REGULATORY CONCERNS IN TRANSITIONAL CARE BRIDGE 2017 TRANSITIONAL CARE SUMMIT November 10, 2017 Presented By David J. Castleton

OVERVIEW Fraud and Abuse HIPAA

Fraud and Abuse Laws All transactions and relationships involving health care providers or suppliers (e.g., physicians, hospitals, ASCs, clinical labs, home health, SNFs, ALFs, GPOs, physical therapy, medical device or pharmaceutical companies) implicate fraud and abuse laws and regulations.

Overview of Federal Heath Care Laws (Fraud and Abuse) Primary statutes addressing fraud and abuse risks to federal health care programs Stark Law Anti-Kickback Statute False Claims Act Civil Monetary Penalties Law

Stark Law Prohibits physicians from “referring” Medicare patients for “designated health services” (“DHS”) to entities with which they, or any family member, have a “financial relationship.” Includes captive referrals within group practices Covers inbound and outbound referrals Requires study of relationships (direct and indirect) involving ownership or compensatory interests Strict liability statute (therefore must comply with a Stark “exception”)

Stark Law DHS Clinical laboratory services Inpatient and outpatient hospitalization services Outpatient prescription drugs Radiology services, including MRI, CAT scans and ultrasound Physical therapy services Occupational therapy services

Stark Law DHS (cont’d) Radiation therapy services and supplies Durable medical equipment and supplies Parenteral and enteral nutrients, equipment and supplies Prosthetics, orthotics and prosthetic devices and supplies Home health services

Exceptions to Stark Law In-office ancillary services Bona fide employment relationship Persons services Office space and equipment rental Risk-sharing arrangements Physician/non-physician recruitment Timeshare lease arrangements

Stark Self-Referral Disclosure Established by Affordable Care Act Process for self-disclosing actual or potential violations Gives CMS the authority to reduce amounts owed

Stark Law Penalties Denial of payment/refund obligation Up to $15,000 per claim $159,089 per arrangement False Claims Act liability (Stark violations can be the basis of government or qui tam (whistleblower) FCA claims) Exclusion from Medicare/Medicaid Participation

Recent Stark Law Developments CMS Golden Rule: Surest means of complying with Stark Law is to reduce the transaction/relationship to a single signed writing (Stark exception compliant) before either party provides items, services, space or compensation to the other party.

Anti-Kickback Criminal offense Offer to pay or receive (and even offer or solicit) remuneration to induce or reward referrals of items or services reimbursed by federal healthcare programs

Remuneration Anything of value, directly or indirectly, overtly or covertly, in cash or in kind.

Anti-Kickback Violations Felony $25,000 fine per violation Imprisonment up to five years per violation Exclusion from Medicare/Medicaid participation

Anti-Kickback Statute One purpose rule: AKS prohibits any arrangement where one purpose of remuneration is to obtain money for the referral of services or to induce further referrals. United States v. Kats, 871 F. 2d 105 (9th Cir. 1989); United States v. Greber, 706 F 2nd 68 (3rd Cir.) cert. denied, 476 U.S. 988 (1085).

Statutory Exceptions to AKS Payments to bona fide employees Properly disclosed discounts Certain payments to group purchasing organizations Waivers of coinsurance for individuals who qualify for certain Public Health programs Certain risk sharing and other arrangements with managed care organizations

AKS Safe Harbors Investment interests Space rentals Employee Personal services Practitioner recruitment Group purchasing ASC Free or discounted transportation

Stark/Anti-Kickback Differences AKS Referrals Physician Anyone Services DHS All Liability Strict Intent Safety Exceptions Safe Harbors

Utah Anti-Kickback Utah Code § 26-20-4 Any person who pays or receives kickback Services paid for by state healthcare program funds Violators subject to criminal and civil penalties Felony or misdemeanor based on size of kickback Fines

False Claims Act Prohibits knowingly presenting (or causing to be presented) a false or fraudulent claim to the federal government. No proof of specific intent to defraud is required. The provider need only “knowingly” present a false or fraudulent claim in the manner described above. Tainted claims (Stark/AKS violations) trigger FCA/whistleblower claims

False Claims Act (cont’d) “Knowingly” Actual Knowledge Deliberate Ignorance Reckless Disregard

Examples of Potential False Claims Claim for service or supply that was not provided Wrong diagnosis code Upcoding Service provided by unlicensed individual Service provided was not medically necessary

False Claims Act $10, 781.40 - $21,562.80 for each false claim Damages up to three times amount claimed

False Claims Act Developments Reverse False Claims: ACA 60-day refund obligation begins when provider “is put on notice of potential overpayment”

Civil Monetary Penalties Law Prohibition against Presenting a false claim Presenting a claim where requirements not met Presenting a claim for a provider not qualified Offering or transferring remuneration to a Medicare or Medicaid beneficiary that the person knows or should know is likely to influence beneficiary selection of a particular provider

Civil Monetary Penalties Civil fine of $10,000 per violation Assessment of up to three times the amount falsely or fraudulently claimed Exclusion from Medicare/Medicaid participation

Civil Monetary Penalties Law Rebates Incentive gifts Free services (transportation) Providing one free service in hopes patient will request another compensated service

CMPL Exceptions Nominal incentives ($10.00 per item or $50.00 per year) Certain remuneration that poses a low risk of harm and promotes access to care Coupons, rebates or other retailer reward programs that meet specified requirements Certain remuneration to financially needy individuals

HIPAA and HITECH Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) Health Information Technology for Economic and Clinical Health Act (“HITECH”)

Personal Health Information Includes any information (whether oral or written) about an individual created or received by a health care provider; and relating to past, present, or future physical or mental health, the provision of healthcare, or payments for provision of healthcare That identifies the individual or can reasonably be used to identify the individual includes name, city/county/ZIP, birth date, age, and more

HIPAA – General Prohibition Requires patient’s written authorization before use or disclosure of PHI for marketing purposes Prohibits selling PHI to business associates or other third parties without prior authorization

Exceptions Communications about a provider’s own products or services E.g., hospital uses patient list to announce arrival of new specialty group or acquisition of new equipment Communication made for treatment of the individual E.g., prescription refill reminders; referral to specialist for follow-up test; free samples of prescription drugs

Exceptions (cont’d) Communication for case management or care coordination E.g., sharing records with outside programs to determine which best suits the patient’s ongoing needs Face-to-face communications Not over the phone

Exceptions (cont’d) Communications about free health fair, wellness activity or discussion group As long as the provider does not “sell” any products or services De-identified PHI

Examples: Third-Party Marketing Provider discloses PHI to third-party marketer (for pay) and third-party recommends its own products or services Requires prior authorization! Drug manufacturer pays provider for list of patients, then uses that list to send discount coupons for new medication directly to patients

Other HIPAA Violations in Marketing Videos, newsletters, photos Testimonials Complete P.T.

HIPAA Violations Breach notification Failure to notify Individual Media HHS Failure to notify

RESPONSES TO REGULATION Head in the sand Education Train

Contact David J. Castleton Ray Quinney & Nebeker P.C. 36 South State Street, #1400 Salt Lake City, UT 84111 dcastleton@rqn.com (801) 323-3322 1432818-1