11

HEALTH CARE COMPLIANCE ASSOCIATION AUDIT AND COMPLIANCE COMMITTEE

ACADEMY

September 20, 2006Orlando World Center Marriott

Orlando, Florida

Gabriel L. Imperato, Esq.

Broad and Cassel

gimperato@broadandcassel.com

22

� Criminal Statutes Specifically Relating to Health Care Fraud (established by HIPAA)

� Health Care Fraud [18 U.S.C. § 1347]

� Theft or Embezzlement in Connection with Health Care [18 U.S.C. § 669]

� False Statements Relating to Health Care Matters [18 U.S.C. §1035]

� Obstruction of Criminal Investigation of Health Care Offense [18U.S.C. § 1518]

OVERVIEW OF HEALTH CARE FRAUD ENFORCEMENT

33

“HIPPA” CRIME FOR HEALTHCARE FRAUD18 U.S.C. § 1347

� Whoever knowingly and willfully executes, or attempts to execute a scheme or artifice –

1) to defraud any health care benefit program; or

2) to obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any health care benefit program.

� In connection with the delivery of or payment for health care benefits, items, or services, shall be fined under this title or imprisoned not more than 10 years, or both.

44

Whoever knowingly and willfully embezzles, steals, or otherwise without authority converts to the use of any person other than the rightful owner, or intentionally misapplies any of the moneys, funds, securities, premiums, credits, property, or other assets of a health care benefit program, shall be fined under this title or imprisoned not more than 10 years, or both.

ADDITIONAL “HIPAA” CRIME OF THEFT OR EMBEZZLEMENT IN

CONNECTION WITHHEALTH CARE SERVICES

18 U.S.C. § 669

55

“HIPPA” CRIME FOR SUBMITTING FALSE STATEMENTS RELATING TO HEALTH

CARE MATTERS18 U.S.C. § 1035

� Whoever, in any matter involving a health care benefit program, knowingly and willfully –

1) Falsifies, conceals, or covers up by any trick, scheme, or device a material fact; or

2) Make any materially false, fictitious, or fraudulent statements or representations, or makes or uses any materially false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry, in connection with the delivery of or payment for health care benefits, items, or services, shall be fined under this title orimprisoned not more than 5 years or both

� Court ruled that falsity through concealment exists where disclosure of the concealed information is required by statute, regulation or government forms for reimbursement

66

OBSTRUCTION OF CRIMINAL INVESTIGATION OF HEALTH CARE

OFFENSE18 U.S.C. § 1518

a) Whoever willfully prevents, obstructs, misleads, delays or attempts to prevent, obstruct, mislead, or delay the communication of information or records relating to a violation of a Federal health care offense to a criminal investigator shall be fined under this title or imprisoned not more than 5 years; or both.

b) As used in this section the term “criminal investigator” means any individual duly authorized by a department, agency, or armed force of the United States to conduct or engage in investigations for prosecutions for violations of health care offenses.

77

CONSPIRACY18 U.S.C. § 371

� A Conspiracy or Agreement to Commit an Illegal Act is

a Separate Crime

� Two or More, Conspired (agreed) to Commit An

Offense and One or More Individuals Committed An

Act to Advance the Object of the Conspiracy

� Agreement to Commit a Crime Can Be Inferred From

Circumstantial Evidence and One Act Furthering

Conspiracy is Sufficient for Culpability

88

AIDING AND ABETTING18 U.S.C. § 2

� Anyone (i.e. consultant) who aids, abets, counsels, commands, induces or procures the commission of a Federal offense is culpable as if he or she directly committed the crime

� Aiding and abetting can be established if an individual associates with a venture, participates to bring it about and seeks by actions to make the venture succeed

99

31 U.S.C. § 3729, the False Claims Act (“FCA”) sets forth seven bases for liability. The most common ones are:

� Knowingly presenting, or causing to be presented, to the Government a false or fraudulent claim for payment

� Knowingly making, using, or causing to be made or used, a false record or statement to get a false or fraudulent claim paid

� Conspiring to defraud the Government by getting a false or fraudulent claim allowed or paid

� Knowingly making, using, or causing to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the Government

THE CIVIL FALSE CLAIMS ACT

1010

� The Defendant must:

� Submit a claim (or cause a claim to be submitted)

� To the Government

� That is false or fraudulent

� Knowing of its falsity

� Seeking payment from the Federal treasury

� Damages (maybe)

ELEMENTS OF AN FCA OFFENSE

1111

KNOWING & KNOWINGLY

� No proof or specific intent to defraud is required

� The Government need only show person:

� Had “actual knowledge of the information”; or

� Person acted in “deliberate ignorance” of the truth or falsity of the information; or

� Person acted in “reckless disregard” of the truth or falsity of the information

1212

� Civil penalty from $5,500 to $11,500 per false claim

� Three times the amount of damages which the Government sustained

PENALTIES

1313

� Were false claims submitted by a provider with knowledge of their falsity?� Was there actual or constructive notice of the rule or policy on

which a potential case would be based?

� Was the rule or policy clear?

� Does the size of the false claim support inference of knowledge or inference of mistake?

� What plans did the provider make to adhere to the rules?

� Are there any past remedial efforts?

� Did the provider receive guidance by program agents on the issue?

� Have there been previous audits to the provider of same or similar billing errors?

DEPARTMENT OF JUSTICEINVESTIGATIVE GUIDELINES

1414

� A private person (“Relator”) may bring a False Claim Act action under the qui tam provisions of the FCA – The Whistleblower

� Government may intervene in a suit brought by Relator

� Relationship between Relator and Government

� Collaborators in recovery of money

QUI TAM ACTIONS & GOVERNMENT INTERVENTION

1515

� If the government intervenes and obtains recovery, the Relator receives between 15% and 25% of the proceeds

� Since 1986, of all the qui tam actions filed, the average yearly intervention rate has been about 25% (approximately 300-400 cases)

� About $1.5 billion of the $1.7 billion in health care FCA recoveries in FY ’03 were from whistleblowers

� Recoveries have increased (higher penalties and publicity)

� Whistleblower protection is provided to those that take lawful actions in furtherance of the qui tam suit, including initiation, investigation, testimony for, or assistance in the action

FCA STATISTICS

1616

I. THE ANTI-KICKBACK STATUTE

� 42 USC § 1320a-7b(b)(2)

It is unlawful to knowingly and willfully offer or pay any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind to any person to induce such person - -

a) to refer an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program, or

b) to purchase, lease, order, or arrange for or recommend purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under a Federal health care program

1717

� What it all means? – Prohibits anyone from purposefully offering, soliciting, or receiving anything of value to generate referrals for items or services payable by any Federal health care program

� 42 states and D.C. have enacted their own anti-kickback statutes

THE ANTI-KICKBACK STATUTE

1818

PURPOSE OF THE LAW

� Prevent the corruption of medical decision-making

� Prevent the overutilization of items or services

� Prevent unfair competition

1919

ELEMENTS

� Remuneration

� Offered, paid, solicited, or received

� Knowingly and willfully

� To induce or in exchange for Federal program referrals

2020

REMUNERATION

� Anything of value

� “In-cash or in-kind”

� Paid directly or indirectly

� Examples: cash, free goods or services, discounts, below market rent, relief of financial obligations

2121

OFFERED, PAID, SOLICITED, OR RECEIVED

� Different perspectives – payors and payees

� “It takes two to tango”

� Old focus: payors subject to prosecution

� New focus: payors and payees (usually doctors)

2222

TO INDUCE FEDERAL PROGRAM REFERRALS

� Any Federal health care program

� A nexus between payments and referrals

� Covers any act that is intended to influence and cause referrals to a Federal health care program

� One purpose test

2323

KNOWINGLY & WILLFULLY

� The anti-kickback law requires that the individual have a particular “state of mind”, acting with knowledge and purpose when committing the offense

� This “knowingly and willfully” requirement has been interpreted differently by the various Federal Courts of Appeal:

� 9th Circuit: must have knowledge of the Anti-Kickback Statue and have specific intent to violate the statute

� 8th Circuit: mere knowledge that the conduct was “wrongful”satisfies the “knowingly and willfully” standard

� 11th Circuit: must show that one acted with an intent to “disobey or disregard” the law

2424

FINES AND PENALTIES

� The Government may elect to proceed:

Criminally:� Felony, imprisonment up to 5 years and a fine up to $25,000 or both� Mandatory exclusion from participating in Federal health care programs� Brought by the DOJ

Civilly:� Violation is based on express or implied certification of compliance with

violations of the Anti-Kickback and Stark Statutes� Penalties are same as under False Claims Act (more later)� Controversial, yet expanding use of the FCA

Administratively:� Monetary penalty of $50,000 per violation and assessment of up to three

times the remuneration involved� Discretionary exclusion from participating in Federal health care

programs� Brought by the OIG

2525

EXCEPTIONS AND SAFE HARBORS

� Many harmless business arrangements may be subject to the statute

� Approximately 24 exceptions (“Safe Harbors”) have been created by the OIG

� Compliance is voluntary

� Must meet all conditions to qualify for Safe Harbor protection

� Is substantial compliance enough?

