Jeff Sessions' DOJ won't defend the Affordable Care Act-- What does that mean?

The Department of Justice (DOJ) in a brief filed in a federal court on June 8, 2018 said it will not defend the Affordable Care Act (ACA) in a lawsuit claiming the ACA's individual mandate, and therefore the entire law, is unconstitutional.

Separately, 16 states and the District of Columbia, which were granted legal standing to intervene in the case, on June 8, 2018 filed a brief defending the ACA.

The Lawsuit Details

The Supreme Court in 2012 upheld the ACA's individual mandate, ruling that although Congress could not force U.S. residents to purchase insurance, lawmakers could impose a tax penalty on individuals who did not enroll in health coverage.

But, a group of 20 Republican-led states, led by Texas Attorney General (AG) Ken Paxton (R) and Wisconsin AG Brad Schimel (R), in February filed a lawsuit in the U.S. District Court in the Northern District of Texas, in which they claimed that a recently enacted tax reform law eliminates the individual mandate's tax penalty starting in 2019 by setting the penalty U.S. residents must pay for remaining uninsured under the ACA at $0. The AGs in the suit argued that by zeroing out the tax penalty, the tax reform law has rendered the individual mandate, and by extension the entire health reform law, unconstitutional.


DOJ's move does not have any immediate effects on any ACA provisions, but the Post reports that it does place the ACA "on far more wobbly legal footing in the case," and "raises the possibility that major parts of the law could be struck down." According to Politico's "Pulse," the case still must move through the courts, and many experts have said they do not believe the 20 states challenging the ACA will prevail in the lawsuit.

California AG Xavier Becerra (D), who has filed a motion in the case in support of the ACA, said, "The … lawsuit is based on a dubious legal claim with the sole goal of stripping Americans of their health care."

Don Verrilli, who served as Solicitor General under former President Obama's administration and successfully defended the ACA in the 2012 Supreme Court case, criticized DOJ's decision, saying the department "has a duty to defend federal laws when reasonable arguments can be made in defense of the law."

Larry Levitt, senior vice president for health Reform at the Kaiser Family Foundation (KFF) and senior advisor to KFF's president, said, "Any time there's uncertainty about the future, insurers are going to build extra cushion into their premiums to make sure they get revenues while they can"


Ultimately, if the plaintiffs win, it could be a deathblow to the ACA, however, it would be equally a death blow to the rule of law, as the DOJ is constitutionally bound to uphold the laws enacted by congress. Bagley, in a blog post wrote, "If [DOJ] can just throw in the towel whenever a law is challenged in court, it can effectively pick and choose which laws should remain on the books." He continued, "That's not a rule of law I recognize. That's a rule by whim. And it scares me."

(Armour, Wall Street Journal, 6/7; Goldstein, Washington Post, 6/7; Beech/Lambert, Reuters, 6/7; Scott, Vox, 6/7; Diamond, "Pulse," Politico, 6/8).

*Adapted from Advisory Board 

How to License a Residential and Outpatient Substance Abuse Rehab in New Jersey

The opioid epidemic is raging, and in places like New Jersey, the need for residential and outpatient treatment is badly needed.

Our firm has identified the key steps to licensing a residential or outpatient substance abuse facility in New Jersey. It is a document specific process, which must be very accurate before a site visit and subsequent inspection is done and certainly before the license is granted.


To license a facility in NJ, the following is an overview of key information and steps for licensing:

Agency in NJ: Dept of Health, Office of Licensing (OOL)  and Technical Assistance Unit (TAU)

Licenses are not transferable so a new license must be submitted on new ownership. 

Submit: 1 application form and 1 copy

Fees: Outpatient: $2,050; Residential $1000 + $500 per bed

3 phases: 

  • App review
  • Physical Plant inspection
  • Licensing

Qualified and CPR trained staff must be hired before licensing.

There is a specific list of persons needed: Clinical director, licensed counseling staff, etc.

50% of counseling staff must be licensed.

There is a 60 day notice before coming on site by the state for an inspection.

Partial list of key documents needed:

  • EIN
  • Certificate of Incorporation or partnership
  • Org chart
  • Out of state compliance 
  • Tentative Staffing roster with resumes
  • Complete Policies and Procedures manual
  • Emergency plan
  • Job Descriptions

Partial list of Physical Plant documents needed:

  • Certificate of Occupancy needed with proper zoning
  • Lease agreement
  • Fire inspection
  • Smoke or Fire detection certification
  • Elevator and Sanitation certification if applicable
  • Boiler and sprinkler certification 
  • Housekeeping contract
  • Pest control contract

Once granted, the license is conditional for 6 months, and will be surprise-inspected within that time frame.

Licensing and getting a facility up and running is complicated and intense. Doing it correctly means the difference between starting in 4 months vs starting in over a year+.  If you have any questions or comments on how to license or starting your facility, please let us know at "The intersection between medicine and law." 

Low Voter Turn out

I wrote this to someone in response to them saying that low voter turnout was because of American laziness:

“While some of what you said may be true, the real reason why there is low voter turn out is because some citizens simply can't afford to vote, as a vast majority of voting municipalities the day to vote is historically a Tuesday, a workday.

The US was an agrarian society at the founding, so having voting mid week wasn't an issue. Sunday was a day of rest, and Monday was needed for travel to the voting booth.

But America today is a different landscape for workers—in a culture where Americans get little time off, whether it’s to vote or do anything else. Forty-two percent of Americans didn’t take a single vacation day last year, partially because they felt too economically insecure to afford it and partially because many of their employers actively discouraged them from doing so. Meanwhile, 23 percent of American workers did not receive paid vacation time, 24 percent did not receive paid holidays, and nearly 40 percent did not receive paid sick leave.

As a result, a Caltech/MIT survey on voting patterns discovered that three of the five most common reasons given by eligible adults who did not vote had an economic component to them: they were too busy, they struggled with transportation, or they faced registration problems. One telling statistic is that 40 percent of voters reported waiting in line to vote—with 17 percent being forced to wait for more than half an hour. That’s prohibitively expensive in a country where time is literally money.

Not surprisingly, the end result is that low-income Americans turn out to vote in far lower numbers. The U.S. Census found that only 47 percent of eligible adults with family incomes of less than $20,000 a year voted in the 2012 presidential election, compared to 80 percent of those whose earning exceeded $100,000. Overall, only 19 percent of likely voters come from families with incomes of less than $30,000 a year, even though that same group comprises 46 percent of nonvoters. Bottom line is that people can't afford to vote.

Childcare costs, leaving work in the middle of the week is too expensive for many people. Very very sad. Effectively disenfranchisement.

Clinical Laboratories Beware: A Summary of the OIG’s Unfavorable Advisory Opinion 16-12


On November 28, 2016, the U.S. Department of Health and Human Services’ Office of Inspector General (OIG) issued OIG Advisory Opinion 16-12, concerning whether a clinical laboratory may provide free labeling of test tubes and specimen collection containers to dialysis facilities.1 The OIG publishes such advisory opinions in response to written requests to review an existing or proposed business arrangement in light of the OIG’s fraud and abuse authorities. Favorable advisory opinions protect the requestor(s) from administrative penalties so long as the arrangement is implemented and maintained as described in the request submitted for the OIG’s review. Unfavorable advisory opinions are also directly applicable only to the actual requestor(s) under the specific facts described in the opinion. Although not binding or controlling on the healthcare industry at large, all of the OIG’s advisory opinions have the potential to provide relevant and important insight into the OIG’s current enforcement priorities and interpretations of laws and regulations, as well as critical guidance in an area that lacks extensive case law.

Advisory Opinion 16-12 addresses whether the Requestor, a laboratory that provides testing services to dialysis patients, may provide free labeling of test tubes and specimen collection containers to some, but not all, of the dialysis facilities with which it does business (the “Proposed Arrangement”). If not provided for by another source, such labeling of test tubes and specimen collection containers is performed internally by the dialysis facilities’ own personnel at the dialysis facilities’ expense. Under the Proposed Arrangement, the Requestor would offer such free services on a case-by-case basis to certain dialysis facilities. According to the Requestor, the Proposed Arrangement would help the Requestor compete with other laboratories which, according to the Requestor’s submission to the OIG, already provide such free labeling services to dialysis facilities. The Requestor represented that its decision whether to offer the free labeling would depend on whether such an offer would help obtain the business of the particular dialysis facility.

Relevant Background

A. Advisory Opinion 08-06 and Subsequent Change to ESRD Reimbursement

The facts of the Proposed Arrangement at issue in Advisory Opinion 16-12 are identical to the facts contained in previous OIG Advisory Opinion No. 08-06, which was solicited by the same Requestor in 2008.3 The primary difference between the two advisory opinions is that, subsequent to Advisory Opinion 08-06, the Centers for Medicaid & Medicare Services (CMS) made changes to the way it reimburses for services related to treating end-stage renal disease (ESRD).4 In making these changes, CMS acknowledged that physicians in ESRD settings sometimes order valuable and necessary laboratory tests that are not directly related to treating ESRD, and therefore had not been covered in the bundled reimbursement.5 Thus, the change in ESRD reimbursement included a mechanism whereby CMS would provide supplemental reimbursement to independent laboratories, hospital-based laboratories, and ESRD facilities for such laboratory services not already covered by the ESRD bundled payment. Under the previous system, “separate payments for administrative tasks associated with laboratory tests, such as labeling test tubes and specimen collection containers,” were prohibited.6

B. The OIG’s Focus on Clinical Laboratories

Utilization of clinical laboratory services has seen a tremendous increase as more options for services, such as various genetic and toxicology testing, become available.7 The OIG has taken notice of such increased utilization and has specifically listed clinical laboratory services as a target focus area in its annual work plans in 2015, 2016, and 2017. The OIG has a longstanding position that “the provision of free or below-market goods or services to actual or potential referral sources” is viewed as suspect for potentially violating the Anti-Kickback Statute (AKS).9 The OIG has further articulated that “when a laboratory offers or gives an item or service for free or less than fair market value to a referral source, an inference arises that the item or service is offered to induce the referral business.”10 Such an inducement could violate the AKS, which makes it a criminal offense to knowingly and willfully offer, solicit, pay, or receive any remuneration in exchange for federal healthcare program business.11 Importantly, the term “remuneration” under the statute is not limited to a direct exchange of money, but extends to the conferral of any tangible benefit.

