Regulatory Control of Providers Financial Relationships

Civil False Claims

The Act

Civil liability may occur when a person or corporation

• Knowingly presents or causes to be presented a false or fraudulent claim for payment to the United States.

• Knowingly uses a false record or statement to obtain payment on a false or fraudulent claim paid by the United States.

• Engages in a conspiracy to defraud the United States to obtain allowance for payment of a false or fraudulent claim

What constitutes “knowing” or “knowingly”

• Having actual knowledge of the falsity of a claim

• Acting in deliberate ignorance of the truth or falsity of the claim.

• Acting in reckless disregard of the truth or falsity of the claim.

• Specific intent to defraud is not required.

Monetary Penalties• $5,000 to $10,000 civil monetary penalties,

per claim.• Treble damages, i.e. three times actual

improper payments collected by a provider.• A claim is each HCFA 1500 from submitted,

not each CPT Code contained on the form.• Permissive exclusion from

Medicare/Medicaid programs.

Statute of Limitations

• Six year of statute of limitations

• Prosecutors often insist on voluntary waiver of the statute of limitations by the provider as a condition of negotiating settlement of a claim.

Regulation of Providers Financial Relationships

Civil False Claims

Qui Tam or Whistleblower Actions

General Criteria

• Cases are initiated by a private individual who brings the claim against a provider to the attention of the federal government.

• The claim or issue must not have been previously disclosed to the public.

• The Department of Justice has 60 days to investigate or obtain additional.

Quit Tam Actions -- Continued

• If after investigation, the Department of Justice declines to pursue the claim, the individual whistleblower may do so.

• The whistleblower may receive from 25 to 30 percent of any recovery if the government does not intervene, 15 to 25 percent if the government does intervene.

Regulation of Providers’ Financial Relations

Civil False Claims

Enforcement Actions

National Investigations and Initiatives

• The physician at Teaching Hospitals Audit Program (PATH)

• DRG Payment Window Recovery Initiative (72 Hour Window Project)

• Lab Unbundling Project• national Discharge/Transfer Claims

Recovery Program.• Pneumonia Upcoding

National Investigations and Initiatives

• The physician at Teaching Hospitals Audit Program (PATH)

• DRG Payment Window Recovery Initiative (72 Hour Window Project)

• Lab Unbundling Project• national Discharge/Transfer Claims

Recovery Program.• Pneumonia Upcoding

Regulation of Providers’ Financial Relations

Medicare/Medicaid Fraud and Abuse

The Safe Harbors

The Safe Harbors

• Space and equipment rental

• Personal services and managementcontracts

• Sale of a physician’s practice

• Discounts

• Employees

• Group purchasing organizations

Safe Harbors -- continued

• Waiver of beneficiary coinsurance anddeductibles.

• Certain investments, including investmentsin ambulatory surgical centers.

• Recruitment of physicians in obstetricalpractice to rural areas.

• Payment of malpractice insurancepremiums in rural areas.

Safe Harbors -- Continued

• Risk Sharing

• Referral Services

• Warranties

• Increased coverage, reduced cost-sharingamounts, or reduced premium amountsoffered by health plans

• Price reductions offered by health plans

Penalties

• Criminal statute requiring proof of criminalintent.

• Fine of up to $25,000 and or up to fiveyears imprisonment for each violation.

Regulation of Providers’ Financial Relations

Medicare/Medicaid Fraud and Abuse

Civil Money Penalties

Civil Money Penalties Law

• A civil statute that parallels the antikickback statute, but is more expansive.

• It prohibits and imposes civil penalties on:– Various types of improperly filed claims– Payments for inducing reduction or limitation

of services– The criminal conduct also punished as crimes.

• Simple negligence standard of proof rather than criminal intent required.

Civil Monetary Penalties

• Penalties– Fines up to $50,000

– Repayment of up to three times the amount of improper reimbursement paid by the government

• Exclusion from federal health programs– May be mandatory or permissive,

depending on a number of factors

The Stark Law

Prohibitions Against Physician Self-Referral

Overview• Stark I --The statute generally prohibits a

physician form referring Medicare patients to a clinical laboratory in which that physician or a member of that physician’s immediate family has a financial relationship. In addition, the clinical laboratory may not file a Medicare claim for services rendered at the laboratory.

• Stark II -- Expanded the Stark I referral prohibition to include other designated health services and broadens the self-referral prohibition to Medicaid services.

Designated Health Services

• Clinical laboratory services

• Occupational therapy services

• Radiation therapy services

• Parenteral and enteral nutrients, equipment and supplies

• Prosthetics, orthotics and prosthetics devices

Designated Health Services -- Continued

• Physician therapy services

• Radiology services

• Durable medical equipment

• Outpatient prescription services

• Home health services

• Inpatient/outpatient hospital services

Financial Relationship

• An ownership or investment interest in the entity to which the referrals may be made -- this includes ownership through debt, equity, or similar means. Also includes an interest in an entity that holds an ownership or investment interest in any entity providing the designated health service to which a referral may be made.

Financial Relationship -- Continued

• A compensation arrangement between the physician (or immediate family member) and the entity is any arrangement involving remuneration between a physician (or immediate family member) and an entity. Remuneration is defined as anything of value, with certain technical exceptions.

General Exceptions to Both Ownership and Compensation

Arrangement Prohibitions• Ownership in publicly traded securities and

mutual funds.

• Ownership interests in hospitals in Puerto Rico and in rural areas -- The rural area exception requires that substantially all of the services be provided to residents of the rural area.

Exceptions Related to Compensation Arrangements

• Rental of office space and equipment

• Bone fide employment

• Personal services arrangement

• Physician incentive plan

• Physician recruitment

• Group practice arrangements with a hospital

• Physician payments

Reporting Requirements• The Stark Law requires providers to disclose the

names and unique physician identification number of physicians who have financial relationships with the entity or family member with such relationships.

• The reporting requirements may not be implemented until HCFA develops and issues a form and instruction booklet addressing the reporting requirements.

• The form has not been created in the over half-decade since the law was enacted.