COMPLIANCE ROAD TRIP Navigating Labs to Make Informed

COMPLIANCE ROAD TRIP “Navigating Labs to Make Informed Decisions” David W. Gee and Kristen R. Blanchette David Wright Tremaine LLP davidgee@dwt. com kristenblanchette@dwt. com

COMPLIANCE ROAD TRIP 1. % BASED CONTRACT MARKETING 2. IN-OFFICE PHLEBOTOMISTS 3. MOBILE PHLEBOTOMISTS 4. LEASING SPACE FROM DOCTORS 5. LAB PRICING PRACTICES ST. AVE. BLVD. RD. WAY

ST. 1. % BASED CONTRACT MARKETING FEDERAL CA Ø PROHIBITED § Why? AKS and No Safe § Why? Medi-Cal AKS Harbor Ø BUT: May be PERMITTED by PORA Safe Harbor Unless Medicare or Medi. Cal Involved YIELD AHEAD

REFERENCES 1. % BASED CONTRACT MARKETING § § FEDERAL 42 U. S. C. § 1320 -a-7(b) [AKS] 42 C. F. R. § 1001. 952 [Safe Harbors] 42 U. S. C. § 1320 -a-7 b (b)(3)(B); 42 C. F. R. § 1011. 952(i) [Bona Fida Employees] 42 C. F. R. § 1001. 952 (d) [Pers. Svs. / and Mgmt. ] ST. CA § Cal. Bus. & Prof. Code § 650(a) [CA AKS – PORA] § Cal. Welf. & Inst. Code § 14107. 2 (a) + (b) [Medi-Cal AKS] § Cal. Welf. & Inst. Code § 14107. 2 (c) [Medi-Cal AKS Safe Harbor]

REFERENCES 1. % BASED CONTRACT MARKETING FEDERAL CASE LAW § U. S. v. Polin, 194 F. 3 d 863 (7 th Cir. 1999) § U. S. v. Starks, 157 F. 3 d 833 (11 th Cir. 1998) § Joint Tech. v. Weaver, CIV-11 -846 -M (W. D. Okla. 1/23/14) § Zimmer v. Nu. Tech Medical, 54 F. Supp. 2 d (N. D. Ind. 1999) § Nursing Home Con. v. Quantum Health Services, 926 F. Supp. 835 (E. D. Ark. 1996) § Modern Med. Labs v. Smith-Kline Beecham Clinical Labs, 1994 U. S. Dist. LEXIS 11525 (N. D. Ill. 8/16/94) CA CASE LAW ST. § People v. Duz-Mor Diagnostic Laboratory, 68 Cal. App. 4 th 654, 671 (1998) § People v. Palma, 40 Cal. App. 4 th 1559 (Cal. Ct. App. 1995) § People v. Guiamelon, 205 Cal. App. 4 th 383, 413, 140 Cal. Rptr. 3 d 584 (2012)

REFERENCES 1. % BASED CONTRACT MARKETING FEDERAL SETTLEMENTS § OIG - Kickback and Physician Self-Referral (08 -21 -2014) [Zimmer-Deptula (ZDI) paid $123 K] § OIG - Kickback and Physician Self-Referral (10 -21 -2013) [FCA case; two owners of DME co. agreed to be excluded for 20 yrs] § OIG Archives - Kickback and Physician Self. Referral (02 -15 -2005) [ TLC paid $130 K to resolve CMP liability] ST. CA LEGIS. COUNSEL OPINION § California Legislative Counsel Bureau Opinion # 1128674, “Clinical Laboratory Referral Practice” (Apr. 20, 2012) (adresses the legality under both federal and state law of a commissionbased contract marketing arrangement)

AVE. 2. IN-OFFICE PHLEBOTOMISTS FEDERAL Ø PERMITTED, IF § Solely collecting and processing lab specimens CA Ø PROHIBITED § Why? LFS has provided guidance on this issue

