Bill Moran and Betta Sherman

Transcription

1 Compliance TODAY July 2013 a publication of the health care compliance association How an eye doctor s son sees compliance an interview with Stephen Kiess Assistant General Counsel for Vidant Health See page Don t fear the Sunshine (but wear your sunscreen) Mary B. Langowski, Kristen E. Ratcliff, and Rebecca Jones McKnight 27 PATH rules for physician oversight and billing Bill Moran and Betta Sherman 31 Texting and mobile devices: Partners in health care Jim Sheldon-Dean and Vidyadhar Phalke 38 After an allegation: Conducting an effective, efficient internal investigation Rob Cepielik, Mike Little, and Greg Garrison This article, published in Compliance Today, appears here with permission from the Health Care Compliance Association. Call HCCA at with reprint requests.

2 by Robert A. Wade and Mark T. Morrell, CHC Responding to technical violations of the Stark Law Stark Law violations can occur even if the provider is unaware of the violation. Because violations of Stark are punished regardless of intention, technical violations can produce large repayments, fines, and penalties. The Medicare Self-Referral Disclosure Protocol (SRDP) can be used to facilitate a settlement, particularly when an infraction is technical. Many potential technical violations identified by providers are defensible, based on the facts of a particular situation. If a technical violation of Stark has occurred, providers must take prompt steps to become compliant and either enter the SRDP or make repayment. Robert A. Wade is a Partner in the Mishawaka, IN office, and Mark T. Morrell is an Associate in the Carmel, IN office of Krieg DeVault LLP. Providers often ask whether a situation that appears to be only a technical violation of the Stark Law (42 U.S.C. 1395nn) must be reported and repaid. As is often the answer in a complex situation, It depends. The situation that appears to be a technical violation may not be a violation of the Stark Law at all. Then again, the situation may fail to satisfy all of the Stark Law s picayune requirements, and if so, reporting and repayment is required because the Stark Law is a strict liability statute. This article (1) reviews the Stark Law and its strict requirements, (2) identifies examples of technical Stark Law violations, (3) discusses the Self- Referral Disclosure Protocol, and (4) reviews a provider s strategy for addressing technical violations of the Stark Law. Background: Stark Law The Stark Law prohibits a physician from making a referral to an entity for the furnishing of certain services, for which Medicare would otherwise pay, if the provider or member of the provider s immediate family had a financial relationship with the entity, unless an exception applies. Since its original passage, the Stark Law s implementing regulations have been amended multiple times, expanding the law s prohibition on certain provider referrals for designated health services (DHS). The exceptions to the Stark Law are specified in 42 C.F.R. Wade Part 411, Subpart J. A compensation arrangement implicated by Stark must satisfy a compensation exception, and an ownership arrangement implicated by Stark must satisfy an ownership exception. The Stark Law is a strict liability statute, meaning that no intent to violate the statute is necessary for a provider to violate the statute. Morrell The Stark Law contains significant sanctions for violations, including denial of payment, refunds of amounts collected in violation of the law (even if the provider was unaware of the violation at the time the claim was submitted or when the reimbursement was received), and exclusion from the Medicare or Medicaid programs. In addition, the United States Department of Health and Human Services (HHS) Office of Inspector General (OIG) may impose a penalty of up to $100,000 for each arrangement designed to

