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2013 Healthcare Fraud and Abuse Bootcamp Webinar Series; 2013 Healthcare Fraud and Abuse Bootcamp Webinar Series; Part I: Fraud, Abuse, and Waste: A Primer Part I: Fraud, Abuse, and Waste: A Primer
This bootcamp webinar series is brought to you by the Fraud and Abuse (Fraud) Practice Group and is co-sponsored by the Healthcare Liability and Litigation (HLL); Hospitals and Health Systems (HHS); In-House Counsel (In-House); Labor and Employment (Labor); Long Term Care, Senior Housing, In-Home Care, and Rehabilitation (LTC-SIR); Life Sciences (LS); Medical Staff, Credentialing, and Peer Review (MSCPR);
Payors, Plans, and Managed Care (PPMC); Physician Organizations (Physicians); Regulation, Accreditation, and Payment (RAP); and Teaching Hospitals and Academic Medical Centers (THAMC) Practice Groups.
February 13, 2013 1:00-2:30 pm Eastern
Presenters
Joseph M. Kahn, Esquire,Member, Nexsen Pruet LLC, Raleigh, NC, [email protected]
Laura F. Laemmle-Weidenfeld, Esquire,Partner, Patton Boggs LLP, Washington, DC, [email protected]
Kevin E. Raphael, Esquire,Partner, Pietragallo Gordon Alfano Bosick & Raspanti LLP, Philadelphia, PA, [email protected]
1
Stark Law42 U.S.C. § 1395nn et seq. A physician may not:
Make a referral To an entity In which the physician or an immediate family member has a
financial relationship For a designated health service (DHS) For which payment may be made under Medicare
2
Stark Law
Regulatory HistoryPhases I – III of Stark regs were issued primarily through independent regulations (2001-2007)Since Phase III, CMS has proposed or finalized new or revised Stark regulations as part of annual IPPS and MPFS regulatory updatesMost recent revisions issued as part of the Patient Protection and Affordable Care Act
3
Stark Law
Refund any amounts collected Civil monetary penalties of $15,000.00 for each service Personal monetary penalties for up to $100,000.00 per
arrangement or scheme to circumvent the law Potential exclusion from the Medicare program
4
Stark Law
“Referral” Broad definition A request by a physician for, or ordering of, or the certifying or
recertifying the need for, DHS A request for a consultation with another physician and any test
or procedure ordered by or performed by the other physician The establishment of a plan of care by a physician that includes
the provision of DHS
5
Stark Law
Exclusions from “referral” definition DHS personally performed by the requesting physician Requests by certain physicians:
Radiologists Pathologists Radiation oncologists
6
Stark Law
“Financial Interest” Any direct or indirect:
Ownership or investment interest Compensation arrangement
The physician may not refer to the DHS entity and the “DHS entity” cannot bill Medicare for that referral if Stark applies
A “DHS entity” is one that either bills Medicare for the DHS or that “performs” the DHS
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Stark Law
11 Designated Health Services
1. Clinical Laboratory Services
2. Physical Therapy Services
3. Occupational Therapy Services
4. Radiology (x-ray, MRI, CT, ultrasound, nuclear medicine, PET)
5. Radiation Therapy Services
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Stark Law11 Designated Health Services (cont’d)
6. Durable Medical Equipment7. Parenteral and Enteral Nutrients/Supplies/Equipment8. Prosthetics and Orthotics9. Home Health Services10. Outpatient Prescription Drugs11. Inpatient and Outpatient Hospital ServicesSee CPT Code List:
http://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral/List_of_Codes.html
9
Stark Law
Overview of Certain Common Exceptions 42 C.F.R. § 411.355-57
For Ownership/Investment Interest In-Office Ancillary Services Physician-ownership of a whole hospital
For Compensation Arrangements Rental of Office Space/Equipment Personal Services Arrangements Fair Market Value Compensation Indirect Compensation Arrangements Physician Recruitment Employment Arrangements
10
The Antikickback Statute (AKS)
42 U.S.C. §1320a-7b(b)
Enacted by Congress in 1972 and revised over the years to address concerns about overutilization and to clarify that scope covers sham transactions
Last revised in 2010 (Affordable Care Act)
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AKS Prohibitions
Prohibits the solicitation or receipt of any remuneration in return for:
referring an individual to another person or entity for the provision of any item or service, or purchasing, ordering, or arranging for, or recommending purchasing, ordering, or arranging
for, any service, facility or item for which payment may be made, in whole or in part, under any Federal health care program
Prohibits the offer or payment of any remuneration to any person to induce that person to
refer an individual to a person for the provision of any item or service, or purchase, order, or arrange for, or recommend purchasing, ordering, or arranging for, any
service, facility or item for which payment may be made, in whole or in part, under any Federal health care program
12
AKS Scope
Statutory prohibitions apply to both sides of the remuneration: payor and payee Both can be liable under the statute Possible to have situation where only one side is liable Prosecutor need not prosecute both
Intended to sweep broadly Intent-based statute:
Cannot violate the statute without acting “knowingly and willfully” with intent to induce or reward referrals.
