1. Stay Out of Jail: Managing Your Risk Georgia Association for Healthcare Facility Managers 2016 Annual Conference Thursday, June 9, 2016 Richard D. Sanders THE SANDERS LAW FIRM, P.C. 3127 Maple Drive NE Atlanta, Georgia 30305 (404) 806-5575 rsanders@southernhealthlawyers.com

2. Overview Stark Law Georgia Patient Self-Referral Act Anti-kickback Statute False Claims Act Patient Protection and Affordable Care Act

3. False Claims Act (“FCA”) Sources of FCA liability include: o The knowing submission of false or fraudulent claims for payment; o The knowing use of false records or statements to support false or fraudulent claims; o The knowing and improper retention of money owed or belonging to the federal government; or o Conspiring with others to commit any of the above violations. Pursuant to the Patient Protection and Affordable Care Act, a claim for payment by a federal program that includes items or services resulting from an AKS violation constitutes a false or fraudulent claim under the FCA.

4. False Claims Act: Enforcement Activity Since 2009, the Department of Justice (“DOJ”) has recovered approximately $16.5 billion for health care fraud under the FCA. In 2015, the DOJ recovered nearly $2 billion for fraud and abuse. o More than $1.1 billion came from qui tam (whistleblower) cases. “Yates Memo” – On September 9, 2015, Deputy Attorney General Sally Yates put forth a policy memorandum announcing the DOJ’s intention of combating corporate crime by targeting and seeking accountability for individual wrongdoing.

5. False Claims Act: Legislative Activity In 2015, Congress passed a new law, the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, which will incentivize the government and whistleblowers to pursue FCA cases. The law requires the DOJ to increase FCA penalties by taking into account inflation (last adjustment was made in 1999). The new penalties can begin as early as July 2016, and will be adjusted in the years thereafter. The initial penalty increase could increase from their current levels of $5,500–$11,000 per false claim to as much as approximately $9,300–$18,600 per false claim.

6. False Claims Act: Jurisprudence The Supreme Court, in Universal Health Services Inc. v. United States ex rel. Escobar, No. 15-7, is addressing the viability and reach of the “implied certification” theory of falsity under the FCA. Under this theory, those (i.e., health care providers) who participate in government programs may be liable under the FCA for accepting government funds while in knowing violation of statutes, regulations, rules, or contractual provisions to which they are subject. According to some federal circuits, government contractors impliedly certify (not expressly) compliance with applicable statutes, regulations, rules, and contractual provisions when receiving government reimbursement, and such certifications may be considered false under the FCA.

7. Patient Protection and Affordable Care Act: CMS’ Final Rule Clarification of the “60-Day Rule” Requires any provider of services or supplies under Medicare or Medicaid to report and return overpayments within sixty (60) days of identification or the date any corresponding cost report is due, whichever is later. Reporting and returning overpayments is an obligation of the False Claims Act, and failure to do so can result in False Claims Act liability, Civil Monetary Penalties Law liability, and exclusion from federal health care programs.

8. Patient Protection and Affordable Care Act: CMS’ Final Rule Clarification of the “60-Day Rule” The Final Rule clarifies that a person is considered to have identified an overpayment when such individual has or should have, through exercising reasonable diligence and through timely, good faith investigation of credible evidence, determined he or she has received an overpayment and quantified the amount of the overpayment. The 60-day clock does not begin to run until after the reasonable diligence period has concluded (which may take at most six months from receipt of credible information, absent extraordinary circumstances).

9. Anti-kickback Statute (“AKS”) Intent based. The AKS prohibits offering, paying, soliciting, or receiving anything of value to induce or reward referrals covered by federal health care program business. Safe Harbors.

10. Physician Self-Referral Law (“Stark Law”) Strict liability. The Stark Law generally prohibits physician referrals of designated health services for Medicare and Medicaid patients if the physician or an immediately family member has a financial relationship with that entity. Exceptions to the Stark Law.

11. CMS’ Final Rule: Stark Law Changes, General Overview On October 30, 2015, the Centers for Medicare and Medicaid Services revealed the 2016 Medicare Physician Fee Schedule (the “Final Rule”), which included significant changes to the Stark Law. The purpose of this Final Rule is to accommodate healthcare delivery and payment system reform, reduce burdens, facilitate compliance, and issue new exceptions to the Stark Law. These new regulations became effective on January 1, 2016, with the exception of the definition of “ownership or investment interest” as it relates to the level of physician ownership in physician-owned hospitals, which will become effective on January 1, 2017.

12. CMS’ Final Rule: New Stark Exceptions Assistance to Compensate a Nonphysician Practitioner o Purpose: address changes to the healthcare delivery and payment systems, alarming primary care workforce shortage projections, and the increasing demand for primary care services (particularly in rural and underserved areas). o Exception: permits remuneration from a hospital, federally qualified health center (“FQHC”), or rural health clinic (“RHC”) to a physician in order to assist the physician in employing a nonphysician provider in the geographic area served by the hospital, FQHC or RHC. o The specific limitations and requirements of this new exception can be found under 42 C.F.R. § 411.357(x).

