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Health Care Law . Professor Edward P. Richards LSU Law Center Institutional Issues. Charitable Hospitals. What is the social bargain behind charitable status of hospitals? What is competitive advantage of being a charitable hospital?

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health care law

Health Care Law

Professor Edward P. RichardsLSU Law Center

charitable hospitals
Charitable Hospitals
  • What is the social bargain behind charitable status of hospitals?
    • What is competitive advantage of being a charitable hospital?
    • What issues does this raise during a conversion to a for-profit hospital?
  • Charitable immunity for torts and its demise
who benefits in charitable organizations
Who Benefits in Charitable Organizations?
  • Who stands in the shoes of shareholders in overseeing the mission of charitable organizations?
  • What is surplus?
  • What is the inurnment problem?
    • How do you decide if there is an inurnment problem?
    • What are the constraints on joint ventures between charitable and for-profit organizations?
charitable purpose
Charitable Purpose
  • What is charitable purpose?
    • Is a bigger better hospital a proper charitable purpose?
    • Is more surplus?
  • What are ways to measure community service?
  • What should the IRS or state tax agencies look at in determining charitable purpose?
  • How does EMTALA work?
  • Who does it apply to?
  • Is EMTALA a medical malpractice law?
  • What is emergency care under EMTALA?
    • Why does this pose a problem for chronic disease management?
  • What are the government remedies for violations?
  • What are the private remedies for violation?
  • What incentives does EMTALA give hospitals in poor neighborhoods?
how does emtala benefit specialty hospitals
How does EMTALA Benefit Specialty Hospitals?
  • What is the quality justification for specialty hospitals?
  • What is the cost justification?
  • How does EMTALA affect their economics in LA?
  • What is the impact on community hospitals?
  • What problems does this cause for health care in the community?
theories of tort liability for health care institutions
Theories of Tort Liability for Health Care Institutions
  • Direct negligence
  • Vicarious liability
    • Employee?
  • Control theories
    • Ostensible agency
    • Implied agency
    • Apparent agency
  • What is ERISA?
  • Why was health insurance included in ERISA?
  • What competitive advantages does an ERISA qualified health plan have?
    • Who regulates the plans - state or the feds?
    • Affects on liability for medical necessity decisions?
    • About coverage decisions, i.e., does the plan have to pay for things like experimental care?
  • How do you tell the difference between a coverage decision and a medical necessity decision?
erisa and health care reform
ERISA and Health Care Reform
  • How does ERISA affect state efforts to create statewide access to health care?
    • What was the Maryland Wal-Mart bill?
  • Why did it run afoul of ERISA?
  • What things can a state do that are not a problem for ERISA?
  • What state actions will run afoul of ERISA
    • Think about California and Massachusetts
discrimination law
Discrimination Law
  • How does the ADA affect health care providers?
  • What other discrimination laws do health care providers have to worry about?
  • Explore the issues posed by an HIV or hepatitis B infected health care provider
  • Explore the issues posed by an HIV or hepatitis B infected patient
staff privileges and hospital physician contracts
Staff Privileges and Hospital–Physician Contracts
  • What is the effect of removing a physician from the hospital medical staff?
    • National Practitioner Database issues?
    • Practice issues?
  • What are the due process rights for physicians?
    • Private hospitals?
    • Public (government) hospitals?
  • What legal claims might a physician make for improper termination?
    • How did Congress limit these claims?
    • Why did Congress limit these claims?
labor and employment
Labor and Employment
  • What is employment at will?
  • What is the NLRB?
    • What can unionized physicians do that independent contractor physicians cannot do?
    • Who can form a union?
    • What is a bargaining unit?
    • Why do hospitals hate unions?
  • Discuss the limitations of whistleblower laws
fraud and abuse

Fraud and Abuse

Are You Cheating the Government?

