www.ober.com 1 what’s new in fraud & abuse tennessee bar association health law forum sandy...
TRANSCRIPT
1
www.ober.com
WHAT’S NEW IN FRAUD & ABUSE
Tennessee Bar AssociationHealth Law Forum
Sandy TeplitzkyOber | Kaler
Bill MathiasOber | Kaler
2
www.ober.com
AGENDA
Background
Recent Cases & Lessons Learned
Advisory Opinions
60-Day Repayment
Monthly Exclusion Screening
Mandatory Compliance Program
Contractor Confusion/Fatigue
What’s Next?
3
www.ober.com
Some Things Don’t Change
Medicare and Medicaid regulations remain incredibly complex
4
www.ober.com
“There can be no doubt but that the statutes and provisions in question, involving the financing of Medicare and Medicaid, are among the most completely impenetrable texts within human experience. Indeed, one approaches them at the level of specificity herein demanded with dread, for not only are they dense reading of the most tortuous kind, but Congress also revisits the area frequently, generously cutting and pruning in the process and making any solid grasp of matters addressed merely a passing phase.”
— Chief Judge ErvinUnited States Court of Appeals for the Fourth Circuit in Rehabilitation Association of Virginia v. Kozlowski, 42 F. 3d 1444, 1450 (4th Circuit 1994)
5
www.ober.com
More Things That Don’t Change
Government continues to view Fraud, Waste, and Abuse as a significant source of revenue
Enforcement remains aggressive
6
www.ober.com
Have You Seen the OIG’s Website Lately?
7
www.ober.com
Aggressive Enforcement
From new joint DOJ/OIG website www.stopmedicarefraud.gov “A joint effort by HHS and the Department of
Justice recovered a record $4 billion from fraudsters in FY2010.”
8
www.ober.com
Fighting Fraud is a Good Investment
The return-on-investment (ROI) for Health Care Fraud and Abuse Control (HCFAC) program Since 1997, $4.9 returned for every $1.0
expended. 3-year average (2008-2010), $6.8 returned for
every $1.0 expended
9
www.ober.com
Additional Cost
Over, Under, and Mis-Utilization
Quality of Care
Access to Care
Patients’ Freedom of Choice
Competition
Exercise of Professional Judgment
Government Balancing Issues
10
www.ober.com
Recent Cases
Recent Cases Tuomey Bradford Kosenske Christ Hospital Saint Joseph Medical Center United Shockwave Wright Medical
Lessons Learned
11
www.ober.com
U.S. ex rel. Drakeford v. Tuomey Healthcare System, Inc.
Facts Tuomey employed surgeons on a part-time basis
through a new wholly-owned LLC to provide surgery at Tuomey’s new outpatient surgery center.
Agreements were ten years in length, and required the employed surgeons to exclusively perform outpatient surgery at the Tuomey outpatient surgery center;
Surgeons were paid in excess of 100% of collections.
12
www.ober.com
U.S. ex rel. Drakeford v. Tuomey Healthcare System, Inc.
Facts (continued)
Tuomey likely entered into the contracts in response to the opening of a competing surgery center in the community – feared that these surgeons would redirect their patients away from Tuomey to the new surgery center.
In Fall of 2005, qui tam lawsuit filed by one of the physicians approached for the venture
13
www.ober.com
U.S. ex rel. Drakeford v. Tuomey Healthcare System, Inc.
Outcome
Jury returned a split verdict on March 29, 2010
Employment agreements violated Stark law but did not violate FCA
Tuomey ordered to repay $45 million for Stark law violations
Court ordered a new trial on FCA allegations due to a mistake in excluding certain testimony
14
www.ober.com
U.S. ex rel. Drakeford v. Tuomey Healthcare System, Inc.
Takeaways
Virtually all FCA cases are resolved through settlement agreements due to potential ramifications of losing – unusual that this case went to trial
Physician employment does not necessarily insulate agreements from Stark liability
15
www.ober.com
U.S. ex rel. Drakeford v. Tuomey Healthcare System, Inc.
