Just 3 of the 1,200 Costly Legal Mistakes Explained in this Desk Reference

Chapter 4.1: The 10 Biggest Legal Mistakes Physicians Make When Dealing With
Practice Support Agreements

When a practice support agreement involves the recruited physician joining a group practice, the Stark law imposes specific requirements as set forth in recently promulgated regulations (effective July 24, 2004):

• If payments are made by the hospital directly to the medical practice, the written agreement regarding recruitment benefits is signed by the group practice as well as the physician.

• Benefits must be passed directly through to the physician except for actual costs incurred by the practice.

• If the hospital provides a collections guarantee, costs allocated by the medical practice to the physician are limited to the actual additional incremental costs attributable to the physician.

• If benefits are paid directly to the medical practice, the benefits cannot be determined based on the volume or value of any actual or anticipated referrals by the practice.

• The medical practice cannot impose any additional restrictions, such as a covenant not to compete, on the recruited physician (other than restrictions based on quality of care).

Action Step: In contemplating working with a group practice, physicians should consult legal counsel and be aware of the Stark law requirements. They should inquire as to the practice’s understanding of these requirements, and insist on compliance.

Consider this scenario: A physician finds that Medicare has been significantly overcharged due to improper coding or billing practices employed by the physician’s office personnel. Steps are immediately taken to ensure that the underlying problem is resolved, and the physician enters into settlement negotiations with HHS-OIG to arrive at a settlement figure. Problem solved, right? Not exactly. Systemic billing problems rarely affect only a single payer (e.g., Medicare). More typically, a problem that results in overcharges to one payer also adversely affects other payers as well. It is easy to overlook the fact that the HHS-OIG is not the only agency that should concern physicians. A provider may have also overcharged Medicaid (comanaged by the state and HHS), the Federal Employee Health Benefits Program (covering federal employees), and Tricare (covering Department of Defense dependents).

Action Step: When an overpayment is identified, a physician should identify the full scope of the problem. A physician should work closely with legal counsel. In most cases, it is in the physician’s best interest to seek a global resolution of overpayments to all federal health benefits programs, not just Medicare.

Often, in an attempt to overcome feelings of guilt for terminating an employee, physicians offer the employee severance pay without obtaining a release of all claims. Sometimes the practice has a formal severance policy set forth in employee manuals or offer letters. In those cases, the terms of the policy must be followed. In all other cases, severance is entirely discretionary and, if offered, should be expressly conditioned on the employee’s agreeing not to file any employment-related claims against the practice, other than a claim for unemployment benefits where applicable.

Action Step: Physicians should consult with experienced employment counsel before offering severance pay to a terminated employee and obtain the necessary written severance agreement and release of claims. Releases for employees who are over age 40, for instance, must conform to the special requirements of federal law.

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1,200 Costly - But Avoidable - Mistakes