As New Yorkers are preparing for Thanksgiving and the official start to the holiday season (although some could argue it started a month ago), required Medicaid providers should also be reviewing their Compliance Programs in preparation to submit their Annual Provider Compliance Program Certification to the New York State Office of the Medicaid Inspector General (“OMIG”).  Required providers must submit a certification at the time of their enrollment and each December thereafter.

As defined by Social Services Law Section 363-d (“Section 363-d”) and Part 521 of Title 18 of the New York Code of Rules and Regulations (“Part 521”), required providers are considered any provider that can answer “Yes” to one of the following questions and therefore must implement a comprehensive Compliance Program:

  1. Is the provider organization subject to Article 28 or Article 36 of the NYS Public Health Law?
  2. Is the provider organization subject to Article 16 or Article 31 of the NYS Mental Hygiene Law?
  3. Does the provider organization claim or order, or can be reasonably expected to claim or order, Medicaid services or supplies of at least $500,000 in any consecutive 12-month period?
  4. Does the provider organization receive Medicaid payments, or can be reasonably expected to receive payments, either directly or indirectly, of at least $500,000 in any consecutive 12-month period?
  5. Does the provider organization submit Medicaid claims of at least $500,000 in any consecutive 12-month period on behalf of another person or persons?

There are two important concepts to be aware of when answering these questions.  First, as defined by the OMIG, Indirect Medicaid Reimbursement is any payment that a provider receives for the delivery of Medicaid care, services, or supplies that comes from a source other than the State of New York.  An example of this is when a provider provides covered services to a Medicaid beneficiary who is enrolled in a Medicaid Managed Care Plan, any payment from the Managed Care Organization is considered an indirect payment.

The second important concept is that the OMIG considers any consecutive 12-month period to be exactly that, any twelve consecutive months.  This determination should not be considered solely on a calendar year.  For example, if a provider established her practice on April 1, 2018 and will not reach $500,000 in either claims or payments by December 31, 2018 but can reasonably expect to hit that mark by March 2019, then that provider should have a Compliance Program in place and be prepared to certify to its implementation by December 31, 2018.

To assist providers, the OMIG’s website identifies seven compliance areas that a provider’s Compliance Program must apply to, as well as eight elements that should be included in all Compliance Programs, regardless of provider type.

The Seven Compliance Areas are:

  1. Billings;
  2. Payments;
  3. Medical necessity and quality of care;
  4. Governance;
  5. Mandatory reporting;
  6. Credentialing; and
  7. Other risk areas that are or should with due diligence be identified by the provider.

The Eight Elements required in every Compliance Program are:

Element 1: Establish written policies and procedures that clearly describe and implement compliance expectations, as well as provide guidance to employees and others on dealing with potential compliance issues.  The written policies and procedures must also identify how to communicate compliance issues to appropriate compliance personnel and describe how potential compliance problems are investigated and resolved.

Element 2: Designate a Compliance Officer who is responsible for the day-to-day operation of the Compliance Program.

Element 3: Establish an effective training and education program for all affected employees and persons associated with the provider, including executives and governing body members (“affected persons”).

Element 4: Establish clear lines of communication to the Compliance Officer that allow all affected persons report compliance issues.  Providers must also establish anonymous and confidential reporting systems.

Element 5: Establish disciplinary policies that are fairly and firmly enforced to encourage good faith participation in the Compliance Program by all affected persons.  The policies must include clear expectations for the reporting or and assistance in resolving compliance issues.  The policies must also include defined sanctions for:

  • failing to report suspected problems;
  • participating in non-compliant behavior; or
  • encouraging, directing, facilitating or permitting either actively or passively non-compliant behavior.

Element 6: Conduct routine compliance assessments for those risk areas specific to the individual provider type, including but not limited to self-audits. These self-audits can be conducted internally or a provider may choose to have an external party conduct the audit.

Element 7: Establish a system for responding to and investigating potential compliance problems as the Compliance Officer becomes aware of them, either by a report received from an affected person or as the result of an internal assessment.  Compliance Program must also establish systems for the provider to report compliance issues the OMIG, as well as repay any related overpayments.

Element 8: Establish a policy of non-intimidation and non-retaliation for good faith participation in the Compliance Program, including but not limited to reporting potential issues, investigating issues, self-evaluations, audits and remedial actions, and reporting to appropriate officials as provided in sections 740 and 741 of the New York State Labor Law.

As mentioned above, each December, required providers must submit a Provider Compliance Program Certification, attesting that they have a Compliance Plan in place and that Compliance Plan satisfies each of the OMIG’s Eight Elements.  If a provider is unable to unequivocally state that their plan meets these requirements then a certification should not be submitted and immediate steps must be taken to all necessary modifications to establish a satisfactory Compliance Plan.  Any provider who submits a false certification may be subject to sanctions, including monetary fines or provider enrollment termination.

If you are unsure whether your Compliance Plan would satisfy the OMIG’s Eight Elements, or if you are a provider who believes you are required to implement a Compliance Plan and have not done so, please do not hesitate to contact Farrell Fritz’s Regulatory & Government Relations Practice Group at 518.313.1450 or NYSRGR@FarrellFritz.com.

New York State Court of Appeals, Albany, New York

Earlier this Summer, the Court of Appeals overturned the Appellate Division Third Department’s (the “Third Department”) unanimous decision in The Matter of Anonymous v. Molik, where it ruled that the New York State Justice Center for the Protection of People with Special Needs (“Justice Center”) exceeded its authority by substantiating a report against a facility or provider agency based upon a “concurrent finding” of neglect.[i]  With its decision, the Court of Appeals has not only clarified the Justice Center’s scope of authority, but also reopened the floodgates to a large number of investigations and appeals that have been existing in a state of limbo since the Third Department’s June 2, 2016 decision.[ii]

Pursuant to Executive Law §§ 551-562 and Social Services Law §§ 488-497, the Justice Center was established in 2013 to protect “vulnerable persons who receive care from New York State’s human services agencies.”[iii] It was created to protect all vulnerable persons, or those “who, due to physical or cognitive disabilities, or the need for services or placement, [are] receiving services from a facility or provider agency.”[iv]

All reportable incidents, including any allegation of neglect,[v] must be reported by a facility to the Statewide Vulnerable Persons’ Central Register (“VPCR”)[vi], whereby the Justice Center is mandated to investigate the allegation(s) and submit its findings to the VPCR.[vii]  The Justice Center’s findings are “based on a preponderance of the evidence and indicate whether the alleged abuse or neglect is substantiated in that it is determined the incident occurred and the subject of the report, facility or provider agency are responsible; or the allegation is found to be unsubstantiated because the event did not occur, or the subject of the report was found not responsible.”[viii] Additionally, the Justice Center may make “a concurrent finding . . . that a systemic problem [at the provider agency or facility] caused or contributed to the occurrence of the incident.”[ix]

