OIG Expands Kickback Safe Harbors While Expanding Bases for CMP

The Office of Inspector General (OIG) for the U.S. Department of Health and Human Services has finalized its newest safe harbor rule that had been pending for two years. The rule, titled "Medicare and State Health Care Programs: Fraud and Abuse; Revisions to the Safe Harbors Under the Anti-Kickback Statute and Civil Monetary Penalty Rules Regarding Beneficiary Inducements," attempts to provide flexibility in new cost-sharing arrangements by preventing certain initiatives by doctors, hospitals and pharmacies from being treated as fraudulent kickbacks by Medicare and Medicaid.

The OIG's new rule amends the federal Anti-Kickback Statute and expands the safe harbors for patients covered in federal healthcare programs for the following activities:

• Waiver by a hospital for cost-sharing imposed under a Federal healthcare program if certain conditions are met;
• Waiver of cost-sharing amounts owed to a federally qualified health center;
• Waiver by a pharmacy for cost-sharing imposed by a federal healthcare program under certain conditions;
• Free or discounted local transportation services if certain conditions are met; and
• Waiver of cost-sharing for emergency use of state or municipality-owned ambulance services to transport patients within a radius of 25 miles in urban settings and 50 miles in rural settings to physicians' offices, hospitals, home health agencies, pharmacies and laboratories.

The rule also excludes the following from the definition of "remuneration" in connection with liability under the Civil Monetary Penalties [CMPs], Assessments and Exclusions law:

• Differentials in cost sharing as part of a benefit design so long as the differentials are disclosed;
• Items or services that improve a beneficiary's ability to obtain items and services payable by Medicare or Medicaid and that pose a low risk of harm to such beneficiary by being unlikely to interfere with clinical decision making, raise patient safety issues, or lead to improper utilization;
• Coupons, rewards or rebates that are available on equal terms to the general public; and
• Free items to persons with financial need if they are not offered as part of any advertisement or solicitation or tied to the provision of other services.
  On the flip side, the final rule allows for CMPs for not granting the OIG access to records in a timely manner, ordering or prescribing while already excluded from government health care programs, making false statements, omissions or misrepresentations when applying for enrollment, not reporting or returning overpayments and using false records or materials that are material to false or fraudulent claims. The OIG decline to make any change in the six-year statute of limitations for bringing exclusion actions.
  
  The final rule was published in the Federal Register on December 7.

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The Strike Force Approach to Combatting Health Care Fraud

Bridget M. Rohde02/10/2014

The U.S. Department of Justice (DOJ), Health and Human Services Office of Inspector General (HHS-OIG) and other federal and state agencies are aggressively prosecuting health care fraud and related offenses through a strike force approach that has its roots in DOJ's historic efforts to combat traditional organized crime (or "La Cosa Nostra"). As DOJ has advised in recent press releases, this approach has been highly impactful in the health care space:

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,700 defendants who collectively have billed the Medicare program for more than $5.5 billion. In addition, HHS's Center for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers. 1

Below, we look at the historic organized crime strike force program, the evolution of the Medicare Fraud Strike Force (MFSF) and MFSF's current approach and seemingly ever-increasing productivity.

Historic Organized Crime Strike Forces

In the 1960s, to address the long-ignored presence of organized crime and its numerous rackets, DOJ developed an organized crime strike force program in which teams of prosecutors in cities across the country focused on the families of La Cosa Nostra operating in their local geographic jurisdictions. These prosecutors worked in partnership with investigators from a variety of federal agencies, and, sometimes local law enforcement as well. Investigations were long-term efforts, as the teams of prosecutors and agents gathered intelligence through confidential sources, electronic surveillance and other investigative techniques,and methodically built broad, deep and impactful cases.

