SELF AUDITS AND DISCLOSURES IN A RAC WORLD. Kathleen Houston Drummy Partner Davis Wright Tremaine LLP Los Angeles, CA

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1 SELF AUDITS AND DISCLOSURES IN A RAC WORLD Kathleen Houston Drummy Partner Davis Wright Tremaine LLP Los Angeles, CA 1

2 Broader Program Integrity Landscape Improper Payments As a result of error As a result of fraud or abuse MACs, RACs, ZPICs, MICs, OIG, etc. 2

3 Identification of Payment Vulnerabilities/Risk Areas CMS Expectation of Provider Awareness Annual OIG Work Plan Pepper Reports Comparative Billing Reports 3

4 CMS MLN Matters No. SE1024 This is the first in a series of articles that will disseminate information on RAC high dollar improper payment vulnerabilities. The purpose of this article is to provide education regarding RAC demonstration-identified vulnerabilities in an effort to prevent these same problems from occurring in the future. 4

on RAC high dollar improper payment vulnerabilities.

5 AND COMING SOON: Mandatory Compliance Programs Condition of enrollment per PPACA OIG Compliance Training Programs 5

6 RAC ROLES DETECT IMPROPER PAYMENTS: Medicare now Medicaid by December 31,

7 EXTRAPOLATE Answer ID 9405: RAC ROLES Question: Will the RACs receive a full contingency fee for claims in which they utilize the extrapolation procedure outlined in the SOC? Answer: Yes. RACs will receive their full contingency fee for extrapolated claims. 7 Source: CMS FAQs

extrapolation procedure outlined in the SOC? Answer: Yes.

8 RAC ROLES REPORTING CASES OF SUSPECTED FRAUD The Case Of The Missing Fraud Referrals RACs Go To School: CMS Training Sessions 8

9 RAISING THE STAKES IN FRAUD AND ABUSE ENFORCEMENT False Claims Act (FCA) FCA standard: false claims with knowledge, reckless disregard, or deliberate ignorance 9

10 Key Provider Fraud Enforcement Provisions of the PPACA False Claims Act (FCA) Fraud Enforcement and Recovery Act of 2009 (FERA) broadens FCA liability Relaxes the intent requirements of the AKS Old test: Violation occurs if One purpose of payment is to induce an illegal referral; Actual knowledge of the AKS s prohibitions; Specific intent to violate the AKS New test: Violation occurs if One purpose of payment is to induce an illegal referral; no longer necessary to prove specific intent to violate the AKS 10

induce an illegal referral; Actual knowledge of the AKS s prohibitions; Specific intent to violate the AKS New test: Violation

11 Key Provider Fraud Enforcement Provisions of the PPACA New liability for the retention of overpayments, even if claim or receipt of overpayment was not knowingly false Time period to return overpayments 60 days Retention of overpayments after 60 days is defined as an obligation and therefore can be an FCA violation Compliance programs as a condition to enrollment in Medicare or Medicaid 11

return overpayments 60 days Retention of overpayments after 60 days is defined as an obligation

12 Key Provider Fraud Enforcement Provisions of the PPACA Knowing falsity is grounds for program exclusion Expands grounds for CMPs for excluded providers and falsities made in Medicare or Medicaid enrollment applications Suspension of program payments pending investigation of credible allegations of fraud 12

providers and falsities made in Medicare or Medicaid enrollment applications

13 Key Provider Fraud Enforcement Provisions of the PPACA Increases funding additional $350 million to fight Medicare fraud and abuse Establishes a national health care fraud and abuse data collection program for reporting adverse actions against providers, information to the NPDB Establishes new grounds for terminating and excluding persons or entities from Medicaid who own or manage entities that fail to repay overpayments, that are excluded from Medicaid, or that are affiliated with excluded persons or entities 13

information to the NPDB Establishes new grounds for terminating and excluding persons or entities from Medicaid who own or manage

14 IF FIND AN IMPROPER PAYMENT WHAT NOW?!? Verify finding of improper payment Error vs. Fraud Consider attorney-client privilege use of outside counsel Inform appropriate hospital stakeholders, e.g., compliance department, management, and/or board Establish prospective compliance 14

Fraud Consider attorney-client privilege use of outside counsel

15 DISCLOSE TO GOVERNMENT? FACTORS TO CONSIDER Follow compliance plan Strength/weakness of legal argument that no improper payment has occurred Government policies and positions 15

