1. law, govt and politics

Health Care Reform Express
Health Care Reform Bulletin No. 9
June 2010
Bricker & Eckler LLP
100 South Third Street
Columbus, Ohio 43215-4291
Phone 614 . 227 . 2300
Fax 614 . 227 . 2390
info@bricker.com
www.bricker.com
COLUMBUS CLEVELAND
CINCINNATI-DAYTON
Health Care Reform
Task Force
Health Care
Michael K. Gire
614 . 227 . 2318
mgire@bricker.com
David M. Johnston
614 . 227 . 8817
djohnston@bricker.com
Karen D. Smith
614 . 227 . 2313
ksmith@bricker.com
Insurance
Miranda C. Motter
614 . 227 . 4810
mmotter@bricker.com
Elisabeth A. Squeglia
614 . 227 . 2396
esqueglia@bricker.com
Faith M. Williams
614 . 227 . 2374
fwilliams@bricker.com
Employment
James G. Petrie
614 . 227 . 2373
jpetrie@bricker.com
EmployEE BENEFITS
Christine M. Poth
614 . 227 . 2395
cpoth@bricker.com
tAX
Meredith K. Knueve
614 . 227 . 4886
mknueve@bricker.com
EDUCATION
Melissa M. Carleton
614 . 227 . 4846
mcarleton@bricker.com
Nicholas A. Pittner
614 . 227 . 8815
npittner@bricker.com
The Health Care Reform Law
Includes Key Stark Law Changes
O
n March 23, 2010 President Obama signed into law the highly anticipated Patient Protection and
Affordable Care Act (PPACA)(H.R. 3590, Pub L 111-148), which was amended shortly thereafter
on March 30, 2010 by the Reconciliation Bill (H.R. 4872, Pub L 111-152) (together, PPACA). As
discussed further below, PPACA contains several significant provisions affecting the Stark law (42
USC 1395nn), including a new Stark law self-disclosure protocol, restrictions on physician-owned
hospitals, and requirements for transparency in physician-owned imaging services.
HHS to Create Stark Law Self-Disclosure Protocol with Compromise
Authority
Among the PPACA’s most positive developments is that Section 6409 requires the Secretary, in
cooperation with the Department of Health and Human Services (HHS) Office of Inspector General
(the OIG), to develop and implement by September 23, 2010 a protocol for health care providers
and suppliers to disclose actual or potential violations of the Stark law (the Stark SRDP). The need
for a Stark law self-disclosure process became more critical a year ago when the OIG announced
it would no longer accept self-disclosures involving violations of the Stark law under its protocol,
unless the self-disclosure also included a colorable anti-kickback statute violation. Following the
OIG’s March 2009 announcement, providers and suppliers were left with no clear options regarding
how and where to disclose a Stark-only violation.
Another concern was that the Centers for Medicare and Medicaid Services (CMS) was bound
by law to impose the full amount of the Stark law penalties, and therefore, could not reduce or
compromise the penalties for Stark law violations. Under the Stark law, violators must repay CMS
all of the reimbursement received for services referred by a physician involved in a noncompliant
arrangement, regardless of the violator’s intent. This overpayment liability can quickly add up to
extraordinary sums, and is often based on mere technical Stark law violations, such as missing
signatures or expired contracts.
Because Stark law penalties are so often disproportionately high in light of the nature of the violation,
many industry stakeholders felt that CMS needed to create a fair and reasonable process to settle Stark
law violations, with the potential for reduced penalties. In response to this concern, PPACA expressly
authorizes the Secretary to reduce the amounts due for Stark law violations to an amount less than the full
penalties, and to consider: i) the nature and extent of the improper or illegal practice; ii) the timeliness of
the self-disclosure; iii) the provider or supplier’s level of cooperation in providing additional
information; and iv) other factors that the Secretary may determine in its discretion.
In addition, the Stark SRDP must identify a specific person, official, or office to whom providers and
suppliers can make disclosures, and explain the effect of self-disclosures on corporate integrity
agreements and corporate compliance agreements. The Secretary must also post information about
how to use the Stark SRDP on the CMS website and HHS is required to report to Congress within
18 months after the Stark SRDP is established on its effectiveness. PPACA clarifies that the Stark
SRDP will be separate from the already existing Stark law Advisory Opinion process under which
parties can write to CMS asking for an opinion about whether a specific arrangement complies
with the Stark law.
