USING HEALTHCARE FRAUD USING HEALTHCARE FRAUD ENFORCEMENT TOOLS-ENFORCEMENT TOOLS-

ADDRESSING QUALITY ISSUESADDRESSING QUALITY ISSUES

OCTOBER 26, 2006OCTOBER 26, 2006

US ATTORNEY’S OFFICEUS ATTORNEY’S OFFICE

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THE ENTIRE HISTORY OF THE ENTIRE HISTORY OF HEALTH CARE PAYMENT AND HEALTH CARE PAYMENT AND

FRAUD ENFORCEMENT FRAUD ENFORCEMENT

IN FIVE MINUTES!

INPUTS PROCESSES OUTCOMES

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THE SIX WAYS-GETTING THE SIX WAYS-GETTING PAID IN HEALTH CAREPAID IN HEALTH CARE

FEE FOR SERVICE COST REPORTS PER DIEM NAME THAT DISEASE (Diagnosis Related

Groups, RUGS) CAPITATION ($ per member per month) OUTCOMES

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EACH WAY TO GET PAID IN EACH WAY TO GET PAID IN HEALTH CARE HAS UNIQUE HEALTH CARE HAS UNIQUE FRAUD RISKS-AND SOME FRAUD RISKS-AND SOME

COMMON ONESCOMMON ONES FEE FOR SERVICE RISKS

– Services billed but not rendered– Medically unnecessary services– Double-billing– Services billed at higher level or with other inappropriate

code to improperly obtain more reimbursement (upcoding, unbundling, evasion of global fees)

– Kickbacks to other providers for patient referrals – kickbacks to patients to use more services

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FEE FOR SERVICE MODEL FEE FOR SERVICE MODEL CASESCASES

USA V. RUTGARD-CODING AND MEDICAL NECESSITY USA V. UNIVERSITY OF MEDICINE AND DENTISTRY OF

NEW JERSEY-BOTH INDIVIDUAL PHYSICIANS AND UMDNJ BILLED AND PAID FOR SAME PHYSICIAN SERVICES

USA V. GREBER-KICKBACKS TO REFERRING PHYSICIANS FOR PHYSICIAN ORDERS

USA EX REL. LEE V. SMITHKLINE-BILLING FOR ORDERED BUT WORTHLESS TESTS

PATH PROJECT- SERVICES PERFORMED BY RESIDENTS BILLED BY ATTENDING PHYSICIANS

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COST REPORTS RISKSCOST REPORTS RISKS

Costs not actually incurred Cost-shifting (allocation of time, effort,

space, employees, patients) Kickbacks from suppliers, to insiders

(costs built into invoice) Cost-padding for fictitious or ineligible

charges (social events, travel and entertainment, ghost employees, relatives)

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MODEL COST REPORT MODEL COST REPORT CASES CASES

JERSEY CITY MEDICAL CENTER-GHOST EMPLOYEES, KICKBACKS

KENSINGTON HOSPITAL-KICKBACKS, UNNECESSARY ADMISSIONS

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PER DIEM RISKSPER DIEM RISKS

Billing after discharge or death Billing for worthless services Billing two payment sources for same

dates (Medicaid and private) Billing two payment systems for

included services (in-patient and out-patient)

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PER DIEM MODEL CASES PER DIEM MODEL CASES

USA V. NHC (NURSING HOME CIVIL FRAUD CASE-2001)

USA V. ROBERT WACHTER AND AMERICAN HEALTHCARE MANAGEMENT 2006 WL 2460790(ED Mo.)– Knowledge about alleged worthless services by

defendants– False statements and records concerning health care

benefits of 5 specific individuals, in violation of 18 U.S.C. 1035

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NAME THAT DISEASE NAME THAT DISEASE RISKSRISKS

This payment system pays the same dollar amount for a given diagnosis and course of treatment, regardless of length of treatment or cost of treatment– Premature discharge/drive-by delivery– Moving patient in same facility to different payment

system (e.g., acute care hospital to snf or rehab facility)

– Disease upcoding (add more complications and co-morbidities, whether or not the patient was treated for them (the Tenet allegations)

– Pump up physical and other therapy in nursing home to move patient to higher category

– Managed care Classifications

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NAME THAT DISEASE NAME THAT DISEASE FRAUDSFRAUDS

COLUMBIA/HCA TENET DRG HOSPITAL CASES

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CAPITATION AND CAPITATION AND MANAGED CARE FRAUDMANAGED CARE FRAUD

Keystone-Mercy Health Plan case(Joe Trautwein)_-false reporting of recoveries

AmeriHealth-(David Hoffman)-trashing physician claims

AMERIGROUP (Illinois False Claims Act qui tam case in fourth week on trial 10/26/06 in Chicago)

“Keep up the good work-not signing up any third trimester pregnant women.”

