practices.

Rural and Critical Access Hospitals face unique challenges and regulations, however they also do somethings better than large organizations. Small hospitals often have an easier time cultivating a culture of compliance. When there are fewer people, it is simply easier to get them onboard. Similarly, it is more feasible to train everyone in an organization on the compliance program and to get face time between the departments and the compliance officer.

For more information specifically on navigating physician contracts at rural hospitals check out our infographic.

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HCCA 2016: Communicating with Regulators and Enforcement: Avoiding Pitfalls

James J. Rough, Associate Director, Navigant Consulting, Inc
Cynthia Santana, Supervising Special Agent, Healthcare, Federal Bureau of Investigation, Las Vegas Office
Shaun Bowen, Deputy Chief Investigator, State of Nevada, Office of the Attorney General
Crane Pomerantz, Deputy Chief-White Collar Unit, Criminal Health Care Fraud Coordinator, US Attorney’s Office, District of Nevada

The Monday afternoon Communicating with Regulators and Enforcement: Avoiding Pitfalls session gave a glimpse into the mind of regulators and prosecutors. When evaluating whether or not to pursue a case there are a few elements to consider such as public safety risk, dollar amount in damages, and amount of information known, among many.

Cases can be approached as civil or criminal. There are two prongs to consider: the mistake that was made and the contributing intent. Regulators and prosecutors understand that medical billing and other topics are confusing and difficult, and they understand that mistakes happen. It’s the evaluation of the second prong, intent, which takes a case from a civil action to a criminal prosecution.

Our panel of speakers all agreed on the seriousness of their responsibility to bring bad actors to justice. To this end, governmental groups pursue open collaboration with each other as well as private entities to identify trends and align efforts to make our healthcare communities safer.


HCCA 2016: Compliance Program Start Up: What are the Basics Needed for your Infrastructure

Debbie Troklus, Managing Director at Aegis Compliance and Ethics Center
Sheryl Vacca, Chief Compliance and Audit Officer at University of California

Having joined MD Ranger in January 2016, this is my first year attending HCCA. I started off the conference attending Compliance Program Start Up: What are the Basics Needed for your Infrastructure. This session discussed the realities of running a compliance program within a larger organization.

As a foundation, there are seven essential elements a compliance program should have:

  1. Standards and Procedures
  2. Education and Training
  3. Oversight
  4. Monitoring and Auditing
  5. Reporting
  6. Enforcement and Discipline
  7. Response and Prevention

Each of the above tenets is packed full of do’s, don’ts, and gray areas that challenge even the most veteran compliance professionals. While recognizing these difficulties, the speakers were clear that the principles of independence and accessibility are crucial to the success in every area. Compliance programs should function independently of other departments which might have a vested interest in the outcome of an investigation, such as management or legal. Instead, these partners should act as peers rather than supervisors, bringing us to the next point of accessibility. Compliance is everyone’s job. Accordingly, the compliance expectations, policies, and education must be communicated to every employee with a goal to promote real understanding and adoption.

The list above can be incredibly overwhelming but taking efforts one step at a time can get you where you want to go. It’s important to perform baseline audits and then evaluate the progress of your efforts. Ask questions like, Did the program get implemented the way it was designed? What impact did it have? According to our speakers, “Rome was not built in a day...compliance programs are also not built in a day”. Document, evaluate, celebrate success, plan for improvements, and take your compliance program to the next level.


HCCA 2016: Implementing a Monitoring Program

Kelly Nueske, Executive Consultant, Pinnacle

Based on the Business Dictionary, the definition of monitor is "Supervising activities in progress to ensure they are on-course and on-schedule in meeting the objectives and performance targets". Be careful with the word "ensure" in your processes because when dealing with humans, it is impossible to be 100% ensured.

Monitoring Auditing
Monitor based on risk Independent
Often has a quality focus Objective
May be continuous--as part of a process Based on risk
Considered an internal control--preventative or detective Focuses on internal controls
  Systematic, disciplined control

While the compliance department is responsible for the overall management of monitoring, the monitoring should occur within each department and by the managers in that department. It is essential to play to the concerns of each department in order to get buy-in from them.

Continuous monitoring should occur no longer than 6 months. Monitoring is intended to fix problems. If nothing has changed in 6 months, clearly something isn't working. Some monitoring needs to happen daily or weekly, but ideally monthly is sufficient. Timing does depend on the issue being monitored.