Early on, DOJ touted the success of its organized crime strike forces in much the same way as it now does the success of MFSF: "Individuals indicted during 1968 as a result of strike force strategy numbered 71 in Brooklyn, 67 in Detroit, 34 in Buffalo, 12 in Chicago and 5 in Philadelphia." 2

At the time of the merger of the strike forces with local U.S. Attorneys Offices in 1990, there were 14 strike forces across the country, located in Brooklyn, Buffalo, Chicago, Cleveland, Detroit, Kansas City, Las Vegas, Los Angeles, Miami, New Orleans and San Francisco. 3

The success of the organized crime strike force approach (and continuing efforts of the U.S. Attorneys' Offices) was incontrovertible. Waves of prosecutions relentlessly taking down the successive hierarchies of the five New York City-based families of La Cosa Nostra is one of the more memorable local examples. While perhaps surprising at first blush, the use of a variation on this approach to combat white-collar crime, including health care fraud, now seems a logical, even inevitable, law enforcement strategy.

The Birth and Evolution of the MFSM

MFSF was initiated in March 2007, in what came to be Phase One, in the Southern District of Florida (Miami). A year later, in March 2008, Phase Two was kicked off in the Central District of California (Los Angeles). As part of the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, a joint effort by DOJ and HHS, in 2009, MFSF expanded to Detroit, Houston, Brooklyn, Tampa and Baton Rouge. In 2011, the program expanded to the total of nine cities it is today, by adding Dallas and Chicago.

Phase One of MFSF was announced in connection with a May 2007 takedown in the Southern District in Florida involving the indictment of organizations and individuals in connection with allegedly conspiring to defraud the Medicare program, making false claims and violating the anti-kickback statute. Thirty-eight individuals were arrested. Collectively, approximately $142 million was allegedly billed in Medicare. MFSF was then described as "a multi-agency team of federal, state and local investigators designed specifically to combat Medicare fraud through the use of real-time analysis of Medicare billing data," focusing on schemes involving infusion therapy and durable medical equipment (DMEs). 4

MFSF became much more. There was the noted expansion to nine cities. In addition to takedowns of discreet cases in particular cities, in late 2009, MFSF began conducting periodic nationwide takedowns, with individuals being arrested in a number of cities simultaneously in connection with healthcare-related offenses. A July 2010 nationwide takedown appears to be the largest such takedown to date, with the arrest of 94 individuals across the country for allegedly participating in schemes to submit approximately $251 million in Medicare claims. 5

Over the years that MFSF has been in existence, it has utilized other hallmarks of the strike force approach to fighting organized crime besides multi-agency cooperation and sprawling takedowns, including employing electronic surveillance techniques, expanding the range of crimes charged, obtaining (and issuing press releases regarding) long prison sentences imposed on individuals, and even having "most wanted" healthcare fugitives. Penalties of fines, forfeiture and restitution have been utilized to recoup public monies and disincentivize fraudsters.

The Current Look of MFSF Cases

A review of MFSF prosecutions in 2013 provides numerous insights into the increasingly broad scope and continuing effectiveness of the strike force approach to combatting healthcare fraud:

Many Venues of Prosecution. DOJ and its partners brought cases across the country, including in California, Florida, Illinois, Louisiana, Michigan, New York, Pennsylvania, Texas and Utah. Certain federal districts had a particularly high concentration of MFSF cases, including the Southern District of Florida, Eastern District of Michigan and Central District of California.

Variety of Health Care Providers Targeted. Cases targeted executives of a health maintenance organization; the owner/operator of an oncology center; the medical director of a hospice; the owner and program coordinator of an adult day care center; owners and others associated with partial hospitalization programs (PHPs); owners and others associated with home health care agencies; owners and others associated with DMEs; owners of ambulance services; and doctors, registered nurses and other medical professionals.

Types of Crimes Charged. Charges included healthcare fraud for submitting false and fraudulent claims to Medicare, violations of the anti-kickback statute, and, in some recent cases, money laundering.

Wide-ranging penalties. Sentences included the imposition of lengthy prison terms; fines, restitution, and forfeiture; exclusions from Medicare, Medicaid and other federal and state health programs; and compliance requirements.

Some specific matters further illustrate the scope of MFSF's efforts and its results.

