1. Welcome to the 2010 Young Urologists Forum Sponsored by the AUA Young Urologists Committee May 31, 2010

2. Quick Announcements Welcome everyone! Housekeeping items Cell phones Please fill out the evaluation at end of Forum NEW! – Young Urologists Web Site: www.AUAnet.org/YoungUrologists

3. The Conundrum of Contracts: A Panel Discussion of Physician Ownership and The Law Panelists Ober|Kaler Julie Kass, Esq., Ober|Kaler Kevin Barry, Esq., Office of Inspector General David Benjamin, MD, YU Committee Member Facilitator Lori Lerner, MD, YU Committee Chair

4. Topics for Today Basics of Stark Statute Basics of Stark Statute Basics of Anti-Kickback Statute Basics of Anti-Kickback Statute Discussion of Scenarios Discussion of Scenarios Questions and Answers Questions and Answers

5. Stark Self Referral Prohibition Physician may not refer: Physician may not refer: –Medicare or Medicaid patients –For “designated health services” –To an entity with which the physician or –an immediate family member has –a “financial relationship” Different exceptions apply to protect certain compensation arrangements and ownership interests Different exceptions apply to protect certain compensation arrangements and ownership interests

6. Stark Self-Referral Prohibition Potential Sanctions Include: Potential Sanctions Include: –Denial of Payment –Refund of Amounts Collected as a Result of Improper billing –Civil Money Penalties of $15,000 per Item or Service Plus 3X the Amount Claimed –Civil Money Penalties of $100,000 for “Circumvention Schemes” –False Claims Act Liability –Exclusion

7. “Designated health services” “Designated health services” - Physical Therapy - Clinical laboratory - Occupational Therapy - DME - PEN - O&P - Prosthetics - Home Health - Outpatient drugs - Hospital services - Radiology - Radiation Oncology Stark Self Referral Prohibition

8. Stark Self-Referral Prohibition Two important amendments to Stark regulations became effective October 1, 2009 Two important amendments to Stark regulations became effective October 1, 2009 –Revised definition of “entity” –Percentage-based and per service compensation prohibited for space and equipment leases

9. Basic Prohibition On Physician Ownership Of DHS Entities Physician-owned DHS Provider; services NOT provided in the office of the physician practice Service Provider bills Medicare for DHS Referral for DHS An ownership exception is required to protect physicians’ referrals to a DHS Provider and to permit the DHS Provider to bill Medicare. Unless the DHS Provider is a rural provider, it is unlikely that an ownership exception exists.

10. Revised Definition of “Entity” Prior to October 1, 2009, a person or entity is considered to be furnishing DHS if it is the person/entity to which CMS makes payment Prior to October 1, 2009, a person or entity is considered to be furnishing DHS if it is the person/entity to which CMS makes payment New rule – Both parties to an arrangement may be considered an “entity” if one party performs the DHS and the other party bills for the DHS New rule – Both parties to an arrangement may be considered an “entity” if one party performs the DHS and the other party bills for the DHS –No regulatory definition of “performs the service” –However, CMS Guidance suggests an entity does not “perform” DHS if it only: Leases or sells space/equipment Leases or sells space/equipment Furnishes supplies Furnishes supplies Provides management or billing services; or Provides management or billing services; or Provides personnel Provides personnel

11. Revised Definition of “Entity” Impact of New Rule – As of October 1, 2009, the physician owner of an entity furnishing DHS “under arrangements” may not have an ownership interest in a DHS entity that does not meet an exception Impact of New Rule – As of October 1, 2009, the physician owner of an entity furnishing DHS “under arrangements” may not have an ownership interest in a DHS entity that does not meet an exception

12. Percentage-based and Per Service Compensation Formulae Effective October 1, 2009, percentage- based and per service compensation is prohibited for space and equipment rentals when referral is by physician-owner of the leasing company Effective October 1, 2009, percentage- based and per service compensation is prohibited for space and equipment rentals when referral is by physician-owner of the leasing company

13. Federal Anti-Kickback Statute Anti-Kickback Statute prohibits Anti-Kickback Statute prohibits –Knowingly and willfully –Directly or indirectly offering, paying, soliciting, or receiving –Remuneration –In order to induce or reward the referral of patients or the purchase of items or services payable by federal health care benefit programs  Violation of the Kickback Statute is a Felony –Criminal fines up to $25K; prison up to 5 years –Civil Money Penalty exposure, fines, exclusion –CMP $50,000 per violation and treble remuneration

14. Federal Anti-Kickback Statute OIG HAS CONCERNS THAT KICKBACKS CAN LEAD TO: OIG HAS CONCERNS THAT KICKBACKS CAN LEAD TO: –Overutilization –Increased Program Costs –Corruption of Medical Decision making –Patient Steering –Unfair Competition

15. Federal Anti-Kickback Statute Federal Anti-Kickback Statute Statutory Exceptions: Statutory Exceptions: – Discounts, employer/employee, GPOs, Part B coinsurance waivers, electronic health records, e-prescribing, etc. Regulatory Safe Harbors: Regulatory Safe Harbors: – OIG is tasked with promulgating regulations on behalf of the Secretary to clarify statutory exceptions to the anti-kickback laws and to establish additional safe harbors

