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Effective Compliance Programs - Elements - Internal Monitoring and Auditing - Implementation of Standards - Training and Education - Respond Effectively and Develop Corrective Actions - Enforce Well Publicized Standards - Operationalize These Elements? - Education, Training, Awareness How Does the Government Find Out About Fraud and Abuse? - Patients - Whistleblowers - Audits - Data Mining Stark Act 42 U.S.C. 1395nn The Stark Law prohibits a physician from making a Referral - to an Entity - for the furnishing of a Designated Health Service - for which payment may be made under Medicare - if the physician (or an immediate family member) - has a Financial Relationship with the entity furnishing the designated health services Stark II Act Proof of Intent is Not Required Penalty Denial of payment or refund; civil money penalties (up to $100,000) and exclusions from federal and state programs for improper claims or schemes What is a Referral? A referral includes: - Request for an item or a service by a physician - Request by physician for consultation with another physician, and any tests or procedures the other physician orders, performs or supervises - Request for or establishment of plan of care that includes provision of designated health services Designated Health Services Designated Health Services include: - Clinical laboratory services; - Physical therapy and occupational therapy services; - Radiology or other diagnostic services (including MRI, CAT scans); - Radiation therapy services; - Durable medical equipment; - Parental and enteral nutrients, equipment and supplies; - Prosthetics, orthotics and prosthetic devices; - Home health services; - Outpatient prescription drugs; and - Inpatient and outpatient hospital services (encompassing almost every type of medical procedure). What is a DHS Entity? - Entity that bills for DHS service - Entity that performs DHS service - “Perform” is given common meaning What is a Financial Relationship? A Financial Relationship includes: - Ownership interests - Through equity, debt , compensation or other means; and - Compensation arrangements - Includes virtually any form of direct or indirect remuneration (i.e., personal service contracts, medical directorships, lease agreements, consulting arrangements, medical service provider arrangements) Nature of Exceptions If Financial Relationship exists with an Entity, and patients are being Referred for Designated Health Service, then activity must either comply with an exception or the activity is illegal Anti-Kickback Statute Under the Anti-kickback Statute, it is illegal to knowingly or willfully: - offer, pay, solicit, or receive remuneration; - directly or indirectly; - in cash or in kind; - in exchange for; - referring an individual; or - furnishing or arranging for a good or service; and - for which payment may be made under Medicare or Medicaid. Penalty Fined not more than $25,000 or imprisoned for not more than five (5) years or both Three Necessary Elements - Intentional Act - Direct or Indirect Payment of Remuneration - To Induce the Referral of Patients or Business What is Remuneration? Extremely Broad Scope, whether in cash or in kind, and whether made directly or indirectly, including: - Kickbacks; - Bribes; - Rebates; - Gifts; - Above or below market rent or lease payments; - Discounts; - Furnishing of supplies, services or equipment either free, above or below market; - Above or below market credit arrangements; and - Waivers of payments due. Caution Almost Any Benefit by and Between Medical Providers Can Be Considered Remuneration SAFE HARBOR PROVISIONS 42 C.F.R. 1001.952 If entity/person satisfies requirements of one or more of the following safe harbor provisions, otherwise suspect payment practices are NOT subject to criminal prosecution – - Investment interests for publicly traded companies and smaller entities; - Space and equipment rental agreements; - Personal services and management contracts; - Sale of a medical practice; - Employees; - Group purchasing organizations and Discounts; - Waiver of beneficiary co-insurance and deductible amounts; - Warranties; and - Health Plan/Managed care. SAFE HARBOR PROVISIONS 42 C.F.R. 1001 - Investments in Ambulatory Surgical Centers (ASCs) - Joint Ventures in Underserved Areas - Practitioner Recruitment in Underserved Areas - Sales of Physician Practices to Hospitals in Underserved Areas - Subsidies for Obstetrical Malpractice Insurance in Underserved Areas - Investments in Group Practices - Specialty Referral Arraignments Between Providers - Cooperative Hospital Services Organization AKS Example Facility seeking to increase knowledge and awareness in the community of the services offered at the facility. - Facility additionally seeks to coordinate care services with local healthcare providers. - Facility enters into agreements with area entities and healthcare providers that pays individuals and entities