Takeaways (continued)
If a proposed arrangement appears to have been developed in response to the fear of losing a referral stream, the government may look closely at issues of commercial reasonableness
Long-term arrangements should be reviewed periodically for compliance
Providers cannot blindly follow a fair market value or commercial reasonableness determination
16
www.ober.com
United States ex rel. Singh v. Bradford Regional Medical Center
Facts V&S Medical Associates was a physician group
and a significant source of referrals for Bradford, including referrals for nuclear testing. In 2001, V&S leased a nuclear camera from GE, which was maintained at V&S’ offices.
Bradford threatened the physicians with the loss of staff privileges, arguing that the lease violated a hospital policy on physicians having competing financial interests. To resolve the dispute, V&S and Bradford entered into a sublease agreement (with a non-compete provision) in October of 2003.
17
www.ober.com
United States ex rel. Singh v. Bradford Regional Medical Center
Facts (continued)
Bradford obtained a report prepared by an accountant which concluded that the amounts to be paid under the sublease were “reasonable.”
The analysis compared Bradford’s expected revenues with and without the sublease in place
Revenue projections were based on the assumption that V&S would refer nuclear imaging services to Bradford once the sublease went into effect
Qui tam lawsuit – Government did not intervene
18
www.ober.com
United States ex rel. Singh v. Bradford Regional Medical Center
Outcome Summary judgment against the Hospital and other
defendants The equipment subleasing arrangement, and related
non-compete agreement, improperly assigned value to the volume of anticipated referrals in violation of the Stark law
Fair market value report took into account anticipated referrals from V&S to Bradford
Defendants bear burden of showing that fixed compensation is consistent with fair market value, and failed to meet that burden
Immaterial that non-compete agreement did not require physicians to refer to Bradford – compensation arrangement was inflated to compensate physicians for anticipated referrals and thus did not reflect fair market value
19
www.ober.com
United States ex rel. Singh v. Bradford Regional Medical Center
Takeaways Question is whether hospital can allocate portion
of payment to non-competes and other intangible assets when entering into financial arrangements with physicians
Fair market value analysis should be based on the Stark law definition of fair market value
Valuations that consider anticipated referrals may be subject to challenge
20
www.ober.com
United States ex rel. Singh v. Bradford Regional Medical Center
Takeaways (continued)
Providers should formally document in a signed written agreement all financial relationships with referring physicians, and adhere to the terms of the agreement Proposal letter and an invoice did not constitute
a written agreement sufficient to satisfy a Stark law exception
Review state contract law
21
www.ober.com
United States ex rel. Kosenske v. Carlisle HMA, Inc.
Facts In 1992, Blue Mountain Anesthesia Associates
(BMAA) and Carlisle Hospital entered into an exclusive anesthesiology services agreement BMAA would provide all anesthesiology services
to patients at Carlisle, and would not provide these services anywhere else
Carlisle would provide the space, equipment, and supplies necessary for BMAA to provide these services
22
www.ober.com
United States ex rel. Kosenske v. Carlisle HMA, Inc.
Facts (continued)
In 1998, Carlisle built a new facility containing an outpatient surgery center and a pain clinic nearby, and BMAA provided services at the facility under essentially the same terms as the 1992 Agreement The 1992 Agreement was never amended to include pain
management services; nor was a new written agreement executed to cover the provision of services at the new facility
23
www.ober.com
United States ex rel. Kosenske v. Carlisle HMA, Inc.
Outcome District Court: the arrangement satisfied the Stark
law personal services exception, and thus granted summary judgment to Carlisle 1992 Agreement constituted a written agreement that
governed the arrangements at the 1998 pain clinic in light of the parties’ intent and actions from 1992 forward
Mutuality of rights and responsibilities (physicians right to provide exclusive services and obtain free office space; hospital’s benefit of having on-call anesthesiologists) was evidence of fair market value exchange
24
www.ober.com
United States ex rel. Kosenske v. Carlisle HMA, Inc.
