Tag: Stark

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Stark Law-Based FCA Lawsuits Multiply: Relators Targeting Physician Compensation

Summary of article from Davis Wright Tremaine, by Robert G. Homchick, Adam D. Romney, Gavin Keene:

Several health systems, including Community Health Network Inc., University of Pittsburgh Medical Center, Erlanger Health System, and Steward Health Care System, have recently faced Stark Law-based False Claims Act (FCA) lawsuits. These lawsuits primarily focus on allegations of above fair market value compensation to physicians for referrals. The cases underscore the increased scrutiny of physician compensation practices and potential severe consequences of Stark Law violations. The trend suggests that health systems should reassess their risk levels arising from physician compensation practices. To mitigate risks, healthcare organizations should ensure fair and transparent compensation arrangements, implement effective compliance programs, take whistleblower claims seriously, and seek legal guidance to navigate Stark Law complexities.

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Health Law Highlights

“Stark” Differences: DOJ’s Renewed Focus on Stand-Alone Stark Law Violations

From Arnold & Porter, by Murad Hussain, Allison W. Shuren, Loreli (Lori) Wright:

The Department of Justice (DOJ) has recently increased enforcement of the False Claims Act (FCA) based on the Stark Law, also known as the Physician Self-Referral Law. This law focuses on financial relationships between physicians and health care entities, particularly when compensation exceeds fair market value (FMV) or varies with the volume or value of referrals. Violations of Stark Law can lead to FCA claims, requiring less proof than Anti-Kickback Statute (AKS)-based FCA claims. This trend has been evident in a series of new FCA enforcement actions and resolutions involving large health care providers since early 2023.

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Health Law Highlights

CMS Again Settles Record Stark Self-Disclosures in 2023

From McGuireWoods, by Gretchen Heinze Townshend, Timothy Fry, Kristen H. Chang, Varsha Gadani, Micaela Enger:

The Centers for Medicare & Medicaid Services (CMS) reported a record 176 settlements of voluntary self-disclosures related to past or potential violations of the physician self-referral law (Stark Law) in 2023, with settlements totaling over $12 million. This represents an increase from 103 self-disclosures and over $9 million in settlements in 2022. Despite the increase in total settlements, the average settlement amount in 2023 was $71,363.73, one of the lowest on record. The CMS’ self-referral disclosure protocol (SRDP) allows healthcare providers to self-disclose violations to resolve overpayment liability. The data suggests that CMS is focusing on processing SRDP submissions more quickly, with average settlement amounts remaining consistent with previous years.

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Health Law Highlights

OIG Approves Hospital’s Redemption Offer to Retiring Physician-Owners

From Bass, Berry & Sims, PLC, by Justin Brown, Krista Cooper, Ashley Gholston Fowler, Travis Lloyd:

  • The U.S. Department of Health and Human Services Office of Inspector General (OIG) issued Advisory Opinion No. 23-12 on January 3, approving a plan by a physician-owned hospital to redeem the ownership interests of physicians who retire at 67 over a two-year period. This opinion provides guidance on redemption of physicians’ ownership interests in syndicated facilities like physician-owned hospitals and ambulatory surgery centers.
  • The requesting party, a limited liability partnership operating two hospitals, proposed a one-time offer to physician-owners turning 67 to redeem their units over two years to avoid a potential liquidity crunch. To accept, a physician-owner must agree to retire within six months of the first payment and certify they will not refer patients to the hospitals or other partners.
  • The partnership would redeem the units in three equal increments over the two-year period at a fair market value price. Redeemed units are offered to existing and prospective physician-owners equally, without regard to the volume or value of referrals or other business generated.
  • The OIG concluded that the arrangement posed a low risk under the federal Anti-Kickback Statute, based on the fact that eligibility for the redemption offer is unrelated to the volume or value of referrals or other business generated, and the remuneration is unlikely to result in unfair competition by altering referral patterns.
  • The advisory opinion highlights the importance of objectivity and consistency in structuring redemptions and offerings. Basing redemptions and offerings on objective criteria unrelated to the volume or value of referrals or other business generated and applying these criteria consistently to all physicians reduces the risk of non-compliance with the Anti-Kickback Statute and federal physician self-referral law (Stark Law).
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Health Law Highlights

CMS Publishes Updated Data on Stark Law Voluntary Disclosures

From Policy & Medicine, by Thomas Sullivan:

  • 2022 was a stand-out year for Stark Law self-disclosures. It was the highest year in both the number of disclosures settled and the aggregate amount of all settlements for the year.
  • In 2020, a total of 36 settlements were reached, ranging from $33 to $952,300, for a total of $4,344,966.
  • In 2021, a total of 27 settlements were reached, ranging from $631 to $1,110,148, totaling $1,988,451.
  • In 2022, a total of 104 settlements were reached, ranging from $299 to $1,171,174, for a total of $9,287,866.
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New Stark Law Exception and Anti-Kickback Statute Safe Harbor Aim to Combat Physician Burnout

From Stevens & Lee:

The Stark Law exception requires that health care entities make their physician wellness program available to all physicians who practice in the geographic area served by the provider, not just physicians who are a member of the entity’s medical staff or hold clinical privileges. Further, because the AKS applies to all health care providers, not just physicians, the new safe harbor adds that the program must be made available to all physicians and other clinicians who practice in the geographic area. Also, the new exemptions require that the program is offered to all physicians (and, under the AKS, including other clinicians) without regard to the volume or value of referrals or other business generated by the provider for the entity.

