N o v e m b e r 2 0 11
Neurosurgery at Englewood Hospital and Medical Center
Minimizing Risk and Maximizing Outcomes Also in this Issue
• IPA of North Jersey Files Class Action Lawsuit Against Horizon Blue Cross/Blue Shield of NJ • Anatomy of a Federal Investigation and Trial for Alleged Stark and Anti-Kickback Violations • Final ACO Rules Released, Along with OIG, FTC, DOJ and IRS Guidance • It’s Official: Supreme Court Will Decide Fate of Reform Law
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Publisher’s Letter Dear Readers, Welcome to the November issue of New Jersey Physician, the only publication reporting on the news of our state’s medical community. The Independent Practice Association of physicians affiliated with St. Joseph’s Regional Medical Center has filed a class action lawsuit against Horizon Blue Cross/ Blue Shield of New Jersey, seeking an injunction to prevent Horizon from terminating certain physicians from the network for seemingly no reason other than the doctors are affiliated with St. Joseph’s. Some of the terminated physicians claim this is to gain leverage for Horizon in their contract negotiations with St. Joseph’s Healthcare System.
Published by Montdor Medical Media, LLC Co-Publisher and Managing Editors Iris and Michael Goldberg Contributing Writers Iris Goldberg Leon Smith, MD Nina Dietrich Richard B. Robins, Esq. John D. Fanburg, Esq. Carol Grelecki, Esq. Kevin Lastorino, Esq. Betsy Fitzgerald
Physicians who enter employment agreements or have financial relationships with hospitals and who provide services to patients under programs such as Medicare-Use Caution. Recently, a large number of New Jersey cardiologists were investigated by the US Attorney’s Office for allegedly receiving kickbacks in exchange for referring their patients to a hospital. What appeared to be innocent employment contracts between the cardiologists and the hospital became the basis for a sweeping federal investigation.
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at Englewood Hospital. From craniotomies performed while patients are awake to endovascular repairs of brain aneurysms and ischemic strokes, the multidisciplinary
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Neurosurgery at Englewood Hospital and Medical Center
Minimizing Risk and Maximizing Outcomes Patients can be assured that they will be treated by many of the regionâ€™s top specialists in stroke care, neurosurgery, endovascular neurosurgery and neuro-oncology.
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Neurosurgery at Englewood Hospital and Medical Center
Minimizing Risk and Maximizing Outcomes By Iris Goldberg
When patients enter through Englewood Hospital and Medical Center’s new 35,000-square-foot, state-of-the-art Emergency Care Center to be evaluated for possible stroke or aneurysm or arrive for a scheduled neurosurgical procedure, they can be assured that they will be treated by many of the region’s top specialists in stroke care, neurosurgery, endovascular neurosurgery and neuro-oncology. With access to the latest research and technology, the multidisciplinary team of experts at EHMC provides the highest level of quality care using the most advanced diagnostic and treatment options. Close to 600 neurosurgical procedures were performed at EHMC during the past year. Frank M. Moore, MD, EHMC Chief of Neurosurgery, emphasizes the Medical Center’s goal of utilizing innovative technology to maximize neurosurgery outcomes, using both ‘open’ neurosurgery and minimally invasive procedures. The majority of these procedures are spine surgeries, Frank M. Moore, MD EHMC Chief of Neurosurgery
ranging from simple minimally invasive disc surgery to the most complex spinal reconstructions, as well
as surgery for scoliosis and other deformities. The Medical Center’s neurosurgery team also performs a number of innovative procedures for brain cancers, aneurysms and other conditions. For example, Dr. Moore cites the “awake” craniotomy as one such innovative procedure. During this ‘open’ procedure, the patient is not put to sleep but rather remains awake during brain surgery in order to provide feedback to the surgeon. “The brain itself has no nerve endings,”
p Here, Dr. Yao peels back the scalp of the patient who will undergo a procedure to remove a tumor in her brain.
Dr. Moore explains. “There is no pain, so you can
Kevin C. Yao, MD Neurosurgeon with a specialty in neuro-oncolgy
actually be working on the brain and the patient can
the brain (provided the patient is a good candidate for the procedure).
be talking to you.”
These are the areas responsible for speech, vision and motor functions.
This past year, EHMC welcomed to its medical staff
Dr. Yao points to the significant advantages of having a patient conscious
Kevin C. Yao, MD, a fellowship-trained neurosurgeon
during the procedure. When removing brain tumors, the techniques of
who specializes in neuro-oncology. Dr. Yao explains
awake craniotomy surgery permit Dr. Yao and his colleagues at EHMC
that awake craniotomy is done when the problem is
to preserve functional tissue within the motor and speech cortex with
located in or directly adjacent to an eloquent area of
greater reliability and better tumor resection.
New Jersey Physician
called neuro-navigation, uses images of the
such a dramatic effect in the target zone that
brain to guide the surgeon to a target within the
the changes are considered “surgical.”
brain. This technique may utilize an external frame attached to the head (frame-based)
or imaging markers attached to the scalp
computer-aided planning and the high degree
(frameless) to orient the surgeon’s approach.
of immobilization, the treatment minimizes
the amount of radiation that passes through As Dr. Moore explains, unlike the awake cra-
healthy brain tissue. “Once again, this allows
niotomy, which is performed only for specifi-
us to maximize the function while minimizing
cally appropriate cases, stereotactic guidance
the surgery,” Dr. Moore emphasizes.
is used for virtually every case. “Stereotaxis is
p Stereotactic guidance uses images of the brain to guide the surgeon to a target within.
very sophisticated and has really become the
While SRS was initially used to treat brain
standard of care,” Dr. Moore relates. “We at
pathologies exclusively, Dr. Yao reports that this
Englewood were one of the first to have this
technology now is providing treatment for some
technology when it first became available.”
tumors of the spine as well. He emphasizes the importance of the multi-disciplinary approach
“This intra-operative navigation allows us to
taken at EHMC to most effectively utilize SRS
see in real-time where we are,” Dr. Moore
“In these cases, there is a very high likelihood
continues. “It doesn’t give us the function but it
that if you do the surgery in the traditional
gives us the location, the anatomy and permits
Mei Zhang, MD has been a radiation
manner with the patient under anesthesia, he
us to use smaller openings. When we can map
oncologist at EHMC for
or she will wake up with a severe problem,”
the area before making the incision, we can
more than eight years.
