Keys to a Sound Mind and Body

Keys to a Sound Mind and Body
Expert Reviews Current Healthcare Law Developments

By Jay Dismukes

From regulations that carry stiff financial consequences, to the spillover from Sarbanes-Oxley, to affordably priced Canadian drugs, healthcare providers must increasingly consider matters that extend far beyond the well-being of their patients.

In a recent presentation, fittingly titled “Healthcare: Something for Everyone,” attorney Andrew Blustein gave a rundown of legal issues and concerns that cut a wide swath through the healthcare industry. Blustein, a partner at Garfunkel, Wild & Travis, P.C., which represents hospitals, physicians and healthcare industry–related clients, was the leadoff speaker for the Aug. 5 Foundation for Accounting Education’s Healthcare Conference.

Central to Blustein’s legal update was the second phase of the federal physician self-referral law known as Stark. The law prohibits a physician, or his immediate family members, from referring Medicare or Medicaid patients to an entity for the provision of designated health services (DHS) if the physician has a financial relationship with the entity.

While phase two of Stark II, issued on March 26 by the Centers for Medicare and Medicaid Services (CMS), provides for exceptions and clarifications on certain issues, including in-office ancillary services, physicians’ benefits, rental arrangements and fair market value compensation, the regulations are considered to be connected to nearly every financial relationship between physicians and DHS-furnishing entities. Consequently, compliance with the regulations, which took effect on July 24, is critical, as is supporting documentation.

“We’re going to see a real uptick in Stark,” Blustein said. “(The law) has some real nasty teeth to it.”

These teeth, according to Blustein’s handout, could include denial of payment (or refunding of payment received); exclusion from Medicare and Medicaid; civil monetary penalties upwards of $100,000; and liability under the federal False Claims Act.

Good…and Bad Medicine

While urging increased attention to Stark, Blustein also advised conference attendees to be mindful of the trickle-down effect that Sarbanes-Oxley has had on the nonprofit community. Just as with for-profits, nonprofits, which traditionally have fewer checks and balances, are being held to a higher level of accountability, expected to live up to their financial reporting responsibilities.

In May of this year, the Healthcare Association of New York State (HANYS) and Healthcare Trustees of New York State (HTNYS), which represent nonprofit healthcare organizations and their boards, announced the publication of corporate governance guidelines. In this age of added scrutiny, Blustein said that New York nonprofit healthcare providers should consult these guidelines and have the tools in place—from an internal audit function to a conflict of interest policy—to ensure strong governance oversight. These nonprofits will also want to take special note of HANYS-issued guidelines regarding the creation of a charity care policy, he added.

At the same time nonprofits are looking into best practices, they may also want to consider federally qualified health centers (FQHC) as potential business opportunities. Under President Bush, these outpatient primary care centers, which assist federally designated medically underserved areas, have received substantial government funding. Among other advantages, FQHCs are eligible for federal grants; receive enhanced Medicare and Medicaid reimbursement; and qualify for federal Tort Claim Act coverage to protect doctors from malpractice claims.

While FQHCs may present intriguing possibilities, Blustein cautioned against other healthcare-related developments, including the importation of prescriptive drugs. Though pharmaceuticals from other countries may be significantly cheaper, Blustein observed that most patients probably prefer drugs that have been approved by the U.S. Food and Drug Administration. He added that providers should also “think twice” about boutique, or concierge, medical services in which payment is made for increased and more convenient access to physicians. Blustein’s handout noted that this practice could be considered a breach of private insurer contracts and, according to the Department of Health and Human Services’ Office of the Inspector General, result in liabilities if billing for Medicare-covered services.

The NYSSCPA’s Health Care Committee, chaired by Harvey N. Susnick, sponsored the conference. Kenneth R. Cerini was the conference chair.