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| Dear Friend,
The coronavirus has closed their office doors, but the U.S. Department of Justice is still prosecuting healthcare crimes and extracting painful settlements.
In fact, it's the subject of this past Monday's blog post, “Free With Purchase” May Sell Cosmetics, but “Free With Referral” Is a Bad Marketing Idea. Follow that link to the blog or just keep reading for the rest of the story.
Last week, the DOJ settled a case involving what might be described as a twist on the "free with purchase" promotion so popular with regular merchants, "regular" in the sense of not having anything to do with healthcare. Here, the allegations were "free with referral."
In the case at point, the allegations were that the defendant physician, Mubashar Choudry, M.D., a cardiologist who treats patients for peripheral arterial disease in Maryland and Washington, D.C., and three medical practices with which he's associated, Washington Cardiovascular Institute, Advanced Vascular Resources, and Washington Vascular Institute, performed free "ankle-brachial index" tests on the patients of other physicians and allowed those physicians to bill for the procedures, thereby providing remuneration in exchange for referrals.
On April 17, 2020, the DOJ announced that Dr. Choudry, and the three medical practices have agreed to pay the United States $750,000 to resolve the underlying False Claims Act allegations that they knowingly billed Medicare and TRICARE for claims in violation of the Anti-Kickback Statute ("AKS"). As mentioned above, the defendants allegedly induced patient referrals by providing ankle-brachial index testing on patients under agreements with the referring physicians but without collecting from the physicians the fair market value for the tests.
As readers are well aware (right?), the AKS prohibits the knowing and willful payment of any remuneration to induce the referral of services or items that are paid for by a federal healthcare program.
Kickbacks can take many forms, from good old cash in a bag, to free rent, to undervalued services (e.g., the so-called company model of anesthesia services problem), to, well, tests that someone else can bill for.
One final point, one that falls into the category of "last, but not least" - the settled allegations arose from a whistleblower action brought by Steven Pringle, a former sales and operations employee of the practices, under the False Claims Act, which permits private parties to sue on behalf of the government for false claims and to receive a share of any recovery.
"Who'll ever find out?" is a question that many physicians ask themselves when hatching too-clever plans. The answer, of course, is your own staff.
In the Choudry settlement, the "why" for the whistleblower probably includes the fact that he's about to receive a check for his share of the government’s recovery. |
| | Newsflash: Business Life In the Time of Coronavirus - Part 5
As discussed in this video, the coronavirus crisis, in fact, any crisis, is like a magnifying glass. It shows the best and the worst of your business structure and practices.
Many underlying defects can be seen as symptoms of underlying group structural and governance problems. They can be corrected.
Of course, other first order problems are a result of events outside of your control.
But even so, you’re not powerless.
This video introduces a tool you can use to thrive in an uncertain future.
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| | Tuesday - There Are Few Do Overs in Deals
Watch Tuesday's video here, or just keep reading below for a revised, more polished transcript: |
| I want to talk with you today about "do overs." The fact is that in many cases, medical groups don’t get a "do over."
I’m heading into the office this morning. A few minutes ago, I realized that I left my cell phone at home, so I turned around and went back to get it. I’m sure you’ve done the same thing more than once. I know I have.
But in terms of many, not all, but many of the decisions that medical group leaders or practice leaders, even if it’s a solo practice, have to make, there’s no "do over" possible.
For example, maybe it's a deal in which you're putting together a venture in which the other party is going to be billing for you. Is that something that will get you into significant compliance issues later? (Often the answer is a resounding "yes.")
Or, for example, maybe it's making a decision to assign a physician to a work at some new location, when no thought was put into your ability to do so when crafting that person’s employment contract. Will that later come back and result in a multi-million dollar lawsuit? (It has.)
These are just the equivalent of the old carpenter rule of “measure twice, cut once.”
I understand that sometimes, in the heat of things, deals move quickly, and people don’t want to slow down and do the proper thinking. I understand that sometimes there’s a strange belief that not vetting a deal up front will save money, when the reality is that it can cost you millions. You’re a hero when you saved the group $20,000 up front. You're a goat when it later ends up costing the group $5 million.
Sure, in some instances, it’s possible to turn around. You’ve gone down the wrong road, so turn around and go back.
But in many instances, that’s not possible.
The better rule, the safer rule, the simpler rule, the sort of quick-and-dirty heuristic, is to actually plan up front. Slow down, take enough time to make sure you have the right advice. Make sure that you’ve considered as many of the issues as possible. And then make your decision.
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| | Wednesday - Hospital Sues Medical Group. Medical Group Returns the Favor. Both Likely Lose.
Watch the video here, or just keep reading below for a slightly polished transcript:
At first I couldn’t believe my eyes.