1. May 2013 Nationwide Takedown. As noted above, MFSF's sixth nationwide takedown took place in May 2013. DOJ and HHS announced arrests in eight cities of 89 individuals, including health care company owners, doctors, nurses and other licensed medical professionals, for allegedly participating in Medicare fraud schemes involving approximately $223 million in billings. Schemes involved billings for home health care, mental health services, psychotherapy, occupational and physical therapy, and pharmacy fraud, as well as infusion therapy and DMEs. Charges included conspiracy to commit health care fraud, violations of the anti-kickback statute and money laundering. 6

2. Multi-million Medicare Fraud Scheme involving Brooklyn Clinic. In addition to the nationwide takedown, MFSF also brought or continued to prosecute individual cases that further illustrate the strike force approach and its results. One illuminating local example is a case charging a $77 million Medicare fraud scheme involving a Brooklyn, New York clinic. The owner and employees of the clinic allegedly paid kickbacks to Medicare beneficiaries and used the beneficiaries' names to bill Medicare for services that were medically unnecessary or never provided. The kickbacks were allegedly paid so that beneficiaries would keep quiet about services that were not provided or would acquiesce to treatment that was unnecessary. A network of money launderers was allegedly used to generate the cash needed for the kickbacks. 7

As of late last year, 13 individuals had been convicted in connection with the multi-million scheme. The owner of the clinic, who pled guilty to one count of conspiracy to commit money laundering, was sentenced to 15 years in prison and ordered to pay approximately $51 million in restitution and $36 million in forfeiture. Another participant—an individual described as a "no-show" doctor who allegedly let the clinic use his Medicare billing number and rarely visited the clinic except to pick up his check—was sentenced to more than 12 years in prison, ordered to pay over $50 million in restitution and another half million in forfeiture and was excluded from Medicare, Medicaid and federal health programs; additionally, New York state revoked his medical license. An individual who "impersonated" the doctor—signing medical charts and prescriptions in the doctor's name and performing medical procedures on patients even though he was not a doctor—was sentenced to eight years in prison, as well as restitution, forfeiture and program exclusions. Among those awaiting sentencing is an individual who pled guilty to laundering the proceeds of the health care fraud through a number of shell companies and bank accounts. 8

In addition to the dollar amount of the fraud scheme,the inclusion of money laundering charges and the variety and size of penalties, this case is notable because the government utilized investigative techniques historically used to investigate organized crime and, in more recent years, investigate insider trading. Specifically, the government stated in press releases regarding this case that it employed a court-authorized audio/video device concealed in a room at the clinic where conspirators gave cash to Medicare beneficiaries. Fitting in with the organized crime analogy, the room included "a Soviet-era poster of a woman with a finger to her lips and the words 'Don't Gossip' in Russian." 9

Effect of Strike Force Approach

As indicated above, in 2009, DOJ and HHS formed the Health Care Fraud Prevention and Enforcement Action Team, or HEAT, which includes the strike force efforts but is more expansive. For one, HEAT is also responsible for many significant civil enforcement actions resulting in multi-million dollar settlements over the last few years. These civil enforcement actions are developed and prosecuted using what can fairly be referred to as a modified strike force approach. DOJ and HHS, often in conjunction with one or more federal or state partner, work cooperatively to investigate and bring expansive cases against pharmaceutical or medical device companies charging violations of the False Claims Act, Food Drug and Cosmetics Act, the anti-kickback statute or other laws and regulations. Commonly, based on a qui tam complaint, an investigation will target specified conduct like off-label marketing of pharmaceuticals or introduction of adulterated drugs into commerce, seek monetary penalties and require remediation of the violations and adherence to a compliance protocol going forward.

A case in point from 2013 involved Johnson & Johnson. On Nov. 4, 2013, DOJ announced a deal requiring Johnson & Johnson and three of its subsidiaries to pay more than $2.2 billion to resolve criminal exposure and civil liability arising from marketing prescription drugs for uses not approved as safe and effective by the Food & Drug Administration (FDA), as well as for paying kickbacks to doctors and the country's largest long-term care pharmacy provider for prescribing and promoting these drugs. 10

To address its criminal exposure, on November 7, Johnson & Johnson subsidiary Janssen Pharmaceuticals Incorporated pled guilty to a misdemeanor charge of misbranding, in violation of the FDCA, in the U.S. District Court for the Eastern District of Pennsylvania. Specifically, Janssen was alleged to have introduced the drug Risperdal into the market for unapproved uses from March 2002 through December 2003, namely treating behaviors of elderly, non-schizophrenic patients suffering from dementia, when it had been approved only for the treatment of schizophrenia; the criminal fines and forfeiture component of the criminal resolution is $400 million. 11

