In this episode of Legally Sound | Smart Business by Pasha Law PC, Nasir and Matt cover the Business of Healthcare. There is more to the healthcare industry than just doctors and nurses. Many Americans have health insurance to cover their yearly needs, but most Americans are not aware of what really goes on behind the curtains. From fraud, contracts, staffing, and even the notorious ‘Dr. Death’, tune in for more details and perspective on the intricacies of the legal world as it pertains to medicine.
Full Podcast Transcript
NASIR: All right. Welcome to our podcast. Today, we are talking about the business of healthcare from a legal perspective. That’s what we do. I don’t think we’ve had an exclusive healthcare-related topic yet.
MATT: It’s definitely taken the forefront in pop culture and what people have been talking about the last year and a half.
This is Legally Sound Smart Business where your hosts, Nasir Pasha and Matt Staub, cover business in the news and add their awesome legal twist. Legally Sound Smart Business is a podcast brought to you by Pasha Law PC – a law firm representing your business in California, Illinois, New York, and Texas. Here are your hosts, Nasir Pasha and Matt Staub.
NASIR: All right. Welcome to our podcast. Today, we are talking about the business of healthcare from a legal perspective. That’s what we do.
Welcome, Matt. It’s been at least a month since I’ve seen you in person via video. You look good.
MATT: Virtually in person, if that even makes sense. Thanks. I try to. It’s a better time than it was this time last year.
NASIR: That’s true. Very true. We’re still doing it virtual even though it’s 2021 and not 2020, but that also is the nature of being distant from each other as well, I suppose.
What have we got today? Well, we’re doing healthcare. We are business attorneys, but we also specialize in the business of healthcare. I don’t think we’ve had an exclusive healthcare-related topic yet. Of course, we’re really deep in healthcare in Texas and California. And so, a lot of our topics are going to be related to that, but I’m excited for this.
MATT: Yeah. Obviously, healthcare has been very primarily featured in the news the last year and a half particularly with what seems to be just an everchanging thing of different rules and regulations that need to be followed. I don’t want to get too deep into it because we’re going to talk about a lot of those today, but it’s definitely taken the forefront in pop culture and what people have been talking about the last year and a half.
NASIR: Yeah. I think one of the biggest things that I keep hearing from both current clients and new clients is telemedicine. There have been rule changes on a CMS level. When it comes to what you can and can’t do from a telemedicine visit has completely changed since the pandemic has come. The realities of what people are more willing to do now – instead of doing an office visit, doing a virtual visit. I think that consumers have had a paradigm shift in that regard as well.
MATT: It touches on what you said at the beginning of this episode. You know, seeing each other virtually. It was just a necessity on what some physicians had to do. It was just a matter of survival. Obviously, there were in-person visits for when it needs to be, but a lot of physicians and other parts of healthcare shifted to that virtual setup just out of they had to do it.
NASIR: Right. I mean, I know I’ve had – both personally and for family members – multiple virtual visits whereas before I don’t even think I had one, but let’s talk about it. It’s actually pretty interesting because the Teladoc model – you can call it a Teladoc model – it’s not a unique model, actually. It’s a model that many physician practices use in states where they have what’s called the prohibition of a corporate practice of medicine. That concept exists in most states of the country – not all – where they want to prevent for-profit businesses that are non-professionals – non-doctors or unlicensed healthcare providers – having ownership over a medical practice.
Teladoc, what do they do? They provide medical services through a technology platform to its patients. How do they make money? They use something called an MSO model – management services organization. I know, Matt, you work with MSOs in California, right?
MATT: Right. I don’t want to simplify it by giving a couple sentences, but – like you said – you set up a separate management services company. It can provide a variation of services then to the healthcare company at that point.
MATT: That’s how you can avoid that corporate practice of medicine. I know California is pretty big on emphasizing the corporate practice of medicine part and some kind of stricter enforcement than maybe in other states, but – I don’t want to say a “workaround” because they probably wouldn’t like that language either – that’s kind of what it is at the end of the day.
NASIR: Yeah, and the thing is, Matt described what the essence of the MSO model is, but the problem is that it gets a little deep in the nuances and it’s easy to lose it. You know, people tend to think that it’s actually a very simple setup. “Hey! You have another entity that provides management services. The professional entity pays.” But it’s a lot more complicated than that.
