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265 Cards in this Set
- Front
- Back
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On the criminal side, the cornerstone health care fraud and abuse provision is ? |
42 U.S.C. § 1320a-7b(a).
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The criminal penalties have been further enhanced by? , which increases the foregoing monetary penalties to up to $250,000 for an individual and up to $500,000 for a corporation or other business entity.
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18 U.S.C. § 3571 |
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$250,000 for an individual and up to $500,000 for a corporation or other business entity. ? prohibits the knowing and willful making of a false statement which affects reimbursement under a federal health program.
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42 U.S.C. § 1320a-7b(a)
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An alternative criminal provision sometimes used in false claims cases is the Criminal False Claims Statute, . That provision prohibits the making or presenting of “any claim upon or against the United States, or any department or agency thereof, knowing such claim to be false, fictitious, or fraudulent.” Violations of this provision are punishable by imprisonment for up to five years and fines of up to $10,000, or both. This provision is not limited to claims affecting reimbursement under federal health programs.
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18 U.S.C. § 287
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Qui tam causes
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Billing for services that use non-FDA approved drugs or devices
• Billing for services that are not medically necessary HEALTH CARE FRAUD AND ABUSE AND STARK ISSUES James C. Dechene I-35 • Billing for services in a manner contrary to CMS “interpretative rules” • Billing for services of a low quality • Failure to meet certain certification conditions for providers of health care • Violation of any applicable law where provider implicitly certifies compliance with all laws • Billing Medicare or Medicaid more than other third party payers |
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the bounds of what might be considered a “false claim” may only be limited by
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the creativity of the pleader.
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What was basic appellate claim US v Universal trade and industries
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variance between indictment and evidence at trial
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US v Gerber 760 F. 2d 68 3rd cir 1985 3rd cir seminal holding?
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any activity which was intended to induce referrals would violate the law even if the payments were also intended to compensate for professional services
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US v Gerber 760 F. 2d 68 3rd cir 1985 3rd cir seminal holding?
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any activity which was intended to induce referrals would violate the law even if the payments were also intended to compensate for professional services
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what is the one purpose test from greber
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if one purpose is a kickback then the arraignment is illegal
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What did Kats argue?
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Kats argues that in instructing the jury on the solicitation charge (on which Kats was acquitted) the court correctly limited the definition of a “kickback” by requiring the jury to find “beyond reasonable doubt that one of the material purposes for the solicitation was to obtain money for the referral of services,”6 but incorrectly allowed the jury to convict on the remaining charges even if it found the referral of services was not a material purpose of the payments.7
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Greber holding vvone-purpose
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As the Third Circuit recently explained, the Medicare fraud statute is violated if “one purpose of the payment was to induce future referrals,” United States v. Greber, 760 F.2d 68, 69 (3d Cir.1985), “even if the payments were also intended to compensate for professional services.” Id. at 72.
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The gist of Bay State Jury instructions 4 points you can or cannot convict if?
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the judge instructed that the Government has to
1) prove that the payments were made with a corrupt intent, that they were made for an improper purpose. 2)If you find that payments were made for two or more purposes, then the Government has to prove that the improper purpose is the primary purpose or was the primary purpose in making and receiving the payments. 3) It need not be the only purpose, but it must be the primary purpose for making the payments and for receiving them. 4)You cannot convict if you find that the improper purpose was an incidental or minor one in making the payments. |
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The gravamen of Medicare Fraud is ?
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inducement
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That a particular payment was a remuneration (which implies that a service was rendered) rather than a kickback ?
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That a particular payment was a remuneration (which implies that a service was rendered) rather than a kickback, does not foreclose the possibility that a violation nevertheless could exist.
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Felci - bay state - The defendants based their case on the theory that ?
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the payments to Felci were only made for actual services performed. This, they contended, was the sole reason for the payments.
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Describe safe harbors legislation - what 4 prongs must be satisfied?
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At best, Congress allowed HHS to create “safe harbors” for certain types of transactions. The proposed regulation does not exempt every transaction in which the amount paid for services is an amount “consistent with fair market value;” rather, it exempts only a small subset of such transactions. To qualify, there must also be:
(1) an agreement in writing; (2) specifying the services to be rendered; (3) for a term of more than one year; (4) with the compensation set in advance. |
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In 1987, Congress repealed 42 U.S.C. § 1395nn and reenacted the provision in altered form at ?
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42 U.S.C. § 1320a-7b.
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Void for Vagueness instructions
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The Supreme Court has set forth the standards for determining whether a statute is void for vagueness:
1) A criminal statute must be sufficiently definite to give notice of the required conduct to one who would avoid its penalties, 2) and to guide the judge in its application 3) and the lawyer in defending one charged with its violation. |
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What about medicare fraud statues mitigates void for vagueness arguments?
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The key to a Medicare Fraud case is the reason for the payment--was the purpose of the payments primarily for inducement. In addition to the knowing and willful requirement, this imposes a second and stronger scienter requirement. The unusually high scienter requirement “mitigate[s] [any] vagueness, especially with respect to the adequacy of notice to the [defendant] that his conduct is proscribed.”
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to be illegal must the cash or goods given to the defendant come from medicare or medicaid funds?
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The plain language of the statute does not require the government to show that Medicare funds were in fact used to make the illegal payment. 42 U.S.C. § 1395nn(b)(1)(B) (remuneration is illegal when it is given in exchange for recommending the purchase of a service for which the “payment may be made in whole or in part under this subchapter”);
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Must a defendant play a substantive role in the scheme to induce to be convicted?
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The language of the statute makes no distinction on the basis of control or extent of participation. Indeed, the phrase “purchasing, leasing, ordering or arranging for or recommending purchasing, leasing, or ordering” (emphasis added) in the statute implies that one need not be in a position of control in order to be guilty of Medicare Fraud.
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Elements of 18 U.S.C. § 371 in Shaw were?
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Shaw has been indicted for conspiring, under 18 U.S.C. § 371, to commit the offense of violating what has been called the Medicare Anti-Kickback Statute (hereinafter "the anti-kickback statute"). That statute reads, in relevant part,
(b) Illegal remunerations (1) whoever knowingly and willfully offers or pays 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, shall be guilty of a felony and upon conviction thereof, shall be fined not more than $25,000 or imprisoned for not more than five years, or both. 42 U.S.C. § 1320a-7b(b)(1999). |
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what does to induce mean in Hansleter?
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“to induce” connotes an intent to exercise influence over reason or judgment in an effort to cause a desired action and is on its face a stronger term than merely “to encourage” or “to influence.” While “encourage” or “influence” may sometimes loosely be used to substitute for “induce,” Congress may reasonably be understood to have used the term with its own unique connotations which are different from those associated with “encourage” or “influence.”
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does government have to prove guarantee of return to convict under Stark?
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to prove a violation, the I.G. does not need to prove a guaranteed “flow of business.”
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Can excessive payment cause guilt under stark?
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Some of the courts applying the statute have inferred intent from the excessiveness of the remuneration. See Lipkis at 1449 (payments for “handling” fees that far exceed the value of the services can be inferred to be remuneration for referrals).
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In Hanlester were inferences concerning intent drawn from the structure of the venture?
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Inferences regarding intent may be drawn from the structure of the venture: whether the venture is limited to potential referral sources; whether the partners are precluded or discouraged from using alternative laboratories; whether the investments were sought to meet the capital needs of the venture; whether the venture met a need for services; and whether the structure was designed to permit the physicians to evade restrictions on their profiting from tests they order by taking advantage of the reference laboratory exception.
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May inferences be drawn from the connection between referral and renumeration?
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Inferences may be drawn from the degree of nexus between the remuneration and the referrals. Clearly, a scheme in which payments (or the shares which generate payments) are proportional to referrals offers the most direct incentive to physicians to refer to overutilize. Even where payments (or ownership shares) are not divided with regard to actual referral patterns, the smaller the number of partners, the greater the impact each physician’s referrals will have on his return and the greater the incentive to refer. (As noted above, however, the legislative record included both flat and proportional arrangements, so lack of proportionality should not be given too much weight.)
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Does under utilization infer a lack of intent to violate the law
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Proof of overutilization could have properly led to an inference that the distributions had the effect of influencing physician investors’ referrals, and therefore that they were probably intended to have that effect. However, the absence of overutilization does not prove the absence of such an intent. ... We have stated that, in determining intent, it “is relevant whether the arrangement was likely to lead physicians to select one laboratory over another or to overutilize laboratory services because of the incentives provided.” ...
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What are the four factors affecting a vagueness inquiry cited in Hanlester v Shalala
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In Village of Hoffman Estates v. The Flipside, 455 U.S. 489, 498-500, 71 L. Ed. 2d 362, 102 S. Ct. 1186, (1982), the court enumerated four factors affecting a vagueness inquiry, including whether or not the statute at issue (1) involved only economic regulation, (2) contained only civil, not criminal penalties, (3) contained a scienter requirement, which might mitigate any vagueness, and (4) threatened any constitutionally protected rights. Id. at 498-99.
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How did the Hanlester v Shalala Court construe the scienter requirement in § 1128B?
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We construe “knowingly and willfully” in § 1128B(b)(2) of the anti-kickback statute as requiring appellants to (1) know that § 1128B prohibits offering or paying remuneration to induce referrals, and (2) engage in prohibited conduct with the specific intent to disobey the law.
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Can a corporate entity be held liable for the conduct of its agents that proves contrary to the entity's written policies?
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Because Hitchcock was acting as an agent for Hanlester and the join venture labs, these corporate entities may be held vicariously liable for her actions. [Citation omitted.] Moreover, the fact that Hitchcock acted contrary to the corporations’ stated policy does not absolve them of liability. [Citation omitted.] “Merely stating or publishing [ ] instructions and policies without diligently enforcing them is not enough to place the acts of an employee who violates them outside the scope of his employment.”
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Does illegality of a contract defend against a suit for breach?
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In conclusion, it follows under the applicable Texas law that the Agreement, being illegal, is void and unenforceable. [Citations omitted.] Indeed, the policy against aiding in the enforcement of an illegal contract is such that a party that has inserted an illegal provision for its own benefit may nevertheless defend against a suit for breach of contract on the basis of the illegality. Elray, Inc. v. Cathodic Protection Service, 507 S.W.2d 570, (Tex. Civ. App. 14 1974).
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What were the initial 10 safe harbors?
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Initially, OIG promulgated ten fairly limited safe harbors. The initial safe harbors covered the following:
(1) investment interests (e.g., joint ventures); (2) space and equipment rentals; (3) personal service and management contracts; (4) sale of physician practices; (5) referral services; (6) warranties; (7) discounts; (8) remuneration to employees; (9) group purchasing arrangements; (10) waiver of beneficiary coinsurance and deductible amounts. These safe harbors are included as part of the OIG’s regulations. The safe harbors are located at 42 C.F.R. § 1001.952. |
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What are the 8 subsequent safe harbors?
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Subsequently, the OIG has add some additional safe harbors. These additional safe harbors, inter alia, address
(1) HMO physician incentive payments; (2) investments in rural entities; (3) investments in ASCs by physicians who perform services at the ASC; (4) Group practice investments; (5) practitioner recruitment to rural areas; (6) Obstetrical malpractice insurance subsidies; (7) Certain cross referral agreements; and (8) Cooperative hospital service organizations. |
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What are the 8 subsequent safe harbors?
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Subsequently, the OIG has add some additional safe harbors. These additional safe harbors, inter alia, address
(1) HMO physician incentive payments; (2) investments in rural entities; (3) investments in ASCs by physicians who perform services at the ASC; (4) Group practice investments; (5) practitioner recruitment to rural areas; (6) Obstetrical malpractice insurance subsidies; (7) Certain cross referral agreements; and (8) Cooperative hospital service organizations. |
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8 Prongs for non public safe harbors
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< 40% of Investment from Referral source/Provider Investors – Equal terms offered to Referral sources as others – Terms unrelated to Referrals – No requirement of Referrals – Not marketed differently to Referral Source Investors – < 40% of referrals from investors – No loans to referral sources – Payments directly proportional to investment |
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Space and rental requirements
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Lease in Writing and signed
– Lease covers all of premises covered – If intervals: set forth the intervals – At least one year term – Aggregate rent set in advance and not determined in a manner that takes into account referrals – Aggregate space rented does not exceed what is reasonably necessary |
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Personal services requirements
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Contract in Writing and signed
– Covers all of services covered – If intervals: set forth the intervals – At least one year term – Aggregate payment set in advance and not determined in a manner that takes into account referrals – Aggregate compensation does not exceed what is reasonably necessary |
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3 discount safe harbors
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Discounts offered by Seller to HMO
– Discounts offered by Seller to Provider under Cost-Based reimbursement – Discounts offered by Seller to other Buyers |
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Seller obligations on discounts
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HMO: No Requirements
– Cost Based: • Fully disclose existence of rebate on each invoice • Inform of obligation to report • Provide end of year calculation – Other Buyer • Full disclosure of full rebate on invoice |
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what is the best way to look at whether a discount does not fit a safe harbor
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does it hurt medicare payments?
