Objectives. Fraud and Abuse defined Enforcement agencies Fraud and Abuse regulations Five-step action plan

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1 Fraud and Abuse Primer: Does your Compliance Program Prevent and Detect Fraud and Abuse? Julie Dean, JD, CHC, CHRC, CHPC Sr. Managing Consultant, Compliance Objectives Fraud and Abuse defined Enforcement agencies Fraud and Abuse regulations Five-step action plan 2

2 The Government s Return On Investment is Higher Than Before For every $1 spent on anti-fraud enforcement from , the federal government recovered A. $3.50 B. $5.70 C. $7.90 D. $8.10 This is $2.70 higher than the historical average Health Care Fraud and Abuse Control Program Annual Report for the Fiscal Year Top Ten Fraud Settlements of Bank of America (Merrill Lynch and Countrywide Financial) )$ $16.65 Billion 2. Johnson & Johnson $2.2 Billion 3. JP Morgan Chase $614 Million 4. US Bank $200 Million 5. Endo Health Solutions $192.7 Million 6. Amedysis, Inc. $150 Million 7. Omnicare, Inc. $124.4 Million 8. Community Health Systems $98.15 Million 9. Dr. Wasfi Makar, Florida oncologist who ran American Cancer Treatment Centers (2 locations) $89.6 Million 10. Halifax Hospital $85 Million 4

3 Fraud Happens... Fraud happens when Medicare is billed for services or supplies not provided and/or when there is an intentional misrepresentation or deception for the purpose p of receiving greater reimbursement 5 Abuse and Waste Drains Medicare Funds Abuse and/or waste happens when providers or suppliers don t follow good medical practices, resulting in unnecessary costs to Medicare, improper payment, or payment for services that aren t medically necessary 6

4 There are Many Forms of Fraud and Abuse Duplicate billing Billing for services not medically necessary Failing to return credit balances Upcoding the level of service in an attempt to receive higher reimbursement Violations of the Anti-kickback Statute or physician self-referral prohibition (Stark law) 7 Oversight and Enforcement Agencies Department of Health and Human Services Medicare is administered by the Secretary of Health and Human Services ( HHS ) Centers for Medicare and Medicaid Services The Secretary of HHS has delegated the responsibilities of administering Medicare to the Administrator of the Centers for Medicare and Medicaid Services ( CMS ) Office of Inspector General The jurisdiction over abusive business practices of Medicare and Medicaid is charged to the Office of Inspector General ( OIG ) Congress created the OIG in 1976 to identify and eliminate fraud, abuse, and waste in HHS programs 8

5 Oversight and Enforcement Agencies Department of Justice ( DOJ ) Includes Main Justice and U.S. Attorneys Offices located in each judicial district throughout the United States, has prosecutorial discretion to bring criminal and civil action under the various federal fraud and abuse healthcare laws Federal Bureau of Investigation ( FBI ) us/investigate/white_collar/health-care-fraud care State Attorney Generals and Medicaid Fraud Control Units ( MFCUs ) 9 Health Care Fraud Prevention and Enforcement Action Team ( HEAT ) May 2009 HHS and the DOJ created the HEAT Task Force HEAT s work is directed by the Secretary of HHS and by the Attorney General of the United States HEAT s Mission: Combine resources across the government to prevent waste, fraud, and abuse Crack down on organizations that abuse the system Highlight best practices by providers and organizations dedicated to ending waste, fraud, and abuse Recover tax payer dollars 10

6 Where is the HEAT Task Force Located? HEAT s Medicare Fraud Strike Force is a multi-agency team of federal, state, and local investigators designed to fight Medicare fraud The Medicare Fraud Strike Force has recently expanded to include nine cities: Baton Rouge, LA Brooklyn, NY Chicago, IL Dallas, TX Detroit, MI Houston, TX Los Angeles, CA Miami Dade, FL Tampa Bay, FL 11 Shift From Pay and Chase Enforcement Efforts to Preventative Program Integrity Efforts As part of the HEAT Task Force, CMS, OIG, and DOJ are developing new tools and techniques to identify fraudulent activity Data analysis command center with improved data sharing among the agencies and contractors The integrated database allows for: o Real time analysis of data o Proactively analyzing suspicious patterns in emerging claims data o Use of predictive analytical tools *DHHS/CMS Report to Congress, Fraud Prevention System, First Implementation Year