Dr. Yao reports. “If the patient is awake and
really tailor the incision,” he notes, explaining
Dr. Zhang relates that she
performing these functions during the surgery,
that prior to the guidelines provided by this
works closely with Dr. Yao
you are getting direct, real-time feedback which
technology, incisions would have to be much
in performing SRS. Before
assures you that the areas you’re concerned
larger, resulting in a more invasive procedure.
radiosurgery is scheduled,
about are not being injured.” Working with radiation oncologists at EHMC,
Mei Zhang, MD Radiation Oncologist
they meet to discuss each case in detail. On the day
As Dr. Yao explains, before the brain is
the neurosurgeons treat some brain tumors
of the procedure, both Dr. Yao and Dr. Zhang
manipulated at all, mapping of the brain has
with stereotactic radiosurgery (SRS). Performed
are in the OR to construct the stereotactic
been done to elucidate, on the surface, where
during a one-day session, SRS delivers a single,
frame. Then the planning is undertaken. “Dr.
a function is located. Applying electrical
high dose of focused radiation beams to a
Yao, who is one of the most expertly qualified
stimulation to each area, with the patient
specific area of the brain. Radiosurgery has
in his field, participates in the planning from
providing the appropriate response, permits the surgeon to tailor a motor and/or speech map of the brain to know precisely where each function lies. “This allows you to determine the best approach to the surgery and get real-time feedback during the surgery, and—if there is any change—it immediately tells you when to stop,” Dr. Yao shares. “It allows you to maximize what you’re trying to do, such as removing a tumor from an eloquent area without compromising function.” An extremely valuable tool utilized by the neurosurgeons at EHMC for the removal of brain tumors and for other neurosurgical procedures is stereotactic guidance. During brain surgery, this technology, sometimes
p Motor functions are monitored during brain surgery November 2011
p Dr. Yao and EMHC neurosurgeon Dr. Marc Arginteanu are aided by a surgical microscope during the surgery.
beginning to end for many of the cases we do,”
of the microvascular anatomy that allows us to
to maximize a traditional surgery,” Dr. Moore
Dr. Zhang shares. Like Dr. Yao, Dr. Zhang is also
minimize blood loss,” he states.
points out. He believes that degenerative
excited about using SRS to treat spine tumors.
scoliosis will become more common as
“As we proceed forward with this, Dr. Yao will
“The other thing is just knowing how to treat
baby boomers age. For them, the benefits of
continue to be a valuable asset,” she says.
tissues,” Dr. Yao adds. He emphasizes the
having a less invasive option for correcting this
importance placed on meticulous technique
condition cannot be overstated.
At Englewood Hospital and Medical Center,
at EHMC which leads to bloodless outcomes.
Patient Blood Management (PBM) plays a
In fact, Dr. Moore and Dr. Yao report that
Dr. Yao reports that a minimally invasive
key role in minimizing surgical risk. PBM,
their patients don’t require blood transfusions
lateral approach can also be used to remove
which is the standard of care at the Medical
although this is often not the case at other
a cancerous tumor on the spine in selected
facilities where these techniques are not
patients. In fact, in a recent procedure he
was able to remove the tumor through small
avoiding unnecessary blood transfusions and their associated increased risk of infection,
incisions on the side and then, still through
complications and death. PBM is used within
Less invasive approaches to spine surgery at
the lateral approach, with the placement of an
every surgical specialty at the hospital,
EHMC also achieve maximum results with
expandable implant, he was able to reconstruct
including minimally invasive and ‘open’
minimized risk. “We do a lot of corrective
the vertebra that had to be removed during the
surgery for the spine,” Dr. Moore shares. “We
procedure as well.
use a combination of lateral and posterior For those conditions of the spine that require
approaches for some of these, which is novel
Another area of innovation in EHMC’s Neuro-
traditional surgery, the neurosurgeons at
and not always done elsewhere.” He cites
surgery program is endo-
EHMC pride themselves on incorporating
scoliosis surgery as one example of a procedure
vascular neurosurgery. For
novel techniques in conjunction with stringent
that lends itself to combining a traditional
example, Paul Saphier,
blood management in order to obtain
approach with one that is less invasive.
MD, who joined the hospi-
optimal outcomes with significantly reduced
tal’s medical staff in 2009,
patient risk. Dr. Moore explains that in spine
During the first stage of surgery, a few small
surgery, particularly, there is the potential
incisions are made on the patient’s side to
for much blood loss. “We always have two
reach the spine in a minimally invasive way to
surgeons working on these cases, which
stabilize and straighten the spine. The second
reduces operative time,” Dr. Moore points
stage of the scoliosis correction is then done in
tise to perform a range of minimally invasive
out, explaining that there will be less blood
the traditional posterior manner.
and innovative endovascular procedures such
loss when the procedure is completed more quickly. “Also, we have extensive knowledge
New Jersey Physician
is one of fewer than 100 enPaul Saphier, MD Endovascular Neurosurgeon
dovascular neurosurgeons in the United States. At EHMC, he uses his exper-
as aneurysm repair, intra-arterial treatment of “So here, we use a minimally invasive technique
acute ischemic stroke (mechanical embolec-
p Dr. Saphier makes a small incision in the groin to enter the femoral artery.
tomy), tumor embolization and screenings for cancer markers. A cerebral aneurysm is an outpoaching in an artery caused by weakness in the vessel wall. Left untreated, an aneurysm in the brain can rupture, resulting in hemorrhagic stroke that can have devastating consequences including severe functional disability, cognitive loss and even death. The basic concept of treating an aneurysm is to prevent blood flow into it by excluding it from circulation. Although some patients are fortunate enough to learn they have an aneurysm before it ruptures, most do not seek treatment until after, when significant symptoms occur. These include severe headache, nausea, disorientation, loss of consciousness and, unfortunately for some, death, which may occur suddenly. Traditionally, aneurysm repair would be accomplished through a craniotomy. This involves opening the skull and gently dissecting the brain to find the aneurysm and sealing or clipping it to close it off. This is obviously a challenging, invasive procedure with the potential for a number of complications. At EHMC, a number of patients with aneurysm can be treated with minimally invasive endovascular surgery. Dr. Saphier explains that endovascular technology involves fluoroscopy and catheterization, a technique first developed by radiologists and cardiologists to treat blood vessels in the heart that can also be applied to treat blood vessels in the brain. In one such procedure, Dr. Saphier, using x-ray guidance, navigates catheters and small wires via a small incision in the groin, through the femoral artery to the blood vessels in the brain. He then identifies where the aneurysm is located and enters the aneurysm with a small catheter in order to fill the aneurysm with metallic coils that cause a blood clot to
p Dr Saphier uses X-Ray guidance to navigate catheters and small wires from the femoral artery to the blood vessels in the brain to repair a ruptured aneurysm. November 2011
Performed in Englewood Hospital’s Angiogra-
initiate treatment as soon as possible, as is
phy Suite, endovascular neurosurgery is similar
to cardiac catheterization as Dr. Saphier often
explains to his patients and their families so
that they might better appreciate the minimally
invasive approach that he will be utilizing. Be-
and Medical Center. Dr.