It seemed like a plot from the old Divorce Court TV show. But no, it wasn’t a battle of the spouses over the failure of a marriage, it was a battle of a hospital and a medical group over what appears to be the failure of an exclusive anesthesia contract.
The Marriage
Trinity Health, a not for profit, Catholic healthcare system, operates more than 90 hospitals across more than 20 states.
Anesthesia Associates of Ann Arbor, also known as “A4,” is the largest anesthesia group in Michigan.
Trinity and A4 are parties to an exclusive anesthesia agreement that covers six of Trinity’s Michigan facilities. That contract apparently has provisions barring Trinity from soliciting the employment of A4’s anesthesiologists and CRNAs.
And, A4 apparently has covenants not to compete in its agreements with its anesthesiologists and CRNAs.
The Breakup
Earlier this year, A4 terminated its payer agreements with Blue Cross Blue Shield of Michigan and with Provider Health.
As a result, In July, Trinity sued A4 in federal court alleging that the terms of the exclusive anesthesia contract between them requires A4 to remain in network.
Additionally, Trinity’s lawsuit seeks to enjoin A4 from enforcing covenants not to compete with its anesthesia providers, whom, it appears, Trinity began courting so that it could employ them.
The other aggrieved spouse, I mean, party, A4, then filed suit in state court against Trinity alleging that the hospital system ignored the non-competes in the agreements between A4 and its anesthesiologists and CRNAs as well as non-solicitation provisions in Trinity’s agreement with A4.
Just as in divorce cases when spouses argue over child custody, this fight over who has “custody” of the anesthesiologists and CRNAs has an uncertain ending for the parties. (However, we can be sure that the divorce lawyers, I mean, trial lawyers, are going to come out okay.)
The Judgment
But no matter the ending, we can extract some valuable lessons from the overall dynamic for your benefit, no matter what medical specialty you’re in.
1. Covenants not to compete, in jurisdictions in which they are enforceable, remain powerful tools. However, they have their limits. They work best within an overall system of protection.
2, Non-solicitation provisions in agreements with hospitals also remain powerful tools. They, too, have their limits. And, they work best within an overall system of protection.
3. No contractual provision is perfect and will always be enforced. This is especially the case with restrictive provisions such as covenants not to compete. And, as medical groups grow larger and control more market share, it may be more difficult for them to effectively enforce restrictive covenants. This is either bad news or great news depending on whether you’re doing the restricting or the soliciting.
4. Lawsuits aimed at enforcing covenants not to compete are likely most effective when brought against the individuals who agreed to them, not a third party. That’s not to say that separate non-solicitation provisions don’t form the basis for other legal action.
5. In light of the Trinity/A4 dispute, agreements to remain in network should be redesigned from another angle. There are at least several others.
6. Unless considered during the exclusive contracting process, medical groups can become uncompensated recruitment agencies. There are strategies to prevent this.
7. Suing the hospital with which you hope to maintain a relationship will probably be as effective as filing a divorce action to save a marriage. Sure, it might be a wake-up call, but more likely it’s a permanent parting of the ways. The more valuable time for action is in the strategy and negotiation phases as well as in regular and purposeful ongoing communication to keep the love alive.
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| | Thursday - Business in the Time of Coronavirus - Part 3 |
| Listen to the podcast here, or just keep reading for the transcript.
Here’s the third in our short actionable business advice series, Business in the Time of Coronavirus, Part 3.
Here are a few suggestions that are immediately actionable:
1. Push to collect, collect, collect. You likely have significant A/R that should have been collected. Get it collected now. If you use a third-party billing service, become the squeaky wheel, and get them to take massive action, now.
2. If you haven’t already, check out CMS’s new process for advancing Medicare payments. It’s administered on the MAC level. Check out your MAC site.
3. Apply for the new, special SBA loans (PPP, EIDL) for traditional SBA loans, and for commercial loans if you need them. Do that now!
4. I’m working with other clients to negotiate temporary financial support (there are various forms of support) from hospitals. It raises issues of rocking the boat with hospitals, so it must be considered very carefully. But, it is something to consider.
5. There is some possibility, however slight, that (if you have one) the group’s general liability policy could provide coverage under their business interruption or other provisions. Although it’s a long shot, it pays to get creative and see if claims might exist.
6. Obviously, other groups are doing what lots of businesses both inside and outside of healthcare are doing, which is reducing payments to owners as well as to “rank and file” personnel, to in essence, “self-finance” over the hump. Consider that for yourself.
7. Push for pre-payments from commercial payors in the same manner as the CMS prepayment plan. Some now have formal programs. In essence, it’s like selling a “gift certificate” to be redeemed in some manner against future claims.
Those are all short-term ideas. But, as I mentioned in Part 2 of this series, use today’s experience to begin solving the long-term governance and structural problems that have come to haunt many medical groups.
As always, contact me if you have any questions.
Stay well. Stay strong. Stay strategic.
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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 here.
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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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