Compliance Risk as Side
Effect of the Shift to Outpatient
There’s an unfortunate side effect
of the increasing velocity of the movement of care from the hospital to the
independent setting (for example, think independent ASC/outpatient setting
instead of hospital outpatient department instead of inpatient
That's the fact that many independent
facilities and ventures either lack the institutional structure (e.g., a
compliance department or competent legal counsel) or are far more
entrepreneurial and risk-desensitized than hospital systems (which are still
not paragons of compliance) to appreciate the severity of what I call the
“stupid compliance mistake,” stupid in the sense that they’re
as obvious as a plate of pasta.
Let’s look at kickbacks as an
In everyday terms, the federal
Anti-Kickback Statute (AKS) prohibits the knowing and willful remuneration
— that is, the offer, solicitation, receipt, or transfer of anything of
value — for referrals of “federal health care program”
patients. The affected programs include Medicare, Medicaid, TRICARE, and about
a dozen others.
a criminal statute. Violation can lead to fines of up to
$25,000 for each kickback, in addition to even greater civil penalties, plus
prison time of up to 5 years for each kickback. So, for example, paying a
kickback in connection with 10 Medicare claims can land you in prison for 50
Sure, maybe you won’t end up doing
that much time, but as I recently wrote on the blog [see Drugs, Sentencing, and Lock (and Roll on to Another Kickback
Prosecution)] two former medical practice partners, Drs. John Couch and
Xiulu Ruan, were sentenced, respectively, to 20 and 21 years in federal prison.
(The duo was also ordered to make restitution of $6,282,023.00 to Medicare,
$3,649,092.97 to Blue Cross/Blue Shield of Alabama, $2,285,170.70 to Tricare,
and $1,695,929.00 to United Heath Group.)
In addition, violations of the AKS can
trigger other federal and state crimes. Most, perhaps all, states have some
companion statute prohibiting kickbacks of “fee-splitting.” Others
have laws criminalizing “commercial bribery.” The transactions and
communications underlying kickback violations, for example the exchange of
emails or even electronic banking transfers, constitute wire fraud. And,
that’s just the start.
Yet a chain of ASCs in Georgia seemingly
entered into a deal with a CRNA group to accept drugs paid for by nurse
anesthetists in exchange for exclusive contracts.
ASCs are reimbursed by both federal
healthcare programs and commercial payors on a CPT code based system. Inherent
in the reimbursement is payment for associated costs, including anesthesia
drugs. Demanding or offering free drugs (or for that matter, free services such
as “helpers” to “assist” the CRNAs in the ASC) leads
both to AKS (as well as False Claims Act) hell.
In the fallout of that Georgia deal, the
CRNA group involved, Sweet Dreams Nurse Anesthesia, paid $1,034,416 to the
United States government plus $12,078.79 to the State of Georgia to resolve the
In fact, the allegations were broader
than just free drugs: the U.S. Attorney also alleged that an affiliate of Sweet
Dreams agreed to fund the construction of an ASC in exchange for contracts for
Sweet Dreams’ selection as the exclusive anesthesia provider at that
facility and a number of other ASCs. How did they miss the danger in that
In fairness, it must be noted that Sweet
Dream fully cooperated with the governmental investigation and that, legally
speaking, the claims were only allegations, in that there was no determination
of, and Sweet Dreams did not admit, liability. (But Sweet Dreams is out the
$1,046,494.79 paid in settlement plus what one might guess is a huge amount of
Yes, I know that as business moves from
the hospital to the outpatient setting, many physicians and other providers are
finding it harder to compete for business, and that many controlling the
business are brazen about wanting something back. And, yes, I know that many
who control facilities don’t think (why they don’t think is another
question) about the compliance issues inherent in the business relationships
they propose or accept.
However, the real world impact of ASCs
(and pharmacies and clinical labs, etc.) gone wild is investigations (which
cost money, lots of money, to deal with), whistleblower lawsuits (which cost
money, lots of money, to deal with), and criminal prosecutions (which cost
money, lots of money, to deal with plus, as with Drs. Couch and Ruan, decades
If you can’t trust a hospital that
claims that the arrangement has been vetted by its attorneys and is compliant
(you can’t), you certainly can’t trust an outpatient facility, or
your co-owners of the outpatient facility, to tell you that a stupid compliance
mistake isn’t really a stupid compliance mistake.
The takeaways for you:
1. Be careful.
2. We can perform a compliance
assessment of any proposed dealings with those who refer to you, or to whom you
3. We can perform a "red team"
compliance assessment (i.e., a simulated government investigation) of your
current dealings. It's better to find your own weaknesses than to permit a
whistleblower or an FBI agent to find them for you.
Wisdom. Applied. 107 - Why You Must
Understand How Sky-High Hospital CEO Turnover Impacts Your Practice
Regardless of how much you trust a
certain hospital CEO's intentions with your medical group's business future,
always get promises in writing. You never know who the next CEO will
“A fork! a fork! my kingdom for a
Excuse the bad Shakespeare, but if a
restaurant can lose business due to the lack of a clean fork for the
entrée, think what this means for your business.
Last week, while dining at a very nice,
and somewhat expensive, restaurant, the busboy clearing the salad plates, which
followed the first, appetizer, course, saw one fork, the one nestled on the
empty salad plate, at my place setting, and said, as he reached to remove the
plate, “please keep your fork.”