Monitoring should occur in areas of high risk. Physician contracts are a high risk area. If you aren't monitoring physician contracting, you should be. What is the process for monitoring the number of hours medical directors are working compared to what is outlined in their contract? Who determines is FMV? What method is used for determining FMV?

For more information on monitoring physician contracts, check out Tools to Audit and Monitor Physician Contract.

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Reports for Hospital Boards and Executives

In April 2015, the OIG released Practical Guidance for Health Care Boards on Compliance Oversight. MD Ranger’s analytic tools generate an Executive Summary which provides day-to-day compliance and physician contracting staff a report to share with executives and the board. This report graphically displays payments by service and facility for health systems.

This report allows administrators and boards to see where money is going and compare across facilities. It can also highlight areas of potential compliance concern, or areas that should be examined more closely.

Executive Summary 1

Executive Summary 2

If you are curious about the Executive Summary, email This email address is being protected from spambots. You need JavaScript enabled to view it. to learn more.

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HCCA 2015: Effective Monitoring and Auditing Programs

Effective Monitoring and Auditing Programs
Dan Roach, General Counsel, Optum360
April 20, 2015

I attended another great session by former Dignity Health General Counsel Dan Roach. Dan was one of MD Ranger's first champions and helped us implement MD Ranger across Dignity Health five years ago.

Auditing and monitoring programs protect organizations by identifying issues early and demonstrate a commitment to compliance program effectiveness. In fact, federal sentencing guidelines say you do not have an effective compliance programs unless you have these programs in place! Keep in mind that these programs serve to protect the compliance officer, if you need yet another reason to implement one at your organization.

Dan hammered home that incentives must align across the organization for behaviors to change and for a culture of compliance to thrive. He also recommends being as transparent as possible with monitoring and auditing programs.

Common pushback from organizations usually revolves around resources. Many organizations don't have large compliance teams, and the staff already have a full workload. After all, if problems are identified, they must be corrected. This takes even more time and resources.

Dan also discussed the differences between auditing and monitoring. Auditing is a sample, periodic, retrospective analysis of a system. Monitoring, on the other hand, is a continuous, frequently automated process that looks at what's happening now.

What happens when mistakes are uncovered in your monitoring/auditing programs? Take action! Corrective action plans help an organization take a reasonable approach. Dan suggests automating where it is possible. However: beware of the ineffective plan. Just because a corrective action plan is in place doesn't necessarily mean that your organization will successfully correct what's been going wrong.


HCCA 2015: General Session with Dan Levinson

General Session with Dan Levinson
April 20, 2015

We had yet another jam-packed session with Inspector General Dan Levinson on April 20th. Here are our key takeaways from Dan's talk.

  • Compliance professionals need to understand compliance in a technologically dynamic world. We must be thinking about how to navigate data and turn it into information--not always an easy task.
  • Unfolding payment changes will be key to managing both heathcare in general and compliance in particular, especially given that performance is now a critical part of healthcare reimbursement. At the same time, we as compliance professionals must keep integrity in focus for our peers across our organizations.
  • We need to think more broadly about who our business partners are, including referral relationships, billing, etc.
  • FCA, AKS, and Stark: understand how all these different laws work and how the changes work are an absolute must. These laws continue to evolve. New safe harbors have been created to keep up to date with changing technologies, and it's important for all compliance professionals to be aware of the current law.
  • Let's bring lawyers under the compliance tent to help us look at things from a new perspective.
  • What's important career development for a compliance officer? Social leadership skills! These are of the utmost importance. Personal skills is a must to connect with people across the organization.


HCCA 2015: Physician Relationship Audit Workshop: Addressing Identified Issues

Physician Relationship Audit Workshop
Anna M. Grizzle, Partner, Bass, Berry & Sims PLC
LeToia Crozier, Chief Compliance Officer, Emdeon
April 22, 2015

Once you have analyzed your physician contracts, it is likely that you will find some issues that need to be resolved.

Common issues to find include:

  • Expired agreements
  • Lack of proper approvals
  • No written agreement or other technical deficiency
  • Lack of documentation to support payments or noncompliance with payment terms, rates, or caps.
  • Lack of FMV documentation

MD Ranger has reports which help prganizations quickly determine which contracts may be out of compliance.  Facilities then use MD Ranger's reports to document FMV for each contract in a simple and standardized way.

