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Delaware Dental Board Proposes “Fee-Splitting” Prohibition

The Delaware Board of Dentistry and Dental Hygiene is proposing an amendment to its regulations to ban what it characterizes as “fee-splitting.” The proposed amendment provides that a dentist or dental hygienist may be disciplined for “engaging directly or indirectly in the provision or receipt of anything of value for recommending a dentist or hygienist’s services.” The proposed regulation, however, permits the offering or receipt of “office gifts” on a quarterly basis if the value of the gifts does not exceed $1,000 annually and the gifts are “unrelated to a specific referral.” As the federal and state Anti-Kickback statutes generally prohibit offering or receiving anything of value in exchange for the referral of federal or state health care program business, dentists who provide services payable by federal or state health care programs cannot rely solely on the proposed state regulation as a guideline for permissible gift-giving.

The comparison between the Dental Board’s proposed regulation and fee-splitting regulations applicable to other Delaware health care providers is interesting. The Board of Medical Licensure and Discipline prohibits payment of a fee by a physician to another physician who has referred a patient to him, “unless the fee is in proportion to the work actually performed by the referring physician.” 24 Del. Admin. Code 1700 Board of Medical Licensure and Discipline 8.1.9. The regulation, while inartfully worded, seems to provide an exception for the sharing of fees among a physician employer and a physician employee. Otherwise, a physician cannot pay another physician a “fee” for referrals.  It is unclear whether a “fee” would include non-monetary gifts. The proposed Dental Board regulation, on the other hand, clearly applies to “anything of value.” Of course, as stated above, federal and state statutes generally prohibit physicians from offering or accepting anything of value in exchange for referrals where payment may be made, in whole or in part, by a federal or state healthcare program.

Delaware physical therapists and athletic trainers are subject to a broad fee-splitting statute which not only prevents them from “transferring fees” to referral sources, but also prevents them from working in the same practice with referral sources, e.g., physicians, as well as any “relative” or “business associate” of a referral source, neither of which is defined in the statute. §24 Del. C. 2616(a)(8). The BMLD regulation does not encompass “relatives” and “business associates.” The proposed Dental Board regulation arguably applies to any scenario where a third person receives or offers anything of value in exchange for referrals on behalf of a dentist or dental hygienist, as it proscribes “engaging directly or indirectly in the provision or receipt of anything of value.”

The Board of Dentistry and Dental Hygiene will hold a public hearing on the proposed regulation on March 17, 2016, and will accept written comments until April 1, 2016. Click here for the text of the proposed regulations and for more information about the hearing and how to submit written comments.

GAO Analyzes Connection Between Hospital-Physician Consolidation and Increased Medicare Spending for Evaluation and Management Services, Recommends Equalizing Rates for E/M Services in Office and Hospital Outpatient Settings

On December 21, 2015, the United States Government Accountability Office (GAO) issued a report entitled, “Increasing Hospital-Physician Consolidation Highlights Need for Payment Reform.” (Click here for the full report.) The GAO’s study was prompted by an inquiry from lawmakers about the more than 8 percent rise in Medicare expenditures for services rendered in hospital outpatient departments (HOPD) between 2007 and 2013, as compared to a 5 percent increase in total Medicare Part B spending during the same time frame.  Some policymakers questioned whether the increase in HOPD spending might be attributable to the growing number of hospital acquisitions of physician practices (“vertical consolidation”), resulting in services that were typically performed in physician offices being performed instead in HOPDs, resulting in higher reimbursement. For example, in 2015, Medicare’s total payment rate for E/M office visits ranged from $58 to $86 higher when performed in an HOPD compared to a physician office. This discrepancy is due to the fact that when the service is provided in a physician office, Medicare makes a single payment to the physician at Medicare’s physician fee schedule rate, but when the service is provided in an HOPD, Medicare makes two payments, one at the physician fee schedule facility rate and another payment to the hospital, typically at the hospital outpatient prospective payment system (OPPS) rate. The GAO noted that although, beginning in 2014, CMS revised its formula for payment of HOPD E/M visits, the revised approach still results in higher total reimbursement for E/M services performed in HOPDs.