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THE SIXTH WAYTHE SIXTH WAYPAYING FOR DATA AND PAYING FOR DATA AND

OUTCOMESOUTCOMES

CMS/PREMIER P4P(Pay for Performance)

Hospital Quality Incentive Demonstration(HQID) with CMS-first full year 2004

Pursuing Perfection Program-Institute for Healthcare Improvement (hospitals)

RHQDAPU Pay for Performance-HMOs, Employer

Coalitions, States

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PAYING FOR PERFORMANCE:PAYING FOR PERFORMANCE:THE ADMINISTRATION PLAN THE ADMINISTRATION PLAN

FOR HEALTH CARE FOR HEALTH CARE

“REFORMING HEALTH CARE FOR THE 21st CENTURY” –National Economic Council 2/06

-Consumer directed care (including Medicaid) subsidies, tax credits, HSAs-funding not control

-transparent information about quality and outcomes (e.g., Medicare Compare)

-Health Information Technology systems “Pay for Performance: A Decision Guide for

Purchasers”-AHRQ April 2006 “Rewarding Provider Performance: Aligning

Incentives in Medicare” Institute of Medicine 2007

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WHAT IS THE QUALITY WE WHAT IS THE QUALITY WE ARE PAYING FOR? ARE PAYING FOR?

1) REDUCTION OF MEDICAL ERRORS/ADVERSE EVENTS

2) IMPROVEMENT IN OUTCOMES

3) COMPLIANCE WITH PRACTICE GUIDELINES OR REQUIREMENTS

4) REDUCTION IN COST FOR SAME OUTCOME

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CORE QUESTION:WHY (AND CORE QUESTION:WHY (AND WHEN) FRAUD WHEN) FRAUD

ENFORCEMENT?ENFORCEMENT?

KNOWING CONDUCT BY INSTITUTION/GROSS AND SYSTEMIC LEADERSHIP FAILURES (Notice, warning, failure to act)

INTENTIONAL ACTS BY INDIVIDUALS FALSE REPORTING, FAILURE TO REPORT APPALLING OUTCOMES WHAT WILL BE CONSEQUENCES OF OUR

INVOLVEMENT?

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HANDLING HISTORIC HANDLING HISTORIC ALLEGATIONS OF SYSTEMIC ALLEGATIONS OF SYSTEMIC

LEADERSHIP FAILURES LEADERSHIP FAILURES LEADING TO HARMLEADING TO HARM

UNITED METHODIST HOSPITAL-MICHIGAN-DEFERRED PROSECUTION

REDDING HOSPITAL-CALIFORNIA-SALE OF HOSPITAL

PUTNAM HOSPITAL-WEST VIRGINIA

EDGEWATER HOSPITAL-ILLINOIS-CONVICTION OF MANAGEMENT COMPANY

CENTRAL MONTGOMERY HOSPITAL- Pa.-SETTLEMENT AGREEMENT FOR OVERSIGHT CHANGES

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UNITED METHODIST UNITED METHODIST HOSPITALHOSPITAL

Dr. Jeffrey Askanazi-anesthesia and pain management– Nurse complaints (pace of practice, lack of

sterile techniques, treatment of patients w/no observable improvement)

– Physician complaints (medical necessity, repeated procedures with no benefit)

– Patient complaints (doctor admitted doing procedure solely for reimbursement)

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UNITED METHODIST UNITED METHODIST HOSPITAL-RESPONSEHOSPITAL-RESPONSE

CEO to complaining physician-your complaints are not welcome

CFO to Board after referral of doctor to Profession Activities Committee-Askanazi generates one-third of hospital income-hospital would not want to hurt him

Medical expert to PAC-cannot do medical necessity review-lack of documentation-Askanazi counseled to improve paperwork

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United Methodist Hospital-United Methodist Hospital-20032003

UMH, Dr. Seward(UMH chief of staff), and Dr. DeWys(chief of Emergency Medicine) indicted(Seward and DeWys had a joint venture with Askenazi, but sat on medical staff committees reviewing his practices

2003-hospital agrees to deferred prosecution agreement

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REDDING HOSPITAL-REDDING HOSPITAL-CALIFORNIA(Tenet)CALIFORNIA(Tenet)

From 1999 to 2002, Redding doctors billed Medicare for unnecessary heart surgeries-”medically unnecessary and failed to meet professional standards of care” according to Inspector General.

