Category Archives: Hospitals
The Chevron Deference Rule: Pay Attention, Health Care Providers! CMS May Lose Control!
It has been nearly 40 years since the Supreme Court indicated in Chevron v. Natural Resources Defense Council that courts should defer to an agency’s reasonable interpretation of an ambiguous statute. Earlier this year, the Supreme Court heard arguments abolishing the Chevron deference rule. It that good or bad? Well, let’s hash it out. Regardless your opinion, the Supreme Court will decide the Chevron deference rule’s legality this summer. And, listening to the oral arguments earlier this year, it seems that a majority of the justices seemed ready to jettison the doctrine or at the very least significantly limit it.
The Chevron deference rule is a critical aspect of administrative law that often remains in the shadows of legal discourse but holds immense implications for the functioning of our government: the Chevron deference rule. This rule, born out of a Supreme Court case in 1984, has been a cornerstone of administrative law, dictating how courts should defer to federal agencies’ interpretations of ambiguous statutes. But as with any legal doctrine, it invites debate, scrutiny, and calls for reform.
In simple terms, the Chevron deference rule mandates that if a statute is ambiguous, courts should defer to the reasonable interpretation of that statute made by the agency tasked with implementing it, unless that interpretation is unreasonable. In essence, it grants federal agencies significant leeway in interpreting laws passed by Congress. This deference has profound effects on the balance of power between the branches of government. For example: CMS is an agency that is allowed deference in its rules that are not laws. See the importance? Without the Chevron deference rule, ALJs would not be bound by CMS’ rules that are not laws. For example, CMS is of the mindsight that extrapolation is legal, allowed, and upheld. The ALJs are bound to agree. No Chevron deference rule? The ALJs can make up their own minds.
The rationale behind Chevron deference is to recognize the expertise of administrative agencies in their respective fields. These agencies possess specialized knowledge and experience that enable them to navigate complex regulatory landscapes. By allowing them deference in interpreting ambiguous statutes, the rule seeks to promote consistency, efficiency, and expertise in policymaking and implementation.
However, as with any legal doctrine, the Chevron deference rule is not without its critics. Some argue that it unduly concentrates power in the hands of unelected bureaucrats, diminishing the role of the judiciary in interpreting the law. Moreover, it raises concerns about accountability and democratic legitimacy, as it can shield agency actions from robust judicial review.
Furthermore, the Chevron deference rule has become a subject of political contention, particularly in recent years. Critics argue that it enables regulatory overreach by agencies, allowing them to enact policies that may exceed the scope of their statutory authority. This concern has led to calls for judicial restraint and a reevaluation of the deference granted to administrative agencies.
So, should the Chevron deference rule stay in place? This question elicits a spectrum of opinions and requires careful consideration. On one hand, the rule promotes efficiency and expertise in governance, recognizing the specialized knowledge of administrative agencies. On the other hand, it raises concerns about accountability, democratic legitimacy, and the balance of power between the branches of government.
In navigating this complex terrain, we must strike a balance that upholds the principles of good governance, accountability, and the rule of law. Perhaps the solution lies not in abolishing the Chevron deference rule altogether but in refining it to address its shortcomings. This could involve clarifying the conditions under which deference is appropriate, ensuring robust judicial oversight, and promoting transparency and accountability in administrative decision-making.
The Chevron deference rule stands as a pivotal element of administrative law, shaping the relationship between the branches of government and influencing the course of public policy. Its effects are profound and far-reaching, touching upon fundamental principles of governance and democracy. As we navigate the complexities of modern governance, let us engage in thoughtful dialogue and debate to ensure that our legal framework reflects the values of accountability, transparency, and the rule of law.
Medicare Can Force a Whistleblower to Dismiss When Smoking Gun is Smoke and Mirrors
2024 has already proven to be audit heavy. It seems that the repercussions of COVID are beginning to appear. Actions related to COVID, such as audits of dates of service (“DOS”) during COVID are commonplace now. Whistleblower actions also seem to be on the rise.
