1. Overview of Health Care Legal Issues Bruce D. Armon, Esq., Partner Business Department Saul Ewing LLP Telephone: 215-972-7985 1-800-355-7777, ext. 7985 Email: barmon@saul.com March 18, 2008

2. Bruce D. Armon, Esq. HEALTH LAW SUBJECTS Regulation of health care providers Credentialing of health care providers Reimbursement issues Fraud and abuse Antitrust Tort law

3. Bruce D. Armon, Esq. FRAUD AND ABUSE The Government's war Anti-Kickback statute Stark statute Criminal prosecutions and civil investigations

4. Bruce D. Armon, Esq. ANTI-KICKBACK STATUTE Basic prohibition – knowing and willful solicitation or receipt of any remuneration in return for referring persons or arranging for acquisition of goods or services Penalties: Criminal and Civil Safe Harbors

5. Bruce D. Armon, Esq. ESSENCE OF MEDICARE/MEDICAID ANTI-FRAUD AND ABUSE STATUTE Prohibits remuneration to induce referrals “Remuneration” is broadly defined – e.g., opportunity to make money, kickback, bribe, rebate, anything of value Statutory Exceptions Judicial Interpretations

6. Bruce D. Armon, Esq. SAFE HARBORS Common Theme -- FMV; 1+ year contracts; full disclosure Intended to protect non-abusive business arrangements If it does not fit, it is not necessarily illegal

7. Bruce D. Armon, Esq. SAFE HARBORS Investment interests Space rental Equipment rental Personal services and management contracts Sale of Practice Referral Services Warranties Discounts Employees Group purchasing organizations Waiver of beneficiary coinsurance and deductible amounts Increased coverage, reduced cost- sharing amounts, or reduced premium amounts offered by health plans Price reductions offered to health plans Practitioner recruitment Obstetrical malpractice insurance subsidies Investment in group practices Cooperative hospital service organizations Ambulatory surgical centers Referral agreements for specialty services Price reductions offered to eligible managed care organizations Price reductions offered by contractors with substantial financial risk to managed care organizations.

8. Bruce D. Armon, Esq. OTHER INTERPRETATIVE RESOURCES OIG Fraud Alerts Advisory Opinions

9. Bruce D. Armon, Esq. STARK STATUTE If a physician (or family member) has a financial relationship with an entity: (1)physician may not "make a referral to the entity for the furnishing of designated health services" for which payment may be made under Medicare or Medicaid; and (2)the entity may not bill for designated health services furnished pursuant to such referral

10. Bruce D. Armon, Esq. WHAT IS A FINANCIAL RELATIONSHIP? An ownership or investment interest in the entity Such interest “may be through equity, debt, or other means” An indirect ownership interest is still an ownership interest A compensation arrangement, with certain exceptions

11. Bruce D. Armon, Esq. WHAT ARE THE DESIGNATED HEALTH SERVICES? Durable medical equipment and supplies Parenteral and enteral nutrients, equipment and supplies Prosthetics, orthotics, and prosthetic devices Home health services and supplies Outpatient prescription drugs Inpatient and outpatient hospital services Clinical laboratory services Physical therapy services Occupational therapy services Radiology, including MRI, CT scans, and ultrasound services Radiation therapy services and supplies

12. Bruce D. Armon, Esq. ARE THERE EXCEPTIONS TO STARK? These are the most important part of the analysis to a health care lawyer, and for our physician-clients.

13. Bruce D. Armon, Esq. CATEGORY OF EXCEPTIONS Ownership only Ownership and compensation Compensation only

14. Bruce D. Armon, Esq. EXAMPLES OF STARK EXCEPTIONS Physician group practices Personal service arrangements Remuneration not related to the provision of designated health services Physician recruitment Rental of office space Equipment leases Bona fide employment relationships Isolated financial transactions Certain group practice arrangements with a hospital Payments by a physician for items and services

15. Bruce D. Armon, Esq. STARK PENALTIES Denial of payment by Medicare Required refunds of payments made by individuals Civil money penalties and possible exclusion from Medicare and Medicaid

16. Bruce D. Armon, Esq. STARK VS. ANTI-KICKBACK No proof of intent Applies to physicians Improper unless exception Unlawful intent Any person or entity Technicalities may not be penalized

17. Bruce D. Armon, Esq. HIPAA What Is This About?

18. Bruce D. Armon, Esq. HIPAA Overview The Health Insurance Portability and Accountability Act of 1996 (P.L. 104- 191) (HIPAA) became law on August 21, 1996. At the time it was commonly referred to as “Kennedy-Kassebaum” (after Senators Ted Kennedy (D-MA) and Nancy Kassebaum (R-KS) who were instrumental in its passage.)

