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Health Care Reform: New Fraud and Abuse Provisions


Title: Health Care Reform 2010: New Fraud and Abuse Provisions Author: Admin Last modified by: PMC Created Date: 4/30/2010 11:16:06 PM Document presentation format – PowerPoint PPT presentation

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Title: Health Care Reform: New Fraud and Abuse Provisions

Health Care Reform New Fraud and Abuse Provisions
  • Kim C. Stanger
  • Hawley Troxell LLP
  • (5/10)

The small print
  • This is overview of selected provisions in law.
  • The law and general requirements are subject to
    change as new regulations issue or the law is
  • Participants should review the law and
    corresponding regulations when seeking to comply.
  • This presentation is given for educational
    purposes only it does not constitute legal
  • This presentation does not establish an
    attorney-client relationship.
  • The opinions expressed are those of the speaker
    they do not necessarily represent the position of
    the Hospital Cooperative or Hawley Troxell LLP.

Patient Protection and Affordable Care Act
  • Cost of health care reform estimated at 940
    billion over 10 years.
  • Most of health care reform can be paid for
    by finding savings within the existing health
    care system, a system that is currently full of
    waste and abuse.
  • Pres. Obama

PPACA Fraud and Abuse Provisions
  • Shorten time for submitting claims.
  • Require report and repayment of overpayments.
  • Impose additional requirements for enrollment.
  • Strengthen and expand current fraud and abuse
  • Expand government and RAC authority for
  • Create new rules for certain providers.
  • Require states to implement similar measures.

PPACA Fraud and Abuse Provisions
Reduced Time for Submitting Claims
  • For services furnished on or after 1/1/10, must
    submit claims to Medicare parts A and B within
    one calendar year from date of service.
  • For services furnished before 1/1/10, must submit
    claims by 12/31/10.
  • HHS may issue regulatory exceptions to one-year
  • (PPACA 6404)

Include NPI
  • By January 1, 2011, providers and suppliers must
    include National Provider Identifier (NPI) on
  • Application for enrollment, and
  • All claims for payment.
  • HHS to issue regulations.
  • (PPACA 6402)

Report and Repay Overpayments
  • Overpayment funds a person receives or
    retains to which person is not entitled after
  • Providers and suppliers must
  • Report and return overpayments to HHS, the state,
    or contractor by the later of
  • 60 days after the date the overpayment was
    identified, or
  • The date the corresponding cost report is due.
  • Provide written explanation of reason for
  • (PPACA 6402)

Report and Repay Overpayments
  • Retaining overpayment after deadline for
    reporting and returning overpayment is an
    obligation under False Claims Act.
  • Knowing failure to report and return
    overpayments by the date due may result in
    penalties under
  • False Claims Act
  • Civil Monetary Penalties Law.

False Claims Act
  • Prohibits
  • knowingly submitting false claim for payment to
    federal government, or
  • Concealing, avoiding, or decreasing an obligation
    to pay to the federal government.
  • (31 USC 3729 et seq.)

False Claims Act
  • Penalties
  • 5,500 to 11,000 penalty per false claim
  • 3x amount claimed
  • Private whistleblowers may assert qui tam
  • Receive percentage of recovery
  • Prevailing party may recover costs and fees
  • (31 USC 3729 et seq.)

False Claims ActChanges
  • Prior public disclosure not a bar to qui tam
  • No dismissal required if government opposes
  • Public disclosure is limited to federal actions,
  • Federal criminal, civil and administrative
  • Federal reports, hearings, audits or
  • News media and perhaps social media.
  • Not state proceedings and private litigation.
  • To be original source, qui tam relator
  • Must provide info to govt prior to public
    disclosure, and
  • Info must be independent of and materially add to
    publicly disclosed allegations.
  • Not required to have direct and independent
  • (PPACA 1303)

Civil Monetary Penalties Law
  • Prohibits specified conduct, e.g.,
  • Submitting false or fraudulent claims, or claims
    for unnecessary services
  • Offering inducements to program beneficiaries
  • Contract with excluded provider
  • Etc.
  • Penalties generally include
  • 10,000 to 50,000 penalty, depending on
  • 3x amount claimed
  • Exclusion from govt programs
  • (42 USC 1320a-7a)