3 circumvent the Stark Law. If a provider had knowledge of a non-compliant arrangement when the claim was submitted or gained knowledge after the reimbursement was received, the federal False Claims Act (31 U.S.C. 3729, 3733) may be implicated. The False Claims Act imposes treble damages on the reimbursement received and up to $11,500 in fines for each claim submitted or retained. Obviously, financial arrangements that do not fully comply with a Stark Law exception may create significant financial penalties or obligations to the entity that billed for the service referred by the physician with whom the entity had a non-compliant arrangement. Literally, technical violations can produce multi-million dollar repayments, fines, and penalties. But it s only technically a violation of the Stark Law Given the Stark Law s strict liability combined with expensive penalties, providers often wonder what to do when they fear that the Stark Law may have been only technically violated. This question brings into view the harsh reality of the Stark Law. Providers understand that the Stark Law was developed to prohibit a physician from making a referral for services payable by Medicare when the provider or member of the provider s immediate family had a prohibited financial relationship. Providers do not always understand, however, Providers do not always understand why an unsigned contract, expired lease, CME seminar, nonmonetary benefit, or other minor situation should give rise to the same punishment as blatant funneling of referrals. why an unsigned contract, expired lease, CME seminar, non-monetary benefit, or other minor situation should give rise to the same punishment as blatant funneling of referrals. A number of situations might qualify as technical Stark Law violations. A few common examples include: Parties negotiate a written contract and act according to the written contract, but the parties cannot locate, or did not actually provide, signature pages to the contract. A written services agreement expires, but the parties continue to operate as if a written contract remains effective. A lease for medical office space expires and is not extended in writing within the six-month holdover period, but the parties continue to operate as if the lease renewed for an annual renewal term. The holdover period in a medical office lease provides for a month-to-month tenancy following termination, and the tenant and landlord have continued the lease after termination for more than six months. A lease for medical office space is extended, and new space is added, but the new space is not included in the extended lease and rent is not charged for this space. A lease for medical office space extends automatically under the contract, and the landlord charges a standard increase of rent, but the increase is not set forth in the lease

4 An agreement with an evergreen renewal provision has been in effect for so long that the payment terms may no longer reflect fair market value. A hospital offers free or discounted continuing medical education (CME) credits to community physicians. A health system realizes that a small number of physicians received nonmonetary compensation that slightly exceeded the permitted annual limit, which is currently $380. A requirement under a medical office space lease agreement for the physician tenant to pay common area maintenance was never charged or paid by the leasing physician. Common among these examples is a familiar fact pattern: Neither party has entered into a relationship with the intention of rewarding referrals. Most technical violations involve an issue about a written contract, often a medical office lease or professional service arrangement. The parties typically have an intention to fit within a Stark Law exception. However, despite all the good intentions, the parties learn (whether immediately or later) that a small detail that is required by a Stark Law exception was not satisfied. Because violations of Stark are punished regardless of intention, instances of when a physician fails to sign a contract could receive a similar punishment as payments that were above fair market value. Self-Referral Disclosure Protocol Most providers are now familiar with the Medicare Self-Referral Disclosure Protocol (SRDP), which is authorized by the Patient Protection and Affordable Care Act (PPACA) and offers a method for health care providers and suppliers to disclose actual or potential violations of the Stark Law. The SRDP is open to all health care providers of services and supplies, whether individuals or entities, and is not limited to any particular industry, medical specialty, or type of service. The SRDP is intended to facilitate the resolution of matters that, in the disclosing party s reasonable assessment, are actual or potential violations of the physician self-referral statute. The Affordable Care Act granted the Secretary of Health and Human Services (HHS) authority to reduce amounts due and owing for actual or potential violations of the statute disclosed under the SRDP. Thus, providers can use the SRDP to report Stark Law violations in order to negotiate a reasonable settlement, especially if such infraction is deemed to be a technical violation. Disclosing parties must submit the following information under the SRDP: 1. Identification of the disclosing party, including, for an entity, information about the organizational and corporate structure of the entity; 2. A description of the matter and duration of the violation; 3. A legal analysis of how the incident failed to satisfy a Stark Law exception, along with a summary of which sub-elements of a particular exception were satisfied; 4. An explanation of how the matter was discovered and the follow-up actions taken to address the issue or the procedural cause of the violation; 5. A statement about any history of similar conduct or enforcement action; 6. A description of any compliance program in place prior to discovery and all remedial and preventative steps taken to avoid future recurrence of the issue or infraction; 7. A description of any required notices provided to other government agencies; and 8. Whether the matter is under current inquiry by any governmental agency. The disclosing party must also conduct a financial analysis to provide an evaluation

