health agencies

Paying Your Marketers Properly – Revisiting the Rabbit Hole … Part 2: Health Care Laws – Anti-kickback: Employees

January 23, 2013 By paulhirsch Leave a Comment

A brief note to the Readers: First, I would like to thank all of the people who have taken time to comment on this article series, and those who have taken time to email me expressing interest in this subject. I know it has been longer than I ever anticipated, but FINALLY I am posting the next part of this “series.” I appreciate everyone’s patience, we are a small office (3 people), and when we had 4 different cases in various phases of litigation simultaneous blog posting and website updates took a far backseat!

Part 2: Health Care Laws – Anti-kickback: Employees

We (here at the firm) have almost always approached the issue of paying marketers form the standpoint of: “in most situations the best approach will be to treat them as an employee, rather than as an independent contractor.” Our original article articulated this in a very basic manner.

So why is this the best approach?

Please note that the term “best” is subjective, this might not be the best approach in certain instances, but we believe that more often than not it will be the simplest approach and minimize an employer’s exposure to liability.

Understanding the “why” necessarily requires looking into the history behind the federal Anti-kickback laws, the impact they had on the healthcare industry, and how the law (and accompanying regulations) adapted through the years.

document stack (small)

The Back Story: Some readers might wonder why this is even a discussion. For those readers, and for those who have not thought about the Anti-kickback laws in some time, here is a greatly condensed explanation:

ALL healthcare providers who participate in the Medicare, Medicaid, or any other healthcare program that is funded by federal dollars are subject to the federal anti-kickback laws. In 1972 Congress responded to abusive practices by healthcare providers participating in the federal healthcare programs by enacting a law which is commonly known as the anti-kickback statute. Initially, this law simply prohibited soliciting or offering a “kick-back, bribe, or rebate.” Each violation of this law was punished as a misdemeanor, a relatively minor offense.

In 1977 Congress elevated the possible punishment for violations of the statute to a felony, and they expanded the scope of what actions were prohibited. Congress realized that the implications of continuing abusive practices of the publicly funded healthcare programs must be stopped in order to ensure effective delivery of healthcare to a growing population of participants. They expanded the reach of this statute by making its punishments apply to “any remuneration.”

In 1977 the statute essentially said the following:

ANYONE who:

◊   offers to pay, pays, receives, or asks for;
◊   ANY remuneration (including any kick-back, bribe or rebate)
◊   directly or indirectly; overtly or covertly; in cash or in any other form;
◊   in return / exchange for furnishing, purchasing, leasing, arranging for, or referral related to;
◊   ANY healthcare item or service which might be paid for partially or fully by the federal government
♦   … can be found guilty of a felony punishable by a fine of $25,000, 5 years in prison, or both for each violation.

Gavel 240 x 180

At this point, the anti-kickback statute substantially became what it is still today, and because it is SO broadly worded, it applies to an overwhelming variety of healthcare related transactions. Congress realized this when they implemented it in 1977. Congress sought to ensure that otherwise legitimate transactions would receive an ‘exception’ by stating that this statue would not apply to a few specific transactions.

Even though this 1977 revision included specific protections for “any amount paid by an employer to an employee (who has a bona fide employment relationship with such employer) for employment in the provision of covered items or services.” This and a few other exceptions were included in the text of the statute to help ensure that the statue was only applicable against the abusive practices it was aimed at stopping.

Only 3 years passed before Congress recognized that their revised language was so broad that it was causing a large amount of uncertainty in the healthcare industry. Healthcare providers were unsure of what transactions or relationships were a violation of the statue. Congress responded by revising the statute in 1980, inserting a “mens rea” requirement (a requirement present in most criminal statutes which means only people who have the specified level of intent may be found guilty of violating the statue). The law now requires that violations be “knowing and willful” in order to be punishable.

