18 th Annual Health Law Conference REGULATORY YEAR IN REVIEW July 17, 2014 Presented by: Tim Johnson Gray Plant Mooty
TOPICS FRAUD AND ABUSE ENFORCEMENT CMS QUALITY INITIATIVES STARK LAW UPDATE HIPAA PRIVACY SECURITY UPDATE
Health Care Executive Survey Recent survey of hospital executives: Top ten concerns: 1.Financial challenges 2.Health care reform 3.Government regulations and mandates 4.Care for the uninsured 5.Patient satisfaction
Health Care Executive Survey: cont. Recent survey of hospital executives: Top ten concerns: 6.Physician hospital relations 7.Population health management 8.Technology 9.Personnel shortages 10. ACO s
HEALTH CARE FRAUD AND ABUSE ENFORCEMENT 5
Health Care Fraud is a Serious Problem US health care accounts for 17% of the gross domestic product with estimates that percentage will grow to nearly 20% by 2020. [Source: National Healthcare Expenditure Projections, 2010-2020 6
Health Care Fraud is a Serious Problem Government spends almost $1 trillion each year on Medicare/Medicaid Programs Expert estimates Medicare and Medicaid fraud ranges from 3% to 10% That means fraud, abuse, and waste cost taxpayers $30 billion to $100 billion per year Not only cost taxpayers money, but also put patients, health and welfare at risk 7
PRIMARY HEALTH CARE FRAUD AND ABUSE LAWS False Claims Act [31 U.S.C. 3729-3733] Anti-Kickback Statute [42 U.S.C. 1320a-7b(b)] Physician Self-Referral Law [42 U.S.C. 1395nn] Civil Monetary Penalties [42 U.S. Code 1320a 7a] Exclusion Statute [42 U.S.C. 1320a-7] 8
Healthcare Enforcement Success Federal government recovered $4.3 billion in FY 2013 Up from $4.2 billion in FY 2012 Fifth consecutive year that recoveries have increased Government has recovered $8.10 for every $1 spent in healthcare enforcement Department of Justice has intervened in approximately 22% of all Whistleblower cases
Health Care Fraud and Abuse Control (HCFAC) Success Over the last five years, administration enforcement have recovered $19.2 billion Highest three year average return investment in the 17 year history of the HCFAC program The prior five years the government recovered $9.4 billion Since the inception of the HCFAC in 1997, the government has returned $25.9 billion to Medicare trust funds
Federal Health Care Enforcement Initiatives According to US AG Eric Holder, more than $60 billion in public and health care spending is lost each year to health care fraud. HHS - there will continue to be an increase in funding and budget to enhance enforcement activities in the health care area
Increased Health Care Enforcement Government shown demonstrated health care commitment to increase fraud and abuse enforcement Fifth consecutive year program has increased recoveries With these extraordinary recoveries, and the record-high rate of return on investment we ve achieved on our comprehensive health care fraud enforcement efforts, we re sending a strong message to those who would take advantage of their fellow citizens, target vulnerable populations, and commit fraud on federal health care programs, said Attorney General Eric Holder.
