OIG Launches New Online Submission Process for the Self-Disclosure Protocol

On July 8th, the Office of Inspector General (OIG) launched a new online submission process for the Self-Disclosure Protocol (SDP).  The SDP allows health care providers to voluntarily identify, disclose, and resolve instances of potential fraud involving federal health care programs, including Medicare and Medicaid.   The OIG has stated that individuals and entities that utilize the SDP will pay a lower amount of damages for violations than would normally be required in resolving a government-initiated investigation.

You can access the online submission process here.

The OIG hopes that the online submission tool for the SDP will streamline the process for providers that want to resolve violations without the time and expense of a government-directed investigation.  With that said, we suggest that providers have an attorney analyze any potential SDP issues prior to completing the online form.  As always, the health law attorneys at OMW are happy to help.

For more information about the SDP online submission process please contact Casey Moriarty.

Urology Group Challenge to Stark Regulations Is Too Little Too Late

A recent federal district court decision granted summary judgment to the government in a lawsuit by a urology group challenging the 2008 changes in Stark regulations affecting “under arrangement” services for hospital patients.  The decision illustrates the significant barriers to a successful challenge to these regulations.

The challenge focused on the 2008 regulatory changes that swept entities performing DHS into the definition of entities “furnishing” DHS and reversed CMS’ 2001 regulatory approval of “per click” lease agreements.  Several challenges to these changes were dismissed for not being raised within the six year limitation period applicable under the federal Administrative Procedures Act.

The arguments against these changes that survived the timeliness bar failed to convince the court that the changes were contrary to express Congressional intent stated in the legislation or were an impermissible interpretation of the legislation.  The court rejected an argument that the group practice exception for certain compensation arrangements constituted a Congressional expression of intent that the term “entity” was not intended to include entities that furnished DHS.  The court readily concluded that including entities that performed DHS within the definition of entities “furnishing” DHS was a permissible interpretation of the legislation.

As for the revision in the regulations to prohibit the previously permitted “per click” lease arrangements, the court noted that CMS is entitled to change its mind as long as there is a reasonable basis for the change.

“Thus, the agency remains free to reinterpret a statute in a way that varies greatly from its past interpretations so long as the agency provides a reasoned basis for its new interpretation.”

For more information regarding the Stark law or False Claims Act in general please contact Greg Montgomery.


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

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.

OIG Issues Updated Self-Disclosure Protocol

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.



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.


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.


OIG Approves Gift Card Program for Medicaid Patients

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.

OIG Opines Favorably on Hospital Emergency Department Call Coverage Arrangement

On October 23, 2012, the Office of Inspector General (“OIG”) issued a favorable response to a hospital’s request regarding its payment of per diem fees to various physician specialties in exchange for emergency department call coverage and related services.  Based on the facts as certified by the hospital-requestor, the OIG concluded that, although the arrangement could violate the federal anti-kickback statute if the parties intended the arrangement to induce or reward referrals of federal health care program business, it would not impose administrative sanctions.  While only the requestor may rely on this advisory opinion, it represents the third time the OIG issued a favorable Advisory Opinion regarding hospital pay for call arrangements.  The OIG similarly reached favorable conclusions in Advisory Opinion No. 07-10 and Advisory Opinion No. 09-05.

In the Opinion, the requestor is a tax-exempt hospital that operates a full time emergency department.  Under the arrangement, the hospital pays per diem fees to physicians to provide call coverage.  The physicians on call are required to be available and respond to calls from the ED within 30 minutes and must provide follow up care, regardless of a patient’s ability to pay.  The Hospital certified to the OIG that 19% of its patients seen in its ED receive uncompensated care, that it offers the arrangement to all specialists on its medical staff who are required to participate in call coverage, that it sets an annual allocation per specialty based on various “burden” factors, that it experienced shortages in the availability of physicians to take call, and that it monitors ongoing performance under the program.  Based on an independent consultant’s review of the per diem rates, the requestor certified to the OIG that the rates are consistent with fair market value and do not take into account the volume or value of referrals or other business generated between the parties.

The OIG concluded that the arrangement fails to qualify for the safe harbor under the federal anti-kickback statute for personal services and management contracts because aggregate compensation is not set in advance (See Safe Harbor, 42 C.F.R. 1001.952(d))    In addition, the arrangement failed to precisely specify a schedule of part-time service intervals.  Because the arrangement does not fit squarely within the safe harbor, the OIG analyzed the totality of the facts and circumstances to determine if the arrangement presents minimal fraud and abuse risk.

Just as it did in the previous Advisory Opinions, the OIG applied the following general “rule of thumb”:

“The general rule of thumb is that any remuneration flowing between hospitals and physicians should be at fair market value for actual and necessary items furnished or services rendered based upon an arm’s-length transaction and should not take into account, directly or indirectly, the value or volume of any past or future referrals or other business generated between the parties.”  70 Fed. Reg. 4858, 4866 (Jan. 31, 2005).

