Health Care Compliance Watch : New York Health Care Compliance Lawyer & Attorney : Ilana Sable : NY Physician Representation Law

A persistent concern for many health care entity-employers (“Entity-Employers”) is retaliation from a disgruntled former employee after the Entity-Employer responds to a “reference request” with negative, albeit truthful, information about the former employee. Often times, the Entity-Employer will choose not to respond to the reference request or will omit key information found in the former employees personnel file in the hopes of avoiding future conflict or retaliation (usually in the form of a lawsuit).  However, the State of New Jersey found any failure to report on the part of Entity-Employer to be a danger to patient safety and welfare and, accordingly, enacted the Health Care Professional Responsibility and Reporting Act (“HCPRREA”) in response.

In New Jersey, pursuant to the HCPRREA, Entity-Employers are prohibited from, among other things, withholding certain information about current or former employees from other health care entities that request information. Entity-Employers are further provided with immunity from civil liability for reporting employment related information to another health care entity. 

In Senisch v. Carlino, et. al., 2011 N.J. Super. Lexis 211 (Decided December 1, 2011 Superior Court of New Jersey, Appellate Division), the Appellate Division upheld a finding that, pursuant to HCPRREA and related case law, Entity-Employers are immunized from civil liability for reporting to another health care entity if said reporting complies with the HCPRREA’s provisions.

In Senisch, Plaintiff was a physician assistant formerly employed by Defendant Deborah Heart and Lung Center (the “Cardiology Center”). Plaintiff had been terminated from his employment with the Cardiology Center because of stated deficiencies in his performance. When Plaintiff attempted to obtain different employment the new employer sought a reference from the Cardiology Center. The Cardiology Center responded to the request with negative information from the personnel file of Plaintiff.

The Appellate Division affirmed the trial court’s findings and held that:

[The HCPRREA] … prohibits health care entities from withholding certain information about current or former employees from other health care entities that request the information. The relevant parts of the Act state:

a. A health care entity, upon the inquiry of another health care entity, shall truthfully:

. . . .

(2) provide information about a current or former employee's job performance as it relates to patient care, as provided in this section, and, in the case of a former employee, the reason for the employee's separation.

. . . .

c. A health care entity, or any employee designated by the entity, which, pursuant to this section, provides information in good faith and without malice to another health care entity concerning a health care professional, including information about a current or former employee's job performance as it relates to patient care, is not liable for civil damages in any cause of action arising out of the provision or reporting of the information.

Accordingly, the Appellate Division concluded that the Defendants could not be held liable in a civil lawsuit for responding to a reference request with negative information from the personnel file of Plaintiff. 

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Health care providers who have been excluded from participation with certain insurance carriers often approach me for guidance concerning their options (if any) for continuing their existing relationships - and possibly treatment – with patients who are insured by the “excluding” insurance carrier. While the reasons for “exclusion” are quite varied and have differing degrees of severity (depending on the particular insurance carrier and type of exclusion that is involved), in almost all cases, exclusion from network participation means that the excluded provider cannot treat patients insured by the excluding insurance carrier, whether directly or indirectly. Provider arrangements made to circumvent exclusion may, among other things, be deemed the “fraudulent practice of medicine” and may carry serious, permanent, consequences for both the excluded provider and any provider assisting the excluded provider with the circumvention.

In the Matter of Josifidis v. Daines, 2011 NY Slip Op 7891 (decided November 10, 2011, Appellate Division, Third Department) the Third Department confirmed a determination of the Hearing Committee of the New York State Board for Professional Medical Conduct (the “Committee”) which, among other things, revoked the medical license of Petitioner Harry Josifidis (the “Excluded Provider”) for the fraudulent practice of medicine. In doing so, the Third Department confirmed the Committee’s finding that the Excluded provider circumvented “his exclusion from insurers’ networks by using another physician’s name.” 

The relevant facts underlying the Third Department’s decision are as follows:

“[The Excluded Provider] was excluded by certain health insurers from being reimbursed as an in-network provider for treatment rendered to their insureds as the result of a prior disciplinary action. [The Excluded Provider] thereafter entered into an agreement with another physician (hereinafter the other physician) by which the other physician’s name appeared on claims submitted to the insurers for [the Excluded Provider’s] treatment of in-network patients.

The Excluded Provider, in an effort to “explain” the legality of the circumvention arrangement, argued that “he relied on the other physician’s representations that their arrangement was ‘lawful and appropriate’” and that “he entered the agreement to provide his patients with continuity of care rather than for profit.”

