Naughty or Nice – 60 Day Overpayment Reporting Rule

According to a recent New York District Court decision, whether providers are subjected to an enforcement action under the False Claims Act for failing to report and return an overpayment within the sixty-day window should turn on whether they have been naughty or nice after learning of the potential of an overpayment.  In this case, at least at the motion to dismiss stage, the court concluded that the providers had been naughty, which, based on the factual recitations seemed a pretty easy call.  Essentially, the providers were alerted to the potential of substantial overpayments by an employee tasked with examining an overpayment issue.  Four days after providing his employer with a spreadsheet detailing the overpayments, the employee was fired and his spreadsheet “filed”.  A couple months later, the employee filed his qui tam action in which the United States and the state of New York eventually intervened.

 

Naughty or nice became important because of the court’s analysis of what constitutes “identification” of an overpayment for purposes of triggering the 60 day report and return obligation.  In this regard, according to the decision, at least one thing is certain.  The answer is not when the amount of the overpayment is finally calculated with certainty.  In response to this argument by the defendants, the court observed this would create ” . . . a perverse incentive to delay learning the amount due . . . relegating the sixty-day period to merely the time within which they would have to cut the check.”

 

The Government took the position that an overpayment is identified when the recipient is put on notice that a certain claim may have been overpaid.  The court agreed that defining “identified”  ” . . . such that the sixty day clock begins ticking when a provider is put on notice of a potential overpayment , rather than when the overpayment is conclusively ascertained, is compatible with the legislative history of the FCA and the FERA highlighted by the Government.”

 

The court characterized the rule derived from a review of legislative history as “unforgiving”, noting that it provides no leeway for the recipient of an overpayment who ” . . . struggles to conduct an internal audit, and reports its efforts to the Government within the sixty-day window, but has yet to isolate and return all overpayments sixty-one days after being put on notice of potential overpayments.”  ”  . . .it nowhere requires the Government to grant more leeway or more time to a provider who fails timely to return an overpayment but acts with reasonable diligence in an attempt to do so.”  Any relief for the provider that is diligently attempting to determine whether the potential overpayment is factually and legally an actual overpayment and, if so, the amount of the overpayment to be returned rests with prosecutorial discretion, which according to the court, ” . . . would counsel against the institution of enforcement actions aimed at well-intentioned health care providers working with reasonable haste to address erroneous overpayments” because in such a  situation the provider would not have acted with reckless disregard, deliberate ignorance or actual knowledge of the overpayment, a requirement of a FCA claim.

 

In fact, in comments to the court in this case, the Government made clear that this was not a case of a provider working diligently on the claims and on the sixty-first day is still scrambling with its spreadsheets.  “You know, the Government wouldn’t be bringing that kind of claim.”

So the moral of the story is if a messenger notifies you of a potential overpayment, be nice, act with diligence to investigate and quantify any overpayment, and for goodness sake don’t shoot the messenger.

To learn more about refunding overpayments please contact Greg Montgomery or Adam Snyder.

 

Washington Earns “F”s on its Telemedicine Report Card

On September 9, 2014, the American Telemedicine Association issued two reports in which it graded all fifty states on telemedicine gaps in coverage and reimbursement and  physician practice standards and licensure.  Not surprisingly, in the area of telemedicine parity Washington received predominantly failing grades.  Washington fared better in the area of Medicaid coverage and conditions of payment but still racked up three failing grades in the ten categories that were graded.  In the report on physician practice standard and licensure, Washington averaged less than a C.

On September 23, 2014 Ogden Murphy Wallace presented the first of two webinar sessions on telemedicine covering CMS, Joint Commission, and Washington rules pertaining to the ability of a site receiving telemedicine services to rely on the credentialing and privileging of the site from which the services are provided.  On October 7, 2014, Ogden Murphy Wallace will present the second session of its telemedicine webinars addressing additional regulatory requirements relevant to telemedicine services in Washington including licensure, informed consent, Washington’s Stark, Anti-Kickback and Anti-Rebating laws, HIPAA compliance and reimbursement.  To register for the October 7 telemedicine webinar click here.

For more information regarding telemedicine laws in Washington please contact Greg Montgomery.

Surviving A Motion to Dismiss False Claims Act Suit

A federal district court recently denied defendant’s motion to dismiss a false claims act lawsuit, concluding that the realtor had alleged a sufficiently detailed factual basis for the claims and provided representative examples of the alleged false claims.  The complaint, filed by a nurse anesthesiologist, alleged that the defendant had violated (and was continuing to violate) the false claims act by indicating on a form that “medical direction” was provided at the time of the anesthesia services regardless of whether one of the defendant’s anesthesiologists prescribed the anesthesia and was present.  This form was then used by defendant’s billing office to prepare and submit payment requests.