The reasoning is because there are a lot of different regulations that apply to any time that you’re sharing fees – sharing fees is probably not the right word – paying money to another company that is sourced from these professional fees. You have to concern yourself. Are you violating certain regulations that prohibit sharing of fees – professional fees, healthcare-related fees? The amount that you’re paying to this management service organization, is it commercially reasonable? Is it being paid for the inducement of referrals? These are all things that, from a compliance perspective, you need to consider, and every state is different.
For example, in Texas, it’s okay to have the professional entity employ all the professionals – the doctors, the nurses, et cetera – but then have the MSO employ the non-healthcare workers such as the administrators, the billers, and things like that. In other states, that model may not be appropriate. How much is being paid – whether it’s a percentage of gross or percentage of net or a flat fee – all of these things matter. On top of that, whether or not the providing is accepting insurance. Are they participating in federal programs? All of a sudden, the very simple model that Teladoc does on a national level becomes very complicated.
By the way, the reason we know what Teladoc’s model is, it’s because they disclose this all publicly – to a certain extent, obviously – when they did their IPO. And so, we can get an idea. It is possible to do this in every state because, otherwise, how else would they make money, but I bet you even Teladoc has challenges in making sure that they’re completely compliant in each and every state.
MATT: Yeah, of course. You have to. Like you said, the rules are going to vary depending on the state. If you’re going to operate in all fifty states, obviously, you need to follow the guidelines for each and every state.
Now, we say that, and it doesn’t sound necessarily as difficult as you would think. I’m sure there are states that are modelling what their guidelines and rules are after other states. Any time you have to look at the laws for all fifty states, oftentimes you can group states together, and it’s going to be the same or very similar laws, but I’m sure they still probably vetted this pretty extensively just because you have to. There might be nuances and just little tiny things you need to know, so I think you’re right about that.
NASIR: I’m sure they continue to monitor because the law in this area, especially in the last year or two, has changed quite a bit. Speaking of doing this diligence, you know, I know we’ve done fifty-state surveys in healthcare and for different reasons. We’ve done fifty-state surveys over practice medicine rules or telemedicine rules or when in comes to the patient solicitation and these kinds of things because, when you have a client that has a certain business model in one state but wants to scale, one of the first questions is, “I want to figure out, which states can I go into and start expanding?”
One of the things that we do is we assign it based upon red light, green light, and yellow light. “You can take this model. It’s green light. You can copy and paste. Do the exact same thing pretty much – with maybe some differences – but it’s a full go.” Of course, the opposite is like, “This model is not going to work. You may not even be able to do business there in the way that you want to.” Because of the difference of state regulation, there are concepts like this. Of course, yellow is in-between where you may have to adjust the model and you may have to do this or that, and that’s something typical in healthcare that you do because, unlike other types of regulated industries, healthcare is one of those where it’s so state-specific.
MATT: Exactly. I can’t hear the streetlight analogy – the red light, green light – without thinking of the game, if you watched Squid Game, the first game they play. You watched or not? I can’t remember.
NASIR: I know the kids’ game. No, I haven’t seen it, but I feel like we have to talk about Squid Game – at least tangentially – because it seems like everyone is talking about it.
MATT: Yeah, I feel like it’s already passed, but it had its window open.
NASIR: I wouldn’t have any ideas.
MATT: It’s not really probably appropriate for purposes of this.
NASIR: Is it really that bad? Okay.
MATT: Not bad, but just not applicable.
NASIR: Oh. Not applicable?
NASIR: Well, I’d heard it’s pretty mild.
MATT: Well, I mean, that too.
NASIR: Speaking of violence, let me see. We can talk a lot about violence. I mean, we can talk about Doctor Death. I’m just looking at my notes here, but let’s talk about employment law – staffing.
By the way, the reason we say business of healthcare versus healthcare law is I think it’s a much different thing. This may be in the weeds a little bit with practicing law but, oftentimes, when someone tells me they’re a healthcare attorney, based upon my experience, they are heavy on compliance. If you have a regulatory question related to healthcare and how to do this or that, they’re the person to talk to.
