Top Legal Issues for 2016—and Beyond

Assuming past truly is prelude, 2016 might very well end up being another banner year for the imposition of new U.S. laws and regulations. In recent times, federal rule-making agencies alone have trotted out annually an average of 3,500 rules(1), plus produced thousands of bulletins and guidance documents brimming with legal significance, reports the Competitive Enterprise Institute, Washington, DC.

Many of 2016’s new rules—not to mention new statutes and executive orders—concern healthcare. Many of those healthcare dictates concern the field of radiology. Accordingly, if you have been wondering whether now is a good time to trim your budget for in-house or outside radiology legal counsel, the answer is flatly no. In this overheated regulatory environment, you are going to need all the legal help you can get.

You will need it for the reason that the metastasizing mass of government strictures increases your risk of someday running afoul of the law. Add to that the discouraging reality that American society is as litigious as ever—neither patients nor members of the plaintiffs’ bar have lost their appetite to sue for injuries arising from acts such as denial of services and medical errors (the latter blamed for 251,000 deaths annually in U.S. hospitals and other healthcare facilities, a Johns Hopkins University School of Medicine study published in the May issue of BMJ finds).

Thus, you have abundant reasons to keep your legal eagles’ talons sharpened and outstretched. Radiology Business Journal consulted several lawyers who focus on radiology and asked them to identify the current legal challenges most likely to roil your waters for the remainder of this decade. Our jurisprudence authorities spotlighted three issues in particular. They are: statutory and regulatory compliance; management and billing expertise; and integration.

Complexity is rule

Tom Hoffman, JD, CAE, sees compliance as the leading challenge confronting radiologists and radiation oncologists. It is a challenge because failure to correctly comply can trigger audits and investigations from the various state and federal agencies charged with administering and enforcing the rules.

The agencies with which a radiology practice or group is most likely to interact include, chiefly, the U.S. Department of Justice (DOJ) and the Office of Inspector General (OIG), says Hoffman, associate general counsel, American College of Radiology, Reston, Va.  “Both the DOJ and OIG have considerable enforcement authority—criminal, civil and administrative,” he explains. “DOJ has the authority to prosecute. OIG works cooperatively with DOJ to investigate and has the authority to sign off with DOJ on settlement agreements.”

It does not help matters that DOJ, OIG and other law enforcement agencies are flush with cash.  “Congress has poured billions of dollars into federal and state law enforcement coffers—and now the lawmakers want to see a return on that investment,” Hoffman says. The agencies, in response, are flexing their muscle.

Statutes underpin the regulations that demand compliance. Hoffman identifies two laws in particular that radiologists should recognize as the basis for engendering the most worry. The first is the False Claims Act. Under this law, a private citizen may either alone or with the government’s intervention bring a lawsuit against a physician or the physician’s group practice.

Such a lawsuit can allege that billings were submitted for services not rendered or for upcoding of services allegedly medically unnecessary. A False Claims Act lawsuit can even assert that the defendant provider showed a negligent or reckless disregard for the rules by filing an erroneous claim. The acts creating liability are many and broad, the dollars that can be levied as penalties are massive and the government has the ability under this law to look back up to six to 10 years for suspect prior claims, Hoffman explains.

The consumer press and trial lawyers are powering the pursuit of False Claims Act violators, Hoffman says. “A Google search of the term ‘whistleblower lawsuits’ or ‘healthcare lawsuits’ will return numerous results explaining to people how to assert rights under the Civil False Claims Act,” he notes.

Those search results, he says, often point to the websites of “sophisticated and aggressive plaintiffs’ lawyers who make their services available on a contingent payment basis, costing the client nothing in legal fees unless the claim is won and results in a recovery.” Hoffman says there are no signs that Congress is interested at this time in making False Claims Act whistleblower lawsuits more difficult to bring, or in making them less potentially profitable to the plaintiffs and their legal representatives.

Raising red flags

The second consequential law of concern to radiologists is the Federal Anti-Kickback statute. This law has served as the impetus for many an investigation of radiologists and groups. “The Federal Anti-Kickback statute is broad, and it subjects violators to criminal, civil and administrative penalties,” Hoffman says.

