1. 2016 ICAHN COMPLIANCE OFFICER WORKSHOP Stuart J. Vogelsmeier, J.D. May 26, 2016

2. Disclaimer ICAHN and Lashly & Baer, P.C. are providing this material for informational and educational purposes only. Healthcare providers should contact their legal counsel for assistance.

3. Anti-Kickback and Stark Update Two Distinct Laws Sometimes Overlapping Applications Both address incentives and over-utilization

4. Anti-Kickback Basics  OIG focus is whether one party is offering or providing remuneration (i.e., something of value) to the other party in exchange for referrals of services or items which are paid by Medicare/Medicaid.  The conduct must be “Knowing” or “Willful”. Was there intent?

5. Anti-Kickback Quick Analysis Is there a referral relationship? Is there something of value being exchanged? Are there Medicare/Medicaid patients? Is there intent? Keep this slide handy

6. Anti-Kickback Consequences Criminal Civil Fines Exclusion

7. Who Can be Investigated? Not Just physicians... Hospital Personnel Sales Agents Attorneys Any person or entity that engages in the conduct

8. Anti-Kickback Flashpoints  Offering free or discounted services, staff, or equipment to physician, with hopes of referrals.  Ex.: Reference lab provides computers to referring physician offices.  What other “offers” have you seen?

9. Anti-Kickback Flashpoints  Paying for services that are not really needed or rendered, with hopes of referrals.  Ex.: Hospital pays high volume orthopedic surgeon $100K to serve as medical director, four meetings per year.  Does this mean medical directorships are risky?

10. Anti-Kickback Flashpoints Paying too much or too little Ex.: High volume surgeon offered medical office space in hospital building for $13 sq. ft. when market rate is $22 sq. ft. Ex.: Physician owns MOB; hospital rents space at $22 sq. ft. when market rate is $13 sq. ft.

11. Anti-Kickback Flashpoints Hospital providing employee-type benefits to non-employed physicians. Physician investment in ancillary provider that is not within physician’s practice area (e.g., internist investing in surgery center).

12. What is a Safe Harbor? Safe Harbor describes conduct/transaction that is “acceptable” to OIG Conduct/transaction within all elements of Safe Harbor is protected from the “Consequences” What if conduct/transaction isn’t within a Safe Harbor?

13. Examples of Safe Harbors Employment Personal Services Agreements Space Leases Equipment Leases Discounts/Rebates ASC

14. Unique Elements of Certain Safe Harbors Personal Services and Lease Safe Harbors require aggregate compensation to be fixed in advance. One Year Term Fair Market Value (get used to this term)

15. What are the Triggers? Paying “too much” or “too little” Hospital has MOB Are lease rates that same for high volume surgeon as they are for low volume surgeon?

16. What is Fair Market Value? Compensation that would be paid if there was no referral relationship between the parties. How do we determine FMV?

17. Fair Market Value Physician Compensation Compensation that would be paid if there was no referral relationship between the parties. Is the physician an employee? Use of Surveys Factors to Consider Don’t Cherry-Pick!

18. Medical Director Agreements Common themes: Paying for services that aren’t rendered Paying too much What should the Compliance Officer do?

19. Fair Market Value Office or Equipment Leases Don’t lease more than you need if the lessor is a referral source Commercial data on comparable space/equipment Don’t forget tenant improvements Equipment Lease-Is Per Click OK?

20. Fair Market Value cont. Surveys and Opinions on FMV Can I do a DIY FMV Analysis? Third Party Opinions Pros and Cons

21. Real World Examples Hospital takes staff physicians on cruise Hospital takes staff physicians to Indy 500 Hospital takes staff physicians to Stanley Cup Finals What do you think? How should you analyze?

22. Remember This Slide Is there a referral relationship? Is there something of value being exchanged? Are there Medicare/Medicaid patients? Is there intent?

