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The OIG & You: Health Care Compliance Programs (and ACOs) in 2011 and Beyond


The OIG & You: Health Care Compliance Programs (and ACOs) in 2011 and Beyond May 10, 2011 Douglas A. Grimm, FACHE Pillsbury Winthrop Shaw Pittman – PowerPoint PPT presentation

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Title: The OIG & You: Health Care Compliance Programs (and ACOs) in 2011 and Beyond

The OIG You Health Care Compliance Programs
(and ACOs) in 2011 and Beyond
  • May 10, 2011

Douglas A. Grimm, FACHE Pillsbury Winthrop Shaw
Pillsburys Health Care Capabilities
  • Pillsburys Health Care team serves the legal
    needs of health care providers, physician groups,
    insurers, medical device manufacturers, group
    purchasing organizations and pharmaceutical
  • Our Health Care Industry Team members have
    extensive experience on legal issues specific to
    the industry, including
  • State and federal certification and licensure
  • Medicare and Medicaid rules and regulations
  • Patient privacy laws
  • Reimbursement and other regulatory regimes
  • Pillsbury's Health Care practice is nationally
    ranked by 2010 Chambers USA, a leading
    independent guide that interviews clients to
    compile its rankings.

Tonights Agenda
  • Part I The Costs of Health Care Fraud and
  • Part II OIGs 2011 Work Plan
  • Part III Deviations from the Normal (or How
    to Handle a Problem)
  • Part IV ACOs - Legal Structure, Governance

Part I The Costs of Health Care Fraud and Abuse
Note US PPP purchasing power parity. Source
Organization for Economic Cooperation and
Development, OECD Health Data, 2009 (Paris OECD,
Nov. 2009).
Fraud, Waste, and Abuse Costs
Cost in Billions
  • Unwarranted Use 250-325
  • Fraud and Abuse 125-175
  • Administrative Inefficiencies 100-150
  • Provider Inefficiency and Errors 75-100
  • Lack of Care Coordination 25-50
  • Preventable Conditions
  • 600-850

Source Thomson Reuters, 2011
Recent News January 24, 2011
  • U.S. Department of Health and Human Services
    Secretary Kathleen Sebelius and U.S. Associate
    Attorney General Thomas J. Perrelli today
    announced a new report showing that the
    governments health care fraud prevention and
    enforcement efforts recovered more than 4
    billion in taxpayer dollars in Fiscal Year 2010. 
    This is the highest annual amount ever recovered
    from people who attempted to defraud seniors and
  • In 2009, recovered 2.5 billion

Sources HHS press release Jan. 24, 2011
Part II OIGs 2011 Work Plan
OIGs Mission and Activities
  • Mission
  • Protect program integrity and the well being of
    program beneficiaries by detecting and preventing
    waste, fraud, and abuse.
  • Identify opportunities to improve program
    economy, efficiency, and effectiveness.
  • Hold accountable those who do not meet program
    requirements or who violate Federal laws.
  • Activities
  • Conduct audits, evaluations, and investigations.
  • Provide guidance to industry.
  • When appropriate, impose civil monetary
    penalties, assessments, and administrative

Annual Work Plan
  • Describes the activities and audits on which the
    OIG will focus for the protection of federal
    health program integrity.
  • Furthers OIGs goals to detect and mitigate
    fraud, waste, and abuse.
  • Hold accountable those who do not meet program
  • 2011 Work Plan was released October 1, 2010.
  • Several new priorities.
  • Largely builds on objectives in 2010 Work Plan.
  • 2011 Work Plan omits EMTALA and coding and
    documentation under the MS-DRG system.

2011 Work Plan New Priorities
  • General areas of focus less specific than in
    past years.
  • New topics address quality, billing concerns.
  • Any time OIG adds new issues to the work plan,
    providers who provide these services and other
    Medicare stakeholders should be knowledgeable of
    these changes.

2011 Work Plan New Priorities
  • (1) Replacement Devices
  • Hospital receives full or partial credit from a
    device manufacturer hospital must use modifiers
    on the inpatient and outpatient claims.
  • Medicare not responsible for the full cost of a
    replaced medical device when hospital receives a
    credit from manufacturer of 50 percent or more
    for a replacement device.
  • (2) Radiation Therapy Quality and Safety Review
  • OIG to review safety and quality of
    intensity-modulated radiation therapy and
    image-guided radiation therapy.
  • (3) Brachytherapy Reimbursement
  • (4) Payments for Non-Physician Outpatient
    Services Under the Inpatient Prospective Payment
    System (IPPS)
  • OIG to review appropriateness of the payments for
    non-physician outpatient services shortly before
    or during hospital stays.