cause of this technology, appropriate patients who have been diagnosed with an incidental aneurysm (not yet ruptured) can elect to un-
Istvan explains that when David Istvan, MD Chief of Emergency Medicine at EHMC
a patient presents with symptoms
dergo endovascular treatment preemptively
possibly be attributed to
without the worry of an invasive procedure.
a ruptured cerebral aneurysm or a blockage
They leave with only a small bandage at the in-
of the blood vessel, Dr. Saphier is contacted
cision site and no longer have to worry about
the possibility of the aneurysm rupturing. “Time is so important that we actually have a
p The catheter is clearly seen as Dr. Saphier navigates it to its target.
In addition to utilizing endovascular techniques
conversation with Dr. Saphier the moment that
for patients who have suffered a hemorrhagic
patient comes through the doors,” relates Dr.
stroke, Dr. Saphier also treats those who have
Istvan. He goes on to share that if it is merely
had an ischemic stroke that is caused by a
suspected that the patient will need treatment
blockage (blood clot) in a cerebral blood
from him, Dr. Saphier will arrive in the
vessel. “The treatment options for this have
Emergency Department before test results are
form. The combination of coils and the blood
increased exponentially during the last five
even received, so that he will be ready in the
clot, over time, turn into a scar that prevents
years or so,” Dr. Saphier is happy to inform.
event that the patient does, in fact, require an
fresh blood from entering.
This is especially true for those patients who
intervention. “This really shows Dr. Saphier’s
are not candidates for the clot-buster TPA or
dedication to the patient and to the program,”
those for whom TPA is not effective.
Dr. Istvan remarks.
hardens and turns into an internal cast (liquid
Using the same endovascular technique, Dr.
Dr. Istvan reports that from the time a patient
embolization). Additionally, he is excited
Saphier is able to navigate through the femoral
arrives at the ED it takes only about 45 minutes
about having performed the first endovascular
artery to the blood vessel to remove the clot
until all test results are available. “We have our
procedure in northern New Jersey that employs
and restore blood flow. “The difference is that
infrastructure geared up this way and it can be
an innovative flow-diverting stent that has just
for ruptured aneurysm, you have to provide
applied to many programs,” Dr. Istvan adds,
recently received FDA approval. This new
treatment within hours. For ischemic stroke, it
referring to the excellent performance history
device is designed with flexibility to be placed
has to be within minutes,” Dr. Saphier is careful
that the Emergency Department at EHMC has
across the aneurysm (not into the aneurysm) in
to point out.
for expediting treatment for patients with a
order reconstruct the vessel from the inside by
Dr. Saphier is passionate about having this
variety of life-threatening conditions.
redirecting blood flow more along the path of
technology available for victims of stroke, the
the normal artery instead of into the aneurysm,
third leading cause of death in the United
EHMC prides itself on being that rare
thereby shutting it down.
States. “Certainly not everyone is a candidate
combination of a true community hospital,
for endovascular neurosurgery but it opens a
providing personalized care in a compassionate
When discussing the benefits of the minimally
tremendous window,” Dr. Saphier states. “This
setting and a world-class healthcare institution
is a game-changer, if we can get there in time.”
Dr. Saphier reports that aneurysms can now also be filled with a liquid substance that
aneurysms, Dr. Saphier is emphatic. “This
distinguished medical staff of expertly trained
technology has proven to be a tremendous
Dr. Saphier shares cases of patients who
physicians and surgeons. Using innovative
advance for neurovascular surgery because the
were paralyzed or unable to speak when they
techniques designed to deliver excellent
risk of complications and morbidity associated
arrived at the ED and after timely endovascular
patient outcomes and minimize risk, the
with these procedures is significantly less,”
surgery are now finding their way back to
neurosurgeons of Englewood Hospital and
he strongly states. In fact, notes that this
normal levels of function.
Medical Center are proving that it is possible
technology has evolved so rapidly over the last
for patients to receive the best of both worlds.
ten years that he is now using endovascular
When a patient arrives at an emergency room,
neurosurgery to treat aneurysms that previously
obviously making an accurate diagnosis within
For more information call 201-894-3000 or
were untreatable, even with open surgery.
a short period of time is crucial in order to
New Jersey Physician
IPA of North Jersey
Files Class Action Lawsuit Against
Horizon Blue Cross/Blue Shield of New Jersey
Clifford Et Al vs. Horizon Healthcare of New Jersey The IPA of North Jersey, an independent practice association of physicians affiliated with St. Joseph’s Regional Medical Center, filed a class action lawsuit today against Horizon Blue Cross/Blue Shield of New Jersey. The lawsuit seeks an injunction to prevent Horizon from terminating certain physicians from the Horizon network for seemingly no reason, other than the doctors are affiliated with St. Joseph’s. Sean A. Smith, Esq., counsel for the IPA and an attorney with Brach Eichler, LLC, said “This action was necessitated by Horizon’s decision to put its business and profits ahead of the delivery of superior medical services to the Paterson and Passaic County public. We filed this action to vindicate a physician’s right to practice and a patient’s right to choose their physician.” Brach Eichler, LLC is located in Roseland, NJ and
is a full-service multidiscplinary firm that handles healthcare regulatory and litigation matters. Dr. Eileen Clifford, SC, a physician member of the IPA of North Jersey and a plaintiff in the lawsuit, said, “The only conclusion that I can draw from Horizon’s correspondence is that Horizon terminated me from its network as leverage in its very public contract negotiations with St. Joseph’s Healthcare System. As a primary care physician and a Sister of Charity, I have practiced at St. Joseph’s for my entire career. Now Horizon is trying to force me to obtain privileges at another hospital to remain in-network with Horizon. I am appalled at Horizon’s tactics – they are hurting my patients, my practice, and needlessly disrupting the community with their actions.”
