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| Dear Friend,
Money.
United States Department of Justice recently announced that Akron General Health System, which was acquired by the Cleveland Clinic Foundation at the end of 2015, will pay $21.25 million to resolve violations of the federal Anti-Kickback Statute brought to issue pursuant to a False Claims Act lawsuit.
The payment, by now owner Cleveland Clinic, resolves allegations that between August 2010 and March 2016, the hospital system paid compensation substantially in excess of fair market value to physicians in order to secure patient referrals.
As always in these types of cases, which are civil actions, the settlement does not involve any admission that the allegations were true.
Here are two takeaways for you:
1. If a hospital violates the law by overpaying physicians for their services, the physicians were overpaid as a result of accepting the extra compensation. Depending on the regulatory scheme, that leaves open the question as to whether the physicians receiving the payments also violated the law. For example, anti-kickback law turns on intent, which can be inferred, but prohibitions against self-referral, such as the federal Stark Law, are strict liability statutes – no intent required.
2. As indicated, the Cleveland Clinic settlement on behalf of its Akron General Health System resulted from a whistleblower action under the federal False Claims Act. Interestingly, the whistleblower was Akron General Health System’s former Director of Internal Audit, Beverly Brouse. She raised issues concerning the arrangements that the system had with certain physician groups and was subsequently terminated. Whether or not those concerns were correct or not and whether or not her termination related to her concerns have now been settled.
As I’ve written before, physicians and their medical groups need to be extremely careful not to create whistleblowers within your ranks. Take compliance concerns to heart and investigate them as part of your internal compliance program. And whatever you do, don’t retaliate against someone for raising compliance concerns; it only adds fuel to the fire and you’re the one who’s likely to get burned. |
| | | Business Life in the Time of Coronavirus Mini-Series
The coronavirus crisis caused a short term economic crisis for many medical groups. Our mini-series shows you the way out. Plus, many of the concepts discussed are applicable during both good times and bad.
[If you haven't already seen them, follow this link to watch our entire series.] |
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Watch Tuesday's video here, or just keep reading below for a revised, more polished transcript:
Too many physicians think there's safety in hospital employment, even though more and more hospitals are going out of business like they’ve never gone out of business before, due to a plentitude of problems.
Recently, I saw a story about a hospital that was taken over by HCA, after which many physicians left that facility. Why? Well, employed physicians are being told that unless they accept a 10-25% pay cut, they'll be replaced. A couple of weeks ago, I did a video on the two-tiered system that once existed for large airplane pilot salaries. A pilot union strike was settled by an agreement to, in essence, create a two-tiered employment system under which all new pilots would be earning less. I didn’t think it was possible to do that with physicians, but every day I learn how wrong I can be. Here we see a prime example of a hospital system employment structure, whether it is direct employment or employment through a related medical group, in which the hospital is doing just that. New employees are being brought on at a new rate, the old employees are getting the “old” rate, at least until contract renewal time, at which point they, too, will be ratcheted down. So, hospital employment is safe, until it’s not. |
| | How to Deploy the Secret Sauce of Opportunistic Strategy
Webinar On Demand
They say that COVID-19 has changed the world, creating the "new normal." Many of your colleagues and many hospital administrators are running scared.
Others, leaders like you, know that crisis means opportunity.
Let me provide you with the strategic tools and insights that you need in order to seize opportunities, whether they’re in the context of your current business relationships, the expansion of your business activities, or the creation of new ventures.
You will learn:
•Defense as a defective default: It’s necessary, but not sufficient.
•Exploiting weakness: Drop the guilt and identify opportunity.
•Flat line negotiation is fatal: Understand its myths and limitations.
•Negotiation reality: Learn to identify and deploy on multiple planes to affect the outcome.
•Maneuver: Harness the power of maneuver, both in overall strategy and in specific negotiation strategy.
Others see a crisis and freeze in fear. Learn how to see the opportunities and obtain the tools to increase your odds of obtaining them.
The price to attend is $479. The cost of not attending is astronomical. |
| | | Wednesday – Felonious Forrest Park Physicians Freighted off to Federal Prison – Medical Group Minute
Watch the video here, or just keep reading below for a slightly polished transcript:
Forest Park was a Texas chain of beautifully constructed hospitals. Operative word: was.
Beneath the veneer of great architecture and beautiful interior design was, so federal prosecutors alleged, a decrepit scheme involving questionable marketing agreements and multiple types of fake arrangements from “consulting contracts” to “leases” and even fake companies.
