PRACTICE FORMATION CONSIDERATIONS: ACHIEVING LEGAL COMPLIANCE WITH DIVERSE PRIVATE MEDICINE MODELS

JAMES J. EISCHEN, JR., ESQ. Partner at Higgs, Fletcher & Mack, LLP 26+ years of experience as an attorney in California Experience in the healthcare field: medical groups, EHR firms, health coaching enterprises and healthcare products. Graduated from the University of California at Davis School of Law. Professional Memberships: San Diego County Bar Association Law & Medicine Section, Attorney-Client Relations Committee, State Bar Of California Section Member, AAPP Corporate Secretary (c) 2013 James J. Eischen, Jr., Esq.

U.S. has a large and widening "mortality gap" among adults over 50 compared with other high-income nations. • Two-thirds of the difference in male life expectancy between the U.S. and other countries is due to deaths in that under-50 age category, and one-third of the gap is due to deaths among women under 50. • U.S. fares worse in nine health domains: birth outcomes, injuries and homicides, teen pregnancies and sexually transmitted infections, HIV/AIDS, drug-related mortality, obesity and diabetes, heart disease, chronic lung disease, and disability. • Areas in which the U.S. is not behind other wealthy countries are cancer screening and mortality, control of high blood pressure and cholesterol, smoking rates, and suicides. • Part of the nation's poor ranking attributed to problems with its $2.6 trillion-a-year health care system (the world's most expensive by far). 50 million Americans without health insurance, fewer doctors per capita, less access to primary care and fragmented management of complex chronic diseases. http://www.npr.org/blogs/health/2013/01/09/168976602/u-s-ranks-below-16-other-rich-countries-in-health-report (c) 2013 James J. Eischen, Jr., Esq.

“The way we pay doctors is profoundly flawed. We need to move rapidly away from fee-for- service and embrace new ways of paying doctors to encourage cost-effective, high quality care.” http://telemedicinenews.blogspot.com/ (c) 2013 James J. Eischen, Jr., Esq.

One problem is that the current fee-for-service system makes it difficult to coordinate after-hours care with a patient's regular doctor. This is problematic considering that providers that know a patient well, or at the very least have a patient's medical record, are able to give better quality of care. • In 2010, 40.2 percent of people said their primary care clinics offered extended hours, such as at night and on weekends. • One in five people found it very difficult or somewhat difficult to reach their clinician after hours. • People that reported less difficulty reaching a physician after hours had fewer emergency department visits (30.4 percent compared to 37.7 percent). • Furthermore, there were lower rates of unmet medical needs (6.1 percent compared to 13.7 percent). http://www.ncpa.org/sub/dpd/index.php?Article_ID=22692 (c) 2013 James J. Eischen, Jr., Esq.

FEE FOR SERVICE FRUSTRATING NEEDED INNOVATION? • Internal medicine moving toward clinical care teams. • Fee for service reimbursement obstacles may frustrate this otherwise necessary shift. http://annals.org/article.aspx?articleid=1737234 (c) 2013 James J. Eischen, Jr., Esq.

EFFECT OF COMPETITION ON HEALTHCARE • Toyota's management philosophy and practices adopted by the hospital as a way to deliver medicine to its patients • Systematic approach to producing cars and trucks efficiently, with the primary goal of pleasing the customer • Attract and retain "paying customers" to survive • http://www.sfgate.com/health/article/S-F-General-following-Toyota-Way-to-efficiency-4879925.php (c) 2013 James J. Eischen, Jr., Esq.

EVOLVING AWAY FROM FEE FOR SERVICES:Private Subscription • Average annual fee = approximately $1,800 • > 4,000 physicians practice privately in the United States in 2012 • Private physician averages about 350 patients • Medicare changes = doctors reimbursed less for care provided • Private patients get • more face-time with doctors • more thorough annual physicals • focus on preventive medicine • Private fee makes up for lost revenue from declining reimbursements http://www.ncpa.org/sub/dpd/index.php?Article_ID=22781 (c) 2013 James J. Eischen, Jr., Esq.

