Month: April, 2017

The Office of Inspector General and the Health Care Compliance Association Collaborate to Provide Guidance on Effective Compliance Programs

On March 27, 2017 the Department of Health and Human Services Office of Inspector General (“OIG”) and the Health Care Compliance Association (“HCCA”) released a document called Measuring Compliance Program Effectiveness: A Resource Guide (the “Guide”). The Guide is the collaboration of forty compliance professionals and OIG staff that met in January 2017 to discuss ways to measure the effectiveness of a compliance program. Given the historically limited information provided by the OIG regarding compliance programs this document provides important insight to the industry regarding how to assess the effectiveness of a compliance program.

The Guide takes the basic seven elements of a compliance program and provides lists of individual compliance program metrics to consider in implementing each item. The areas addressed in the Guide including the following:

  1. Standards, Policies and Procedures, including policy/procedure access, accountability for their update and the quality of their content
  2. Compliance Program Administration, including the roles of those responsible, the culture fostered by the compliance personnel, incentives, evaluations and risk assessment based on staffing/knowledge base
  3. Screening and Evaluation of Employees, Physicians, Vendors and other Agents, including accountability, potential conflicts of interest, disclosures and proper screening protocols
  4. Communication, Education and Training on Compliance Issues, including proper training, communication and accountability
  5. Monitoring, Auditing and Internal Reporting Systems, including proper processes, risk assessments, proper monitoring and auditing and timely corrective action plans/remediation
  6. Discipline for Non-Compliance, including consistency, awareness and documentation
  7. Investigations and Remedial Measures, including proper guidelines, consistency, quality, process, documentation, timeliness, communication and competency

The Guide is cautious to point out that it is not a “checklist” of required items to be applied wholesale in assessing the effectiveness of a compliance program. Rather, the items are intended to serve as broad ideas of metrics for health care organizations to choose based upon which best fit their needs. The Guide even states that an attempt to use all or even a large number of the items in the Guide would be impractical and is not recommended. Thus, it is important for health care organizations to consult with their compliance department and legal counsel to assess which best fit their needs and assist in advancing the effectiveness of their compliance program. Factors such as the organization’s risk areas, size, resources, industry segment, etc. are all critical to the analysis of which items to utilize.

Potential Pitfalls For the Health Care Private Equity and Family Office Investor

Despite the uncertain reimbursement environment and the strict regulatory scheme, health care remains an attractive industry for private equity and family office investors.  On the other side, health care providers facing a murky future and looking for capital to expand their platforms are looking for the opportunities presented by private equity and family office investors.  The resulting marriage can prove fruitful for both parties.

Investors are typically aware of the tough regulatory environment in health care, but are not necessarily up to speed on what they should be looking for when conducting due diligence on potential provider partners.  Here are a few topics to keep in mind:

  1. Coding:  Providers have been scrutinized in recent years for improper coding, upcoding and insufficient documentation in the medical record to support the code provided for the service rendered.  The code directly corresponds with the reimbursement provided to the provider for the service.  Improper coding, whatever the reason for it, can result in recoupment of payments, civil penalties and criminal penalties.  An investor should engage a qualified and experienced coding consultant to audit the potential partner’s coding practices.
  2. Compliance:  Some providers are required by law now to have robust compliance programs in place while others are not required, but it is strongly recommended and may become required for all sometime in the near future.  Compliance programs consist of more than just a binder of policies and procedures collecting dust on the shelf; they include regular audits and risk management programs.  Experienced counsel should be engaged to review and audit a potential partner’s compliance program.
  3. Self-Referral and Anti-Kickback Laws:  These laws place strict limitations on relationships between providers and other potential referral sources.  What may be the valuable keys to the success of a provider (and, ultimately, an investor’s returns) exists in a dangerous minefield and tangled regulatory maze.  This goes beyond the well-known federal Stark Law and Anti-Kickback Statute and extends to various state versions of those laws, some of which mimic their federal counterparts and others which are completely different.  Experienced counsel should be engage to evaluate all relationships which may implicate these laws.
  4. Corporate Practice of Medicine Doctrine:  See Cecylia Hahn’s March 13, 2014 post on this blog for a complete explanation of this concept, but also be aware that many states have some form of this doctrine.  Of course, the doctrine is not identical across the states that employ it.
  5. Licensing:  Many states require that certain types of health care facilities be licensed and, in some instances, obtain a certificate of need before getting licensed.  It is vital to ensure that the facility has all of the licenses and permits that it needs as penalties for non-compliance can range from daily monetary penalties to complete shutdown of a facility.  Requirements vary from state to state.  Additionally, an investment, depending on the structure, may trigger a change of ownership or control that requires notice or consent of a licensing authority in connection with the investment.
  6. HIPAA:  For many years, HIPAA existed with little enforcement.  The regulatory scheme was out there, but a violation did not appear to lead to any consequences.  No more.  Heavy penalties for violations have been publicized in recent years, from hundreds of thousands of dollars to tens of millions of dollars, from small practices to large institutions.  When a breach happens, the government has seized upon that opportunity to examine whether the provider is strictly following HIPAA, including have the required policies and procedures in place and conducting risk assessments.  Experienced counsel should be engaged to review and audit a potential partner’s HIPAA compliance program.