The GAO confirmed the trend of vertical consolidation, noting that between 2007 and 2013 the number of vertically consolidated hospitals increased from about 1,400 to 1,700, while the number of vertically consolidated physicians nearly doubled from about 96,000 to 182,000. The GAO then used various analytical methods to determine if there was a correlation between consolidation and the increase in HOPD spending.  The GAO found that the percentage of E/M office visits performed in HOPDs, rather than in physician offices, was approximately 10 percent higher in counties with the highest levels of vertical consolidation.

The GAO recommended that Medicare equalize reimbursement for Evaluation & Management (E/M) services regardless of provider setting, and, absent equalization of E/M reimbursement rates in the HOPD and office settings, the Medicare program would pay more than necessary for E/M services.  The report notes that the Bipartisan Policy Center and Medicare Payment Advisory Commission (MedPAC) have estimated that equalizing payment rates for services, including E/M services, performed in HOPDs and physician offices could save Medicare between $1 billion and $2 billion annually.  The GAO acknowledged, however, that legislative action would be required to achieve equalization as CMS lacks statutory authority to equalize total payment rates between HOPDs and physician offices.

Federal Trade Commission Issues Guidance on How State Licensing Boards May Avoid Antitrust Scrutiny

Earlier this year DE Health Law reported on a decision by the U.S. Supreme Court, North Carolina State Board of Dental Examiners v. Federal Trade Commission, holding that a state professional licensing board could be liable under federal antitrust laws for engaging in anticompetitive behavior in the absence of “active supervision” of the board by the state. In particular, the Supreme Court held that a state board on which a controlling number of decision makers are active market participants in the occupation the board regulates may invoke the “state action defense” to federal antitrust enforcement only when two requirements are satisfied: first, the challenged restraint must be clearly articulated and affirmatively expressed as state policy; and second, the policy must be actively supervised by a state official (or state agency) that is not a participant in the market that is being regulated. (Click here to review the previous post.)

In the wake of the Supreme Court’s decision, state officials sought guidance from the Federal Trade Commission regarding antitrust compliance for state boards regulating occupations. In response, the FTC’s Bureau of Competition issued a 13-page document (available by clicking here) that provides an overview of antitrust considerations implicated by the activities of state licensing boards and also offers specific examples of when “active state supervision” is required and what may constitute “active state supervision” for purposes of the “state action defense.”

The state must exercise “active supervision” over a board “on which a controlling number of decision makers are active market participants.” According to the guidance, an “active market participant” is an individual who is licensed by the board or “provides any service subject to the regulatory authority of the board.” Active market participants constitute a “controlling number of decision makers” if they comprise a majority of the board, or if they effectively control the board’s decisions as a matter of procedure or custom. While the guidance cautions that whether a board is controlled by active market participants is a fact-bound inquiry, it provides several examples of scenarios when a board might be considered controlled by active market participants even when licensees comprise a minority of the board’s voting members.

As to what may constitute “active state supervision” that satisfies the state action defense, the guidance identifies a number of factors the FTC will consider, namely whether the “supervisor” (1) has obtained the information necessary for a proper evaluation of the action recommended by the regulatory board; (2) has evaluated the substantive merits of the recommended action and assessed whether the recommended action comports with the standards established by the state legislature; and (3) has issued a written decision approving, modifying, or disapproving the recommended action, and explaining the reasons and rationale for such decision. The guidance goes on to give examples of what might be considered satisfactory state supervision in the contexts of a board’s issuance of a regulation with potential anticompetitive effects and a board’s administration of its disciplinary process.

With the exception of the Board of Examiners of Nursing Home Administrators, the majority of members of all the boards licensing health care professionals in Delaware are required by statute to be licensees and, hence, “active market participants.” Accordingly, the Supreme Court’s decision and the FTC’s subsequent guidance are particularly relevant to the conduct of those boards.

Labels: Antitrust, Licensing Board, State Action

Five Years Post-Bradley

Five years ago, on September 1, 2010, one of the nine “Bradley” bills, House Bill 459, took effect in Delaware.  Among other things, this bill clarified the obligations of hospitals to report any disciplinary action affecting a physician’s privileges, the obligations of law enforcement to report unprofessional conduct by a physician, and that a physician’s failure to report unprofessional conduct of another physician is itself unprofessional conduct.  Subsequent legislation incorporated “failure to report” into the definition of “unprofessional conduct” applicable to other health care professionals as well.

