Transcript Health Care Reform 2010: New Fraud and Abuse Provisions

Health Care
Reform: New
Fraud and Abuse
Provisions
Kim C. Stanger
Hawley Troxell LLP
(5/10)
The small print…
This is overview of selected provisions in law.
 The law and general requirements are subject to change
as new regulations issue or the law is amended.
 Participants should review the law and corresponding
regulations when seeking to comply.
 This presentation is given for educational purposes only;
it does not constitute legal advice.
 This presentation does not establish an attorney-client
relationship.
 The opinions expressed are those of the speaker; they
do not necessarily represent the position of the Hospital
Cooperative or Hawley Troxell LLP.

Patient Protection and
Affordable Care Act (“PPACA”)
PPACA:
Overview
Cost of health care reform estimated at
$940 billion over 10 years.
 “[M]ost of [health care reform] can be
paid for by finding savings within the
existing health care system, a system that
is currently full of waste and abuse.”
– Pres. Obama
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PPACA Fraud and Abuse
Provisions
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Shorten time for submitting claims.
Require report and repayment of overpayments.
Impose additional requirements for enrollment.
Strengthen and expand current fraud and abuse
laws.
Expand government and RAC authority for
investigations.
Create new rules for certain providers.
Require states to implement similar measures.
PPACA Fraud and Abuse
Provisions
Reduced Time
for Submitting Claims
For services furnished on or after 1/1/10, must
submit claims to Medicare parts A and B within
one calendar year from date of service.
 For services furnished before 1/1/10, must
submit claims by 12/31/10.
 HHS may issue regulatory exceptions to oneyear limit.
(PPACA 6404)
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Include NPI
By January 1, 2011, providers and suppliers
must include National Provider Identifier (“NPI”)
on
– Application for enrollment, and
– All claims for payment.
 HHS to issue regulations.
(PPACA 6402)
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Report and Repay
Overpayments
“Overpayment” = funds a person receives or retains
to which person is not entitled after reconciliation.
 Providers and suppliers must:
– Report and return overpayments to HHS, the
state, or contractor by the later of:
 60 days after the date the overpayment was
identified, or
 The date the corresponding cost report is due.
– Provide written explanation of reason for
overpayment.
(PPACA 6402)
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Report and Repay
Overpayments
Retaining overpayment after deadline for
reporting and returning overpayment is
an “obligation” under False Claims Act.
 “Knowing” failure to report and return
overpayments by the date due may result
in penalties under:
– False Claims Act
– Civil Monetary Penalties Law.
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False Claims Act
Prohibits
– knowingly submitting false claim for payment
to federal government, or
– Concealing, avoiding, or decreasing an
obligation to pay to the federal government.
(31 USC 3729 et seq.)
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False Claims Act
Penalties
– $5,500 to $11,000 penalty per false claim
– 3x amount claimed
 Private whistleblowers may assert qui tam
lawsuits.
– Receive percentage of recovery
– Prevailing party may recover costs and fees
(31 USC 3729 et seq.)
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False Claims Act
Changes
Prior “public disclosure” not a bar to qui tam action.
– No dismissal required if government opposes dismissal.
– Public disclosure is limited to federal actions, e.g.,
 Federal criminal, civil and administrative actions.
 Federal reports, hearings, audits or investigations.
 News media and perhaps social media.
 Not state proceedings and private litigation.
 To be “original source,” qui tam relator
– Must provide info to govt prior to public disclosure, and
– Info must be independent of and materially add to
publicly disclosed allegations.
– Not required to have direct and independent
knowledge.
(PPACA 1303)
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Civil Monetary Penalties
Law
Prohibits specified conduct, e.g.,
– Submitting false or fraudulent claims, or claims for
unnecessary services
– Offering inducements to program beneficiaries
– Contract with excluded provider
– Etc.
 Penalties generally include
– $10,000 to $50,000 penalty, depending on violation
– 3x amount claimed
– Exclusion from govt programs
(42 USC 1320a-7a)
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Civil Monetary Penalties Law
Changes
Expanded to prohibit:
– Failing to report and return known overpayment.
 Penalties up to $10,000 per violation
 3x damages
 Exclusion from govt programs
– Knowingly making false statement in application, bid,
or contract to participate or enroll in a federal health
care program.