Congress took the time to specify that it was “concerned that criminal penalties may be imposed under current law to an individual whose conduct, while improper, was inadvertent.” Also, the 1980 changes are “to assure that only persons who knowingly and willfully engage in the proscribed conduct are to be subject to criminal sanctions.”

As is often the case, Congress’s best intention-ed actions did not provide the desired results (we all know what road was paved by best intentions).
By 1987 the complaints of over breadth of the wording in the statute and rising concerns about fraud and abuse in the federal healthcare industry rose to the point that Congress had to act. Congress’ response was to issue a comprehensive set of amendments to the federal healthcare system and the anti-kickback statute.

These amendments added that violators of the anti-kickback statute could also be subject to exclusion from participation in the healthcare programs if they were convicted of a criminal offense in connection with healthcare items or services. Simultaneously, Congress allowed the Department of Health and Human Services (HHS) to issue guidance and rules concerning healthcare transactions and relationships. This delegation of power is a notable point in the HHS’s history, because Congress instructed the HHS to issue “safe harbors” for certain transactions, financial relationships, and interactions. HHS was empowered to “promulgate regulations specifying payment practices that will not be subject to criminal prosecution” or otherwise be the “basis for exclusion from participation” in the federal healthcare programs.

The OIG chose to issue their guidance on the anti-kickback safe harbors through its OIG department. The OIG issued its first “Final Rule” listing certain safe harbors in 1991. Since then, these “safe harbors” have become some of the most essential guidelines for healthcare providers whenever financial transactions are concerned. Since their inception and presently these safe harbors can be found at § 1001.952 in the Code of Federal Regulations (C.F.R.).

The Current Rule:

Big or small, non-profit or for profit, privately owned or publicly traded, ALL healthcare providers who participate in Medicare, Medicaid, or any other federal healthcare program MUST abide by the safe harbors in order to successfully ensure compliance with the applicable laws and regulations.

Many states have implemented their own anti-kickback laws and almost all of them have modeled their state laws off of the federal statute. Some states not only model their prohibitions after the federal law, they even adopt the federal simply by mere reference to them.

The previous description and brief history of the anti-kickback statute provides a solid frame of reference to begin looking in detail at these safe harbors, including the “Employee” safe harbor, which is in essential parts as follows:

C.F.R. § 1001.952 (“Exceptions”): “The following payment practices shall not be treated as a criminal offense … and shall not serve as the basis for an exclusion…

C.F.R. § 1001.952(i) (Employees): Prohibited “remuneration” does not include any amount paid by an employer to an employee, who has a bona fide employment relationship with the employer, for employment in the furnishing of any item or service for which payment may be made in whole or in part under Medicare, Medicaid or other Federal health care programs. For purposes of… this section, the term employee [shall be defined by the IRS’ definition].

Employee vs. Independent Contractor ( a Marketer as an Employee – examined)

Now, we can finally gain some ‘traction’ understanding why marketers should be paid as employees rather than as independent contractors, beginning with an analysis of the employee safe harbor.

At the outset, the safe harbor clearly protects payments from an employer to an employee… then it goes on to specify “for employment in the furnishing of any item or service for which payment may be made in whole or in part under Medicare, Medicaid or other Federal health care programs.” …

“for employment in the furnishing of”: This language is simply unclear. What is employment “in the furnishing of…”?

INTERPRETATION A: What is the simple answer? What is most obvious?

Couldn’t this phrase “in the furnishing of…” simply apply to the actual delivery of healthcare? Wouldn’t it be a very simple and obvious explanation to say: “this safe harbor clearly protects payments made by a healthcare company to a therapist (or nurse, aide, etc.)? Yes, the safe harbor would clearly apply to this “furnishing of” healthcare items or services.

If you are a healthcare provider entity participating in Medicare/Medicaid your business is to provide healthcare items or services and obviously payments made to employees who actually provide the hands on care should be exempt from prosecution. We would generally say OF COURSE! This particular application is not a hotly contested issue, because the answer is quite obvious.

