MDNews - Cleveland-Akron-Canton

++++++++++++++++++++++++ + + ++++++++++++++++++++++++ HEALTHCARE LAW +++ +++ Management Proposal Poses Anti-Kickback Risk By Joseph J. Feltes, JD arrangement by which a laboratory man- agement company sought to provide allergy and antigen-based immunotherapy services within primary care physicians' offices. On November 23, 2011, the OIG posted T an unfavorable Advisory Opinion (No. 11-17), stating that the proposed laboratory arrangement potentially could generate prohibited remuneration under the Federal Anti-Kickback Statute, which could result in the imposition of administrative sanc- tions and monetary penalties. The OIG declined to comment whether the proposed arrangement also could implicate the Stark laws prohibiting physician self-referrals. The Proposed Arrangement. A laboratory services management company proposed entering into an exclusive service and management contract with various primary care physician practices to operate an allergy testing laboratory in the physicians' offices. Under the contract, the management company would provide lab technicians, equipment, supplies, training, billing, and marketing services for provid- ing lab services on an "as-needed" basis. It also would review patient files to identify potential candidates for allergy testing and treatment (The OIG hinted parenthetically how going through patient files might constitute a HIPAA Privacy violation). Physicians, in turn, would provide space and furniture within their offices to operate the allergy lab, staff for patient scheduling and other administrative services, medical HE OFFICE OF Inspector General, charged with protecting the Medicare Trust, recently gave the thumbs down to a proposed office supplies, and general liability and malpractice insurance. The physicians would supervise the lab technicians and interpret lab results. Physician practices would bill Federal health care programs and commercial third-party payers under their provider identification numbers. The manage- ment company would do the billing and collection for the physicians. For its services, the management company would take a 60% cut of the physicians' gross collections for allergy testing and immunotherapy items and ser- vices, which the management company claimed represented fair market value. Basis for the OIG's Unfavorable Advisory Opinion. The OIG, at the outset, determined that the proposed arrangement could not qualify for immunity protection under the per- sonal service and management safe harbor, because laboratory services would be provided on an "as needed" basis, as opposed to a set schedule, and compensation would be calculated on a percentage of gross collections, rather than on an aggregate amount set in advance. The OIG correctly noted that failure to meet all safe harbor criteria does not necessarily mean that the pro- posal would violate the Anti-Kickback Statute. Instead, it called for the OIG to examine the totality of circumstances to determine the extent of risk the proposed arrangement presented. The OIG opined that the proposed laboratory arrangement constituted significant risk under the Anti-Kickback Statute because: 44 | Cleveland-Akron-Canton MD NEWS MDNEWS.COM JANUARY-FEBRUARY 2012 + The management company's fee would not be tied to actual and necessary services provided to physicians, adding that "percentage compensation arrange- ments are inherently problematic under the Anti-Kickback Statute, because they relate to the volume and value of business generated between the parties, rather than the fair market value of the services [set in advance] provided." The fee structure itself, warned the OIG, would create a substantial risk of overutilization. + The management company's proposed mining of patient files to identify can- didates for allergy testing and services constituted a "suspect marketing activity," because it could "encourage physicians to order medically unneces- sary tests. Significance to Physicians. This par- ticular Advisory Opinion applies directly only to the entities who requested it. The OIG's conservative stance, nevertheless, provides guidance to physician practices that either are contemplating entering into a management contract, or already have similar arrangements, with third-party management companies that provide services (not limited to allergy laboratories) on an "as needed" basis and take a percent- age of gross collections. Joe Feltes is an attorney with Buckingham, Doolittle & Burroughs in Canton and a member of its Health & Medicine Practice Group. Mr. Feltes is also the managing partner of Buckingham Canton. ■ LAB TEST:

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