BREAKUPS HURT

The Situation – A medical practice finds itself suffering deep divisions related to practice philosophies and compensation matters, often leading to practice breakups. These events can harm professional reputations, vendor relationships, employee livelihoods, patient care and can lead to the loss of health insurance contracts.  Even amicable breakups can require substantial attention.

My experience indicates that most practices, when faced with deep and contentious divisions, are unable to agree on nearly any point.  My suggestion when counseling in these situations has been to first reach an agreement on minimizing the damage to all concerned by focusing the agreements on how to wind down the practice, and leave issues regarding compensation and reimbursement for the period after the physicians have broken up and moved on to their new practices.  Concentrating on all issues at the time of breakup often leads to paralysis and the worst of the various possible outcomes.

Obviously, having an agreement when the practice is formed on how any defections or breakups will be handled is best, but even in the absence of such an agreement, getting the parties to agree on minimizing the mutual damage is often a very attractive arrangement.  Once the parties have agreed to stop hurting each other, they can find agreements on how to handle employees, patient records, insurance contracts, etc. while agreeing to arbitrate or litigate specific issues regarding compensation and similar issues.

Given the likelihood of a future of more and more exclusive provider agreements, I recommend even more strongly that practice groups provide for eventual breakups of practices, agreements that will not leave all of them, or any significant number of the providers excluded from important provider networks.  Finally, making these agreements either in advance (best), or at the time of the break (better than nothing), is also substantially cheaper than two, five or twenty medical providers each hiring their own experts, attorneys, valuation experts, etc.

HEADS – WE WIN, TAILS – YOU LOSE

Most plans do not cover the costs of services received by plan members outside of the plan network, except when “medically necessary” for emergency or urgent conditions.  As we see more exclusive provider agreements, and with the upcoming mandate and exchange based plans, it is likely that exclusive provider agreements will result in more and more conflicts between payors and providers regarding out-of-network referrals and waiver of patient co-payments and deductibles.

Since 1994, OIG has prohibited routine waiver of co-payments and deductibles as violations of the Federal Anti Kick-Back Statute. It will be interesting to watch how out-of-network referrals will be handled.  You may wish to seek clarification from your provider networks on their policies with regard to out-of-network referrals/waivers of patient co-payments and deductibles so that your billing source can be advised to comply, or so you may have the opportunity to seek clarification from either the plan, or from OIG, how to handle such situations.

With “base” charge master rates becoming extraordinarily different than Medicaid/Medicare reimbursement rates, huge amounts of money can be accumulated in these issues in very short periods of time, leading to claims of hundreds of thousands of dollars of losses.

CMS FEE SCHEDULES

CMS has been busy with fee schedule changes.  CMS proposes to update the Clinical Laboratory Fee Schedule (CLFS).  The CLFS was established in 1984, and sets Medicare payment rates at the lesser of the amount charged, the fee schedule amount for the state or area, or the national limitation amount.  CMS proposes the CLFS be substantially revised, particularly for codes where technological changes affect the price of the test.  CMS proposes to review all of the CLFS codes over five years, and expects that most adjustments will result in decreases.

CMS also details new services and payment changes in its 2014 schedule published July 8^th.  Last year CMS launched New Care Coordination Services to pay for physician practice work to guide patients from facilities to their homes.  Now CMS plans additional services to be billed separately from patient visits, the first is for managing care for a patient in two or more chronic conditions expected to last over 12 months (or until death).  If these two new services/codes are available, they will not be available until 2015.

Also, the 2014 fee schedule shows an SGR formula cut of physician payments by 24.4%.  Congress will have until January 1, 2014 to change this by legislation.

WELLPOINT AT IT AGAIN – HIPAA VIOLATIONS

WellPoint continues to have difficulty coloring inside the lines.  HHS announced that WellPoint will pay $1,700,000.00 to resolve allegations that WellPoint left the information of more than 612,000 members available online because of inadequate safeguards.  The information vulnerable included names, birthdates, addresses, telephone numbers, social security numbers and health data.

This newsletter is edited by Paul Wallace of Jones • Wallace, LLC, a member of the American Bar Association Healthcare Law Section and the American Health Lawyers Association who has been representing physicians and healthcare practices for over 25 years.  Mr. Wallace assists physicians in health practices in contract items, federal legal compliance, creation of practice entities, estate and wealth planning and similar issues.  Please feel free to call if you have any questions about this newsletter or any other matter at (812) 402-1600 or pwallace@joneswallace.com.