In Molik, a male resident engaged in inappropriate sexual conduct with a female resident after two staff members momentarily left a common room at the Petitioner’s facility.[x] This assault was the third incident in a six month period, with the previous two assaults being known to the Petitioner.[xi]  The Justice Center investigated the incident, but did not substantiate a report of neglect against the two individuals because “there were no policies or requirements in place prohibiting staff from leaving the room unattended while residents were gathered there.”[xii] However, since the male resident had previously engaged in similar conduct, the Justice Center substantiated a concurrent finding of neglect against the Petitioner, the operator of the residential facility, “for failing to implement clear staff supervision protocols and for failing to modify [the male resident’s] care plan to increase his level of supervision after the first two attacks.”[xiii]

The Petitioner requested that the Justice Center amend its finding to unsubstantiated, which was denied, leading to the Petitioner’s Article 78 action where it received unanimous support from the Third Department.[xiv]  In its decision, the Third Department overturned the Justice Center’s concurrent finding, stating that it did not have to “defer to the Justice Center’s interpretation of the statutory provisions in question . . . [but rather defer to the] pure statutory interpretation dependent only on accurate apprehension of legislative intent.”[xv] “[T]he only circumstance under which the Justice Center could substantiate a report of neglect against a facility or provider agency is where an incident of neglect has occurred but the subject cannot be identified — a situation that is plainly not present here.”[xvi] The Third Department continued by saying, while the Justice Center does, in fact, have the authority to make a concurrent finding, “the only concurrent finding that may be made is that a systemic problem caused or contributed to the occurrence of the incident.”[xvii] Accordingly, since the controlling statute did not provide the Justice Center with the clear ability to categorize a concurrent finding it necessarily followed that such a finding could not constitute neglect on the part of a provider agency.[xviii]

The Court of Appeals, however, did not share in the Third Department’s view, stating that courts may look beyond the literal text of a statute when “the plain intent and purpose of the statute would otherwise be defeated.”[xix] Consequently, the Court viewed the Petitioner’s, and the Third Department’s, narrow interpretation of the law as “leav[ing] the Justice Center powerless to address many systemic issues, defeating the purpose of the Act and preventing the Justice Center from protecting vulnerable persons where it is most critical to do so.”[xx]  The Court, in light of the particular underlying events in Molik, ruled that to uphold this construction “would perversely allow this dangerous cycle to continue: employee conduct could not be substantiated because it does not violate facility policies, but facility policies would remain ineffective because the Justice Center lacks authority to implement change.”[xxi]

In her dissenting opinion, Judge Rivera stated that she agreed with the majority that “[i]t would lead to absurd results if [N.Y. Soc. Serv. Law § 493(3)(a) were interpreted] to permit a facility or provider agency to be found responsible in those situations where an incident occurs and no subject can be identified, but not where an identified subject is found not responsible for a confirmed incident of abuse or neglect.”[xxii]  However, Judge Rivera points out that a ‘concurrent’ finding should be viewed as an ‘adjunct’, requiring that an initial finding of neglect must be made before a provider agency could be found to have concurrently committed neglect, even if the initial subject is ultimately found not responsible.[xxiii]  In Molik, as reasoned by Judge Rivera, the initial step of establishing a finding of abuse or neglect was never reached because the allegation of neglect against the two identified subjects was declared unsubstantiated; therefore, a ‘concurrent’ finding could not be made.[xxiv]

In a post-Molik world, it is imperative that all provider agencies subject to Justice Center oversight review their internal policies, procedures, and processes, understanding that they too are now clearly within the Justice Center’s reach.  Provider agencies should evaluate previous incidents that occurred within the facility to determine whether the necessary corrective actions have been taken or if further steps are needed.  Furthermore, staff training curriculum should be reevaluated to determine whether opportunities for improvement exist.

If you have any questions or would like additional information regarding the Justice Center, or would be interested in assistance reviewing, developing or revising your policies, processes, and training programs, please do not hesitate to contact Farrell Fritz’s Regulatory & Government Relations Practice Group at 518.313.1450 or NYSRGR@FarrellFritz.com

————————————————————————————————————————

[i] Anonymous v. Molik, 2018 WL 3147607 (N.Y. Jun. 28, 2018).

[ii] Matter of Anonymous v. Molik, 141 A.D.3d 162, (App. Div. 3 Dep’t, June 2, 2016)

[iii] 14 N.Y.C.R.R. § 700.1(a).

[iv] N.Y. Soc. Servs. Law § 488(14).

[v] 14 N.Y.C.R.R § 624.3(b)(8).

[vi] N.Y. Soc. Serv. Law § 492(1)(a).

[vii] Id. at (3)(c)(i); Id. at (3)(c)(viii); N.Y. Soc. Serv. Law § 493(1).

[viii] N.Y. Soc. Serv. Law § 492(3)(a).

[ix] Id. at (3)(b).

[x] Molik, 2018 WL 3147607 at *1.

[xi] Id.

[xii] Id.

[xiii] Id.

[xiv] Id. at *2.

[xv] Molik, 141 A.D.3d. at 166 (internal citations omitted).

[xvi] Id. at 167 (citing N.Y. Soc. Serv. Law § 492(3)(a)).

[xvii] Id. at 167–168 (internal citations and quotations omitted).

[xviii] Id.

[xix] Id. at *4.

[xx] Molik, 2018 WL 3147607 at *5.

[xxi] Id.

[xxii] Id. at 8

[xxiii] Id. at 9.

[xxiv] Id. at 10.

Unlike most other types of employment arrangements involving physicians, physicians acting as a medical director are compensated purely for the performance of administrative services related to patient care services. That is not to say that a medical director does not play a crucial role in the operation of a health care provider. In fact, the New York State Department of Health recommends, or even requires, medical directors be put in place for certain types of providers, and federal law similarly requires medical directors for certain types of services and facilities.

 

Because medical directors are not performing medical services, many physicians feel comfortable entering into medical directorship with little or no written documentation. However, physicians should proceed with caution when undertaking a medical director role. In particular, medical director arrangements are often scrutinized by the Office of the Inspector General (“OIG”) of the U.S. Department of Health and Human Services to determine whether the arrangement is, in reality, being used as a vehicle to provide remuneration to physicians for patient referrals. For this reason, where the contracting provider participates with federal payors and the physician may refer patients to the contracting provider, the physician should enter into a written medical director agreement that is structured to fall within an exception (or safe harbor) to the federal Stark and anti-kickback statutes.