Outcome (continued)
Circuit Court: reversed and remanded the summary judgment ruling
The arrangement did not satisfy the personal services exception
Rejected the fair market value analysis of the lower court
25
www.ober.com
United States ex rel. Kosenske v. Carlisle HMA, Inc.
Takeaways The “procedural” components of the Stark law
are essential – keep written agreements updated so that they accurately reflect the services being performed
What may have constituted fair market value consideration at the signing of an agreement must be able to withstand a current fair market value analysis in light of changed circumstances
26
www.ober.com
United States ex rel. Kosenske v. Carlisle HMA, Inc.
Takeaways (continued)
In-kind remuneration – including free office space and equipment – can serve as the basis for finding a Stark violation
Anesthesiologists who provide pain management services are viewed as referral sources
27
www.ober.com
Christ Hospital
Facts
From 1997 until 2004, the hospital limited work at its Heart Station – an outpatient cardiology testing unit – to those physicians who referred to the hospital
Qui tam lawsuit filed by cardiologist who formerly worked at Christ Hospital
28
www.ober.com
Christ Hospital
Outcome
The Health Alliance of Greater Cincinnati and Christ Hospital agreed to pay the U.S. $108 million to settle the alleged violations of the AKS and FCA and entered into a CIA
29
www.ober.com
Christ Hospital
Takeaways
Certain physician benefits – such as paid call coverage arrangements and other opportunities that can generate income for physicians – cannot be based on the volume or value of referrals from the physicians
Opportunity to generate a fee may constitute a financial benefit to physicians
30
www.ober.com
Saint Joseph Medical CenterBaltimore, Maryland
Facts From 1996 until 2006, Saint Joseph Medical Center
(SJMC) allegedly paid kickbacks to a group of cardiologists under the guise of professional services agreements to induce the referral of patients to SJMC E.g., an EKG-reading contract was renewed annually, and
eventually SJMC was paying for services that had no relationship to reading EKGs, including payments for the salaries of two nurse practitioners who previously worked at the hospital
When SJMC tried to eliminate the nurse practitioner salaries in 2004, the physicians “demanded” that the hospital pay equivalent amounts under a new contract to maintain overall remuneration levels
Qui tam lawsuit filed by three cardiac surgeons who were members of a rival cardiology group
31
www.ober.com
Saint Joseph Medical Center
Outcome
SJMC agreed to pay the U.S. $22 million to settle allegations that it violated the FCA, AKS, and Stark Law and entered into a CIA
SJMC must appoint physician executives to oversee medical staff quality-of-care matters and hire a Peer Review Consultant to evaluate the hospital’s peer review practices
32
www.ober.com
Saint Joseph Medical Center
Takeaways
All financial relationships between physicians and the hospitals to which they refer, including medical directorships, call coverage arrangements, and rental arrangements, must be for legitimate and necessary items or services and payments must be consistent with fair market value
33
www.ober.com
United States v. Borrasi
Facts Sometime between 1999-2002, Dr. Borrasi conspired
with 2 executives of inpatient psychiatric hospital to provide remuneration to Dr. Borrasi and other members of his group in exchange for increased Medicare referrals.
Dr. Borrasi argued that remuneration was paid under part-time employment relationships for administrative services.
Testimony at trial suggested that physicians were given “false titles,” “faux job descriptions,” and were asked to submit “false time sheets.”
Testimony also suggested that physicians did not perform any of the administrative duties in their job descriptions and only occasionally attended committee meetings.
34
www.ober.com
United States v. Borrasi
Outcome Criminal conviction of physician for conspiring
to defraud the United States and accepting kickbacks in exchange for patient referrals in violation of AKS.
