Legal Department


Paying Medical Doctors for Referrals
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Legal Department
Tuesday, 03 August 2010 00:00

 

studin32-8The question has been asked by doctors nationally in many ways, “Can I pay the medical doctor in some sort of veiled monetary manner to get referrals?” The answer according to STARK, anti-kickback regulations, Medicare Office of Inspector General (OIG) and probably every other regulatory and disciplinary board, is a resounding, “NO!”

 
Tread Carefully Before Entering a PPO Agreement
Legal Department
Written by Deborah A. Green, Esq.   
Friday, 26 August 2005 20:18

If you are a provider under a Preferred Provider Organization plan, you may be losing tens of thousands of dollars to which you are entitled. There is a scam occurring throughout the country, called the “Silent PPO”, which is costing doctors a lot of money and creating a financial windfall for certain unscrupulous insurance companies and brokers. It works as follows:

Your patient, Mrs. Jones, who is covered by Shady Insurance Company, is treated by you. You bill Shady for 80 percent of the bill and collect the 20 percent co-pay from Mrs. Jones. Shady asks a discount broker to find out whether you are a party to any PPO contracts. The broker learns that you are a provider for Crooked PPO. The broker buys your discount fee information from Crooked and sells the information to Shady. Shady sends you a discounted payment with an Explanation of Benefits, explaining that Mrs. Jones is entitled to the PPO discount; or, in certain cases, Shady will contact Crooked and Crooked will submit a discounted payment to you, claiming Mrs. Jones as its own enrollee.

Your billing department accepts the discounted payment because, although it can verify whether Mrs. Jones is a member of the PPO, it cannot as easily verify whether Shady belongs to the PPO and is, therefore, entitled to the discount. You lose money, because you should have been paid the full 80 percent for Mrs. Jones’ bill, not the discounted amount.

The parties making money on your labor are Shady, because it pays less on the claim than it should; Crooked, because it gets paid either by the broker, for selling the discount information to the broker, or by Shady, for processing the claim on Shady’s behalf; and the broker, who gets paid for supplying Shady with your PPO information. One way to avoid this problem is by being very careful when you enter into a PPO agreement. Determine whether the PPO is reputable before you sign anything.

The following characteristics are generally indicative of a legitimate PPO:

1. The contract provides for the following in writing:
  a. Provider directories are current.
  b. Provider directories are made available to you before you sign the contract.
  c. The directories are updated quarterly.
  d. You receive a list of payers at contract signing.
  e. You receive a list of payers before you are required to give a discount.
  f. You receive an updated list of payers on a regular basis.
  g. You have permission to approve new payers—if you do not approve of the new payers you may opt out of the contract with no penalty.
  h. Members have ID cards which identify the member, the PPO and the PPO telephone number in order to verify eligibility.

2. The PPO has a large staff nationwide. A large staff indicates that the PPO is concerned about both provider and customer relations. It should have about:
 a. One customer service employee per 3000 covered lives,
 b. One claims administration employee for every 3500 covered lives,
 c. One provider relations employee for every 1200 providers.

3. The PPO should credential providers according to set standards and practices. The process should take 60 to 90 days and should require re-credentialing at least every two years.

4. The PPO should have its own internal Utilization Management/Quality Assurance Program.

5. The PPO should present its fee schedule as the basis for negotiation.

6. The PPO should offer training and educational programs.

The following characteristics are generally indicative of a problem PPO:

1. The PPO does not have a payer list or will not give you one.

2. Payors identify themselves as PPO members via the EOB only after you have seen their members.

3. The PPO does not issue ID cards, will not provide you with a specimen card (or refer to it in your agreement), and has no eligibility verification hotline.

4. The PPO has a small staff (This is almost an immediate give-away that the PPO has been set up to resell provider numbers).

5. The PPO does not credential its providers.

6. The PPO claims to have a national network, but contracts out all its Utilization Management and Quality Assistance functions.