Most often, the exception used under both Stark and anti-kickback laws will be the “personal services” safe harbor. Although slightly different under each statute, some key elements in complying with the “personal services” safe harbor are as follows:

 

  • Written Agreement: The agreement between the physician and the provider should be in writing, with a term of not less than one year. [1]
  • Duties: The agreement should provide for all of the services which the physician is expected to perform.[2]
  • Commercially Reasonable: The services provided by the medical director should be necessary to the provider and not exceed the amount of services required by the provider. This analysis is focused not only on whether the contracting physician’s services in and of themselves are necessary, but also whether there are other medical directors and whether numerous medical directors are performing duplicative services.[3]
  • Compensation: [4]
    • Fair Market Value – The physician should be paid fair market value for the services provided. To this end, it might be helpful to obtain a fair market value analysis, taking into account the geographic location, the experience of the physician, the certification of the physician, and they type of facility. While having such an analysis is not an absolute defense in an investigation, it is useful to demonstrate that fair market value was analyzed and that the remuneration falls within what was believed to be an acceptable range.
    • Hourly Rate – It is recommended that the medical director be paid on an hourly basis, with such hourly rate being paid at the fair market value rate.
    • Cap on Compensation – it is also recommended that the aggregate compensation a physician can earn for his documented hours be capped, to further ensure reasonableness.[5]
  • Documentation: The physician should keep daily time logs of services performed and the time spent on each service. This shows that the physician is performing real work, for which he or she is being paid fair market value, and also can be used to demonstrate that the services being performed are necessary for the facility.

While it is always best to consult with an experienced professional before entering into medical director arrangement, adhering to the criteria set forth above can offer protection for both the physician and the facility.

[1] 42 CFR 1001.952(d)(1): “The agency agreement is set out in writing and signed by the parties.” 42 CFR 1001.952(d)(4): “The term of the agreement is for not less than one year.” 42 U.S.C. 1395nn(e)(3)(A)(i): “the arrangement is set out in writing, signed by the parties, and specifies the services covered by the arrangement.” 42 U.S.C. 1395nn(e)(3)(A)(iv): “the term of the arrangement is for at least 1 year.”

[2] 42 CFR 1001.952(d)(2): “The agency agreement covers all of the services the agent provides to the principal for the term of the agreement and specifies the services to be provided by the agent.” 42 U.S.C. 1395nn(e)(3)(A)(ii): “the arrangement covers all of the services to be provided by the physician.”

[3] 42 U.S.C. 1395nn(e)(3)(A)(iii): “the aggregate services contracted for do not exceed those that are reasonable and necessary for the legitimate business purposes of the arrangement.”

[4] 42 CFR 1001.952(d)(5): “The aggregate compensation paid to the agent over the term of the agreement is set in advance, is consistent with fair market value in arms-length transactions and is not determined in a manner that takes into account the volume or value of any referrals or business otherwise generated between the parties for which payment may be made in whole or in part under Medicare, Medicaid or other Federal health care programs.” 42 U.S.C. 1395nn(e)(3)(A)(v): “the compensation to be paid over the term of the arrangement is set in advance, does not exceed fair market value, and . . . is not determined in a manner that takes into account the volume or value of any referrals of other business generated between the parties.”

[5] In OIG Advisory Opinion No. 01-17 (2001), the OIG said that even though total aggregate compensation over the contract has not be set in advance, the totality of facts and circumstances in the specific circumstances at hand yield a conclusion that there is no significant increase in risk of fraud and abuse – however, this finding was likely due to the presence of a monthly payment cap. In 2003, in Advisory Opinion 03-8, the OIG found that a proposed arrangement does not qualify for protection under the safe harbor because the aggregate compensation paid under a management agreement would not be set in advance.

While there has been discussion of the potential proliferation of telemedicine for quite some time, telemedicine is finally positioned to take off thanks to the latest federal budget. The Bipartisan Budget Act of 2018 incorporated the text of the CHRONIC Care Act,[1] which facilitates Medicare reimbursement for telemedicine services by – among other things – allowing Medicare accountable care organizations to build broader telehealth benefits into Medicare Advantage plans and expand the use of virtual care for stroke and dialysis patients. While many providers are eager to take the leap into telemedicine, there are still some things to look out for:

Not all states have caught up – while the vast a majority of states have enacted legislation mandating private insurers provide some degree of parity of insurance coverage between in-person and telehealth services, at least a dozen states have enacted no such legislation at all.

Beware of Stark, Anti-Kickback and private inurement violations, as telemedicine often involves complex arrangements between physicians and healthcare facilities. To that end, make sure the terms of any compensation arrangement are commercially reasonable and/or consistent with fair market value. And be vigilant when evaluating market data, as pricing may vary widely due to participants coming into a market at low cost for strategic reasons. Market data may also be impacted by accessibility to healthcare services in certain localities. The Office of Inspector General of the Department of Health and Human Services (OIG) has issued Advisory Opinions related to telemedicine compensation arrangements that should be considered when reviewing such arrangements. Additionally, in April of this year OIG issued a report highlighting instances of improper billing for telemedicine services.

One area on which practitioners have particularly set their sights is telemedicine for opioid addiction treatment. However, unlike the popular telemedicine practices of dialysis and stroke treatment, substance abuse treatment via telemedicine has its own set of constraints.

  • Providers of Medication-Assisted Treatment to reduce opioid use disorders have restrictions on the number of patients they may treat at any given time, with a limitation of 30 patients for their first certification year and the opportunity to increase to 100 in the subsequent year upon fulfilment of certain criteria.
  • Additionally, restrictions on a provider’s ability to prescribe certain controlled substances used to treat opioid use disorder over telemedicine exist under both state and federal laws.

In sum, while the CHRONIC Care Act facilitates further foray into the expanding world of telemedicine, there are many pitfalls to be aware of in both ensuring compliance with applicable laws and ensuring the ability to set up a profitable business.  Always consult with an experienced professional before expanding your practice.

[1] The Creating High-Quality Results and Outcomes Necessary to Improve Chronic Care Act.