16 GOVERNMENT POLICIES AND POSITIONS Encourage Self-Disclosure and Repayment CMS FORM 855 CMS s Overpayment Refund Form (1999) CMS Proposed Rule (January 2002) Did not become final 16

17 GOVERNMENT POLICIES AND POSITIONS, CTD. Civil False Claims Act Penalties reduced from treble to double U. S. Sentencing Guidelines OIG Open Letters to Providers (2000, 2001, 2006, 2008) OIG Self Disclosure Protocol Specific, onerous format Can result in reduced exposure 17

Sentencing Guidelines OIG Open Letters to Providers (2000, 2001,

18 IMPACT ON RAC AUDITS: RACs may not review claims that are under review by another government entity MPIM, CHAPTER 4, 4.33: RAC DATA WAREHOUSE to track RAC activity and prevent conflicts between RAC reviews and other program integrity activities RAC compensation is impacted by self-disclosures and voluntary refunds 18

33: RAC DATA WAREHOUSE to track RAC activity and prevent conflicts between RAC

19 CMS RAC FAQs Q: If a provider performs a self audit, how should they notify the RAC? A: If a provider does a self-audit and identifies improper payments, the provider should report the improper payments to the appropriate Medicare claims processing contractor. The exact information necessary for the self referral can be determined by contacting your local carrier, FI or MAC. There are two types of self audits. One is commonly called a voluntary refund and is claim based. If the required claim information is included along with the amount of the improper payment, the claim will be adjusted by the claim processing contractor. The RAC will be aware of the adjustment, but the refund does not preclude future review. The second type of self audit may involve the use of extrapolation. If extrapolation is used, the claim processing contractor will review the case file to determine if it is acceptable. The claim processing contractor will accept or deny the extrapolation for the issue identified by the provider. If the claim processing contractor accepts the extrapolation, those claims in the universe will be excluded from RAC review. 19

The exact information necessary for the self referral can be determined by contacting your local carrier, FI or MAC. There are two types of self audits.

20 DISCLOSURE: PROS Cut off FCA liability Cut off whistleblower Limit/reduce fines and penalties (U.S. Sentencing Guideline, FCA, OIG) Avoid CIA or CCA Head off criminal indictment Allow provider/practitioner to negotiate subpoenas Allow provider/practitioner to frame case regarding law and publicity Reduce likelihood of broader investigation 20

Sentencing Guideline, FCA, OIG) Avoid CIA or CCA Head off criminal indictment Allow

21 DISCLOSURE: CONS Government will discover improper payment Fine or penalty may be imposed possibly worse than expected Further investigation possibly into areas not the subject of disclosed violation Time and expense of cooperating with governmental investigation Negative publicity possible headline damage 21

22 OPTIONS FOR GOVERNMENT DISCLOSURE: WHICH AGENCY? Disclosure to certain government agencies may resolve some enforcement issues but not others 22

23 DISCLOSURE: WHICH AGENCY? MAC/FI/CARRIER Routine billing errors but may not cut off whistleblower or FCA CMS Not for criminal or FCA 23

24 DISCLOSURE: WHICH AGENCY? OIG Voluntary Disclosure Protocol (VDP) AKS or Stark violations with colorable anti-kickback violation No FCA Sometimes used for conduct involving low grade intent or for rogue employee May not absolve from all claims, e.g., FCA, but VDP could help to head off enforcement by other agencies 24

25 DISCLOSURE: WHICH AGENCY? DOJ Can resolve all claims but potentially will be a higher profile disclosure Will cut off whistleblowers and FCA U.S. Attorney Same as DOJ and provider/practitioner may be in a better position to identify local AUSA with prior relationship who will act as an advocate DWT

26 QUESTIONS? 26

DEALING WITH STARK AND ANTI- KICKBACK PROBLEMS IDENTIFIED IN REVIEWS OF HOSPITAL-PHYSICIAN FINANCIAL ARRANGMENTS

DEALING WITH STARK AND ANTI- KICKBACK PROBLEMS IDENTIFIED IN REVIEWS OF HOSPITAL-PHYSICIAN FINANCIAL ARRANGMENTS CORRECTIVE ACTION, PHYSICIAN NEGOTIATION, AND VOLUNTARY DISCLOSURE; CASE STUDIES Dennis