Why Worry? Fraud and Abuse Risks for Managed Care Organizations. Overview

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1 Why Worry? Fraud and Abuse Risks for Managed Care Organizations Stephen K. Warch Shareholder, Nilan Johnson Lewis Overview Risks Created by Incentives Offered by Health Plans and Providers o Prohibition on Beneficiary Inducements o Medicare Marketing Guidelines o Best Practices to Avoid Risk FWA Risks Created in Provider-Payor Relationships o Managed Care Contracts o Incentive Programs o Network Activities 1

2 What s Wrong with Free Stuff? Alters the medical and coverage decision-making process of vulnerable populations Promotes over-utilization of health care services Can favor large providers with financial resources Can create quality of care concerns Federal Prohibition Against Beneficiary Inducements Civil Monetary Penalty Statute: SSA 1128A(a)(5) CMPs may be imposed based on improper offers to or transfers of remuneration to Medicare/Medicaid beneficiaries Key question is remuneration likely to influence the beneficiary to order a Medicare/Medicaid covered service from a provider or supplier? Remuneration = broadly defined: transfers of items or services for free or for other than fair market value 2

3 2002 OIG Special Advisory Bulletin OIG offering inducements to influence beneficiary choice of provider raises quality & cost concerns Nominal gifts OK value under $10, no more than $50 in aggregate per year Bulletin notes 5 exceptions where a beneficiary inducement may exceed the nominal amounts: Waiver of cost sharing obligations based on financial need Properly disclosed co-payment differentials Incentives to promote certain preventive care services Practices permitted under Anti-kickback statute Waiver of hospital outpatient co-payments in excess of minimum Exceptions to Remuneration ACA Expansion Under the Affordable Care Act Provisions affecting fraud, waste and abuse, the exceptions to the definition of remuneration were expanded to include: Remuneration which promotes access to care and poses a low risk of harm to patients and Federal health care programs The offer or transfer of coupons, rebates or rewards by a retailer, provided they are offered on equal terms and are not tied to the provision of other items or services reimbursable by Medicare or Medicaid The offer or transfer of free or less than FMV items to a person in financial need, provided certain conditions are met Note no parallel exceptions under AKS! 3

4 Application Scenario: Gift Cards/Rewards Walgreens 2012 Settlement o $25 gift card provided when transferring a prescription o Over the $10 nominal value limit o Did not fall within an exception o Was supposed to exclude Medicare/Medicaid programs o $7.9 million settlement OIG Advisory Opinions allow gift cards/rewards o Opinions and o OIG concluded each program presented a low risk of fraud and abuse Gift Cards/Rewards as Allowable Incentives OIG Opinion gift cards given to patients, tied to service shortfalls in hospital Structure of program was acceptable why? Cards were not redeemable for health care items Nominal value - $10; system in place to ensure $50 annual limit Not cash or cash equivalent OIG Opinion free loyalty cards that result in discounts on gasoline purchases, based on volume of purchases (including purchases of federally reimbursable items/co-pays and co-insurance) Also determined to be acceptable why? Consists of retailer rewards fits within expanded ACA exception Offered to everyone on equal terms does not target Medicare/Medicaid Beneficiaries Not tied to Medicare/Medicaid services only redeemable for gasoline 4

5 Gift Cards/Rewards as Allowable Incentives OIG Opinion No $20 grocery gift cards offered to members in capitated Medicaid plan as inducement to visit FQHC and receive a health screening Also determined to be acceptable why? Capitated program therefore would not increase costs Limited value, moderate scope Targets an underserved population for preventive care services Application Scenario: Free Screenings Common marketing practice, with significant risk Preamble to CMP Final Rule Free non-covered screening test would be OK if no tie in to provision of other services OIG Advisory Opinion Free blood pressure screenings offered by a hospital found to be OK why? Not tied to use of any other services provided by the hospital, or any particular provider Does not result in referrals to a particular provider; no discounts offered for follow-up services Visitors directed to follow up with PCPs Services were akin to preventive care services 5

6 Application to MCOs? CMP Statute and OIG Bulletin focus = providers But OIG takes the position that CMP does apply to MCOs Incentives offered to beneficiaries by Medicare or Medicaid MCOs to enroll in a plan not covered by CMP Incentives to influence an already enrolled beneficiary subject to CMP Leads to interplay with Medicare Marketing Guidelines 6

