Transcript Strategic Opportunities

HEALTH CARE INDUSTRY PERSPECTIVES
ON HEALTH CARE REFORM
Mississippi Chapter
Healthcare Financial Management
Association
2010 Ethics, Accounting & Auditing and
PFS Workshop
June 11, 2010
Hilton Hotel, Jackson MS
1
STRATEGIC
OPPORTUNITIES
FOR HOSPITALS
2
Health Care Delivery System Reform
The Senate Finance Committee Legislation Will Include
Payment Reforms Aimed at Improving the Delivery System
Increase Health Care “Value”
Electronic Health Records
3
Manage Radiology
Benefits
3. Prerequisite
Accountable Care
Organizations
Tactics
Bundled Payments
2.
Reduce Costs
Improve Quality
Reduce Preventable
Readmissions
The Goal
Value-Based
Purchasing
1.
A Roadmap to Reform
Most of President Obama’s Ambitious Health
Care Goals Depend on Bending the Cost Curve
Causal Relationship Between the President’s Health Care Goals
Primary
Outcome
Catalyst
Reduce
Cost
Growth
Invest in
Prevention and
Wellness
Secondary
Outcome
Maintain
Coverage
During Job
Transitions
Assure
Affordable
Coverage
End Barriers
for Pre-Existing
Conditions
Improve
Safety and
Patient Care
Source:
1) http://www.whitehouse.gov/issues/health_care/
4
Tertiary
Outcome
Protect
Families from
Medical
Bankruptcy
Guarantee
Choice of Docs
and Health
Plans
Selected Provisions
 Administrative Simplification
 Moving to standardized processes by evaluation of systems every 3 years using input
from the National Committee on Vital Statistics, the Health Information Technology
Policy Committee, the Health Information Standards Committee, standard setting
organizations and stakeholders -Public Health Services Act Sec. 399HH(a)), as added
by Act Sec. 3011 of the Patient Protection and Affordable Care Act (P.L. 111-148)).
 Delivery System Changes
 Bundling – beginning 2013 pilots thru 2015 (Social Security Act Sec. 1866D, as added



by Act Sec. 3023 of the Patient Protection and Affordable Care Act (P.L. 111-148)).
Readmissions – 2013 penalties for “excessive re-admissions” (SSA Sec. 1886(q)(3),
as added by Act Sec. 3025 of the Affordable Care Act).
Hospital acquired conditions -Act Sec. 2702
Accountable Care Organizations – 2012, allows hospitals and physicians to provide
leadership in voluntary ACOs. Some savings to be shared Section 3022 of the Patient
Protection and Affordable Care Act (P.L. 111-148) adds Social Security Act Sec. 1899
 Innovation Center – 2011 creates a Center for Medicare and Medicaid Innovation
designed to improve quality and reduce program expenditures- Section 3021 of the
Patient Protection and Affordable Care Act (P.L. 111-148) amends Title XI of the Social
Security Act by adding the new SSA Sec. 1115A
5
Global Payments
The Legislation Will Include Expanded Bundled Payment Demonstration Projects
Sample Inpatient Stay
1: Current Payment Methodology:
MS-DRG Pmt
- 3 Days
Admit
Physician Fee
Schedule
Discharge
Home Health
PPS Episode
+ 7 days
Readmission:
MS-DRG Pmt
+ 14 days
+ 19 days
30 Day Episode of Care
2: Proposed Bundled Payment System:
MAC
Payment
Hospital
Negotiated Pmts
MS-DRG + Avg. PAC
Cost – “Efficiencies”
6
+ 27 days
+ 30 days
Selected Provisions
 Independent Payment Advisory Board (IPAB) Section 3403 of the Patient
Protection and Affordable Care Act (P.L. 111-148)
 Binding payment recommendations on Medicare and non-binding on private insurers

payments to providers
Exclusion such as hospitals (except CAH) until 2019
 340B drug program extended Act Sec. 7101(a) of the Patient Protection and
Affordable Care Act (P.L. 111-148), amending Public Health Service Act Sec.
340B(a)(4) by adding subparagraphs (M) through (O)
 Market basket update adjustments -Affordable Care Act Sec. 3401
 RAC expansion -Affordable Care Act Sec. 6411
 Graduate Medical Education – no reductions in IME payments but re-distributes
65 percent of unused residency to primary care and surgeons SSA Sec.
1886(h)(8)(B), as added by Act Sec. 5503(a)(4) of the Affordable Care Act
7
Something To Think About
 Be proactive, explore how to make the new legislation work in your
organization
 Ignoring the delivery and payment system changes will be
detrimental
 Most importantly, understand totally where your revenue comes
from and how this will change
 Tax Exemption
8
Financially Positive or Negative for Health Care Providers
 Modeling
 Market Basket Update
 DSH-UPL
 Hospital Acquired Conditions
 Physician Payment Revisions
 Contracts with other payers
9
Being Pro Active