The Third Department concluded that “[s]ubstantial evidence in the record shows that [the Excluded Provider] repeatedly submitted bills in the other physician’s name for services he had provided in order to receive payment from insurers who had specifically excluded him from being reimbursed for such services…. Accordingly, [the Third Department found] that the Committee properly rejected [the Excluded Provider’s] explanation and substantial evidence in the record supports its determination.”

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Providers, physicians and other suppliers who receive unfavorable overpayment determinations by Medicare Recovery Audit Contactors (“RACs”) for services and supplies provided to Medicare beneficiaries under Part A and Part B have up to five levels of appeal available to them.  This process is exactly the same for all providers, physicians and suppliers who want to appeal a Medicare claim decision.  The five levels of appeal are as follows:

1.         Redetermination is performed by the claims processing contractor

2.         Reconsideration is performed by the Qualified Independent Contractor (QIC)

3.         Administrative Law Judge (“ALJ”) Hearing

4.         Appeals Council Review

5.         Final Judicial Review (Federal District Court Review)

First Level of Appeal: Redetermination

A redetermination is an examination of a claim by Medicare processing contractor personnel (i.e. Fiscal Intermediary; Medicare Administrative Contractor) who are different from the personnel who made the initial determination. The appellant (the individual filing the appeal) has 120 days from the date of receipt of the initial claim determination to file an appeal. A minimum monetary threshold is not required to request a redetermination.

Second Level of Appeal: Reconsideration

A party to the redetermination may request a reconsideration if dissatisfied with the redetermination.  A Qualified Independent Contractor (“QIC”) will conduct the reconsideration. The QIC reconsideration process allows for an independent review of medical necessity issues by a panel of physicians or other health care professionals. A minimum monetary threshold is not required to request a reconsideration.

Third Level of Appeal: Administrative Law Judge Hearing

If at least $130.00 remains in controversy following the QIC’s decision, a party to the reconsideration may request an Administrative Law Judge (“ALJ”) hearing within 60 days of receipt of the reconsideration. Appellants must also send notice of the ALJ hearing request to all parties to the QIC reconsideration and verify this on the hearing request form or in the written request. The amount in controversy threshold for as of 2010 is $130.

Fourth Level of Appeal: Appeals Council Review

If a party to the ALJ hearing is dissatisfied with the ALJ’s decision, the party may request a review by the Appeals Council. There are no requirements regarding the amount of money in controversy. The request for Appeals Council review must be submitted in writing within 60 days of receipt of the ALJ’s decision, and must specify the issues and findings that are being contested.

Fifth Level of Appeal: Judicial Review in U.S. District Court

If at least $1,300.00 or more is still in controversy following the Appeals Council’s decision, a party to the decision may request judicial review before a U.S. District Court Judge.  The appellant must file the request for review within 60 days of receipt of the Appeals Council’s decision.  The amount in controversy required to request judicial review is increased annually by the percentage increase in the medical care component of the consumer price index for all urban consumers.  The amount in controversy threshold for 2011 is $1,300.

For more information about the Medicare Appeals process, please see the Medicare Appeals Process brochure (pdf) issued by the Department of Health and Human Services, Centers for Medicare and Medicaid Services.

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Traditionally, it was only “doctors” that provided medical care to patients – likely with the help of some sort of unlicensed assistant – and doctors would, therefore, limit their billing (and revenue) to the services that they, individually, provided. In recent years licensed and/or certified non-physician practitioners (“NPP’s”) have begun to provide an increasing amount and variety of medical care to patients and, accordingly, increase the amount of reimbursement and revenue to health care practices that utilize the services of an NPP.

The regulations and statutes regarding NNP education, scope of practice, supervision and training are primarily based on state laws and, in many ways, differ from state to state. The designation and variety of NPP’s also vary from state to state, but, generally speaking, NPP’s can be categorized as follows:

• Advanced Practice Nurse
• Certified Registered Nurse Anesthetist
• Clinical Nurse Specialist
• Clinical Psychologist
• Clinical Social Worker
• Nurse Midwife
• Nurse Practitioner
• Occupational Therapist
• Physician Assistant
• Physical Therapist
• Speech Pathologist
• Surgery Assistant

Billing and Reimbursement for Non-Physician Practitioner Services

Reimbursement received by health care practices for services provided by NPP’s varies substantially among federal, state and commercial payors, and should be thoroughly evaluated prior to submission of medical bills. For instance, Medicare will reimburse for services provided by certain NPP’s in private physician practices when:

(1) The bill for NPP services is submitted using the NPP’s own name and national provider identifier (“NPI”) number. The NPP is reimbursed at eighty-five (85%) percent of the Medicare physician fee schedule.