2626

STATUTORY EXCEPTIONS

� The 5 exceptions that have been enacted by Congress:

1) Discounts and other price reductions

2) Payments to employees

3) An amount paid by a vendor of goods or services to a group purchasing agent

4) Waiver of Part B co-payments by Federally qualified health centers

5) “Shared Risk” exception

2727

REGULATORY SAFE HARBORS

� Investments in large entities

� Investments in small entities

� Investments in small entities in underserved areas

� Investments in group practices

� Investments in ambulatory surgical centers (ASCs)

2828

ADDITIONAL SAFE HARBORS

�� Space and Rental EquipmentSpace and Rental Equipment

�� Personal Services and Personal Services and Management ContractsManagement Contracts

�� EmployeesEmployees

�� DiscountsDiscounts

�� Managed CareManaged Care

�� Managed Care Managed Care ““shared riskshared risk””arrangementsarrangements

�� Practitioner Recruiting in Practitioner Recruiting in Underserved AreasUnderserved Areas

�� Ambulance RestockingAmbulance Restocking

�� Sale of PracticeSale of Practice

�� Referral ServiceReferral Service

�� WarrantiesWarranties

�� Group Purchasing OrganizationsGroup Purchasing Organizations

�� Routine Waiver of CoRoutine Waiver of Co--Payments Payments and and Deductibles

�� Subsidies for Obstetrical Subsidies for Obstetrical Malpractice Insurance in Malpractice Insurance in Underserved AreasUnderserved Areas

�� Cooperative Hospital Services Cooperative Hospital Services OrganizationsOrganizations

�� Specialty Referral Arrangements Specialty Referral Arrangements Between ProvidersBetween Providers

2929

GUIDANCE ON THEANTI-KICKBACK STATUTE

� Advisory Opinions from the OIG

� A party may request advice on the law, concerning (1) remuneration within the meaning of the law, (2) whether they are meeting one of the law’s exceptions or safe harbors, or whether their arrangement warrants the imposition of a sanction

� Recent Advisory Opinions on gainsharing arrangements in hospitals

• Fraud Alerts and Special Advisory Bulletins

• Preamble to the Safe Harbor Regulations

• Compliance Program Guidance’s

• www.oig.hhs.gov

3030

THE STARK LAW

� Section 1877 of the Social Security Act, 42 U.S.C. 1395nn

� The law is complicated and consists of the original statute (Stark I in 1989) and the amended provisions (Stark II in 1996)

� Stark II regulations have gone into effect in phases in 2002 and 2004, but some are still pending

3131

THE STARK LAW

� A prohibition on physician self-referrals

� If a physician (or immediate family member) has a direct or indirect financial relationship (ownership or compensation) with an entity that provides designated health services (“DHS”), the physician cannot refer the patient to the entity for DHS and the entity cannot submit a claim for the DHS, unless the financial relationship fits an exception

3232

PENALTIES

� Nonpayment of claims to entity submitting claims

� Civil Money Penalties of $15,000 for each service rendered plus an assessment of three time the amount claims

� Penalty of up to $100,000 for “circumvention scheme”

� FCA liability for submission of false claims resulting from Stark prohibited referral.

3333

DIFFERENCE BETWEENANTI-KICKBACK STATUTE

AND THE STARK LAW

� Physician referrals only

� No “knowingly and willfully standard” –strict liability

� Involves Designated Health Services (“DHS”)

3434

TYPES OF DESIGNATED HEALTH CARE SERVICE

(“DHS”)

� Clinical laboratory

� Physical therapy

� Occupational therapy

� Radiology and Imaging Services (MRI, CAT, scan, ultrasound)

� Durable medical equipment and supplies

� Parenteral and enteral nutrients, equipment and supplies

� Prosthetics, orthotics and prosthetic devices and supplies

� Home health services

� Outpatient prescription drugs

� Inpatient and outpatient hospital services

3535

WHAT IS A FINANCIAL RELATIONSHIP?

� Nearly any type of investment or compensation agreement between the referring physician and the DHS entity will quality as a financial arrangement under the Stark law

Examples:

� Stock ownership

� Partnership interest

� Rental contract

� Personal service contract

� Salary

• Compensation agreements can be direct or indirect

� Exceptions for certain indirect compensation arrangements

3636

EXCEPTIONS

� Compliance is mandatory

� Types of exceptions:� In-office ancillary services

� Personal physician services by member of group practice

� Pre-paid health plan

� Certain publicly traded securities

� Rural provider (investment interests)

� Hospital ownership (must be in the “whole” and not “specialty”hospital)

� Rental of office space and equipment

� Bona fide employment

� Personal services arrangement

� Physician recruitment

3737

ADDITIONAL EXCEPTIONSADDED IN JANUARY 2002

� Fair Market Value compensation arrangements

� Academic medical center arrangements

� Implants provided in an ASC (implants are DHS, but are not included in the bundled Medicare ASC payment)

� EPO and other dialysis-related drugs furnished in or by an ESRD facility

� Preventing screening tests, immunizations, and vaccines

� Eyeglasses and contact lenses following cataract surgery

� Non-monetary compensation up to $300

� Medical staff incidental benefits provided by a hospital

� Risk sharing arrangements

� Compliance training

� Indirect compensation arrangements

3838

HOT TOPICS

� Medical Directorships

� Physician Recruitment

� Joint Ventures

� Pharma and Medical Device Marketing

� Clinical Research

3939

PHYSICIAN RECRUITMENT

� Community need (vs. hospital need)

� Physician relocating practice to hospital service area

� Benefits geared to reasonable financial security of physician in startup phase

� Payout period limited to 3 years

� No benefits to existing group practice beyond actual incremental additional costs of adding new physician

� No relationship to anticipated referrals

� Ok to require maintenance of hospital privileges

4040

MEDICAL DIRECTORSHIPS

� Actual, necessary, non-duplicative services

� Fair Market Value payments

� Contemporaneous time and effort documentation

� No relationship to referrals

4141

JOINT VENTURES

� Issue: Excessive reward to referral sources?

� Any relationship of investment opportunity to referral volume

� Minimal investment by referral sources

� Tracking/pressure regarding referrals

� Extraordinary returns on investment

� Required divestments/non-transferability of investment interests

� “Shell” structures: contractual joint ventures where party only brings referrals to joint venture.

