OIG’s Report Highlights Enforcement Successes in 2014

The Office of Inspector General (OIG) recently published its Semiannual Report to the U.S. Congress. This Report summarizes the OIG’s enforcement activities from March, 2013 to September, 2013.

The Report highlights the OIG’s significant efforts in the enforcement of fraud and abuse laws.  For fiscal year (FY) 2013, the OIG is expecting total recoveries of $5.8 billion, consisting of nearly $850 million in audit receivables and about $5 billion in investigative receivables.

Additionally, for FY 2013, the OIG brought 960 criminal and 472 civil actions against individuals or entities that engaged in health-care-related offenses.   Compared with FY 2012, the number of criminal actions in FY 2013 rose by 182 cases, and the number of civil cases rose by 105 cases.

According to the OIG, these enforcement results are partially due to the successes of the Health Care Fraud Prevention and Action Team (HEAT).  HEAT is a partnership between Federal, State, and local law enforcement to identify fraudulent health care schemes.   The program combines sophisticated data analysis and investigative intelligence to move quickly against violators of fraud and abuse laws such as the False Claims Act.

There is no doubt that the OIG’s accomplishments in FY 2013 will motivate investigators to root out more health care fraud and overpayment schemes in FY 2014.  To avoid a costly investigation and potential prosecution, providers should take extra care that they are following Medicare and Medicaid laws and properly billing for services rendered to patients.

You can read the entire OIG Semiannual Report here.

For more information about health care fraud and abuse laws, please contact Casey Moriarty.

OIG Issues Unfavorable Advisory Opinion Related to Fee Arrangement

Earlier this week the OIG issued an unfavorable Advisory Opinion concerning the relationship between an Anesthesiology Group (defined as the “Requester” in the OIG opinion), a Psychiatry Group and a Hospital.  The Psychiatry Group performed electroconvulsive therapy (ECT) services at the Hospital, requiring related anesthesia services.  The Requester had an exclusive contract with the Hospital for the provision of anesthesia services.  The specific arrangements reviewed by the OIG dealt with the Hospital’s pressure on the Requester to carve out exceptions to its exclusive contract that would have the effect of allowing the Psychiatry Group to have access to a new anesthesia revenue stream.  Ultimately, the OIG determined that the Proposed Arrangement could potentially generate prohibited remuneration under the anti-kickback statute.

The Proposed Arrangement stemmed from negotiations between the Hospital and the Anesthesiology Group, which had held an 18 year exclusive relationship with the Hospital until 2011.  In late 2010 the Psychiatry Group relocated its practice, which centers around ECT services, to the Hospital; a member of the Psychiatry Group included an anesthesiologist.  In 2011 negotiations with the Anesthesia Group, the Hospital modified the exclusive relationship to allow the Psychiatry Group’s anesthesiologist to perform ECT anesthesia services, and to request the Anesthesiology Group’s coverage while he was not available.  In 2012, the Psychiatry Group requested a provision allowing it to bring in a part time anesthesiologist if the Psychiatry Group and the Anesthesiology Group could not agree on terms for those additional services.  After the 2012 contract went into effect, the Psychiatry Group notified the Anesthesiology Group that it wanted to bring in the additional anesthesiologist and asked the Anesthesiology Group to enter into the Proposed Arrangement.

The Proposed Arrangement provided that the Anesthesiology Group would provide the ECT anesthesia coverage services that were needed and would reassign all billing rights to Psychiatry Group.  In exchange the Anesthesiology Group would receive a per diem rate which the Anesthesiology Group asserts was less than fair market value and below what it would receive if it billed directly for the anesthesia services.  The Psychiatry Group would retain the difference between the amount collected and the per diem rate.  The OIG unequivocally rejected this Proposed Arrangement, finding that the per diem payment made to the Anesthesiology Group did not fall under the personal services and management contract safe harbor of the anti-kickback statute because it was not set in advance nor consistent with fair market value.  Further, the OIG determined that the fee generated for the Psychiatry Group was a door to solicit compensation for its patient referrals for ECT services:

 “The Proposed Arrangement appears to be designed to permit the Psychiatry Group to do indirectly what it cannot do directly; that is, to receive compensation, in the form of a portion of Requestor’s anesthesia services revenues, in return for the Psychiatry Group’s referrals of ECT patients to Requestor for anesthesia services. The Additional Anesthesiologist Provision gave the Psychiatry Group the ability to solicit this remuneration for its ECT patient referrals by allowing the Psychiatry Group to contract with an anesthesiologist other than Requestor if Requestor and the Psychiatry Group were not successful in negotiating the terms of an agreement for Requestor to provide ECT anesthesia services. The Proposed Arrangement therefore presents the significant risk that the remuneration Requestor would provide to the Psychiatry Group—i.e., the opportunity to generate a fee equal to the difference between the amounts the Psychiatry Group would bill and collect for Requestor’s anesthesia services, and the per diem amounts the Psychiatry Group would pay to Requestor—would be in return for the Psychiatry Group’s anesthesia referrals to Requestor. We discern no safeguards in the Proposed Arrangement that would minimize this risk.”

What perhaps might be the most interesting part of the opinion, are the OIG’s comments in concluding the opinion. Although not asked to opine on the Hospital’s relationships with the Psychiatry Group and Requester, the OIG commented in a footnote about the potential improprieties of the Hospital’s relationship with those parties:

“Although we have not been asked to opine on, and express no opinion regarding, any aspect of Requestor’s relationship with the Hospital, including the 2012 Contract or the Additional Anesthesiologist Provision, we cannot exclude the possibility that: (i) the Hospital agreed to negotiate for the Additional Anesthesiologist Provision in exchange for, or to reward, the Psychiatry Group’s continued referral of patients to the Hospital for ECT procedures; (ii) the Hospital leveraged its control over its large base of anesthesia referrals to induce Requestor to agree to the Additional Anesthesiologist Provision; and (iii) Requestor agreed to the Additional Anesthesiologist Provision in exchange for access to the Hospital’s stream of anesthesia referrals.”

This OIG opinion highlights the OIG’s continued concern regarding arrangements that allow referring providers access to new revenue streams in a manner that may be connected to the providers referrals.  Parties desiring to enter into these types of arrangements should take care to include as many safeguards (using the OIG’s language) to ensure that the payments are not related to referrals.  In the absence of such safeguards, it is pretty clear that the OIG will not look favorably upon the arrangement.

For more information about this particular OIG Opinion or the anti-kickback statute in general please contact Elana Zana or Don Black.

 

Joint Commission Standards for Boarding and Leadership Collaboration with Behavioral Health Community

Effective January 1, 2014, hospitals, accredited by the Joint Commission, will be required to meet the elements of performance (EPs) related to boarding and leadership collaboration for behavioral health patients, as part of The Joint Commission’s revised standard for managing the flow of patients through the emergency department. Overcrowding and patient boarding in the emergency department has drawn considerable attention recently (see e.g., Seattle Times article on psychiatric boarding), and The Joint Commission recognizes that the problems with patient flow may have multiple factors and stem from other areas within and outside the hospital, not just the emergency department.

Under Leadership Standard LD.04.03.11 or the “Patient Flow” Standard, the following EPs will go into effect for hospitals starting next year:

  • EP 6. The hospital measures and sets goals for mitigating and managing the boarding of patients who come through the emergency department. Note: Boarding is the practice of holding patients in the emergency department or another temporary location after the decision to admit or transfer has been made. The hospital should set its goals with attention to patient acuity and best practice; it is recommended that boarding time frames not exceed 4 hours in the interest of patient safety and quality of care.
  • EP 9. When the hospital determines that it has a population at risk for boarding due to behavioral health emergencies, hospital leaders communicate with behavioral health care providers and/or authorities serving the community to foster coordination of care for this population.

