Medicare and Medicaid Repayments and...

Presenting a live 90‐minute webinar with interactive Q&A

Medicare and Medicaid Medicare and Medicaid Repayments and Disclosures Meeting Refund and Reporting Obligations to Comply with FERA, FCA and PPACA

T d ’ f l f

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

WEDNESDAY, AUGUST 24, 2011

Today’s faculty features:

Thomas S. Crane, Member, Mintz Levin Cohn Ferris Glovsky and Popeo, Boston

Robert L. Roth, Partner, Hooper Lundy & Bookman, Washington, D.C.

James G. Sheehan, Medicaid Inspector General, New York Office of the

Medicaid Inspector General, Albany, N.Y.

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STRAFFORD PUBLICATION CLE WEBINAR

Medicare and Medicaid:Repayments and DisclosuresRepayments and Disclosures

August 24, 2011

Presented by:

Robert L. RothH L d & B k P CHooper, Lundy & Bookman, P.C.

2000 K Street, N.W., Suite 200Washington, D.C. 20006

T l h (202) 587 2590Telephone: (202) 587-2590Email: [email protected]

Goals for Today’s Presentation

Review legal authorities relating to repayments and Review legal authorities relating to repayments and disclosures under Medicare and Medicaid, including changes made by the Patient Protection and Affordable Care Act (“PPACA”)

Discuss how Federal False Claims Act ("FCA") liability was heightened by the mandatory repayment provisions inheightened by the mandatory repayment provisions in PPACA

Present practical steps to take in response to the changes made by PPACA and the changes made to the FCA by the Fraud Enforcement and Recovery Act of 2009 (“FERA”)

Hooper, Lundy & Bookman, P.C.©6

Goals for Today’s Presentation

R i h f b k f t /h Review how far back for overpayments you go/how far back the government can go; what is the effect of administrative finalityadministrative finality

Discuss to which agency should you report and what should you say, including the effect of PPACA’sshould you say, including the effect of PPACA s Medicare Self-Referral Disclosure Protocol

Review range of potential enforcement risks –g pincluding criminal prosecution, CMPs, exclusion, and adverse certification action.


Report and Return Obligation Added by PPACA

42 U S C §1320a 7k(d) Reporting and Returning of42 U.S.C. §1320a-7k(d) - Reporting and Returning of Overpayments (added by PPACA)

“(1) In general.— If a person has received an overpayment, the person shall (A) report and return the overpayment to the S t th St t i t di i t tSecretary, the State, an intermediary, a carrier, or a contractor, as appropriate, at the correct address; and (B) notify the Secretary, State, intermediary, carrier, or contractor to whom the overpayment was returned in writing of the reason for the overpayment.”



42 U S C §1320 7k(d) t’d42 U.S.C. §1320a-7k(d) – cont’d

“(2) Deadline for reporting and returning overpayments An(2) Deadline for reporting and returning overpayments.— An overpayment must be reported and returned under paragraph (1) by the later of (A) the date which is 60 days after the date on which the overpayment was identified; or (B) the date any corresponding cost report is due, if applicable.”




“(3) Enforcement Any overpayment retained by a person after(3) Enforcement.— Any overpayment retained by a person after the deadline for reporting and returning the overpayment under paragraph (2) is an obligation (as defined in section 3729(b)(3) of title 31, United States Code) for purposes of section 3729 of such title.”



42 U S C §1320 7k(d) t’d42 U.S.C. §1320a-7k(d) – cont’d“(4) Definitions.— In this subsection:(A) Knowing and knowingly The terms knowing and(A) Knowing and knowingly.— The terms knowing and knowingly have the meaning given those terms in section 3729(b) of title 31, United States Code.(B) Overpayment.— The term "overpayment" means any funds that a person receives or retains under title XVIII or XIX to which the person after applicable reconciliation is not entitledwhich the person, after applicable reconciliation, is not entitled under such title.”




“(C) Person (i) In general The term person means a provider(C) Person. (i) In general.— The term person means a provider of services, supplier, medicaid managed care organization (as defined in section 1903(m)(1)(A)), Medicare Advantage organization (as defined in section 1859(a)(1)), or PDP sponsor (as defined in section 1860D-41(a)(13)). (ii) Exclusion.— Such term does not include a beneficiary.”f y


Reverse False Claims and Overpayment Obligations:Statutory Language From FCAy g g

Old 31 U.S.C. §3729(a)(7)-- “Any person who … knowingly makes, uses, or caused to

be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money , g p y yor property to the Government….”

New 31 U.S.C. §3729(a)(1)(G)“Any person who knowingly makes uses or causes to-- Any person who … knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government or knowingly conceals or knowingly andGovernment or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government….” (emphases added)


(emphases added).

FERA’s Changes Concerning LiabilityFor Reverse False Claims

FERA establishes liability for a person who:“K i l k b d d-- “Knowingly makes, uses or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government.” (emphasis added)(emphasis added)

OR-- “Knowingly conceals . . . an obligation to pay or transmit

t t th G t”money or property to the Government”OR

-- “Knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government.” (emphasis added)


Key Defined and Undefined Terms

“Material” 31 U.S.C. §3729(b)(4) -- “having a Material 31 U.S.C. §3729(b)(4) having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.”

“Obligation” 31 U.S.C. §3729(b)(3) - “an established duty, whether or not fixed, arising from an express or implied contractual, grantor-grantee, or licensor-li l ti hi f f b d i illicensee relationship, from a fee-based or similar relationship, from statute or regulation, or from the retention of any overpayment ” (emphases added)


retention of any overpayment…. (emphases added).

Key Defined and Undefined Terms

Undefined Terms: Undefined Terms:-- “Improperly”

The Committee Report states: “The Committee does not intend this language to create liability for a simple retention of an overpayment that is permitted by a statutory or regulatory process for reconciliation provided that the receipt of the overpayment is not b d illf l t f i i t t i th tbased on any willful act of a recipient to increase the payments from the Government when the recipient is not entitled to such Government money or property.”

“E t bli h d d t i i f ”-- “Established duty … arising from”-- “Overpayment”


CMP Added By PPACA

PPACA §6402(d)(2) amends the Federal CMP statute. New 42 U.S.C. §1320a-7a(a)(10) exposes CMP liability to § ( )( ) p y

any person “that knows of an overpayment (as defined in paragraph (4) of [42 U.S.C. §1320a-7k(d)]) and does not report and return the overpayment in accordance with suchreport and return the overpayment in accordance with such section.”

The CMP for violations of this provision is up to $10,000 for each item or service, plus an assessment of up to three times the amount claimed for each such item or service.


CMP Added By PPACA

“The Secretary may make a determination in the same proceeding to exclude the person fromsame proceeding to exclude the person from participation in the Federal health care programs (as defined in [42 U.S.C. §1320a-7b] and to direct the fappropriate State agency to exclude the person from participation in any State health care program.” 42 U S C §1320 7 ( )U.S.C. §1320a-7a(a).


Important QuestionsPost-PPACAPost PPACA

When will an overpayment deemed to be “identified”?

What is the meaning of “after applicable reconciliation”?

What is the effect of the mandatory repayment provisions on appeal rights and waiver of liability?

To what extent is administrative finality available as a defense?


Important QuestionsPost PPACAPost-PPACA

Can overpayments be corrected through adjustment Can overpayments be corrected through adjustment bills, in lieu of reporting/returning?

Does the report/return obligation apply to p g pp yoverpayments that occurred before March 23, 2010?

Will guidance from CMS be issued in 2011? Will it gbe in the form of notice and comment rulemaking?

What is the applicable statute of limitations?



Overpayment Refund HypotheticalA provider submits a Medicare claim that is properly processed and paid. After receiving payment, the provider determines that the claim, as submitted, was incorrect and, therefore, that it has received an overpayment. The claims-submission period has not yet expired. The provider is considering submitting an adjustment request to correct the payment on the claim.

Is the claim adjustment process still viable post-PPACA and FERA or must the provider more formally “report and return” the “overpayment”?

What if the adjustment request is submitted within 60 days of the overpayment being identified?

What if more than 60 days has passed?



CMS-838 - for providers to use to identify credit balances (and, therefore, potential overpayments). It must:

-- be submitted 4 times a year, 30 days after the close of each tquarter.

-- include an explanation of the "reason" that it is retaining the credit balance.

-- be signed by an “Officer or Administrator” who certifies that the information is “a true, correct, and complete t t t d f th b k d d f thstatement prepared from the books and records of the

provider in accordance with applicable Federal laws, regulations, and instructions.”