Civil lawsuits similarly claimed that Johnson & Johnson and Janssen promoted Risperdal to doctors and nursing homes for unapproved uses in the elderly, children and mental disabled. A complaint in the Eastern District of Pennsylvania specifically alleged that the FDA repeatedly advised Janssen that marketing Risperdal as safe and effective for the elderly would be misleading. It also alleged that Janssen downplayed health risks to the elderly posed by Risperdal and improperly promoted its use in children. Speaker fees were allegedly paid to doctors to encourage them to write prescriptions. In addition, Johnson & Johnson and Janssen allegedly engaged in off-label promotion of a newer anti-psychotic drug, Invega. 12

Johnson & Johnson and Janssen agreed to pay over $1.2 billion to resolve civil liability under the False Claims Act in relation to Risperdal and Invega. In addition, Johnson & Johnson agreed to pay another $149 million in connection with the alleged kickbacks that were allegedly paid to the large long-term care pharmacy. 13

An additional component of the resolution was a five-year Corporate Integrity Agreement, described as requiring major changes to the way Johnson & Johnson's pharmaceutical subsidiaries do business. Annual compliance certifications are required by certain management employees and board members. As the government stated,"[t]his agreement is designed to increase accountability and transparency and prevent future fraud and abuse." 14

A telling remark by U.S. Attorney General Holder Eric Holder, who delivered remarks at the press conference on this resolution, is that pharmacists, who were supposed to be "gatekeepers" providing independent review of patient medications, instead recommended the drugs for unapproved uses at the companies' request. 15

Conclusion

In 2014, MFSF is in full flower. There is every reason to expect the strike force approach to be utilized for the foreseeable future, unless and until health care fraud significantly diminishes as a public concern. The specific cases arising from MSFS' efforts in 2013 can help drive risk assessments and fine-tuning of compliance programs to avoid repeating the expensive mistakes made by some in the health care industry in the past. The resolutions of these cases serve as a reminder of the need to prioritize compliance.

Bridget M. Rohde, a member of Mintz Levin in New York, is a former chief of the Criminal Division of the U.S. Attorney's Office for the Eastern District of New York.

http://m.newyorklawjournal.com/module/alm/app/ny.do#!/article/1457727614

OIG publishes study report of physician owned distributorships

On October 23, 2013, the Department of Health and Human Services, Office of Inspector General (“OIG”) published a report entitled “Spinal Devices Supplied by Physician-Owned Distributors: Overview of Prevalence and Use” (the “Report”).¹ The Report was provided as a response to Congressional requests to determine the extent to which physician-owned distributorships (PODs) provide spinal devices to hospitals. The Report follows prior OIG review of PODs – specifically, a 2013 Special Fraud Report² and a Senate Finance Report issued in 2011.³
In its production of the Report, the OIG reviewed 1,000 claims by 615 hospitals billed to Medicare in 2011 that included spinal fusion surgery. Each hospital associated with those claims was asked to complete a questionnaire about its knowledge of PODs. Surgeries from 7 states accounted for just over 50% of the use of PODs devices. The states with the highest reported PODs use were California, Texas, Missouri, Florida, Pennsylvania, Alabama and Georgia (collectively, 52%).
The Report noted that the exact makeup of PODs varies. Specifically, (1) whether physicianinvestors practice in the hospitals to which they distribute the devices, (2) whether the PODs solely distribute devices or both manufacturer and distribute their own devices, and (3) which services the PODs offer with the purchase of the devices. In several instances, the Report noted that the PODs provide physician-investors with the opportunity to profit from their own use of the devices.
PODs have been in the marketplace for more than a decade. An important cornerstone of PODs organizations is the assertion by most PODs that the arrangement can lower healthcare costs because it is a more efficient means of delivering the product to the hospital. That is, fewer “middlemen” or sales personnel equates to lower costs and ultimately savings that are passed on to the consumer. The PODs also create an opportunity to increase competition within the marketplace by allowing smaller manufacturers to compete with larger, international manufacturers. Consistent with prior OIG examinations, the Report was highly critical of these assertions.
Notable Findings
Some notable findings from the Report include:

1. In FY 2011, PODs supplied devices used in almost 20% of the spinal fusion surgeries billed to Medicare.
2. Surgeries that used POD devices used almost 2 fewer devices per surgery than surgeries that did not use POD devices.
3. Device costs for surgeries that used POD devices were not lower than those for all other surgeries.
4. The growth rate of spinal surgery after hospitals began purchasing from PODs was three times that for all hospitals.
5. The complexity of hospitals’ caseloads of spinal surgeries was slightly higher for hospitals that purchased devices from PODs than that for hospitals that did not purchase from PODs.