7. The PPO does not have a fee schedule—it starts negotiations by asking how much of a discount you are willing to give.

8. The PPO is indifferent to the efficiency of your practice.

Reviewing the PPO contract for these items may be a bit time consuming initially, but will save you much money over the long run.

If you have any questions with regard to the above or with respect to any other legal heath care issues, you may FAX your questions to Deborah A. Green, Esq., at 954-971-3787 or call 954-971-7778 or e-mail This e-mail address is being protected from spambots. You need JavaScript enabled to view it . In future issues, she will be answering those questions that are of interest to the broadest audience.

Ms. Green has been a practicing attorney since 1977. She is admitted to the practice of law in the State of New York and Florida and is a member of the American Health Lawyers Association, the New York State Bar Association Health Care System Design Committee, the New York State Bar Association Health Care Providers Committee, the American Bar Association Health Law Section and the Florida Bar Health Law Section. She has formed numerous multi-discipline practices throughout the country.

Disclaimer

Because this column is being presented to you by an attorney, it would not be complete without a disclaimer. This column is provided subject to and governed expressly by the terms of this disclaimer. This column is provided for educational purposes only. The accuracy or timeliness of the information presented herein is not warranted. The information presented herein is not intended to be advice as to a specific fact pattern with which you may be presented.  Accordingly, please note that the information contained herein is not being presented as legal advice with respect to any matter and that no attorney-client relationship is hereby established.

 
Careless Use of Coding
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Legal Department
Written by Larry Economos, Esq.   
Tuesday, 26 July 2005 18:51

In 1999, Dr. Joseph purchased a hydro therapy modality table, commonly known as a hydrobed, a water based massaging device which is more or less a bed upon which a patient lies for treatment. There being no specific current procedural terminology code for this modality, the manufacturer recommends the use of one of three plausible codes: 97022 (whirlpool); 97214 (massage); or 97139 (unspecified procedure). Dr. Joseph, realizing that insurance companies reimburse 97022 (whirlpool) at a slightly higher rate than the others, uses the whirlpool code for billing purposes throughout 2003, never bothering to contact his chiropractic board or the insurance companies to get an opinion as to the proper code for use.

In 2001-02, the American Chiropractic Association, acknowledging confusion in the industry as to the proper coding for hydrobed therapy, issues a position statement suggesting that the proper code to use for billing purposes is 97139 (unspecified procedure).  Unfortunately, Dr. Joseph never is made aware of the ACA’s position statement until after being criminally indicted for, among other things, coding hydrobed therapy as 97022 (whirlpool) from 1999 to 2003. 

Guilty or not guilty?

Dr. Joseph is found guilty of mail fraud in coding hydrobed therapy as 97022 (whirlpool) from 2001 through 2003.  His defense of plausible interpretation of an ambiguous billing code is refuted by his choice of a code for greater financial gain in the face of industry recommendation of a preferable code that reimbursed at a lower rate.

Larry Economos, a civil and criminal defense attorney whose practice focuses on federal health care fraud defense, is a managing partner with Mills & Economos, LLP. Mr. Economos can be contacted via his website address, www.leconomoslaw.com, or by telephone at 800-456-0460, 704-375-9913, or 252-752-6161.

 
The Legal Map to a Multi-discipline Practice, Part II
Legal Department
Written by Deborah A. Green, Esq.   
Wednesday, 22 June 2005 17:03

Benefits of the Multi-discipline Practice

The multi-discipline practice eliminates the delay that occurs when a patient needs to travel to various locations to see different doctors. I am certain that there have been occasions when the patient you were treating required medical treatment. Accordingly, you referred that patient to a medical doctor. In some instances, the patient returned to you; in other instances, the patient was lost for good. In all instances, the patient was put to the inconvenience of having to make an additional appointment at another location for treatment. You and the medical doctor lost valuable time and energy playing telephone tag, and the patient lost days waiting for the new appointment when he could have been recovering.

