No “Privilege Against Self-Incrimination” (Fifth Amendment) for Corporate Documents in a Fraud and Abuse Investigation

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In a federal grand jury investigation into illegal physician kickbacks paid by a laboratory, Circuit Court Judge Cohen, writing for the U.S. Court of Appeals for the Third Circuit, affirmed the U.S. District Court for the District of New Jersey’s order of contempt against a physician and his practice after refusing to produce documents, including patient records, from his Professional Association organized in 1973. In re In the Matter of the Grand Jury, decided May 15, 2015.

Specifically, a blood laboratory was suspected of paying kickbacks to physicians for patient referrals spanning a seven year period. A grand jury was impaneled to investigate and it issued a subpoena to the sole owned practice for certain documents that included patient records. The doctor agreed that the business was not entitled to protection, but that the implication would be he supplied the documents violating his Fifth Amendment rights.The Court noted that a custodian of records may not refuse production even if production might be incriminating, citing well established U.S. Supreme Court precedent. Noted further was that the subpoena was carefully crafted to produce only the necessary documents.  Thus, it was not overly broad in violation of the Fourth Amendment.The practice was found in civil contempt by the District Court and sanctioned in the amount of $2,000 per day for noncompliance.If you have any questions or concerns, please feel free to contact Meghan McNab at

CMS Proposes Medicaid Managed Care Revisions

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The Centers for Medicare & Medicaid Services (“CMS”) published its proposed rule to update its standards and requirements for Medicaid managed care plans.

CMS notes that laws passed since the Medicaid managed care regulations were promulgated in 2002 have changed Medicaid to such an extent that the current regulations are no longer adequate. Accordingly, the proposed rule addresses many issues in order to bring the regulatory scheme in line with these changes, including: modernizing the Medicaid managed care regulations to reflect changes in the usage of managed care delivery systems; aligning the rules governing Medicaid managed care with those of other major sources of coverage, including coverage through qualified Health Plans and Medicare Advantage plans; implementing statutory provisions; strengthening the actuarial soundness of payment provisions to promote the accountability of Medicaid managed care program rates; promoting the quality of care; strengthening efforts to reform delivery systems that serve Medicaid and Children’s’ Health Insurance Program (“CHIP”) beneficiaries; ensuring appropriate beneficiary protections and enhance policies related to program integrity; requiring states to establish comprehensive quality strategies for their Medicaid and CHIP programs regardless of how services are provided to beneficiaries; implementing provisions of the Children’s Health Insurance Program Reauthorization Act of 2009; and, addressing third party liability for trauma codes. See Proposed rule, 80 FR 31098, June 1, 2015, for further information.

If you have any questions or concerns, please feel free to contact Meghan McNab at

OIG Issues Warning to Physicians

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The United States Department of Health and Human Services Office of Inspector General (“OIG”) released an alert to physicians and health care organizations related to compensation arrangements that could violate the Anti-Kickback Statute (“AKS”).  Specifically, the OIG issued guidance that compensation arrangements with physicians must be for services actually provided and not one purpose of the arrangement can be for the physician’s past or future referrals (the “Alert”).

The AKS, authorizes penalties of up to five years in jail and $25,000 in fines, for individuals or entities that knowingly and willfully offer, pay, solicit, or receive remuneration in order to induce or reward the referral for individuals or entities that knowingly and willfully offer, pay, solicit, or receive remuneration in order to induce or reward the referral of business reimbursable under Federal health care programs. However, the statute and current regulations provide safe harbors that protect certain arrangements that might otherwise implicate the AKS, from penalty.  Nevertheless, many safe harbors require compensation to represent fair market value for the services provided.

The OIG noted that it has reached settlements with 12 individual physicians who entered into questionable medical directorships and office staff arrangements.  It was alleged that the compensation paid in these arrangements was improper because such compensation took into account the volume or value of referrals and did not reflect fair market value for the services under the arrangements.  Above all, the OIG explained that the physicians were an integral part of these schemes and were subject to liability.

Knowing the OIG’s continued focus on compensation arrangements with physicians, organizations need to be aware of the potential liability issues related to such arrangements.  Organizations and physicians should ensure such arrangements are properly analyzed to ensure compliance with the AKS.

If you have any questions about this Alert or if you would like additional information, please contact Robert A. Wade at (574) 485-2002 or Alex T. Krouse at (574) 485-2003.

ACO Final Rule Released

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On June 4, 2015, the Centers for Medicare and Medicaid Services (“CMS”) issued a Final Rule for the “Medicare Shared Savings Program: Accountable Care Organizations.” The Final Rule follows the December 2014 Proposed Rule and the review of more than 270 public comments. The Medicare Shared Savings Program was initially implemented under the Affordable Care Act in 2011 in order to “promote accountability for a population of Medicare beneficiaries, improve the coordination of fee-for-service items and services, encourage investment in infrastructure and redesigned care for high quality and efficient service delivery and promote higher value care.”[1] In addition to maintaining the initial purposes, the 2015 Final Rule also aims to “advance the ACO models, codify existing guidance, reduce administrative burden and improve program function and transparency in a number of program areas.”[2]The Final Rule contains the following notable revisions:

  • More efficient data sharing to allow Accountable Care Organizations (“ACOs”) improved access to Medicare beneficiary claims data, while leaving the option for beneficiaries to deny sharing of the data intact.
  • The addition of Track 3, a third performance-based risk option that offers a higher sharing rate than Tracks 1 and 2, as well as a waiver for the three-day Skilled Nursing Facility Rule, beginning in 2017.
  • Modifications to Track 2 that provide ACOs with additional choices for setting their minimum savings and loss rates, including the option of a symmetric threshold for savings and losses under the performance based risk tracks.
  • The option to renew Track 1 Participation Agreements for an additional three-year agreement period.  This option is available to ACOs that have met the quality performance standard in at least one of the first two years of their initial Track 1 agreement period and maintain good standing with the program.
  • Increased significance on primary care services in the beneficiary assignment methodology by removing “specialist physicians” from step two of the methodology and adding primary care services provided by nurse practitioners, clinical nurse specialists and physician assistants to step one of the methodology.
  • Modification to the financial benchmark resetting methodology by allocating equal weight to the historical benchmark years of the ACO, as well as applying savings produced by the ACO in its prior agreement years.
  • Updated eligibility standards, including the expansion of the requirements for agreements between ACOs and Medicare-enrolled entities, updated governing body and leadership qualifications and a requirement for the ACO to detail how they will encourage the use of “enabling technologies” to improve care coordination.[3]
All revisions in the Final Rule become effective on August 3, 2015, with the exception of three amendments. The data sharing amendment that modifies how beneficiaries may deny the sharing of claims and the amendment revising the requirements for notification of participation in a shared savings program both go into effect on November 1, 2015.  Additionally, the amendment modifying the methods ACOs may use to request beneficiary identifiable data will go into effect on January 1, 2016. With more than 400 participating organizations in the shared savings program, the Final Rule will affect a large number of health care entities throughout the country.

If you have any questions or concerns, please feel free to contact Brian Heaton at or Meghan McNab at

[1] Medicare Program; Medicare Shared Savings Program: Accountable Care Organizations, 80 Fed. Reg. 32692, 32694 (June 9, 2015)(amending 42 C.F.R. pt. 425).
[2] Id.
[3] Finalized Changes to the Medicare Shared Savings Program Regulations, CMS, June 4, 2015 (last visited June 16, 2015).