“Actual knowledge or specific intent — With respect to violations of this section, a person need not have actual knowledge of this section or specific intent to commit a violation of this section.”
13
Liability Under AKS Felony statute
Fines Imprisonment
As of ACA in 2010, claim resulting from violation of the statute constitutes a false or fraudulent claim under the FCA.
Even pre-2010, AKS allegations often bootstrapped onto FCA
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AKS Safe Harbors
Both statute and regulations set forth various safe harbors Very narrowly defined Must satisfy ALL criteria to have protection If arrangement falls within safe harbor, immune from
prosecution, regardless of intent Fitting a financial relationship into a safe harbor is not required
Statute contains several safe harbors, including: Discounts and similar price reductions Amounts paid by employers to bona fide employees Amounts paid by vendors to GPOs Any additional safe harbors the Secretary promulgates in
regulations
15 15
AKS Regulatory Safe Harbors
Regulatory safe harbors, 42 C.F.R. §1001.952: Investment interests Space rental Equipment rental Personal services and management agreements Sale of practice Practitioner recruitment Ambulatory surgical centers Ambulance replenishing HER
Regulatory safe harbor for every statutory safe harbor, PLUS
16 16
Damages/Loss Under the AKS
Previously somewhat unsettled. Different theories: Value of claims submitted Value of claims paid Value of the kickback
FCA context: Under new ACA provision that AKS violation results in submission of a false claim under the FCA, DOJ argues that the measure of damages is the value of the claims submitted.
Under new ACA provision defining criminal loss, Sentencing Guidelines amended “to provide that the aggregate dollar amount of fraudulent bills submitted to [a] Government health care program shall constitute prima facie evidence of the amount of the intended loss by the defendant.” PPACA, § 10606(a)(2)(B).
17
AKS vs. Stark Law AKS applies to all health care providers and anyone else who
can influence referrals; Stark applies only to physicians and DHS entities to whom they refer.
AKS applies to all items or services reimbursable under FHCP; Stark applies only to Designated Health Services.
AKS requires willful intent to induce referrals; Stark imposes strict liability.
Failure to fit relationship within AKS safe harbor does not mean automatic violation; failure to fit relationship within Stark exception does mean automatic violation.
18 18
Civil False Claims Act
31 U.S.C. §3729 et seq. Civil statute Initially enacted in 1863 to combat fraud, waste and
abuse in Civil War effort Revised significantly in 1943, 1986, 2009 Add’l revisions as part of PPACA in 2010 Department of Justice has responsibility for enforcing
(Civil Frauds, USAOs)
19 19
Conduct Prohibited Under FCA
Submitting a claim for payment, OR causing claim to be submitted for payment, by Government funds. § 3729(a)(1)(A)
Making or using, or causing to be made or used, false records or statements material to a false claim, §3729(a)(1)(B)
Making or using, or causing to be made or used, false records or statements material to an obligation to pay money or property to the Government, or knowingly concealing or improperly avoiding or decreasing an obligation to pay money to the Government, §3729(a)(1)(G)
Conspiring to defraud the Government by getting a false or fraudulent claim paid, §3729(a)(3)
All require “knowledge” and link to Government funding
20 20
“Knowledge” Under the FCA
Statute defines as: Actual knowledge that the claim or statement was false, OR Deliberate ignorance of truth or falsity of the claim or statement,
OR Reckless disregard of the truth or falsity of the claim or
statement
Proof of specific intent to defraud is NOT required
21 21
Other Key Provisions
Materiality: having a tendency to influence or be capable of influencing payment or receipt of money or property
Obligation: established duty, including that arising out of retention of any overpayment
22
Damages and Penalties Under the False Claims ActThe FCA imposes:
Treble the “amount of damages which the government sustains because of the act” giving rise to liability.