(2) The bill for NPP services is submitted using the supervising physician’s NPI as “incident to” the services provided by the physician. The NPP’s services will be reimbursed at One Hundred (100%) percent of the Medicare physician fee schedule. Further, if covered NPP services are furnished, then services and supplies furnished incident to the NPP’s services may also be covered.

In order for a health care practice to submit a bill to Medicare for NPP services provided “incident to” the services of the supervising physician, the following criteria must be met:

(a)   The NPP services must be performed under the direct supervision of the physician as an integral part of the physician’s personal in-office service (this does not mean that each occasion of an incidental service performed by a NPP must always be the occasion of a service actually rendered by the physician.

(b) There must be a direct, personal, professional service furnished by the physician to initiate the course of treatment of which the service being performed by the NPP is an incidental part, and there must be subsequent services by the physician of a frequency that reflects the physician’s continuing active participation in and management of the course of treatment;

(c)   The supervising physician must be physically present in the same office suite and be immediately available to render assistance if that becomes necessary;

(d) Also, a physician might render a physician’s service that can be covered even though another service furnished by a NPP as incident to the physician’s service might not be covered.

In practice, this translates to the following criteria:

(1) The supervising physician initially sees the patient (or sees the patient at a previous visit) and initiates the plan of care that the NPP is carrying out.

(2)The supervising physician remains involved in the patient’s care and continuously documents this involvement in the patient’s medical record.

(3)The NPP is an employee and/or independent contractor associated with the physician practice.

(4)The supervising physician (or another physician of the physician practice) must be in the medical office at all times that the NPP provides services and must be immediately available to intervene in the patient’s care if medically necessary.

Commercial payors, on the other hand, are free to set their own policies and guidelines for credentialing NPP’s and providing reimbursement for their services. Some commercial payors are willing to credential NPP’s and allow NPP services to be reimbursed using the NPP’s own provider number or instruct physician practices to bill for services provided by the NPP under the supervising physician’s provider number as “incident to” the services provided by the supervising physician. Other commercial payors simply refuse to reimburse for services provided by an NPP altogether. It is also important to note that a health care practice may be able to negotiate the reimbursement rate provided by certain commercial carriers for services provided by NPP’s.

Additionally, federal, state and commercial payors each have unique restrictions and guidelines concerning an NPP’s ability to examine and treat new patients, patients with new or worsening conditions, and so forth. Accordingly, health care practices should always request and keep on file each payor’s written policy concerning qualification, billing, coding and reimbursement of NPP services.  

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Over the past few years health care providers have reported an increasing surge in the outsourcing of medical billing and collections  to third party medical billing companies.  The outsourcing surge stems from a number of factors, most of which are focused on increasing revenue and surviving payor scrutiny.  

First, health care providers rely on medical billing companies to assist them with processing claims in accordance with applicable rules, regulations, laws and statutes (“health care laws”).  With the increasing complexity of the health care industry, the demand for familiarity with health care laws can be overwhelming for health care providers and will often require the education, knowledge and skill of an independent professional.

Second, health care providers are increasingly consulting with medical billing companies to provide them with timely and accurate advice regarding reimbursement matters and overall business decisions.  Medical billing companies normally support a variety of providers and organizations with different specialties and, therefore, have a unique insight to reimbursement issues, as well as diagnosis and procedure code utilization and optimization.  The critical component is a medical billing company’s ability to conduct practice-to-practice comparisons and data mining of coding, billing and collection patterns.

Third, medical billing companies normally have professionals dedicated to specific specialist and/or process areas, thereby increasing employee efficiency, skill and knowledge within the assigned area.  For instance, professionals skilled in collecting unpaid cardiology claims will have the benefit of uncovering and monitoring payor patterns of rejection and denial, and will have the insight to determine which coverage determinations are worth fighting or which coding practices to alter.  

Fourth, in most cases a medical billing company will consistently provide clients with customized practice reports and analytics that offer an in depth look at key metrics an allow the provider to make informed, strategic, decisions concerning billing, coding and collections.  While most of this data and analysis can be conducted in-house, is often underutilized or overlooked altogether with small physician practices. 

