Over the past several months, the Centers for Medicare & Medicaid Services (CMS) has taken a number of steps that show an awareness of the regulatory burden placed upon participants in the government’s health care programs, and even some willingness to consider reducing those burdens. While it remains to be seen whether the recent proposals will have measurable results, the following actions can still be viewed with guarded optimism.
Proposed Changes to Medicare
In July, 2018, CMS proposed significant changes to Medicare, to be included in rules that take effect in 2019. These changes cover physician fee schedules, streamlining Evaluation & Management (E&M) billing, advancing “virtual care,” decreasing drug costs, revising the MIPS program and establishing the MAQI demonstration project. The agency also asked for comments on price transparency issues.
Healthcare marketing arrangements that violate the Anti-Kickback Statute (AKS) can lead to serious financial and criminal consequences. Understanding the types of marketing arrangements that courts have found to be in violation of the statute and the potential implications are critical for marketers to know in order to operate in the healthcare industry.
Under the AKS, it is a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce referrals of items or services reimbursable by the Federal health care programs. Where remuneration is paid purposefully to induce referrals of items or services paid for by a Federal health care program, the AKS is violated. By its terms, the AKS ascribes criminal liability to parties on both sides of an impermissible transaction. An example of a highly scrutinized arrangement involves percentage compensation. For regulators, percentage compensation arrangements provide financial incentives that may encourage overutilization and increase program costs.
One healthcare employer’s compensation arrangement with its employees just got much needed support from the 11th Circuit Court of Appeals. The employer there, which provided AIDS patients certain healthcare related services, paid its employees a bonus of $100 per patient. The case was brought on the argument that the compensation arrangement constituted an illegal kickback under the federal Anti- Kickback Statute. The court, however, disagreed because the employees who received the bonuses were “bona fide employees.”
The court’s focus on the plain language of the safe harbor for bona fide employees was refreshingly clear, notably that “any amount paid by an employer to an employee (who has a bona fide employment relationship with such an employer) for employment in the furnishing or any item or service.” Essentially, any amount paid by an employer to a bona fide employee is not considered to be “remuneration” under the Anti-Kickback Statute.
How serious is the federal government that corporate compliance is necessary for healthcare providers?
In late 2015, the Department of Justice (DOJ) hired the agency’s first Compliance Counsel. Then, in early 2017, the DOJ published “common questions” that US Attorneys should ask as part of a criminal investigation when the DOJ evaluates a company’s compliance program. The “common questions” published by the DOJ describe specific factors that prosecutors should consider in conducting an investigation of a corporate entity, determining whether to bring charges, and negotiating plea or other agreements. These factors include “the existence and effectiveness of the corporation’s pre-existing compliance program” and the corporation’s remedial efforts “to implement an effective corporate compliance program or to improve an existing one.”
The United States Department of Justice (DOJ) has the power to issue civil investigative demand (CIDs) when the DOJ has reason to believe that a person may be in possession of information relevant to a false claims investigation. The DOJ is empowered to serve CIDs by the False Claims Act (FCA). A CID is similar to a grand jury subpoena; however, it provides greater versatility in the use of the information obtained. In addition to requiring the production of documents similar to a grand jury subpoena, CIDs demand other types of discovery responses and the information gathered may be shared between the civil and criminal sides of an investigation. Given this flexibility and with the passage of the Fraud Enforcement and Recovery Act of 2009 (which changed the law to allow issuance of a CID without the personal signature of the Attorney General), the DOJ has substantially increased its use of CIDs in the realm of healthcare law enforcement.
The Supreme Court of the United States in the case of Universal Health Services v. United States ex rel. Escobar (decided 6/16/2016) extended the reach of the False Claims Act (FCA) to cover implied false certifications made “in certain circumstances” by healthcare providers in requesting payment for goods and services.
At issue was a theory of liability known as the “implied false certification theory” and whether this theory was valid under the FCA. The implied false certification theory treats a payment request as an implied certification of compliance with relevant statutes, regulations or contract requirements that are a material condition of payment and treats a failure to disclose a violation as a misrepresentation that renders the claim false or fraudulent.
Stepping into 2016, physicians and medical practices must continue to be vigilant about the changing landscape in healthcare. Those who adapt quickly and smartly will thrive, while those who don’t will lose. What can they do?