Learn to think out of the chiropractic box. The multi-discipline practice is limited in the services that it can render only by your imagination and the ability of the practice’s providers. The services that may be offered are vast.  Do not treat the multi-discipline practice as an overgrown chiropractic practice—that is not its function.

Protocols of the Multi-Discipline Practice

In all instances there must be a medical director who is a licensed medical physician who makes all medical decisions. The medical director is employed by a medical Professional Entity in those states where the corporate practice of medicine doctrine (“the Doctrine”) is in effect; or, as discussed in an earlier issue of The American Chiropractor, in those states where the Doctrine is not in effect, the medical doctor is employed by a general business entity, such as an entity or limited liability company (“LLC”). The practice may employ chiropractors, physical therapists, acupuncturists, phlebotomists, nurse practitioners, physician assistants, and various other types of health care providers.

Corporate Compliance

The various entities need to have a series of agreements which describe the duties and obligations of each entity to the other.

After the entities have been formed and the legal documentation signed, you are required to maintain the corporate existence of all three companies. Limited personal liability and the tax benefits of doing business in the corporate form are available only when you comply with the requirements of corporate law.

The benefits of corporate operation flow from the legal recognition of the entity as an entity separate from its individual shareholders, directors and officers. To enjoy these benefits, you must operate the entity as a separate entity and in accordance with certain formal requirements.

It is essential that corporate and personal affairs be kept separate. Never mix corporate and personal funds, assets, or accounts. Do not use corporate funds or assets for personal or for another business’s use. Business should be done in the corporate name. Avoid any indication that you are dealing in a personal capacity. The corporate name should be used on the telephone, advertisements, letterheads, cards, signs, etc.

When signing documents, it should always be made clear that you are acting on behalf of the entity.

In keeping with the recognition of the entity as a separate legal entity, the formalities of corporate operation provide the mechanism by which the entity governs itself, makes decisions, and takes action. Properly held meetings of shareholders and directors are the key to formal operation. The courts consider observance of the formalities as important evidence in deciding whether or not the entity has been operated as a separate entity. The formalities are often the source of authority for those who act on behalf of the entity. Officers, directors and employees who act without authority (that is, without the proper approval of the shareholders or the directors, properly made and recorded in the corporate minutes) may be personally liable for their acts.

Initial Steps to Forming a Multi-Discipline Practice:

1. Review your lease with respect to prohibitions against sub-letting. Many leases contain clauses that prevent an existing tenant from sub-letting its space to another entity. In such a case, an addendum to your existing lease will have to be negotiated with your landlord. Your landlord may require additional security, a personal guaranty or a lump sum payment to permit you to sublet the premises to the management company (which will, then, further sublet to the Professional Entity). Make certain that you obtain the landlord’s permission for successive sub-lets in writing. You will also need to get written permission from your landlord to make the appropriate structural changes, if necessary.

2. In the event that you maintain a home office, you need to determine whether you are permitted to sublet to a third party.

3. You may wish to sell your patient list to the Professional Entity and your equipment to the Management Company. In that event, you will need to obtain a fair market value appraisal of both your patient list and equipment.

4. Retain the services of a qualified consulting firm. Before you retain such a consulting service, make sure that the firm has not been excluded by Medicare/Medicaid. You should also price the services and ask for (and follow up on) references. The first year of managing a multi-discipline practice can be very confusing. You are learning brand new procedures, and there will be an intense learning curve. Although you will require a competent lawyer to prepare your documentation, he or she is neither a coding and billing expert nor a clinician, and will probably be unqualified to provide you with all the information that you will need. In most instances, your consulting agreement should not be longer than one year. Your learning curve is steepest in the beginning—by your tenth month, you should be comfortable with what you are doing.  The eleventh and twelfth month should be for streamlining the process.

5. Bear in mind that, in most cases, your consultant is not an attorney—if you have any legal questions, ask your lawyer. Your consultant is not legally permitted to provide legal advice to you—even  if he or she does, you are not permitted to rely upon it. If something seems too good to be true, it generally is—seek professional help.