A civil penalty of $5,500 to $11,000 for each false claim.
23 23
Qui Tam Provisions
A person may bring a civil action for a violation of § 3729 “for the person and for the United States Government.”
The case is filed under seal to give the Government time to investigate and decide whether to “intervene.” Seal provision often extends up to two years, or longer.
The “relator” receives 15% - 25% of the “proceeds of the action of settlement of the claim” or, if the government declines, 25% to 30%.
Relators have received over $3.4 billion from the “proceeds” of False Claims Act cases.
Certain jurisdictional bars, such as the “public disclosure” bar and the “first to file” bar, have been the subject of significant litigation. Rockwell v. United States (Supreme Court 2007).
24 24
FCA Liability Predicated on Violation of Other Laws and Regulations The violation of a separate statute or regulation can provide the
basis for liability under the FCA
The underlying violation renders the claim false or fraudulent, thus giving rise to the FCA violation
Three basic categories:
Items or services were defective
Claimant falsely expressly certified compliance with statute/regulation
Compliance was a condition of payment
25 25
“Express Certification” Theory
FCA liability arises when: the person submitting the claim expressly certifies in writing that the
items or services at issue comply with the law, knowing that in fact they do not, and
compliance with the law is a condition of payment by the government
Often arises in the cost report context in conjunction with AKS
violations Cost reports contain certifications that the individual signing it is
aware of relevant statutes and regulations and that the services provided complied with all such statutes and regulations
Some cost reports even contain language directly referencing the AKS
26 26
“Implied Certification” Theory
FCA liability arises even in the absence of an express certification of compliance with relevant statutes or regulations when: the claimant knows it did not comply with the statute or
regulation but nevertheless submits the claim (or causes it to be submitted)
again, compliance with that statute or regulation is a condition of payment
Applies more often in context of health care claims for individual patients (UB-92s, HCFA 1500s), which implicitly represent that the submitter is in compliance with applicable law and regulations and is, therefore, entitled to payment
Initially more controversial theory than express certification, but becoming well-established now in AKS and Stark context
27 27
Compliance Basics
Common Grounds For Non-Compliance:
Compensation methodology not appropriatePayment not consistent with FMVPayments are made without documentation of work performedStark non-compliance often a technical violation
Contract not fully executed or Contract expires without written renewal Improper amendments
28
Compliance Basics
Common Problem Areas With Physician/Hospital Contractual Relationships Building Leases Equipment Leases Medical Director Agreements Employment Agreements Physician Recruitment Issues Professional Service Agreements
29
Compliance Basics
Competitor Government AuditDisgruntled Employee
• Disgruntled or former employee may turn into a whistleblower.
• Be wary of disruptive employees. The number of physician whistleblowers is on the rise.