Background: Horizon has given St. Joseph’s less than a 1% rate increase since 2009. St. Joseph’s innetwork agreement with Horizon expires on December 31, 2011 and St. Joseph’s has notified Horizon that it will not continue that contract at the current rates. While St. Joseph’s negotiates with Horizon to obtain reasonable reimbursement rates for a new contract, Horizon has sent termination letters to physicians practicing at St. Joseph’s, advising them that their contracts will be terminated as of December 31, 2011. Horizon has also sent letters to patients advising them that their physicians will no longer be a part of the Horizon network. For more information on this matter contact: Charles X. Gormally, Esq. – Litigation Practice Chair, Brach Eichler L.L.C.. (973) 403-3111 or (c) (973) 752-3962
Anatomy of a Federal Investigation and Trial for Alleged Stark and Anti-Kickback Violations
Lessons Learned By Richard B. Robins, Esq. of Brach Eichler L.L.C.
Recently, a large number of New Jersey cardiologists were investigated by the United States Attorney’s Office for allegedly receiving kickbacks in exchange for referring their patients to a hospital. What appeared to be innocent employment contracts between the cardiologists and the hospital became the basis for a sweeping federal investigation. Many of the cardiologists paid large settlements to the government, which far exceeded the salaries the doctors had received under their contracts. Some of the cardiologists even pleaded guilty to criminal charges! A single cardiologist was able to fight off the government and defeat the charges that he had participated in an illegal kickback scheme. This story provides a cautionary tale for physicians who enter employment contracts or financial relationships with hospitals and other institutions, and who provide services to patients under the federal health care programs, including Medicare.
The Government Investigates the UMDNJ Cardiology Program In 2003, a former faculty member of the University of Medicine and Dentistry of New Jersey – New Jersey Medical School (“UMDNJ”) filed a “whistle-blower” suit, triggering a federal investigation of the UMDNJ cardiology program. In 2006, a Federal Monitor released a report finding that highlevel UMDNJ officials had devised a scheme to enter “sham” employment contracts with various local cardiologists to serve as “Clinical Assistant Professors.” The report found that the cardiologists performed little or no work, but still received “salaries,” which actually were kickbacks paid in exchange for referring their
New Jersey Physician
patients to UMDNJ for surgical procedures. In 2009, UMDNJ paid an $8.3 million settlement to the United States to settle these claims that it had paid kickbacks to the cardiologists, and that it had submitted false claims to Medicare for the cardiac procedures which resulted from the kickbacks.
The Government Takes Aim Against Individual Cardiologists After the UMDNJ settlement, the United States government then demanded payment from – and, in some cases, threatened criminal charges and jail sentences against -- many of the cardiologists who had employment contracts with UMDNJ. All but one of those doctors entered criminal guilty pleas or civil settlements with the government. The settlements typically required the cardiologists to pay the government twice the amount they had received under their contracts. Needless to say, the guilty pleas and settlements were highly publicized by the United States Attorney’s Office, generating much negative publicity regarding the cardiologists.
A Fight to the Finish This author represented the single cardiologist who refused to settle with the government. The cardiologist had entered an employment contract with UMDNJ, which contained a nonexclusive list of services. The government alleged that the cardiologist performed few of the services listed in this contract and that he had entered a “sham” contract and accepted a salary in exchange for referring patients to UMDNJ for cardiac surgery. The government charged that the cardiologist had violated the federal Anti-Kickback Statute
and the Anti-Self Referral Act (or “Stark Law”). The Anti-Kickback Statute, 42 U.S.C. §1320a7b et seq., makes it illegal to knowingly and willfully offer, pay, solicit or receive something of value to induce business reimbursed under a federal health care program such as Medicare. The Stark Law, 42 U.S.C. §1395nn, et seq., makes it illegal for a physician to make referrals for services to an entity in which the physician or an immediate family member has a financial relationship (including an employment contract or ownership interest), unless the physician meets an exception such as having a “bona fide employment relationship” for fair market value. The government also charged the cardiologist with violating the federal False Claims Act, by causing UMDNJ to submit “false claims” (bills) to Medicare for the patients whom the cardiologist referred to UMDNJ. A finding of liability under the False Claims Act will result in the award of triple damages, civil penalties, and investigation and litigation costs against a physician. The cardiologist accused by the government contended that he had performed a substantial amount of the services listed in his contract. The cardiologist argued that he would have performed all of the listed services, but he was denied that opportunity by UMDNJ. The cardiologist also performed other substantial services for UMDNJ which were not specifically listed in his contract, but which he maintained were part of the employment arrangement and were of great value (such as on-call services). In sum, the cardiologist contended that he had entered a “bona fide employment relationship” and had performed legitimate services for fair market
value. The cardiologist denied any knowledge of or participation in a kickback scheme. In March 2011, this case went to a jury trial in the United States District Court, Newark, New Jersey. This was the first and only case from the federal investigation of the UMDNJ cardiology program that actually went to trial. At the conclusion of the trial, the jury found in favor of the cardiologist on all issues. The jury found that the physician did not violate the Anti-Kickback Statute, and that he had a “bona fide employment relationship” with UMDNJ for fair market value which did not violate the Stark Law. As a result, there was no violation of the False Claims Act.
Lessons Learned Despite the ultimate positive outcome for the single physician who went to trial against the government, the UMDNJ cardiology scandal and the numerous guilty pleas and settlements resulting from that investigation present a cautionary tale of lessons to be learned. • Employment contracts with hospitals are subject to rigorous analysis for compliance with the Anti-Kickback Statute and the Stark Law. • The government will aggressively pursue what it views as any violations of the Anti-Kickback Statute and the Stark Law. This could extend to physicians’ relationships with ambulatory surgery centers. • Physicians should not assume that their employment contracts with hospitals are lawful. • Physicians must be aware of the actual services rendered under their contracts, not just the contract language, in order to help assure compliance with law. • The fact that a physician rendered necessary, valuable and legitimate medical services, will not lower the amount of damages awarded against a physician for a False Claims Act violation, if the court concludes that the Anti-Kickback Statute or the Stark Law was violated and that “false claims” for payment were submitted to Medicare due to those violations. Physicians should keep these lessons in mind when they enter employment contracts or other financial arrangements with institutions including hospitals. Otherwise, they may end up facing criminal charges or civil suits filed by the government. Experience from the UMDNJ cardiology scandal shows that while it is possible to take on the government and win, most physicians who face the threat of civil suits by the government will end up entering into costly settlements with the attendant negative publicity, rather than risking an even worse outcome at trial.
