Health Law Advisor

The U.S. Department of Health and Human Services’ Office of Inspector General (“OIG”) recently issued Advisory Opinion No. 21-02, regarding a joint investment by a health system, a manager, and certain surgeons in an ambulatory surgery center (“ASC”) (the “Proposed Arrangement”). According to a national survey, most hospitals and health systems are planning to increase their investments in ASCs and anticipate converting hospital outpatient departments to ASCs. Many hospitals with ASCs operate the ASCs as physician joint ventures. As payors and patients continue to show interest in having outpatient procedures performed in ASCs, there is an expected trend to see an increase in investments and joint ventures in ASCs therefore making the Advisory Opinion particularly noteworthy.

In their request to OIG, the health system and the manager (“Requestors”) specifically inquired whether the Proposed Arrangement would constitute grounds for sanctions under the Federal Anti-Kickback statute (“AKS”). Based upon the facts provided in the request for the Advisory Opinion and a supplemental submission, the OIG reached the favorable conclusion that due to the low risk of fraud and abuse, the OIG would not impose sanctions on the health system or the manager in connection with the Proposed Arrangement.

The Proposed Arrangement

Under the Proposed Arrangement, the health system, five orthopedic surgeons, three neurosurgeons employed by the health system, and a manager, would invest in a new ASC. The health system would own 46 percent of the ASC, the surgeons would collectively own 46 percent of the ASC, and the manager would own 8 percent of the ASC. The manager certified that no physician has had, or would have, ownership in the manager that provides management and other services to the ASC. Furthermore, the ASC would operate in a medical facility owned by a real estate company jointly owned by the health system, the surgeons, and the manager. The ASC would enter into space and equipment leases as well as service arrangements with the health system and the real estate company.

OIG’s Analysis

Based on the following criteria, the OIG determined that the following safeguards in the Proposed Arrangement would mitigate the risk and that, as such, the OIG would not impose administrative sanctions in connection with the Proposed Arrangement:

Health System and Physician Investor Interest

(1) Although one or more of the neurosurgeons would fail to meet the Hospital-Physician ASC Safe Harbor Provision requirement that a physician investor derive at least one-third of his or her medical practice income for the previous fiscal year or previous 12-month period from the performance of ASC-qualified procedures, the health system certified that the neurosurgeons would use the ASC on a regular basis as part of their medical practices. Additionally, the health system certified that the surgeons would rarely refer patients to each other.

(2) The Proposed Arrangement would contain certain safeguards to reduce the risk that the health system would make or influence referrals to the ASC or the surgeons. For example, the health system certified that any compensation paid by the health system to affiliated physicians for services furnished would be consistent with fair market value and would not be related, directly or indirectly, to the volume or value of any referrals. In addition, the health system certified that it would refrain from any actions designed to require or encourage affiliated physicians to refer patients to the ASC or the surgeons and would not track referrals made to the ASC.

In this episode of the Diagnosing Health Care Podcast:  The vaccine passport has been a major topic of discussion as businesses and governments consider how to balance privacy and safety through the rollout of the COVID-19 vaccine. Epstein Becker Green attorneys Patricia Wagner, Alaap Shah, and Jessika Tuazon discuss the privacy and security concerns companies must weigh as they consider developing or implementing vaccine passports, such as the collection and use of an individual's personal health information. As state governments and the private sector take the ...

In December 2015, we wrote about the many failed health insurance co-ops created under the Affordable Care Act (“ACA”), and the impact of those failures on providers and other creditors, consumers, and taxpayers. At that time, co-ops across the country had more than one million enrollees. As of January 2021, there were roughly 120,000 enrollees in three remaining co-op plans. Nonprofit co-op insurers were intended to increase competition and provide less expensive coverage to consumers. However, low prices, lack of adequate government funding, restrictions on the use of ...

On April 8, 2021, the U.S. Department of Justice (“DOJ”) announced the first charges brought in connection with alleged fraud on the Accelerated and Advance Payment Program, administered by the Centers for Medicare & Medicaid Services (“CMS”).[1]  According to the indictment, Francis Joseph, M.D., a Colorado physician, has been charged with misappropriating nearly $300,000 from three different COVID-19 relief programs: the Accelerated and Advance Payment Program, the Provider Relief Fund, and the Paycheck Protection Program.[2]

Accelerated and Advance Payment Program

The Accelerated and Advance Payment Program is intended to provide emergency funds by way of expedited payments to health care providers and suppliers when there is a disruption in claims submission or claims processing.  While CMS has historically utilized this program to provide targeted relief in response to national emergencies or natural disasters affecting certain portions of the country, the program was expanded in March 2020 to apply to a broader group of Medicare Part A providers and Part B suppliers nationwide due to the financial impact of COVID-19.[3]

According to the indictment, Dr. Joseph allegedly submitted an Advance Payment Request Form for a medical practice of which he had relinquished control, and then transferred approximately $92,000 from the medical practice’s operating account to a personal bank account (approximately $87,000 of that amount was paid by the Medicare Administrative Contractor as an advance payment the previous day).

