Mid-Atlantic Health Law TOPICS

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Did You Know? Fall 2008

Repayment of Income Guarantee: Did you know that a federal judge preliminarily refused to enforce a physician income guarantee agreement because the hospital may have inaccurately projected the need for the physician? In MaineGeneral Medical Center v. Hensen, MaineGeneral allegedly told Dr. Hensen that Augusta, Maine’s population needed a third otolaryngologist. Dr. Hensen, an otolaryngologist, subsequently signed an agreement in which MaineGeneral agreed to guarantee Dr. Hensen’s income during his first two years of practice in Augusta, provided that Dr. Hensen practice in the area for multiple years. Dr. Hensen left Augusta after the first year, and refused to repay the money advanced. In rejecting MaineGeneral’s motion for summary judgment to compel Dr. Hensen’s repayment, a federal judge held that additional facts were needed to determine if MaineGeneral had sufficiently estimated the need for a third otolaryngologist.

CON De-docketing: Did you know that the Maryland Health Care Commission de-docketed three applications for a certificate of need (CON) in Montgomery County when the applicants did not properly disclose their family’s ownership interests in other CON applicants? Alpha Health Services, BIC Home Health Care and Dynamic Visions Home Health Care all applied for CONs for a home health agency in Montgomery County. Dynamic Visions’ application allegedly did not properly disclose that a father and his two daughters had ownership interests in Dynamic Visions. The two daughters also allegedly had ownership interests in Alpha Health Services and BIC Home Health Care. As a result, the Commission de-docketed the applications for failure to provide a full and complete response to the Commission.

Laboratory Billing: Did you know that independent laboratories may no longer bill Medicare for the technical component of physician pathology services provided to hospital patients? In 1999, the Centers for Medicare and Medicaid Services (CMS) first adopted a policy requiring hospitals to bill Medicare for the technical component of physician pathology laboratory services provided to hospital patients when an independent laboratory performed that technical component. However, CMS, and later Congress, allowed (grandfathered) hospitals that had existing laboratory services arrangements in 1999 to permit their independently contracted laboratories to bill Medicare for those technical components, despite the change in policy. On July 1, 2008 that grandfather rule expired.

Medicare Physician Pay Cut: Did you know that the Medicare Improvements for Patients and Providers Act (MIPPA) only postpones a Medicare physician pay cut until January 1, 2010? Medicare pays the lower of the actual charge for a physician’s services or the amount calculated from the product of the relative value of the service, a geographic factor and a conversion factor. Under the prior law, this conversion factor would have decreased automatically by -10.6% on July 1, 2008, and by an additional -5.0% in 2009. With MIPPA, this conversion factor is expected to be updated by as much as -21% on January 1, 2010, unless there is further Congressional action. In the interim, the conversion factor will remain at 0.5% for the rest of calendar year 2008, and will increase by 1.1% for calendar year 2009.

Ambulance Patient’s Ability to Pay: Did you know that a federal appellate court held that a hospital emergency department director’s question to a paramedic over the telephone about a patient’s ability to pay triggered that hospital’s duty to examine the patient under the Emergency Medical Treatment and Active Labor Act (EMTALA)? In Morales v. Sociedad Español de Auxilio Muto y Beneficencia, a patient in an ambulance was experiencing severe abdominal pain. The ambulance paramedics called ahead to the hospital's emergency department director, who asked if the patient had medical coverage. After the paramedics could not answer the question, the director terminated the phone call. The paramedics assumed that the hospital refused to examine the patient, and brought the patient to a different facility. The United States Court of Appeals for the First Circuit held that, although the patient had not yet arrived on the hospital's grounds, the patient had “come to” the hospital under EMTALA, and, therefore, the hospital must provide an appropriate medical screening examination and determine if an emergency medical condition exists. Although First Circuit opinions are not binding on Maryland federal or state courts, and the hospital has asked the U. S. Supreme Court to overturn the decision, Morales is a reminder that it is a bad policy to ask about an emergency patient’s ability to pay for medical services until after the patient has been examined, and the hospital’s EMTALA duties have been completed.


October 12, 2008




Rosen, Barry F.


Health Care