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Richard Robins is Counsel in the Healthcare Practice Group of Brach Eichler L.L.C., based in Roseland. November 2011
Health Law Update
Provided by Brach Eichler LLC, Counselors at Law
OIG Disapproves of Management Services Arrangement between Pathology Lab and Management Company Owned by Referring Physicians In a recent Advisory Opinion, No. 11-15, the U.S. Department of Health & Human Services Office of Inspector General (OIG) concluded that a proposed arrangement, whereby physician investors in a management company would provide laboratory management services on a percentage basis to a clinical laboratory to which they also refer patients, could potentially generate prohibited remuneration under the federal Anti-Kickback Statute. Under the proposed arrangement, a company owned and managed by physicians would enter into a management services agreement with a pathology laboratory for a term of three years. The management company would furnish the pathology lab with the complete array of clinical laboratory pathology services for a fixed maximum number of hours each year, as well as utilities, furniture, fixtures and the exclusive use of laboratory space and equipment. The management company would also provide the pathology lab with marketing and billing
services, as well as essential non-physician staff. In turn, the pathology laboratory would pay the management company a usage fee that would be calculated based on a percentage of the laboratory’s income, fixed in advance for a term of 12 months, which generally would correspond to the volume of the laboratory’s use of the management company’s services, personnel and equipment. Furthermore, the physician owners/managers of the management company would likely have little or no background in the clinical laboratory services field. The OIG noted the similarity this arrangement has with the questionable joint venture arrangements that have been the subject of previous OIG guidance. Under this arrangement, the income of the physician-owned entity would vary with the volume or value of referrals from the physician investors. Because that aggregate usage fees paid by the management company would not be set in advance and would be calculated based on a percentage of the
pathology laboratory’s income, the OIG found that this fee structure would effectively link the physician investors’ profit distributions to the laboratory business they send the pathology lab, posing considerable risk of overutilization of laboratory services, distorted medical decision-making and increased costs to federal health care programs. As a result, the OIG concluded that the proposed arrangement appears to have no business purpose other than to permit the physician investors to profit from the business they generate for the pathology lab in the form of their laboratory specimen referrals. Based on these facts, the OIG concluded that the proposed arrangement would pose more than a minimal risk of fraud and abuse under the federal Anti-Kickback Statute and there was no safe harbor to bring this arrangement into compliance.
Final ACO Rules Released, Along with OIG, FTC, DOJ and IRS Guidance The Centers for Medicare & Medicaid Services (CMS) released on October 20, 2011 its final rule for Accountable Care Organizations (ACOs) participating in the Medicare Shared Savings Program. Responding to more than 1,300 public comments to the rule first proposed under the Affordable Care Act this past April, CMS made significant modifications intended to reduce the burden and costs for participating ACOs. Coinciding with the Medicare Shared Savings Program final rule, CMS and the Department of
New Jersey Physician
Health & Human Services Office of Inspector General released an interim final rule concerning waivers for federal fraud and abuse laws and the Stark Law (the federal physician self-referral law). The interim final rule includes manageable requirements and offers protection for ACO participants during the period leading up to participation in the shared savings program, as well as waivers for participation in the program and for shared savings distributions, and waivers for relationships otherwise complying with a Stark Law exception and for beneficiary incentives.
Also released is the Federal Trade Commission and Department of Justice joint statement of antitrust enforcement policy for ACOs participating in the shared savings program, and the IRS fact sheet for tax-exempt organizations participating in the shared savings program. Both the joint statement and the fact sheet demonstrate greater flexibility for ACO participants. The antitrust statement, in particular, continues to include a 30% threshold and a complicated primary service area calculation for compliance with the safety zone, but it eliminates the previously required review of ACOs with a greater
Health Law Update market share. Instead, the statement refers to the rule of reason analysis, and clinical and financial integration, first discussed in the 1996 statements of antitrust enforcement policy. • CMS’s Final Rule can be found at www.ofr.gov/OFRUpload/ OFRData/2011-27461_PI.pdf • The Federal Trade Commission and Department of Justice joint statement regarding antitrust enforcement policy can be found at www.justice.gov/opa/pr/2011/October/11-at-1384.html • The CMS and the HHS OIG interim final rule concerning waivers for fraud and abuse and self-referral laws can be found at www.ofr.gov/OFRUpload/OFRData/2011-27460_PI.pdf • The IRS fact sheet relating to tax-exempt organizations participating in ACOs can be found at www.irs.gov/newsroom/ article/0,,id=248490,00.html
HIGHLIGHTS OF MEDICARE SHARED SAVINGS PROGRAM CHANGES: • S taggered start dates for early entries: April 1, 2012 and July 1, 2012 •E xtended initial terms for early entries •R isk and non-risk tracks still available, but the non-risk track does not require the sharing of losses in any year •B eneficiaries are assigned using a preliminary prospective method, with a final reconciliation •B eneficiaries are assigned by primary care services performed by specialists, PAs and NPs, in addition to those provided by primary care physicians •Q uality measures reduced from 65 measures in 5 domains to 33 measures in 4 domains • L onger phase-in for quality measures: first year, pay for reporting; second and third year, pay for reporting and performance •A COs to share on first dollar saved once the minimum savings rate is achieved •N o withhold of shared savings • F lexible approach to antitrust compliance
New Jersey Statehouse Revitalizing NJ’s Healthcare Industry, One Hospital at a Time Two bills under consideration in Trenton would use tax incentives to bring failed hospitals back to life and help smaller facilities expand physician supply versus demand within 10 years By Betsy Fitzgerald
A shuttered or downsized healthcare facility means much more than the loss of medical services. It means lost jobs, lost revenues, and lost taxes -- both on the local and the state level. Two Bills wending their way through the Statehouse are meant to address this situation, using state tax incentives to spur investment in healthcare. Legislation sponsored by Sen. Robert Gordon (D-Bergen) focuses on redeveloping facilities that have gone dark. Meanwhile, Sen. Jim Whelan (D-Atlantic) has introduced a measure to help hospitals that have kept their doors open obtain capital to expand. Both bills have been approved by the Senate Budget Committee.
