OIG Updates its Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs

June 3, 2013 By

On May 8, 2013, the OIG issued an updated Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs (the “Updated Special Advisory Bulletin”).  The Updated Special Advisory Bulletin replaces and supersedes the OIG’s 1999 Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs.

The Updated Special Advisory Bulletin advises that the effect of an OIG exclusion is that the provider will receive no Federal Health care program payment for any items or services furnished by an excluded person or at the medical direction or on the prescription of an excluded person.  The prohibition on payment applies to all methods of Federal health care program payment.  It also extends to items or services beyond direct patient care.  Accordingly, OIG says that an excluded person is prohibited from serving in an executive or leadership role (i.e., as the CEO or CFO, general counsel, director of health information management or director of human resources) for a provider that furnishes items or services payable by Federal health care programs and is prohibited from providing other types of administrative and management services (i.e., health IT services and support, strategic planning, billing/accounting, staff training and human resources).

OIG urges providers to review each job category and contractual relationship to determine whether the item or service being provided is directly or indirectly, in whole or in part, payable by a Federal health care program.  If it is, OIG advises the provider to screen everyone that performs under that contract or category.  This would include, for example, screening nurses provided by staffing agencies or physician groups that contract with hospitals to provide ER coverage, and billing or coding contractors.  OIG warns that relying on the screening conducted by the contractor may not always be sufficient to protect the provider from CMP liability.

The Updated Special Advisory Bulletin warns that providers who arrange or contract with an excluded person face potential civil monetary penalties (“CMPs”) of up to $10,000 for each item or service furnished by the excluded person for which payment is sought, in addition to an assessment of up to three times the amount claimed and program exclusion.  OIG states that CMP liability would apply to the furnishing of all of the categories of items or services that are violations of an OIG exclusion, including direct patient care, indirect patient care, administrative and management services, and items or services furnished at the direction or on the prescription of an excluded person when the person furnishing the services either knows or should know of the exclusion.  Exclusion violations may also lead to criminal prosecutions or civil actions (i.e., claims under the False Claims Act).  OIG urges providers to use OIG’s self-disclosure protocol to self-disclose the employment of or contracting with an excluded person.

To best minimize risk of overpayment and CMP liability, OIG suggests that providers check the OIG’s List of Excluded Individuals and Entities (the “LEIE”) monthly.  OIG also recommends that providers use the LEIE as the primary source of information on exclusion.

To access the Updated Special Advisory Bulletin, click here.

If you have questions regarding exclusions from federal health care programs or provider contracting generally please contact Carrie Soli.

Filed Under: Compliance, Hospitals, Medicaid, Medicare, OIG

Stark Law Really Does Have Teeth

May 9, 2013 By

Tuomey Jury Finds Monetary Value of $39 Million for 21,370 Claims Submitted in Violation of False Claims Act

On May 8, 2013, the jury in the False Claims Act lawsuit against Tuomey Healthcare Systems, Inc. returned its verdict.  Based on its finding that Tuomey violated the Stark law, the jury found that Tuomey also violated the False Claims Act by submitting 21,370 false claims with a total value in excess of $39 million.

The court instructed the jury that the government’s case was based on allegations that Tuomey entered into compensation arrangements with certain physicians that violated the Stark law.  The government sought relief under the False Claims Act for these alleged Stark law violations.

The court instructed the jury that damages for Stark based violations of the False Claims Act are to be based on what the Medicare program paid to Tuomey for claims submitted in violation of Stark.  Under the False Claims Act, each false claim is subject to a penalty of between $5,500 and $11,000.  In addition, damages may be tripled.

In what might be considered by some as a substantial understatement, one of the attorneys for Dr. Michael Drakeford, who initiated the lawsuit under the whistleblower provisions of the False Claims Act, was quoted as commenting:

“Perhaps the message to be taken from this verdict is that the Stark law really does have teeth and when a hospital decides to pay physicians for referrals, it risks paying a very high price.”

As part of its on-going quarterly lunch time webinar series, the Ogden Murphy Wallace Healthcare Practice Group will provide a presentation on self-disclosure options and avoidance of state and federal False Claims Act liability in its June 4, 2013 webinar (to register click here).  If you have questions regarding self-disclosure or Stark in general please contact Greg Montgomery.

