Medical necessity is foundational to payment by government payers (Medicare, Medicaid, Tricare, FEHBP) for health care services. If services are not medically necessary, any claims filed constitute false claims. In a recent DOJ False Claims Act (FCA) case, a civil settlement of a whistleblower action was reached in resolution of allegations that over a more than six-year period, a rehabilitation therapy contractor violated the FCA by causing the submission by 12 skilled nursing facilities (SNFs) of false claims for “medically unnecessary, unreasonable, and/or unskilled rehabilitation therapy services.” Under the Settlement Agreement, the rehabilitation therapy provider agreed to pay $8.4 million to resolve the matter.
BACKGROUND ON SNF REIMBURSEMENT
In order to understand the case, it is important to understand (at least at a basic level) SNF reimbursement. This case arises during the time period 2010-2016 when SNFs were paid by Medicare under the Resource Utilization Groups (RUGs). By way of background, RUGs are a prospective payment model which includes a system of grouping a SNF’s residents according to their clinical and functional statuses which information derives from the minimum data set (MDS) assessment for the resident. Soon after adoption, many SNFs and rehabilitation therapy providers adjusted their model of care delivery to increase the level of reimbursement. The methodology created an incentive to deliver more therapy than skilled nursing services since those RUGs were reimbursed at a higher rate.
There have been a rise in cases recently, in which practices that operate under a Health Care Clinic License have been brought under scrutiny by insurance companies trying to recoup funds through any means possible. In an effort to claw back funds insurance companies are beginning to claim that medical directors are failing to meet their statutory obligations under Florida Law which in turn can have serious monetary repercussions. Due to the clinics allegedly failing to meet their statutory obligations the insurance companies are filing suit to recoup any payments made while violating the Health Care Clinic Act obligations, and to stall any future payments due until such cases are heard.
By law, a medical director must be a health care practitioner that holds an active and unencumbered Florida license as a medical physician, osteopathic physician, chiropractic physician, or podiatric physician. The type of services provided at a clinic may dictate who would be able to serve as a clinic’s medical director, because a medical director must be authorized under the law to supervise all services provided at the clinic.
You do everything right. You’re careful to dot your i’s and cross your t’s. Compliance is hard-wired because you’re in an industry that’s highly regulated and you’ve built into your operations a series of compliance checks and balances. However, even with strong controls in place, compliance efforts sometimes fall short– and whether you’re a physician group, a pharmacy, a durable medical equipment company, a home health agency, or any other health care provider, someday you might find yourself face-to-face with law enforcement officials or regulatory enforcement authorities. What do you do? How do you assure the most successful outcome with minimal business disruption?
Compliance is the foundation to mitigating the risks inherent in any health care operation. Compliance can reduce the likelihood that regulators or law enforcement suddenly appear on your doorstep. But preparation for emergencies and uncertainties is the key to reducing the risk that non-compliance leads to lengthy business interruption. Although you may be saying “if”, you really should be thinking and acting more like “when”. It costs everything to be ill-prepared and it costs very little to be well-prepared. The following preparation can prevent much of the uncertainty that arises in these cases.
POLICIES AND PROCEDURES
First and foremost, make sure you have well-developed policies and procedures for what to do in such instances. You should review these policies and procedures with your employees regularly, focusing on the importance of compliance. Out of fear and uncertainty, employees can do things that create unnecessary challenges. Educating them as to what their rights and responsibilities are will mitigate those risks. Make sure your policies and procedures include the designation of who is in charge (“person in charge”) when the government does show up.
A recent Department of Justice $500,000 settlement with a cardiology practice underscores the need for ensuring tighter compliance by medical practices. There, the practice billed Medicare for cardiology procedures for which interpretive reports were also required. Medicare paid for the procedures, but upon audit, CMS could not find the requisite interpretive reports. The False Claims Act case settled for $500,000, but it’s likely that (1) the reimbursement by Medicare was far less, and (b) the legal fees behind the settlement weren’t too far behind the settlement amount! Had the practice self-audited each year, would they have found the discrepancy?