Gordon said his bill, S-3100, would use tax incentives to provide financing “for developers who want to recycle healthcare facilities that have ceased operation. There is a need for some additional incentives to really help developers take on these projects.”
Hospital projects generate construction jobs and permanent jobs, as well as the economic stimulus provided by the hospital’s investment in new equipment, Schroeder said. “Then the state gets the benefit of having people employed at a newer, bigger facility.”
Beth Schroeder, chief of staff for Whelan, said S-3077 proposes making hospitals eligible for grants for up-front financing for expansion; the grants would be based on an estimate of the additional taxes the state expects to collect once the expansion is finished and the workers hired. “A lot of hospitals want to expand but they just don’t have the wherewithal to do so, and we are looking to build our healthcare sector here,” she said.
Gordon is a former trustee of Barnert Hospital in Paterson, which went bankrupt and was acquired in 2008 by a group of hospital developers who reopened it as a “medical mall,” whose tenants include physician’s offices and diagnostic imaging. State healthcare industry experts often point to Barnert as a model for hospital redevelopment. “I’ve seen the conversion of that property into a catalyst for economic activity in that section of Paterson,” Gordon said. November 2011
Statehouse What’s more, the building would not have to
sufficient flexibility, so that the owners of
Colgan said Barnert was licensed for 300 acute
provide healthcare services to be eligible for
closed hospitals can work with surrounding
care beds but was only using about 125 beds
the tax incentives he proposes: the hospital
communities to foster redevelopment projects
by the time it closed. Had an incentive program
could be redeveloped as an office building
that are economically viable and address local
had been in place at that time, Barnert might
or for other nonmedical purposes. When
needs and expectations.”
have been able to downsize the hospital and
considering a project, Gordon explained, “we
lease the remaining space to medical mall
would not do it unless there is a belief that
Several of the state’s surplus hospitals resulted
tenants “and it would still be open today as an
there is a positive net benefit to doing this in
from their being replaced by new hospitals.
acute care hospital operating 125 beds.”
terms of job creation, income creation and, as
Virtua built a replacement hospital in Voorhees
a result, tax revenue generation.”
for its hospital in that town; Capital Health in
Colgan said about 700 people now work at the
November relocated Mercer Medical Center in
Barnert Medical Arts Complex, which he said
Trenton to a new hospital in Hopewell.
pays Paterson about $600,000 a year in property
Right now at Barnert, “there is a lot of economic activity there, the building is being used for
taxes. He said CHA is now negotiating with
healthcare purposes, there are medical offices,
A decade ago in Camden, Virtua pioneered
healthcare tenants to move into Kessler, which
outpatient facilities as well, and certainly there
the concept of replacing an acute care
he said pays about $100,000 a year in property
is a need in that community,” for the services,”
hospital with a facility providing medical and
taxes. Kessler is smaller than Barnert and will
Gordon said. “I see this as a way really to create
community services. Today, Virtua Camden
probably create 250 to 300 new jobs when it is
incentives for redevelopment. In many cases
houses a satellite emergency department,
fully leased some time next year, Colgan said.
the hospitals are the largest employers and
doctor’s offices and a Camden charter school.
“The key is to get people back to work, and
have substantial physical facilities and we see
Virtua CEO Richard P. Miller recently called
healthcare is a big boost to our economy.”
a number of them are now underutilized. This
Virtua Camden, “a model that we should see
is good public policy and a legitimate use for
more of as healthcare changes.”
Randi Minniaer, vice president for policy and legislation for the New Jersey Hospital
taxes incentives.” Virtua Camden gets about 90,000 medical visits
Association said “in some cases hospitals have
Barnert is owned and was redeveloped by
a year provides about 500 jobs, according to
closed and still have millions of dollars in debt”
Community Healthcare Associates (CHA)
Virtua. Jersey City Medical Center moved into
which poses an obstacle to redevelopment. “We
of Bloomfield. William Colgan, a principal
its new facility in 2004, and still owns the vacant
appreciate the interest from the legislature and
of CHA, said he advocates legislation that
Greenville Hospital. JCMC chief executive
the administration to work with the industry to
creates financing for hospital development.
officer Joseph Scott has also spoken in favor of
develop and redevelop closed facilities. What
The most effective program, he said, would be
legislation to spur hospital redevelopment.
we want to do is to identify the most viable
something similar to the urban transit hub tax
program to offer the most incentives to win in
credit program, in which the hospital or the
Community Healthcare Associates, which
developer could receive state tax credits and
redeveloped Barnert, in October purchased
then sell the credits to a profitable corporation,
Kessler Memorial Hospital in Hammonton,
Colgan echoes Minniaer’s concern about the
thus generating cash to purchase and renovate
which closed in 2009; CHA is developing
amount of debt some closed hospitals are
a closed hospital.
Kessler into a medical mall.
carrying. CHA paid about $2 million to purchase
Several hospitals have closed as full-service
Colgan of CHA said the entire hospital industry
million was invested in the property, by CHA
acute care hospitals, but continue to provide
could benefit from redevelopment financing.
and by the tenants, “to get it operational for
healthcare services. Muhlenberg Hospital in
“We are not just dealing with hospital closures:
new healthcare uses,” Colgan said.
Plainfield closed as an acute care hospital in
the healthcare system at large needs some
2008 but still operates a satellite emergency
sort of incentive program to allow for the
He stressed that CHA is not asking the state
department, a dialysis center, and a nursing
revitalization.” New Jersey, he said has “an
to use taxpayer money to subsidize hospital
aging hospital system, and it is really a big
Barnert while it was in bankruptcy; another $25
problem. There need to be incentive programs “We appreciate state legislators interested in
that allow for revitalization -- whether it’s the full
Before the state provides financing, it performs
creating incentives to help redevelop closed
transformation in the event of a closed hospital
a net benefit analysis, which is “a determination
hospitals, such as Muhlenberg,” said Adam
or the revitalization of an existing hospital. We
that if [the state] provides an incentive, it will
Beder, vice president of government affairs
need incentives that allow private developers to
have a greater financial benefit to New Jersey”
for JFK Health System, Muhlenberg’s parent.
come in and work in partnership with nonprofit
from the taxes collected once the project is
“We certainly would support legislation that
producing revenue, Colgan explained. The
provides economic incentives coupled with
New Jersey Physician
state won’t approve a project unless “At the
Statehouse end of day, there [is] more money in the state
Colgan said redeveloping Barnert Hospital
incentives. “We fought a very hard battle at
treasury as a result of revitalizing the building.”