 Penalties up to $50,000 per violation
 Exclusion from govt programs.
(PPACA 6402, 6408)
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Civil Monetary Penalties Law
Expanded to prohibit:
– Ordering or prescribing items or services
when person ordering or prescribing is
excluded from federal health care program.
– Failing to grant OIG timely access for audits,
investigations, evaluations upon reasonable
request.
 Penalties up to $15,000 per day.
(PPACA 6402(d), 6408)
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Civil Monetary Penalties Law
New exceptions:
– Programs that promote access to care and pose
a low risk of harm to patients and health care
programs.
– Coupons, rebates and other rewards from a
retailer that are offered to general public not tied
to items reimbursed under Medicare/Medicaid.
– Unadvertised items or services for free or less
than fair market value based on financial need.
– Part D plan waiver for first fill copayment for a
generic Part D drug.
(PPACA 6402)
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Stark Self-Referral Law
If a physician (or their family member) has a
financial relationship with an entity:
– The physician may not refer patients to that
entity for designated health services, and
– The entity may not bill Medicare for such
designated health services
unless the referral or financial relationship is
structured to fit within a regulatory exception.
(42 USC 1395nn; 42 CFR 411.350)
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Stark Self-Referral Law
Penalties
– No payment for services provided per
improper referral
– Repayment of payments improperly received
– Civil penalties
 $15,000 per improper referral/claim
 $100,000 per scheme
(42 USC 1395nn; 42 CFR 411.350)
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Stark Changes:
In-Office Ancillary Services
To qualify for in-office ancillary services
exception, if provider refers patient for MRI, CT,
or PET scan performed in physician’s office,
physician must:
– Notify patient that patient may obtain the
services from other suppliers, and
– List of other suppliers where patient resides
that can provide the service.
 HHS may expand list of affected services.
 Applies to referrals after 1/1/10.
(PPACA 6003)
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Stark Changes:
Physician-Owned Hospitals
To qualify for “whole hospital” and “rural provider”
exceptions, physician-owned hospitals:
– Must have physician ownership and provider
number by 12/31/10.
– Cannot convert from ASC or increase percentage
of total value of physician ownership or
investment after 3/23/10.
– Cannot expand number of operating rooms,
procedure rooms, and beds after 3/23/10.
 Exception for certain high Medicaid hospitals.
 Regulations due 1/1/12.
(PPACA 6001, 10601; Reconciliation Act 1106)
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Stark Changes:
Physician-Owned Hospitals
Must comply with additional reporting duties, e.g.,
– Submit annual report to HHS identifying physician
owners and investors.
– Referring physician owners must notify patients of:
 Referring physician’s ownership interest
 Treating physician’s ownership interest.
– Disclose that hospital is owned by physicians in
 Hospital website
 Public advertising.
– If hospital does not have physician on site 24/7,
 Notify patient of such fact prior to admission
 Obtain patient’s written acknowledgement of fact.
(PPACA 6001, 10601; Reconciliation Act 1106)
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Stark Changes:
Physician-Owned Hospitals
Cannot condition physician’s ownership/investment
on referrals.
 Cannot offer physician owner/investor more
favorable ownership opportunities than a person
who is not a physician owner/investor.
 Hospital cannot guarantee, make payment, or
subsidize loan to physician or group to acquire
ownership/investment interest.
 Returns distributed based on ownership/investment
interests.
 Other requirements.
(PPACA 6001, 10601; Reconciliation Act 1106)
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Stark Changes:
Self-Disclosure Protocol
HHS must establish a self-disclosure
protocol by 9/23/10 for reporting Stark
violations, including:
– Agency to whom disclosures may be
reported, and
– Process for corporate integrity and
compliance agreements.
 Separate from advisory opinion process.
(PPACA 6409)
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Stark Changes:
Compromise re Penalties
HHS is authorized to settle Stark violations for
less than full statutory penalties if participate in
self-disclosure protocol.
 Factors to consider include:
– Nature and extent of illegal or improper
practice
– Timeliness of self-disclosure
– Cooperation in providing information
– Other factors HHS deems relevant.