Additional key requirements for physician wellness programs to meet both the Stark Law exception and the AKS safe harbor are identical, and include that the program must:

  • Be made available for the primary purpose of preventing suicide, improving mental health and resiliency or providing training in appropriate strategies to promote mental health and resiliency
  • Be set forth in a written policy that includes an estimation of the cost of the program, the content and duration of the program, the evidence-based support for the program’s design, the personnel conducting the program and the method for evaluating the success of the program
  • Consist of counseling, mental health services, a suicide prevention program or a substance use disorder prevention and treatment program

The new Stark Law exception and AKS safe harbor provide an additional mechanism for health care entities to address burnout and mental health issues within their provider populations. Furthermore, regulations pertaining to these new statutory exceptions may come in the summer or early fall, which may provide additional requirements or additional guidance on these programs.

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Alert

Hospice, home health agency and owners pay over $1.8M to resolve claims concerning physician payments

The founders of an Edinburg hospice and related home health agency have paid to resolve allegations they submitted claims to Medicare that resulted from unlawful referrals.

Onder Ari, 49, Edinburg, and Sedat Necipoglu, 48, McAllen, founded Allstate Hospice LLC and Verge Home Care LLC. They and their companies have now paid $1,847,279.36 following an investigation into improper payments to physicians for referrals.

Ari and Necipoglu offered compensation to physicians who were responsible for a significant majority of their patient referrals. Specifically, they provided physicians with monthly payments pursuant to medical directorship agreements with Allstate and Verge. Those payments were in excess of fair market value for the services the physicians actually provided. They also sold interests in Allstate to five different physicians which ultimately netted them substantial quarterly dividends. They also provided physicians other gifts and benefits, such as travel and tickets to sporting events.

Source: Hospice, home health agency and owners pay over $1.8M to resolve claims concerning physician payments

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Alert

Revisions to Stark Law Rules Covering Physician Profit Sharing and Bonuses

The new provision allows a member of a group practice to receive profits from DHS directly attributable to the physician’s participation in a value-based enterprise.

CMS clearly has made the determination that participation in such enterprises is so essential that it is allowing a direct tie between a physician’s participation and the profits derived from DHS.

CMS also clarified that if a group has five or fewer physicians, overall profits means the profits from DHS from the entire group; but if a group has more than five physicians, the group may designate a component of at least five physicians to aggregate the profits for the purpose of distribution.

Although other portions of the Final Rule go into effect January 1, 2021, the profit sharing and productivity bonus provisions do not go into effect until January 1, 2022.

Source: Revisions to Stark Law Rules Covering Physician Profit Sharing and Bonuses

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Alert

What Stark law, anti-kickback changes mean for value-based care at ASCs

HHS issued two rules on value-based care arrangements recently that will affect orthopedic surgeons and ASCs. CMS made adjustments to the Stark law, and HHS updated the federal Anti-Kickback Statute and the civil monetary penalties law to ensure healthcare providers could develop value-based care arrangements without fear of fraud and abuse charges.

The changes to the Anti-Kickback Statute make it easier to enter into value-based care arrangements, especially if providers take full risk. The exceptions create flexibility in how physicians are compensated. The exceptions don’t require setting compensation in advance, consistency with fair market value or determined in a way that doesn’t take the volume or value of physician referrals into account. But there is a commercial reasonableness standard for pay, and the exceptions apply to both Medicare and non-Medicare beneficiaries.

The new exceptions and safe harbors are for value-based arrangements when participants take on full risk, substantial risk with at least 10 percent downside, or arrangements where providers do not take on financial risk. There are incentive payments for participants who take on at least 10 percent risk.

Source: What Stark law, anti-kickback changes mean for value-based care at ASCs

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Highlight

HHS Finalizes Highly Anticipated Final Rules Amending AKS and Stark Law Regulations, Part III: Value-Based Arrangements

A value-based arrangement is an arrangement entered into between a value-based enterprise (VBE) and one or more of its participants, or among VBE participants in the same VBE, for the provision of one or more value-based activities for a target patient population. The final rule defines a VBE participant as an individual or entity that engages in at least one value-based activity as part of a value-based enterprise, other than a patient acting in their capacity as a patient.

For purposes of the OIG’s new safe harbors, a VBE is two or more participants that: (1) are collaborating to achieve at least one value-based purpose; (2) are each a party to a value-based arrangement with the other (or at least one other participant in the same VBE); (3) have an accountable body or person responsible for financial and operational oversight of the VBE; and (4) have a governing document describing the VBE and how its participants intend to achieve the VBE’s value-based purpose(s).

The size and structure of a VBE can vary greatly from a large network of providers and suppliers; a separate legal entity, like an Accountable Care Organization (ACO); or just two providers contracting together to form a value-based arrangement.Finally, a value-based purpose is (1) coordinating and managing the care of a target patient population; (2) improving the quality of care for a target patient population; (3) appropriately reducing the costs to, or growth in expenditures of, payors without reducing the quality of care for a target patient population; or (4) transitioning from health care delivery and payment mechanisms based on the volume of items and services provided to mechanisms based on the quality of care and control of costs of care for a target patient population.

Source: HHS Finalizes Highly Anticipated Final Rules Amending AKS and Stark Law Regulations, Part III: Value-Based Arrangements | Mintz