Physicians in the Bulls-eye

Several recently reported cases highlight the growing risk physicians face if they succumb to competitive pressures, especially offers of remuneration from labs, pharmacies, home health agencies and other providers to whom they refer. In many cases, the effort to recoup fees may come years after the physician received and spent the fees, with no insurance coverage for the defense of the claim and/or to satisfy any potential liability.

Bankruptcy Trustee Recoups Specimen Handling Fees Paid to Physicians

The bankruptcy trustee for a diagnostic laboratory (Lab) filed over 1,000 lawsuits against physicians attempting to recoup, for the benefit of the Lab’s creditors, what he claimed to be excessively large specimen processing and handling fees paid to physicians. In 2015, the Lab agreed to pay $47 million to the U.S. Department of Justice (DOJ) to resolve allegations that it paid kickbacks to physicians in connection with these fees and the waiver of patient co-pays and deductibles. As a result, the trustee maintained that each physician payment also constituted a fraudulent transfer under the Bankruptcy Code and sued to recover the payments. Similar allegations were also made by the trustee to recover payments under state fraudulent transfer laws. Continue Reading

Capitol Hill Healthcare Update

White House Eyes Panel on Drug Prices While Senators Call for Transparency

President Donald Trump is considering appointing lawmakers to a bipartisan commission that would develop strategies to lower prescription drug prices, while senators last week called for greater transparency into how medicines are priced. Trump has been sharply critical of the pharmaceutical industry, including as recently as last week when he repeated his remarks that drug companies are “getting away with murder.” The president is said to be frustrated that drug prices in the United States are higher than in other industrialized countries where governments set prices.

It is not clear whether a commission will be created or whether it would replace a potential Trump executive order on drug prices, which administration officials had focused on earlier this year. Work on that executive order has cooled in recent months. Industry officials oppose the idea of a commission, which would give their opponents on the Hill – mostly Democrats – a platform to advocate for anti-industry provisions. Democrats have long wanted to lift the ban on the U.S. Department of Health & Human Services (HHS) negotiating prices for Medicare Part D drugs and removing the ban on importation of drugs from other countries where governments set prices. Continue Reading

Structuring Clinical Practices to Prevent Pitfalls – Deeply Rooted Corporate Practice Doctrine Remains Strong

With growing patient demands, advanced technology and payer restraints, healthcare providers are increasingly exploring management agreements with experienced companies to handle the daily operations of their clinical practice. However, healthcare professionals need to be aware of the potential pitfalls in doing so, especially given the deeply rooted corporate practice of medicine doctrine in many states, which provides that practitioners, not corporations, should retain control of the business decisions that affect the practice of medicine. While the corporate practice of medicine is often thought of as an antiquated doctrine, the New York and New Jersey courts recently affirmed that the doctrine is indeed alive and well.

At its core, the corporate practice doctrine prohibits non-physician-owned business entities from engaging directly in clinical practice. States adopting the doctrine, whether through statutory law, common law or otherwise, commonly state that it ensures a clinician is responsible for the control and direction of a medical practice. Many states have adopted provisions that enable healthcare professionals to enter into arm’s length arrangements for services by non-physician entities. However, the medical professionals should have an integral role in the direction of their clinical practice at all times. Continue Reading

Florida Emergency Power Plan Rule Requires Nursing Homes and Assisted Living Facilities to Obtain Generators

The deadline is November 15, 2017

In response to the death of eight nursing home residents after a power failure in Hollywood, Florida during Hurricane Irma, Florida regulators recently issued emergency rules requiring the state’s nursing homes and assisted living facilities to have and maintain backup generators and alternate fuel for power emergencies. However, due to the current high demand for generators in Florida and other barriers to compliance, many nursing homes and assisted living facilities are finding it extremely difficult, if not impossible, to comply with the state’s emergency power plan rule by the November 15, 2017 deadline. Read More >>

Capitol Hill Healthcare Update

Democrats and Some Republicans Say Congress Must Restore Insurer Subsidies

President Trump’s announcement Friday that he would stop cost-sharing payments to insurance companies triggered a firestorm on Capitol Hill, with lawmakers in both parties calling on Congress to restore the funding quickly.

House Democratic Leader Nancy Pelosi (D-Calif.) said lawmakers could leverage upcoming must-pass budget bills to include the payments to insurers. Sen. Bill Cassidy (R-La.) and Rep. Leonard Lance (R-N.J.) were among some of the GOP lawmakers who said Congress should restore the payments as part of the appropriations process.

