The US Attorney recently announced charges against 47 defendants in a $250 million fraud scheme, claiming to be the largest pandemic-related case to date. [https://www.justice.gov/opa/pr/us-attorney-announces-federal-charges-against-47-defendants-250-million-feeding-our-future] This underscores the DOJ’s commitment to fight COVID-19-related fraud. One area that is ripe for enforcement is the laboratory space and their arrangements with specimen collection sites. It’s possible that some labs have been paying more than fair market value for specimen collection services. Read this. … [Read more...]
Kickbacks Are Not Always Cash
In the case of sleep and respiratory DME manufacturer Respironics, the Company helped one of its suppliers secure an interest-free loan that was fully guaranteed by Respironics. Under terms of the loan, Respironics bore the full financial risk of non-payment. It’s important to remember that “value” can come in forms other than cash. Value can be conveyed in the forgiveness of debt and the avoidance of risk. (non-recourse debt) https://www.justice.gov/usao-ndia/pr/sleep-and-respiratory-equipment-manufacturer-pay-12-million-resolve-allegations … [Read more...]
Don’t Dismiss Commercial Reasonableness
In a recent a case, a home health owner pleaded guilty to paying kickbacks and billing for services that were never provided or were not medically necessary (of course). The kickbacks were paid through sham employment agreements/relationships. I believe a more scrutinous look at the necessity of those employment arrangements would have revealed something inappropriate and commercially unreasonable. But, healthcare providers and owners need to consult their attorneys in order for these problematic arrangements to be identified. https://www.justice.gov/usao-ma/pr/lowell-nurse-pleads-guilty-100-million-home-health-care-fraud-and-kickback-scheme … [Read more...]
Camouflaged Kickbacks – Payments to a “Marketing Company
A mother-daughter-owned pharmacy paid kickbacks and bribes to marketing and telemedicine companies in exchange for referring Medicare beneficiaries for expensive durable medical equipment (DME) and prescriptions for pharmaceutical medication, which were usually not medically necessary. The kickbacks were paid to “marketing companies” with sham contracts meant to disguise the bribes as payments for marketing and other services. https://www.justice.gov/usao-sdfl/pr/mother-and-daughter-pharmacy-owners-charged-health-care-fraud-and-kickback-crimes … [Read more...]
The Evolution of Physician Compensation
Physician compensation is evolving. The way healthcare employers are paying physicians has vastly changed after the COVID-19 pandemic. Traditional productivity-based compensation models have been upended, and there is slow migration to quality-based compensation. Additionally, in 2020, the federal government announced changes to the physician fee schedule which raised reimbursement for those providing office visits and decreased reimbursement for others. As demand for physicians increased following the pandemic, countless employer payment structures are transitioning. Some have opted for value-based models, while others have implemented structural changes to their productivity-based … [Read more...]
It’s Damn Expensive to Hire a Physician!
According to a 2021 study by the Association of Advancing Physician and Provider Recruitment (AAPPR), it takes about 248 days to fill an open physician-specialist position and 207 days to fill a primary care physician opening. The estimated expense to interview, recruit and onboard a new provider is, on average, $60,000 (usually higher). This includes the recruiter's fee which typically ranges between 15% to 30% of the first year’s salary. According to the latest report by Merritt Hawkins, over 78% of new provider placements offer a relocation allowance which averages a little more than $10,500, and an average signing bonus of $31,000. … [Read more...]
ASC Industry Snapshot (2 min. read)
Patients in the US have been pining for greater affordability and efficiency in healthcare.[1]The ambulatory surgery center (ASC) model has become an alternative to inpatient hospitals over the last few decades because they perform surgeries where patients do not need to be admitted to the hospital. This alternative facility lowers costs, reduces the risk of infections, and allows patients to recover in the comfort of their homes. ASCs reduce surgery costs by an estimated 45%-60%, due to lower fixed costs and reduced overhead costs.[2] During the Covid-19 Pandemic, many hospitals experienced a significant challenge due to the near-full occupancy of beds in a few severely hit areas.[3]This … [Read more...]
Is there a Commercially Reasonable (CR) Risk with Cost-Plus Management Fees?
Many MSA fee structures are based on a cost-plus fee structure. And often times the MSO cannot accurately forecast the expenses of providing management services. So one question is whether the actual expenses incurred by the MSO are reasonable and sensible. It’s my understanding that the Stark Law guidance on CR relates to whether an entire arrangement is “reasonable” and/or “furthers a legitimate business purpose.” Even though the Stark Law doesn’t explicitly address the reasonableness of individual expenses within an arrangement, does it cover the reasonableness of certain expenses? This issue also exists with COVID specimen collection arrangements and whether certain expenses are … [Read more...]
FMV of Space and Equipment Leases
HVG has come across some existing lease arrangements where the lease rate was calculated based on the fair or desired rate of return to the lessor/landlord or owner of the equipment. In most cases, this does not comply with the current Stark Law definitions. Under the new Stark Law definitions, CMS reaffirmed its two-part definition related to the rental of office space. Fair market value means with respect to the rental of office space, the value in an arms-length transaction of rental property for general commercial purposes (not taking into account its intended use), without adjustment to reflect the additional value the prospective lessee or lessor would attribute to the proximity … [Read more...]
FMV is Not Enough to Keep You Out of Hot Water
There are a number of arrangements that require not only an opinion of the FMV rate in terms of dollars but also an estimate of time, cost, or some other element. For example, the FMV for arrangements such as MSAs, marketing services, and specimen collection services are normally calculated using a “cost plus mark-up” model. In these cases, the appraiser can opine to the fair market mark-up on costs, but determining the fair and reasonable amount of expenses is the other critical element to ensure FMV compliance. HVG is seeing this often with specimen collection arrangements, where the actual costs incurred in providing specimen collection services is scrutinized. To ensure full FMV … [Read more...]
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