Important QuestionsPost-PPACA

CMS 838 states that “[a]nyone who misrepresents CMS- 838 states that [a]nyone who misrepresents, falsifies, conceals, or omits any essential information may be subject to fine, imprisonment, or civil money penalties

d li bl F d l l ”under applicable Federal laws.” What is the effect of PPACA report/return requirement on

the CMS-838 process?the CMS 838 process? NYOMIG (Jim Sheehan) says “if your balance sheet has

a reserve due third parties, you have an overpayment.” 9/14/2010 PPT P t ti t 269/14/2010 PPT Presentation at 26

What about refunds to beneficiaries?


An Important Regulation

42 C.F.R. §489.41

“(a) Prompt refund to the beneficiary or other person is the preferred method of handling incorrect collectionspreferred method of handling incorrect collections.

(b) If the provider cannot refund within 60 days from the date of the notice of incorrect collection, it must set aside an amount,

l t th t i tl ll t d i t tequal to the amount incorrectly collected, in a separate account identified as to the individual to whom the payment is due. This amount incorrectly collected must be carried on the provider's

d i thi til fi l di iti i d irecords in this manner until final disposition is made in accordance with the applicable State law.”


What About Kickbacks?

PPACA amends the Anti-kickback Statute to provide that anyPPACA amends the Anti kickback Statute to provide that any claim that “result[s] from” an AKS violation is now a false or fraudulent claim under the FCA “ l h l d l f“a claim that includes items or services resulting from a

violation of [the AKS] constitutes a false or fraudulent claim for purposes [of the FCA]”f p p [ f ]

Where items or services included in a claim “result[] from” an AKS violation, that claim is now a false or fraudulent claim nder the FCA e en if there is no accompan ing certificationunder the FCA, even if there is no accompanying certification

of compliance with the laws by the entity submitting the claim


Do Kickbacks Implicate Overpayment Authorities?Authorities?

Is a claim infected by a kickback an “overpayment”? Is a claim infected by a kickback an overpayment ? What if only one component of inpatient care is

infected by a kickback? Is the whole DRG theinfected by a kickback? Is the whole DRG the “overpayment”?

Does the failure to report/repay claims infected by Does the failure to report/repay claims infected by kickbacks create additional liability under the FCA?


Notice of Possible Overpayment

Where notices of possible overpayments come from:p p y Government demand, including MACs, RACs, MICs, and

ZPICs Other outside notice Inside notice – compliance plan hot-line, internal audit exit

interviewinterview

Once receiving notice of a possible overpayment: Must you follow-up? Must you follow up? If you must follow-up, what is the scope and timing of the

follow-up?


Practical Responses –Notice of Possible Overpayment

Post-PPACA – need to move very quickly y q y Follow-up on a notice of a possible overpayment can

be divided into the following three phases: Investigation Developing the refund/disclosure strategy Implementing the selected strategy

Post-PPACA – may need to report/return before the i i i h b l dinvestigation has been completed


Practical Responses –Notice of Possible Overpayment

Other important issues:Other important issues: The Medicare Payment and Appeals Process, including

Finality - In the Case of O’Connor Hospital, Medicare Appeals Council (Feb. 1, 2010) – important RAC appeal

Waiver of Overpayment Recoveries

i h l (b) id Without Fault Statute - 42 U.S.C. §1395gg(b) - provider “shall, in the absence of evidence to the contrary, be deemed to be without fault if the Secretary's determination that more f f ythan such correct amount was paid was made subsequent to the third year following the year in which notice was sent....”


The O’Connor Case

In the Case of O’Connor Hospital – A Closer LookIn the Case of O Connor Hospital A Closer Look Medicare Appeals Council declines request by CMS to

review decision limiting recovery for RAC “short stay” disallowance to the difference between what was paid on andisallowance to the difference between what was paid on an inpatient basis and what would have been paid on a outpatient basis for observationCMS li li i P B ill i CMS policy limits recovery to Part B ancillaries

Counter-productive CMS policy – providers should appeal all RAC denials of this kind

Effect on compliance self-audits and self-disclosures Caveat on use of statistical sampling


Additional Enforcement Tools

The Use of Criminal Authority - 18 U S C §1347 (health The Use of Criminal Authority - 18 U.S.C. §1347 (health care fraud) - East Tennessee Heart Consultants (E.D. Tenn.) (Pretrial Diversion Agreement, Federal and State Settlements

J 4 2007)- January 4, 2007)

Federal State Private Use of FCA Authority - U S ex rel Federal, State, Private Use of FCA Authority - U.S. ex rel. McCaslin v. Harris County Hosp. Dist., S.D. Tex., No. H-03-4438, settlement signed 6/4/07 – recovery of MSP and M di id TPLMedicaid TPL overpayments


Medicaid v. Medicare Recovery Actions

Medicare - Federal program – focus on recovery of Medicare p g yoverpayments from providers.

Medicaid – Federal/State program – Federal focus on i f th t t hi h i t i t d trecovering from the state which, in turn, is expected to recover

from the provider. See “Review of Medicaid Credit Balances at Baystate Franklin Med. Ctr. for the Period Ending June 30, 2006” (Report Number A-01-07-00002) (July 11, 2007) (reviewing federal and state roles in recovering Medicaid provider overpayments)provider overpayments).


Medicaid Integrity Program

Enacted in the Deficit Reduction Act of 2005 Enacted in the Deficit Reduction Act of 2005 Includes “identification of overpayments” Special overpayment contractor to assist “in Special overpayment contractor to assist “in

developing approaches to data mining”


New York State Medicaid Self-Disclosure Guidance

Self-Disclosure Guidance issued by the New York State Office of the Medicaid Inspector General (“OMIG”) on March 12, 2009 at

http://www.omig.state.ny.us/data/images/stories/self_disclosure/omig_provider_self_disclosure_guidance.pdf

OMIG has developed this approach to encourage and offer incentives for providers to investigate and report matters that involve possible fraud, waste abuse or inappropriate payment of funds – whether intentional orwaste, abuse or inappropriate payment of funds whether intentional or unintentional – under the state’s Medicaid program.

Guidance at 1.Guidance at 1.


New York State Medicaid Self-Disclosure Guidance

September 14, 2010 NYOMIG PPT Presentationp , “OMIG will not require or expect providers to look back more

than six years from the date of disclosure unless the disclosure i l b t t OMIG d t i th iinvolves a base year cost report, or OMIG determines there is a basis to suspect fraud.” Slide 31

“Expectation of full access to records.” Slide 37pectat o o u access to eco ds. S de 37 “We count the number and extent of disclosures as an outcome

measure of our effectiveness as an agency.” Slide 38 “Upon completion, we send a close-out letter to the provider

summarizing our resolution of the disclosure.” Id.


Medicaid Initiatives

When Medicaid repayment or disclosure protocols When Medicaid repayment or disclosure protocols, such as the New York Medicaid Self-Disclosure Guidance, are established by states, it is important to , y , pscrutinize them for federal/state issues.

This helps assure that repayments/disclosures are p p yproperly coordinated at both governmental levels.


Conclusion

Questions and AnswersQuestions and Answers

1101491.1


Medicare and Medicaid Repayments and Disclosures

Meeting Refund and Reporting Obligations to Comply with Meeting Refund and Reporting Obligations to Comply with g f p g g p yg f p g g p yFERA, FCA and PPACAFERA, FCA and PPACA

Th S C ETh S C EThomas S. Crane, Esq.Thomas S. Crane, Esq.(617) 348(617) 348--1676 1676

[email protected]@mintz.com

August 24, 2011 August 24, 2011 ---- 1 to 2:30 pm EDT1 to 2:30 pm EDT

[email protected]@mintz.com

Webinar Sponsored by Strafford PublicationsWebinar Sponsored by Strafford Publications© Copyright, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., 2011, non-exclusive license to Strafford Publications

MINTZLEVINCOHNFERRISGLOVSKY ANDPOPEOPC

NOTEThe views expressed in these materials and in the

seminar presentation are the personal views of the author and do not represent the formal

position of Mintz, Levin, Cohn, Ferris, Glovsky d P P C th i di id l tt and Popeo, P.C., any other individual attorneys

at the firm, or any of its clients. The presenter expressly reserves the right to advocate freely expressly reserves the right to advocate freely

other positions on behalf of clients.


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NOTEThese materials are based on a section of the Healthcare Compliance Legal Issues Manual, Third Edition that will be published by the Third Edition, that will be published by the

American Health Lawyers Association in Spring of 2011, and originally appeared as a chapter entitled , g y pp p

"Voluntary Disclosure" in BEST PRACTICES HANDBOOK IN ADVISING CLIENTS ON

FRAUD AND ABUSES ISSUES (American Health FRAUD AND ABUSES ISSUES (American Health Lawyers Association, June 1999) and numerous speeches presented to various AHLA seminars.


