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On Wednesday, May 21st, the OIG posted a new Advisory Opinion, 09-05 evaluating a poposed on-call compensation arrangement between a hospital and the specialists on its medical staff.   The Hospital proposed an arrangements where members of its medical staff who agreed to provide on-call coverage to the Hospital's emergency department on a schedule established by the Hospital would be compensated on a per encounter basis for encounters with those patients who came to the Hospital ED who were otherwise indigent and uninsured.

What makes this Advisory Opinion interesting is not the Hospital's proposed methodof paying the on-call physicians although it is creative and will be something I will propose to clients who struggle with how to do this.  Its not the fact the OIG felt that any on-call compensation arrangement would pass muster under an Anti-Kickback analysis, OIG has recognized that such arrangements can be necessary and appropriate in certain circumstances.  

It is the fact that the OIG seems to have given up on the idea of trying requiring that such arrangements be limited to areas where there are physician/specialist shortages.  OIG acknowledges that, "on-call coverage compensation potentially creates considerable risk that physicians may demand such compensatiion a s a condition of doing business at a hospital, even when neither the services provided nor any external market factor (e.g., a physician shortage) support such compensation."  But, despite this acknowledgement, OIG required nothing in the proposed on-call compensation arrangement to ensure that this was not a situation where the physician specialists were merely holding the Hospital hostage.

As a result,  we need to expect that more and more and more physician specialists will now demand that their hospitals pay them to take call coverage in the ED and will point to this Advisory Opinion as the basis for asserting that there are no compliance justifications or market force elements that might exist in the particular hospital's market to justify a hospital's refusal to make those payments.   At a time when more and more hospitals are operating at a net loss and without any extra income to cover such expenses, hospitals will be increasingly asked by physicians to find the money somewhere. 

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On January 16, 2009, The Center for Medicaid and State Operations ("CMSO") issued a directive to all State Medicaid Directors to begin requiring Medicaid providers to ensure that individuals who are providing services to Medicaid beneficiaries are not excluded from participation in the Medicare or Medicaid program. 

Normally, health care providers cross-check the HHS-OIG excluded provider list on a regular basis (usually annually or on a rotating annual basis, where a provider's staff is very large).   The OIG has required such excluded provider checks as part of an effective compliance program for many years.  But now, with this new letter from CMSO, the burden for such checks has been ratcheted up. 

Until this letter issued last month,  the burden for identifying excluded individuals who provide services in the Medicaid program was left with the States.  Now, the States have placed the burden squarely on providers.  Specifically, CMSO has directed States that they should advise all current providers to screen all employees and contractors to determine whether any of them have been excluded.  States are suppose to require providers to "search the HHS-OIG website monthly to capture exclusions and reinstatements that have occurred since the last search."  As always, providers need to immediately report to the State any exclusion information that is discovered. 

Obviously, the big issue is whether OIG, CMSO and the States really expect every Medicaid provider to check ALL employees and contractors against the excluded provider list every month or whether providers can continue to check the list in a reasonable fashion given the size of its organization.  I do know that some Michigan Medicaid providers, including community mental health agencies, are asking their contract hospitals to confirm that they are checking all employees on a monthly basis. 

Providers who do not already check all employees and contractors against the excluded provider list, on a monthly basis, would do well to check with the Michigan Medicaid program to confirm whether the State intends to enforce such an unrealistic expectation on Medicaid providers who are already overly burdened by the Medicaid program, without adequate compensation.  Certainly this is just another argument physicians will us to determine not to participate in the Medicaid program.

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Last week, the Office of Inspector General (OIG) published its "Work Plan" for federal fiscal year 2009.   Many health care providers use the annual OIG Work Plan as a road map to guide their annual compliance efforts and this has always been a strategy that I have supported.  Although I usually suggest that compliance officers and the health care providers they represent look not just at the current year's Work Plan but the past two or three years Work Plans, collectively,  I think it is very important for health care providers to be aware of what the OIG thinks it should pay attention to, in any particular year.  Its also noteworthy to understand how the OIG's focus changes from year to year and over time. 

Of particular note in this year's Work Plan is the continuation of some significant reviews and the initiation of others that are in areas where health care providers often struggle.  They include OIG's review of:

• Provider-Based Status for Inpatient and Outpatient Facilities
• Hospital Owned Physician Practices Billed as Outpatient Services
• Provider Bad Debt Allocations
• Medicare Secondary Payer Compliance
• Diagnostic X-rays Performed in Hospital Emergency Departments
• EMTALA Compliance
• Never Events
• Physician Services Performed by Non-Physicians
• Medicare Payments for Sleep Services
• Services Performed by Clinical Social Workers
• Outpatient Physical Therapy Provided by Independent Therapists
• Payments for Colonoscopy Services

Given some of the questions that I have received from clients in the past six months, I see EMTALA Compliance and Medicare Payments for Sleep Studies as particularly interesting and suggestive of the fact that OIG and CMS think that providers are not doing things correctly in these areas. 

Your compliance committee should take the time to review the new OIG Work Plan and modify its compliance focus accordingly.

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On August 26, 2008 the OIG issued Advisory Opinion No. 08-10, expressing significant concern for a proposed block lease arrangement between a physician group that operates a free-standing facility providing certain cancer treatment services, including intensity-modulated radiation therapy (IMRT) and a urology group that often treats patients who might benefit from receiving IMRT.

The proposed arrangement involved the urology group entering into a series of contracts that would create a "block lease" of the other physician group's IMRT facilities, including space, equipment, administrative and clinical personnel, and radiologist services to supervise the IMRT procedures.  In evaluating the arrangement under the federal anti-kickback statute, the OIG noted that the urology group would not actually participate in performing any component of the IMRT service and would contract out substantially all of the services, including all of the professional services. 

The OIG concluded that the proposed arrangement was designed to allow the group owning the IMRT facility to do, indirectly, what the anti-kickback statute is intended to prohibit it from doing directly ... "pay the urology group a share of the profits for their IMRT referrals."  The OIG concluded that by agreeing to a deal that gave the urology group the opportunity to retain the difference in reimbursement between what was paid for IMRT services provided to the urology group's patients and the rents and fees it would pay to purchase the services, the urology group would be receiving improper remuneration for referrals for IMRT services. 

For physician groups currently engaged in block lease arrangements, this Advisory Opinion should be reviewed carefully.  Counsel to such group may need to advise their clients that a renegotiation of existing arrangements is required in order to bring such financial arrangements squarely into compliance with the federal anti-kickback statute and avoid the risk of civil and criminal sanctions.

A copy of Advisory Opinion 08-10 can be found here. 

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