long term care litigation - conference materials

AMERICAN CONFERENCE INSTITUTE 3RD ANNUAL FORUM ON PREVENTING AND DEFENDING LONG TERM CARE LITIGATION JANUARY 23, 2013, MIAMI, FLORIDA

Stephen Siegel, Esq.

Broad and Cassel, Miami, FL

Linda A. Baumann

Arent Fox LLP

Glenn P. Hendrix

Arnall Golden Gregory LLP

Norris Cunningham

Indianapolis, IN

PREPARING FOR UNPRECEDENTED

FRAUD & ABUSE SCRUTINY IN THE

LONG TERM CARE SETTING POST-

HEALTHCARE REFORM

Broad and Cassel, Miami, FL

[email protected]

Stephen Siegel, Esq.

The Current Hostile Environment

Criminal and civil enforcement risks

Administrative and regulatory enforcement risks-

Sanctions, Audits and Overpayments

Whistleblowers

Federal and state enforcement

Media and public scrutiny

Compliance program challenges and risks

3

False Claims Act

Q: When Willie Horton was asked why he robbed

banks, what was his response?

A: That’s where they keep the money

4

False Claims Act

Google “nursing home qui tam” –

AttorneysForWhistleblowers.com

WhistleblowersAganistFraud.com

quitam-lawyer.com

quitamteam.com

fightforvictims.com

5

Elements of an FCA Offense

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)

6

False Claims Act 31 U.S.C. § 3719

7 bases for FCA 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 material to get a false or fraudulent claim

paid

Knowingly making, using, or causing to be made or used, a false

record or statement material to an obligation to pay or transmit

money or property to the Government, or knowingly concealing

or avoiding or decreasing an obligation to pay or transmit

money or property to the government

Conspiring to commit a violation of the False Claims Act

7

Knowing & Knowingly

No proof of specific intent to defraud is required

The Government need only show person:

Had “actual knowledge of the information”; or

acted in “deliberate ignorance” of the truth or falsity

of the information; or

acted in “reckless disregard” of the truth or falsity of

the information

8

Penalties

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

claim

Three times the amount of damages which the

Government sustained

9

Qui Tam Actions & Government Intervention

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 (about 25% of cases, 3-400 per year)

Relationship between Relator and Government

Collaborators in recovery of money (Relator receives

15% -30% of recovery if govt intervenes)

10

Qui Tam Actions & Government Intervention

Vast majority of actions are brought by private parties,

including:

Fired administrators

Disgruntled nurses

Unhappy LPNs

Frustrated staff

NOTE: RETALIATION is not permitted

Types of FCA Cases

Unbundling

Services not rendered

Upcoding

Submitting false or inflated cost reports

Quality of care (“standard of care”/”worthless claims”)

False claims based on Stark/Anti-Kickback violation (“Tainted Claims”

12

Affordable Care Act False Claims Act Amendments

Liability for overpayments and failure to return a

known overpayment within 60 days from

identification-return of known overpayment an

affirmative and express obligation

A violation of the Federal Anti-Kickback Statute

constitutes a false or fraudulent claim under the False

Claims Act

13

PHYSICIAN SELF-REFERRAL 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

Violations are per se, do not need knowledge or intent

NOTE: There is an Advisory Opinion process

14

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.

15

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

16

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

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

16

Exceptions

Compliance is mandatory

Some 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)

Rental of office space and equipment

Bona fide employment

Personal services arrangement

Physician recruitment

18

Anti-Kickback Statute

Felony to knowingly and willfully offer, pay, solicit, or receive

anything of value in return for a referral, or to induce

generation of business reimbursable under a Federal health

care program [42 U.S.C. § 1320a-7b(b)].

Per ACA § 6402(f) No actual knowledge (if there is “reckless

disregard” or “deliberate ignorance”) or specific intent to

commit a violation of AKS

19

Elements

Remuneration, i.e., anything of value, in cash or in

kind, direct or indirect

Offered, paid, solicited, or received

Knowingly (actual, deliberate ignorance, wanton

disregard) and willfully

To induce or in exchange for Federal program

referrals/business

20

To Induce Federal Program Referrals

Any Federal health care program, including Medicaid and

Medicare

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 and culpability can be established without a

showing of specific intent to violate the statutory prohibitions

21

Fines and Penalties

The Government may elect to proceed:

Criminally (DOJ):

Felony, imprisonment up to 5 years and a fine up to $25,000 or both

Mandatory exclusion from participating in Federal health care programs

Civilly (OIG):

Violation constitutes a false or fraudulent claim under the Civil False Claims Act

Penalties are same as under False Claims Act

Controversial, yet expanding use of the FCA

Administratively (OIG)

- $50,000 per violation + treble damages

- Discretionary exclusion

22

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?