In denying the motion to dismiss the false claims act complaint, the court generally noted that the realtor’s allegations were sufficiently specific to allow defendant to identify the instances provided as examples and respond to the allegations.  The court also observed that the examples alleged by realtor included details that only a person with personal knowledge of the events would know.  Finally, the court actually summarized the facts alleged by realtor that satisfied the who, what, when, where, and how necessary to survive a motion to dismiss a false claims act lawsuit.

In its decision, the court distinguished an earlier false claims act lawsuit involving similar allegations that was dismissed for failure to meet specificity requirements thereby providing practitioners with slightly more refined guidance as to the nature and specificity of allegations required for a false claims act lawsuit.

For questions regarding the false claims act please contact Greg Montgomery.

Delay in Return of Overpayments Leads to False Claims Act Suit

The generally accepted wisdom is to move expeditiously to investigate and return federal health care program overpayments once you become aware of them.  Now we know the potential downside of failing to do so even when all overpayments are eventually returned.

Late last month the United States Attorney’s Office filed a false claims act complaint in intervention against Continuum Health Partners.  The complaint seeks treble damages, civil penalties and costs.

Relevant facts:

  • From early 2009 to late 2010, due to a computer glitch, defendant submitted improper claims to Medicaid for additional payments for services
  • September 2010  New York state comptroller notified defendant of a small number of these claims improperly billed to and paid by Medicaid
  • February 2011 defendant became aware of much larger batch of improper claims totally over $1,000,000 that may have been submitted to and paid by Medicaid
  • Defendant repaid improper claims in dribs and drabs eventually repaying everything by March 2013 – 300 improper claims were repaid only after the Government issued a Civil Investigative Demand to defendant regarding payment of these claims in June 2012

“Continuum thus intentionally or recklessly failed to take the necessary steps to timely identify the claims affected by the software issue or to timely reimburse DOH for those affected claims that resulted in overbilling to Medicaid.”

For more information about this case or for assistance with reporting overpayments please contact Greg Montgomery.

Public Hospital Districts Offering Maternity Services Must Offer Abortion Services

A recent Washington Attorney General Opinion concludes that a public hospital district may not administer or fund programs to provide maternity care benefits or services without making provision for abortion services, benefits, and information.  The Opinion primarily relies on RCW 9.02.100 and RCW 9.02.160 which respectively provide in part:

The sovereign people hereby declare that every individual possesses a fundamental right of privacy with respect to personal reproductive decisions.

Accordingly, it is the public policy of the state of Washington that:

(1) Every individual has a fundamental right to choose or refuse birth control;

(2) Every woman has the fundamental right to choose or refuse to have an abortion (subject to legislative limitations)

If the state provides, directly or by contract, maternity care benefits, services, or information to women through any program administered or funded in whole or in part by the state, the state shall also provide women otherwise eligible for any such program with substantially equivalent benefits, services, or information to permit them to voluntarily terminate their pregnancies.

The Opinion emphasizes that no Washington public hospital district is required to provide maternity care benefits, services, or information.  However, it endorses a broad interpretation of these benefits to include a large range of prenatal, childbirth, and postpartum services and information.  It also concludes that a public hospital district provides maternity care benefits if it financially subsidizes a healthcare provider that provides these benefits.

Accordingly, the Opinion concludes that if a public hospital district contracts for the provision of maternity care benefits and subsidizes this through the use of public funds it must provide the substantially equivalent benefits, services and information required by RCW 9.02.160.  The Opinion expresses no opinion on how public hospital districts might comply with these requirements or what might constitute substantially equivalent benefits, services and information.

For more information about this Opinion or hospital compliance requirements please contact Greg Montgomery.

OIG Approves Venture Spawned by CMS Hospital Readmission Penalties

In a recent Advisory Opinion, the OIG approved a business venture intended to reduce preventable hospital readmissions by providing post-discharge services to patients.  The venture would sell a package of services to hospitals intended to better coordinate post-discharge care and to help patients adhere to their post-discharge plans of care.  The focus would initially be on those conditions CMS has identified as potentially triggering readmission payment penalties.

Hospitals would be charged a flat annual “set-up” fee and an additional “per patient” fee. Patients would have to elect to receive the services.  Under the service, the patient would have access to assistance 24 hours a day, seven days a week, either through a Patient Liaison or through a nurse hotline.

The OIG found a low risk of fraud or abuse under the anti-kickback law because, among other things, the program could potentially save federal money by decreasing excessive hospital readmissions.  The proposed program also was unlikely to interfere with clinical decision making since its purpose was to ensure such decision making was implemented for the benefit of the patient.

The OIG also found a low risk of any Civil Monetary Penalty violation.  The proposed program appeared to be intended to assist patients in the post-discharge period without influencing or limiting a patient’s choice of providers or suppliers.  If you have questions regarding this opinion please contact Greg Montgomery.