The Joint Commission notes that the four-hour time frame referenced in EP 6 serves as a guideline (not a requirement) to help the hospital set a reasonable goal for its institution. Also, the goal of EP 9 is to “facilitate the more efficient use of limited resources, and build leverage to implement more effective systems of care for individuals at risk of psychiatric emergencies.” Though the communication required in EP 9 will vary depending on the nature of the relationship, The Joint Commission advises that “such communication should occur at least annually and may range from conference calls and correspondence to meetings, education forums, and strategic working groups.”

EP 6 and EP 9 are in addition to the revised EPs that went into effect at the beginning of this year on January 1, 2013.  The other revisions address: the use of data and measures to identify, mitigate and manage issues affecting patient flow; the management of emergency department throughput as a system-wide issue; and the environment of care, staffing, assessment, reassessment and care for patients with behavioral health emergencies.

To help organizations implement these requirements, The Joint Commission released an “R3 Report on Patient Flow through the Emergency Department” that provides the requirement, rationale and references for the updated standards.  If you have questions about these accreditation standards, please contact Don Black or Jefferson Lin.

OIG Okays Provision of Free Services to Uninsured and Underinsured Patients

On October 15, 2013, the Office of Inspector General (OIG) released an Advisory Opinion concerning a community health services organization’s provision of free dental care to financially needy uninsured and underinsured patients that are not covered by Medicaid.

The organization was concerned that the free services violated two aspects of the Medicaid law: (1) the Social Security Act prohibits providers from billing Medicaid charges for items or services substantially in excess of the provider’s “usual charges,” and (2) the Anti-Kickback Statute prohibits providers from offering remuneration to Medicaid patients to induce them to receive services from the provider.

In the Advisory Opinion, the OIG stated that when a provider calculates its “usual charges,” it need not consider free or substantially reduced charges to uninsured or underinsured patients with financial need.  Therefore, the OIG would not seek to exclude a provider from the Medicaid program for providing discounts to financially needy uninsured and underinsured patients.

The OIG also stated that the organization’s provision of free services to financially needy uninsured or underinsured patients does not violate the Anti-Kickback Statute because the free services will not be provided to Medicaid patients.  The Anti-Kickback Statute would only be implicated if a provider used the free services as a means to induce Medicaid patients to order additional services that could be billed to the Medicaid program.

The bottom line is that providers may offer free services to uninsured or underinsured patients with financial hardship.  With that said, it is critical that providers have uniform eligibility criteria to determine whether such patients actually are financially needy.  In separate guidance released in 2004  the OIG outlined factors that providers should consider in determining financial need, including:

  • The local cost of living;
  • A patient’s income, assets, and expenses;
  • A patient’s family size; and
  • The scope and extent of a patient’s medical bills.

By applying these factors uniformly at all times, providers can ensure that their provision of free or discounted services meets OIG requirements.

If you would like more information please contact Casey Moriarty.

Guidance on Refill Reminders and Enforcement Delay until Nov. 7th

The Office of Civil Rights recently released guidance related to the new HIPAA marketing requirements and refill reminders.  The guidance includes several FAQs and examples to help navigate the new HIPAA marketing/refill reminder rules.  In conjunction with the release of this guidance (and as a result of a lawsuit filed by Adheris, Inc.), HHS has decided to delay enforcement of the refill reminder requirements until November 7, 2013.  This enforcement delay is only with regard to the refill reminder rules and does not apply to the rest of the HIPAA requirements which will be enforced starting September 23, 2013.

Pursuant to HIPAA, a covered entity or business associate must receive a patient’s written authorization before using or disclosing PHI to make a marketing communication to him/her – unless another exception otherwise applies.  The new HIPAA marketing definition includes a generally common sense definition of marketing, with certain limited exceptions.  The new marketing rule creates an explicit exception “to provide refill reminders or otherwise communicate about a drug or biologic that is currently being prescribed for the individual, only if any financial remuneration received by the covered entity in exchange for making the communication is reasonably related to the covered entity’s cost for making the communication.”  The focus of the guidance is on two key phrases within the definition:  (1) whether the drug is  “currently being prescribed” and (2) whether there is financial remuneration and if so if it is “reasonably related to the covered entity’s cost of making the communication”.