There are several, less than ideal, but possibly feasible ways to try to produce informal documentation or reduce the trouble cause by these contracts.

  • There is a 6-month holdover provision. While you shouldn't make a habit of allowing contracts to expire, you may be safe under this provision. Work quickly to rectify the expired contract.
  • What constitutes a contract under your state laws? It may be less formal than you think.
  • Do you have an email chain which could show an agreed upon renewal, continued agreement, or change in duties?
  • Are there meeting notes, physician's calendar record, or claims data that could support the arrangement in the absence of proper documentation?
  • Can you implement retroactive opinions or other contemporaneous documentation to support decisions and actions?

Most importantly as soon as you find a problem, rectify it. If you can rectify the problem, you cut off the period where you may be noncompliant and could be held accountable for repayments.

Some potential responses to noncompliance once you have investigated how big the violation is are:

  • Repay claims
  • CMS voluntary self-disclosure protocol
  • OIG self-disclosure
  • US Attorney's office or state Attorney General's office

Finally, once identified issues are resolved, it would probably be a good idea to implement a policy to avoid future issues.

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HCCA 2015: Physician Relationship Audit Workshop: A Practical Guide to Auditing Physician Relationships

Physician Relationship Audit Workshop
Anna M. Grizzle, Partner, Bass, Berry & Sims PLC
LeToia Crozier, Chief Compliance Officer, Emdeon
April 22, 2015

Physician contracts are often overlooked or thought to be a small part of compliance's role however, with Stark law, the Anti-Kickback Statute, and the False Claims Act, the stakes are too high not to pay attention. Every year there has been an increase in the number of specifically physician relationship cases like Tuomey.

The first step of a physician contract audit is to locate all of your physician contracts. You may have them all in a centralized database--this is great. However, you may still find contracts that are not centralized. The first step is to update or create this database. While some MD Ranger subscribers use a formal contract management system, some subscribers use their MD Ranger online portal to centralize all of their physician contracts.  Gather supporting data for the contracts like FMV information, time records and logs, general ledger accounts, and accounts payable records.

Then, dive in. Analyze each and every contract and the supporting information. Work to determine:

  • Is there a written agreement?
  • Is there a time commitment outlined?
  • Has the agreement expired?
  • Is the agreement FMV and commercially reasonable?
  • Has the FMV and commercial reasonableness been reviewed in the last two years?
  • Are the parties complying with the terms?
  • Does the agreement comply with a Stark exception?

Pay special attention to "stacked" arrangements--physicians who have several contracts which independently are FMV and commercially reasonable but when accumulated together, are masking overpayments. Without a centralized database of contracts, these will likely be overlooked.

While nobody attending this session had a similar policy, the speakers recommended a blanket policy where if a proposed physician payment is above the median or 75th percentile, you must obtain an outside opinion. In our subscribers' experience, this type of policy not only creates consistency across services, but actually reduces the number of high payments due to requiring an extra step.

Further analysis on each contract can include:

  • Are duties listed being performed?
  • Are payments linked to contracts?
  • Does the agreement comply with regulations?
  • Are time sheets being submitted?
  • Is documentation of space utilization available?
  • How is non-monetary compensation being tracked?

For the suggested steps to take once you identify issues, read part two.

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HCCA 2015: Physician Payments Sunshine Act

Moderated by Robert S. Brown, Compliance Manager, UW Medicine; Jodie R. Caplan, Senior Compliance Consultant, Carilion Clinic; Ryan Hulslander, Associate General Counsel, Cochlear Americas
April 19, 2015

Though MD Ranger data doesn't report the types of payments covered under the Sunshine Act, we were nevertheless curious to attend this session and learn about this new mandated reporting for physician payments. This is an element of ACA and is in it's first years of publication and use.

The moderators began by stating that obligations change our brain chemistry by citing neurological studies proving that conflicts of interest matter because they affect behavior.

This act is intended to promote transparency. No assumptions or conclusions about the data itself; people can review and make own decisions. However, presenting information without context can be problematic because a payment doesn't necessarily mean it is inappropriate; ie, it's not proof that payments are inappropriate or kickbacks. Most are probably justifiable payments. The payments in and of themselves should not suggest there's necessarily a conflict of interest.