• Recovery Audit Contractors (RAC)
• Zone Program Integrity Contractors
Ways Compliance Issues Are Often Identified:
• More likely in highly competitive markets in which providers are vying for key referral source relations
• Double-edged sword
30
Compliance Basics
Governmental Guidance OIG Compliance Guidance:
https://oig.hhs.gov/compliance/compliance-guidance/index.asp Section 6401 of PPACA: Requires Medicare providers adopt a
compliance plan with “core elements” (to be defined) MMA Guidance: http://www.cms.gov/Medicare/Medicare-
Contracting/MedicareContractingReform/ComplianceProgramGuidance.html
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Compliance Basics
7 Basic Tenets of an Effective Compliance Plan Establish and distribute written policies Designation of individual(s) to monitor compliance Commitment to training and education System for receiving reports of non-compliance Regular internal audits Disciplinary policies developed and enforced Process for investigation and report of issues
32
Compliance Basics
General Best Practices:Follow Policies and ProceduresCreate culture of compliance Regularly audit contracts and compensationCompliance education for administrators and medical staffUse template agreements designed to meet Stark exceptions and Anti-kickback statute safe harbors
33
Compliance Basics
Best Practice “Do’s”:Develop and follow consistent process for physician contractingEducate, Educate, EducateRequire use of time sheets or other verifiable documentation before compensation is paid to physicians Tie physician payment requests to executed contracts
34
Compliance Basics
Best Practice “Do’s”:Document, Document, DocumentDocument FMV determination for all payments made to physiciansDocument compliance effortsMaintain database of contracts and supporting documentsCarefully define duties in each agreement with a physician
35
Compliance Basics
Analysis FundamentalsIs a physician and/or DHS entity involved?Ownership or compensation?Which direction are referrals going?Which direction is compensation going?What Stark exception could apply?What AKS Safe Harbor could apply?
36
OIG Work Plan
Provides description of new and ongoing areas/issues that OIG plans to pursue during the next 12 months and beyond
Published annually, usually during the first week of October
Covers Medicare, Medicaid, and legislative and legal activities
37
Fiscal Year 2013 Work Plan
Examples of Work Plan Concerns: Hospital – Owned Physician Practices Using Provider-Based
Status Hospital – Acute-Care Inpatient Transfer to Inpatient Hospice
Care Hospitals – Inpatient and Outpatient Hospital Claims for the
Replacement of Medical Devices Hospitals – Outpatient Observation Services During Outpatient
Visits Nursing Homes – Adverse Events in Post-Acute Care Nursing Homes – Quality of Care Hospice – Nursing Home Practices and Financial Relationships Home Health Face-to-Face Requirement
38
Consolidation of Databases
Medicare – Fraud Investigation Database Medicaid – Medicaid Integrity Group Data Engine Payment Databases Databases can be accessed by Program Integrity
contractors, OIG, and law enforcement
39
Data Mining
Increasingly advanced investigation technique Review for discrepancies:
Services provided to wrong gender Transport when not consistent with other procedures Services provided on same date of service by different providers
40
Data Mining
Look for overutilization trends and billing outliers Start audit or investigation
Communication between private insurance companies and government investigations
41
7 ZPICs with the following areas of focus: Identify fraud, waste, and abuse through data analysis. Impose Administrative Actions such as suspensions,
overpayment collections, referrals or sanctions. Provide data to law enforcement to ensure coordination on
investigations.
Data available to ZPICs: Part A/B claims, Home Health/Hospice claims, DME
claims, and Part D PDE data Beneficiary and provider information
Zone Program Integrity Contractors (ZPICs)
42
Recovery Audit Contractors (RACs)
RAC PROJECT to detect and correct past improper payments
to implement actions that will prevent future improper payments.
Providers can avoid submitting claims that don’t comply with Medicare rules
CMS can lower its error rate
Taxpayers & future Medicare beneficiaries are protected
43
Recovery Audit Contractors (RACs)
4 RACs with the following areas of focus: Identify past improper payments made on claims for items or services provided
to Medicare beneficiaries. Recoup improper payment errors. Make recommendations to recoup improper payments.
Data available to RACs: Part A/B claims, Home Health/Hospice claims, and DME claims. All applicable data files for all claims paid during the specific timeframes of the
contract for the appropriate geographic area.
Timeliness of Data: Adjudicated claims data updates are provided by CMS as they become available
(monthly or quarterly).