The OIG’s Analysis in Advisory Opinion 16-12

Upon reviewing the Requestor’s submission, the OIG concluded that the Proposed Arrangement posed “more than a minimal risk of fraud and abuse.”12 According to the OIG, under the Proposed Arrangement the Requestor would provide a tangible benefit directly to dialysis facilities because “most, if not all, of the services the Requestor would provide…would substitute for services the dialysis facilities otherwise would be required to perform at their own expense,” and such an expense is not reimbursable by CMS regardless of it occurring at an ESRD facility. By alleviating a non-reimbursable duty that the dialysis facilities would otherwise be required to perform, the Requestor would be providing remuneration to those facilities, thereby leading to the inference that the Requestor was trying to influence the dialysis facilities’ laboratory preferences. The OIG noted that such an inference is “consistent with, and supported by, the Requestor’s representation that the labeling services would be offered to the dialysis facilities when necessary to retain or obtain their business.”

Finally, though technically not binding on any entity other than the Requestor, Advisory Opinion 16-12 states that similar arrangements involving Requestor’s competitors may “run afoul” of the AKS. It is important to note that the OIG’s advisory opinion is not a definitive finding that the Proposed Arrangement actually violates the AKS because such a violation requires specific intent, which the OIG acknowledged is fact-specific and beyond the scope of such an opinion. Thus, while such arrangements would likely result in a negative inference regarding intent from the OIG, a laboratory or dialysis facility currently involved in such an arrangement could possibly rebut the inference with facts demonstrating the lack of such unlawful intent, although this would be a steep, uphill battle.


Advisory Opinion 16-12 is the latest example in a continuing trend of government enforcement in the laboratory space. In 2015, several laboratories settled multi-million dollar False Claims Act (FCA) matters with the U.S. Department of Justice (DOJ) involving CMS reimbursement for laboratory services.15 For example, in April 2015 Health Diagnostic Laboratory (HDL) agreed to pay $47 million to settle allegations that it had paid physicians a “processing and handling fee” worth between $10 to $17 per referral when the physicians ordered certain blood tests, allegedly in violation of the AKS and the FCA.16 In October 2015, Millennium Health agreed to pay $256 million for allegedly providing free drug screen cups to clinics in exchange for physicians ordering drug screens and genetic tests the government believed to be medically unnecessary, also allegedly in violation of the AKS and the FCA.17 Finally, in addition to the OIG’s advisory opinion, CMS has also stated in its own guidance that a laboratory providing free items or services to a physician could also violate the Stark law

Based on the guidance and settlements discussed above, laboratories should remain extremely cautious of providing any benefit to a referral source, and referral sources, such as providers, should be careful when accepting one, as any such benefit could potentially be viewed as an unlawful inducement in violation of federal fraud and abuse laws.

Reposted from Scott R. Grubman and Gregory A. Tanner, Chilivis, Cochran, Larkins & Bever, LLP, Atlanta, GA


Can you prescribe your patients controlled medications remotely under the Federal Ryan Haight Act without ever meeting them?

Can you prescribe your patients controlled medications remotely without ever meeting them? These medications include suboxone, buprenorphine, and any DEA schedule II and III drugs. ( It would appear NO under the Federal Ryan Haight Online Pharmacy Protection Act. (

The Federal Ryan Haight Online Pharmacy Protection Act is a law that came about in the late 90s with the proliferation of online pharmacies to stem the fraudulent distribution of controlled meds without prescriptions.

It's very restrictive, because there is an absolute requirement for one (1) in-person visit for a controlled med to be prescribed. However, there are seven (7) exceptions and I'll explain the easiest one to allow you prescribe.  The easiest exception for when the patient is located at a facility registered with the DEA and is being treated by a DEA-registered provider who is in the physical presence of the patient.

Real Life Example For Illustration 


  • Patient A is at a mental health clinic that is not registered with the DEA.
  • Patient A is in the physical presence of a mental health worker, but is not in the physical presence of a DEA registered provider.
  • Psychiatrist B is registered with DEA and treats the patient via telemedicine.
  • Physiatrist B’s treatment includes a prescription for a controlled substance.

DEA finds that this issuance of a prescription via telemedicine violates the Ryan Haight Act.


The easy solution is to find a local to your patient DEA registered clinic (ER, Urgent Care, etc) who has a Doc/NP/PA who is registered with the DEA (most prescribers are), and have patient go to that clinic, and in the presence of that DEA registered provider, have your remote visit and prescribe controlled meds. 

Not the most elegant solution but there are some proposals for new laws to be come in, however they have not been passed as of writing this article. (

The “Improving Access to Remote Behavioral Health Treatment Act” would allow certain community mental health centers and addiction treatment centers to obtain DEA registration as a clinic, thereby allowing telemedicine providers to prescribe controlled substances to patients present at those sites without the need for an in-person examination. Currently, treatment  sites are restricted to DEA-registered hospitals and some very limited other non-hospital clinics.

If you have more questions, please contact my law firm at or if you have need more advice on how to stay compliant. 


Corporations Can Hire Nurse Practitioners In California

There is no restriction on who can hire a nurse practitioner in California. However, there needs to be a contract between a NP and a physician to supervise.

"In California, nurse practitioners may form professional corporations, but there are no restrictions on what type of entities can employ nurse practitioners. Nevertheless, the employment of nurse practitioners is generally restricted due to the physician supervision requirement."

What's interesting about this supervision, the supervision really has to do with prescriptions for drugs or medical devices to patients. Not their medical records etc on a daily basis, like you would a medical resident or PA

"If a physician employs or contracts with nurse practitioners (“NPs”) or physician assistants (“PAs”), the physician must properly supervise these mid-level practitioners to avoid liability under Section 2264.  With respect to NPs, a physician: (1) may only supervise four at any one time, and (2) must develop written standardized protocols and procedures in order to allow the NP to furnish drugs or medical devices to patients.[13]  With respect to PAs, a physician must exercise control by one or more of the following: (1) examination of the patient the same day care is given to the patient by the PA; (2) countersigning and dating all medical records written by PA within 30 days; or (3) review, countersign, and date a minimum 5% sample of medical records written by the PA."

California Hospital Paid More Than $3.2 Million to Settle Allegations That It Violated Stark Law

The reality of Stark Law is always present and very real.

Last year, according to a press release by the Justice Department, Tri-City Medical Center, a hospital located in Oceanside, California, agreed to pay $3,278,464 to resolve allegations that it violated the Stark Law and the False Claims Act by maintaining financial arrangements with community-based physicians and physician groups that violated the Medicare program’s prohibition on financial relationships between hospitals and referring physicians.


The Stark Law generally forbids a hospital from billing Medicare for certain services referred by physicians who have a financial relationship with the hospital unless that relationship falls within an enumerated exception. The exceptions generally require, among other things, that the financial arrangements do not exceed fair market value, do not take into account the volume or value of any referrals and are commercially reasonable. In addition, arrangements with physicians who are not hospital employees must be set out in writing and satisfy a number of other requirements.


The settlement resolved allegations that Tri-City Medical Center maintained 97 financial arrangements with physicians and physician groups that did not comply with the Stark Law. The hospital identified five arrangements with its former chief of staff from 2008 until 2011 that, in the aggregate, appeared not to be commercially reasonable or for fair market value. The hospital also identified 92 financial arrangements with community-based physicians and practice groups that did not satisfy an exception to the Stark Law from 2009 until 2010 because, among other things, the written agreements were expired, missing signatures or could not be located.

“Patient referrals should be based on a physician’s medical judgment and a patient’s medical needs, not on a physician’s financial interests or a hospital’s business goals,” said U. S. Attorney Laura E. Duffy of the Southern District of California. 


This settlement illustrates the government’s emphasis on pursuing health care fraud cases and is another example of the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. 


One of the most powerful tools the Justice Department has is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $27.1 billion through False Claims Act cases, with more than $17.1 billion of that amount recovered in cases involving fraud against federal health care programs.


What we can learn from this case is that for you as a physician group, hospital, or provider who is taking Medicaid or Medicare funds and doing Designated Health Services (DHS) is to ensure that your financial arrangements for clinical services and otherwise do not exceed fair market value (FMV), do not take into account the volume or value of any referrals, and are commercially reasonable. If you are a physician who is not hospital employee, then your agreement must be set out in writing. However, your arrangement may also fall into a ‘safe harbor’ exception to Stark Law, which means that Stark Law may not affect as much or at all.

If you have questions or comments, or if your arrangement could fit into a ‘safe harbor’ then please contact our office at any given time.  

Call for a free 15 min consultation today





(310) 896-5183

Creating a Vivitrol/Naltrexone Clinic to Help Fight the Opioid Epidemic In the $35 Billion Addiction Market

There is a huge need for outpatient programs in every state that offer Vivitrol/naltrexone because of the opioid epidemic that has taken our nation.

The Opioid Epidemic

The epidemic has ravaged our country. Of the 20.5 million Americans 12 or older that had a substance use disorder in 2015, 2 million had a substance use disorder involving prescription pain relievers and 591,000 had a substance use disorder involving heroin.

It is estimated that 23% of individuals who use heroin develop opioid addiction. Drug overdose is the leading cause of accidental death in the US, with 52,404 lethal drug overdoses in 2015.

Because of the epidemic, the addiction market is $35 Billion a year, according to Forbes Magazine.

What this means is that there is a huge need and demand for addiction outpatient services, such as Vivitrol injections and Naltrexone implants, that insurance is currently mandated to pay for to help save people from crisis.

What is more, services that can be delivered by addiction companies owned by non-clinicians and clinicians alike.

What is Naltrexone?

Naltrexone blocks the effects of opioid medication, including pain relief or feelings of well-being that can lead to opioid abuse. An opioid is sometimes called a narcotic. Naltrexone is used as part of a treatment program for drug or alcohol dependence.

Vivitrol is the brand name of naltrexone.

Naltrexone is used to prevent relapse in people who became dependent on opioid medicine and then stopped using it. Naltrexone can help keep you from feeling a "need" to use the opioid.