16. Anti-Kickback Statute Relevant Safe Harbors: Relevant Safe Harbors: - Investments in small entities - Personal Service Agreements - Leases - Physician Recruitment - Ambulatory Surgery Centers (ASCs) - Others

17. Joint Venture Safe Harbor Small entity safe harbor Small entity safe harbor –<40% “tainted investors” –Terms same for “tainted” and non-“tainted” “passive investors” –Offer to “tainted” investor not based on referrals –No referral requirements or discriminatory marketing –<40% of revenue from investor referrals –Entity cannot loan purchase money to investor –Return proportional to investment

18. Scenario #1: Laser Unit My two partners and I own a holmium laser rental company, complete with laser, truck and tech. For years we’ve been doing business with our two local hospitals. We had a per case rate and as of October 1, 2009, both hospitals have asked for a new contract. My two partners and I own a holmium laser rental company, complete with laser, truck and tech. For years we’ve been doing business with our two local hospitals. We had a per case rate and as of October 1, 2009, both hospitals have asked for a new contract. 1.Can we continue to be successful and contract with these hospitals? 2.Can we still charge per click/per case? 3.Is there a difference if we own the equipment (laser) versus rent or lease it from a vendor? 4.Do you expect more changes to the current Stark Laws? 5.Would it matter if we added a different type of laser (Greenlight) etc.?

19. Basic “Under Arrangements” Structure Is No Longer Stark Compliant Referrals for ”hospital” services Physician- owned Service Provider Referrals to hospital are now also considered referrals to Physician-owned Service Provider

20. Do Not “Perform” Services for the Hospital Start with the definition of “entity” Start with the definition of “entity” How much do you need to “peel away” so that you are not considered to “perform” the service? How much do you need to “peel away” so that you are not considered to “perform” the service? –Equipment –Personnel –Disposable (but costly) supplies

21. Convert Joint “Services” Venture to a Joint “Equipment Leasing” Company Mobile Laser Joint Venture Equipment Lease ONLY Hospital provides personnel, supplies, management NOT %-based or per-click compensation formula Referrals for Hospital Laser Services Considered to be Lessor Lessor Lessee

22. Insertion of an Intermediary Organization Mobile Laser Joint Venture Management and Leasing Company Per-service compensation is permissible Flat-fee compensation arrangement

23. Scenario #1: Laser Unit Anti-Kickback Statute Kickback analysis continues to be highly relevant Kickback analysis continues to be highly relevant Physician-ownership not illegal per se Physician-ownership not illegal per se

24. Scenario #1: Laser Unit Anti- Kickback Statute Basic Tenets of Anti-Kickback Analysis: Basic Tenets of Anti-Kickback Analysis: – Cannot solicit or receive, or offer or pay remuneration in exchange for referrals of program beneficiaries or to induce the purchasing, lease or arranging for items or services reimbursed under federal health care programs – Two way street – just as illegal to solicit or accept payment for referrals, as it is to offer or make such payments.

25. Scenario #1: Laser Unit Anti-Kickback Statute Fact Specific Analysis – Turns on “Intent” Fact Specific Analysis – Turns on “Intent” Requirement for “Intent” Requirement for “Intent” –New Legislation: a person may violate the anti-kickback statute without knowledge of, or specific intent to violate, the statute

26. Scenario #1: Laser Unit Anti-Kickback Statute OIG Guidance – Joint Ventures OIG Guidance – Joint Ventures 1989 Special Fraud Alert on Joint Ventures1989 Special Fraud Alert on Joint Ventures – Questionable features of suspect JVs: Manner in which investors selected/retainedManner in which investors selected/retained Nature of business structureNature of business structure Financing/profit DistributionsFinancing/profit Distributions

27. Scenario #1: Laser Unit Anti-Kickback Statute OIG Guidance – Joint Ventures –2003 Special Advisory Bulletin on Contractual Joint Ventures JVs between existing suppliers and health care entities to provide services to the entities’ patients are “suspect” JVs between existing suppliers and health care entities to provide services to the entities’ patients are “suspect” –“Suspect” criteria Provider expands into new line of business Provider expands into new line of business Provider neither operates nor provides Provider neither operates nor provides Contract manager is an established provider Contract manager is an established provider Economic benefits are shared Economic benefits are shared Return varies with volume or value of referrals Return varies with volume or value of referrals

28. Scenario #2: Imaging Services We are currently thinking about adding imaging services to the office with CT and plain film. We are currently thinking about adding imaging services to the office with CT and plain film. 1. Besides decreasing reimbursement for these services, do you see the new Stark laws affecting what and how we add these services? 2. Can we get outside referrals for imaging? (PCP referring patients, etc.)