23. Real World Examples Hospital provides separate lounge for ambulance company personnel-stocked refrigerator, cable TV etc. Hospital Foundation golf tournament allows pharmaceutical companies to sponsor holes See the Prior Slide

24. What is your role? Get it in writing-most relevant Safe Harbors require written agreement How have you determined Fair Market Value? If the transaction isn’t within a Safe Harbor, how close is it?

25. Stark Law Basics Is a physician involved? Is there a financial relationship? Is there a Designated Health Service? Is there a referral? Is Medicare or Medicaid involved? Is there an “Exception”?

26. Stark Law Penalties: Refund Civil Penalties Exclusion

27. Physician Physician or immediate family member Includes M.D., D.O, D.D.S., D.M.D., D.P.M., D.C., O.D.

28. What’s a Financial Relationship? Ownership Interest Compensation Arrangement Direct or Indirect Indirect-can’t hide behind an entity

29. Designated Health Services Clinical Lab Physical Therapy Occupational Therapy and Speech Language Pathology Service Radiology (including nuclear medicine, MRI, CT, X-Ray and ultrasound)

30. Designated Health Services Cont. Radiation Therapy services and supplies Durable Medical Equipment and Supplies Parenteral and enteral nutrients, equipment and supplies Prosthetic, orthotics and prosthetic devices and supplies

31. Designated Health Services Cont. Home Health Services Outpatient Prescription Drugs Inpatient and Outpatient Hospital Services All physician/Hospital relationships are potentially subject to Stark

32. What’s a Referral? Request by a physician for an item or service payable by Medicare/Medicaid Request by a physician for the establishment of a plan of care that includes DHS

33. What’s an Exception? Strict compliance with Exception is mandatory Unlike AKS Safe Harbor, if transaction doesn’t fit a Stark exception, there is a violation Exceptions are very complex (surprise)

34. Potential Exceptions for CAH Physician Relationships Employment Relationships*** Personal Services Arrangements*** Rental of Office/Equipment*** ***Similar to AKS, but some differences Written Contract, Fair Market Value are Keys

35. What are other relevant Exceptions? In-Office Ancillary Services Physician Services Ownership in a rural provider Ownership in a whole hospital

36. Non-Monetary Compensation Up to $392 Hospital may provide non-monetary compensation to physicians of $392 in 2016 No cash Typically entertainment, meals, other non-cash Comp. cannot take into account referrals

37. Non-Monetary Compensation cont. If benefit inadvertently exceeds $392, but is less than $588 (50% excess), there’s a “return” option Return within 180 days following receipt of excess Return can be used only once every three years per physician

38. Medical Staff Appreciation Event In addition to $392, hospital can provide one local medical staff appreciation event for enter medical staff. Any “giveaways” at event are subject to $392 limit

39. Medical Staff Incidental Benefits Compensation offered to all members of medical staff in same specialty Benefit used on hospital’s campus (e.g., meals, parking) Compensation provided only when physician is making rounds or engaged in services or activities that benefit hospital/patients

40. Medical Staff Incidental Benefits Benefit provided only on hospital campus- internet, pagers, radios used away from campus to access records, patients or personnel meets on-campus requirement May identify medical staff on hospital website or in advertising (meets on-campus)

41. Medical Staff Incidental Benefit Benefit designed to facilitate delivery of health care services Value of less than $33 per occurrence

42. What are the Stark Hot Buttons? Administrative Services Contracts between Hospitals and Physicians Medical Director Agreements Space and Equipment Leases

43. What are Stark the hot buttons? Loan agreements Hospital guarantees Recruitment agreements

44. Example Hospital provides non-employed staff physician free meals in hospital cafeteria, login access to EMR, golf outing valued at $200-includes golf balls, Cardinals-Cubs tickets valued at $180, medical staff appreciation dinner at local country club, identification on Hospital website Does this work? How is value calculated?

45. What Should the Compliance Officer Know About Stark? Inventory of physician arrangements Non-employed staff physicians are key How is Fair Market Value Determined? How do you track non-monetary benefits?

46. Conclusion Questions or comments Thank you.