Naltrexone is also used to treat alcoholism by reducing a clients' urge to drink alcohol. This may help client drink less or stop drinking completely. Naltrexone will not cause a client to "sober up" and will not decrease the effects of alcohol you recently consumed.

It is fast to diagnose and to deliver, meaning that with right marketing and partnerships, there will always be someone needing and benefiting from it.

Outpatient Clinic Naltrexone Reimbursement by Insurance and Private Pay

Insurance companies are much more likely to pay and quicker to reimburse for medical/pharmacological intervention than mental health for addiction, although they are both necessary for a client’s recovery.

The cost of naltrexone differs by insurance type and is often covered by a client’s insurance.

For instance, Vivitrol reimbursements is usually range from $2,000 to $5,000 per month. Naltrexone implants, which is a simple 10 min outpatient procedure can pay from $6,000 to $26,000

(Stahl, S. M. (2014). Prescriber's guide: Stahl's essential psychopharmacology (5th ed.). New York: NY: Cambridge University Press.)

But keep in mind, sometimes insurance companies will require you to submit a prior authorization before they will cover naltrexone. A prior authorization requires you to meet certain criteria. Please ask us if you have questions about what prior authorization.

Starting an Outpatient program

Unfortunately, addiction is around us everywhere. But, we can help those who are suffering by having simple but effective outpatient program that can get people the help they deserve.

The steps are simple in concept, but, heavily regulated in practice.

The first steps, is to find an outpatient facility that is up to code with local zoning ordinances. For most municipalities, a general commercial zoned building is enough, but check with your local zoning office to be sure.

Second step, is to license that facility. Every state, has its own licensing criteria and procedures for licensing a medical or outpatient program. If you are unsure, contact a local licensing expert.

Third step, finding staffing, with the most important person being a licensed physician to help diagnose, write orders, perform some outpatient services, and chart with additional staff to assist the physician with outpatient procedures, and others for mental health services, and others to do billing, HR and other back office duties. 

Fourth step, making sure that all medical records, and procedures are done within regulation and compliant with any law.

Fifth step, is to be able to send out proper bills to the client’s insurance companies that fit within their definition of medical necessity, and be compliant.

If you have any questions about anything within this article, Khatri Med Law can assist you with answers, and assist a complete start to finish services for a turnkey Naltrexone Implant/Vivitrol business.

Call for a free 15 min consultation today.


Khatri Med Law, PC

“At the intersection of medicine and Law”


Rebilling Denied Claims and Appeals in Substance Abuse Billing

For substance abuse rehab services where overhead is very high, think mortgage/lease, payroll, ancillary services, having a couple of insurance claim denials can be the difference between thriving, and thinking about shuttering. I’ve seen it many times at this point in my healthcare career.

As kids playing in the schoolyard, we get ‘do-overs.’ Do you get a ‘do-overs’ as a rehab facility if there is a denied claim? The short answer: yes. The long answer: I wouldn’t necessarily call appealing and billing again a denied claim a ‘do-over,’ but the important thing is that if you suffer a denial, you can still get paid. Welcome to the world of ‘rebilling.’

What is a rejected claim?

What is the difference between a claim and a denial?  According Universal American article, “Rejected claims are defined as claims with invalid or missing data elements. Some examples are illegible claim fields or missing or invalid codes and/or missing or invalid member or provider ID numbers.” This M-Scribe article further explains that these errors “prevent the insurance company from paying the bill as it is composed, and the rejected claim is returned to the biller in order to be corrected.”

Two take away points here:

  1. Rejected claims are returned to the healthcare provider without registration in the the insurance company’s claim processing system.
  2. The rehab facility then has a certain period of time—as defined the insurance company—to correct the claim.

If the rejection occurs because the provider failed to submit the original claim or the corrected claim on time, the facility will have their claim rejected. This is why billing or rebilling promptly and timely is super important, and should be done accurately.

What is a denied claim?

These occur after the insurance company receives your claims, and they’re typically the result of not proving medical necessity or other fatal errors. There are about 9:

1.    Lack of medical necessity

2.    Data-entry mistakes

3.    Wrong insurance information

4.    Missing claim information (e.g., ICD-10 codes, G-codes, and modifiers)

5.    Missing or invalid referral/authorization

6.    Credentialing or provider issues (licensing).

7.    Submission outside of timely filing window

8.    Wrong subscriber information

9.    Failure to submit insurance requested information


What does a billing or rebilling service do when you have a denied claim?

You will know your facility’s claim was denied, because you will receive notification on the Explanation of Benefits letter (EOB). When you receive a denial you, your billing company, or the rebilling company should:

  1. Identify the error code, or reason for denial.
  2. Contact the insurance company to clarify the reason for the denial.
  3. Follow the insurance company’s instructions for correcting and rebilling the claim, including finding medical necessity in existing charts.
  4. Make sure they document this conversation—along with any and all interactions they have with the insurance company.
  5. Appeal



Appeals come into play when you as the facility don’t agree with the insurance companies final determination. For example: you or your billing company correct a claim and rebill, and you still receive a denial. In these situations—the denied claim should be appealed within seven (7) days of the insurance company’s final determination, as you’ll have a 67% chance of getting paid. Conversely, if you wait any longer, the denied claims have a 60% chance of not getting paid.

Lastly, when an appeal is made for your claim, a rebilling company will make sure they provide the insurance company with a clear narrative, all related patient documentation and charting, and documentation of all interactions you had with the insurance company in relation to the denial.


What happens if your facility keeps getting denials?

A good billing or rebilling company can help you get a system to address every denial as soon as you get it. For instance, they can help get a system to help you:

  1. Know the reason for denial and/or code.
  2. Logging this information.

Why have a log? Because these reasons can help a company get to the root cause of systemic issues. For example, if a denial is due to lack of coverage or failure to obtain authorization, you know you’ve got a front office issue. If medical necessity isn’t demonstrated or the insurance carrier requirements aren’t met, you can understand that the issue with the rehab. If the wrong codes were billed or there are modifiers missing, you know it’s a billing-related problem.

Once the source of the denials is figured out, the rebilling company can help you address the issues, and get you paid. For instance, the company help you create better policies and procedures to eliminate future errors, they can make sure your staff is trained thoroughly. They can help you ensure through trainings that everyone understands insurance company requirements, and the rehab’s policies and procedures. They can also help a rehab create a culture of accountability. After all, what’s the point of having standard polices and procedures if no one has to be held to them?


Khatri Med Law PC can handle your rebilling and insurance claim needs. KML is lead by a seasoned healthcare attorney, doctor, and treatment center owner, and has recovered hundreds of thousands of dollars for many companies. Please call us for further consultation or information, anytime.; (310) 896-5183;

The Insurance Benefits of Accreditation for Drug Rehabs During the Time of Trump

Billing medical insurance for drug rebab services can be tricky, especially when the Affordable Care Act is under attack and has already been repealed in the US House, which is why insurance companies are looking more and more to accredited rehab facilities to ensure that their reimbursements are only going to highly effective programs. The process of going through accreditation by companies such as Joint Commission, clinicians can become informed not only about how to effectively chart for medical necessity, but also about the proper way to prepare for insurance billing and reimbursement. As a behavioral health service provider, you give clients the ability to get back to living life without drug and new shot at life; as a businessperson, you should reap the benefits of quick reimbursement.

Accreditation shows high functionality of a company through standardizing:

  • Client records

  • HR

  • Emergency management

  • Infection control

  • Patient care and services

  • Information management

  • Performance improvement

  • Quality and assurance programs

The number of clients that need drug rehab services is phenomenal. As millions of clients still suffer under the opioid epidemic, millions have insurance and qualify for services. With this many clients needing care and the ACA's mental health and rehab benefits on the chopping block by the Trump administration, any practitioner or rehab who interacts with insurance companies needs to be best prepared for the future.

Currently, the trend has been that more insurance providers are requiring accreditation before they reimburse because of how unregulated the drug rehab industry has historically been before the ACA, and recently at time of writing this, has been intensifying presumably because of the unsure future of mental health benefits. For instance, talking with a detox center client of mine just last week, they told me they turned down four detox clients with good plans (low deductible, co-pay, and total out-of-pocket) because the detox center did not have an accreditation. What's more, if a rehab wants to take any type of Federal, State, or Military insurance plan, those plans specifically will want accreditation.

Accreditation is also an integral part of many Blue Cross Blue Shield, State, Federal, and smaller commercial insurance plans. Rehabs, especially those working with detox and IOP clients, this accreditation becomes more pertinent as there is more competition out their for them. Unless the staff or program director staff has much educational training on this, it is almost impossible to know the standards or the ramifications of the accreditation processes.

Another benefit of accreditation, is that billing may become less opaque. What may seem complex, but when you comply with the accreditation rules, the process can be quite smooth because your clinicians know what to chart for. What's more, being accredited will allow you to advertise and use that logo on your website.

Conclusion: Accreditation can be a difficult process. However, this is not an arduous process if you find professionals who know what to do and when to do it. Accreditation is one way to alleviate some of the hassles of insurance reimbursement for you and your clients. Give your company the best shot at success.

About the Author: Rishi Khatri is both an healthcare attorney and doctor and has worked in healthcare clinical practice and law since 2008. He advices and consults for a vast variety of healthcare companies for compliance, mergers and acquisitions, clinical practices, accreditation, including drug rehabs.

Please contact him at or (310) 896-5183 for questions or free consultation.

Management Services Organizations (MSO) vs The Anti-Kickback Statute (AKS)

I've written on this before (see above), but this time, I wanted to tackle a real life example.

With the continued growth of the healthcare industry, it only makes sense that Management Services Organizations (“MSO”) have grown rapidly in number and profitability in the last decade as well. MSOs are companies that provide administrative services such as back office management, billing, marketing, HR, etc to healthcare providers or organizations, allowing healthcare providers to concentrate on delivering high quality healthcare services.

However, there are many laws that MSOs and providers must stay compliant of. At the Federal level, those laws, to name two, are Stark Law and Anti-Kickback Statute. Each state has their own individual laws as well, but the Office of Inspector General ("OIG") of the Federal Department of Health and Human Services is highly influential to State decisions. Stark Law and AKS both have civil and criminal liability.