We have even seen a few qui tam actions going forward even though the government did not intervene, which is rare, to say the least. In most cases, if the government does not intervene, usually, the whistleblower dismisses the case. The last qui tam action that I was worried was going to forward even though the government refused to intervene was a cardiologist practice. The number one reason that these super educated cardiologists were even on the metaphoric chopping block was because English was not the first language of any doctor employed by the practice. Imagine how smart you have to be to not only become a doctor, but to become a doctor in a country where you do not even speak the native language – to me – this is remarkable. The facility at issue employed 9 remarkable cardiologists, and, no surprise, the practice was the best and most desirable in the area. Plus, the practice was undergoing a possible acquisition by a nearby hospital, which was in the best interest of the doctors. The cardiologists were less than stellar business owners, but excellent doctors.
What happened was one of the senior cardiologists wrote an email that the whistleblower and the government, at first, took as a smoking gun. The doctor disseminated the email to everyone. Including the staff. This is what it said,
“…going forward, bill everything at a 99215; no matter what.”
The Feds believed that they had a smoking gun. Wouldn’t you?
99215 is Procedure Code 99215: Evaluation and Management Description for 40 minutes.
What the good doctor meant was this…COVID is upon us. Remember that? The times were so crazy and hectic in the health care world, which is why I am infuriated that the government is conducting audits of DOS during COVID. Sorry. Can we not give a “GET OUT OF JAIL FREE card” to all those providers who continued services in the midst of COVID?
What the misunderstood cardiologist meant by saying, “bill everything at a 99215 no matter what” was … we are in midst of COVID; this is worldwide pandemic. We are specialists. We are cardiologists. Anytime someone comes to us, it’s at least a 99214. During COVID, OF COURSE EVERY VISIT IS A 99215.
But that’s not what the government read. Which is why defense lawyers exist.
In this instance, I was afraid that the whistleblower would go forward regardless what the government decided. But I was wrong. Apparently, we were so convincing to the government that the government actually demanded the whistleblower to dismiss.
I did not know this until this case, which was only about 7 years ago, that in rare circumstances, the government can force a whistleblower to dismiss even if the whistleblower is gung ho.
In this case, the whistleblower was “gung ho.” But the government was adamant that there was no fraud since the “smoking gun” was, in reality, neither a gun nor was it smoking.
Since January of 2021, CMS and OIG accept anonymous and confidential whistleblower disclosures. Can you imagine your competitor accusing you of fraud in order to get your consumers? It happens. In fact, next blog, I will tell you a story of two specialized dental practices in Minnesota. And how one practice purposefully and nefariously accuses the other of fraud. That accusation resulted in a two-year reimbursement suspension for the accused practice which resulted in the business closing. The accuser facility is thriving and opened up three new offices. Is this really what are fraud laws are intended to do. The laws are being used to put competitors out of business, not finding fraud.
RAC Audits Are BOO-Very Scary, and, Sometimes, Are DEAD wrong!
For Monitor Monday, today, October 30, 2023, I dressed up as a RAC auditor. BOO!!! I get a spooky 13.5% commission for overzealous auditing tactics. RAC auditors come in every shape and size, color or gender.
In my experience, RACs are garishly incorrect in their assessments. I will reveal three, real life examples where these audit contractors accused healthcare providers of owing money but were found to be dead wrong:
Example 1 – Medical Necessity quibbles:
In a haunting case involving a hospital, the RAC alleged that certain cardiac procedures were billed inappropriately, citing concerns about the medical necessity of these services. They claimed the hospital should refund a repugnant amount for these procedures. However, upon closer examination and an appeal process, it was revealed that the services were indeed medically necessary and aligned with the standard protocols. The ghastly RAC’s accusation was disproven, and the hospital was not required to return any funds. Spine-tingling!
Example 2 – Improper Coding of Diagnosis:
A healthcare provider, particularly a large physician group, was accused by the RAC of using suspicious, improper diagnostic codes, leading to overbilling for certain services provided to Medicare and Medicaid beneficiaries. After a thorough internal audit, it was determined that the codes used were accurate and supported by the patient’s medical records. The RAC’s allegations were unfounded, and no repayment was required. Suspicious. A haunting reminder to spook audits.
Example 3 – Alleged Duplicate Billing:
In a murderous case involving a nursing facility, the RAC identified what they believed were instances of duplicate billing for certain procedures and services. Upon further review, it was revealed that the billing discrepancies were due to the RAC’s misunderstanding of the facility’s billing processes. Mysterious. The facility provided evidence showcasing that the billed services were distinct and not duplicates. Consequently, the RAC’s claim was refuted, and no repayment was deemed necessary. Suspicious.