44
Medicare Part D Integrity Contractors
Following areas of focus: Ensure that fraudulent or abusive behavior against the Medicare
program is identified and corrective action is taken
Serve as a law enforcement liaison to ensure coordination on cost-cutting issues
Identify, monitor and track fraud, waste, and abuse in Medicare through data analysis
Conduct compliance and financial audits
Data available to MEDICs: - Prescription Drug Event (PDE) data and Part B claims data Complaints Tracking Module (CTM) data
45
Medicare Overpayment Appeal Process – 5 Stages
Redetermination Reconsideration ALJ Hearing
If provider loses, as a matter of law, provider has to pay overpayment demand, regardless of further appeals
Medicare Appeals Council U.S. District Court
46
Background: Medicaid Integrity Program
Deficit Reduction Act (DRA) of 2005 established the Medicaid Integrity Program (MIP) in § 1936 of the Social Security Act
Dramatically increased Federal resources to fight Medicaid fraud, waste, and abuse
Requires CMS to contract with entities to: Review provider claims Audit providers and others Identify overpayments, and Educate providers, managed care entities, beneficiaries and others
with respect to payment integrity and quality of care
Provide effective support and assistance to States
47
Medicaid Integrity Contractors
Three types of MICs: Audit Review Education
Five jurisdictions: New York (CMS Regions I & II) Atlanta (CMS Regions III & IV) Chicago (CMS Regions V & VII) Dallas (CMS Regions VI & VIII) San Francisco (CMS Regions IX & X)
48
Objectives of MICs
Ensure that paid claims were:
For services provided and properly documented;
For services billed properly, using correct and appropriate procedure codes;
For covered services; and
Paid according to Federal and State laws, regulations, and policies
49
Audit MICs
Conduct post-payment audits Combination field and desk audits
Fee-for-service, cost report and managed care audits
Audits will identify overpayments; States will collect overpayments and adjudicate provider appeals
50
Suspension of Payments
Medicare/Medicaid payments to any provider or supplier may be suspended pending an investigation of credible allegations of fraud, unless a good cause exception applies (PPACA § 6402)
51
Self-Disclosure
• Refund to CMS/Medicaid/private insurers
• OIG Self Referral Program
• Stark Self-Referral Disclosure Program
• Proposed regulations (expected to be issued in final form soon) - refund “identified overpayments” in 60 days and refund $ or a potential False Claims Act violation
52
New Trend for Fiscal Intermediaries
Fiscal Intermediaries now sending letters indicating that overpayment exists, and demanding refund within 60 days pursuant to 60-Day Rule
53
Most Common Criminal Statutes - Federal
Mail Fraud – 18 U.S.C. sec. 1341 Wire Fraud – 18 U.S.C. sec. 1343
Both 20 years; fine
Health Care Fraud – 18 U.S.C. sec. 1347 10 year; fine
54
Most Common Criminal Statutes – Federal (cont.)
Obstruction of Justice Medicare Fraud – 42 U.S.C. sec 1320a-7(b)(a) – 5 year;
$25,000 False Statements – 18 U.S.C. sec. 1001
55
Most Often Used State Criminal Statutes
Medicaid Fraud Insurance Fraud
Private Right of Action for Insurance Cos.
Health Care Fraud Conspiracy
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Most Common Fraud & Abuse Issues Investigated
Anti-Kickback Statute ex. Facility X pays doctors money for referrals
Upcoding Services not rendered/ghost visits Medical Necessity
Unnecessary Procedures
Violation of Stark as basis of FCA claim
57
Compliance Plan’s Importance in Criminal Investigations
• Sentencing guidelines – U.S.S.G. §8B2.1 – “Effective Compliance and Ethics Program”
• FCA liability considerations
• Corporate Integrity Agreement (“CIA”) required?
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U.S.S.G. § 8B2.1 – Effective Compliance and Ethics Program
(a) To have an effective compliance and ethics program, for purposes of subsection (f) of §8C2.5 (Culpability Score) (Fines) and subsection (b)(1) of §8D1.4 (Recommended Conditions of Probation – Organization), an organization shall –
(1) exercise due diligence to prevent and detect criminal conduct; and
(2) otherwise promote an organizational culture that encourages ethical conduct and a commitment to compliance with the law
The failure to prevent or detect an offense does not necessarily mean that the program is not generally effective
59
Be Alert to Fraud Loss Calculation
• U.S.S.G. § 2B1.1 - sentencing guidelines for fraud – used in health care offenses
• Numbers driven – U.S.S.G § 2B1.1 (8) – additional offense levels after $1 million in loss
• Enhancements?• Abuse of Trust
• “Intended Loss” – Be aware!
