1. HEALTH LAW PRACTICE IN GOVERNMENT: HEALTH CARE FRAUD AND ABUSE 2009 ABA Health Law Section James G. Sheehan James G. Sheehan Medicaid Inspector General/former Associate US Attorney Albany, New York 518 473-3782 JGS05@OMIG.state.ny.us

2. USUAL DISCLAIMERS Focus on Medicare and Medicaid Propagation is not plagiarism-if you see a good idea, I probably borrowed it if you would like to use these slides in your own presentation, or pass them to others, feel free JGS05@OMIG.STATE.NY.US

3. GROWING JOBS IN GOVERNMENT HEALTH LAW PRACTICE-FRAUD AND ABUSE Prosecutors, defense counsel Civil litigation-investigations, whistleblower (qui tam) cases, money recovery, defending agency actions Government f/a contractor work state and federal program integrity agencies Compliance officers The growth is outside the criminal area

4. TRENDS IN THE LAW OF FRAUD ABUSE AND COMPLIANCE OLD MODEL-FRAUD-INTENTIONAL CONDUCT OLD MODEL-ABUSE-SUSPECTED BUT UNPROVEABLE INTENTIONAL CONDUCT;PATIENT NEGLECT OR MISTREATMENT NEW MODEL-FAILURE OF COMPLIANCE SYSTEMS AND CONTROLS NEW MODEL-”IMPROPER PAYMENT”-

5. TREND IN THE LAW OF FRAUD, ABUSE, AND COMPLIANCE OLD MODEL:CRIMINAL PRIMARY, PROOF BEYOND REASONABLE DOUBT (DOJ) RECENT MODEL:CIVIL FALSE CLAIMS ACT PRIMARY- SETTLEMENT INCLUDES $, CORPORATE INTEGRITY AGREEMENT, MISDEMEANOR PLEA (OIG) NEW MODEL:DATA-DRIVEN REVIEW, RECOVERY OF IMPROPER PAYMENTS (RACs, Medicaid Integrity Contractors), FOCUS ON COMPLIANCE OUTLIERS IN PAYMENT AND QUALITY-ADMINISTRATIVE ACTION (CMS, state program integrity agencies);arbitrary and capricious

6. CHANGING LANGUAGE IN MEDICARE AND MEDICAID PROGRAM CONTROLS OLD LANGUAGE-”FRAUD AND ABUSE” NEW LANGUAGE-”PROGRAM INTEGRITY, IMPROPER PAYMENTS” “any payment that should not have been made or that was made in an incorrect amount “ “Improper payments” require neither intent nor faultI

7. CHANGING EXPECTATIONS OF HEALTH CARE PROVIDERS (particularly large institutional providers) MANDATORY “Effective” compliance and internal controls – –Billing – –Quality – –Reporting – –Credentialing – –Governance – –Compliance process

8. WHAT IS FRAUD – “Fraud” is intentional breach of the standard of good faith and fair dealing, as understood in the community, involving deception or breach of trust, for money (USA v. Goldblatt) – In health care practice, “fraud and abuse” has come to includes far more than the Goldblatt definition-kickbacks and Stark violations – Health care fraud, mail fraud, false statements and instruments, insurance fraud statutes – “false or fraudulent claim” in False Claims Acts (state and federal 31 U.S.C. 3729 et seq.)) – 42 CFR 433.302 definition of fraud for Medicaid

9. ABUSE WHAT IS “ABUSE”? “ABUSE MEANS PRACTICES THAT ARE INCONSISTENT WITH SOUND... MEDICAL OR PROFESSIONAL PRACTICES AND WHICH RESULT IN UNNECESSARY COSTS..., PAYMENT FOR SERVICES NOT MEDICALLY NECESSARY, OR...WHICH FAIL TO MEET RECOGNIZED STANDARDS FOR HEALTH CARE.”

10. HOW DOES “FRAUD” DIFFER FROM “ABUSE”? “Fraud” requires evidence of the intent of a specific individual “Fraud means an intentional deception or misrepresentation made by a person with the knowledge that the deception could result in some unauthorized benefit to himself or some other person. It includes any act that constitutes fraud under applicable Federal or State law. “ 42 CFR 455.2

11. HOW DOES “FRAUD” DIFFER FROM “ABUSE”? “Abuse means provider practices that are inconsistent with sound fiscal, business, or medical practices, and result in an unnecessary cost to the Medicaid program, or in reimbursement for services that are not medically necessary or that fail to meet professionally recognized standards for health care. It also includes recipient practices that result in unnecessary cost to the Medicaid program.” 42 CFR 455.2-similar provisions in state regulations-(see, e.g., 18 NYCRR 515.1 (B)) No evidence of intent of specific individual required At the beginning of an investigation, neither prosecution nor defense can know whether matter will be a fraud case, an abuse case, or no case.