The Delaware Division of Professional Regulation’s website includes links to lists of physicians and nurses who have been publicly disciplined.  The physician list dates back to 1963, the nurse list back to 1990.  As one might expect, the number of physicians and nurses who were disciplined by their respective professional boards increased dramatically beginning in 2010.  With respect to physicians, prior to 2010 the highest number of physicians disciplined by what was then the Board of Medical Practice was 10 physicians in 2008.  Of the ten physicians disciplined that year, two of them had their licenses revoked.  In 2010, 15 physicians were disciplined, and while no licenses were revoked in 2010, 12 physicians received some type of suspension, including six emergency temporary suspensions.  According the DPR’s list, from 1963 through 2009, a total of only 11 physicians (including Earl Bradley) had their licenses suspended (although 24 licenses were revoked during the same time period, with the highest number of revocations being 4 in 2007).  Below are figures for physician disciplinary actions for the period from 2011 to the present (the DPR last updated the physician list on August 25, 2015):

Year Physicians Disciplined Suspensions Revocations
2011 22 7 1
2012 23 5 2
2013 35 6 3
2014 34 3 4
2015 17 (to date) 1 2

As illustrated above, in 2011 and 2012, the Board of Medical Licensure and Discipline sanctioned double the number of physicians it had disciplined during its former peak year of 2008, and three times as many physicians in 2013 and 2014 as it had in 2008.  While the number of suspensions increased more or less proportionately (the 12 suspensions imposed in 2010 being somewhat of an aberration), the number of revocations did not.  Thus the figures indicate that while more violations of the physician licensing statute and regulations are being reported and investigated, there has not been a concomitant increase in violations that merit the most serious sanction of revocation

The list of publicly disciplined nurses also shows a jump in the numbers beginning in 2010.  Prior to 2010, the highest number of nurses publicly disciplined in a given year was 43 in 2005, with the Board of Nursing suspending seven and revoking two licenses.  After 2005, the number of disciplinary actions declined steadily to 14 in 2009, when the Board revoked one license and suspended one license.  In 2010, the Board disciplined about two and a half times as many nurses as it had in 2009, suspending 16 of them and revoking 6 licenses.  The figures for the period from 2010 to the present are as follows (the DPR last updated the nurse list on August 17, 2015):

Year Nurses Disciplined Suspensions [1] Revocations
2010 39 16 6
2011 47 13 4
2012 68 14 4
2013 83 42 3
2014 68 26 0
2015 69 (to date) 17 0

While the Board of Nursing had imposed at least one suspension every year from 1990 through 2009, the number of suspensions in proportion to the total number of disciplinary actions in a given year was generally less than a third.  In 2009, however, over 40 percent of the sanctions imposed were suspensions, and half the sanctions imposed in 2013 were suspensions.  As with physicians, however, the number of revocations did not increase proportionately to the number of disciplinary actions.

The tables above demonstrate that since the Bradley legislation was enacted, the total number of disciplinary sanctions imposed on physicians and nurses was the highest in 2013 (thus far).  It remains to be seen whether the numbers will level off or decline in the coming years.

[1] “Temporary suspensions” and “Stayed suspensions” are not included in the below figures.

New Guidance on Mobile Device Security for Health Care Providers

At the end of July the National Institute of Standards and Technology of the U.S. Department of Commerce (“NIST”) released a draft practice guide, Securing Electronic Health Records on Mobile Devices, that demonstrates how health care IT professionals can use existing technologies, including commercially available and open source tools, to better protect electronic protected health information (“ePHI”) systems and facilitate secure sharing of ePHI through mobile devices.  According to the guide, the full text of which is available here, “many health care providers are using mobile devices in health care delivery before they have appropriate privacy and security protections in place.”  The guide is intended to provide a technical roadmap for achieving HIPAA-compliant use of mobile devices by health care professionals.

