Read the hypothetical case study below carefully.

Congratulations. You have been hired as the first chief compliance officer (CCO) for Mystic Health Systems, a tax-exempt charitable organization located in the Midwest, which operates a 250-bed hospital with $400 million in annual revenue (Mystic Hospital), a 200-member multispecialty physician group (Mystic Medical Group), and a 100-bed skilled nursing facility (Mystic Nursing Home), each of which is separately incorporated. Mystic Hospital is located in an urban (city) setting approximately 5 minutes from the state's capital; Mystic Nursing Home is located in a developing, previously rural area approximately 45 minutes from the state's capital; and Mystic Medical Group has multiple offices throughout the five counties that surround and include the state's capital (mostly in suburban areas).

WEEK 2: You review some of the business contracts in the files of Mystic Health Systems.

Laboratory Service: Mystic Medical Group contracts with Iffy Labs for clinical laboratory services ordered by the medical group's physicians. The contract includes a disclosure that states that the CMO of Mystic Health System has a 51% stake in Iffy Labs and that, in order to comply with medical ethics, the CMO did not take any part in negotiating the terms of the agreement. The terms of the agreement provide that if laboratory services ordered by Mystic Medical Group physicians are not reimbursed by a third-party payer, then Iffy Labs will bill Mystic Medical Group at the lowest rate it accepts as full reimbursement from any other payer, further reduced by 25%. Iffy Labs agrees to pick up and dispose of all biohazardous waste products (such as sharps) at Mystic Medical Group, in addition to those related to the collection of specimens for analysis. After the first 5,000 laboratory services ordered, Mystic Medical Group will receive a rebate of $2 for each additional laboratory service ordered.

After reading this case study answer the following questions below:

1. What are the legal and/or compliance issues raised by the hypothetical?

2. What law, regulation, or governance requirement/policy MAY have been violated? Consider among the following and explain why a potential violation may have occurred.

• Federal False Claims Act
• Physician Self-Referral "Stark" Law
• Federal Anti-Kickback Statute
• Federal Tax-Exempt Law
• Emergency Medical Treatment and Labor Act (EMTALA)
• Health Insurance Portability and Accountability Act (HIPAA)
• Antitrust Law
• Organizational bylaws
• Scope of practice laws, licensure, certification
• Employment law, corporate liability

3. Which issues merit highest priority? Why?

4. Which issues would you recommend for further investigation? Why?

5. What, if any, further steps would you suggest (e.g., referral to inside/outside counsel, involvement of additional departments or individuals, revision of policies/procedures, termination of employment or contractual relationships, self-reporting to the government, internal audit, etc.)?

6. To the extent you believe there to be a legal or compliance-related issue, please recommend alternatives to the problematic program, policy, programmatic element/component, departmental or corporate structure, and/or relationship that you believe would not violate any laws. These alternative proposals do not require detail; however, and particularly where the offending program/policy is designed to increase access, improve quality, or reduce costs, the CEO and board will want to know that these ultimate goals can still be achieved if you are recommending elimination or modification of existing activities.