The alleged aim? Referrals of well-insured patients to the out-of-network hospitals.
Last week, a slew of defendants, including physicians, were sentenced to terms in federal prison.
Some Background
In April 2019, the jury in the second round of Forest Park bribery and kickback trials in federal court in Dallas found seven of nine defendants guilty.
- Spine surgeon Shawn Henry, D.O.
- Spine surgeon Michael Rimlawi, D.O.
- Pain management physician Mike Shah, M.D.
- Spine surgeon Douglas Won, M.D.
- Nurse and workers’ compensation insurance consultant, Iris Forrest
- Forest Park’s co-administrator Mac Burt
- The owner of companies through which Forest Park channeled payments to physicians, Jackson Jacob.
Others had been found guilty at earlier trials or had pleaded guilty.
At issue were multiple charges, from violation of the federal Anti-Kickback Statute to money laundering. The government contended that Forest Park took in $200 million and paid out $40 million in kickbacks and bribes before finally shutting down all business operations. Central to the fact pattern concerning the convicted physicians was the “co-marketing agreement” concept: The physicians were given “marketing money” to boost their practices and, ultimately, the hospitals’ business.
The defendants argued that the so-called “marketing money” was not tied to referrals, an argument that the prosecution dismissed. At least one of the participants in the scheme admitted that marketing money was doled out as a percentage of referred cases.
The Sentencings
- Shawn Henry, D.O. – 7 ½ years
- Michael Rimlawi, D.O. – 7 ½ years
- Mike Shah, M.D. – 48 months
- Douglas Won, M.D. – 5 years
- Iris Forrest – 3 years
- Mac Burt – 12 ½ years
- Jackson Jacob – 8 years
In addition to those seven defendants, the following individuals were also sentenced last week:
Hospital manager Alan Andrew Beauchamp, who pleaded guilty, was sentenced to 5 years, 3 months.
Wade Neal Barker, M.D., a Forest Park co-founder, who pleaded guilty, was sentenced to 5 years.
Chiropractor Frank Gonzalez who referred patients to Forest Park for bribes and who pleaded guilty, was sentenced to 21 months.
Israel Ortiz, who pleaded guilty and whose company filled out pre-authorizations for worker’s comp patients received a 1 year sentence..
But wait, there are more:
The other Forest Park co-founder, Dr. Richard Toussaint Jr., who pleaded guilty, was previously sentenced to 5 years in prison to run concurrently with another sentence he was previously serving.
Andrew Jonathan Hillman, a health care company owner, was sentenced in December 2019 to five years in prison after pleading guilty.
Semyon Narosov, Hillman’s business associate, was sentenced in July 2020 to 4 years 3 months in prison after pleading guilty.
Carli Adel Hempel was sentenced in October 2020 to three years’ probation. She pleaded guilty.
And, Kelly Wade Loter and Andrea Kay Smith, both of whom pleaded guilty, were given probation in January 2020.
The Moral
The easiest (and most gratuitous) takeaway is that kickbacks are illegal. But, you already knew that.
What is far more important to note is the need for caution, extreme caution, whenever entering into any sort of financial relationship with someone or some entity with whom you share a referral relationship, no matter which way the referrals flow.
For example, some of the allegations in the Forest Park case centered around the payment of “marketing money” from the facility to physicians. Some naïvely believe that marketing money from a hospital to physicians is not something that should involve significant anti-kickback scrutiny. Wrong.
Additionally, Forest Park shows that even convoluted payments through “money drop” entities, even ones that look like a game of Chutes and Ladders, can be un-woven. And, as a double take away for you, they can be un-woven by other participants in a scheme such as the former Forest Park Chief Operating Officer and a physician/investor/founder who both previously pleaded out early and cooperated with the authorities in convicting their fellow schemers.
One can assume that all or nearly all of the now convicted men and women had counsel advise them on the propriety of their arrangements. In fact, the Dallas Morning News reported that the sentenced physicians had the marketing money deal “approved” by their so-called “health care lawyers”.
When someone tells you the deal is okay because their attorney vetted it, don’t be so sure. Get your own counsel.
And, make sure that the person advising you not only has knowledge, but also a good dose of common sense, which, apparently, is not that common. |
| | | | | Listen to the podcast here, or just keep reading for the transcript.
Need a marketing consultant to help grow your ASC? You might want to check with your carriers first.
Background
As the latest step in a trend that began several years ago, effective for 2021, CMS added 267 new codes to Medicare’s ASC covered procedures list.