7 Fraud and Abuse Regulations Civil Monetary Penalties Law Federal False Claims Act State False Claims Acts Stark Law Anti-kickback Statue 13 Social Security Act Civil Monetary Penalties Law The OIG may seek CMPs for a wide variety of conduct Presents or causes to be presented claims to a Federal health care program that t the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent. 42 U.S.C. 1320a-7a(a)(1)(A) and (B). Violates the anti-kickback statute (42 U.S.C. 1320a-7b(b)) by knowingly and willfully: (1) offering or paying remuneration to induce the referral of Federal health care program business; or (2) soliciting or receiving remuneration in return for the referral of Federal health care program business. 42 U.S.C. 1320a- 7a(a)(7). Presents or causes to be presented a claim that the person knows or should know is for a service for which payment may not be made under 42 U.S.C. 1395nn, the physician self-referral or "Stark" law. 42 U.S.C. 1395nn(g)(3). 14

8 Penalties Under the Civil Monetary Penalties Law Civil monetary penalties up to $10,000 per claim, up to $50,000 under certain circumstances, plus treble damages Criminal penalties for false statements and representations made knowingly and willfully Criminal fines up to $25,000, up to five years imprisonment, or both Mandatory exclusion from participation in federal health care programs under certain circumstances Permissive exclusion from participation in federal health care programs (exclusion at the OIG s discretion) 15 The False Claims Act Covers Fraud Involving the Medicare and Medicaid Programs The False Claims Act ( FCA ) establishes liability for any person who knowingly presents, or causes to be presented, a false or fraudulent claim to the U.S. government The FCA allows private individuals (whistleblowers or relators) to bring suit (qui tam actions) As an incentive, they share in the funds recovered by the government 16

9 Recent Amendments to the False Claims Act Deficit Reduction Act (DRA) of 2005 amended the FCA to add whistleblower protections and requirements to provide workforce education Fraud Enforcement and Recovery Act (FERA) of 2009 expands the concept of reverse false claims under the FCA by extending liability to anyone that knowingly conceals an overpayment Patient Protection and Affordable Care Act (2010) establishes a firm timetable to return overpayments after 60 days from the date the overpayment is identified, the overpayment is considered a false claim under the FCA 17 Analysis of a False Claim Did the hospital submit a claim for payment to the federal government? Was the claims false or fraudulent? Was the claim submitted knowingly? For purposes of the statute, the terms knowing and knowingly mean that a person (1) has actual knowledge, (2) acts in deliberate ignorance of the truth or falsity of the information or (3) acts in reckless disregard of the truth or falsity of the information. 31 U.S.C. 3729(b). Accordingly, there is no requirement that the person submitting the claim have actual knowledge that the claim is false. 18

10 Fines and Penalties under the False Claims Act Civil Monetary Penalties range from $5,500 to $11,000 for each false claim submitted Treble damages Potential exclusion from participation in federal health care programs 19 False Claims Act Resources FCA Primer /04/22/C-FRAUDS_FCA_Primer.pdf State False Claims Act 20

11 Examples of Whistleblower Payouts 2014 Johnson & Johnson $2.2 billion $167.7 million paid to whistleblowers Amedysis, Inc. $150 million $26 million paid to whistleblowers primarily former Amedysis employees Omnicare, Inc. $124.4 million $17.24 million paid to one whistleblower, a former Omnicare employee Halifax Hospital $85 million $20.8 million paid to one whistleblower 21 The Stark Law Prohibits Physician Self Referrals The Stark Law prohibits a physician (or immediate family member of physician) from making referrals for designated health services covered by Medicare to an entity with which the physician (or immediate family member of physician) has a financial relationship unless the financial relationship satisfies an exception to the Stark Law Hospital may not bill Medicare for improperly referred designated health services 22