Model impacts of Medicare and Medicaid
Estimate income/ volume levels of “new patients”
Evaluate service lines
Evaluate costs


Direct care
Support
10
Know the margins – The Driving Forces
11
Model of Governmental Payers
12
Non Governmental Payers




Impact of Health Insurance Exchanges on traditional insurance
Impact of family coverage and shifts to employers
Impact of “pay the penalty” un or under insured
Remember – “bend the cost curve”
13
Being Pro Active




Model impacts of Medicare and Medicaid
Estimate income/ volume levels of “new patients”
Evaluate service lines
Evaluate costs


Direct care
Support
14
Reviewing Service lines
 Outpatient Rehabilitation Services
 Primarily two services – Occupational & Speech Therapy
 Determined the payer mix was unable to sustain the current
level of expense.
 Due to the competition and availability in the service area,
the Hospital elected to discontinue service.
 Net increase to contribution margin $600,000 annually.
15
Being Pro Active




Model impacts of Medicare and Medicaid
Estimate income/ volume levels of “new patients”
Evaluate service lines
Evaluate costs


Direct care
Support
16
Analysis of Costs
 The Cost structure
 Direct patient care
 Components of Overhead
 Identified areas for cost savings
 Invested in premier database to benchmark both cost and quality
 Expended Information Technology funds for capturing data and
developing standardized processes
17
Labor Costs
 Productivity standard which was an integration of standards




established by a proprietary database and adapted Hospital’s
culture
Review of standards began with a bi-weekly process which was
historical and reactionary
Moved to a daily matrix which was successful due to the step
transition (key – moving from reactionary to integrated)
Savings as a result of the intense use of standards
1. FTE’s decreased from 4.5 to 3.9 per adjusted occupied bed
2. Reduction of salary costs of $6.8 million
Other considerations including freezing merit increases and
elimination of contract staffing
18
Purchased Services
 Retirement Plan – Hospital operated under a defined benefit
 “Freeze” implemented with alternative retirement plan
 With matching mechanism through 403(b) savings of $700k
annually
 Real Estate and other rental agreements
 Negotiated through consolidations and space eliminations
resulted in $270k savings
 Management of professional services
 Hired a director for key areas including IOP, BIO Med, Rehab
and Housekeeping - savings of $1million
19
Quality & Efficiency
 Chief Medical Officer established a work group to evaluate the
clinical effectiveness of the following programs:
 Cardiology
 Pediatrics
 Orthopedics
 Behavioral Health
 Women’s Health Services – including Nursery
 General medical – Surgical
20
Key Finding
 Length of Stay – too high
 With 60% of total expense representing labor costs, the Hospital
began an intense review of daily activities and labor hours
 Greatest opportunity – Review standards and protocols for delivery
of patient care
 Intensified use of Hospitalist program
 Indexed length of stay @ 100% of standard
21
Other Considerations
 Mindset review of expense
 Formulary review of Pharmacy - $200k
 Courier alignment with outpatient - $175k
 Benefit plan sync with industry - $1.5 mil
 Overall, everything is matched up with:
 Board Policy and Mission
 Rating Agency – Capital Access
 Budget constraints
22
Analysis of PPACA’s
Impact on Employers
23
September 23, 2010 Plan Changes
 UNAVOIDABLE AND/OR NON-GRANDFATHERABLE PROVISIONS
1.
No Lifetime Limits on “Essential Benefits”
2.
Restrictions on Annual Limits for “Essential Benefits”
3.
No Pre-Existing Conditions Exclusions for Children Under 19
4.
If a child under 26 is not eligible for enrollment in a separate employer
sponsored plan, then plan already providing coverage to children must extend
coverage through age 25 regardless of student/marital/dependent status
5.
Existing Coverage can’t be rescinded absent fraud
6.
Large Employers (200 FTEs) must auto-enroll new employees
7.
Non-prescription, over the counter drugs (excluding insulin) can’t be included in
a Flexible Spending Account (“FSA”) deduction [For tax years beginning after
12/31/10]
24
September 23, 2010 Plan Changes
 AVOIDABLE AND/OR GRANDFATHERABLE PROVISIONS FOR PLANS
EXISTING BEFORE MARCH 23, 2010
1.
Certain Evidence-Based Preventive Care (Including Well-Child Care)
and Immunizations Can’t Be Subject to Cost-Sharing
2.
Insurance Based/Non-Self Funded Plans Must Comply with Requirements
Preventing Favorable Treatment of Highly Compensated Employees
3.
Internal/External Appeals Processes
4.
Enrolled Employees May Select Any Participating Primary Care
Doctor
5.
No Pre-Authorization or Increased Out of Network Cost Sharing for
emergency services
6.
No Pre-Authorization or Mandatory Referral for OB-GYN Services
25
Small Employer Tax Credit (2010-2013)
 SMALL EMPLOYER (25 FTEs) TAX CREDIT FOR 35% OF HEALTH
CARE COVERAGE COST