7th Circuit affirmed conviction and 72-month sentence of physician
Upheld jury instruction based on one-purpose test
35
www.ober.com
United States v. Borrasi
Takeaways
Not enough just to call a payment employment
Employment exception and safe harbor require
Employment relationship to be bona fide
Services to actually be provided
36
www.ober.com
United Shockwave Services
Facts United provides hospitals with lithotripsy (shockwave
therapy) and laser services and equipment to crush kidney stones and treat men with enlarged prostates
United has several physician-owners
Allegedly leveraged patient referrals to obtain contract business from hospitals in Illinois, Indiana, and Iowa
Physician owners were involved in contract negotiations with hospital customers
37
www.ober.com
United Shockwave Services
Outcome
United entered into a $7.3 million CMP settlement with OIG
United entered into a 5-year CIA
Required to hire an IRO to monitor lithotripsy and laser arrangements between United and any hospital in Illinois, Iowa, and Indiana that receives referrals from United or any of its physician-owners
38
www.ober.com
United Shockwave Services
Takeaways “This settlement sends a strong message that
companies, including those with physician-owners, cannot use Federal health care beneficiary referrals to line their pockets by securing business from hospitals or other providers. We continue to have serious kickback concerns when companies link investment opportunities to the ability to generate business and offer returns on investment that are disproportionate to business risk.”
39
www.ober.com
Wright Medical Technology, Inc.
Facts
Allegedly hired orthopedic surgeons as consultants, in an effort to induce them to use the firm's hip and knee reconstruction and replacement products
40
www.ober.com
Wright Medical Technology, Inc.
Outcome Wright paid $7.9 million to the U.S. to settle
allegations that it paid kickbacks to induce doctors to use its hip and knee devices and engaged in fraudulent marketing practices in violation of the FCA
Wright entered into a one year Deferred Prosecution Agreement (DPA) with the USAO for the District of New Jersey and a 5 year CIA with HHS-OIG
41
www.ober.com
Wright Medical Technology, Inc.
Outcome (continued)
USAO offered the DPA in light of the company’s remedial actions to date and its willingness to
Undertake additional remediation as needed; Acknowledge responsibility for its behavior; Continue its cooperation with the government; Demonstrate its good faith and commitment to full compliance with federal health care laws
42
www.ober.com
Wright Medical Technology, Inc.
Takeaways
Consulting contracts may be subject to increased scrutiny under the AKS
Being proactive – taking sensible remedial action when a potential violation is discovered – can influence prosecutorial decisions and subsequent enforcement actions
43
www.ober.com
Lessons Learned
Providers should formally document all financial relationships with referring physicians in a signed written agreement before any services are provided or any space or equipment is used
The parties must adhere to the terms of the agreement
Arrangements with physicians must be for real and meaningful services, leases, equipment
44
www.ober.com
Lessons Learned
Document purpose and intent of relationship, highlighting non-referral business reasons – answer the “why” question
Fair market value analysis should be based on the Stark law definition of fair market value
Document the provision of services
In-kind remuneration – including free office space and equipment – can serve as the basis for scrutiny under AKS and Stark violation
45
www.ober.com
Lessons Learned
Opportunity to generate a fee could be viewed as an inappropriate financial benefit to physicians
Long-term arrangements should be reviewed periodically for compliance
Employment relationships and fair market valuations may be subject to challenge
46
www.ober.com
Recent Advisory Opinions
Since last years Health Law Forum, there have been several important advisory opinions
10-23 10-24 11-01 11-02 11-06 11-08
47
www.ober.com
Advisory Opinions 10-23 & 10-24
OIG analyzed 2 different, but related arrangements between sleep testing provider and hospital
OIG rejected proposed arrangement with part-time marketing and per-click payments
OIG approved proposed arrangement with full-time marketing and fixed, annual fees
Not all such arrangements are illegal High standard for favorable advisory opinion Helpful discussion of risks associated with “under
arrangements” transactions
48
www.ober.com
Advisory Opinion 11-01
OIG analyzed arrangement by pediatric charity hospital to waive all cost sharing, provide lodging assistance, and to provide transportation assistance
OIG approved cost sharing based on longstanding, charitable mission of the hospital.