23

Guidance on the Anti-Kickback Statute (cont’d.)

Fraud Alerts and Special Advisory Bulletins

Preamble to the Safe Harbor Regulations

Compliance Program Guidance’s

Advisory Opinions

www.oig.hhs.gov

24

Difference Between Anti-Kickback Statute and the Stark Law

Physician referrals only

No “knowingly and willfully standard” – strict liability

Involves Designated Health Services (“DHS”)

Physician/”Immediate Family Member” on both sides

of the transaction

25

QUESTIONS?

LONG TERM CARE FRAUD & ABUSE

RISKS: FALSE CLAIMS ACT CASES INVOLVING

POOR QUALITY OF CARE

1717 K St NW

Washington, DC 20036

[email protected]

Linda A. Baumann

Arent Fox LLP

FCA Quality of Care Cases

Generally involve allegations that quality of care was

so poor that any claim for reimbursement is “false”

Submitting “false” claims for reimbursement subjects

nursing home to potential False Claims Act liability

28

FCA Quality of Care Theories

Three theories typically used in FCA quality of care cases

Express false certification (legally false claim)

Implied false certification (legally false claim)

Worthless services (factually false claim)

29

Express False Certification

Theory:

Provider makes affirmative statement of compliance with a

statute or regulation

Provider’s statement was false

Government requires statement (certification) of compliance

as condition of payment

See, e.g., Mikes v. Straus, 274 F.3d 687 (2d. Cir. 2001)

30


Examples of forms that have been alleged to create express certifications

of compliance

Medicare Enrollment Application for Institutional Providers

“I understand that payment of a claim by Medicare is conditioned upon the claim and

the underlying transaction complying with such laws, regulations and program

instructions … and on the provider’s compliance with all applicable conditions of

participation in Medicare.”

Medicaid provider agreement

“The provider agrees to provide covered services … in accordance with all applicable

federal and state laws, regulations, policies and procedures relating to

the provision of medical services according to Title XIX [of the Social Security Act]”

Claims forms

“This claim, to the best of my knowledge, is correct and complete.”

31


Forms that have been alleged to create express certifications

of compliance con’t

Annual cost reports

“I am familiar with the laws and regulations regarding the provision of health

care services, and that the services identified in this cost report were

provided in compliance with such laws and regulations.”

Health Insurance Benefit Agreement, Form CMS-1561

“In order to receive payment under title XVIII of the Social Security Act,

[provider] agrees to conform to the provision of [section 1866 of the SSA]

and applicable provision in 42 CFR.”

EDI enrollment form

Provider will “submit claims that are accurate, complete, and truthful.”

32

Implied False Certification

Theory:

Act of submitting a claim for reimbursement implies

compliance with governing federal rules that are a

precondition to payment

Provider submits a claim

Provider does not (and is not required to) affirmatively state

compliance with a federal rule

Provider does not comply with the federal rule

Compliance with the federal rule is a precondition to payment

33

Implied False Certification

Ab-Tech Construction, Inc. v. U.S., 31 Fed. Cl. 429 (Fed. Cl.

1994), aff’d, 57 F.3d 1084 (Fed. Cir. 1995)

Submission of payment vouchers with correct amount

were false claims under the FCA because they

represented implied certification by company of

continued adherence to eligibility requirements for

participating in Small Business Administration program

34

False Certification Cases

Potential Defenses

Scienter: did defendant know that the claims submitted were

false or act in reckless disregard?

Language of the certification

In Mikes v. Straus, where the spirometry tests did not meet

ATS guidelines, the court found that the regulatory language

that required the government to pay only if services were

“medically necessary,” related to the level, not the quality,

of services provided

35


Potential Defenses con’t

Underlying statute or regulation does not expressly state

that the provider must comply in order to be paid

Frequently cited 42 U.S.C. 1320c-5(a) relates to quality of care but

not payment (according to Mikes v. Straus court)

Nursing home conditions of participation are not directly tied to

reimbursement

See, e.g., Landers v. Baptist Mem. Health Care Corp., 525 F.Supp.2d 972(

2007)

But see US ex rel. Sanchez-Smith v. AHS Tulsa Reg. Med. Ctr , 754 F.Supp.2d

1270 (ND OK 2010) (OK active treatment requirements maybe conditions

of payment)

36



Helpful language in case law, e.g., Mikes v Straus:

“Not all instances of regulatory noncompliance will cause a claim to

become false”

“Permitting qui tam plaintiffs to assert that defendants’ quality of

care failed to meet medical standards would promote federalization

of medical malpractice”

