Michigan Supreme Court Decision in Jilek v Stockson a Win for Healthcare Providers

Posted on January 9, 2012 by Stephanie Hoffer

The Michigan Supreme Court has issued its long-awaited decision in Jilek v Stockson, and it is a victory for healthcare providers.

The Supreme Court summarily reversed the Court of Appeal’s holding that the applicable standard of care for a physician board-certified in family practice medicine but practicing in an urgent care facility was that of an emergency medicine physician. The Supreme Court succinctly held, “[T]he appropriate standard of care was ‘family practice’ because the defendant physician is board-certified solely in family practice.” The Supreme Court added that it was proper to allow the jury to consider the setting in which the physician was practicing, i.e., urgent care as opposed to an emergency medical facility.

The Supreme Court also reversed the Court of Appeal’s holding that the urgent care center’s internal policies and procedures could be used as evidence of a breach of the standard of care. Interestingly, the Court did not author its own reasoning on this point but rather, incorporated by reference the dissent contained in the Court of Appeals opinion. It reasoned that this case was indistinguishable from prior case law holding that policies and procedures were inadmissible for purposes of establishing the standard of care. This rationale is consistent with long established public policy arguments in favor of protecting and encouraging best practices without fear of having those efforts used against them in court.

What this Means for Healthcare Providers

Health care providers can be reassured that courts will not be allowed to sanction the use of experts whose qualifications do not match the specialty in question; rather, their conduct will continue to be judged by someone with similar knowledge, skill and experience, in a setting- specific context.

Hospitals can be reassured that their internal policies and procedures remain inadmissible to establish the standard of care. While plaintiffs’ attorneys will likely continue their efforts to seek admission of policies and procedures for other reasons, they must still overcome a relevancy objection. Notably, Jilek does not address the threshold discoverability of policies and procedures.

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CMS 2009 Physician Fee Schedule - The Revised Anti-Markup Rules are Here

Posted on November 10, 2008 by Veronica Marsich

CMS has submitted its 2009 Physician Fee Schedule Final Rule to the Officer of the Federal Register for publication and the document should be published some time in November.  As is usually the case, CMS has loaded the Physician Fee Schedule Final Rule with lots of interesting information.  In addition to an updated list of the CPT codes that constitute "designated health services" under the Stark Law, and a re-opening of the comment period for the proposed Stark exceptions on gain sharing arrangements, this Final Rule contains a set of newly revised Anti-Markup Rules relative to the reassignment of billing for diagnostic testing services.

Originally, 42 CFR 414.50 contained a rule that prohibited a physician, who intended to bill for the technical component (TC) of a diagnostic test that was performed by someone other than the physician,  from "marking up" the charge for the TC component of the diagnostic test above the actual cost of the test.  In other words, if a physician wanted to purchase certain TCs of diagnostic tests from a hospital and then bill globally for the test (billing the hospital's TC and his own professional interpretation (PC) of the same test) the physician was prohibited from billing more for the TC of the test than what the hospital charged the physician to perform the test.  This rule was generally known as the "Anti-Markup Rule."

In 2008, CMS revised the Anti-Markup Rule so that if a physician or other supplier bills for the TC or PC of a diagnostic test that was ordered by the physician or other supplier (or ordered by someone related to that physician or supplier through common ownership or control) and if the diagnostic test is either purchased from an outside supplier (such as a hospital) or performed at a site other than the office of the billing physician or supplier, the payment to the billing physician or supplier for the TC or PC of that diagnostic test cannot exceed the lowest of : 

  1. the performing supplier's net charge to the physician;
  2. the billing physician or supplier's actual charge; or 
  3. the fee schedule amount for the test that would be allowed if billed by the performing supplier directly.

Needless to say, this 2008 Final Rule was a mess!  So much so that application of that Rule was delayed until January 1, 2009 due to the complexity of the Rule and the number of existing arrangements that needed to be unwound.  And then, in the mean time, CMS has decided to further revise the Rule altogether.

Thankfully, and perhaps as evidence that CMS does listen to the provider communities concerns, CMS has adopted a revised Anti-Markup Rule that provides two different alternative ways to avoid  the general prohibitions set forth in the 2008 Rule.  Specifically, under Alternative 1, if the physician or supplier performing the test (i.e. the physician supervising the TC or a diagnostic test or performing the PC of a test, or both) performs "substantially all" (at least 75 percent) of their services for the billing physician or supplier, then none of the services provided by the performing physician or supplier on behalf of the billing physician or supplier are subject to the Anti-Markup Rule, irrespective of where (in terms of location) those services are performed.  If the performing physician/supplier does not meet this "substantially all" test, but the TCs conducted or supervised or the PCs performed are done in the office of the billing physician or other supplier by an employee or independent contractor physician of the billing physician or supplier, then the services can still avoid application of the Anti-Markup Rule limitations.  Under this Alternative 2, the focus is on where the performing physician or supplier provides that service rather than on for whom substantially all of his or their services are provided. 

Unfortunately, CMS has not, despite these new amendments to the 2008 Rule, seen the need to delay application of the Anti-Markup Rule and all of its changes.  So, providers for whom the Anti-Markup Rule is applicable ... particularly physician groups and other suppliers who purchase diagnostic testing services or any component of such services need to be in full compliance with these billing rules as of January 1, 2009.

 
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FY 2009 Stark Law Amendments

Posted on September 22, 2008 by Veronica Marsich

 

DHS entities need to move quickly to take inventory of their existing financial arrangements to determine or confirm that all appropriate financial arrangements are in writing and fully executed by the parties. They must then evaluate the nature of the compensation under any space or equipment leases which may involve referring physicians, to ensure that the compensation is not on a percentage or per click basis. If those agreements do determine compensation in that manner, then they must be renegotiated as quickly as possible. Finally, DHS entities need to begin to budget and allocate appropriate resources in the event that they are one of the 500 institutions to receive a DFRR request. DHS entities will have only 60 days to respond to a DFRR request if received.

 

On August 1, 2008, the Center for Medicare and Medicaid Services ("CMS") issued its most recent revisions to the Stark law regulations. Changes were published in the Federal Register on August 19th as part of the FY 2009 Inpatient Prospective Payment System. Many of the changes made by CMS were previewed in language proposed in CMS’s proposed physician fee schedule for 2008 published last fall. Those not previewed at that time were previewed this year in the FY 2009 Proposed IPPS Rule.

There are several topics of particular interest for physicians and DHS entities in these revised regulations. They include:

    • Clarifications and limitations regarding the ability of physicians and DHS entities to carry out their perspective obligations under a negotiated financial arrangement in the absence of a fully executed written agreement, where the execution of a written agreement is a required element of the relied upon Stark exception;
       
    • The elimination of percentage based compensation in all lease agreements for space and/or equipment;
       
    • The elimination of the per click compensation methodology in all lease agreements for either space or equipment; 
       
    • Expand the definition of DHS entity to include those who perform DHS; 
       
    • A decision by CMS to move forward with its DFRR financial transaction reporting program.
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