Civil Monetary Penalties Law Changes
  • Expanded to prohibit
  • Failing to report and return known overpayment.
  • Penalties up to 10,000 per violation
  • 3x damages
  • Exclusion from govt programs
  • Knowingly making false statement in application,
    bid, or contract to participate or enroll in a
    federal health care program.
  • Penalties up to 50,000 per violation
  • Exclusion from govt programs.
  • (PPACA 6402, 6408)

Civil Monetary Penalties Law
  • Expanded to prohibit
  • Ordering or prescribing items or services when
    person ordering or prescribing is excluded from
    federal health care program.
  • Failing to grant OIG timely access for audits,
    investigations, evaluations upon reasonable
  • Penalties up to 15,000 per day.
  • (PPACA 6402(d), 6408)

Civil Monetary Penalties Law
  • New exceptions
  • Programs that promote access to care and pose a
    low risk of harm to patients and health care
  • Coupons, rebates and other rewards from a
    retailer that are offered to general public not
    tied to items reimbursed under Medicare/Medicaid.
  • Unadvertised items or services for free or less
    than fair market value based on financial need.
  • Part D plan waiver for first fill copayment for a
    generic Part D drug.
  • (PPACA 6402)

Stark Self-Referral Law
  • If a physician (or their family member) has a
    financial relationship with an entity
  • The physician may not refer patients to that
    entity for designated health services, and
  • The entity may not bill Medicare for such
    designated health services
  • unless the referral or financial relationship is
    structured to fit within a regulatory exception.
  • (42 USC 1395nn 42 CFR 411.350)

Stark Self-Referral Law
  • Penalties
  • No payment for services provided per improper
  • Repayment of payments improperly received
  • Civil penalties
  • 15,000 per improper referral/claim
  • 100,000 per scheme
  • (42 USC 1395nn 42 CFR 411.350)

Stark ChangesIn-Office Ancillary Services
  • To qualify for in-office ancillary services
    exception, if provider refers patient for MRI,
    CT, or PET scan performed in physicians office,
    physician must
  • Notify patient that patient may obtain the
    services from other suppliers, and
  • List of other suppliers where patient resides
    that can provide the service.
  • HHS may expand list of affected services.
  • Applies to referrals after 1/1/10.
  • (PPACA 6003)

Stark Changes Physician-Owned Hospitals
  • To qualify for whole hospital and rural
    provider exceptions, physician-owned hospitals
  • Must have physician ownership and provider number
    by 12/31/10.
  • Cannot convert from ASC or increase percentage of
    total value of physician ownership or investment
    after 3/23/10.
  • Cannot expand number of operating rooms,
    procedure rooms, and beds after 3/23/10.
  • Exception for certain high Medicaid hospitals.
  • Regulations due 1/1/12.
  • (PPACA 6001, 10601 Reconciliation Act 1106)

Stark Changes Physician-Owned Hospitals
  • Must comply with additional reporting duties,
  • Submit annual report to HHS identifying physician
    owners and investors.
  • Referring physician owners must notify patients
  • Referring physicians ownership interest
  • Treating physicians ownership interest.
  • Disclose that hospital is owned by physicians in
  • Hospital website
  • Public advertising.
  • If hospital does not have physician on site 24/7,
  • Notify patient of such fact prior to admission
  • Obtain patients written acknowledgement of fact.
  • (PPACA 6001, 10601 Reconciliation Act 1106)

Stark Changes Physician-Owned Hospitals
  • Cannot condition physicians ownership/investment
    on referrals.
  • Cannot offer physician owner/investor more
    favorable ownership opportunities than a person
    who is not a physician owner/investor.
  • Hospital cannot guarantee, make payment, or
    subsidize loan to physician or group to acquire
    ownership/investment interest.
  • Returns distributed based on ownership/investment
  • Other requirements.
  • (PPACA 6001, 10601 Reconciliation Act 1106)

Stark ChangesSelf-Disclosure Protocol
  • HHS must establish a self-disclosure protocol by
    9/23/10 for reporting Stark violations,
  • Agency to whom disclosures may be reported, and
  • Process for corporate integrity and compliance
  • Separate from advisory opinion process.
  • (PPACA 6409)

Stark ChangesCompromise re Penalties
  • HHS is authorized to settle Stark violations for
    less than full statutory penalties if participate
    in self-disclosure protocol.
  • Factors to consider include
  • Nature and extent of illegal or improper practice
  • Timeliness of self-disclosure
  • Cooperation in providing information
  • Other factors HHS deems relevant.
  • (PPACA 6409)