37



Government reimbursement is not conditioned on perfect

compliance

HHS often has other remedies to address imperfect compliance,

such as required corrective action, civil monetary penalties,

temporary government management, suspension or exclusion, and

the discretion on which and when to use them

Qui tam plaintiffs should not be allowed to use the FCA to

supplant HHS’s regulatory discretion, see, e.g., U.S. ex rel. Swan

v. Covenant Care, Inc., 279 F.Supp.2d 1212 (E.D.Cal. 2002)

38

Worthless Services

Theory

The provision of extremely poor quality service is the

functional equivalent of providing no service at all

Note the 2013 OIG Work Plan project related to monitoring the quality of

care in skilled nursing facilities. A report is due out in FY 2013 and

enforcement may increase thereafter

39

Worthless Services

Where is the dividing line between low quality care and care so

poor that it essentially is worthless?

Some courts have held that ordinary negligence or malpractice are

different than worthless services

A plaintiff must present facts demonstrating (i) the provision of entirely

“worthless services” or (ii) at a minimum, the provision of grossly negligent

services related to a particular standard of care or regulatory requirement,

see, Sanchez-Smith v. AHS Tulsa Reg’l Med. Ctr., 754 F.Supp.2d 1270

A challenge to the level of care and amount of services provided to patients

due to understaffing was not an allegation that neglect was so severe that

patients were receiving worthless care, see Covenant Care

Courts do not want to federalize medical malpractice claims

40

Worthless Services

Theory is relatively straightforward when a provider bills for an

individual act of care that is deficient

More difficult to apply theory when provider receives per

diem/bundled payment covering multiple services

Must prove that facility did not provide minimum level of care necessary

under its obligation to the federal government

A provider commits fraud “[a]t some very blurry point” when it fails to

perform the minimum necessary care activities required to promote

the patient’s quality of life and still presents claims for reimbursement

See, e.g., U.S. v. NHC Health Care Corp., 163 F.Supp. 2d 1051 (W.D.

Mo. 2001)

41

Worthless Services

Potential Defenses

Provision of some services to patient under bundled payment may

defeat claim

Even assuming that bundled payment was exclusively for therapy

services and acknowledging that provision of therapy did not meet

active treatment regulations, no false claim for worthless services

because patient received at least some of the care for which provider

billed, including some therapy care. See Sanchez-Smith v. AHS Tulsa

Reg’l Med. Ctr.

42

Worthless Services

Potential Defenses

Courts have held that a dispute over the appropriate standard of care

is not necessarily a violation of the FCA

Medical center’s failure to conform with Medicare’s conditions of

participation or other applicable standards of care, if proven, would

not be sufficient on its own to create genuine issue of material fact as

to a worthless services claim, see. e.g., Landers v. Baptist Mem. Health

Care Corp.

43

FCA Case Examples

Worthless Services

U.S. v. GMS Management-Tucker (E.D. Pa. 1996)

First worthless service case

Nursing facility allegedly violated the FCA by billing

Medicare & Medicaid for grossly inadequate wound care

and nutritional services

Company settled for $575,000 and compliance obligations

44

FCA Case Examples

Worthless Services

U.S. v. Chester Care Center (E.D. Pa. 1998)

Nursing facility allegedly provided deficient care that rose

to the level of patient abuse

Allegations included scalding a patient to death by placing

him in 138-degree bathwater, and failing to properly

monitor diabetes patients, tend to patients’ nutritional needs

and provide appropriate wound care

Company settled for $500,000

45

FCA Case Examples

Worthless Services

Life Care Center of Lawrenceville, GA (N.D.Ga., filed 2002)

Qui tam lawsuit (by family members of patients) alleging failure to

provide appropriate nursing care resulting in premature death of

several residents

Allegations included understaffing, inadequate training, high staff

turnover, and an ineffective medical director

In 2005, Company settled for $2.5 million and agreed to independent

monitor for five years

46

FCA Case Examples

Worthless Services

U.S. ex rel. Academy Health Ctr. Inc. v. Hyperion

Foundation, Inc. (S.D.Miss, filed 2009, unsealed 2012)

Qui tam lawsuit by owner and landlord of leased facility alleging

consistent failure by nursing home to provide essential nursing services to

residents beginning in Oct. 2005

Rationing of items required for basic resident needs, e.g., oxygen bottles and garbage

bags

Facility is chronically short-staffed; some nurses must provide direct care to over 30

residents

Medicare and Medicaid billed for services that were either nonexistent

or so deficient that they were “effectively worthless.”

Funds intended for resident care allegedly diverted to other entities

47

FCA Case Examples

Worthless Services

Hyperion Foundation con’t

Other allegations

Officer/director of Hyperion excluded from participation in

Medicare

Failure to disclose all individuals with ownership/controlling

interest as required by law

Nationwide scheme

48

FCA Case Examples

Worthless Services

Golden Living: U.S. & State of GA ex rel. Micca v.