19. Bruce D. Armon, Esq. HIPAA Key Provisions Insurance reform - improve portability and continuity of health insurance for groups and individuals. Extend fraud and abuse prevention measures to all types of insurers (not just Medicare/Medicaid), and dedicate additional resources to fraud and abuse enforcement. Administrative simplification - create a framework for the standardization of electronic data interchange (EDI) in health care, including protections for the privacy and security of individually identifiable health information.

20. Bruce D. Armon, Esq. Administrative Simplification Electronic Transactions and Code Sets Standards Privacy Standards Security Standards Electronic Signature Standards Identifier Standards Employer Identifier Standard Provider Identifier Standard Health Plan Identifier Standard Individual Identifier Standard

21. Bruce D. Armon, Esq. Final Rule published December 28, 2000 (65 FR 82462 et seq.) Effective Date - April 14, 2003 Final Rule, Version II, published August 14, 2002 (67 FR 53182 et seq.) Privacy Standards

22. Bruce D. Armon, Esq. Privacy Standards Is created or received by a health care provider, health plan, public health authority, employer, life insurer, school or university, or health care clearinghouse; and Relates to the past, present, or future physical or mental health or condition of an individual, the provision of health care to an individual, or the past, present, or future payment for the provision of health care to an individual. “Health information” is any information, whether oral or recorded in any form or medium, that:

23. Bruce D. Armon, Esq. Individually Identifiable Health Information Individually Identifiable Health Information (IIHI) is health information that identifies an individual or there is a reasonable basis to believe could be used to identify an individual.

24. Bruce D. Armon, Esq. Protected Health Information The focus of the Privacy Rule is Protected Health Information (PHI). PHI is IIHI that is transmitted or maintained in electronic or any other form or medium.

25. Bruce D. Armon, Esq. Applicability Health Plans Health Care Clearinghouses Health Care Providers Privacy Rule applies to covered entities:

26. Bruce D. Armon, Esq. Health Care Providers Health care providers include any individual or entity that is covered as a provider under Medicare or any other person or organization that provides medical or other services or who furnishes, bills or is paid for health services or supplies in the normal course of business.

27. Bruce D. Armon, Esq. Uses and Disclosures of PHI When PHI is to be disclosed for purposes of Treatment Payment Health Care Operations an individual’s consent is not required pursuant to the Final Rule, Version II

28. Bruce D. Armon, Esq. Administrative Requirements Privacy official Contact person for complaints Training Safeguards Complaints Sanctions Mitigation

29. Bruce D. Armon, Esq. Administrative Requirements (cont’d) Intimidating or retaliatory acts Waiver of Rights Policies and procedures Documentation

30. Bruce D. Armon, Esq. Business Associate Business Associate means with respect to a Covered Entity (other than as a member of the workforce) an entity that performs or assists In the performance of a function or activity involving the use or disclosure of individually identifiable health information, including claims processing or administration, data analysis, process or administration, utilization review, quality assurance, billing, benefit management, practice management and repricing, or any other function covered by these regulations.

31. Bruce D. Armon, Esq. Preemption of State Law General preemption rule. A requirement or other provision of the HHS Privacy Rule that is contrary to a provision of state law preempts the state law provision unless an exception applies.

32. Bruce D. Armon, Esq. DECIDING WHERE TO PRACTICE Institutional Private practice

33. Bruce D. Armon, Esq. EVALUATING A PRACTICE OPPORTUNITY Developing your checklist Identify priorities Determine deal- breakers

34. Bruce D. Armon, Esq. THE FIRST INTERVIEW Establishing a rapport Identifying the “nuts” and “bolts” of the practice Asking the right questions

35. Bruce D. Armon, Esq. THE MAJOR ISSUES Compensation -- not just salary! Term and termination Be aware of the Agreement’s details

36. Bruce D. Armon, Esq. COMPENSATION Possible salary formulas Base salary Base salary PLUS production or collections Production less overhead Income Guarantee

37. Bruce D. Armon, Esq. NON-SALARY BENEFITS Salary is only part of the equation Ascertain employer’s potential flexibility

38. Bruce D. Armon, Esq. TERM AND TERMINATION Term How long is the initial term? Automatic renewals and notice provisions

39. Bruce D. Armon, Esq. TERM AND TERMINATION Termination For cause Without cause Timelines for termination Effects on benefits

40. Bruce D. Armon, Esq. MOVING ON Non-competition provisions Access to patient records and confidentiality Settling disputes -- arbitration or litigation?

41. Bruce D. Armon, Esq. SYNOPSIS FOR NEGOTIATING EMPLOYMENT AGREEMENTS Don’t rely on a handshake The devil is in the details Don’t be afraid to ask for changes Enjoy your first professional practice opportunity (even though it might seem far away)!