Healthy innovation

By Phil Fuhrer
Phil.Fuhrer@StarNewsOnline.com

Published: Wednesday, September 18, 2013 at 3:02 p.m.

Photo by Ken Blevins

Jeff James is the CEO of Wilmington Health.

Jeff James can see clearly now, and it’s a beautiful thing. “I’ve never been more excited about the future of health care, and I’ve been doing this for over two decades,” says James, the dogged and innovative chief executive officer of Wilmington Health. “We are working here to integrate the providers and payors and hospitals.

“If we do it right, Wilmington is going to be a destination for health care.”

Looking in the rear view mirror, though, James was more apprehensive than excited.

James was chief financial officer at the Shannon Clinic (the provider) in San Angelo, Texas, where, typically, the doctor roster doubled and care expanded as he worked endless hours to grab market share, outdo the competition and beat up on the insurance companies (the payors). Then, in the late 1990s, along came his first child, a daughter.

“And I just couldn’t imagine how I was going to explain to my little girl what I did for a living,” says James. “I didn’t just mean all the absences at home because of work, but what were we really accomplishing. I said, ‘No, I’m not going to continue to do that.’ So I flipped from being a competitor to a physicians’ advocate

“We’re working to change the landscape so across the health-care continuum we can collaborate together to become trusted, transparent partners in the community.”

If you think it’s just bluster, get this: “I actually tell insurance companies how to pay Wilmington Health less.” Or, “We have a terrific economy of scale on purchases of supplies, but we let independent doctors in the area get their supplies through us so they can save money.”

James, now nearing 50, is just getting started, so if you want to peek into his future paradigm of community health care, please take a seat and buckle up.

First, some background.

He was a Marine for four years, including two years at Cherry Point, where “I fell in love with coastal Carolina,” developed his competitive edge and got his future college tuition covered. That paid for five years at Eastern Illinois University, in his native state, ending with a master’s in business administration.

This was the early 1990s, James signed up for a pilot program in Illinois to tackle and solve numerous state issues, especially saving money. Teamed with an MBA from Harvard and another from DePaul, James’ assignment was whether to privatize the state’s far-flung motor pool, with its thousands of vehicles, mechanics and garages.

“Both from a cost and efficiency standpoint,” remembers James, “our research showed that it was absolutely clear that turning it all over to a private company made sense. But politics and the bureaucracies got hold of it and ignored our recommendation. We couldn’t impact change.

“So I pointed out to the state another waste of money: me,” says James, “if they weren’t going to listen to our recommendations.”

His wife, Liz, pointed him to the health care industry, and he signed on with a 10-doctor orthopedic group in Springfield, and, sans political intervention, he began to thrive in a profession he had never considered.

“It was a relatively small practice, but I learned health care from the ground up,” says James. “It taught me how competitive health care could be. The growth was focused on growth. And beating the competition. I was a Marine, a Type-A. Worked for me.”

But down in Texas a few years later, just thinking about how to explain himself at “bring-your-parent-to-school day,” Jeff James had his epiphany.

“It was a complete 180,” he says.

And when he was hired in 2008 to come to coastal Carolina and run Wilmington Health, which is 100 percent independently owned by its physicians, including those on its board of directors, James found the perfect landscape to test his theories of collaboration, transparency and trust between the triad of health-care provider, payors and hospitals.

With white boards and posters along the Wilmington Health office corridors on Medical Center Drive, pounding home the mission of everyone rowing in the same direction – especially a medical cadre that has doubled in size to 150 people practicing at 21 locations since his arrival – James is determined to make Wilmington Health a trusted partner in health care and service.

He has champions across the landscape here, including Paul Snyder, the CEO of Glen Meade Center for Women’s Health, who could have been a nay-saying competitor:

“Jeff truly wants to transform the delivery of health care in Wilmington and the surrounding counties,” says Snyder. “He knows Wilmington Health cannot do this without the involvement and support of other key players in the health-care community. (So) he’s always been very transparent and welcoming of all constituents to the table – the major insurance companies and hospitals, down to single specialty practices.

“Success for Jeff is not simply driven by improving the quality and value of health-care delivery at Wilmington Health; rather, he wants all providers to be a part of this rising tide so that health-care consumers across the market place benefit. Wilmington needs advanced health-care thinkers like Jeff James.”

James’ transformation came on two levels: the waning of his competitive streak and the wooing of physicians.

THE COMPETITIVE PIE: 

“I realized down in Texas, market share and fighting the competition was ‘scarcity thinking.’ You were taught there was this small pie and you have to fight for your piece of it. Or pieces of it. And if somebody got a piece of it, you were losing. So for you to do better, somebody else has to do worse.