12 What are Designated Health Services Designated Health Services include, but are not limited to, the following services when payable in whole or in part by Medicare: Clinical laboratory services Physician therapy, occupational therapy, and outpatient speechlanguage pathology services Radiology and certain other imaging services Radiation therapy services and supplies Durable medical equipment and supplies Parenteral and enteral nutrients, equipment and supplies Prosthetics, orthotics and prosthetic devices and supplies Home health services Outpatient prescription drugs Inpatient and outpatient hospital services 23 How Can the Hospital Minimize its Risk of Potential Stark Violations? Have financial arrangements with physicians been reviewed by legal counsel and documented in writing Financial arrangements with physicians should fit into an exception to the Stark Law Common Exceptions include: Medical office building leases Equipment leases Employment agreements Professional services agreements Recruiting agreements Non-monetary compensation Incidental benefits 24

13 Elements of a Stark Law Analysis Does Stark Law apply to the arrangement? Physician o Stark Law only applies to physicians, i NOT NPs or PAs Referral o A referral includes a request, order, certification, or recertification by a physician for a Designated Health Service (DHS) payable under Medicare Financial relationship o A financial relationship can be either a direct or indirect ownership or investment interest in the entity that furnishes the DHS or a compensation arrangement between the physician and the DHS entity 25 Elements of a Stark Analysis If Stark Law applies, does the arrangement fit into an exception to the Stark Law? 35 exceptions Arrangement must satisfy each element of the exception If the arrangement does not fit into an exception, then Stark Law prohibits the arrangement 26

14 Stark Law Analysis Tool Does the arrangement involve a physician? Yes Does the physician refer DHS? Yes Does the physician (or immediate family member) have a financial relationship with the entity furnishing the DHS (i.e. the hospital)? Yes Does an exception apply? Stark prohibits the arrangement No No No No Yes Stark does not prohibit the arrangement 27 Fines and Penalties for Violations of The Stark Law Civil Monetary Penalties of $15,000 fine per claim and, in certain cases, not to exceed $100,000 per violation if the person knows or should have known the claim violates the statute Denial of payment Refund of payment Liability under the False Claims Act Exclusion from participation in federal payor programs 28

15 What is the Stark Self Referral Disclosure Protocol ( SRDP )? Applies only to Stark Law violations Process to voluntarily disclose actual or potential violations of the physician self-referral or Stark Law, and the associated actual or potential Medicare overpayment The SRDP represents a chance to reduce potential exposure to Stark Law penalties. CMS is open to resolving certain Stark violations for less than the maximum possible penalties when disclosed through the SRDP Abuse/PhysicianSelfReferral/Self_Referral_Disclosure_Protocol.html Abuse/PhysicianSelfReferral/Downloads/6409_SRDP_Protocol.pdf 29 Payment for Referrals is a Felony under the Anti Kickback Statute The Anti-kickback Statute (AKS) makes it a crime for individuals to knowingly and willfully offer to pay, solicit, or receive remuneration in order to induce or reward the referral of business reimbursable under any of the federal health care programs If a transaction, relationship, or payment is structured in a manner that meets the requirements of a safe harbor, it can be protected from civil or criminal penalty under the Anti-Kickback Statute The Affordable Care Act revises the evidentiary standard under the AKS by eliminating the requirement of actual knowledge of, or specific intent to commit, a violation of the statute 30

