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“Navigating Labs to Make Informed Decisions” David W. Gee and Kristen R. Blanchette David Wright Tremaine LLP

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Presentation on theme: "“Navigating Labs to Make Informed Decisions” David W. Gee and Kristen R. Blanchette David Wright Tremaine LLP"— Presentation transcript:

1 “Navigating Labs to Make Informed Decisions” David W. Gee and Kristen R. Blanchette David Wright Tremaine LLP

2 COMPLIANCE ROAD TRIP 1. % BASED CONTRACT MARKETING 2. IN-OFFICE PHLEBOTOMISTS 3. MOBILE PHLEBOTOMISTS 4. LEASING SPACE FROM DOCTORS 5. LAB PRICING PRACTICES ST. AVE. BLVD. RD. WAY

3 1. % BASED CONTRACT MARKETING FEDERAL  PROHIBITED  Why? AKS and No Safe Harbor CA  PROHIBITED  Why? Medi-Cal AKS  BUT: May be PERMITTED by PORA Safe Harbor Unless Medicare or Medi-Cal Involved YIELD AHEAD ST.

4 REFERENCES 1. % BASED CONTRACT MARKETING FEDERAL  42 U.S.C. § 1320-a-7(b) [AKS]  42 C.F.R. § [Safe Harbors]  42 U.S.C. § 1320-a-7b (b)(3)(B); 42 C.F.R. § (i) [Bona Fida Employees]  42 C.F.R. § (d) [Pers. Svs./ and Mgmt.] CA  Cal. Bus. & Prof. Code § 650(a) [CA AKS – PORA]  Cal. Welf. & Inst. Code § (a) + (b) [Medi-Cal AKS]  Cal. Welf. & Inst. Code § (c) [Medi-Cal AKS Safe Harbor] ST.

5 REFERENCES 1. % BASED CONTRACT MARKETING FEDERAL CASE LAW  U.S. v. Polin, 194 F.3d 863 (7th Cir. 1999)  U.S. v. Starks, 157 F. 3d 833 (11th Cir. 1998)  Joint Tech. v. Weaver, CIV M (W.D. Okla. 1/23/14)  Zimmer v. NuTech Medical, 54 F. Supp. 2d (N.D.Ind.1999)  Nursing Home Con. v. Quantum Health Services, 926 F. Supp. 835 (E.D. Ark. 1996)  Modern Med. Labs v. Smith-Kline Beecham Clinical Labs, 1994 U.S. Dist. LEXIS (N.D. Ill. 8/16/94) CA CASE LAW  People v. Duz-Mor Diagnostic Laboratory, 68 Cal.App.4th 654, 671 (1998)  People v. Palma, 40 Cal.App.4th 1559 (Cal. Ct. App. 1995)  People v. Guiamelon, 205 Cal.App.4 th 383, 413, 140 Cal.Rptr.3d 584 (2012) ST.

6 REFERENCES 1. % BASED CONTRACT MARKETING FEDERAL SETTLEMENTS  OIG - Kickback and Physician Self-Referral ( ) [Zimmer-Deptula (ZDI) paid $123K]  OIG - Kickback and Physician Self-Referral ( ) [FCA case; two owners of DME co. agreed to be excluded for 20 yrs]  OIG Archives - Kickback and Physician Self- Referral ( ) [ TLC paid $130K to resolve CMP liability] CA LEGIS. COUNSEL OPINION  California Legislative Counsel Bureau Opinion # , “Clinical Laboratory Referral Practice” (Apr. 20, 2012) (adresses the legality under both federal and state law of a commission- based contract marketing arrangement) ST.

7 2. IN-OFFICE PHLEBOTOMISTS FEDERAL  PERMITTED, IF  Solely collecting and processing lab specimens CA  PROHIBITED  Why? LFS has provided guidance on this issue AVE.

8 REFERENCES 2. IN-OFFICE PHLEBOTOMISTS FEDERAL  CMS Commentary to Final Stark II Regs., 66 Fed. Reg. 856, (Jan. 4, 2001)  OIG Special Fraud Alert: Special Arrangements for the Provision of Clinical Lab Services, 59 Fed. Reg (Dec. 19, 1994) CA  Legis. Counsel of CA, Clinical Lab Personnel: Placement in Physician’s Offices - #2433 (Feb. 29, 1996)  Memo re: Legal opinions re: phleb. issues from Karen Nickel, Ph.D., Chief, LFS (July 11, 1997) [AKS] AVE.