The above are just a few of the areas that a potential investor should evaluate when exploring a transaction with a potential provider partner.  The rewards may be achievable in the partnership, but it is important to conduct the appropriate due diligence to avoid the possible penalties.

Value-Based Reimbursement for Care through a Clinical Integration Network

The current environment in health care reimbursement is causing providers to reassess the way in which they are reimbursed for services. For many years now, reimbursement has been moving away from fee-for-service and toward value-based reimbursement, and most notably alongside the implementation of the Affordable Care Act. Implementing models for such reimbursement, however, has had a certain lag time.  Among other reasons, change is time-consuming, expensive, and uncomfortable. However, over time, factors such as competition have encouraged providers to dip their toe in the value-based reimbursement for care model.  This article discusses a particular type of model that reimburses for value-based care, that is, the clinically integrated network.

Most commonly, a clinically integrated model brings together hospitals and physicians in a newly formed entity known as a clinically integrated network.  A CIN may take on a few different forms. One form may involve a hospital (or its captive professional corporation if we are in a corporate practice of medicine state) as the sole member of the CIN, with participating physician agreements running to the CIN.  The physicians would have a strong presence on the governing board of the CIN. Physician empowerment is a key component of the CIN as the physicians are the front line to the provision of and reporting on care.  Structuring the CIN this way alleviates the regulatory issues (e.g., the Stark Law) that physician ownership in the CIN would present.  Another form of CIN may involve physician ownership (in addition to physicians provider agreements) running to the CIN.  The hospital (or its captive PC) would also have equity in the CIN.  Board membership in this scenario would likely be based on percentage of ownership in the CIN. The physician equity model would require fitting the arrangement into a Stark exception, which may be challenging.

Once formed, a major value proposition of a CIN is to leverage the network with governmental and commercial payers in contracting for payment arrangements, particularly given the CIN is now in a position to receive payment based on performance for quality and efficiency metrics.

In setting quality metrics, a CIN may borrow from the Medicare Accountable Care Organization Shared Savings Program model.  (Both the CIN and the ACO strive for quality care and reward participants for the resulting shared savings.)  Those metrics fall into one of the following four domains: (1) Patient / Caregiver Experience, (2) Care Coordination / Patient Safety, (3) Preventive Health, and (4) At-Risk Population.

Patient / Caregiver Experience measures may include timely care, appointments and information; doctor/patient communication; patient rating of doctor; access to specialists; health promotion and education; shared decision making; and health/functional status.

Care Coordination / Patient Safety measures may include readmissions; admissions for certain conditions (e.g., asthma, heart failure); percentage of primary care physicians who qualify for EHR incentive payments; medication reconciliation; and falls and screening for fall risk.

Preventive Health measures may include influenza immunization; pneumococcal vaccination; adult weight screening and follow up; tobacco use assessment and cessation intervention; depression screening; colorectal cancer screening; mammography screening; and blood pressure screening.

Finally, At-Risk Population measures would address chronic conditions such as diabetes and hypertension.

Physician participants in the CIN, guided in their care of patients by these measures, would then also report on the data they have gathered for each measure, the idea being that savings to payers stemming from positive results would be shared with the CIN and trickle down to the physician participants.

The CIN is just one model that encourages value-based care to obtain value-based reimbursement.  Other models for the provision of medical care that consider value-based measures include integrated physician associations, physician-hospital organizations, and patient-centered medical homes.  Whether or not a new health care law is passed (or the ACA is amended) in the near future, it appears that value-based reimbursement for care is here to stay.

Governor Christie Signs Bill Aimed at Combating Opioid Abuse

On February 15, 2017 Governor Christie signed into law P.L. 2017, c. 28, Senate No. 3 designed to curb the ongoing opioid abuse epidemic facing the State of New Jersey.  The scope of the overwhelming opioid epidemic facing the State was demonstrated by the bipartisan support the bill received.  Indeed, the bill passed with virtually no opposition, passing with a Senate vote of 33-0 and an Assembly vote of 64-1 with 5 abstentions.

The bill takes a multipronged approach to combating the ongoing opioid crisis by: (1) requiring insurance companies to provide coverage for both inpatient and outpatient substance abuse treatment; (2) limiting the amounts of opioid medications practitioners can prescribe; and (3) imposing additional continuing education requirements on the medical community.