4242

MARKETING OF PHARMACEUTICALS AND

MEDICAL DEVICES

� Discounts and remuneration to purchasers

� Educational grants

� Research grants

� “Switching” or conversion payments

� Formularies and formulary support

� Relations with formulary committee members

� Formulary placement payments

� Relationships with physicians

� Consulting and advisory payments

� Business courtesies and gifts

� Education/research funding

4343

CLINICAL RESEARCH

� NIH Guidance on Financial Conflicts of Interest

� Any relationship between outcome and compensation

� Researchers proprietary interest in studied product

� Equity interest in the sponsor

� Other significant compensation by sponsor

� Grants for unnecessary or duplicative research

� Cost mischarging and duplicative reimbursement

4444

CLINICAL RESEARCH

� Commercial Sources

� Pharma and medical device

� Consultant arrangements with clinical trial sponsors (Pharma CPG)

� Recruitment of clinical trial subjects

� Integrity of reporting of clinical trial information

� Medical treatment of clinical trial subjects

� Federal Grants

� NIH and other

� Clinical investigations time allocation

� Billing for services covered under a grant

4545

HOSPITAL SPECIFICBILLING ISSUES

� DRG classifications for reimbursement

� Discharge/Transfers

� Inpatient DRG Coding

� Suspect Pairings

� Pneumonia

� Septicimia

� OIG highlights in its semi-annual report ($116 million Medicare overpayment in 2 year period)

� Outlier payments for greater reimbursement

4646

HOSPITAL SPECIFICBILLING ISSUES

� Outpatient PPS

� Pass-through costs

� Outpatient Cardiac Rehab

� Incident to/direct supervision by physician

� Diagnostic Testing in ERs

� Medically necessary?

4747

HOSPITAL BILLING/MEDICAL NECESSITY ISSUES

� Coronary Artery Stents

� Medically necessary

� Multiple procedures

4848

PHYSICIAN BILLING ISSUES

� E&M coding (perennial target - $23 billion in 2001)

� Consultations

� Use of -25 Modifier (E&M service unrelated to procedure code on same day)

� Place of service coding errors

4949

PHYSICIAN BILLING ISSUES

� Medical necessity of diagnostic tests

� Radiation therapy management services

� One billable unit for every five sessions

� Services and suppliers “incident to”

� Training and billing reviews for physician practices

� Essential in OIG’s view

5050

PHARMACEUTICAL FRAUD

� Medicaid rebates – best price violations

� Price manipulation (“AWP”/”ASP”)

� Promotion of off label use

� Relationships with health care professionals and inducements to prescribe pharma products

� Marketing schemes

� Pharmacy benefit managers and switching arrangements and contract kickbacks

� Shorting prescriptions and drugs returned to stock

� Secondary market and internet purchases

5151

MEDICARE PART D

� Compliance trends under Medicare Part D Prescription Drug Benefit

� CMS organized to identify cases of suspected fraud, conduct complaint investigations, to conduct audits and make appropriate referrals to law enforcement

5252

EMERGING TRENDS INPART D FRAUD

� Fraud in enrollment and eligibility in health plans

� Phony Part D plans to obtain personal beneficiary information tosubmit claims under Medicare program (i.e. identity theft)

� Misuse of CMS, HHS or Medicare program name

� Stating plan agents work for SSA, CMS, HHS

� Aggressive marketing tactics by Part D plans

� Medicare beneficiaries enrolled against their will

� Enrolled in general managed care plan when they only wanted prescription drug plan

� Unsolicited door to door sales

� Misrepresentation of product – not a drug plan

� Payment of “up front” premiums

5353

OTHER EXAMPLES OF PART DFRAUD & ABUSE

� Falsifying reports and health plan data submitted to CMS

� Failure to provide medically necessary services

� Payments for excluded drugs or drugs that are not for “medically accepted indication”

� Bait and switch pricing

� Duplicative premiums

� Failure to disclose or misrepresentation of rebates, discounts or other price concessions

5454

PHARMACY BENEFIT MANAGERSEXAMPLES OF FRAUD & ABUSE

� Prescription drug switching

� Prescription drug shorting

� Illegal remuneration

� Failure to offer negotiated prices

5555

MAIL ORDER PHARMACIES

� Shorting prescriptions

� Switch to preferred drugs without doctor’s order

� Reimbursement without credit for returned medications

� Cancellation of problematical prescriptions

5656

WHOLESALE PHARMACEUTICAL SUPPLIERS

� Counterfeit and adulterated drugs through grey market purchases (e.g. fake, diluted and illegally imported drugs)

� Drug diversion

� Inappropriate documentation of pricing information

5757

PHARMACEUTICAL MANUFACTURERS

� Integrity of data to establish rate of reimbursement

� Illegal remuneration and inducements

� Inappropriate relationships with health care professionals and health plans

� Illegal off-label promotion

� Illegal use of free samples

5858

PHARMACIES

� Inappropriate billing practices

� Claim brand price, but provide generic drugs

� Claim for non-existent prescriptions

� Claim to multiple payors for same prescriptions

� Drug shorting – less than called for dosage

� Bait and switch pricing – brand to generic

� Forging prescriptions

� Illegal remuneration

� Failure to offer negotiated prices

5959

PHYSICIANS

� Prescription drug switching

� Script mills (i.e. oxycontin and other controlled substances)

� Illegal remuneration schemes

� Theft of DEA number or prescription pads

6060

QUALITY OF CARE

� Hospital/physician services

� Cardiac catheterization procedures

� Hospital/medical staff responsibility

� Quality of care in nursing homes

� Services not provided

� “Deficient” services vs. “worthless” services

� Physician services

� Deficient services versus “worthless” services –medically unnecessary and unreasonable.

6161

OFFICE

OF

INSPECTOR GENERAL

WORK PLAN

2006

6262

OIG WORK PLANS

� Articulates areas of high compliance risk

� Priorities for enforcement activity

� Identify Federal health program vulnerabilities

� Road map for compliance program effectiveness and auditing and monitoring agenda for health care organizations

� Work plan assists in identification and focus for compliance efforts for health care organizations

6363

MEDICARE HOSPITALSAREAS OF FOCUS FOR OIG WORK PLAN 2006

� Adjustments for graduated medical education payments

� Payments for observation services versus inpatient admissions for dialysis services

� Nursing and allied health education payments

� Inpatient prospective payment system wage indices

� Inpatient rehabilitation facilities payments

� Inpatient hospital payments for new technologies

� Inpatient psychiatric hospitals� Inpatient rehabilitation payments-

late assessments� Long term care hospital payments� Critical access hospital

� Organ acquisition costs� Rebates paid to hospitals� Coronary artery stents� Outpatient outlier and other

charge-related issues� Outpatient department payments� Unbundling of hospital outpatient

services� “Inpatient Only” services

performed in an outpatient setting� Diagnosis-related group coding

abuses� Hospital reporting of restraint-

related deaths

6464

DELETED FROM OIG WORK PLAN 2005 AND NOT INCLUDED IN

OIG WORK PLAN 2006

� Quality Improvement Organization -- Beneficiary Complaints

� Graduate Medical Education Voluntary Supervision in Non-hospital settings

� Post Acute Care Transfers

� Inpatient Outlier and Other Charge-Related Issues

� Consecutive Inpatient Stays

� Level of Care in Long-Term Care Hospitals

� Outpatient Cardiac Rehabilitation Services

� Lifetime Reserve Days

6565

NEW FOCUS AREA FOR HOSPITALS IN2006 WORK PLAN

� Only seven (7) focus areas in OIG Work Plan 2006 are areas not previously identified in prior work plans. The most important areas of focus, from a liability perspective, are as follows:

� Payments for observation services versus inpatient admissions for dialysis services

� Payment for interrupted stays and outlier payments at inpatient psychiatric hospitals

� Payments for hospital outpatient departments for multiple procedures, repeat procedures and global services

� Unbundling of hospital outpatient procedures

� The most important recurring areas of focus in 2006 OIG Work Plan are as follows:

� Outlier payments to hospital outpatient departments

� Hospital reporting of restraint related deaths

� Medicaid diagnosis related group payment for hospital services within three days of admission

6666

RISK AREAS FOR PHYSICIANS NEW FOCUS AREAS IN OIG WORK PLAN 2006

1. Duplicate physical therapy claims

2. Payment to physicians for initial preventative physical examinations pursuant to coverage under the Medicare Modernization Act

Recurring Focus Areas

Propriety of contractual relationships between physicians and billing companies

1. Payments to physicians employed at VA hospitals

2. Physician hospice care plan oversight

3. Excluded physicians ordering or performing services

4. In-office pathology services

5. Cardiography professional and technical component billing

6. Authorization, medical necessity and physician certification for physical and occupational therapy services

7. Medical necessity of physician office mental health services

8. Medical necessity of wound care services and claims by physicians

6767

OTHER AREAS OF PHYSICIAN CONCERN

�� Medical necessity for coronary artery stentsMedical necessity for coronary artery stents