5 of the length of time in which the particular matter was noncompliant. In connection with SRDP, PPACA also requires that an overpayment be reported and returned within 60 days after the date the overpayment is determined. This means that the provider must report the non-compliant arrangement within 60 days after the overpayment has been quantified by the reporting entity. The amount of the overpayment must be determined through the use of reasonable diligence and appropriate allocation of resources. Failure to report and return such overpayment on a timely basis exposes entities to potential penalties under the False Claims Act. Technically speaking, what should a provider do? Providers that follow a rigid compliance program will undoubtedly discover potential technical Stark Law violations from time to time. Before running immediately to the SRDP, providers are advised to discuss the specific facts of a particular potential technical violation of Stark with experienced legal counsel to identify whether another Stark Law exception may be applicable under the circumstances, or whether the Stark Law even applies to the subject arrangement. Counsel may advise that an arrangement that a provider believed to be a technical violation instead satisfied a Stark Law exception, or that another legal argument is available in reasonable defense of a Stark Law exception. Some examples of when a possible technical violation may be defended include: The physician is an employee, thus requiring no written agreement signed by the parties. The referring physician did not have a direct financial relationship with the DHS entity, and the compensation arrangement did not meet the indirect compensation arrangement definition, because the Train Your Employees with HCCA s Top-Rated DVD Compliance and Ethics: An Introduction for Health Care Professionals HCCA s video provides everything you need to conduct compliance and ethics training 23-minute video with seven dramatizations (available in DVD or VHS) Trainer s Guide with suggested program agendas and discussion outlines Reproducible participant materials DVD includes viewer s menu for easy customization of training sessions HCCA member price $350 non-member price $395 Visit for more information and to order

6 compensation paid to the physician did not vary based upon the volume or value of referrals to such entity. A state statute or case law may cause the arrangement to conform with a Stark Law exception, as may be the case to satisfy the written arrangement signed by the parties requirement. The legal theory of mutual mistake may apply. The potential technical violation was a contract violation with all requirements of a Stark Law exception being met (i.e., late payments). The physician was not a source of referrals to the DHS entity. The entity in question does not perform or bill DHS. The alleged benefit was free use of space, but complied with Medicare s billing requirements (i.e., physician billing separately for professional services and hospital billing for technical services in a provider-based clinic). If, after conferring with legal counsel, the provider determines that an arrangement is potentially non-compliant, the provider should take prompt, proactive steps to bring the arrangement into compliance as quickly as possible. Once the provider is assured that the arrangement is compliant, an investigation should be conducted to evaluate retrospectively whether the arrangement was indeed non-compliant and calculate how long the arrangement failed to satisfy an applicable Stark Law exception. This analysis must be conducted promptly with the 60-day overpayment deadline as a guidepost for how quickly the investigation and analysis must occur. In making a retrospective analysis, the If, provider will need to establish whether, and to what extent, Medicare reimbursement is associated with the arrangement during the period. Under SRDP, the disclosing entity agrees that the time limit for reopening claims is tolled upon filing. If, after conferring with counsel and completing the retrospective investigation of the matter, the provider determines that there is a Stark Law violation, the provider must determine whether to repay the amount immediately to the Fiscal Intermediary, or to enter the SRDP. Smaller repayment amounts may justify immediate disclosure and repayment without reporting through the SRDP. On the other hand, larger amounts may warrant negotiation and settlement of the repayment through the SRDP. Entering the SRDP will take a certain investment of time, energy, and expense, but may be warranted when the amount of potential repayment is large. All relevant documents should be collected for delivery upon request. In such an instance, the provider should coordinate with legal counsel to prepare the disclosure, quantify the amount of the overpayment, develop the written legal analysis to be submitted, and review the final draft prior to submission. after conferring with legal counsel, the provider determines that an arrangement is potentially non-compliant, the provider should take prompt, proactive steps to bring the arrangement into compliance as quickly as possible