In regard to insurance coverage, the bill requires insurers to provide 180 days per plan year of inpatient and outpatient treatment of substance abuse disorders when determined to be medically necessary by the patient’s physician, psychologist or psychiatrist without the need for any prior authorization.  The bill further prohibits any retrospective or concurrent review of medical necessity for the first 28 days of inpatient or intensive outpatient substance abuse treatment.

Thereafter, inpatient treatment may be subject to concurrent review which cannot be initiated more frequently than two week intervals.  However, the law provides the patient with both internal and external review processes on an expedited basis if the insurer’s review determines treatment is no longer medically necessary.  Moreover, even if the insurer’s determination is upheld on appeal, the patient cannot be discharged until after all appeal rights have been exhausted and the insurer must provide benefits through the date following the final determination.

Conversely, outpatient treatment after the initial 28 days may be subject to retroactive review of medical necessity by the insurer.  Nevertheless, it is not until the first 180 days of either inpatient or outpatient substance abuse treatment has passed that further treatment can be subject to preauthorization by the insurer.

The bill further limits initial prescriptions of opioid medications to a five day supply which shall be for the lowest effective dose of the immediate-release opioid medication.  Prior to issuing an initial prescription a practitioner is required to: (1) take and document a thorough medical history, including the patient’s past experience with non-opioid medication and pain management techniques, and the patient’s substance abuse history; (2) conduct and document a physical examination of the patient; (3) develop a treatment plan focused on determining the cause of the patient’s pain; and (4) access relevant information from the Prescription Monitoring Program.

Four days after the issuance of an initial opioid prescription, a practitioner may issue a subsequent prescription for up to a thirty day supply. However, such prescriptions may be written only if: (1) the patient’s prior prescription for the opioid drug was given within the last year; (2) the practitioner determines the subsequent prescription is necessary and appropriate to the patient’s treatment needs and documents his or her rationale for that determination; and (3) the practitioner determines and documents that the subsequent prescription does not present an undue risk of abuse, addiction or diversion.

Moreover, if a third prescription for opioid medication is given the practitioner must enter into a “pain management agreement” with the patient.  The “pain management agreement” is a written contract executed between practitioner and patient which is designed to: (1) prevent the development of physical or psychological dependence; (2) document both the practitioner’s and patient’s understanding of the pain management plan; (3) establish the patient’s rights in regard to treatment  and obligations associated with the use and storage of opioid medications; (4) identify the specific medications and other modes of treatment that are included in the pain management plan; (5) specify the measurers the practitioner may employ to ensure the patient’s compliance, including random specimen screens and pill counts; and (6) establish the process for terminating the agreement, and consequences if the practitioner has reason to believe the patient is not complying with the agreement.

Furthermore, the bill attempts to ensure that patients taking these medications are doing so with informed consent.  To do so, prior to issuing the first and third prescriptions of an opioid drug a practitioner is required to discuss with the patient, or the patient’s parent or guardian if under 18 years of age, the risks associated with the drugs being prescribed.  This discussion must include, but is not limited to: (1) the reasons the prescription is necessary; (2) alternative treatments that may be available; and (3) the risks of addiction and overdoes associated with the drugs being prescribed, including that: (i) opioids are highly addictive, even when taken as prescribed; (ii) that there is a risk of developing physical of psychological dependence on the drug; and (iii) that taking more opioids than prescribed, or mixing opioids with alcohol, sedatives or benzodiazepines can result in fatal respiratory depression.  A record of these discussions must be documented in the patient’s chart.

There are additional requirements on practitioners treating patients requiring long term treatment, exceeding three months, from opioid medications.  Under those circumstances, the practitioner must: (1) at a minimum of every three months, review and document the course of treatment, any new information regarding the source of the pain and the patient’s progress toward treatment objectives; (2) determine and document whether the patient is experiencing problems associated with physical and psychological dependence prior to each prescription renewal; (3) periodically make and document reasonable efforts, unless clinically contraindicated, to stop the use of opioid medications by attempting other medications or treatments to reduce the potential for abuse or dependency; (4) review Prescription Drug Monitoring information; and (5) monitor compliance with the pain management agreement.

Finally, the bill adds additional continuing education requirements on practitioners.  Specifically, to meet their continuing education requirements practitioners are now required to complete at least one credit per compliance period of educational programs on topics or issues concerning prescription of opioid medications including responsible prescribing, alternatives for managing and treating pain and the risks and signs of opioid abuse, addiction and diversion.  These continuing education requirements apply to physicians, physician assistants, nurses, advanced practice nurses, optometrists, dentists and pharmacists.

The new bill is a significant attempt to curb the opioid epidemic facing New Jersey.  While it remains to be seen how effective these attempts will be, if success is shown, given Governor’s Christie’s recent appointment by President Trump as the chairman to the White House’s commission to combat America’s opioid problem, this bill may form the basis for federal attempts to combat this nationwide epidemic.