These examples underscore the critical need for providers to have robust internal compliance measures in place. While RACs serve a vital purpose in identifying billing errors, they are not infallible. Providers need to be equipped to challenge these audit findings, ensuring they are based on accurate and comprehensive information.
It’s crucial for healthcare providers to engage in a proactive approach by conducting their internal audits, maintaining accurate documentation, and being prepared to challenge RAC determinations when necessary. These efforts not only protect providers from unwarranted financial obligations but also ensure that Medicare and Medicaid funds are appropriately allocated.
In conclusion, the relationship between RACs, healthcare providers, and government healthcare programs is complex. The examples provided demonstrate that while RACs play a critical role in safeguarding the integrity of Medicare and Medicaid, their findings are not always accurate. Providers must be diligent in ensuring their billing practices align with regulations and be prepared to contest any erroneous audit findings to maintain fiscal stability and fair reimbursement for services rendered.
Happy Halloween!!!!
Amidst Medicaid Expansion, Provider Shortages Skyrocket!
From February 2020 through March 2023, enrollment in Medicaid increased by 35.3 percent, or over 22 million individuals. Enrollment in Medicaid increased in every State during COVID. Concurrently, many States report a shortage of providers willing to accept Medicaid. Today NC will be announcing its Medicaid expansion, so the nationwide numbers will rise in the near future. However, as we are introducing over 22 million Americans to Medicaid, the number of physicians, oral surgeons, BH providers, or any health care provider type who accept Medicaid is not increasing. In many places, providers who accept Medicaid is shrinking. See blog.
For example, Arkansas expanded Medicaid in 2014, leading to a surge in Medicaid enrollees. While the expansion successfully reduced the state’s uninsured rate, it also highlighted the shortage of healthcare providers, especially in rural areas. Many residents in these underserved regions face long wait times to see a doctor, limiting their access to timely care.
Nationwide, access to mental health services has been a concern. Medicaid expansion aimed to provide mental health coverage to more people, but there has been a shortage of mental health professionals to meet the growing demand. In many states, there are waitlists regardless the crisis.
Providers continue to face insurmountable challenges. Such challenge is the burden of audits conducted by Recovery Audit Contractors (RACs), Medicare Administrative Contractors (MACs), and Targeted Probe and Educate (TPE) programs. These audits are designed to ensure that healthcare providers comply with the complex web of regulations governing reimbursement and patient care. However, the reality is that these audits often impose an overwhelming burden on providers and their attorneys, making compliance a Herculean task.
The healthcare industry in the United States is governed by a myriad of rules, regulations, and guidelines. From Medicare and Medicaid requirements to state-specific laws, providers must navigate a complex regulatory maze to ensure compliance. RACs, MACs, and TPE programs scrutinize providers’ billing practices, medical necessity of services, and documentation to identify overpayments and potential fraud or abuse.
Healthcare providers, from hospitals to individual practitioners, must allocate significant resources to respond to audits and maintain compliance. The burden starts with the anticipation of an audit, as providers are often left in the dark about when and how they will be audited. This uncertainty can be paralyzing, as it requires providers to divert time, personnel, and financial resources away from patient care to prepare for an audit that may or may not occur.
Once an audit is initiated, providers are faced with a deluge of demands. They must gather and submit an extensive amount of documentation, which can include patient records, billing records, and other relevant materials. The process is not only time-consuming but also disruptive to day-to-day operations. Smaller practices, in particular, may struggle to allocate the necessary personnel and resources to meet these demands, potentially affecting patient care quality.
One of the most significant challenges faced by healthcare providers and their attorneys is the ever-changing nature of healthcare regulations. Keeping up with the latest rules and guidelines is a daunting task, and providers must constantly adapt their practices to remain compliant. The complex interplay between federal and state regulations further complicates matters, as what is compliant at one level may not be at another.
Healthcare attorneys play a critical role in assisting providers through the audit process. However, we too are challenged by the intricate nature of healthcare regulations and the constant need to stay abreast of updates and changes. David would concur, I believe, in my statement that, being a health care regulatory attorney is not a laid-back, calm career choice. We have to continue to educate ourselves at quite a fast pace. Think about how often laws and rules change federally and in 50 States. Tomorrow I am going to Baltimore Maryland for the Fraud and Abuse Conference by the American Health Law Association. I will let you know if I learn anything mind-blowing.