GGNSC Holdings, LLC (N.D.Ga., filed 2010)

Qui tam lawsuit alleging that two Atlanta-area Golden Living Center nursing

facilities provided patients with worthless wound care services from 2006 to

2011 that resulted in severe harm to patients

In Jan. 2013, company settled by agreeing to pay $613,300 and enter into a

CIA covering six Atlanta-area facilities, which included an independent monitor

for five years

The relator was a physician who was the Medical Director at one of the facilities

for over 10 years (before his termination) and who is the attending physician for

several current residents

Case brought under federal and state false claims act statutes

49

FCA Case Examples

Worthless Services

Golden Living con’t

The relator cited the following statutes and regulations, among others, to

support his “worthless services” claim

42 U.S.C. § 1320c-5(a)(2) –provider services must meet

professionally recognized standards of care

42 U.S.C. § 1320a-7(b)(6)(B) – provider may be excluded from

Medicare for submitting claims for care that does not meet

professional standards

42 U.S.C. § 1396r(b)(1)(A) – nursing facility care must promote

maintenance or enhancement of resident quality of life

42 U.S.C. 1396r(b)(4)(A)(vii) – nursing facility services must meet

professional standards of quality

42 C.F.R. § 483.1 et seq. – requirements for Medicare and Medicaid

participation

50

FCA Case Examples

Worthless Services

U.S. v. Villaspring (E.D.Ky., filed 2011)

U.S. filed FCA complaint alleging that Villaspring Health Care Center

billed for worthless services from 2004 to 2008

Worthless services allegedly rendered to numerous patients due to

staffing shortages resulting in, e.g., medication errors, poor nutrition,

inadequate wound care, and death

“Services that were worthless, in that they were not provided or

rendered, were deficient, inadequate, substandard, and did not

promote the maintenance or enhancement of the quality of life of the

residents” and were of a quality that failed to meet professionally

recognized standards of health care

51

FCA Case Examples

Worthless Services

Villaspring con’t

Facility received almost $16 million from Medicare and Medicaid in

2004-08

Complaint names 6 residents who received deficient care

Facility received $108,000 for their care

Complaint doesn’t specify if all services they received were

“worthless”

CEO/majority owner and parent company also named as defendants

52

Case Examples – Related Cases

U.S. v. Houser (N.D.Ga. 2012)

GA nursing home operator convicted for tax fraud and

health care fraud conspiracy (under appeal)

First criminal case in which defendant convicted after

trial in federal court under, inter alia, worthless services

theory

Allegations of food shortages, leaking roofs, lack of

nursing & housekeeping supplies, poor sanitary

conditions, major staff shortages, & safety concerns

53


U.S. v. Houser cont’d

Nursing homes closed by State in 2007

Defendant sentenced to 20 years in prison and

ordered to pay $6.7 million in restitution to Medicare

and Medicaid and $872,000 to the IRS.

54


Spay v. CVS Caremark Corp. (E.D.Pa., filed 2009, unsealed 2012)

Relator alleges worthless services and false certification in the Medicare

Part D context

Motion to dismiss denied by federal district court in PA in Dec. 2012

Alleged false certification that each prescription drug event (PDE) claim

submitted was true, accurate, and complete

Worthless services allegation that numerous PDE claims submitted where

government was not provided with the bundle of services it paid for and

that were required by regulation (i.e., concurrent drug utilization review)

55

QUESTIONS?

Liability for Too Much Care?

DOJ Rehab RUGs Billing Investigations

Arnall Golden Gregory LLP

(404) 873-8692

[email protected]

American Conference Institute

Preventing & Defending LTC Litigation January 22, 2013

Glenn P. Hendrix

Background: Medicare RUGs

Medicare sets out five rehabilitation categories for nursing

home patients, called “Resource Utilization Groups” (RUGs),

which provide for increasing levels of rehabilitation and a

corresponding increase in the daily reimbursement for care:

Minute thresholds for rehabilitation RUG subcategories:

Ultra High (“RU”) -- minimum of 720 min./week

Very High (“RV”) – minimum of 500 min./week

High (“RH”) – minimum of 325 min./week

Medium (“RM”) -- minimum of 150 min./week

Low (“RL”) -- minimum of 45 min./week

58

The Roadmap

The OIG’s Dec. 2010 Report

OIG report on “Questionable Billing By Skilled Nursing

Facilities” analyzed SNF billing practices between 2006

and 2008

Identified three “questionable” billing practices:

(1) Excessive billing of ultra high (RU) therapy RUGS

(2) Too many residents identified as needing a high level

of assistance with ADLs, and

(3) Keeping residents longer than medically necessary as

evidenced by unusually long average lengths of stay.