16 How Can the Hospital Minimize its Risk of Potential AKS Violations? Have financial arrangements with referral sources been reviewed by legal counsel and documented in writing Financial arrangements with referral sources should fit into a Safe Harbor to the AKS Common Safe Harbors include: Medical office building leases Equipment leases Employment agreements Professional services agreements Recruiting agreements 31 A Violation of the Anti Kickback Statute is also a Violation of the False Claims Act Title VI Section 6402 Explicit FCA violation A claim that includes an item or Service, resulting from an AKS Violation, constitutes a false claim under the FCA Ignorance of Law is not a defense IGNORANCE OF THE LAW IS NO EXCUSE I DIDN T KNOW THAT, EITHER ACA revises the intent requirement of the AKS by providing that a person need not have actual knowledge, or specific intent to commit a violation, of this section 32

17 Analysis Under the Anti kickback Statute Does the arrangement implicate the AKS? Are the medical services paid for under a federal healthcare program? Is there a direct or indirect financial arrangement between the referring party and the medical provider? Does the arrangement violate the AKS? Does the arrangement fit within a safe harbor to the AKS? If not, is the purpose of the arrangement the inducement of referrals? 33 Fines and Penalties for Violations of the AKS Felony Imprisonment for five years Civil Monetary Penalties Fines up to $25,000 Exclusion from Medicare Program Liability Under the False Claims Act 34

18 OIG Self Disclosure Protocol For violations of the Anti-kickback Statute Self-Disclosure-Protocol.pdf g p p 09.pdfhttps://oig.hhs.gov/fraud/docs/openletters/OpenLetter pdf 35 Anti kickback Statute Resources title42-vol5-sec pdf 36

19 Comparison Chart FCA AKS Stark Target Anyone contracting Medicare/Medicaid Doctors with the federal government Providers Focus Fraud Payment for referrals Self-referrals Services Any type of services Any type of services Designated Health Services Criminal Penalties Up to 10 years prison Up to 5 years prison None Civil Penalties Treble damages up to treble damages Yes Penalty Range Exclusion Authority Private Right of Action Mandatory $5,500 to $11,000 per claim Felony violation; fines up to $25,000; civil monetary penalties; liability under the FCA Potential exclusion for participation in Federal payor programs Civil penalties of $15,000 fine per claim; potential liability under the FCA Potential exclusion for Potential exclusion for participation in Federal participation in Federal payor programs payor programs payor programs Qui Tam (Whistleblower shares in the recovery) None None Intent Intent must be proven: actual knowledge; acts in deliberate ignorance; or acts in reckless disregard Per the Affordable Care Act, a person need not have actual knowledge or specific intent to commit a violation of the AKS Strict Liability Law - no intent required FIVE STEPS TO DETECTING AND PREVENTING FRAUD,, WASTE, AND ABUSE 38

20 1. Identify Your Hospital s Risk Areas Hospital-wide risk assessment Departmental risk assessments OIG Annual Work Plan PEPPER Report Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/Data-Analysis/ Survey results from government and accreditation agencies Denial Reports Medical necessity Admission i criteria i Coding audits Hotline calls Patient complaints Establish Internal Controls for Identified Risk Areas Policies and procedures Add audits of identified ed risk areas to the Annual Auditing and Monitoring Plan Conduct base-line audit Compare to industry benchmarks Conduct follow-up audits Track and document progress made toward meeting benchmarks Report results to the Board Random testing of identified risk areas 40

21 3. Training Specific to Identified Risk Areas Fraud and abuse training Training specific to identified risk areas Training on new policies and procedures implemented to address risk areas Job-specific training Communication with Employees Establish policies and procedures that encourage employees to ask questions and report compliance concerns Maintain an anonymous hotline Take reported compliance concern seriously Investigate every compliance concern reported Implement and publicize a strict anti-retaliation policy 42

22 5. Utilize Compliance Resources CMS website OIG website HEAT task force website QHR compliance consultants Hospital s legal counsel Network of compliance officers Trade association 43 44

23 Thanks for Attending! Intended for internal guidance only, and not as recommendations for specific situations. Readers should consult a qualified attorney for specific legal guidance. 45