The business of healthcare is a little bit different. That’s why I like to say we’re business corporate attorneys with an emphasis in the healthcare industry because that’s a very different approach. When it comes to employment law, we’re talking about employment issues or staffing issues that come up in healthcare that are unique to that industry.
MATT: I think that’s an important distinction. You know, you’re exactly right. There are a lot of compliance issues that these attorneys will need to know. We’re going to get into some of those later, but there are the other issues that are still legal that you need to know as well. The first one is going to be employment law related.
Let me step back a second. Obviously, there are little nuances for hiring physicians and nurses and things of that nature. I don’t know if we really want to get into all of those details, but the big story in the news in terms of employment law in the healthcare industry has been just the ability to have people to work, particularly with the vaccine mandates. I think I saw a story in Houston. There was a facility with around 26,000 employees. They’ve lost close to 1,500 of them because they refused to get the vaccine. It’s not just a problem in healthcare necessarily, but it’s been a major one across the country, particularly with hospitals. Obviously, you need to have people to actually provide the services. If you’re understaffed when there’s already a high demand to begin with, it becomes a huge economics issue.
NASIR: Yeah. As we know, when it comes to recruiting staff in general, outside of healthcare even, it’s kind of a strange time. Unusual based upon what’s happened in the last few decades here in this country. But when it comes to recruiting nurses, I mean, gosh! I remember the encouragement of getting people to get their nursing degrees when I was in college was really high at that time. There was a nurse shortage in California, and I think there still is, and across the country. Add on top of that, nurses don’t want to work certain jobs. They don’t want to work in COVID units. Like Matt said, they don’t want to get the vaccine. And so, that has become a pretty big challenge. We’ve seen it firsthand with our clients for sure – to the extent that we’ve seen – not with our clients necessarily but we’ve seen facilities. I saw one in Central Texas where they were advertising that they’re not requiring vaccines for their staff in order to recruit. Even the administrator was saying, “Look, I think everyone should get vaccines. From a healthcare perspective, I don’t understand the concept of why, but we also need staffing. If, by not requiring it, we’re able to recruit a staff, that’s more valuable to our patients than it is to have no support at all,” which seems understandable.
MATT: I do need to correct that. I said 1,500 out of 26,000. It seemed high when I said it. I added an extra zero on there. 150 out of 26,000 which I think is more in line with the general population.
NASIR: Yeah, that makes sense.
MATT: From the employment perspective, that’s obviously been the more topical issue the last couple of years. Other things that come into play, you know, from all the employees that are working these hospitals and different healthcare facilities – obviously, if you didn’t know – there’s also a very strong confidentiality perspective that needs to be looked at. I don’t know if you saw the story. Where was it? There was a nurse that worked for Texas Children’s Hospital that posted something about a boy that got measles on a Facebook group for anti-vaxxers. I mean, that’s a textbook definition of unauthorized disclosure of PHI. I’m sure, as you can guess, she ultimately—
NASIR: Patient Health Information.
MATT: Sorry. Patient Health Information.
As I’m sure you can guess, she ultimately got terminated for posting that. That’s a big no-no.
NASIR: Right. I know I came across it, and I feel like maybe our team talked about it because it seems so ridiculous that would happen, but these kinds of HIPAA breaches really happen quite often. It’s interesting because, from a legal perspective, it happens so often, you get kind of – what’s the word? It’s almost like the same data breaches. You get immune to every time it happens. The OIG on a federal level – and, also, frankly, their state agencies as well – you know, they’re the ones you have to report to if you have significant breaches. They get a ton every year. Depending upon how bad of a breach it is, you may be required to disclose it. Depending on how bad a breach there is, you may have to disclose it to the patient.
Oftentimes, if it’s a bad breach, depending upon different factors, including the size of your facility, what was the cause of the breach and these kinds of things, you may have fines, you may have corrective action plans that you have to agree to, and these can be really significant. But, at the same time, it’s just crazy how often this happens. You’ll see people in healthcare – as they should be – be very paranoid about any kind of breach, yet it happens all the time. Anything from a laptop being stolen can be tens of thousands, hundreds of thousands of records, now all of a sudden in someone else’s hands that now, in one incident, became a very costly nightmare.