Finally, another issue that small physician practices face with in-house medical billing is hiring, training and maintaining an adequate medical billing staff.  Normally, small physician practices allocate one to two designated staff members for medical billing and collection purposes and suffer the consequences of insufficient and inefficient staff in the form of timely filing issues, timely appeal issues, lack of follow up and collections, contractual allowances and, ultimately, write offs.

It is important to note that third party medical billing companies significantly vary in terms of the type of services provided and the manner in which these services are provided for their respective clients. For example, some medical billing companies provide coding services for their clients, while others only process pre-arranged Superbills that have already been coded by the provider.  Additionally some medical billing companies offer a spectrum of management services, including patient intake support, accounts receivable management and debt collections. 

The main question to consider when determining whether to use an in-house medical billing professional or to outsource to a outside medical billing company is “what are you coding and billing, and why?” If the answer to this simple question is not supported by customized practice reports and analytics, strategic and informed, decisions concerning the coding, billing and collections choices made for each patient, and driven by the voluminous rules, regulations and statutes affecting health care practice, then the answer is flawed and is likely costing the practice critical revenue.

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Appearance enhancement and weight loss businesses that involve licensed professionals or that require a specialized business license will face complicated regulatory considerations when franchising their business. These regulatory considerations are heightened in states with strong corporate practice of medicine statutes in that the products, procedures and/or services offered by these franchise concepts may implicate what, in certain instances, may be considered the practice of “medicine.”

Is your franchise concept unlawfully practicing medicine or implicating applicable health care related regulations and/or statutes?

If you are starting an appearance enhancement or weight loss franchise, or would like to evaluate your existing concept, you must conduct a comprehensive review with a focus on the following issues:

1.       Corporate Practice of Medicine and Anti-Fee Splitting Statute. In many states, professional health care related services can only be offered by licensed health care professionals or authorized professional health care organizations. Similarly, certain federal and state regulations and statutes further mandate that licensed health care professionals and professional health care organization cannot share the fees that they earn for providing professional services with any individual or organization other than members of their own professional organization.

2.       Implication of Stark Laws and Prohibited Self-Referrals. The Stark laws and anti self-referral statues prohibit, with varying degrees, medical practices and/or facilities from submitting - and Federal and/or state regulated health care programs from paying - any claims for certain designated health service if the referral of the designated health service comes from a physician with whom the medical practice and/or facility has a prohibited financial relationship. Depending on the services being offered by the appearance enhancement center, the Stark laws or anti self-referral statutes can be violated depending on the business arrangements developed for the concept.

3.       Implication of Anti-Kickback Statutes.  Depending on the structure of the arrangement, certain joint ventures, service agreements and/or management arrangements raise a number of compliance concerns and, in many situations, can implicate both the federal and state-specific anti-kickback statutes. Accordingly, once the full appearance enhancement or weight loss concept is outlined, it is important to evaluate the proposed business arrangement in light of these, among other, federal and state-specific regulatory and compliance concerns to determine whether the desired regulatory balance can be reached and maintained.

For more information concerning the franchising of your health care related concept, please contact Ms. Ilana Sable or visit www.hccwlaw.com.

For additional information concerning setting up a franchise the following article is recommended:

How to Franchise Your Business

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Health care providers participating in governmental health care programs, including Medicare or Medicaid, must confirm, when employing or contracting with a physician, employee, vendor or other affiliated party, that the individual or entity is not excluded from participation in any governmental health care program. 

The U.S. Department of Health and Human Services Office of Inspector General (“OIG”)has the authority to impose civil monetary penalties against any health care provider that employs or contracts with an individual or entity that the provider knows or should know is excluded from participating in any federal health care program, including Medicare. Furthermore, most state governments also impose sanctions against health care providers that employ or contract with individuals or entities that are excluded, on either the federal or state level (or both), from participating in governmental health care programs. 

Accordingly, health care providers must, prior to employing or contracting with any individuals or entities and periodically during the term of the employment or contract, confirm whether the individual or entity is excluded, debarred or suspended from participating in any federal or state-specific health care program.

