Houston Medical Journal May 2017 May_2017MJH_finallorev2
THA: Texas legislature invests in behavioral health care, see page 6
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The Leading Source for Healthcare Business News
May 2017 • Volume 14, Issue 2 • $3.50
INSIDE
▼
Diabetic wound device may
provide patients with faster
healing rates
see page 4
INDEX
▼
Financial Perspectives.......3
Technology.......................4
THA...............................6
Integrative Medicine.........7
Breaking Ground..............8
Hospital Headlines.........10
Moving On Up..............11
Aromatherapy:
Fad or fact?
see page 7
. . . . . . . . . . . .
U.S. Court analyzes medical director
arrangements under new legal
standards
BY MARY M.
BEARDEN and
ALLISON SHELTON,
Brown & Fortunato,
P.C.
On March 15, 2017, the U.S.
District Court for the Western
District of Pennsylvania
applied two relatively new
legal standards to analyze
eight
medical
director
arrangements between a
hospital and a physician
group. Specifically, in U.S. ex rel. Emanuele
v. Medicor Associates, the court determined
whether certain expired and unwritten
arrangements could satisfy an exception to
the Stark Law and whether non-compliance
with a Stark exception could result in a
violation of the False Claims Act (FCA).
The plaintiff in the suit, Dr. Tullio
Emanuele, had worked as a cardiologist for
the defendant, Medicor Associates, Inc.,
for four years. Medicor is a physician group
that consists of cardiologists and internal
medicine physicians. For several years,
Medicor’s physicians served as medical
directors for Hamot Medical Center’s Heart
and Vascular Institute. Hamot is a 401-
bed hospital in Erie, Pennsylvania. Dr.
Emanuele filed an FCA qui tam suit alleging
that the arrangements between Medicor
and Hamot violated the Stark Law and the
federal anti-kickback statute.
Eight medical director arrangements
between Medicor and Hamot were the
subject of the court’s opinion. For six of
these arrangements, Medicor and Hamot
had initially executed formal, written
agreements. When the agreements expired,
however, Medicor’s physicians continued
to serve as Hamot’s medical directors, and
Hamot continued to pay Medicor for such
services. Two of the six arrangements
were not set forth in a formal contract.
Nevertheless, Medicor and Hamot had
several written documents that referenced
the arrangements.
The court analyzed whether the eight
arrangements could satisfy an exception
to the Stark Law. Under the Stark Law,
a physician may not refer Medicare
beneficiaries to an entity for certain
services when the physician has a financial
relationship with the entity unless the
relationship satisfies an exception to the
Stark Law. Medical director arrangements
are considered financial relationships under
Stark. Generally, providers utilize the fair
market value exception or the personal
services exception for such arrangements.
Both of these exceptions require that the
arrangement be set out in writing and
signed by the parties.
Prior to 2016, the exceptions required that
the arrangement be set out in a formal
contract in order to satisfy the writing
requirement. This led to numerous technical
violations of the Stark Law. Therefore,
to provide some relief, the Centers for
Medicare and Medicaid Services (CMS)
revised the regulations. Now “a collection
of documents, including contemporaneous
documents evidencing the course of conduct
between the parties, may satisfy the writing
requirement.”
Applying the new standard, the court
concluded that the six arrangements that
had expired written agreements could
reasonably satisfy a Stark exception.
Medicor and Hamot produced a series of
invoices and checks that were exchanged
between the parties following the expiration
Please see LEGAL AFFAIRS page 12
PRSRT STD
US POSTAGE
PAID
HOUSTON TX
PERMIT NO 13187