In order to receive, employer must subsidize at least 50% of employee
premiums

50% Credit Is Available for Tax Years 2014-2015 [Technically it’s available
for any two years beginning after 12/31/13-presumably the 2014-15, but not
necessarily.]
26
2011 Calendar Year Changes
1.
Aggregate Value of Employer Sponsored Coverage Must Be
Identified on 2011 W-2
2.
Value of coverage to be identified on W-2 will be determined in the
same manner as the 40% excise or “Cadillac” tax, namely, through
use of current COBRA valuation and will include employee paid
premiums and FSA contributions but exclude stand-alone
dental/vision.
27
2013 Calendar Year Changes
1.
Annual Employee Pre-Tax Contributions to FSA Capped at $2,500
2.
Hire-Date/Annual Enrollment Distribution of Standardized Summary
of Plan Benefits/Coverage
3.
Mandatory Employee Notice of Rights to Health Insurance Exchange
Subsidy (Including “Free Choice Voucher”)
28
2014 Calendar Year Changes
1.
No Pre-Existing Conditions Exclusions or Limitations
2.
No Coverage Waiting Period Greater Than 90 Days
29
Grandfatherable/Avoidable Changes For Plans Existing
Before January 1, 2014
1.
2.
3.
4.
Group Insurance Coverage Is Guaranteed for Issue and Renewal
(Subject to Annual/Special Enrollment Periods)
Group Plans Became Subject to Modified Community Rating Rules:

Gender/Health Status Can’t Be Used for Premium
Calculation

Age Premium Variations Limited to 3:1

Tobacco Premium Variations Limited to 1.5:1
“Essential Health” Benefits Must Be Offered for small group plans
[Does not apply to large groups or to self-insured plans]
Limits on Out of Pocket Expenses/Deductibles

