HSC-NO and Medical Billing

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1 Regulatory Compliance Training For Management Revised

2 Why Does Management Need Specialized Regulatory Compliance Training? Regulations impact: Contracts Grants Clinical Trials Reimbursement

3 Failure to Follow these Regulations can result in Loss of all Federal funding Debarment from participation in any federal programs (Medicare, Medicaid & Federal grants, etc.) for up to 5 years Civil Monetary Penalties (CMP) Jail sentences

4 Who Needs This Training? All members of Management (Chancellor, Vice Chancellors, Deans, Assistant Deans, Department Heads, & Business Managers)

5 Health Care Laws That Impact LSUHSC-NO Examples: Anti-kickback Statute The Stark Amendments HIPAA

6 HIPAA and Business Associate Agreements A Business Associate Agreement is required anytime LSUHSC-NO conducts business with entities if: The entity is not covered under HIPAA; and There is a potential for the creation or exchange of PHI BA Agreements have standardized terms to protect and guard the confidentiality of an individual s PHI.

7 Who is a Business Associate? A business associate is a person or entity whom LSUHSC-NO has performed a function or activity on behalf of the University involving the use or disclosure of PHI. A business associate is not a member of our workforce

8 Contracts that may need Business Associate Agreements Only contracts in which LSUHSC-NO pays the vendor need to be considered, and then look for the following as to the types of services provided where PHI would be sent to the vendor. Billing, claims processing or administration data analysis utilization review quality assurance benefit management practice management re-pricing legal services (e.g. malpractice case) actuarial services accounting services (e.g. if PHI is disclosed to CPA); consulting services data aggregation management services administrative services accreditation; and financial services any contract in which the vendor is contracting to do a service on behalf of LSUHSC-NO where protected health information might be used or disclosed to the vendor

9 Where do I find a Business Associate Agreement? The LSUHSC-NO Policy on HIPAA Business Associate Agreements and a copy of the approved LSUHSC-N.O Business Associate Agreement contract can be found at: 53/AttachmentA-ContractAddendum.doc - Go to policy V: Patient Information Policy: Use and Disclosure of Protected Health Information to Business Associate If you are unsure whether a contract needs a BA agreement, please contact the LSUHSC-N.O. Privacy Officer.

10 Contracts Examples: Rental of Office Space Physician Services In-office Ancillary Services Physician Recruitment

11 Anti-Kickback Statute (42 U.S.C. 1320a-7b) (cont.) (2) whoever knowingly and willfully offers and pays any remuneration (including any kickback, bribe or rebate) directly or indirectly, overtly or covertly, in cash or in kind to any person to induce such person - (A) to refer an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under [Medicare] or a State health care program, or (B) to purchase, lease, order, or arrange for or recommend purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under [Medicare] or a State health care program, shall be guilty of a felony and upon conviction thereof, shall be fined not more than $25,000 or imprisoned for not more than five years, or both.

12 All Contracts Must Have Compensation that is set in advance Have compensation that reflects fair market value Not take into account the value or volume of referrals

13 Compensation Set In Advance Contract term is at least one year Compensation does not vary over the contract term If the contract is terminated prior to one year, a new contract may not be executed between the parties for the same services until a year has passed.

14 Fair Market Value The value in arms-length transaction, consistent with the general market Specifies time frame of the arrangement Should be in writing and signed by both parties and covers identifiable items or services

15 Value or Volume of Referrals Compensation may not be based on the number of referrals for designated health services made. Compensation may not be based upon the dollar amount generated by referrals for ancillary services.

16 U.S. v. McClatchey Example of an Anti-kickback Case The first appeal and criminal conviction of physicians and hospital administrators The 10 th Circuit found Mr. Dennis McClatchey, hospital vice president and Drs. Robert and Ronald LaHue who had a geriatric practice, guilty of violating the Anti-kickback laws by accepting payment in exchange for referring patients to McClatchey s hospital.

17 U.S. v. McClatchey (cont.) The indictment charged McClatchey with one count of conspiracy to offer or pay remuneration to the LaHues in exchange for Medicare and Medicaid patient referrals, in violation of 18 U.S.C. 2 and 42 U.S.C. 1320a-7b(b)(2)(A), (B). Dr. Robert LaHue was sentenced to 70 months in prison Dr. Ronald LaHue was sentenced to 51 months in prison. McClatchey served 3 years probation, six months home detention and paid $30,000 in fines.