29. In-Office Ancillary Exception to Stark DHS ancillary to referring physician’s professional services DHS ancillary to referring physician’s professional services Furnished by physician, group practice member, or person supervised by them Furnished by physician, group practice member, or person supervised by them Centralized building or same building in which referring physician provides some services unrelated to DHS Centralized building or same building in which referring physician provides some services unrelated to DHS Billed by physician or group practice Billed by physician or group practice

30. In-Office Ancillary Exception Building requirement Building requirement –Single street address –Need not be adjacent to where non-DHS provided –Can not be a mobile vehicle, internal loading dock or parking garage (Phase II) –Can be a SNF, other facility or patient’s home –Shared facilities permitted Centralized Building Centralized Building –Group practices only –Can included mobile vehicle –No shared facilities

31. Disclosure Requirements For CT and MRI, doctors need to provide written disclosure of ownership of imaging equipment and list of alternative suppliers For CT and MRI, doctors need to provide written disclosure of ownership of imaging equipment and list of alternative suppliers CMS may add other services to list of disclosure CMS may add other services to list of disclosure

32. Scenario #2: Imaging Services Anti-Kickback Statute Group Practice Safe Harbor May apply Group Practice Safe Harbor May apply Where no safe harbor applies, not illegal per se. Where no safe harbor applies, not illegal per se. Facts & Circumstances Analysis Facts & Circumstances Analysis Accepting Outside Referrals – FMV/reasonableness/cross-referrals Accepting Outside Referrals – FMV/reasonableness/cross-referrals Potential issues with enrollment if too many patients from outside the practice Potential issues with enrollment if too many patients from outside the practice

33. Scenario #3: ASCs I am considering forming a multi-specialty ASC. This is a stand alone center, solely owned by physicians. There are 14 full partner/shareholders and 2-3 part owner/shareholders. The shareholder specialties include – General Surgery, Orthopedics, Podiatry, Urology, ENT, Ophthalmology and Pain. There are many other surgeons and specialties that use the center, but have no ownership.

34. Scenario #3: ASCs 1. What are the Safe Harbor rules that apply? 2. Are there anti-kickback rules or any Stark issues with an ASC? 3. Would any rules change if an outside company bought a number of shares or percentage of the center? 4. Would the rules change if there was a joint venture made with the hospital with an established ASC? 5. Are there differences in single specialty centers?

35. Scenario #3: ASCs Stark Law No DHS: No issue No DHS: No issue Bundled payment rate for ASCs Bundled payment rate for ASCs Beware of separately billed DHS Beware of separately billed DHS

36. Scenario #3: ASCs Anti-Kickback Statute ASC Safe Harbor: Common Requirements ASC Safe Harbor: Common Requirements –Medicare certified (42 C.F.R. part 416) –Dedicated OR and recovery room –Disclosure to patients –Interest cannot be offered based on prior or anticipated referrals or other business generated –No loans from ASC or investor to purchase interest –Returns proportional to ownership interest –All ancillary services must be part of ASC services and not separately billed –No discrimination against Program patients

37. Scenario #3: ASCs Anti-Kickback Statute ASC Safe Harbor: Single Specialty ASCs ASC Safe Harbor: Single Specialty ASCs –All investors are Physicians in the same specialty, in a position to refer directly to the ASC and perform procedure there Physicians in the same specialty, in a position to refer directly to the ASC and perform procedure there Group practices composed exclusively of such physicians Group practices composed exclusively of such physicians “Unrelated persons” (not making or influencing referrals) “Unrelated persons” (not making or influencing referrals) –At least 1/3 of each physician’s practice income in the past year derived from ASC procedures

38. Scenario #3: ASCs Anti-Kickback Statute ASC Safe Harbor: Multi-Specialty ASCs ASC Safe Harbor: Multi-Specialty ASCs –All investors are Physicians in a position to refer directly to the ASC Physicians in a position to refer directly to the ASC Group practices composed exclusively of such physicians Group practices composed exclusively of such physicians “Unrelated persons” “Unrelated persons” –At least 1/3 of each physician’s practice income in the past year derived from ASC procedures –At least 1/3 of investor’s ASC procedures in the past year must be at the investment ASC

39. Scenario #3: ASCs Anti-Kickback Statute ASC Safe Harbor: Hospital/Physician ASC ASC Safe Harbor: Hospital/Physician ASC –Investors are One or more hospitals One or more hospitals Physicians meeting other ASC safe harbor requirements Physicians meeting other ASC safe harbor requirements “unrelated persons” “unrelated persons” –ASC may not use hospital space or services absent a safe harbored agreement –Hospital may not claim ASC costs on cost report –Hospital may not be in a position to make or influence referrals to investors or ASC

40. Questions? Julie Kass Julie Kass O ber | Kaler 410-347-7314 jekass@ober.com Kevin Barry, Esq., Office of Inspector General David Benjamin, MD, YU Committee Member

41. Thank You for Attending the 2010 Young Urologists Forum! Sponsored by the AUA Young Urologists Committee Be Sure to Visit the Young Urologists Web Site at www.AUAnet.org/YoungUrologists!www.AUAnet.org/YoungUrologists