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guidelines for safe harbor analysis
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Failure to satisfy does not doom arrangement
• If you cannot satisfy, useful exercise to meet as many prongs of safe harbor as possible • Consider whether failure to satisfy particular prong is driven by inducement intent • Consider reasonableness of overall venture • Look to specific intent |
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Concerns over Safe Hrbors
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Conservative practitioners may nix any venture that does not meet a safe harbor
– If transactions limited to safe harbors, many legitimate ventures would be thwarted – In some cases, may be possible to create an abusive arrangement that satisfies a safe harbor • Question of whether bad intent may defeat a safe harbor |
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Can bad intent trump a safe harbor
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Maybe - this is an arguable context
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What is the art of
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art to construing Advisory Opinions
– A Favorable Advisory Opinion protects specific transaction – An Unfavorable Advisory Opinion merely says OIG does not have enough information or knowledge of specific intent |
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What are the key points in the OIG advisory opinion process
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Identify all parties to transaction
• Provide all relevant documents • Cost: $100/hour for time spent by govt. • Statute directs OIG to issue decision within 60 days after complete application to decision • Reality: approximately 2 years to obtain a final OIG Advisory Opinion |
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OIG Advisory opinion process
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Checklist provides summary of requirements
– Parties to transaction – Existing arrangement or will be implemented – No longer need for initial check – Estimate of cost or Cap – Orig. + 2 copies – Identification of parties – Identification of entities – All relevant information All operative documents – All collateral or oral understandings – Signed certification of accuracy – Certification for proposed arrangement that parties in good faith plans to implement |
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Can advisory opinions OIG be introduced as evidence at trial
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May not be introduced into evidence by others
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When is it advisable to seek AO?
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Risk of receiving an unfavorable decision and continuing with transaction on facts unlikely to be challenged by prosecutors – More compelling case for seeking AO: Planned transaction just barely misses requirements for safe harbor for technical reasons – Another approach: Parties commit to abandon transaction if no guarantee – Still another rationale: Seek to level playing field by requesting AO for what competitors are doing, hoping or expecting to be turned down: establish rules for competition |
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Advisory Opinion History How many favorable how many not?
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1997: 6 total; 2 unfavorable •2005: 12 total; 1 unfavorable • 2006: 22 total; 4 unfavorable • 2007: 22 total; 5 unfavorable • 2008: 24 total; 2 unfavorable • 2009: 17 total; 0 unfavorable • 2010: 21 through 9/30; 1 unfavorable • 228 total opinions; 36 unfavorable (15%) 1998: 19 total; 6 unfavorable • 1999: 14 total; 3 unfavorable • 2000: 11 total; 0 unfavorable • 2001: 21 total; 2 unfavorable • 2002: 15 total; 4 unfavorable • 2003: 15 total; 3 unfavorable • 2004: 19 total; 3 unfavorable |
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what are the key features of Advisory Opinion 97-5
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Outpatient Radiology/Hospital Imaging JV
• 51/49 Radiology/Hospital ownership • JV offering state of art imaging • Radiology Group provides professional direction to hospital • Hospital provides space to Radiologists • Stated: Market value of space = Market value of services $400,000 investment • Radiologist to bill for Professional Component • JV Bills for Technical component – 51/49 split • Fails safe harbor: 51% from radiologists; who provide services •Hospital’s employed physicians will be prohibited from referring – Should this be important? • No Hospital actions to encourage medical staff to refer – Should this be important? • Referrals will not be tracked • Hospital to maintain own imaging units • Radiologists generally do not refer • No referrals: Distributions not inducementsRemuneration for radiologists’ exclusive hospital contract? – Remuneration based on investment – Not disproportionate to investment • How different than Hanlester? – Value of premises same as value of services • Aren’t other physicians provided space for medical director services? • Aren’t other medical directors compensated? • Why not radiologists? Neither Radiologists or Hospitals refer or influence |
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Advisory Opinion 98-2 key points
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Pharmaceutical mfg./wholesaler discounts
• Multi-source generics • Ultimate customers: retail pharmacies; hospitals; providers • Discounts available to all wholesalers • Wholesalers do not bill programs • Does not fit into safe harbor – Why does this not fit into a safe harbor?Manufacturer asks Wholesaler to provide following services: – Call customers promoting products – Include advertising materials – Ads in wholesaler catalog – Pharma Co. to report as part of AMP & BP – Not connected to any other arrangement – Inform purchaser of reporting obligationsSafe Harbor: only for discounts to buyer who submits claim • Price reduction to induce purchases • Proposed arrangement similar to safe harbor • Little reason to not protect • Query: how does this square with OIG view that if not safe harbored discount: illegal? • Would you have sought an Advisory Opinion on these facts? |
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Advisory Opinion 98-5 key points
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Nursing Home Coordination of Benefits (COB) provision with HMO
• Nursing Home agreed to forego Co-payments in certain cases where HMO Plan is Secondary to Medicare • If Medicare payments exceed what Plan would pay: accept Medicare as payment in full • Agree to not collect co-pays and deductibles • Viewed as financial benefit to HMO Plan for referring Plan’s patientsSome of HMO Plan’s patients are covered by Medicare • Not within health plan safe harbor – Nursing home claims amounts from Medicare in excess of Plan’s Fee schedule • Not within waiver of co-payments – Limited to hospital waivers • Not within Discount Safe Harbor – Discounts are not provided to an entity submitting claims to Governmental programsWaivers may result in kickbacks • Nursing home may increase length of stay to recoup the waiver • Plan has no incentive to control costs if it gets benefit of discounts • Nursing home might scrimp on services • OIG: may be prohibited remuneration • What are the key Parties to the Advisory Opinion asked OIG to Reconsider • Parties provided additional facts relating to the health plan, which was a commercial HMO • In Advisory Opinion 01-13, based on the new facts, OIG did approve the arrangement, subject to the specific circumstancesfactors/concerns here? |
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Advisory Opinion 98-8 key points
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DME Company affiliate sells products to its walk-in customers for less than DME Company charges Medicare
• DME company supports higher Medicare charges on basis of additional costs with Medicare: – Documentation Requirements – Claims Processing – Delivery & Distribution – Surety BondMedicare price: 21-32% more than Cash & Carry price of affiliate • OIG Benchmark: – Compare profit margins – If the Medicare profit margin is less than Cash & Carry: Good Cause • Insufficient information to reach firm conclusion • Advisory Opinion does provide important metric for assessing price differentials |
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Advisory Opinion 99-6 key points - what is nickname
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St. Jude Children’s Hospital program to waive co-payments
• Focus on unique aspects of St. Jude Hosp.: – Children come to Memphis from around nation – Referred by community physicians – Access to Research Protocols – Treating physicians are salaried employees – 55% of expenses covered by charitable donations – 20% Charity CareSt. Jude never has billed children or families as part of its mission • St. Jude Policy predates Medicare and Medicaid • Policy is not advertised • Relatively small % of St. Jude patients covered by Medicare or Medicaid • Request sought by 2 hospitals seeking to enter into Affiliate ArrangementsSt. Jude Affiliates required to adopt St. Jude Policy • Affiliates to operate Pediatric Oncology clinics • ALSAC to pay all copays and deductibles for patients • Waiver of Co-Pay Safe Harbor only applies to Medicare; not Medicaid or CHAMPUSOIG will not impose sanctions re St. Jude: – St. Jude Policy pre-dates Medicare/Medicaid – Critical component of St. Jude’s Mission – 99% of care by salaried physicians – Few govt. beneficiaries affected – Research protocols provide access to cutting edge treatments for children with difficult conditions – Program helps offset burdens on family of traveling too and staying in Memphis for extended periodsOIG will not impose sanctions re Affiliates: – No technical waiver of copays; ALSAC pays – Not an inducement for referrals – Not an inducement to refer to St. Jude’s, since patients are treated at Affiliates – Small benefit for Affiliates – Little risk of over-utilization – Public benefit of expanded researchVery Unique Advisory Opinion – Only Advisory Opinion that publicly identifies one of requestors – Reliance on Unique position and mission of St. Jude’s Children’s Hospital clearly drives opinion – But: 80% of hospitals are not-for-profit with a mission – Should same analysis apply to them? • Highly doubtful |
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Advisory Opinion 99-13 key points
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Discount Pathology Services for non-Medicare Patients for “Bill Account” clients
• Bill Account pricing substantially below Medicare charges and reimbursement • May in some cases be below costs • Economies of single monthly statement; Not dealing with payers; denials, etc. • Proposal: greater discounts to match competitionNew discounts greater than cost savings • Some are below cost • Discount not conditioned on referrals • But: expectation of referrals from “Bill Account” clients of Medicare business • Bill Medicare at Medicare rates • Consider analytical framework of Advisory Opinion 98-8 |
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Advisory Opinion 99-13
• OIG Analysis: |
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Potential Kickback –Not commercially reasonable to offer discounts below costs without Medicare referrals • Pricing non-Medicare below costs – But: could still be a problem if discounted prices did cover costs • Greater discounts than same volume customers might receive without referrals of Medicare • Also: Charges to Medicare substantially in excess of usual chargesKey analysis, along with AO 98-8, on justification of non-Medicare pricing less than Medicare • Key: compare margin on Medicare business, mindful of higher Medicare costs, to margin on non-Medicare business • What makes Medicare more costly? – Cost of duplicate claims for each service – Cost of denials – Regulatory costs Discounted prices for non-Medicare an incentive to refer Medicare business – Does not meet discount safe harbor: not offered to Medicare – Nexus between “Bill Account” discounts and Medicare business – Obvious motive for Discounts on non-Medicare business to get Medicare business |
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OIG Advisory Op. 01-20
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Hospice Arrangement with SNF
• Medicare pays Hospice a per diem for all services – Including services in Hospital or SNF • Patient waives Curative services – Must have terminal diagnosis – Hospice provides comfort care • If patient needs a SNF, Hospice contracts to pay SNF out of Hospice per diem • Here: dually eligible 3 OIG Advisory Op. 01-20 • Dually eligibles: Medicare pays; Medicaid pays co-pays • Medicaid pays Hospice 95% of SNF benefit • Hospice pays SNF full SNF payment (100%) plus cost of palliative drugs • OIG had recognized that Hospices can pay 100% of SNF rate: i.e., pay 5% subsidy so SNFs are indifferent between Hospice and Medicaid(Medicare/Medicaid) Here: OIG refuses to grant favorable A.O. for Hospice paying 100% of SNF Medicaid reimbursement + Cost of drugs • Drugs typically included in state per diem to SNF • If Hospice paid for drugs, SNF better off with Hospice patients than regular Medicaid patients • OIG viewed additional payment as a financial benefit/inducement to SNFpatient |
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OIG Advisory Op. 03-03
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Pharmaceutical Co. had offered Patient Assistance Program (PAP) to help with cost of rejection drugs for transplant patients
• Medicare had paid for Immuno-suppressive for 36 mos. • Pharmaceutical Co. had a PAP to provide free drugs after the 36 mos. Of Medicare Coverage • Medicare then expanded coverage to life • Pharma Co. that proposed a Co-Insurance Benefit for Medicare patientsOIG said PAP not within the patient inducement statute – Pharma Co. does not submit claims, and no direction to particular pharmacy • However, PAP program found to be squarely prohibited by AKS • Profitable for Pharm Co. to accept Medicare portion for Manufacturer •OIG rejects proposal to effectively waive co-pays • OIG relies on less abusive alternatives – Manufacturers can pool resources and give grants based on need; applicable to all drugs – A.O. should not be read as discouraging pharmacies from waiving co-pays in individual hardship cases • Number of OIG AO’s for PAP programs No incentive to choose cheaper products |
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OIG Advisory Op. 03-03
• Key points in analyses: |
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Programs supported by several manufacturers, which support patients with conditions, but not directed to particular Pharmaceutical Co’s product generally acceptable – PAP programs should not steer patients to a particular product |
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OIG Advisory Op. 03-03
• Key points in analyses: |
OIG Advisory Op. 03-03
• Key points in analyses: – Programs supported by several manufacturers, which support patients with conditions, but not directed to particular Pharmaceutical Co’s product generally acceptable – PAP programs should not steer patients to a particular product |
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OIG Advisory Op. 03-05
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OIG notes ASC safe harbor is limited to investments by physicians who actually use facility • No OIG willingness to permit this arrangement • OIG claims: ASC JVs involving physicians in a position to generate referrals are potentially abusive |
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OIG Advisory Op. 03-05
rebuttals to refusal |
An odd refusal to grant a favorable advisory opinion
– Unlikely that non-surgeons can do anything to influence referrals to ASC – Only surgeons are in a position to refer to ASC – Primary care physicians do have incentive to refer to surgeons in their group practice, but that is present no matter what • One option: just have surgeons in group own ASC? • Could adjust ownership of Group Practice to perhaps comply? • Was an integrated group practice |
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OIG Advisory Op. 03-08 key points - per click per order?
