Category Archives: Physician Employment Agreements

How to Protect Your Practice’s Trade Secrets

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dreamstimemaximum_51887081-flipBy: Shobha Lizaso

“Prevention is better than cure” is a maxim that has reigned in the healthcare industry for thousands of years; however, this phrase echoes through the halls of the legal profession as well.

Healthcare practices often neglect to appreciate the value of their confidential information as assets and the need to protect these assets. Although HIPAA and HITECH compliance aids in maintaining the confidentiality of patient records, it does not protect a provider’s trade secrets.

Trade secrets of a healthcare practice may include any of the following: patient lists, financial information, contract rates, contract terms client lists, collection rates, marketing tactics, pricing/discount information, and methods of doing business. If leaked, this information may be used by competitors to secure advantages over a healthcare practice. For example, patient lists could be used to solicit a practice’s patients or contract rates and terms can be used by a competitor to undercut the rates of a practice. Continue reading →

Physician Compensation Targeted by the Department of Justice

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healthcare business change in ownershipBy: Jeff Cohen

The DOJ reported on August 5th a settlement with a South Carolina hospital concerning physician compensation.  Though certainly not the first or the biggest case of its kind (e.g. note the Halifax Hospital and North Broward Hospital District cases, which generated settlements of over $100M and $60M respectively), it’s attention grabbing nonetheless.

The SC case was brought by a whistleblower, a neurologist formerly employed by the hospital.  The doctor alleged that the seven year employment agreements violated Stark and the Anti Kickback Statute because the compensation was more than what was legally permissible and was also based in part on ancillary services ordered by the employed doctors.  Seasoned readers will understand that the concept of “fair market value” (FMV) is at the heart of regulatory compliance and also that compensation surveys of organizations like the Medical Group Management Association (MGMA) are important guides in term of what is/is not FMV.  In the SC hospital case, compensation met or exceeded the top 10% of similarly qualified physicians in the area, which is very interestingly noted by the DOJ (because some of the comp levels were still within the MGMA surveys).  In other words, the trend here is for the Feds to push back against comp levels on the high end of the FMV spectrum. Continue reading →

Physicians: Start Preparing for 2016 Changes in Healthcare

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By: Jeff Cohen

Stepping into 2016, physicians and medical practices must continue to be vigilant about the changing landscape in healthcare.  Those who adapt quickly and smartly will thrive, while those who don’t will lose.  What can they do?

Stabilize

Stability for medical practices requires two things:  clear analytics and fixes.  Smart medical practices will examine threats outside the practice and within it.  As far as external threats go, the key area to focus on is competition.  Do you know what competitors are doing and how they’re different than you?

Internal threats are general revealed in the form of (a) employees that need better training and communication, (b) employees that just need to go, and (c) creating a succession plan for the practice.  If the practice is top heavy with older physicians, what plan is in place to ensure that “new blood” is brought in?  What recruitment strategies are in place?  Can the practice go it alone or does it need a recruitment arrangement with a hospital that can demonstrate a community need?  How will the older physicians phase out?  Is there a plan in the corporate documents to make sure phase out is slow and planned?  What do departing physicians get?  What about billing and collection?  When was the last time that was analyzed?  And finally, coding analysis.  Is money being left on the table?  Far too many practices actually undercode visits and services out of fear of payer audit.  Apart from constituting a False Claims Act violation (though regulators are not fast to indict providers who are underpaid), the differential can mean the difference between a good year and a bad one.

Finally, in light of the fact that regulatory and recoupment activity has never been higher, practices would do well to ensure compliance via a self-audit and compliance plan.  This is a different animal than a coding audit.  This one looks at all contractual relationships to ensure compliance and augments coding compliance.   Continue reading →

Tuomey Court Has A Lot to Say

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By: Jeff Cohen

The Tuomey decision, U.S. Court of Appeals case out of South Carolina, contains important lessons for physicians, especially as it relates to (1) compensation arrangements with hospitals, (2) proper compensation arising in connection with the provision of designated health services (“DHS”), and (3) the advice of counsel defense.

The concept of DHS arises largely in the context of the federal Stark Law, which in pertinent part (1) forbids physicians from owning and referring to providers of DHS (e.g. PT, rehab, diagnostic imaging, home health, DME, clinical laboratory, inpatient and outpatient hospital services), (2) describes how medical practices can provide DHS to their own patients, and (3) forbids even physicians within a practice from allocating DHS profits on the basis of who ordered or referred to them.

The Tuomey case involves a whistleblower action filed against a not for profit hospital system.  The original jury in that case decided that the system didn’t violate the False Claims Act, but the appellate court set aside the verdict using facts and testimony that had be excluded from the jury trial, Tuomey Healthcare System was found to have knowingly submitted over 21,000 false claims to Medicare and the government was awarded over $237 Million (most of it in the form of punitive damages).  The government (which often advances the plaintiff’s—“relator” case in whistleblower cases) filed a motion for a new trial, which the trial court granted and the appellate court affirmed.