9 3. MOBILE PHLEBOTOMISTS FEDERAL  NO GUIDANCE (besides authority re: phlebs) CA  CAUTION: LFS – NO “Roving phlebs”  WHY? Prohibited by Bus. & Prof. Code § 650 BLVD.

10 REFERENCES 3. MOBILE PHLEBOTOMISTS FEDERAL  42 C.F.R. § (2) CA  Memo re: Legal opinions re: phleb. issues from Karen Nickel, Ph.D., Chief, LFS (July 11, 1997) AKS]  Regs related to phleb: Cal. Bus. & Prof. Code § 1242, § , § 1246 BLVD.

11 4. LEASING SPACE FROM DOCTORS FEDERAL  PERMITTED, SUBJECT TO:  Stark Law  AKS Safe Harbor CA  PERMITTED, SUBJECT TO:  PORA RD.

12 REFERENCES 4. LEASING OFFICE SPACE FROM DOCTORS FEDERAL  42 C.F.R (b) [AKS Space Rental Safe Harbor]  42 U.S.C. § 1395nn (e) (1)(A); 42 C.F.R. § (a) [Stark Law Space Safe Harbor Exception]  OIG Special Fraud Alert (Feb. 2000) (listing requirements) CA  Cal. Bus. & Prof. Code § (PORA)  Cal. Bus. & Prof. Code § (b)(2) (exception to PORA re: leases) RD.

13 5. LAB PRICING PRACTICES FEDERAL  WHAT YOU NEED TO KNOW:  Medicare Usual Charge Rule  Discounting Rules and AKS CA  WHAT YOU NEED TO KNOW:  Anti-Markup Rules  Disclosure Rules  Direct Billing  Medi-Cal Lowest Charge Rule WAY

14 REFERENCES 5. LAB PRICING PRACTICES FEDERAL  42 U.S.C. §1320a-7(b)(6)(A) [Medicare Usual Charge Rule]  Ltr. from K. McAnaney, Chief, OIG (April 26, 2000) [Medicare Usual Charge Rule]  OIG Advisory Opinion CA  Cal. Bus. & Prof. Code § (anti- markup and disclosure req.)  Cal. Bus. & Prof. Code § (direct billing)  22 C.C.R. § (a) (Medi-Cal “Lowest Charge Rule”)  Hunter Labs v. Quest (settled in 2011)  AB 1494 WAY

15 COMPLIANCE ROAD TRIP SUMMARY 1.% BASED CONTRACT MARKETING FEDERAL & CA PROHIBITED (BUT SEE CA PORA) 1.% BASED CONTRACT MARKETING FEDERAL & CA PROHIBITED (BUT SEE CA PORA) 3. MOBILE PHLEBOTOMISTS FEDERAL = NO GUIDANCE CA = PROHBITED (per LFS guidance) 3. MOBILE PHLEBOTOMISTS FEDERAL = NO GUIDANCE CA = PROHBITED (per LFS guidance) 4. LEASING OFFICE SPACE FROM DOCTORS FEDERAL = PERMITTED, subject to Stark AND AKS CA = PERMITTED, subject to PORA 4. LEASING OFFICE SPACE FROM DOCTORS FEDERAL = PERMITTED, subject to Stark AND AKS CA = PERMITTED, subject to PORA 5. LAB PRICING PRACTICES SEE RULES FOR FEDERAL & CA 5. LAB PRICING PRACTICES SEE RULES FOR FEDERAL & CA ST. AVE. BLVD. RD. WAY 1.IN-OFFICE PHLEBOTOMISTS FEDERAL = PERMITTED (key word: “solely”) CA = PROHIBITED (per LFS guidance) 1.IN-OFFICE PHLEBOTOMISTS FEDERAL = PERMITTED (key word: “solely”) CA = PROHIBITED (per LFS guidance) AVE.

16 David W. Gee & Kristen R. Blanchette David Wright Tremaine LLP and


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