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Mgmt of I/P Rehab Units by outside Mgmt. Co. • Mgmt Fee: per patient per day basis • Mgmt Co. also to arrange for Program Director; Community Outreach and Medical Director • Medicare reimburses on a prospective payment basis |
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OIG Advisory Op. 03-08 why denied
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Not within personal services safe harbor: Aggregate Compensation not set in advance • OIG Advisory Op. 03-08 • Another odd denial of favorable A.O. – No indication that Management Company in any special position to refer patients – Payment on a Per Diem basis seems eminently reasonable given the services performed – Addition of Management Company does not change any real incentives: Management Company has same incentives as Hospital – Suggestion: OIG should consider whether an arrangement adds to incentives that already exist OIG skeptical of per patient, per click or per order compensation arrangements • PPS does not eliminate risk of over-utilization |
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OIG Advisory Op. 03-13 key points MRI rural?
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Ownership of freestanding MRI in rural area • Not a medically underserved area Persons able to generate referrals: 30% • Community members or physicians not able to refer: 40% • Owner MDs: 13% of revenues • Hosp.: 24% of revenues • Safe Harbor problem: Over 40% owned by persons in a position to make referrals • All members of the medical community, as well as others, offered opportunity to invest • Same investment terms offered to all • Hospital/Foundation: 30% |
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OIG Advisory Op. 03-13
• Bona fide investment to develop new service - reasons OIG approved |
OIG Advisory Op. 03-13
• Bona fide investment to develop new service • Arrangement followed proposed, but later revised, rural JV safe harbor • None of characteristics of suspect JV • Community-oriented effort • Thus: Risk of AKS issues relatively low – While OIG came out right way here, it could have felt forced to the result by fact that venture in good faith followed proposed Safe Harbor |
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OIG Advisory Op. 04-08 key points PT
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Physician Group Practice proposed Physical Therapy Option to pay higher amount to get access to physical therapist • Does not meet safe harbor, since while aggregate rent fixed, schedule of usage not set – Use when needed • OIG: multiple, overlapping part-time leases • Structure difficult to monitor and assess FMV(PT) center • Group Practice proposed to have LLC own PT center • LLC to lease to several practices • Lessee enter into one year lease arrangement • Pay fixed monthly rent for unlimited use |
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OIG Advisory Op. 04-08 rents why denied
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•
Some practices will pay more, others less than FMV for the space (depending on actual usage) • Rents create a guaranteed income stream for the Center, and clear incentive for practices to only use Center • Thus: Denial of Favorable A.O. • Once again, OIG analysis subject to challenge • An attempt to reasonably share space with fixed leases |
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Questions and ideas about OIG Advisory Op. 04-08 - how to make it favorable
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•
How can structure be changed? – Arguably, could do a defined time share, allocating space to defined time slots, but that could add inefficiencies – If you had defined time slots, could lessee practices trade time slots? • Economically: Fixed scheduling very similar to arrangement turned down • Just less flexibility with scheduling • Hard to see Fraud Risk with flexible schedule, but fixed rental payments |
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OIG Advisory Op. 08-10
• Radiologists block lease space, equipment, etc. what were issues |
OIG Advisory Op. 08-10
• Radiologists block lease space, equipment, and personnel to urology practices for intensity-modulated radiation therapy (IMRT) (prostate cancer treatment) • Radiologists to contract separately with the Urology Groups to supervise, as independent contractors, the IMRT procedures • OIG noted that all agreements appeared to satisfy safe harbors • Yet: OIG declined to issue favorable advisory opinion |
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OIG Advisory Op. 08-10 why did OIG deny the radiologists/urologist's plan?
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OIG Advisory Op. 08-10
• Similar parameters as OIG’s Suspect Joint ventures • Arrangement between traditional provider of services (radiologists) and referral sources (urology practices) • Urologists’ profits would vary with referrals • Radiologists essentially shared some of the profits from the IMRT service with Urologists through the arrangement • Notwithstanding all agreements implementing arrangement satisfied safe harbor, OIG said all that was safe harbored agreements protected compensation paid by Urologists • Profit from venture potentially illegal remuneration |
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OIG Advisory Op. 08-10
• Analytically, very similar to ? |
OIG Advisory Op. 08-10
• Analytically, very similar to A.O. 04-08 • Only here: Requestors took the extra step of having a fixed schedule of times • While OIG’s physician self-referral concerns may be valid, seems to eliminate value of Safe Harbors • Any Lease or Personal Services arrangement that satisfies Safe Harbor has profit potential |
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What are the Legal Uses of OIG Advisory Opinions
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Legal Uses of Advisory Opinions
• AO process provides good insight into what OIG thinks might be problematic • If there are favorable Advisory Opinions, anyone else can duplicate structure and seek own AO • Alternatively, other parties can seek an Opinion of Counsel, which might have a similar analysis as OIG • Rely on Advice of Counsel Defense |
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Can less than one year contracts for rental abide in safe harbor?
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Contracts cannot be altered during a one year period but may have < 1 year duration
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Steps in stark analysis
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1) determine whether there is any referral to an entity performing designated health services. In most cases, if a physician orders a designated health service to be performed, that will be a referral.
2) determine whether there is any referral to an entity performing designated health services. In most cases, if a physician orders a designated health service to be performed, that will be a referral. 3) see whether there is an applicable exception to the Stark Act. Under the Stark Act, however, failure to satisfy the terms of an exception precisely means that the exception is not satisfied, and any referrals would violate the Stark Act. |
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Exceptions to Stark Act - 11 or to the letter k
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a. Ownership and/or compensation arrangements in rural entities;
b. Physician’s services provided personally by, or under the personal supervision of, another physician in the same group practice as the referring physician; c. In-office, ancillary medical and other health services if they are provided personally by the referring physician, or a physician member of the same group practice as the referring physician, or employees of the physician or group practice if they are personally supervised by the referring physician or physician member of the group practice; d. Services furnished by prepaid health plans; e. Other financial relationships specified by the Secretary in regulations; f. Rental of office space, if there is a written agreement between the parties and certain other conditions are satisfied; g. An arrangement between a hospital and a physician for the employment of the physician (or immediate family member) or for the provision of administrative services is excepted under certain circumstances; h. Specific identifiable physicians’ services furnished to an individual receiving hospice care, if payment for such services may be made under Medicare as hospice services; i. Remuneration paid by a hospital to induce a physician to relocate to the geographic area; a. Ownership and/or compensation arrangements in rural entities; b. Physician’s services provided personally by, or under the personal supervision of, another physician in the same group practice as the referring physician; c. In-office, ancillary medical and other health services if they are provided personally by the referring physician, or a physician member of the same group practice as the referring physician, or employees of the physician or group practice if they are personally supervised by the referring physician or physician member of the group practice; d. Services furnished by prepaid health plans; e. Other financial relationships specified by the Secretary in regulations; f. Rental of office space, if there is a written agreement between the parties and certain other conditions are satisfied; g. An arrangement between a hospital and a physician for the employment of the physician (or immediate family member) or for the provision of administrative services is excepted under certain circumstances; h. Specific identifiable physicians’ services furnished to an individual receiving hospice care, if payment for such services may be made under Medicare as hospice services; i. Remuneration paid by a hospital to induce a physician to relocate to the geographic area; |
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Must there be a Stark exception for each relationship or can one exception cover a whole complex transaction
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It is key under the Stark Act to ensure that (1) there is an applicable exception available for each financial relationship that might exist; and (2) that the terms for complying with the exception are precisely met.
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Does failure to meet conditions of a Stark exception equate to inevitable illegality
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It is key under the Stark Act to ensure that (1) there is an applicable exception available for each financial relationship that might exist; and (2) that the terms for complying with the exception are precisely met. Under
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If you fail a stark safe harbor do you have an offence
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Yes as opposed anti-kickback
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Is Stark a strict liability law
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yes
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Stark 1 covered what
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Lab work
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Stark Financial interest is?
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Either ownership of compensation
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Steps predicate to possible Stark Violations and analysis
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1 Physician 2 Designated service? 3) referral to entity, 4) financial relationship 5) bill Medicare 5 ) Is there an exception
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Stark Analysis - After determined initial question require analysis
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Is there a financial relationship
Ownership? statute and regs have exceptions for ownership or interests or both Make sure all elements of exception are satisfied - go back to stark text |
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Important Stark exceptions
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Apply both to ownership and investment
1) physician services - in group practice - satisfy all prongs of group practice exception 2) in office ancillary services - tests are billable as in office ancillary satisfy all prongs - by some one in group - other physician or employee and in same building Academic Medical Center Exception - must be employees of the center must have faculty appt has to provide academis services compensation has to be set in advance and consistent with FMV Publicly traded Securities Ownership of mutual funds Ownership of hospitals in Puerto rico Rural provider ownership do not reside in Metro area Ownership in entire hospital and member of medical staff - controversial because of single specialty hospitals these not exempted Office space rental Bona Fide Employment - payroll where compensation is not determined on basis of volume or value of referrals Personal service Compensation set in advance per click prohibted Physican recruitment to hospital from outside of area and cannot make referals and remuneration must not reflect volume of referrals Isolated transaction - one time sale at fair market value Grandfathered arraignments Physician charitable Non monetary physician under $300 per annum Professional courtesy - pro court must be offered , to all physician in staff or area, routinely provif]ded, must be in writing and approved by governing body, not offered to Medicare members - medicaid unless financial need, 3rd parties must be informed of waivers of copay |
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FMV
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Arms length and cannot be adjusted to reflect proximity or location for lease
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designated health services
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a list of CPT codes - get CPT code and check in regs
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express certification
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certification that appears on the billing form
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when is a claim false
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Claim is false only if government would not pay if facts had been known
To satisfy FCA, must link alleged wrongful activity to decision to pay Must show claims with the potential to wrongfully induce government payment |
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is this an express cert case
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what type of provider and is the certification on the form submitted - the actual words that go to certification
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False express certification
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Express False Certification
VII-29: “a claim . . . is not legally false simply because the particular service furnished failed to comply with the mandates of a statute, regulation or contractual term that is only tangential to the service for which reimbursement is sought” “it does not encompass those instances of regulatory compliance that are irrelevant to the government’s disbursement decisions” |
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implied certification
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Implied False Certification
Recognizes implicit certification in limited circumstances Statute or regulation must expressly state need to comply to be paid |
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ultimate question of certification
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what ever is missing is that material to the govts decision to pay - if govt had known would they have refused to pay
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what about Scienter under knowing and willful standard
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Scientor:
More than mere innocent mistakes or negligence Reckless disregard must be of applicable regulations Attempt to contact HCFA undercuts inference of deliberate ignorance Disagreement of scope of physician involvement fails to be FCA Remedy: CMS can reduce reimbursement |
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weight of authority - does stark and antikick violation create a false claims case
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yes -
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First Question in any Certification Case:
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What has provider certified
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what are Sources of Certification:
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Provider Agreement (Hospitals, SNFs)
Supplier Agreement (DME Suppliers) Application for Supplier Number Cost Reports CMS 1450 Billing Form (Hospitals) CMS 1500 Billing Form (Part B Suppliers) |
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part A Certifications
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Claims for Part A reimbursement on UB-04/CMS 1450 form
In addition: File Cost Report Look to either form to find possible certifications Consider compliance with laws certification as hook to get to Kickbacks |
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what are part b certifications
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Some certifications in Medicare Enrollment Application for Supplier Number
Part B claims on CMS-1500 Certifications on back of form as set forth on II-38-40 Acceptance of assignment requirements Personally furnished or “incident to” Medically indicated and necessary |
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What did the defendants do in Mayers v. Dept. of HHS
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Mayers v. Dept. of HHS
• Behavior: using provider numbers of recruited foreign physicians to bill for non-covered chiropractic services • Challenge constitutionality of CMPA penalties – 307 false bills – 2702 items and services – $145,550 in reimbursement sought – $24,697.73 received – Assessment of $1,791,100 plus suspension for 25 |
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Mayers v. Dept. of HHS
• Is CMPA Criminal? |
Mayers v. Dept. of HHS
• Is CMPA Criminal? – Congress Designated as Civil – Civil MPA label of Congress determinative • Does magnitude of penalty negate label? – Court not persuaded that penalties excessive for Civil – Each false claim imposes immense toll on society – Analogous to Punitives in Tort; Treble damages, etc. |
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Mayers v. Dept. of HHS what kinds of penalties could be imposed
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Mayers v. Dept. of HHS
• Damages: 70 times greater than amount collected • Penalty result of applying fines to conduct • Aggravating circumstances • Can impose CMPA on negligent conduct without violating due process • Note: Current law could impose penalties of $10,000 per claim, plus treble damages – $27.5 Million possible penalty – Compared to $24,697.73 received in reimbursement – 1,112 times reimbursement |
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CMPA violate due process for mere negligent conduct?