If I were eating at Denny’s or the
local pizza joint, I’d understand the request and be happy to keep my old
fork. But at close to $125 a person, it either boiled down to the management
having hired an idiot or the managers having no idea how to manage, which is,
in reality, the same thing: a highly effective business
Years ago, I spoke at a national
specialty healthcare conference and, following a quip that if the physician
practices represented in the room didn’t wake up to some significant
managed-care contracting issues, they’d soon all find themselves working
simply for Medicaid rates.
A hand popped up from the crowd, and the
physician attached to it told me that his practice was almost entirely Medicaid
and he was doing extremely well. I had to meet that guy on a more personal
level, and I did; in fact, I represented him for years.
His model, which included the operation
of many walk-in, as well as appointment based, clinics, competed by offering
what could almost be described as white glove treatment (the interpersonal
kind, the “we show that we care about you” kind) to patients that
other practices viewed as low-paying. In essence, he gave them a metaphorical
clean fork with each metaphorical course of service.
These small things, from the way that a
receptionist answers the phone, to the speed at which you return a phone call,
to the exchange of pleasantries, are like the clean fork, the warm bowl of nuts
in first class, the offering of a black napkin instead of a white one to those
wearing dark pants, that are, essentially, extremely inexpensive in cost but
relationship-making in reality.
They are the small hinges that swing
wide doors. They are the evidence that you understand the lifetime value of a
customer/patient/what ever you call them. They are the fertile soil for
relationships as opposed to one-off transactions.
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Success. Even more success. It’s
what you want. Welcome to the club, which appears to be getting more exclusive
every day, not due to evolution but to self-selection. Of course, sometimes we
get stuck, or at least delayed, by the problems that pop up, blocking the way.
But for many, the problem is that they don’t know what the problem is.
I’ve been working with medical group leaders with the aim of increasing
their group’s profits and managing their risk of loss for over 30 years.
Does that mean that I have all of the answers? No. But what I do have is a
point of view, a way of thinking about your success. So go ahead and start
reading now. No one is going to do it for you. Which, by the way, is thinking
tool number one.
Having fallen for the fallacy that
there’s profit in market share, hospitals have gorged on acquisitions and
on employment and alignment of physicians. Many physicians have been willing
participants through practice sales and in the belief that there’s safety
in hospital employment. But it’s becoming evident that physician
employment leads to losses and that integrated care delivers neither better
care nor lower costs. And now, technology is about to moot many of the reasons
for a hospital’s existence. How can your practice survive and even thrive
in the post-hospital world?
Some days, it seems as if
everyone, from anesthesia groups to vascular surgery practices, is talking
about selling their practice to a larger group, to private equity investors, or
to a hospital.
The reality is that some practices can
be sold, some can never be sold, and some have nothing to sell. The reality also is that there are a number of
strategic alternatives to a practice sale.
A perfect storm of factors is
accelerating the market for hospital-based medical group mergers and
The healthcare market is changing
rapidly, bringing new sets of problems. How can you find a solution, how can you engage in the right
development of strategy, and how can you to plan your, or your group’s,
future without tools to help clarify your thinking?
Directions is a collection of thoughts
as thinking tools, each intended to instruct, inform, and even more so, cause
you to give pause to instruct and inform yourself.
If you're an independent learner or need a refresher on a current
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Recent Interviews and Published
Are you prepared for guerrilla warfare? Mark's
article, The Flea That Killed the Medical Center CEO: A Cautionary
Tale, published in the Fall 2017 issue of Communique. Read or download
Mark's article, How to Prevent
Your Medical Group From Getting Robbed of its Staff, was published in
the Summer 2017 issue of the Pennsylvania Society of Anesthesiologists'
magazine, Sentinel. Read or download here.
Read some strategies for the inevitable
Hospital CEO turnover in Mark's article Hospital CEO Turnover:
What You Must Know and Do to Protect Your Anesthesia
Group featured in the summer edition of Communique. Read or download here.
Mark covers the trend of hospital based
care an article entitled The Impeding Death of Hospitals: How to
Help Your Clients Survive featured in Today's CPA. Read or download here.
Mark's article Why Your Compliance Efforts May Be
Worthless was published in the Spring 2017 volume of Communique. Read or download here.
was quoted in the article ASC Regulatory Areas That Developers Need To
Pay Attention To published on Nov. 9, 2016 in The Ambulatory M&A
Advisor. Read or download here.
Mark's article OIG Advisory Opinion
Secrets and Strategies was published in the Summer 2016 volume
of Communique. Read or download here.
Finders keepers, losers weepers. Except in connection with overpayments from
Medicare, then it’s a violation of the federal False Claims Act leading
to significant liability—that is, unless you repay the overpaid sum
within 60 days. Read CMS Resets the Clock for Return Of Medicare
Overpayments published on AnesthesiologyNews.com in May 2016. Read or download here.
Mark's article A New Strategy
To Profit From Interventional Radiology, co-authored with Cecilia
Kronawitter, was published on AuntMinne.com on May 23, 2016. Read or download here.
Three of Mark’s blog posts were
republished as a column entitled Practice Challenges in the
Spring 2016 issue of the Pennsylvania Society of Anesthesiologists Newsletter,
the Sentinel. Read or download here.
Mark's article Is There An
Interventional Radiology ASC (irASC) In Your Future? was
published in the April/May 2016 volume of Radiology
Business Journal. Read or download here.