59

Industry Trends Per the OIG

Between 2006 and 2008

SNF patient population age and diagnoses distribution

remained constant.

Yet the percentage of patients with ultra-high (RU)

therapy RUG levels jumped, especially in for-profit

SNFs.

Thus, an additional $5 billion spent on ultra high therapy

RUGs, even though “beneficiaries’ ages and diagnoses

at admission were largely unchanged from 2006 to

2008.”

OIG Report, “Questionable Billing by Skilled Nursing

Facilities,” Dec. 2010.

60

Higher RUGs in For-Profits

For-profit SNFs – higher RUGs than non-profit SNFs.

Large chains more likely to bill RU than small chain or inde-

pendently-owned for-profit SNFs

For-profit SNFs -- longer average lengths of stay (ALOS)

than non-profit SNFs.

Non-profit SNF ALOS – ranged from 23 days to 24 days

For-profit SNF ALOS -- ranged from 28 days

(independents) to 31 days (large chains).

Billing by for-profits purchased by large chains changed

post-acquisition, sometimes as much as 9%.

61

Nov. 2012 OIG Report

Nov. 2012 OIG report -- “Inappropriate Payments to Skilled Nursing

Facilities Cost Medicare More than One Billion Dollars in 2009” --

claimed that:

SNFs billed an estimated 25% of claims in error in 2009 and

Medicare inappropriately paid $1.5 billion for these claims

(representing 5.6% of the total $26.9 billion that paid by Medicare

to SNFs);

Incorrect classification of beneficiaries into RUGs categories

resulted in a net of $1.2 billion in inappropriately upcoded

Medicare payments;

SNFs reported inaccurate information to Medicare on at least one

MDS item for 47% of the claims;

SNFs provided more therapy than necessary to Medicare patients.

62

Enforcement Actions

ZPIC and RAC audits

OIG investigations overseen by Department of Justice

(DOJ) with view toward an FCA lawsuit:

OIG subpoena for records, including massive email

productions

Seeking emails showing pressure on therapists to hit

certain RUG targets

Interviews of former employees

Therapist bonuses tied to RUG utilization

Medical record review

Statistical extrapolation

63

The Life Care Case

On Nov. 28, 2012, the DOJ intervened in qui tam actions in E.D.TN

against Life Care Centers of America, Inc. (“Life Care”).

Whistleblower cases filed in 2008. Investigation commenced in 2009.

Government alleges that Life Care billed nearly 68% of Medicare

rehab days at the RU level, as compared to an RU average of 35%

nationwide) and systematically maximized RU-level billings by:

“Aggressively push[ing] its facilities and therapists to get as many of

its Medicare beneficiaries into the Ultra High RUG [resource

utilization group] level as possible.”

“Setting aggressive Ultra High related targets that were completely

unrelated to its beneficiaries’ actual conditions, diagnoses, or needs.”

64

Life Care Complaint (cont’d)

“Reinforc[ing] those targets at corporate meetings and presentations,

through regular emails from or visits by corporate personnel, through

employee performance evaluations.”

“Imposing action plans on underperforming facilities.”

“Punish[ing] those facilities and employees that failed to meet its Ultra

High targets or that complained about corporate pressure.”

“Reward[ing] and applaud[ing] those that met its targets.”

“Frequently overr[iding] or ignor[ing] the recommendations of its own

therapists and unnecessarily delay[ing] discharging beneficiaries from its

facilities.”

“Pressur[ing] its facilities and therapists to extend their Medicare

beneficiaries’ stays … to maximize Medicare revenue.”

“Provid[ing] excessive amounts of therapy that were not medically

reasonable or necessary.”

65

Life Care Complaint – Clinical

Allegations

Government alleges that Life Care billed for ultrahigh therapy that “sometimes

jeopardized the health of Medicare patients who were imminently terminal,

fatigued, sick, or otherwise medically unstable.”

Cites ten patient examples, including:

“Patient D was a 92-year-old resident of Life Care of Orlando in Florida who was

dying of metastatic cancer (melanoma) that had spread to his brain and lungs.

Patient D had received palliative radiation therapy and was becoming weaker and

more medically fragile after that treatment. Nevertheless, Life Care therapists

recorded at least two hours a day of therapy in all three disciplines at the Ultra

High level for Patient D from July 24, 2007, until his death on August 8, 2007. Two

days before Patient D’s death, he was spitting out blood. Life Care therapists,

however, still recorded 48 minutes of physical therapy, 47 minutes of occupational

therapy, and 30 minutes of speech therapy that very day. The day Patient D died,

Life Care therapists recorded 35 minutes of physical therapy and had him

scheduled for occupational therapy later in the day.”