The burden of RAC, MAC, and TPE audits in healthcare is undeniable. While these audits are essential to protect the integrity of the healthcare system, the complex regulatory landscape, coupled with the uncertainty and resource-intensive nature of the audit process, places an overwhelming burden on providers and their attorneys. Healthcare providers are in a constant struggle to balance compliance with the delivery of quality patient care, and their legal representatives are similarly tasked with navigating an ever-changing regulatory maze.
Addressing this burden requires a collaborative effort among stakeholders, including government agencies, healthcare providers, and legal experts. Streamlining audit processes, providing clearer guidance, and ensuring that audits are conducted fairly and transparently can go a long way in alleviating the burden on providers. In the end, the goal should be to strike a balance between safeguarding taxpayer dollars and allowing healthcare providers to focus on what they do best – caring for patients. Or maybe we just need a computer program for audits that is NOT Excel.
The No Surprises Act and How It Can Benefit You, Personally! YOU WANT TO READ THIS BLOG!
Surprisingly, I am talking about the No Surprises Act today. Last year, I had an unwelcome surprise. I was thrown from my horse on February 20, 2022. I’ve been thrown from many horses, and usually, I land on my boots or, at worst, my behind. However, last year, I awoke in the ICU after being thrown from a horse. Surprise! Spoiler alert, I ended up ok, according to most. However, I was helicoptered from the extremely rural area to the closest hospital. And you are probably thinking that I was blessed that someone could contact and obtain a helicopter so quickly for me…it probably saved my life. And you may be right. But there are two things about me that you probably don’t know: 1) my best friend in life is an ER Trauma nurse with over 20 years’ experience; and (2) I don’t like to spend $49,753.00 for a helicopter ride that I don’t even remember.
Let me explain. As I said earlier, I was unconscious when someone contacted a helicopter. Let me tell you who I was with. Let me set the stage, so to speak. I was with my husband Scott, my bff Tracey – the ER trauma nurse, and her husband Josh. I never asked them, because, quite frankly, I didn’t think to ask who called the helicopter until now. Regardless, I was helicoptered, and received a bill a month or so later for almost $50k. And I freaked.
I am without a doubt even more sympathetic to my provider-clients who get notices of owing tens of thousands or millions of dollars. That $50k stopped my heart for a second. Then, I thought, Dr. Ronald Hirsh and others have spoken about the NSA multiple times on Monitor Monday. Maybe I should re-listen to a couple, really good, detailed podcast episode. I did so.
Last year, in my unconscious-state, I would have entrusted my life with Tracey to drive me about 30 minutes to a hospital because:
- She is an ER Trauma nurse.
- She is good at her job. She was handed a decapitated arm once. I am sure I would have had nightmares, not she.
- She works at the nearest hospital and it was only 30 minutes away. She is/was friends with the ER surgeons. So, yes, had you asked me whether I wanted a $50k helicopter ride or a 30-minute ride with an experienced ER Trauma nurse – I would have chosen the free one. that, from some of her stories, I think may be more experienced than the MDs she performs under.
However, after I presented this story on RACMonitor, Dr. Hirsch, along with several listeners, one of whom is an emergency physician, told me that they would NEVER recommend a private transfer to the hospital, even if Dr. Hirsch were driving, especially for an unconscious, head injury victim. I was told that the helicopter was the way to go in my case, but that I should not be liable for it. I agree, hence the NSA. However, in the same vein, providers need to be paid. Remember, this paragraph was written after RACMonitor and after I was told the helicopter was the way to go.
However, had you asked me then, I would have chosen the free ride to the hospital. Post haste!!! Instead of getting my consent to pay $50k for a helicopter ride or a free ride with an ER Trauma nurse, I was “forced” to the helicopter. And here is where the NSA gets confusing. It was effective January 2022. The political issue arose a stark “T” or perpendicular “behind a rock and a hard place.” A month or so after my accident, I got the bill for almost $50k. Like I said, my heart palpitated. Just like the doctors, hospitals, DME providers, dentists, LTCF, HH, BHP, and anyone who accepts Medicare or Medicaid hearts’ would palpitate when they receive a bill for tens of millions of dollars that they may or may not truly owe.
The DOS happened to be one month after the NSA went into effect. No one wanted to pay for this ride. My health insurance went to bat for me; or, really, for them. My health insurance also didn’t want to pay for my $50k helicopter ride. The letter from my insurance company to the helicopter company said: “Upon review of your request, we have confirmed the claim was processed according to the terms of the No Surprises Act (NSA). Accordingly, your request does not qualify as an appeal under the terms of the member benefit plan.”