6. Consider implementing a compliance program into your practice. View it like a form of preventive care that protects against fraudulent or erroneous conduct. Compliance programs are internal controls and procedures that promote adherence to federal, state, and private health care programs and requirements that help you run your practice legally.

7. Review the existing policies and procedures currently in effect in your office. Make certain that they are appropriate to a multi-discipline practice. Make certain that all policies are written and that they are lawful. I have seen some personnel policies that violate almost every right guaranteed by the United States Constitution. Be sure that yours will not expose you to liability.

8. Make sure that you retain a qualified health care lawyer.

If you have any questions with regard to the above or with respect to any other legal heath care issues, you may FAX your questions to Deborah A. Green, Esq., at 954-971-3787 or call 954-971-7778 or e-mail This e-mail address is being protected from spambots. You need JavaScript enabled to view it . In future issues, she will be answering those questions that are of interest to the broadest audience.

Ms. Green has been a practicing attorney since 1977. She is admitted to the practice of law in the State of New York and Florida and is a member of the American Health Lawyers Association, the New York State Bar Association Health Care System Design Committee, the New York State Bar Association Health Care Providers Committee, the American Bar Association Health Law Section and the Florida Bar Health Law Section. She has formed numerous multi-discipline practices throughout the country.

DISCLAIMER

Because this column is being presented to you by an attorney, it would not be complete without a disclaimer. This column is provided subject to and governed expressly by the terms of this disclaimer. This column is provided for educational purposes only. The accuracy or timeliness of the information presented herein is not warranted. The information presented herein is not intended to be advice as to a specific fact pattern with which you may be presented.  Accordingly, please note that the information contained herein is not being presented as legal advice with respect to any matter and that no attorney-client relationship is hereby established.

 
Guilty / Not Guilty
Legal Department
Written by Larry Economos, Esq.   
Sunday, 22 May 2005 15:57

gavelandscalesofjusticeDr. Robinson, who owns Quality Care Chiropractic Center, has a run in with the State Employees Health Insurance Program (SEHP).  He’s accused of up coding surface electromyographies and failing to maintain documentation necessary to show medical necessity for the treatments.  He explains that it’s all due to negligence, and a civil settlement agreement is reached where, in return for continued program access, Dr. Robinson promises to adhere to a probationary period of two months, wherein he will not submit claims, and to attend several claims filing seminars. 

During the probationary period, Dr. Robinson reorganizes his clinic, switching title ownership to a partner, while retaining beneficial ownership of the practice.  In the absence of strict guidelines as to incidental billing rules, Dr. Robinson, in order to make ends meet, instructs his partner to submit many jointly treated patients under his partner’s provider number, so full payment for services can be obtained.  The claims are electronically filed and checks are returned in the mail representing payment. 

Just prior to passage of the probationary period, a civil subpoena arrives from SEHP’s legal counsel, requesting all medical records documenting several of the claims filed for jointly treated patients. Dr. Robinson and his partner agree that only the partner’s medical records should be furnished for review.

Guilty or not guilty?  In this case, guilty.  Dr. Robinson and his partner have committed health care fraud and mail fraud by devising a scheme to obtain insurance monies to which they were not entitled.  Despite the electronic filings, the requirement of a mailing is satisfied by the insurance company’s mailing of checks in payment of the claims that misrepresented the fact that only the partner had treated the patients. 

Confusion as to incidental billing rules is not a good defense, especially given the explicit terms of the settlement agreement.  As the two agreed to engage in the claims’ filing, the two are guilty of conspiracy to commit mail fraud, as well as conspiracy to commit health care fraud.  And, as if that’s not enough, they both will need a good attorney to try to wiggle themselves out of an obstruction of justice charge for failing to comply fully with the subpoena.

Larry Economos, a civil and criminal defense attorney whose practice focuses on federal health care fraud defense, is a managing partner with Mills & Economos, LLP.

Go to www.leconomoslaw.com, or call 800-456-0460, 704-375-9913, or 252-752-6161.

 
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