Individual ($5,950) and $2,000

Family ($11,900) and $4,000
30
2014 Calendar Year Changes (cont.)
HEALTH INSURANCE EXCHANGES
 List of Qualified Plans becomes available through either state/federal Administrator
 Four Levels of Plans Based on Actuarial Value Between 60-90%
 Exchange Plans Must Offer Essential Benefits
 Exchange-Based Subsidy Eligibility:
 Household Incomes Between 100-400% FPL (88K for Family of Four)
 Ineligible for government healthcare
 Employer sponsored plan doesn’t pay at least 60% of actuarial value and
premium exceeds 9.5% of annual household income
 Exchange Based Employer Penalties
 Employers With Over 50 FTEs incur $143/month or $2,000 (annually) per
employee (after first 30) for failure to offer “minimum essential coverage” to all
FTEs/dependents if ONE receives a subsidy through an Exchange
 Employer with Over 50 FTEs incur $250/month or $3,000 annual tax for each
employee who opts for Exchange due to “Unaffordable Minimum Essential
Coverage” meaning premiums exceeding 9.5% of household income or plan has
actuarial value of less than 60%
Note: Mercer study says 38% of employees will meet this threshold
31
Health Insurance Exchanges (cont.)
FREE CHOICE VOUCHER ELIGIBILITY
1.
Household Income Less Than 400% of FPL ($43,200-individual)
($88,200 – family of four)
2.
Required to pay between 8 and 9.8% of household income for
coverage
Voucher Amount = $ cost of Coverage Under Employer-Based Plan
Vouchers are Deductible by Employers
Vouchers Are Excluded from Employee’s Income
Vouchers Apply to All Employers, Regardless of Size
32
2014 Employer Reporting Duties
IF 5O FTEs, THEN:
a. declaration that employer does or does not offer minimum
essential coverage to FTEs/dependents;
b. disclosure of coverage waiting period length;
c. disclosure of information on lowest-cost option in each
enrollment category;
d. disclosure of employer’s share of total plan costs;
e. disclosure of number and names of employees receiving health
care coverage
33
Consequences
 Very large employers may drop employer-sponsored coverage
 AT&T could save $1.8b annually
 CBO estimates that employers that drop coverage would substitute wages for
premium benefits
 Employees would buy in to the Exchange, where reimbursement rates will be
lower than with employer group plans (not going well in MA)
34
Consequences
 2010 average cost for family of 4 is $18k; 10k funded by employer
 Other insurance reforms will result in increased premiums
 Credits expire when industry fees escalate
35
TAX IMPLICATIONS:
TAX-EXEMPT HOSPITALS
36
TAX-EXEMPT HOSPITAL IMPLICATIONS
 Section 9007 of the PPACA added yet another layer of requirements
that must be met in order to maintain tax-exempt status and avoid
excise tax penalties.
 Except for the community health needs assessment requirement
and imposition of excise tax penalties, Section 9007 applies to
taxable years beginning after March 23, 2010.
37
TAX-EXEMPT HOSPITAL IMPLICATIONS, cont.
Section 9007 has five primary components:
 §9007(a) adds new requirements for §501(c)(3) hospitals through




the addition of Section 501(r)(1)-(7) to the IRC;
§9007(b) amends IRS Section 4959 to impose an excise tax for
noncompliance with §501(r)(3);
§9007(c) provides for mandatory federal review of the community
benefit activities of §501(c)(3) hospitals;
§9007(d) adds reporting requirements;
§9007(e) requires the Secretary of the Treasury to make annual
reports to Congress.
38
TAX-EXEMPT HOSPITAL IMPLICATIONS, cont.
Section 9007(a) adds Section 501(r)(1)-(7) to the IRC and imposes
significant new obligations on tax-exempt organizations.
 Applicability: Section 9007 applies to organizations that operate
facilities required by the state to be licensed/registered/recognized
as a hospital and to other organizations with hospital care as a
principal function.
 Must be tax-exempt under §501(c)(3), so governmental facilities are
not included.
 For multi-hospital systems, the rules apply separately to each
facility.
39
TAX-EXEMPT HOSPITAL IMPLICATIONS, cont.
New Section 501(r) has four primary components:




