Institutional Issues

1. Institutional Issues

2. Charitable Hospitals • What was charitable immunity and why did we have it? • What is the social bargain behind charitable status of hospitals? • What is competitive advantage of being a charitable hospital? • What issues does this raise during a conversion to a for-profit hospital?

3. Who Benefits in Charitable Organizations? • Who stands in the shoes of shareholders in overseeing the mission of charitable organizations? • What is surplus? • What is the inurnment problem? • How do you decide if there is an inurnment problem? • What are the constraints on joint ventures between charitable and for-profit organizations?

4. Charitable Purpose • What is charitable purpose? • Is a bigger better hospital a proper charitable purpose? • Is more surplus? • What are ways to measure community service? • What should the IRS or state tax agencies look at in determining charitable purpose?

5. EMTALA • How does EMTALA work? • Who does it apply to? • Is EMTALA a medical malpractice law? • What is emergency care under EMTALA? • Why does this pose a problem for chronic disease management? • What are the government remedies for violations? • What are the private remedies for violation? • What incentives does EMTALA give hospitals in poor neighborhoods?

6. Specialty Hospitals • What is the quality justification for specialty hospitals? • What is the cost justification? • How does EMTALA affect their economics in LA? • What is the impact on community hospitals? • What problems does this cause for health care in the community?

7. Theories of tort liability for health care institutions • Direct negligence • Vicarious liability • Employee? • Control theories • Ostensible agency • Implied agency • Apparent agency

8. ERISA • What is ERISA? • Why was health insurance included in ERISA? • What competitive advantages does an ERISA qualified health plan have? • Who regulates the plans - state or the feds? • Affects on liability for medical necessity decisions? • About coverage decisions, i.e., does the plan have to pay for things like experimental care? • How do you tell the difference between a coverage decision and a medical necessity decision?

9. ERISA and Health Care Reform • How does ERISA affect state efforts to create statewide access to health care? • What was the Maryland Wal-Mart bill? • Why did it run afoul of ERISA? • What things can a state do that are not a problem for ERISA? • What state actions will run afoul of ERISA • Think about California and Massachusetts

10. Discrimination Law • How does the ADA affect health care providers? • What other discrimination laws do health care providers have to worry about? • Explore the issues posed by an HIV or hepatitis B infected health care provider • Explore the issues posed by an HIV or hepatitis B infected patient

11. Staff Privileges and Hospital–Physician Contracts • What is the effect of removing a physician from the hospital medical staff? • National Practitioner Database issues? • Practice issues? • What are the due process rights for physicians? • Private hospitals? • Public (government) hospitals? • What legal claims might a physician make for improper termination? • How did Congress limit these claims? • Why did Congress limit these claims?

12. Labor and Employment • What is employment at will? • What is the NLRB? • What can unionized physicians do that independent contractor physicians cannot do? • Who can form a union? • What is a bargaining unit? • Why do hospitals hate unions? • Discuss the limitations of whistleblower laws

13. Fraud and Abuse • Are You Cheating the Government?

14. Conditions of Participation (COP) • The contract between the providers and CMS • If you do not comply with the COP you can be denied payment or excluded from the program • If you knowingly violate the provisions of COP it can be grounds for false claims and criminal prosecution

15. What does the government care about? • Cost • Utilization (medical necessity) • Quality

16. Cost • This is controlled directly • The feds decide what they want to pay • What are the constraints on pricing?

17. Utilization (Medical Necessity) • What are the issues we have seen on medical necessity? • Is the treatment needed? • Is it experimental? • Is it effective? • Is it covered by the policy • What are the political constraints on the government in setting utilization rules?

18. Quality • Does the government care about quality? • What about when quality and cost collide? • Should patients have a right to cheaper, lower quality care? • Does the federal government directly control quality? • States? • JCAHO?

19. Fraud Issues • Was the care delivered at all? • Durable medical equipment scams • Billing for more care that was actually delivered • Was the care necessary? • Was the care unbundled? • (Charging separately for care that should be one charge) • Where kickbacks paid?

20. Related Laws • General government contracting laws • Mail and wire fraud • RICO • False Claims Act • Statutory penalties - $5-11,000 per claim • Treble damages (whichever is higher) • Qui tam - private enforcement

21. Coding • CPT codes - AMA • Some are time based • Others are work-based • You get paid more for doing more • It does not matter how long you take • Levels 1-5 • Is it better to see a lot of patients or do a lot to each you see?

22. Why use Codes? • Uniform billing for all claims • Equalize billing across specialties • Provide incentives for more comprehensive care • Allows computerized payment • Allows tracking of medical information derived from claims forms

23. Upcoding • Anything that increases the payment for the encounter • Can be legal • Optimizing coding • Can be illegal • Work that was not do, or work that was not properly documented • Misstating the patient's medical condition

24. US v. Krizek, 111 F.3d 934 (D.C. Cir. 1997) • The judge thinks the doc is a good guy • Criticizes the crazy reimbursement system • Let the doc put on evidence of standard billing practices to refute fraud charges • Thinks the law is crazy because the feds can assess $81,000,000 in penalties

25. What did Krizek do wrong? • Did he actually treat the patients? • Was his treatment medically necessary? • What were the issues in billing? • Billed for 40-50 minute time code for everyone • Who did this • What was the justification? • Did the doc know?