Provider Relief Fund

The Provider Relief Fund is a $178 billion measure appropriated under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act that offers aid to providers who were financially impacted by COVID-19 and treatment and other assistance to individuals suffering from COVID-19.

The indictment marks the second time that DOJ has brought charges related to misuse of Provider Relief Fund distributions (DOJ announced the first charges in February 2021 against a home health provider).  According to the indictment, Dr. Joseph’s former medical practice met the criteria for a Provider Relief Fund distribution of $31,782, but Dr. Joseph allegedly transferred those funds from the medical practice’s operating account to a personal bank account.

Cyber threats and cybersecurity controls have evolved significantly over the past two decades since the HIPAA Security Rule were originally promulgated. During this same time, healthcare entities have increasingly become a prime target of hackers seeking to extort payment using ransomware, exfiltrate patient data to commit fraud, or disrupt operations in other nefarious ways.  Recognizing these challenges, some security professionals have sought further clarity on the HIPAA Security Rule that they deem to be “long in the tooth”. Yet, regulators have not made any ...

In this episode of the Diagnosing Health Care Podcast:  Since the start of the COVID-19 pandemic, many jurisdictions have enacted protections from COVID-19-related liability claims through legislation and executive orders. These liability shields, however, may give health care businesses a false sense of security and offer little protection when it comes to employment claims.

Epstein Becker Green attorneys Denise Merna Dadika, Gregory Keating, and Elena Quattrone discuss the unintended liability consequences health care employers must consider as they ...

In this episode of the Diagnosing Health Care Podcast: Since the start of the COVID-19 pandemic, many jurisdictions have enacted protections from COVID-19-related liability claims through legislation and executive orders. These liability shields, however, may give health care businesses a false sense of security and offer little protection when it comes to employment claims.

Epstein Becker Green attorneys Denise Merna Dadika, Gregory Keating, and Elena Quattrone discuss the unintended liability consequences health care employers must consider as they ...

On April 19, 2021, the Office of Inspector General’s (OIG) Office of Audit Services (OAS) released the results of an audit conducted on the accuracy of diagnosis codes submitted to CMS by Humana, Inc. for 2015 dates of service. Based on the audit results, the OIG recommended Humana return a whopping $197.7 million in alleged overpayments and enhance its policies and procedures to prevent, detect and correct noncompliance with Federal requirements for diagnosis codes that are used to calculate risk-adjusted payments.

Under the Medicare Advantage (MA) program, the Centers for ...

On April 29, 2021, the Federal Communications Commission (FCC) will begin accepting applications for the second round of its COVID-19 Telehealth Program (the “Program”). However, the application filing window will only be open for a very short seven day period and will close on May 6, 2021. To give all applicants an equal opportunity to have their applications reviewed, the FCC announced that all applications filed during this period will be reviewed once the application filing window has closed.

Initially, in March 2020, Congress appropriated $200 million for the first round of the COVID-19 Telehealth Program funding under the CARES Act. An additional $249.95 million was provided to the FCC in December 2020, under the Consolidated Appropriations Act (CAA), to helping address inequities in access to health care service. The COVID-19 Telehealth Program was designed to help health care providers purchase telecommunications equipment, broadband connectivity, and other devices necessary for providing telehealth services to rural, low-income and underserved populations.

The Program is limited to nonprofit and public health care providers (47 U.S.C. § 254(h)(7)(B)) that fall within the following categories:

1. Post-secondary educational institutions offering health care instruction, teaching hospitals, and medical schools;
2. Community health centers or health centers providing health care to migrants;
3. Local health departments or agencies;
4. Community mental health centers;
5. Not-for-profit hospitals;
6. Rural health clinics;
7. Skilled nursing facilities; or
8. Consortia of health care providers consisting of one or more entities falling into one of the first seven categories.

Our colleagues Brian Cesaratto and Alexander Franchilli of Epstein Becker Green have a new post on Workforce Bulletin that will be of interest to our readers: “NAME:WRECK” Cybersecurity Vulnerability Highlights Importance of Newly Issued IoT Act".

The following is an excerpt:

A recently discovered security vulnerability potentially affecting at least 100 million Internet of Things (“IoT”) devices[1] highlights the importance of the newly enacted IoT Cybersecurity Improvement Act of 2020 (the “IoT Act”). Researchers at the security firms Forescout ...