Reduction in Healthcare Spending Annual % Increase American spending on health care rose only 3.7% in 2012, slower than the growth of the economy overall Decrease in percentage of US spending on health care from 17.3% to 17.2% Health care spending still averages $8,900 per person in 2012
Reduction in Healthcare Spending - Reasons Slow economic recovery = reduced private insurance use by individuals Reduction in drug prices Government held back payments increases for physicians Unclear if reduction in health care spending due to recession or larger structural changes in the medical industry
Controlling Hospital Spending Hospital costs continues to increase Increase due to increased prices, not demand for services or aging Chronic illnesses still account for approximately 84% of health care cost for entire population, not just the elderly Source: Journal of American Medical Association (November 13, 2013)
Huge Variance across US in Nursing Home and Home Healthcare Expenditures Medicare capital spending on post acute care grown 5% per year or faster in 34 of the 50 most populated hospital markets Medicare patients in Connecticut more than twice as likely to end up in nursing homes than Arizona Medicare averages $8,800 for Louisiana patient on HHA, $5,000 less than it spends for New Jersey resident One out of four Medicare beneficiaries in Chicago receives additional services after hospital discharge three times the rate than Phoenix
Huge Variance across US in Nursing Home and Home Healthcare Expenditures cont. In 2012, $62 billion paid to nursing and therapy patients in rehab facilities, nursing home and long term care facilities Equals $1 of every $6 went to nursing and therapy patients in rehab facilities, nursing home and long term care facilities Louisiana spends 31% of its healthcare budget on post acute care services while Hawaii spends only 12%
Huge Variance across US in Nursing Home and Home Healthcare Expenditures cont. McAllen, Texas has average outpatient and hospital care cost, yet has 2.5 times higher expenses for home health services, long term care services, and rehab facilities In McAllen, Texas, Medicare spends approximately over $4,700 per capita on post acute care services, while the national average is approximately 1,900
ACA - 60 Day Overpayment Rule Under the Affordable Care Act providers required to refund overpayments within 60 days of being identified In June, 2014 the DOJ intervened in a False Claim Whistleblower Action against Mount Sinai Health System Whistleblower suit alleges Mount Sinai failed to return hundreds of Medicaid overpayments within 60 days
FCA - 60 Day Overpayment Rule, cont. According to the complaint, Mount Sinai conducted an internal review and found more than 900 instances where it was paid incorrectly Instead of refunding all of the money, Mount Sinai fired the employee that conducted the review and did nothing further Mount Sinai did refund a small portion of the 900 claims
Omnicare Defends False Claims Act Suit Medicare Part D insurer Fox RX sues Omnicare for billing for services not covered because FDA off label drug use Fox RX sues other providers, as well Omnicare presents evidence that its pharmacist did not knowingly violate False Claims Act OmniCare wins Omnicare sued for attorney s fees and wins Omnicare accuses Fox RX of shotgun allegations brought without good faith, support, or exercise of reasonable diligence
Antikickback Statute Settlement DOJ announced settlement with Omnicare Omnicare is nation s largest provider of drugs and pharmacy services to skilled-nursing facilities Omnicare to paid $124 million to settle allegation of improper drug discounts to SNF 2 Whistleblowers 1 will receive $17 million
Is your organization Creating Whistleblowers? Well known fact that whistleblowers are most likely current or former employees Many whistleblowers act on information generated based on internal reviews If internal reviews expose potential improper billing activities, providers should respond Failure to respond may create opportunity for whistleblower to file suit Catch 22: Do internal reviews to make sure you re doing things right - but create evidence for whistleblowers
Health Care Fraud and Abuse Forecast The government will continue to target industries that have demonstrated high level fraud i.e health care The government will expand its important effort into new areas of fraudulent activities quality, ACA, etc. Increased spending dedicated to health care fraud enforcement = greater collaboration between federal and state enforcement agencies More use of enhanced technology capabilities such as data-mining to pursue complicated health care fraud scheming The government will begin more use of non health care specific statutes such as the RICO to investigate and prosecute violators
HHS OIG 2014 WORK PLAN HOSPITALS Inpatient Admission criteria Defective device costs Provider based billing impact Provider based/free standing clinic costs CAH Swing beds and benef costs GME Payments Cardiac Catherizations and heart biopsies
