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NEW JERSEY MEDICAL BOARD APPROVES AMENDMENTS TO PROFESSIONAL PRACTICE REGULATIONS

The New Jersey Board of Medical Examiners ("the Board") has approved significant amendments to its so-called "professional practice" regulations governing referrals, kickbacks, billing, practice entities, and affiliations. As anticipated, and as reported in prior issues of Statlaw, the amendments bring the Board's regulations more in line with the federal Medicare and Medicaid Anti-Kickback Statute and Stark II self-referral prohibitions. However, because of New Jersey's "Cody" law restricting certain types of services beyond those restricted by Stark, but allowing referrals related to grandfathered financial interests, there will remain various idiosyncracies in the Board's regulations. For example, as currently written the proposed restrictions would apply to all diagnostic services, not just diagnostic radiology services. Because the Board's regulations are not limited to Medicare and Medicaid reimbursed services but apply regardless of payer, these rules are of paramount importance to all physicians practicing in New Jersey. The amendments have yet to be published in the New Jersey Register and will be subject to a comment period and possibly hearings. A large volume of comments is anticipated as well as a lengthy period for the Board to review the comments and make revisions. Thus, it could be year's end before the rules are adopted in final form.

The Health Insurance Portability and Accountability Act of 1996 ("HIPPA") is pouring more than $500 million into healthcare fraud enforcement programs this year alone, and prosecutors are not wasting time before spending this money. Flagrantly abusive cases and major providers are not the only targets. Numerous reports from around the country, including New Jersey and surrounding states, reveal that individual physicians are being subjected to intimidating investigations and threats of fines and asset seizures, often based on allegations that do not become clear until months after the inquiry begins. Another outgrowth of HIPPA is the recent adoption, by Health & Human Services' Office of Inspector General ("OIG"), of a rule that will ease that department's burden of proof in bringing sanctions against health care practitioners and others who fail to furnish Medicare and Medicaid beneficiaries with medically necessary services that satisfy professionally recognized quality standards. The rule also sets a penalty sanction amount of up to $10,000 for each instance of medically improper or unnecessary services provided (previously limited to the actual or estimated cost of the services) and, when program exclusion is the sanction, the minimum period of program exclusion is now one year. From what we've seen so far of HIPPA and its progeny, this is just the tip of the iceberg.

WARNING: Physicians have been receiving so-called limited audit letters from Medicare that include a Pertinent Professional Background Questionnaire. The questionnaire asks about the physician's private practice, including group practice affiliations and involvement in ancillary services. Physicians should be forewarned and consult legal counsel prior to answering the questionnaire. These seemingly innocuous questions can lead to further scrutiny and, worse, the answers could potentially be construed as admissions of guilt

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