In order to arrive at their recommended solution, which can be implemented as outlined in the guidance or customized to a particular health care provider’s IT environment, NIST simulated interaction among mobile devices and an EHR system supported by the IT infrastructure of a medical organization.  They tested hypothetical scenarios in which a primary care physician uses a mobile device to send a referral containing a patient’s clinical information to another physician, to send an electronic prescription to a pharmacy, or to add information to a patient’s electronic health record.  In each scenario the mobile device interacts with an EHR system.

Health care providers using mobile devices to access or transmit patients’ ePHI are well-advised to confirm that their IT professionals are familiar with the guide’s recommendations.  Business Associates of health care providers who access or transmit ePHI via mobile devices should also consult with their IT personnel to determine whether those recommendations should be implemented by the Business Associate.

Comments of the draft guidance may be submitted to NIST by September 25, 2015 via e-mail at

Governor Markell Signs Delaware Medical Orders for Scope of Treatment Act

On May 28thGovernor Markell signed House Bill No. 64, the Delaware Medical Orders for Scope of Treatment or “DMOST” Act.  The legislation establishes a clinical process to facilitate communication between an adult patient with a “serious illness or frailty” and the patient’s physician (or other health care practitioner licensed to write medical orders under Title 24 of the Delaware Code) who “would not be surprised if [the patient] died within the next year” regarding what life-sustaining treatments, if any, the patient wishes to receive.  Based on that consultation, the legislation allows the physician to complete a DMOST form documenting the patient’s wishes as a medical order intended to be honored by personnel attending the patient in any health care setting, including the patient’s home, a health care institution, or by emergency personnel.

The legislation makes clear that a DMOST form differs from an advance health care directive.  While an advance health care directive may be made by any adult and is intended to express the individual’s preferences with respect to life-sustaining treatment in the event the individual is incapacitated, a medical order is required to give effect to those preferences, and a new order must be issued if the individual is transferred from one health care setting to another.  The DMOST form, on the other hand, is a medical order that is intended to be effective in any health care setting, whether or not the individual is incapacitated, although a patient with decision-making capacity may at any time void the DMOST form or otherwise request treatment different from that specified on the form. The legislation also provides that a DMOST form may be completed after consultation between an individual’s physician and the individual’s authorized representative if the individual lacks capacity.

Health-care practitioners and providers, institutions, and emergency-care providers (as all defined by the Act) have an obligation to treat a patient who has a completed DMOST form in accordance with the directions and options indicated on such form, except as otherwise provided in the Act.  In addition, the legislation provides guidance regarding how conflicts between health-care practitioners and a patient’s authorized representative may be resolved and how conflicts between an advance health care directive, a DMOST form, a patient’s expressed oral or written directives, or the decisions of a patient’s authorized representative should be resolved in determining the scope of treatment.  The failure to act in accordance with the Act’s requirements can result in professional discipline and civil monetary penalties.

The bill authorizes the Department of Health and Social Services to promulgate regulations regarding the process for completion, modification and revocation of the DMOST form as well as directing the Department to prepare a standard DMOST form.  It also requires Delaware health care providers to honor a medical order form executed in another state if it is valid under the laws of that state or meets the requirements for a valid DMOST form.  A majority of states have enacted legislation similar to the DMOST Act, although they may refer to it as POLST (“Physician’s Orders for Life Sustaining Treatment”), MOLST (“Medical Orders for Life Sustaining Treatment”), or a like term.  In fact, regulations of the Delaware Department of Public Health previously permitted Delaware health care providers to use a MOLST form, but in 2013 the Department directed Delaware health care providers to stop using the form due to concerns that it was being used beyond the parameters specified in the regulation.  The DMOST Act, and regulations promulgated thereto, should provide more clarity about the proper use and function of the DMOST form.

The DMOST Act takes effect upon the adoption of regulations by DHSS which the bill specifies will occur no later than a year from the legislation’s enactment.  Click here to review the full text of the DMOST Act.

