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| Dear Friend,
Refer a few patients and I'll give you $100.
Sometimes, I think it’s Groundhog’s Day. No, not the Punxsutawney Phil kind, but the Bill Murray movie kind, you know, when things keep repeating themselves over and over and over again. Like stupid kickback schemes. Even so, I’m not tired writing about them because, obviously, if physicians keep doing this crap, there’s a real need for what really amounts to a public service announcement. So, let’s start with my recommendation that you keep two things in mind: First is a shorthand definition of the federal Anti-Kickback Statute (“AKS”), a criminal law. It prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by Medicare and other federally funded programs. Remuneration is a broad concept – it can be made directly or indirectly, overtly or covertly, in cash or in kind. Second, are a few lines from the epic poem Marmion by Sir Walter Scott: Oh, what a tangled web we weave
when first we practice to deceive!In fact, if every physician simply remembered those two points, the Department of Justice would probably have to lay off a few hundred lawyers. (Just think of the joy that would bring you.) Let’s illustrate the importance of those two points by way of the story of N ew York physician, Klaus Peter Rentrop, M.D., who perhaps didn’t read about the AKS and who perhaps skipped taking an English literature class. In mid-September 2023, the U.S. Attorney’s Office for the Southern District of New York announced that it settled a civil fraud lawsuit against Dr. Rentrop. and his medical practice Gramercy Cardiac Diagnostic Services P.C. (“Gramercy Cardiac”) for paying millions of dollars in kickbacks to physicians and their practices for patient referrals. In connection with the settlement, Dr. Rentrop and Gramercy Cardiac admitted: - From 2010 through 2021, Gramercy Cardiac, at Dr. Rentrop’s direction, entered into rental agreements (the “Rental Agreements”) with more than 130 physicians and medical practices (the “Rental Practices”) under which Gramercy Cardiac leased a portion of the other practice’s office space, usually one or two exam rooms for certain days or hours each month. Gramercy Cardiac paid a total of more than $11 million to the Rental Practices pursuant to the Rental Agreements.
- From 2010 through 2021, Gramercy Cardiac, at Dr. Rentrop’s direction, entered into independent contractor agreements (the “Independent Contractor Agreements”) with more than 50 cardiologists (the “Gramercy-Contracted Cardiologists”) or their medical practices.
- Gramercy Cardiac sent the Gramercy-Contracted Cardiologists to the rented office space one or more times each month to see patients who were referred for an assessment by the healthcare providers at the Rental Practice. The Gramercy-Contracted Cardiologists in turn referred these patients to Gramercy Cardiac to undergo diagnostic tests and procedures, such as PET and SPECT scans.
- Gramercy Cardiac paid many of the Gramercy-Contracted Cardiologists a flat fee for each diagnostic test or procedure which the cardiologist referred to Gramercy Cardiac provided that the patient received the test or procedure at a Gramercy Cardiac location. These “per procedure” fees were the only compensation Gramercy Cardiac provided to the Gramercy-Contracted Cardiologists.
- Certain versions of Independent Contractor Agreements stated that the Gramercy-Contracted Cardiologist was to be paid not for the referrals to Gramercy Cardiac, but rather for the “[a]dministration and supervision” of the PET and SPECT scans to be performed at Gramercy Cardiac. However, in many cases, the Gramercy-Contracted Cardiologists did not, in fact, administer and supervise the PET and SPECT scans and were nonetheless paid by Gramercy Cardiac based solely on the number of tests and procedures referred.
- At the time the Rental Agreements were executed, it was understood that the Rental Practices would refer their patients to the Gramercy-Contracted Cardiologists. Indeed, Gramercy Cardiac calculated the number of hours per month that Gramercy Cardiac leased the office space based on the volume of expected patient referrals.
- Gramercy Cardiac calculated its return on investment from its Rental Agreements — which it internally referred to as the “efficiency” of the Rental Agreements — by comparing the revenue Gramercy Cardiac generated from the patient referrals to the payments it made to the Rental Practice.
- When a Rental Agreement’s return on investment fell below the minimum threshold, Gramercy Cardiac, at Dr. Rentrop’s direction, would often refuse to pay the Rental Practice the amounts due under the Rental Agreement. In addition, at Dr. Rentrop’s direction, Gramercy Cardiac physician liaisons advised Rental Practice physicians that if the volume of referrals to Gramercy-Contracted Cardiologists did not increase, rent would be decreased, or the Rental Agreement would be terminated. Gramercy Cardiac terminated a number of Rental Agreements because the return on investment through patient referrals was too low.
- When negotiating or re-negotiating the monthly rental payment to be made under a Rental Agreement, Gramercy Cardiac took into account the expected or historic return on investment based on the volume of patient referrals generated from the Rental Practice.
- The rental fees paid by Gramercy Cardiac under the Rental Agreements were in excess of fair market value for at least some Rental Agreements.
And what will the settlement cost Dr. Rentrop and his practice? - They’ll pay $4,510,678 to the United States government and, in regard to state claims, $1,989,362 to the State of New York, for a total of $6.5 million.
- As a form of security for the payments, Dr. Rentrop and Gramercy Cardiac entered into a Consent Judgment in the amount of $64,416,515, which may be enforced if they do not pay the required $6.5 million.
- Dr. Rentrop agreed to relinquish his ownership and control over Gramercy Cardiac by the end of 2023, and will pay a portion of the proceeds of any sale of the practice to the United States.
- He’s also indefinitely barred from working for any entity that bills federal healthcare programs, and has entered into a Voluntary Exclusion Agreement with HHS-OIG which prohibits him from, among other things, participating in Medicare, Medicaid, or other federal healthcare programs for five years.