12. HOW DOES GOVERNMENT DETECT FRAUD OR ABUSE? OLD MODEL-INFORMANTS, WHISTLEBLOWERS, HOTLINES, READING NEWSPAPERS NEW MODEL-RISK OF RANDOM REVIEW, ERROR RATE MEASUREMENT, QUALITY ASSESSMENT NEW MODEL-DATA INTEGRATION, MINING, ANALYSIS (e.g., Medstat, Salient, Fair Isaac, Entity Analytics) NEW MODEL-AUDIT CONTRACTORS-RACs, MICs

13. New York Data Mining Approaches Data Matches/Demographics Men having babies Fillings in crowns Excluded persons on public, health provider payroll Hospital in-patient ambulance trips Women giving birth every 5 months Dead people having prescriptions filled Enrollees with multiple lives One enrollee-two managed care numbers

14. FRAUD EXAMPLES (IF CONDUCT IS INTENTIONAL) Billing for services not provided Billing for services not provided Billing for unneeded services Billing for unneeded services Submitting a claim you know is not reimbursable (Stark) Submitting a claim you know is not reimbursable (Stark) Submitting a claim you know is not properly coded to get more money Submitting a claim you know is not properly coded to get more money Providing a false diagnosis Providing a false diagnosis Keeping money you know you are not entitled to Keeping money you know you are not entitled to Creating false documents to support a claim or cost report Creating false documents to support a claim or cost report

15. FRAUD EXAMPLES Lying to a regulatory agency of the Government to keep your license or certification (which allows you to continue to collect Medicaid claims) is a fraud. See United States v. Blumeyer 114 F.3d 758 (8 th Cir. 1997) Lying to a regulatory agency of the Government to keep your license or certification (which allows you to continue to collect Medicaid claims) is a fraud. See United States v. Blumeyer 114 F.3d 758 (8 th Cir. 1997) The negligence of the victim is not a defense to fraud-”the laws... against fraud are most needed to protect the careless and naïve from lupine predators...” US v. Kreimer 609 F. 2d 126 (5 th Cir. 1980) The negligence of the victim is not a defense to fraud-”the laws... against fraud are most needed to protect the careless and naïve from lupine predators...” US v. Kreimer 609 F. 2d 126 (5 th Cir. 1980)

16. HINTS OF FRAUD inconsistent statements inconsistent statements Probing claims Probing claims Claims denials and resubmissions Claims denials and resubmissions Missing, altered or xeroxed documents Missing, altered or xeroxed documents Lulling statements Lulling statements Employment of untrained or vulnerable individuals in managerial positions Employment of untrained or vulnerable individuals in managerial positions Large cash transactions Large cash transactions Icebox treatment Icebox treatment Data mining for outliers, surges, networks Data mining for outliers, surges, networks Usual suspects Usual suspects

17. WHAT ELSE IS “FRAUD AND ABUSE” IN HEALTH CARE ? “Unacceptable practice” 18 NYCRR 515.2 “Unacceptable practice” 18 NYCRR 515.2 –Submitting a claim in an amount “in excess of established rates or fees” Unacceptable recordkeeping “failure... to maintain records necessary to fully disclose the medical necessity for and the nature and extent of the medical care” –Excessive services –Failure to meet recognized standards-”furnishing medical care... that fails to meet professionally recognized standards of health care...” –(See 42 CFR 1001.701 –(See 42 CFR 1001.701 for similar HHS/OIG authorities, also Medi-Cal provider agreement, Kentucky unacceptable practices regs., Texas DADS DAHS Handbook, Section 8000)