REFERENCES AVE. 2. IN-OFFICE PHLEBOTOMISTS FEDERAL § CMS Commentary to Final Stark § II Regs. , 66 Fed. Reg. 856, 948 -49 (Jan. 4, 2001) § OIG Special Fraud Alert: Special Arrangements for the Provision § of Clinical Lab Services, 59 Fed. Reg. 65372 (Dec. 19, 1994) CA Legis. Counsel of CA, Clinical Lab Personnel: Placement in Physician’s Offices - #2433 (Feb. 29, 1996) Memo re: Legal opinions re: phleb. issues from Karen Nickel, Ph. D. , Chief, LFS (July 11, 1997) [AKS]

BLVD. 3. MOBILE PHLEBOTOMISTS FEDERAL Ø NO GUIDANCE (besides authority re: phlebs) CA Ø CAUTION: LFS – NO “Roving phlebs” § WHY? Prohibited by Bus. & Prof. Code § 650

REFERENCES 3. MOBILE PHLEBOTOMISTS FEDERAL § 42 C. F. R. § 493. 1242 (2) BLVD. CA § Memo re: Legal opinions re: phleb. issues from Karen Nickel, Ph. D. , Chief, LFS (July 11, 1997) AKS] § Regs related to phleb: Cal. Bus. & Prof. Code § 1242, § 1242. 6, § 1246

RD. 4. LEASING SPACE FROM DOCTORS FEDERAL CA Ø PERMITTED, SUBJECT TO: § Stark Law § PORA § AKS Safe Harbor

REFERENCES RD. 4. LEASING OFFICE SPACE FROM DOCTORS FEDERAL § 42 C. F. R. 10001. 952(b) [AKS Space Rental Safe Harbor] § 42 U. S. C. § 1395 nn (e) (1)(A); 42 C. F. R. § 411. 357(a) [Stark Law Space Safe Harbor Exception] § OIG Special Fraud Alert (Feb. 2000) (listing requirements) CA § Cal. Bus. & Prof. Code § 650. 01 (PORA) § Cal. Bus. & Prof. Code § 650. 02(b)(2) (exception to PORA re: leases)

5. LAB PRICING PRACTICES FEDERAL Ø WHAT YOU NEED TO KNOW: § Medicare Usual Charge Rule § Discounting Rules and AKS CA WAY Ø WHAT YOU NEED TO KNOW: § Anti-Markup Rules § Disclosure Rules § Direct Billing § Medi-Cal Lowest Charge Rule

REFERENCES 5. LAB PRICING PRACTICES § § § WAY CA FEDERAL 42 U. S. C. § 1320 a-7(b)(6)(A) [Medicare § Cal. Bus. & Prof. Code § 655. 5 (antimarkup and disclosure req. ) Usual Charge Rule] § Cal. Bus. & Prof. Code § 655. 7 (direct Ltr. from K. Mc. Ananey, Chief, OIG billing) (April 26, 2000) [Medicare Usual § 22 C. C. R. § 515501(a) (Medi-Cal “Lowest Charge Rule] Charge Rule”) OIG Advisory Opinion 99 -13 § Hunter Labs v. Quest (settled in 2011) § AB 1494

COMPLIANCE ROAD TRIP SUMMARY ST. 1. % BASED CONTRACT MARKETING FEDERAL & CA PROHIBITED (BUT SEE CA PORA) 1. IN-OFFICE PHLEBOTOMISTS AVE. 3. MOBILE PHLEBOTOMISTS BLVD. FEDERAL = PERMITTED (key word: “solely”) CA = PROHIBITED (per LFS guidance) FEDERAL = NO GUIDANCE CA = PROHBITED (per LFS guidance) 4. LEASING OFFICE SPACE FROM DOCTORS RD. FEDERAL = PERMITTED, subject to Stark AND AKS CA = PERMITTED, subject to PORA 5. LAB PRICING PRACTICES SEE RULES FOR FEDERAL & CA WAY

QUESTIONS? David W. Gee & Kristen R. Blanchette David Wright Tremaine LLP davidgee@dwt. com and kristenblanchette@dwt. com