Already, one in five physiciansis restricting the number of Medicare patients in their practice and one in three primary care doctors – the providers on the front lines of keeping the cost of seniors’ care low – are restricting Medicare patients, according to a 2010 AMA survey of more than 9,000 physicians who care for Medicare patients. http://www.forbes.com/sites/brucejapsen/2013/01/30/1-in-10-doctor-practices-flee-medicare-to-concierge-medicine/ (c) 2013 James J. Eischen, Jr., Esq.

REMOVING MENU DISTORTIONS FROM HEALTH CARE DELIVERY • Subscription model is financially viable (“gym anology”) • Subscription = payment for counseling and medical direction disconnected from plan-funded intervention • Subscription = compensation for connection/tracking/coordination (c) 2013 James J. Eischen, Jr., Esq.

STABILIZED PRACTICE CASH FLOW • FFS = financial disincentive to connect with medical practice • Subscription = investment in connection, incentive to remain connected (c) 2013 James J. Eischen, Jr., Esq.

PRIVATE MEDICINE HAS COME A LONG WAY • Washington • Qliance • Florida • MDVIP • Expansion with confirmed FFNCS model compliance • Fee For Non-Covered Service • Subscription models diversify (c) 2013 James J. Eischen, Jr., Esq.

Private medicine delivers excellent care in a manner that is attractive to physicians. • Question: Whether it has the potential to fix many of the more serious problems that exist in our system for delivering primary care. • Affordability • Reducing the number of patients that private-practice physicians see significantly reduces the number of patients served by each primary care physician. • Private medicine remains attractive to doctors and patients in many regards. But significant questions remain about whether it should be promoted as a model that can meet the needs of most patients in society even with the advent of hybrid models. (c) 2013 James J. Eischen, Jr., Esq.

MEDICARE ASSIGNMENT COMPLIANCE • Unless you have opted outof Medicare • Avoiding billing for covered services • Avoiding billing for “buzz words” • Access • Care coordination • Membership (?) • 24/7 communications (?) • Electronic records access (c) 2013 James J. Eischen, Jr., Esq.

LIABILITY AND PENALTIES FOR ADDED PAYMENT FOR COVERED SERVICES http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/SE0421.pdf (c) 2013 James J. Eischen, Jr., Esq.

OIG ALERT – MARCH 31, 2004 • Alert from Office of Inspector General, March 31, 2004 • http://oig.hhs.gov/fraud/docs/alertsandbulletins/2004/FA033104AssignViolationI.pdf (c) 2013 James J. Eischen, Jr., Esq.

OIG ALERT 03-31-04 • While the physician characterized the services to be provided under the contract as “not covered” by Medicare, the OIG alleged that at least some of these contracted services were already covered and reimbursable by Medicare. • Among other services offered under this contract were the “coordination of care with other providers,” “a comprehensive assessment and plan for optimum health,” and “extra time”spent on patient care. OIG alleged some of these contracted services were already covered and reimbursable by Medicare. • Result: Settlement paid to OIG and physician stopped offering the contract (c) 2013 James J. Eischen, Jr., Esq.

A Roadmap for New Physicians: Avoiding Medicare and Medicaid Fraud and Abuse, U.S. Department of Health & Human Services and Office of Inspector General • http://oig.hhs.gov/compliance/physician-education/index.asp • Private reimbursement compliance issues (c) 2013 James J. Eischen, Jr., Esq.

OIG: NO “DOUBLE BILLING” • If you are a participating or non-participating physician, you may not ask Medicare patients to pay a second time for services for which Medicare has already paid • Charging an “access fee” or “administrative fee” that allows patients to obtain Medicare-covered services from your practice constitutes double billing • It is legal to charge patients for services that are not covered by Medicare • If you have opted-out of Medicare • May charge for “access” and “care coordination” • Must comply with opt-out contract rules (c) 2013 James J. Eischen, Jr., Esq.

IMPORTANT REMINDERS FOR MEDICARE COMPLIANCE • DO NOT offer to sell “access” • DO NOToffer to sell “care coordination” • DO NOToffer to sell “extended hours” • DO NOToffer to sell “24/7 access” • DO NOTassume that because other practices do the above, it is OK (c) 2013 James J. Eischen, Jr., Esq.