The case involves the following: Continue reading →

OIG Fraud Alert – Physician Compensation Arrangements May Result in Significant Liability

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OIG crestThe HHS Office of Inspector General in a fraud alert released 6-9-15 is telling physicians to be cautious about entering into payment agreements that could violate the Anti-Kickback statute. In the alert, OIG tells physicians entering into such payment arrangements that their compensation must reflect the services’ market values. Further, OIG notes that such an arrangement could violate the Anti-kickback Statute if it seeks to increase the number of referrals the organization receives from those physicians.

Medical Director Supervision Restrictions

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so 2014By: Karina Gonzalez

Medical Directors are used in an administrative capacity to oversee all medical services and care, specifically referring to substance abuse programs and services.  Increasingly, commercial healthcare plans are targeting their role in addictions treatment facilities and denying payment of claims based on audit findings that Medical Directors in Florida may be responsible for far too many treatment facilities and too many patients.

Does Florida have any specific requirements or published guidance on the number of treatment facilities or number of patients for which responsibility falls to the Medical Directors in addictions treatment?

Florida’s Administrative Code directed to substance abuse programs and services does not have any directive which talks about a restriction on the number of facilities or patients recommended for oversight by a Medical Director.  It specifies that addictions receiving facilities, detoxification, intensive inpatient treatment, residential treatment, day or night treatment with host homes and medication and methadone maintenance treatment must designate a Medical Director who oversees all medical services. This Medical Director must hold a current license in the state of Florida.  Continue reading →

Protecting Your Practice Through Restrictive Covenants

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Contract CWBy: Charlene Wilkinson

The beginning of a new year is a great time to evaluate your medical practice and determine ways to protect its healthy growth for the future.  The time, effort and dedication that it may take to build a successful practice may be quickly undermined without certain contractual protections in place.   As you seek to establish or expand your practice, it is essential to protect your hard earned efforts from employees and consultants taking a portion of your patient base, employees and valuable proprietary business processes to compete against you.

One of the ways physicians seek to protect the investment that they have made in their practice is through the use of restrictive covenants. Restrictive covenant is an all-inclusive term used to refer to all contractual restrictions upon competitive practices; nonsolicitation; confidential information and use of trade practices.  Restrictive covenants may be found in a number of documents related to your practice. A restrictive covenant may be found in your practice governing documents, such as the shareholder agreement, the partnership agreement of a partnership or the operating agreement of a limited liability company. A restrictive covenant is often included in an employment contract where it prevents an employee from engaging in certain competitive practices while they are an employee and for a period of time after their employment ends. There may be a restrictive covenant provision in a contract for the sale of a party’s interest in the practice. Continue reading →

More Than a Legal Look: The Business Implications of Recruitment Agreements

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contractBy: Jackie Bain

Many lawyers have written extensively on the legal issues surrounding recruitment agreements, but there is an information gap out there between the discourse over the legal issues and how those issues make an impact on the actual business, the practice. When a practice decides to employ a new physician with the help of a hospital, the practice is essentially a business making a business decision. With that in mind, the practice must fully inform itself of the implications that a Recruitment Agreement will have on their bottom line. Continue reading →

Mega Practices – How Big is Too Big?

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mega practicesBy: Jeff Cohen

A January 24, 2014 court ruling in Idaho that will require the unwind of a hospital system’s purchase of a large primary care medical practice will cause mega practices to think twice about their size.  The Idaho court ruled that St. Luke’s Health System’s purchase of the 40 physician Saltzer Medical Practice violated pertinent state and federal antitrust laws because the group had 80% of the primary care physicians in Nampa, Idaho, a city of roughly 85,000.  The suit was brought by two competing hospitals and succeeded, despite St. Luke’s claims that integrating the practice would improve the quality of care. 

Continue reading →

Florida Medical Spas: Regulators Look Beyond the Surface

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money syringeThere is no such thing as a “medical spa” in Florida.  True!  They are not uniquely licensed.  In fact, they are usually not licensed at all because (1) they are owned and operated by licensed healthcare professionals, and/or (2) they do not file claims for reimbursement with health insurers.  And they are not a regulated entity.

What then is a “medical spa”?  If you want the long answer, go here. The short answer is It’s simply a place where people receive traditional spa services (e.g. facials), plus many other medical procedures, typically focused on cosmetic services (e.g. hair removal, Botox).   It’s “medical” because of the nature of the services provided.  It’s “medical” because (ideally) physician supervision is woven into the business model.

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