18 Stark 42 U.S.C. 1395nn Section 1877 of the Social Security Act (the Act) prohibits physicians from referring Medicare patients for certain designated health services (DHS) to an entity with which the physician or a member of the physician's immediate family has a financial relationship--unless an exception applies. Section 1877 also prohibits an entity from presenting or causing to be presented a bill or claim to anyone for a DHS furnished as a result of a prohibited referral.

19 Stark 42 U.S.C. 1395nn Designated Health Services (DHS) Clinical Laboratory Services Physical Therapy Services Occupational Therapy Services Outpatient Speech-language Pathology Services Radiology and certain other Imaging Services Radiation Therapy Services and Supplies

20 Costs in Clinical Trials Research Related Costs: Items or services required solely for the provision of the investigational item or service, the monitoring of the effects of the item or service, and the prevention of complications Generally funded by the sponsor of the clinical trial May not be billed to third party insurance

21 Costs (cont.) Items or services needed for reasonable and necessary care arising from an investigational item or service Standard of Care (Routine) Costs: Items or services that are typically provided absent a clinical trial Costs generally are not covered by sponsor May be billed to third party insurance

22 National Coverage Decision (NCD) Serves to define the routine costs of clinical trials and identify the clinical trials for which payment for such routine costs should be made Routine costs of clinical trials include all items and services that are otherwise generally available to Medicare beneficiaries

23 Desirable Characteristics of a Clinical Trial The subject or the trial is to test whether the intervention potentially improves the participants health outcomes The trial is well supported by available scientific and medical information or it is intended to clarify or establish the health outcomes of interventions already in common use

24 Desirable Characteristics of a Clinical Trial (cont.) The trial does not unjustifiably duplicate existing studies The trial design is appropriate to answer the research question being asked in the trial The trial is sponsored by a credible organization or individual capable of executing the proposed trial successfully

25 Qualification Process for Clinical Trials Clinical trials that meet the qualifying criteria will receive Medicare coverage of routine costs after the trials lead principal investigator (PI) certifies that the trial meets the criteria. The PI enrolls the trial in a Medicare clinical trials registry

26 Qualification Process for Clinical Trials Some clinical trials are automatically qualified to receive Medicare coverage of their routine costs. The PI does not need to certify that the trials meet the qualifying criteria. The PI must enroll the trials in the Medicare clinical trials registry

27 Billing In order to avoid erroneous bills, performance sites must be informed of research subjects and research related costs. Erroneous billing for failure to appropriately notify performance sites can be considered fraud.

28 Who Audits the University? External Entities Federal Government DHHS OIG Department of Education State Auditors Legislative Auditors Board of Regents LSU System Auditors LSU System Internal Audit Grant and/or Contract Sponsors LSUHSC-NO Auditors LSUHSC-NO Office of Compliance Programs

29 Key to a Successful Audit Organized files Documentation for expenses Appropriate and timely approvals Audit trails (i.e. documentation) Knowledge of LSU policies and regulations Ensure that all direct costs and revenues are posted to the appropriate projects. Preparing for an audit the same day you prepare the proposal Remember: If it s not documented, it didn t happen. Document! Document! Document!

30 Challenges at LSUHSC-NO Accurate charging of direct salary costs to grants and contracts Effort certification Consistency in estimating, accumulating and reporting costs Consistency in allocating cost incurred for the same purpose

31 Notification of Audits If you receive notification from an entity external to LSUHSC-NO that they will be conducting an audit, notify the Office of Compliance Programs at Please include in your notification: The name of the external entity The grant or program being audited The date(s) the audit is scheduled The individual(s) in your area that will be meeting with the auditors

32 Notification of Audits (cont.) The Office of Compliance Programs will assign someone to: Assist you in preparing for the audit Participate in meetings with the external auditors Assist in writing the response to the audit report Assist with any needed corrective action

33 Examples of Settlements Associated with Noncompliance Harvard University $3.3 Million The settlement: The university and an affiliated teaching hospital agreed in June to pay a total of $3.3-million to resolve accusations that a researcher worked fewer hours than promised on a project to study aging. The accusations included other accounting and management issues, including salaries paid to scientists who did not meet one of the grant's citizenship requirements. The response: After discovering the accounting problems in 1999 and reporting them to the National Institutes of Health, Harvard created a new Office of Research Compliance to monitor accounting and also increased efforts to train its grant administrators. SOURCE: Chronicle reporting Section: Government & Politics Volume 50, Issue 45, Page A20 The Chronicle: 7/16/2004: Accounting for Researchers' Time