 

 

Providing Care at Home

As we reported in our annual series highlighting the various healthcare related provisions of the 2018-19 New York State Budget (here), the Enacted Budget reflects the state’s overall policy towards consolidation of the home care marketplace.  Nowhere is the effort to force consolidation more apparent than in the Licensed Home Care Services Agencies (LHCSA) space.  The Enacted Budget has imposed a two-year moratorium on new approvals, a limit on the number of LHCSAs with which Managed Long Term Care Plans (MLTCP) can contract and a new requirement that in the future LHCSA applicants will need to demonstrate “public need” and “financial feasibility” for a post-moratorium certificate of need.  As explained below, however, there may yet be hope for LHCSA applicants and projects that were in the pipeline prior to the moratorium if they fit within one of the three narrow statutory exceptions to the moratorium.  In this article we explore the recent history of LHCSAs in New York, as well as the recent guidance offered by the New York State Department of Health (“DOH”) on how these new restrictions will be implemented.

LHCSAs were subject to a prior moratorium until 2010, when that moratorium was ended by DOH.  The rapid growth in number of LHCSAs since that time can be attributed to a number of factors, including New York’s aging population, the trend away from inpatient long-term care, the “age in place” movement, and the fact that, up until this year, there was no “public need” or “financial feasibility” requirements in order to obtain a certificate of need for a LHCSA.  There are currently over 1,400 LHCSAs authorized to provide hourly nursing care, assistance with activities of daily living and other health and social services to New York’s low-income elderly and disabled populations – though the number actually providing services is unknown.  As noted by Crain’s Health Pulse on April 23, 2018, the most recent employment figures for the home care industry, which includes Certified Home Health Agencies (CHHA), show the sector has been growing at a breakneck pace.  In the past five years alone, home health employers have added 72,600 jobs in New York.  And, for the first time ever, the number of people employed in the home health sector in New York City (167,000) has surpassed the number employed by private hospitals in New York City (166,300).  In contrast, and highlighting the increasing demand for homecare services over inpatient long term care services, nursing home employment is on the decline.

As a result of this growth, the general sentiment among DOH officials appears to be that there are once again too many LHCSAs; hence the reforms included in the 2018-19 Enacted Budget.  Ostensibly, DOH believes that fewer providers will reduce waste, inefficiency, and the opportunity for fraud.  Industry advocates, on the other hand, maintain that efforts to consolidate the industry ignore the fact that home care is provided locally and should therefore be locally run, and that various cultural and special needs communities require individualized boutique services that larger consolidated firms may not be able to accommodate.

While the general effort to consolidate the LHCSA marketplace and home care in general was not unexpected, the rather abrupt implementation of these provisions has clearly caught the industry’s major stakeholders off guard.  If the colloquy among the members of the Public Health and Health Planning Committee’s (PHHPC) Establishment and Project Review Committee (EPRC) at its April 12, 2018 meeting is any indicator (click here for the video and transcript), neither the EPRC nor the estimated 350 or so LHCSAs with applications pending before the PHHPC or in the pipeline were aware that these changes were forthcoming.  Indeed, less than three weeks earlier, at a meeting of the EPRC on March 22, 2018, the EPRC approved some 22 LHCSA applications for presentation to the full PHHPC for final approval.  On April 12, however, the EPRC was asked to consider a motion withdrawing that approval and deferring action on those applications, and 12 additional applications, until the DOH had time to consider them in the context of the moratorium.  After some confusion, the motion was withdrawn without comment and the 22 previously approved applications were sent to the full PHHPC, where they were ultimately deferred pending evaluation under then yet-to-be drafted guidelines on exceptions to the moratorium.  There was one new piece of information offered at the meeting – in response to concern that the two-year period of the moratorium seems arbitrary, Deputy Commissioner Sheppard noted the period was “specifically determined as the period of time that the Department would need to develop and promulgate regulations establishing a full need methodology for the approval of LHCSAs, including a determination of public need and financial feasibility.”  It is also clear that DOH intends to use the two-year period to collect data under the Enacted Budget’s new registration and cost reporting provisions, which went into effect to “better understand” the existing LHCSA marketplace and as part of its public need and financial feasibility formula moving forward.

It is worth noting that this is not the first time that a moratorium affecting submitted and future applications has been imposed.  The DOH imposed a moratorium on CHHAs between 1994-2000, as well as a moratorium on LHCSAs between 2008-2010 (as noted).  In 2000, the DOH imposed a moratorium on the processing of all pending nursing home applications which had yet to receive final approval and begin construction in order to study public need in light of perceived oversupply.  The nursing home moratorium was challenged multiple times in State Supreme Court by aggrieved applicants and repeatedly upheld by the Second and Third Departments.  See, e.g., Matter of Urban Strategies v. Novello, 297 A.D.2d 745 (2d Dept. 2002) and Jay Alexander Manor Inc. v. Novello, 285 A.D.2d 951 (3d Dept. 2001).  One interesting distinction between previous moratoria on LHCSAs, CHHAs and nursing homes and the instant moratorium on LHCSAs is that the former were imposed by the DOH under its discretionary enforcement and regulatory authority, whereas the latter was enacted by the Legislature through its inherent power to regulate health and welfare.  Whether the instant moratorium, which will arguably be more difficult to defeat given its origin, will face a court challenge remains to be seen.

Until the expiration of the LHCSA moratorium on March 31, 2020, however, only those applications which fit within one of three exceptions will be processed: (1) the ALP Related Exception; (2) the Change of Ownership Related Exception; and (3) the Serious Need Exception.  In early May, the DOH released guidance documents, as well as new applications and instructions related to these three statutory exceptions.  The statutory language containing the exceptions and the recent guidance provided by DOH are summarized below.

  • ALP Related Exceptions.

Statutory Language:

(a) an application seeking licensure of a licensed home care services agency that is submitted with an application for approval as an assisted living program authorized pursuant to section 461-l of the social services law.

Additional information from DOH Guidance and Revised Application:

  • The ALP application must have been submitted to the Department and an application number issued, that number must be included in the applicant’s submission.
  • Ownership of the LHCSA must be identical to the ownership of the ALP.
  • Approval will be limited to serving the residents of the associated ALP. Therefore, the application may request only the county in which the ALP resides as the county to be served.
  • The application must include an attestation acknowledging that the approval will be limited to serving the residents of the associated ALP.

 

  • Change of Ownership Related Exceptions.

Statutory Language:

(b)  an  application seeking  approval  to  transfer  ownership for an existing licensed home care services agency that has been licensed and operating for a  minimum of  five years for the purpose of consolidating ownership of two or more licensed home care services agencies.