7 MMG Incentives and Rewards Any promotional activity or item offered to a beneficiary Cannot be cash or cash equivalent Non-Discriminatory No waiver/lowering of co-payments Cannot be in the form of a health benefit Rewards and Incentives, Continued Any incentive must be of nominal value o Value of less than $15 per item o Cannot exceed $50 annually o Creates significant compliance challenges Cannot be used in pre-enrollment advertising Cannot consist of meals in connection with sales and marketing activities o Exceptions (of course) Cannot be an incentive to enroll others in the plan 7

8 Rewards and Incentives, Continued Cannot be designed to steer beneficiaries to particular providers, practitioners or suppliers This requirement impacts a lot of marketing and network initiatives Goal is a level playing field Navigation Challenges and General Rules Incentive Programs are likely to increase Clear signals of support at CMS/OIG for incentive programs targeting health prevention and behavior change ACA Section 4108 Programs Increasing recognition of the value incentive programs can have in promoting preventive care For Medicare MCOs, incentives to enrolled beneficiaries must comply with both MMGs and CMP Statute Medicaid MCOs increasing popularity, but an unclear landscape 8

9 MCO Best Practices: Designing Incentive Programs to Avoid Risk Select Incentives of Appropriate Value Nominal value safe zones (under both CMP and MMGs) Offer incentives that are of reasonable value in relation to the conduct being incentivized Incentives designed to promote preventive care will be viewed favorably Do not tie incentives to the receipt of other covered services either explicitly or implicitly Incentives should be provider-neutral to avoid claims of inappropriate steerage Select incentives of appropriate character never offer cash or cash equivalents Provider - Payor Relationships Managed Care Relationships Clinical Programs Physician Incentive Compensation Programs MCO Network Activities 9

10 Is the EMCO Safe Harbor an Ocean? The Eligible Managed Care Organization (EMCO) Safe Harbor: 42 CFR (t) EMCO = Primarily Medicare Advantage Plans and Medicaid Managed Care Plans where payment to the plan is on a capitated basis Safe Harbor covers any payment between an EMCO and a provider for items or services provided certain conditions are met Creates a broad and flexible safe harbor EMCO Safe Harbor Requirements 1. Signed agreement, longer than 1 year, specifies the items and services covered under the agreement 2. No tie in to, or inducement related to, services reimbursed under fee for service or cost-based plans 3. No cost-shifting that results in increased payments from a federal health care program This allows the packaging of multiple types of services and payment arrangements. Items and Services cannot include marketing or pre-enrollment activities 10

11 Other Safe Harbors Affecting MCO Relationships with Providers Price Reductions Offered to Health Plans: 42 CFR (m) What s the difference? Key = application to a broader range of health plans Specific to price reductions Less flexibility Price Reductions Offered to Health Plans by Providers with Substantial Financial Risk : 42 CFR (u) Other Safe Harbors Affecting MCO Relationships with Enrollees Health plan activities relating to adjustments to benefits, copayments, etc. Increased coverage, reduced costsharing, or reduced premium amounts offered by health plans: 42 CFR (l) Must offer the increased coverage or reduced cost sharing to everyone For cost-based plans, may not claim costs as bad debt or otherwise attempt to shift burden of the changed benefits Potentially implicates beneficiary inducement issues 11

12 MCO Clinical Initiatives Physician Incentive Programs Regulations allow risk-based Medicare and Medicaid plans to operate Physician Incentive Programs without significant requirements (i.e. CMP) May not create incentives to limit medically necessary services If the PIP creates substantial financial risk for the physician (either fees at risk or significant bonus amounts) additional requirements apply (stop loss insurance; reporting; enrollee surveys) But, MCO should structure PIP programs to account for safe implementation within the provider system (See OIG Advisory Opinion No ) Does the PIP tie to achieving recognized quality benchmarks; does the PIP encourage compliance with standards of care? Does the provider have systems and protocols in place to monitor implementation? Are the quality targets consistent with the services offered by the provider? Is the PIP transparent to patients and within the provider system? MCO Network Activities Exchanges of anything of value between payors and providers outside of written agreement risk Providers = access for payors; connection with members Examples: payor makes a donation to a provider in need payor establishes a rewards program for provider s employees payor enlists provider assistance in marketing to potential enrollees (MMG tie-in) What is the motivation? 12

13 MCO Network Activities, Cont d Bona fide charitable contributions generally OK Payments tied to specific clinical and operational performance measures, included in the written agreement Payments that are designed to promote preventive care services to underserved populations Be wary of any provider/payor activities that are designed to promote plan enrollment Questions? Discussion? Thank You! Stephen K. Warch Nilan Johnson Lewis (612) swarch@nilanjohnson.com 13