a “marketing” stipend to market the facilities services. - Payment – To Individuals or Entities – For the “Purpose” of Inducing Referrals - Some Services Reimbursed by Medicare or Medicaid False Claims Act Generally a false/fraudulent claim/statement made or caused to be made for payment to the United States, 31 U.S.C. § 3729(a) - Includes conspiracy and “reverse” false claims provisions Claim must be submitted “knowingly” - Actual knowledge - Deliberate ignorance - Reckless disregard - No specific intent to defraud required Element #1 "Claim" “Claim” includes any kind of document or other communication that reasonably could be expected to cause the government to make or approve a payment. “Claim” includes claims to third parties who are paid/reimbursed by the government. - Contract with third party physical therapy service. Person who “causes” a false claim to be presented, even if not the actual presenter of the claim, may be liable. Person actually presenting the claim need not know it is false. Example: Individual practitioners could be liable for submitting claims on behalf of a facility. Element #2 "False/Fraudulent" Examples: - Billing for services that were never delivered or rendered, either at all, or in the manner documented. - Performing inappropriate or unnecessary services. - Double billing – Charging more than once for the same goods or service. Element #3 "Knowing" “Knowing" and "knowingly" means a person has actual knowledge of the false information; acts in deliberate ignorance of the truth or falsity of the information; or acts in reckless disregard of the truth or falsity of the information. 31 USC § 3729(b) "Knowing" Conspiracy Claim – 31 USC § 3729(a)(3) - “Person conspires to defraud the Government by getting a false or fraudulent claim allowed or paid.” - Co-conspirators are liable for acts of other co-conspirators in the event there is knowledge that an individual defrauding the government. - In this context, failing to prevent the submission of a false claim may give rise to liability under the FCA if the defendant had a duty to prevent a fraud on the government. Penalties - Civil penalties of $5,500 to $11,000 per claim, plus treble damages (i.e., 3 times the amount of the government’s damages). - Exclusion from Medicare/Medicaid. Qui Tam/Whistleblower Provisions The FCA contains qui tam, or whistleblower, provisions. Qui tam is a unique mechanism in the law that allows citizens to sue, on behalf of the government, in order to recover damages. 31 U.S.C. § 3730(b). - Disgruntled employees - Unhappy patients - Estranged spouses A qui tam suit initially stays “under seal” (confidential) with the Court for at least 60 days during which the U.S. Department of Justice can investigate and decide whether to join the action. Whistleblowers can recover: - 15-25% of the settlement or judgment if DOJ participates; or - 30% if DOJ declines to intervene. False Claims Act Risk Areas - Reporting and Repaying Overpayments - Services Not Rendered - Lack of Medical Necessity - Upgrading - Risks for Failure to provide Appropriate Service - Stark Violations - Kickbacks in contractual relationships between physicians, hospitals and manufacturers - False Certifications - Inflating Cost Reports - Research Grant Fund PPACA Changes - "Original Source" PPACA modifies the original source requirement: - Only requires a relator to have “knowledge that is independent of and materially adds to the publicly disclosed allegations,” which omits the prior requirement that the knowledge be “direct and independent of . . . the information on which the allegations are based.” - “Independent knowledge” and “materially adds” are undefined. Expanded Definition of "Claim" The Fraud Enforcement and Recovery Act of 2009 (FERA) modified the definition of “claim” to include: “any request or demand . . .for money or property and whether or not the United States has title to the money or property, that – *** (ii) Is made to a contractor, grantee, or other recipient, if the money or property, is to be spent or used on the Government’s behalf or to advance a Government program or interest, . . .” Expansion of FCA Liability for Retention of Overpayment Obligation - This may be the single most significant development under the FCA. - Previously, a “false claim, record, or statement” was required to violate the FCA. Now, “knowing” and “improper” concealment or avoidance of an obligation is sufficient. - Under FERA, if one knowingly and improperly retains an overpayment from the Government, there is potential liability. This is known as a “reverse false claim.” - “Improperly” is not defined. - The FERA amendments added a definition of “obligation” to mean: “an established duty, whether or not fixed, arising from . . the retention of any overpayment.” - The FCA’s requirement to report and return overpayments is linked to the new definition of “obligation” in the statute. Quantification of Potential Overpayment Recent Case Law