House committee gives its approval to Medicare Advantage telehealth bill

A bill—The Increasing Telehealth Access in Medicare (ITAM)—aimed at improving access to Medicare Advantage telehealth services received approval from the House Ways and Means Committee on September 13, 2017. The unanimous approval came alongside the committee’s unanimous passage of a bill (H.R. 3726) to simply physician self-referral prohibitions and a bill (H.R. 3729) to continue Medicare add-on payments for ambulance services.


The bipartisan bill, Increasing Telehealth Access in Medicare (ITAM) (H.R. 3727), introduced by Representatives Diane Black (R-Tenn) and Mike Thompson (D-Calif), seeks to encourage the use of telehealth by making it a basic benefit—rather than a supplemental service—for Medicare Advantage beneficiaries. Although critics of telehealth warn that the service presents a risk of overutilization in a fee-for-service reimbursement model, proponents of the new ITAM bill note that by pairing telehealth with Medicare advantage, that concern is “flipped on its head.”


A related bill, in the Senate, known as the Furthering Access to Stroke Telemedicine Act (S. 431), would permit any site exclusively administering acute care stroke treatment to be included in the list of eligible Medicare sites for telemedicine services, without regard for the site’s geographic location. In May of 2017, the Senate Finance Committee unanimously passed the Creating High-Quality Results and Outcomes Necessary to Improve Chronic (CHRONIC) Care Act (S. 870), a bill designed to expand telehealth access for Medicare beneficiaries with chronic conditions while increasing the incentives for accountable care organizations (ACOs) to provide those services.

Structure call coverage arrangements to avoid Stark & AKS issues

When compensating physicians for the time they spend on-call, hospitals should draft call coverage agreements with care to avoid potential problems implicating federal laws prohibiting physician self-referral (Stark Law) and kickbacks (Anti-Kickback Statute (AKS)). In a webinar presented by the Health Care Compliance Association (HCCA), Robert G. Homchick, partner at Davis Wright Tremaine LLP, and Scott M. Safriet and Adam S. Polsky, partners at HealthCare Appraisers, Inc., discussed changes to the call coverage risk analysis based on court opinions and changes in government implementation of rules.

As with most physician compensation arrangements, the Stark Law (42 U.S.C. §1395nn) is the threshold issue when analyzing call coverage agreements; additionally, if the agreement passes muster under Stark, the AKS (42 U.S.C. §1320a-7b) risks should be relatively modest. Both analyses contain some of the same considerations, such as fair market value (FMV) and commercial reasonableness.

Homchick, Safriet, and Polsky noted the following concerns for call coverage:

  • on-call coverage is becoming more expensive, but hospitals are facing decreased reimbursement; and
  • because traditional methods of securing call coverage no longer apply to all situations, hospitals are becoming more creative to obtain coverage.

To effectively secure coverage, hospitals should consider many options, and determine which is best applied in their situation. Potential coverage options include concurrent coverage, telemedicine, bundling on-call coverage with services beyond the emergency room, on-call coverage payment for employed physicians, and use of the “activation fee” concept.

However, the webinar cautioned that not all arrangements are the same, and in situations where it is truly difficult to secure coverage, a different approach may be necessary. Additionally, hospitals should look into the underlying reasons of why securing that coverage has been difficult—for example, are there shortened response times, a physician shortage in the marketplace, or is coverage restricted or quasi-restricted.

Former Tuomey CEO faces the ‘Stark’ reality of referral scheme

The former CEO of Tuomey Healthcare System agreed to a four-year period of exclusion and a $1 million settlement as a result of his involvement in a physician-referral scheme. The former executive’s exclusion and settlement follow a jury finding that Tuomey defrauded Medicare by filing false claims based upon illegally referred services.


The government alleged that, due to fears that Tuomey would lose outpatient procedure referrals to a new surgery center, the former CEO entered into contracts with 19 specialist physicians, requiring the physicians to refer patients to Tuomey in exchange for compensation greatly in excess of fair market value. During the trail against Tuomey, the government asserted that the former CEO ignored warnings from the hospital’s attorneys that the physician contracts were “risky.”

Tuomey judgment

 After a month long trial, a South Carolina jury determined that the referral arrangement violated the Stark Law (42 U.S.C. § 1395nn). The illegal arrangement resulted in a $237.4 million judgment against Tuomey. Subsequently, the U.S. resolved its judgment against the health care system for $72.4 million and Tuomey was sold to Palmetto Health, a multi-hospital health care system. Prior to the CEO’s termination, the jury concluded that Tuomey filed more than 21,000 false claims with Medicare (see Tuorney saga punctuated with DOJ settlement, Health Law Daily, October 19, 2015). 


The settlement with the former CEO is based upon allegations that, as a key decision maker, he led or participated in the scheme to defraud Medicare. Under the terms of the agreement, in addition to the $1 million payment, the former CEO will be excluded from federal health care program participation for a period of four years. His exclusion prohibits him from providing management or administrative services paid for by federal health care programs.

Stark law needs a check-up, says Senate Finance Committee

As Medicare payments move from fee-for-service to value-based and other alternative payment methods, are the Stark law’s prohibitions on physician self-referrals still relevant? In a July 12, 2016 hearing titled “Examining the Stark Law: Current Issues and Opportunities,” the Senate Committee on Finance heard testimony on how the law can be improved. Both the Committee Chairman, Sen. Orrin Hatch (R-Utah), and Ranking Member, Sen. Ron Wyden (D-Ore), agreed on the importance of coordination of care and of the Stark law (42 U.S.C. §1395nn) and expressed their hopes of reaching a bipartisan solution.

As background information for the hearing, Hatch released a white paper on how the Stark law is working in practice, highlighting the law’s complexity, the severity of its penalties, its significant compliance costs, and its effect on efforts to integrate health care delivery. The paper, “Why Stark, Why Now? Suggestions to Improve the Stark Law to Encourage Innovative Payment Models,” followed up on a December 2015 round-table discussion with Stark law experts.

Testimony focused on the difficulties and costs of compliance with the Stark law, particularly in light of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) and the Medicare and CHIP Reauthorization Act of 2015 (MACRA) (P.L. 114-10). Troy A. Barsky, partner at Crowell & Moring LLP and former CMS Director of the Division of Technical Payment Policy, called Stark law reform “overdue and necessary.” Barsky says that the law has become a “tangled web” of “conflicting standards, ambiguous and conflicting definitions, and volumes of regulations” that leaves compliance expensive and “unachievable as a practical matter.” He further called the Stark law an obstacle to health care delivery and reimbursement reform.

Ronald A. Paulus, M.D., President and CEO of Mission Health, a safety net health system in western North Carolina, explained the problems his organization faces with Stark law compliance. He said that the Stark law affects the health system’s ability to fully implement pay-for-performance programs, and affects day-to-day patient care in significant, negative ways. Paulus added, the law “creates a choking fog of uncertainty” and often “creates truly absurd outcomes that directly cause patient harm.” Further, he noted that CMS does not have the authority to address the problems with the Stark law, and called on Congress to act.

Lastly, Peter B. Mancino, Deputy General Counsel of the Johns Hopkins Health System Corporation, discussed the costs of compliance with the Stark law, including regular audits, training programs, and tracking programs. He discussed the organization’s roles as payor and provider, both at academic medical centers and community hospitals, which gives it a unique perspective. Mancino called the Stark law “the top compliance risk of our health system” and asked for “common-sense revisions that will make Stark more understandable and less burdensome to providers.”