While the OIG generally recognized that hospitals may properly structure pay for call arrangements within the general “rule of thumb,” it also generally identified the same problematic compensation structures that it listed in previous opinions:  (1)  Arbitrary “lost income” compensation, (2) payment for no identifiable service, (3) aggregate on call payments disproprotionately high compared to regular practice income, and (4) payment for services for which the physician already receives separate reimbursement from payors or patients.

The OIG concluded that, overall, the arrangement presents a low risk of fraud and abuse for the following reasons:

  1. The requestor certified that, based on an independent valuation, the per diem rates are fair market value and the hospital meaningfully contemplated call burden to set rates;
  2. Uniform administration of per diem payments without regard to referrals or volume of business generated;
  3. Physicians required to provide actual and necessary services for which they are not otherwise compensated;
  4. The arrangement is offered on a consistent basis to all specialists who are required to take call; and
  5. Costs are not passed on to federal health programs.

The OIG was ultimately convinced that this arrangement contains sufficient safeguards to reduce the risk that the per diem fees are intended to generate referrals of Federal health care business.

For more information about ED call coverage or the Anti-Kickback and Stark rules in general please contact Adam Snyder.

OIG Releases 2013 Work Plan – Important Topics for Both Hospitals and Physicians

Fall must be here because the FY 2013 OIG Work Plan is out.  Providers of all shapes and sizes should at least browse the table of contents to see whether any of the  OIG’s topics for FY 2013 touch important aspects of their businesses and practices.  Among the many topics, some highlights include:


  • Analyze the “savings” of expanding the hospital three day payment window to 14 days;
  • Review Medicare payments for hospital discharges that should have been billed as transfers;
  • Review payment for canceled hospital surgical procedures;
  • Review effect on costs of hospital acquisition of ASCs;
  • Review payments for outpatient physical therapy services provided by independent therapists;
  • Review appropriateness of payments for sleep study services and the high utilization of sleep testing procedures;
  • Review coding of anesthesia services (personally performed versus medical direction of up to four concurrent procedures);
  • Review the payment for practice expenses of imaging services;
  • Review the medical necessity of high cost diagnostic imaging tests;
  • Review physician billing for “incident-to” services; and
  • Review physician coding of place of service.


Also of note, OIG states that it expects to publish a revised Provider Self-Disclosure Protocol some time in FY 2013.

If you have questions about any of these topics or the OIG Work Plan in general please contact Don Black.


Online Coupon Advertising Gets Thumbs Up From The OIG

On March 27, 2012 the Department of Health and Human Services Office of Inspector General (“OIG”) released Advisory Opinion No. 12-02.  The opinion stated that a proposed website that would display coupons and advertising from health care providers, suppliers, and other entities would not lead to administrative sanctions or civil monetary penalties under the federal anti-kickback statute or the prohibition against providing inducements to beneficiaries.
A corporation would operate the proposed website that would contract with providers, suppliers, and other health care entities who wish to provide coupons and advertisements on the website.  The coupons can offer discounts on services or items through either percentage or dollar-off amounts; however, the coupons cannot offer free services and any coupon must apply to the entire service cost, not just the patient’s cost-sharing obligation.  Any provider who wishes to pay a membership fee may post coupons on the website.  Additionally, health care providers and suppliers may choose to purchase advertising space on the website.
The OIG noted that the proposed arrangement involved two activities that could implicate the anti-kickback statute:  (i) selling advertising space on the website to health care providers and suppliers that may bill federal health care programs, and (ii) posting providers’ coupons for health care items or services.  The OIG further noted that the coupons could also implicate the civil monetary penalty provision prohibiting inducements to beneficiaries.
The OIG found the proposed website to have a permissibly low risk of fraud or abuse because:
• The website operator is not a healthcare provider or supplier.  Although one of the members is a practicing physician, his name would not appear anywhere on the website, nor would the site claim to be operated by a doctor or other healthcare provider or supplier.
• The payments from providers and advertisers to the operators would not depend on customers using the coupons.  Instead, the providers and advertisers would pay a set fee, consistent with fair market value in an arms-length transaction.  Thus, the fee would not take into account the volume or value of any referrals.
• The advertising could take the form of banner or pop-up advertisements on a publicly accessible website.  The website would not require customers to register, and any customer information voluntarily gathered would not be shared with providers or advertisers.
• The types of coupons decreases risk under the anti-kickback statute because they are not pre-paid coupons for services that might not be medically appropriate for the customer.  For example, a coupon could include 50% off of a mammogram or $100 off of a memmogram surgery, but could not be a coupon for a free mammogram or a Groupon-style prepaid coupon for a mammogram for $10 prepaid to the coupon service.  The latter two examples could cause a customer of the website to seek care they might not need because the service is either free or was paid for before consulting with the healthcare provider to determine whether the service is appropriate for the customer.
The OIG also noted that the advertising and coupons involved are similar to accurate and non-deceptive print advertising in general circulation media that does not typically raise concerns.
For more information regarding this OIG opinion or if you have questions regarding the anti-kickback statute please contact Laura Carlsen.