Healthcare Law I
1/9/2012 4:22:00 AM
- Principles from Better, A. Gawande, that apply to practice of healthcare law:
- PPACA = new healthcare reform act
 1) diligent
 2) doing right
 3) ingenuity
I. Intro to Healthcare System (Players, Payors, and Policers in the U.S. Healthcare
System)
- US used to be the only developed nation in the world that didn’t have a “universal
healthcare” system; government did contribute to Medicaid, Medicare, VA, CHIP children’s
health, etc. (about 27% of people’s healthcare)

60% of country received healthcare insurance from their job
 (16%) A lot are uninsured: some can’t afford it & some opt against it
- Through the system  person gets sick; goes to primary care physician; then specialty
physician; then hospital or testing facility; then pharmacy; then person gets better
- Players in system  consumers on the bottom, then providers, then payors, and finally
regulators/enforcers

Consumers - patients, sick/injured people, etc.
o Important issues: looking for affordable, quality care and access to care
(i.e. location, finances, discrimination, etc.)

Providers - hospitals, specialty hospitals, ASC’s (ambulatory surgery centers multi-specialties and single specialty), public health clinics, mental health
centers, physicians, diagnostic imaging providers, ESRD facilities (end-stage
renal disease), nursing homes, etc.
o Physicians:
 Primary Care physicians (who can always refer)
 Family Practice Physicians
 Pediatricians
 OB’s

Mid-level providers
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Nurse practitioners, PAs, etc.
Specialists
 Referring:
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Neurosurgeons
Cardiologists
Orthopedists
Oncologists
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 Radiologists (may refer - interventional)
 Anesthesiologists
 Pathologists
Payors - Medicaid, Medicare (who do have to pay a premium), VA, private
insurance (BCBS & deductibles, co-pay’s, etc.), patients, workers’ comp
programs, lawsuits (damages), charity care (no payment), etc.
o Almost 50% of MS is on Medicaid
o Important issues: low cost, value for the amount paid, etc.
Regulators - government is the big healthcare regulator
o Important issues: compliance, quality control, to ensure no
discrimination, no fraud
o There are many state & federal government agencies that regulate
hospitals
o Major regulatory schemes:
 CON laws - cert of need
 EMTALA
 HIPAA - privacy law
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 Dermatologists
Non-referring:
ERISA - pension plans, group insurance plans
UHCDA - uniform healthcare decisions act about informed consent
STARK - Pete Stark - involving referrals; “anti-self-referral law”
ANTIKICKBACK STATUTE - paying for referrals
FCA - false claims act
Interrelationships 
o Physician/hospital relationship
 Sometimes physicians are employees of the hospital (usually nonreferring doctors), but mostly they are not
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Medical staff membership - loose affiliation of all the doctors that
have been granted privilege to practice in the hospital
 Credentialing process must be completed in order to
become a part of the medical staff
 Documents (bylaws, fair hearing plan, etc.)
 Peer Review
Doctors can put patients into hospital = referral to hospital
Patients go into hospital voluntarily (i.e. ER doc)

If doctor is employed by hospital, doc gets salary but no direct
money from patient
 If not an employee, doc gets paid a “professional fee” and
hospital gets paid “technical fee” for aspirin, bed usage, etc.
2010 Healthcare Reform
Brief History
The Patient Protection and Affordable Care Act (PPACA) - March 23, 2010
The Health Care and Education Reconciliation Act - March 30, 2010
Key Implementation Dates:
– Immediately after passage
– September 23, 2010 (6 month mark)
– January 1, 2011 and annually thereafter
– Other dates as designated in implementing regulations
Key Provisions for 2010-11

Grandfathered Plan Provisions
o Any plan that existed on the date of passage 3/23/10 could stay in effect,
sort of but not absolutely (can't be grandfathered into everything)
o Grandfathered status could be forfeited by these plans
 If after 3/23/10 wants to eliminate all coverage for a particular
condition (want to not cover diabetes anymore, etc.)
 Could not increase co-insurance amounts
 Could not increase annual benifit amounts

There is no way they could stay the exact same, eventually would
lose grandfathering

Pre-Existing Conditions - Can no longer impose on people under 19, after 2014
can't do this at all (any condition that was present before coverage whether or
not diagnosis had occurred)
o Under 19 - Can't impose on people, can't use PEC (after 6 months)
o Everyone - After 2014
-Lifetime Maximums - No lifetime maximum on ESB 6 months after passage
 What are essential health benefits - ESB, who the hell knows
- Annual Maximums - on ESBs are being phased out - 4 phases
 PPACA
 Interim Regulations
-Dependents - now goes up to age 26 (children, step, foster, adopted)

Can't increase premium for adult child, but can charge more if you add one to
policy
-Rescission of Coverage - retroactive cancellation of a policy

You can't rescind policies anymore except in case of fraud or material
misrepresentation of facts

You can still cancel prospectively, you just can't rescind (ask for benefits paid
back)
 You can still cancel for unpaid premiums
-Post-2011 Effective Provisions

Individual Mandate - by 2014 all citizens are required to purchase minimum
essential coverage (term of art)

Exceptions
o American Indians
-
o Incarcerated Persons
o Those with religious objections
o Those with financial hardship (below tax filing threshold) $18700 per
couple in 2009
Penalty for non-compliance with individual mandate
2014-$95 per person or 1% of taxable income
2015-$325 per person or 2% of taxable income
2016-$695 per person or 2.5% of taxable income
After 2016 it will increase by a cost of living increase
A maximum of 3 times the flat rate for families
-Health Benefit Exchange (every state must have one)
o Like Travelocity for insurance
o Supposed to be user-friendly and easy (is this run by the same government,
haha)
o UT, MA, MI already have one
o It will offer 4 levels
 Precious metals - Bronze, Silver, Gold, and Platinum (60, 70, 80, and
90% coverage)
 They have to be qualified health plans (not sure what this means)
 Available to individuals and small groups (1-100 people)
-Expansion of Medicaid
-It will cover people under 60 with incomes under 133% of federal poverty level
- Add 14,000,000 new medicaid
- The gov't will pay the first 2 years of all additional cost (for new people)
- After this they will cover 90%
- All new beneficiaries will receive a package equivalent to something bought
through the exchange (probably bronze or silver)
-Tax/Fee Related Provisions
-
Medicare (2013)
o Payroll Taxes (has always been 1.45 %, now it will be 2.3%)
o If you make over $200,000 as a single or $250,000 as a couple there will be
an addition 3.8% tax on unearned income
-Industry Specific Revenue Raising Provisions
- Insurance - $8 billion fee due to the gov't, by 2018 it goes to $14.3 billion
- Pharmaceutical - $2.3 billion, 2018 $4.1 billion, 2019 back to $2.3 and stays
- Medical Device Mfrs. - Excise tax of 2.3%
-Impact to Employers - generally they will have to provide affordable coverage to employee
and if they go to exchange and get a credit they get penalized
- Small employers will get credits if they offer health insurance to employees
- Middle sized want get anything really
o For instance, if 1 employee goes to exchange and receives credit they receive
$2000 penalty
- Large employers will get penalized if they don't offer insurance affordably
-Cost
- $938 billion over ten years (CBO)
o Covers additional 32 million by 2019
o Leaves 23 million uninsured
o Provisions effective various times from NOW through 2019
Tension over public option - Senate didn’t want to include a public option & the House
firmly wanted it; House did adopt Senate’s version with a few changes
*March 23, 2010 - President Obama signs into law the Patient Protection and Affordable
Care Act
o Very important date since certain provisions must happen 6 months &
also 1 year after this date
- Public option = government-paid insurance

PPACA doesn’t have a public option, but instead created a state-based American
Health Based Exchange
- Changes to Insurance industry - no pre-existing conditions anymore = insurance
companies can’t deny coverage on this basis anymore

People will now avoid paying premiums & wait until something bad happens
until procuring insurance
o What is the long-term effect on private insurance companies? economic
problems
CON Law
1/9/2012 4:22:00 AM
- Mornings on Horseback, David McCullough
- Cordato  thinks CON laws should be repealed & that there should be a free market in
health care