OIG approved lodging and transportation assistance, citing PPACA amendment to permit payments that promotes access to care and poses low risk of F&A.
49
www.ober.com
Advisory Opinion 11-02
OIG analyzed comprehensive local transportation arrangement.
OIG approved arrangement despite it not fitting into earlier guidance on local transportation arrangements.
50
www.ober.com
Advisory Opinion 11-06 OIG analyzed payments for electronically receiving and
responding to referral requests from hospitals through online post-acute care referral service.
OIG found that the payments did not meet referral services safe harbor because they were not assessed uniformly and were not based solely on cost of operating referral service.
OIG issued unfavorable opinion out of concern that payments created an uneven playing field and that payments could be an unlawful pay-to-play fee.
Many hospitals participate in online post-acute care referral services and need to re-assess those relationships in light of this Opinion.
51
www.ober.com
Advisory Opinion 11-08
OIG analyzed existing and proposed CPAP set up arrangements between DME supplier and IDTF.
OIG issued unfavorable opinion. With regard to existing arrangement, the OIG found that
“carve out” of Federal business was not sufficient protection for favorable advisory opinion.
With regard to proposed arrangement, the OIG reiterated longstanding concerns about arrangements between DME suppliers and IDTFs as potential referral sources.
52
www.ober.com
Advisory Opinion 11-08
Opinion represents warning about CPAP set-up services arrangements
... but does not rule out possibility that such arrangements could be appropriately structured.
Keys will be existence of a legitimate business purpose of arrangement and FMV of payments.
53
www.ober.com
60-Day Repayment Requirement
§6402 of PPACA requires reporting and repayment of overpayments within 60 days of identification (or due date of next cost report, if applicable) What’s “identification”?
Violations actionable under FCA
Regulatory guidance will be forthcoming... (or so we’ve heard)
Absent guidance, providers must struggle to come up with practical approaches to complying with the 60-day requirement.
54
www.ober.com
Monthly Exclusion Checking
Seriously.... every month
Growing number of State Medicaid Programs are requiring monthly screening of current employees and contractors. See TennCare Policy PI 11-002 (effective 6/22/2011)
State Medicaid Director Letter instructed states to “require providers to search the HHS-OIG website monthly to capture exclusions and reinstatements that have occurred since the last search.”
HHS-OIG CIAs still only require annual screening.
55
www.ober.com
Mandatory Compliance Programs
It’s coming.... eventually.
§6401 of PPACA makes compliance programs mandatory....
....but only after implementing regulations establish the core elements for mandatory compliance programs
Growing numbers of providers are establishing (or updating) compliance programs in anticipation of them becoming mandatory.
56
www.ober.com
Need a Plan??
57
www.ober.com
Contractor Confusion/Fatigue
Hard to keep track of the alphabet soup of contractors looking for fraud Comprehensive Error Rate Testing (CERT) Contractors Medicare Administrative Contractors (MACs) Recovery Audit Contractors (RACs) Medicaid Integrity Contractors (MICs) Zone Program Integrity Contractors (ZPICs) Program Safeguard Contractors (PSCs)
58
www.ober.com
Contractor Confusion/Fatigue
Administrative burdens and costs Responding to multiple inquiries Greater documentation requirements
Confusion about applicable rules E.g.: Site visits to DME suppliers requesting physician
notes, yet no Medicare requirement that DME suppliers maintain such notes.
Lack of coordination by contractors Unreasonable extrapolations Protracted appeals
59
www.ober.com
What’s Next?
OIG/DOJ increased emphasis on pursuing individual liability for fraud and abuse perpetrated by health care entities - Goal is “to alter the cost-benefit calculus of the corporate executives who run these companies”
Increasingly aggressive federal/state enforcement Qui Tam Relators driving government priorities Increasing importance of comprehensive and
aggressive corporate compliance efforts
60
www.ober.com
“Be careful out there”
61
www.ober.com
QUESTIONS?
Sandy TeplitzkyOber | Kaler
Bill MathiasOber | Kaler