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Can impose CMPA on negligent conduct without violating due process
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What violations did Mayers commit - Chiro
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US v. Mayers
• Appeal of Criminal false claims convictions • Double jeopardy theory • Chiropractor recruited foreign physicians • Used to bill for services not otherwise covered by Medicare when billed by Chiropractor • Paid large CMPA penalty in 2nd case |
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Mayer Particulars
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US v. Mayers
• Initial CMPA: claims against Medicare • Criminal action: comparable claims and theories regarding private insurance carriers • Not the same conduct • Fraud on IRS could not have been resolved in OIG action • No double jeopardy or violation of due process |
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Mackby fact pattern
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U.S. v. Mackby
• Owner of PT clinic used Father’s Provider number to bill • Use of physician number avoided Medicare Part B Cap on PT reimbursement • Services were provided • But: use of MD number caused reimbursement to be paid above cap • Every claim was equally false • But: focus of case was on those claims that exceeded the PT Cap |
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Mackby Theory and outcome
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U.S. v. Mackby
• Claims false by using M.D. Provider ID • False claims caused reimbursement to exceed cap for therapy • Mackby had sufficient knowledge – Actual Knowledge – Deliberate ignorance of the truth or falsity – Reckless disregard of the truth or falsity • District Court: Imposed total penalty of $729,454.92 – $5,000 civil penalty for each of 111 patients who exceeded the cap: $555,000 – Treble excess |
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Points about Mackby excessive fines
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U.S. v. Mackby
• Issue: Does Excessive Fines Clause Apply? – Payment constitutes punishment for offense – Payment is grossly disproportionate to the gravity of offense • Court: FCA civil sanctions are subject to analysis under Excessive Fines Clause because payments are in part punitive • Consider both $10,000 per claim and treble damages in analysis • Case remanded to District Court to apply Excessive Fines Analysis |
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Qui Tam penalties and relator shares
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Civil Penalties
• 3 times amount claimed • $5,500 to $11,000 per claim • Qui Tam Relator share – 15% to 25% if Govt. Intervenes – 25% to 30% if Govt. Does not Intervene |
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Qui Tam violations consist of
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Violations
• Knowingly presents False or Fraudulent Claim • Knowingly makes false record or statement to get false claim approved • Conspires to defraud • FCA theories have greatly expanded scope through express and implied certification theories • Effectively creates a private cause of action for Relators |
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key points of Knowing or Knowingly
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Knowing and Knowingly
• Actual Knowledge • Deliberate ignorance of the truth or falsity • Reckless disregard of the truth or falsity • Knowledge does not require specific knowledge of FCA law • Knowledge of facts/falsity is enough |
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stats for DOJ recoveries or Qui Tam actions
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DOJ Recoveries
• 2002: $1.2 Billion; $1.1 Billion from Whistleblowers • Relators received $160 Million • 1997: 533 qui tams; Now: in 300s/year • 4,000 qui tams filed since 1986; $6 Billion in recoveries • $5.9 Billion in suits pursued by DOJ; $260 Million in relator only suits • $4 Billion in Government initiated suits |
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doj 2022 actions revoeries via Qui Tam
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DOJ 2002 Recoveries
• $568 Million from TAP • $87.3 Million from PacifiCare • $76 Million from General American Life Insur. • $73.3 Million from State of Calif. & Co. of Los Angeles (Query: Vermont Natural Resources?) • $29 million from Lifemark Hospitals • $17 million from Tenet |
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what are qui tam provisions?
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Qui Tam Provisions
• Right to file complaint • 60 or more days for Govt to investigate and intervene • If govt. intervenes: relator along for the ride • Can attempt to participate in settlement discussions, etc. • Both Govt. and Defendant would prefer for relator to stay on sidelines If govt. does not intervene: much less success • Sometimes, relator drops lawsuit if govt. does not intervene • Recovery: 15%-25% in govt. intervenes; 25% to 30% of govt. does not intervene • Settlements with govt. usually do not include attorneys fees • Settle with govt.; separately settle with relator on fees |
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describe Stinson v Prudential
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U.S. ex rel Stinson v Prudential
• PI Attorney discovered insurance company failure to honor MSP obligations • Matter uncovered in discovery in PI case • Initial action against Provident • Commenced qui tam action in 1988 • Government did not intervene – Would have been a good case for Government Intervention • Stinson proceeded with action |
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Stinson Qui Tam Issues
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U.S. ex rel Stinson v Prudential
• Issue is whether Stinson precluded by jurisdictional bar from proceeding as relator • Jurisdictional bar does not preclude U.S. from proceeding with FCA action if it intervened – Query: could U.S. avoid relator’s share here if it intervened? – Government typically has not raised that as an issue – Government willing to provide 15% bounty, even in questionable cases • Jurisdictional bar does preclude action by relator where Government does not intervene |
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describe Stinson Judicial Bar
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U.S. ex rel Stinson v Prudential
• Jurisdictional Bar: – Action based on public disclosure – Relator not the original source • Here: Action based on information from discovery in unrelated case • Relator: Discovered information in that case and put pieces together |
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Stinson PUblic Disclosure
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U.S. ex rel Stinson v Prudential
• Public Disclosure: – Discovery in litigation historically filed with court – Here: local rule did not require filing – Civil Case covered by “Hearing”: Full range of proceedings – Information from discovery: potentially accessible to public – Local rule: did not need to file and did not file |
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Stinson Qui Tam Public Disclosure and original source
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U.S. ex rel Stinson v Prudential
• Public Disclosure – Decision based on theoretical accessibility of Discovery – Could have looked to actual disclosure – In any event: Critical discovery here was filed with court • Original Source: – Need direct and independent knowledge – Would not have learned other than public disclosure – Need substantive information of fraud |
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Was Stinson the original source
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Stinson not an Original Source:
– Information not a result of own independent investigation – Resulted from publicly disclosed discovery • Result: Stinson’s suit is completely barred • Note: U.S. Government could still proceed if it wanted to litigate |
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Cousens v Yale Qui Tam Fact Pattern
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U.S. ex rel Cousens v. Yale
• Cardiac device salesman filed qui tam March 31, 1994 • Some broad disclosure by Maier in 1991 communications to FI • Maier did not have specific information as to how hospitals billed • Maier did not have specific allegations of fraud • But: Maier disclosures did lead to Govt. Subpoena |
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Cousens Qui Tam Procedural points
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U.S. ex rel Cousens v. Yale
• Some indication that government shared some of subpoena responses with Cousens • Congressional Hearings on issue subsequently • Cousens initiated lawsuit in 1994 • Govt. filed notice of intent to intervene 8/02 (8 years later!) • Complaint still had not been served at time of Motion |
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Cousens Is motion pre-mature?
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17
• Is motion pre-mature? – Court decides issues ripe – Govt. Intervention would cure jurisdictional defect – But: potentially no jurisdiction over relator • |
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Cousens suit based on publicly disclosed infor?
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Is Cousens suit based on publicly disclosed infor?
– Analysis of Maier statements – Maier’s statements did not name names |
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COusens outcomes
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Maier did not implicate Yale by name
• Maier information led to subpoenas that led to explicit knowledge • Court holds at 12(b)(6) stage that Maier information not specific enough to be disclosure of allegations and transactions • Relator allowed to proceed on basis of no specific prior disclosure relating to Yale U |
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Responsibilities of Compliance Officer
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Responsibilities of Compliance Officer
• Establish Corporate Compliance Plan • Draft Guidelines, Policies and Procedures • Proactively identify Compliance Risks • Ensure that employees are trained • Arrange for audits • Investigate reports of potential violations • Identify and correct problematic behaviors • Determine when to report behaviors |
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Responsibilities of In-House Counsel
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Responsibilities of In-House Counsel
• Advise company on specific legal issues • Represent and defend company • Preserve attorney-client privilege • Company’s decision, not counsel’s, as to whether to waive attorney-client privilege • Different considerations relating to possible self-reporting – Privilege issues generally makes it the Company’s decision, not in-house counsel, whether to self report results of counsel investigation 3 |
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Relationship Between Compliance and General Counsel
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Relationship Between Compliance and General Counsel
• OIG prefers that Compliance Officer be separate and distinct from General Counsel • Difference in roles raise issues with too close of a relationship between Compliance Officer and General Counsel • In some organizations, GC is the Compliance Officer – Concerns over conflicts between roles – What hat is person wearing at any point in time – Are discussions with Compliance Officer Privileged? • Generally not 4 |
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Benefits of Compliance Program
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Benefits of Compliance Program
• Reduced likelihood of a violation • Detect violations before government • Reduced criminal fines and penalties • Reduced likelihood of civil liability • Reduced likelihood of personal management liability • Reduced likelihood of program exclusion |
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More Benfits of compliance program
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Reduced risk of qui tam actions
• Reduced likelihood of government imposed compliance plan – But: if a serious violation, OIG will still require a Corporate Integrity Agreement (“CIA”) • Possible attorney-client privilege benefits • Educate employees on need for compliance • Demonstrate corporate intent to comply |
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Elements of Compliance Program
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Elements of Compliance Program
• Written procedures and policies • Education and training programs • Designation of a compliance officer • Open communication • Auditing and monitoring • Internal investigation and enforcement • Correction of identified problems |
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What do written Policy and Proc accomplish
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Written Policies and Procedures
• Employee standards of conduct – Employee Handbook for all employees – Policies and Procedures for Specific Areas • Focus on specific areas of concern – Review OIG Guidelines for relevant industry segment – Many Handbooks and Policies are available on the Web • Educate and Inform Employees |
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Compliance Education and Training
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Education and Training
• Initial training for all employees and new employees • At least annual training for relevant employees • Focus on areas of concern for each employee • Marketing concerns • Coding Concerns • Billing Concerns • Other Reimbursement Concerns |
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Compliance Officer responsibility
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Compliance Officer
• Responsible for development and maintenance of Compliance Program • Should report to Board – Issues noted earlier if General Counsel or reporting to General Counsel • Need not be Full-time; will be in larger organizations • May have guidance of Compliance Committee • Ensure audits and responses to reports 10 |
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How to establish open communications
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Open Communications
• Hotline • Maintenance of anonymity • Log all calls • Log investigation and response • Provide code and time to call back • Ability to follow up with caller • Even if identity disclosed: no retaliation |
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Investigation and enforcement compliance points
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Investigation and Enforcement
• Documented follow-up of all reports • Consider retention of outside counsel for investigation • Be prepared to waive privilege • Interview memos • Document Review • Report of Outcome • Discipline of Responsible Parties |
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How to correct compliance breaches
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Correction of Problems
• Refunds to payers • Correction of system flaws • Possible self-reporting to OIG – Note: if subject to a CIA, reporting to OIG becomes mandatory • 60 days to report suspected violation – Not a legal obligation unless subject to CIA • But: some discretion to determine if likely “offense” • Consideration of intent |
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Describe OIG Compliance Guidelines