Additional information from DOH Guidance and Revised Application:

  • Only changes in ownership that consolidate two or more LHCSAs may be accepted during the moratorium. Consolidate means reducing the number of LHCSA license numbers, not a reduction in the number of sites operated under a license number.  A LHCSA license number, for this purpose, is the first four digits, before the “L”.  The application must include all sites of the to‐be‐acquired agency.
  • LHCSAs to be acquired must be currently operational and have been in operation at least five years.
  • The application must request approval to acquire all of the sites of the existing agency.
  • The application must include an attestation and statistical report data verifying the seller(s) is/are operational and has/have been for a minimum of five years, which shall include:
    • the number of patients served in each county for which they are approved to serve and the number and types of staff employed, currently and in each of the previous five years.
    • A statement that reads “In accordance with the requirements of 10 NYCRR 765-2.3 (g) {Agency Name} will promptly surrender their Licensed Home Care Services Agency license(s) to the NYS Department of Health when they cease providing home care services.”
    • A statement that that indicates the operator understands that the actual transfers of ownership interest may not occur until after all necessary approvals are acquired from the DOH and the PHHPC
  • If an existing LHCSA is purchasing one or more LHCSAs, the buyer must also currently be operational per 10 NYCRR Section 765‐3(g).  The application must include an attestation and statistical report data verifying the buyer is currently operational, which shall include:
    • the number of patients served in each county for which they are approved to serve and the number and types of staff employed, currently and in each of the previous five years.

Examples of Qualifying Change of Ownership Applications  

  • An existing LHCSA purchases one or more separately licensed existing LHCSAs. Upon approval, the purchased LHCSAs licenses must be surrendered and their sites become additional sites of the purchasing LHCSA.
  • A new corporation (not currently licensed as a LHCSA) purchases two or more existing LHCSAs. One new license is issued, with the purchased LHCSAs licenses being surrendered and their sites becoming sites of the newly licensed LHCSA.

Examples of Non‐Qualifying Changes in Ownership Applications  

  • A new proposed operator replaces the current operator of a LHCSA.
  • A new controlling entity is established at a level above the current operator.
    • During the moratorium, the change or addition of controlling persons above the operator does not qualify under the exception criteria. As such, if the controlling person/entity chooses to submit an affidavit attesting they will refrain from exercising control over the LHCSA (see 10 NYCRR Section 765-1.14(a)(2) for required affidavit language) until the moratorium is lifted and an application can be submitted, processed, and approved, then the corporate transaction may proceed. Within 30 days of the moratorium being lifted, the agency must submit an application for PHHPC approval of the controlling person.
  • A partial change in ownership requiring Public Health and Health Planning Council approval.
    • Transfers of ownership (full or partial) due to the death of an owner, partner, stockholder, member without the consolidation of LHCSA licenses, does not qualify under the exemption criteria. However, in accordance with section 401 of the State Administrative Procedure Act (SAPA), the LHCSA may continue to operate until the Moratorium is lifted and an application may be submitted, unless other sections of regulation or law require otherwise.
  • Serious Concern Exceptions:

Statutory Language:

(c)  an  application  seeking licensure  of  a  home  care  services agency where the applicant demonstrates  to  the  satisfaction  of  the  commissioner  of  health   that submission  of  the application to the public health and health planning council for consideration would  be  appropriate  on  grounds  that  the application addresses a serious concern such as a lack of access to home care services in the geographic area or a lack of adequate and appropriate  care,  language and cultural competence, or special needs services.

Additional information from DOH Guidance and Revised Application:

  • There is a presumption of adequate access if there are two or more LHCSAs already approved in the proposed county.
  • Approved LHCSAs include those that are operational and those approved but not‐yet‐
  • If there are two or more LHCSAs in the requested county:
  • the applicant must articulate the population to be served for which there is a lack of access to licensed home care services;
  • the applicant must submit substantial, data‐driven proof of lack of access to the population (demographics, disposition and referral source for targeted patient population, level of care and visits required, payor mix, etc.);
  • the applicant must provide satisfactory documentation that no existing LHCSA in the county can provide services to the population;
  • if more than one county is requested, the application must include all required material for each county individually;
  • the applicant may request to operate in up to five counties, only.

 

The first round of applications to be processed under this framework occurred at the May 17, 2018 meeting of the PHHPC  (Link to video and agenda).  Those of us looking for additional insight on how the new guidance would be applied by DOH and evaluated by the PHHPC in practice were left wanting, as the entire discussion regarding LHCSAs encompassed less than two minutes of the nearly three-hour meeting.  Notably, the five applications considered and approved at the hearing (as a batch) were all within the ALP Related Exception.  They included:

Elderwood Home Care at Wheatfield

Elderwood Home Care at Williamsville

Western NY Care Services, LLC

Home Care for Generations, LLC

Magnolia Home Care Services

While it may be coincidence, this suggests that DOH and PHHPC have either prioritized LHCSA applications fitting within the ALP Related Exception, or that these types of applications are the simplest to identify and review.

In addition to the guidance on exceptions to the moratorium, DOH has also recently released guidance on the Enacted Budget’s limitations on the number of LHCSAs with which MLTCPs can contract.  As noted in our previous post (here), beginning October 1, 2018, the Commissioner of Health may limit the number of LHCSAs with which an MLTCP may contract, according to a formula tied to (1) MLTCP region, (2) number of MLTCP enrollees,  and (3) timing (the number changes on October 1, 2019).  Exceptions are allowed if necessary to (a) maintain network adequacy, (b) maintain access to special needs services, (c) maintain access to culturally competent services, (d) avoid disruption in services, or (e) accede to an enrollee’s request to continue to receive services from a particular LHCSA employee or employees for no longer than three months.

DOH guidance issued on April 26 to plan administrators (link here), explains the formula that will be used to calculate the number of LHCSAs with which an MLTCP can contract. MLTCPs operating in the City of New York and/or the counties of Nassau, Suffolk, and Westchester may enter into contracts with LHCSAs in such region at a maximum number calculated based upon the following methodology:

  1. As of October 1, 2018, one contract per seventy-five members enrolled in the plan within such region; and
  2. As of October 1, 2019, one contract per one hundred members enrolled in the plan

within such region.

MLTCPs operating in counties other than those in the city of New York and the counties of Nassau, Suffolk, and Westchester may enter into contracts with LHCSAs in such region at a maximum number calculated based upon the following methodology:

  1. As of October 1, 2018, one contract per forty-five members enrolled in the plan within such region; and
  2. As of October 1, 2019, one contract per sixty members enrolled in the plan within such region.

Additionally, the DOH confirmed that in instances where limits on contracts may result in the enrollee’s care being transferred from one LHCSA to another, and in the event the enrollee wants to continue to be cared for by the same worker(s), the MLTC plan may contract with the enrollee’s current LHCSA for the purpose of continuing the enrollee’s care by that worker(s). These types of contracts shall not count towards the limits mentioned above for a period of three months.