Conclusions
Based upon its findings, the OIG reached several conclusions:

1. The use of PODs is increasing. With a substantial growth rate since 2009, nearly 20% of all Medicare spinal surgeries involved PODs and of the hospital’s surveyed, nearly one-third reported making purchases from PODs. It is clear from the Report that notwithstanding the Special Fraud Alert and extensive concerns raised by the OIG in recent years, that PODs, if not growing, are at least deeply rooted within the spinal surgery marketplace.
2. PODs do not appear to reduce costs or spinal surgery caseloads. The OIG concluded that hospitals that purchase from PODs perform more spinal surgeries and have slightly more complex caseloads than hospitals that do not purchase from PODs. Though the OIG did not pursue the cause, it did determine that hospitals in its study experienced increased rates of growth in the number of spinal surgeries performed as compared to the growth rate for hospitals overall.
3. PODs raise significant fraud and abuse concerns. The OIG reiterated its concern that the PODs create significant concerns under the federal Anti-Kickback Statute. As supported by its findings, the OIG noted that devices sold by PODs are “physician preference items” in which the physician’s choice (either of brand or design) may heavily outweigh that of the hospital’s power of choice in selecting (and purchasing) the devices. Though the federal Sunshine Act will require PODs to become more transparent, the Report noted that the disclosure by hospitals and physicians to their patients is widely disparate and the ability of patients to identify potential conflicts of interest among physicians and hospitals is reduced.

Impact
The Report is an example of the OIG’s consistent, multi-year, focused review of PODs. Both hospitals and physicians must carefully consider their current (or prospective) use of PODs in light of the OIG’s findings and conclusions. It is clear that there is tension between the PODs (which many support as a means to reduce overall healthcare costs, while continuing to drive innovation in the marketplace) and the OIG (which does not appear to have become any more willing to accept such claims). Providers can best address the tension and the resulting uncertainty by being vigilant in their compliance efforts, specifically: (1) reviewing current conflicts of interest policies and revising the same as necessary to interface with PODs and (2) reviewing any current PODs to determine their compliance with federal and state laws.

http://www.lexology.com/library/detail.aspx?g=378604de-99fc-46d9-ad6d-d719ffdc123a

Office of Inspector General (OIG) Issues Negative Advisory Opinion Regarding Anesthesiology Provider Contract

On November 12, 2013, the Office of Inspector General (“OIG”) released Advisory Opinion 13-15 concluding that a proposed arrangement between an anesthesiology group and a hospital-based psychiatry group could potentially generate prohibited remuneration under the federal Anti-Kickback Statute (“Kickback Statute”). The OIG based its conclusion on the fact that the proposed arrangement would not qualify for safe harbor protection and that it presented more than minimal risk under the Kickback Statute because the psychiatry group would receive payment in exchange for referrals to the anesthesiology group.
The proposed arrangement originated from the anesthesiology group’s contract with a hospital as the exclusive provider of anesthesiology services that, in 2012, included a carve out to allow the psychiatry group to provide anesthesiology services to the hospital’s electroconvulsive therapy (“ECT”) patients as well as hire an additional anesthesiologist to provide such services at the psychiatry group’s discretion. Shortly after the carve out was negotiated, the psychiatry group determined that another part-time anesthesiologist was necessary. The psychiatry group proposed that it and the anesthesiology group should enter into a contract whereby the anesthesiology group would provide a part-time anesthesiologist for ECT patients. The psychiatry group would bill and collect for those services and, in turn, would pay the anesthesiology group a fixed, per diem rate for its services. The psychiatry group would retain the difference between the amount collected and the per diem rate.
As an initial matter, the OIG concluded that the per diem compensation would not qualify for protection under the personal services and management contracts safe harbor to the Kickback Statute because (i) the aggregate compensation to be paid over the term of the agreement would not be “set in advance,” and (ii) the safe harbor protects only those payments made by a principal (i.e., the psychiatry group) to an agent (i.e., the anesthesiology group) and, here, the principal would receive compensation from the agent in the form of retaining the difference between the amount billed and collected and the per diem rate.
Additionally, the OIG concluded that the proposed arrangement posed more than a minimal risk under the Kickback Statute for the following reasons:

