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| Dear Friend,
Compounding kickbacks.
That's the subject of this past Monday's blog post, Compound Drugs: Miracle Cure Or Kickback Lure? Follow that link to the blog or just keep reading for the rest of the story:
It’s the middle ground between light and shadow, between medical science and stupidity, and it lies between the pit of man’s desires and the summit of his bank account. This is the dimension of disintegration. It’s an area which we call the Indictment Zone.
Gary Robert Lee, Krishna Balarma Parchuri, and Jerry May Keepers. Christopher R. Parks. Three doctors and a former lawyer. The stuff of dreams compounded, so it is said, with a heavy dose of dreams of stuff.
Compounding pharmaceuticals, specific drugs for specific patients, offers tremendous benefit. The problems arise when the benefit is for the prescribing physician. Then, as Drs. Lee, Parchuri, and Keepers, and Mr. Parks, might attest, that is, if they elect to testify in their own defense at trial, we’re dealing with analyses under the federal Anti-Kickback Statute (AKS) and state law counterparts.
In a case currently winding its way toward trial in the U.S. District Court for the Northern District of Oklahoma, Lee, et al., are alleged to have engaged in a host of criminal acts centering around a compounded prescription scheme.
Lee and Keepers are charged with conspiracy to commit health care fraud. Keepers and Parchuri are also charged with soliciting and receiving illegal bribes and kickback payments. Additionally, Parchuri is charged with obstructing the criminal investigation into the health care offenses.
According to the indictment, beginning in 2012, Parks and Lee, who controlled several compounding pharmacies, conspired to pay kickbacks to physicians to induce them to write expensive compounding prescriptions to be filled at the controlled pharmacies.
As a part of the conspiracy, the government alleges that the kickback-receiving physicians were provided with pre-printed prescription pads that listed compounding formula choices; physicians checked a box and then faxed the form directly to the associated pharmacy – no prescription was handed to the patient for him or her to take to a pharmacy of choice.
Claims for payment for the compounded drugs were submitted to federal health care programs as well as to private payors, and the proceeds allegedly split among the defendants using a variety of methods.
The government alleges that Parchuri received up to $50,000 a month in exchange for writing those prescriptions, and that over time, Keepers solicited and received more than $860,000 in kickbacks and bribes.
The indictment claims that kickbacks were disguised through sham agreements, including purported pharmacy and university study “medical directorships” and “consulting physician” agreements, as well as via intermediary limited liability companies.
As always, note that allegations and indictments are charges only and not convictions. The defendants are innocent until proven guilty.
However, defending against charges such as these is mindbogglingly expensive. At least one of the physicians defendants had replacement counsel appointed for him by the court because he could no longer afford to pay for his own defense.
If convicted, conspiracy to violate the federal anti-kickback stature carries a possible maximum sentence of five years in prison and a $250,000 fine. In addition, violation of the anti-kickback statute itself carries up to 10 years in prison and a $100,000 possible fine. A conviction of health care fraud without injury or death also carries a possible maximum of 10 years in prison, but if resulting in injury or death, the maximum penalty climbs to 20 years or life in prison, respectively.
Compounded drugs are valid treatment. Prescribing them is legal. However, accepting (or paying) kickbacks to prescribe them is a crime.
Seems simple, but each year, no, each week, we’re reminded that “simple” isn’t much of a deterrent to stupid.
There are many legitimate ways for physicians to increase their practice income. They include, depending on state law, investments in compounding pharmacies and the direct dispensing of pharmaceuticals. But any deal must be structured in compliance with the anti-kickback statue. And then, of course, also in compliance with other applicable laws, from Stark to state law considerations.
Just because some other party to the deal tells you that a deal’s been vetted by their lawyers and is “legal,” don’t bet on it. Vet it through your own counsel and assess your own risk. As in carpentry, measure (assess) twice, cut (do the deal) once. Or not do the deal – you get the idea.
After all, that other party won’t be paying your fine or doing your time. |
| | Tuesday - Success in Motion Video: You Get One Opportunity Not to Second Guess
Watch Tuesday's video here, or just keep reading below for a revised, more polished transcript: |
| You’ve got a tough decision to make. You gather the facts. You think quickly about the various strategies that are open to you. You choose one. And, you act on it.
And now, if you’re like most people, you start second-guessing yourself. Or if you’re a medical group leader, you have people in your group second-guessing you. If things didn’t turn out as expected, you should have done this, you shouldn’t have done that, you acted rashly – blah, blah, blah and so on.
Well, it wasn’t their job to make the decision, it was yours. Are all decisions correct? No, but the decision was the decision.
What does second-guessing do? It does nothing about the decision already made. Perhaps it informs you about decisions to be made in the future.
But, second-guessing yourself about a decision already made is purely destructive. The impact is to inhibit you, to retard you of the ability of making decisions in the future. So stop second-guessing yourself. Pull a lesson from it – that’s one thing. But you can’t beat yourself up over a decision already made.