Are CON laws productive/destructive?
What is the CON Law and Why is it here?
- 1974: National Health Planning and Resource Development Act
 Intent to have major healthcare services/equipment pre-approved
- Legislative intent:
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Insure quality healthcare
 Insure access to indigent population, etc.
- 1987: government repeal of Act
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followed end of cost-plus reimbursement
15 states dropped CON programs
35 (including MS) still have them
CON Process Governed by:
- MS State Dept of Health
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State Health Plan
o Issued each year, effective 7/1
Parameters for Obtaining CON
- CON granted only if Dept determines:
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Need exists
Other specific/general criteria are satisfied
o I.e. X amt of MRI scans per year; X amount of people in order to have an
open heart area, etc.
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Indigent care
o “R/ amount of indigent care” is defined by MDOH as: that amount
comparable to the amount of indigent care offered by other providers of
the same service in the same geographic area
 What about being around providers that refuse to provide
Medicaid services? (especially MS)

Access to indigent patients
MCA §41-7-191 (sets out everything that needs CON approval)
- Requires CON approval for any of the following 10 types of activity:
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1. Any expenditure that exceeds the “capital expenditure threshold,” as defined
by MDOH
o $1.5M for major medical equipment
o $2M for anything else
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2. Construction, development, establishment of a new health care facility
o “Health Care Facility” = hospitals, nursing homes, comprehensive medical
rehab facilities, ambulatory service centers, home health agencies
o NOT doctors’ offices, dentists’ offices, diagnostic testing facilities

3. Relocation of a health care facility or portion thereof, or major medical
equipment
o Unless within a mile; AND
o Costs less than capital expenditure threshold
 What is a “portion” of a health care facility/service?
 CON Manual says wing, unit, service, or beds = parts of a
facility

4. These always require CON:
o Open heart surgery, cardiac catheterization, skilled nursing beds, home
health services, MRI/PET scanners* (exam Q), radiation therapy, ASC (if
single specialty), LTAC service, invasive diagnostics, swing beds, etc.
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8. Relocation of one or more health services (within mile, under cap, etc.)
6. Acquisition or control of “major medical equipment” (if your replacing a new
one since old one worn out, then you don’t need CON if bought at FMV)
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7. Change in ownership
10. Any capital expenditure b or on behalf of a health care facility not covered in
1-10 above
o Can’t have someone else build for you, and then you buy from them trying
to avoid CON laws
To obtain CON:

Satisfy 4 general goals of State Health Plan:
o To prevent the unnecessary duplication of health resources
o To provide cost containment
o To improve the health of MS residents
o TO increase the acceptability, accessibility, continuity and quality of
health services
Specific Standards and Criteria:
- Open Heart Surgery  MUST show you have MIN pop of 100K people; 150 surgeries per
year by end of 3d year; other providers in area doing 150 surgeries per year for 2 years;
staffing levels of personnel and location; data maintenance

The way to show required amount of surgeries hospitals usually: 1) bring in
other doctors with established client base, or 2) bring in doctors that sign
affidavits to state he will refer at least X amount of heart surgeries to this
hospital per year
- MRI Services/Equip***  MUST show 2700 procedures per year by end of year 2;
existing units must be performing at least 1700 procedures a year; full range of diagnostic
imaging modalities available; staffing levels personnel and location; data maintenance
- Acute Care Beds  3 “bed need formulas:” 1) counties with no hospital - state average
below is the base; 2) counties with a hospital - Average daily census of existing hospital in a
county (how many beds are occupied daily): ADC + K * √ADC; 3) counties with rapidly
growing populations - if county is projected to grow at least 10% & has population of
140,000 & there must be fewer than 3 beds per person
 MS 1.72 bed per 1000
 K = 2.57 (confidence factor)
- ASC’s  1000 surgeries per operating room per year; population base of 60,000 within 30
minutes; existing facilities in ASPA have done 800 surgeries per room per year in most
recent year; economically viable in 2 years; physician support within 25 miles; other
services available

Haven’t granted one of these if several years since no facility existed then when
it was passed
- St. Dominic v. MSDOH and Methodist (1998) 
1) Can a new hospital be a relocation when nothing of substance is being
relocated?
o MSSC said DOH has authority to adopt its own definition of terms
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2) Can designation of “relocation” eliminate the statutory requirement of proof
of need for the project?
o Still have to meet the need requirement
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3) Is there substantial objective evidence in the record of need for a new hospital
in Jackson?
o Not needed; but DOH wanted new hospital, so they created a new
standard of “any specific advantage” (i.e. anything good from new
hospital) -- BUT MSSC said this is not acceptable
o Methodist pointed to caring for the “indigent” in Jackson - but they
wanted to build it in NE Jackson (and they had by this time)
- St. Dominic v. Madison County Medial Center (2006) - St. Dom wanted to move beds, staff,
furniture, really “relocate”
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MSSC said NOT a relocation since you will be hiring new people, etc. - it would be
a New hospital
Methods to Satisfy the SHP’s “Need Requirements”
- “The MSDH may use a variety of statistical methodologies including, but not limited ot,
market share analysis or patient origin data to determine substantial compliance with
projected need and with applicable criteria and standards in this Plan.”
- Some sets of standards prescribe formulas for projected need
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Use prescribed formula
Use another methodology
o Recent MRI cases - no published decision
- Where there is no prescribed formula, a variety of methodologies have been approved by
the Dept and on appeal:
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Population calculations based on patient origin data
Sworn affidavits by supporting physicians
Reference to historical utilization and document growth of practices
-MSDH v. Natchez Community (1999) - HUGE holding
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“Unsupported statements by physicians do not constitute substantial evidence
upon which Department should grant CON”
o Significant deference give to MSDH on CON review
o Substantial evidence = “more than a scintilla or a suspicion”
General Review Criteria
- 16 general review criteria apply to every project - those with specific criteria and those
without
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Economic viability (making profit in third year, even a penny)
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Need, generally, for project
No significant adverse impact to existing service providers
o A shuffle of service already provided will not be approved
o State wanted to protect existing providers
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Quality of care (existing providers)
Others: staffing requirements, etc.
Procedure for Obtaining CON:
- Step 1: Notice of intent to Apply for CON (30 days before filing application)
- Step 2: File CON application with MDOH

CON applications considered on schedule of “review cycles”

Filing dates Dec 1, Mar 1, June 1, Sept 1
o Very important to file on right day to ensure the right state health plan
will apply; only hospital with an application in at that time versus others
trying to apply then, etc.

Filing fee
o Not less than $1250 or more than $75,000
- Step 3: Application must be “deemed complete”
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30 days from filing
 opportunity to submit additional information
- Step 4: Comment period
 30 days - letters accepted from affected parties
- Step 5: Department issues its “staff analysis”
 First indication of whether application will be approved or disapproved
- Step 6: “Affected parties” may request a hearing on the application
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Called a hearing during the course of review
Must be requested within 20 days after issuance of the staff analysis
The applicant may request a hearing IF the application is recommended for
disapproval
- Step 7: Hearing within 60 days of hearing request
 Presided over by hearing officer (employee of AG)
 Parties submit proposed finding with 30 days of transcript
- Step 8: Hearing officer’s findings/conclusions
- Step 9: State health officer announces the Department’s decision at the next monthly CON
announcement meeting
Appeals from MDOH
- First Appeal : Chancery Court
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Appeal within 20 days of MDOH Final Order
Applicant may appeal to Hind Co. or home county
Opponent may appeal only to Hinds Co.
Chancellor must rule within 120 days from Final Order of MDOH or MDOH
deemed affirmed
- Second Appeal: MS Supreme
 Appeal within 30 days from Chancery decision
 Oral argument granted if requested
- Standard of Review - same at both levels
- Timeline - usually around 273 days for Final Decision from MDOH; day 423 Appeal to
Supreme, sometimes can take a year just to wait at Supreme level
SO CON Law
- Pro’s: prevents unnecessary duplication; curtails free market/competition; increases
efficiency; decreases costs; and maintains quality
Con’s:
Health Insurance Portability & Accountability Act
1/9/2012 4:22:00 AM
Privacy Issues
- FL: Woman brings teenaged daughter to work at hospital. Leaves her unattended at
computer. Girl logs in, looks up patient phone numbers and calls people to tell them they’ve
tested HIV positive. One patient attempted suicide

Issues like the above situation lead to the need for privacy rules for medical files,
information, etc.
HIPAA: Background
- Enacted in 1996
- HITECH Act (in ARRA) February 2009

HIPAA must be complied with; government must inspect hospitals & audit to
ensure HIPAA is being complied with
- Intended to Protect privacy & security (how to protect electronic info, communications,
etc.)
- Enormous source of practice due to government’s current treatment of it
HIPAA’s Overall Goals
- Provide continuity & portability of health insurance benefits to people in between jobs
- Ensure security and privacy of individual health information (Only one you need to know)
- Reduce administrative expenses in the heath care system
- Provide uniform standards for electronic health information transactions
- pro
1. Who is covered?