INTERPRETATION B:

What if we try to apply the logic from Interpretation A to a common marketer scenario? Now we are asking to apply that same wording, which so obviously applies to say… a nurse, to a person who is not licensed to provide medical services, and also whose services can NOT be paid in whole or in part by the federal healthcare program!

Now the issue can become so much more uncertain and less obvious. However, to many employers who are healthcare providers the answer should still be fairly evident…

If your business revolves around and essentially IS the provision of healthcare items or service (which may in part or in whole be paid by a federal healthcare program) how can you exist if you don’t have clients? Isn’t finding clients a necessary and integral part of furnishing those services? If clients, potential clients, or referral sources do not know that your business exists then how could you possibly ever furnish any item or services?

Of course, to a healthcare provider this seems axiomatic and the answer is obvious. Healthcare, like any other business must be marketed in order to furnish whatever items or services it offers! Therefore, employing a marketer to properly market your business is employment “in the furnishing of…”

OIG “GUIDANCE”… How does the OIG help “guide” the industry with regards to this issue? DO they support our general conclusions in Interpretation B?

The OIG has numerous ways of providing guidance: official ‘Advisory Opinions,’ comments posted in the Federal Register, special advisory bulletins, and their ‘Fraud and Abuse Alerts.’ All of these things are sources of explanation and guidance for healthcare providers about the safe harbors. They are extremely significant. Both state and federal courts frequently turn to these sources in order to apply or interpret what the various safe harbors mean.

Unfortunately, there is relatively little that is commonly known about specific guidance explaining how the employee safe harbor should be applied. In fact, the best piece of information is frequently overlooked. Some courts have picked up on it and seemingly understood its implications, others have chosen to bypass it for reasons unknown… what is it?

“The proposed exception for employees permitted an employer to pay an employee in whatever manner he or she chose for having that employee assist in the solicitation of program business.…”

To anyone looking at the anti-kickback employee safe harbor, as it might apply to paying marketers, this simple sentence should be a profound clarification!
Why?
Because, it justifies what should otherwise be obvious… that employing a marketer IS employment “in the furnishing of” applicable healthcare items or services! Thus, this is the most important sentence to explain why paying your marketer properly starts with paying them as an employee.

NEXT TIME:

The explanation continues: Employee vs. Independent Contractor… Contd. (Independent Contractor as a Marketer – examined) & Employee vs. Independent Contractor… Contd. (“Bona Fide” – Who is an Employee?)

Photo Credits:

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CMS Announces New Application Fee for Providers 855A

December 6, 2012 By Pearson & Bernard Leave a Comment

DEPARTMENT OF HEALTH AND HUMAN SERVICES – NEW Provider Enrollment Application Fee Amount for Calendar Year 2013CMS – Medicare, Medicaid, and Children’s Health Insurance Programs;

CMS has announced a $532.00 calendar year (CY) 2013 application fee for institutional providers that are initially enrolling in the Medicare or Medicaid program or the Children’s Health Insurance Program (CHIP); revalidating their Medicare, Medicaid or CHIP enrollment; or adding a new Medicare practice location.

This fee is required with any enrollment application submitted on or after January 1, 2013 and on or before December 31, 2013.

This is a slight increase from the previous fee, but none-the-less providers should be aware of the fee increase. Fortunately, no advanced fee has been attached to “basic” changes of information submitted via an 855A.

Please remember CMS must be notified promptly (usually within 30 days) of almost ALL changes in the structure, administration, and “upper-level” personnel within any provider organization!

We regularly file 855A forms for providers and have a great working relationship with CMS contractors. If you think you might need to submit an 855A or if this little note makes you wonder if you should have, but didn’t, please contact us. We can almost always give you a quick answer regarding what you need to do regarding an 855A.