Stumbling under this law turns out to be relatively easy. Hoffman warns that offering referrers items of even limited value can be enough to attract unwelcome DOJ or OIG attention. Another way to draw notice is by installing as your medical director a non-radiologist from a referrer practice. And the red flags come no redder than when you pay below-market value to rent space or equipment from a referrer.

Hoffman, who served with the OIG earlier in his career, makes the point that the laws and rules enforced by the federal government show no sign of becoming less stringent or ambiguous—characteristics that can make them “very challenging to comply with,” he cautions. Even so, from what Hoffman can discern, most radiology and radiation oncology groups are pursuing compliance in a commendable manner.

Doing the best job of it are—as one might expect—large practices and academic-based departments, those with ample resources at their disposal. They have established some of the most comprehensive and effective compliance training and monitoring programs anywhere, Hoffman says, adding: “These practices have used their resources and connections to help them understand the game.”

Large or small, one aspect of compliance known for causing problems is internal enforcement, or making sure there is compliance with compliance. Hoffman warns that adequate policies and procedural mechanisms must be in place to keep the practice aligned with the rules. If not, all bets are off as to whether a visit from a DOJ or OIG investigator is in the cards.

“I would urge radiologists and radiation oncologists to not succumb to the it-hasn’t-happened-to-me-yet-so-why-worry-about-it syndrome,” he says. “Avoid complacency. The enforcement climate is tougher than ever. There are more government actors out there looking to make their mark against physicians and practices. So tread carefully.”

Billing expertise

Meeting the challenges of compliance requires making appropriate and adequate investments in sophisticated management and billing expertise, according to Thomas W. Greeson, JD, a partner in the law firm Reed Smith LLP, Falls Church, Va.

“Radiology groups are going to find themselves way behind the eight ball if they are not investing significantly in management and billing expertise,” Greeson predicts. “Those investments are necessary in order to equip groups to meet the challenges of the new value-based payment methodologies arising out of the Medicare Access and CHIP Reauthorization Act [MACRA]—the Merit-based Incentive Payment System [MIPS] and the Alternative Payment Model System [APM].”

The challenges Greeson refers to revolve around financial transactions. However, wrapped up within them is the potential for significant value-based payment penalties—penalties just waiting to be levied against those that try to conduct business without the benefit of professional management and billing expertise.

“A group can invest in in-house expertise, or it can contract with a third-party billing and management company that is itself making the considerable investment required to supply the necessary expertise,” he says. “Either way, the days when groups could operate without that expertise are numbered—and they are numbered precisely because of the growing complexity of the ever-changing Medicare payment rules.”

Those days are numbered for at least one other reason: customer expectations. Greeson asserts that radiology providers must deliver to their hospital partners not only great service but also great value. Delivering both necessitates, again, substantive investments in management and billing expertise, plus the IT infrastructure to support that enhanced expertise, he says.

Rising expectations of better service and value are fruits of the MACRA, MIPS and APM trees, Greeson asserts. “Hospitals are likely to be in the center of these new payment systems with more and more bundled payment arrangements through hospital-sponsored accountable care organizations [ACOs] or clinically integrated networks [CINs]. Consequently, a radiology group is well served if it is seen by the hospital as being a player that brings value. Investing in professional management and billing expertise can help radiology groups emerge as important allies to their hospital customers.”

Acquiring greater professional management and billing expertise requires an investment of capital, not an investment in a new organizational charter, Greeson assures. For example, if your group is set up to operate as a limited liability partnership, you need not convert to a professional corporation, a limited liability corporation, or some other business entity type in order to take advantage of enhanced professional management and billing expertise, he says.

More and more groups are recognizing the need to invest in professional management and billing expertise—or, if outsourcing, to make sure their billing companies are making those kinds of investments. Too many practices still “don’t get the importance of being prepared to cope with the changing, complex regulatory and competitive environment in which they will be practicing,” he laments.

Radiologists have no shortage of resources for help in learning more about why those management and expertise outlays are a good idea, Greeson says.  “The professional societies—led by the American College of Radiology and the Radiology Business Management Association—are doing great work in this regard,” he enthuses.