These are the codes for procedures that Medicare recognizes for payment in the ASC setting. Put another way, no code, no payment. Put even another way, with a code, it’s not only Medicare that follows, that is, pays, commercial carriers look to Medicare in that regard.
And, put even another way, procedures that previously could be performed, meaning performed and reimbursed, only in a hospital setting, whether inpatient or outpatient, can now be performed in an ASC.
In addition, CMS has announced the phase out over 2021, 2022, and 2023 of the Inpatient Only List, the list of procedures, that to be reimbursable, must be performed in a hospital on an inpatient basis.
Those procedures that were once inpatient only will be going to HOPDs and to ASCs. Over time, when CMS reaches payment parity between HOPDs and ASCs, all will be ASC procedures.
Carriers Helping Push Procedures Out of HOPDs Today
Complain as you might about carriers raising premiums and cutting reimbursement, often on the same day, they know a good deal when they see one.
Take, for example, New York’s Empire BlueCross BlueShield, which announced a new coverage policy to push more procedures out of the HOPD setting to ASCs by making ASCs the default site of service for a host of outpatient procedures for commercial plan patients.
Patients need a medical necessity review to have their procedure performed in an HOPD. No medical necessity review applies if the procedure is performed in an ASC.
According to a carrier spokesperson, “Empire BlueCross BlueShield is committed to being a valued healthcare partner in identifying ways to achieve better outcomes, lower costs and deliver access to a better healthcare experience for consumers.”
What This Means For You
How the story’s changed!
Just two decades ago, carriers saw ASCs, predominately owned by physicians, as “conflicts of interest.” How could they, they claimed, trust a physician to admit his or her own patient to a facility he or she owns?
But now, it’s clear that ASCs provide better care at lower cost, in a setting that’s preferred by both patients and physicians.
Some see the payment policy shift, governmental and commercial, as motivation for hospitals to acquire or build their own ASCs.
As to 100% hospital-owned ASCs, physicians who’ve already given up control of their practice to the hospital through employment will have no choice but to go along, meaning without ownership.
But as to all other physicians, as well as in connection with potential joint venture ASCs, why would physicians want to partner with a hospital at all? It can’t be for their ASC management skill; they have none. And, if the hospital proposes a three way JV to independent physicians, you’ve got two “partners” and a diluted physician ownership percentage.
As I see it, we’re about to witness a huge increase in the already tidal shift in the site of surgical service to the ASC setting. Partnering with the right long-term, and, therefore, non-PE backed, management company makes sense, as they bring skills to the table that you’re lacking.
However, be careful to avoid a manager that’s as bureaucratically impacted as a hospital (or an insurance carrier!) or you’ll risk losing both your competitive advantage and the fun, yes, fun, of doing your cases in an enjoyable environment. |
| | | Calibrate Your Compass
Read our exclusive RedPaper to guide you through this evolving situation.
The coronavirus crisis caused a short-term economic crisis for many medical groups. Our RedPaper shows you the way out. Plus, many of the concepts discussed are applicable during both good times and bad.
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| | | | We all hear, and most of us say, that the pace of change in healthcare is quickening. That means that the pace of required decision-making is increasing, too. Unless, that is, you want to take the “default” route. That’s the one is which you let someone else make the decisions that impact you; you’re just along for the ride. Of course, playing a bit part in scripting your own future isn’t the smart route to stardom. But despite your own best intentions, perhaps it’s your medical group’s governance structure that’s holding you back.
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| In fact, it’s very likely that the problem is systemic. The Medical Group Governance Matrix introduces a simple four-quadrant diagnostic tool to help you find out. It then shows you how to use that tool to build your better, more profitable future. Get your free copy Free.
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| | | | Whenever you're ready, here are 4 ways I can help you and your business:
1. Download a copy of The Success Prescription. My book, The Success Prescription provides you with a framework for thinking about your success. Download a copy of The Success Prescription here.
2. Be a guest on “Wisdom. Applied. Podcast.” Although most of my podcasts involve me addressing an important point for your success, I’m always looking for guests who’d like to be interviewed about their personal and professional achievements and the lessons learned. Email me if you’re interested in participating.
3. Book me to speak to your group or organization. I’ve spoken at dozens of medical group, healthcare organization, university-sponsored, and private events on many topics such as The Impending Death of Hospitals, the strategic use of OIG Advisory Opinions, medical group governance, and succeeding at negotiations. For more information about a custom presentation for you, drop us a line.
4. If You’re Not Yet a Client, Engage Me to Represent You. If you’re interested in increasing your profit and managing your risk of loss, email me to connect directly. |
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