conditions of participation cop
Conditions of Participation (COP)
  • The contract between the providers and CMS
  • If you do not comply with the COP you can be denied payment or excluded from the program
  • If you knowingly violate the provisions of COP it can be grounds for false claims and criminal prosecution
what does the government care about
What does the government care about?
  • 1) Cost
  • 2) Cost
  • 3) Cost
  • 4) Cost
  • 5) Utilization (medical necessity)
  • 6) Quality
  • This is controlled directly
  • The feds decide what they want to pay
  • What are the constraints on pricing?
utilization medical necessity
Utilization (Medical Necessity)
  • What are the issues we have seen on medical necessity?
    • Is the treatment needed?
    • Is it experimental?
    • Is it effective?
    • Is it covered by the policy
  • What are the political constraints on the government in setting utilization rules?
  • Does the government care about quality?
  • What about when quality and cost collide?
  • Should patients have a right to cheaper, lower quality care?
  • Does the federal government directly control quality?
    • States?
    • JCAHO?
fraud issues
Fraud Issues
  • Was the care delivered at all?
    • Durable medical equipment scams
    • Billing for more care that was actually delivered
  • Was the care necessary?
  • Was the care unbundled?
    • (Charging separately for care that should be one charge)
  • Where kickbacks paid?
related laws
Related Laws
  • General government contracting laws
  • Mail and wire fraud
  • RICO
  • False Claims Act
    • Statutory penalties - $5-11,000 per claim
    • Treble damages (whichever is higher)
  • Qui tam - private enforcement
  • CPT codes - AMA
  • Some are time based
  • Others are work-based
    • You get paid more for doing more
    • It does not matter how long you take
    • Levels 1-5
  • Is it better to see a lot of patients or do a lot to each you see?
why use codes
Why use Codes?
  • Uniform billing for all claims
  • Equalize billing across specialties
  • Provide incentives for more comprehensive care
  • Allows computerized payment
  • Allows tracking of medical information derived from claims forms
  • Anything that increases the payment for the encounter
  • Can be legal
    • Optimizing coding
  • Can be illegal
    • Work that was not do, or work that was not properly documented
    • Misstating the patient's medical condition
us v krizek 111 f 3d 934 d c cir 1997
US v. Krizek, 111 F.3d 934 (D.C. Cir. 1997)
  • The judge thinks the doc is a good guy
  • Criticizes the crazy reimbursement system
  • Let the doc put on evidence of standard billing practices to refute fraud charges
  • Thinks the law is crazy because the feds can assess $81,000,000 in penalties
what did krizek do wrong
What did Krizek do wrong?
  • Did he actually treat the patients?
  • Was his treatment medically necessary?
  • What were the issues in billing?
  • Billed for 40-50 minute time code for everyone
    • Who did this
    • What was the justification?
    • Did the doc know?
doc s defense
Doc's Defense
  • He really did spend the time, he just did not spend it all on the patient
  • Lots of stuff you do in the office as part of the care
scienter what does the prosecutor have to show the doc knew
"Scienter" - What does the prosecutor have to show the Doc knew?
  • Intent to defraud?
  • Knowing that the claim is wrong but submitting it anyway?
  • Why does the statute specifically say that there is no need to prove intent to defraud?
  • What is the doc's certification problem?
district court ruling
District Court Ruling
  • Found liability on the days when there were more than 12 codes for 50 minutes
  • Thought that the doc was liable, but an unfortunate system
appeals court
Appeals Court
  • Makes it clear that reckless ignorance is wrong and grounds for liability under the Act
  • Is not sympathetic to the doc's claimed slipshod accounting
is bad care fraud
Is Bad Care Fraud?
  • What would make bad care fraudulent?
  • What are you certifying when you bill for care?
whistleblower provisions
Whistleblower Provisions
  • Only protection if you bring suit
  • Not a good protection
  • Health care is a vindictive business
  • Whistleblowers and folks who are not team players get screwed
interesting issues
Interesting Issues
  • Bribes by device and drug companies
    • Oncologists can make millions on the drugs they administer - should you care?
  • PATH audits (medical schools)
  • HCA/Tenant Health Care
qui tam
Qui Tam
  • Standing in the shoes of the government
  • 15-20%
  • Feds can march in
  • May not apply to claims against states
physicians as fiduciaries
Physicians as Fiduciaries
  • Model Penal Code
  • Informed consent law
  • General principles
    • Knowledge differential
    • Power differential
fiduciary obligations
Fiduciary Obligations
  • The physician acts as purchasing agent for the patient
  • Self-referral laws target incentives that encourage the physician to make certain decisions contrary to the patient's interests
    • Order unnecessary care or tests
    • Choose providers based on criteria other than the best interests of the patient
why does the federal government care
Why Does the Federal Government Care?
  • They claim to care about quality
    • FTC undermines this with talk about the right to buy cheap, crummy care
  • They care a lot about costs
    • Unnecessary care is wasted money and bad for the patient
    • It is assumed that if a kickback is necessary, the care is either worse or more expensive
problems with the federal bias
Problems with the Federal Bias
  • The feds are only concerned with incentives to order more care or to steer care
  • They do not care if there are incentives to deny care
    • Big issue with HMOS and other structured plans
    • Underlines the problem with consumer directed care
the general self referral laws
The General Self-Referral Laws
  • There is broad statutory authority banning deals that create incentives to refer business
  • These deals have to be analyzed to map out the cash flow to determine what incentives the physicians see
