Crossing the Legal Sales Line: Do You Know the Warning Signs? (Part 2)

Editor’s Note: We at Today’s Wound Clinic receive many inquiries from readers about the correct use of cellular and tissue-based products (CTPs). With the articles in this series, we will present relative, hypothetical scenarios followed by responses from industry experts as to the appropriateness of each example from various perspectives. This edition focuses on aspects concerning the general legal perspective. Readers who would like to suggest additional scenarios can email jdarrah@hmpglobal.com.

Also See Part 1 of this article series.

Scenario No. 1: VLUs & DFUs That Won’t Heal

“Bob,” the helpful sales representative for a company that manufactures wound care CTPs, really wants to meet his sales quota this month. As it turns out, the staff at Super Busy Wound Care Center has many patients scheduled who probably could be helped by the product that Bob is marketing. His company has signed a business associate agreement (BAA) with the parent hospital, and that’s why he has been assured by his corporate legal department that it is ok for him to view HIPAA-protected information in the patients’ charts. He spends one particular afternoon at Super Busy going through a stack of charts for patients living with venous leg ulcers (VLUs) or diabetic foot ulcers (DFUs) that haven’t decreased in size by at least 40% over four weeks. There are a lot of wounds here that the clinic is not aggressively treating, and it seems like what Bob is doing is actually providing a valuable service, assuming that the clinic is not going to be more proactive in treating these wounds. He finds six patients who are good candidates for a CTP and suggests to the nurses that he start the insurance verification process, and the nurses give him the “OK.” Did Bob cross the line? 

Lawrence F. Kobak (LK): “Yes, Bob crossed the line. Bob has randomly accessed protected health information (PHI), but has no legitimate business need to access this information. A prime example of such access would be a billing company accessing the medical record of a patient to ensure that the proper billing code was used. Here, we have Bob, who is not a licensed healthcare provider, using patients’ private records for his own gain. Not only has he crossed the line, but Super Busy has a legal obligation to inform patients of this type of illegal access of their PHI. Any wound care center would be open to stiff fines in this example. Some states, such as New York, have additional privacy regulations and disciplines/fines that would come in to play in this scenario as well.”

Scenario No. 2: Insurance Verification 

Bob, the helpful CTP rep, offers to lighten the load of the overworked front-office staff by handling the paperwork for “Mrs. Jones’” CTP insurance verification. With her chart in hand, he calls “Vera,” the verification specialist, whose hotline services are paid for by his company, the CTP manufacturer. The problem is that “Dr. Overworked” hasn’t provided sufficient documentation in the chart to justify the medical necessity of this patient getting a CTP. So, together, Bob and Vera go to work. Vera reads a series of questions to Bob over the phone, and he combs through the chart, looking for enough information to support the medical necessity of a CTP for Mrs. Jones. Neither is completely sure about the meanings of a few of the medical terms, or whether her prediabetes can be diagnosed as diabetes. However, a diagnosis of diabetes would help justify the CTP, so they include diabetes on her list of indications. When they have completed the attestation paperwork, Dr. Overworked is grateful and he signs it without actually reading it. Did Bob and/or Vera cross the line? What should Dr. Overworked be concerned about? 

LK: “For starters, Dr. Overworked has crossed the line. He has a legal obligation to have accurate and complete medical records. Signing off for any order or care plan without reading it will not ensure that records are accurate. We run into the same privacy concerns here with Bob as we did in Scenario No. 1. Is one of Bob’s delegated jobs by the wound care center auditing its records for appropriate diagnoses? Probably not. Lastly, we have to concern ourselves with Vera. Vera is an employee of the CTP company, not the wound care center. Is one of the CTP company’s duties mentioned within its BAA with the wound care center diagnosis verification? Probably not. As such, Vera would be acting outside the BAA. Again, the patients involved would have to be notified of the breach of their privacy.” 

Scenario No. 3: APCs & Package Pricing  

“Pam,” the passionate program director, is having an increasingly hard time keeping her wound care hospital-based outpatient department (HOPD) in the financial black since the advent of package pricing for cellular products. She appreciates it when Bob, the helpful CTP rep, donates products, because that’s a huge help to her bottom line. The way this transaction works is that Bob donates the product and Pam still charges the high-bucket Ambulatory Payment Classification (APC) rate without having to fork over practically the entire sum to cover the cost of the product. What a huge help! 
Did Pam cross the line?  