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p p

OutlineOutline

A.A. Legal Foundation for SelfLegal Foundation for Self--Disclosing Disclosing O t d M ki R f dO t d M ki R f dOverpayments and Making RefundsOverpayments and Making Refunds

B. Benefits and Risks to Self-DisclosureB. Benefits and Risks to Self Disclosure

C. Selecting Where to Disclose

D. Self-Disclosure Protocols


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IntroductionIntroduction

“Voluntary Disclosure” a misnomer because repayment of funds may be legally compelled repayment of funds may be legally compelled

We will assume no continuing violations of llaw

Now more important than ever for counsel to punderstand how to navigate the self-disclosure process: G t f t Government enforcement Internal audits and investigations Whistleblowers


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Legal Foundation for SelfLegal Foundation for Self--Disclosing Disclosing Overpayments and Making RefundsOverpayments and Making RefundsOverpayments and Making RefundsOverpayments and Making Refunds

Health Reform ─ Section 6402,Pub. L. 111-148 t bli h § 1128J(d)148, establishes new § 1128J(d)

Mandatory reporting and returning of toverpayments

Statutory definition of overpayment:“ The term `overpayment' means any

funds that a person receives or retains under title XVIII or XIX to which the under title XVIII or XIX to which the person, after applicable reconciliation, is not entitled under such title.”


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not entitled under such title.


Health Reform ─ New § 1128J(d) (cont.)M d t ti d t i f Mandatory reporting and returning of

overpayments (cont.) Providers must ─ “(A) report and return the overpayment to the (A) report and return the overpayment to the

Secretary, the State, an intermediary, a carrier, or a contractor, as appropriate, at the correct address;

dand “(B) notify the Secretary, State, intermediary,

carrier, or contractor to whom the overpayment was returned in writing of the reason for the overpayment.”


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Health Reform ─ New § 1128J(d) (cont.)f § J( ) ( )Mandatory reporting and returning of

overpayments (cont.) Timeframes for reporting p y ( f f p gand returning overpayments ─ “(A) the date which is 60 days after the date on y

which the overpayment was identified; or

“(B) the date any corresponding cost report is due, if li bl ” if applicable.”


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Health Reform ─ New § 1128J(d) (cont.)Mandatory reporting and returning of

overpayments (cont.) EnforcementA t t i d b ft th Any overpayment retained by a person after the deadline for reporting and returning the overpayment is an “obligation” and therefore

ti bl d th F l Cl i A t if actionable under the False Claims Act if “knowing”.

New CMP for anyone who knows of an yoverpayment and does not report and return the overpayment in accordance with 1128J(d).


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General considerations

Several other Medicare authorities to consider CMS 855 provider/supplier enrollment form CMS 855 provider/supplier enrollment form ----CMS 855 provider/supplier enrollment form CMS 855 provider/supplier enrollment form

overpayments may be recouped through overpayments may be recouped through withholdingwithholdingM di i t ti f fi i l M di i t ti f fi i l Medicare requires accurate reporting of financial Medicare requires accurate reporting of financial informationinformation

Knowing reporting of materially inaccurate or false Knowing reporting of materially inaccurate or false g p g yg p g yinformation may constitute a false statementinformation may constitute a false statement

Similar state laws may also applySimilar state laws may also apply


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G l id ti ( t )General considerations (cont.) When a refund is required to be made to

Medicare, a good faith effort may need to be made to refund co-payment amounts to b fi i ibeneficiaries


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Legal Foundation for SelfLegal Foundation for Self--Disclosing Disclosing Overpayments and Making RefundsOverpayments and Making RefundsOverpayments and Making RefundsOverpayments and Making RefundsCan be very difficult to determine whether and

h t h b “id tifi d”when an overpayment has been “identified”. Medicare laws permit overpayment to be waived in

certain instances generally where a provider is certain instances generally where a provider is “without fault”

Where counsel finds a good-faith basis to believe Where counsel finds a good faith basis to believe that no overpayment exists, a refund to the government is not compelled

Identification of a billing problem vs. specific overpayments


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The Stark Law Prohibits the submission of a claim when a

Medicare or Medicaid referral has taken l hibi d fi i l place pursuant to a prohibited financial

relationship Wh id l d th t l When a provider concludes that a clear

violation of the Stark law exists, a refund may be compelledmay be compelled

Compensation must be consistent with fair market value;


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market value;


The Stark Law (cont.): Compensation must not indirectly (or in some

cases directly) take into account the volume or value of referrals;

Compensation must not indirectly (or in some cases directly) take into account other businesses generated; and

Th t t b i ll The arrangement must be commercially reasonable even if the physician made no referrals


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referrals.

Legal Foundation for SelfLegal Foundation for Self--Disclosing Disclosing Overpayments and Making RefundsOverpayments and Making RefundsOverpayments and Making RefundsOverpayments and Making RefundsPeriod of Disallowance 73 Fed Reg at 48700-48709 (Aug. 19, 2008) 42 CFR 411.353(c)(1)). 42 CFR 411.353(c)(1)).

Related concepts Temporary non-compliance (411.353(f)). Temporary non-compliance (411.353(g)).


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Period of Disallowance (cont.)( Sets the outer limits during which DHS

providers can be guaranteed that billing is providers can be guaranteed that billing is permitted.

Period of disallowance begins at the time the Period of disallowance begins at the time the financial relationship fails to meet all of the

i t f li bl tirequirements of an applicable exception.


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Period of Disallowance (cont.)( Ends no later than: If non-compliance is unrelated to compensation → If non compliance is unrelated to compensation

the date the arrangement satisfies an exception. If non-compliance is related to compensation →

h d h l i hi ll f hthe date the relationship meets all of the requirements of an applicable exception and any excess compensation is returned or underpayment p p yhas been paid


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Period of Disallowance (cont.)( CMS provides no assurance as to the period of

disallowance: If the reason for non-compliance is never corrected

orE ti ( d t ) ld b Excess compensation (or underpayments) could be construed as either payment for referrals that pre-date a noncompliant arrangement or will occur after the end of the noncompliant arrangement.


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Period of Disallowance (cont.): CMS explicitly rejects under this rule

immunizing arrangements during period of immunizing arrangements during period of non-compliance. But see two temporary non compliance But see two temporary non-compliance

rules under 411.353(f) and (g).


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Period of Disallowance (cont.)( Practical Issues Effect on other remedial fixes? Use of promissory note by DHS provider with

security agreement and collateral? Effect on other dispute settlements: is

negotiated settlement payment equal to the return of “all” excess compensation?return of all excess compensation?

Self-disclosure as to period of non-compliance?


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compliance?



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Obligation to Return Overpayments OMIG takes the position that providers are OMIG takes the position that providers are

obligated to return overpaymentsobligated to return overpaymentsg p yg p y Cites to 18 NYCRR Cites to 18 NYCRR §§ 515.2515.2 (b)(3) tracks very closely SSA (b)(3) tracks very closely SSA §§ 1128B(a)(3) (1128B(a)(3) (seesee( )( ) y y( )( ) y y §§ ( )( ) (( )( ) (

slide #4)slide #4)


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FAR Contractor Disclosure Requirementq Close the Contractor Fraud Loophole Act, Pub.

L. 110-252 (enacted June 30, 2008) L. 110 252 (enacted June 30, 2008) Required revision of FAR

73 Fed. Reg. 67064 (Nov. 12, 2008, effective 73 Fed. Reg. 67064 (Nov. 12, 2008, effective date Dec. 12, 2008): Clause 52.203-13 -- Contractor Code of Business

Ethics and Conduct


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FAR Mandatory disclosure (cont.): C t t h ll ti l di l i iti Contractor shall timely disclose, in writing, To the agency OIG, with a copy to the CO, Whenever in connection with the award Whenever, in connection with the award,

performance, or closeout of the contract or subcontract,

Contractor has credible evidence that a principal, employee, agent, or subcontractor has committed-- (A) A violation of Federal criminal law involving fraud, (A) A violation of Federal criminal law involving fraud,

conflict of interest, bribery, or gratuity violations found in Title 18 of the United States Code; or

(B) A violation of the civil FCA. MINTZLEVINCOHNFERRISGLOVSKY ANDPOPEOPC

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(B) A violation of the civil FCA.


FAR Mandatory disclosure (cont.):y “By mandating disclosure to the OIG, the rule

will add weight to the arguments inside a corporation that good business practices in the long run favor compliance and disclosure.”