• The proposed arrangement was designed “to permit the psychiatry group to do indirectly what it cannot do directly; that is, to receive compensation, in the form of a portion of the anesthesiology group’s service revenues, in return for the psychiatry group’s referrals of ECT patients to the anesthesiology group.”
• The additional anesthesiologist carve out to the 2012 contract between the hospital and the anesthesiology group gave the psychiatry group the ability to solicit remuneration for its ECT patient referrals by allowing the psychiatry group to contract with an anesthesiologist other than the anesthesiology group if the groups were not successful in negotiating the terms of an agreement. The OIG stated that this presents significant risk that the remuneration the anesthesiology group would provide to the psychiatry group, i.e., the opportunity to generate a fee equal to the difference between the amounts the psychiatry group would bill and collect and the per diem amounts, would be in return for the psychiatry group’s referrals to the anesthesiology group.

Importantly, although outside the scope of the opinion, the OIG noted the potential kickback nature underpinning a hospital’s carve out from an exclusive contract. In a footnote, the OIG stated that “[a]though we have not been asked to opine on, and express no opinion regarding, any aspect of [the anesthesiology group’s] relationship with the hospital . . . we cannot exclude the possibility that: (i) the hospital agreed to negotiate for the additional anesthesiologist provision in exchange for, or to reward, the psychiatry group’s continued referral of patients to the hospital for ECT procedures; (ii) the hospital leveraged its control over its large base of anesthesia referrals to induce the anesthesiology group to agree to the additional anesthesiologist provision; and (iii) the anesthesiology group agreed to the additional anesthesiologist provision in exchange for access to the hospital’s stream of anesthesia referrals.”
In light of this opinion, health care providers should carefully consider whether any of their arrangements that otherwise comply with the personal services and management contracts safe harbor involve direct or indirect payments from the agent to the principal as the OIG has stated that such payments are not protected by the safe harbor. Additionally, although only addressed in a footnote, the OIG expressed concern with carve outs to exclusive contracts between hospitals and providers. Providers and hospitals should carefully examine such arrangements for potential Kickback Statute implications.

http://www.natlawreview.com/article/office-inspector-general-oig-issues-negative-advisory-opinion-regarding-anesthesiolo
 

Eight Tips to Consider as Momentum Builds in the Quality Fraud Arena

Reprinted from REPORT ON MEDICARE COMPLIANCE, the nation's leading source of news and strategic information on Medicare compliance, Stark and other big-dollar issues of concern to health care compliance officers.

By Nina Youngstrom, Managing Editor

September 16, 2013Volume 22Issue 32More Sharing Services

With momentum building for more administrative and enforcement actions against providers over quality deficiencies, hospitals and physician groups should be monitoring quality metrics and thinking carefully about the marketing and compensation moves they make.

“Quality fraud is an underappreciated liability in the Medicare and Medicaid programs,” says Philadelphia attorney Alice Gosfield.

In addition to false claims cases for medically unnecessary stents implanted in hospitals and substandard care in nursing homes and the August arrest of a physician for medically unnecessary cancer treatment(RMC 8/12/13, p. 1), there is growing risk of fraud allegations for inaccurate reporting for pay for performance and other quality improvement programs — especially with whistleblowers and their lawyers expanding into new areas.

There’s no shortage of weapons in the enforcement arsenal for quality failures. Providers can be excluded from federal health care programs for providing items or services substantially in excess of patient needs (42 USC 1320a-7(b)(6)(B), Gosfield notes. OIG also can impose civil monetary penalties for (1) submitting claims for a pattern of items or services that the provider knows or should have known are not medically necessary; (2) providing false or misleading information that could be expected to lead to premature discharge from the hospital, (3) hospital payments to physicians to reduce services; and (4) physician incentive plans that put physicians at substantial financial risk, she says.