 

Filed Under: Compliance, False Claims Act, Medicare, Stark

Whistleblowers Expected to Receive $2.8 Million in Settlement of Stark Based False Claims Act Lawsuit

May 7, 2013 By

The Department of Justice recently announced a settlement with Adventist Health System/West under which the Department of Justice and the state of California will collect $14.1 million in settlement of False Claims Act allegations.  The lawsuit was initially filed by private individuals as whistleblowers who will receive a significant portion of the settlement.  There was no determination or admission of liability.

According to the announcement, the lawsuit alleged that Adventist Health improperly compensated physicians at one of its facilities by transferring assets to the physicians at less than fair market value and by compensating physicians for teaching services at rates contended to be above fair market value.  These payments to physicians were alleged to violate the Stark law and anti-kickback laws.

In commenting on the settlement, a representative of the Office of Inspector General observed:

“Payouts by hospitals and clinics – as the government alleged in this case – raise substantial concerns about physician independence and objectivity.  Taxpayers and vulnerable patients rightfully expect such payments to be investigated and pursued.”

As part of its on-going quarterly lunch time webinar series, the Ogden Murphy Wallace Healthcare Practice Group will provide a presentation on self-disclosure options and avoidance of state and federal False Claims Act liability in its June 4, 2013 webinar (to register click here).  If you have questions regarding self-disclosure and overpayments in general please contact Greg Montgomery.

Filed Under: Anti-Kickback/Stark, Compliance, False Claims Act, Overpayment

False Claims Act Recoveries Top $14.2 Billion

May 2, 2013 By

On May 1, 2013, the  Department of Justice announced a settlement with two Montana hospitals that added $3.95 million to its recoveries under the False Claims Act.  According to the announcement, with this additional recovery,  the Department of Justice has used the False Claims Act to recover more than $14.2 billion in federal healthcare payments since January, 2009.

Once again, allegations of hospital-physician financial relationships that violated the Stark law prohibition against self-referral were the stated basis for the allegations of False Claims Act liability.  In this case, according to the announcement, it was alleged that the hospitals paid incentive compensation to certain physicians in a manner that took into consideration the value or volume of the referrals by the physicians to the hospital by improperly including certain designated health services in the formula for calculating physician incentive compensation.

This situation was voluntarily disclosed by the hospitals.  In this regard, an OIG representative was quoted as commenting:

 “There is an expectation that corporations providing services to Medicare and Medicaid beneficiaries adhere to the provisions of the Stark Law.  I applaud St. Vincent Healthcare and Holy Rosary Healthcare for recognizing their potential liability in this matter and making a disclosure”

As part of its on-going quarterly lunch time webinar series, the Ogden Murphy Wallace Healthcare Practice Group will provide a presentation on self-disclosure options and avoidance of state and federal false claims act liability in its June 4, 2013 webinar (to register click here).  If you have questions regarding self-disclosure and overpayments in general please contact Greg Montgomery.

Filed Under: Anti-Kickback/Stark, Compliance, False Claims Act, Hospitals, Medicare, Overpayment, Stark

CMS PROPOSES TO INSPIRE MORE WHISTLE BLOWING

April 25, 2013 By

In a recently published proposed rule, CMS and HHS propose to substantially increase financial rewards available to individuals who report information regarding individuals or entities engaging in acts or conduct that are subject to Medicare sanctions.  The existing reward incentive program offers 10% of the amount of overpayment recovered or $1000 whichever is less.  Under the proposed rule, the reward could take a substantial jump up to 15% of $66,000,000, equaling $9,900,000.

 

CMS explains that under the existing reward incentive program which has been in effect since July 1998, only 18 rewards have been paid in a total amount of less than $16,000 and less than $3.5 million in overpayments have been collected.  It notes that after the IRS increased the rewards available under its rewards program in 2006, it has collected almost $1.6 billion and paid approximately $193 million in rewards.  CMS also tips its hat to the success of the whistle blower provisions of the False Claims Act, noting that rewards under this Act range from 15% to 30% of amounts recovered.

 

CMS estimates that with the proposed rule in place annual recoveries will increase by $24.5 million.  There will, however, be no whistle blower double dipping.  While conduct may entitle a whistle blower to recover under both the False Claims Act and the Reward Incentive Program, whistle blowers are going to have to pick only one whistle.  Regardless of which whistle is chosen, the bottom line is that with this new rule more individuals are going to be looking much harder at the conduct of providers and entities that seek payment for services and supplies from Medicare.