The OIG has given some guidance (Advisory Opinion No. 11-17 ) for MSOs. A request for the OIG review was for a contract in which the Requestor "MSO," was a laboratory services management company--

“Under the [Agreement], the MSO proposes to provide allergy testing and immunotherapy laboratory services and related items to primary care physicians and physician practices ("Physicians") within the Physicians' medical offices. Specifically, the MSO would enter into exclusive contracts with the Physicians to operate an allergy testing laboratory on the Physicians' behalf.

The MSO would provide all of the necessary laboratory personnel (including laboratory technicians), equipment, supplies, training, and billing and collection services to Physicians on an as-needed basis. Additionally, the MSO would assist the Physicians with marketing allergy services to patients by providing patient education materials and reviewing patient files to identify candidates for [The MSO's] allergy laboratory services.

The Physicians would provide: (1) space within their offices to operate the laboratory; (2) administrative staff for patient scheduling and other administrative tasks; (3) general medical office supplies and furniture; (4) general liability and malpractice insurance; and (5) physician supervision and interpretation of laboratory results.

The Physicians would bill Federal health care programs, [Medicare and Medicaid], and third-party payors, [commercial insurance companies], for the laboratory items and services provided under the Agreement under the Physicians’ provider identification numbers. The MSO would provide billing and collection services on behalf of the Physicians for the allergy testing services.

In consideration for the MSO's services, under the Agreement, Physicians would pay the MSO a fee equal to 60% of the Physicians' gross collections from the testing and services, a fee that The MSO stated as equal to fair market value (FMV).”

The Physicians were to agree to use the MSO as their exclusive provider of antigen-based immunotherapy laboratory services and as the sole allergy testing unit for the Physician’s patients.


There are ‘exceptions’ under the AKS, which are equipment leases and personal services and management contracts. In this case, they could have been potentially applicable (42 CFR 1001.952(c) and (d)).  


 The OIG concluded that the Agreement would not qualify for safe harbor protection under the anti-kickback statute for two reasons:

1)   The services would be provided on an as-needed basis; the agreement therefore would not specify the schedule of intervals, the precise interval length, or the charge for such intervals.

2)   The relevant safe harbors provide that total compensation to be paid under the contract must be set in advance and cannot be determined in a manner that takes into account the volume or value of any business generated between the parties that is payable by a federal health care program (such as Medicare). 

(Keep in mind, there are similar laws as the AKS in many states, such as CA, FL, and NY.)

The salient point the OIG noted is is that in the MSO agreement, the Physicians would pay the MSO a percentage of their gross collections from insurance, Medicare and Medicaid. For services under their arrangement, the total fees would not be set in advance, and they would be based, in part, on the volume or value of the reimbursement from insurance, which did not pass the seven point requirements for personal services contract safe harbor.

The OIG concluded that the Agreement does not fit into a safe harbor. The OIG further stated it must examine “the totality of the facts and circumstances to determine the extent of the risk posed by the Agreement” with respect to inducements to refer.


Ultimately, OIG determined that the Agreement would not be afforded protection because:

1)    “Percentage compensation arrangements are inherently problematic under the anti-kickback statute, because they relate to the volume and value of business generated between the parties, rather than the fair market value of the services provided.” Which is what the MSO agreement was to rely upon.

2)   The MSO was going to review the Physicians patient files to identify marketing candidates for the MSO lab services, which the OIG said was "a suspect marketing activity." The OIG stated: “We are concerned that this type of marketing activity could encourage Physicians to order medically unnecessary tests that could pose a risk of patient harm.” 

All this being said, that are numerous ways to fit MSO agreements into 'safe harbors exceptions,' and each state has their own exceptions too for MSO contracts. Khatri Med Law can help you build a safe, compliant, profitable and effective MSO in whatever state you wish to conduct business in.

If you have further questions or comments, please give us a call at (310) 896-5183 or for more information or consultation.

Bad Faith Denial of Insurance Coverage

I decided to write a new blog about Bad Faith denial of coverage after hearing so many stories from my clients and their patients and how so many of their legitimate insurance claims were being denied, for little or no reason.


It is simply when an insurance carrier refuses to pay a claim without a reasonable basis or even if insurer has a reasonable basis for denial, failing to properly investigate the claim in a timely manner. It can also mean a failure by an insurance carrier to defend or indemnify or settle claim within policy limits without a reasonable basis, or failing to properly and timely investigate or defend the claim. 

Each state has their own law. Where I currently live, in California, to prove an insurance bad faith claim, the insured must prove:

  1. Benefits due under the policy were withheld; and
  2. The reason for withholding benefits was unreasonable or without proper cause. 

In other words, the insurance company must have acted unreasonably or without proper cause in withholding benefits that were warranted under the policy.

What To Do If Your Insurance Carrier Is Not Cooperating

You can make an appeal directly through the insurance companies and their process. However, if they aren’t cooperating or giving you a hard time, it might be time to take to it to the next level.

All plans must have an external review process to keep appealing if you have completed the health plan's internal appeals process and are not satisfied. Contact a competent law firm, attorney, and your state insurance division for help.

The Federal Center for Medicaid and Medicare Services (CMS) can also enforce mental health parity if states do not enforce the law. If you have concerns that your insurance plan is not following parity, contact the CMS help line at 1-877-267-2323, extension 6-1565.

If you have a self-insured plan—a plan where the employer assumes the financial risk for providing health care benefits to its employees—the U.S. Department of Labor (DOL) has authority to enforce parity. To find out more, call the DOL’s toll free number at 1-866-444-3272 or contact a benefit advisor in one of the DOL regional offices.

If you have a health plan under Medicare or Medicaid there are different appeals processes. Contact your plan for details.

More Evidence of Bad Faith

There are other types of insurance conduct which may be bad faith and can further corroborate how the insurance company is not acting fairly:

1. An insurer may be acting in bad faith if the insurer delays, discounts or denies payment without a reasonable basis for its delay, discounting or denial.

2. Failure of insurer to acknowledge and reply promptly upon notification of a covered claim.

3. Failure of Insurer to pay a covered claim as a result of failing to do a proper, prompt and thorough investigation as to reasonable liability and damages based upon all available information.

4. Failure of insurer to affirm or deny coverage of claims within a reasonable time upon receipt of claim and/or proofs of loss.

5. Failure to offer or attempt to effectuate prompt, fair and reasonable evaluation of damages and equitable settlements of claims to insured within a reasonable time where liability is reasonably clear.

6. Insurer attempts to settle a claim for less than the amount to which a reasonable person would have believed was entitled or attempts to substantially diminish a claim requiring an insured to initiate litigation.

7. Attempting to settle claims on the basis of an application and/or policy which was altered without notice, knowledge or consent of the Insured.

8. Making payment(s) for claims without accompanying statement indicating the coverage for which payment(s) are being made.

9. Insurer failure to make known any arbitration award appeals policy in an attempt to settle a claim for less than the arbitration amount awarded.

10. Insurer requiring claimant or physician to submit both a preliminary claim report and formal proof of loss forms which contain substantially the same information.

11. Failure of insurer to promptly settle claims, where liability and coverage is reasonably clear under one portion of the insurance policy in order to influence settlements of coverage for another portion(s) of the policy.

12. Failure of insurer to promptly provide reasonable explanation and basis when denying or making a compromise offer of claim settlement.

13. Failure of insurer, when making a cash payout to settle a first party auto insured claim, to pay the same amount which the insurer would pay if repairs were made.

14. Requesting over burdensome documentation demands not required by the policy.

15. Reference or focusing on recovering on the uninsured portion of the loss.

16. Using illegal and fraudulent investigative methods and procedures.

17. Using harassing, intrusive or demeaning investigative methods and procedures which victimize the insured.

18. Failure of an insurer to settle a claim directly, when and where settlement is required, and instead requiring the insured to pursue a claim against another party first before offering settlement.

19. Failure of Insurer to make full and satisfactory payment of a first party claim prior to requiring settlement or exhausting the limits of a third-party insurer (i.e. in uninsured motorist cases).

20. Failure of Insurer to unreasonably refuse to waive subrogation thus hindering or preventing a claimant from reaching settlement with the party at fault (i.e. in uninsured motorist cases).

21. Unjustified contention and/or "lowballing" regarding the value of a loss.

22. Intentionally withhold, misinterpret or misconstrue claims information and/or failure to not inform insured of provisions and covered benefits under the policy pertinent to a claim.

23. Attempts to use indiscriminate measures, reference and/or procedures that diminish or reduce the top line amount or value representing full payment of the claim.

24. Intentional or irresponsible non-disclosure and withholding of information, misinterpretation of file documents and/or policy provisions, that would be in favor of the claimant.

25. Unsubstantiated and unwarranted accusations of arson.

26. Wrongful threats not to pay claims.

27. Utilization and/or development of deceptive insurer schemes or use of outside company services set up or conducted to carry out the same false pretense schemes (i.e. "Independent Medical Examiner Paper Reviews") for the purpose to be able to wrongfully deny or reduce payment of claims.

28. Insurer advice to claimant not to hire a lawyer.

29. Treatment of insureds represented by attorneys as insurer adversaries.

30. Treatment of insureds and claimants as adversaries.

31. Significant increase in amount of premium as a result of making a claim where insured was not at fault and in conflict with industry standards.

32. Cancellation of a policy as a result of making a claim or result of an accident where insured was not at fault and in conflict with industry standards.

33. Failure to live up to, conform or comply to industry standards.

34. Using inaccurate or wrongful information of a factual or legal nature to diminish, deny or delay payment of a claim.

35. Not being forthcoming with facts regarding coverage to deny, delay or reduce the amount of the claim.

36. Using extreme undue persecution, wrongful and victimizing tactics and actions, meant to crush, threaten, thwart, intimidate, oppress, in order to scare away and get the claimant not to make or pursue a claim.

37. Failure to convey to insureds settlement offers and demands of adversaries in accident and liability cases.

38. Changing or altering policy coverage without informing or receiving the consent of insured.

39. Representation by an insurer that an investigation "of fact" is taking place, knowing that no investigation is being done, in order to intentionally stop and dismiss an inquiry by a plaintiff, plaintiff's attorney or DOI examiner.