The guidance identifies the following as satisfying the first requirement that the drug is currently being prescribed:

WITHIN EXCEPTION

• Refill reminders.

• Communications about generic equivalents of a drug being prescribed.

• Communications about a recently lapsed prescription (one that has lapsed within the last 90 calendar days).

• Adherence communications encouraging individuals to take prescribed medicines as directed.

• Where an individual is prescribed a self-administered drug, communications regarding all aspects of a drug delivery system.

NOT WITHIN EXCEPTION

• Communications about specific new formulations of a currently prescribed medicine.

• Communications about specific adjunctive drugs related to the currently prescribed medicine.

• Communications encouraging an individual to switch from a prescribed medicine to an alternative medicine.

With regard to the second prong, whether there is financial remuneration and if so whether it is related to the cost of making the communication, HHS provides the following information:

WITHIN EXCEPTION

• Communication does not involve remuneration.

• Communication involves only non-financial or in-kind remuneration, such as supplies, computers, or other materials.

• Communication involves only payment from a party other than the third party (or other than on behalf of the third party) whose product or service is being described in the communication, such as payment from a health plan.

• Remuneration involves payments to the covered entity by a pharmaceutical manufacturer or other third party whose product is being described that cover the reasonable direct and indirect costs related to the refill reminder or medication adherence program, or other excepted communications, including labor, materials, and supplies, as well as capital and overhead costs.

• Remuneration involves payments to a business associate assisting a covered entity in carrying out a refill reminder or medication adherence program, or to make other excepted communications, up to the fair market value of the business associate’s services.  The payments may be made by a third party whose product is being described directly to the business associate or through the covered entity to the business associate.

NOT WITHIN EXCEPTION

• Communication involves financial remuneration other than as described above.

The guidance then provides a series of examples and FAQs that are quite helpful in explaining what is and what is not permissible under the refill reminder exception to the marketing rule.  Though refill reminders are permitted, a covered entity should be careful to ensure that it is following the exception requirements or it should request patient authorization for such communications.  For more information about HIPAA and the marketing rule specifically please contact Elana Zana.

 

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.

New Law Would Limit Liability for Innocent Billing Errors

The Fairness in Health Care Claims, Guidance and Investigations Act, H.R. 2931  would amend the False Claims Act (“FCA”) by requiring that regulators satisfy procedural steps before embarking on costly fraud investigations.  The Bipartisan legislation, introduced by Representatives Howard Coble (R), North Carolina and David Scott (D), Georgia, would raise the burden of proof under the FCA, would except matters that do not exceed a ‘de minimus’ threshold, and would establish safe harbors for reliance on regulator guidance and implementation of model compliance programs.

The American Hospital Association issued a letter in support of the proposed legislation as well as a memo describing the legislation.

For more information regarding the False Claims Act or Government Investigations, please contact Adam Snyder at 206.447.7000.

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.

 

Washington Certificate of Need Program Commences Rule Making: Consumer Transparency in Affiliations & Dialysis

The Washington State Certificate of Need Program has announced its commencement of the rule-making process related to hospitals and dialysis.  This action is in response to the directive issued last month by Governor Inslee instructing the CN Program to expedite rule making related to the corporate restructuring, affiliations, acquisitions and mergers occurring in hospitals across the state.  His directive requires that:

The Certificate of Need process should be applied based on the effect that these transactions have on the accessibility of health services, cost containment, and quality, rather than on the terminology used in describing the transactions or the representations made in the preliminary documents.