 

As part of its on-going quarterly lunch time webinar series, the Ogden Murphy Wallace Healthcare Practice Group will provide a presentation on self-disclosure options and avoidance of state and federal false claims act liability in its June 4, 2013 webinar.  If you have questions regarding these updated protocols or self-disclosure and overpayments in general please contact Greg Montgomery.

 

Filed Under: Compliance, Medicare, Overpayment Tagged With: ,

OIG Issues Updated Self-Disclosure Protocol

April 17, 2013 By

The OIG recently issued an update to its self-disclosure protocols to supply providers with additional guidance for self-disclosure.  In touting the benefits of self-disclosure, the OIG update notes that it now rarely requires integrity agreements in conjunction with self-disclosure settlement, it’s damage multiplier may be as low as 1.5, and the self-disclosure may stop the sixty (60) day clock running on potential False Claims Act liability.

The updated protocols emphasize that not every billing error is eligible for or should be reported under these protocols.  Reporting is limited to matters that may potentially violate federal laws for which civil monetary penalties are authorized.  Thus, for example, if you should discover that you may not have met all the criteria for provider based billing in an off campus clinic, you may have billing errors, but properly and promptly addressed, these do not invoke civil monetary penalties.

Recognizing that conduct for which civil monetary penalties are authorized also may be conduct that violates the Stark law, the updated protocols have a separate section providing guidance for disclosing arrangements that potentially violate both anti- kickback and Stark laws.  Arrangements that potentially violate both anti-kickback and Stark laws should be disclosed under the OIG protocol and not under the CMS stark self-disclosure protocol.  Of note in comparison to the CMS self-disclosure protocol for potential Stark violations, the updated OIG protocol is very clear that the self-disclosure submittal  must clearly acknowledge that the disclosed arrangement constitutes a potential violation of the anti-kickback and Stark laws.

As part of its on-going quarterly lunch time webinar series, the Ogden Murphy Wallace Healthcare Practice Group will provide a presentation on self-disclosure options and avoidance of state and federal false claims act liability in its June 2013 webinar (to register click here).  If you have questions regarding these updated protocols or self-disclosure and overpayments in general please contact Greg Montgomery.

 

Filed Under: Compliance, OIG, SRDP, Stark

OIG ISSUES SPECIAL FRAUD ALERT ON PHYSICIAN-OWNED DISTRIBUTORSHIPS

March 26, 2013 By

On March 26, 2013, the Office of Inspector General (“OIG”) issued a Special Fraud Alert regarding physician-owned entities or distributorships (referred to as “PODs”) that generate revenue from the use of implantable medical devices ordered by their physician-owners for use in procedures performed by such physician-owners at hospitals or ambulatory surgery centers (“ASCs”).

While the Special Fraud Alert focuses on certain characteristics of PODs that create substantial risk of fraud and abuse and potential danger to patient safety, the OIG cited other prior pronouncements and guidance it issued over the past twenty-four years regarding its long-standing concern over physician investments in entities to which they refer.  Prior OIG guidance cited included the 1989 Special Fraud Alert on joint Venture Arrangements, published in 1994  and a letter dated October 6, 2006, regarding physician investments in the medical device industry.

It is clear that the OIG believes that significant risk of patient or program abuse, including but not limited to potential violations of the Federal Anti-Kickback statute, may flow from arrangements between and among physicians, device manufacturers and other device vendors.  The Anti-Kickback statute makes it a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce, or in return for, referrals of items or services reimbursable by a Federal health care program.

In its current Special Fraud Alert regarding physician-owned entities, the OIG recounted its view of certain questionable features regarding selection and retention of investors, solicitation of capital contributions, and distribution of profits, all of which potentially raise four general concerns typically associated with kickback arrangements:

1.  Corruption of medical judgment;

2.  Over-utilization;

3.  Increased costs to the Federal health care programs and beneficiaries; and

4.  Unfair competition.

The OIG is particularly concerned in this arena because the physician may play a significant role in the selection of the type of device and which manufacturer to use.  The OIG cautions that disclosure of financial interest may not be sufficient to cure what would otherwise amount to fraud and abuse, and identifies the following specific characteristics of arrangements that would cause concern:

— The size of the investment offered varies with anticipated volume or value of devices used by the physician.

— Distributions are made on the basis of volume as opposed to ownership interest.

— Conditioning referrals based on the use of certain devices on entities to which physicians refer.

— Arrangements that incentivize a physician’s use of certain devices or penalizes the physician for the failure to use certain devices.

— PODs ability to buyout physicians interests on favorable terms based on physician’s failure to meet certain volume requirements.