Dr. Chae Hyun Moon, director of cardiology and Dr. Fidel Realyvasquez, chief of cardiac surgery alleged in civil suits of performing unnecessary surgeries.

November,2005-Moon and Realyvasquez agree to civil resolution-never bill Medicare again, resolve pending suits

No criminal charges were brought; US Attorney states that there was little chance of convincing a jury of physicians’ criminal intent beyond a reasonable doubt.

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REDDING HOSPITAL-2005REDDING HOSPITAL-2005

Physicians were major revenue sources Thirteen prior lawsuits-1988-2002(relevant?) Moon’s privileges restricted at competing

Redding hospital (lack of availability) Tenet spokesman states to New York Times,

“we don’t have an independent means of judging medical necessity.”(November 2002)

November, 2002-Tenet hires Mercer national medical audit practice to review medical necessity after whistleblower suit, FBI search warrant, state medical board action.

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PUTNAM HOSPITAL(HCA)PUTNAM HOSPITAL(HCA) Dr. John King-orthopedic physician, hired 11/02-6/03 100 malpractice suits Peer reviewer, brought in by hospital –Dr. King is a

“snake-oil salesman” “not competent to practice medicine.”(Wall Street Journal, 9/21/05 citing federal court suit.)

Issue-failure of credentialing to discover prior malpractice suits, history of drop-out in residency programs, prior suspension.(JCAHO found Putnam’s credentialing deficient in 2002, before King was hired)

Problem- need for additional orthopedic surgeon –what should hospital have done?

Mark Foust,HCA: neither HCA nor Putnam responsible for any harm to patients (per WSJ)-once issues identified by consultant, privileges suspended

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EDGEWATER MEDICAL EDGEWATER MEDICAL CENTERCENTER

MANAGEMENT COMPANIES PLEAD GUILTY TO HEALTH CARE FRAUD-2003– Physicians falsely stated need for

hospitalization to patients– Physicians performed unnecessary

angioplasties and cardiac catheterizations– kickbacks to physicians for patient

recruitment

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CENTRAL MONTGOMERY CENTRAL MONTGOMERY MEDICAL CENTER-2005MEDICAL CENTER-2005

USE OF PATIENT RESTRAINTS WITHOUT APPROPRIATE ORDERS

NEED FOR SYSTEMIC SOLUTION IN COMPLIANCE WITH CONDITIONS OF PARTICIPATION

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Medical Errors and Care Medical Errors and Care Failures Since “To Err Is Failures Since “To Err Is

Human”Human” “The Long Road to Patient Safety: A Status Report

on Patient Safety Systems” Daniel Longo, et al. 294 JAMA No. 22 (December 14,2005) – “Data are consistent with recent reports that

patient safety system progress is slow and is a cause for great concern. . .” the current status of patient safety system progress is not close to meeting IOM recommendations. . .” (based on 2002 and 2004 study of Missouri and Utah hospitals)

At what point does the failure to have an effective safety system result in False Claims Act or other fraud liability?

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Section 501(b) Section 501(b) 10 Quality Measures 10 Quality Measures

(RHQDAPU)(RHQDAPU) Acute myocardial infraction Heart failure Pneumonia These are same measures collected by

JCAHO for use in their certification program

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SECTION 501 Reporting-and SECTION 501 Reporting-and paymentpayment

CMS FAQ RESPONSE: “Data from selected charts for each

hospital that submits data will be audited; a successful audit is not required for the FY 2005 annual payment update. Additional requirements for data accuracy will likely be added for fiscal years 2006 and 2007.”