But I came across ‘abundance thinking.’ Guess what? The pie can be infinite. It can grow. As you get better, you let others know how to get better. It’s especially true in health care. The better we all are, the more people will come to Wilmington for health care and the more people will stay.”

DOCTORS WITHIN BORDERS:

 A big cog in James’s triad of collaboration was the doctor. But now, as much as CEO, he actually is proudest of his title: physicians’ advocate.

“In the past, the doctors were the problem to collaboration and integration,” says James. “But they also are the solution. Doctors are trained to be independent, and by nature they are very competitive. Physicians are the only fragmented piece of the health-care industry – there are hundreds of independent practices. But as they do come to group practices, it allows us to finally, clinically integrate.”

He often has meetings well before the crack of dawn or late into the evening with independents who want to test the Wilmington Health waters.

James also firmly distinguishes between collaboration, his touchstone, and consolidation, which, in his view, simply raised costs for patients and payors by grouping tests and services under one roof, inflating prices.

The new paradigm works best if all parts of the triad support transparency to the consumer and the payor around quality cost and the patient experience. James believes that new technologies allow for information contained within the Electronic Medical Record to be married with information contained in claims files from providers to give a clear picture of which providers can provide true value.

James: “True value is the intersection of cost and quality. This provides a legitimate scorecard of the performances of all involved in health care.

“Transparency is the catalyst for this major new health-care model,” James continues. “Historically, all we have had are anecdotal representations of patient experiences as the surrogate for quality, like how long you were in the waiting room. But that’s about to change. Informed choices will be possible and will drive true innovation that will decrease cost and improve clinical outcomes for the patients.”

His daughter, now a straight-A student at New Hanover High, or his 8-year-old son, can now have Dad over to school for show-and-tell, and he won’t melt. In fact, he’ll probably start right in with a message for the sophomores or the third-graders: collaborative, transparent health care, where patients can monitor and track the outcomes of their docs, is coming to Wilmington, and it’s going to bring more and more patients with it.

“The Mayo Clinic,” says James, “it never, in any presentations or speeches or literature, talks about market share. It only talks about quality of care. And here in Wilmington, I think you’re going to see that all of us (providers, payors, hospitals) are going to play the game with our cards face up.

“That’s how we’ll develop trust to make this a health-care destination.”

http://www.starnewsonline.com/article/20130918/BETTERLIVING/130919618?Title=Healthy-innovation

The Stark Law and Federal Anti-Kickback Laws: What You Need to Know

7/18/2013 - Kameron Gifford, CPC

Could my organization be at risk? What areas exist for potential violations?

Anti Kickback Enforcement - 

In the past, kickback enforcement actions have concentrated on three areas: kickbacks related to costs shown on cost re-ports; physician referrals to hospitals, suppliers, and ancillary services; and hospital referrals to entities that provide services to patients after hospitalization, such as medical equipment suppliers or nursing services. However, there is an increasing role in healthcare for payors and middlemen who control or influence purchasing decisions by using access to patient health and utilization information and provider data. These payors and middlemen may pay kickbacks to obtain or retain contracts, to receive favorable treatment in contracts, to obtain confidential patient or provider data, or to influence agents or fiduciaries to exercise discretion on behalf of a principal in favor of the payor. This body of law can be complex because the techniques used by payors and recipients vary by industry, and there are more extensive and complicated money flows among the parties and related entities. 

Stark Act Definitions.

Before addressing some of the exceptions, it is important to define the key terms of the general rule. The fundamental way to avoid the application of the general rule is to distinguish oneself from the definition of critical terms. First and foremost, it should be noted that the Stark Act only prohibits referrals to entities for a DHS. Designated health services include:

1. clinical laboratory services;
2. physical therapy services;
3. occupation therapy services;
4. radiology services (including MRIs, Ultrasounds, and CAT scans);
5. radiation therapy and supplies;
6. durable medical equipment and supplies;
7. parenteral and enteral nutrients, equipment, and supplies;
8. prosthetics, orthotics, and prosthetic devices and supplies;
9. home health services;
10. outpatient prescription drugs; and
11. inpatient and outpatient hospital services.

If that seems like pretty much everything, it is.

Who is part of my immediate family?

Physicians must take note that the direct or indirect financial relationships of an “immediate family member” will be imputed to them for the purpose of determining whether a referral was a prohibited one. “Immediate family member” is defined as a “husband or wife; birth or adoptive parent, child, or sibling; stepparent, stepchild, stepbrother, or stepsister; father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law; grandparent or grandchild; and spouse of a grandparent or grandchild.” Once again, the regulations use a broad definition that should give physicians and health care providers pause.