April 2010
Health Care Reform Express
In connection with the Stark SRDP, health care providers and suppliers should also be aware of changes
in Section 6402 requiring repayment of overpayments to the government within 60 days of the date the
overpayment is “identified.” Although several important aspects of the 60-day refund obligation remain
uncertain, such as a clear definition of what constitutes an “identified overpayment,” providers and suppliers
should begin taking steps to incorporate audit and refund processes into their compliance efforts. Future
CMS regulations should clarify application of this rule, including possible tolling of the 60-day period, or
other effects on the 60-day repayment obligation of using the Stark SRDP.
No New, and Restrictions On Existing, Physician-Owned Hospitals
After years of reconsidering the Stark law “whole hospital” exception, PPACA has finally prohibited
physicians from ownership in new hospitals to which they will refer altogether. (The Stark “whole
hospital” exception allows a referring physician to own an interest in an entire hospital if the physician is
authorized to perform services at the hospital.) Specifically, Section 6001 prohibits physician ownership
in a hospital that does not have a Medicare provider agreement as of December 31, 2010. As a concession to
existing physician-owned hospitals, PPACA grandfathers physician-owned hospitals with Medicare provider
agreements in place by December 31, 2010, thereby allowing physicians to keep their ownership in
existing hospitals. However, PPACA will make changing pre-existing physician-owned hospitals more
difficult by restricting increases in the percentage of total value of physician ownership and investment interests
in physician-owned hospitals from the amounts held as of March 23, 2010 and restricting increases
in operating rooms, and procedure rooms. A limited exception to this restriction allows growth for
physician-owned hospitals that treat the highest percentage of Medicaid patients in their counties.
In a move toward greater transparency, PPACA requires both referring and treating physician-owners
in these hospitals to disclose their ownership in the hospital to patients in time for patients to make a
meaningful choice about their hospital care. Section 6001 also requires a written annual report to CMS
identifying the owners and extent of ownership; reported information will be posted on the CMS website.
Similarly, the hospital must identify physician ownership in any advertising and on the hospital’s website.
Lastly, new patient safety provisions require physician-owned hospitals to disclose to patients prior to their
admission any period of time when the hospital does not have a physician on the premises and to obtain
a signed acknowledgement from the patient. Physician-owned hospitals must also have the capability to
assess and provide initial treatment for patients, and to refer and transfer patients to appropriate facilities.
CMS is required to issue regulations providing further guidance on these changes by January 1, 2012.
Transparency in Physician Ownership of Imaging DHS Required
This document has been
prepared as a general
reference document
for informational purposes. The information contained herein is
not intended to be and
should not be construed
as legal advice. Each
circumstance should be
considered and evaluated separately, and
possibly with involvement of legal counsel.
Please contact Bricker
& Eckler for permission
to reprint this bulletin in
part, or in its entirety.
Page 2
In Section 6003 PPACA incorporates a new transparency requirement for physician ownership of certain
ancillary services effective January 1, 2010. In particular, PPACA amends the Stark law in-office ancillary
services exception to require physicians referring patients for in-office MRI, CT, PET, or other radiology
services that the Secretary of HHS may deem appropriate, to inform patients, in writing, at the time of
their referral that i) the physician has an ownership interest in the imaging or other service provider to
which the physician has referred the patient, and ii) the patient has the option to obtain the services from a
person other than the referring physician, a physician member of the same group practice as the referring
physician, or someone directly supervised by the referring physician or another physician in the group
practice. Section 6003 also requires the referring physician to provide the patient with a list of alternative
suppliers in the area where the patient resides. Numerous questions regarding implementation of these
requirements remain, including how many alternatives a physician must list and how to identify the
geographic area where the patient resides. Despite these lingering questions, physicians relying on the
in-office ancillary services exception should take steps immediately to develop and issue patient notices
using a good faith interpretation. Further regulations required by PPACA should clarify these issues in the
future. Although PPACA states that Section 6003 was effective January 1, 2010, enforcement for services
prior to PPACA’s enactment on March 23, 2010 is unlikely.
This Bulletin was prepared by Claire Turcotte with assistance of Shannon DeBra and Bryn Beers. Please
contact Claire Turcotte at 513.870.6573/cturcotte@bricker.com or Shannon DeBra at 513.870.6685/sdebra@
bricker.com, or any member of the Health Care Practice Group for further information. The Bricker &
Eckler Health Care Reform web site can be accessed at www.bricker.com/reform.