The next big revelation expected from the DOH vis a vis LHCSA restrictions are the parameters by which “financial feasibility” and “public need” will be determined for purposes of issuing certificates of need once the moratorium is over.  As those regulations become available, we will provide a further update.  If you have questions about whether your project may satisfy the requirements of one of the above exception, or you would like to be part of the conversation with the DOH as the framework for the new CON methodology is developed, contact Farrell Fritz’s Regulatory & Government Relations Practice Group at 518.313.1450 or NYSRGR@FarrellFritz.com.

 

The Broadest Impact:  2018-19 NYS Managed Care Budget Highlights

This, the last of our posts on the 2018-19 New York State Health Budget (the “Enacted Budget”), focuses on an area of healthcare that has perhaps the broadest impact of the sector as a whole — managed care.  A prior post in the series (here) discussed the central role that hospitals have traditionally played in healthcare reform efforts, but even they have less influence (at least, as a matter of policy) than managed care, which controls the funding that fuels virtually every other part of the healthcare system.  For purposes of this article, “managed care” really means Medicaid managed care in all its various guises, since that is the funding most directly controlled by the State – while the various forms of Medicare managed care (Medicare Advantage, Medicare Part D, etc.) and commercial managed care are important, and even critical, to the healthcare system in New York, they are generally not a focus of State budgeting (at least directly).  So this post will focus on the various forms of Medicaid managed care, including managed long term care (MLTC) that provide long term care services, fiscal intermediaries for consumer-directed consumer assistance, mainstream managed care plans that provide acute and primary care services, health homes that coordinate care for people with chronic illnesses, and others.  Note that one species of Medicaid managed care, Development Disabilities Individual Support and Care Coordination Organizations, are not addressed in this post, but were addressed in a prior one (here).

Just a quick word before examining the key provisions impacting managed care:  this series has not pretended to be a comprehensive analysis of all the healthcare provisions in the 2018-19 New York State Health Budget.  It has merely provided a survey of the highlights of certain key areas in the healthcare space.  Inevitably, some areas have not been directly addressed; particular ones that come to mind include primary care, professional practice, life science research and others.  In part, this was due to the lack of significant reforms in those areas; however, it was also true that the sectors we did address often included references to those other sectors.  Nowhere is this truer than in regard to managed care, which, as noted, touches on every other area of healthcare.  Key provisions in the managed care space are summarized below.

Managed Long Term Care & Fiscal Intermediaries

Managed Long Term Care (MLTC) Eligibility.  Since 2012, adults have been eligible for MLTC enrollment if they require community-based care for more than 120 days.  The Enacted Budget provides that, effective April 1, such individuals are only eligible if that 120 days is a continuous, not aggregate, period.

Changing MLTC Plans.  Effective October 1, 2018, the Enacted Budget allows MLTC enrollees to switch plans without cause anytime within 90 days of notification or the effective date of enrollment (whichever is later), but thereafter, the Department of Health (DOH) is authorized to prohibit changing plans more than once every 12 months, except for good cause.  “Good cause” includes poor quality of care, lack of access to covered services, and lack of access to providers “experienced in dealing with the enrollee’s care needs,” and may include other categories identified by the Commissioner of Health.

Nursing Home Resident Eligibility.  Effective April 1, 2018, the Enacted Budget provides that individuals who are permanently placed in a nursing home for a consecutive period of three months or more will not be eligible for MLTC, but instead will receive services on a fee-for-service basis.  In a side letter, DOH has promised to provide guidance highlighting information about an individual’s rights as a nursing home resident, nursing home and MLTC plan responsibilities, and supports for individuals who wish to return to the community.

Plan Mergers.  Effective April 1, 2018, surviving plans in a plan merger, acquisition or similar arrangement must submit a report to DOH within 12 months providing information about the enrollees transferred, a summary of which DOH will make available to the public.

Licensed Home Care Services Agency (LHCSA) Contracting.  As discussed in a prior post (here), beginning October 1, 2018, the Commissioner of Health may limit the number of LHCSAs with which an MLTC plan may contract, according to a formula tied to region, number of enrollees and timing (before or after October 1, 2019), with some exceptions.  In a side letter, DOH has indicated that it will issue guidance to assist both MLTC programs and LHCSAs in minimizing the disruption of care for Medicaid members and the impacted workforce from this initiative.

Fiscal Intermediary Advertising.  The Enacted Budget includes provisions that limit the advertising practices of fiscal intermediaries under the Consumer Directed Personal Assistance Program (CDPAP).  CDPAP provides chronically ill and/or physically disabled Medicaid enrollees receiving home care services with more flexibility and freedom of choice to obtain such services.  Fiscal intermediaries help consumers facilitate their role as employers by: providing wage and benefit processing for consumer directed personal assistants; processing income tax and other required wage withholdings; complying with workers’ compensation, disability and unemployment requirements; maintaining personnel records; ensuring health status of assistants prior to service delivery; maintaining records of service authorizations or reauthorizations; and monitoring the consumer’s/designated representative’s ability to fulfill the consumer’s responsibilities under the program (in this regard, they are not truly managed care, although there are some similarities).  The Enacted Budget prohibits false or misleading advertisements by fiscal intermediaries.  Furthermore, fiscal intermediaries are now required to submit proposed advertisements to DOH for review prior to distribution, and are not permitted to disseminate advisements without DOH approval.  The DOH is required to render its decision on proposed advertisements within 30 days.  In the event DOH has determined the fiscal intermediary has disseminated a false or misleading advertisement, or if an advertisement has been distributed without DOH approval, the fiscal intermediary has 30 days to discontinue use and/or remove such advertisement.  If DOH determines a fiscal intermediary has distributed two or more advertisements that are false or misleading or not previously approved by DOH, the entity will be prohibited from providing fiscal intermediary services and its authorization will be revoked, suspended or limited.  Additionally, DOH will maintain a list of these entities and will make this list available to local departments of social service, health maintenance organizations, accountable care organizations and performing provider systems.  These limitations apply to marketing contracts entered into after April 1, 2018.

Fiscal Intermediary Reporting.  The Enacted Budget allows the Commissioner of Health to require fiscal intermediaries to provide additional information regarding the direct care and administrative costs of personal assistance services.  DOH may determine the type and amount of information that will be required, as well as the regularity and design of the reports.  These cost reports must be certified by the owner, administrator, chief administrative officer or public official responsible for the operation of the provider.  The DOH must provide at least 90 days’ notice of this report deadline.  If DOH determines the cost report is not complete or inaccurate, it must notify the provider in writing and specify the correction needed or information required.  The provider will have 30 days to respond to DOH’s request for supplementary information.  In the event a provider cannot meet this filing deadline, DOH may provide an additional 30 day extension if the provider sends written notice prior to the report due date which details acceptable reasons beyond their control which justify their failure to meet the filing deadline.