the lease scam
The Lease Scam
  • Hospitals often own professional buildings
  • Physicians in the professional are more likely to admit patients to the hospital
    • Proximity
    • Shared services
  • Is the hospital providing incentives for physicians to be in their professional building?
  • How do you put a fair market value on proximity?
the recruitment scam
The Recruitment Scam
  • The hospital sees that there is a need for physicians with specific skills in the community
  • The hospital recruits a physician with a relocation package
    • Moving expenses
    • Salary support for a period of time
  • Does any of this obligate the physician to refer to that hospital?
  • What if it is the only hospital in the community?
the lab scam
The Lab Scam
  • There is a huge amount of money in medical lab tests
    • Hence my skepticism about the real causes of defensive medicine
  • Is the lab providing incentives to the physician?
    • Direct kickbacks
    • Subsidized services, like renting space in the physician's office
    • Gifts - trips to the fishing camp
the hospital investment scam
The Hospital Investment Scam
  • Hospital wants to increase the flow of surgical patients
  • Hospital sets up surgical suite as a separate corporation and sells surgeons shares
  • Earnings are based on the capital contribution
  • What is the impact of a admitting patients on the physician's return on investment?
the practice purchase scam
The Practice Purchase Scam
  • Hospital buys the physician's practice
  • Hires the physicians to deliver care in the new hospital practice
  • Is this really a sale or just a kickback scheme?
  • How was the business valued?
  • What are the terms for payment?
    • Is any of the payment contingent on referrals?
the stark law approach
The Stark Law Approach
  • Stark has a list of 11 defined services
  • Any deals that influence the ordering of these services are banned
  • There are a series of safe harbors for transactions that are not thought to be abusive
philosophy of stark
Philosophy of Stark
  • Simplify the law by clearly outlining the forbidden areas
  • Create safe harbors that can be used as models
problems with stark
Problems with Stark
  • Too much money in the forbidden areas
  • Doc and hospitals go the extra yard to game the system
  • Spotty to non-existent enforcement
    • No clear boundaries
    • Puts complying entities at a completive disadvantage
exceptions to stark
Exceptions to Stark
  • Physician controlled ancillary services
    • If the doc runs the lab and it is part of the practice, it is not covered by Stark
    • What is the incentive?
    • Is it even worse than for an outside lab?
analyzing stark transactions
Analyzing Stark Transactions
  • Is it a covered service?
  • Does it met the ancillary service exception?
  • Is there any financial linkage between the provider and the referring doc?
the integrated provider exception
The Integrated Provider Exception
  • Integrated providers provide both medical and hospital and other services
  • It is OK to tell employees where to refer patients
  • You cannot pay employees a bonus for referrals, but they can share in the profits (gain share)
  • Does this exception make any sense?
  • Does it just provide a way for hospitals to avoid self-referral laws by buying physician's practices?
fundamental assumptions
Fundamental Assumptions
  • Competition is good
  • Big is not bad
  • Monopoly practices are bad
  • People should be allowed to buy whatever quality they want
  • The market will provide whatever is necessary
market organization
Market Organization
  • Vertical markets
  • Horizontal markets
  • What is the market for services?
    • Rural markets with limited providers
    • Urban markets
  • Are there specialized services?
monopoly power what one competitor does
Monopoly Power - What one Competitor Does
  • What does monopoly power allow?
    • Unilateral anticompetitive actions
  • Tying
joint action
Joint Action
  • Any time competitors make agreements that affect competition there is an antitrust question
  • Professional standards can be anti-competitive vehicles
  • Why are docs such a problem?
  • Are labor unions an alternative?
  • Federal prosecution
    • Criminal fines
    • Prison time
  • Civil enforcement by the FTC
    • Fines
    • Treble Damages
  • Private enforcement
    • Treble damages and attorney's fees
per se v rule of reason violations
Per Se v. Rule of Reason Violations
  • Per se violations only require proof of the violation, not the market power of the competitors or the effectiveness of the action
  • Rule of reason violations require detailed market analysis
  • The defendant is well on the way to winning if the court decides it is rule of reason
the professional standards defense
The Professional Standards Defense
  • Is it a defense that the restraints improve patient care?
    • Why does the FTC not care about quality?
    • What are other controls on quality?
  • Can you do group action through a professional organization?
    • Is JCAHO an illegal conspiracy?
per se violations through joint action
Per Se Violations Through Joint Action
  • Group boycott
    • Wilk - Chiropractor
    • Indiana Federation of Dentists
  • Market division agreements
  • Price fixing
the advertising cases
The Advertising Cases
  • Lawyer advertising
    • First case was advertising lower prices
    • Then any truthful advertising
  • Physicians
    • Followed the lawyer cases
physician staff privileges cases
Physician Staff Privileges Cases
  • How can staff privileges become an antitrust issue?
  • Is peer review among competitors always an antitrust issue?
  • How could the staff avoid this claim?
  • What did the feds do to protect peer review?
    • Federal Health Care Quality Improvement Act
how do antitrust issues change with health care consolidation
How do Antitrust Issues Change with Health Care Consolidation?
  • What can large group practices do that individual docs cannot do?
  • How about hospitals buying physician practices?
    • How does this affect competition?