MATT: Yeah, and I think the example I gave is not the common scenario of an employee just posting.
NASIR: Yeah. Usually, it’s an accident.
MATT: Yeah. Usually, it’s some sort of security breach or something – like you said, having a laptop taken.
NASIR: Security breaches are the big things. I think, you know, we can just talk about very simple ways to protect yourself when it comes to HIPAA breaches.
First, you have to have a written policy. You have to have adequate training. These are some of the basics. But, from a company perspective, look to the more common scenarios as to how these things occur. One of the common ways is to, again, if your staff has electronic data in a portable device – whether that’s a laptop or so forth – it’s very simple and easy to get the data encrypted, so that’s something that you have to do. If someone finds a laptop, they shouldn’t be able to access all that data. That’s number one.
Number two is I think the most common HIPAA breaches to date now are related to some company or some hacker gets in your system and then either extorts you or has access to that data or what-have-you, and that’s the means that, all of a sudden, you have a HIPAA breach. It doesn’t have to be posted publicly in order for it to be a HIPAA breach, obviously. How does that usually happen? We’re talking about phishing emails and brute force on passwords and things like that.
These are things that technologically, even though healthcare tech is kind of expensive and hard to do because there are so many different components going on and there are a lot of gaps, these are some basic things that you need to have – whether it’s two-factor authentication and training again to make sure your staff doesn’t suffer from email phishing and things like that.
If you’re able to address those things, that’s probably 90 percent of the most common breaches. I don’t have the stats in front of me, but if you look at all the breaches that get reported, that’s usually the cause. It’s not because of some nurse posting on Facebook.
MATT: Yeah, that’s the other 10 percent – their Facebook posts.
NASIR: Facebook posts in that Facebook group – the anti-vax group.
MATT: That reminds me of something locally here in UC San Diego Health. You mentioned the phishing attacks. That occurred at UCSD Health. You know, that’s a problem in and of itself. Maybe it could have been avoided. Who knows? But the issue here is they didn’t report it. I know we were talking about the actual employees themselves, but this was a huge ordeal because – you mentioned this earlier – depending on the details of the breach, the facility has to report that. I think they just thought they could sweep this under the rug. Let’s see. I think it was half a million patients, if I remember correctly. It was quite a few. It was well over what the threshold is. I don’t know how they thought they’d be able to get away with it.
NASIR: Yeah, and I think the threshold is small. It’s like 500 patients or so, as far as reporting goes. It’s interesting because we’ve been in these conversations. You know, we have a client that comes to us and tell us, “We’ve had a HIPAA breach. We’ve done the investigation. This was the cause. This is the number.” Now, no harm, no foul because, I mean, maybe they were in the system. What do you do if, really, you have no reason to believe that this breach will be made public, right? Only a few people know.
Of course, the problem is if you get caught. Of course, our advice is always, “Look, you know, you need to self-disclose. You’re required to self-disclose in certain situations.” By not doing so, then now, all of a sudden, you’re opening the doors of huge liability, which is what happened here, right? Where was this? UC San Diego, you said?
NASIR: UC San Diego Health. I mean, if they did so without informing and chose not to do that, or maybe they didn’t comply to a law. Also, the thing is too, there might be something more here, but what ends up happening too is that, if someone has access to your system, depending upon how good your technological logs are, you may or may not be able to prove – one way or another – what they had access to, right?
There are actually different standards as to what is considered a breach and how many records and these kinds of things. Of course, if that happens, you know, you need to get legal counsel right away. Some people advise, “Look, as soon as a data breach occurs, you need to have a crisis management plan put into effect specifically as it relates to data breaches,” because, again, you only have a certain number of days in order to report and to do the investigation internally then follow-up with other training.”
MATT: Yeah, I’d like to draw a line and compare these on the healthcare side to a data breach on whatever regular company. I mean, what’s the name of that one company? I guess a lot of them have had data breaches. Like, Home Depot was one, I think, right? Didn’t Home Depot have a big data breach?
NASIR: Yeah, it’s hard to name any big-box company that hasn’t had a data breach.