(PPACA 6409)
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Anti-Kickback Statute
Prohibits individuals or entities from
knowingly and willfully offering,
paying, soliciting or receiving
remuneration to induce referrals of
items or services covered by
Medicare, Medicaid or any other
federally funded program unless fit
within regulatory exception.
(42 USC 1320a-7b; 42 CFR 1001.952)
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Anti-Kickback Statute
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Penalties
– Felony
– 5 years in prison
– $25,000 fine
– $50,000 civil administrative penalty
– Exclusion from Medicare/Medicaid
Anti-Kickback Statute Changes
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May violate statute even if:
– You did not know of AKS
– You did not intend to violate AKS
– Rejects Hanlester v. Shalala (9th Cir.
1995)
* Ignorance of the law is no longer a
defense.
Anti-Kickback Statute Changes:
AKS Violation = FCA Violation
Anti-Kickback Statute
 Criminal statute
 Beyond reasonable
doubt standard
 5 years in prison
 $25,000 fine
 Exclusion from
Medicare/Medicaid
False Claims Act
 Civil statute
 Preponderance of
evidence standard
 Civil penalties
– $5,500 to $11,000 per
claim
– 3x amount claimed
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Qui tam lawsuit
Increased Funding for Enforcement
$100 million in 2011
 $250 million through 2016.
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OIG Investigative Authority
Providers who fail to grant timely access to
records may be fined $15,000 for each day that
access is denied.
 OIG may obtain information from providers and
beneficiaries.
 OIG may subpoena witnesses to testify in
exclusion cases.
 OIG may access databases.
– Government databases integrated to facilitate
data matching, mining and sharing.
(PPACA 6402, 6408)
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RAC Audits
States must implement RAC audits for
Medicaid by 12/31/2010.
– RACs paid according to amount
recovered.
 Medicare Parts C and D will be subject to
RAC audits.
(PPACA 6411)
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Suspension of Payments
Pending Investigation
HHS may suspend payments to a provider
pending an investigation of a credible
allegation of fraud against the provider.
 HHS shall withhold FPP from state if state
Medicaid does not suspend payment.
 CMS must consult with OIG to determine
whether there is a credible allegation of
fraud.
(PPACA 6402)
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Recovery from
Related Providers
HHS may recover payments from
providers and suppliers that share same
tax identification number as entity with
past-due obligation to Medicare.
 Applies even if they have different billing
number or NPI.
(PPACA 6401)
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Mandatory
Compliance Plans
Providers will be required to have
compliance plans as condition to
enrollment and re-enrollment.
 HHS will determine
– Timing re industry sectors
– Applicable standards for compliance
plans.
(PPACA 6401)
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Enrollment Process
HHS must implement screening process for enrollees
in Medicare, Medicaid, and CHIP by 9/23/10.
– Licensure checks
– Maybe background checks, fingerprints,
unannounced site visits, database inquiries, etc.
 Screening applies to:
– New enrollees: by 3/23/11
– Current enrollees: by 3/23/12
– Revalidation: by 9/23/10
(PPACA 6401)
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Enrollment Process
Institutional providers will be charged a
$500 enrollment fee beginning 2010.
– Subject to CPI adjustment
– Hardship exemptions may be available.
(PPACA 6401)
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Enrollment Process
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Enrollees must disclose info about affiliates with
uncollected debt, that have been excluded from
govt programs, or had billing privileges denied.
– HHS may deny enrollment based on affiliation.
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Remember HHS may impose penalties for false
statements in enrollment process, including:
– $50,000 civil monetary penalty per false
statement, or
– Exclusion from govt program.
(PPACA 6401, 6402)
Enrollment Process
HHS may subject certain enrollees to oversight
during provisional period lasting 30 days to one
year.
– Prepayment reviews
– Payment caps
– Others as HHS deems appropriate.
 HHS may place moratorium on enrollment of
certain providers or categories if necessary to
prevent waste, fraud or abuse.
– Not subject to judicial review.
(PPACA 6401)
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501(c)(3) Tax-Exempt Hospitals
501(c)(3) Tax-Exempt Hospitals
Must conduct community needs assessment at
least every 3 years and implement strategy.
 Effective for tax year beginning 3/23/12.
 HHS to review community needs assessment at
least once every 3 years.
 Violations may result in:
– $50,000 excise tax
– Loss of tax exempt status?