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OIG Compliance Guidelines
15 • OIG Compliance Guidelines for most segments of the healthcare industry • Guidelines – Reinforce the elements of a compliance program – Identifies key compliance concerns identified by OIG • Always a useful starting point • Checklist to evaluate completeness and comprehensiveness of any Compliance Plan |
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Describe OIG Laboratory Compliance Plan
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Laboratory Compliance Plan
• First guidelines published by OIG • Reflected laboratory prosecutions in the 1990s • Some of billing risk areas have now been superseded by reimbursement changes • OIG view: wrong to exploit reimbursement system • Focuses on issues that separately had been identified by OIG 16 |
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describe Laboratory: Standards of Conduct
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Laboratory: Standards of Conduct
• A compliance policy should clearly direct employees to avoid: – False claims – Financial incentives for referrals – Stark bill violations |
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Laboratory: Medical Necessity describe as per Compliance issues
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Laboratory: Medical Necessity
• Puts onus on laboratory to police medical necessity – Not the physicians who in fact order the tests • Submit claims only for services that are medically necessary • Educate medical staff about areas where unnecessary services are being ordered • Notify physician’s ordering unnecessary services of their error and attempt to correct • Does requisition process encourage unnecessary tests? |
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Laboratory: Medical Necessity
10% |
LLaboratory: Medical Necessity
• Permit a la carte ordering • Require diagnosis codes with order • Reminder to only order necessary tests • List of codes used and charges • Physician acknowledgement of customized profiles • Track top 30 tests • Investigate growth over 10% • Permit a la carte ordering • Require diagnosis codes with order • Reminder to only order necessary tests • List of codes used and charges • Physician acknowledgement of customized profiles • Track top 30 tests • Investigate growth over 10% Puts burden on entity that bills for tests, not on ordering physician • Mechanism to make labs police the ordering practices of ordering physicians • Difficulty of telling customer not to order |
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Laboratory: Billing rules
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Laboratory: Billing
• Proper CPT coding • Bill only for ordered and performed • Don’t bill for more tests than ordered • Don’t bill for calculations and tests 21 |
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Laboratory: Accuracy of ICD-9 Codes
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Laboratory: Accuracy of ICD-9 Codes
• When submitting diagnostic information, laboratory should not: – Use diagnostic information from specimens – Use “cheat sheets” with information that has triggered past reimbursement – Use computer programs that automatically insert medical necessity information – Make up medical necessity information |
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Laboratory: Other issues
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Laboratory: Other issues
• Minimize standing orders • verify orders at least annually • Comply with Fraud Alerts • Charge non-Medicare for full profile provided |
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Laboratory: Compliance With Fraud Alerts
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Laboratory: Compliance With Fraud Alerts
• Review all fraud alerts issued by the OIG • Cease and correct any conduct declared unlawful in such a fraud alert • Appropriately investigate, report, and correct identified problems |
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Laboratory: Marketing
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Laboratory: Marketing
• Encourage honest, fully informative and non-deceptive marketing. • Describe services offered by the practice • Describe services provided when special stains or procedures are ordered • Describe cost of special procedures • Avoid financial incentives or inducements 25 |
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Laboratory: Enhanced Services
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Laboratory: Enhanced Services
• Compliance policies should ensure the practice appropriately bills for enhanced services • Watch out for the offering of enhanced services as an inducement for Medicare services |
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Laboratory: Courtesy Services
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Laboratory: Courtesy Services
• Special concern should be given to courtesy discounts: – Longstanding policy of “professional courtesy” to physicians – Courtesy discount can be viewed as an inducement in return for referrals – Do not misrepresent discount if seeking reimbursement from a third party payer – Guidelines do not give complete consideration of Stark implications of Professional Courtesy 27 |
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Laboratory: Compliance as Performance Issue
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Laboratory: Compliance as Performance Issue
• Use compliance in employee evaluations • Evaluate managers on subordinate compliance • Compliance as Condition of Employment • Discipline non-Compliance |
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Hospital Compliance Programs
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Hospital Compliance Programs
• Demonstrate commitment to compliance • Prevent criminal and unethical conduct • Improve quality of care • Encourage reporting of violations • Initiate corrective action • Minimize program loss to false claims Tailor to unique circumstances: large, small, rural, urban, teaching • Same 7 components in same order as Lab • Standards emphasize commitment to compliance |
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Hospital: Risk Areas
• |
Hospital: Risk Areas
• Billing for services not provided • Providing medically unnecessary services • Upcoding • DRG Creep • Billing for O/P testing w/i 72 hrs. • PATH issues • Duplicate billing • False Cost Reports • Unbundling Billing for discharge and not transfer • Patient choice for discharge planning • Credit balances • Financial Incentives • Joint Ventures • Financial arrangements with HBPs • Stark violations • Failure to provide necessary care to MCOs • Patient Dumping |
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Hospital: Claims Development Issues
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Hospital: Claims Development Issues
• Document professional services prior to billing • Documentation should support each claim • Legible and auditable medical records – “if it is not documented, it was not done” – May, however, be some ability to establish that services were performed even in face of deficient records Diagnosis and procedures on claim supported by medical record • Billers and consultants should not have financial incentives tied to reimbursement |
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Hospital: Medically Necessary Claims
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Hospital: Medically Necessary Claims
• Bill only after procedure performed • Bill only for services that are medically necessary • Bill only for procedures that have been properly ordered • Ensure CPT codes used accurately describe service performed • Diagnostic information provided by ordering physician |
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ospital: PATH Issues
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H
• Hospitals should bill only for services actually provided • Academic Medical Center should bill only for services of supervising physician that were actually provided • Ensure supervisory physician services provided • Physicians document personal presence and involvement • Document physician presence and participation in key elements of service |
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Hospital: Cost Reports
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Hospital: Cost Reports
• Accurate documentation of costs • Accurate allocation of costs • Unallowable costs not claimed • Follow past FI cost report adjustments or report as disputed items others • Identify related parties • Bad debts in accordance with CMS Policies • Home office cost reports |
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Hospital: Kickback and Self Referral Concerns
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Hospital: Kickback and Self Referral Concerns
• Scrutinize arrangements with referral sources • Avoid financial inducements with referral sources • Terms of hospital-based physician arrangement |
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Compliance Officer Responsibilities
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Compliance Officer Responsibilities
• Oversee program • Report to Board • Update and revise program • Multifaceted education and training • Educate Independent Contractors • Coordinate with HR • Financial Compliance reviews • Investigate all reports |
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Compliance Officer attributes and responsibilities
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Compliance Officer
• High Level Official • Reports to CEO and Board • Works With Compliance Committee • Implements Compliance Committee • Revises Compliance Program • Educational and Training Programs Develops Policies and Procedures • Oversees and Monitors Compliance Activities • Coordinates Internal Reviews and Audits • Encourages Employees to Report Problems • Reviews All Aspects of Operations 41 |
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Compliance Officer Expertise:
• |
Compliance Officer Expertise:
• Coding • Billing • Fraud and Abuse • Stark law • Related regulatory issues impacting the hospital • Privacy 42 |
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Compliance Committee
• |
Compliance Committee
• Analyzes Industry Environment • Assesses Policies and Procedures • Assists in Development of Policies • Assists in Development of Code of Conduct • Assists in Development of Internal Controls • Assists in Development of Mechanism to Resolve Problems |
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Employee Education and Training
should address |
Employee Education and Training
• Emphasize Commitment to Compliance • Reimbursement Requirements • Incident to requirements • Alterations to medical records • Proper documentation • Fraud and Abuse • Duty to Report • Training Need not be Excessive, but Comprehensive |
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New Employee Requirements
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New Employee Requirements
• Prudent Background Investigation • Reference Checks • Avoid Sanctioned Individual |
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Compliance as an Element of a Performance Evaluations
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Compliance as an Element of a Performance Evaluations
• Discuss Compliance in Reviews • Compliance as Condition of Employment • Disciplinary Action for Violations |
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Open Communication
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Open Communication
• Compliance Officer must be accessible to all employees • Confidentiality and Non-Retaliation Policies • Procedure to Consult with Compliance Officer • Hotlin |
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Disciplinary Requirements
• |
Disciplinary Requirements
• Written Policy of Disciplinary Actions – Oral or Written Warnings – Privilege Revocation – Financial Penalties – Termination |
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Auditing and Monitoring
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Auditing and Monitoring
• Develop Appropriate Sampling Protocols • Maintenance of Audit Records • Site Visits and Interviews • Questionnaires • Review of Records and Charts • Review Documentation • Reviewers independent of Mgmt and MDs |
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Auditing and Monitoring
• A compliance program should includ |
Auditing and Monitoring
• A compliance program should include regular, periodic audits of operations: – coding – billing – reporting – record keeping – sales and marketing – notices and disclosures to physicians 50 |
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Responding to Complaints
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Responding to Complaints
• Prompt Investigation • Identify and Correct Problem • Return Overpayments |
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Internal Investigation and Enforcement
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Internal Investigation and Enforcement
• Compliance programs should require that potential problems be promptly investigated to determine whether a violation has occurred • Investigations include: – employee interviews – review of relevant documents |
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Disciplinary Action
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Disciplinary Action
• A compliance program must include written policies and procedures setting forth disciplinary actions that will be imposed on employees who fail to comply with the policies and/or the law 53 |
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Employee Discipline
• Compliance Officer Should Document |
Employee Discipline
• Compliance Officer Should Document Employee Discipline • Discipline can include: – Written Sanctions – Financial Penalties – Termination |
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Government Reporting compliance issues
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Report Criminal or Civil Violations in 60 Days
– Note: There is no Law that mandates this – But: failure to report will be taken as evidence of an ineffective Compliance Plan • Provide All Evidence to Government • Estimate Cost Impact |
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Retention of Records
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Retention of Records
• All records required by federal or state law or the compliance plan should be maintained. • Records to be maintained include: – patient records – reports documenting compliance activities |
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OIG compliance guidelines for Small Physician Practices
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Small Physician Practices
• Softer approach than prior guidelines • Responds to criticisms of AMA that OIG was picking on physicians • Re-orders 7 elements • Reordering has significance in identifying what OIG really wants • Much more deferential tone than other guidelines 2 |
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Elements for Small Practice compliance
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•
Re-orders elements and prioritizes: – Auditing and Monitoring (5) – Written Standards and Procedures (1) – Compliance Officer (3) – Training and Education (2) – Investigation and Reporting (6) – Open Lines of Communication (4) – Enforcing Disciplinary Standards (7) • Concern over getting compliance help from hospitals (Kickback) |
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What should small practice complaince audit incude?
