COMPLIANCE ROAD TRIP

“Navigating Labs to Make Informed Decisions” David W. Gee and Kristen R.

BlanchetteDavid Wright Tremaine LLP

davidgee@dwt.com kristenblanchette@dwt.com

COMPLIANCE ROAD TRIP

1. % BASED CONTRACT MARKETING

2. IN-OFFICE PHLEBOTOMISTS

3. MOBILE PHLEBOTOMISTS

4. LEASING SPACE FROM DOCTORS

5. LAB PRICING PRACTICES

ST.

AVE.

BLVD.

RD.

WAY

1. % BASED CONTRACT MARKETING

FEDERAL PROHIBITED

Why? AKS and No Safe Harbor

CAPROHIBITED

Why? Medi-Cal AKS

BUT: May be PERMITTED by PORA Safe Harbor Unless Medicare or Medi-Cal Involved

YIELDAHEAD

ST.

REFERENCES

1. % BASED CONTRACT MARKETING

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]

ST.

REFERENCES

1. % BASED CONTRACT MARKETING

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)

ST.

REFERENCES

1. % BASED CONTRACT MARKETING

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)

ST.

2. IN-OFFICE PHLEBOTOMISTS

FEDERAL PERMITTED, IF

Solely collecting and processing lab specimens

CAPROHIBITED

Why? LFS has provided guidance on this issue

AVE.

REFERENCES

2. IN-OFFICE PHLEBOTOMISTS

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)

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]

AVE.

3. MOBILE PHLEBOTOMISTS

FEDERAL NO GUIDANCE

(besides authority re: phlebs)

CACAUTION: LFS – NO

“Roving phlebs” WHY? Prohibited

by Bus. & Prof. Code § 650

BLVD.

REFERENCES

3. MOBILE PHLEBOTOMISTS

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

BLVD.

4. LEASING SPACE FROM DOCTORS

FEDERAL PERMITTED,

SUBJECT TO: Stark Law AKS Safe Harbor

CA PERMITTED,

SUBJECT TO: PORA

RD.

REFERENCES

4. LEASING OFFICE SPACE FROM DOCTORS

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)

RD.

5. LAB PRICING PRACTICES

FEDERAL WHAT YOU NEED TO

KNOW: Medicare Usual

Charge Rule Discounting Rules

and AKS

CAWHAT YOU NEED TO

KNOW: Anti-Markup Rules Disclosure Rules Direct Billing Medi-Cal Lowest

Charge Rule

WAY

REFERENCES

5. LAB PRICING PRACTICES

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

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

WAY

COMPLIANCE ROAD TRIPSUMMARY

1. % BASED CONTRACT MARKETING FEDERAL & CA PROHIBITED (BUT SEE CA PORA)

3. MOBILE PHLEBOTOMISTSFEDERAL = NO GUIDANCE

CA = PROHBITED (per LFS guidance)

4. LEASING OFFICE SPACE FROM DOCTORSFEDERAL = PERMITTED, subject to Stark AND AKS

CA = PERMITTED, subject to PORA

5. LAB PRICING PRACTICESSEE RULES FOR FEDERAL & CA

ST.

AVE.

BLVD.

RD.

WAY

1. IN-OFFICE PHLEBOTOMISTSFEDERAL = PERMITTED (key word: “solely”)

CA = PROHIBITED (per LFS guidance)

AVE.

QUESTIONS?

David W. Gee & Kristen R. BlanchetteDavid Wright Tremaine LLP

davidgee@dwt.com and kristenblanchette@dwt.com