Here’s an easy way of remembering what it appears Dr. Rentrop didn’t get. Don’t wait! Print out the following in credit card size and keep it in your wallet for frequent and easy reference:
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| | | | Tuesday -The Negotiations Have Already Started. You Just Don’t Know About It. - Success in Motion
Watch the video here, or just keep reading below for a slightly polished transcript:
Let’s talk about negotiation, one of my favorite topics.
I believe I’ve written posts on this before, maybe something to do with a hallway chat, the notion is that a hallway chat is part of the negotiation.
I want to hit harder on this.
Oftentimes we have an incorrect understanding of what negotiation is, what it consists of.
We think it’s the formal face-to-face, or these days, the formal discussion over a Zoom call, to hammer out the provisions of some agreement, say between your group and a facility.
But the reality is that every interaction members of your group (and certainly you if you’re the group’s leader) have with a facility and its leadership, over perhaps the course of years, is an element in an ongoing negotiation that you just don’t understand is occuring.
How you present yourself, how you respond to questions, how you respond to proposals that are perhaps cloaked as little off-hand comments like “hey we’re thinking of starting the ORs at 7 in the morning, not 7:30,”, or “gee do you think we could get a little more coverage on Saturdays?” These aren’t just “how’s the weather” type comments. These are poking and prodding to see what kind of response you’re going to give.
And even if they’re not, your response and your comments in these situations will, if you are dealing with someone who’s an experienced negotiator, be remembered and will probably be documented and eventually will be used against you.
So this means two things for you.
1. You can heed my advice and watch what you say and how you respond – a purely defensive posture.
2. But you can also use this sort of strategy offensively to plant contract suggestions in situations that aren’t formally contract negotiations.
Think how you can use the broad scope of negotiation defensively and think how you can use it offensively.
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| | Wednesday - The Devaluation of Value-Based Billing - Medical Group Minute
Watch the video here, or just keep reading below for a slightly polished transcript: "Value based billing" remains dominant in the medical industry news. Mostly, though, it’s a lie because value is determined by the customer, not by some bean counter at CMS. Sure, CMS may be paying the bill for Medicare patients, but the patients are the actual customers and only they can assess whether value was truly delivered.
Yes, I know. I can hear you out there, the third guy from the left, wearing khakis and a white lab coat, muttering, “But, CMS is paying the bill." And, of course, that’s the problem. Once organized medicine (read that as the letters A, M and A) bought into the concept of Medicare in 1965, physicians opened the doors to government meddling. After all, if the government is going to pay, the government is going to demand something, and something more and more and more, as the price for payment. To quote President Reagan, "The nine most terrifying words in the English language are, 'I'm from the government and I'm here to help.’”
When you hear the words “value based” in connection with healthcare, just view them as a flare in the night warning you that within the next moment or so you’ll hear something that sounds socially useful but which has nothing, or very little, to do with anything other than figuring out how to pay you less or control you more. This is especially true if the comments are coming from an “economist,” because economics is the study of who gets what in the actual world, while today's so-called “economists” are those who’re preaching who should get what in their imagined world. Unfortunately, these folks are often paired with those who have guns, i.e., the government, to enforce their nonsensical theories.
If you don’t believe that value is determined by the patient, here’s an interesting story, as noticed on the web from the site of Florida TV station WPTV.
An expectant mother, Paula D’Amore, was in labor and on her way to Boca Raton Regional Hospital with her husband. They were just a wee bit late, as the baby popped on out in the D’Amore’s car in the hospital parking lot with help from Mr. D’Amore followed by some assistance from a few nurses who came on out to their car.
The value issue?
Well, the hospital decided to bill Ms. D’Amore the full charge of the use of its delivery room, over $7,000, even though neither Ms. D'Amore or her baby were ever in the delivery room. (Attention hospital CEOs: neither car nor parking lot equals delivery room.)
Another local news outlet, the Sun-Sentinel newspaper, reports that the hospital’s vice president for marketing said the hospital felt that the delivery room charge was a suitable bill. Perhaps the paper got the guy’s title wrong, because it seems more like “VP of sales prevention” than of marketing.
The point, of course, is that the value of the services received by Ms. D’Amore can only be assessed from her point of view, not the hospital’s. Even more ridiculously, is to assume that someone over a thousand miles away, as in Washington, DC, can determine value.
Yes, the payor can dictate the amount that they will pay. But at least let’s be honest about this and acknowledge that that amount has nothing to do with value. Of course, saying “screw you, this is what we’re paying and this is the data you have to give us before we’ll give you even that” isn’t politically correct, and these folks are if anything, politically correct.
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| | | Listen to the podcast here, or just keep reading for the transcript.
I found an old lock in the garage. Now, what's the combination?
When we talk about joint ventures in healthcare, we tend to think of illegality, as in "suspect joint venture," the pejorative term crafted by the OIG (that is, by the Office of Inspector General of the U.S. Department of Health and Human Services, the agency charged with enforcing the federal Anti-Kickback Statute) to indicate an arrangement that should be carefully scrutinized because it's likely an illegal kickback in disguise.
But that's the case only when there's remuneration, overt or (more likely) covert, within the structure or the operation of the joint venture. That is, there's a benefit, or an opportunity to gain a benefit, conferred on the party in a position to refer patients.
But there are many other instances in which healthcare providers can create joint ventures quite legally, even arrangements between those in a position to refer and those in a position to receive referrals.
In many instances, it's these combinations that will allow physician groups to remain independent of hospital control.
And, it's also a way for groups or other entities to partner without a complete merger, a way to remain independent and in control of your destiny.
The key is to tread carefully and to engage in compliance focused planning as a part of your larger joint venture strategy, not as an "add on" performed after your deal is, or so you thought, designed.
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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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| | | | 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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