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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Arizona Supreme Court Confirms Abolishment of Original Tortfeasor Rule

For more than thirty years, Arizona law has allowed juries to allocate fault among all who contribute to an injury. On July 18, 2016, the Arizona Supreme Court unanimously re-affirmed Arizona’s commitment to “comparative fault” by reversing a trial court’s decision that attempted to reconcile “full allocation” of fault with a much older doctrine that made the “original” or first in- line tortfeasor legally responsible for all injuries resulting from an occurrence regardless of the fault of subsequent tortfeasors. In Cramer v. Starr, No. CV-15-1317- PR, filed July 18, 2016, the Court held that the “original tortfeasor rule” (“OTR”) was abolished by the Arizona Legislature with the enactment of the Uniform Contribution Among Tortfeasors Act (“UCATA”), ARS §§ 12-2501 to 12-2509, including the comparative fault provision, ARS § 12-2506, which extinguished joint and several liability, subject to three exceptions. http://www.azcourts.gov/opinions/Search-Opinions-Memo-Decs/year/2016/court/999 In Cramer, the plaintiff was injured in a car accident with petitioner-defendant Cramer. Following the accident, plaintiff had spinal fusion surgery performed by a physician to treat her injuries from the car accident. The defendant driver designated the physician as a non-party at fault, alleging that the surgery was unnecessary … Continue reading

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Supreme Court Unanimously Adopts “Implied Certification” Theory of False Claims Act (“FCA”) Liability

On June 16, 2016, the U.S. Supreme Court in Universal Health Services, Inc. v. United States, ex. rel. Escobar, U.S. No. 15-17, 06/16/2016, ruled unanimously in an opinion written by Justice Thomas that the “implied false certification theory” can be a basis for FCA liability. This theory treats a provider’s payment request as provider’s implied certification of compliance with any statutes, regulations, or contract requirements that are material conditions of payment. This means that a failure to disclose a violation of the material conditions is a misrepresentation that renders the claim false or fraudulent.  By accepting this theory of FCA liability, the Court held that providers can have FCA liability if they bill the government when not in compliance with regulations that are not explicit conditions of payment. The FCA makes it unlawful to knowingly present a false or fraudulent claim to the government for reimbursement. A claim can be false either factually or legally.  A claim is factually false when a provider submits a claim for services that were not provided.  A claim is legally false when a provider falsely certifies compliance with regulations that are a condition of … Continue reading

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Risk Corridor Payment Litigation

Highmark Inc. and some of its health insurance affiliates (“Highmark”) recently filed a lawsuit in the U.S. Court of Federal Claims seeking to recover damages for the federal government’s failure to make risk corridor payments to insurers with high claims costs due to the insurer’s participation in the health care exchanges created by the Patient Protection and Affordable Care Act (“ACA”). More specifically, the lawsuit arises out of the United States’ failure to pay in full the amounts owed to the Highmark insurers under the ACA’s risk corridor program for the calendar year 2014. Highmark is seeking the amount it says it is owed for 2014 under the risk-corridor program, which is approximately $223 million, minus the amount it has been paid so far, which is currently around $27 million. Highmark also is seeking interest and legal expenses.  Further, Highmark is seeking declaratory relief that the government’s 2015 and 2016 risk corridor payments must be made on time and in full. As part of the ACA, the federal government created the risk corridors program to mitigate the pricing risk to insurers. This risk was due to a lack of information … Continue reading

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Internal Revenue Service Denies Tax-Exempt Status for a Commercial ACO

In April 2016, the Internal Revenue Service (the “Service”) issued a final determination denying a nonprofit corporation (the “Network”) tax exempt status under Section 501(c)(3) of the Internal Revenue Code (the “Code”).  The private letter ruling involved a tax-exempt health system (the “System”) that formed the Network to operate an accountable care organization (“ACO”) that did not participate in the Medicare Shared Savings Program (“MSSP”).  Rather, the Network was formed and operated as a non-MSSP clinically integrated network.  The Network was intended to develop and implement financial incentives to participating providers by tying payments to the providers’ collective success at (i) reducing the cost of healthcare for individuals; (ii) improving patient access and quality of care; and (iii) improving population health and patient experience.  These goals were measured by the Network’s analysis of clinical information and a patient satisfaction tool. Participation in the Network was open to providers employed by the tax-exempt System, providers in private practice that held medical staff privileges with the System, and providers in private practice that were not affiliated with the System.  The Network also represented all of those participating providers (including those in private practice) … Continue reading

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