13. CMS’ Final Rule: New Stark Exceptions Timeshare Arrangements o Purpose: CMS acknowledged the utility of timeshare arrangements whereby an individual could use another person or entity’s premises, equipment, personnel, items, supplies or physician services under a license rather than under a traditional lease. o Exception: a hospital or local physician practice may arrange with a specialist from another community to provide services in a space owned by a hospital or practice on a limited or as- needed basis. o Further details regarding this arrangement can be located at 42 C.F.R. § 411.357(y).

14. CMS’ Final Rule: Modifications to Existing Stark Law Exceptions, Policies, Definitions and Other Changes Writing Requirement o CMS clarified in its Final Rule that the existing writing requirement in many Stark Law exceptions does not require an arrangement to be in a single “formal” written contract. o Rather, the writing requirement can be satisfied by showing a collection of documents evidencing the course of conduct between the parties. o To further clarify this policy, CMS replaced the terms “agreement,” “lease,” “written contract,” and “contract,” with the terms “arrangement” and “writing.” o Moreover, when parties use a collection of documents to satisfy the writing requirement, a signature is required on a contemporaneous writing(s) sufficient to document the arrangement.

15. CMS’ Final Rule: Modifications to Existing Stark Law Exceptions, Policies, Definitions and Other Changes Term Requirement o Certain Stark Law exceptions (i.e., rental of office space, rental of equipment, and personal services arrangements) require a term of at least one year. o CMS clarified that a formal written contract or other document with an explicit term provision is not required to satisfy the “term” element. o Instead, the term requirement can be satisfied so long as the arrangement clearly establishes that a business relationship will last for at least one year. On the other hand, an arrangement that actually lasts for one year will satisfy this requirement. o CMS further provides that “Parties must have contemporaneous writings establishing that the arrangement lasted for at least 1 year, or be able to demonstrate that the arrangement was terminated during the first year and that the parties did not enter into a new arrangement for the same space, equipment, or services during the first year.”

16. CMS’ Final Rule: Modifications to Existing Stark Law Exceptions, Policies, Definitions and Other Changes Signature Requirement & Temporary Noncompliance o The Final Rule allows an entity ninety (90) days to obtain required signatures, regardless of whether the noncompliance was purposeful or inadvertent. o In order to utilize this temporary noncompliance period, the arrangement must satisfy all other requirements of the applicable exception. o However, an entity can only use this temporary noncompliance period to satisfy the signature requirement once every three (3) years for the same referring physician.

17. CMS’ Final Rule: Modifications to Existing Stark Law Exceptions, Policies, Definitions and Other Changes Holdover Arrangements o Previously, expired arrangements under the Rental of Office Space Exception, Rental of Equipment Exception and Personal Services Exception were permitted for up to six (6) months if the arrangement satisfies the requirements of an exception upon its expiration, and the arrangement continues to comply with the same terms and conditions after the stated expiration. o Under the Final Rule, indefinite holdovers are permitted provided the arrangement:  (1) satisfies all of the elements of the applicable exception at the time of the stated expiration;  (2) continues under the same terms and conditions as the original agreement; and  (3) continues to comport with all of the elements of the applicable exception during the course of the holdover.

18. CMS’ Final Rule: Modifications to Existing Stark Law Exceptions, Policies, Definitions and Other Changes Definition of Remuneration o The Final Rule revised the definition of “remuneration” under the Stark Law to make it clear that the provision of items, devices, or supplies that are used solely to collect, transport, process, or store specimens for the entity providing the items, devices, or supplies, or to order or communicate the results of tests or procedures for such entity does not constitute remuneration.

19. CMS’ Final Rule: Modifications to Existing Stark Law Exceptions, Policies, Definitions and Other Changes Geographic Area Served by FQHCs and RHCs o According to the Physician Recruitment Exception, remuneration may be provided by a hospital to a physician in order to induce the physician to relocate his or her medical practice to the geographic area served by the hospital and become part of the hospital’s medical staff. o This exception was also expanded to include FQHCs and RHCs. o The term “geographic area served by the hospital” is partially defined as “the lowest number of contiguous postal zip codes from which the hospital draws at least 75 percent of its inpatients.” o However, this definition did not provide guidance as to the geographic areas in which a FQHC or RHC can recruit a physician. o As a result, the Final Rule added a new definition to clarify this discrepancy by defining the geographic area served by a FQHC or RHC as “the lowest number of contiguous or noncontiguous zip codes from which the FQHC or RHC draws at least 90 percent of its patients, as determined on an encounter basis.”

20. Georgia Patient Self-Referral Act (“Georgia Mini-Stark Law”) Georgia has state laws that restrict certain compensation arrangements similarly covered by the federal Anti-kickback Statute and Stark Law. The Georgia Mini-Stark Law prohibits the referral of a patient for the provision of designated health services to an entity in which the health care provider has an investment interest. However, unlike the federal Anti-kickback Statute and Stark Law which only apply to government payors, the Georgia Mini-Stark Law applies to all payor types.

21. THANK YOU Richard D. Sanders THE SANDERS LAW FIRM, P.C. 3127 Maple Drive NE Atlanta, Georgia 30305 (404) 806-5575 rsanders@southernhealthlawyers.com