Stability for medical practices requires two things: clear analytics and fixes. Smart medical practices will examine threats outside the practice and within it. As far as external threats go, the key area to focus on is competition. Do you know what competitors are doing and how they’re different than you?
Internal threats are general revealed in the form of (a) employees that need better training and communication, (b) employees that just need to go, and (c) creating a succession plan for the practice. If the practice is top heavy with older physicians, what plan is in place to ensure that “new blood” is brought in? What recruitment strategies are in place? Can the practice go it alone or does it need a recruitment arrangement with a hospital that can demonstrate a community need? How will the older physicians phase out? Is there a plan in the corporate documents to make sure phase out is slow and planned? What do departing physicians get? What about billing and collection? When was the last time that was analyzed? And finally, coding analysis. Is money being left on the table? Far too many practices actually undercode visits and services out of fear of payer audit. Apart from constituting a False Claims Act violation (though regulators are not fast to indict providers who are underpaid), the differential can mean the difference between a good year and a bad one.
Finally, in light of the fact that regulatory and recoupment activity has never been higher, practices would do well to ensure compliance via a self-audit and compliance plan. This is a different animal than a coding audit. This one looks at all contractual relationships to ensure compliance and augments coding compliance.
While the False Claims Act (FCA) has been in existence for years, many providers do not know that the rule was extended in 2010. As part of the Affordable Care Act (ACA), Congress created the “60 Day Rule” and extended the False Claims Act liability to health care providers who fail to report and return overpayments within 60 days of identification if that overpayment came from a federal program (i.e., Medicare and Medicaid). United States ex rel. Kane et al. v. Healthfirst, Inc., et al (Case No. 1:11-cv-02325) (S.D.N.Y. August 3, 2015) is the first case in which the federal government intervened on an alleged violation of the 60 Day Rule.
USA v. Pediatric Services of America – settlement under the False Claims Act involving a health provider’s failure to investigate credit balances on its books to determine whether they resulted from overpayment by a federal health care program.
The U.S. Attorney for the Northern District of Georgia announced that Pediatric Services of America Healthcare, Pediatric Services of America, Inc., Pediatric Healthcare, Inc., Pediatric Home Nursing Services (collectively, “PSA”), and Portfolio Logic, LLC agreed to pay $6.88 million ($6,882,387) to resolve allegations that PSA, a provider of home nursing services to medically fragile children, knowingly (1) failed to disclose and return overpayments that it received from federal health care programs such as Medicare and Medicaid, (2) submitted claims under the Georgia Pediatric Program for home nursing care without documenting the requisite monthly supervisory visits by a registered nurse, and (3) submitted claims to federal health care programs that overstated the length of time their staff had provided services, which resulted in PSA being overpaid.
“Participants in federal health care programs are required to actively investigate whether they have received overpayments and, if so, promptly return the overpayments,” said United States Attorney, John Horn. “This settlement is the first of its kind and reflects the serious obligations of health care providers to be responsible stewards of public health funds.”
In December, 2012, the OIG reviewed and frowned upon two proposed scenarios, each of which had the effect of shifting to ASC-owner/surgeons a portion of the fees earned from anesthesia services. The OIG has done it again!
In an era of tremendous stress in the healthcare marketplace, it’s not surprising that some surgeons were willing to push the envelope to capture anesthesia fees they otherwise would not receive. Traditionally, physician-owned surgery and endoscopy centers contract with anesthesia providers on an exclusive basis and let the anesthesiologists separately bill for anesthesia services. Anesthesiologists kept whatever was collected for anesthesia services; and surgeons kept whatever was paid for their services. Plus, if the surgeon was also an owner of the center, the surgeon received a portion of the profits left over from the facility or technical fee. In the past several years, however, center-owning surgeons are often looking for ways to share anesthesia fees. The latest OIG Advisory Opinion (13-15) may cause some surgeons to back down or to reevaluate the long-term viability of the so-called “Company Model.”
Health law is the federal, state, and local law, rules, regulations and other jurisprudence among providers, payers and vendors to the healthcare industry and its patient and delivery of health care services; all with an emphasis on operations, regulatory and transactional legal issues.