Community health needs assessment - §501(r)(3)
Financial assistance policy - §501(r)(4)
Limits on charges - §501(r)(5)
Changes to billing and collection methods - § 501(r)(6)
Treasury has requested comments on the §501(r) requirements.
40
TAX-EXEMPT HOSPITAL IMPLICATIONS, cont.
New Section 501(r) components:
Component One: Community health needs assessment (§501(r)(3)):
 Effective date: taxable years beginning after March 23, 2012.
 Requirements:
 Must conduct a community health needs assessment in the
taxable year or either of the two prior taxable years.
 Must have adopted a strategy to implement the identified needs.
 The assessment must take into account the input of a broad
spectrum of stakeholders in the community served by the facility
and it must be made “widely available to the public”.
41
TAX-EXEMPT HOSPITAL IMPLICATIONS, cont.
…and, for not complying with Section 501(r)(3), Section 9007(b)
imposes an excise tax.
 Section 9007(b) imposes an excise tax of $50,000 for failing to meet
the CHNA requirements in Section 501(r)(3).
 Effective Date: The excise tax technically applies for failures to
comply occuring after March 23, 2010, but the CHNA requirement
doesn’t become effective until taxable years after March 23, 2012.
42
TAX-EXEMPT HOSPITAL IMPLICATIONS, cont.
New Section 501(r) components:
Component two: Financial assistance policy (§501(r)(4)):
 The organization must have a written financial assistance policy and “widely
publicize” the policy within the community served.
 Policy requirements:
 Eligibility criteria, including whether financial assistance offered includes
free or discounted care;
 The basis for calculating patient charges;
 If the organization does not have a separate billing and collections
policy, the actions that may be taken in the event of non-payment (i.e.,
collections actions, credit reporting, etc.).
 Additionally, the organization must have a written policy requiring the
organization to provide, without discrimination, care for emergency medical
conditions to individuals regardless of their eligibility for financial assistance.
43
TAX-EXEMPT HOSPITAL IMPLICATIONS, cont.
New Section 501(r) components:
Component three: Limits on charges (§501(r)(5)):
 If a person meets the requirements of the financial assistance policy,
then their charges for emergency or other medically necessary care
must be limited to not more than amounts generally billed to
individuals with insurance coverage.
 The use of gross charges is prohibited.
44
TAX-EXEMPT HOSPITAL IMPLICATIONS, cont.
New Section 501(r) components:
Component four: Changes to billing and collection methods
(§501(r)(6)):
 The hospital cannot engage in ”extraordinary” collection actions until
it has made “reasonable efforts” to determine if the individual is
eligible for financial assistance under its policy.
 Regulations are to be issued to define “reasonable efforts”.
45
TAX-EXEMPT HOSPITAL IMPLICATIONS, cont.
Section 9007(c) provides for mandatory federal review:
 Section 9007(c) requires that the Secretary of the Treasury review
the community benefit activities of each hospital subject to §501(r) at
least once every 3 years.
 Schedule H implications and a new definition of “community
benefit”???
46
TAX-EXEMPT HOSPITAL IMPLICATIONS, cont.
…and Section 9007(d) provides for additional reporting requirements:
 Section 9007(d) addresses several issues of recent legislative
concern by adding to the reporting requirements for §501(c)(3)
hospitals.
 This section amends the Form 990 reporting requirements to include
the following:


a description of how the hospital is addressing the needs identified in
the CHNA, a description of any needs not being addressed, and an
explanation as to “why not”;
the audited financial statements of the hospital or the consolidated
financial statement, if applicable.
 Implications
47
TAX-EXEMPT HOSPITAL IMPLICATIONS, cont.
To complete the circle, Section 9007(e) requires the Secretary of the
Treasury to provide annual reports to Congress.
 Section 9007(e) reports will include information for private, taxexempt, and governmental hospitals regarding:



levels of charity care provided;
bad debt expenses; and
unreimbursed costs for services provided with respect to non-means
tested programs.
 Additionally, §9007(e) reports will include information regarding
costs incurred by tax-exempt hospitals for community benefit
activities.
 Morever, §9007(e) requires that this information will be compiled into
a study on trends and submitted to Congress within 5 years.
48
OTHER NOTABLE TAX CHANGES
49
OTHER NOTABLE TAX CHANGES
 Section 9001: Excise tax on “Cadillac” plans
 Section 9002: Inclusion of cost of employer-sponsored health coverage on







W2
Section 9003 and 9004: “Qualified” distributions/reimbursements from
HSAs, FSAs, HRAs and Archer MSAs and increases in taxes on nonqualified distributions
Section 9005: Limits on health flex spending arrangements under cafeteria
plans
Section 9012: Elimination of deduction for expenses allocable to Medicare
Part D subsidy
Section 9013: Modifies the itemized deduction for medical expenses
Section 9015: Changes to FICA
Section 9017: (nullified and replaced with §10907(b)): Tax on indoor tanning
Section 1402: Tax on net investment income
50
Impact of Health Reform and Fraud
Enforcement and Recovery Act of
2009
51
Health Care Reform: A Big Deal
52
Fraud Enforcement and Recovery Act of 2009 (FERA)
 FERA signed into law May 20, 2009
 Expands the scope of the False Claims Act (FCA)
 Increases funding for enforcement
53
False Claims Act Amendments - FERA
 Fraud Enforcement and Recovery Act of 2009 (FERA)
 Retention of Overpayments
 Violation to “knowingly and improperly avoid or decrease an
obligation” to pay money to the United States, including an
obligation based on “an established duty, whether or not
fixed…arising from…the retention of any overpayment.”
 Must be “knowing and improper”
 Whether or not “fixed” amounts
54
FERA Broadens FCA to Reach More Types of
Transactions
 Pre-FERA, FCA required that allegedly false claims for payment must be
presented directly to an officer or employee of the government
 FERA eliminates “presentment” requirement
 Extends liability to false claims for payment on government-funded projects,
regardless of whether the claim is presented to or processed by a
government official
 Expands definition of a “claim” under the FCA to include any request or
demand for money or property