(PPACA 9007)
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501(c)(3) Tax-Exempt Hospitals
Must establish financial assistance policy.
– Amount billed to qualified patients cannot
exceed amount billed to patients with
insurance.
– Cannot take extraordinary collection actions
until determine whether patient qualifies
under policy.
– Must provide emergency care without regard
to ability to pay.
(PPACA 9007)
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DME and Home Health
Services
Physicians who order DME or certify home
health services must be enrolled in Medicare to
receive payment.
 Physicians or midlevels must have face-to-face
encounter with a patient prior to ordering DME
or certifying home health services.
– May conduct encounter by telemedicine.
– Must document encounter as condition of
payment.
(PPACA 6407, 10605)
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DME and Home Health Services
HHS may revoke enrollment for physicians
and suppliers who fail to maintain and,
upon request, provide access to
documentation related to:
– Written orders or claims for DME
– Certifications for home health services
– Other high risk items designated by
HHS.
(PPACA 6406)
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Long Term Care Providers
Additional reporting and notification
requirements
 Mandatory compliance, quality assurance,
and performance improvement programs
 Website information
 Background checks and fingerprinting
 Staff training
 Complaint processes
 New demonstration projects
(PPACA 6101-6105, 6111, 6121, 6201)
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Transparency Reports:
Drug Samples to Physicians
Drug manufacturers and distributors must
report samples distributed to physicians
beginning 4/1/12.
(PPACA 6004)
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Transparency Reports:
Physician Payments or Ownership
Drug and device manufacturers must report beginning
3/31/13:
 Payments or transfers of value to physicians or
teaching hospital
 Physician or family members’ ownership or
investment
 Subject to certain exceptions.
 Penalties
– If not “knowing”: $1,000 to $10,000 per payment;
up to $150,000 total annually.
– If “knowing”: $10,000 to $100,000 per payment;
up to $1,000,000 total annually.
(PPACA 6002)
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Medical Malpractice
Limits
Appropriates $50 million in grants to
states to develop, implement, and
evaluate alternatives to current tort
litigation.
(PPACA 10607)
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Responding to PPACA
Responding to PPACA
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Take action to timely submit claims.
– Pre-1/1/10 claims by 12/31/10.
– Post-1/1/10 claims within 1 year
Revitalize compliance efforts.
– Compliance plan
– Auditing and monitoring
– Responding to suspected violations
– Document actions
Report and repay within 60 days.
– Put in place process of evaluation
– Document actions
Responding to PPACA
Review physician transactions to ensure
compliance with Stark and AKS.
– Written contracts
– Current contracts
– Fair market value for legitimate services
– Compensation set in advance
– Not based on referrals
 If transactions are non-compliant, consider
– Repayment obligations
– Self-disclosure protocol.
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Responding to PPACA
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Monitor physician’s compliance.
– General compliance activities for employed
physicians.
– Orders or certifications for DME and home
health services.
– Notice re in-office ancillary services.
– Ownership or investment in specialty
hospitals, including:
 Expansions
 Required notices
Responding to PPACA
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Consider capitalizing on new compliance
exceptions.
– Programs that increase access to care
but do not create waste, fraud, or
abuse, e.g., transportation programs.
– Others?
Responding to PPACA
Consider corporate structures and
affiliations.
– May be liable for affiliated entities’
obligations.
– May be subject to penalties for
violations of owned entities.
 If contemplating enrollment of new entity,
may want to do so before new enrollment
processes take effect.
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Responding to PPACA
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Tax exempt hospitals, begin working on
– Community needs assessment
– Financial assistance policy
– Charges for emergency medical care.
Responding to PPACA
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If offer DME or home health services,
ensure compliance with new
requirements.
– Written orders from qualified provider
– Maintain documentation
Responding to PPACA
Watch for new regulations as they come
out.
 Consider coordination with association and
getting involved in policy or rulemaking.
– State Medicaid changes
– Malpractice reform
– Other?
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Resources
AHA Summary of Health Care Reform
 OIG Supplemental Compliance Program
Guidance for Hospitals
 IHA Sample Compliance Plan
 Hawley Troxell Client Updates
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– [email protected]
– 208-388-4843
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Tons of stuff on internet
Questions?
Kim C. Stanger
(208) 388-4843
[email protected]