While I agree that I should not have been liable for a $50k helicopter ride, I do have empathy for the helicopter company and its nurses. It expended money on my behalf. And I am appreciative. I feel like there should be a less Draconian law than the NSA. Because of my being unconscious during my helicopter admission and my lack of ability to consent, shouldn’t mean the providers shouldn’t be paid for services rendered.
But maybe the letter, which ostensibly shuts down any appeal to additional funds by the provider, means that the provider was paid an amount, maybe a reduced amount, but an amount nonetheless. If anyone knows whether surprised patients’ medical bills get paid at a reduced rate, let me know! Thanks!
Advocates Split on the Benefit of Banning Non-Compete Clauses!
The Federal Trade Commission (“FTC”) unilaterally issued a Proposed Rule to ban non-compete clauses in employment contracts. See blog. The first question is: Does the FTC have the legal authority to ban non-compete clauses? As a member of the American Society of Medical Association Counsel (“ASMAC”), the president, Greg Pepe, sent out an informal questionnaire to solicit comments by health care attorneys and heads of medical societies.
Greg said, “The respondents were split 50%/50% between medical society attorney members and private practice attorneys who are members. In general, the most common threads were as follows:
- The most common comment was that non-compete provisions in physician employment contracts impede the physician/patient relationship. This comment came up over and over in a number of ways.
- A few comments pointed out that rural areas were disproportionately harmed by non-competes, with physicians having to move away to comply.
- Hospital-based physician groups need non-competes to protect their arrangements.
- Exemptions for non-profits is a loophole that eviscerates the effort.
- ASMAC should be mindful of the divergent interests of its members and their client when considering this kind of commentary.
Very few people offered specific examples of the ways non-competes in physician contracts harmed physicians. If your organization takes steps to comment please keep ASMAC advised.”
I decided that ASMAC’s findings, even if informal, were important enough to post here on my blog. So, thank you, Greg, for heading this up.
I would like to pay particular attention to #4. Because, a week or so ago, I presented on RACMoniter the story about the FTC banning non-compete clauses, but failed to acknowledge the exemptions for non-profits, which is a HUGE exception. There are 6093 hospitals in the U.S. 1228 of the 6093 hospitals are for profit. The vast majority of hospitals are either government run or non-profit. If you notice above, the “anti-banning comment of non-competes” came from hospital-based physician groups (#3). That makes sense.
Most people, when asked, touts that non-compete agreements impede physician-patient relationships. Personally, as an attorney, non-compete agreements represent requiring me not being able to work at another law firm if I decided Practus, LLP, did not work out. Similarly, if I had attended med school and was working at a hospital in Angier, NC, which was in close proximity to my home, and received a better offer at a nearby hospital, why should I be impeded from working? Obviously, families need to have an income, and what if the physician was the sole breadwinner? The non-compete agreement could really adversely affect a family.
Non-compete agreements, also called restrictive covenants, are an increasingly common requirement for employment in many sectors, including health care. Sometimes non-compete agreements appear as a clause within a contract. Other times, they are separate contracts in and of themselves. Though common, the terms of non-compete agreements vary greatly.
Most people, even physicians, when presented with a contract, “fake” review the contract, and sign without digesting – or even reading – the material. Many don’t even know that a non-compete clause exists in their contracts. Until it’s too late.
Will the FTC’s Proposed Rule become permanent? So far, there have been 4.91k comments. One anonymous person posted: “I am completely in favor of forbidding noncompete agreements.” A woman posted: “I am a veterinarian and have worked close to 40 years. I have been an associate and a practice owner. I see no justification for non-competes and in fact feel it harms the entire profession. Non-competes are pervasive and notoriously difficult to fight. For many years now I have worked for corporations and have watched colleagues both attempt to negotiate non-competes and bear the brunt of legal battles if they attempt to challenge the non-compete. Should you really have to move your entire family to acquire a job? How do I harm a company by working for their competitor?”
A guy wrote: “These should’ve been banned a long time ago. Job mobility is important if we “really” believe in our economic system. Ban NDAs.”