MATT: Sure. If Home Depot has a data breach, and they need to notify and they’re contemplating whether they should or not even though they’re required to, I mean, it’s probable that they’ll lose some customers because of that because they can go to Lowes or what-have-you. With a hospital, to me it’s completely different because it’s so difficult to find a good physician that you like. I don’t think you’re necessarily going to use many patients because you disclosed the data breach. Again, this is, of course, you have to do it, but if you’re weighing the pros and cons in doing it, I don’t think you’re going to lose too many patients as opposed to some other big-box store. That’s a completely different analysis, in my opinion.
NASIR: I think that’s mostly true, but if you’re in a small healthcare community, then that might be an issue, but I think that’s generally correct. I mean, again, even we become immune to HIPAA breaches. Similarly, people have become to getting that email that your personal information may have been stolen or accessed and “our commitment to security” and all that jab. Yeah, pretty common.
MATT: Not to disagree with you – even though we don’t disagree often – but I feel like, in a smaller community, it’s even likely they would leave their care facility because there are less options.
NASIR: Well, see, it depends. It depends. I know certain communities where you have a couple of options, right? They go to A or B. For example, if you find out a physician one place messed up professionally, that can have detrimental effects to that facility in that community. Similarly, if you feel like this company is not professional, they’re not even handling their PHI or whatever, it could have a negative. It’s very fact-specific.
MATT: Yeah, I don’t necessarily disagree with that. That brings us into our next story we want to talk about too – Doctor Death.
NASIR: Doctor Death.
MATT: It’s not as applicable because part of the issue was this guy was bouncing around for different facilities. If you haven’t heard about him. What’s his name? Christopher Duntsche.
NASIR: I didn’t even know he had a real name. I thought his name was Doctor Death.
MATT: Well, I think he went by Doctor D. We’ll get into the story, but I think some media outlet picked it up and started calling him Doctor Death. I believe he’s based out of Dallas. Is that right? Somewhere in Texas.
NASIR: All the healthcare news is from Texas.
MATT: Long story short, he basically was performing surgeries and just screwing up time after time. Like I said before, he’s going to different facilities and, eventually, you know, once there were a couple of miscues – and we’re talking about serious miscues too – these facilities started catching on and finding out.
The problem here is, once these facilities started finding out about it, some of them just didn’t do anything about it or didn’t report him. I think there were two in particular that didn’t report him. You have to report to the Department of Health and Human Services. It kind of clears everything for the practitioners. The idea behind it, of course, this guy is not fit to be a physician. It’s malpractice and patients need to be aware of this because I think part of the problem with this guy too was that he had a bunch of positive reviews. I’m assuming they were fabricated because, like I said, his track record was really bad.
NASIR: You know, every time I hear this story, in some ways, I get how it happened. On the other way, how could it have gone on for so long? In healthcare, especially in the hospital surgery context, there is always a credentialing process and there are always peer reviews. This is part of any kind of compliance program, any kind of accreditation and so forth. As a patient, you know, these are some things to look at if you’re going to a facility – what their accreditation is, what are their standards, what’s their reputation, and so forth. These are some things that you can look into because they do a pretty decent job at making sure these facilities are following these processes.
But to kind of bring it home to business of healthcare, in other words, Matt and I can talk about what to do very easily and enumerate it down there, but it’s not helpful because that’s easy to obtain. The hard part is actually doing it. In other words, the map of how to run a rate healthcare, safe client facility, that map has been drawn many years ago. The hard part is actually implementing it, taking credentialing seriously, for example, and going above and beyond the minimum.
For example, when you do credentialing for a healthcare facility – sorry, for any kind of providers – you often hire some third-party credentialer. You have to also understand their process and making sure that they are doing what they’re supposed to be doing well. I’ve seen issues where we’ve had healthcare professionals that were hired that weren’t licensed because the credentialer company was not matching up. They were just looking up the license under the name of the provider – not matching it with date of birth or social security number and doing some kind of other check because, obviously, if someone has the same name as another licensed professional, they can easily just say that they’re licensed. Literally that kind of thing happened. It’s things that are very easily preventable if you are really earnestly taking it seriously.