66

The Other Side of the Story Problems with the

Government’s World View

The OIG’s understanding that SNF resident characteristics upon

admission have not changed since 2006 is wrong.

The OIG report ignores SNF resident characteristics upon discharge

(i.e., outcomes and benefits of therapy). Solely focused on resident

characteristics upon admission.

The OIG’s macro conclusion that medically unnecessary rehab is

widespread is based solely on statistical trends, except for the

following statement:

“OIG audits of 5 SNFs found that 20 to 94% of sampled claims

from 2002 through 2004 were medically unnecessary, were

submitted at an inappropriate payment rate, or were insufficiently

documented.”

67

SNF Patients Are Not the Same As In

2006

SNF residents did change even per OIG Report (App. C,

Table C-1):

1.9% increase in younger beneficiaries (< 70 years of age)

2.5% decrease in young-old beneficiaries (<70 years of age,

but > 85 years of age)

Care involving use of rehab procedures – 12.1% ► 17%

OIG’s focus on primary hospital diagnosis fails to

recognize that patients have many “types” of diagnoses

impacting the need for rehab.

68

SNF Patients Are Not the Same As In

2006

Even CMS disagreed with OIG recommendation of reliance on

hospital diagnosis for determining proper amount of therapy:

Hospital diagnosis may not be the primary reason for post-

acute SNF services. “[T]he hospital diagnosis may not be the

primary reason for post-acute services… [T]herapy utilization in

acute care hospitals would not be an accurate indicator of post-

acute therapy needs… [and] CMS has also examined [Part B

claims] and has determined that diagnosis is not a good

indicator for the type or amount of therapy services a Medicare

beneficiary should receive.” (emphasis added)

69

The OIG’s Macro

Medical Necessity Data is Wrong

OIG report relied solely on trending data, except this statement:

“OIG audits of 5 SNFs found that 20 to 94% of sampled claims

from 2002 through 2004 were medically unnecessary, were

submitted at an inappropriate payment rate, or were insufficiently

documented.”

Yet …

2 of the 5 audits focused on infusion therapy, not rehab

OIG found all 5 providers had substantial overpayments;

however, CMS did not agree and issued denials to only 4

At least 2 of the 4 providers appealed and received fully

favorable judgments from CMS for the vast majority of the

claims

70

How Much Therapy is Too Much?

“Each resident must receive and the facility must provide the

necessary care and services to attain or maintain the highest

practicable physical, mental, and psychosocial well-being, in

accordance with the comprehensive assessment and plan of

care.” 42 U.S.C. § 1395i-3(b)(4)(A)(i).

SNFs must ensure that “a resident’s abilities in activities of

daily living do not diminish unless circumstances of the

individual’s clinical condition demonstrate that diminution was

unavoidable.” 42 C.F.R. § 483.25(a)(1).

SNF surveys consider whether each resident “obtains optimal

improvement or does not deteriorate within the limits of a

resident’s right to refuse treatment….”

71

Amount of Therapy Should Be Tied To

Outcomes

Proper question – not whether rehab is increasing, but whether

better outcomes are resulting from the increased rehab.

OIG Report ignores this question, looking only at the “inputs”

(increased revenue for therapy), with no consideration of the

“outputs.”

Regardless of whether the condition of residents entering SNFs has

changed since 2006, have outcomes changed?

Increased discharges to home?

Reduced re-hospitalizations within 30 days of discharge?

AHCA beginning to study the issue on an industry-wide basis, but

available macro data is limited.

72

Intensive Therapy Improves Outcomes,

Including:

Greater than expected gains in ADL tasks for stroke patients. Gerben DeJong, Susan

Horn, Randall Smout, Wenqiang Tian, Koen Putman & Julie Gassaway. Joint Replacement Outcomes on Discharge from

Skilled Nursing & Inpatient Rehabilitation Facilities. Archives of Physical Medicine & Rehabilitation (2009) 90 (8): 1284-

1296.

Positive gains in functional status and overall reductions in the cost of care for

long-term care residents. Rita Bode, Allen Heinemann, Patrick Semik &Trudy Mallinson, Relative Importance

of Rehabilitation Therapy Characteristics on Functional Outcomes for Persons with Stroke, Stroke 2004, 35:2537-2542;

Gert Kwakkel, Robert C. Wagenaar, Tim Koelman, Gustaaf Lankhorst & Johan Koetsier. Effects of Intensity of

Rehabilitation After Stroke, Stroke (1997), 28: 1150-1556.

