2011 FRAUD & ABUSE UPDATE

John HellowHooper, Lundy & Bookman, PC310-551-8155JHellow@Health-Law.com

All views expressed in the seminar materials and in the speakers’ presentation are personal views and do not represent the formal positions of Hooper, Lundy & Bookman, Inc. or any of its clients. The speakers expressly reserve the right to freely advocate other positions in other forums.

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Patient Protection and Affordable Care Act (“PPACA”)

Public focus on PPACA insurance reforms, most of them not effective until 2014

But PPACA once again increased fraud and abuse protections and expanded self-reporting requirements, with many effective NOW

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PPACAFraud & Abuse Provisions

New 60-day deadline for reporting and refunding of overpayments

Revised False Claim Act (FCA) public disclosure bar

Clarified knowledge requirement for health care fraud crimes, including Anti-Kickback Statute (AKS) violations

New Stark Law provisions regarding physician-owned hospitals and voluntary disclosure protocol

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PPACAFraud & Abuse Provisions

New Civil Monetary Penalties (CMPs) for various health care law violations

New DHHS authority to temporarily withhold payments to providers under investigation for fraud

New mandatory Medicare & Medicaid provider exclusion requirements

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2010 Overpayment Reporting & Refunding

Effective March 23, 2010, all Medicare and Medicaid overpayments must be reported and refunded to the applicable payor within the later of:

• "60 days after the date on which the overpayment was identified;" or

• "the date any corresponding cost report is due."

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2010 Overpayment Reporting & Refunding

“Overpayments" are defined as "any funds that a person receives or retains under [Medicare] or [Medicaid] to which the person, after applicable reconciliation, is not entitled;”

An overpayment “retained by a person after the deadline for reporting and returning the overpayment" is also an "obligation" for purposes of the federal False Claims Act (FCA).

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From Overpayment To False Claim

In 2009, the FCA was revised to impose civil liability on any person who “knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government;”

Other FCA revisions defined an “obligation” as including “retention of an overpayment” and no longer required any claim or statement about such obligation to be submitted to government as an essential element of a reverse false claim

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2010 Overpayments:FAQs and Some Answers

When is an overpayment “identified?” for purposes of the 60-day clock?

Does the 60-day rule require an identified overpayment to be reported if its amount is still unknown?

Must any overpayment arising before March 23, 2010 and identified on or after March 23, 2010 be reported and refunded within 60 days?

How does the 60-day rule apply to interim payments subject to the cost report reconciliation process?

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2010 FCA Changes

The PPACA revises the FCA’s “publicdisclosure/original source” bar to:

Limit public disclosure sources to a federal hearing, administrative report, audit, or investigation (while retaining a congressional and Government Accounting Office report, hearing, audit, or investigation, and the news media as public disclosure sources)

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2010 FCA Changes

Require an “original source” to have "knowledge that is independent of and materially adds to the publicly disclosed allegations“

Even if “public disclosure/original source” bar applies, the district court may not dismiss the action without the government’s consent

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2010 AKS Changes

In order to obtain an AKS conviction, the government must prove that a person “knowingly and willfully” violated the statute

The PPACA clarifies that this intent standard does not require a person to have actual knowledge that his conduct violates the AKS or have a specific intent to violate the AKS

The PPACA also provides that any claim “resulting from” an AKS violation is a false claim within the meaning of the FCA

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2010 Stark Changes

Effective December 31, 2010, the Stark Law exception permitting some physician-owned hospitals will be eliminated, no such new hospitals will be allowed, and existing physician-owned hospitals will be prohibited from expanding many aspects of the facility including beds, procedure rooms, and operating rooms, or increasing the percentage of physician ownership

DHHS must develop self-disclosure protocols for Stark violations by no later than September 2010

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2010 Withholding of Payment

DHHS is now authorized to withhold payments to a provider where there is a “credible allegation” of fraud 

DHHS must promulgate regulations defining when there is a “credible allegation of fraud” for the purpose of a withhold

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2010 New Civil Monetary Penalties

$50,000 + treble damages for knowingly making false statements, omission, misrepresentation of a material fact in any federal healthcare program application, bid, or contract

$50,000 for each false record or statement used for payment from federal healthcare program (FCA-type provision)

$15,000 per day for failure to grant timely access, upon reasonable request, to OIG for audits, investigations, evaluations, etc.

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2010 Mandatory Exclusions

A state must terminate a provider from its Medicaid program if: The provider is terminated by Medicare or a

Medicaid program in another state; or The provider owns, controls, or manages a

provider:

• That has delinquent unpaid overpayments;• Is suspended, excluded, or terminated from

participation; or• Is affiliated with a suspended, excluded, or

terminated individual or entity

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2010 Permissive Exclusions

DHHS may now exclude a hospital from participation in federal healthcareprograms if: The hospital knowingly makes a false

statement, omission, or misrepresentation of material fact in any application, agreement, bid, or contract to participate or enroll in a federal healthcare program

The hospital intentionally obstructs a Medicare/Medicaid program audit or investigation

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2010 Mandatory Compliance Plans

DHHS can now require designated providers to have compliance programs in place as a condition of program participation.

Plan requirement will almost certainly be applied to hospitals

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Questions?