Covered entities - determined by 3 Q test
o Does business furnish, bill for, or receive payment for health care in the
normal course of its business? (if YES, continue; if NO, not an entity)
o Does business conduct covered transactions? (exchange of electronic
healthcare info b/t payor and provider)
o Are any of those covered transactions conducted in electronic format?
I.e. anyone who takes Medicare/Medicaid must do so
electronically
o EX: hospitals, clinics, nursing homes, imaging centers, home health,
counselors, social services, labs, ambulance services, physicians, etc.


Business Associates: people or other businesses not a part of health provider’s
workforce who assist covered entity which involves exchange of patient
information
o I.e. outside billing company, lawyer, data storage company/facility
o ALSO covered under HIPAA; so they must have HIPAA compliance plan &
train their employees to comply with HIPAA
2. What is protected & when?

“Individually Identifiable Health Information” (IIHI)  anything about one’s
physical/mental health that is attached to name, SS#, phone #, address, etc.
o Can de-identify information & then it isn’t protected

“Protected Health Information” (PHI)
o Relates to physical/mental health
o Individually identifiable
o Created or received by covered entity
EX: medical records, billing information, prescriptions, patient
charts, ID bracelets, Different formats: (white boards, spoken,
emails, voicemails)etc.
 Even the fact that somebody has come to see them (leaving the
sign-in sheet out)
 Serious penalties under HIPAA if PHI is used for marketing
purposes
o HIPAA 18


BASICALLY, you may not do anything with someone else’s PHI - unless:
o HIPAA permits it; OR
o You have a valid authorization from that person (a “HIPAA-compliant
authorization”)
- Do you have CE (covered entity) or BA (business associate)? if NO, HIPAA doesn’t apply; if
YES, continue to next
- Do you have PHI? if NO, HIPAA doesn’t apply; if YES, continue to next
- Does HIPAA say you can release it? if NO, can NOT release it (unless authorization)

TPO (typical permitted releases) = treatment, payment, operations  hospital
can fax/send medical records & PHI (example of if HIPAA does apply, but can
release)
 Can send info to insurance company, medicare/medicaid, etc.
If your state law is more stringent then you have to go by that (like CA's scheme basically
supplants HIPAA, preemption, typically called a subpoena rule)

BUT: how much can you release?
o Minimum Necessary Standard
 Applies with every disclosure except:
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Treatment - when physician wants patient’s records,
should send everything
Law Enforcement Needs (some)
Authorization - can turn over all unless limited by patient

In every other circumstance, only turn over the
Minimum Amount necessary to satisfy order, etc.
Permitted Disclosures
- Treatment
- Payment
- Healthcare Operations: peer review processes, quality assurances, etc.
- When required by law: court order, etc. (BUT if patient has received notice of the
subpoena & has had opportunity to object, then documents can be released)
- To the patient (or his legal representative)
- With Valid authorization
EX: mother withdraws child from daycare due to learning another child was HIV positive in
the course of her work = no problem
EX2: nurse tells other mothers that other child with HIV positive = BIG problem
3. What duties does HIPAA impose?

Requires training of ALL employees on how to comply with HIPAA

Employee manuals must include notification of disciplinary action, termination,
etc.
4. What rights does HIPAA grant?

Patients’ rights  notice of privacy practices; inspect/copy PHI; request
amendment to PHI; request contact in particular manner; request restriction to
uses/disclosures; and receive accounting of all disclosures (up to 7 years)
o Entitled to know their rights; 30 days to inspect/copy their own records,
etc.
Authorizations
- The Covered Entity is required to obtain HIPAA complaint authorizations for uses and
disclosures of PHI not otherwise permitted
- HIPAA requires that certain information and statements be contained in the authorization
Enforcement
- HIPAA is enforced by Dept of Health & Human Services
- Complaint-driven process (investigations based on individual complaints; but now also
government-initiated investigations into compliance)

Can have complaints by patients, state AG’s, etc.
- CE must have a process to receive & investigate complaints
- Requires compliance plan
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Lose presumption of good faith effort if don't have
Have to have compliance/privacy officer
Patients' Rights Under HIPAA
o Notice of Privacy Practices
o Inspect/Copy PHI
o Request Amendment to PHI
o Request Contact in Particular Manner (ex. don't call my house (don't want
family to know yet that I am going to cancer doc))
o Request Restriction to Uses/Disclosures
o Receive Accounting of all Disclosures
ARRA (HITECH Act)
- American Recovery and Reinvestment Act (Feb. 17, 2009)
- Breach Notification Rules

CE’s must give notice to patient whose info has been breached - written letters
sent to those who information has been compromised

If breach affects 500+ patients, then CE must publish it to public (tv, paper, etc.)
o Must also give notice to HHS who puts it on their website
 “Incidental breach” = no financial harm, no harm to reputation, etc.
- Business Associate Compliance
- Mandatory Enforcement Actions
- Increased Penalties for Breach
- Damages to Individuals
- Required audits (HITECH)
- AG suits
- Penalties for Misuse of PHI by CE


Tiered penalty system under HITECH (from $5 - 50,000)
Top end penalty under HITECH - $1.5M per year (if deemed to be intentional
violation)
o Intentional has not been defined (discussion that if you didn't have
compliance plan you could be deemed intentional)
- Willful neglect - may also include CE who doesn’t have a HIPAA compliance plan (i.e. govt
now considers this a “willful neglect” mistake

Substantial fines

Jail time (up to 10 years)
Handout Hypo’s
Informed Consent &
Uniform Health Care Decisions Act
1/9/2012 4:22:00 AM
- 50% severely ill persons with an advance directive
- 12% of people whose physician participated in putting the advance directive together
- 80-90% physicians who were unaware of the existence of patients’ advance directives
Informed Consent

Arose from the Nuremberg trials - where Nazi’s performed medical
experiments/tests on prisoners

SO, idea arose that no one should have any medical procedure without giving
consent
- 3 elements of “informed consent:”


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1) Duty to warn patient or patient’s representative
2) Of all known risks of proposed surgery or treatment
3) So that patient or representative is in a position to make an intelligent
decision as how to proceed with surgery or treatment
- Consequences of failure to obtain informed consent

Unless it specifically follows elements, then any consent obtained is a tort =
battery (can lead to high damages)

There is an emergency exception in the US (i.e. must be danger of immediate
death)

Rule of Thumb  patient gets to say… always! (doctor may know better, BUT
patient says)
Exceptions to Consent Requirement
- Emergencies

Defined as “where treating physician using competent med knowledge that
proposed treatment is immediately necessary and that delay from obtaining
consent would result in death or serious bodily harm (life, limb, disfigurement,
or impairment of faculties,etc.)”
o UNLESS there’s an advance directive against proposed treatment
- Testing for Infectious Disease


Ex: AIDS, blood-born diseases
2 reasons:
o Either doctor or hospital needs to know in order to give appropriate care
to patient (safer)
o Doctor or hospital needs to know in order to protect other patients
Governing Law
- Miss. Code Ann. §41-41-3, et seq.
 Governs un-emancipated minors
- Modified by Uniform Health Care Decisions Act (UHCDA)


July 1, 1998 (after this date, “living wills” are no longer valid & recognized in MS)
Governs adults/emancipated minors
o Allows “Individual Instructions”
o Allows Powers of Attorney for Healthcare Decisions
o Allows Advanced Healthcare Directives
- Healthcare providers MAY decline to comply with an individual instruction or health care
decision for reasons of conscience or if it is contrary to a policy of the institution

Ex: Catholic hospital doesn’t believe in abortion ever & is allowed to decline to
comply with individual instruction
o Largely relies on individual hospital’s policies
- UHCDA provides immunity for healthcare or institutions acting in good faith and in
accordance with generally accepted healthcare standards
Big Q: Can the patient consent?
- 3 Key Categories of People:

Un-emancipated Minors (MS = under 18)
o Generally, if under 18, someone else must give consent for treatment
o Who can consent for a Minor? (oral or written consent) (must go from top
to bottom; if there is a guardian then if they don't consist then you don't
go to parent or sister, etc.)
 The minor’s guardian or custodian
 The minor’s parent
 An adult brother or sister of the minor
 The minor’s grandparent
 If none of the above, any adult who has demonstrated
“special care & concern” for minor and is available may


consent for the minor
Any female regardless of age/marital status can consent for
herself in matters of pregnancy, etc.
 Can also consent for her child, but not herself in other
matters not related to pregnancy
EXCEPTIONS where no informed consent is required: 1) alcohol &
drug treatment; 2) venereal disease; and 3) giving blood (if over
17)


If minor at least 15 years old seeks help from psychiatrist,
doctor can treat that patient without consent & doctor has
no obligation to inform parents, BUT he can tell parents
despite minor’s objections ((if he tells parents, it’s against
HIPAA & then how can he get paid?))
Adults or Emancipated Minors with capacity
o “Emancipated Minor” = person under 18 who is or has been married;
adjudicated by court as emancipated; adjudicated by court for purpose of
making healthcare provisions by court of competent jurisdictions
o Who May Consent?