40. Biased investigation of that which is supposed to be neutral and unbiased.

41. Utilization of internal one-sided or outside companies biased schemes, such as in so-called "IME" bias (independent medical examiner bias), which are supposed to be objective and neutral, in order to wrongfully enable, facilitate and support insurer's position to fraudulently deny, reduce or discontinue payments of claims.

42. Repeated and constant reference and intentional miscommunication and misrepresentation by insurer downplaying the size of a claim to insured's attorney.

43. The same claims person of an insurer handling conflicting and both sides of the same or related claims.

44. Deviating from standard procedures called for in an insurer's claims manuals.

45. Attempting to prevent the court or an insured's attorney with due exception from securing a copy of an insurer's claims manual.

46. Abusing and/or misusing the judicial court system in order to delay or settle in good faith payment of a claim where liability to the claim is clear and amount of the claim is reasonable in order to delay insurer's having to make payment of a claim.

47. Fraudulently misrepresenting and revealing various conflicting financial information that mischaracterizes the true financial information and status of an insurer.

48. Attempting to shift blame and responsibility of investigation to insured and away from the insurer.

49. Threatening to harm insured and/or take legal action against an insured to recover amounts paid by insurer as in a short-term workmen's compensation or short-term disability claim in order for insurer to discontinue having to make payment on a longer or long-term basis.

50. Insurer refusal to settle a third party claim against an insured within the limits of the insured's policy thereby exposing the insured to additional liability.

51. Intentionally misinterpreting or misconstruing the law to the disadvantage of the insured and benefit of the insurer.

52. Deny treatment for a covered health benefit because of its expensive cost and instead misrepresenting and suggesting a less costly procedure in its place to be just as effective when it is not.

53. Unreasonable denial of a covered health benefit because of its high cost.

54. Unreasonable misinterpretation of policy language.

55. Taking undue excessive advantage of unlimited time when knowing there may be no time limitations established on alleged investigations of such matters or matters of fact.

56. Making health insured patients pay their standard copay when the cost of both the drug and the pharmacy's fee for dispensing the managed care prescription is lower than the copay amount.

57. Causing health insureds to pay a copay that is higher than what the cost of the prescription is to the insurer because of common secretive rebate deals between insurers and drug manufacturers which subsequently are not disclosed and therefore do not accurately represent the true cost of the drug.

58. Health insurers not acting in the best interests of the patient and/or acting for their own self-enrichment at the health expense and disadvantage of the patient.

59. Some health insurer secretive deals are alleged to result in the health insurer selection of a more expensive drug to be on their list of acceptable drugs ("Formulary list"), services or procedures deceptively generating greater insurer profits, excessive higher costs to patients and illegally billing federal Medicare or state Medicaid programs.

60. Good faith insurers look for and find ways to accept and pay claims properly and promptly ... Bad faith insurers unlawfully look for and find ways to not pay, delay, diminish, disapprove and deny payment of claims, provisions or exclusions.

Contact Us at Khatri Med Law if you have more questions or need help with your claim at or (310) 740-0366

3 Myths of Teletherapy using Video Conferencing

Teletherapy using Video from a Clinician’s Point of View: 

1. Teletherapy is not the same as face to face therapy:

As mental health care meets the internet, we are seeing more and more clinicians providing care to their clients through the means of telepsychiatry tools such as video conferencing.  A few years ago, video conferencing was a plan B in my practice, reserved for those times when either my clients or I were not able to make it to the office. I felt connected to my clients via video conferencing in our teletherapy sessions, but I attributed that to the fact that our original sessions were face-to-face.

When I was first introduced to teletherapy online for substance abuse/mental health treatment that is strictly conducted via video conferencing, I had some reservations as to how connected the participants and therapists would feel. I am happy to report that teletherapy feels exactly the same as in-person therapy!

After the first 30 seconds or so, once the initial newness wears off, you forget that you are sitting in front of your computer. As the clinician, I am able to assess the client’s body language, eye contact, and verbal content just as I would in person.

Clients report feeling comfortable being in their own space, and are able to be open to the therapeutic process. I find that an additional benefit is that clients are now learning helpful tools via telepsychiatry to cope with their concerns in the environment where they need it most… home.

2. Teletherapy using video is  only for those who live in remote areas:

With all the healers, therapists, and counselors out there, it’s easy to think that therapeutic video conferencing would only be for those who do not have easy access to mental health care professionals. While it is true that teletherapy using video conferencing now opens the door to those in remote areas, it also meets the needs of many other people.

We gain the flexibility to work with individuals whose jobs make scheduling in-person therapy difficult, parents who are raising children, teenagers who are in school, college students, couples and families who live in separate locations, folks without transportation, people with physical disabilities, and clients with social anxiety, as well as those who are not comfortable with the social stigma of going to therapy or a treatment center. Now, because of therapeutic video conferencing, there is telemental health program or therapist out there that can work around your life.

Telepsychiatry video from the WVU Health Report

3. Teletherapy can feel disconnected:

As I mentioned earlier, the fact that you are actually on your computer seems to vanish within the first minute of teletherapy and it feels as natural as ever. Individual therapy is always meant to be a personal path for a client. Therefore, as long as client and therapist are connected, therapy is working! In terms of group therapy, video conferencing allows for the same compassion, understanding, feedback, and friendship that any face to face group can offer. It ensures confidentiality all while letting clients in different geographical locations learn to trust each other, grow together, and inspire each other.

Technological advances and new therapeutic programs are giving us the opportunity to reach clients in ways that are unimaginable a few years ago. The Telepsychiatry space is still new, and tools such as therapeutic video conferencing allows for confidentiality, a safe container, unconditional positive regard, and the awareness that any client would get in the room. In short, teletherapy using video conferencing retains the benefits of traditional in-person therapy while expanding its range and increasing accessibility.

By: Heather Konopa LMFT, Clinical Director of iMedRecovery 
Telehealth Based Adult and Adolescent Substance Abuse and Mental Health Recovery Program
"We Bring Recovery Home."
(888) 496-2029

Appealing Medical Insurance Claims When Denied

The fact of the matter is that claims are not always paid. When a claim is denied, you will gather all of the information relevant to the claim and review it: the claim form, the remittance advice or EOB (explanation of benefits), the remark codes by each claim line explaining why this claim was rejected, the patient’s medical record documentation, and the 3rd-party payer’s fee schedule (if one is provided). If a review of these forms seems to support a payment of the claim—and if that support is well documented—the provider may wish to appeal the claim.

Appeals are often made if:

  • A claim is denied for lack of pre-authorization but there were evident reasons why pre-authorization could not be obtained.
  • A claim is denied because the payer deems a procedure not medically necessary, yet the physician believes it was medically necessary.
  • The third-party payer denies a claim based on a pre-existing condition that the physician does not believe falls under the terms of pre-existing conditions.
  • Payment is denied without reason or a lower payment is made without adequate explanation.
  • Services are bundled and only one of the bundled codes will be reimbursed.
  • No modifiers are used (however, the third-party payer will not directly state this is missing).

The appeal process may vary slightly depending upon the third-party payer, but most of the steps are very similar. The appeal must be made in writing and must state the reason for the appeal (some carriers, like Medicare and Tricare, have forms to be filled out that will act as the written request). Since most carriers have a set time in which an appeal must be made, timeliness is important. There is a window in which appeals must be started they must be dated and make copies of all documents used in appeals process. Attached to this written appeal will be all supporting documents and records.

Following Up on Appeals

The third-party payer will review the appeal. (They usually have internal time limits on their review process, as well—typically 30 days.) They will inform the provider of their decision through a phone call or a letter. If unsatisfied with the decision, the payer may allow for one or more followup “levels” of appeal. At this point, if the payer’s decision is still unsatisfactory, there are steps that can be taken. Some payers will use an objective peer review. The peer review is a group of physicians who can review the claim as well as the supporting documentation and arbitrate the differences between the payer and the provider. They can decide, based on the medical care, the necessity of the procedures performed or services provided, and the payments made, whether the healthcare provider is entitled to a payment or partial payment.

Government insurers, such as Medicare and Tricare, have more prescribed steps in the appeal and review process. These should be followed exactly and within the time limits set forth by their guidelines. For more information on Medicare appeals, visit their

For Tricare appeals information, visit their website:

For more information of appealing denied claims, utilization review, or general healthcare legal questions, please contact us at or (310) 896-5183 and speak with a healthcare law expert. 

Khatri Medical Licensing & Law: "Where medicine and law meet."

The Business Associate Agreement (BAA) and a Template

Whenever you do business or have some sort of regular transactional relationship in or around a healthcare business setting, that person, or entity then becomes a "business associate."

According to U.S. Department of Health & Human Services, a business associate is a person or entity, other than a member of the workforce of a covered entity, who performs functions or activities on behalf of, or provides certain services to, a covered entity that involve access by the business associate to protected health information.  A “business associate” also is a subcontractor that creates, receives, maintains, or transmits protected health information on behalf of another business associate.  The HIPAA Rules generally require that covered entities and business associates enter into contracts with their business associates to ensure that the business associates will appropriately safeguard protected health information.  The business associate contract also serves to clarify and limit, as appropriate, the permissible uses and disclosures of protected health information by the business associate, based on the relationship between the parties and the activities or services being performed by the business associate.  A business associate may use or disclose protected health information only as permitted or required by its business associate contract or as required by law.  A business associate is directly liable under the HIPAA Rules and subject to civil and, in some cases, criminal penalties for making uses and disclosures of protected health information that are not authorized by its contract or required by law. A business associate also is directly liable and subject to civil penalties for failing to safeguard electronic protected health information in accordance with the HIPAA Security Rule.

Please find the following BAA template: 

Template Business Associate Agreement Provisions

    [Words or phrases contained in brackets are intended as either optional language or as instructions to the users of these sample provisions.]

Business Associate Agreement

by and between

[contracted company]


[Your Company]


Catch-all definition:

The following terms used in this Agreement shall have the same meaning as those terms in the HIPAA Rules: Breach, Data Aggregation, Designated Record Set, Disclosure, Health Care Operations, Individual, Minimum Necessary, Notice of Privacy Practices, Protected Health Information, Required By Law, Secretary, Security Incident, Subcontractor, Unsecured Protected Health Information, and Use.