�� Medical necessity of rehabilitation and infusion therapy serviceMedical necessity of rehabilitation and infusion therapy services in s in nursing homenursing home

�� Medical necessity and excessive billing of imaging and laboratorMedical necessity and excessive billing of imaging and laboratory y services in nursing homesservices in nursing homes

�� Medical necessity and receipt of DMEMedical necessity and receipt of DME

�� Reimbursement for Medicare drug benefitReimbursement for Medicare drug benefit

�� Focus on physician services in Independent Diagnostic Testing Focus on physician services in Independent Diagnostic Testing Facilities (Facilities (““IDTFIDTF’’ss””) regarding appropriate supervision and ) regarding appropriate supervision and licensure of personnel performing testslicensure of personnel performing tests

�� Medical necessity of CORF servicesMedical necessity of CORF services

�� Inappropriate payments and utilization of covered preventative cInappropriate payments and utilization of covered preventative care are servicesservices

�� Physician prescribing of drugs, such as oxycontinPhysician prescribing of drugs, such as oxycontin

6868

OFFICE OF INSPECTOR GENERAL (“OIG”)OFFICE OF INVESTIGATIONS (“OI”)

�� OI conducts investigations of fraud and misconduct and OI conducts investigations of fraud and misconduct and health care fraudhealth care fraud

�� Identifies systematic weaknesses in vulnerable program Identifies systematic weaknesses in vulnerable program areas and recommends management, regulatory and areas and recommends management, regulatory and legislative corrective actionlegislative corrective action

�� Provides investigative Provides investigative assistance in criminal and civil in criminal and civil false claims, civil money penalty and exclusion casesfalse claims, civil money penalty and exclusion cases

�� Responds to thousands of complaints of health care Responds to thousands of complaints of health care fraud from various sources, including fraud from various sources, including ““whistleblowerswhistleblowers””

�� Provider selfProvider self--disclosure programdisclosure program

�� False claims and antiFalse claims and anti--kickback violationskickback violations

6969

OFFICE OF INSPECTOR GENERALOFFICE OF LEGAL COUNSEL (“OCIG”)

� Resolution of Civil False Claims Act cases and negotiation of Corporate Integrity Agreements (“CIA”)

� Provider Compliance with Corporate Integrity Agreements

� Industry Guidance: Advisory Opinions, Fraud Alerts and Compliance Program Guidances

� Development of regulations, including safe harbors to the anti-kickback statute

� Enforcement of civil money penalty and exclusion statutes

� Enforcement of the patient anti-dumping statute

7070

HOSPICE PROVIDERS

� Hospice providers meet quality of care standards

� Provider oversight activities and quality of care

� Evaluate arrangements between Hospice and nursing homes

7171

EXCLUDED PROVIDERS

� Evaluating the extent to which Medicare is billed for Part B services ordered by providers excluded from the Medicare program

� Part of physician section, but affects Medicare Part B Services

� Home health

� DME

� Outpatient radiology

� Laboratories

7272

HOME HEALTH PROVIDERSOUTLIER PAYMENTS

� Long term high intensity cases where episode of care costs exceed threshold amount

� Evaluate the frequency of outliers

7373

ENHANCED PAYMENT

� Evaluate payment to HHA for therapy services

� Number and duration of therapy services

� Survey certifications regarding quality of care

�Performed by the state

�Follow-up on deficiencies in the nature of “cyclical non-compliance”

7474

SKILLED NUSRING SERVICES – NURSING HOMESREHAB AND INFUSION THERAPY

� Analysis of whether rehab and infusion therapy services were:

� Medically necessary

� Adequately supported in documentation

� Actually provided

7575

IMAGING AND LABORATORY SERVICES

� Evaluate the medical necessity and excessive billing for imaging and laboratory services provided to nursing home residents

� Evaluate a sample of services and examine utilization patterns

7676

OTHER TOPICS

� Consolidated billing

� Payments for day of discharge

� Consecutive inpatient stays

� Deficiency trends

� Quality of care

� Enforcement action against noncompliant nursing homes

� Compliance with complaint investigations

� Immediate jeopardy

� Actual harm

7777

DURABLE MEDICAL EQUIPMENT SUPPLIERS

� Medical necessity of durable medical equipment and supplies

� Therapeutic footwear

� Pricing of equipment and supplies

� Home glucose testing supplies

� Test strips

� Lancets

� Medical necessity and utilization

7878

OTHER TOPICS

� Laboratory services during inpatient stays

� Part B radiology services provided to inpatients

� Separately billable lab services under ESRD

� Lab proficiency testing

� Quality of care in dialysis facilities

� Ambulance services

� Ground

� Hospital inpatients

7979

PRIVATE PAYOR FRAUD

� What is private payor insurance fraud?

� Fraud against those who pay for private health insurance coverage

8080

FEDERAL STATUTES PROHIBITING PRIVATE PAYOR INSURANCE FRAUD

� Mail fraud

� Wire fraud

� Fraud against health care benefit plans

� Conspiracy to commit fraud through false claims and false statements

� Fraud under the RICO statute

8181

FEDERAL PROSECUTIONS INVOLVING FRAUDAGAINST PRIVATE PERSONS

� Examples� US v. Posner, D.C., et al (S.D. Fla.)

Mail Fraud: 18 U.S.C. § 1341; Wire Fraud: 18 U.S.C. § 1343; and Conspiracy: 18 U.S.C. § 371 – for submission of claims to private payors for services not rendered, not rendered as claimed and for medically unnecessary services

� US v. Individual Chiropractor

Health Care Fraud: 18 U.S.C. §1347; Conspiracy: 18 U.S.C. § 371 – for claims for services in accordance with a standard treatmentprotocol lasting approximately three months regardless of the patient injuries or the medical necessity of the treatment protocol and for submission of claims for medical, chiropractic and therapeutic services which were not performed during the treatment protocol and/or never occurred

8282

PRIVATE PAYOR ATTEMPTS TO LIMIT FRAUD AND ABUSE

THROUGH STATE LEGISLATION

� Examples

� Florida legislation regulating activities under the personal injury protection program – limiting solicitation of patients; imposition of medical director responsibilities on personal injury medical clinics

� Licensure and registration of clinics and denial of payment for unlicensed or unregistered clinics by private health plans

8383

EXAMPLES OF PRIVATEPAYOR POSITIONS

IN CIVIL LITIGATION

� Violations of Federal or state false claims statutes

� Violations of Federal or state anti-kickback and self-referral laws

� Violations of state law governing insurance and provider relationships

� Submission of claims which are allegedly medically unnecessary and/or unreasonable

8484

PRIVATE PAYOR AFFIRMATIVE LITIGATION AGAINST PROVIDERS IN STATE

AND FEDERAL COURTS� Examples

� State Farm Mutual Automobile Insurance Company v. Universal Medical Center of South Florida, Inc. (Dade County, Court of Appeal) – Denial of payment because physical therapy performed by medical assistants (not licensed physical therapists) provided under physician supervision is prohibited under state law.

� State Farm Mutual Automobile Insurance Company v. Comprehensive Medical Group, Inc., et al (N.D. Illinois) – Complaint by insurance company against multiple providers for false and fraudulent claims for worthless and unnecessary diagnostic tests rendered to victims of automobile accidents on an nation-wide scale.