Individual
 Individual instruction (to be documented)



Must have capacity; oral or written; may be limited
to take effect only upon specified conditions
(whatever patient wants)
Advanced Healthcare Directive (must be signed, dated &
witnessed to be valid)


Consent or refuse any treatment
Designate healthcare providers

Approve/disapprove of tests or life-sustaining
machines
 Artificial nutrition and hydration issues
Designated Agent for Healthcare Decisions
 Power of Attorney


Appoints Agent to make decisions
Must satisfy certain requirements of validity
o Writing; dated on date it was executed;
signed by patient; witnessed by 2 people or
notary; agent can’t be owner/ee of nursing
home where patient is living

Agents’ powers are limited in time & scope
o I.e. only takes effect when patient loses
capacity (ceases to be able to make decisions)
o Once patient regains capacity, agency ends
o Only goes so far as document says (i.e. he is
my agent, but under no circumstances may
he consent to DNR for me)
o Can't put someone who has capacity in
mental health facility

CANNOT be witnessed by:
o Healthcare provider
o Employee of provider/facility; or
o Agent


1 witness must be someone other than:
o Family member;
o Person entitled to any part of estate upon
death
Revocation:

Agent designation
o Signed writing or personal communication to
healthcare provider required for revocation
o Except: divorce/annulment/legal separation
- automatically revokes prior designation of
spouse as agent

Any other part of advanced directive
o any clearly manifested manner of revocation
is sufficient



Multiple Healthcare Directives
o most recent one prevails to the extent of any
conflict
Court-Appointed Guardian
 Guardian: judicially appointed guardian or conservator

Below Agent in authority
o Cannot revoke designation of agent

Must follow individual instructions/advanced
directives of ward
o Can't trump advanced directive, just answer
questions
 Decisions require no judicial approval
Surrogate Decisions-maker statute



Surrogate: individual, other than patient’s agent or
guardian, authorized under Act to make a healthcare
decision for patient
Descending priority:


Spouse, unless legally separated;
An adult child; (if multiple children, go with
majority; if only 2, all disqualified & must go to
court)


A parent; or
An adult brother or sister
Court
 Judicial Decree
 May be obtained:


Where no agent, no surrogate, or surrogate has
refused to act
 There is written request from physician
 Proper documents are presented to the Court
Expense to be borne by patient’s estate or by his or her
caretaker (hospitals don’t receive payment)
 Adults or Emancipated Minors who are incapacitated
Un-emancipated Minors & Abortion
- MS laws strictest for this in nation;
- If under 18, minor needs written consent from both parents or legal guardian REQUIRED


If parents are divorced, written consent from the primary custodial parent is ok
If one parent in married household isn’t available for giving consent, then the
other can give consent

If the natural father, adoptive father, or stepfather is also the father of the
unborn child, his consent is insufficient

Minor can petition court to remove requirement of consent IF it finds minor is
mature, well-informed & able to make decision on her own OR that abortion is in
minor’s best interest
o Only 2 cases where child has petitioned court - both were denied
o Grandmother characterized one as “emotionally fragile” and the other
found girl was just scared of responsibility
Adults/Emancipated Minors with Capacity
- May consent to their own treatment
- Have the right to refuse treatment
- May execute documents recognized by UHCDA
 I.e. power of attorney, advance directives, etc.
- If found to be incapable of making health care decisions, treatment decisions will be
governed by UHCDA

“Capacity” = Ability to understand significant benefits, risks, and alternatives to
proposed treatment & to make/communicate decision about that treatment

Adults presumed to have this capacity & there must be a determination that an
adult lacks this capacity
Determinations of Capacity
- The primary physician must make the determination that an individual lacks or has
regained capacity
-Primary Physician - a physician desingnated " see powerpoint"
- Record that determination in patient’s record


MUST be recorded in chart; coded correctly; etc.
If not written down, it didn’t happen in courts’ eyes (according to federal
government)
 VERY important to document at all times during care
- Communicate the determination to the patient, if possible, and to any other person then
authorized to make health care decisions for the patient
Definition:
- Health Care Decision



Selection of healthcare providers and institutions
Approval of tests, procedures, programs of medication, DNR orders
Directions to provide withhold or withdraw artificial nutrition and hydration
and all other forms of health care
- Does not in
- See powerpoint
Implementation of Health Care Decisions:
- Duties of HC Providers & Institutions




Communication
Documentation
Comply with Patient’s wishes
May decline, under certain circumstances, to comply with an individual
instruction or health care decision
 May NOT require advanced directive as condition for treatment
Liability of HC Providers:
- A HC provider or institution isn’t subject to civil or criminal liability or to discipline for
(just on consent part; if they leave a scalpel inside can be liable):


Complying with a HC decision of a person with apparent authority;
Declining to comply with a HC decision of a person apparently without authority;
OR

Complying with an advance HC directive and assuming that the directive was
valid when made and has not been revoked or terminated
o Surrogates are also not liable for the medical decisions they make so long
as they are made in good faith
Medicare Appeals and RAC Audits
1/9/2012 4:22:00 AM
1. Overpayments
2. STARK violations (i.e. payments that were inappropriate)
3. AK violations (i.e. payments that were inappropriate)
4. False Claims Act
- Medicare providers get specific & unique numbers for billing purposes (i.e. to submit
bill/claim to government & get reimbursement); there are codes that apply for certain
procedures & the code is on the form which is then sent to Medicare; EVERY expense
submitted to Medicare must have a Code on it with his provider number
- Medicare pays claims, but reserves right to come back & claim mistake and inappropriate
payments (due to wrong coding, “up-coding” = claiming more time with a patient than
actually spent, services medically unnecessary, billing for services not actually provided,
services not properly provided = no supervision, improper licensing, etc.)
- Ways to Discover Billing Issues:
 Government Audits
 Whistleblower
 Self-audits
Background
- Jan. 2008 OMB Report- Medicare
 3rd highest abuse in federal funding
Medicare Contracting Reform
- “Recovery Audit Contractors”
- Test to figure out if auditing system for overpayment discovery worked it did
3-Year Test Phase:
- 4 concerns raised:

Contingent Fee (contractors can receive almost up to 9% if overpayment
identified to government)

Unqualified Auditors (i.e. RAC’s themselves)  adjusted to require professionals
in determinations & reviews like what’s medically necessary

No SOL of how far back they could look & how many overpayment claims they
can find; so they adjusted to only allowing auditors to go back 3 years

No limit on records reviewed by auditors which greatly inhibited providers; now
adjusted to only 10% of average monthly claims up to 200 per 45 days for
hospitals; for solo physician up to 10 per 45 days
- Since program in place, auditors found 40-45% of all records reviewed have been
Overpayments
- 4 RAC’s nationwide geographically, we’re in C (started around Aug. 2009)
- Automatic review = objective inaccurate billing (ex: tonsillectomy gets billed twice in one
day); usually computers do this constantly
- Complex review = site visits, interviews, pull records, issue letters… 5-level appeal
process
 They request documents & review to let you know how many they find
Handout Example
First Level of Appeal = “Redetermination”
- 120 days from receipt of initial demand