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Physicians: Auditing
• OIG Guidelines for what to Audit: – Practice Standards and Procedures – Accurate Coding – Full Documentation in Records – All services reasonable and medically necessary – Identify if any incentives for unnecessary services – Baseline audit – Annual re-audits – 5-10 claims/Payer/Physician – Refund and Investigate |
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Physicians: Compliance Standards & Procedures
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Physicians: Standards & Procedures
• Billing for services not rendered • Billing for not reasonable and necessary • Double Billing • Billing for non-covered • Misuse of Provider ID No. • Unbundling • Failure to use coding modifiers • Blanket use of mid-range E&M codes • Upcoding Physicians: Standards & Procedures • Can bill for denial with full disclosure • Legible documentation • History, Evaluation, Examination, etc. • CPT & ICD-9 Supported by documentation • CMS 1500 – Link diagnosis to service – Modifiers – Full COB information re other payers Arrangements with hospitals, hospices, Nursing facilities, HHAs, DMEs, Pharma Cos. • All Financial Arrangements with referral sources • JVs • Consulting or Medical Director Contracts • Leases • Gratuities • Maintenance of records |
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Physicians: Compliance Officer Responsibilities
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Physicians: Compliance Officer
• Several members of practice can share role • One Compliance Officer for several entities • Responsible for: – Audits – Policies – Training – Checking for Exclusions – Investigations |
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Physicians: Compliance Training & Education
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Physicians: Training & Education
• Determine who needs training • General Compliance Training • Coding & Billing • Initial Training and at least Annual Refresher 9 |
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Physicians: Compliance Communication
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Physicians: Communication
• Means for any employee to report concerns • Suggestion box/other means • Failure to report violation • Protect anonymity • No retribution for anyone reporting any concerns |
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Physicians: Compliance Discipline
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•
Punishments up to termination • Consider aggravating and mitigating circumstances • Warnings/Reprimands |
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Physician Compliance Risk Areas
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•
Follow LMRP • Use ABNs/Comply with ABN Requirements • CMNs for DME and HHA Services • Billing for non-covered services as if covered – Indicate on Claim submitted for denial – If paid when not covered: Refund Payment • EMTALA Compliance • PATH Compliance • Gainsharing Compliance Billing – Refund Excess Charges – Professional Courtesy • Rental of Space by recipients of referrals • Advertising approved by Medicare 15 |
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Pharmaceutical Co. Compliance
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Pharmaceutical Co. Compliance
• Integrity of Pricing Information – AMP & BP for Medicaid Rebates – Consider all discounts; free goods contingent on purchase of goods; rebates, coupons – Grants – Other benefits conditioned on purchases • Kickbacks or Financial Inducements – Does arrangement interfere with clinical integrity? – Increase costs to Govt. Programs? – Potential to increase utilization? – Patient safety or quality concerns? |
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Pharmaceutical Co. Compliance
• Risk Areas |
Pharmaceutical Co. Compliance
• Risk Areas – Hide de factoprice concessions – Offering services of benefit to purchasers – Educational Grants for Marketing Reasons – Research payments tied to utilization – Any financial benefit linked to purchases Risk Areas – Formulary Support Activities • Financial arrangements with Formulary Cmtes • Service and other pmts. To PBMs • Formulary placement payments • Manipulating AWP/acquisition cost “spread” Risk Areas – Physician relationships • Gifts • Entertainment • Personal Service Compensation Arrangements • Expense relief • Urge Safe Harbor Structure • If not: review all aspects of relationship Risk Areas – “Switching” Arrangements • Cash payments for prescription changes – Consulting and Advisory Payments – Payments for Detailing – Business Courtesies and Gratuities – Educational and Research Funding Risk Areas – Compensation arrangements and Compliance Focus with Sales Agents – Drug Samples/PDMA 22 |
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OIG Corporate Integrity Agmts
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OIG Corporate Integrity Agmts
• Promptly notify Payers of Overpayments • Report to OIG aggregate of overpayments • Engagement of Independent Review Organ. • Report all material violations of CIA • Audit: Use of Discovery Sample of 50 • If 5% financial error rate: Full Sample • Full report to OIG of IRO Audit • Full description of audit CIA Audit Guidelines useful for any Compliance Program – OIG will expect same standards in any Compliance Program – Essence of Program: • Statistical Probe or Discovery Sample • If < 5% error rate: refund what you found • If > 5% error rate: use error rate to determine larger sample size • Review larger universe and determine expected overpayment with a 90% Confidence and 25% Precision Guidelines for Compliance Officer audits • Include Systems Review • OIG Site Visits • Obligations when Contractor Suspended by GSA – Arthur Anderson |
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OIG Corporate Integrity Agmts
• Suspended Provider |
OIG Corporate Integrity Agmts
• Suspended Provider – May continue using IRO – Can’t renew IRO – Can’t charge any IRO costs to government 25 |
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OIG CIA Checklist
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OIG CIA Checklist
• Compliance Officer • Compliance Committee • Code of Conduct Certifications • Policies and Procedures Certifications • Certification of Training • All Review/Audit Reports • Aggregate Overpayments • Certification of Confidential Disclosure Program • Verification of no ineligible employees • Notification of Govt. Investigations • Summary of Material Deficiencies |
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Sulzbach FCA Complaint
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Sulzbach FCA Complaint
• Government has been going after attorneys more aggressively • Recall the Kansas City case (LaHue) where both in-house and law firm counsel were indicted and tried • That case highlights ethical risks for counsel – Need to give advice that comports with the law – If client chooses to ignore advice, document that advice was not followed – Concerns over giving overly aggressive advice Sulzbach wore two hats – General Counsel – Compliance Officer • Complaint highlights risk associated with same person serving as both GC and Compliance Officer • Complaint focuses on Sulzbach’s role as Compliance Officer |
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Sulzbach FCA Complaint
• Background: |
Sulzbach FCA Complaint
• Background: – Tenet had a long history of compliance issues, investigations, and large settlements – As a result of prior settlements, Tenet was subject to a CIA – CIA’s impose additional requirements on Compliance Officer • Legal responsibility to audit • Legal obligation to report suspected or likely violations • Certifications signed by Compliance Officer 29 |
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Sulzbach FCA Complaint
• Potential Stark Violation Issues: |
Sulzbach FCA Complaint
• Potential Stark Violation Issues: – One of Tenet’s hospitals employed a number of physicians – Ten of physician employment arrangements were called into question • Base salary substantially in excess of what each physician had earned in private practice • Hospital was losing money on the purchased practices • Income paid to physicians exceeded objective MGMA benchmarks • Evidence that financial considerations from referral changes made arrangements more attractive to Hospital • Evidence of material changes in referral patterns as a result of arrangement 30 |
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Sulzbach FCA Complaint
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Sulzbach FCA Complaint
• Sulzbach retained law firm to investigate • Law firm concluded that arrangements were problematic • Sulzbach did not disclose violations to OIG under CIA and certified that report was accurate • Reports of outside law firm were not disclosed to OIG for a number of years on basis of privilege • Ultimately, Tenet agreed to waive privilege in connection with a near $ Billion Settlement Complaint charges Sulzbach with FCA violations – Potential damages: $54 Million plus at least $5,000 for each of 70,000 payments – Likely exclusion from all governmental programs • What should Sulzbach have done? – When she received initial report from outside counsel? – When she certified Compliance Report? • Complaint ultimately was dismissed on Statute of Limitations grounds |
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Stevens Indictment
• |
Stevens Indictment
• Vice President and General Counsel of Pharma Co. • 2002: FDA commenced investigation of Co. for Off-Label Promotion • FDA sought information on Presentations by Physician speakers between 1/1/2001-10/9/2002 • Co. gathered presentations of speakers and found a number contained materials relating to uses of drug not currently approved by FDA Stevens responses to FDA allegedly contained materially false statements and concealed some documents • Stevens allegedly withheld documents that showed off-label discussions in Physician Presentations • Told FDA that Co. did not engage in off-label promotion when she knew of presentations by 28 physicians that discussed off-label uses • Told FDA that Co. had not developed any programs promoting off-label Stevens knew at time of response that Co. had paid numerous physicians in 2001-2002 to give promotional talks that included slide presentations discussing off-label uses • Stevens discussed production with several lawyers, including outside law firms assisting in the production • Memo from other attorneys analyzing pros and cons of disclosure of information regarding off-label activities Stevens determined not to produce any of the Presentations with off-label content to FDA • In 2003, Stevens learned that an employee had reported off-label content and provided some of the information to FDA • FDA appears to be holding Stevens accountable for withholding content of physician presentations (perhaps on theory that physician off-label content was not controlled by Co. |
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Stevens Indictment
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Stevens Indictment
• Indictment charges: – Obstruction of official FDA proceeding by making false and misleading statements to FDA and withholding documents (18 USC 1512 and 18 USC 2) – Knowingly concealed, covered up and falsified records and documents to impede FDA investigation (18 USC 1519 and 18 USC 2) – Multiple counts of knowingly making materially false, fictitious and fraudulent statements and representations (18 USC 1001 and 18 USC 2 |
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Stevens Indictment
• Indictment charges: |
Stevens Indictment
• Indictment charges: – Obstruction of official FDA proceeding by making false and misleading statements to FDA and withholding documents (18 USC 1512 and 18 USC 2) – Knowingly concealed, covered up and falsified records and documents to impede FDA investigation (18 USC 1519 and 18 USC 2) – Multiple counts of knowingly making materially false, fictitious and fraudulent statements and representations (18 USC 1001 and 18 USC 2 |
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Ethics Lessons for Healthcare Attorneys
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Ethics Lessons for Healthcare Attorneys
• Responsibilities of General Counsel and Corporate Compliance Officer are very different • Keep in mind different roles of Compliance Officer and General Counsel • While Corporate Compliance Officer can be an attorney, should be separate from Office of General Counsel • Both Counsel and Compliance Officer should make it their goal that client is compliant with applicable law |
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Ethics Lessons for Healthcare Attorneys 2
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In either GC or Compliance Role, do not let diligence in protecting client cause you to violate any legal obligation
• General Counsel issues: – Need to preserve attorney-client privilege, unless waived by client – Privilege extends even to knowledge of criminal violations – Do not confuse privilege with immunizing legal advice that you may give to a client – Counsel is potentially on the hook for legal advice to violate any applicable law 39 |
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Ethics Lessons for Healthcare Attorneys
• Compliance Officer Issues |
Ethics Lessons for Healthcare Attorneys
• Compliance Officer Issues – Generally is not viewed as an attorney in that role, so communications not likely privileged – If under a CIA, an affirmative legal obligation to disclose violations – Any certification signed by anyone (GC, Compliance Officer, etc.) subjects the signer to FCA exposure if certification is false – Potential criminal exposure for False Statements in Criminal Investigation 40 |
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42 U.S.C. § 1320a-7b(b)(2)(A)?
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A defendant violates the Act when he knowingly and willfully offers or pays any remuneration . . . to any person to induce such person . . . 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 . . . . 42 U.S.C. § 1320a-7b(b)(2)(A).
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Willfully in McClatchey
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in order to act willfully as I have defined that term, a person must specifically intend to do something the law forbids, purposely intending to violate the law.
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What are the three evidences of McClatchey’s intent to violate the Act?
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First, well before entering into the 1993 contract, McClatchey knew the LaHues had not performed substantial services required under the prior contracts. The LaHues themselves reported that fact to McClatchey and McGrath in late 1991 or early 1992, and McGrath's subsequent investigation revealed the LaHues were only reporting two hours per week of work at Baptist.
Second, McClatchey knew that certain Baptist staff members were not even interested in having the LaHues perform some of these services. McGrath reported to McClatchey that the medical director of the Family Care Residency Program did not want the LaHues teaching residents and that the director of Social Services did not want the LaHues to make nursing home referrals to Baptist patients because her practice had always been to provide families the names of three doctors who could make such referrals. Third, McClatchey understood how important the LaHues' patient referrals were to Baptist's financial health. Eckard even testified that McClatchey placed "substantial emphasis" on Eckard's ability to maximize admissions and profitable outpatient visits to Baptist from BVMG business. Based on this knowledge, a reasonable jury could infer that McClatchey's very reason for negotiating a new contract |
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Can a defendant be convicted because they hoped, expected or believed referrals might ensue from remuneration designed for other purposes?
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A defendant cannot be convicted merely because they hoped or expected or believed that referrals may ensue from remuneration that was designed wholly for other purposes.
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Does oral encouragement to refer patients violate the Act?
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mere oral encouragement to refer patients or the mere creation of an attractive place to which patients can be referred does not violate the law. There must be an offer or payment of remuneration to induce
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A unique argument set forth by the Lahues concerning Constitutionality of the one purpose rule was?
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defendants argued the "one purpose" standard renders the Act unconstitutionally vague by vesting undue discretion in "government officials to decide what is legal and what is illegal."
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On what grounds did the LaHue Court adopt the one purpose test?
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Stare Decisis from McClatchey and "Under settled law, a broadly worded statute can be sufficiently clarified by a narrowing, authoritative interpretation to fend off a vagueness challenge." Dirks v. SEC, 802 F.2d 1468, 1471 (D.C. Cir. 1986).
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When may facial unconstitutionality be raised?
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Facial challenges are permitted when the statute "threaten[s] to chill constitutionally protected conduct" and "in some instances ... on pre-enforcement review." United States v. Gaudreau, 860 F.2d 357, 360-61 (10th Cir. 1988). at 360-61.
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When are discounts legal?
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a discount or other reduction in price obtained by a provider of services or other entity under a Federal health care program if the reduction in price is properly disclosed and appropriately reflected in the costs claimed or charges made by the provider or entity under a Federal health care program;
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In Shaw – what did the government contend about the discount exception?
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the government says that the "discount exception" is an affirmative defense that must be raised and proved at trial and is therefore not an essential element of the crime the facts of which need to be alleged in the indictment.
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What were the ten safe harbors?
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42 C.F.R. § 1001.952. Those ten safe-harbor provisions included business arrangements concerning investment interests, space rental, equipment rental, referral services, warranties, employees, group purchasing organizations, the sale of practices, and discounts.
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what is a carve out
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the statute partially withdraws from that declaration, or "carves-out" an exception to that declaration by granting certain "discounts or other reductions in price" that define a kind of immunity from criminal liability under the statute ("Paragraphs (1) and (2) shall not apply to - (A) a discount or other reduction in price...").