� Medically unnecessary diagnostic tests of no clinical value� Misleading diagnostic findings� False claims for multiple procedure codes� Diagnostic studies rendered to maximize profit without regard to

medical necessity� Spinal ultra sounds; somotosensory evoke potential; dermatome evoke

potentials; and nerve conduction velocity studies, having no clinical value in confirming or excluding the existence of nerve root injury or location of neurological dysfunction or inflammation

� Purpose of performing the test is merely for financial gain

8585

CORPORATE LIABILITY, COMPLIANCEAND GOVERNANCE

� HIPPA ’96 and Corporate Scandals

� The New Era of Corporate Responsibility

� Sarbanes-Oxley Act of 2002

� Department of Justice Principles of Federal Prosecution of Business Organizations of 2003

� United States Sentencing Guideline Amendments of 2004

8686

CORPORATE LIABILITY, GOVERNANCE AND COMPLIANCE

� Eliminate conflicts of interest and promote independent decision-making in the best interests of the business organization

� Self governance, self reporting and acceptance of responsibility are building blocks of the organizational culture expected from reordered enforcement priorities

8787

SARBANES-OXLEY AND THE SENTINEL EFFECT ON BUSINESS ORGANIZATIONS

� Public companies –governance and integrity of financial information

� Private companies –fiduciary obligations of Board of Directors and shareholder derivative liability

� Not-for-profit organizations – fiduciary obligations and Attorney General oversight

� Caremark Decision – all organizations� Duty of compliance

oversight enters the Boardroom – fiduciary obligation of individual Board members

8888

CAREMARK DECISION (cont’d.)

� Oversight and responsibility for compliance by the Board of Directors and high level personnel of the organization

� Board knowledge about the content and operation of the organization’s compliance program to prevent and detect violations of the law

� Board exercises reasonable oversight with respect to implementation and effectiveness of the compliance program.

8989

SARBANES-OXLEY ACT (cont’d.)

� Corporate scandals resulted in quick legislative action in 2002

� Attempt to foster change in the way business organizations act and assign greater responsibility to executives for failures in the accuracy of financial statements

9090

SARBANES-OXLEY ACT (cont’d.)

� Increased accountability of corporate executives and board members and improved self governance

� Accuracy and full disclosure of corporate financial information

� Elimination of internal and external conflicts of interest

� Foster compliant corporate culture by protecting reports of misconduct.

9191

DEPARTMENT OF JUSTICE PRINCIPLES OF FEDERAL PROSECUTION OF BUSINESS

ORGANIZATIONS “THOMPSON MEMO”

� Voluntary disclosure and self-reporting as quasi mandatory function of cooperation

� Cooperation in investigating business organizations own wrongdoing

� Affects charging decision against business organization

� Affects sentence under sentencing guidelines

� Business organization’s cannot run the risk of failing to have an effective compliance program

� Failure to detect and prevent wrongful conduct will result in consequences for any business organization in current enforcement environment.

� Deferred Prosecution Agreements and Corporate Integrity Agreements

9292

WHAT CHANGED?

� More consistent, nationwide law enforcement response to corporate fraud

� Proactive approach and faster prosecutions encouraged

� Greater uniformity in case disposition with potentially grave consequences for business organizations.

9393

WHAT CHANGED?

� New emphasis on completeness of cooperation� Did business organization, while purporting to

“cooperate”, engage in conduct that actually impeded investigation, e.g.:� Overly broad assertions of legal representation

(organization and employees)� Directions not to meet/cooperate with government

agents� Incomplete or delayed document production� Failure to promptly disclose illegal conduct known

to corporation� Continued financial or other support of culpable

employees� Joint defense agreements with culpable employees.

9494

WHAT CHANGED?

� Complete cooperation includes full disclosure of key facts

� May require waiver of attorney-client and work product protections

� Not an absolute requirement

� Limited in most cases to factual internal investigation and contemporaneous advice given regarding conduct at issue

� Controversial and subject to abuse by prosecutors

9595

SENTENCING GUIDELINE AMENDMENTS OF 2004

� Sentencing guidelines for organizations introduced concept of compliance program to reduce criminal culpability for business organizations in 1991

� Sarbanes-Oxley Act required United States Sentencing Commission to review and amend guidelines to enhance compliance program effectiveness

� Amendments encourage business organizations to partner with Federal government and promote self policing, reporting and cooperation in investigations of itsown wrongdoing.

9696

SENTENCING GUIDELINE AMENDMENTS OF 2004 (cont’d.)THE UNITED STATES SENTENCING COMMISSION’S

ORIGINAL ESSENTIAL ELEMENTS FOR A COMPLIANCE PROGRAM

� Standards of Conduct and Policies and Procedures� Developed and distributed to all employees to promote a commitment

to compliance� Compliance Officer

� Focal point for compliance activities� Education and Training

� Continued education and training essential for an effective compliance program

� Monitoring and Auditing� Process for continuing evaluation for a successful compliance program

� Reporting and Investigation� Communication to detect and prevent misconduct with ability to

investigate and implement corrective action� Enforcement and Discipline

� Discipline for failure to adhere to compliance standards and procedures� Response and Prevention

� Ability to respond to and correct non-compliant activity and conduct.

9797

SENTENCING GUIDELINE AMENDMENTS (cont’d.)

� Amendments continue to emphasize prevention and detection of criminal conduct, but further emphasize promotion of organizational culture which encourages compliant and ethical conduct

� Amendments stress organizational responsibility, risk assessmentand ethical behavior

� Strict legal compliance must be accompanied by a strong commitment to proactive governance and management of risk and ethical behavior

� Compliance with law, but also implement “best practices”

9898

SENTENCING GUIDELINE AMENDMENTS (cont’d.)

� Amendments adopt “carrot and stick”approach regarding criminal penalties for business organizations

� Sustained effective compliance program can mean difference between survival and demise of business organizations

9999

CONTENT OF SENTENCING GUIDELINE AMENDMENTS

� Establishment of compliance standards and procedures and creation of code of conduct reasonably capable of reducing misconduct and promoting ethical behavior�Focus on areas of high risk and adopt procedures to

reduce non-compliant activity� Assigning oversight and responsibility to high level

personnel and governing authority for organizational compliance program�Knowledgeable about content and operation of

compliance program�Ensure implementation and effectiveness of program�Compliance professionals provided with adequate

resources and authority and reporting responsibility to governing authority.

100100

CONTENT OF SENTENCING GUIDELINE AMENDMENTS

� Compliance Responsibilities Should Not Be Delegated to Individuals Who Have Engaged in Misconduct� Organizational Screening Process

Required for Hiring and Promotion� Training of Upper Level Management and

Employees and Agents Addressing Specific Risk Areas

� Auditing and Monitoring to Detect Violations of the Law� Procedures for Allowing Anonymous

Reporting� Expanded Focus of Reporting to Include

Potential Misconduct and Seeking Guidance on Compliance Matters

� Expand Enforcement of Compliance Program by Disciplinary and Incentive Measures with Employees

� Responsiveness to Misconduct Through Investigation, Corrective Action and Possible Voluntary Disclosure.

101101

ONGOING RISK ASSESSMENT OF LIKELY RISKS FOR BUSINESS

ORGANIZATION

� Amendments expect more than creation of compliance program – compliance program must actually be effective in detecting and preventing misconduct

� Offense by high level personnel creates rebuttable presumption of ineffectiveness

102102

“COOPERATION” OR “UNCONDITIONAL SURRENDER”

� Cooperation taken into consideration in charging decisions by Department of Justice� Organization’s ability to make witnesses

available� Disclosure of organization’s internal

investigation, including waiver of attorney/client privilege when necessary, to identify individuals responsible and scope of conduct

� Disclosure in a timely and complete manner before facts become stale and to better enable recovery of losses

� Cooperation evaluated on case-by-case basis

� Deferred prosecution agreement – survival of business organization – corporate integrity agreement with Department of Health and Human Services

� Circumstances literally coerce business organizations into cooperation and the United States Sentencing Commission and the Courts are taking notice of constitutional abuses.

103103

“COOPERATION” OR “UNCONDITIONAL SURRENDER”

(cont’d.)

� Powerful incentives involved in business organization’s decision to cooperate in investigation of own wrongdoing

� Department of Justice views self-reporting as a quasi mandatory function of cooperation

� Drives wedge between organization and its employees

� Undermines fundamental employer/ employee relationship.

104104

DEFERRED PROSECUTION AGREEMENTS

(“DPA”)� Deferred Prosecution Agreement

– creature of Department of Justice – consequence of enforcement of corporate culpability� Organization commits to “best

practices” for effective governance and promotion of ethical culture of compliance

� Chief Compliance Officer reporting directly to Board

� Extensive training and education programs

� Hotline reporting of non-compliant conduct

� Appointment of monitor to oversee obligations under deferred prosecution agreement.