BUT after 30 days, they begin recoupment & stop paying doctor for claims
 If no appeal by day 30, recoupment on day 41
- First review by same people who made the initial overpayment decision
- Generally answer in 60 days, unless they want more time which is always given
Second Level of Appeal = “Reconsideration”
- “On the record” review (no in-person hearing)
- MUST submit all documentation at this time if you ever want it in the record
- Conducted by “Qualified Independent Contractor” employed by Medicare
 Reversal usually very rare
 If still unfavorable, recoupment MUST begin now out of reconsideration
Third Level Appeal
- Before Administrative Law Judge = first chance to be treated fairly & impartially
 Government employee still, but finally not on Medicare’s payroll
- BEST shot at reversal
- Basically a trial
- Where there has been an extrapolation, the ALJ must review each and every patient chart
review determination to ensure number is correct
Fourth Level Appeal
- Back to Medicare Appeals Council (MAC)
Fifth Level Appeal
- Federal District Court where great deference is given to MAC
Defenses:
- Treating physician rule  treating physician has best opportunity to know what patient
needs at the time, thus he should be afforded more deference
- Provider without fault
- Reopening regulations - National Coverage Determination/Local Coverage
Determinations  opinions by governmental agencies; local = local opinions just
persuasive not binding
- Challenges to statistics/extrapolation  didn’t follow their own rules; population was
inappropriate, etc.
Avoid RAC Audits?
- Probably not; should try to limit your exposure to them - i.e. have proper & solid
compliance plan, monitor areas that RAC may look for according to their website, develop
process to properly respond to requests for records, develop process for appeals
STARK
- Makes it unlawful for:

A physician
o Includes immediate family members
o BUT ask what kind of doctors  some doctors can’t refer
 Ex: can’t send it to an entity owned by your husband since
eventually that money will be coming to you “anti-self-referral
law”
o does not include mid-level providers, i.e. nurse practitioners, physicians
assistants, CRNA’s, or RPA’s

To refer
o A request by physician for item/service that Medicare will pay for
o NOT personally performed services
 Ex: referrals can occur between doctor & hospital where he
performs service/item

Federally Funded Patients
o Non-federally funded patient referrals aren’t actionable under Stark, i.e.
Blue Cross patients can be referred

For Designated Health Services
o Just about everything we deal with: clinical lab services, PT, OT,
diagnostic radiation, radiation therapy services & supplies
 IF NOT DHS, then can’t violate Stark when referring
 Doesn’t count “personally performed services”
 Government keeps adding more services to this list

If the physician has a Financial relationship with the entity
o Compensation relationships
Where doctor/family member is being paid something by entity;
any K relationship that results in doc getting a fee (i.e. doc renting
something from hospital, hospital providing space, MUST be
exchange of money)
o Ownership/Investment interest
 Where doctor owns an imaging center to which he sends all of his
patients there - so he gets the money from the tests = VIOLATION
of Stark
 I.e. leases, rent, etc.
o Entity can be pretty much anyone, clinic, hospital, nursing home, lab,

pharmacy, non-profit, HMO, etc.
 Referring physician isn’t an entity
FIRST TEST from above FOR TEST
1. Physician?
2. Refer?
3. FFP’s?
4. DHS
5. Financial relationship?


If all of the above, must find an exception to be able to Refer
OR can’t do it!!!
o Look at Stark first because if you satisfy all, then there IS a problem &
don’t even have to do AKS analysis
- Penalties by occurrence, knowing violations/schemes, or exclusion from program
- Strict Liability - no intent necessary; if violation, you’re done
- Qui Tam actions (actions begun by whistleblower)
- False Claims Act - $11,000 per claim penalty + 3X amount claimed
AKS:
- Violated:

Whenever any individual or entity
o Not necessarily a physician

Knowingly or willfully
o If evidence of no intent, may be OK even without a safe harbor

Solicits, offers, pays, or receives
o EVEN an offer to reward

Any remuneration
o Not just money -- it’s the “transfer of anything of value, directly or
indirectly, overtly or covertly, in cash or in kind”

To induce or reward referrals of items or services
o Applies to any transaction where ONE PURPOSE is to induce or reward
referrals
 Payable by a federal healthcare program
SECOND TEST from above FOR FINAL:
1. Any IND/Entity
2. KNOWING/WILLFUL
3. S O P R
4. ANY Remuneration
5. INDUCE or REWARD referrals
6. FF Items/Services


If yes, find a “SAFE HARBOR” & then maybe you can still do it
There are instances where even if no safe harbor, then may still can do it
Penalties: criminal liability as felony (max fine of $25,000) & mandatory exclusion from
federal healthcare program if convicted

Even lawyers can go to jail if it violates AKS; so be careful in advising individuals
or entities
STARK/AKS Hypos
1/9/2012 4:22:00 AM
Stark
- If you’re tied to that entity by any dollar or kind (even $1), then you may not refer
federally funded patients under Stark; SL for any violations
- Physicians work at nursing homes, rent spaces, conduct surgeries/tests at hospitals, etc.
- Must know the elements to a T: if you have a BCBS patient, if you have a DR that can’t
refer (i.e. radiologist), etc.
- 17-18 exceptions to STARK
Stark Exceptions
1. Rental of Office Space (or equipment)

In writing, signed, specify premises (equipment)

At least 1 year
o VERY important
o Can have a “holdover” (i.e. when someone outlives their K, but can’t
change terms) of up to 6 months (terms of lease can't change)
 Once holdover expires, must go back to STARK analysis

Space rented is only what is needed
o I.e. can’t give too much for lower amount

Charge set in advance, not based on volume or value of referrals, but on FMV

Commercially R/
o Number one fight between doctors and hospitals; doctors know the
money that hospitals make from the derivative services from the doctors
being there; thus they fight for more money
2. Bona Fide Employment (i.e. W2 employee - you are theirs; 1099 employee - principal
and agent where agent gets job done wherever it’s done)

Identifiable services (they can tell you what he is paid to do)
o **OB-GYN’s, pediatricians, family physicians, etc.
o OB-GYN’s always recruited by hospitals
o Can have referrals to their own hospitals under this exception

Compensation is:
o FMV
o Not determined based on volume or value of referrals


Commercially R/
CAN have productivity bonuses based on personally performed services
o Personally performed = patient visits
o For example, hospitals can pay doctors for seeing 45 patients in a day
since they know that 5 of those patients will more than likely end up in
their hospital
o Trick is to determine where FMV intersects the optimal number of
personally performed services
3. Personal Service Arrangements (i.e. Medical Directors at hospitals)



With doctor, group practice
In writing, signed, specific about services
Covers ALL services provided to the entity
o In order to pay for what you’re getting from deal

Services provided are least necessary
o I.e. can’t hire 2 “Labor & Delivery Medical Directors” since that would
provide more services than least necessary
 At least 1 year
 Compensation - set in advance, FMV, not tied to referrals
Difference Between 2 & 3:
 Employment - #2 - doesn’t have time requirement
 Arrangement - #3 - has 1 year requirement
4. Recruitment: Hospital to Doctor

Must be intended to induce doctor
o To relocate medical practice into the “geographic service area”
o In order to become member of hospital’s medical staff
 Must be legitimate employment



In writing, signed
Hire Not conditioned on referrals by doctor to hospital
Remuneration/payment not tied to referrals
o Payment not limited, just can’t be tied to referrals
o It’s “commercially R/” to pay a doctor to relocate in order to bring
someone to maybe an undesirable area

No restriction on staff privileges elsewhere
o Can’t restrict her practicing privileges at other hospitals
 Geographic area is lowest number of contiguous counties where
75% of inpatients come from
 Hospitals map out where all patients come from; then they
have to tie the top 75% of business in a “contiguous area”
(i.e. areas adjacent to one another)

Relocated means EITHER:
 Moved medical practice from outside service area to inside
service area and at least 25 miles; OR
 Less that 25 miles, but at least 75% of doctor’s revenues
will come from new patients


These patients must not follow doctor from
establish practice, but distance him from that
previous practice
Relocation requirement Doesn’t apply if:
 Recruit has practice for one year or less or is a resident; OR

Has been employed for 2 years immediately prior, with
Department of Defense , VA, Prison Bureau, or Indian
Health Service
 Since you can’t take these patients with you, etc.
5. Recruitment: Hospital Assisting Group Practice

Agreement must be signed by party to whom payments are directly made
o Can be new doctor or clinic (whoever receives the money)

Hospital may pay:
o Actual cost incurred by Group in recruiting
o Money paid directly to recruited physician (must pass through)
o Costs allocated to Group cannot exceed actual additional incremental
costs attributable to recruited physician
 Can’t charge more for the space already utilized with the other
doctors (if no space is added)
 If hire new nurse, then can pass those costs along as well



Keep records 5 years
Remuneration from Hospital not tied to referrals
Group cannot restrict physician from practicing in hospital’s geographic area
o i.e. no covenants to compete
6. Non-Monetary Compensation

Up to $359 (in 2011) per year, per doctor
o Must keep up with this by chart on what is given to each doctor
o Flowers, cookies, Christmas gifts, trays to staff, etc.



