1 Legal Perspective and OIG UpdateHFMA Western Michigan Annual Reimbursement Update September 20, 2016 Neal A. Cooper, JD, CPA, CHC Seyburn Kahn

2 Medicare Appeals, OIG Issues, Fraud & Abuse DevelopmentsRoadmap Medicare Appeals Administrative developments Recent court decisions on Medicare appeal issues OIG Issues Resources Reports Advisory Opinions Fraud & Abuse Developments Intro Recent cases and settlements 965091

3 Medicare Appeals PRRB Website redesignPRRB publishes final jurisdictional decisions 965091 3

4 Medicare Appeals PRRB Rule ChangesOPPS Proposed Rule (Nov. 13, 2015) included a final rule regarding the Medicare Part A appeal process (effective for cost reporting periods beginning on or after January 1, 2016) CMS removed the jurisdictional requirement from the appeals rules (i.e., that a provider must “claim or protest” an item as a condition of filing an appeal) This is now a substantive cost report requirement. 965091 4

5 Medicare Appeals PRRB Rule Changes, cont’dJurisdictional requirements added to 42 C.F.R. § (a)(1) and 42 C.F.R. § (a)(1) (appeal regulations) are now moved to the cost reporting regulations at 42 C.F.R. § (j). The regulations now provide that a provider must claim the full reimbursement amount or self-disallow the specific item in its cost report to potentially qualify for reimbursement for that “specific item.” 965091 5

6 Medicare Appeals PRRB Rule Changes, cont’dFor self-disallowance, providers must estimate the reimbursement amount for each specific item it self-disallowed as a protested amount Providers must attach separate worksheets to the cost report for every self-disallowed item. Providers must explain why each specific item was self-disallowed and describe how the estimated reimbursement amount for each specific self-disallowed item was calculated 965091 6

7 Medicare Appeals Shands Jacksonville Medical Center v. BurwellD.C. Circuit decision, September 2015 Lead case among several group appeals challenging noncompliance with Administrative Procedures Act before implementing 0.2% reduction to inpatient Medicare rate CMS essentially conceded the issue in the 2017 IPPS proposed rule, obviating numerous group appeals. 965091 7

8 Medicare Appeals 2015D01, Jan. 29, 2015 Ruled that Observation sand Swing Bed days are included in the bed count for purposes of IME and DSH calculations Hospitals in the Sixth Circuit (Michigan, Indiana, Ohio and Kentucky) are subject to the decision in Clark Regional Medical Center v. Shalala, 314 F.3d 241 (6th Cir. 2002) Different treatment in all other states is not arbitrary, capricious or an abuse of discretion. 965091 8

9 Medicare Appeals Topics for recent PRRB DecisionsFTE Counts and IME/GME calculation DSH (where do the days go, what days count – state plans, SSI, observation bed days) Bad debts (crossovers, moratorium, reasonable collection effort, presumption of noncollectability, timing of write-off, etc.) MDH/SCH/rural eligibility and calculation RHQDAPU 2% penalties from market basket (only 1!) 965091 9

10 Medicare Appeals Topics for recent PRRB Decisions, cont’dHospital wage index (non-responsive provider included in MSA data) Therapy caps Capital cost HSR vs. FR SNF limits and RCL ESRD composite rate exceptions 965091 10

11 Medicare Appeals Topics for recent PRRB Decisions, cont’dOutlier calculations Low-volume adjustments Low Income Patient adjustments (numerous) Nursing and allied health programs Jurisdiction 965091 11

12 OIG Issues OIG resources: OIG news (discussed later) OIG guidance OIG guidance OIG Advisory Opinions 965091 12

13 OIG Issues OIG GuidancePractical Guidance for Health Care Governing Boards on Compliance Oversight (04/20/2015) 965091 13

14 OIG Issues OIG Advisory Opinions for 2015-201616-08: Hospice supplemental payment to nursing facilities when the nursing facilities receive payment for their patients' room and board 16-07: Savings card program for individuals with Part D for drug that is statutorily excluded from coverage 16-06: Interest in group purchasing organization 16-05: Use of “preferred hospital” network as part of “Medigap” policy (see also AO 16-04, 16-03, 16-01, 15-09, 15-08, 15-05, 15-03) 16-02: Medical center that offers pregnant women transportation aid to and from hospital for delivery; and short-term lodging near hospital 965091 14

15 OIG Issues OIG Advisory Opinions for 2015-2016, cont’d15-17: Charitable organization's patient assistance program (see also AO 15-16, 15-14, 15-06) 15-15: Hospital to bill radiology group for transcription of radiology group's reports for patients of a third-party clinic that provides the technical component of the radiology exams 15-13: Free van shuttle service to certain medical facilities in an integrated health system 15-12: Home health provider's policy to offer free introductory visits 15-11: Limited patient assistance program for free drug for patients who experience a delay in insurance approval process 965091 15