A physician wrote: “As a physician I have suffered significant financial and personal hardship relating to a non-compete agreement. As a result of a non-compete I had to move across the country (twice). I suffered significant loss of income as a result of this not withstanding the expense of relocating twice within a year. My self and my family also suffered significant psycho-social ramifications and de-stabilization. I now also face another non-compete agreement that will essentially render me unable to leave my next position without tremendous harm to my life-long earning potential, credibly rendering me an indentured servant. The presence of a non-compete also removes any leverage an employee such as myself might have to negotiate agains unacceptable working or wage conditions.”
Unlike the commenters from ASMAC, which was split 50-50, it appears that many comments support banning non-compete agreements, but, remember, the not-for-profit exception!! The comment period is open through Mar 10, 2023.
340B Drug Pricing Program: Drug Companies Are Concerned!
The federal 340B Drug Pricing Program allows qualifying hospitals and clinics that treat low-income and uninsured patients to buy outpatient prescription drugs at a discount of 25 percent to 50 percent. The program is intended to help safety-net health care providers stretch their financial resources to reach more financially vulnerable patients and deliver comprehensive services.
The 340B Drug Pricing Program has spiked in use. It has become more and more popular over the years.
In 2020, there were 8,100 provider sites (including both hospitals and pharmacies), but that number rose to 50,000 by 2020. New data released in August 2022 by the Health Resources and Services Administration suggest discounted purchases under the 340B program reached $44 billion in 2021, about 16% more than in 2020. Drug companies are concerned.
On November 30, 2022, the 340B Drug Pricing Program; Administrative Dispute Resolution Notice of Proposed Rulemaking (NPRM) was published in the Federal Register. Section 340B(d)(3) of the Public Health Service Act requires the establishment of an Administrative Dispute Resolution (ADR) process for certain disputes under the 340B Program. Under the statute, the ADR process is designed to resolve:
- Claims by covered entities that they have been overcharged for covered outpatient drugs by manufacturers; and
- Claims by manufacturers, after the manufacturer has conducted an audit of a covered entity, that a covered entity has violated the prohibition on diversion or duplicate discounts.
This NPRM proposes new requirements and more efficient procedures to make the 340B Program’s ADR process more accessible and efficient, including ensuring that ADR panels hearing disputes are comprised of subject matter experts on the 340B Program, and establishing an independent HRSA reconsideration process. The NPRM will be open for public comment through January 30, 2023. Please refer to the Federal Register (PDF – 315 KB) publication for instructions about how to submit comments.
The question is how does the new proposed rule mesh with the Inflation Reduction Act of 2022? If you recall, the Inflation Reduction Act of 2022 (IRA) allows Medicare to negotiate drug rates. It has been suggested that the following 10 medications will be the first 10 negotiated:
Does the IRA and 340B conflict? How can you negotiate prices of a drug if the drug is already discounted?
Gift Cards Violate AKS? Maybe NOT!!!
Is Giving Gift Cards to Medicaid Consumers Suffering Substance Abuse Issues Who Comply with Weekly Criteria To Promote Wellness Against the Anti-Kickback statute (AKS)?
Yes, but who cares?
OIG does not care and even published an opinion stating that OIG would not penalize the practice.
The AKS is a criminal law that prohibits the knowing and willful payment of “remuneration” to induce or reward patient referrals or the generation of business involving any item or service payable by the Federal health care programs (e.g., drugs, supplies, or health care services for Medicare or Medicaid patients). Remuneration includes anything of value and can take many forms besides cash, such as free rent, expensive hotel stays and meals, and excessive compensation for medical directorships or consultancies. In some industries, it is acceptable to reward those who refer business to you. However, in the Federal health care programs, paying for referrals is a crime. The statute covers the payers of kickbacks-those who offer or pay remuneration- as well as the recipients of kickbacks-those who solicit or receive remuneration. Each party’s intent is a key element of their liability under the AKS.
Criminal penalties and administrative sanctions for violating the AKS include fines, jail terms, and exclusion from participation in the Federal health care programs. Physicians who pay or accept kickbacks also face penalties of up to $50,000 per kickback plus three times the amount of the remuneration.
Safe harbors protect certain payment and business practices that could otherwise implicate the AKS from criminal and civil prosecution. To be protected by a safe harbor, an arrangement must fit squarely in the safe harbor and satisfy all of its requirements. Some safe harbors address personal services and rental agreements, investments in ambulatory surgical centers, and payments to bona fide employees.
However, study after study after study have demonstrated that people with substance abuse issues have a higher likelihood of success with monetary incentives. See article as an example.