What counts as a financial relationship?

The most critical definition for physicians wishing to comply with Stark entails understanding what constitutes a “direct or indirect financial relationship.” In general, a “financial relationship” is a direct or indirect ownership interest, investment interest, or compensation arrangement with any entity that furnishes DHS. What constitutes a direct financial relationship is fairly straightforward, with one twist: A direct relationship exists if the investment interest or the compensation passes between either the referring physician or a member of his or her immediate family and the entity furnishing the designated health service without any intervening persons or entities. Thus, even if a physician has no contact with a DHS-providing entity, he or she may still have a direct financial relationship with the entity through an immediate family member. In contrast to a direct relationship, what constitutes an indirect relationship is more complex, and requires analysis in the context of the three different types of “financial relationships.”

What is an Ownership or Investment Interest? What counts as an Indirect Ownership or Investment Interest?

An ownership or investment interest in a DHS entity can take the form of equity, debt, stock, certain stock options, partnership interests, memberships interests in an LLC, etc. An ownership or investment interest “includes an interest in an entity that holds an ownership or investment interest” in the DHS entity. Thus, an ownership interest in a subsidiary company is not an ownership interest in the parent or another subsidiary of the parent unless the subsidiary has an interest in the parent or another subsidiary of the parent. An interest in a retirement plan is specifically excluded from the definition of ownership or investment interest. The following, while specifically excluded from the definition of ownership or investment interest, are

nonetheless considered a form of “compensation arrangement”:

1) stock options or convertible securities until executed;

2) an “under arrangement” contract between a hospital and a physician-owned entity;

3) a security interest held by a physician in equipment sold to a hospital and financed

through a loan from the physician; and

4) an unsecured loan subordinated to a credit facility.

An indirect ownership or investment interest exists if there is “an unbroken chain” of persons having an ownership or investment interest and the entity providing DHS has actual knowledge or acts in “reckless disregard or deliberate ignorance” that the referring physician has an indirect ownership interest in the entity, no matter how many “intermediary” interests exist. In fact, an indirect ownership or investment interest exists even though the entity providing DHS does not know the “precise composition of the unbroken chain.” Referring physicians and DHS entities must therefore be careful to check that no “unbroken chain” establishes an indirect ownership or investment interest. As noted above, the DHS entity will be denied payment despite its lack of knowledge if, depending on the circumstances, CMS determines that the entity has acted with reckless disregard or ignorance of the referring physician’s investment and ownership interests along the chain. A DHS entity therefore should make certain it knows exactly whom they are dealing with before accepting a referral.

What is a Compensation Arrangement? What counts as an Indirect Compensation Arrangement?

If you thought the definition of an ownership or investment interest was complex, it gets worse. Of the types of financial relationships prohibited by the Stark law, compensation arrangements are the most onerous to grasp. A compensation arrangement is “any arrangement involving remuneration, direct or indirect, between a physician (or a member of a physician’s immediate family) and an entity,” including “under arrangement” contracts. In addition to the twist involving members of the physician’s immediate family noted above, a physician is deemed to have a direct compensation arrangement with a DHS entity if “the only intervening entity between the physician and the entity furnishing DHS is his or her physician organization. In such situations, for purposes of this section, the physician is deemed to stand in the shoes of the physician organization.”

The regulations entail a long definition of an indirect compensation arrangement. First, an indirect compensation, like an indirect investment or ownership interest, requires an “unbroken chain” of persons or entities having a financial interest between the referring physician and the DHS entity. However, unlike the indirect investment or ownership interest, an indirect compensation arrangement can exist if the intervening interest is either an investment or ownership interest or a compensation arrangement. Second, the referring physician must receive compensation from a person or entity in the chain with which the physician has a direct financial relationship that varies with the volume or value of referrals generated by the physician for the DHS entity. Finally, just as in the context of an indirect ownership or investment interest, the DHS entity must have “actual knowledge of, or act in reckless disregard or deliberate ignorance of” the referring physician’s compensation varying with the volume or value of referrals. For the purposes of determining whether an unbroken chain exists, the physician will “stand in the shoes” of his or her physician organization.

Concerned your Financial Relationships Might Implicate the Stark Act?