Filed Under: Blog, Home Health Agencies, Noteworthy News - Health Care Tagged With: 855A, CMS, health agencies, healthcare agencies, healthcare agency, home health agencies

Paying Your Marketers Properly – Revisiting the Rabbit Hole

October 9, 2012 By paulhirsch Leave a Comment

Update: 12-06-2012 – This Article Series is not forgotten, it is still “in-the-works!” In our desire to compile an authoritative basis for our opinion on this matter we are still reviewing a massive amount of documents, from Legislative History of Congress all the way to state court litigation documents which address this topic. We have read most of it and have “digested” what we have read. However the creation process is taking a backseat to ongoing litigation. We are simply waiting for things to slow down a bit before we delve into writing this article series – after all client needs come first!

Of course, if you have specific questions about a current situation or questions about what you want to do in terms of your marketing approaches, we are more than willing to advise you on a particular circumstance! If in doubt – ASK US!-

Paying Your Marketers Properly – Revisiting the Rabbit Hole

Introduction – Part 1 (of 5)

After updating our website recently we have noticed that our article “Paying Your Marketers – Properly” and the issues covered within it have spurned many questions and comments both here on our site and from some of our clients. The health care industry is an ever-changing world, subject to ebb and flow of legislation, agency rules / regulations, court decisions and an ever-changing labor pool. Notably, Liz wrote this article almost ten years ago!

Many changes have occurred throughout the health care industry since the original article was written. Government agencies charged with oversight of the industry and its participants work differently then they did ten years ago. In fact, almost every facet of the industry has been affected by continual changes in the laws, rules, and regulations governing how agencies do business in this marketplace. It follows that the issue of paying marketers has changed also. Ultimately the crux of the original article remains in place, but none-the-less it deserves a fresh analysis.

One illustration of this change can be seen in the government’s focus (both on the state and federal levels) on strengthening and enforcing the prohibitions on fraud and abuse within the industry. The government’s new resolve in combating fraud and abuse has developed throughout many areas. One of the most visible examples of this new focus and resolve is the DOJ-HHS’s HEAT strike-teams, which actively combines and focuses the intelligence and resources of federal and state agencies towards the single inexorable goal of prosecuting businesses and people involved in Medicaid and Medicare fraud and abuse.

Moreover, beyond the health care industry itself, almost every industry (including health care) and every business, across the country, faces the perils and pitfalls of the changing environment of employer / employee relationships and employment laws. Federal and state agencies have promulgated new rules and regulations, and have adapted their methods and strategies in dealing with employment law. The “old-hat” areas of discrimination, retaliation, and harassment are as much of a concern as ever. However as technology advances and permeates the fabric of our society new questions are being raised such as: When can you run a criminal background check on a prospective employee? Can you ask a potential employee for their password to social media websites so you can better evaluate them? What are the limits you can place on employees’ use of social media both on the clock and off the clock (there is a surprising amount of controversy in this area particularly!)?

So how does all of this effect marketing strategies and payment structures for marketers in the health care industry?

In some ways many things are unchanged, but unfortunately that is not the whole story. Certain recent developments in the health care industry and employment law should give pause to health care providers when they decide to start or continue with marketing strategies and payment structures.

We have decided to start a multi-part series of articles which will shed new light on some old concepts, highlight certain techniques and approaches to structuring marketer training and payment, identify emerging issues and areas of concern, and suggest “functional adaptation methods” which can help health care businesses avoid potential pitfalls.

Please note: Many of the emerging issues about social media and employment law could be entire articles in and of themselves. So, this series will touch on some points of these emerging issues, but if there is interest in a more in-depth look we will consider putting together an article on these issues themselves.

Here are the planned segments:

Part 1: Introduction

Part 2: Health Care Laws (Anti-kickback and other federal rules & – Employee vs. Independent Contractor considerations)

Part 3: Employment Laws ( Fair Labor and Standards Act (FLSA) – wages paid and hours worked – payment structures – necessary documentation)

Part 4: Emerging Concerns

Part 5: “Functional Adaptation Methods” ®

(Please note regarding the phrase “functional adaptation methods:” some people might be looking for “best practices,” however we detest this catch phrase and purposefully choose to avoid it. As many successful business people can attest this phrase is one of the general corporate ear candy catch phrases which are in vogue. At the outset, this phrase in particular tends to over-simplify complex issues, because what might be best a best practice in one instance might not be what is best for every situation.)