Republicans – including Trump – have long complained the payments are illegal because then-President Obama authorized them by executive order even though they were never sanctioned in the Affordable Care Act (ACA) statute. One federal court has held the payments as unconstitutional though that case is on appeal. Continue Reading

Five New Team Members Join BakerHostetler’s National Healthcare Practice

Partner Mark A. Kadzielski and Counsel Jeeyoung Kim have joined BakerHostetler in our Los Angeles office. Mark focuses his practice on representing hospitals, medical staffs, managed care enterprises and institutional and individual healthcare providers through government regulatory and licensing matters, peer review, joint commission accreditations, credentialing, compliance and corporate government oversight, and Medicare certification. Jeeyoung will work closely with Mark on these matters while also focusing on patient privacy and telemedicine.

Elizabeth Goldman has joined our team in the Washington, D.C. office. Elizabeth has a strong background of working with clients on complex Medicare reimbursement and coverage disputes, as well as many other healthcare regulatory and compliance issues. She will work with hospitals and health systems, medical staffs and other healthcare providers. Elizabeth will work closely with Lee Rosebush in our Washington, DC office.

Our Houston office also has two new healthcare team members. Kathryn Carey and Jessica Adams will be working closely with our established full-service Houston healthcare team. Kathryn focuses her practice on regulatory work for clients in the healthcare industry, with an emphasis on healthcare privacy and data security. Jessica focuses her developing practice on healthcare law, particularly on regulatory and compliance matters.

Capitol Hill Healthcare Update

CHIP Renewal Triggers Partisan Clash Over Offsets

Although the Children’s Health Insurance Program (CHIP) enjoys broad bipartisan support on Capitol Hill, lawmakers last week sharply disagreed over how to pay for its renewal – signaling that a final vote could be delayed for months.

The House Energy and Commerce Committee and the Senate Finance Committee last week approved separate versions of bills to renew federal CHIP funding. The Senate process has so far been bipartisan though committee Chairman Orrin Hatch (R-Utah) and the panel’s top Democrat, Sen. Ron Wyden (D-Ore.) have not spelled out how they would pay for their bill. Continue Reading

Capitol Hill Healthcare Update

Alexander, Murray Seek Health Law Stabilization Agreement

With congressional Republicans’ efforts to repeal the Affordable Care Act (ACA) on hold at least for now, the bipartisan leaders of the Senate HELP Committee are seeking to rekindle their work to shore up the health law’s troubled individual marketplace.

Committee Chairman Lamar Alexander (R-Tenn.) said he hoped to be able to announce an agreement as soon as this week with the top panel Democrat, Sen. Patty Murray (D-Wash.). The senators have been discussing a deal that would include locking in cost-sharing payments to insurers while granting states flexibility to try to lower consumers’ insurance costs. Continue Reading

Preparing for the New Partnership Audit Rules

The Bipartisan Budget Act of 2015 substantially changed audit-related rules impacting entities taxed as partnerships, including both state-law partnerships and many limited liability companies (LLCs). The most significant change is that any additional tax or penalties resulting from an audit of an entity taxed as a partnership generally will be assessed and collected at the entity level (as opposed to at the partner or member level). These new rules are effective for taxable years beginning on or after January 1, 2018. Proposed regulations addressing, among other things, some of the problem areas of these new rules were released in January 2017, but were almost immediately withdrawn as part of the Trump administration’s regulatory freeze. Updated proposed regulations were re-released mid-June 2017.

Now is the time for entities taxed as partnerships (i.e., partnerships and many LLCs) to evaluate the new rules and amend their governance documents to address the changes. Hospitals commonly utilize LLCs for affiliations and ancillary joint ventures and should consider their options under the new rules. The changes also impact many physician entities, including physician practice groups, real estate holding companies, and ambulatory surgical centers taxed as partnerships. Continue Reading

Capitol Hill Healthcare Update

GOP Divisions Threaten to Sink ACA Repeal Effort – Again

Republicans’ last-ditch effort to overhaul the Affordable Care Act (ACA) suffered potentially fatal blows as GOP senators in recent days voiced either outright opposition to or serious reservations about legislation pushed by Sens. Lindsey Graham (R-S.C.) and Bill Cassidy (R-La.).

The senators’ bill would repeal the ACA’s individual and employer mandate penalties and turn the law’s Medicaid expansion into a trillion-dollar block grant to states. Graham and Cassidy also were readying last-minute funding and regulatory changes in an effort to woo reluctant Republican colleagues in advance of today’s Senate Finance Committee hearing on the legislation. Continue Reading