Mainstream Managed Care and Health Homes

Quarterly Meetings on Medicaid Managed Care Rates.  In a side letter, the Executive has committed to providing quarterly updates to the Legislature regarding Medicaid managed care rates, including the actuarial memorandum which, pursuant to statute, is provided to managed care organizations 30 days in advance of submission to the federal Centers for Medicare and Medicaid Services (CMS).  This is intended to increase the transparency of Medicaid managed care rates.

Separate Rate Cells or Risk Adjustments for Specific Populations.  In a side letter, DOH has committed to exploring separate rate cells or risk adjustments for the nursing home, high cost/high need home and personal care, and Health and Recovery Plan (HARP) populations.  DOH will re-engage CMS regarding this reimbursement methodology with the assistance of health care industry stakeholders impacted by these changes (e.g. advocates, providers and managed care organizations).  This will hopefully lead to a fairer rate structure for plans serving higher-risk patients.

Health Homes Targets.  The Enacted Budget requires the Commissioner of Health to establish reasonable targets for health home participation by enrollees of special needs plans and other high risk enrollees of managed care plans to encourage plans and health homes to work collaboratively to achieve such targets.  The DOH was also empowered to assess penalties for failure to meet such participation targets where they believe such failure is due to absence of good faith and reasonable efforts.

Health Home Criminal History Checks.  The Enacted Budget requires criminal history checks for employees and subcontractors of health homes and any entity that provides community-based services to individuals with developmental disabilities or to individuals under 21 years old.

Health Home Reporting.  Similar to fiscal intermediaries (above) and LHCSAs (here), the Enacted Budget allows the Commissioner of Health to require health homes to report on the costs incurred to deliver health care services to Medicaid beneficiaries.

***

So that concludes our series on the 2018-19 New York State Healthcare Budget.  If you have any questions or would like additional information on any of the above referenced issues, or any of the other items covered (or not covered) in the series, please do not hesitate to contact Farrell Fritz’s Regulatory & Government Relations Practice Group at 518.313.1450 or NYSRGR@FarrellFritz.com.

 

Few, if any, in the medical industry are unfamiliar with the federal Anti-Kickback Statute (“AKS”).  Under AKS, those giving or receiving compensation for referrals for items or services reimbursed by the federal healthcare programs are subject to criminal prosecution.  The statute is intended to prevent exploitation of the federal healthcare system, avoid unnecessary inflation of program costs and encourage fair competition in the industry.

AKS prohibits, among other things, the knowing and willful payment or receipt of any form of compensation to induce or reward referrals involving any item or service payable by federal healthcare programs.  “Federal healthcare programs” include more than just Medicare and Medicaid – “any plan or program providing health care benefits, whether directly through insurance or otherwise, that is funded directly, in whole or part, by the United States government (other than the Federal Employees Health Benefits Program), or any state health care program” is included.  This means that remuneration for referrals in connection with items and services that are reimbursable under TRICARE, the Veterans Administration, Federal Employees’ Compensation Act, and block grant programs are all subject to prosecution under AKS.

 

Where items or services are not reimbursable by a federal healthcare program, providers and referring parties are not subject to AKS prosecution.  However, due to an emerging trend in prosecution, the absence of reimbursement from federal healthcare programs should no longer leave providers and referral sources with a sense of security that they cannot be prosecuted for kickback arrangements.

 

Prosecutors are increasingly bringing charges against payers and recipients of remuneration for referrals in the medical arena under the Travel Act.  The Travel Act criminalizes the use of the United States mail and interstate or foreign travel for the purpose of engaging in certain specified criminal acts.  The Travel Act typically enforces two categories of state laws – laws prohibiting commercial bribery (i.e. corrupt dealings to secure an advantage over business competitors) and laws addressing illegal remuneration, including specific provisions regarding improper payments in connection with referral for services.

 

In two very recent high profile cases, prosecutors brought charges against those allegedly involved in kickback schemes under the both AKS and the Travel Act – Biodiagnostic Laboratory Services in New Jersey and Forest Park Medical Center in Texas.  Both cases have resulted in several plea bargains, yet both have charges under AKS and the Travel Act that are still pending.  While no court has directly ruled on the merits of prosecuting kickback schemes for medical services and items under the Travel Act, it is noteworthy that, in the Forest Park Medical Center case, the charges under the Travel Act survived a motion to dismiss at the district court level just last month.

 

All parties involved in referral arrangements for medical items or services should be on heightened alert as a result of this development.  Whereas AKS can only be used to prosecute parties to a kickback arrangement where federal healthcare program funds are at issue, the use of the Travel Act may broaden prosecutors’ reach to the private payor sector, even where federal healthcare programs are not involved.

In our July 10, 2017 post, Concierge Medicine – Is it for you?, we cautioned that Medicare compliance concerns do not fall away when moving to a concierge or direct-pay model.  HHS has determined that concierge-style agreements are permitted as long as Medicare requirements are not violated.  Unless a physician has opted out of Medicare, the predominant requirement is that an access or membership fee cannot be charged to a Medicare patient for services that are already covered by Medicare.  But how does a concierge physician know where to draw the line?  The relevant authorities have issued very limited guidance in this area.

In March 2004, an OIG Alert was issued reminding Medicare participating providers that they may not charge Medicare patients fees for services already covered by Medicare.  OIG used, as an example, a case involving physician’s charge of $600 for a “Personal Health Care Medical Care Contract” that covered, among other things, coordination of care with other providers, a comprehensive assessment and plan for optimum health, and extra time spent on patient care.  Because some of these services were already reimbursable by Medicare, the physician was found to be in violation of his assignment agreement and was subjected to civil money penalties.  The physician entered into a settlement with OIG and was required to stop offering these contracts.

In 2007, OIG settled another case involving a physician engaged in a concierge-style practice.  There, the physician, who also had not opted out of Medicare, asked his patients to enter into a contract under which the patients paid an annual fee. Under the contract, the patient was to be provided with an annual comprehensive physical examination, coordination of referrals and expedited referrals, if medically necessary, and other service amenities.  The physician was similarly found to have violated the Civil Monetary Penalties Law by receiving additional payment for Medicare-covered services and agreed to pay $106,600 to resolve his liability.