Health care providers can use the following four steps to conduct their participation investigations when employing and/or contracting with individuals or entities:

1.      Initial Review. When conducting your initial review, it is critical that the proposed employee or contractor be reviewed on both a federal and state-specific level.

a.      Federal Review. The following websites contain information concerning individuals and entities excluded from federal health care programs and are excluded from receiving federal contracts, certain subcontracts, and certain federal financial and nonfinancial assistance and benefits:

·         http://oig.hhs.gov/exclusions/exclusions_list.asp

·         https://www.epls.gov/epls/search.do

·        http://www.treasury.gov/resource-center/sanctions/SDNList/Pages/default.aspx 

To obtain the most comprehensive review result, a full criminal background check should be conducted and should incorporate a criminal background review in all fifty states. 

b.      State-Specific Review. Each state has its own review regulations concerning provider exclusion, debarment, termination and/or suspension. In the State of New York, health care providers are obligated to conduct participation reviews on a monthly basis and, in addition to conducting the federal reviews, New York State based reviews should, at a minimum, focus on the following lists:

·         http://www.omig.ny.gov/data/content/view/72/52/

·         http://www.op.nysed.gov/opd/rasearch.htm

·         http://www.health.ny.gov/professionals/doctors/conduct/

·         http://www.op.nysed.gov/opsearches.htm

·         http://www.nydoctorprofile.com/welcome.jsp 

For a listing of state-specific Medicaid sanction lists, please see: http://www.omig.ny.gov/data/images/stories//state_sanc_url_list.pdf 

2.      Demand Representations from the Employee or Contractor. Health care providers can ask on employment and/or vendor applications whether the individual or entity is now or has in the past been excluded, debarred or suspended from participating in any federal or state health care program.

3.      Document Every Step of the Participation Review Process. Make sure to print the results of each participation review (including the search parameters and results of each individual website that is visited) that you conduct and that you retain in the individual employee/contractor file the results of each exclusion review. 

4.     Incorporate the Participation Review Plan Into the Organizations Compliance Program. As with any other compliance obligations imposed on a health care provider, it is important to streamline the participation review process by incorporating a set of written guidelines that employees and compliance personnel will follow into the organizations comprehensive compliance program.  For more inforamation about comprehensive compliance programs for all health care practices and facilities, please visit the following website.

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Daniel Cook of Outpatient Surgery Magazine recently reported on a pending New Jersey State bill that may effectually close many single-room surgery centers in the State of New Jersey.  On May 26, 2011, the New Jersey State Senate introduced an amended bill that proposes to increase regulation and taxation to single-room surgery centers and, most critically, requires all surgery centers to be licensed by the New Jersey Department of Health and Senior Services regardless of their size.  Licensure would be contingent upon the surgery center's fulfillment of certain design standards and, in many cases, will require complicated re-designs of certain single-room surgery centers that existing locations cannot support.

For more information on the amended bill see Mr. Cook’s full report in Outpatient Surgery Magazine.

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For health care practices and facilities, employing and/or “partnering” with physicians and other licensed health care professionals is a necessary part of doing business. The profitable advantages and increased revenue that come with offering the services of a licensed health care professional often drive health care practices and facilities to find creative methods for proffering these service arrangements. However, depending on the state within which the health care practice of facility sits, many service arrangements implicate “corporate practice of medicine” regulations and must be thoroughly crafted and evaluated to avoid regulatory violations.

Most states have laws and regulations that prohibit – in varying degrees - the “corporate practice of medicine” by certain business entities and unlicensed individuals making it extremely important to fully evaluate the regulatory implications and validity of the proposed corporate structure or partnership. Moreover, while largely dependent on the state within which the health care practice or facility is located, there also exist statutory “exemptions” to the “corporate practice of medicine” and various methods for organizing and structuring a health care practice or facility in order to lawfully employ and/or partner with a physician or other licensed health care professionals.

In the State of New York, individual practitioners, professional partnerships, professional corporations, professional limited liability companies and professional service corporations (where all shareholders are licensees of one profession and whose members practice only that profession) are all authorized to offer professional services. Additionally, several statutory exemptions exist for hospitals and other health care “facilities” allowing these licensed/accredited organizations – often owned and/or managed by unlicensed health care professionals - to offer the services of physicians and other licensed health care professionals.

Most states also maintain “fee-splitting” or profit sharing regulations which mandate that licensed health care professionals or professional firms cannot share with other than members of their own professional firm the fees earned for providing professional services. The fee-splitting regulations normally coincide with the individual state’s corporate practice of medicine regulations and have similar degrees of prohibition.

For more information on the corporate practice of medicine laws and regulations in New Jersey and New York, please visit www.hccwlaw.com.

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