was not easy, and he doubts most hospital
Barnert to largely break even.”
developers would take it on without tax
Singer Bill Addresses Doctor Shortage in New Jersey … Report says 12 percent gap in physician supply versus demand within 10 years Legislation sponsored by Senator Robert Singer
deserve to know that well-trained doctors will
have been ranked by the Commissioner of
(R-Ocean) that establishes a physician loan
be available to serve their health care needs
Health and Senior Services on the basis of
redemption program for certain specialties was
when they need it most.”
health status and economic indicators.
today. The bill is based on a recommendation
The bill provides for redemption of qualifying
“Perhaps more significantly, the demand for
in a report issued by the New Jersey Council
loan expenses for physicians in specialties
doctors is increasing because of the growing
of Teaching Hospitals that said loan forgiveness
that are projected to experience a significant
population of seniors, ” Singer concluded. “It
is one of the top factors that medical residents
shortage in the State, if they work in the State for
takes about seven years to train a physician so
look for in determining a practice.
10 years in designated underserved areas. The
we need to begin now because as the baby
passed by the Senate Education Committee
Advisory Graduate Medical Education Council,
boom generation begins to retire we need to
“We need to address the impending physician
in consultation with the New Jersey Council of
ensure that we have enough doctors to care
shortage to prevent the risk of people going
Teaching Hospitals, would determine which
and provide for everyone’s medical well-being.”
without any, or with insufficient care,” Singer
specialties are projected to have a significant
stated. “The nine million New Jersey residents
shortage. Underserved areas are those which
It’s Official: Supreme Court Will Decide Fate of Reform Law We learned this week that the U.S. Supreme
healthcare reform, the feds pay 100 percent
reimbursement over at 10-year period – will be
Court will hear a case challenging the
until 2016 and then the state governments
stripped away. The cuts will stay, but hospitals
constitutionality of the Affordable Care Act (or
would have to pick up its fair share of the cost
and other healthcare providers will still be
Obamacare if you prefer). The Court announced
of the expansion.)
required to care for people who cannot pay.
and-half hours of oral argument on the case in
• Whether the case is even ripe for Supreme
The arguments in this case will be fascinating
March 2012, with a decision likely in late June
Court review. Some say that the penalty
(if they sold tickets for this on Stubhub I’d buy
2012. Some of the key questions to be decided
provision of the law must go into effect first in
one) and the subsequent decision even more
by the Court include:
2015 before the Court can decide the case. On
so. Hopefully, we will have some clarity in just
this last point, the Court did leave itself some
seven months. In the meantime, N.J. hospitals
• The constitutionality of the individual
wiggle room for a deferral of a decision if it
will continue to do what they’ve always done –
mandate that American citizens carry health
agrees that the penalty provision must go into
provide care to all despite great challenges and
insurance or pay a penalty.
• Whether the rest of the law may move
I’m a healthcare professional first and foremost,
Betsy Ryan is president and CEO of the
forward if the individual mandate is not upheld.
but I’m also an attorney. And for the healthcare
New Jersey Hospital Association. Her blog,
that it will hear an almost unprecedented five-
community, the individual mandate is key. If
Healthcare Matters, examines the many issues
• Whether Congress can expand Medicaid to
the rest of the law moves forward without the
confronting New Jersey’s hospitals and their
cover more people and require states to pay
individual mandate, we will be left with many
patients. Readers are encouraged to join the
for their portion of Medicaid. (In New Jersey,
positive aspects of the law, but the largest
discussion, because healthcare matters - to all
we have a 50-50 match, so if the feds spend a
one – providing care for insured Americans
dollar, the state must match that dollar. Under
in exchange for $155 billion in cuts to our November 2011
The robotic surgeons of Saint Barnabas Medical Center brought their Da Vinci systems to The Mall at Short Hills to allow shoppers to “test drive” and familiarize themselves with the robots. Crowds lined up to try their luck at manipulating the system as the surgeons explained how the Da Vinci operates. One of the most typical questions I overheard was, “What if the machine goes crazy and takes control?” Patiently, it was explained that the robot is a tool, not a self operating machine. It can not do any moves that are beyond the control of the surgeon, and if the surgeon just removes his head from the screen, the robot ceases movement. In attendance at this crowd pleasing event were Louis LaSalle and Samantha Anton of Saint Barnabas Medical Center, and Drs. Denehy, Crane, Graf, Keiser, Quartell, Sansobrino, Taylor, LaSalle, Ahmed, Esposito, Lovallo and Patel plus many others. A most educational and fun event was had by all. p Mr. Louis LaSalle of Barnabas Healthcare
p Dr. Michael LaSalle demonstrates the control center of the da Vinci to a shopper
p Large crowds gathered to try their hand at operating the da Vinci Surgical robot with the help of the many robotic surgeons present.
New Jersey Physician
Annette Catino, Founder and CEO of Qualcare, Inc., Named
“Executive of the Year” by NJBIZ Magazine
Catino founded QualCare in 1991. In the 20
QualCare, Inc. is a full-service managed care
years since, she has grown QualCare into a
organization that offers self-funded PPO, HMO
multimillion-dollar business serving more than
Network, Point of Service (POS) Network,
750,000 people in New Jersey, New York and
and Open Access Health Plans, third party
Pennsylvania. QualCare is New Jersey’s largest
provider-sponsored, managed care company.
services, and a Workers’ Compensation product Under Catino’s leadership, QualCare has
including medical case management, network
crafted products that increase transparency
access, TPA services and medical bill review
and make healthcare more affordable. She was
and re-pricing. Headquartered in Piscataway,
instrumental in introducing what are known
New Jersey, QualCare is owned by 15 non-profit
as multiple employer welfare arrangements,
hospitals and physician-hospital organizations.
which allow small and mid-size employers to
QualCare contracts with 108 acute, specialty
band together and offer self-insured healthcare
and rehabilitation hospitals as well as almost
benefits to their employees.
