Download ATLANTA WOMEN*S HEALTH GROUP All

15th Annual Cardiovascular
& Medicine Symposium
St. Augustine, Florida – May 15, 2014
Rick M. Reznicsek, Esquire
RezLegal, LLC
4230 Pablo Professional Court, Suite 200
Jacksonville, Florida 32224
Telephone: (904) 567-1179
Facsimile: (904) 567-1066
Email: [email protected]
www.rezlegal.com
Physician Compensation
in Private Practice
vs.
Hospital Employment
The Impact of the Federal Stark Law
and
Florida Law
The Impact of the Federal Stark Law & Florida Law
STARK LAW
A Physician having an ownership interest in, or
financial relationship with an entity may not
make a referral to the entity for furnishing
Designated Health Services reimbursable by
Medicare of Medicaid.
The Impact of the Federal Stark Law & Florida Law
Penalties:
 Denial of payment
 $15,000 per service
 Exclusion from Medicare and Medicaid
 $100,000 for entering into a “circumvention scheme”
 Violation of False Claims Act

Treble damages
The Impact of the Federal Stark Law & Florida Law
Ownership:
 Stock, units, percentage interest, etc.
 Secured debt

Unsecured debt is considered compensation
The Impact of the Federal Stark Law & Florida Law
Financial Arrangement:
 Employment
 Independent contractor
 Anything of value (tickets, meals)

$300 non-cash exception
Referral:
 Request, ordering, certification for the establishment
of a plan of care, including the request for a consult
and the tests or procedures derived from that consult
The Impact of the Federal Stark Law & Florida Law
DHS:
 Clinical lab
 Physical therapy
 Radiology (including MRI, CT, ultrasound)
 DME
 Home health
 Prosthetics, orthotics
 Outpatient prescription drugs
 Inpatient and outpatient hospital services
 Radiation therapy
The Impact of the Federal Stark Law & Florida Law
Florida Law:
 Covers DHS plus any other health care item or service
 Not limited to Medicare/Medicaid
Stark Exceptions:
 Ownership and compensation exceptions

Physician services (personally performed)

In-Office ancillary

Nuclear medicine

Cardiac catheterization

Lithotripsy
The Impact of the Federal Stark Law & Florida Law
 Ownership exceptions

Publicly traded securities
 Compensation Exceptions

Office space lease

Equipment lease

Employees

Personal service arrangements

Physician recruitment

Fair Market Value compensation

Non-monetary gifts/compensation up to $300
The Impact of the Federal Stark Law & Florida Law
Halifax Hospital Case – November 2013:
 6 employed physicians – medical oncologists
[employed through hospital subsidiary]

Base compensation plus bonus

Bonus is a pool shared by the 6 physicians
 Pool is 15% of the profit for the Medical Oncology
Program
•
Medical Oncology Program consists of
professional fees (from physician services) plus
outpatient oncology pharmacy charges plus
outpatient services not performed by the
physicians
The Impact of the Federal Stark Law & Florida Law
Halifax Hospital Case – November 2013 (cont’d):
 Court

The physicians participated in the profits
generated from their referrals for prescriptions
and work performed by others

The employment exception to the Stark Law
prohibits compensation based on the volume or
value of referrals

The incentive bonus was not based solely on
“services personally performed”

This arrangement violates the Stark Law
The Impact of the Federal Stark Law & Florida Law
Tuomey Hospital Case – May 8, 2013:
 Jury verdict

21,000 improper claims totaling $39 million

Per US Government, minimum recovery is $237
million (max of $357 million)

CEO, VP and law firm have all resigned

Settlement discussions ongoing
The Impact of the Federal Stark Law & Florida Law
Tuomey Hospital Case – May 8, 2013 (cont’d):
 Gastroenterology physicians considering performing
outpatient surgical procedures in their offices and not
at Hospital
 Other specialists said “us too”
 Hospital signed contracts with 19 doctors

Required physicians to provide outpatient
procedures exclusively at hospital (or hospital ASC)

The 19 physicians were part-time employees of
hospital only when they performed outpatient
procedures at the hospital
The Impact of the Federal Stark Law & Florida Law
Tuomey Hospital Case – May 8, 2013 (cont’d):
 Compensation to physicians: base salary plus bonus

Bonus = 80% of collections, from both professional
fees and facility fee (technical component)
 Jury determined this arrangement violated Stark; did
not meet employment exception

Payment of a portion of the facility fee to doctor is
inappropriate
The Impact of the Federal Stark Law & Florida Law
Net result of Tuomey and Halifax:
 Employed physicians of a hospital system cannot
share in any DHS ancillary revenues

What if the ancillary revenues were generated
within the physician offices (ultrasound)?

Can the in-office ancillary exception be applied to
physicians employed by a hospital-owned
subsidiary?

Language from the Halifax court indicates not
(bonuses were not based solely on “services
personally performed”)
The Impact of the Federal Stark Law & Florida Law
Net result of Tuomey and Halifax (cont’d):
 Does this reasoning extend to non-hospital
employees?

Private equity

Publicly traded (Sheridan, Mednax)
The Impact of the Federal Stark Law & Florida Law
Private Practice - Physician owned
 In-office ancillary services exception
 Applies to group practice
 Physicians in the group practice can share in the profit
generated by DHS
The Impact of the Federal Stark Law & Florida Law
Private Practice - Physician owned (cont’d)

Acceptable distribution methods:
 Even split
 Split based on ownership % (based on investment)
 Number of hours worked
 Seniority
 Generation of non-DHS revenue or RVUs
 Other methods not directly related to the volume
or value of the physician’s referrals for DHS
The Impact of the Federal Stark Law & Florida Law
Private Practice - Physician owned (cont’d)

Not acceptable distribution methods:
 Based on number of patients sent for DHS
 Based on revenue of DHS referred
 Any method that considers the volume or value of
DHS referrals
The Impact of the Federal Stark Law & Florida Law
 Profits from non-DHS have no restrictions under Stark
But… State Laws have impact.
 Florida Anti-Fee Splitting Law

It is impermissible to pay or receive any
commission, bonus, kickback or rebate, or engage
in any split fee arrangement, either directly or
indirectly, for patients referred to providers of
health care goods and services
The Impact of the Federal Stark Law & Florida Law
 Crow case

Physician sold his practice to an HMO

Physician employed by the HMO

Physician owns no interest in the HMO

Physician compensation based on total revenues
generated by physician for the HMO
 Including laboratory, radiology, diagnostic testing

Court
 Bonuses may not be paid for patient referrals.
Therefore it is inappropriate to pay employed
physician a bonus based on ancillary revenues
generated by the physician.
The Impact of the Federal Stark Law & Florida Law
 Bottom line

Sharing in ancillary revenues
Hospital Employee
• No sharing DHS
Private Practice
• Owners can share in DHS
and non-DHS