HHS 2014 OIG WORK PLAN EQUIPMENT SUPPLIERS Reasonableness of fee schedule Competitive bidding compliance Cost of Parenteral nutrition Power mobility devices supplier compliance Frequency replaced supplies necessity Diabetes testing supplies
HHS 2014 OIG WORK PLAN PHYSICIAN PRACTICES E & M Payments Reassignment compliance Place of Service Coding Excess billing of beneficiaries Imaging services billing by practices Laboratory billing by practices Special focus on Ophthalmologists
HHS 2014 OIG WORK PLAN OTHER PROVIDERS Ambulances- billing, necessity transport level Diagnostic Radiology High cost tests Sleep clinics high utilization End Stage Renal Disease facilities Rural Health Clinic location requirements Chiropractic Services
HHS 2014 OIG WORK PLAN NURSING HOMES Part A billing by Nursing homes Questionable billing for Part B Verification of deficiency corrections National Background checks for employees Hospitalization of nursing home residents for preventable conditions
New False Claims Act Liability Hospital billing for poor quality = False Claim Hospital billing for unnecessary care = False Claim Oversight of quality as important as hospital oversight of hospital billing New IRS form 990 articulates boards will exercise independence in their roles and carry out good governance practices for all their responsibilities
CMS QUALITY IMPROVEMENT INITIATIVES
Enhanced / Proactive Focus by CMS Never Events CMS policy - not reimburse hospitals for services that occurred because of hospital mistakes The intention is to avoid Federal and State fiscal consequences from the provider s improper patient care Pay for performance based on value-based payment plan New federal protection rules for confidential reporting of mistakes
Improvement in Hospital Acquired Infections According to recent CDC study, hospital acquired infections is decreasing Significant reductions reported in 2012 for all infections 44% decrease in central line associated post treatment infections 20% decrease in infections related to surgical procedures However, 1 in 25 hospital patients still acquire an infection and 1 in 9 of those die Source: CDC Healthcare Associated Infection Progress Report (March 2014)
Hospital Preventable Errors Dispute on severity of the problem Over 400,000 people die each year in US hospitals from preventable errors Roughly 1/6 of all deaths in US each year resulting from preventable hospital errors Hospital preventable errors third leading cause of deaths in the United States Source: Journal of Patient Safety (September 2013)
Medicare Crackdown on Patient Injuries Hospital Acquired Condition Reduction Program 3 rd P4P under ACA More than 750 Hospitals to lose 1% of Medicare payment 54% of all teaching hospitals Initially look at infections and avoidable safety problems Other ACA P4P Programs are high admission rates and 24 quality measures
STARK LAW UPDATE
Stark Law Update First time in several years there has been little change in Stark Law regulations CMS extended expiration of Stark Law exception for donation of EHR items and services until the end of 2021 Provided addition clarification for exception regarding donation of HER such as when EHR software is deemed interoperable Removed electronic prescribing capability requirement
Stark Law Update Physician run hospitals required to report ownership and investment information under Affordable Care Act (March 2014) 2 Stark Law Advisory opinions: Provision of free surgical devices = illegal remuneration under the Stark Law Provision of devices used solely to collect, transport, or process specimens not illegal remuneration under Stark Law
Stark Law Update Self Disclosures Little information on Self Disclosures Latest information: October, 2013: 82 Stark reported self disclosures for 2013 Total expected for 2013 over 100 CMS has received 322 self disclosures in total CMS has reached settlement with 37 of the self-disclosures - collected $3.9 million Big concern: Even if provider self discloses under Stark Law, CMS may still pursue civil monetary penalties or false claims act liability
Stark Law Settlements DOJ announced settlement with Halifax Medical Ctr Florida Halifax agrees to pay $85 million settlement to resolve Stark Law violations Halifax paid incentive bonuses to 6 oncologist that were tied to tests ordered by the physicians Halifax also paid excess compensation to neurosurgeons Whistleblower received $20.8 million
Stark Law Settlements DOJ announced settlement with Memorial Hospital in Ohio Memorial agrees to pay $8.5 million settlement to resolve Stark Law violations Memorial had improper financial arrangements with two physicians Memorial voluntarily disclosed the violations Settlement resolves False Claims, Antikickback Statute and Stark Law
Stark Law Settlements DOJ announced settlement with St. James Healthcare Montana St. James paid $3.85 million for improper MOB JV with physicians Physicians lease rates were below fair market value St. James voluntarily disclosed the violations Settlement resolves False Claims, Antikickback Statute and Stark Law