Cannot be solicited by doctor
Not tied to referrals
Cannot violate the AKS
o Meaning doctor can’t threaten to stop sending patients if his solicitation
or request isn’t complied with

Inadvertent overpayment - OK IF:
o Overpayment doesn’t exceed 50% of allowed
o Is repaid in earlier of within 180 days, or in same calendar year
 Doctor repays overage
o Can only be used once every 3 years as to same doctor
7. Medical Staff Incidental Benefits

Items or services used on hospital’s campus
o I.e. dining - cafeteria floor with amazing chef to keep doctors in hospitals
away from drug reps; parking, car washes




At times when doctors are making rounds or otherwise benefitting hospital
Provided to ALL members of medical staff in same specialty
Without regard to volume or value of referrals
Low value per benefit
o Less than $25 per benefits
 No violation of AKS
*8. In Office Ancillary Services (i.e. lab in office, shots on site, etc.)

Primary exception relied on by physicians to protect referrals for designated
health services within their practices: 3-Part Test 
o Performance test
 Service must be performed by:
 Referring physician;
 Another member of the same “group practice”;
 An individual supervised by the referring physician (or
member of same Group)
o Billing test
 Services must be billed by:
 The performing or supervising physician
 The group practice (under group’s number)
 Third party billing company under Group’s billing number
o Site of Service test
 Group Centric Test:
 Same building where physician or group practice has
office open 35 hours/wk; and
Referring physician/group practice regularly practices at
least 30 hours per week
Patient Centric Test:
 Patient receiving DHS generally comes to that building for
services from referring physician or group;
 Referring physician or group owns or rents office normally
open at least 8 hours/wk; and
 Referring physician/group members practice there at least
6 hours/wk
Specialist Centric Test:






DHS is provided when referring physician is present and is
in connection with a patient visit;
Referring physician or group owns or rents office normally
open at least 8 hours/wk; and
Referring physician/group members practice there at least
6 hours/ wk
Group Practice


2 or more physicians legally organized
Each member provides substantially the full range of services of his practice to
the group (75%)



Substantially all of the services rendered are billed by the group
Income & Expenses distributed in a predetermined manner
No physician receives compensation directly or indirectly based on referrals of
designated health services

Critical Issues relate to Compensation:
o Compensation must be set in advance, but you can’t pay based on volume
or value of referrals of DHS
o You can pay profits and bonuses on other non-DHs factors though:
RVU’s, patient encounters, number of non-DHS services, any
combination
9. Rural Area Providers (get from PPT)



Can do almost everything
So long as 75% of patients are coming from rural areas - then you don’t have to
worry about ownership
o Still have to worry about FMV, etc.
AKS VIOLATION
- Safe Harbors Similar to Stark Exceptions
- Remember same elements for STARK also apply here
 Rental of Space
 Equipment Rental
 Personal Services & Management K’s
 Employees
1. Practitioner Recruitment

Remuneration does include amounts paid:
o To induce a practitioner
o Who has been practicing for less than 1 year OR any other to relocate
o His primary place of practice
o Into a HPSA for his specialty

SO LONG AS ALL NINE OF THE FOLLOWING STANDARDS ARE MET
o see PPT
2. Investment Interests
- Large Investment interests
- Small entity Providers
 Physicians can do business with group where they own less than 40% of interest
3. Joint Venture-Underserved Areas

75% area
HYPO #2:
- $150,000 not FMV
- CAN’T do it on these terms  but can give her something but must be on FMV or can be
employed for 6 months as cardiologist
- here: can’t just serve for 6 months, ask is it least necessary services
HYPO #3:
- when you see MRI & CT scanner, think DHS
- you have a doctor and businessman: STARK = physician or immediate family member
- Small Town Hospital want to pay the radiologists more; so 2 hospitals with Small Town’s
borders being threatened


HYPO #5:
Radiologists DON’T REFER, so no more STARK analysis
So, YES Small Town can do this
- Relocation must be TO join the medical staff; for STARK purposes, doctor never left the
Hospital’s Medical Staff
- SO Can’t do it
HYPO #7:
- Would want to lease the equipment; Yes can do this under Rental of Office
Space/Equipment
STARK/AKS Hypo’s
1/9/2012 4:22:00 AM
- Should always refer to Handout - exact language of exceptions for exam answers
- Look to Financial Relationship first
- 4 main differences between AKS & STARK
Hypo 1
- “Medical directorships” = personal service arrangement exception
- Physician - referring - assuming FFP - for DHS - and there’s a compensation financial
relationship - THUS exception

Personal Services Arrangements: written agreement, signed, specification of
services provided (we assume these are satisfied in the Contract); Must be at
least 1 year term (need more info on this); Compensation must be FMV and not
tied to referrals (here - flagrant violation since compensation directly tied to
referrals; the arrangement in itself violates the law regardless of how many
referrals actually occur - i.e. if doctors never refer less than 5 patients monthly)
 SO  can’t do it
Hypo 2
- STARK analysis: doctor - referring to hospital - assuming FFP’s (if NOT, STARK doesn’t
apply) - yes DHS - financial relationship of proposed work

Bona Fide Employment exception identifiable services (assume it can be
done); FMV; written agreement
o Doesn’t have to be for 1 year either under this exception
o This would’ve worked, but cardiologist doesn’t want to be employed

Personal Services exception must be 1 year (here 6 months won’t work); in
writing, setting forth all terms; must be FMV
- Hospital must make her Medical Director for 1 year under PS; OR employed by hospital
Hypo 3
- Dr. J is under STARK analysis: Dr. J is a physician, referring to the hospital, probably FFP’s,
providing DHS, and Small Town wants to lease land from the LLC and Dr. J’s husband

Money is going to LLC  thus Rental of Space exception: lease must be in
writing, signed by parties, at least for 1 year, specifics involved, not based on
value/volume of referrals, and lease price must be FMV
o No problem leasing land from LLC

Hospitals competing over group of radiologists  thus no STARK problem since
Radiologists don’t refer!
Hypo 4
- STARK analysis: doctor - referring to hospital - probably FFP’s - providing DHS - and
financial relationship with hospital ($50,000)

Recruitment exception regardless, Doctor must be moving practice from
outside geographic area of hospital in inside of it (unless he’s in his residency,
worked with Indians, or the VA for at least 2 years, or in first year of practice
o As lawyer, you could pay $50,000 back and tell officer of mistake
Hypo 5
- STARK analysis

Recruitment doctor is already on medical staff, thus the purpose is no longer
to induce doctor to JOIN medical staff; so Hospital cannot do this arrangment,
BUT

Hospital could always employ the doctor or make him a medical director under
personal services arrangement
Hypo 6
- “Pre-certification” = insurance may require doctor to call & basically get
permission/ensure patient’s coverage before procedure is conducted
- STARK analysis: doctor (Spyne) referring FFP’s for DHS, and financial relationship is in
the form of a Service (i.e. more secretary hours, etc.)

It’s legitimate business reason for doctor to assume all pre-cert’s since she’s the
one actually being paid in the end (just not solely for main referral source)
 Not really an exception
Hypo 7
- STARK analysis: all satisfied - financial benefit of getting the x-ray equipment for free

Can’t be given for free - must be FMV transaction
o Equipment rental
o Non-monetary compensation (if enough physicians for the $300)
Hypo 8
- NOT a STARK violation -- the money is going to the volunteer organization, not the
surgeon’s family
- Where the money goes is important
Hypo 9
- STARK analysis -- all 5 satisfied so there is a problem

Hypo 10
Recruitment exception -- relocation requirements are satisfied; BUT Dr had
already applied for privileges on staff, thus what the hospital is offering isn’t
being offered to induce the move
- No problem since anesthesiologists don’t usually refer patients
- Could use bona fide employment or personal services arrangement

Personal services  not for medical purposes; more so for administrative
purposes - could offer medical directorship (generally $25-50,000/year)
- When group wants a new physician

Recruitment: Hospital assisting group practice - special requirements plus
relocation requirements, etc.
Hypo 11
- “all of the practice group’s overhead attributable to Dr. Jung” = actual additional
incremental expense  then OK
- Recruitment exception - hospital assisting group practice

Teaching Hospital can recruit as a resident; relocation rqt doesn’t apply to her
since she’s a resident

Issue is whether she has already accepted the first offer - whether she has
accepted the first income guarantee
o If already accepted, then can’t offer another longer income guarantee
Hypo 12
- Physicians self-referring in both centers

In-Office Ancillary Services: 3 tests must be met - 1) performance test; 2) billing
test; 3) site of service test
o Billing not specifically mentioned - but probably meet this, just mention
the need for more information
o Second center doesn’t meet site of service test - so can’t refer to 2nd center
False Claims Act
1/9/2012 4:22:00 AM
- History
 1863-Also known as Lincoln Law
 Since 1986, over $12 billion in FCA settlements and judgments
 Fraud and abuse adds 10% to total health care spending (1994)
 1999 - Medicare paid $13.5 billion in improper payments
-FCA was designed to protect the government from paying for goods or services that have
not been provided or were not provided in accordance with government regulations
- -31 usc 3729 first 2 subsections occur most often

(a) Liability for certain acts: Any person who...
o (1)Knowingly presents to US government a false or fraudulent claim for
payment
o (2)Knowingly makes or uses a false record or statement to get a false or
fraudulent claim paid by the government
o (3)Conspires to defraud the government by getting a false or fraudulent
claim paid
-Knowing, knowingly...