Improvements by at least one stage in mobility and ADL functional

independence for patients with stroke, orthopedic conditions, and

cardiovascular/pulmonary conditions. BR Przbylski, ED Dumont, ME Watkins, SA

Warren, AP Beaulne, & DA Lier. Outcomes of enhanced physical and occupational therapy service in a nursing home

setting, Archives of Physical Medicine and Rehabilitation (1996), 77(6): 554-561.

Good clinical outcomes in severe cognitively impaired patients. Carol Barnes, Douglas

Conner, Lil Legault, Nora Reznickova & Cynthia Harrison-Felix. Rehabilitation Outcomes in Cognitively Impaired Patients

Admitted to Skilled Nursing Facilities from the Community, Archives of Physical Medicine & Rehabilitation (2004); 85: 1602-

1607.

73

Intensive Rehab Improves Outcomes

• Study of physical therapy by Chiodo et al. (1992) shows that functional

gains were seen in:

88% of patients receiving high-intensity physical therapy

33% of patients receiving moderate-intensity physical therapy

13% of patients receiving minimal-intensity therapy

Laura K. Chiodo, Meghan B. Gerety, Cynthia D. Mulrow, Mary C. Rhodes, and Michael R. Tuley. The Impact of Physical

Therapy on Nursing Home Patient Outcomes, Physical Therapy (1992); 72: 168-175.

Increased therapy hours are strongly associated with increased

Functional Independence Measure (FIM) gains.

Carol Barnes, Douglas Conner, Lil Legault, Nora Reznickova, and Cynthia Harrison-Felix. Rehabilitation Outcomes in

Cognitively Impaired Patients Admitted to Skilled Nursing Facilities from the Community, Archives of Physical Medicine and

Rehabilitation (2004); 85: 1602-1607.

74

Intensive Rehab Improves Outcomes

More intense therapy is associated with increased community discharge:

participation in rehabilitation therapy increases the likelihood of discharge home

by 54% to 78%.

more intensive therapy (i.e., >330 minutes per week) increases the likelihood of

discharge home two-fold.

Walter Wodchis, Gary Teare, Gary Naglie, Susan Bronskill, Sudeep Gill, Michael Hillmar, Geoff Anderson, Paula

Rochon, & Brant Fries. Skilled Nursing Facility Rehabilitation and Discharge to Home After Stroke, Archives of Physical

Medicine and Rehabilitation (2005); 86: 442-448.

More intensive rehab results in increased community discharges. Anne Deutsch, Carl Granger,

Allen Heinemann, Roger Fiedler, Gerben DeJong, Robert Kane & Maurizio Trevisan, Poststroke Rehabilitation: Outcomes and

Reimbursement of Inpatient Rehabilitation Facilities and Subacute Rehabilitation Programs, Stroke 20056, 37:1477-1482;

Gerben DeJong, Ching-Hui Hsieh, Julie Gassaway, Susan Horn, Randall Smout, Koen Putman, Roberta James, Michael Brown,

Elizabeth Newman & Mary Foley. Characterizing Rehabilitation Services for Patients with Knee and Hip Replacement in Skilled

Nursing Facilities and Inpatient Rehabilitation Facilities, Archives of Physical Medicine and Rehabilitation (2009) 90(8): 1269-

1283.

Therapy use positively related to community discharge and negatively related to

mortality. Greg Arling, Arthur Williams, Donna Kopp. Therapy Use and Discharge Outcomes for Elderly Nursing Home

Residents, Gerontologist (2000), 40(5):587-595; P Langhorne, R Wagenaar, and C Partridge. Physiotherapy after stroke: more

is better?, Physiotherapy Research International (1996); 1(2): 75-88.

75

Setting Substitution

Limited access to IRFs more SNF patients want intensive,

short-term rehab (since 2004 there has been a 26%

reduction in IRF census)

Limited access to LTCHs more SNF patients admitted

directly from hospital with complex medical needs

Increased home and community-based service fewer SNF

patients are long term care residents

Increased access to home health fewer SNF patients

requiring < 8 hours of skilled care

76

OIG Completely Ignored the “After” Picture

Are better outcomes the result of the increased therapy?

Increased discharges to home?

Higher FIM scores?

Reduced re-hospitalization within 30 days of discharge?

77

What’s Next?

Several active ongoing DOJ investigations. Some will

become FCA actions.

Copycat qui tam cases.

Reimbursement changes.

Changes in clinical approach?

78

QUESTIONS?

