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“Navigating Labs to Make Informed Decisions”

COMPLIANCE ROAD TRIP. “Navigating Labs to Make Informed Decisions”. David W. Gee and Kristen R. Blanchette David Wright Tremaine LLP davidgee@dwt.com kristenblanchette@dwt.com. 1. % BASED CONTRACT MARKETING. COMPLIANCE ROAD TRIP. 2. IN-OFFICE PHLEBOTOMISTS. ST.

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“Navigating Labs to Make Informed Decisions”

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  1. COMPLIANCE ROAD TRIP “Navigating Labs to Make Informed Decisions” David W. Gee and Kristen R. Blanchette David Wright Tremaine LLP davidgee@dwt.com kristenblanchette@dwt.com

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

  3. ST. • 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

  4. REFERENCES ST. • FEDERAL • 42 U.S.C. § 1320-a-7(b) [AKS] • 42 C.F.R. § 1001.952 [Safe Harbors] • 42 U.S.C. § 1320-a-7b (b)(3)(B); 42 C.F.R. § 1011.952(i) [Bona Fida Employees] • 42 C.F.R. § 1001.952 (d) [Pers. Svs./ and Mgmt.] • CA • Cal. Bus. & Prof. Code § 650(a) [CA AKS – PORA] • Cal. Welf. & Inst. Code § 14107.2 (a) + (b) [Medi-Cal AKS] • Cal. Welf. & Inst. Code § 14107.2 (c) [Medi-Cal AKS Safe Harbor]

  5. REFERENCES ST. • 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-11-846-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 11525 (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.4th 383, 413, 140 Cal.Rptr.3d 584 (2012)

  6. REFERENCES ST. • FEDERAL SETTLEMENTS • OIG - Kickback and Physician Self-Referral (08-21-2014) [Zimmer-Deptula (ZDI) paid $123K] • OIG - Kickback and Physician Self-Referral (10-21-2013) [FCA case; two owners of DME co. agreed to be excluded for 20 yrs] • OIG Archives - Kickback and Physician Self-Referral (02-15-2005) [ TLC paid $130K to resolve CMP liability] • CA LEGIS. COUNSEL OPINION • California Legislative Counsel Bureau Opinion # 1128674, “Clinical Laboratory Referral Practice” (Apr. 20, 2012) (adresses the legality under both federal and state law of a commission-based contract marketing arrangement)

  7. AVE. • FEDERAL • PERMITTED, IF • Solelycollecting and processing lab specimens • CA • PROHIBITED • Why? LFS has provided guidance on this issue

  8. REFERENCES AVE. • 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] • FEDERAL • CMS Commentary to Final Stark II Regs., 66 Fed. Reg. 856, 948-49 (Jan. 4, 2001) • OIG Special Fraud Alert: Special Arrangements for the Provision of Clinical Lab Services, 59 Fed. Reg. 65372 (Dec. 19, 1994)

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

  10. REFERENCES BLVD. • FEDERAL • 42 C.F.R. § 493.1242 (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, § 1242.6, § 1246

  11. RD. • FEDERAL • PERMITTED, SUBJECT TO: • Stark Law • AKS Safe Harbor • CA • PERMITTED, SUBJECT TO: • PORA

  12. REFERENCES RD. • FEDERAL • 42 C.F.R. 10001.952(b) [AKS Space Rental Safe Harbor] • 42 U.S.C. § 1395nn (e) (1)(A); 42 C.F.R. § 411.357(a) [Stark Law Space Safe Harbor Exception] • OIG Special Fraud Alert(Feb. 2000) (listing requirements) • CA • Cal. Bus. & Prof. Code § 650.01 (PORA) • Cal. Bus. & Prof. Code § 650.02(b)(2) (exception to PORA re: leases)

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

  14. REFERENCES WAY • CA • Cal. Bus. & Prof. Code § 655.5 (anti-markup and disclosure req.) • Cal. Bus. & Prof. Code § 655.7 (direct billing) • 22 C.C.R. § 515501(a) (Medi-Cal “Lowest Charge Rule”) • Hunter Labs v. Quest (settled in 2011) • AB 1494 • 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 99-13

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

  16. QUESTIONS? David W. Gee & Kristen R. BlanchetteDavid Wright Tremaine LLPdavidgee@dwt.comand kristenblanchette@dwt.com

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