105105

CORPORATE INTEGRITY AGREEMENTS (“CIA”)

� Creature of Office of the Inspector General (“OIG”) of the United States Department of Health and Human Services� Obligations in return for continued participation in Federal

health programs� A part of global criminal and/or civil settlement� May represent OIG’s opinion on the organization’s compliance

programs� Adopts and adheres to seven essential elements of an effective

compliance program, including:� Education and training� Focused audit and monitoring� Independence of compliance officer

� Reporting requirements to OIG.

106106

QUALITY OF CARE AND THE MEDICAL NECESSITY AND REASONABLEMENSS OF

HEALTH CARE SERVICESWHO DECIDES

� Practicing Physicians – See 42 U.S.C. § 1395 and Case Law

� Medicare & Medicaid Contractors for Processing Medicare and Medicaid Claims for Reimbursement – See 54 Fed. Register at 4305

� Hospitals through Utilization Review and in Conjunction with Quality Improvement Organization (“QIO”) (formerly Peer Review Organizations) – See 42 U.S.C. § 1320c-5

� Law Enforcement Agencies –� Department of Justice – Criminal & Civil

� State Attorney General’s/Medicaid Fraud Control Units – Criminal and Civil

� Office of Inspector General, Health and Human Services –Administrative – criminal, civil and administrative

107107

FEDERAL HEALTH PROGRAMS DO NOT COVER ITEMS OR SERVICES WHICH ARE NOT REASONABLE AND NECESSARY FOR

THE DIAGNOSIS AND TREATMENT OF ILLNESS OR INJURY

� See 42 U.S.C. § 1395y(a)(1)(A) (Medicare) and 42 U.S.C. § 1396a (Medicaid)

108108

QUALITY OF CARE/MEDICAL NECESSITYAND REASONABLENESS

� Hospital/Physician Services

� Cardiac Catheterization Procedures

� Hospital/Medical Staff Responsibility

� Medical Necessity and Reasonableness

� Quality of Care in Nursing Homes

� Services Not Provided

� “Deficient” Services vs. “Worthless” Services

� Physician Services

109109

HOSPITAL AND PHYSICIANSMEDICAL NECESSITY CONUNDRUM

� Physicians decide what is medically necessary

� Staff physicians not employed by hospital

� Independent Peer Review function by Medical Staff Physicians at hospital

� Overutilization? Patient care/safety

� United Memorial Hospital/physician and corporate liability

� Growing basis for whistleblower claims under False Claims Act

110110

PHYSICIAN/HOSPITAL RELATIONS ANDCRIMINAL AND CIVIL LIABILITY FOR

MEDICALLY UNNECESSARYAND UNREASONABLE SERVICES

United Memorial Hospital Case

� Criminal prosecution and conviction of Medical Staff Physician, Physician Chief of Medical Staff, Physician Chief of Emergency Medicine and Chief Executive Officer of hospital

� Criminal conviction of hospital

� Collateral civil and administrative liability for physicians and hospital

111111

UNITED MEMORIAL HOSPITAL CASE (cont’d.)

� Multiple patient death’s resulted in malpractice actions against physician and hospital

� Resulted in Board of Medicine proceedings against physician resulting in suspension of license

� Resulted in adverse newspaper publicity and opening of Federal and state criminal investigations

� Federal government indicted Dr. Askanazi for mail fraud for multiple counts for the submission of false claims, including claims for medically unnecessary surgical procedures

� State Attorney General sought charges for manslaughter based on grossly negligent surgical procedures, but ultimately declined to prosecute

112112

CRIMINAL CONVICTION OF MEDICAL STAFF PHYSICIAN

� Medical Staff Physician convicted by jury of mail fraud for false claims to Medicare, Medicaid and private health insurance companies for:

� Upcoding of patient office visits; higher E&M level than actually provided to patient (60 minute claim, when only five to ten minute visit with each patient and claims for H&P tests never performed – blood pressure, cardiac examination, range of motion)

� Claims for directing anesthesiology services when no such direction was provided

� Claims for medically unnecessary pain management services

� Pain management services placed patients at risk for their health and safety

113113

CRIMINAL CONVICTION OF PHYSICIAN CHIEF OF STAFF AND CHIEF OF EMERGENCY

MEDICINE AND OF UNITED MEMORIAL HOSPITAL

� Conspiracy with physician medical staff member to submit false claims to Medicare, Medicaid and private payors for facility fees to hospital related to physician’s medically unnecessary surgeries

� Obstruction of internal investigation of complaints about physician medical staff member to allow continued performance of unnecessary surgical procedures to generate additional physician and hospital fees

114114

CASE AGAINST HOSPITAL

� Hospital is informed three months after Dr. Askanazi conviction that it is under investigation� Hospital is invited by United States Attorney to conduct its own internal investigation of its

relationship with Dr. Askanazi� In a March 22, 1999 letter to the Hospital’s attorney, the Assistant United States Attorney suggested

that the Hospital conduct an internal investigation of its relationship with Dr. Askanazi, disclose the results to the government and reach a mutually acceptable resolution:

. . . Our willingness to proceed in the manner outlined in our meeting should be seen as a tremendous opportunity to, after full disclosure, shape the outcome of this matter, an opportunity very few subjects of federal investigations receive.

* * *Nevertheless, we indicated that if United Memorial Hospital agrees to cooperate, we would expect a complete and comprehensive investigation into every aspect of United Memorial Hospital’s relationship with Dr. Askanazi, including, but not limited to, whether a medical/billing audit of a statistically valid random sample of UB-92s disclosed any problems, whether anyone at United Memorial Hospital had a financial relationship with Dr. Askanazi and whether and how that relationship affected the institution’s [sic] relationship with Dr. Askanazi, and what United Memorial Hospital did or did not do when it learned about certain facts concerning Dr. Askanazi’s practice.

* * *Again, I am sure you appreciate that if United Memorial Hospital, through and in conjunction with counsel, undertakes such an investigation, the entire investigation and all of its results are arguably protected by the attorney-client, work product, and/or peer review privileges. Accordingly, those privileges must all be waived.

� Hospital agrees to conduct internal investigation and cooperate with United States Attorney and disclose results waiving all applicable privileges

115115

EVIDENCE AGAINST HOSPITAL

� Number of procedures performed by Dr. Askanazi rose from 24 in January, 1994 (his first year) to 230 in December, 1994 and Hospital net income grew from $424K in 1993 to $2.2M in 1994

� 1994 and 1995 saw numerous complaints by Physician medical staff members, nurses and operating staff regarding Dr. Askanazi� Patient volume� Number of operating procedures� Number of repeat procedures with no apparent patient improvement� Numerous violations of hospital procedures related to sterilization

� Complaints described Dr. Askanazi’s operating procedures as an “assembly line” or “mill”� Complaints of operating on “walk in” patients without conducting an examination of

patient to determine if procedure was medically necessary� Nurse complaints were ignored – “you’re replaceable”� Physician complaints were ignored – “you’re uncooperative”� Physician procedures generating significant income for hospital “so keep concerns to

yourself or leave hospital.”� Physicians complained that Dr. Askanazi could not know whether pain management

services were medically necessary because he prescribed treatments without conducting a sufficiently thorough examination of patient to make an accurate diagnosis

� Physician expressed concerns about Dr. Askanazi’s clinical judgment given number and type of procedures; stopped referring patients to Dr. Askanazi because of concerns; recommended Dr. Askanazi not be granted expanded pain management privileges (which Dr. Askanazi granted to himself as head of the hospital’s anesthesia department).

116116

EVIDENCE AGAINST HOSPITAL (cont’d.)

� Physicians expressed concerns to Chief of Staff and Chief of Emergency Medicine

� Radiology group refused to read diagnostic tests ordered and performed by Dr. Askanazi because questions about their diagnostic value

� Radiologist concerns about these procedures were rejected by Medical Staff Executive Committee at Hospital

� Hospital Board of Trustees questioned Dr. Askanazi’s procedures and was advised it could not initiate a peer review of a physician’s quality of care – only the Medical Staff could conduct review.