Medical practices have felt the weight of price compression and regulatory load more than probably any segment in the healthcare sector. They are doing far more for far less. And regulations expand faster than viruses! Hence, many have a strategy of regulatory compliance that can best be characterized as a combination of facial compliance (“We bought the manual and put it on the shelf”) and hope (“They’re not really serious about this, are they?”). Unless you’re part of a practice of more than 20 doctors, it’s likely that you can do more to ensure regulatory compliance.
Florida Healthcare Law Firms adds experienced attorney Zach Simpson to the team to assist with pharmacy law, imaging center compliance, as well as chiropractic law, healthcare business development and contract negotiation.
Florida Healthcare Law Firm has announced that they have added Zach Simpson to the team. Zach brings a wealth of healthcare business experience in settings such as private medical practices, large law firms and healthcare management companies. Zach specializes in areas including operations, process, procedures, rules, regulations, management, organization, compliance, analytics, and problem solving. He’s also worked on physician dispensing programs and within numerous medical systems mastering programs like Abbadox, PACS, K-Pacs, Carestream, Merge, and Telax to improve the efficiency of medical centers’ day-to-day activities.
“Now more than ever, healthcare businesses are taking the time to attend to important tasks like processes, policies and procedures. The ones who unfortunately closed during COVID had some ‘downtime’ to focus on what to do better when reopening. Zach’s wide variety of experience in medical offices brings first hand knowledge on how to prepare and how to run things smoothly. As we all have adapted to a ‘new normal,’ Zach is on board to help with business management and development,” Florida Healthcare Law Firm COO Autumn Piccolo says. Founder and President, Jeff Cohen, goes on to say that, “We help you with the business operation side so that you can focus on what you do best, care for patients. Zach’s organizational skills and leadership are a great addition for current and future clients. His analytical and negotiation skills will absolutely benefit healthcare business owners.”
In 2015, Assistant Attorney General Leslie Caldwell spoke publicly about the importance for every healthcare provider to not only have a compliance program on its shelf, but also being sure that the compliance program is “tailored to the unique needs, risks and structure of each business or industry.” Assistant Attorney General Caldwell explained, “the adequacy of a compliance program is a factor when [the DOJ] decide[s] how and whether to prosecute a company. The lack or insufficiency of a compliance program can have real consequences for a company when a violation of law is discovered.”
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.”
Telehealth law Florida is constantly evolving The latest example is found with Florida’s Department of Children and Families (DCF) recent proposed rule change which now includes a definition of Telehealth as a delivery system in substance abuse. Telehealth can be used in treatment or prevention services through electronic communications from one site to another. However, it does not include delivery of services using only the audio on a telephone, or e-mails, text messages, fax transmissions, US mail or other parcel service. Proposed Rule 65D-30.0031 (83) Definitions.
Telehealth services can be used in intensive outpatient, day or night treatment, day or night treatment with community housing, outpatient, interventions, aftercare, and prevention. If a substance abuse provider plans on including telehealth services it must submit to DCF detailed procedures outlining which services it intends to provide. The provider will be responsible for the quality of the equipment and technology used in the telehealth service. Proposed Rule 65D-30.004 (20) Common Licensing Standards.
The U.S. Food and Drug Administration (FDA) has issued new guidance for regenerative medicine manufacturers and healthcare providers. At the core of the guidance are two central interpretations: 1) the FDA’s current interpretation of the minimal manipulation and homologous use criteria set forth in 21 CFR Part 1271; and 2) the FDA’s current view on the same surgical procedure exception under 21 CFR 1271.15(b). Additionally, the FDA issued a notice to all interested stakeholders that the FDA intends to initiate increased discretionary enforcement over the next 36 months for human cell and tissue-based products. Given these developments, healthcare companies and providers impacted by this guidance are strongly encouraged to ensure compliance with the FDA’s new interpretations.
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.