Poor Quality of Care Can Be ‘Criminal’

There’s also the risk of criminal liability for poor quality care. In June 2013, cardiologist Sandesh Rajaram Patil pleaded guilty to charges that he exaggerated the blockage in a patient’s arteries to justify stent placements and falsely recorded the severity of the patient’s illnesses to collect reimbursement for a cardiac stent at Saint Joseph’s Hospital in London, Ky. (RMC 6/17/13, p. 3). He agreed to a 30- to 37-month prison sentence and the hospital repaid the government $256,800 for Patil’s stent procedures. In another case, Peninsula Regional Medical Center in Salisbury, Md., paid $1.8 million to settle false claims allegations in connection with physician John R. McLean’s stent implants. McLean was sentenced to eight years in prison after a jury found him guilty of one count of health care fraud and five counts of making false statements relating to health care matters (RMC 8/15/11, p. 1).

OIG has also sharpened its focus on quality in recent years through its work plans. Gosfield says OIG began mentioning quality and safety in 2003 and has since “manifested increasing sophistication.” It published a document with the American Health Lawyers Association on the board’s responsibility for health care quality that emphasized oversight of quality as part of the board’s core mission. “In health care, we are not making widgets, so the business standards that also apply aren’t enough to fulfill the fiduciary standards the board has,” she says. OIG work plans show a progression of interest in quality of care. In 2009, OIG did a study of hospital never events and present-on-admission coding and the following year continued with POA coding but expanded to adverse events. In 2011, OIG continued its focus on adverse events, and drilled down into the types of facilities that most frequently transferred patients with certain diagnoses that were present on admission. Hospitals don’t want those patients on their tab so they transfer them. “OIG thinks it’s problematic,” she notes. In its 2012 Work Plan, OIG continued to study the types of facilities that transferred patients with certain diagnoses that were POA conditions. In 2013, ambulatory surgery centers attracted more attention, with an OIG review of safety and quality of care and adverse events, she says.

Work plans are not the only arena for OIG’s oversight of quality deficiencies. OIG now has corporate integrity agreements (CIAs) tailored for quality-related fraud settlements, and a dedicated section of the website where they are housed. On top of the usual CIA requirements, organizations must hire a peer review consultant — not just an independent review organization, Gosfield notes.

And now hospitals and physicians face a new frontier of quality-related fraud risks. All the Medicare and commercial pay-for-performance programs that link payment to quality improvement, such as value-based purchasing, the Physician Quality Reporting System and state reporting of adverse events, “are potentially subject to false claim liability,” she says. DOJ has identified the kinds of risks that arise in the data reporting arena. They include reporting false data, submitting false statements in support of a claim and making false statements to avoid repaying the government. “DOJ also talks about the implicit quality issues in claims,” she says. In DOJ’s eyes, when claims are submitted, providers are attesting to the medical necessity of the services and conveying that the services met all quality requirements — “personnel were appropriately licensed and properly supervised; supervisors were appropriately trained and had appropriate clinical privileges,” she says, which may go well beyond what people perceive to be what they attest to when submitting a claim.

Data integrity is no small matter. The myriad of health care delivery arrangements driven by health reform depend on the accuracy of data. But if it isn’t consistent and reliable, the arrangements are at risk and whistleblowers may have a field day.

Whistleblowers Have Lots of Places to Look

Whistleblowers — usually insiders at a health care organization — may base quality-related FCA allegations on an insufficient number of nurses on a unit to provide necessary care; inadequate equipment; lack of sufficient resources to live up to clinical practice guidelines; the use of untrained, unqualified personnel to perform skilled services; and insufficient supervision of services, she says. Backed by their attorneys, more whistleblowers are hammering away at providers even if the DOJ does not intervene.

In light of all these developments, Gosfield recommends hospitals and physicians consider the following eight “action steps”:

(1) Review marketing and advertising for quality promises made to the community. “The mere puffery that exists in health care advertising can come back to bite you in terms of holding yourself out as meeting a standard of care. The quality better be factual and supportable by the data back at the mothership,” she says.