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Multiple Sources and ReportsMultiple Sources and Reports

RHQDAPU (reporting hospital quality data for annual payment update)

JCAHO State reporting Mandated reports-errors, near misses Mandated apologies Quality improvement organizations Private Sector P4P Contracts Whistleblowers

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Compliance and Compliance and Medical Errors IssuesMedical Errors Issues

Section 501(b) of Medicare Modernization Act of 2003 – 0.4% reduction in reimbursement for each fiscal year (2005 and after) if the hospital fails to submit quality data on 10 quality measures

During FY 2006, “approximately 96% of all eligible hospitals received their full annual payment. . .”

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501(c) + RHQDAPU x 501(c) + RHQDAPU x Knowing Falsity =Knowing Falsity =

False claim?

False statement in support of claim?

False statement in order to avoid repayment to government?

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Express False CertificationsExpress False Certifications

Services were in fact provided as claimed– Phantom services– Different (unqualified) provider

Services were medically necessary Services were supervised as required

for payment

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Implied False CertificationImplied False Certification Many courts have premised False Claims

Act liability on an implied certification of compliance with a statute or regulation that creates a precondition to payment– US ex rel. Lee (9th Cir.)– US ex rel Mikes (2d Cir.)– US ex rel Quinn (3d Cir.) (suggesting in

dicta that precondition need not be express as long as compliance is not irrelevant to payment decision)

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Conditions of ParticipationConditions of Participation

Some courts have concluded that conditions of participation are not necessarily the same as conditions of payment– US ex rel. Mikes– US ex rel. Swan (E.D. Cal)– US ex rel. Cooper (W.D. Pa.)

But a fraudulent representation or promise to comply with conditions of participation could make subsequent claims false– US ex rel. Swan– US ex rel. Curtis (M.D. Fla.)– A fraudulent representation of compliance is a false

claim

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Conditions of Participation Conditions of Participation Issues HCFA Form 2552-Issues HCFA Form 2552-

96(Express False 96(Express False Certification) Certification) Patients’ Rights – 64 FR 36069 (1999) (includes

right to freedom from physical and chemical restraint, with limited exceptions.) Deaths related to restraint must be reported by hospital 42 CFR 480.13(f)

Quality Assessment/Performance Improvement – 68 FR 3435 (2003)

Authentication of Verbal Orders – 42 CFR 482.24(c)(1) – dated,timed, authenticated

Renal Dialysis Facilities – proposed 70 FR 6184-6254 (2005) – extensive changes to 42 CFR 494

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Medical Errors and Care Failures Medical Errors and Care Failures Move to Criminal CasesMove to Criminal Cases

USA v. Martha Bell and Atrium I (W.D. Pa. 2005) Bell(nursing home administrator) convicted of health fraud and Atrium convicted of making false statements arising out of false records of care

USA v. American Healthcare Management (W.D. Mo. November, 2005) – indictment charging violation of 18 U.S.C. § 1035 (False Statements concerning Health Care) because “the Defendants knew, at the time the claim was submitted, that the services were so inadequate, deficient and substandard as to constitute worthless services.”

Http://www.usdoj.gov/usao/moe

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Medical Errors and Failures to Medical Errors and Failures to Report – ExclusionReport – Exclusion

American Healthcare Management v. Inspector General (www.hhs,gov/dab/decisionsCR1278) (February 15, 2005)

Misdemeanor conviction of parent company of a snf for failure to report elder abuse is a conviction which relates to “neglect or abuse of patients in connection with delivery of a healthcare item or service.”

5 year exclusion upheld

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Reporting Requirements For Reporting Requirements For Hospitals (PA, IL, NY, RI)Hospitals (PA, IL, NY, RI)

Act 13 of 2002, 40 P.S.A. 1303. – requires mandatory reporting to the Patient Safety Authority and the Department of Health by hospitals of “serious events” and “incidents” starting June 2004

Requires designation of patient safety officer and patient safety committee, patient safety plan, reporting scheme

Prohibits retaliation against employee for reporting serious event or incident

Requires written notice to patients of certain events

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Physical and Chemical Physical and Chemical Restraints in Care FacilitiesRestraints in Care Facilities

USA v. Kidspeace E.D. Pa. – Settlement in excess of $1.8 million with Consent Decree – restraints (child psychiatric facility)

Mercer County Geriatric Center (restraints, nutrition and hydration) – D-NJ (Civil Rights case)

A. Holly Patterson, E.D. NY – restraints, nutrition, inadequate care (Civil Rights case)

Hospital restraints, Medicare condition of participation, 42 C.F.R. 482.13

USA v. Central Montgomery Hospital, July 25, 2005 – $200,000 settlement and consultant required to review restraint usage at the hospital, US Attorney Office, E.D. Pa.