You should be. Violation of the Act will result in a denial of payment by Medicare to the DHS and could result in a civil penalty of up to $100,000 for the DHS entity, referring physician, or both. A physician or other entity wishing to determine compliance with the Stark act has several options. The physician or entity can contact our offices with their questions and receive guidance based on their situation. Further, a physician or entity can request an “advisory opinion” from CMS regarding whether their referral arrangement violates the Act and regulations promulgated under it. It should be noted that advisory opinions are binding on both the requesting party and CMS. This can be a useful tool because it will give assurance to the physician or DHS-providing entity. Although both options entail costs, those costs are dwarfed by the potential costs associated with the CMS determining a referral to be “prohibited.”

What is the Anti-Kickback Law and How is it Different from Stark?

Although similar in purpose, the statute colloquially known as the “Anti-Kickback” law imposes even more severe penalties on entities violating its provisions. The Anti-Kickback law makes it a felony for anyone who receives a form of payment in return for referring a patient to another for Medicare or Medicaid-covered services. The law also forbids payment in return for purchasing, leasing, or ordering any good, facility, service or item which would be paid for under either Medicare or Medicaid. Violating the act comes with a heavy penalty – a felony conviction punishable by a fine up to $25,000 and/or five years in jail. Both sides of the transaction are forbidden – the law forbids both the receipt of and the offering to pay or payment of the kickback. Recently, Physician-Vendor relationships have come under heightened scrutiny by federal and state regulators. It is important for physicians and their vendors to carefully structure their relationships to avoid potentially violating the Anti-Kickback law.

“Safe Harbor” Transactions

Congress and the Department of Health and Human Services (“HHS”) have provided several “safe harbors” allowing entities to avoid violations of the Anti-Kickback law. Many of the excepts are made to exclude certain arrangements or transfers from the definition of payment, thus shielding the parties from potential criminal liability under the Anti-Kickback law. The safe harbors include:

1. Investment Interests:

Three types of payments are exempted under the safe harbor for “investment interests.” To fit in the first exemption, the entity must have less than $50 million in assets related to the furnishing of health care items and services. With active and passive investors, there are restrictions on the respective ownership interests that may be held by those capable of making referrals or furnishing Medicare or Medicaid covered health services. These restrictions are relaxed somewhat if the entity is located in an “underserved area.” The exemption for investment interests allows that, in certain circumstances, dividends or interest are deemed not to be payments as far as the Anti-Kickback law is concerned. However, the regulations impose very precise and lengthy conditions on compliance with the exemption. Entities wishing to use this exemption should consult with their attorney to ensure full compliance with the investment interest safe harbor.

2. Space Rental:

Remember that the Anti-Kickback law forbids certain leasing arrangements. Recognizing that this could put a strain on health care providers attempting to find a place to set up shop, HHS provided a safe harbor for space rental. This safe harbor requires the lease to be in writing, cover all the premises leased between the parties and specify those premises, be for at least one year, be for fair market value rent, which is set in advance, and not lease more space than is “reasonably necessary” to provide the desired service. The rent can in no way reflect the volume or value of referrals between the parties for Medicare or Medicaid covered services.

3. Equipment Rental:

What good is an empty office? Modern health care requires some very complicated and very expense equipment. Many health care providers find it more economical to rent rather than own their equipment. In a corollary to the safe harbor for space rental, HHS has provided a safe harbor for equipment rental. The same conditions as applied to the space rental lease apply to the equipment lease.

4. Personal Services / Management Contracts:

A safe harbor exists for payment made to agents (persons authorized to act for another) as compensation, so long as the agency agreement is set out in writing and covers all the services the agent will provide, be for not less than one year, be for an amount equal to the fair market value for such services, be for an amount set out in advance, and in no way take into account the volume or value of any referrals or business generated payable by Medicare or Medicaid.

5. Referral Services:

Payment can even be made to a referral service under a safe harbor promulgated by HHS. The payment, as you’ve probably guessed, cannot be based on the volume or value of referrals, but only on the costs of operating the referral service. There can be no restrictions on the manner in which the services referred are provided. Further, the referral service must make certain disclosures to the person seeking the referral and maintain a written record certifying those disclosures.

6. Payments made to Bona Fide Employees:

Payments to an employee will be safe so long as there is a “bona fide” (real) employment relationship and the payments do not take into account the value or volume of referrals for Medicare or Medicaid covered services.