� A review of patient medical charts by the Medical Staff Professional Activities Committee resulted in a determination that documentation was insufficient to determine how Dr. Askanazi made patient decisions� Ordered review for improved documentation

117117

EVIDENCE AGAINST HOSPITAL (cont’d.)

� Dr. Askanazi described himself to the medical staff of hospital as the “Sam Walton” of pain management.

� Dr. Askanazi freely admitted he was at hospital to make money and intended to double stats each month and admitted to patient he was doing procedures simply for reimbursement, which was reported to hospital and ignored.

� Dr. Askanazi rewrote a hospital poster to read “quantity over quality.”

� Board reviewed costs and revenue of pain management practice at Hospital and requested review of the appropriateness of pain management procedures.

� Board was advised that Dr. Askanazi’s practice “had a favorable financial impact on hospital operations when compared to budget.”

118118

EVIDENCE AGAINST HOSPITAL (cont’d.)

� Chairman of Board stated that any reviewer of Dr. Askanazi’s practice should not be someone who would antagonize him or cause him to take his practice to a competitor.

� Chief Executive Officer of Hospital advised a Board member that “Dr. Askanazi’s practice constituted approximately one-third of the hospital’s income” and further stated “we wouldn’t want to hurt him, would we.”

119119

EVIDENCE AGAINST HOSPITAL (cont’d.)

� Hospital governance and compliance significantly compromised by conflicts of interest

� Dr. Askanazi’s business affiliations extended to those fielding complaints about Dr. Askanazi at the Hospital

� Chief of Medical Staff and Emergency Medicine formed an entity with Dr. Askanazi to build a surgery center

� Each physician personally guaranteed a loan for the surgery center

� Each physician served on Board of Directors of company formed by Dr. Askanazi to provide pain management services to the hospital

� CEO of Hospital left to become CEO of bio tech firm owned by Dr.Askanazi

� All three of these Hospital officers took part in the review of Dr. Askanazi’s practices at the Hospital while they were contemplating or involved in business ventures with Dr. Askanazi and refused to recuse themselves from deliberations despite these direct and indirect financial relationships with Dr. Askanazi.

120120

EVIDENCE AGAINST HOSPITAL (cont’d.)

� Hospital sought outside review of medical necessity of pain management procedures which resulted in a report of inability to provide an opinion because of paucity of documentation in medical record.

� Hospital medical staff took no action in response to this review for eight months and then merely counseled Dr. Askanazi to improve his paperwork.

� Hospital took no action until patient death and then referred matter to the Medicare Peer Review Organization of Michigan to review numerous pain management patient charts. A subsequent report by the peer review organization stated the following:

� “There were several themes that recurred in the records examined:Specifically, the evaluative process presented was uniformly inadequate. Results of the testing data, and finding either within history or on physical examination that supported the purported diagnostic impressions were consistently absent. There was an apparent routine overuse of invasive techniques without clear indications. The Pain Management activities seem to have proceeded without evidence of [sic] efficacy, quality assurance or outcome evaluation. . . .Continuing to allow invasive procedures without objective evidence of improvement in pain level, narcotic use, functional improvement or return to work is not warranted.”

� Dr. Askanazi finally voluntarily resigned from Hospital Medical Staff.

121121

EVIDENCE AGAINST HOSPITAL (cont’d.)

� Despite long history of complaints, patient deaths and complications and reports of outside reviewer and Peer Review Organization of Michigan, Hospital continued to bill and collect facility fees generated by unnecessary pain management procedures for several years.

122122

WARNING SIGNALS

� Physician privileges restricted at other hospitals

� Complaints from nursing and medical staff

� Quantity of patients and explosive growth of practice

� Negligent credentialing and peer review

� Cloned medical records – inadequate history and physicals –diagnosis inconsistent with treatment – treatment regardless of medical necessity or reasonableness

� History of malpractice complaints and related complications

� Evidence of financial motivation superceding quality of care andmedical necessity considerations

� Conflicts of interest compromising organizational governance andcompliance activities.

123123

LESSONS FROM CASE

� Don’t be afraid to “know which way the wind is blowing” when you see the Warning Signals;

� Investigate whenever it appears there may have been a pattern of billing for unnecessary medical services. If the medical necessity is unclear, do not bill for the service and make restitution where necessary;

� Do not tolerate conflicts of interest in organizational governance and in addressing compliance matters;

� Given the law on collective corporate responsibility and deliberate ignorance, take little comfort in the fact that specific, high level hospital officials didn’t know about the pattern of billing for unnecessary medical services.

124124

ADMINISTRATIVE SANCTIONS

� Introduction

� The term “sanctions” represents the full range of administrative remedies and actions available to the Federal and state governments to deal with questionable, improper or abusive actions of health care providers under Federal health programs.

125125

SUSPENSION, OFFSET AND RECOUPMENT OF

PAYMENTS TO PROVIDERS

� Suspension of payment is the withholding of payment by an intermediary or carrier from the provider of an already approved Medicare payment amount before a final determination is made as to the amount of any overpayment that exists

� Offset is the recovery by the Medicare program of a non-Medicare debt (i.e. Medicaid) by reducing present or future Medicare payments and applying the amount withheld to the indebtedness.

� Recoupment is the recovery by Medicare of any outstanding Medicare debt by reducing present or future Medicare payments and applying the amount withheld to the indebtedness.

126126

EXCLUSION

42 U.S.C. § 1320A-7

� When an exclusion is imposed, no payment is made to anyone for any item or service furnished, ordered, or prescribed by an excluded party under Medicare, Medicaid, or any other Federal Health Program. In addition, no payment is made to any business or facility – e.g., a hospital that submits bills for payment of items or services provided by an excluded party.

127127

EXCLUSION (cont’d.)

� Unless and until an individual or entity is re-instated,

no payment will be made by Medicare, Medicaid, or

any other Federal Health Program for any item or

service furnished by an excluded individual or entity,

or at the medical direction of, or on the prescription

of, a physician or other authorized individual who is

excluded.

128128

EXCLUSION (cont’d.)

� It is important to note that a provider may not submit claims to Medicare automatically upon the expiration of the period of exclusion. Excluded health care providers must petition for reinstatement, and be reinstated by the Department of Health and Human Services; Office of Inspector General (“OIG”), before they can lawfully submit claims to Federal Health Programs. An excluded individual or entity submitting, or causing the submission of, claims for items or services furnished during an exclusion period is subject to at least a civil monetary penalty, potential criminal liability, or both.

129129

EXCLUSION (cont’d.)

� The Secretary of Health and Human Services (the “Secretary”) must exclude individuals and entities from Medicare, Medicaid, and other Federal Health Programs when they are convicted of certain offenses. The grounds for mandatory exclusion were expanded as part of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”).

� First, if an individual or entity has been convicted of a criminal offense relating to the delivery of an item or service under Medicare or under any state health care program, (i.e. Medicaid) exclusion is mandatory.

130130

EXCLUSION (cont’d.)

� Second, if an individual or entity has been convicted under federal or state law of a criminal offense relating to neglect or abuse of patients in connection with the delivery of a health care item or service, exclusion is mandatory. This is true evenwhen such patients are not program beneficiaries.

� Third, exclusion is required for individual or entities that have been convicted, under federal or state law, of a criminal offense consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct.

131131

EXCLUSION (cont’d.)

� Finally, if an individual or entity has been convicted, under Federal or state law, of a criminal offense consisting of a felony relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance, exclusion must be imposed.

132132

EXCLUSION (cont’d.)

� These exclusions may apply to those individuals or entities that (a) are or have been health care practitioners or providers, (b) hold or have held a direct or indirect ownership or control interest in a health care entity, (c) are or have been officers, directors, agents, or managing employees of the entity, or (d) are or have been employed in any capacity in the health care industry.

133133

EXCLUSION (cont’d.)