26. Doc's Defense • He really did spend the time, he just did not spend it all on the patient • Lots of stuff you do in the office as part of the care

27. "Scienter" - What does the prosecutor have to show the Doc knew? • Intent to defraud? • Knowing that the claim is wrong but submitting it anyway? • Why does the statute specifically say that there is no need to prove intent to defraud? • What is the doc's certification problem?

28. District Court Ruling • Found liability on the days when there were more than 12 codes for 50 minutes • Thought that the doc was liable, but an unfortunate system

29. Appeals Court • Makes it clear that reckless ignorance is wrong and grounds for liability under the Act • Is not sympathetic to the doc's claimed slipshod accounting

30. Is Bad Care Fraud? • What would make bad care fraudulent? • What are you certifying when you bill for care?

31. Whistleblower Provisions • Only protection if you bring suit • Not a good protection

32. Interesting issues • Bribes by device and drug companies • PATH audits (medical schools) • HCA

33. Qui Tam • Standing in the shoes of the government • 15-20% • Feds can march in • May not apply to claims against states

34. Understanding Self-Referral Laws

35. Physicians as Fiduciaries • Model Penal Code • Informed consent law • General principles • Knowledge differential • Power differential

36. Fiduciary Obligations • The physician acts as purchasing agent for the patient • Self-referral laws target incentives that encourage the physician to make certain decisions contrary to the patient's interests • Order unnecessary care or tests • Choose providers based on criteria other than the best interests of the patient

37. Why Does the Federal Government Care? • They claim to care about quality • FTC undermines this with talk about the right to buy cheap, crummy care • They care a lot about costs • Unnecessary care is wasted money and bad for the patient • It is assumed that if a kickback is necessary, the care is either worse or more expensive

38. Problems with the Federal Bias • The feds are only concerned with incentives to order more care or to steer care • They do not care if there are incentives to deny care • Big issue with HMOS and other structured plans • Underlines the problem with consumer directed care

39. The General Self-Referral Laws • There is broad statutory authority banning deals that create incentives to refer business • These deals have to be analyzed to map out the cash flow to determine what incentives the physicians see

40. The Lease Scam • Hospitals often own professional buildings • Physicians in the professional are more likely to admit patients to the hospital • Proximity • Shared services • Is the hospital providing incentives for physicians to be in their professional building? • How do you put a fair market value on proximity?

41. The Recruitment Scam • The hospital sees that there is a need for physicians with specific skills in the community • The hospital recruits a physician with a relocation package • Moving expenses • Salary support for a period of time • Does any of this obligate the physician to refer to that hospital? • What if it is the only hospital in the community?

42. The Lab Scam • There is a huge amount of money in medical lab tests • Hence my skepticism about the real causes of defensive medicine • Is the lab providing incentives to the physician? • Direct kickbacks • Subsidized services, like renting space in the physician's office • Gifts - trips to the fishing camp

43. The Hospital Investment Scam • Hospital wants to increase the flow of surgical patients • Hospital sets up surgical suite as a separate corporation and sells surgeons shares • Earnings are based on the capital contribution • What is the impact of a admitting patients on the physician's return on investment?

44. The Practice Purchase Scam • Hospital buys the physician's practice • Hires the physicians to deliver care in the new hospital practice • Is this really a sale or just a kickback scheme? • How was the business valued? • What are the terms for payment? • Is any of the payment contingent on referrals?

45. The Stark Law Approach • Start has a list of 11 defined services • Any deals that influence the ordering of these services are banned • There are a series of safe harbors for transactions that are not thought to be abusive

46. Philosophy of Stark • Simplify the law by clearly outlining the forbidden areas • Create safe harbors that can be used as models

47. Problems with Stark • Too much money in the forbidden areas • Doc and hospitals go the extra yard to game the system • Spotty to non-existent enforcement • No clear boundaries • Puts complying entities at a completive disadvantage

48. Exceptions to Stark • Physician controlled ancillary services • If the doc runs the lab and it is part of the practice, it is not covered by Stark • What is the incentive? • Is it even worse than for an outside lab?

49. Analyzing Stark Transactions • Is it a covered service? • Does it met the ancillary service exception? • Is there any financial linkage between the provider and the referring doc?

50. The Integrated Provider Exception • Integrated providers provide both medical and hospital and other services • It is OK to tell employees where to refer patients • You cannot pay employees a bonus for referrals, but they can share in the profits (gain share) • Does this exception make any sense? • Does it just provide a way for hospitals to avoid self-referral laws by buying physician's practices?