Regardless of whether government has title to the money or property
Includes requests for money to a contractor, grantee, or any other
recipient of government funds used to advance a government program
55
FERA Permits Non-Employees to Bring Retaliation Claims
 Pre-FERA FCA allowed employees to sue employer for damages
and other relief if discriminated against as a result of their actions in
connection with a false claims lawsuit or investigation
 FERA makes retaliation claims available to contractors and agents
who contend that they have been discriminated against
56
Patient Protection and Affordable Care Act Provisions
Affecting False Claims Act
 Patient Protection and Affordable Care Act (PPACA) (March 2010)
 Public Disclosure bar curtailed
 Enhanced influence of whistleblower plaintiffs’ bar
 60-day Period to Report and Return Overpayments
 Runs from the point at which the overpayment is “identified” or the
date any corresponding cost report is due, whichever is later
 After the 60-day period, the overpayment becomes an “obligation “
under the FCA
 “Identified” is not defined
 FERA includes expansion of FCA definition of “obligation” to
amounts that are not “fixed”
 60-day period for repayment of amounts received in violation of
Stark law already in place (trigger for civil monetary penalties)
57
Patient Protection and Affordable Care Act Provisions
Affecting False Claims Act – Anti-Kickback Statute
 Claims submitted in violation of Anti-Kickback Statute are False
Claims, regardless of certification
 The intent element of the Anti-Kickback Statute has been revised
to explicitly reject 9th Circuit case law
 Under current 9th Circuit case law, the government is required to
show that a defendant:
 Had actual knowledge that the conduct was prohibited, and
 Had a specific intent to violate the AKS
 Resolves split among courts
 The Act revises the AKS to state that, to meet the “knowing and
willing” intent element, “a person need not have actual knowledge”
that the AKS prohibits a particular conduct
58
Practical Considerations
 Implications of Changes

Retention of overpayments/reverse false claims
 No requirement of falsity or fraudulent conduct
 No definition of “improper” avoidance of an obligation, so what does
it mean?
 Is “knowing” retention enough?
 When is an overpayment “identified” for purposes of the 60-day time
period?
 Does “identified” mean “quantified”?
 Under FERA amendments to the FCA, an “obligation” to return funds
need not be “fixed”
59
PRACTICAL CONSIDERATIONS
 Public Disclosure Jurisdictional Bar
 Government now controls whether it applies
 The bar applies, unless the government objects
 Enables government to permit private whistleblower counsel to


file and pursue parasitic lawsuits under the FCA
Enables government to retain private counsel to pursue these
cases
Enhanced influence of whistleblower plaintiffs' bar in government
enforcement
 Former DOJ counsel comment that should expect to see arguments
that government would not make, and tactics the government would
not use
 Profit motive only
 Lack of government oversight of conduct of litigation or of plaintiff’s
counsel
60
PPACA Amendments To Stark Law
 In-Office Ancillary Services Agreement
 Exception revised to require referring physician to inform



patients that they may obtain specified services from a person
other than the referring physician or his/her practice
Applies to: MRI, CT PET, Other designated health services
specified by the HHS Secretary
Written list of suppliers who furnish services in the area in which
the patient resides must be provided at the time of the referral
Effective January 1, 2010 (actually date law signed by President,
March 24)
61
PPACA Revisions to Stark Law “Whole Hospital” and
Rural Provider Exceptions
 Both exceptions narrowed to apply only to physician-owned hospitals that
have physician ownership and provider agreements in operation on
December 31, 2010
 Must now meet certain other requirements
 Hospitals must now report to HHS annually to identify physician owners
 Hospitals must have procedures in place to require physician owner