7. Recruitment:

Just as there were relaxations under STARK for physician recruitment, there exists a safe harbor under the Anti-Kickback regulations for payments made to induce a practitioner to join with an entity. There is a litany of conditions that must be met for this safe harbor to be met. For example, if the recruit is leaving an established practice, the revenues at the recruiting entity must generate 75% of its revenue from new patients; that is, the recruit can only bring 25% worth of patients with him from his old practice. Further, there can be no condition that the recruit make referrals, influence referrals, or otherwise generate business for the new entity as a condition of receiving the benefits of his or her new employ.

http://www.pvwlaw.com/legal-articles-and-information/health-care/the-stark-law-and-anti-kickback-laws/the-stark-law-and-federal-anti-kickback-laws/

15 Recent Issues Between Hospitals and Payors

Written by Jim McLaughlin | April 26, 2013

Here are 15 recent issues that occurred between hospitals, health systems and payors within the past month, starting with the most recent. 

1. Aetna, Baptist Memorial Health Care Make Collaborative Care Agreement 
Baptist Memorial Health Care in Memphis, Tenn., and Aetna partnered in a collaborative care agreement to offer Aetna Whole Health, a commercial healthcare product.

2. Aetna, Carolinas HealthCare Announce Accountable Care Collaboration
Aetna and Charlotte, N.C.-based Carolinas HealthCare System are using a clinically integrated organization model to support patient-centered medical homes and other accountable care efforts.

3. Minnesota Hospitals Denounce Blue Cross Payment Changes  
The Minnesota Hospital Association called out Blue Cross and Blue Shield of Minnesota, saying the health insurer is slashing payments to rural hospitals that will "put them into deep, deep red ink."

4. Bill Requiring North Carolina Hospitals to Post Prices Passes Senate Committee 
A bipartisan North Carolina Senate committee threw its support behind a bill that would require hospitals to make their bills more transparent and comprehensible to patients.

5. CMS Rejects Pioneer ACOs' Plea for Pay-for-Performance Delay 
CMS did not accept a request from its Pioneer accountable care organizations to delay tying pay to outcomes.

6. BCBS of Tennessee, Erlanger Form Strategic Partnership 
BlueCross BlueShield of Tennessee and Erlanger Health System in Chattanooga, Tenn., signed a five-year strategic network partnership agreement, effective July 1.

7. Cornerstone Health Care, BCBS of North Carolina Form ACO 
Cornerstone Health Care, a Highpoint, N.C.-based physician group with more than 365 physicians, partnered with Blue Cross and Blue Shield of North Carolina to form an accountable care organization.

8. Pennsylvania Lawmakers: Highmark-West Penn Deal May Hurt Small Hospitals 
Four Pennsylvania state senators sent a letter to Gov. Tom Corbett, arguing the pending merger between Pittsburgh-based health insurer Highmark and West Penn Allegheny Health System could hurt small local hospitals if safeguards are not put in place.

9. Report: U.S. Healthcare System Can Save $560B in Public, Private Reforms 
If the United States tinkered with Medicare more, reformed tax policies, prioritized healthcare quality and incented states to improve care, the healthcare system could save roughly $560 billion over the next decade, according to a report from the Bipartisan Policy Center Health Care Cost Containment Initiative. 

10. UC Health, Anthem Reach New Contract 
UC Health and Anthem Blue Cross and Blue Shield of Ohio reached a new contract, meaning all UC Health hospitals and providers are now in-network again for Anthem patients.

11. Study: Bundled Payment Structures Show Promise 
When structured well, bundled payment models can be effective and profitable for hospitals that can reduce the cost of each episode of care, according to a study conducted by Singletrak Analytics and DataGen.

12. Cooper University Health Care Acquires 20% Interest in New Jersey Health Insurer 
Camden, N.J.-based Cooper University Health Care announced it will acquire a 20 percent interest in health insurer AmeriHealth New Jersey, marking the state's first hospital-payor acquisition of its kind. During a conference call announcing the deal, leaders also announced there was room at the table for more providers to join in the partnership.

13. $24M Ruling Against UnitedHealth May Enhance Payors' Scrutiny of In-Network Providers 
A Nevada jury ruled that two affiliates of UnitedHealth Group must pay $24 million in damages for negligent oversight of a physician who gave two patients hepatitis C through unsterile care.

14. Superior Health Partners, BCBS of Michigan Partner for Accountable Care 
Superior Health Partners, an alliance of eight independent health systems in Michigan's Upper Peninsula, announced an accountable care organization-like partnership with Blue Cross Blue Shield of Michigan.

15. Mountain States Health Alliance Nears Expiration of BlueCross BlueShield Contract 
The contract between BlueCross BlueShield of Tennessee and the 13 hospitals of Johnson City, Tenn.-based Mountain States Health Alliance is due to expire at the end of May, with no renewal agreement yet finalized.