Filed Under: Blog, Business Development, Home Health Agencies, Uncategorized Tagged With: Employment law, Fair Labor Standards Act, health agencies, healthcare agencies, healthcare agency, home health agencies, home health marketers, Marketing health care, Marketing Health Services, Paying for Home Health Marketing, paying marketers properly, What can I ask an applicant

504 Rehabilitation Act Grievance Policy

February 28, 2012 By Pearson & Bernard Leave a Comment

The Rehabilitation Act of 1973 was the predecessor of the American Disabilities Act of 1990 and imposed a duty upon federal contractors, or entities that participate in federally funded programs to accommodate persons with “handicaps.” In addition, Section 504 of the law prohibits a business which participates in a program that receive federal financial assistance from discrimination which affects the receipt of the federal benefit and in employment of individuals. Thus this law applies to home health agencies which participate in Medicare or Medicaid who, as outlined in the law, employ more then fifteen (15) persons.
The regulations adopted to implement section 504 provides that “no qualified Handicapped individual shall on the basis of handicap be excluded from participation in, be denied the benefits of, or otherwise be subjected to discrimination under any program or activity which receive or benefits from federal financial assistance.” The law and regulations do not require an affirmative action policy. Yet, the regulations outline specific discriminatory actions which are prohibited including denial of a benefit or service, providing a less effective benefit of service or a different benefit or service either directly or through a contract, license or other arrangement if such acts are done on the basis of a person’s handicap. As previously stated, the prohibition extends to access to services or facilities as well as to employment opportunities.
Similar to the ADA, Section 504 of the Rehabilitation Act generally requires program participant to reasonably accommodate a qualified person with a handicap in the employment setting. Such a duty is not stated for accessibility to services. Instead, the regulations simply prohibit using the handicap as the basis of denial, restriction or limitation on services.
The regulations require that a covered entity appoint a specific person to coordinate is compliance. In addition, the covered entity must institute a grievance policy applicable complaints about possible discriminatory acts. The grievance policy should address employment grievance and patient grievance and include the following:

1. Adopt a written grievance procedure to be incorporated in clinical and employment policies. The grievance policy should be included in patient admission packets.

2. The grievance procedures should outline that complaints be in writing and addressed to a management level person and/or the identified Grievance Coordinator.

3. Establish specific time frames for filing the compliant and the investigation of the changes.

4. Outline the time frame and chain of command for decision_making on the complaint including identifying the person or the job title of the person who will oversee the investigation of the complaint.

5. Provide for a grievance hearing_ a meeting of the aggrieved party and the decision makers including the Chief Executive Officer of the company as a final step in the procedure.

Agencies also must maintain a log of grievances from patients or employee that fall under section 504, by disabled person who are either patient, applicants for employment, etc. In addition, agencies must post a notice of compliance with Section 504 of the Rehabilitation Act which includes the name of the Grievance Coordinator. Agencies who advertise, either for employees or for educational purposes, should also include reference to being non_discriminatory on the basis of race, sex, disability, religion, or ethnic background.

In light of the recent cases, home health agencies should make sure they are in compliance with Section 504 of the Rehabilitation Act and address the issues in admission policies. A grievance procedure should be adopted and incorporated in agency admission and compliance policies. Decisions on admission or discharge should be characterized as related to the agency’s ability to provide or reasonable expectation to be able to provide the care for patients, which may include whether or not the agency can afford to pay its employees to provide services.

Filed Under: Blog, Home Health Agencies Tagged With: 504 Rehabilitation Act Grievance Policy, health agencies, healthcare agency