But there's another far too common medical group phenomenon. It’s not second-guessing by the leader, it’s a related form of second-guessing by the rest of the group. It's when somebody in the group undermines and badmouths the leader or leaders for the decision made. He or she runs off to hospital administration (in respect of a group that has a contract with the hospital) to express that they have no faith in the group leader’s strategy, or in the group leader’s ability to lead.
Almost always, this results in an undermining of the group itself, a weakening of the relationship between the group and the facility or the group and its contracting partner, which has bad consequences for all involved.
For those thinking about "leaking" as a strategy, it generally boomerangs back to affect you and the group itself.
For those groups who have people who undermine, my suggestion is that you get rid of them as fast as you can. They’re simply cancer within the group and that cancer has to be treated.
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| | Wednesday - Medical Group Minute Video: Hospitals Beg to Be Aligned By Physicians! – Rebroadcast
Watch the video here, or just keep reading below for a slightly polished transcript:
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| Over the past decade or so, hospitals have spent countless hundreds of millions of dollars “aligning” physicians.
This so-called alignment has included acquiring physician practices, employing physicians in states without corporate practice of medicine restrictions, and, in states where hospitals can’t directly employ, employment through captive medical groups or foundations.
Hospitals claim that the idea is to “coordinate care.” But the actual goal is to control cash.
More recently, though, there’s been an increasing tide of procedures flowing out of the hospital to outpatient facilities, chiefly to ambulatory surgery centers (ASCs). [If you haven’t already read my book The Impending Death of Hospitals, you should pick up a copy. You can get in on Amazon or you can download a PDF version for free on my website.
The notion is that as technology advances and as the safety of procedures in the ASC setting increases, more and more procedures are being added to Medicare’s list of approved outpatient surgery center procedures.
Because many if not all private payers follow Medicare’s lead on this, private payers, too, are pushing procedures out to ASCs because reimbursement is much lower and because outcomes are much greater: less chance of infection, more efficiency, happier patients paying lower copays and having much better patient care experiences.
And now we’re seeing something very interesting. In connection with my ASC work – my physician clients forming physician-owned ASCs – we’re seeing hospitals chasing those physician deals, asking, and sometimes begging, to be included as investors in the deal: They want physicians to “align” the hospital!
Hospitals understand that soon they will no longer be able to compete for many procedures that had been done on an inpatient basis and now and forevermore will be done on outpatient basis. They can no longer compete on the basis of having those cases performed in hospital outpatient departments (HOPDs) because reimbursement for the same procedure is up to 80% higher in HOPDs than in ASCs.
As a result, hospitals want to burrow their way into your ASC deal. But why would you want them to align with you? They’re simply after the control, and the profit, that they’re losing on the “hospital” side.
Many would answer that with, “Well, I want money from the hospital to help seed the ASC.”
But the bottom line is that if you vet the decision and the numbers in connection with whether it makes sense to form an ASC – and it does – why do you need even a million dollars from a hospital when in a year or two you could potentially be pumping out two million a year in facility fee profits without them?
Yes, it might be a short-term gain. But “hospital as co-owner” is usually long-term pain.
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| | Thursday - Podcast: The Looming Horrible Impact of FMV on Physician Compensation |
| Listen to the podcast here, or just keep reading for the transcript.
Thinking more about the impact, the looming impact, the horrible impact of this whole notion of fair market value and compensation and how it is going to gut physician income. I do mean gut physician income. You like working for $150,000 a year if you’re a surgeon? Alright you think I’m crazy, but I’m not. Let me tell you why.
As more and more and more physicians become employed by hospitals and become employed by large groups that use industry wide surveys to set compensations, whether or not this has anything at all to do with compliance purposes, you’re going to see more and more references to things like the 50th percentile of ENT compensation in the central region of the United Sates.
And as more and more physicians become employed by organizations that are looking at the same service and there for reducing compensation to fit within those narrow bands, those narrow mediocre bands, the 50th percent bands, the 70th percentile you will see those percentiles dropping. I mean right now you have some outliers. Some high outliers, sure you have some low ones, but you got a lot higher ones. And what happens those high ones will be brought down to the median as the median goes lower and lower.
Well if you don’t like that future you have to do several things.
1. You have to push back against the way compensation is applied to you. I mean do you think you are a 50th percentile man or what? If the answer is no, then why are you accepting 50th percentile compensation.
2. You have to push back against the use of surveys.
3. You have to think that the future perhaps isn’t for you within a large organization. That is going to put a cap on your earning ability. It’s got to be outside of it. Fortunately, that ties in the fact that as I view the world of healthcare, the future of the world of healthcare, hospitals and any large physician employers don’t’ have a very bright future.
Go to the website. Get a free download of my most recent book, The Impending Death of Hospitals, and find out why.
So, have good look at work. Think about what you are being paid today and think about whether you want to whittle back down or whether you want to find your own future and be the one who’s perhaps whittling someone else. |
| | | | 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 here.
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Come listen to Mark speak in sunny
Las Vegas on January 17, 2020, at the American Society of Anesthesiologists Conference on Practice Management.
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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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