OPT-OUT: COMPLIANCE REQUIREMENTS • The physician/practitioner has filed an affidavit in accordance with §40.9 and has signed private contracts in accordance with §40.8 but, the physician/practitioner knowingly and willfully submits a claim for Medicare payment (except as provided in §40.28) or the physician/practitioner receives Medicare payment directly or indirectly for Medicare-covered services furnished to a Medicare beneficiary (except as provided in §40.28); (For specific information about Chapter 15, sections 8 and 28, refer to http://www.cms.hhs.gov/Manuals/downloads/bp102c15.pdf on the CMS website. The sections of Chapter 15 that are revised by CR6081 are attached to CR6081.) • The physician/practitioner fails to enter into private contracts with Medicare beneficiaries for the purpose of furnishing items and services that would otherwise be covered by Medicare, or enters into private contracts that fail to meet the specifications of §40.8; or • The physician/practitioner fails to comply with the provisions of §40.28 regarding billing for emergency care services or urgent care services; or • The physician/practitioner fails to retain a copy of each private contract that the physician/practitioner has entered into for the duration of the opt-out period for which the contracts are applicable or fails to permit CMS to inspect them upon request. (c) 2013 James J. Eischen, Jr., Esq.

OPT-OUT: NONCOMPLIANCE CONSEQUENCES • All of the private contracts between the physician/practitioner and Medicare beneficiaries are deemed null and void. • The physician’s or practitioner’s opt-out of Medicare is nullified. • The physician or practitioner must submit claims to Medicare for all Medicare covered items and services furnished to Medicare beneficiaries. • The physician or practitioner or beneficiary will not receive Medicare payment on Medicare claims for the remainder of the opt-out period, except as stated above. • The physician or practitioner is subject to the limiting charge provisions as stated in §40.10. • The practitioner may not reassign any claim except as provided in the Medicare Claims Processing Manual, Chapter 1, “General Billing Requirements,” §30.2.13. (For more information about the General Billing Requirements refer to http://www.cms.hhs.gov/manuals/downloads/clm104c01.pdf on the CMS website). • The practitioner may neither bill nor collect any amount from the beneficiary except for applicable deductible and coinsurance amounts. • The physician or practitioner may not attempt to once more meet the criteria for properly opting out until the 2-year opt-out period expires. (c) 2013 James J. Eischen, Jr., Esq.

CAN I CHARGE FOR PATIENTS’ ACCESS TO ELECTRONIC HEALTH RECORDS? • Patients can ask for a copy of their electronic medical record in an electronic form. • When individuals pay by cash they can instruct their provider not to share information about their treatment with their health plan. • New limits on how information is used and disclosed for marketing and fundraising purposes. • Prohibits the sale of an individuals’ health information without explicit permission. • MUST ONLY CHARGE ACTUAL COSTS www.hhs.gov/news/press/2013pres/01/20130117b.html (c) 2013 James J. Eischen, Jr., Esq.

STATE LAW INSURANCE ISSUES(REGARDLESS OF OPT-OUT STATUS) • Avoiding appearance (or reality) of insurance • Why? • Lack of adequate capitalization • Lack of registration • State law violation of insurance regulations (c) 2013 James J. Eischen, Jr., Esq.

Discounting, rebates, insurance plan co—pays/deductibles: Avoiding improper incentivizing under state/federal laws • May not “incentivize” • No free toaster oven • Do not routinely waive co-pays and deductibles—WATCH OUT! • May not induce utilization (c) 2013 James J. Eischen, Jr., Esq.

PHYSICIAN-PATIENT CONTRACT DRAFTING RECOMMENDATIONS • Easy to read contract • Simplify • Clarity, particularly on key issues • Use FAQs and brochures to express details, use the contract to craft the compliance posture • Fee structure must avoid state insurance issues • Amenities allocated to private fees to avoid Medicare compliance issues (Q: Does your staff know how to properly explain your retainer/subscription model?) • Or comply with opt-out requirements • http://www.cms.hhs.gov/Manuals/downloads/bp102c15.pdf • Avoid inducements/discounting (i.e. no toaster ovens) • AVOID PROMISES YOU CAN’T KEEP (c) 2013 James J. Eischen, Jr., Esq.

PRACTICE FORMATION CONSIDERATIONS: ACHIEVING LEGAL COMPLIANCE WITH DIVERSE PRIVATE MEDICINE MODELS