Duration: The disclosure requirement for an individual contract continues until at least 3

ft fi l t th t t years after final payment on the contract.


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FAR Mandatory disclosure (cont ):FAR Mandatory disclosure (cont.): “Timely” and “Credible evidence” -- “[U]sing the standard of ‘credible evidence’ rather [U]sing the standard of credible evidence rather

than ‘reasonable grounds to believe’ [initially proposed] will help clarify ‘timely‘’ because it i li th t th t t ill h th implies that the contractor will have the opportunity to take some time for preliminary examination of the evidence to determine its credibility before deciding to disclose to the Government.”


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False Claims Act (FCA) amendments in the False Claims Act (FCA) amendments in the Fraud Enforcement and Recovery Act of 2009 (FERA), Pub. L. 111-21( )

FCA act makes it illegal, FCA act makes it illegal, inter aliainter alia, to knowingly , to knowingly make, use or cause to be made or used, a false make, use or cause to be made or used, a false

d l id d d l id d record or statement to conceal, avoid or decrease record or statement to conceal, avoid or decrease an an obligationobligation to pay or transmit money or to pay or transmit money or property to the government.property to the government.property to the government.property to the government.


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False Claims Act (FCA) amendments in False Claims Act (FCA) amendments in FERA (cont.)

FERA tweaks this language and adds:FERA tweaks this language and adds: FERA tweaks this language and adds:FERA tweaks this language and adds: “or knowingly conceals or knowingly and “or knowingly conceals or knowingly and

improperly avoids or decreases an improperly avoids or decreases an obligationobligationp p yp p y ggto pay or transmit money or property to the to pay or transmit money or property to the governmentgovernment”


65



FERA tweaks this language and adds a new FERA tweaks this language and adds a new FERA tweaks this language and adds a new FERA tweaks this language and adds a new definition of “obligation”, which includes: “an definition of “obligation”, which includes: “an established duty, whether or not fixed, arising established duty, whether or not fixed, arising f i li d t t l f i li d t t l from an express or implied contractual . . . from an express or implied contractual . . . Relationship, from a feeRelationship, from a fee--based or similar based or similar relationship, from statute or regulation, or from relationship, from statute or regulation, or from p, g ,p, g ,the retention of any overpaymentsthe retention of any overpayments”


66



Query whether this language creates a new Query whether this language creates a new Query whether this language creates a new Query whether this language creates a new duty to return overpayments or merely refers duty to return overpayments or merely refers back to a preback to a pre--existing “established duty” (if existing “established duty” (if

?) ?) any?) any?)


67


Self-Disclosure Case Study: Condell yMedical Center BNA Health Care Fraud Report, vol. 13, No. 1, p , , ,

p. 44-46, B. Roark & M. Fortugno Self-disclosure made to USAO, not OIG Reduced to settlement agreement in 6 months Size of settlement -- $36M -- highlights g g

significant liability providers can incur due to Stark and AKS violations


68

Legal Foundation for SelfLegal Foundation for Self--Disclosing Disclosing Overpayments and Making RefundsOverpayments and Making RefundsOverpayments and Making RefundsOverpayments and Making RefundsSelf-Disclosure Case Study: Condell yMedical Center (cont.) Condell not required to enter into CIAq

But OIG did provide release Condell agreed that United States and Illinois g

had valid claim for $150M AUSA served as sole point of contact and

handled coordination with OIG, DOJ Civil Division and Illinois


69


HIPAA healthcare fraud authorities

Add as potential authorities, HIPAA health care crimes –

18 U.S.C. § 669 (theft or embezzlement in connection with a health care benefit program)

§ 1347 (health care fraud)

As applied in US Attorney for the Eastern District of pp yTennessee settlement with East Tennessee Heart Consultants (“ETHC”), January 4, 2007


70


Self-Disclosure Case Study: ETHC

Background And Allegations

ETHC is a medical practice of 42 cardiologists that employs more than 250 people in Knoxville, Tennessee.

Two former employees of ETHC filed a qui tam action under the False Claims Act on November 6, ,2003. These employees had worked as ETHC’s Patient Financial Services Representatives (“PSRs”)


71

( PSRs ).


Self-Disclosure Case Study: ETHC (cont.) Background And Allegations (cont.) ETHC had a number of credit balance practices p

which amounted to a “policy” of avoiding repaying credit balances or making refunds difficult for payors and patients seeking money

d thowed them The vast amounts of credit balances that the

practice owed related to patients, not Medicare, d d hMedicaid or other payors

Important: there were no allegations of false claims or poor quality of care.


72

p q y


Self-Disclosure Case Study: ETHC (cont.)

Background And Allegations (cont.) ETHC’s year end books did not reflect credit ETHC s year-end books did not reflect credit

balances as accounts payable, allowing these monies to be treated as year-end profits to physicians.

When the practice converted to a new billing t l ti f th dit b l t system, a large portion of the credit balances at

that time did not move over into the new system and were thus removed from the practice’s books.


73



Settlements ETHC agreed to ETHC agreed to --

o a criminal pretrial diversion agreement (“PDA”),o separate civil settlements with the federal and state

governments governments, o a five-year Corporate Integrity Agreement with the

Office of the Inspector General (“CIA”).Fi i l T $2 9 illi i i il l i Financial Terms -- $2.9 million in civil penalties and restitution to private payors and 11,220 patients.


74


Self-Disclosure Case Study: ETHC (cont.) Settlements (cont.) Government Programs:

o $1 5 million to DoJ for settling civil claims o $1.5 million to DoJ for settling civil claims under the FCA related to federal health care programs; $200 000 t th t t f ttli t t l o $200,000 to the state for settling state laws claims;

o (Relators’ share came to over $330,000) Restitution:

o $1 million to 11,220 patients; o $200,000 to private health plans.


75 ETHC paid $71,868 for Relators’ attorney’s fees.

Legal Foundation for SelfLegal Foundation for Self--Disclosing Disclosing Overpayments and Making RefundsOverpayments and Making RefundsOverpayments and Making RefundsOverpayments and Making RefundsSelf-Disclosure Case Study: ETHC (cont.)

Criminal Pretrial Diversion Agreement

A Criminal Pretrial Diversion Agreement (“PDA”) is a process by which a prosecutor

t i i i l h f d fi d agrees to waive criminal charges for a defined period of time during which the target agrees

to undertake certain activities either under the to undertake certain activities, either under the oversight of the probation department or a

court-appointed monitor.MINTZLEVINCOHNFERRISGLOVSKY ANDPOPEOPC

76

pp

Legal Foundation for SelfLegal Foundation for Self--Disclosing Disclosing Overpayments and Making RefundsOverpayments and Making RefundsOverpayments and Making RefundsOverpayments and Making RefundsSelf-Disclosure Case Study: ETHC (cont.)

Pretrial Diversion Agreement (cont.)

18 month supervision by U.S. Probation Office;

the PDA does not permit ETHC to waive refunds for amounts below a dollar threshold.

All unpaid credit balances as identified in the PDA at the end of this 18 month process must be paid to the Government’s Crime Victim Fund.


77



The CIA requires:

ETCH to develop and implement specific policies and procedures to encourage full compliance with all Federal health care program requirements, p g q ,including its commitment to prepare and submit accurate claims consistent with such requirements.

This policy must be reflected in ETHC’s Code of Conduct.


78



The CIA requires (cont.):

ETHC employees with responsibilities for submitting claims are required to attend to five (5) hours of specific training annually. p g y

The CIA also requires that ETHC engage an Independent Review Organization to perform p g previews to assist ETHC in assessing and evaluating its billing and coding practices


79


Self-Disclosure Case Study: ETHC (cont.) Significance: First enforcement action against providers for

failing to repay overpayments.

Sets new ground in the use of government fraud th iti l t d t id d t ff ti authorities related to provider conduct affecting

private payors and patients, not just Medicare and Medicaid programs. p g

Government used the criminal process to break this new legal ground to effectuate a result it felt

d dMINTZLEVINCOHNFERRISGLOVSKY ANDPOPEOPC

80

was needed.