� A mandatory exclusion based on an initial program-

related crime must be imposed for at least five (5)

years. Those convicted of three health care-related

crimes must be permanently excluded from any

Federal health care program. Individuals convicted

of two health care-related crimes are subject to a

mandatory minimum 10-year exclusion.

134134

EXCLUSION (cont’d.)

� The Secretary may, but is not required to, exclude an individual or entity when, among other circumstances:

� An individual or entity has been convicted, under Federal or state law:

�Of a criminal offense consisting of a misdemeanor relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of any health care item or service or with respect to any act or omission in aprogram operated by or financed in whole or in part by any Federal, state or local government agency; or

�Of a criminal offense relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct with respect to any act or omission in a program (other than a Federal Health Program) operated by or financed in part by any Federal, state or local government agency.

135135

EXCLUSION (cont’d.)

� An individual or entity has been convicted under Federal or state law in connection with the interference or obstruction of any investigation into any criminal offense pertaining to program-related crimes.

� An individual or entity has been convicted under Federal or state law of a criminal offense which is a misdemeanorrelating to the unlawful manufacture, distribution, prescriptionor dispensing of a controlled substance.

� An individual or entity whose license to provide health care has been revoked or suspended by any state licensing authority or who otherwise has lost such license or right to apply for or renew such license for reasons bearing on the individual’s or entity’s professional competence, professional performance, or financial integrity.

136136

EXCLUSION (cont’d.)

� An individual or entity has been suspended or excluded from participation or otherwise sanctioned under any Federal Health Program or state health program for reasons bearing on the individual’s or entity’s professional competence, professional performance, or financial integrity.

� An individual or entity has submitted a false or improper claim, regardless of whether a civil monetary penalty or assessment has been imposed.

� An individual or entity has been determined by the Secretary to have committed an act involving fraud, a kickback, or other prohibited activities.

137137

EXCLUSION (cont’d.)

� An entity with respect to which the Secretary determines that a person who has been previously sanctioned has a controlling interest.

� An entity is controlled by a family member or a member of the household of a sanctioned individual if the transfer of ownership or control interest in an entity was made to such person “in anticipation of, or following, a conviction, assessment, or exclusion”.

� An individual or entity fails to grant immediate access upon reasonable request to the Secretary, a state agency performing reviews and surveys for the Secretary, the OIG or a state Medicaid Fraud Control Unit.

138138

EXCLUSION (cont’d.)

� An individual has a direct or indirect ownership or control interest in a sanctioned entity and who knows or should know (under the definition relating to CMPs) of the action constituting the basis for the sanction described below or is an officer or managing employee of such an entity. A “sanctioned entity” is an entity that has been convicted of any offense giving rise to a mandatory exclusion or of fraud, obstructing an investigation, or a misdemeanor offense relating to controlled substances or that has been excluded fromparticipation under the Medicare Program or under a state healthcare program.

� The length of a permissive exclusion ranges from one to three years and may be adjusted based on mitigating or aggravating factors as set forth in the governing regulations.

139139

EXCLUSION (cont’d.)

� The OIG will also attempt to exclude “indirect participants” in the Medicare program by prohibiting Medicare providers from doing business with the “indirect participant” and refusing to reimburse providers for the costs of any items or services purchased from the “indirect participant.”The authority of the OIG to impose such an exclusion on “indirect participants” is questionable and has not been addressed directly by the courts. However, the OIG maintains that such power derives from Section 1862(3) of the Social Security Act, which denies payment for services furnished at the medical direction or on the prescription of an excluded physician. According to the OIG, this language demonstrated Congressional intent that the government not pay, directly or indirectly, for the services of “untrustworthy individuals and entities.”

140140

EXCLUSION (cont’d.)

� The remedy of exclusion has been upheld against challenges on the basis of a violation of the Double Jeopardy and Ex Post Facto clauses of the United States Constitution

141141

EXCLUSION (cont’d.)

� It has been held that an administrative delay in reviewing and affirming a providers’ appealed exclusion does not, in itself, constitute a denial of due process

� The exclusion period may commence long after the underlying basis (i.e. conviction of program related crime) for the exclusion action

142142

EXCLUSION (cont’d.)

� There have been judicial rulings which have held that affirmative misrepresentations by criminal counsel about the collateral administrative consequences of entering a criminal plea to a program related crime constituted ineffective assistance of counsel and, therefore, vacated the underlying plea. Accordingly, the exclusion was also, subsequently, vacated

143143

CIVIL MONEY PENALTY LAW

� Civil Monetary Penalties Law

� Since 1981, HHS has had the authority to levy administrative penalties and assessments against providers as punishment for filing false or improper claims or as a collateral consequence of prior bad acts. Social Security Act § § 1128 and 1128a. 42 U.S.C. § §1320a-7 and 1320a-7a. Since then, the statute has been amended regularly to apply to other Federal programs and agencies and to apply to a broader range of acts and omissions.

� Treble damages and penalties

144144

CORPORATE INTEGRITY AGREEMENTS (“CIA’s”)

� The OIG imposes compliance obligations on health care providers as part of its settlements of Federal health care program investigations arising under a variety of false claims statutes

� Elements of CIA

� A term of 3 or 5 years

� Requires a provider to implement a variety of compliance measures to ensure the integrity of Federal health care program claims submitted by the provider

� Addresses specific facts of conduct at issue

145145

CORPORATE INTEGRITY AGREEMENTS (“CIA’s”) (cont’d.)

� Corporate Integrity Agreements

� Also can include requirements to:

� Hire a compliance officer/appoint a compliance committee;

� Develop written standards and policies;

� Implement a comprehensive employee training program;

� Audit billings to Federal health care programs;

� Establish a confidential disclosure program;

� Restrict employment of ineligible persons; and

� Submit a variety of reports to the Office of Inspector General

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CORPORATE INTEGRITY AGREEMENTS (“CIA’s”) (cont’d.)

� A part of global criminal and/or civil settlement

� May represent OIG’s opinion on the organization’s compliance programs

� 7 significant elements of an effective compliance program, including:

� Specific training language

� Focused audits/reviews

� Independence of compliance officer

� Annual reporting requirements under CIA

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INDEPENDENCE OF THE COMPLIANCE OFFICER

� Dual responsibility of compliance officers are increasingly suspect to the OIG at large organizations

� Sufficient commitment of resources

� Reporting to Board of Directors/Trustees

� CCO subordinate to General Counsel or CFO not favored by OIG

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OIG EXPECTATIONSCOMPLIANCE TRAINING

� Broad based compliance program training

� Extensive and specific training for risk areas

� Document training

� Efforts made to train physicians

� Technology training

� Essential for effective compliance programs

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OTHER COLLATERAL CONSEQUENCES

� Disciplinary Proceedings Under State Law for Licensed Individuals

� Managed care organization relationships

� Medical staff relationships

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DEFICIT REDUCTION ACT OF 2006(FEBRUARY 8, 2006)

�� Will have a profound effect on enforcement of the health care frWill have a profound effect on enforcement of the health care fraud and aud and abuse laws under state law and under state Medicaid programsabuse laws under state law and under state Medicaid programs

�� ProvisionsProvisions

1.1. It requires states to pass false claims statutes which are consiIt requires states to pass false claims statutes which are consistent with stent with the the Federal false claims statute, including a whistleblower provision false claims statute, including a whistleblower provision and gives the states significant economic incentives to obtain rand gives the states significant economic incentives to obtain recoveries ecoveries under the statute.under the statute.

2.2. Medicaid provider who receives in excess of $5 million annually Medicaid provider who receives in excess of $5 million annually is is required to have in place mandatory compliance programs or face required to have in place mandatory compliance programs or face the the prospect of denied reimbursement for Medicaid services.prospect of denied reimbursement for Medicaid services.

3.3. Appropriations for Medicaid fraud enforcement in unprecedented Appropriations for Medicaid fraud enforcement in unprecedented amounts.amounts.

The impact of these changes will parallel the impact which the Federal HIPAA statute and the whistleblower provisions of the Federal

False Claims Act has had on enforcement in Medicare fraud over the last 10 years.

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THE ENDTHE END

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