disclosure ownership to patients
Ownership and investment cannot be conditioned on referrals from the
physician
 Limited opportunities for further expansion
 HHS will conduct audits beginning November 2011 to determine if hospitals
are complying with new revisions to the exceptions.
62
Can you syndicate a hospital to physicians now?
$%*! no, you
can’t!
63
PPACA - Stark Law Self-Disclosures and Settlements
 Within six months, HHS must develop and implement a disclosure protocol
for actual and potential Stark violations in collaboration with the OIG.
 Secretary now has authority to reduce the amount due for a Stark violation
by considering:
 the nature/extent of the improper/illegal practice
 the timeliness of self-disclosure
 the cooperation in providing additional information related to the
disclosure
64
Presidential Memorandum
65
Presidential Memorandum
 “Finding and Recapturing Improper Payments”


Issued March 10, 2010
To heads of executive departments and agencies
 References Executive Order 13520, November 20, 2009, “Reducing
Improper Payments”
 Obama Administration focuses on hospital billing to Medicare:

Announces expansion of “Payment Recapture Audits”
 Directs heads of executive departments and agencies to expand use of
Payment Recapture Audits:


To the extent permitted by law
When cost effective
 Directs Office of Management and Budget to development guidance and
coordinate with Council for Inspectors General on Integrity and Efficiency
66
Expansion of RAC Program
 Patient Protection and Affordable Care expands scope of RAC program to:
 State Medicaid programs by 12/31/2010
 Medicare Parts C and D by 12/31/2010
 State Divisions of Medicaid must contract with auditing firms by
12/31/2010
 HHS required to submit annual report on RAC program to Congress
67
Stark Law & Anti-Kickback Enforcement Under The False
Claims Act
 Recent cases highlight aggressive DOJ litigation policy to seek massive


damages
PPACA redefined kickbacks (overpayments by the government =
obligations owed to the government) as predicates for FCA violations
CMS required to offer a self-disclosure protocol before the end of 2010
 WHAT TO DO?
 Review physician agreement negotiation process for:
 Documentation on valuation issues
 Timeliness of execution
 Understand the enormous whistleblower risk presented by
physicians (and disgruntled employees)
68
Stark Law & Anti-Kickback Enforcement Under The False
Claims
 Nexus between Stark and False Claims has become tighter


DOJ and OIG are pursuing Stark and Anti-kickback qui tams against
hospitals as False Claims cases without regard to size of the facility
An entity may not present or cause to be presented a Medicare claim or
a bill to any individual, third party payor, or other entity for Stark DHS
furnished pursuant to a Stark-prohibited referral (42 U.S.C.
1395nn(a)(1)
69
Stark Law & Anti-Kickback Enforcement Under The False
Claims
 Excerpt from BNA Health Care Report – April 13, 2010
 Federal Jury Finds Hospital Violated Stark, Not FCA: Possible
Liability Cut to $45 Million
 A jury for a federal district court March 29 reached a split verdict by
finding a South Carolina hospital violated the Stark physician selfreferral law but did not violate the False Claims Act, which reduced
the potential liability of defendants from $300 million to about $45
million (United States ex rel. Drakeford v. Tuomey, D.S.C., No.
3:05-cv-02858-MJP, jury verdict 3/29/10).
70
Stark Law & Anti-Kickback Enforcement Under The False
Claims
 Tuomey Takeaways
 Big case for DOJ
 Attempt to establish massive FCA damages regardless of size of
defendant’s operations
 Tuomey is 200 bed hospital
 Strong follow up by DOJ to maximize Stark damages to be
assessed by Court
 Physician whistleblower
71
Summary of False Claims Focus
 No case too small or too large for attention
 “Technical” violations do not get a “pass” but focus in moving towards Fair
Market Value
 Importance of understanding Self-disclosure options now and in the future
 Trend toward physician whistleblowers – uniquely positioned to bring
damaging allegations
 Focusing on Fair Market Value documentation
 Purpose to create inference that physician had incentive to refer
patients
72
THANK YOU
401 East Capitol Street
Suite 200
Jackson, MS 39201
1020 Highland Colony Parkway
Suite 400
Ridgeland, MS 39157
Dinetia M. Newman, Esq.
601-965-8169
[email protected]
David A. Williams, CPA, FHFMA
601-326-1000
[email protected]
E. Russell Turner, Esq.
601-965-8159
[email protected]
Eugenia Stark Thomas, Esq.
601-965-8177
[email protected]
73