Changes Increased Enforcement in 2015 and Beyond Enforcement Measures - Data Mining: This includes mining for abuse through public quality data in which different individuals or departments within the same organization submit different data. - Halting Payments Under Prepayment Review - HHS and DOJ Partnerships: In July 2012 announced was a new collaboration among states, private insurers, and the federal government to prevent fraud. Use of technology to collaborate when detecting fraudulent payments. Understanding Fraud and Liabilities Failing to Comply With Billing Requirements “intentional failure to comply when person knows or should know with the intent to obtain payment” -- Alex T. Krouse, J.D., M.H.A. 4101 Edison Lakes Parkway, Suite 100 Mishawaka, IN 46545 Phone: 574-485-2003 Email: akrouse@kdlegal.com
31 USC § 3729(b) "Knowing" Conspiracy Claim – 31 USC § 3729(a)(3) - “Person conspires to defraud the Government by getting a false or fraudulent claim allowed or paid.” - Co-conspirators are liable for acts of other co-conspirators in the event there is knowledge that an individual defrauding the government. - In this context, failing to prevent the submission of a false claim may give rise to liability under the FCA if the defendant had a duty to prevent a fraud on the government. Penalties - Civil penalties of $5,500 to $11,000 per claim, plus treble damages (i.e., 3 times the amount of the government’s damages). - Exclusion from Medicare/Medicaid. Qui Tam/Whistleblower Provisions The FCA contains qui tam, or whistleblower, provisions. Qui tam is a unique mechanism in the law that allows citizens to sue, on behalf of the government, in order to recover damages. 31 U.S.C. § 3730(b). - Disgruntled employees - Unhappy patients - Estranged spouses A qui tam suit initially stays “under seal” (confidential) with the Court for at least 60 days during which the U.S. Department of Justice can investigate and decide whether to join the action. Whistleblowers can recover: - 15-25% of the settlement or judgment if DOJ participates; or - 30% if DOJ declines to intervene. False Claims Act Risk Areas - Reporting and Repaying Overpayments - Services Not Rendered - Lack of Medical Necessity - Upgrading - Risks for Failure to provide Appropriate Service - Stark Violations - Kickbacks in contractual relationships between physicians, hospitals and manufacturers - False Certifications - Inflating Cost Reports - Research Grant Fund PPACA Changes - "Original Source" PPACA modifies the original source requirement: - Only requires a relator to have “knowledge that is independent of and materially adds to the publicly disclosed allegations,” which omits the prior requirement that the knowledge be “direct and independent of . . . the information on which the allegations are based.” - “Independent knowledge” and “materially adds” are undefined. Expanded Definition of "Claim" The Fraud Enforcement and Recovery Act of 2009 (FERA) modified the definition of “claim” to include: “any request or demand . . .for money or property and whether or not the United States has title to the money or property, that – *** (ii) Is made to a contractor, grantee, or other recipient, if the money or property, is to be spent or used on the Government’s behalf or to advance a Government program or interest, . . .” Expansion of FCA Liability for Retention of Overpayment Obligation - This may be the single most significant development under the FCA. - Previously, a “false claim, record, or statement” was required to violate the FCA. Now, “knowing” and “improper” concealment or avoidance of an obligation is sufficient. - Under FERA, if one knowingly and improperly retains an overpayment from the Government, there is potential liability. This is known as a “reverse false claim.” - “Improperly” is not defined. - The FERA amendments added a definition of “obligation” to mean: “an established duty, whether or not fixed, arising from . . the retention of any overpayment.” - The FCA’s requirement to report and return overpayments is linked to the new definition of “obligation” in the statute. Quantification of Potential Overpayment Recent Case Law Changes Increased Enforcement in 2015 and Beyond Enforcement Measures - Data Mining: This includes mining for abuse through public quality data in which different individuals or departments within the same organization submit different data. - Halting Payments Under Prepayment Review - HHS and DOJ Partnerships: In July 2012 announced was a new collaboration among states, private insurers, and the federal government to prevent fraud. Use of technology to collaborate when detecting fraudulent payments. Understanding Fraud and Liabilities Failing to Comply With Billing Requirements “intentional failure to comply when person knows or should know with the intent to obtain payment” -- Alex T. Krouse, J.D., M.H.A. 4101 Edison Lakes Parkway, Suite 100 Mishawaka, IN 46545 Phone: 574-485-2003 Email: akrouse@kdlegal.com