60
U.S.S.G. §2B1.1, Application Note 3(F)(viii):
“In a case in which the defendant is convicted of a Federal health care offense involving a Government health care program, the aggregate dollar amount of fraudulent bills submitted to the Government health care program shall constitute prima facie evidence of the amount of the intended loss, i.e. is evidence sufficient to establish the amount of intended loss, if not rebutted.”
61
Exclusion Overview
Health care equivalent of debarment
Medicare, Medicaid and other Federal health program won’t reimburse services provided, ordered or prescribed by individual or entity
HHS-OIG has exclusive federal authority
Issue arises in FCA cases and criminal cases, as well as administrative exclusion matters
Mandatory and permissive, 42 U.S.C. §1320a-762
Mandatory Exclusion Authority
Exclusion is non-discretionary where: Criminal conviction related to delivery of item or
service under Medicare/Medicaid Criminal conviction related to patient neglect or abuse Felony conviction for other health care-related fraud,
theft, or other financial misconduct Felony conviction relating to unlawful manufacture,
distribution, prescription, or dispensing of controlled substances
5-year minimum exclusion period, potentially longer under regulatory aggravating factors. 42 C.F.R. § 1001.102.
63
Permissive Exclusion
OIG may exclude on variety of grounds Misdemeanor convictions relating to
non-Medicare/Medicaid health care fraud and non-health care-related fraud against governmental program
Misdemeanor convictions relating to unlawful manufacture, distribution, prescription, or dispensing of controlled substances
Loss of health care license for reasons relating to professional competence, professional performance, or financial integrity
Provision of unnecessary or substandard items or services
64
Permissive Exclusion, cont’d.
Bases for permissive exclusion, cont’d: Submission of false/fraudulent claims to Federal health
care program Kickback arrangements Defaulting on health education loan or scholarship
obligations Controlling a sanctioned entity as an owner, officer or
managing employee Length of exclusion: presumptively 3 years, can be
extended or shortened based on regulatory factors. 42 C.F.R. §1001.201(b).
65
Duty Not to Employ Excluded Individuals / Entities
CMP liability attaches to employing excluded individual. 42 U.S.C. §1320a-7a(a)(6).
CMS generally will not pay for services provided by excluded individual
CIAs typically require annual exclusion check for employees
Some states require monthly verification
66
Criteria Considered by OIG for Permissive Exclusion
Severity of misconduct at issue
Provider’s future financial responsibility
Likelihood that same/similar conduct will reoccur
67
Exclusion Process
42 C.F.R. §1001.2001-1001.2007
Administrative process varies based on exclusion basis. In most cases, OIG provides notice of intent to exclude,
provider responds with additional information
In limited situations, OIG provides notice of exclusion
Provider may appeal exclusion through ALJ, then DAB, then district court
Reinstatement is not automatic when exclusion period ends
68
Exclusion / FCA Overlap
Big stick that drives FCA settlements
Typically FCA settlement agreements contain waiver of permissive exclusion by HHS-OIG in exchange for defendant entering into Corporate Integrity Agreement
OIG has ability to exclude despite settlement, if no waiver
69
Exclusion/Criminal Resolution Overlap
Again, exclusion can drive negotiated resolutions, particularly given mandatory exclusion risk
Can lead to complex negotiations regarding pleas, NPAs, DPAs
70
Questions?
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2013 Healthcare Fraud and Abuse Bootcamp Webinar Series; Part I: Fraud, Abuse, and Waste: A Primer © 2013 is published by the American Health Lawyers Association. All rights reserved. No part of this publication may be reproduced in any form except by prior written permission from the publisher. Printed in the United States of America.
Any views or advice offered in this publication are those of its authors and should not be construed as the position of the American Health Lawyers Association.
“This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal or other professional services. If legal advice or other expert assistance is required, the services of a competent professional person should be sought”—from a declaration of the American Bar Association
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