Private Payors

The Social Security Act provision cited above is not applicable to private payorsis not applicable to private payors

For the most part any obligation a provider h t f d t hi h it i t may have to repay funds to which it is not

entitled lies with the payor’s provider contract

Other state laws may require disclosure and/or refunds


81

OutlineOutline






82

Benefits and Risks to SelfBenefits and Risks to Self--DisclosureDisclosure

Benefits generally May reduce exposure to criminal fines Reasonable prospect that a prosecutor will Reasonable prospect that a prosecutor will

not pursue a criminal action Reduction in penalties under the civil FCA Reduction in penalties under the civil FCA Decreased risk of prosecution Settlement


83


Additional benefits:

Ability to more fully frame the issues and disclosure,

Ability to demonstrate that the organization is ready and willing to behave responsibly,

Likelihood of avoiding subpoenas or search warrants


84


Additional benefits (cont.):

Ability to complete a thorough internal investigation, andinvestigation, and

Opportunity to develop and improve relationships with enforcement officials relationships with enforcement officials that are less adversarial, and may prove useful in the futureuseful in the future


85


Authorities and programs encouraging self-disclosure

United States Sentencing Guidelines

United States Sentencing Guidelines provide substantial incentives for organizations that identify criminal conduct to self-disclose

A voluntary disclosure coupled with cooperation d f ibili h ld and acceptance of responsibility should -- at a

minimum -- halve the organization’s fine


86


False Claims Act In the civil context, the False Claims Act (“FCA”)

provides for treble damages and penalties of $5,000 to $10,000 for each false claim

A voluntary disclosure may reduce damages to an amount not less than two times the amount of damages

Disclosure must be made to the person “responsible for investigating FCA violations” within 30 days


87


False Claims Act (cont.): Person must fully cooperate and must not

“have actual knowledge” of the existence of gan investigation

If criminal exposure may exist, consideration could be given to proceeding under a proffer agreement


88


The OIG Open Letter and Self-Disclosure Protocol

Health care providers that promptly selfHealth care providers that promptly self--disclose improper conduct may receive disclose improper conduct may receive favorable treatmentfavorable treatment OIG’s “best evidence” is where a provider, OIG’s “best evidence” is where a provider,

through its compliance program through its compliance program ––oo identifies problematic conductidentifies problematic conductoo identifies problematic conductidentifies problematic conductoo remedies the conduct and prevents it from remedies the conduct and prevents it from

recurring, and recurring, and oo makes a full and timely disclosuremakes a full and timely disclosure


89

oo makes a full and timely disclosuremakes a full and timely disclosure


Health care providers that promptly self-disclose improper conduct may receive favorable treatment (cont.) Where a provider has demonstrated that its

compliance program is effective and agrees to maintain it OIG may not even require a CIA maintain it, OIG may not even require a CIA

Potential for less rigorous CIAs, e.g., require the provider to make only limited changes to its provider to make only limited changes to its existing policies and procedures


90


The Stark Law Self-Referral

Disclosure Protocol (SRDP)(SRDP)


91


Health Reform - Section 6409,Pub. L. 111-f148

Compromise of Stark Law overpayments and penaltiesand penalties


92



93


Encouraging self-disclosure: “[W]e are making a concerted effort to recognize “[W]e are making a concerted effort to recognize

providers who find problems within their own providers who find problems within their own organizations, reveal (selforganizations, reveal (self--disclose) those issues to the disclose) those issues to the g , (g , ( ))OMIG, and return inappropriate payments.” OMIG, and return inappropriate payments.”

“[I]t is essential to develop and maintain a fair, “[I]t is essential to develop and maintain a fair, reasonable process that will be mutually beneficial for reasonable process that will be mutually beneficial for reasonable process that will be mutually beneficial for reasonable process that will be mutually beneficial for both New York State and the provider involved.”both New York State and the provider involved.”

“[T]he intended use of this guidance is significantly “[T]he intended use of this guidance is significantly more expansive in scope than the protocol of the more expansive in scope than the protocol of the more expansive in scope than the protocol of the more expansive in scope than the protocol of the federal Department of Health and Human Services federal Department of Health and Human Services (DHHS) Office of the Inspector General’s (OIG).”(DHHS) Office of the Inspector General’s (OIG).”


94


Specific incentives: “[T]he OMIG typically Specific incentives: “[T]he OMIG typically extends the following benefits to providers extends the following benefits to providers extends the following benefits to providers extends the following benefits to providers who, in goodwho, in good--faith, participate in a selffaith, participate in a self--disclosure: disclosure: “Forgiveness or reduction of interest payments (for up “Forgiveness or reduction of interest payments (for up Forgiveness or reduction of interest payments (for up Forgiveness or reduction of interest payments (for up

to two years) to two years) “Extended repayment terms “Extended repayment terms “Waiver of penalties and/or sanctions “Waiver of penalties and/or sanctions p /p / “Timely resolution of the overpayment “Timely resolution of the overpayment “Recognition of the effectiveness of the provider’s “Recognition of the effectiveness of the provider’s

compliance and a decrease in the likelihood of compliance and a decrease in the likelihood of imposition of an OMIG Corporate Integrity Program imposition of an OMIG Corporate Integrity Program imposition of an OMIG Corporate Integrity Program imposition of an OMIG Corporate Integrity Program

“Possible preclusion of subsequently filed New York “Possible preclusion of subsequently filed New York State False Claims Act qui tam actions based on the State False Claims Act qui tam actions based on the disclosed matters.”disclosed matters.”


95


The risks of disclosure

and non-disclosure


96

OutlineOutline






97


The risks of disclosure and non-disclosure Will inevitably lead to repayments Always a chance that the government would Always a chance that the government would

never find out about the problem May also require the provider to be more May also require the provider to be more

forthcoming M lt i th i b i May result in the issue becoming more

expensive and may identify other issues that may never have been raised otherwise


98

may never have been raised otherwise


Importance of pre-disclosure review or i ti tiinvestigation

To the extent possible, it is important to be To the extent possible, it is important to be able to demonstrate that the provider has:able to demonstrate that the provider has:able to demonstrate that the provider has:able to demonstrate that the provider has: Investigated the practice and identified the cause,Investigated the practice and identified the cause, Taken steps to correct the problem through Taken steps to correct the problem through

systems changes and appropriate employee systems changes and appropriate employee education,education,

A process in place to ensure that the problem will A process in place to ensure that the problem will A process in place to ensure that the problem will A process in place to ensure that the problem will not recur (e.g. corporate compliance program), andnot recur (e.g. corporate compliance program), and

Appropriately disciplined employees or agents Appropriately disciplined employees or agents responsible for the problemresponsible for the problem


99

responsible for the problem.responsible for the problem.


Importance of pre-disclosure review or investigation (cont.)

Counsel has an enormous advantage in a voluntary disclosure when she is in full command of all relevant facts based upon a thorough internal investigationinvestigation

Research fully applicable law in order to martial i l l d fappropriate legal defenses


100

OutlineOutline






101

Selecting Where to DiscloseSelecting Where to Disclose

Selecting the Option

The second most difficult task facing healthcare counsel is the determination where healthcare counsel is the determination where to disclose among the options identified in the next slide

Few clearly right or wrong answers

Many factors to be considered in advising clients


102


Options

Providers have a variety of choices

Fiscal intermediaries or carriers,

CMS,

OIG,

A local U S Attorney’s office (DOJ) and A local U.S. Attorney’s office (DOJ), and

States Attorneys General


103


Is this merely a negligent billing error? Is this merely a negligent billing error?

Does the provider need the certainty of a Does the provider need the certainty of a formal settlement or closing letter?

Are there indicia of wrongdoing?

Is the matter criminal or civil in nature, and what is the potential exposure for the client?


104


General Rules

Matters that involve billing errors can generall be disclosed to the fiscal generally be disclosed to the fiscal intermediary and/or the carrier as appropriate

When possible civil or criminal exposure has been identified, counsel must determine

h th t t b i th tt t th whether or not to bring the matter to the attention of the OIG or the DOJ


105


When to Use the OIG Protocol Matters exclusively involving overpayments or errors

that do not suggest that violations of law have occurred should be brought directly to the attention of occurred should be brought directly to the attention of the entity that processes claims and issues payment on behalf of the government agency responsible for the

ti l F d l h lth particular Federal healthcare program

It is intended to facilitate the resolution of only matters that in the provider’s reasonable assessment matters that, in the provider s reasonable assessment, are potential violations of federal, criminal, civil or administrative laws


106


March 24, 2009 Open Letter Update “ f ff l d “As part of our ongoing efforts to evaluate and

prioritize our work, these refinements aim to focus our resources on kickbacks intended to induce or reward a physician’s referrals.”

“OIG will no longer accept disclosure of a matter that involves only liability under the physician self-referral involves only liability under the physician self-referral law in the absence of a colorable anti-kickback statute violation. “

For kickback-related submissions under the SDP, “we will require a minimum $50,000 settlement amount to resolve the matter.”