— The POD is a shell entity that is not truly engaged in the business, or provides no oversight related to distribution functions.

— Physicians fail to identify conflicts of interest through their involvement with PODs related to Hospital or ASC conflict of interest processes.

This Special Fraud Alert reiterates the OIG’s longstanding position that a physician’s ability to profit from referrals may lead to violations of the Federal Anti-Kickback statute.  Finally, the OIG reminds concerned parties that the OIG Advisory Opinion process is available.   For more information about physician-owned entities, the applicability of the Anti-Kickback statute, and the OIG Advisory Opinion process, please contact Adam Snyder or Don Black at (206) 447-7000.

Filed Under: Anti-Kickback/Stark, Compliance, Medicare, OIG Tagged With: , , ,

WHISTLE-BLOWING CARDIOLOGIST EXPECTED TO RECEIVE $2.4 MILLION

January 29, 2013 By

Under the terms of a settlement agreement signed earlier this month, Dr. Nicholas L. DePace should receive approximately $2,400,000 as his portion of a settlement of the qui tam False Claims Act lawsuit he filed in 2008.  In addition, defendant Cooper Health System agreed to pay $430,000 to the law firm that represented Dr. DePace in the qui tam action.

The essence of the 60 page complaint filed by Dr. DePace is that Cooper Health System made improper payments to physicians to induce referrals by recruiting high volume referring physicians and paying them $18,000 annually to sit on its heart institute advisory board formed in 2002.    According to the complaint, the advisory board was staffed with two categories of members:  physicians employed by the Health System or related entities and local physicians who were recruited to the board to advise the heart institute.  Dr. DePace was employed by one of the Health System related entities for slightly more than five months in 2007 and alleged that he served as an advisor to the heart institute during 2007 and 2008.

In his complaint filed in 2008, Dr. DePace alleged that the only responsibility required of the advisory members was attendance at bi-monthly meetings of the board which were to last approximately 17 hours each.  According to the complaint, although the function of the advisory board was to provide advice to the heart institute, the selection process for recruiting members to the board was governed by the volume of new business the member could provide regardless of the member’s academic credentials or professional experience.  The complaint recites in great detail the agendas at several meetings (largely unrelated to cardiology), the five-star cuisine served at one such meeting, and the duration of the meetings which allegedly fell far short of the 17 hours mentioned.  The complaint calculates that the advisors were paid in excess of $550/hour to attend these meetings and were required to attend only four such meetings a year to earn their $18,000 in advisory compensation.

The complaint estimated that  from the formation of the advisory board in 2002 until the complaint was filed in 2008, Cooper Health System paid at least $2,268,000 in illegal kickbacks in the form of advisory fees.  According to the complaint, these payments allowed Cooper Health System to “lock-in” valuable referrals from general practitioners and cardiologist and solidify dominance in the healthcare market in southern New Jersey.

The total amount to be paid by Cooper Health System under the terms of the settlement agreement was in excess of $12 million.  The settlement agreement does not constitute an admission of liability by Cooper Health System or a concession by the United States or Dr. DePace that any of the claims were not well founded.

If you have questions regarding OIG settlements please contact Greg Montgomery.

 

Filed Under: Anti-Kickback/Stark, Compliance, OIG

OIG Approves Gift Card Program for Medicaid Patients

January 16, 2013 By

According to a new advisory opinion issued by the U.S. Department of Health & Human Services’ Office of Inspector General, healthcare providers may be able to use free gift cards to encourage patients in capitated Medicaid managed care plans to receive clinical services.

In the opinion, a federally qualified health center (FQHC) asked the OIG whether it could offer free grocery store gift cards to certain patients in capitated Medicaid managed care plans.  The goal of the gift card program was to incentivize patients to receive health screenings and other clinical services at the FQHC.

The OIG stated that, in general, the Anti-Kickback Statute prohibits Medicare and Medicaid providers from providing “giveaways” to patients in order to induce them to receive clinical services.  However, the OIG approved this specific gift card program because the only eligible patients were enrolled in capitated Medicaid plans.  Under these plans, the FQHC’s reimbursement would not be based on the nature or number of services that the FQHC provides to the patients. Thus, the gift card program would not result in increased costs to the Medicaid program.

The opinion represents an interesting exception to the general rule that providers should not provide free goods and services to patients to  incentivize them to receive clinical services.  View the full opinion.

Filed Under: Anti-Kickback/Stark, Compliance, Medicaid, OIG
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