Preparing for Unprecedented Fraud & Abuse Scrutiny in the Long Term Care

Setting Post-Healthcare Reform

COMPLIANCE

COMPLIANCE

Patient Protection and Accountable Care Act of 2010

§ 6102 requires Medicare participating skilled nursing facilities

must have an operational compliance plan no later than March

23, 2013

(2 years after PPACA’s enactment)

The program must be “effective in detecting and preventing

criminal, civil, and administrative violation” and

“promoting quality of care”

COMPLIANCE 7 components of a SNF compliance plan:

1. Standards & procedures “reasonably capable of reducing the prospect” of criminal, civil and administrative violations

2. Assignment of overall compliance program oversight to “high-level personnel” with “sufficient resources and authority” to assure compliance

3. Exercise of “due care” not to delegate “substantial authority” to persons the facility knows or should know have a “propensity to engage in criminal, civil, or administrative violations”

4. Effective communications of compliance standards and procedures throughout the organization

5. Consistent enforcement of appropriate disciplinary measures, including for failure to detect an offense

6. Following detection of an offense, reasonable responses to prevent further similar offenses

7. Periodic reassessment of the plan and modification to reflect changes in the organization and the law

COMPLIANCE

Compliance Policies to look for:

1. Written standards of conduct

2. Education of new and re-education of all employees & vendors

3. Procedure for investigating allegations

4. Establishment of an effective “hot-line”

5. Effective medical necessity review

6. Credit balances/bad debt policies

7. Records retention and HIPAA compliance

8. Claims/cost report auditing

9. No retaliation

10. Screening for excluded/debarred staff/vendors

COMPLIANCE

Why an effective compliance plan is important 1. Absence of an effective compliance plan is a violation of the conditions

of participation

2. An effective compliance plan can ensure that-

- facility and staff meet standards of care

- no false claims were “knowingly” submitted

- there is adequate documentation of items and services provided

3. Enables the facility to become aware of and address small problems before they become “bet the farm” disasters

4. Reduce both the risk of violations as well as the sanctions when something happens

5. Enhances the image of the facility as attempting to “do the right thing”

6. Provides evidence of effort to mitigate, when you need to show that “stuff just happens”

Norris Cunningham

ELDER JUSTICE ACT

Hall, Render, Killian, Heath and Lyman

Elder Justice Act (Section 1150B of Patient Protection and Affordable Care Act of 2010)

Background

The Elder Justice Act was established by the Patient

Protection and Affordable Care Act of 2010. It applies

to “long-term care facilities,” defined as residential care

providers that arrange for, or directly provide, long term

care. This includes nursing facilities, skilled nursing

facilities, hospice programs operating in SNF/NFs, and

intermediate care facilities for the mentally retarded

(ICFs/MR). The Act applies only to entities that receive at

least $10,000 of Federal funds annually

Elder Justice Act (continued)

(Section 1150B of Patient Protection and Affordable Care Act of 2010)

Background

The Act does not apply to assisted living facilities

The Act broadens the scope of who is required to report

suspected abuse, and imposes affirmative obligations on

facilities to provide annual training to “covered

individuals”, to post a conspicuous notice, and to develop

additional internal policies.


*Section 1150B of Patient Protection and Affordable Care Act of 2010

Reporting Requirements

“Covered Individuals” are required to report any

reasonable suspicion of crimes committed against

residents of the facility

“Covered Individuals” include anyone who is an owner,

operator, employee, manager, agent, or contractor of the

facility. All covered individuals with knowledge of the

incident must report.

The obligation to report is on individuals, not the facility.



Reporting Requirements

Reporting should occur if the events that cause the

reasonable suspicion of crime result in serious bodily

injury, a report must be made immediately, but no later

than two hours after forming the suspicion.

If the events that cause the reasonable suspicion of crime

do not result in serious bodily injury, a report must be

made no later than 24-hours after forming the suspicion.

Reporting may be done by calling, faxing, or emailing

both local law enforcement and the state survey agency.



Penalties

Failure to report subjects “Covered Individual” to CMP

of not more than $200,000.

If failure to report exacerbates the harm to the victim or

results in harm to another individual, then CMP is

$300,000.

Exclusion from Federal Healthcare Programs



Retaliation: A long term care facility may not…

Discharge, demote, suspend, threaten, harass, or deny

promotion, or any employment related benefit or in any

manner discriminated against an employee for lawful

acts done to the employee; or

File a complaint or a report against a nurse of employee

for making a report, or causing a report to be made, or

taking steps in furtherance of a report



Penalities for Retaliation

CMP of not more than $200,000.

Exclusion from Federal Healthcare Programs for 2 years

Both of the above



Questions Re Elder Justice Act:

To whom does it apply?

EVERYONE! (Except facility attorneys?)

What actions are reportable?

When do “reasonable suspicions” exist?

What level of injury is “serious bodily injury”?

What is “lawful conduct”?

What conduct constitutes retaliation?

QUESTIONS?

long term care litigation - conference materials

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