Transcript The Future of Hospital/Physician Integration
Legal Limits on HME Marketing
Carrie Bryant, Esq., CHC
Compliance Officer American HomePatient
William T. Mathias, Esq.
Principal Ober|Kaler 1
Outline of Presentation
Background Legal Limits on Marketing Anti-kickback Statute Stark Self-referral Law False Claims Act Prohibition Against Beneficiary Inducements State Law HIPAA/HITECH Medicare Anti-solicitation Law Recent Guidance Changing Compliance Environment 2
Some Things Don’t Change
Medicare and Medicaid regulations remain incredibly complex 3
“There can be no doubt but that the statutes and provisions in question, involving the financing of Medicare and Medicaid, are among the most completely impenetrable texts within human experience. Indeed, one approaches them at the level of specificity herein demanded with dread, for not only are they dense reading of the most tortuous kind, but Congress also revisits the area frequently, generously cutting and pruning in the process and making any solid grasp of matters addressed merely a passing phase.” —
Chief Judge Ervin
United States Court of Appeals for the Fourth Circuit in
Rehabilitation Association of Virginia v. Kozlowski
, 42 F. 3d 1444, 1450 (4 th Circuit 1994) 4
More Things That Don’t Change
Government continues to view Fraud, Waste, and Abuse as a significant source of revenue Enforcement remains aggressive 5
Have You Seen the OIG’s Website Lately?
6
Aggressive Enforcement
From new joint DOJ/OIG website www.stopmedicarefraud.gov
“A joint effort by HHS and the Department of Justice recovered a record $4 billion from fraudsters in FY2010.” 7
Fighting Fraud is a Good
Investment
The return-on-investment (ROI) for Health Care Fraud and Abuse Control (HCFAC) program Since 1997, $4.9 returned for every $1.0 expended.
3-year average (2008-2010), $6.8 returned for every $1.0 expended 8
Government [Mis]perception of DME Industry Government is skeptical of DME industry Lack of trust Few bad apples have poisoned the well with government Lead to questions about the overall medical necessity of some DME Central to government’s regulation and investigation of DME industry 9
DME Industry Feeling Undervalued
10
Government Balancing Issues
Additional Cost Over, Under, and Mis-Utilization Quality of Care Access to Care Patients’ Freedom of Choice Competition Exercise of Professional Judgment 11
Anti-Kickback Statute
12
Anti-Kickback Statute
Federal anti-kickback law generally prohibits the provision of any economic benefit in exchange for the referral of patients or business that will be reimbursed under any Federal health care program.
42 U.S.C. § 1320a-7b(b).
13
Anti-Kickback Statute
Prohibited Conduct Knowing & willful Solicitation or receipt or Offer or payment of Remuneration In return for referring a federal health care program patient, or To induce the purchasing, leasing, or arranging for or recommending purchasing or leasing items or services paid by a federal health care program 14
Anti-Kickback Statute
“Two-way Street” Meaning that it is just as illegal to solicit or accept payments for referrals, as it is to offer or make such payments. 15
Anti-Kickback Statute
Penalties Criminal fines & imprisonment Civil money penalty of $50,000 plus 3X the amount of the remuneration Exclusion False Claims Act liability Section 6402 (f)(1) of PPACA makes Anti-Kickback violations actionable under FCA 16
Relevant AKS Safe Harbors [42 C.F.R. § 1001.952]
Personal Services & Management Contracts Safe Harbor Employment Exception and Safe Harbor Space Lease Safe Harbor Equipment Lease Safe Harbor 17
AKS Decision Tree 1. Is there an economic benefit?
If Yes 2. Is there a referral or recommendation?
If Yes 3. Is there a statutory exception?
If No 4. Is there a safe harbor?
If No 5. Is there a potential for abuse?
If No Go to Stark Analysis If No If No If Yes If Yes
If Yes, Problem!