It’s the same with the peer review process. You know, physicians are well aware. If you have any kind of incident or deviation of what the expected outcome is, there’s usually some sort of peer review. That process becomes highly important, and making sure that physicians better themselves but also, if there is something serious going on, that it’s found out very early and prevented from going further. The credentialing process is supposed to weed these. You know, in theory, if this doctor had a pattern of this, it should have been weeded out a long time ago. There were some failures, and you can look up the story. There were definitely some failures in different aspects of the processes of what policies were appropriately implemented.
MATT: Yeah, I think that was the big thing – other than the non-reporting, the fact that he was able to go on for so long and not end up being caught, I guess, but he eventually was. I think it all worked out for everyone except some of the patients.
All right. I think we hit on some of the bigger employment-related topics in the healthcare industry. Let’s talk about some of the regulatory items. We’re not going to bore you with the non-fun stuff. We’re going to talk about fraud and abuse and things like that.
The one story that’s been in the news somewhat recently – and I think it broke maybe a month or two ago, I guess, whenever this comes out—
NASIR: Yeah, it was recent.
MATT: It was with the NBA players. I think there were a little under 20 in particular. Basically, they had this ring.
NASIR: Did you know any of them? Were any of them famous?
MATT: I’d heard of all of them. There was no one that was like an all-star, but there’s definitely a handful of guys that were prominently known and played in the league for a while, including the guy who was kind of the ringleader.
Basically, what they were doing was they had this whole plan set up to defraud the NBA’s health and welfare benefit plan. Well, the main individual was Terrence Williams. I’m sure I got his name right. I believe it’s Terrence Williams. Yeah, Terrence Williams would essentially recruit other players, and these were all retired players, and would produce fake invoices. They would submit it to the league’s health and welfare benefit plan, and then they would get some sort of reimbursement back – you know, whatever that amount was.
I guess I should specify too that these former NBA players weren’t actually getting the treatments. They were just submitting invoices. I should specify that part. They were just claiming that they got these different procedures and then would submit it, get reimbursement portion back, and just pocket the money. I think it was set up too where the ringleader was supposed to get a kickback on top of that too. I don’t think all the players complied.
NASIR: That’s a double kickback, right? It’s a kickback on the reimbursement service that was never performed and he got a kickback on that kickback.
MATT: Yeah, I wanted to find the exact number. I think it was around four million dollars in total or alleged fraudulent treatment and services. I wanted to point out one in particular because I thought it was pretty funny. There was one player who claimed he got $48,000 in dental work in Beverly Hills, California. At the time of the procedure, he was actually playing in a league in Taiwan. I feel like that’s very easy to prove that one was fraudulent.
MATT: For some of the other ones, maybe not so much, but this just shows you an example of what exactly these guys were trying to pull off. I mean, eventually, someone is going to catch wind of this. Authorities start looking into it and then it really opens up from there.
NASIR: I mean, this is an incredible story because of who is involved, on one hand, but not an incredible story when you talk about the actual act because the rampant fraud and abuse in healthcare, I think many would be very surprised with how much is going on. It is a crime of significant proportion. But that’s also why there are stiff penalties. However, because of the nature of healthcare, there is some ease of committing this crime compared to others, and that’s because, in order to get money, you have to submit paperwork. In return, you get a check. I mean, obviously, there’s much mor to that. There’s a lot of checks and balances, but it’s not like walking to a bank with a gun.
I mean, it’s unlike any other crime that I can think of. It’s not even like taking money out of a cash register, right? You’ll see schemes like this from unsophisticated and sophisticated people. Usually, there’s more than one person involved. It’s atypical that, with any kind of sizeable abuse, that one person did everything. For example, in this case, they had to submit a claim by using some kind of provider, and the money is going to go to that provider. Assuming that, in the NBA, their healthcare providers themselves. I don’t know if that’s the case or not, but the money didn’t go to them directly, right? They pocketed it. They arranged these things.
You know, when it comes to the NBA health benefit plan, it’s probably a rich plan. I mean, I have assumptions that what that plan is willing to pay out is probably a little bit better than what most self-funded plans are in the country. That’s what’s unusual – the people involved here. Unfortunately, when you talk about healthcare fraud and abuse and the law in this area, it’s pretty significant.