Continued Priorities (1/5)
  • Priorities continued from the 2010 Work Plan
  • Provider-Based Status
  • OIG reviewing cost reports of hospitals claiming
    provider based status to determine the
    appropriateness of the designation and the
    potential impact on Medicare.
  • Hospitals should review the provider-based
    requirements (42 C.F.R. 413.65(d)).
  • Physicians Evaluation and Management (EM)
    coding and documentation.
  • OIG reviewing the extent of potentially
    inappropriate payments for EM services and
    consistency of EM medical review determinations.
  • Payments to Critical Access Hospitals (CAHs)
  • OIG determining whether CAHs meet the conditions
    of participation and whether CAHs have met the
    designation criteria in the Social Security Act.

Continued Priorities (2/5)
  • Medicare Excessive Payments
  • OIG continuing to review Medicare claims with
    unusually high payments to determine their
  • Medicare Disproportionate Share Payments (DSH)
  • OIG continuing to determine whether these
    payments have been made in accordance with
    Medicare requirements.
  • Medicare Outlier Payments
  • OIG reviewing outlier payments and identifying
    national trends and characteristics of hospitals
    with high or increasing rates of outlier
  • Duplicate Graduate Medical Education (GME)
  • OIG continuing to review provider data from CMSs
    Intern and Resident Information System to
    determine whether duplicate GME payments have
    been claimed.

Continued Priorities (3/5)
  • Hospital Capital Payments
  • OIG reviewing Medicare inpatient capital payments
    to determine whether capital payments to
    hospitals are appropriate.
  • Hospital Acquired Conditions (HAC)
  • OIG reviewing early implementation of the CMS HAC
    policy also reviewing Medicare claims data to
    identify the number of beneficiary stays
    associated with HACs and determine impact on
  • Hospital Readmissions
  • OIG continuing to review claims to determine
    readmission trends.
  • Place of Service Errors
  • OIG reviewing place of service coding on Medicare
    Part B for hospital outpatient departments.

Continued Priorities (4/5)
  • ASC Payment Rates
  • OIG reviewing the appropriateness of the
    methodology for setting ASC payment rates under
    the revised ASC payment system.
  • Excluded Providers and Deceased Beneficiaries
  • OIG assessing the extent to which Medicare paid
    for services ordered or referred by excluded
    providers OIG continuing to review claims with
    dates of service that occur after the
    beneficiarys death.
  • Independent Physical Therapists
  • OIG focusing on independent physical therapists
    with high utilization rates for outpatient
    therapy services to assess compliance with
    Medicare regulations.

Continued Priorities (5/5)
  • Skilled Nursing Facilities (SNFs)
  • OIG reviewing Medicare Part A payments to SNFs
    and conducting reviews to determine the medical
    necessity of claims and whether the claims were
    sufficiently documented and correctly coded
    during CY 2009.
  • Nursing Homes
  • Continuing oversight of poorly performing nursing
    homes and reviewing the extent to which nursing
    home residents are hospitalized.
  • Home Health
  • Reviewing Part B payments for services and
    medical supplies provided to beneficiaries in
    home health episodes and examining the adequacy
    of controls established to prevent inappropriate
    Part B payments for services and medical

Part III Deviations from the Normal (How to
Handle a Problem Qui Tams, Internal
Investigations, Self-Disclosure)
  • Investigatory letter from the Department of
    Health and Human Services Office of the Inspector
    General (OIG).
  • Time consuming, costly audit/investigation.
  • Civil monetary penalties.
  • Treble damages.
  • Criminal penalties, including jail time.

Qui Tam Trends
  • False Claims Act
  • Any person who knowingly presents, or caused to
    be presented, to an agent or officer of the
    United States government a claim for payment or
    approval that is false or fraudulent is liable to
    the United States for a civil penalty of not more
    than 11,000 per claim plus three times the
    amount of the governments damages.
  • The qui tam provision allows private citizens to
    sue on the governments behalf (whistleblowers).
    A whistleblower can receive 15-30 of the total
    proceeds from a successful case.
  • DOJ recovered 2.5 billion in 2010 for False
    Claims Act violations related to health care
  • Amendments since 2009 broadened the scope of the
    Act (FERA, PPACA).