24,000 physicians and other ancillary providers at over 44,000 locations
QualCare, Inc, New Jersey’s largest full-service, managed-care organization, announced today that its founder and CEO, Annette Catino, was named “Executive of the Year” by NJBiz at the 2011 Business of the Year Awards. The annual NJBiz Business of the Year Awards recognize the state’s most dynamic businesses and business leaders who share a commitment to professional excellence, business growth and the community. Award recipients were announced on December 5, 2011 at The Palace
Annette Catino also is well regarded for her
throughout New Jersey
healthcare expertise, and she has worked
and the surrounding
closely with various health associations
areas. Please visit us at
and state agencies to shape New Jersey’s
healthcare industry. She has served as a member of Governor Christie’s Transition Team on Healthcare. In addition, she serves as a Board Member of Caucus NJ Educational Corporation, Northfield Bancorp and Pure Inventions, LLC. She resides in Millstone,
at Somerset Park in Somerset, NJ.
“I am honored to be selected by NJBiz for this
prestigious award, which reflects the hard work
husband Wayne Kalwaytis her
of the entire QualCare team,” said Catino. “I have always had a strong passion for healthcare, combined with a deep commitment to giving back to the communities in which we work and live. Over the course of my career, I have truly been humbled by the opportunity to help residents of New Jersey live healthier lives.” November 2011
Food for Thought
West Orange, New Jersey By Iris Goldberg
For those who live in the towns surrounding Pal’s Cabin, this will not be informative because you’ve been there and frankly, it is what it is. But for those who have never been and might find themselves in the area while shopping or to see a movie, let me tell you – it might be just what you’re looking for. Opened during the Great Depression in 1932 as a summertime venture by two “pals,” Marty and Roy, Pal’s Cabin began as a 10’ by 12’ hot dog stand. In 1935, Marty and Roy came up with the idea of serving charcoal-broiled steak for the amazing price of 50 cents. Before long, the eatery became quite popular and the business grew in leaps and bounds.
foods. Although the décor is a bit ‘tired’ perhaps, Michael and I find it to be the perfect spot for a burger and fries, some buffalo wings, a great salad or even a hearty meal.
Today, Pal’s Cabin is a favorite of locals who enjoy the casual atmosphere and the extensive menu of reasonably priced and well prepared comfort
Last week, we were both in the mood for a burger. We didn’t want a ‘designer’ burger, nor did we want one from a burger chain store. Michael suggested Pal’s and since I hadn’t been there in ages, I immediately agreed. Entering from the parking lot, you find yourself on the lower level which houses a private party room. On the walls are awards that the restaurant and its owners have received over the years. Also, there are the celebrity photos including Babe Ruth, Liberace and even Bill Clinton to name a few.
p The Tap room
p Prime Rib
p Clams Casino
New Jersey Physician
We climbed the stairs and it was as if the greeter could read our minds and knew exactly what we were in the mood for because she led us straight to the bar room, complete with flat screen TVs and showed us to a cozy booth with a sofa for two against the wall. Our server appeared immediately to take the beverage order – beer on tap for Michael and a diet soda for me. As we sipped we gazed around the room. There was much going on. The bar itself was jumping and there were also tables of animated drinkers and diners as well as other tables for two with couples who were doing as we were, relaxing together after a workday.
Michael prefers his onions sautéed. Both of us dug in and didn’t stop until our plates, which also held some great fries and a bit of cole slaw, were clean. As we left, I wondered why we don’t visit Pal’s cabin more often. I think we all get caught up looking for the next “new and great thing,” whether it’s a restaurant or a cell phone or something to wear. Sometimes, in my opinion, it’s better to stick with what you know. Pal’s Cabin is located at 265 Prospect Avenue, West Orange, NJ 07052. (973) 731-4000.
The server returned to take our order. We made it easy for her. A Caesar salad to share first and two cheddar cheese burgers. The salad was surprisingly good. The dressing had the right balance of ingredients and I especially liked the homemade croutons. Served on a large platter with two smaller plates for us to use, the portion was certainly ample for sharing. Let me tell you – the burgers at Pal’s Cabin are excellent. They were cooked medium rare just as we requested. (I know you are not supposed to order ground beef that is not thoroughly cooked but it was a big sacrifice for us to move from rare to medium rare). The beef itself was superb. I know the owners of Pal’s also own a cattle ranch in Wyoming for the purpose of producing quality beef. I guess that’s the reason. The half-pound burger was served with a generous covering of melted Vermont cheddar cheese and I topped mine off with some raw onion.
p NY Strip Steak
Let Brach Eichler’s Health Law Practice Group Help You Chart a Strategic Course For Your Health Care Business Health care providers have long come to rely on the attorneys of Brach Eichler to navigate the regulatory environment at both the state and federal levels. Now that health care reform is being implemented, Brach Eichler is ready to help you make sense of the significant changes, the statutory framework and the ramifications for health care providers in New Jersey. Health Law Practice Group Todd C. Brower Lani M. Dornfeld
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101 Eisenhower Parkway • Roseland, New Jersey 07068 • t. 973.228.5700 • f. 973.228.7852 • www.bracheichler.com November 2011
Diagnosis Food for Thought
Famed Infectious Disease Specialist Leon Smith, MD has suggested we start a contest. He will submit symptoms and the correct diagnosis will win a New Jersey Physician T-Shirt, as well as getting honorable mention in our column. Case I
A four month male infant with 105° F fever, negative lung, ear, heart and joint findings. Infant was not toxic with redness of tongue, and nails which later changed in color and swelling.
42 year old physician developed a high fever, abdominal flat lightest color patch of redness (small size), non productive cough. He had rales RUL, conjunctivitis and he was toxic with normal blood pressure. The doctor received a pet for Christmas. The lab revealed an elevated white cell count. Sputum revealed many PMN’s but negative for bacteria.
Labs negative except platelets were markedly elevated.
The following responses were received for September’s column: Case 1: Factitious fever vs Familial Mediteranean Fever Case 2: Collagen disease probably Wegener’s Granulometosis The following responses were received for October’s column: Case 1: C ontact dermatitis (actually, contact urethritis) due to sensitivity to oil based lubricant or spermacide used by partner. Case 2: S eizure is reported adverse effect of Pepcid. Blood test should have picked up metabolic alkalosis, if that were cause Neither of these responses were precisely correct though some are close. Winners to be announced in the next issue.
Please send responses to MGoldberg@NJPhysician.org 20
New Jersey Physician
Call for Nominations
New Jersey Physician Magazine invites all medical practices to submit nominations for cover stories. Practices should include a brief description of what makes the practice special. Please contact the publisher Iris Goldberg at igoldberg@NJPhysician.Org November 2011