Contributing physician payment data are GPO's and manufacturers of drugs, devices, supplies, etc. Items that are reported are anything of value, and could be cash, stock, LLC, partnership shares, loans, bonds, etc.


HCCA 2015: False Claims Act Developments

Session moderated by John T. Boese, Counsel, Fried Frank Harris Shriver & Jacobson LLP; Michael Granston, Director, Commercial Litigation Branch, Fraud Section, Civil Division, US Department of Justice; Gary W. Eiland, Partner, King & Spalding LLP; Michael A. Morse, Partner, Pietragallo Gordon Alfano Bosick & Raspanti, LLP
April 19, 2015

The first session I attended was moderated by four attorneys and it was about current developments with the False Claims Act. If you're a frequent reader of our blog and other MD Ranger publications, you're aware that the FCA has come into the spotlight within the healthcare industry given that it is now invoked in some Stark and AKS violations.

The first thing that was discussed was how are the cases investigated and the typical process of these investigations. Since most of the audience were hospital compliance executives, they were curious to hear about what it's like to go through these types of whistleblower cases. As you'd suspect, the vast majority are settled and never see a courtroom; however, it might be resolved after quite a lengthy investigation. During the investigation and information gathering stage, the hospital still should expect to have a lot of interaction with the DOJ.

These Qui Tam lawsuits are typically filed under seal by the whistleblower. The complaint is not served on the defendant before the government reviews it. Then, DOJ has to decide whether or not it's going to pick it up themselves. Thus, the defendant doesn't really know where the lawsuit is coming from; or they might not even know it's going on. Obviously, this is concerning for many healthcare compliance professionals.

Sometimes, however, there's a good reason to disclose the lawsuit to the defendant. For example, there could be a backstory about the whistleblower himself/herself that could be helpful (ie, knowing the source and the backstory of the allegations).

To establish whether or not the conduct was against the law and move forward, the next step is to approach the subject of the investigation. This commences by requesting documents voluntarily or by subpoena. Then, DOJ works with the subject to see if there's resolution before a lawsuit is filed.

An interesting legal debate is what does a claim needs in order to be false. This is because "falsity" is not defined within the statute. In fact, the most controversy surrounds situations where you've provided a service but you've failed to comply with another statute (like AKS or Stark). So, in the course of providing goods or services to the government you don't defraud them with the actual service, you end up violating an ancillary law and thus the claim is false.

Damages are most of the focus of FCA discussions. The law stipulates three times the amount of damages the government sustains plus civil claims. As you'd suspect, the devil is in the details. What claims count? How do you quantify these claims? It's often a debate that happens between defense and DOJ because there are so many ways to calculate these damages.


HCCA 2015: Compliance Program Start Up: What Are the Basics Needed for Your Infrastructure

Starting off this year's compliance institute, I attended Compliance Program Start Up: What Are the Basics Needed for Your Infrastructure. Debbie Troklus of Aegis Compliance and Ethics Center and Sheryl Vacca of University of California discussed the overall necessities of a compliance program. There are seven elements of an effective compliance program:

  1. Policies and Procedures
  2. Education and Training
  3. Oversight
  4. Monitoring and Auditing
  5. Reporting
  6. Enforcement and Discipline
  7. Response and Prevention

And, to think that are more than a dozen areas for which to cover each step.

Debbie and Sheryl stressed that while "tone at the top" is important, tone in the middle is crucial. What this means is that it is while it is important for the management and executives to back compliance, it crucial that middle management is compliance's champion. If middle management isn't on board, it won't get done.

It was also emphasized that your organization must embrace a culture of compliance. Does compliance take top priority in the organization? Are all employees on board right down to the bus drivers, do they know who to talk to if they see a problem? It is everyone at an organization's responsibility to keep an eye out for compliance offenses and report them and it is management's job to listen such that employees don't become frustrated and resort to whistleblowing.

Stay tuned for more from the 2015 HCCA Compliance Institute!

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HCCA: What’s FMV Got to Do with It?

Monday, I attended the session “What’s FMV Got to Do with It?: The Role of Fair Market Value in Physician Employment Arrangements”.  While MD Ranger doesn’t benchmark employed or salaried physician data, it is very closely related to the contracted physician arrangement.  Because of the recent developments in the Halifax case, this session revolved much around this example.

