On July 26, 2024, Judge Sheldon Rennie of the Delaware Superior Court held that 24 Del. C. §2616(a)(8) was unconstitutional. The case is Kathy Callaway, PT, CHT, and Randeep Kahlon, MD v. Delaware Examining Board of Physician Therapists and Athletic Trainers, C.A. No. N23C-05-196 (Del. Super. Ct. July 26, 2024).
24 Del. C. §2616(a)(8) (the “Statute”) was enacted by the General Assembly more than 20 years ago. The Statute makes it grounds for discipline for a physical therapist or athletic trainer to have “engaged directly or indirectly in the division, transferring, assigning, rebating or refunding of fees received for professional services or who profits by means of a credit or other valuable consideration such as wages, an unearned commission, discount or gratuity with any person who referred a patient, or with any relative or business associate of the referring person.” This has been interpreted by the Attorney General to mean that physical therapists and athletic trainers cannot be employed by or contract with a referring physician or physician group.
An almost identical prohibition is contained within the licensing statute for massage therapists and technicians. And chiropractors have a similar prohibition (although there is a carve-out for relationships with physicians who work at least 10 hours per month in Delaware).
The Plaintiffs were Kathy Callaway, a physical therapist, and Randeep Kahlon, a physician. After attempts to have the Statute amended by the General Assembly failed, the Plaintiffs sued the Examining Board of Physical Therapists and Athletic Trainers (the “Board”) seeking various forms of declaratory relief, one of which was a declaration that the Statute is unconstitutional. Both parties moved for summary judgment, and Judge Rennie issued his opinion earlier this week. The Court found that the Statute is unconstitutional because it violates the principles of equal protection afforded by the 14th Amendment. Specifically, the Court found that the Statute treats physical therapists and athletic trainers differently from other similarly situated individuals. As noted by the Court, Title 24 regulates podiatrists, chiropractors, dentists, nurses, occupational therapists, optometrists, pharmacists, mental health professionals, psychologists, speech/language pathologists, dieticians, and massage therapists. Yet only physical therapists and massage therapists are subject to an employment restriction. The Court found that the Board had provided no conceivable basis for the disparate treatment, noting that when asked why an occupational therapist would be treated differently than a physical therapist, the Board had no answer.
The Board has 30 days to file an appeal to the Delaware Supreme Court. However, if there is not appeal or if the Delaware Supreme Court affirms the Superior Court’s decision, the prohibition against physicians hiring and working alongside physical therapists and athletic trainers will no longer exist.
On December 3, the Centers for Medicare & Medicaid Services (“CMS”) issued a new rule that enhances CMS’s ability to exclude or remove providers from participation in Medicare. According to a press release issued by CMS, the new rule is designed to “prevent physicians and other providers with unpaid debt from re-entering Medicare, remove providers with patterns or practices of abusive billing, and implement other provisions to help save more than $327 million annually.”
The new rule has several provisions. The first, and most significant given CMS’s stated purpose for the rule, is as follows:
CMS may now deny enrollment if the provider, supplier or owner thereof was previously the owner of a provider or supplier that had a Medicare debt that existed when the latter’s enrollment was voluntarily terminated, involuntarily terminated or revoked AND
There are terms under which the provider, supplier or owner thereof can avert the denial, including repaying the debt in full, or agreeing to a repayment schedule for the entire debt if the provider meets the criteria for an extended repayment schedule provided by 42 C.F.R. § 401.607.
To illustrate how this rule may be applied, consider the following example. Provider ABC is owned by Owner X. ABC terminates its enrollment in Medicare. At the time of the termination, ABC had an outstanding Medicare debt. Owner X leaves ABC less than a year after the termination. Thereafter, as long as ABC’s debt remains unpaid, Owner X may be excluded from participating in Medicare, either as a provider or supplier or as an owner thereof, if CMS determines that the outstanding debt poses an “undue risk of fraud, waste or abuse.” It is not clear from the rules what CMS considers to constitute an “undue risk”, and whether that is based on a dollar figure, or some other criteria. Owner X may avoid denial if he/she agrees to a repayment schedule for the debt, or pays the debt in full.
The new rule also expands the bases on which CMS can deny enrollment or revoke billing privileges based on prior felony convictions. Under the prior rule, CMS could deny enrollment to any provider, supplier or owner who was convicted of a state or federal felony in the prior 10 years. The new rule expands that to include “managing employees”.
CMS can now revoke Medicare billing privileges if the provider or supplier has a “pattern or practice of submitting claims that fail to meet Medicare requirements”, including the requirement that the service be reasonable and necessary. Many commenters to the proposed rule suggested that the provision was arbitrary and subjective, granting too much discretion to CMS. CMS responded by stating that “sporadic billing errors would not result in revocation”. CMS does not define “pattern or practice”, but listed several factors that would be considered, including: (1) percentage of submitted claims that were denied; (2) total number of claims denied; (3) the reason(s) for the claim denials; (4) whether there is a history of final adverse actions; (5) the time period over which the pattern has continued; and (6) how long the provider has been enrolled in Medicare. With respect to factors (1) and (2), CMS declined to establish objective numerical thresholds.
The new rule also provides that revoked providers must submit all remaining claims within 60 days after revocation. Revoked providers and suppliers may now only submit a corrective action plan where the revocation was based on noncompliance with the enrollment requirements, or the enrollment application. In other words, a revocation based on provider or supplier conduct is no longer eligible for a corrective action plan.
The new rule goes into effect on February 3, 2015.
In 2013, the Department of Justice collected over $3.8 billion in qui tam and non-qui tam settlements and judgments under the False Claims Act (“FCA”). Of the total amount collected, $2.7 billion, or 70% were in cases in which the Department of Health and Human Services (“HHS”) was the primary client agency. In comparison, cases from the Department of Defense represented just 1% of the total collections. Surprisingly, the total numbers for 2013 were actually slightly lower than 2012 numbers. In 2012, total collections were $4.9 billion, with HHS cases representing $3.1 billion, or 63%.
Notwithstanding the slight decrease in total judgments and settlements, it is clear that one type of case under the FCA is beginning to account for an increasing portion of the total: cases where the government has alleged that the services were not properly supervised by a physician or a qualified non-physician provider (“NPP”), such as a licensed physical therapist.
CMS regulations define three types of physician supervision:
In order to bill Medicare or Medicaid for certain services, the service must have been appropriately supervised under these definitions. The government takes the position that services billed but not properly supervised are not “reasonable and necessary” and are, therefore, false claims. For example, MRIs with contrast require direct supervision. Although the supervising physician need not be in the room during the treatment, the physician must be “immediately available” somewhere on the premises. What is more, it is not enough that any physician or NPP is immediately available – the supervising physician or NPP must have within his or her State scope of practice and hospital privileges the ability to perform the service or procedure.
The following recent settlements provide some insight into the types of services where the government is paying close attention:
It is worth noting that most, if not all, of the major settlements involved physician supervision over services that require direct supervision, rather than general or personal. This is perhaps not surprising: general and personal supervision are clearly and understandably defined, whereas CMS has declined to provide specific time or distance limits that would meet the definition of “immediate” and “interruptible” for direct supervision.
Direct supervision is required for most outpatient services. The following is a non-exclusive list of services that require direct supervision:
Understanding the level of supervision that a particular service or treatment requires is extremely important, particularly for health care providers who bill for services that they do not perform themselves. The consequences for billing for services where the requisite level of supervision was not present could be dire and could include not only significant financial liability, but exclusion from federally funded healthcare programs.