107


The Stark Law Self-Referral

Disclosure Protocol (SRDP)(SRDP)


108


When to Use the SRDP After a provider’s initial assessment has

determined a conduct potentially violates the S k L Stark Law

Open to all providers, but not intended as an advisory opinion from CMS whether there is a advisory opinion from CMS whether there is a violation “A disclosing party should make a submission to A disclosing party should make a submission to

the SRDP with the intention of resolving its overpayment liability exposure for the conduct it identified” SRDP


109

identified” - SRDP



110


When to Disclose “[P]“[P] idid d t t t OMIG d t t t OMIG “[P]“[P]rovidersroviders are encouraged to contact OMIG are encouraged to contact OMIG

as early in the process as possible.”as early in the process as possible.” “Matters related to an on“Matters related to an on--going going Matters related to an onMatters related to an on--going going

audit/investigation of the provider are not audit/investigation of the provider are not generally eligible for resolution under the generally eligible for resolution under the selfself--disclosure protocol. disclosure protocol.

“Unrelated matters disclosed during an on“Unrelated matters disclosed during an on--going audit may be eligible for processing going audit may be eligible for processing going audit may be eligible for processing going audit may be eligible for processing under the selfunder the self--disclosure protocol assuming disclosure protocol assuming the matter has received timely attention.” the matter has received timely attention.”


111

yy

Selecting Where to DiscloseSelecting Where to DiscloseWhen to Disclose When to Disclose cont. cont. ---- Factors to consider in Factors to consider in

determining whether to selfdetermining whether to self--disclosedisclosedetermining whether to selfdetermining whether to self disclosedisclose “the exact issue“the exact issue “the amount involved“the amount involved “any patterns or trends that the problem may “any patterns or trends that the problem may

demonstrate within the provider’s system, demonstrate within the provider’s system, “the period of non“the period of non--compliance, compliance, the period of nonthe period of non compliance, compliance, “the circumstances that led to the non“the circumstances that led to the non--compliance compliance

problem, problem, “ h i i ’ hi d “ h i i ’ hi d “the organization’s history, and “the organization’s history, and “whether or not the organization has a corporate “whether or not the organization has a corporate

integrity agreement (CIA) in place.”integrity agreement (CIA) in place.”MINTZLEVINCOHNFERRISGLOVSKY ANDPOPEOPC

112

g y g ( ) pg y g ( ) p


When to Disclose When to Disclose cont. cont. –– ““Issues Issues appropriate for disclosure may include, appropriate for disclosure may include, but are not limited to: but are not limited to:

“Substantial routine errors “Substantial routine errors “Systematic errors “Systematic errors yy “Patterns of errors “Patterns of errors “Potential violation of fraud and abuse laws” “Potential violation of fraud and abuse laws” ote t a o at o o aud a d abuse a s ote t a o at o o aud a d abuse a s


113


When to Disclose (cont.) “[The repayment of simple, more routine occurrences “[The repayment of simple, more routine occurrences

of overpayment should continue through typical of overpayment should continue through typical methods of resolution which may include voiding or methods of resolution which may include voiding or methods of resolution, which may include voiding or methods of resolution, which may include voiding or adjusting the amounts of claims.”adjusting the amounts of claims.”

“OMIG monitors both the number of occurrences and “OMIG monitors both the number of occurrences and dollar amounts of voids and/or adjustments, as well as dollar amounts of voids and/or adjustments, as well as any patterns of voids and/or adjustments.” any patterns of voids and/or adjustments.”

“ OMIG highly discourages providers from “ OMIG highly discourages providers from “ OMIG highly discourages providers from “ OMIG highly discourages providers from attempting to avoid the selfattempting to avoid the self--disclosure process when disclosure process when circumstances in fact warrant its usecircumstances in fact warrant its use.” .”


114

OutlineOutline






115

SelfSelf--Disclosure ProtocolsDisclosure Protocols

OIG

SELF-DISCLOSURE

PROTOCOL

(SDP)(SDP)


116

OIG SDPOIG SDP

DHHS OIG Provider Self-Disclosure OIG Self Disclosure Protocol 63 Fed OIG Self-Disclosure Protocol, 63 Fed. Reg. 58,399 (Oct. 30, 1998)

www.oig.hhs.gov/authorities/docs/selfdisclosure.pdflfdisclosure.pdf


117

OIG SDP (cont.)OIG SDP (cont.)

Format for Disclosure Must be written and mailed and delivered to

the OIG in Washington and provide:Th dd PIN t I D b The name, address, PIN, tax I.D. number, disclosure of “pertinent relationships” and names and addresses of any related entities;

Whether the provider had knowledge of a current government inquiry;

A “full description” of the problem;A full description of the problem; The identity of the provider, type and provider

billing number;


118


Must be written and mailed and delivered to Must be written and mailed and delivered to the OIG in Washington and provide (cont.):

The reason the provider believes a violation of federal, criminal, civil or administrative laws has occurred; and;

A certification that the disclosure is truthful.


119


The OIG SDP requires that the provider d t i t l i ti ti conduct an internal investigation

demonstrating "that a full examination of the practice has been conducted ”practice has been conducted.

Self-assessment or audit Purpose to estimate the financial impact of the

problem on Medicare, Medicaid, or other government programs. g p g

Detailed guidance relating to developing the self-assessment work plan, including


120

p , g


OIG Follow-Up

OIG retains the right to review documents, interview witnesses, review records and otherwise test the validity of the provider’s assertions and test the validity of the provider s assertions and conclusions


121


The Stark Law Self-Referral The Stark Law Self Referral Disclosure Protocol (SRDP)

Modeled after the OIG SDP, but contains l i diffseveral important differences


122

Stark Law SRDP (cont.)Stark Law SRDP (cont.)

U lik OIG CMS d t it ll l Unlike OIG, CMS does not permit parallel disclosures to other agencies (for example, OIG)OIG)

But as with OIG, the availability of SRDP is t l d d b i ti ti f th tt not precluded by investigation of the matter


123


Format and Content for SRDP Identity of provider and description of “pertinent

relationships”

Full description of the problem

How the problem was discovered

What measures were taken to address and prevent abuses

Statement regarding why the disclosing party believes a violation occurred, including a complete legal analysis of the application of Stark Law


124

analysis of the application of Stark Law


Detailed Requirements Description of the existence and adequacy of a

pre-existing compliance programp g p p g

A statement certifying whether the disclosing party has a history of similar conduct or has party has a history of similar conduct or has any prior criminal, civil and regulatory enforcement actions against itg

Certification that the disclosure is truthful


125


Full internal investigation expected Self-Assessment Calculate, by year, the total amount potentially due , y y , p y

and owing, i.e., the amount of Medicare billings based on the impermissible referrals

Describe audit methodology

Summary of auditing activity and documents


126


Potential For Reduced Penalties – factorsN t d t t f i ill l ti Nature and extent of improper or illegal practice

Timeliness of the self-disclosure Cooperation of the provider in the SRDP process

Liti ti i k i t d ith th tt di l d Litigation risk associated with the matter disclosed Financial position of the disclosing provide

Repayments of overpayments Repayments of overpayments Required repayments under 1128J(d) are suspended “The disclosing party must refrain from making

payment relating to the disclosed matter to the Federal payment relating to the disclosed matter to the Federal health care programs or their contractors without CMS’s prior consent.”


127


CMS Follow-up CMS may conclude that the disclosed matter

warrants a referral to law enforcement

CMS may use the submission to prepare a recommendation to OIG and DOJ for recommendation to OIG and DOJ for resolution of FCA, civil monetary penalty, or other liability y


128



129

NY OMIG SDPNY OMIG SDP

The Process The Process –– The initial report The initial report Basis for the initial disclosure Basis for the initial disclosure Basis for the initial disclosure Basis for the initial disclosure The Medicaid program rules potentially The Medicaid program rules potentially

implicated; implicated; C ti ti t k C ti ti t k Corrective action taken Corrective action taken Optional selfOptional self--disclosure form, disclosure form, available atavailable at

www.omig.state.ny.uswww.omig.state.ny.us.” .” Complete ReportComplete Report Summary of underlying cause of the problem and Summary of underlying cause of the problem and

any corrective action taken;any corrective action taken;yy Detailed list of paid claimsDetailed list of paid claims Names of individuals involved in any suspected Names of individuals involved in any suspected

improper or illegal conduct improper or illegal conduct MINTZLEVINCOHNFERRISGLOVSKY ANDPOPEOPC

130

p p gp p g

NY OMIG SDP (cont.)NY OMIG SDP (cont.)