18
Stark Physician Self-Referral Law 19
Stark Self-Referral Law
The federal Stark physician self-referral law generally prohibits a physician from making referrals to an entity for any of eleven (11) designated health services if the physician (or an immediate family member) has a “financial relationship” with the entity. 42 U.S.C. § 1395nn 20
Stark Self-Referral Law
Physician may not refer: Medicare [or Medicaid] patients For “designated health services” to an entity with which the physician or an immediate family member has a “financial relationship” Ownership interest – through equity or debt Compensation arrangement Unless the relationship fits in an exception 21
Stark Self-Referral Law
“Designated health services” Clinical laboratory DME Orthotics & Prosthetics PEN Home Health Radiology Radiation Therapy PT/OT Inpatient Hospital Services Outpatient Hospital services Outpatient drugs 22
Stark Self-Referral Law
Penalties Denial of Payment $15,000 per service 2X damages Exclusion False Claims Act liability 23
Relevant Stark Exceptions
Personal services Employment Space rentals Equipment rentals Fair market value compensation Non-monetary compensation (<$359 in 2011) 24
Relevant Stark Exceptions (cont.) In-office Ancillary Services Exception Limited exception for DMEPOS items Canes, crutches, walkers, and folding wheelchairs Blood glucose monitors Infusion pumps that are DME (not infusion pumps used for parenteral and enteral nutrition) No other DME covered by this exception 25
Stark Decision Tree
1. Is there a physician or immediate family member?
If Yes 2. Is there a direct or indirect financial relationship?
If Yes 3. Is there a referral?
If Yes 4. Is there a designated health service?
If Yes 5. Is there a statutory exception?
If No 6. Is there a regulatory exception?
If Yes Okay!
If No If No If No If No If Yes
If No, Problem!
26
False Claims Act
27
Federal False Claims Act
Prohibits filing, or causing to be filed “false or fraudulent” claims Using false statement to “conceal, avoid or decrease” a government obligation Intent “Intent to defraud” not required Filing claims with “reckless disregard” of their truth or falsity is sufficient Liability 3X Damages $5,500 to $11,000 per claim 28
Prohibition Against Beneficiary Inducements
29
Prohibition Against Beneficiary Inducements
Prohibits offering or paying remuneration to any Medicare or Medicaid beneficiary that the offeror knows, or should know, is likely to influence the recipient to order an item from a particular supplier.
42 U.S.C. § 1320a-7a(a) Exception for items of nominal value – $10 per item and $50 per beneficiary per year 30
State Laws
31
State Laws Don’t forget about state laws State fraud and abuse laws State mini-Stark laws Fee splitting prohibitions Patient brokering laws State licensing laws Corporate practice of medicine State False Claims Acts 32
Health Insurance Portability and Accountability Act (HIPAA) 33
HIPAA/Privacy
HIPAA requires “covered entities” to adhere to certain basic requirements aimed at protecting the privacy of “protected health information” (PHI) 34
HIPAA/PHI
Protected Health Information Information related to past, present, or future physical or mental health condition or provision of health care services –and– Information related to payment for health care services.
Information can be linked to a particular individual.
Information regardless of form or medium (electronic, written, or verbal).
35
HIPAA/Uses & Disclosures
PHI may not be used or disclosed unless use or disclosure is specifically permitted by HIPAA or authorized by patient.
Permitted Uses and Disclosures include: Treatment Payment Health Care Operations Other uses and disclosures as specified in Notice of Privacy Practices 36
HIPAA/Original Definition
of Marketing
Marketing means: “To make a communication about a product or service that encourages recipients of the communication to purchase or use the product or service....” 37
HIPAA/Exceptions to Definition
of Marketing
Definition of marketing does not include: communications to describe a health-related product or service (or payment for such product or service) that is provided by, or included in a plan of benefits of, the covered entity making the communication communications for treatment of the individual communications for case management or care coordination for the individual, or to direct or recommend alternative treatments, therapies, health care providers, or settings of care to the individual 38
HIPAA/HITECH Changes to Marketing
HITECH Act made changes to the definition of “Marketing” Where covered entity receives “direct or indirect payment” marketing communication not considered “health care operation” (so patient authorization required) Limited exceptions : Communication regarding a currently prescribed drug or biological (for which payment must be “reasonable”) Communication made by business associate according to the terms of business associate agreement.
