Navigating the California Corporate Practice of Medicine “CPM” Prohibition

By Paul Giancola CPM is a variation of the statutory prohibition against unlicensed practice of medicine. CPM states enforce the prohibition against corporations practicing medicine by requiring a separation between medical/clinical decisions made by physicians and business decisions made by corporations.  This generally means that physicians cannot be employed by non-medical professional corporations or LLCs absent an exception . In this regard, The California Medical Board (CMB) states that the following clinical decisions should only be made by a California-licensed physician and would constitute the unlicensed practice of medicine if performed by an unlicensed person: Determining what diagnostic tests are appropriate for a particular condition. Determining the need for referrals to, or consultation with, another physician/specialist. Determining how many patients a physician must see in a given period of time or how many hours a physician must work. Responsibility for the ultimate overall care of the patient, including treatment options available to the patient. In addition, the following “business” or “management” decisions and activities, resulting in control over the physician’s practice of medicine, should be made by a licensed California physician and not by an unlicensed person or entity: Ownership … Continue reading

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Recent Arizona appellate decisions of note to providers

With change, breaking news, and uncertainty dominating the legal concerns of health care providers on a federal level, it remains important to review and refresh on state-level concerns and legal rules. This is especially true for those currently or frequently involved in health care litigation. In particular, Arizona appellate courts issued three decisions early this year of which health care providers may wish to take note. First, in Stafford v. Burns, 756 Ariz. Adv. Rep. 34 (App Div. 1 January 17, 2017), the Arizona Court of Appeals held that the heightened standard of proof for claims against a health care professional set forth in A.R.S. s 12-572(A) (“clear and convincing evidence” instead of a preponderance of the evidence) applies broadly “whenever the acts or omissions the plaintiff contends were deficient were provided in the course of evaluating and treating a patient in a hospital emergency department.” The heightened standard of proof of proof under the statute applies when services are provided in compliance with the federal Emergency Medical Treatment and Active Labor Act. The appellant had argued for a narrower interpretation that would have ratcheted down the burden of proof … Continue reading

Posted in court of appeals, Health Care

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You’re Fired: What Impact Will Sally Yates’ Departure Have on the DOJ’s Fraud Enforcement?

As most of the world now knows, President Trump fired acting Attorney General Sally Yates last week after she declined to defend the President’s travel ban. Dana Boente has replaced Ms. Yates, but he may not be long for the job.  In fact, it is possible that by the time you are reading this, Alabama Republican Jeff Sessions will have been confirmed as Attorney General of the United States.  The Senate Judiciary Committee advanced Mr. Sessions to the full Senate along party lines and a confirmation is expected any day. While the rest of the world watches the political drama unfold and anticipates the immediate impact on existing travel ban litigation, those who do business with the Federal Government cannot help wondering about the enduring legacy of the infamous “Yates Memo,” named for its now-former acting Attorney General author. Although its application is often nuanced, the purpose and crux of the Yates Memo is that absent special permission based on extraordinary circumstances, the Department of Justice must pursue individuals in corporate fraud and abuse cases.  Until a new policy is announced, the Yates Memo’s mandate remains in effect. Mr. Sessions … Continue reading

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Want to run the government like a business? Bring back the ACA.

Just days after his inauguration, President Donald Trump signed an executive order to delay further implementation of the Patient Protection and Affordable Care Act (ACA). This is just one of many steps the President and Congress plan to take in an effort to repeal the ACA. It sounds simple – just a few strokes of a pen and this behemoth of a law will disappear into history. But will it? Aside from the individual mandate and Medicaid expansion, two of the most famous and controversial pieces of the ACA, there are countless others. The ACA itself required the creation of nearly fifty new entities, with each of those entities authorized to implement other new entities or programs. For example, the ACA authorized the creation of the Center for Medicare and Medicaid Innovation (CMMI), which has created over eighty innovation models with the goal of increasing the quality and efficiency of patient care while decreasing the cost. This new relationship between cost and quality in health care is termed “value based purchasing,” and it is an idea that has taken root beyond the reaches of the ACA. Over 65% of the … Continue reading

Posted in Affordable Care Act, Private Payors

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Yahoo! Data Breach Results in Another Lawsuit Against Corporate Directors and Officers

A number of claims have been made against companies’ directors and officers alleging a breach of fiduciary duty for failing to adequately oversee data security programs.  To date, the defendants’ oversight of the programs and their documentation of that oversight have been sufficient enough so as to allow courts to rule in directors’ and officers’ favor. The past several years have seen a number of high-profile data breaches involving public companies, including Wyndham Worldwide, Home Depot, Target and, most recently, Yahoo!  Each of the earlier cases yielded lawsuits against the companies’ boards of directors and/or officers, and, last week, plaintiffs filed a class action lawsuit against Yahoo! and its CEO, CFO and board member alleging federal securities law violations relating to Yahoo!’s disclosure of the data breach.     The plaintiffs’ claims against directors and officers in previous cases have generally revolved around breaches of fiduciary duty, and, more specifically, the respective boards’ oversight of data security.  To date, the cases have been dismissed by motions at various stages.  In each of those cases, the courts have examined the nature and extent of boards’ oversight of data security programs.  A brief summary of the cases … Continue reading

Posted in Business Law, Governance, Securities | Tagged

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The MACRA Final Rule: In Search of the “Goldilocks” Model