Delaware General Assembly Passes Telemedicine Bill

On May 14ththe Delaware General Assembly passed HB 69 amending Title 18, the state’s Insurance Code, and Title 24, governing health care professions and occupations, to facilitate the use of “telehealth” and “telemedicine” in the delivery of health care to patients located in Delaware. The bill defines “telehealth” as “the use of information and communications technologies consisting of telephones, remote patient monitoring devices or other electronic means which support clinical health care, provider consultation, patient and professional health-related education, public health, health administration, and other services as described in regulation.” “Telemedicine” is defined as “a form of telehealth which is the delivery of clinical health care services by means of real time two-way audio, visual, or other telecommunications or electronic communications, including the application of secure video conferencing [to] facilitate the assessment, diagnosis, consultation, treatment, education, care management and self-management of a patient’s health care by a health care provider practicing within his or her scope of practice as would be practiced in-person with a patient.”

The proposed amendments to the Insurance Code would require health insurers to cover telehealth and telemedicine services at the same reimbursement rates as in-person consultations.  The proposed amendments to the Medical Practice Act, Chapter 17 of Title 24, include a new section 1769D authorizing physicians to practice telehealth and telemedicine.  Under section 1769D, diagnosis and treatment via telemedicine is only permitted if  (1) the physician has previously conducted an in-person examination of the patient, (2) there is another Delaware-licensed healthcare provider present with the patient, (3) the diagnosis is based on both audio and visual communication, or (4) the service meets the standards for establishing a physician-patient relationship pursuant to guidelines established by major medical specialty societies, such as radiology or pathology.

The bill also authorizes the professional boards of the following health care professions to promulgate regulations governing the use telehealth and telemedicine by such professionals: physician assistants, respiratory therapists, genetic counselors, podiatrists, chiropractors, dentists, nurses, occupational therapists, optometrists, pharmacists, mental health and chemical dependency counselors, psychologists, dietitians and social workers. A bill authorizing the use of “telehealth” in the practice of physical therapy was previously signed by the Governor in August 2014 (see December 3, 2014 DE Health Law Blog regarding the regulations proposed by the Examining Board of Physical Therapists pursuant to that bill).

The full text of HB 69 can be viewed by clicking here.

U.S. Supreme Court Rules Against Medicaid Providers Seeking Higher Reimbursement Rates

In a 5-4 decision issued on March 31, 2015, the U.S. Supreme Court ruled that Medicaid providers cannot sue state Medicaid agencies pursuant to Section 30(A) of the Medicaid Act for failure to raise reimbursement rates. A January 20, 2015 post on this blog describes the background of the case, Armstrong v. Exceptional Child Center, Inc.   Justice Scalia, writing for the majority, opined that the Supremacy Clause of the U.S. Constitution does not provide a basis to imply a private right of action to enjoin a state law or regulation that is inconsistent with federal law. The majority further reasoned that because the Medicaid Act expressly authorizes the Secretary of the U.S. Department of Health and Human Services to withhold Medicaid funds if a state does not comply with the Act’s funding requirements, by providing this remedy Congress had signaled its intent to foreclose other remedies. The full text of the Court’s opinion is available here.

Delaware Drug-related Regulatory Updates

Drug-related revisions to the regulations governing nurses and pharmacists practicing in Delaware took effect on March 11, 2015.  For nurses, “unprofessional conduct” that may lead to disciplinary action now expressly includes diverting, possessing, obtaining, supplying or administering illegal drugs.  For pharmacists, a new regulation expressly requires that dispensed medications returned to a pharmacy “by the public” must be disposed of in accordance with Delaware and federal controlled substances laws, and “proposed disposal methods must be authorized by the Delaware Office of Controlled Substances and federal authority.”

There are also changes to both the nursing and pharmacy regulations with respect to educational/training requirements.  For nurses, one Continuing Medical Education hour (60 minutes) now equals one contact hour (as opposed to 1.2 contact hours).  For pharmacists who administer immunizations and other injectable medications, the required CPR certification must be obtained through hands-on education as opposed to an online course.

OIG Issues New Advisory Opinion that Sheds Additional Light on How the Government Views Beneficiary Inducements

The federal Civil Monetary Penalties statute, 42 U.S.C. 1320a–7a, allows the government to impose Civil Money Penalties “(“CMPs”) when it determines that a health care provider has offered remuneration to a federal health care program beneficiary to influence the beneficiary to select the provider for services paid for by Medicare or Medicaid. Similarly, the federal Anti-Kickback Statute, 42 U.S.C. 1320a–7b(b), prohibits offering remuneration in exchange for referrals of federal health care program business. These statutes generally prevent a health care provider from advertising or offering free goods or services to federal health care program beneficiaries to induce them to obtain services from the provider that are payable by federal health care programs. However, exceptions to this general prohibition do exist, and earlier this month the OIG issued  Advisory Opinion No. 15-01, which sheds light on how the OIG evaluates arrangements where non-cash inducements are provided to federal health care program beneficiaries.