Thus, the "discount exception" carves out a specific kind of remuneration from the universe of the potentially "illegal remuneration" that the statute circumscribes. This means that labeling the transaction a "discount" does not save the activity from prosecutorial scrutiny because a discount is a kind of remuneration. It means also that for a defendant to be found criminally liable for offering or soliciting illegal remunerations, all the elements of the crime as stated in paragraphs (1) and (2) of § 1320a-7b(b), including the mens rea element, must be found beyond reasonable doubt. [Citation Omitted.] In other words, the fundamental analysis required of a trier of fact is "to recognize that the substance rather than simply the form of the transaction should be controlling." [Citation Omitted.] |
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What key thing must happen to make discounts a viable safe Harbor?
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For these competitively low prices (in the form of discounts or "other reductions") to be exempt from criminal liability, however, they must enure to the benefit of Medicare and Medicaid and of their beneficiaries. Thus, one essential component of this exception is that the federal or state health program share in and benefit from the reduced cost of the services or goods that are being provided at a discount or other reduced price. [Citation Omitted.]
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Are rebates per se illegal?
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It is not the case, as the government argues, that any rebate is per se illegal remuneration. Nor is it the case, as defense argues, that any discount, "properly disclosed and appropriately reflected", is exempt from criminal liability. What makes the activity illegal is not the label someone attaches to the form of the transaction, even if the form may give rise to the rebuttable inference of illegality.
The reason behind the transaction and the requisite state of mind underlying the criminal act are more significant than form and label. |
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What did the 1991 OIG rule about discounts say discounts are?
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in 1991, the OIG clarified what kinds of discounts would be within safe harbors under its rules. Those clarifications included the following. Discounts were only transactions made
1)on an arms length basis and 2) not through a joint-venture or collusive contract. [Citation Omitted.] A discount was not a gift of free "bundled goods," those goods that were closely related to the purchased goods, such as free "surgical packs." [Citation Omitted.] Discounts included rebate checks, redeemable coupons and credits subject to certain conditions, one of which is that the reductions in prices are attributable to the original good or service that was purchased or furnished. [Citation Omitted.] A discount could be an end-of-the-year payment made on the basis of charges or acquisition costs, but only for cost-report providers, and only under certain conditions. [Citation Omitted.] |
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OIG said in 1994 about discounts
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In 1994, the OIG issued further clarifications of its 1991 final rules. [Citation Omitted.] Those clarifications included a new paragraph on the scope of the discount safe harbor, saying that
for the purposes of this regulation, a 'rebate' is any discount which is not given at the time of sale. Consequently, a rebate transaction may be covered within the safe harbor if it involves a buyer under § 1001.952(h)(1)(i) or (h)(1)(ii), but it is not covered if it involves a buyer under § 1011.952(h)(1)(iii) because under that provision, all discounts must be given at the time of sale. |
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In 1991 OIG further defined rebates as
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The term "rebate" was expanded, however, to include "any discount the terms of which are fixed at the time of sale of the good or service and disclosed to the buyer, but which is not received at the time of the sale of the good or service," a modification that enabled the OIG "to extend safe harbor protection to certain charge-based buyers and buyers reimbursed on the basis of fee schedules who obtain rebates."
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Shaw court concluded about rebates-discounts
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In sum, for the purposes of interpreting the "discount exception" (paragraph (A) of § 1320a-7b(b)(3) of the anti-kickback statute, as opposed to paragraph (E), the safe-harbor regulations), a rebate is a kind of discount, as well as a kind of reduction in price. Both can be a form of remuneration that if offered or received with the requisite mens rea, might be considered "illegal remuneration" under the statute, and thus cannot be barred entirely from consideration under the "discount exception."
(b) "properly disclosed and appropriately reflected" (i) The Parties' Arguments Any "discount or other reduction in price" must be "properly disclosed and appropriately reflected" in order to qualify for immunity from criminal liability under the exemption. |
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What section governs giving pharmaceutical samples?
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Section 353(c) provided that no person may sell, purchase or trade or offer to sell, purchase or trade any drug sample. Section 353(c) applied to samples of a drug which was intended for human use but, because of it’s toxicity, potential for harmful effect and method of use, and the collateral measure necessary for use, was not safe for use except under the supervision of a practitioner licensed by law to administer such drug and with written prescription of such practitioner. Section 353(c)(1) further provided that a sample of such a drug was a unit of drug not intended to be sold but intended to promote the sale of the drug. The drugs Lupron and Zoladex were drugs subject to the requirements of Section 353(c)(1) and the free samples of the drug Lupron provided to physicians by TAP sales representatives, as set forth in this Indictment, were drug samples within the meaning of Section 353(c)(1).
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Prescription Drug Marketing Act provided in part as follows:
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Title 21 United States Code section 331(t) prohibited the sale, purchase and trade, and the offer to sell, purchase and trade, drug samples in violation of section 353(c) of that Act. Section 331(t) also prohibited causing such conduct.
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What does a doc have to do to get samples
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Section 353(c)(3) permitted a manufacturer of a drug to distribute samples of the drug through its sales representatives but only if a practitioner licensed to prescribe the drug made a written request for such samples, which request contained at least the following: the name, address and professional designation of the practitioner, the identity and quantity of the drug requested, the name of the manufacturer of the drug, the date of the request, and the practitioner’s signature.
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What does Title 42 U.S.C. section 1396r-8 require?
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Title 42 U.S.C. section 1396r-8 required that in order for a manufacturer of a drug to receive payment from the various State Medicaid programs for prescription of its drug to Medicaid program beneficiaries, the manufacturer had to enter into a rebate agreement with the Secretary of Health and Human Services.
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What does the pharmaceutical rebate agreement governed by Title 42 U.S.C. section 1396r-8 do?
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In such a rebate agreement, the manufacturer had to promise to sell its drug to the Medicaid programs at its best price. That section further defined best price as “the lowest price available from the manufacturer during the rebate period to any wholesaler, retailer, provider, health maintenance organization, nonprofit entity or governmental entity.” The section also provided that “best price” includes “cash discounts, free goods that are contingent on any purchase requirement, volume discounts and rebates” and does not include “prices that are merely nominal in amount.”
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What were the three possible ways you could find defendants in this case guilty of a violation involving the anti-kickback statute?
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The first is through a direct violation of Title 42 United States Code § 1320a-7b(b) (2) (B) -- what we call a substantive violation -- as charged in the three counts, Counts 2, 3 and 4, before you against Ms. Jokiaho individually.
The second way charged also deals specifically with Ms. Jokiaho in Counts 2, 3 and 4 in the alternative as what we call an aider and abettor through violation of Title 18 united States Code § 2. The third way the government chooses to charge a criminal violation involving the anti-kickback statute is against all defendants through what is called a conspiracy charge, essentially an agreement, as I will explain more fully, between two or more people to violate the anti-kickback statute, through violation of the general conspiracy statute, Title 18 United States Code §37l. |
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In TAP what did the court outline as the basic elements of ANTI-KICKBACK STATUTE
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Basic Elements
First, that the defendant offer or pay remuneration to any person. Second, that one purpose of that remuneration offered or paid was to induce orders or purchases or arrangements or recommendations for ordering or purchasing the drugs Lupron or Prevacid. Third, that the drugs were paid for, in whole or in part, by a federal health care program, specifically the Medicare and Medicaid programs. Fourth, that the defendant acted knowingly, willfully and intentionally |
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Tap language about remuneration
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You will understand that payment from the federal health care program is not itself "remuneration" within the meaning of the anti-kickback statute. That would be circular. Of course, a provider of medical service can be paid for drugs and related services, if they are proper for payment under a federal health care program. And so I instruct you as a matter of law that any monies paid by the Medicare program or Medicaid program to physicians as reimbursement for Lupron or Prevacid do not constitute remuneration offered or paid indirectly by TAP or any of the defendants before you.
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services of an agent, such as a doctor acting as a consultant, provided that the following conditions are met:
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First, the agreement must be set out in writing and signed by the parties.
Second, the agreement must cover all of the services the agent provides to the principal. That is, the services have to be subject to that writing for the term of the agreement and the agreement must completely specify the services to be provided by the agent. Third, if the agreement contemplates sporadic or part-time services by the agent, the agreement must specify the exact schedule or length of and charge for such services. It cannot be open ended as to these elements. Fourth, the term of the agreement cannot be for more than a year. |
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End of year discounts are allowed under what four conditions?
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Calculated on only purchases in last year, 2 must claim benefit in same yea discount was earned, 3 must fully and accurately report to Secretary, and 4 must supply documentation on request by Secretary and/or state agency
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What is the fundamental test for complying with discount reporting requirements?
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A notation that the actual purchase price is net discount
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Clean analysis approaches each defendant how?
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I think your analysis would be a little cleaner if you focused more on the inducement factor, from the eyes of each defendant.
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Conditions for safe harbor for purchase of doctor practice
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One safe harbor only applies to the acquisition of a practice by another physician. It does not apply to the acquisition of a practice by a hospital or integrated delivery system. In order to satisfy this safe harbor, the following conditions must be satisfied:
1. The period from the date of the first agreement to the completion of the sale must not exceed one year; and 2. The selling practitioner must not be in a position to influence referrals to the practice more than one year after the initial sale agreement. |
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Safe harbor for sale of doctor practice to hospital?
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for the acquisition of a practice by a hospital. To satisfy this safe harbor, the practice must be located in a Health Practitioner Shortage.
This safe harbor protects the buy and “hold” practice utilized by many rural hospitals. To be covered under this safe harbor, the practice must be located in a HPSA for the practitioner’s specialty area. As of the date of the first agreement pertaining to the sale, the hospital must diligently and in good faith engage in commercially reasonable recruitment activities that may reasonably be expected to recruit a new practitioner to take over the acquired practice within one year and the sale must actually be completed within three years of the date of the first agreement pertaining to the sale. Following the sale, the practitioner cannot be in a position to make or influence referrals or otherwise generate Federal health care program business for the purchasing entity. |
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What are four categories of ASCs that are eligible for the safe harbor
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(1) Surgeon-Owned ASCs.
All investors in a surgeon-owned ASC must be general surgeons, surgeons engaged in the same surgical specialty, surgical group practices or unrelated persons. In addition, one-third of each surgeon investor’s medical practice income from all sources for the prior year must be derived from the surgeon’s performance of procedures at the ASC. (2) Single-Specialty ASCs. All investors must be physicians engaged in the same medical practice specialty, group practices composed exclusively of such physicians, or unrelated persons. Each physician investor must also satisfy the one-third medical practice income standard. (3) Multi-Specialty ASCs. All investors must be physicians who fall into the eligible class of physicians for surgeon-owned ASCs and single specialty ASCs, group practices composed exclusively of such physicians, or unrelated persons. In addition to satisfying the medical practice income standard for the prior year, each physician investor must have performed at least one-third of his or her ASC procedures in the prior year at the investment ASC. (4) Hospital/Physician ASCs. All investors must be at least one hospital and (i) physicians who satisfy the requirements for a surgeon-owned ASC, single-specialty ASC, or multi-specialty ASC; (ii) groups practices composed exclusively of such physicians; or (iii) unrelated persons. The ASC may not use hospital space, hospital equipment, or hospital services, unless each such item or service is provided pursuant to an agreement satisfying the applicable safe harbor for space rental, equipment rental, or personal services and management contracts. The hospital may not include any costs attributable to the ASC on its cost reports nor make any claim for payment from a Federal healthcare program. Most notably, the hospital may not be in a position to make or influence referrals directly or indirectly to any investor or ASC. |
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What list of requirements are common to all ASCs with respect to safe harbors?
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Common Requirements.
(a) The ASC’s operating and recovery room must be used exclusively by the ASC. (b) Physician owners must fully disclose their investment interests to patients whom they refer to the ASC. (c) The terms offered to investors may not be related to past or expected referrals or other business generated for the ASC. (d) Returns on investment must be directly proportional to the amount of capital invested. (e) Investors may not borrow funds, or receive a loan guarantee, from the ASC or another investor. (f) All ancillary services must be related to the primary ASC procedures and may not be billed separately to a Federal healthcare program. |
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Describe 3 key points of Obstetrical Malpractice Insurance Subsidies
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1)This safe harbor allows a hospital or other entity to pay all or part of the malpractice insurance premiums for practitioners, including certified nurse midwives, who provide obstetrical services in a primary care HPSA.
