New Jersey - Volume XIII, Number 4 - April, 2004

NEXT PHASE OF STARK II FINAL RULES PUBLISHED - The Centers for Medicare and Medicaid Services (CMS) has published the long awaited Stark II/Phase II final rule, governing prohibited “self-referrals.” The rule is effective July 26, 2004, and clarifies multiple exceptions, including recruitment arrangements, equipment and space leases, and employee and independent contractor relationships. The rule also allows certain percentage compensation arrangements previously questioned or prohibited and revises some criteria of the in-office ancillary services exception. Practices with arrangements affected by the Stark rule, especially if earlier advised that a preferred arrangement would violate Stark, should revisit those arrangements with health law counsel. Contact Denise Sanders at KACS for information on the Stark rule and other physician referral regulatory requirements.

OIG ISSUES ALERT ON EXTRA CHARGES FOR MEDICARE SERVICES - HHS’ Office of Inspector General (OIG) has issued an alert to physicians regarding the potential liabilities of billing Medicare patients for Medicare covered services. Participating providers can charge Medicare patients extra for items and services not covered by Medicare, and for deductibles and coinsurance, without violating their assignment agreement. But when they request any other payment for covered services from Medicare patients they are liable for substantial penalties and exclusion from Federal health care programs. The alert came after the OIG became aware of physicians asking patients to pay additional fees and following an OIG investigation of a physician who presented to his patients (including Medicare patients) a “Personal Health Care Medical Care Contract” asking them to pay an annual $600 fee for “coordination of care,” “a comprehensive assessment and plan for optimum health,” and “extra” patient care time. The OIG alleged that at least some of these services were already reimbursable, covered Medicare services. The physician agreed to a monetary settlement and to cease offering the contracts. Physicians contemplating patient contracts asking for additional fees, or so-called “boutique” medical practices, should exercise caution when charging for services that may already be covered by third-party payors.

PRINCETON’S “ENTITY” POLICY COVERS PHYSICIAN MALPRACTICE - In a ruling that could have profound effects upon Princeton Insurance Company, a NJ Superior Court held that Princeton policies written to cover professional corporations and other entities also provide additional coverage for acts of professional malpractice by physicians employed by these entities. Thus, a physician with a one million dollar malpractice policy and another policy covering his corporation for one million, will have a total of two million dollars coverage. Princeton argued that entity coverage only applies to negligence of the entity’s administrative staff. KACS represented the physician in the case.

CHAPERONE RULE ADOPTED: The NJ State Board of Medical Examiners (Board) has adopted a rule, effective April 5, 2004, requiring licensees in an office setting to advise patients and examinees of their right to have a chaperone present during specified medical examinations, i.e., breast and pelvic examinations of females, and genitalia and rectal exams of males or females. The rule explains the required patient notice and addresses situations where the practice is unable to provide a chaperone acceptable to the patient or the patient refuses a chaperone and the licensee believes one is necessary. In such cases, the physician need not provide care for the immediate medical problem presented, so long as the physician discusses with the patient the risks of not receiving further care.

STATE ASKS PHYSICIANS TO REVIEW MED MAL INFO: Physicians who receive a letter from the NJ Division of Consumer Affairs asking them to check the accuracy of their medical malpractice history being provided to The Record (pursuant to a court order), should carefully review the information and, if challenging its accuracy, submit supporting documentation to the Board by the deadline. If you are challenging the accuracy of the number reported, KACS will be able to assist you.

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