Pay close attention to the outcomes of three cases winding their way through the courts this summer, legal experts advise.
On deck are cases that could reshape Stark Law, the Anti-kickback Statute, and the 60-day federal overpayment rule. Decisions on these cases could affect billing practices and practices arrangements, as well as federal reporting obligations. Below is a selection of critical health law cases facing doctors and how they might impact practice.
1. Council for Urological Interests v. Sylvia Burwell et al.
Summary: This case centers on whether the federal Stark Law can prevent physicians from referring patients to hospitals to which the physicians lease equipment, among other things. In 2008, the U.S. Department of Health & Human Services (HHS) issued regulations that effectively prohibit physicians who lease medical equipment to hospitals from referring their Medicare patients to these same hospitals for outpatient care involving that equipment. The regulation prohibits physicians from charging hospitals for the leased equipment on a per-use basis, or a “per-click” basis as it is commonly known. In 2009, the Council for Urological Interests – a nonprofit corporation owned by urologists – sued, claiming the text and legislative history of the Stark Law preclude the HHS from enforcing the per-click ban. The regulation limits the ability of physicians who own joint ventures to refer their patients to receive services under these arrangements, the plaintiffs said. A district court ruled in favor of the HHS, and the Council appealed. A spokeswoman for the U.S. Department of Justice declined to comment for this story.
Case status: In June 2015, the U.S. Court of Appeals for the District of Columbia Circuit ruled that the HHS must reconsider its per-click referral ban. The court suggested that the agency may have misconstrued the legislative history of the Stark Law in order to enact the rule.
Why doctors should care: The ultimate outcome of the case will determine whether or not physicians can engage in per-click leases under Stark Law, said Chicago health law attorney Ericka L. Adler.
Ericka L. Adler
“When HHS changed the regulations to no longer allow the per-click arrangement where physicians were self-referring, it caused a lot of deals to be undone,” Ms. Adler said in an interview. “[Certainly], these lease arrangements could, in many cases, be restructured to look more like normal leases and meet the Stark equipment lease exception, but in some cases it created hardships, such as in rural areas.”
Reconsideration of the regulation could mean that the HHS creates more appropriate carve-outs to the rule, Ms. Adler noted.
In the meantime, the appeals court ruling means the per-click ban cannot be enforced while the government reconsiders, which is a positive development for physicians, said Washington health law attorney Thomas L. Mills, who represented the Council for Urological Interests.
“CMS’ permitting per-click leases to non–physician-owned companies while banning them for physician-owned entities made no sense, particularly when the medical procedure is not susceptible to overuse,” Mr. Mills said in an interview. “Perhaps more importantly, the [appeals] decision is a victory for the rule of law. It shows that CMS does not have carte blanche to disadvantage physicians by steering control of the implements of their practices to less important participants in the health care delivery system. ... Physicians should be free to band together to purchase the equipment they believe will provide the most effective treatment for their patients, instead of being forced to rely on the arbitrary procurement decisions of hospitals.”
2. United States v. Continuum Health Partners Inc.
Summary: The federal government contends that three hospitals failed to return overpayments to Medicaid in violation of an Affordable Care Act requirement that they be reported and repaid within 60 days of identification. The government alleges that because of a computer glitch, three hospitals that are operated by Continuum Health Partners Inc., billed both the government and a managed care organization (MCO) for the same services. After the New York State Comptroller’s Office alerted Continuum to a possible overbilling, Continuum conducted an internal investigation and allegedly found 900 potentially improper Medicaid claims totaling $1 million, according to court documents. The government claims that Continuum failed to repay the overpayments within 60 days and instead repaid only “small batches” of the affected claims over the next 2 years. Continuum argues that the hospitals did not knowingly conceal the overpayments from the government and that the overbillings had not been officially identified. Rather, Continuum argues there is only evidence that administrators discussed potential overpayments. The “mere notice of a potential overpayment does not give rise to an established duty until 60 days after the overpayment is identified,” Continuum said in court documents. Attorneys for the government and for Continuum did not return messages seeking comment.