2) The safe harbor covers full subsidies for practitioners who practice obstetrics full time in a HPSA. A practitioner who does not engage in obstetrics as a “routine” part of his or her practice or who practices obstetrics only part-time in a HPSA and part-time somewhere else may only receive subsidies proportional to the amount of time the practitioner provides obstetrical services in a HPSA. At least 75% of the practitioner’s obstetrical patients 3) For the first year, a practitioner may certify that the practitioner believesthat he or she will meet the 75% test, but after the first year the test is measured bypatients from the preceding year. The safe harbor covers subs |
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In the event that a safe harbor does not exist for a specific arrangement what are the key points to examine?
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In the event that a safe harbor does not exist for a specific arrangement, care must be used to ensure that the arrangement does not violate the fraud and abuse provision. The parties should be able to demonstrate conclusively that the arrangement
(1) has a legitimate business purpose wholly apart from any possible impact on referrals; (2) does not provide any remuneration in return for referrals of Medicare or Medicaid business; and (3) does not have as one of its purposes the encouragement of referrals of Medicare or Medicaid business. Otherwise the arraignment should be pursued. |
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Checklist for OIG AO
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PRELIMINARY CHECKLIST FOR ADVISORY OPINION REQUESTS9
Updated July 1999, this checklist reflects the OIG final regulations published in the Federal Register on July 16, 1998 (63 FR 38311). This version of the checklist is not substantially different from the previous versions set forth. The checklist is for informational purposes only, and should not be a substitute for reading the regulations on issuance of OIG advisory opinions. TECHNICAL REQUIREMENTS 1. The requestor is a party to the arrangement. (42 CFR 1008.11) ______ 2. The request is for an existing arrangement or one which the requestor in good faith plans to undertake. (42 CFR 1008.15(a)) ______ 3. The requestor has included: a. A non-refundable check or money order for $250, payable to the Treasury of the United States. (42 CFR 1008.31(b) and 1008.36(b)(6)) ______ b. A request for a written estimate of the cost involved in processing the advisory opinion. (Optional) (42 CFR 1008.31(d)(2)) ______ c. A designated triggering dollar amount. (Optional) (42 CFR 1008.31(d)(3)) ______ d. An original and two copies. (42 CFR 1008.36(a)) ______ e. The name and addresses of the requestor and all other actual and potential parties to the extent known to the requestor. (42 CFR 1008.36(b)(1)) ______ f. The name, title, address, and daytime telephone number of a contact person. (42 CFR 1008.36(b)(2)) ______ g. Each requesting party's Taxpayer Identification Number. (42 CFR 1008.36(b)(8)) ______ h. Full and complete information as to the identity of each entity owned or controlled by the individual, and of each person with an ownership or control interest in the entity. (42 CFR 1008.37) ______ i. If applicable, a statement that some or all of the information or documents provided are trade secrets or are privileged or confidential commercial or financial information and are not subject to disclosure under the Freedom of Information Act (42 CFR 1008.36(b)(4)(v)) _____ DESCRIBING THE ISSUES & THE ARRANGEMENT The request includes: 1. A declaration of the subject category or categories for which the opinion is requested. (42 CFR 1008.36(b)(3)) ______ 2. A complete and specific description of all relevant information bearing on the arrangement and on the circumstances of the conduct. (42 CFR 1008.36(b)(4)) ______ 3. All relevant background information. (42 CFR 1008.36(b)(4)(i)) ______ 4. Complete copies of all operative documents, if applicable, or narrative descriptions of those documents. (42 CFR 1008.36(b)(4)) ______ 5. Detailed statements of all collateral or oral understandings (if any). (42 CFR 1008.36(b)(4)(iii)) ______ C. CERTIFICATIONS 1. The request includes a signed certification that all of the information provided is true and correct and constitutes a complete description of the facts regarding which an advisory opinion is sought. (42 CFR 1008.38(a)) ______ 2. The certification is signed by - a. The requestor if the requestor is an individual. (42 CFR 1008.38(c)(1)) ______ b. The CEO or comparable officer if the requestor is a corporation. (42 CFR 1008.38(c)(2)) ______ c. The managing partner if the requestor is a partnership. (42 CFR 1008.38(c)(3)) ______ 3. If the request is for a proposed arrangement, it contains a signed certification that the arrangement is one that the requestor in good faith plans to undertake. (42 CFR 1008.38(b)) ______ |
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types of prosecutions
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1 Kick back and financial inducements, 2 self referral statutes - doctors who provide 3 false claims, 4 beneficiary inducement 5 anti-gouging 6 hippa criminal private insurance
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When may OGI AOs be introduced as evidence in a court proceeding?
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The regulations also provide that “an advisory opinion may not be introduced into evidence by a person or entity that was not the requestor of the advisory opinion.”11 It is not clear, however, whether a court might either take judicial notice of OIG Advisory Opinions or consider the analysis of the OIG in analyzing specific
10 42 C.F.R. § 1008.53. 11 42 C.F.R. § 1008.55. |
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The eight elements for investment safe harbor are:
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1) no more than forty percent of the investment interests may be held by investors who are in a position to make or influence referrals, furnish items or services, or generate business (“Interested Investors”);
2)interests offered to passive investors who are Interested Investors cannot be made on terms different from those offered to other investors; 3)the terms on which an investment is offered to Interested Investors cannot take into account any previous or expected volume of referrals, services furnished, or amount of business generated from such investors; 4)there is no requirement that a passive investor make referrals to, or otherwise generate business for, the entity as a condition of remaining an investor; 5) the entity cannot market or furnish the items or services differently to passive investors and non-investors; 6) no more than forty percent of the gross revenue of the entity may come from Interested Investors; 7) he entity cannot loan or guarantee funds to an Interested Investor if the loan or guarantee is used to obtain the investment interest; and 8) an investor’s return on investment must be directly proportional to the amount of capital investment of that investor. |
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The eight elements of safe harbor for investments are required by what statute?
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Strict compliance with all elements is required. See 56 Fed. Reg. 35952, 35954 (July 29, 1991).
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) Indicators of an unlawful joint venture
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OIG identified the following indicators of a potentially unlawful venture:
a. Investors are chosen from referral sources; b. Persons in a position to make more referrals are offered a greater investment in the venture; c. Participants are encouraged to make referrals or are requested to sell back their interest if there are inadequate referrals; d. Managers of the venture track and publish the venture’s sources for referrals; e. Investors may be required to sell back their interest if they no longer practice in the area; or f. Investment interests are not transferable to non-referral sources. |
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Patient-Hospital illegalities
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The fraud report includes a list of suspect incentive arrangements that illustrate potentially unlawful activity:
• Payment for each referral. • The use of free or significantly discounted office space or equipment. • The provision of free or significantly discounted billing, nursing, or other staff services. • Free training for the physician’s office staff. • Guaranteed physician income. • Low-interest or no-interest loans, or loans that may be “forgiven” based on the number of patient referrals. • Payment of professional development activities and continuing education courses. Provision of health insurance benefits at below-market rates. • Payment for services in excess of the fair market value for such services, or payment for services involving few, if any, substantive duties by the physician. |
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Pharma fraud alert
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the OIG cautions providers, pharmacists, and suppliers to look for payments and gifts that are
(1) made to a person who is in a position to generate business for the paying party; (2) related to the volume of business generated; and (3) are more than nominal and/or exceed the fair market value of services rendered, or are unrelated to provision of any service other than patient referrals. |
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Hospice Fraud Alert
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This fraud alert identifies a number of practices which could be viewed as potential kickbacks between hospices and nursing homes to influence the referral of patients. Specific practice which are suspected kickbacks include:
♦ A hospice offering free goods or goods at below fair market value to induce a nursing home to refer patients to the hospice. ♦ A hospice paying “room and board” payments to the nursing home in amounts in excess of what the nursing home would have received directly from Medicaid had the patient not been enrolled in hospice. ♦ A hospice paying amounts to the nursing home for “additional” services that Medicaid considers to be included in its room and board payment to the hospice. ♦ A hospice paying above fair market value of “additional” non-core services which Medicaid does not consider to be included in its room and board payment to the nursing home. ♦ A hospice referring its patients to a nursing home to induce the nursing home to refer its patients to the hospice. ♦ A hospice providing free (or below fair market value) care to nursing home patients, for whom the nursing home is receiving Medicare payment under the skilled nursing facility benefit, with the expectation that after the patient exhausts the skilled nursing facility benefit, the patient will receive hospice services from that hospice. ♦ A hospice providing staff at its expense to the nursing home to perform duties that otherwise would be performed by the nursing home. |
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Fraud Alert for SNF
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This Fraud Alert focuses on the provision of medical and other health care services to residents of nursing facilities and identifies some practices which concern the OIG. Specifically, OIG is concerned about (1) claims for services not provided as claimed; (2) False claims to circumvent coverage limitations; and (3) medically unnecessary services.
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) examples of excessive billing
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OIG further stated that the following situations may suggest fraudulent or abusive activities:
‘‘Gang visits’’ by one or more medical professionals where large numbers of residents are seen in a single day. Frequent and recurring ‘‘routine visits’’ by the same medical professional. Unusually active presence in nursing facilities by health care practitioners who are given or request unlimited access to resident medical records. Questionable documentation for medical necessity of professional services. |
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) Fraud Alert for SNF
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This Fraud Alert focuses on the provision of medical and other health care services to residents of nursing facilities and identifies some practices which concern the OIG. Specifically, OIG is concerned about (1) claims for services not provided as claimed; (2) False claims to circumvent coverage limitations; and (3) medically unnecessary services.
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examples of excessive billing
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OIG further stated that the following situations may suggest fraudulent or abusive activities:
‘‘Gang visits’’ by one or more medical professionals where large numbers of residents are seen in a single day. Frequent and recurring ‘‘routine visits’’ by the same medical professional. Unusually active presence in nursing facilities by health care practitioners who are given or request unlimited access to resident medical records. Questionable documentation for medical necessity of professional services. |
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Advisory Opinion No. 97-1
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In this Advisory Opinion, OIG found that a charitable organization partly funded by kidney dialysis providers could pay the Medicare Part B, Medigap and other insurance premiums of financially needy end-stage renal disease patients.
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Advisory Opinion No. 97-2
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In this Advisory Opinion, OIG concluded that a state-funded program that pays Medicare Part B, Medigap and other insurance premiums of financially needy end-stage renal disease patients would not violate the fraud and abuse laws.
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Advisory Opinion No. 97-3
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Here OIG found that a specific transfer of assets arrangement followed by an application for Medicaid benefits would not violate 42 U.S.C. § 1320a-7b(a)(6).
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Advisory Opinion No. 97-4
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In this Advisory Opinion, OIG concluded that an arrangement under which an Ambulatory Surgery Center would decline to pursue co-payments from certain patients who have employer-sponsored Medicare complementary coverage could constitute grounds for imposition of fraud and abuse sanctions and penalties.
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Advisory Opinion No. 97-5
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In this Advisory Opinion, OIG found an outpatient radiology imaging center joint venture owned by a medical group specializing in radiology and a hospital care provider would not generate prohibited remuneration within the meaning of the Anti-Kickback Statute.
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Advisory Opinion No. 97-6
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This Advisory Opinion found that a proposed ambulance restocking arrangement where a hospital would restock the supplies consumed by the ambulance company in transporting a patient to the hospital likely would constitute an illegal inducement or kickback to the ambulance company by the hospital.
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Advisory Opinion No. 98-1
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OIG concluded in this Advisory Opinion found that a proposed contractual arrangement for distribution and billing services may involve prohibited remuneration under the Anti-Kickback Statute.
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Advisory Opinion No. 98-2
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In this Advisory Opinion, OIG concluded that a certain pharmaceutical discount pricing arrangements between a manufacturer and wholesalers would not violate the Anti-Kickback Statute. While the arrangement did not expressly fall into the discount safe harbor, the discount arrangement still was found acceptable.
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Advisory Opinion No. 98-3 purchase and provision of an ambulance to a municipal fire department
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OIG concluded here that a hospital system’s purchase and provision of an ambulance to a municipal fire department presented minimal risk of abuse and this would not trigger sanctions under the Anti-Kickback Statute.
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Advisory Opinion No. 98-4
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coordination of benefits provision in a provider agreement between a nursing home and a healthcare plan
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laches for delays to Government extensions in Qui Tam
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Laches only comes into play when the govt proceeds in equity
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Qui Tam extensions = denial of due process?
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especially where evidence has been routinely destroyed
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Qui Tam false claims civil or criminal?
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civil
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who enforces civil monetary penalties act
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oig not under false claims - usa ttys enforce
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what is key to defense
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show on the evidence there was no inducement
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Joint venture illegal
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must satisfy the key 6 prongs - non 40% prongs - how close on the other 2
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