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Patient Safety and Quality Patient Safety and Quality Improvement Act of 2005Improvement Act of 2005

(42 U.S.C. 299c-21)(42 U.S.C. 299c-21)

“A provider may not take an adverse employment action. . .against an individual. . . Based upon good faith reported information. . . To the provider. . . Or to a patient safety organization.”

“Adverse employment action” includes credentialing and certification

Equitable relief authorized “for any aggrieved individual” to enjoin any violation or for reinstatement and back pay

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Future of Health Fraud Future of Health Fraud ProsecutionsProsecutions

Quality/Safety/Dignity issues Financial loss to government and

beneficiaries Whistleblower information and referrals Part D exposures from new program

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Compliance Safeguards Compliance Safeguards 501(c) + RHQDAPU =501(c) + RHQDAPU =

Significant role for audit and compliance in assuring the accuracy and reliability of data, data collection, and data reporting

“Chart audit validation process” “Publishable data”

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Compliance SafeguardsCompliance SafeguardsHospital Boards in Quality Hospital Boards in Quality

and Patient Safetyand Patient Safety “Getting the Board on Board: Engaging Patient

Boards in Quality and Patient Safety” in 32 Joint Commission Journal on Quality and Patient Safety 179-187 (April 2006)

Interviews conducted with CEOs and Board Chairs at 30 hospitals in 14 states

“The level of knowledge of landmark IOM quality reports among CEOs and board chairs was remarkably low. . .There were significant differences between the CEOs’ perception of the knowledge of board chairs and the board chairs’ self-perception”

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Compliance SafeguardsCompliance SafeguardsHospital Boards in Quality Hospital Boards in Quality

and Patient Safetyand Patient Safety Increasing education on quality Frame an agenda for quality Quality planning, focus from board level Governance responsibility for quality Greater focus on patients

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Compliance Processes Compliance Processes and Safeguardsand Safeguards

Upfront processes – commitments to quality and other preventative measures

Compliance officer/patient safety officer role Utilization programs

– Plans– Policies – Training – Monitoring of utilization processes

Peer review processes/conflicts Quality of care as an element of a compliance

program

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COMPLIANCE PROCESS AND COMPLIANCE PROCESS AND SAFEGUARDSSAFEGUARDS

42 U.S.C. 1395x(k), 42 CFR 482.30- utilization review requirements for hospitals

Review of durations of stay Review of medical necessity of services,

drugs Every outlier case; sampling of other

cases

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Deficit Reduction Act ImpactDeficit Reduction Act Impact

Quality Demonstration Project –ultimate goal-induce and reward quality

2005 Deficit Reduction Act requirement effective (1/07) – advise employees of federal and state false claims acts and whistleblower statutes – likely to generate additional government enforcement activity

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QUALITY AND ENFORCEMENTQUALITY AND ENFORCEMENT

HAS THERE BEEN A SYSTEMIC FAILURE BY MANAGEMENT AND THE BOARD TO ADDRESS QUALITY ISSUES?

HAS THE ORGANIZATION MADE FALSE REPORTS ABOUT QUALITY, OR FAILED TO MAKE MANDATED REPORTS?

HAS THE ORGANIZATION PROFITED FROM IGNORING POOR QUALITY, OR IGNORING PROVIDERS OF POOR QUALITY?

HAVE PATIENTS BEEN HARMED BY POOR QUALITY , OR GIVEN FALSE INFORMATION?

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QUALITY AND ENFORCEMENTQUALITY AND ENFORCEMENT

PROSECUTION SHOULD BE LIMITED TO EGREGIOUS CASES, SYSTEMIC FAILURES TO RESPOND

REGULATORS AND PROSECUTORS SHOULD SUPPORT VOLUNTARY EFFORTS, WHISTLEBLOWERS INTERNAL REMEDIES

PEER REVIEW PROCESS SHOULD RECEIVE NEEDED LEGAL PROTECTION-(Patient Safety Act, Kibler v. Northern Inyo County Hospital

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Useful Web SitesUseful Web Sites

www.cms..hhs.gov/HospitalQualityInits (qualifying for Annual Payment Update)

www.hospitalcompare.hhs.gov ( reports from hospital shown to consumers)