Qui Tam Trends Continued
  • The 60-Day Rule
  • PPACA expanded the definition of a reverse false
    claim to include the knowing retention of
  • Overpaid funds must be reported and returned
    either within 60 days of identification or when
    the corresponding cost report is due.
  • Increased exposure. Potential for whistleblowers.
  • Civil Investigative Demands
  • FERA authorized the U.S. Attorney General to
    issue Civil Investigative Demands (CIDs). U.S.
    Attorneys may issue a CID to any person believed
    to have possession, custody, or control over
    documents or documentary information relevant to
    an investigation of false claims prior to
    government intervention into a qui tam suit.
  • A CID can consist of (a) a request for the
    production of documents (b) a demand for oral or
    deposition testimony (c) service of
    interrogatories requiring written response and
    (d) any combination of these devices. 
  • FERA also authorizes U.S. Attorneys to share
    information obtained pursuant to a CID with
    counsel for a qui tam relator.
  • Increased exposure. Potential for whistleblowers.

Plan for Addressing Problems
  • From OIGs website
  • If you are engaged in a relationship you think is
    problematic or have been following billing
    practices you now realize were wrong
  • Immediately cease filing the problematic bills.
  • Seek knowledgeable legal counsel.
  • Determine if any funds were collected in error
    from your patients and from the federal health
    care programs. Report and return overpayments.
  • Unwind the problematic investment.
  • Disentangle yourself from the problematic
  • Consider using OIGs or the Centers for Medicare
    and Medicaids (CMSs) self-disclosure

Internal Investigations
  • Purpose seek to uncover the truth about alleged
    misconduct within the organization.
  • Typical elements
  • Collect and examine written or recorded evidence.
  • Interview suspects and witnesses.
  • Obtain written statements.
  • Conduct computer and network forensics.
  • Consult with managers, human resources, and legal
  • Helpful to have clear policies on conducting
    internal investigations.
  • Document everything.
  • Need-to-know-basis inform only those necessary.

  • OIG Self-Disclosure Protocol (Anti-Kickback,
    False Claims Act violations)
  • CMS Self-Referral Disclosure Protocol (Stark

OIG Voluntary Self-Disclosure Protocol (SDP)
  • The OIGs use of voluntary self-disclosure
    programs . . . is premised on a belief that
    health care providers must be willing to police
    themselves, correct underlying problems and work
    with Government to resolve these matters.
  • Federal Register, Vol. 63, No. 21, October 30,

OIG Voluntary Self-Disclosure Protocol
  • Matters that are potentially violative of
    Federal criminal, civil or administrative laws.
  • OIG may conclude that the disclosed matter
    warrants referral to DOJ.
  • No firm commitments about resolution OIG is
    not obligated to resolve the matter in any
    particular manner.
  • Opening lines of communication at an early stage
    generally benefits the provider.

CMS Self-Referral Disclosure Protocol (SRDP)
  • Mandated by PPACA.
  • Describes process for providers and suppliers to
    voluntarily disclose actual or potential
    violations of the physician self-referral or
    Stark law, and the associated actual or potential
    Medicare overpayment.
  • CMS open to resolve certain Stark violations for
    less than the maximum possible penalties for
    disclosures through the SRDP.
  • The Stark Law is a strict liability statute with
    huge potential penalties that could attach to
    even technical violations of the law, such as a
    lapsed contract or a missing signature. The SRDP
    represents a chance to reduce potential exposure
    to Stark Law penalties.
  • Among concerns CMS has encouraged parties to
    place anticipated repayments in an
    interest-bearing escrow account. May be
    difficult for some providers.

Decision to Voluntarily Self-Disclose
  • Why disclose?
  • Disclosure is a mitigating factor in determining
    the severity of the penalties.
  • Increased opportunity to negotiate a fair
    monetary settlement.
  • Offers providers the opportunity to minimize
    costs and disruptions from a full-scale
  • Potential to avoid exclusion from federal health
    care programs.
  • Potentially high overpayment (gt1 million).
  • Right thing to do.
  • Why not?
  • Does not guarantee protection from civil,
    criminal, or administrative actions from another
  • Admission will likely carry substantial civil
  • May be used against you by private insurers.
  • Potential waiver of attorney-client privilege,
    information may become discoverable by a qui tam

  • OIG Self-Disclosure Guidelines
  • OIG SDP Guidance after 2003
  • CMS Self-Referral Disclosure Protocol

Responding to an OIG Investigatory Letter
  • Litigation hold.
  • Communicate to all employees that they are not to
    destroy any documents related to the
  • Conduct internal investigation.
  • Cooperate with investigators.
  • Provide complete, truthful, accurate information
    to investigators.
  • Supply documents and materials within your
  • OIG has the power to
  • Obtain statements under oath.
  • Gather evidence.
  • Serve subpoenas.
  • Review documents relevant to a matter under
  • Under special authorities, make arrests.