Specific definitions:

(a) Business Associate.  “Business Associate” shall generally have the same meaning as the term “business associate” at 45 CFR 160.103, and in reference to the party to this agreement, shall mean [Insert Name of Business Associate].

(b) Covered Entity.  “Covered Entity” shall generally have the same meaning as the term “covered entity” at 45 CFR 160.103, and in reference to the party to this agreement, shall mean [Insert Name of Covered Entity].

(c) HIPAA Rules.  “HIPAA Rules” shall mean the Privacy, Security, Breach Notification, and Enforcement Rules at 45 CFR Part 160 and Part 164.

Obligations and Activities of Business Associate

Business Associate agrees to:

(a) Not use or disclose protected health information other than as permitted or required by the Agreement or as required by law;

(b) Use appropriate safeguards, and comply with Subpart C of 45 CFR Part 164 with respect to electronic protected health information, to prevent use or disclosure of protected health information other than as provided for by the Agreement;

(c) Report to covered entity any use or disclosure of protected health information not provided for by the Agreement of which it becomes aware, including breaches of unsecured protected health information as required at 45 CFR 164.410, and any security incident of which it becomes aware;

[The parties may wish to add additional specificity regarding the breach notification obligations of the business associate, such as a stricter timeframe for the business associate to report a potential breach to the covered entity and/or whether the business associate will handle breach notifications to individuals, the HHS Office for Civil Rights (OCR), and potentially the media, on behalf of the covered entity.]

(d) In accordance with 45 CFR 164.502(e)(1)(ii) and 164.308(b)(2), if applicable, ensure that any subcontractors that create, receive, maintain, or transmit protected health information on behalf of the business associate agree to the same restrictions, conditions, and requirements that apply to the business associate with respect to such information;

(e) Make available protected health information in a designated record set to the [Choose either “covered entity” or “individual or the individual’s designee”] as necessary to satisfy covered entity’s obligations under 45 CFR 164.524;

[The parties may wish to add additional specificity regarding how the business associate will respond to a request for access that the business associate receives directly from the individual (such as whether and in what time and manner a business associate is to provide the requested access or whether the business associate will forward the individual’s request to the covered entity to fulfill) and the timeframe for the business associate to provide the information to the covered entity.]

(f) Make any amendment(s) to protected health information in a designated record set as directed or agreed to by the covered entity pursuant to 45 CFR 164.526, or take other measures as necessary to satisfy covered entity’s obligations under 45 CFR 164.526;

[The parties may wish to add additional specificity regarding how the business associate will respond to a request for amendment that the business associate receives directly from the individual (such as whether and in what time and manner a business associate is to act on the request for amendment or whether the business associate will forward the individual’s request to the covered entity) and the timeframe for the business associate to incorporate any amendments to the information in the designated record set.]

(g) Maintain and make available the information required to provide an accounting of disclosures to the [Choose either “covered entity” or “individual”] as necessary to satisfy covered entity’s obligations under 45 CFR 164.528;

[The parties may wish to add additional specificity regarding how the business associate will respond to a request for an accounting of disclosures that the business associate receives directly from the individual (such as whether and in what time and manner the business associate is to provide the accounting of disclosures to the individual or whether the business associate will forward the request to the covered entity) and the timeframe for the business associate to provide information to the covered entity.]

(h)  To the extent the business associate is to carry out one or more of covered entity's obligation(s) under Subpart E of 45 CFR Part 164, comply with the requirements of Subpart E that apply to the covered entity in the performance of such obligation(s); and

(i) Make its internal practices, books, and records available to the Secretary for purposes of determining compliance with the HIPAA Rules.

 Permitted Uses and Disclosures by Business Associate

(a) Business associate may only use or disclose protected health information

[Option 1 – Provide a specific list of permissible purposes.]

[Option 2 – Reference an underlying service agreement, such as “as necessary to perform the services set forth in Service Agreement.”]

[In addition to other permissible purposes, the parties should specify whether the business associate is authorized to use protected health information to de-identify the information in accordance with 45 CFR 164.514(a)-(c).  The parties also may wish to specify the manner in which the business associate will de-identify the information and the permitted uses and disclosures by the business associate of the de-identified information.]

(b) Business associate may use or disclose protected health information as required by law.

(c) Business associate agrees to make uses and disclosures and requests for protected health information

[Option 1] consistent with covered entity’s minimum necessary policies and procedures.

[Option 2] subject to the following minimum necessary requirements: [Include specific minimum necessary provisions that are consistent with the covered entity’s minimum necessary policies and procedures.]

(d) Business associate may not use or disclose protected health information in a manner that would violate Subpart E of 45 CFR Part 164 if done by covered entity [if the Agreement permits the business associate to use or disclose protected health information for its own management and administration and legal responsibilities or for data aggregation services as set forth in optional provisions (e), (f), or (g) below, then add “, except for the specific uses and disclosures set forth below.”]

(e) [Optional] Business associate may use protected health information for the proper management and administration of the business associate or to carry out the legal responsibilities of the business associate.

(f) [Optional] Business associate may disclose protected health information for the proper management and administration of business associate or to carry out the legal responsibilities of the business associate, provided the disclosures are required by law, or business associate obtains reasonable assurances from the person to whom the information is disclosed that the information will remain confidential and used or further disclosed only as required by law or for the purposes for which it was disclosed to the person, and the person notifies business associate of any instances of which it is aware in which the confidentiality of the information has been breached.

(g) [Optional] Business associate may provide data aggregation services relating to the health care operations of the covered entity.

Provisions for Covered Entity to Inform Business Associate of Privacy Practices and Restrictions

(a) [Optional] Covered entity shall notify business associate of any limitation(s) in the notice of privacy practices of covered entity under 45 CFR 164.520, to the extent that such limitation may affect business associate’s use or disclosure of protected health information.

(b) [Optional] Covered entity shall notify business associate of any changes in, or revocation of, the permission by an individual to use or disclose his or her protected health information, to the extent that such changes may affect business associate’s use or disclosure of protected health information.

(c) [Optional] Covered entity shall notify business associate of any restriction on the use or disclosure of protected health information that covered entity has agreed to or is required to abide by under 45 CFR 164.522, to the extent that such restriction may affect business associate’s use or disclosure of protected health information.

Permissible Requests by Covered Entity

    [Optional] Covered entity shall not request business associate to use or disclose protected health information in any manner that would not be permissible under Subpart E of 45 CFR Part 164 if done by covered entity. [Include an exception if the business associate will use or disclose protected health information for, and the agreement includes provisions for, data aggregation or management and administration and legal responsibilities of the business associate.]

Term and Termination

(a) Term. The Term of this Agreement shall be effective as of [Insert effective date], and shall terminate on [Insert termination date or event] or on the date covered entity terminates for cause as authorized in paragraph (b) of this Section, whichever is sooner. 

(b) Termination for Cause. Business associate authorizes termination of this Agreement by covered entity, if covered entity determines business associate has violated a material term of the Agreement [and business associate has not cured the breach or ended the violation within the time specified by covered entity].  [Bracketed language may be added if the covered entity wishes to provide the business associate with an opportunity to cure a violation or breach of the contract before termination for cause.]

(c) Obligations of Business Associate Upon Termination.

[Option 1 – if the business associate is to return or destroy all protected health information upon termination of the agreement]

Upon termination of this Agreement for any reason, business associate shall return to covered entity [or, if agreed to by covered entity, destroy] all protected health information received from covered entity, or created, maintained, or received by business associate on behalf of covered entity, that the business associate still maintains in any form.  Business associate shall retain no copies of the protected health information. 

[Option 2—if the agreement authorizes the business associate to use or disclose protected health information for its own management and administration or to carry out its legal responsibilities and the business associate needs to retain protected health information for such purposes after termination of the agreement]  

Upon termination of this Agreement for any reason, business associate, with respect to protected health information received from covered entity, or created, maintained, or received by business associate on behalf of covered entity, shall:

    1. Retain only that protected health information which is necessary for business associate to continue its proper management and administration or to carry out its legal responsibilities;
    2. Return to covered entity [or, if agreed to by covered entity, destroy] the remaining protected health information that the business associate still maintains in any form;
    3. Continue to use appropriate safeguards and comply with Subpart C of 45 CFR Part 164 with respect to electronic protected health information to prevent use or disclosure of the protected health information, other than as provided for in this Section, for as long as business associate retains the protected health information;
    4. Not use or disclose the protected health information retained by business associate other than for the purposes for which such protected health information was retained and subject to the same conditions set out at [Insert section number related to paragraphs (e) and (f) above under “Permitted Uses and Disclosures By Business Associate”] which applied prior to termination; and
    5. Return to covered entity [or, if agreed to by covered entity, destroy] the protected health information retained by business associate when it is no longer needed by business associate for its proper management and administration or to carry out its legal responsibilities.

[The agreement also could provide that the business associate will transmit the protected health information to another business associate of the covered entity at termination, and/or could add terms regarding a business associate’s obligations to obtain or ensure the destruction of protected health information created, received, or maintained by subcontractors.]

(d) Survival.  The obligations of business associate under this Section shall survive the termination of this Agreement.

Miscellaneous [Optional]

(a) [Optional] Regulatory References. A reference in this Agreement to a section in the HIPAA Rules means the section as in effect or as amended.

(b) [Optional] Amendment. The Parties agree to take such action as is necessary to amend this Agreement from time to time as is necessary for compliance with the requirements of the HIPAA Rules and any other applicable law.

(c) [Optional] Interpretation. Any ambiguity in this Agreement shall be interpreted to permit compliance with the HIPAA Rules.



Print name and title______________________________________






 [Your Company]by ________________________________



How to Evaluate Your 1099 Independent Contractor Healthcare Worker

Lately, I’ve been helping my clients with how to handle their independent contractor employees in their healthcare companies.

The issue comes when you need to evaluate a 1099 independent contractor doing services for you, like seeing your patients. The IRS would like to convert your independent contractor to someone on your payroll.

Without going in depth about the big differences between an independent contractor vs a bonafide worker, essentially, the general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. (

That is, while you can't tell the contractor when to come, or how to do their job, you can still look at the work product they contracted to make for you and base your evaluation of them on that.

For many healthcare companies and for accreditation companies like Joint Commission, having a yearly assessment is very important.  