LK: “It is possible that Pam and the HOPD crossed the line, but this is a bit of a grey area. The rep has not gained money by donating something of value, but the HOPD has obtained something of value and could be somewhat beholden to the company, and that would worry the federal government under the Anti-Kickback Statute (AKS). 

The ‘donated’ products have actual financial value. This ‘donation’ creates an incentive for the clinic to use Pam’s products, which involve payable items through a federal program. From the information given, this scenario does not fall under the safe harbor exceptions. It also comes close to a quid pro quo for future orders. Now, if the CTP is being used as part of a trial, that might place this within a safe harbor exception, which would require individual legal analysis to determine any qualification. Also, any arrangement as to the pricing of the CTPs must entail charging the wound care clinic fair market value. A volume discount may be offered if it comports with the fair market value of the products being offered.”

Scenario No. 4: Donated CTPs

“Dr. Top Cellular User” prides herself in keeping up with all the newest CTPs. However, it takes a long time for new products to get on the hospital formulary (if they ever do at all), so if she wants to keep up with what’s new, she can only do that by trying donated cellular products. Sometimes, half of the CTP applications she does each week are actually donated by the manufacturer. However, since she gets reimbursed the same amount regardless of which product she applies, it doesn’t matter. She bills them all the same, regardless of whether the product was purchased by the hospital or donated. After all, the hospital is the party that is supposed to buy the CTP, so as far as her charges are concerned, it really doesn’t matter that the product was donated. Has Dr. Top Cellular User crossed the line?  

LK: “The donated CTPs may be medically indicated, but if the patient has Medicare, Medicaid, or some other federal coverage, the government is getting charged for ‘donated’ items. The key question to ask is: Is there even a whiff of a quid pro quo between the donor of the product and the HOPD or Dr. Top providing services and being reimbursed with federal money? There is a problem if the donation is earmarked to benefit the recipient of the free goods — here, the HOPD and Dr. Top.  The fact that some of the goods are donated and some are not does not change the final analysis. The AKS is concerned with any incentive or reward for using a particular company or product.”

Scenario No. 5: CTP Samples

Bob, the helpful CTP rep, has offered to provide CTP samples to “Dr. Interested” for any three patients of her choice. Dr. Interested identifies a candidate patient, explains to the patient that he or she has the opportunity to have a free product, so that she (the physician) can gain experience with it, and asks if the patient is comfortable with allowing Bob to be in the room during the procedure. The patient agrees. Bob provides Dr. Interested and the clinic nurse with instruction and advice on how to prepare and best apply the product. The patient agrees to let Bob take wound photos, but Dr. Interested tells Bob that the photos he takes should have no PHI visible, so the ruler in the photo does not have a date or the patient’s initials on it. Bob returns next week when the patient is seen for follow up, and Bob provides further guidance to Dr. Interested regarding the normal appearance of his CTP after a few days have elapsed. The clinic nurses confer and confirm with Bob on his instructions regarding which dressings the manufacturer recommends using with the product. Neither the physician nor the hospital charges for the application of the cellular product. The application is documented in the chart, including the lot number and expiration date, but with a note that there was no charge “because the product was donated as a part of a product evaluation.” Did Bob cross the line? 

LK: “Bob did not cross the line. He was in the treatment room with the patient’s permission. The nonidentifiable photographs were taken with the patient’s permission. (It would be best if this permission were in writing.) There is no reference to Bob accessing the patient’s charts. The donated product was not part of any attempt to induce or remunerate the physician. No government funds were involved in reimbursement. Bob did not touch the patient, as he is not a healthcare provider. We are not told if the product is approved by the U.S. Food & Drug Administration, but it is implied by the fact that Bob was using the manufacturer’s instructions during his interaction with the healthcare professionals. Therefore, the physician need not use special consent for use of the experimental treatment. Looks like all is well with Bob and Dr. Interested.” 

Lawrence F. Kobak may be reached at lkobak@frierlevitt.com.