16 OIG Issues OIG Advisory Opinions for 2015-2016, cont’d15-10: Hospital system's proposal to lease non-clinician employees and to provide operational and management services to related psychiatric hospital at hospital system's fully loaded costs 15-07: Subsidies from medical device manufacturer to patients participating in a clinical study 15-04: Laboratory's agreements with physician practices to provide all laboratory services for the practices' patients and waive all fees for those practices' patients who are enrollees of certain insurance plans that require use of a different laboratory 15-02: Effect of exclusion from Medicare, Medicaid, all other Federal health care programs 965091 16

17 OIG Issues OIG Advisory Opinions for 2015-2016, cont’d15-01: Advertising and providing free diapers and play yards in connection with services under a state's home visiting program for at-risk mothers and infants 965091 17

18 OIG Issues CMS Advisory Opinions for 2015-2016CMS AO (first and only since 2014): Can a hospital add outpatient observation beds to existing physician-owned hospital without violating expansion restrictions? State does not license observation beds Observation beds are not for inpatient use CMS concluded that adding outpatient observation beds would not violate the Stark expansion restrictions. 965091 18

19 Fraud and Abuse DevelopmentsKey laws applicable to healthcare fraud Stark Law: the prohibition against self-referrals Anti-kickback Statute: the prohibition against inducements to refer False Claims Act: the prohibition against false claims to the federal government for payment Anti-Inducement: the prohibition against gifts to induce beneficiaries to consume items or services payable under Medicare/Medicaid HIPAA Violation Penalties: penalties for breach of unsecured individually-identifiable health information State Analogs 965091 19

20 Fraud and Abuse DevelopmentsFalse Claims Act is the HAMMER Overpayments become per se violations of FCA 60 days after discovery unless repaid Violation of Anti-kickback Statute may be FCA violation Violation of Stark Law may be per se violations of FCA Penalties of all these laws are cumulative Additional exposure is also cumulative, such as: Tax evasion, Money laundering Wire/mail fraud, etc. 965091 20

21 Fraud and Abuse DevelopmentsSpecial Mention: Medicare anti-markup rule Effective January 1, 2009, Medicare limited payment to a physician or other billing supplier for certain diagnostic tests to the lowest of: Performing supplier's "net charge" to billing supplier; Billing supplier's actual charge; or Fee schedule amount 965091 21

22 Fraud and Abuse DevelopmentsPenalties associated with noncompliance and recent examples HIPAA Examples Advocate Health Care $5.55M penalties for failure to remediate multiple breaches NY Presbyterian Hospital $2.2M for allowing ABC crew to film urgent care patients without their consent N. Memorial Health Care (MN) $1.55M for failure to implement BAAs and proper risk analysis 965091 22

23 Fraud and Abuse DevelopmentsOther HIPAA settlements involve Compromised IT system security Loss/theft of unencrypted thumb drives Loss/theft of unencrypted hard drives Boxes of medical records left on a driveway Use of publicly-available internet calendaring 965091 23

24 Fraud and Abuse DevelopmentsSecond Round of HIPAA Audits February 24, 2014, OCR announced a survey of 800 covered entities and 400 business associates first step toward selecting organizations to be audited in 2016, verified entities suitable for HIPAA audit (including business associates) by asking: "Is the organization still in business?" "Is the organization the healthcare entity indicated by the database?" 965091 24

25 Fraud and Abuse Developments"That's where the money is." –Willie Sutton 965091 25

26 Fraud and Abuse Developments"Do Not Gossip!" 965091 26

27 Fraud and Abuse DevelopmentsPenalties associated with noncompliance and recent examples Look at the OIG and CMS websites https://oig.hhs.gov/fraud/enforcement/index.asp Many examples are self-disclosed OIG and CMS both have self-disclosure protocols Self-disclosure is not only wise, it is necessary 965091 27

28 Fraud and Abuse DevelopmentsOIG Settlements ( ): Employing Excluded Individual (38) Nurse; certified nurse assistant; licensed vocational nurse; LPN Technicians (clinical, lab, x-ray) Assistants (social services, activities, chiropractic, dental) Administrative (office manager, biller, QA specialist, health info specialist, housekeeper, HH community liaison) Residential counselor Speech language pathologist Home health aide Vaccinator Owner (chiropractic, pharmacy, DME with year exclusion) 965091 28

29 Fraud and Abuse DevelopmentsOIG Settlements ( ), cont’d: Ambulance billed at inflated level (15) EMTALA (12) Antifreeze, transferred due to insurance Gunshot victims Pregnant; no medical history, vitals, fetal monitoring, exam on patient; sent to family dr., stillborn baby Drano, transferred due to mistake re peds GI on call Dialysis patient; death Septic shock patient; death Alcohol withdrawal, discharged to parking lot; bacterial pneumonia; death 965091 29