The Opinion was issued in response to a request by a provider of care coordination and intervention services (“Provider”) under a state’s Medicaid-funded Maternal Infant Health Program (the “Program”). To advance the Program’s goal of promoting healthy pregnancies, positive birth outcomes, and infant health and development, the Provider’s services include psychosocial and nutritional assessments, coordination with other medical care providers and Medicaid Health Plans, and family planning education. The state sponsoring the Program directed Program providers to market their services to the target population and to medical care providers who would be potential referral sources, including advertising and offering incentives, such as free diapers, to Medicaid beneficiaries participating in the Program. Accordingly, the Provider advertised and offered one free pack of diapers (with a value of less than $5.00) to Program-eligible Medicaid beneficiaries who attended an initial consultation with the Provider, and beneficiaries who enrolled in the Program continued to receive a pack of free diapers at each visit with the Provider up to the Program maximum of ten visits. The Provider also advertised and offered a free play yard, valued at approximately $50.00, to each beneficiary who completed all ten visits.

The OIG concluded that while the arrangement could potentially generate prohibited remuneration under the AKS if the requisite intent to induce or reward referrals of federal health care program business was present, it would not impose administrative sanctions under the CMP statute for two reasons. First, the OIG noted that the free diapers, with a value of less than $5.00 per item and $50.00 in the aggregate (assuming a beneficiary attended and received a package of diapers at all ten Program visits) are “nominal value” incentives that are permissible under the OIG’s long-standing interpretation of the CMP statute permitting non-cash incentives to a federal health care program beneficiary of no more than $10 per item, or $50 in the aggregate on an annual basis. Second, the OIG noted that both the diapers and the play yards satisfy the requirements of the Preventive Care Exception in the CMP statute, 42 U.S.C. 1320a–7a(i)(6)(D).

The regulatory criteria for preventive care incentives to be excluded from the definition of remuneration for purposes of the CMP statute are: (1) the incentive must be given to promote preventive care services, defined as  “prenatal service or a post-natal well-baby visits or a specific clinical service described in the current U.S. Preventive Services Task Force’s Guide to Clinical Preventive Services;” (2) the incentive cannot be cash or an instrument convertible to cash; (3) the value of the incentive cannot be disproportionately large in relationship to the value of the preventive care service; and (4) the delivery of the preventive care service is not tied (directly or indirectly) to the provision of other services reimbursed in whole or in part by Medicare or Medicaid.  42 C.F.R. 1003.101.  The OIG concluded that the free play yards, whether offered alone or in combination with the free diapers, satisfied all the regulatory criteria of the Preventive Care Exception. While it is easily understood how the Provider’s incentives comported with the first three regulatory requirements, it is less apparent how the Provider’s delivery of prenatal and post-natal counseling could be considered “not tied (directly or indirectly) to the provision of other services (namely, prenatal and post-natal well baby visits) reimbursed” by Medicaid, since a primary purpose of the Provider’s services is to encourage pregnant Medicaid beneficiaries to obtain proper prenatal and post-natal medical care. The OIG reasoned, however, that even though the Provider’s preventive services are “intended to supplement the medical care that Program beneficiaries receive, Program services are not tied, directly or indirectly, to the provision of that care.” In other words, Medicaid beneficiaries could avail themselves of the Provider’s services whether or not they obtained the recommended medical services.

While the AKS and CMP statutes generally prohibit health care providers from offering Medicare and Medicaid beneficiaries incentives to seek their services, the Preventive Care Exception is one of a number of statutory exceptions to the definition of remuneration in the CMP statute. Providers seeking to market and promote their services to federal health care program beneficiaries are well-advised to take into consideration the parameters set by these statutes and their related regulations for such activities.

  • Navigating Delaware's Legal Landscape