OMIG expects most selfOMIG expects most self--disclosures will be disclosures will be completed within six monthscompleted within six monthscompleted within six monthscompleted within six months

Restitution Restitution –– Factors Factors Nature of the problemNature of the problempp Effectiveness of the provider’s compliance Effectiveness of the provider’s compliance

program program Dollar amounts involvedDollar amounts involved Time periodTime period Thoroughness and timing of the provider’s Thoroughness and timing of the provider’s

disclosure disclosure Potential harmPotential harm Provider’s efforts to prevent the problem from Provider’s efforts to prevent the problem from

recurringrecurringMINTZLEVINCOHNFERRISGLOVSKY ANDPOPEOPC

131

gg

Medicare and Medicaid Repayments and Disclosures

Meeting Refund and Reporting Obligations to Comply with Meeting Refund and Reporting Obligations to Comply with g f p g g p yg f p g g p yFERA, FCA and PPACAFERA, FCA and PPACA

Thomas S. Crane, Esq.Thomas S. Crane, Esq.August 24, 2011 August 24, 2011 ---- 1 to 2:30 pm EDT1 to 2:30 pm EDT

Webinar Sponsored by Strafford PublicationsWebinar Sponsored by Strafford Publicationsp y ffp y ff

© Copyright, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., 2011, non-exclusive license to Strafford Publications


ACA SECTION 6402 AND THE ACA SECTION 6402 AND THE DISCLOSURE OF “IDENTIFIED”DISCLOSURE OF “IDENTIFIED”DISCLOSURE OF IDENTIFIED DISCLOSURE OF IDENTIFIED

OVERPAYMENTSOVERPAYMENTS

JAMES G. SHEEHAN(formerly)NEW YORK MEDICAID INSPECTOR

GENERALjamesgsheehan@aol [email protected]

518 527-1026

THE MARCH 2010 ACA AND THE MAY THE MARCH 2010 ACA AND THE MAY 2009 FERA (False Claims Act2009 FERA (False Claims Act2009 FERA (False Claims Act 2009 FERA (False Claims Act Amendments)Amendments)

• ACA = Patient Protection and Affordable Care Act (effective March 23, 2010 unless ( ,otherwise specifically stated)

• FERA = Fraud Enforcement and Recovery• FERA = Fraud Enforcement and Recovery Act, signed by the President in May, 2009

• (consult counsel on effective dates)• (consult counsel on effective dates)

134

THE THREE MOST IMPORTANT THE THREE MOST IMPORTANT MEDICAID INTEGRITYMEDICAID INTEGRITYMEDICAID INTEGRITY MEDICAID INTEGRITY PROVISIONS OF ACAPROVISIONS OF ACA• MANDATORY REPORTING, REPAYMENT, AND

EXPLANATION OF OVERPAYMENTS BY “PERSONS”PERSONS

• “IMPROPER RETENTION” OF OVERPAYMENT BEYOND 60 DAYS IS A FALSE CLAIMBEYOND 60 DAYS IS A FALSE CLAIM (invokes penalties and whistleblower provisions)p )

• MANDATORY COMPLIANCE PLANS (first in nursing homes, later in other providers), duty to look for improper payments

135

THE CURRENT STATE OF THE CURRENT STATE OF MANDATED COMPLIANCE MANDATED COMPLIANCE

CORPORATE INTEGRITY AGREEMENTS (US HHS OIG) l 1990• CORPORATE INTEGRITY AGREEMENTS (US HHS-OIG)-early 1990s• Mandated Medicaid Compliance Requirements 42 CFR 420.• MANDATED COMPLIANCE DISCLOSURES FOR NON-PROFITS ON IRS 990 (2008) (not

required to have compliance standards on conflicts, disclosure, etc. only to report whether you do)whether you do)

• MANDATED FRAUD REPORTING FOR MEDICAID MANAGED CARE PLANS in some states (e.g., Florida)

• MANDATED COMPLIANCE PROGRAMS FOR MEDICARE ADVANTAGE AND PART D (CMS-2009) (72 FR 68700 and program memos)

• MANDATED COMPLIANCE PROGRAMS FOR FEDERAL CONTRACTORS (2009) (FAR 52.203-13) (reporting of “significant overpayment(s)” on the contract)

• MANDATED “EFFECTIVE” COMPLIANCE PROGRAMS FOR NY MEDICAID PROVIDERS-(New York OMIG 2009) (18 NYCRR 521)

• MANDATED REPAYMENT OF MEDICARE AND MEDICAID OVERPAYMENTS (PPACA• MANDATED REPAYMENT OF MEDICARE AND MEDICAID OVERPAYMENTS (PPACA Section 6402 (2010)

• MANDATED COMPLIANCE PROGRAMS FOR NURSING HOMES AND SOME OTHER HEALTH PROVIDERS-Patient Protection and Affordable Care Act Sections 6102, 6401 (2013 effective date for nursing homes)

136

PPACA SECTION 6402 MEDICARE AND MEDICAID PROGRAMAND MEDICAID PROGRAM INTEGRITY PROVISIONS

• ‘‘(d) REPORTING AND RETURNING OF O SOVERPAYMENTS—

• ‘‘(1) IN GENERAL — If a person has received anoverpayment, the person shall—

• ‘‘(A) report and return the overpayment to the Secretary, the State, an intermediary, a carrier, or a contractor, as appropriate, at the correct address; andand

• ‘‘(B) notify the Secretary, State, intermediary, carrier, or contractor to whom the overpayment was returned in writing of the reason for thereturned in writing of the reason for the overpayment.

137

SPECIAL RISKS FOR ATTORNEYS SPECIAL RISKS FOR ATTORNEYS IN 6402 AND COMPLIANCEIN 6402 AND COMPLIANCEIN 6402 AND COMPLIANCE IN 6402 AND COMPLIANCE OBLIGATIONSOBLIGATIONS• What is obligation, professional standard of

care to look for overpayments if engaged on due diligence, compliance program review or defending investigation?

• What is general counsel/ compliance officer obligation to report after looking?

• What privileges apply to discussion of identified overpayments in context of mandated reporting?

138

SPECIAL RISKS FOR ATTORNEYS SPECIAL RISKS FOR ATTORNEYS IN 6402 AND COMPLIANCEIN 6402 AND COMPLIANCEIN 6402 AND COMPLIANCE IN 6402 AND COMPLIANCE OBLIGATIONSOBLIGATIONS• What privileges apply to discussion of

identified overpayments in context of mandated reporting

• What other attorney obligations exist in at ot e atto ey ob gat o s e stpublic companies (noisy withdrawal, reporting)epo g)

• What should instructions be to consultants and expertsand experts

139

WHAT IS AN “OVERPAYMENT”?WHAT IS AN “OVERPAYMENT”?WHAT IS AN OVERPAYMENT ?WHAT IS AN OVERPAYMENT ?

• ‘‘(B) OVERPAYMENT—The term ‘‘overpayment’’ means any funds that a person receives or retains under title XVIII (Medicare) or XIX (Medicaid) to which the person, after applicable reconciliation, is not entitled under such title”

• “funds” not “benefit”

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WHAT IS “APPLICABLE WHAT IS “APPLICABLE RECONCILIATION”?RECONCILIATION”?RECONCILIATION”?RECONCILIATION”?

• No definition in statute• Interim payments prior to cost reportInterim payments prior to cost report

based payment determinations• reconciliations related to Medicaid best• reconciliations related to Medicaid best

price determinations for prescription drugs• CMS 838 quarterly report of Medicare• CMS 838 – quarterly report of Medicare

credit balances

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WHO MUST RETURN THE WHO MUST RETURN THE OVERPAYMENT?OVERPAYMENT?OVERPAYMENT?OVERPAYMENT?

“ ” ( hi h i l d i d• A “person” (which includes corporations and partnerships) who has “received” or “retained” the overpaymentF “ i t” t d t di tl• Focus on “receipt”; payment need not come directly from Medicaid; if “person” “retains” overpayment due the program, violation occurs

• “person” includes a managed care plan or an individual• “person” includes a managed care plan or an individual program enrollee as well as a program provider or supplier

• Is a state agency a “person”? Vermont v US 529 U S• Is a state agency a person ? Vermont v. US 529 U.S. 765 (2000); is local government a state agency? Cook County v. US 123 S. Ct. 1239 (2003)

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WHEN IS AN OVERPAYMENT WHEN IS AN OVERPAYMENT “IDENTIFIED”?“IDENTIFIED”?“IDENTIFIED”?“IDENTIFIED”?