Anti-Kickback Statute
  • Prohibits individuals or entities from knowingly
    and willfully offering, paying, soliciting or
    receiving remuneration to induce referrals of
    items or services covered by Medicare, Medicaid
    or any other federally funded program unless fit
    within regulatory exception.
  • (42 USC 1320a-7b 42 CFR 1001.952)

Anti-Kickback Statute
  • Penalties
  • Felony
  • 5 years in prison
  • 25,000 fine
  • 50,000 civil administrative penalty
  • Exclusion from Medicare/Medicaid

Anti-Kickback Statute Changes
  • May violate statute even if
  • You did not know of AKS
  • You did not intend to violate AKS
  • Rejects Hanlester v. Shalala (9th Cir. 1995)
  • Ignorance of the law is no longer a defense.

Anti-Kickback Statute ChangesAKS Violation
FCA Violation
  • Anti-Kickback Statute
  • Criminal statute
  • Beyond reasonable doubt standard
  • 5 years in prison
  • 25,000 fine
  • Exclusion from Medicare/Medicaid
  • False Claims Act
  • Civil statute
  • Preponderance of evidence standard
  • Civil penalties
  • 5,500 to 11,000 per claim
  • 3x amount claimed
  • Qui tam lawsuit

Increased Funding for Enforcement
  • 100 million in 2011
  • 250 million through 2016.

OIG Investigative Authority
  • Providers who fail to grant timely access to
    records may be fined 15,000 for each day that
    access is denied.
  • OIG may obtain information from providers and
  • OIG may subpoena witnesses to testify in
    exclusion cases.
  • OIG may access databases.
  • Government databases integrated to facilitate
    data matching, mining and sharing.
  • (PPACA 6402, 6408)

RAC Audits
  • States must implement RAC audits for Medicaid by
  • RACs paid according to amount recovered.
  • Medicare Parts C and D will be subject to RAC
  • (PPACA 6411)

Suspension of Payments Pending Investigation
  • HHS may suspend payments to a provider pending an
    investigation of a credible allegation of fraud
    against the provider.
  • HHS shall withhold FPP from state if state
    Medicaid does not suspend payment.
  • CMS must consult with OIG to determine whether
    there is a credible allegation of fraud.
  • (PPACA 6402)

Recovery from Related Providers
  • HHS may recover payments from providers and
    suppliers that share same tax identification
    number as entity with past-due obligation to
  • Applies even if they have different billing
    number or NPI.
  • (PPACA 6401)

Mandatory Compliance Plans
  • Providers will be required to have compliance
    plans as condition to enrollment and
  • HHS will determine
  • Timing re industry sectors
  • Applicable standards for compliance plans.
  • (PPACA 6401)

Enrollment Process
  • HHS must implement screening process for
    enrollees in Medicare, Medicaid, and CHIP by
  • Licensure checks
  • Maybe background checks, fingerprints,
    unannounced site visits, database inquiries, etc.
  • Screening applies to
  • New enrollees by 3/23/11
  • Current enrollees by 3/23/12
  • Revalidation by 9/23/10
  • (PPACA 6401)

Enrollment Process
  • Institutional providers will be charged a 500
    enrollment fee beginning 2010.
  • Subject to CPI adjustment
  • Hardship exemptions may be available.
  • (PPACA 6401)

Enrollment Process
  • Enrollees must disclose info about affiliates
    with uncollected debt, that have been excluded
    from govt programs, or had billing privileges
  • HHS may deny enrollment based on affiliation.
  • Remember HHS may impose penalties for false
    statements in enrollment process, including
  • 50,000 civil monetary penalty per false
    statement, or
  • Exclusion from govt program.
  • (PPACA 6401, 6402)

Enrollment Process
  • HHS may subject certain enrollees to oversight
    during provisional period lasting 30 days to one
  • Prepayment reviews
  • Payment caps
  • Others as HHS deems appropriate.
  • HHS may place moratorium on enrollment of certain
    providers or categories if necessary to prevent
    waste, fraud or abuse.
  • Not subject to judicial review.
  • (PPACA 6401)

501(c)(3) Tax-Exempt Hospitals
501(c)(3) Tax-Exempt Hospitals
  • Must conduct community needs assessment at least
    every 3 years and implement strategy.
  • Effective for tax year beginning 3/23/12.
  • HHS to review community needs assessment at least
    once every 3 years.
  • Violations may result in
  • 50,000 excise tax
  • Loss of tax exempt status?
  • (PPACA 9007)