34 Examples (cont.) Johns Hopkins University $2.6 Million The settlement: The university agreed in February to pay $2.6- million to settle claims that scientists there had knowingly overstated how much time they had spent on addiction research in the mid-1990s. The charges were brought by a whistle-blower who said that a researcher had billed the granting agency more than 100 percent of his available work time and had promised that the grant would support work by other employees, work that was never performed. The response: The university noted that during the years in question, researchers with faculty appointments who worked on the studies were employed by a corporation, Physicians, whose financial accounts were not part of the university's central payroll system. The corporation has since merged with the university. SOURCE: Chronicle reporting Section: Government & Politics Volume 50, Issue 45, Page A20 The Chronicle: 7/16/2004: Accounting for Researchers' Time

35 Examples (cont.) Northwestern University $5.5 Million The settlement: The university agreed in February 2003 to a settlement of $5.5-million over charges brought by a whistleblower that medical researchers at the university had reported spending more time on federally sponsored projects from 1995 to 2001 than they actually did. The response: The university said it had taken steps to improve its regulatory compliance. The government's complaint followed a period of rapid growth in the amount of federal research money the university received, and the university's management systems did not keep pace, said Alan K. Cubbage, a university spokesman. SOURCE: Chronicle reporting Section: Government & Politics Volume 50, Issue 45, Page A20 The Chronicle: 7/16/2004: Accounting for Researchers' Time

36 Examples (cont.) University of Minnesota Allegations of misuse of NIH grant funds $32 Million dollar Settlement Yale University tenured Professor forced out for allegedly padding his business travel expenses by approx. $150,000. Florida International University Fined $11.5 Million for improperly billing the U.S. Dept. of Energy for scientists time, travel and administrative expenses

37 Federal Sanctions As a recipient of federal funds, LSUHSC-NO is responsible for ensuring that no individual or company who has been excluded from participation in federal programs is compensated or reimbursed from federal sources of funds.

38 Federal Sanctions Most hospitals and other organizations affiliated with the University require that any LSUHSC-NO personnel or students working at their facilities must be eligible to participate in federal programs.

39 University Responsibilities All new hires are required to sign a form disclosing whether they have been excluded from participation in federal programs. All purchase orders include language requiring the vendor to disclose whether they have been excluded from federal programs.

40 University Responsibilities A report is run monthly comparing all employees, students and vendors against federal exclusion databases. Compliance Office staff members review any matches to certify that the individual or vendor is actually the one specified in the federal exclusion database.

41 Department Responsibilities When a department is notified that an employee, student or vendor is excluded from federal programs, the department has three options:

42 Department Responsibilities (cont.) Option 1 Separate the individual from the University or cancel the agreement with the vendor. This is the cleanest choice.

43 Department Responsibilities (cont.) Option 2 Allow the employment, enrollment or contract to continue. This option requires the department to develop a written plan which must be approved by the Compliance Officer to show how the department will ensure that no federal funds will be used to compensate or reimburse the individual or company and that all contract terms regarding excluded individuals will be followed.

44 Department Responsibilities Option 3 (cont.) Allow the employment, enrollment, or contract to continue while the individual or company seeks reinstatement with the federal government, if eligible. This option requires the department to develop a written plan which must be approved by the Compliance Officer to show how the department will ensure that no federal funds will be used to compensate or reimburse the individual or company and that all contract terms regarding excluded individuals will be followed during the period while reinstatement is being sought.

45 Department Responsibilities (cont.) This option is often the best compromise. It allows the department to retain the individual or contract to its benefit while limiting the effort of monitoring the individual or vendor to the time that is spent seeking reinstatement.

46 Permanent Memorandum 76 PM-76 is the policy on detection, reporting and investigation of financial irregularity. LSU will not tolerate or condone any acts or omissions that constitute a financial irregularity whether or not such act or omission results in any economic loss to LSU.

47 PM-76 (cont.) Management is responsible for the prevention and detection of financial irregularities and for ensuring that proper internal controls are in place to reduce the risk of such conduct. Management is authorized to take such in the course and scope of their duties, to prevent further loss to LSU or to mitigate such loss as may have occurred.

48 PM-76 (cont.) A knowing failure to report an incident that is covered by PM-76 is, in itself, a violation and may subject the violator to disciplinary action. All employees shall fully cooperate with any investigation into incidents covered by this policy which may include providing documents, compiling data, participating in interviews, or other tasks as required.

49 PM-76 (cont.) Management is responsible for reporting acts of known or suspected financial irregularities. Reporting can be done to: Immediate supervisor Internal Audit Compliance One of the various hotlines

50 THE END Any Questions? We are here to help! Office of Compliance Programs 433 Bolivar Suite 811 New Orleans, La (504)