“Direct or indirect payment” does not include payment for treatment.
39
HIPAA/HITECH Changes to Marketing – Proposed Rule
PROPOSED Rule – not final Differentiates between “treatment” and “marketing” communications Under PROPOSED Rule Notice of potentially subsidized treatment communications must be included in notice of privacy practices with opt-out procedure Communication must identify what is subsidized.
40
HIPAA/HITECH Changes to Marketing – Proposed Rule
Examples: Manufacturer pays practice to send out flier to all patients advertising new device – Marketing Manufacturer pays practice to send out notice of new device to all patients whose treatment might be benefited by new device – Unclear Manufacturer pays practice to send out notice of new device to those patients that the practice (not the manufacturer) identifies as patients who could benefit from new device – Treatment 41
HIPAA/Marketing & Authorizations If covered entity’s activities are “marketing,” the covered entity must obtain an individual’s authorization to use or disclose his/her information An authorization is not required: if the marketing is a “face-to-face” communication made by a covered entity to an individual; or the marketing is the provision of a promotional gift of nominal value provided by the covered entity.
45 C.F.R. §§ 164.508(a)(3)(i)(A)&(B).
42
Medicare Anti-solicitation Law 43
Medicare Anti-solicitation Law [42 U.S.C. § 1395m(a)(17)] Prohibits suppliers from contacting Medicare beneficiaries by telephone regarding covered items unless: Beneficiary has given supplier written permission Supplier has previously provided the covered item to the beneficiary and contact relates to such covered item Supplier has furnished a covered item to beneficiary in last 15 months, then contact may relate to any covered item 44
OIG Special Fraud Alert on DME Telemarketing
45
OIG Special Fraud Alert on
DME Telemarketing
First issued in 2003 68 Fed. Reg. 10254 (Mar. 4, 2003) Updated in 2010 75 Fed. Reg. 2105 (Jan. 14, 2010) Reflects OIG concerns about DME telemarketing 46
Original Fraud Alert on
DME Telemarketing
OIG reiterated the statutory telemarketing prohibitions OIG emphasized that “suppliers cannot do indirectly that which they are prohibited from doing directly.” DMEPOS supplier cannot hire an unrelated marketing entity to make unsolicited telephone calls to Medicare beneficiaries to market their products or services. 47
Updated Fraud Alert on DME
Telemarketing
Largely repeated prior Alert Added a concern about DME suppliers contacting beneficiaries based solely on treating physicians’ preliminary verbal or written order Added reference to criminal and civil penalties for using interstate telephone calls as part of fraud scheme 48
Additional Guidance on
DME Telemarketing
On February 17, 2010, OIG posted letter with CMS FAQs FAQs provide some helpful guidance but do not fully resolve issue 49
Additional Guidance on DME Telemarketing
Not “unsolicited” to return beneficiary’s phone call Not “unsolicited” if physician contacts supplier on behalf of beneficiary with beneficiary’s knowledge Does supplier need to collect documentation from physician reflecting beneficiary’s knowledge that physician would contact supplier?
No, but it is business decision by supplier to collect such documentation.
Supplier cannot ask beneficiary about other items during initial call, but may on subsequent call if beneficiary becomes a customer 50
Practical Guidance
51
Practical Guidance
Various laws impose restrictions on HME marketing activities.
Compliance with 1 law does not necessarily result in compliance with other laws.