Mean that a person:
o Has actual knowledge of the information
o Acts in deliberate ignorance of the truth or falsity of the information; or
o Acts in reckless disregard of the truth or falsity of the information, and
o no proof of specific intent to defraud is required
 (31 USC 3729(b))
-"Claim"

Includes any request or demand for money or property if the government
provides any part of the money or property requested or if the government will
reimburse any portion of the money or property that is requested
-Types of Causes of Action

Billing for services not performed
 Billing for services performed by someone other than the billing provider
 Billing for services performed by unlicensed or unapproved personnel
 Billing for unreasonable costs
-Reverse False Claims

Anyone who knowingly makes, uses or causes to be made or used, a false record
or statement to conceal, avoid or decrease an obligation to pay or transmit
money or property to the government
-Qui Tam Actions




Civil Actions for False Claims
Brought by "relators"
One or more relators may bring suit
Government has the right to
o Intervene and join the action
o Decline to intervene
o Settle case before intervening
-Deadline for Qui Tam Action

Statute of limitations under FCA
o 6 years from violation
o 3 years from when Government knew or should have known of violation
o Never more than 10 years after violation
o If another relator files first, you lose your right to bring action
-How is a Qui Tam Filed?


Federal Court
Complain and disclosure statement of all evidence in relator's possession must
be served on Attorney General and US Attorney for district where brought
 Everything stays under seal - 60 days
 Violation of seal order may result in dismissal of action
-How Long?
 Seal period may be extended. Can last up to a year.
 After Seal period, complaint is served on defendant and case proceeds normally
-Damages Available




Actual Damages to Government
(Treble Damages)
Civil Penalties per claim
Whistleblowers/Relators receive money only if Government recovers money
from defendant
 Can receive between 15 and 30% of the total recovery from the defendant
-10 things to do if you get a visit on a Qui Tam action



Ask the gov't for ID (keep record of who came, business card)
If they ask to speak to particular people ask why
Get a copy of search warrant and make sure they are only looking at things
included

Call you immediately

Listen and keep a record of everything they hear, said - entitled to follow around
(keep record of everything they look at, etc.) (ask for inventory of what they
took)


Ask to back up any computers that they want to take with them
Send all non-essential personnel home on paid leave (as few people talking as
possible)

Clients instruct employees that they are free to talk to government but they
don't have to talk to government (you will provide counsel and they can talk to
them first) (If gov't asks for interview room say we don't have one available)
(Call all absent employees and tell them the same thing)

Not to destroy anything or otherwise impede the investigation in any way

Want to debrief anybody the gov't did talk to
Will cover preventative actions at some point
- 3rd regulatory scheme
- STARK or AKS violations can also be False Claims violations
- Qui tam actions - “whistleblowers” could make good money under the Lincoln Law - went
away around 1940 & now this actions back in 1986 when signed back into law
 Requirement of “knowing” intent is BROAD under this Act
 “Claim” = any demand for money from the government
- Relator must gather a lot of evidence before raising concerns with employer/bringing it to
government’s attention B/C their percentage of recovery increases with more amounts of
evidence
- ex: 1994 actual damages $250,000 on 8000 claims -- max damage award could’ve been
$81 million
EMTALA
- Emergency Medical Treatment and Active Labor Act
- Red Barnes Case (1985) - crackhead goes to hospital, ER doc calls neurosurgeon (says I’m
not coming in for that type of patient), 2nd neuro says the same thing, Neuro at another
hospital says don’t bring him there, a 5th says can bring him here if ER doc comes too (he
dies on way there)
-Before EMTALA no legal mandate to take these people
- Also called anti-dumping law
In a nutshell

Background
o Came out as part of COBRA in 1986
o Applies to every hospital that takes medicare and has an ER dept
o Hospital and doctors involved in violation can
o If hospital takes me


Application
General Req’s
o Screen
o Stabilize
o Or, Under Certain conditions, TRANSFER
 Requirements for Transfers Out
 Requirements for Transfers In
 Have to keep documentation of transfer for 5 years
 On-Call Req’s
 Penalties for Violation
Emtala Says......
- Medical Screening Requirement:

In the case of a hospital that has an emergency dept, if an individual comes to the
emergency depat, the hospital must provide an appropriate medical screening
examination, including ancillary services routinely available to the emergency
dept., to determine whether an emergency medical condition exists.
Emergency Dept.
- Dedicated Emergency Dept.
o Any dept or facility of the Hospital that is:
 Licensed by the State as an emergency dept; or
 Held out to public as providing em. treatment
 Can be located on or off main campus
-
“comes to the emergency dept” means:
o At the hospital’s dedicated emergency dept (“DED”) requesting treatment
o On hospital property other than DED with what may be an emergency
medical condition
o In a hospital-owned ambulance (anywhere)
o In a non-hospital-owned ambulance on hospital property
 If hospital says don’t come here (got too much business) once they
come on property they have “come to the emergency dept.”
-
If taken to St. Dominic’s helipad to be transferred to Baptist they aren’t deemed to
have “come to emergency dept” at SD unless he develops another condition
A Little Bit About Ambulances...
-Hospital Owned vs. Non
- Only time that Hospital can turn away its own ambulance is when EMS puts
them on diversion
- Trauma System Issues
- You have to pay into the system or you have huge fines
- Level 1, 2, 3, or 4 (Med, UMC, UAB)
- Appropriate Medical Screening Exam (MSE)
-Conducted by qualified medical personnel
-Personnel who are qualified set out in hospital bylawas
-Purpose - to determine whether an emergency medical condition exists
-Must be provided regardless of diagnosis, financial status, race, color, national
origin and/or disability
- May be requested by a minor child
-CMS says...
-“Emergency Medical Condition” means:
-A medical condition manifesting itself by acute symptoms of sufficient
severity such that the absence of immediate medical attention could
reasonable be expected to result in Placing the health of the individual (or, with respect to a pregnant
woman, the health of the woman or her unborn child) inserious
jeopardy;
 Serious impairment to bodily functions; or
 Serious dysfunction of any bodily organ or part
- Baby K case if child leaves stable & then comes back with same respiratory problems,
hospital still must treat sick patient
 Not decision for doctor to make; must stabilize the baby
-EMTALA Says...

Stabilization Requirement
o If any individual comes to the hospital and has an emergency me

“Stabilized” means
o no material deterioration of the condition is likely, within reasonable
medical probability, to result from or occur
o ....