Much of the debate over the Halifax case, according to this session, stems from whether the physician arrangements in question were employment arrangements or not.  Employment and contracted physician arrangements are held to different standards under Stark and AKB.  It is important to note that when you have a bona fide employee, you can pay them for referrals but, a contracted physician is subject to the referral regulations and penalties from violations under Stark law and AKB.

How do you document employment of physicians or the FMV for contracted physician arrangements in your organization?

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HCCA: Stark, AKB, and IT–Considerations for the Compliance Professional

I attended a session yesterday at HCCA which tackled the incredible complex and rapidly evolving topic of IT as it relates to Stark and AKB violations.  Jim Donaldson of Baptist Health Care Corporation lead the presentation, with the goals of gaining an appreciation for the growing complexity of situations that involve provider technology initiating compliance issues with physicians.

Jim comforted the crowd by acknowledging that everyone is struggling with issues of compliance when it comes to technology.  Because things change so quickly, it’s difficult, if not impossible, to stay ahead of the curve.  He caught us up on a few risks, some quite surprising, that are coming to play in hospital/physician relationships.

The devil is in the details when it comes to non-employed physicians and technology.  Did you include ethernet wiring in your physician office lease?  If not, or your physicians aren’t paying for it, you could have a Stark issue on your hands.  Are physicians at your hospital using your wireless for accessing a virtual desktop connected to their private practice?  This means that a physician is getting a resource from your organization without paying for it.

As cloud-based services continue to grow, so will challenges with using these technologies with an eye towards compliance.  Behavioral and mental health practitioners who wish to utilize online technology like Skype or Google Hangouts cannot do so without a business associates agreement.


HCCA: Updates from Dan Levinson at the OIG

I had the privilege of attending Dan Levinson’s talk this morning at the 18th annual HCCA conference.  As the Inspector General, Dan has tremendous influence over hospital compliance.  It was quite interesting to hear what’s on Dan’s mind and his goals for the OIG in 2014.

After mentioning the Halifax case several times, it was clear how Stark and AKB are still of great importance to the OIG and that they are pursuing cases actively.  What’s particularly concerning about that case is the fact that the compliance officer repeatedly voiced her concerns over Stark violations was ignored by her executive team.  Lesson learned:  regardless of what impact addressing Stark violations might have on your organization, it will be better in the end to self-disclose and figure out a solution before facing a multi-million dollar settlement (in this case, $85 million).

The key areas for 2014 for the OIG, according to the IG, are:

  • The new health exchanges (security, payments, etc.)
  • Adverse events across all types of facilities, including the post acute setting
  • New updates to the safe harbor laws (important for physician contracting!)
  • New civil monetary penalties
  • New exclusions


HCCA: Compliance in the Post-Acute Environment

On Sunday morning, I attended the session “Compliance in the Post-Acute Environment”. Given that MD Ranger serves an increasing number of these types of organizations, I looked forward to learning more about compliance in this particular space.

The speakers first tackled the tough reality that, while compliance programs for post acute facilities have been mandated by ACA, we still don’t know the specific requirements of these programs. This presentation addressed how compliance officers in the post acute world can “predict” what the OIG and CMS will care about, and structure their compliance program and procedures accordingly.

Overall, it’s safe to say that many elements of an acute care organization’s compliance program translate on the post acute care side of the industry. The speakers emphasized the importance of an easy to understand code of conduct (or compliance policies), as well as a compliance officer that has the resources and authority to do her job. Sanction screening, internal monitoring, enforcement, and measures to address non-compliance were all important elements of post acute compliance programs.

Despite the fact that a lesser number of physicians are involved in post acute care, the speakers took care to mention that a thorough review of your physician contracts is essential to preventing risks like AKB violations or Stark violations. Reviewing agreements with all referral sources can help you document your compliance with federal regulations and ensure that all contracts are fair market value. Integrating physician agreements with your formal compliance program is key.  From our perspective at MD Ranger, we couldn’t have said it better ourselves. Because post acute care organizations are so heavily dependent on referrals from key physicians, documentation of FMV becomes even more critical.

Post acute organizations:  how do you handle physician contract auditing at your facilities?


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