The Department’s rulemaking process shall also consider ways to improve transparency for consumer information and ease of use, specifically the Department shall ensure hospitals supply non-discrimination, end of life care and reproductive health care policies; and the Department shall ensure that consumers have access to the policies on its webpage. The Department’s rulemaking process shall also consider the factors in RCW 43.06.155, the principles and policies in the implementation of health reform, including the guarantee of choice for patients.

In response to this directive, the CN Program has released concept rules to implement the directive.  These concept rules contain two significant modifications:

1.  A new defined term in WAC 246-310-010: “Sale, purchase, or lease” means any transaction in which the control, directly or indirectly, of part or all of any existing hospital changes to a different person, including but not limited to by contract, affiliation, corporate membership restructuring, or any other transaction.

This change is significant, as the “sale, purchase, or lease” of all or part of an existing hospital is subject to the CN rules and review.  The new definition expands the applicability of the CN rules and review.  Whereas previously affiliations were typically reviewed under Determinations of Reviewability, the expanded definition would subject such transactions to CN approval.

2.  A new section which collects hospital policies, maintains the policies and list of limitations on certain services online, and requires all hospitals to submit these policies and lists within 60 days of the effective date of the new rule.  The proposed new section is reproduced below:

New Section WAC 246-310-XXX Collection of Hospital Policies

1) Every hospital must submit to the department its following policies related to access to care:

a) Admission;

b) Non-discrimination;

c) End of life care; and

d) Reproductive health care.

2) If the effect of one or more of a hospital’s policies required under subsection (1) of this section limits or excludes access to services authorized by law, the hospital must submit to the department a list of services that are limited or not available at the facility.

3) The department shall post a copy of the policies received under subsection (1) of this section and lists received under subsection (2) of this section on its website.

4) If the hospital makes changes to any of the policies listed under subsection (1) of this section, it must submit a copy of the changed policy to the department within thirty days after the hospital approves of the changes.

5) No later than sixty days following the effective date of this rule each hospital must submit to the department the documents identified under subsections (1) and (2) of this section.

These proposed rules will have an impact on future transactions and existing hospitals.  The proposed revisions will be discussed at an August 5th workshop located at the Department of Health.

If you would like further information about these proposed rules or certificate of need in general please contact Elana Zana.

CA Surgeon Stripped of Medicaid Funding for Failure to Treat HIV Positive Patient

On July 18th, the U.S. Department of Health and Human Services announced that a California surgeon who refused to treat a patient based solely on the patient’s condition as HIV positive would lose Medicaid funding.  The surgeon had refused to perform necessary back injury and a resulting investigation by the HHS Office of Civil Rights found the surgeon had discriminated against the patient in violation of federal laws.  The violation ultimately resulted in an action to ensure compliance with federal civil rights laws and eventually the surgeon’s loss of the federal funding.

The determination underscores the need for health care providers to make best efforts to ensure patients and prospective patients who fall within protected classes receive the same treatment and standards of care as any other patient.  Failing to do so can jeopardize federal funding and also expose the provider to a range of potential claims for violations of federal and state workplace laws.

The fundamental steps to help avoid claims and liability are:

●             Have effective policies:  Providers should have written policies prohibiting discrimination and harassment.  Having an effective policy notifies all employees that discrimination and harassment will not be tolerated, and helps set a tone for conduct in the workplace.

●             Train up supervisors and staff:  All supervisors and staff should be fully aware of workplace discrimination and harassment laws and how to respond to potential problems.  Training helps prevent claims, allows problems to be identified and addressed early on, and provides vital potential evidence that the employer took reasonable steps to prevent improper behavior.

●             Familiarize yourself and staff with Medicaid rules:  Washington State Medicaid provider requirements obligate participating providers to provide all services without discriminating on the grounds of “race, creed, color, age, sex, sexual orientation, religion, national origin, marital status, the presence of any sensory, mental or physical handicap, or the use of a trained dog guide or service animal by a person with a disability.”  In addition, WA Medicaid allows termination of a provider relationship for discriminating in furnishing health care services as prohibited by federal statute.

For more information regarding avoiding such liability please contact Patrick Pearce.