(2) Consider the “page six” version of any quality-related initiatives, Gosfield says, referring to the gossipy section of the New York Post. She recounted a consultation with a Texas hospital, which had a “restive” medical staff after the hospital cut a $2 million deal to recruit out-of-town academic researchers because it lost its local medical school affiliation. The independent staff physicians were unhappy about the deal with the new physicians and asked Gosfield if the hospital could pay them for improving quality. She said “yes,” but wondered what they had in mind, and asked them to page-six it for her. “Enthusiastic physicians helping hospitals to improve mortality, from 97% survival rate to 98%.” She told them that was not how it would look. Instead, the page-six version would be “Greedy local physicians, already making millions, seek more money not to kill patients.”

(3) The boards of hospitals and physician groups should be well-versed in their quality metrics and transparency initiatives and understand what data populates them.

(4) Make sure you know who in your organization reports quality data and what data they report.

(5) Monitor the data for “accuracy, consistency among reports, timeliness, completeness and clues to other problems,” Gosfield says. “You need a plan for this, with signed responsibility.

(6) Your compliance program should have a quality oversight component.

(7) Compliance officers, risk managers and quality assurance managers should team up. “Compliance should not be in splendid isolation from quality.”

(8) Physician practices should clinically integrate and hospitals that employ physicians should help their physicians clinically integrate (e.g., form ACOs). “I cannot overemphasize how much true clinical integration can forestall many of these problems,” she says. “It is about generating data that help you change behavior and standardizing to evidence-based criteria.”

http://aishealth.com/archive/rmc091613-03

California-based healthcare facility pays $14.1M

June 5, 2013 11:27 AM
By STEPHANIE OSTROWSKI

WASHINGTON (Legal Newsline) – After allegedly violating the False Claims Act, healthcare facility Adventist Health System/West and its affiliated hospital White Memorial Medical center have agreed to pay $14.1 million to settle with the United States and California.

The settlement announced May 3 resolves allegations that Adventist Health physicians referred patients improperly to White Memorial and were compensated. According to the Department of Justice assets were transferred at less than fair market value, including medical and non-medical supplies and inventory.

The compensation the referring physician received from White Memorial violated the Anti-Kickback Act, Stark Statute, and by extension, the False Claims Back according to the United States.

About $11.5 million will be paid to the U.S. Government and the majority will benefit the Medicare Trust Fund. The remaining $2.6 million will be paid to California’s Department of Health Care Services.

“Kickbacks and other unlawful financial arrangements cost taxpayer dollars and undermine the integrity of medical judgments,” said Stuart F. Delery, the Acting Assistant Attorney General for the Civil Division. “The Department of Justice is committed to making sure that physician referrals do not involve payments made in violation of federal law.”

Prohibited by the Anti-Kickback Act is the offering, paying soliciting, or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid and/or other federally-funded programs.

The Stark Statute prohibits a hospital from submitting claims for referrals made by physicians who have a financial arrangement with the hospital.

Both the Anti-Kickback Act and Stark Statute are intended to ensure that a physician’s medical judgment and decisions are based on the best interest of the patient and not on financial incentives.

“Payouts made by hospitals and clinics – as the government alleged in this case – raise substantial concerns about physician independence and objectivity,” said Ivan Negroni, Special Agent in Charge of the Office of Inspector General, U.S. Department of Health and Human Services San Francisco region.  “Taxpayers and vulnerable patients rightfully expect such payments to be investigated and pursued.”

Under the qui tam, or whistleblower, provisions of the False Claims Act, private citizens can bring civil actions on behalf of the United States and share in any recovery. In this case, the whistleblowers will collectively receive $2,839,219.

According to the settlement, White Memorial has entered into a comprehensive five-year Corporate Integrity Agreement with the Office of Inspector General of the U.S. Department of Health and Human Services to ensure future compliance with federal health care benefit program requirements.

Adventist Health is headquartered in Roseville, Calif., and operates 19 hospitals and over 150 clinics in California, Hawaii, Oregon and Washington.  White Memorial Medical Center is a teaching hospital located in Los Angeles.

This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services.

The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $14.2 billion.

The claims settled by this agreement are allegations only.

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