52
Practical Guidance
HIPAA Marketing Restrictions Medicare Telemarketing Prohibition Face-to-Face Communications OK OK Written communication without using protected health information (PHI) Written communication using PHI OK Depends on content: Describing health related products – OK Treatment – OK Care coordination or recommending alternative treatments or settings – OK Selling item unrelated to treatment – NO (need authorization) OK OK 53
Practical Guidance
Telephone call to current patient HIPAA Marketing Restrictions Medicare Telemarketing Prohibition Depends on content: Describing health related products – OK Treatment – OK Care coordination or recommending alternative treatments or settings – OK Selling item unrelated to treatment – NO (need authorization) OK 54
Practical Guidance
Telephone call to former patient HIPAA Marketing Restrictions Medicare Telemarketing Prohibition Depends on content: Describing health related products – OK Treatment – OK Care coordination or recommending alternative treatments or settings – OK Selling item unrelated to treatment – NO (need authorization) Depends on circumstances: Patient has given written permission – OK Contacting patient only regarding covered item previously furnished by Company – OK.
Contacting regarding furnishing a different covered item – OK within 15 months of when Company furnished service to patient.
if 55
Recent Guidance
56
Advisory Opinions 10-23 & 10-24
OIG analyzed 2 different, but related arrangements between sleep testing provider and hospital OIG rejected proposed arrangement with part time marketing and per-click payments OIG approved proposed arrangement with full time marketing and fixed, annual fees Not all such arrangements are illegal High standard for favorable advisory opinion Helpful discussion of risks associated with “under arrangements” transactions 57
Advisory Opinion 11-06
OIG analyzed payments for electronically receiving and responding to referral requests from hospitals through online post-acute care referral service. OIG found that the payments did not meet referral services safe harbor because they were not assessed uniformly and were not based solely on cost of operating referral service.
OIG issued unfavorable opinion out of concern that payments created an uneven playing field and that payments could be an unlawful pay-to-play fee.
Many hospitals participate in online post-acute care referral services and need to re-assess those relationships in light of this Opinion. 58
Advisory Opinion 11-08
OIG analyzed existing and proposed CPAP set up arrangements between DME supplier and IDTF.
OIG issued unfavorable opinion.
With regard to existing arrangement, the OIG found that “carve out” of Federal business was not sufficient protection for favorable advisory opinion.
With regard to proposed arrangement, the OIG reiterated longstanding concerns about arrangements between DME suppliers and IDTFs as potential referral sources.
59
Advisory Opinion 11-08
Opinion represents warning about CPAP set-up services arrangements ... but does not rule out possibility that such arrangements could be appropriately structured.
Keys will be existence of a legitimate business purpose of arrangement and FMV of payments.
60
Changing Compliance Environment
61
60-Day Repayment Requirement
§6402 of PPACA requires reporting and repayment of overpayments within 60 days of identification (or due date of next cost report, if applicable) What’s “identification”?
Violations actionable under FCA Regulatory guidance will be forthcoming... (or so we’ve heard) Absent guidance, providers must struggle to come up with practical approaches to complying with the 60-day requirement.
62
Monthly Exclusion Checking
Seriously.... every month Growing number of State Medicaid Programs are requiring monthly screening of current employees and contractors.
“ See TennCare Policy PI 11-002 (effective 6/22/2011) State Medicaid Director Letter instructed states to require providers to search the HHS-OIG website monthly to capture exclusions and reinstatements that have occurred since the last search.” HHS-OIG CIAs still only require annual screening.
63
Mandatory Compliance Programs
It’s coming.... eventually.
§ 6401 of PPACA makes compliance programs mandatory.... ....but only after implementing regulations establish the core elements for mandatory compliance programs Growing numbers of providers are establishing (or updating) compliance programs in anticipation of them becoming mandatory.
64
What’s Next?
OIG/DOJ increased emphasis on pursuing individual liability for fraud and abuse perpetrated by health care entities Goal is “to alter the cost-benefit calculus of the corporate executives who run these companies” Increasingly aggressive federal/state enforcement Qui Tam Relators driving government priorities Increasing importance of comprehensive and aggressive corporate compliance efforts 65
“Be careful out there”
66
Questions?
Carrie Bryant, Esq., CHC
Compliance Officer American HomePatient
William T. Mathias, Esq.
Principal Ober|Kaler 67