The Medicare Access and CHIP Reauthorization Act (“MACRA”) Final Rule published late last year implements CMS’ new payment approach for physicians and other Medicare Part B eligible clinicians under the Merit-Based Incentive Payment System (“MIPS”) and looks to steer clinicians towards more “at risk” advanced alternative payment models (“Advanced APMs”).  In light of some Congressional concerns on MIPS’ potential negative impact on small physician groups, the Final Rule softened some of the initial timeframes for MIPS implementation.  In addition, the Final Rule proposed a new “ACO Track 1+” model that would qualify as Advanced APM, which some providers hope will turn out to be that ACO in the “goldilocks zone” – not too much, not too little, but just the right balance of shared savings and risk.  Last week, CMS issued some new guidance regarding the ACO Track 1+ model and promised to provide additional details in the coming months. CMS helps (or hopes) to ease into MIPS As we noted in our prior blog post on the MACRA Proposed Rule, MIPS represents the consolidation of three CMS reporting programs: Physician Quality Reporting System, the Value-Based Modifier Program, and Meaningful … Continue reading

Posted in MACRA | Tagged ,

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If Obamacare’s Days are Numbered, What’s Next? Trumpcare.

The Affordable Care Act has withstood 62 repeal attempts by the House of Representatives and several challenges brought to the U.S. Supreme Court.  Now, with Donald Trump as President and a new Republican-led House and Senate, full or partial repeal of the ACA seem likely to occur sometime in 2017, perhaps with a delayed effective date.  What impact would an ACA repeal have on healthcare industry?  Is a full repeal possible?  What are the potential varieties and timing of any replacement “Trumpcare” programs?  Below are some of our initial thoughts on some of these questions. Provider uncertainty ahead. Several stock analysts have expressed concern that successful repeal of the ACA would have a negative financial impact on health care providers and that any replacement would not be as lucrative for providers.  The first immediate impact after the election of Trump was a sharp decline in stock prices for some healthcare services companies, although some medical device and pharmaceutical companies saw a rise in stock prices, presumably on theory that less regulation would be better for their businesses.  MACRA was the result of bi-partisan consensus to move into alternative payment models … Continue reading

Posted in Affordable Care Act | Tagged , ,

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Ninth Circuit Upholds Felony Conviction of Urologist, Under FDCA, for Reusing Single-Use Needle Guides During Prostate Biopsies (September 9, 2016)

In 2014, Las Vegas urologist, Dr. Michael Kaplan, was convicted by a federal jury for reusing single-use plastic needle guides during prostate biopsies. He was convicted of conspiracy to commit adulteration in violation of the Federal Food, Drug, and Cosmetic Act (“FDCA”), 21 USC Section 331(k) with the intent to defraud or mislead, and sentenced to 4 years in prison. The background of the case began in 2010 when Dr. Kaplan’s office ran out of reusable needle guides for prostate biopsies. The needle guide is a housing that stabilizes the needle throughout the biopsy procedure.  During the procedure, the needle is contaminated with tissue, blood, and fecal material.  Patients take antibiotics to prevent infection. Needle guides come in single-use and reusable forms. Reusable guides are made of stainless steel and can be disinfected after every use.  Single-use guides are made of plastic and are not to be reused. The plastic guides are prone to scratching by the needle, which may create crevices that can trap debris. After Dr. Kaplan needed to purchase a new ultrasound machine, he could no longer use his reusable stainless steel guide as it did not … Continue reading

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“Pick Your Pace” for MACRA Rollout (But Don’t Be Too Slow)

CMS Acting Administrator Andy Slavitt recently announced that CMS would provide new physician reporting options for the first year of the MACRA program starting January 1, 2017. In response to concerns about the MACRA Proposed Rule, including how excessive reporting can distract from patient care, Administrator Slavitt outlined four options for first-year reporting, which are summarized below. As we noted in a recent Health Law Checkup blog post, it is perhaps not surprising that CMS chose to provide physicians with additional flexibility for the program’s first-year reporting requirements, given the condensed rollout schedule.  Ultimately, we still need to see the final details in the MACRA Final Rule, which is due out by November 1, 2016, to gauge how much flexibility CMS is actually providing and whether there are any intended or unintended consequences for physicians that pick a “slower” reporting pace.  For example, payment adjustments for those participating in the Merit-based Incentive Payment System (“MIPS”) will increase dramatically – from plus/minus 4% in 2019 to plus/minus 9% in 2022 – so physicians may not want to slow down efforts to prepare for MACRA, despite these new first-year reporting changes. First … Continue reading

Posted in MACRA | Tagged

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The Physician’s Self-Referral Law – Are Changes Finally Coming?

The Physician Self-Referral Law, also known as the Stark law, prohibits a physician from referring federal health care program patients for “designated health services” to an entity in which the physician (or an immediate family member) has a financial relationship, unless an exception applies. Financial relationships include both ownership and investment interests, as well as compensation arrangements.  The law also prohibits an entity from billing federal health care programs for services provided pursuant to an impermissible referral.  Although Congress intended the Stark law to provide a bright line test to curb physicians’ self-referrals, it has, over the years, increased in complexity and breadth. In December, 2015, the Senate Committee on Finance and the House Committee on Ways and Means invited a group of Stark law experts and stakeholders to participate in a roundtable discussion on issues related to the Stark law. The discussion resulted in a majority staff report issued on June 30, 2016 from the Senate Finance Committee entitled “Why Stark, Why Now?- suggestions to improve the Stark law to encourage innovative payment models.”  The report was based on 90 comments  from the industry roundtable discussion about the  law. … Continue reading

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