30 Fraud and Abuse DevelopmentsOIG Settlements ( ), cont’d: EMTALA (12), cont’d Suicidal/homicidal ideation extracted by SWAT team Mentally ill patient restrained by police/security sent to jail Untreated displaced hip fracture Residency refusal PA discharged finding no need for immediate medical attention; family resisted; police escorted out; admitted to other hospital non-responsive; ventilator; bacterial meningitis. 965091 30

31 Fraud and Abuse DevelopmentsOIG Settlements ( ), cont’d: Kickbacks (12) Brokers/spouse gifts (3 year to permanent exclusion) (6) Kickbacks for DME or surgical supplies (2) Medical Director fees for no services Non-compliant donation for EHR (5 year exclusion) Inflated rent paid to physician Physician services furnished by Nurse Practitioner Unlicensed/unsupervised/medically unnecessary/not furnished/inconsistent with cond. of payment or prof stds 5-, 10-, 15-, 30-year or indefinite exclusions) (12) 965091 31

32 Fraud and Abuse DevelopmentsOIG Settlements ( ), cont’d: Failure to submit cert’d AMP data (1 misrepresentation $12.64M) (7) Drug screening billing irregularities/misuse of modifiers (6) Hospice services furnished at general inpatient level of care, rather than routine care (3) Default on DOJ/OIG settlement agreement (indefinite exclusion) (2) Miscellaneous False statements in provider enrollment Unbundling (17 year exclusion) Drugs dispenses inconsistent with inventory records Blood tests not furnished as claimed False claims re IOP at Dr.-owned psych hospital (15 years) Suspended/revoked license (DDS) 965091 32

33 Fraud and Abuse DevelopmentsYour friendly neighborhood oncologist 965091 33

34 Fraud and Abuse DevelopmentsDr. Farid Fata 45 years in prison Forfeiture of $16.6M 13 counts health care fraud Conspiracy to pay kickbacks Money laundering Joint effort by US Department of Justice, Federal Bureau of Investigation, CMS Office of the Inspector General, and the IRS 965091 34

35 Fraud and Abuse DevelopmentsMedicaid Fraud Strike Force June 22, 2016 announcement 301 individuals; 36 federal districts; 23 states Largest coordinated takedown in history Charges – committing/conspiracy to commit: Healthcare fraud Anti-kickback Statute violations Money laundering Identity theft 965091 35

36 Fraud and Abuse DevelopmentsOperation Spinal Cap $600M in allegedly illegal referrals 14-year California orthopedic surgery scheme Hospital CFO and 2 surgeons involved Kickbacks for lumbar and cervical fusion Fake management services agreements and sublease of space from surgeons Phony consignment pharmacies 965091 36

37 Fraud and Abuse DevelopmentsTuomey Final settlement of $72.4M October 2013 judgment for $237,454,195 Stark violations for compensation above fair market value (False Claims Act penalties only) Litigating to judgment is unusual 965091 37

38 Fraud and Abuse DevelopmentsAdventist Health $115 settlement of False Claims Act claims Allegation of payment to physicians for referrals Bonus structure purportedly took into account the number of tests and procedures ordered 965091 38

39 Fraud and Abuse DevelopmentsMunir Uwaydah Charged in $150M insurance fraud claim 15 defendants, including counsel Allegations include: PA operated on patients without surgeon present Services billed to private insurance Medical records inappropriately modified Use of “marketers” 965091 39

40 Fraud and Abuse DevelopmentsColumbus Regional Hospital (GA) $25M to settle Anti-kickback Statute charges Allegations included: paying medical director kickbacks to influence referrals Upcoding E&M services Upcoding radiation therapy services 965091 40

41 Fraud and Abuse DevelopmentsJorge Juvier Owner/operator of HIV/AIDS clinics in NYC 5+ years in prison; $12M+ restitution Allegations included: Fake patients Billing for drugs not provided or furnished in highly diluted form Medically unnecessary services 965091 41

42 Fraud and Abuse DevelopmentsUniversal Health Svcs v. US ex rel. Escobar SCOTUS Jun 16, 2016, holding: Implied false certification theory can be a basis for liability under the False Claims Act when a defendant submitting a claim makes specific representations about the goods or services provided, but fails to disclose non-compliance with material statutory, regulatory, or contractual requirements that make those representations misleading with respect to those goods or services; and 965091 42

43 Fraud and Abuse DevelopmentsUniversal Health Svcs v. US ex rel. Escobar SCOTUS Jun 16, 2016, holding, cont’d: (2) liability under the FCA for failing to disclose violations of legal requirements does not turn upon whether those requirements were expressly designated as conditions of payment. Large implications for False Claims Act cases Confirms implied false certification theory Raises issues of materiality to payment decision 965091 43

44 Medicare Appeals, OIG Issues, Fraud & Abuse DevelopmentsQuestions? Medicare Appeals, OIG Issues, Fraud & Abuse Developments HFMA Western Michigan Annual Reimbursement Update September 24, 2014 Neal A. Cooper, JD, CPA, CHC