While it may be difficult to walk the line to keeping independent contractors truly 1099, you can still evaluate their performance and work product to ensure that your clients are receiving the high level of care they deserve. 

Whatever the case may be, the following are some examples of ways you could evaluate your 1099s:

  • Direct observation of the provision of care.
  • Audit of documentation, including clinical/case records
  • Review of incident reports.
  • Review of periodic reports (their notes) submitted by the person or organization providing services under contractual agreement.
  • Collection of data that address the efficacy of the contracted service.
  •  ...and more.

In the event that contracted services do not meet expectations, you can take steps to improve care, treatment, or services. 

In some cases, it may be best to work with the contractor to make improvements, whereas in other cases it may be best to renegotiate or terminate the contractual relationship. 

If you have to renegotiate someone's contract, or let them go, make sure that there isn't a disruption of their client's treatment. 

In case you need any guidance on how to do a yearly appraisal, Conan O'brien does a great job doing it here: 

At Khatri Medical Licensing & Law we handle employee contracts, including 1099 and W2 across all levels. 

Thinking of Conducting a Clinical Trial? There are 8 Legal Issues You Should be Aware of

Starting a clinical trial can be an exciting prospect for a healthcare organization. While the legal issues may seem daunting, there are about 8 issues to keep in mind, and their solutions.

1. You must identify the scientific value/purpose of the study. 


Clinical trials or other research with little scientific value implicate the federal Anti- kickback Statute and IRS requirements. In addition, clinical trial proposals that offer inducements to physicians to participate implicate the federal Anti-kickback Statute. So be extra careful of this. 

Questions to ask:

  • Does research have scientific value? (may need review by IRB (internal review board) for complete assessment).
  • Does study protocol demonstrate appropriate “scientific purpose”?

How to fix the issues:

  • Develop specific research intake process.
  • Ensure that all information is complete and accurate before being forwarded to legal/finance. Determine nature of study and nature of all financial arrangements. Make initial determination on scientific value of study before study is presented to IRB.
  • Determine extent of resources (including space, personnel) to be used to conduct the study.

2. Make sure you address IRS issues. 

Uncle Sam has specific rules about scientific studies, so make sure you are always in compliance with IRS requirements .That is,  your study must address issues of scientific purpose.       

How do you ensure this? Think about the following or ask these questions: 

  • The study must further your hospital or organization's mission statement.
  • It must be research undertaken for new applications of products or drugs in order to improve the ability to treat various conditions or diseases. (IRS)
  • The research cannot be just “quality control programs,” “ordinary testing for certification programs,” or the sole function of the principal investigator. (IRS).
  • You can also ask, does the study have scientific value and is it for new applications of drugs or products to improve the ability to treat certain conditions or diseases?
  • Does the study require the exclusive use by the sponsor of bond-financed facility space?


Make sure you have your attorney’s look over these issues. They can be quite complicated.  

3. Develop a proper research budget

It's very important that your budget is drawn up and allocated correctly. The development of the budget, money going directly to the investigator, and/or the ability to earn and keep profits generated from participation in the trial will implicate the federal Anti- kickback Statute and compromise patient care.  These are heavy duty Federal healthcare laws with large penalties. See my blog on the federal Anti-kickback Statute, and see Prescription Drug Marketing Special Fraud Alert.

Questions to ask to keep yourself compliant with the law:

  • Are budgeted amounts based upon Fair Market Value (FMV)?
  • Do any funds flow directly to any of the investigators (physician)?
  • Were there any inducements to the investigators to get subjects to participate in the study?
  • Do any financial incentives exist for physicians to coerce patient participation?
  • Are investigators or the hospital keeping profits derived from the research?
  • Is there a process in place to ensure allocation/return of excess funds?
  • Are time records being documented?
  • Are the study limited to the appropriate number of investigators/sites?
  • Are there direct payments?
  • Are there any payment terms not included in the budget?

Make sure:

  • You review the total impact of the aggregate of your financial relationships.
  • Develop written qualification criteria for investigators/sites  and stick by it, i.e. do not limit to high prescribers.
  • Ensure that there are no incentives for participation

 Are you going to be taking in any Federal Medicare funds?

Questions and solutions:

  • Develop process for conducting FMV analysis for rates paid for or to the research project. One such method might be to calculate physician’s time involved and pay based upon an hourly rate or to calculate based upon usual and customary charges for the services provided.
  • Include in FMV site resources needed for the study and the overhead amounts. Develop standard overhead cost calculation for use on all studies.
  • Develop procedures that has someone who follows the release of the study funds
  • Ensure that excess funds are not routed back to back to the investigator— if money allocated from the clinical trial exceeds a certain threshold in a 12- month period – all subsequent funds must be returned to sponsors. However, funds may be distributed to hospital or exempt affiliate (such as a related foundation).

4. Obtain financial conflict of interest disclosures. 

  • Financial conflicts of interest implicates the federal Anti-kickback Statute, which is bad news. 
  • Do a financial conflict check for everyone involved (e.g., nurses, medical students.)
  • “Financial interest” includes fees, gifts, honoraria, options, directorships, special relationships with potential for personal material gain.
  • Disclosure must be ongoing, meaning if something new arrises for one of the team, then they must disclose too.


  • Develop financial conflict of interest disclosure form to be completed by everyone involved with the study.
  • Develop patient freedom of choice forms.
  • Develop process for completion of form and for meaningful disclosure.
  • Develop a written policy for financial disclosure.

5. Require written contracts for terms of of 1-year 

Clinical research trial contracting can be structured to fall within the personal service and management safe harbor to the federal Anti-kickback Statute.

Compliance with the safe harbor offers protection against liability under the Anti-Kickback statute.

Conduct outside a safe harbor must be analyzed based on the “facts and circumstances.”

  • Signed written document.
  • Specifies services.
  • Part time vs. full time.
  • 1-year term.
  • Aggregate compensation set in advance, fair market value not based on referrals.
  • Legal activity.
  • Commercial reasonableness. 


  • Develop template contract, and require that all contracts are compliant with template. All deviations should receive legal review.
  • Provide template to all of your contracting parties.

6. Establish appropriate monitoring systems for billing federal health care programs. 

Participation in clinical drug trials raises a number of obligations with respect to billing Medicare for services rendered. In addition, the OIG (Office of Inspector General) is concerned that providers are billing the Medicare program for services for which the provider already has been reimbursed pursuant to a clinical trial agreement with a manufacturer. Improper billing implicates the Federal Anti-Kickback Statute and the Federal False Claims Act.

The billing rules for billing the Medicare program for clinical trials vary depending upon whether the clinical trial is for a drug, for a cancer drug, for an approved drug, non-approved use or for a non- approved use. The rules also differ for devices.


  • Appoint someone in the billing department to act as the clinical research trial liaison and the billing expert for clinical trials.
  • This person would be responsible for interfacing with the study coordinator, as needed, providing training to the billing department, monitoring the status of research trials and assessing the billing status of drugs/devices subject to a clinical trial.
  • Develop a training process for the billing department so that they are informed of all study services and the scope of the study to enhance more accurate billing.

7. Research Meetings-make sure they are modest. 

Research meetings to exotic locations or with no scientific purpose implicate the federal Anti-Kickback Statute.

Make sure they:

  • Are Modest.
  • Not promotional.
  • Have a scientific purpose.
  • Are the appropriate size.
  • Have appropriate participants.
  • Are at the appropriate locale. 

8. Completion of clinical trial. 

You must make sure that there is an appropriate completion of the study with appropriate follow-up demonstrates that the study had a valid scientific purpose and scientific pursuit.


  • Completion of clinical trial requirements.
  • Are study results published? Utilized?
  • Ensure that billing no longer bills patient as if study is in place.
  • Excess funds will need to be allocated.



Keep on Auditing Your Study for Compliance and audit it randomly during the course of the trial.  

Examples of audit areas (as explained above) could include:

  • Are services for enrolled patients billed correctly?
  • Has patient recruitment met requirements?
  • Is investigation following study protocol?
  • Is study operating within parameters of budget?
  • Do any financial conflicts of interest exist?
  • Does study continue to have legitimate scientific purpose?
  • Are funds correctly allocated?


At Khatri Medical Licensing & Law, we can set up a compliant study for you, create appropriate contracting, fee arrangements, advise you on best practices, and help you audit for compliance in regards to Stark Law, AKS, IRS issues and any state laws and regulations. 

Please contact us at or (310) 896-5183. 

Social Worker (MSW) Job Description (March 16, 2015)

Hospice Social Worker-MSW


New home hospice based in L.A. The agency has a integrative health and research philosophy and approach to care. 

The Hospice Social Worker will be working with individuals facing a terminal illness and their families. In this role he or she will assists in meeting the psychosocial needs of patients and their caregivers. The Hospice Social Worker will assess patient needs and assists with referrals to appropriate local/state/community resources. 

The Hospice Social Worker will educate patients, families, significant other regarding options for care outside the hospital as appropriate including but not limited to nursing home placement, home health, hospice, rehab, long term acute care, assisted living and DME needs. Works closely with victims of abuse and/or neglect, makes appropriate referrals to the Department of Human Services and provides appropriate resources per departmental policy. Assists with DHS guardianship when needed. 

In this role the Hospice Social Worker will coordinate the Hospice Volunteer Program through training and supervising volunteers within the program while continuous recruiting new volunteers to meet patient needs. The Hospice Social Worker will perform under the direction and supervision of the Hospice Clinical Supervisor and Agency Administrator.

Other: The Hospice Social Worker may be required to assist with the needs of Home Health Patients and or provide supervision to BSW's within his or her agency at the request of the Agency Director. 


EDUCATION/LICENSURE/CERTIFICATION/SKILLS REQUIREMENTS REQUIRED: Graduation from an accredited school of Social Work with a minimum of a Masters degree and current licensure in the State of Pennsylvania required. Current CPR certification is required. 

EXPERIENCE PREFERRED: Case Management experience preferred within hospice. Familiarity with local referral agencies preferred. Working knowledge of Medicare, Medicaid, Blue Cross and other third party payers preferred. Volunteer Program Experience Preferred.