“id ifi d” f i i h h f f• “identified” for an organization means that the fact of an overpayment, not the amount of the overpayment has been identified. (e.g., patient was dead at time service was allegedly rendered APG claim includes service notwas allegedly rendered, APG claim includes service not rendered, charge master had code crosswalk error)

• Compare with language from CMS proposed 42 CFR 401 310 overpayment regulation 67 FR 3665 (1/25/02401.310 overpayment regulation 67 FR 3665 (1/25/02 draft later withdrawn)– “If a provider, supplier, or individual identifies a Medicare

payment received in excess of amounts payable under the p y p yMedicare statute and regulations, the provider, supplier, or individual must, within 60 days of identifying or learning of the excess payment, return the overpayment to the appropriate intermediary or carrier.” y

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WHEN IS AN OVERPAYMENT WHEN IS AN OVERPAYMENT “IDENTIFIED”?“IDENTIFIED”?“IDENTIFIED”?“IDENTIFIED”?

l d f• Employee or contractor identifies overpayment in hotline call or email

• Patient advises that service not receivedPatient advises that service not received• RAC advises that dual eligible Medicare

overpayment has been found d l d d• OMIG sends letter re deceased patient,

unlicensed or excluded employee or ordering physicianp y

• Qui tam or government lawsuit allegations • Criminal indictment or information

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THE OBLIGATION TO RETURN AN THE OBLIGATION TO RETURN AN IDENTIFIED OVERPAYMENT ISIDENTIFIED OVERPAYMENT ISIDENTIFIED OVERPAYMENT IS IDENTIFIED OVERPAYMENT IS CONTINUINGCONTINUING• CRITICAL DATE: WHEN WAS THE

OVERPAYMENT IDENTIFIED• NOT: WHEN WAS THE OVERPAYMENT

RECEIVEDC• CONTINUING DUTY TO REPAY

IDENTIFIED OVERPAYMENTS FROMIDENTIFIED OVERPAYMENTS FROM PRIOR TIME PERIODS

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DOCUMENTING GOOD FAITH DOCUMENTING GOOD FAITH EFFORT TO IDENTIFYEFFORT TO IDENTIFYEFFORT TO IDENTIFY EFFORT TO IDENTIFY OVERPAYMENTSOVERPAYMENTS

• Create a record to demonstrate to the government that your organization collected or attempted to address allegations of overpayments – Develop standard form to document employee’s internal

disclosure – Document interviews – Document evidence and means to determine if credible – Record employees involved in deliberations and decisions

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PROVIDER MUST STATE THE PROVIDER MUST STATE THE REASON FOR OVERPAYMENTREASON FOR OVERPAYMENTREASON FOR OVERPAYMENTREASON FOR OVERPAYMENT

N if h S h h d i• Notify the State to whom the overpayment was returned in writing of the reason for the overpayment

• Use OMIG’s Disclosure Protocol, available on the OMIG web site, www.OMIG.ny.govs te, O G y go

• COMPARE WITH PA 2010 Self-Audit Protocol: http://www.dpw.state.pa.us/omap/omapfab.asp

• COMPARE WITH NJ Self-Disclosure Process www.nj.state.us/njomigj / j g• Mass., Ct. do not yet have disclosure protocols• COMPARE WITH federal OIG Self-Disclosure Protocol

http://oig.hhs.gov/authorities/docs/selfdisclosure.pdfCOMPARE WITH CMS “ li it d/ l t f d ” t M di• COMPARE WITH CMS “unsolicited/voluntary refunds” to Medicare contractors (checked July 2, 2010)

• See, e.g., http://www.wpsmedicare.com

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MORE REASONS FOR MORE REASONS FOR OVERPAYMENTSOVERPAYMENTSOVERPAYMENTSOVERPAYMENTS

• Failure to refund credit balances• Excluded ordering or servicing person• Patient deceased • Servicing person lacked required license or Se c g pe so ac ed equ ed ce se o

certification• Ordering provider deceased more than six O de g p o de deceased o e a s

months prior to date of service• Billing system errorg y

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MORE REASONS FOR MORE REASONS FOR OVERPAYMENTSOVERPAYMENTSOVERPAYMENTS OVERPAYMENTS

• Service induced by false statement of ordering provider

• Service inconsistent with physician order or• Service inconsistent with physician order or treatment plan

• Service not documented as required byService not documented as required by regulation

• No order for service• Service by unenrolled provider “billing through”

enrolled provider

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GOVERNMENT IS USING DATA TO GOVERNMENT IS USING DATA TO DETECT OVERPAYMENTSDETECT OVERPAYMENTSDETECT OVERPAYMENTS DETECT OVERPAYMENTS

• EXCLUDED PERSONS• DECEASED ENROLLEESDECEASED ENROLLEES• DECEASED PROVIDERS• CREDIT BALANCES• CREDIT BALANCES• WHAT IS GO-BACK OBLIGATION WHEN

PROVIDER IS PUT ON NOTICE THATPROVIDER IS PUT ON NOTICE THAT SYSTEMS ARE DEFICIENT?

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“OVERPAYMENT” INCLUDES:“OVERPAYMENT” INCLUDES:OVERPAYMENT INCLUDES:OVERPAYMENT INCLUDES:

• PAYMENT RECEIVED OR RETAINED FOR SERVICES ORDERED OR PROVIDED BY EXCLUDED PERSON “no payment will be madeEXCLUDED PERSON no payment will be made by Medicare, Medicaid or any of the other Federal health care programs for any item or

f h d b l d d d d lservice furnished by an excluded individual or entity or at the medical direction or on the prescription of a physician or other authorizedprescription of a physician or other authorized individual who is excluded . . .” 42 CFR 1001.1901

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PPACA SECTION 6402 (d) MEDICARE AND MEDICAIDMEDICARE AND MEDICAID PROGRAM INTEGRITY PROVISIONS

• (3) ENFORCEMENT — Any overpayment retained by a person after the deadline forretained by a person after the deadline for reporting and returning the overpayment under paragraph (2) is an obligation (asunder paragraph (2) is an obligation (as defined in section 3729(b)(3) of title 31, United States Code) for purposes ofUnited States Code) for purposes of section 3729 of such title. (False Claims Act)Act)

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SEC. 6402 (d) MEDICARE AND MEDICAID PROGRAM INTEGRITYMEDICAID PROGRAM INTEGRITY PROVISIONS

• ‘‘(g) In addition to the penalties provided for in this section or section 1128A, a claim that includes items or services resulting from a violation of this section (i.e., a kickback) constitutes a false or fraudulent claim for purposes of subchapter III of chapter 37 of title 31, United States Code.’’ (False Claims Act)

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Defendant violates FCA if it:Defendant violates FCA if it:Defendant violates FCA if it:Defendant violates FCA if it:

• “knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government” new 31 U.S.C. 3729(a)(1) (G)

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NY Mandatory ComplianceNY Mandatory ComplianceNY Mandatory ComplianceNY Mandatory Compliance

k d C li• New York Mandatory Compliance Program• NY Medicaid law and regulation: every provider receiving more

than $500,000 per year must have, and certify to, an effective compliance program with eight mandatory elements. 18 NYCRR 521p p g g y

• Statute – November 2006; Regulation – 7/1/09

• Mandatory compliance includes• Mandatory compliance includes – Audit program, – Disclosure to state of overpayments received, when identified (over 80

disclosures in 2009)– Risk assessment, audit and data analysisRisk assessment, audit and data analysis– Response to issues raised through hotlines, employee issues

• Effective program required by 10/1/09

• Certification of effective compliance program – 12/31/09

• Evaluation - ongoing155

CONCLUSION: THE THREE MOST CONCLUSION: THE THREE MOST IMPORTANT MEDICAID INTEGRITYIMPORTANT MEDICAID INTEGRITYIMPORTANT MEDICAID INTEGRITY IMPORTANT MEDICAID INTEGRITY PROVISIONS OF PPACAPROVISIONS OF PPACA• MANDATORY REPORTING AND

REPAYMENT OF OVERPAYMENTS BY “PERSONS”

• RETENTION OF OVERPAYMENT IS A O O O SFALSE CLAIM (invokes penalties and whistleblower provisions)s eb o e p o s o s)

• MANDATORY COMPLIANCE PLANS

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FREE STUFF FROM OMIGFREE STUFF FROM OMIGFREE STUFF FROM OMIGFREE STUFF FROM OMIG

• OMIG website - www.OMIG.ny.gov• Mandatory compliance program-hospitals, managed

care, all providers over $500,000/yearcare, all providers over $500,000/year• Over 2500 provider audit reports, detailing findings in

specific industry • istserv (put your name in get emailed updates)• istserv (put your name in, get emailed updates)• New York excluded provider list/links to other state lists• Follow Twitter: NYSOMIG

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