501(c)(3) Tax-Exempt Hospitals
  • Must establish financial assistance policy.
  • Amount billed to qualified patients cannot exceed
    amount billed to patients with insurance.
  • Cannot take extraordinary collection actions
    until determine whether patient qualifies under
  • Must provide emergency care without regard to
    ability to pay.
  • (PPACA 9007)

DME and Home Health Services
  • Physicians who order DME or certify home health
    services must be enrolled in Medicare to receive
  • Physicians or midlevels must have face-to-face
    encounter with a patient prior to ordering DME or
    certifying home health services.
  • May conduct encounter by telemedicine.
  • Must document encounter as condition of payment.
  • (PPACA 6407, 10605)

DME and Home Health Services
  • HHS may revoke enrollment for physicians and
    suppliers who fail to maintain and, upon request,
    provide access to documentation related to
  • Written orders or claims for DME
  • Certifications for home health services
  • Other high risk items designated by HHS.
  • (PPACA 6406)

Long Term Care Providers
  • Additional reporting and notification
  • Mandatory compliance, quality assurance, and
    performance improvement programs
  • Website information
  • Background checks and fingerprinting
  • Staff training
  • Complaint processes
  • New demonstration projects
  • (PPACA 6101-6105, 6111, 6121, 6201)

Transparency ReportsDrug Samples to Physicians
  • Drug manufacturers and distributors must report
    samples distributed to physicians beginning
  • (PPACA 6004)

Transparency ReportsPhysician Payments or
  • Drug and device manufacturers must report
    beginning 3/31/13
  • Payments or transfers of value to physicians or
    teaching hospital
  • Physician or family members ownership or
  • Subject to certain exceptions.
  • Penalties
  • If not knowing 1,000 to 10,000 per payment
    up to 150,000 total annually.
  • If knowing 10,000 to 100,000 per payment
    up to 1,000,000 total annually.
  • (PPACA 6002)

Medical Malpractice Limits
  • Appropriates 50 million in grants to states to
    develop, implement, and evaluate alternatives to
    current tort litigation.
  • (PPACA 10607)

Responding to PPACA
Responding to PPACA
  • Take action to timely submit claims.
  • Pre-1/1/10 claims by 12/31/10.
  • Post-1/1/10 claims within 1 year
  • Revitalize compliance efforts.
  • Compliance plan
  • Auditing and monitoring
  • Responding to suspected violations
  • Document actions
  • Report and repay within 60 days.
  • Put in place process of evaluation
  • Document actions

Responding to PPACA
  • Review physician transactions to ensure
    compliance with Stark and AKS.
  • Written contracts
  • Current contracts
  • Fair market value for legitimate services
  • Compensation set in advance
  • Not based on referrals
  • If transactions are non-compliant, consider
  • Repayment obligations
  • Self-disclosure protocol.

Responding to PPACA
  • Monitor physicians compliance.
  • General compliance activities for employed
  • Orders or certifications for DME and home health
  • Notice re in-office ancillary services.
  • Ownership or investment in specialty hospitals,
  • Expansions
  • Required notices

Responding to PPACA
  • Consider capitalizing on new compliance
  • Programs that increase access to care but do not
    create waste, fraud, or abuse, e.g.,
    transportation programs.
  • Others?

Responding to PPACA
  • Consider corporate structures and affiliations.
  • May be liable for affiliated entities
  • May be subject to penalties for violations of
    owned entities.
  • If contemplating enrollment of new entity, may
    want to do so before new enrollment processes
    take effect.

Responding to PPACA
  • Tax exempt hospitals, begin working on
  • Community needs assessment
  • Financial assistance policy
  • Charges for emergency medical care.

Responding to PPACA
  • If offer DME or home health services, ensure
    compliance with new requirements.
  • Written orders from qualified provider
  • Maintain documentation

Responding to PPACA
  • Watch for new regulations as they come out.
  • Consider coordination with association and
    getting involved in policy or rulemaking.
  • State Medicaid changes
  • Malpractice reform
  • Other?

  • AHA Summary of Health Care Reform
  • OIG Supplemental Compliance Program Guidance for
  • IHA Sample Compliance Plan
  • Hawley Troxell Client Updates
  • 208-388-4843
  • Tons of stuff on internet

  • Kim C. Stanger
  • (208) 388-4843