EXPERIENCE REQUIRED: 0-2 years of Hospice experience is required. Excellent communication skills (oral and written) required. Continuing education courses/competency validation in areas which update knowledge and expertise in grief, death and dying, discharge planning, financial assistance and community resources required. Working knowledge of Social Work theory and practice required.

Contact with resume at or office number (310) 896-5183


Rishi R. Khatri, Esq. | Khatri Medical Licensing & Law
2029 Century Park East |14th Floor | Century City, Los Angeles, CA 90067
OFFICE 310.896.5183 | MOBILE 310.740.0366 | FAX 310.919.0388

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The Healthcare Management Services Organization (MSO) in the Age of the Affordable Care Act (ACA) and Stark Law

This small article is only intended to briefly touch on the basics of MSOs, Corporate Practice of Medicine, and two exceptions so that an MSO arrangement can employ to be legally compliant with Stark Law. There are many other aspects to MSOs and many other laws that need to be considered, such as fair market valuations, Anti-Kickback Statute, safe-harbors, and other exceptions that will not be covered here. 

Management Service Organizations (MSO): Basics

What are they? 

A Management Service Organization (MSO) is a business that provides non-clinical services to providers. MSOs most commonly provide administrative services to physician practices, but services provided by particular MSOs can vary widely (see the list below). Some MSOs provide a variety of services. Others specialize exclusively in a certain type of service. 

What do they do? 

An MSO may simply provide management and administrative services to a practice, or it may acquire a practice’s assets and subsequently enter into agreements to provide the practice with space and/or equipment. MSOs may be owned by non-healthcare provider investors, by a hospital, by a group of physicians, a joint venture between a hospital and physicians, or a health plan. They may interact with, be combined with or evolve into an Independent Practice Associations (IPA) or ACO. Some MSOs provide specialized services to other MSOs. 

Generally, the purpose of an MSO is to assist physician practices with the administrative challenges associated with running their business. MSOs can be attractive to physician practices because, while the practice receives significant administrative assistance from the MSO, unlike an employment scenario, the physicians can maintain a significant level of autonomy. 

What kinds of MSOs are there? 

An MSO can be one of any one of these or any combination these types: 

  1. Administrative, Operational, Financial 
  2. Personnel
  3. Education 
  4. Coding, Billing and Collection
  5. Office Space
  6. Equipment
  7. Information Technology 
  8. Compliance 
  9. Credentialing 
  10. Group Purchasing
  11. Managed Care 
  12. Strategic Planning 

The Prohibition of Corporate Practice of Medicine

Prohibitions on the Corporate Practice of Medicine is a concept that arises in light of a state's proscription against the unauthorized practice of medicine and specifically against a non-licensed individuals’ owning, maintaining, or operating a place of business in which an individual is employed or otherwise engaged to practice medicine.

There are several legal and regulatory considerations that need to be fully understood when moving forward with any healthcare contractual arraignment, especially an MSO: 

Stark Law (The federal self-referral law/Social Security Act §1877; 42 USC §1395nn.)

This Federal physician self-referral proscription prohibits physicians from ordering “Designated Health Services” (DHS) for Medicare (and to some extent, Medicaid) patients from entities with which the physician (or an immediate family member) has a “financial relationship.”

Exceptions to Stark Prohibitions

Stark includes a general prohibition on self-referrals and a number of exceptions. Specifically, the statute and regulations provide that a number of types of financial relationships do not even fall with the purview of the statute. In addition, there are a host of exceptions that apply to ownership and compensation arrangements. 

MSO arrangements between providers with referral relationships, such as a physician or physician practice and a hospital, will generally constitute a "financial relationship." Accordingly, it is critical that the arrangements between these providers satisfy the requirements of the applicable Stark exceptions.

Personal Services Arrangements Exception

Any provision of services from physician to the MSO should comply with the personal services arrangement exception. However, another exception (the fair market value compensation exception) applies to services from the entity to the physician. This exception for personal service arrangements protects compensation arrangements between a physician and an entity if the physician is an independent contractor and not an employee of the entity. The exception requires:

(1) a written agreement that specifies the services covered by the arrangement;

(2) that the arrangement cover all of the services to be provided by the physician to the entity;

(3) that the term of the agreement must be for one year or more;

(4) that the aggregate services contracted for must not exceed those that are reasonable and necessary for the legitimate business purposes of the arrangement;

(5) that the compensation to be paid over the term of the agreement be set in advance, not exceed fair market value, and not be determined in a manner that takes into account the volume or value of any referrals or other business generated between the parties; and

(6) that the services to be performed under the arrangement not involve the counseling or promotion of a business arrangement or other activity that violates any state or federal law. 

Since the personal services arrangements exception only applies to covered services provided by the physician to the entity, we must look elsewhere for an exception that protects services provided by the MSO to the physician or physician practice

Fair Market Value Exception

Stark Law excepts compensation from an arrangement between an entity and a physician for the provision of items or services (other than the rental of office space) by the entity to the physician or group of physicians under the following conditions:

(1) The arrangement is in writing, signed by the parties, and covers only identifiable items or services, all of which are specified in the agreement; 

(2) The writing specifies the timeframe for the arrangement, which can be for any period of time and contain a termination clause, provided that the parties enter into only one arrangement for the same items or services during the course of a year. An arrangement made for less than 1 year may be renewed any number of times if the terms of the arrangement and the compensation for the same items or services do not change; 

(3) The writing specifies the compensation that will be provided under the arrangement. The compensation must be set in advance, consistent with fair market value, and not determined in a manner that takes into account the volume or value of referrals or other business generated by the referring physician. 


MSOs are very useful entity that can benefit both physicians and owners of the MSO alike. The MSO agreement, however, is complex and must be carefully constructed in light of a host of federal and state regulatory considerations. An bright attorney who is versed in these concepts and laws should be contacted. 

Our firm handles such matters and arrangements. Please feel free to contact us at any time through our website, or if you have any questions or comments about this article. 

Rishi R. Khatri, Esq. | Khatri Medical Law, PC
OFFICE 310.896.5183 | MOBILE 310.740.0366 | FAX 310.919.0388
Twitter: @KhatriMedLaw



How do you protect yourself from surprisingly high ER bills?

High and surprise hospital bills are nothing new. Just look at some news headlines or do a quick Google check and easily find articles or blogs like:

“The Emergency: Severed Finger: The Bill: $83,000” 

“After Surgery, Surprise $117,000 Medical Bill From Doctor He Didn’t Know" 

“N.C. high court to hear case of $14K hospital bill” 

How then do you avoid high or surprise bills from the ER?

Needing to go the Emergency Room (ER) is a difficult situation to be in as you are in some sort of medical emergency and that’s all you can think about. You or your loved one's health is the absolutely the most important thing. Unfortunately, the average ER visit bill is $3000 or more.

Here are some quick tips that may help reduce super-high ER bills, or at least when you get the bill, you will know beforehand:

1) Know which ERs are in your insurance network—Contact your insurance company and find out which ERs your insurance company covers. That way if an emergency comes, you will not have to think about which ER to go to. There was a recent news story about a woman in an emergency who was insured, but was transported to the wrong hospital which wasn’t in her network. If she had known which ER she was covered in, she might have directed the paramedics to take her there.

2) Out-of-Network Doctors in the ER and Balance-Billing—Another problem people run into is that they go to the ER that is in their insurance network, but then get slammed with a high ER bill anyway. What sometimes happens in these cases is even though the ER is in network, some of the doctors working at the time you are there are not, so they bill at their regular rate, which may be well above what your insurance pays to them.

This is called balance-billing. They then submit their bill and ask for the balance of their bill, directly from you. Several states have addressed this balance-billing issue for ERs. California and several other states restrict this practice for out-of-network providers.

See this list to find if your state has a law protecting patients against balance-billing and look to the ‘ER services' column:

3) Keep your wits and READ everything—This is obviously easier said than done, especially if you are in an emergency situation. The last thing you want to think about is money or how you are paying for the bill in this situation. If it’s a rapid or fluid situation, the ER personnel will be presenting a lot of papers for you to sign. Please try to read everything. And if there is something your don’t understand, please ask. It is your right to be fully informed of what you are signing.

I have an analogy for this situation: you wouldn’t walk to a car dealership and agree to buy a car without them telling you what you are buying and what the terms are, would you?

A hospital form that you sign isn’t just a run-of-the-mill form you just sign. It’s a binding fee for service contract. Once you sign it, you are bound to its terms. That is, if you agree to payment within it, you must pay.

If you don’t understand something in it, ask the nurse or ER personnel what the term in the form meant. If they don’t understand what the ER contract form means, ask them to find someone who can tell you what it’s for. If you still don’t understand or if it’s not explained to you, then you may want to move on to my next tip.

4) Strike or line out the forms—You have the legal right to remove terms from the ER contract by physically striking or lining them out with your pen. Simply, this means that you are not agreeing to that the term struck or lined out, which means you may not obligated for that term.

Be careful, because striking out or not agreeing to terms runs both ways, meaning the ER then is not obligated to give you a service, which in an emergency situation is tricky.

5) Don't be bullied--Most everyone at the ER will be useful and helpful to you. Unfortunately, like every workplace, you will meet some bad players. These particular people may try to force or bully you to sign something that you don't understand. They may not even realize that's what they are doing. Don't be bullied into signing anything you don't understand. It's your right to be informed and stand up for yourself. 

6) Get an estimate--Some states require that hospitals give you an estimate of the regular hospital bill. Almost all states are required to give you a line item bill. While it's not clear whether ERs are obligated to give you an estimate of charges beforehand, see if you can get one, or see if they will tell you how much each service provided will cost before they do something. 

7) Go to an Urgent Care Center instead of the ER--If you are not in a dire situation and feel safe enough to go to an Urgent Care Center instead of the ER, then do that. Frequently, urgent care will be less expensive than an ER. Again, be cautious though, as they could possibly have high rates too. The best thing to become familiar with the Urgent Care Centers around your areas. Call around your area and find out what their rates are. Knowledge is power. 

Overall, being in an emergency situation is difficult and going to the ER is a last option. Obviously you or your loved one's health is the absolutely the most important thing, but if you have to go, PLAN AHEAD, ASK QUESTIONS, and DON'T BE BULLIED. 

*Thank you ABC Reporter Nurse Michelle Katz for this topic!