Source: https://www.healthcapital.com/hcc/newsletter/01_19/HTML/DIALYSIS/convert_hc_topics_dialysis_ctrs_regulatory_1.23.19.php
Timestamp: 2019-04-22 04:48:22+00:00

Document:
Healthcare organizations, including dialysis centers, face a range of federal and state legal and regulatory constraints, which affect their formation, operation, procedural coding and billing, and transactions. With existing federal and state regulations related to medical liability, licensure, accreditation, certificate of need, fraud and abuse, and antitrust laws, the expansive regulatory landscape of the U.S. healthcare industry greatly shapes the practice of medicine and the delivery of healthcare services. This fourth installment in the five-part series regarding dialysis centers will review the regulatory environment in which these enterprises operate.
Government regulators perceive many types of healthcare business arrangements, which in other industries are often regarded as typical motivations inherent in commercial relationships between parties, as exhibiting the potential for a significant risk of fraud. Fraud and abuse laws, specifically those related to the federal Anti-Kickback Statute (AKS) and physician self-referral laws (the “Stark Law”), may have the greatest impact on the operations of healthcare organizations.
The federal AKS and Stark Law are generally concerned with the same issue – the financial motivation behind patient referrals. However, while the AKS is broadly applied to remuneration between providers or suppliers in the healthcare industry and relates to any item or service that may be paid for under any federal healthcare program, the Stark Law specifically addresses the referrals from physicians to healthcare entities with which the physician has a financial relationship for the provision of defined services that are paid for by the Medicare program. Additionally, while violation of the Stark Law carries only civil penalties, violation of the AKS carries both criminal and civil penalties.
“(1) The EPO and other dialysis-related drugs are furnished in or by an ESRD facility. For purposes of this paragraph, “EPO and other dialysis-related drugs” means certain outpatient prescription drugs that are required for the efficacy of dialysis and identified as eligible for this exception on the List of [Current Procedural Terminology/ Healthcare Common Procedure Coding System] CPT/HCPCS Codes; and “furnished” means that the EPO or dialysis-related drugs are administered to a patient in the ESRD facility or, in the case of EPO or Aranesp (or equivalent drug identified on the List of CPT/HCPCS Codes) only, are dispensed by the ESRD facility for use at home.
(3) All billing and claims submission for the EPO and other dialysis-related drugs does not violate any Federal or State law or regulation governing billing or claims submission.
The regulatory scrutiny of healthcare entities has significantly increased in recent years. Therefore, the severe penalties that may be levied against healthcare providers, including dialysis centers, under the AKS or the Stark Law will likely raise a hypothetical investor’s estimate of the risk of investing in a Dialysis Center. There has been a continuous change and innovation in the technological environment of dialysis centers, which will be discussed in the fifth and final installment of the series.
“Criminal Penalties for Acts Involving Federal Health Care Programs” 42 U.S.C. § 1320a-7b(b)(1) (2013).
“Medicare and Medicaid Patient and Program Protection Act of 1987” Pub. L. No. 100-93, § 2, 101 Stat. 680, 680-681 (August 18, 1987).
“The Balanced Budget Act of 1997” Pub. L. 105-33, § 4304, 111 Stat. 251, 384 (August 5, 1997).
“Re: OIG Advisory Opinion No. 15-10” By Gregory E. Demske, Chief Counsel to the Inspector General, Letter to [Name Redacted], July 28, 2015, http://oig.hhs.gov/fraud/docs/advisoryopinions/2015/AdvOpn15-10.pdf (Accessed 4/24/18), p. 4-5; “U.S. v. Greber” 760 F.2d 68, 72 (3d Cir. 1985).
“Health Care Reform: Substantial Fraud and Abuse and Program Integrity Measures Enacted” McDermott Will & Emery, April 12, 2010, p. 3; “Patient Protection and Affordable Care Act” Pub. L. No. 111-148, § 6402, 119, 124 Stat. 119, 759 (March 23, 2010).
“Health Care Fraud and Abuse Laws Affecting Medicare and Medicaid: An Overview” By Jennifer A. Staman, Congressional Research Service, September 8, 2014, https://www.fas.org/sgp/crs/misc/RS22743.pdf (Accessed 12/10/18), p. 5.
;McDermott Will & Emery, p. 3; “Patient Protection and Affordable Care Act” Pub. L. No. 111-148, § 6402, 124 Stat. 119, 759 (March 23, 2010).
“Liability under subchapter III of chapter 37 of title 31” 42 U.S.C. § 1320a-7b(g) (2013).
“Civil Monetary Penalties Inflation Adjustment for 2017” Federal Register Vol. 82, No. 22 (February 3, 2017) p. 9133.
“Medicare and State Health Care Programs: Fraud and Abuse; Clarification of the Initial OIG Safe Harbor Provisions and Establishment of Additional Safe Harbor Provisions Under the Anti-Kickback Statute; Final Rule” Federal Register Vol. 64, No. 223 (November 19, 1999) p. 63518 and 63520.
“Re: Malpractice Insurance Assistance” By Lewis Morris, Chief Counsel to the Inspector General, U.S. Department of Health and Human Services, Letter to [Name redacted], January 15, 2003, http://oig.hhs.gov/fraud/docs/alertsandbulletins/MalpracticeProgram.pdf (Accessed 3/28/18), p. 1.
“Exceptions” 42 C.F.R. §1001.952 (October 1, 2017).
“CRS Report for Congress: Medicare: Physician Self-Referral (“Stark I and II”)” By Jennifer O’Sullivan, Congressional Research Service, The Library of Congress, July 27, 2004, http://www.policyarchive.org/handle/10207/bitstreams/2137.pdf (Accessed 7/2/12), p. 15; “Limitation on certain physician referrals” 42 U.S.C. §1395nn (2013); “Avoiding self-referral: Understanding the Stark laws” Medical Economics, April 1, 2015, http://www.medicaleconomics.com/practice-management/avoiding-self-referral-understanding-stark-laws (Accessed 1/22/18).
42 U.S.C. §1395nn (a)(2) (2013).
42 U.S.C. §1395nn (h)(1) (2013).
“General exceptions to the referral prohibition related to both ownership/investment and compensation” 42 C.F.R. 411.355 (g) (1-4) (2010).
“Medicare Program; Revisions to Payment Policies Under the Physician Fee Schedule and Other Revisions to Part B for CY 2016; Final Rule” Federal Register Vol. 80, No. 220 (November 16, 2015) p. 71315.
“OIG Work Plan: 2018 Year in Review and a New Approach for 2019 – Hospitals” Office of Inspector General, December 11, 2018, https://www.hcca-info.org/Portals/0/PDFs/Resources/Conference_Handouts/webConferences/december11attendeecopy.pdf?ver=2018-12-05-140938-057 (Accessed 1/21/19), p.12.
“California proposes bill to regulate dialysis clinics” By Maria Castellucci, Modern Healthcare, March 30, 2017, https://www.modernhealthcare.com/article/20170330/NEWS/170339996 (Accessed 1/21/19); “Mandating Staffing Ratios in Hemodialysis Facilities” By Anjay Rastogi and Glenn M. Chertow, Clinical Journal of American Society of Nephrology, Vol. 13, No. 7 (July 2018), p. 1110-1112.
“CON-Certificate of Need State Laws” National Conference of State Legislatures, August 17, 2018, available at: http://www.ncsl.org/research/health/con-certificate-of-need-state-laws.aspx (Accessed 1/23/19).

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