There are ways, by the way, that one can inadvertently commit fraud because, unlike the common definition of fraud where it requires this intent, healthcare fraud in the context of stark law, in the context of anti-kickback rules, they don’t need to prove that you have the intent to defraud, et cetera. Going back to when we were talking about the MSO model where, if you’re paying or splitting fees or those fees are such that it’s beyond what’s commercially reasonable or beyond what’s fair market value, those could be considered illegal funds and could be called back and even criminal in some cases, depending upon the nature of it.
This is still recent, so I don’t know what the repercussions are going to be on these NBA players, but I’ll tell you that, if they were dealing with Medicare dollars versus dollars from their own plan, their future would be much different because, when you deal with the criminal punishment and so forth when you’re dealing with Medicare fraud, it’s actually pretty harsh.
MATT: No doubt. I was trying to find it. I think some of them have maybe some hearings coming up.
NASIR: They plead guilty or something?
MATT: Actually, I don’t know. You know, I haven’t stayed on top of this story too much. I don’t know if any of them have.
NASIR: It’s probably still too early.
MATT: See, you can talk about basketball. You’ve got it down.
NASIR: I mean, this is basically a basketball episode. It’s a sports episode.
MATT: Yeah, then we’ll talk about the other basketball player that I wanted to talk about – Elizabeth Holmes. I can’t confirm whether she played basketball, but she’s done a lot of things. Well, if you’ve read up on her upbringing and history and everything, she basically said she’d accomplished everything at an age before anyone was to accomplish that. It seemed like it checked out for a while until the authorities realized she was also defrauding people.
NASIR: That’s what happens in these kinds of scams and frauds. They lie big – so much so that it becomes unfathomable to question whether they’re lying or not because, well, why would someone lie about that?
MATT: Yeah, and I would say she was defrauding not only physicians and patients, but also, she had quite a bit of investor money too. I believe it all centered around, if I remember correctly, a big piece of it was this Edison device which was blood testing or blood screening, and she claimed all these things as it’s the top equipment piece for what it does and it can do something that none of the other products can do. I believe they were even using other companies-created blood screening devices too which was one of the big problems.
NASIR: Yeah. People may not recognize Elizabeth Holmes. They may recognize Theranos, their company.
MATT: I was going to ask you. I think it’s Theranos, but I’m not sure.
NASIR: Theranos, yeah. By the way, the only reason I know this is because I had a doctor friend that was telling me about it. I thought it was interesting. He was telling me they were doing. By the way, it’s like the worst sourcing. I hadn’t even looked it up online. It’s like, “Oh. Someone told me this.” Anyway, I’ll tell it anyway just in case. If it’s not true, then let’s take it as an anecdote.
He was saying that one of the ways she was keeping it away from everybody was that she was taking it to other labs to do the actual testing at first, and then she actually started. How she was actually caught was she was buying equipment from other entities to actually run these tests. I think what she was selling was some kind of magic device that would be able to give these results very quickly and kind of almost miraculously. She raised a bunch of money and apparently is currently on trial still, right? Is it still going on? Or is it finished?
MATT: I believe it’s still going on, yeah.
NASIR: It’s in week ten of our trials which is pretty long. It’s weird because, you know, people use the word “allegedly” and so forth, but it seems either she committed fraud or didn’t. It doesn’t seem like it would be that complicated of either proving a fact or disproving it, but it seems strange that it’s taking so long. Maybe she’s not guilty.
MATT: It’s possible. Innocent until proven guilty. I imagine there’s quite a few witnesses and also quite a bit of details.
MATT: Yeah, there’s a lot of people that are going to get pulled into this. From what I recall, when the investors started catching wind of this, I believe she spent an extensive amount of time and money through her legal team to try to essentially block any sort of access to information about the company. I mean, there was a whole bunch of it.
MATT: I imagine she’s retained a lot of attorneys for this as well for this case on the criminal side.
NASIR: All right. The next section is some topics that I really do enjoy talking about – I mean, I enjoy all of it, but particularly when it comes to healthcare – contracting. For those of you not in healthcare, you may know that when you are a patient, you can either go out of network or in network. Typically, the patient responsibility of an out-of-network provider tends to be higher because of how insurance plans work. Providers enter into these contracts because they get a pre-negotiated rate and, in theory, they should be steered a higher volume of patients because the payer will advertise that this provider is in their network and can be negotiated and it’s less expensive out of pocket, right?