OIG obviously understands the efficacy of gift cards. Maybe Congress can back up OIG because, you can be sure that, if the proposed rule is passed, litigation will ensue. People will claim that the FTC does not have the legal authority to issue such a rule in violation of the AKS.
Non-Compete Clauses Banned, According to Proposed Rule
Non-compete clauses have dominated the health care field for years. Generally, noncompete clauses place restrictions on a person’s ability to work in three different ways:
- geographical restrictions,
- time restrictions, and
- line of business restrictions
On January 5, 2023, the Federal Trade Commission (“FTC”) released a notice of proposed rule-making to prohibit employers from imposing noncompete clauses on workers. Noncompete agreements block people from working for competing, potential employers or starting a competing business, after their employment ends.
Data show that non-compete clauses affect about one and five American workers, approximately 30 million people. However, non-compete clauses are predominantly in healthcare. By far, doctors employed by hospitals sign more non-compete agreements than any other profession. The theory behind eliminating non-compete agreements is that non-compete causes prevent employees from accepting better opportunities that offer higher pay or better working conditions.
Non-compete clauses are common and have been a contentious issue for decades. Some theorize that non-competes disrupt the physician-patient relationship and remove physicians who are already in short supply from the workforce.
I say, eliminating noncompete agreements may evolve healthcare.
As written, the federal rule will supersede state laws that currently govern noncompete and would apply retroactively, invalidating existing agreements.
This proposed rule comes with criticism and legal obstacles that will surely be tested. So for all of you who jumped up and down for the new proposed rule, expect litigation because as much as eliminating noncompete clause is awesome for physicians, hospitals will be adversely affected.
Many people have complained that the rule is over broad and vague. Challenges include whether the FTC has the authority to issue the non-compete rule under Section 5 of the FTC Act, the primary section the FTC cites as providing its rulemaking authority. Section 5 gives the FTC authority to police both “unfair methods of competition” and “unfair or deceptive acts or practices” affecting commerce. Although Section 18 of the FTC Act contains an explicit grant of rulemaking authority to the FTC for unfair or deceptive acts or practices, the statutory authority for the FTC’s ability to make rules for unfair methods of competition is less clear. Even if the federal courts conclude that the FTC had the authority to make a rule under the FTC Act, there will be challenges to the legality of the non-compete rule itself. The FTC claims that the non-compete rule is based on a finding that non-compete clauses constitute an “unfair method of competition and therefore violate Section 5 of the Federal Trade Commission Act.”
To address these problems, the FTC’s proposed rule would generally prohibit employers from using noncompete clauses. Specifically, the FTC’s new rule would make it illegal for an employer to: enter into or attempt to enter into a noncompete with a worker; maintain a noncompete with a worker; or represent to a worker, under certain circumstances, that the worker is subject to a noncompete.
The proposed rule would apply to independent contractors and anyone who works for an employer, whether paid or unpaid. It would also require employers to rescind existing noncompetes and actively inform workers that they are no longer in effect.
The agency estimates that the new rule could boost wages by nearly $300 billion a year and expand career opportunities for about 30 million Americans.
The commission invites the public to submit comments. The FTC will review the comments and may make changes, in the final rule, based on the comments and on the FTC’s further analysis of the issue. Comments are due 60 days after the federal register publishes the proposed rule. You have until March 6 to comment.
A Brave New World: No Covenants Not to Compete???
“On January 5, 2023, the Federal Trade Commission released a Notice of Proposed Rulemaking (NPRM) to prohibit employers from imposing noncompete clauses on workers. True to their name, noncompetes block people from working for a competing employer, or starting a competing business, after their employment ends. Evidence shows that noncompete clauses bind about one in five American workers, approximately 30 million people. By preventing workers across the labor force from pursuing better opportunities that offer higher pay or better working conditions, and by preventing employers from hiring qualified workers bound by these contracts, noncompetes hurt workers and harm competition.” Link.
Physician noncompete contracts are a common but sometimes contentious issue, as they have the potential to disrupt the physician-patient relationship and remove physicians — who are already in short supply — from the workforce.
Eliminating noncompete agreements will evolve health care.
The Commission invites the public to submit comments on this proposed rule. The FTC will review the comments and may make changes, in a final rule, based on the comments and on the FTC’s further analysis of this issue. Comments will be due 60 days after the Federal Register publishes the proposed rule. You have until Match 6th to comment.