Greeson argues that it has never been more important from the standpoint of avoiding legal problems that radiology groups clearly and fully understand the importance of investing in professional management and billing expertise. “All challenges bring with them opportunities,” he says. “Here, there will be opportunities for those who step up and try to have the management, data analytics and billing expertise to do well in this changing complex regulatory and competitive environment.”

Come together

Sometimes, radiology groups with which Greeson works wonder how they can obtain the capital needed for these investments when margins are so thin. Greeson believes the answer is to consider becoming bigger, if appropriate.

Agreeing with that prescription is attorney W. Kenneth Davis Jr., JD, a partner in the law firm of Katten Muchin Rosenman LLP. For Davis, however, getting bigger does not mean merely revving up the marketing machinery to attract more referrals. It also means endeavoring to integrate with other radiology groups and hospitals.

“Integration is the trend and it is intensifying, even though it is still in an early stage,” Davis says. He notes that the push for integration is spurred by the need to keep pace with changes occurring in both the public and private sectors.

“Thanks to modifications to Medicare and the advent of the Affordable Care Act, big payors are getting bigger—and those payors increasingly want to contract with hospitals that have become integrated entities to which greater levels of risk can be offloaded,” he explains. “For radiology groups, that means they are going to have to reconfigure themselves so that they can participate in the clinical integrations undertaken by their hospitals.”

Many radiology groups know they need to reposition in order to win contracts from hospitals that have embarked upon payor-instigated integrations. They are unsure how to proceed, however, largely because hospitals themselves are uncertain about how to reposition for clinical integration, Davis says.

“This puts radiology groups in a difficult position,” he notes. “The groups know that to have a seat at the table, they must be flexible in accommodating the hospital. At the same time, the groups are reluctant to agree to contract terms that may place in the hands of the hospital or the CIN an amount of discretion that makes for far too much uncertainty or unpredictability.”

One remedy for radiology groups stuck in this Catch-22 situation is to integrate with other radiology groups, Davis says. “The bigger a radiology group can become by integrating with other groups, the better positioned it will become to deal with the uncertainty these integrating hospitals inject into the picture,” he reasons.

However, integration is rarely about increasing market reach or strength in order to get paid more. “It’s mostly about competing more effectively—becoming better positioned to participate in the integration activity of the hospitals,” he says. “One reason large hospital systems are encouraging integration by radiology groups is to be able to reduce the number of contracts they, the hospitals, must manage. Rather than have eight different contracts with eight different providers, the big health systems would prefer having just one contract. Radiology groups that combine and become bigger are in a better position to help hospitals achieve the goal of fewer contracts.”

Ensure commitment

By its nature, integration requires first identifying potential partners that share similar values and virtues. Once a potential integration partner is identified and successfully courted, the difficulty then becomes deciding how the integration will be governed and how participants will be compensated. Davis says a mistake practices sometimes make is to fashion an integration contract that permits the parties to easily undo the deal in the event they later hit a rough patch.

“I advise parties to a prospective integration that, when they are putting their agreement together, they not include a perpetual ‘get out of jail free’ card,” he suggests. “Having it in there means the parties will be entering the agreement without much commitment to its success.”

Other dicey issues pertain to customer loyalty and conflicts of interest. As Davis points out, old hospital customers may feel betrayed by a radiology group integration that severs past relationships in favor of accommodating a bigger—competing—hospital ACO or CIN. As for how conflicts of interest get addressed, this can be significant enough to potentially implicate antitrust issues in some instances.

“The business drivers for integration can be there and make all the sense in the world,” Davis says. “But these arrangements still have to conform to the governing laws.”

Unquestionably, there are more legal issues with which radiology providers must grapple if they seek to integrate. For that matter, there are more legal issues with which radiology providers must grapple, period.

Integration, investments in professional management and billing expertise and compliance with regulations are the most prominent among a myriad of other important legal issues affecting radiology practices, groups and departments today. Clearly, the nation’s tireless and prolific rule-makers are doing everything within their power to ensure that radiology providers and their lawyers have no shortage of legal issues to address during the remainder of 2016 and on into the foreseeable future.


  1. Crews CW. CEI’s 2015 unconstitutionality index: 27 regulations for every law. Competitive Enterprise Institute website. Published January 4, 2015. Accessed June 23, 2016.