As demonstrated by these settlements, violations of a physician’s assignment agreement results in substantial penalties and exclusion from Medicare and other Federal health care programs.  It would behoove a concierge physician to tailor contracts offered to Medicare patients.  Fees charged under such contracts should relate only to noncovered services and amenities.  For example, fees could relate to additional screenings by the concierge physician that are not covered by Medicare or amenities such as private waiting rooms.

According to the GAO’s 2005 Report on Concierge Care Characteristics and Considerations for Medicare, HHS OIG has not issued more detailed guidance on concierge care because its role is to carry out enforcement, not to make policy.  However, physicians with specific concerns regarding the structure of their concierge care agreements or practices may request an advisory opinion from HHS addressing their concerns.  Advisory opinions are legally binding on HHS and the party so long as the arrangement is consistent with the facts provided when seeking the opinion.

Next week, look for the release of Medical Marijuana 105, the fifth post in a series of posts discussing the current state of law in New York regarding medical marijuana.  To read the latest post in the series, Medical Marijuana 104:  Responsibilities of Health Insurers, click here.

On June 14, 2017, the Sixth Circuit Court of Appeals in Breckinridge Health, Inc., et al. v. Price affirmed the district court’s finding that HHS could offset the amount of a hospital’s Medicare reimbursement by the Medicaid Disproportionate Share Hospital (DSH) payments received by such hospital.  In its decision, the Sixth Circuit followed the holding of the Seventh Circuit Court of Appeals in its 2012 decision in Abraham Lincoln Memorial Hospital v. Sebelius, where the Seventh Circuit, under similar facts, came to the same conclusion.

 

Breckinridge Health involved various Kentucky Critical Access Hospitals that, as part of Kentucky’s contribution to the DSH program, must pay a 2.5% tax on their gross revenue (the KP-Tax).  The revenue from the KP-Tax is then deposited into the Medical Assistance Revolving Trust under Kentucky law.  Funds from the revolving trust are then used to fund, in part, the DSH payments made to Kentucky hospitals.

 

The hospitals in this case had historically sought and received reimbursement under the Medicare Act’s reasonable cost statute for the full amount of their 2.5% tax payment.  However, for 2009 and 2010, full reimbursement was denied by the Medicare Administrative Contractor.  Instead, each hospital’s tax costs were offset against the amount of Medicaid DSH payments such hospital actually received.  This decision was upheld by the Provider Reimbursement Review Board and later the Administrator of the Centers for Medicare and Medicaid Services and, finally, the district court.

 

In affirming the district court’s decision, the Sixth Circuit relied on the Seventh Circuit’s rationale in Abraham Lincoln Memorial Hospital.  There, Illinois hospitals paid a tax assessment to the state as a condition of participation in Medicaid “access payments.”  The Seventh Circuit found that the tax assessment was a reasonable cost eligible for Medicare reimbursement.  However, because the payments the Illinois hospitals received from the fund were meant to reduce expenses associated with participation in the program, including the expense of paying the mandatory tax assessment that is a condition to participation, the set off was appropriate because the net economic impact of the access payments must be considered in calculating the reimbursement.

 

Applying the Seventh Circuit’s rationale, the Breckinridge court reasoned that “[b]ecause the DSH payment [the hospitals] received derived from the fund into which the [hospitals’] KP-Tax expenditures were placed, the net effect of the DSH payment is to reduce, at least in part, the costs [the hospitals] incurred in paying the KP-Tax.  Therefore, it constituted a refund notwithstanding the fact that it was not labeled as such.”  In other words, by receiving a return of the economic value of their KP-Tax payments through the disbursement of revolving trust funds, the hospitals essentially had already been reimbursed for their KP-Tax payments and such costs were not eligible to be reimbursed again under the reasonable cost statute.

 

In affirming the district court’s judgment, the Sixth Circuit made clear that the standard of review is to give the judgment of HHS controlling weight unless it is “arbitrary, capricious, or manifestly contrary to the statute.”  However, through its detailed review of HHS’s decision, the Breckinridge court bolsters the rationale arguably justifying the expanding view that DSH payments can properly be set off against the reasonable costs of participation.

The Medicaid Fraud Control Unit (MCFU) of the New York State Office of the Attorney General has recently issued restitution demand letters to providers for allegedly entering into percentage-based contracts with their billing agents. The MCFU letters cite the Medicaid Update March 2001, titled “A Message for Providers Using Service Agents as follows:

Billing agents are prohibited from charging Medicaid providers a percentage of the amount claimed or collected. In addition, such payment arraignments, when entered into by a physician, may violate the Education Law and State Education Department’s regulations on unlawful fee-splitting.

A physician will be guilty of misconduct if he or she permits:

any person to share in the fees for professional services, other than: a partner, employee, associate in a professional firm or corporation, professional subcontractor or consultant authorized to practice medicine, or a legally authorized trainee practicing under the supervision of a licensee. This prohibition shall include any arrangement or agreement whereby the amount received in payment for furnishing space, facilities, equipment or personnel services used by a licensee constitutes a percentage of, or is otherwise dependent upon, the income or receipts of the licensee from such practice, except as otherwise provided by law with respect to a facility licensed pursuant to article twenty-eight of the public health law or article thirteen of the mental hygiene law.

See Educ. Law §6530(19)*.

A physician is subject to professional misconduct charges if he or she has

directly or indirectly requested, received or participated in the division, transference, assignment, rebate, splitting, or refunding of a fee for, or has directly requested, received or profited by means of a credit or other valuable consideration as a commission, discount or gratuity, in connection with the furnishing of professional care or service . . .

See Educ. Law §6531.

The prohibition against fee-splitting is related to the state anti-kickback law which prohibits physicians from

[d]irectly or indirectly offering, giving, soliciting, or receiving or agreeing to receive, any fee or other consideration to or from a third party for the referral of a patient or in connection with the performance of professional services . . .

See Educ. Law §6530 (18).

Licensed professionals in New York State must review their contracts to verify that the compensation paid to their agents is not based on a percentage of fees for professional services.

*A similar rule applies to other licensed professionals. See N.Y. Rules of the Board of Regents §29.1(b)(4).

**In addition to the Federal Anti-Kickback Statute at 42 U.S.C. §1320a-7b(b), New York has enacted its own wide-reaching anti-kickback and anti-referral laws and regulations seeking to eliminate fraud and abuse in healthcare on a statewide basis. The state anti-kickback statue is set forth in the Social Services Law (See N.Y. Social Services Law § 366-d). The N.Y. Education Law addresses matters of professional misconduct rather than violations of fraud and abuse laws and regulations.