“Appropriate transfer” means:
-A hospital that has specialized capabilities or facilities shall not refuse to accept an
appropriate transfer of an individual who requires such specialized capabilities or facilities
if the hospital has the capacity to treat the individual
-On-Call Physicians
- Each hospital must maintain an on-call list of physicians on its medical staff.
-HOSPITAL has ultimate responsibility for ensuring adequate on-call
coverage.
-List to be maintained in manner that will best meet the needs of patients, in
view of hospital’s resources.
-Physician group names are not sufficient., must have individual names
-In determining EMTALA compliance, CMC will consider “all relevant factors”
-Fact based inquiry
-Demands on Dr., how often hospital sees that condition, etc.
-A physician who does not come to the hospital when called, but repeatedly
or typically directs the patient to be transferre........
-A physician may be on call sumultaneously for more than one
hospital
-Physicians may perform elective surgery while on call
- For both of these you must have back-up plan in hospitals
document
-Liability for selective response to call by physician
-Physician may be liable.
-Hospital may be liable for permitting.
-Can’t be selective about call for any factor
-Response time of on-call physicians.
-The expected response time should be stated in minutes in the
hospital policies
-Terms such as “reasonable......
Physician Liability Slide....
Acceptable Responses to a call to come treat an ER Patient?...
-No
-Maybe
-No
-OK for physician, hospital should have call doc #2
-No
-Update call schedule
-No
-No
-No
Duty to Report
- Tranferring physician obligated to identify non-respon
- Receiving hospital obligated to notify CMS of transferring hospital and on-call
physician
o Have to report w/in 72 hours (Not reporting is a separate violation)
Duty Under EMTALA Ends: ....
Hypo #1
a) You can do this
b) Can’t turn him away
Hypo #2
a) Not required to see him in office, only requires to emergency dept
Hypo #3
a) You don’t have an option,
AKS Hypo’s
Hypo 1
- Violation of AKS, unless Safe Harbor Found

Even if example didn’t have last sentence, still violation of AKS, but maybe ok
under Personal Services (as long as complies with the particulars
- BUT the remuneration is tied to the number of patient referrals as evidenced by the last
sentence of the hypo  thus NOT OK under any safe harbor (as written)

With AKS, don’t have to fall squarely under Safe Harbor (word by word)
o As opposed to STARK where it must be followed to the T
Hypo 2
- Violation of AKS by hospital (as well as by cardiologist since she’s soliciting money from
hospital for referral patients)

Safe Harbor of Personal Services (but must be 1 year)
o Can change to 1 year & make it fit

Safe Harbor of Bona Fide Employment
o If she consented to be employed
- BUT can’t do this under STARK

Must always go through analysis however - can’t just say “not relevant since not
allowed under STARK”
- “Medical Director” is always a physician with an administrative component of a particular
department of a hospital that provides treatment
Hypo 3
- Violation of AKS, must find Safe Harbor
o Look to Practitioner Recruitment safe harbor - must fit all 9 requirements
 This Safe Harbor would save the arrangement under AKS IF you
clarify only IF 75% of revenues come from HPSA, MUA, or MUP
patients, then it’s ok
Hypo 5
- Violation of AKS

Look to Recruitment safe harbor - must fit all 9
o Must clarify it’s ok as long as 75% of revenues come from HPSA, MUA, or
MUP patients
Hypo 6
- Violation of AKS  remuneration here is the value of the pre-cert service

While this is clear violation of AKS and there’s no safe harbor, you could still
argue that the intent for this would instead be to ensure that you yourself get
paid in the end versus reward for referrals (i.e. legit reason to pre-cert herself)
Hypo 7
- Violation of AKS by physicians


Can’t do this as written - no safe harbor applies
Could try to rent it out to doctors - or doctors could buy it from hospital under
other safe harbors
Hypo 8
- NO Violation since money is going to the Junior League

Immediate family members do not matter under AKS
ON ALL THESE, REMEMBER IF THE DOCTORS HAVE
ALREADY ASKED FOR SOMETHING THEY HAVE BROKEN
THE LAW
Final Review
1/9/2012 4:22:00 AM
- Bring exceptions/safe harbor handout (only highlighted/underlined though) & calculator
- Format:

Part 1 20 questions, only 12 answers (1.5 hours)
o 8 of those marked with Star MUST be answered
o Then can choose 4 others from the remaining 12
 Covering CON and its formulas, HIPAA, UHCDA, EMTALA,
fraud/abuse (STARK, AKS, False Claims Act, and overpayments) ,
Medicare/aide operations -- with headings
 Variety of short discussion, listing, MPC, etc.

Part 2 3 longer discussion questions -- all of Fraud/Abuse
o 2 STARK/AKS
o 1 False Claims Act/Government investigations (1.5 hours)

Part 3 BONUS questions
o 4 short questions
 Can write on exam - but must turn it back in with number on it
- Grading: both parts are equally weighted; Bonus about 8-10 points
Government Investigations
1/9/2012 4:22:00 AM
- Relates to False Claims Act, Qui Tam, etc.
- Ex: whistleblower takes all his information/findings to government; government then
either 1) takes the claim or 2) whistleblower pursues case at own risk (i.e. not worth
pursuing)

If government takes claim, then government will probably continue to gather
information, or go directly after offender by showing up at hospital
o 1. Issuing grand jury subpoenas (requiring testimony from clients)
 Clients can plead the 5th or if some attorney-client privilege comes
up
 Grand jury is without client’s lawyer
DA can ask any question within all scopes - so lawyer will want to
de-brief client to learn what all DA knows/has of claim
o 2. Issuance of search warrants/showing by surprise  at places of
business to search client’s documents (to search/examine/take
documents within warrant); can issue document subpoenas, etc.
 Government while at place of business will almost always try to
interview client’s employees at the same time
o 3. Covert operations -- monitoring phone calls (with that party’s consent)

What to do to be Ready in Advance of Government’s Presence:
- Be sure that clients have compliance program in place (required)
*A good way to show you don't have intent under AKS and to negotiate settlement in
STARK

Essentially rules/guidelines for how to comply with all government regulations
in place (i.e. AKS, STARK, FCA, etc.)
o 1) Plan document: stating client, location information & client’s plan for
compliance - always available to employees
o 2) Must provide training on plan to ALL employees (also apprise them of
law)
o 3) Must provide for internal audits of client’s business
 Can be yearly, quarterly, etc. - at client’s discretion
 Audit = internal review of every piece of business; i.e. coding,
billing, referrals; to ensure compliance
o 4) Designation of compliance officer
 Including monitoring client’s operations to ensure following its
compliance program
o 5) Provision for internal investigation (once you find something wrong
from internal audit; someone reports a problem; etc.)
 Anonymous reporting system best - drop box, hotline, etc.
 Should also immediately call lawyer - arguable to also increase
privilege
o 6) Provision for Remedial Measures (i.e. re-paying any overpayments
from govt; any additional training because of problem; billing issue by
billing office
 There are now self-disclosure protocols under STARK and AKS; i.e.
client must decide when they discover the violation whether to
report it
 No self-disclosure under STARK yet - most clients are
hoping that problem just doesn’t get discovered
 IF possibility of whistleblower, then always self-disclose to
get benefit of doubt when govt decides penalty
 counseling and training
o 7) Provision for Internal investigation
 If you discover, suspect, or someone reports a problem
- 10 things to get clients to ask govt




1) ID before giving them access to documents
2) Ask for copy of search warrant - either original or make copy
3) Call your lawyer immediately
4) Listen to everything that is said when government is there - walk behind and
record everything said between them, to your employees, everything

5) Try to compile inventory of everything government takes - can ask, but
they’re not obligated

6) Client should back-up any computer database before leaving office (to be able
to continue its operation)


7) NEVER agree to expand search beyond what warrant states
8) Deal appropriately with employees: 1- send all non-essential personnel home
for the day on paid leave; 2- tell employees that they may/not talk to
government & that client will provide lawyer if they wish before they talk to
govt; 3- contact absent employees to alert them to possible home contact by
government & offer lawyer to advise them before speaking if they’d like; 4- do
not designate a room on site for interviews with employees (if willing to speak,
must go outside)


9) DO NOT destroy anything/otherwise impeded government’s investigation
10) De-brief any employee who gets interviewed by government immediately
after that encounter
- Clients must understand that all textual communication/electronic/online may come
back, be reproduced, always
STARK/AKS Approach:
1. Is there a problem under either of these schemes?
2. Is there an easy fix?

I.e. is there some piece of fact pattern that could easily be changed to eliminate
the problem?

Ex: client wants to do this = STARK violation; if client doesn’t refer federally
funded patients, then OK
3. Is there an Exception or Safe Harbor?


STARK Exception - how does it apply? STRICT fit with exception; is it satisfied?
AKS Safe Harbor - how does it apply? looser fit - not everything must be satisfied
(as long as an intent to induce referrals isn’t shown); is it satisfied?
4. Final answer
STARK hypo’s -- don’t worry about numbers 13 & 14
TEST
-Structure of Healthcare System
-Medicare & Medicaid,
-Changes under PPACA
-Overpayments and Audits
- Appeals under RAC
-STARK & AKS
-FCA
-Gov't investigations and preparing client
-HIPAA
-Informed Consent
-UHCA
-EMTALA
EXAM (Review the 17th)
3 sections -20 short answer, a paragraph maybe, short answer, multile choice (8 you have to answer,
pick out of the others) - HIPAA, EMTALA, etc.
-2nd Fraud and Abuse Laws, STARK, AKS
-3rd Bonus Question section