That’s from the patient perspective, but what people may not be aware of is that dropping of in and out of networks by big hospitals and other providers happens all the time. Well, maybe patients do. I mean, I’m sure patients have experience where the doctor they’ve been going to for years are no longer in network with such and such payer. People ask, “What are the reasons why?” and so forth.
Something in the business of healthcare that we do besides reviewing these contracts and using network contacts is also how to deal with reimbursements out of network in particular. That’s something of a specialty that our firm has developed over the years. That’s a whole world in and of itself – clearing the legal rights of out-of-network providers.
MATT: Yeah. Like you said, bouncing in and out happens all the time. You know, unfortunately, the big victims here are the patients. If they say they’re in network at a facility and they no longer are, then it becomes a huge burden on them. It can be burden from the cost perspective as well – whether they want to continue to be out of network or whether they want to go to somebody else who is in network.
I know there was something in recently in Georgia. There are tons of examples, but I think there was roughly 80,000 people there at a facility between Atlanta Medical Center and UnitedHealthcare. I don’t know. There are many stories we can talk about. Like you said, it’s a frequent occurrence. But, from the patient perspective, there’s not really anything you can do, unfortunately.
NASIR: I’ll tell you, these kinds of big contracts disrupt the market like Memorial Hermann, for example. They’re a big hospital system here in Texas. In fact, let’s see how big they are. Anyway, they’re a big hospital. Memorial Hermann is a big hospital system here in Texas, particularly in Houston. Both Blue Cross Blue Shield and Memorial Hermann announced that they sent termination letters to each other. Now, in a few months, if they’re not able to renew up or come to terms, then all of these patients aren’t going to be able to access in-network benefits at those facilities.
I’ll tell you, when it comes to Memorial Hermann and Blue Cross Blue Shield, I’m not sure if we have as much sympathy for either of them because one is a big healthcare system and the other one is a very dominant healthcare payer here in Texas. And so, both have a pretty incredible amount of negotiating power with each other. And so, these are two very big systems that are going at it with each other.
Most providers aren’t big systems, especially in Texas. You know, in California, it’s unusual to not have huge supergroups whereas, in Texas, the healthcare culture is a little bit different. And so, it’s not as easy to negotiate contracts for smaller providers. It just isn’t.
As healthcare changes and as it develops, new laws come into effect. You know, the No Surprises Act – which is a new legislation that’s coming out on January 1 – deals with a lot of surprise bill issues and sets specific reimbursement requirements from providers and how that’s going to affect contracting is yet to be seen, but it most likely will. There’s a lot of interesting business aspects to this – from both market perspective and providers.
MATT: Yeah. Like you said, why does this happen? It’s just negotiation or bargaining power between the insurers and the providers on pricing. Another way to look at it would be in the landlord-tenant perspective, especially from a commercial real estate aspect. You know, right now, I would imagine that there’s a pretty high vacancy for a lot of buildings on the commercial side. And so, right now, maybe you could say the tenants have the bargaining power. But, a couple of years ago, when businesses were booming, it might be the other way around.
It’s not a perfect analogy to what’s going on here, but like you said, it depends on the size of the different companies here. Like I said, ultimately, the losers are the patients at the end of the day.
NASIR: No doubt.
That’s a flyover with the business of healthcare. That’s kind of the stuff that we do on a daily basis with a lot of our clients.
MATT: Particularly the fraud and dealing with fraud.
NASIR: Again, if you talk to healthcare attorneys, they deal with a lot of that, but to me that’s not the business healthcare, but we had a talk about that because it’s what’s in the news and in the industry. Luckily, we don’t have to deal with that too much, frankly, at all.
Either way, fraud or no fraud, thank you for joining us and don’t forget to be very active in our social media as we are. Comment, like, and share this post. We’re also going to be on YouTube as well. If you’re listening to the audio version of this, you can listen to and watch the video version of this. If you’re watching the video version of this, you’re already listening to the audio version, but if you only want the audio, then you can listen to the podcast. Or you can just close your eyes.
MATT: Or you could do only video and turn the volume off. Every option is in play.
NASIR: Every option.
MATT: All right. Well, I think that wraps it up, so keep it sound and keep it smart!