Takeaways for Part III
  • Take control and define scope.
  • Obtain expert advice bring counsel in early.
  • Understand options for self-reporting.
  • Address all elements of the protocol (whether OIG
    or CMS).
  • Expect delays.
  • Keep CEO and Board informed.
  • Do not underestimate the benefits of a robust
    Compliance Program and Cooperative Approach.
  • Anticipate publicity.

Part IV Accountable Care Organizations - Legal
Structure and Governance Issues
ACO Structural Requirements
  • Each ACO must
  • Be a legal entity recognized and authorized under
    applicable state law to engage in its business.
  • Have a taxpayer identification number.
  • Be comprised of an eligible group of ACO
  • Have a mechanism for shared governance.
  • Organizations coming together to form an ACO will
    almost always need to form a new entity.
  • An existing organization may become an ACO
    without forming a new entity, but satisfying
    governance requirements will probably discourage
    it from doing so.

Legal Entity
  • ACO must have a formal legal structure that is
    authorized under state law to
  • Receive and distribute shared savings under the
    Medicare Shared Savings Program (MSSP).
  • Repay shared losses under MSSP.
  • Establish, report and ensure provider compliance
    with health care quality criteria, including
    quality performance and reporting standards.
  • Perform the ACOs other functions.
  • Corporation, partnership, limited liability
    company, etc.
  • May not be a contractual joint venture alone.
  • Existing entity may qualify if it satisfies
    requirements, including shared governance.

Taxpayer Identification Number
  • ACO must have a taxpayer identification number.
  • MSSP payments will be made to that TIN.

Eligible ACO Participants
  • Who may form an ACO
  • ACO Professionals, i.e., physicians, physician
    assistants, nurse practitioners and clinical
  • Networks of ACO Professionals.
  • Partnerships and joint venture arrangements
    between hospitals and ACO Professionals.
  • Hospitals employing ACO Professionals.
  • Who may also participate in an ACO
  • Certain other providers, such as Federally
    Qualified Health Centers (FQHCs) and Rural
    Health Centers (RHCs).
  • Critical Access Hospitals that bill Medicare for
    both facility and professional services.
  • Others may provide services to an ACO, but may
    have a smaller or no role in governance.

Mechanism for Shared Governance
  • ACO must have a governing body, e.g., Board of
    Directors, Board of Managers, etc. with broad
    authority and responsibility for the ACOs
    administrative, fiduciary and clinical
  • Governing Bodys responsibility includes
    definition of processes to promote evidence-based
    medicine and patient engagement, report on
    quality and cost measures, and coordinate care.
  • Governing Body must be separate and unique to the
    ACO where the ACO comprises multiple entities,
    e.g., independent group practices.

Proportional Representation
  • Governing Body must provide proportional
    representation for ACO Participants.
  • At least 75 of Governing Body must be ACO
    Participants or their designated representatives.
  • Each ACO participant must choose an appropriate
    representative from within its sic organization
    to represent them sic on the governing body and
    each ACO participant must have appropriate
    proportionate control over governing body
    decision making.
  • How does this work with 1 hospital and 200
    independent physicians?
  • Governing Body must include at least 1 ACO
    beneficiary with no conflict of interest,
    includes family members.

Leadership and Management
  • ACO operations must be managed by an executive,
    officer, manager or general partner accountable
    to the Governing Body.
  • Full-time senior-level medical director who is
    physically present on a regular basis.
  • Medical license in the state(s) in which ACO
  • Board-certified.
  • ACO Participants and providers/suppliers must
    have a meaningful financial or other commitment
    to the ACOs clinical integration program likely
    to motivate them to make clinical integration
    program succeed.

Tax-Exemption Considerations
  • Tax-exempt organizations (TEOs) may avoid
    private inurement and private benefit, and wish
    to avoid unrelated business insurance tax (UBIT).
  • Must have all of the following
  • Terms of TEOs participation set forth in advance
    in writing, negotiated at arms length.
  • ACOs current participation in MSSP.
  • TEOs share of benefits losses proportional to
    benefits or contribution TEO provides.
  • Any ownership interest of TEO must be in
    proportion to value of capital contributions
    allocations distributions in proportion to
  • All contracts and transactions are at fair market

Fraud and Abuse Considerations
  • As a concept, ACOs violate Stark, AKS and CMP.
  • No proposed regulations addressing fraud abuse.
  • Preamble language proposes waivers.
  • Stark waiver for payments to ACO participants
    including providers.
  • AKS waiver for any payments necessary for ACOs
    participating in MSSP.
  • CMP waiver for distribution of shared savings as
    long as payments are not for reducing medically
    necessary services.