Latest Word from Ex-Representative Fortney Stark Stark Law Sponsor Stark Law is one of the most complex federal health care regulatory laws Ex-Rep Stark believes Stark Law should be repealed The intent of the law was to go after people with bad intentions who are soliciting referrals, and offering kickbacks and special rates. Now Stark Law has too many complications that were added by high priced lawyers who tried to build loopholes for their clients
Stark Law Recommendations Have process to review all financial relationships with physicians Ensure there are written agreements in place for all financial relationships with physicians Ensure that all agreements are in place prior to beginning agreement Ensure that there is support justifying the fair market value of the consideration being provided
Patient Dumping San Francisco sues Nevada for discharging psychiatric hospital patients in San Francisco Hospital in Las Vegas bussed nearly 1,500 patients out of state since 2008 About 500 patient bussed to California Patients given small amount of food and medication and told to dial 911 or find a shelter upon arrival of new city Nevada responds that California owes it $6.2 million for treating 445 California residents in Nevada Federal class action filed in Nevada on behalf of affected patients
Hospitals Deportation of Undocumented Patients A study by Center of Social Justice identified 800 immigrant patients deported from hospitals in 15 states to at least seven different countries A recent article in Associated Press reported 600 immigrant patients medically discharged in the last five years Unclear if medical repatriation exists in any significant degree Hospitals have no solution for problem
CMS Moratorium on New Providers Accountable Care Act gave power to CMS to suspend provider enrollment to reduce abuse CMS received heat from Congress why no moratoria had never been issued July, 2013, CMS suspended enrollment for new HHA and ambulance providers in Miami, Chicago, and Houston Goal to combat fraud, waste, and abuse and vital health care programs
CMS Moratorium on New Providers In January, 2014, CMS suspended enrollment for six months for new home HHA in Fort Lauderdale, Detroit, Dallas, and Houston Extended suspended enrollment for home health providers in Chicago and Miami New suspended enrollment on ambulance firms in Philadelphia and Houston CMS identifies areas for moratorium by analyzing supplier billing registration and billing data from counties
CMS Moratorium on New Providers Where unusual patterns are detected, CMS consults local enforcement agency Texas Harris County had highest ratio of suppliers to Medicare patients in country Texas Harris County also had high rate of churn: High volume of claims then stop - providers are changing supplier numbers to evade regulators
New Telemedicine Guidelines American Medical Association's ("AMA") and Federation of State Medical Boards (FSMB) A valid patient-physician relationship State Licensure Choice of Provider. \Information on Provider Credentials Consistent Standards and Scope Compliance with Evidence-Based Practice Guidelines Not binding on States
New Focus on Critical Access Hospitals According to recent OIG reports, nearly two thirds of Critical Access Hospitals would not be granted critical access status Federal regulations require that Critical Access Hospitals must be at least 35 miles from another hospital 2006 exemptions for hospitals that are designated a Necessary Provider Both CMS and OIG believe necessary provider exemptions should be eliminated Would have significant impact on Critical Access Hospitals
HIPAA PRIVACY / SECURITY UPDATE
HIPAA Privacy Enforcement May 2014 report, HHS/OCR has resolved almost 23,000 cases It investigated over 10,000 cases and found no violation had occurred In approximately 59,000 cases, HHS determined violation minor or not eligible case for enforcement Since the beginning of HIPAA, HHS has received over 97,000 HIPAA complaints
Most Common HIPAA Privacy Violations Impermissible use and disclosures of PHI Lack of safeguards of PHI Lack of patient access to their PHI Use and disclosures of PHI more than minimum necessary Lack of administrative safeguards of electronic PHI
HIPAA Complaints Most Common Violators 1. Private practices 2. General hospitals 3. Outpatient facilities 4. Health plans 5. Pharmacies
HIPAA Enforcement Results by Year
HIPAA Security Rule Enforcement Started 2009 As of May 2014, HHS has received 880 complaints HHS closed 644 complaints after investigation OCR has 301 open complaints
HIPAA Enforcement OCR has referred over 530 HIPAA complaints to DOJ for criminal investigation
Business Associate Agreement Compliance Requirement January 2013 HHS issued lengthy omnibus HIPAA/HITECH privacy, security, enforcement, and breach notification rules. General compliance date was September 2013 For existing Business Associate Agreements (BAA) must update by September 2014 For updated or revised business Associate Agreements, must comply with new requirements Extremely important all Business Associate Agreements updated as of September 2014
Contact Information Tim A. Johnson Gray Plant Mooty 612.632.3208 timothy.johnson@gpmlaw.com 60