INARF
​​Home | login | contact us
  • About Us
    • About Us
    • Board of Directors
    • Staff
    • Corporate Committees
    • Professional Interest Sections
    • Awards & Recognition
  • Membership
    • Member Login
    • Membership
    • Member Benefits & Inquiries
    • Organizational Member Directory
    • Associate Member Directory
    • Member Job Postings
  • Events
    • Upcoming Events
    • INARF 2022 Pre-Conference
    • INARF 2022 Annual Conference >
      • Schedule & Educational Sessions
      • Sponsor Opportunities
      • Exhibit Opportunities
      • Artisan Opportunities
      • Annual Awards
  • Professional Development
    • Professional Development
    • INARF DSP Series
    • INARF Leadership Academy
  • Technical Assistance
    • Technical Assistance
    • News & Information
    • Resources
  • Governmental Affairs
    • Governmental Affairs
    • INARF PAC
    • Bills Being Watched
    • Statehouse News
    • Take Action Now With VoterVoice!
  • About Us
    • About Us
    • Board of Directors
    • Staff
    • Corporate Committees
    • Professional Interest Sections
    • Awards & Recognition
  • Membership
    • Member Login
    • Membership
    • Member Benefits & Inquiries
    • Organizational Member Directory
    • Associate Member Directory
    • Member Job Postings
  • Events
    • Upcoming Events
    • INARF 2022 Pre-Conference
    • INARF 2022 Annual Conference >
      • Schedule & Educational Sessions
      • Sponsor Opportunities
      • Exhibit Opportunities
      • Artisan Opportunities
      • Annual Awards
  • Professional Development
    • Professional Development
    • INARF DSP Series
    • INARF Leadership Academy
  • Technical Assistance
    • Technical Assistance
    • News & Information
    • Resources
  • Governmental Affairs
    • Governmental Affairs
    • INARF PAC
    • Bills Being Watched
    • Statehouse News
    • Take Action Now With VoterVoice!

News

ARTICLE

Date ArticleType
8/20/2015 Professional Interest Sections

Medicare and Medicaid Fraud and Abuse Primer
Alex Krouse, Associate, Krieg DeVault

 
Audio (MP3)
Listen in New Window
 
Presentation (PDF)
Open in new window


DIsclaimer: This presentation is for educational purposes only and should not be considered legal advice. If you have specific legal questions, please contact an attorney.

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
  1. has actual knowledge of the false information;
  2. acts in deliberate ignorance of the truth or falsity of the information; or
  3. 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  

© Indiana Association of Rehabilitation Facilities, Inc. (INARF)
    615 North Alabama Street, Suite 410, Indianapolis, IN 46204
    (t) 317-634-4957 / (f) 317-634-3221 / Contact us by email
ANCOR Proud Member Small