Mandatory Self-Reporting Obligation
  • ACOs are required to create a compliance plan.
  • Plan must contain a requirement to report
    suspected violations of law to an appropriate law
    enforcement agency.
  • Suspected violation? Who to report?
  • Appropriate law enforcement agency?
  • Apply to ACO, ACO participants, other
  • Incentives for voluntary self-reporting.
  • Contrast Penalties for failure to make reports.

Part V Accountable Care Organizations The
Role of Information Technology
ACOs and HIT
  • HIT is the backbone for ACOs.
  • What do ACOs need in terms of HIT? share data,
    use data.
  • Electronic health records
  • Data management
  • Personal health records
  • Health information exchange
  • What is the role of Meaningful Use compliance?
  • Where is the patient in all of this?

Electronic Health Records Necessary
  • Stores patient data
  • Supports transactions
  • E-Prescribing
  • Referrals
  • Computerized order entry
  • Manage patients
  • What patients is the ACO accountable for?
  • Master patient index for ACO providers
  • Registry capabilities
  • tracking care provided to patients
  • assessing appropriate management of care
  • Communication tools to support team approach to
  • notifications
  • messaging

How Do Providers Get in the Game?
  • Meaningful Use
  • Mandated by HITECH
  • Three phases of implementation
  • Three Stages from 2011 through 2016 proposed by
    ONC Health IT Policy Committee (HITPC)
  • Carrots 44,000 - 61,000 per physician
  • Sticks Reduced reimbursement starting in 2015
  • 1 in 2015 2 in 2016 and 3 in 2017
  • Additional penalties could reach 4 or even 5 if
    fewer than 75 percent of EPs nationwide have not
    adopted EMR/EHR solutions by 2018.
  • The goals/requirements of ACOs align with those
    of Meaningful Use.

Meaningful Use (1/3)
  • Stage 1 Capture and share data 2011 25
    Criteria focusing on
  • Medication orders
  • Core clinical documentation
  • E-copies of information to patients
  • Quality and immunization reporting
  • Drug-drug, drug-allergy interactions
  • Drug formulary checks
  • Medication lists
  • Lab results
  • Patient reminders
  • E-Prescribing

Meaningful Use (2/3)
  • Stage 2 Advanced Care Processes with Decision
    Support 2013
  • Health summaries for continuity of care
  • Registry reporting and reporting to public health
  • Populate PHRs
  • CPOE for all order types
  • Evidence-based order sets
  • Clinic decision support at the point of care
  • Comprehensive EHR
  • Claims and eligibility checking

Meaningful Use (3/3)
  • Stage 3 Improved Outcomes 2015
  • Minimum levels of performance on quality , safety
    and efficiency measures
  • Clinical decision support for national
    high-priority conditions
  • Access comprehensive data from all available
  • Experience of care reporting
  • Medical device interoperability
  • Dynamic/ad hoc quality reports
  • Real-time surveillance
  • Multimedia support
  • Patients have access to self-management tools
  • Use of epidemiologic data
  • Clinical dashboards
  • Accounting to patients

HIEs and Patient-Centered Care
  • Providers use HIEs to connect with other
  • HIEs can assure validity and completeness of
    patient data.
  • ACOs will
  • Communicate with providers via HIE
  • Use HIE to manage patient data
  • Provide patient locating services
  • Establish registries
  • Use HIE as a gateway to other networks

How Does the Patient Fit In?
  • According to HHS, it is patient first.
  • Care systems must be sensitive to patient and
    family concerns.
  • Payment programs should be oriented to health
    care journeys and not episodes.
  • ACOs need to intertwine data use with patient
    privacy and confidentiality.
  • NCQA The organization has a policy that states
    its commitment to treating patients in a manner
    that respects their . . . privacy. . . . A method
    is provided to handle complaints and to maintain
    privacy of sensitive information.

HIT Supporting Patient Rights
  • HIT must enable protection of patients rights.
  • Provider patient communication.
  • Authentication of those accessing information.
  • Patient consent to access to and use of personal
    health information.
  • Patient involvement in care management.
  • Patient access to his/her own information.

Next Steps For HIT in ACO Development
  • Focus on ACO participants achievement of
    meaningful use.
  • Move beyond Stage 1 as quickly as possible
  • Enable advanced care processes
  • Decision support
  • Design, implement and re-engineer existing
  • Make a place for patients in the IT structure
    that protects them and enables them to
    participate actively.

  • Douglas A. Grimm, FACHE
  • Pillsbury Winthrop Shaw Pittman
  • 2300 N Street, NW
  • Washington, D.C. 20037
  • (202) 663-8283