Former Hospital CFO Blows Whistle On Effort To Buy Medicaid Referrals

Georgia recently joined a false claims act lawsuit alleging that Healthcare Management Associates, Inc. and Tenet Healthcare Corporation hospitals have been improperly paying for referrals for many years.  According to the complaint, the hospitals paid interpreter, management and other service fees to clinics in exchange for which the clinics referred pregnant, undocumented women to the hospitals for delivery and post-delivery care paid for, in part, from Medicaid funds available for emergency deliveries and post-delivery care of the newborn.  Georgia seeks to recover three times the dollar amount of false Medicaid claims plus civil penalties of between $11,000 and $15,000 for each false claim.

Tenet issued a statement to the effect that the agreements were legitimate and the hospitals were providing necessary healthcare services to women in underserved Hispanic communities served by the hospitals.  According to Tenet the services were designed to increase the likelihood of a safe birth and healthy baby.

The lawsuit was filed by Ralph Williams who served briefly as a CFO for one of the HMA hospitals before he was fired.  Among other things, the Complaint alleges:

  • Hospitals paid the clinics up to $15,000 to $20,000 a month for referrals
  • One hospital projected a 56.2% rate of return on its investment in a clinic’s “Hispanic Maternity Program”.
  • One clinic billed a hospital for in excess of 13 hours a day of interpreter services during June and July 2009 but Williams was unable to confirm that any clinic employee was on the hospital campus at any time during this period

Georgia brought its claims under its state false claims act based on the federal false claims act.  Washington has a virtually identical act applicable to Medicaid payments.

For more information please contact Greg Montgomery.

 

Hospital Medical Staff Lacks Capacity To Sue – Medical Staff Bylaws Are Not a Contract

The Minnesota Court of Appeals recently issued a decision that, in Minnesota, hospital medical staffs do not have capacity to sue as unincorporated associations.  In addition, the Court concluded that, at least in this case, medical staff bylaws do not constitute a contract between members of the medical staff and the hospital.

With respect to the issue of whether the medical staff bylaws create a contract between members of the medical staff and the hospital, the court focused on two points: (1) repeated reference in the medical staff bylaws to the right of the hospital board to approve, amend, and/or repeal the medical staff bylaws, and; (2) Minnesota rules that require hospitals to have medical staff bylaws approved by the governing body.  On this second point, the decision relies on a series of decisions from other jurisdiction holding medical staff bylaws not to create a contract for lack of consideration due to the existence of state laws requiring such bylaws.

The court relied on prior Minnesota court decisions for its conclusion that the medical staff could not sue as an unincorporated association.

These two issues are regularly litigated in courts around the country and there is hardly unanimity in the decisions.  This decision contains a very useful collection of cases going both ways on the issues and the legal theories relied on for the differing conclusions.  For questions concerning this case or related hospital medical staff issues please contact Greg Montgomery.

US Intervenes In Whistleblower False Claims Act Lawsuit Alleging Submission of More Than $500 Million in Improper Claims

After the United States decided to intervene, a whistleblower lawsuit under the federal false claims act was unsealed.  The Amended Complaint alleges that over the period 2004 to 2010, the defendants submitted over $500 million in claims to Medicare, Tricare, and Medicaid that were the result of physician compensation schemes in violation of Stark and Anti-Kickback laws.

According to the Amended Complaint, a seventy-one (71) member physician group provided outpatient care and treatment for clinic patients under a services contract with the clinic.  Under the contract, the clinic billed and collected for the physician services and split the net proceeds with the physician group.

The Amended Complaint alleges that the physician group received two additional components of compensation intended to induce referrals to the clinic and increase the tests ordered at the clinic.  According to the Amended Complaint, the clinic furnished the physician group with office space, equipment, and a variety of services at below fair market value.  In addition the physicians in the group were allegedly paid a percentage of the technical fees charged and collected by the clinic for tests they ordered.

The whistleblower is an interventional cardiologist who was employed by the physician group from 2003 until he was fired in 2011.

Medicaid Disallows Reimbursement, Requires Reporting for Provider Preventable Conditions

Starting  July 1, 2013, the Washington Medicaid program will not pay a provider for the health care costs of treating conditions that the provider could have prevented.  The rule, WAC 182-502-0022, contains a long list of such conditions and adds a few more acronyms to health care speak, including:

(1) PPC – provider preventable conditions that include hospital and non-hospital acquired conditions;

(2) OPPC – other provider preventable conditions that are a PPC subset of conditions identified in WAC 246-302-030, and;

(3) HCAC – health care acquired conditions that are also a PPC subset occurring in an inpatient hospital setting.

Providers, including inpatient hospitals, must report any PPC to the Health Care Authority even if there is no intent to bill for services related to the PPC.  Health care professionals or designees responsible for or associated with a PPC involving a Medicaid patient must notify the Health Care Authority within forty-five (45) calendar days of confirming the PPC.

A similar reporting requirement applies to hospitals for OPPC.  And, of course, Medicaid patients are not liable for payment of an item related to a HCAC or an OPPC and must not be billed for any item or service related to a PPC.

For information about this new rule or Medicaid reimbursements please contact Greg Montgomery.