18. What else is included in “health care fraud and abuse?” violations of the Medicare/Medicaid Anti- Kickback Act, 42 U.S.C. 1320a-7b-”knowingly and willfully offering or making, soliciting or accepting anything of value in return for the referral of a patient whose services are reimbursable by Medicare or Medicaid.” violations of the Medicare/Medicaid Anti- Kickback Act, 42 U.S.C. 1320a-7b-”knowingly and willfully offering or making, soliciting or accepting anything of value in return for the referral of a patient whose services are reimbursable by Medicare or Medicaid.” USA v. Greber 760 F. 2d 68(3d Cir. 1985)-Act is violated even if only “one purpose” is to induce referrals USA v. Greber 760 F. 2d 68(3d Cir. 1985)-Act is violated even if only “one purpose” is to induce referrals

19. WHO INTERPRETS AND ENFORCES THE FRAUD AND ABUSE LAWS? Courts, agencies, manuals, treatises Courts, agencies, manuals, treatises Compliance officers, attorneys, professional societies Compliance officers, attorneys, professional societies Center for Medicare and Medicaid Services (CMS) Center for Medicare and Medicaid Services (CMS) Office of Inspector General, Department of Health and Human Services(OIG) Office of Inspector General, Department of Health and Human Services(OIG) Prosecutors Prosecutors Private whistleblowers and their counsel Private whistleblowers and their counsel Government contractors Government contractors

20. HOW ARE FRAUD AND ABUSE LAWS ENFORCED? Denial or authorization of payment(CMS and its contractors, state agencies, CSC) Denial or authorization of payment(CMS and its contractors, state agencies, CSC) Issuing bulletins, guidances, opinions, manuals, regulations(CMS and its contractors, OIG, state Medicaid agencies, OMIG,CSC) Issuing bulletins, guidances, opinions, manuals, regulations(CMS and its contractors, OIG, state Medicaid agencies, OMIG,CSC) Investigating fraud allegations(OIG, state IGs,OMIG, state MFCUs) Investigating fraud allegations(OIG, state IGs,OMIG, state MFCUs) Prosecuting civil and criminal fraud cases Prosecuting civil and criminal fraud cases Prosecuting administrative sanctions and exclusion cases(OIG, OMIG) Prosecuting administrative sanctions and exclusion cases(OIG, OMIG) ENTERING SETTLEMENTS, CONSENT ORDERS(EVERYONE) ENTERING SETTLEMENTS, CONSENT ORDERS(EVERYONE) Deferred prosecution agreements(DOJ so far, states?) Deferred prosecution agreements(DOJ so far, states?)

21. HOW ARE FRAUD AND ABUSE LAWS ENFORCED? STATE EXCLUSION PROCEEDINGS STATE EXCLUSION PROCEEDINGS STATE TERMINATION PROCEEDINGS 18 NYCRR 504.7 STATE TERMINATION PROCEEDINGS 18 NYCRR 504.7 Public disclosure-NY website list beginning January 1, 2010 of providers who bill for dead patients Public disclosure-NY website list beginning January 1, 2010 of providers who bill for dead patients Review of mandatory compliance program effectiveness-New York-18 NYCRR 521 Review of mandatory compliance program effectiveness-New York-18 NYCRR 521

22. THE NEXT PAYMENT REFORM WILL BE QUALITY AND OUTCOMES BASED PREDICTION: THE SHIFT TO QUALITY BASED REPORTING AND PAYMENT WILL HAVE INDUSTRY EFFECTS GREATER THAN THE SHIFT FROM COST REIMBURSEMENT TO DRGs. MOVING FRAUD AND ABUSE ISSUES TO QUALITY REPORTING INCREASES NEED FOR ATTORNEYS WITH CLINICAL BACKGROUND OR INTEREST (RN/JDs,Pharm.D./JDs)

23. COMPLIANCE AS ENTERPRISE RISK JUNE 19,2009 HOUSE HEALTH CARE DISCUSSION DRAFT- – –10 point mandatory compliance plan for certain health providers and suppliers-similar to New York regulation – –Section 1641 of discussion draft-Medicare provider must return overpayment, provide statement in writing of reason for overpayment – –Growth in compliance and oversight of compliance

24. HOT NEW ISSUES IN HEALTH CARE FRAUD MEDICAID IS NEWEST AREA OF EMPHASIS-CMS ROLE WITH STATES MEDICAID IS NEWEST AREA OF EMPHASIS-CMS ROLE WITH STATES “EFFECTIVE” COMPLIANCE PLANS-EVERY PROVIDER SHOULD HAVE ONE “EFFECTIVE” COMPLIANCE PLANS-EVERY PROVIDER SHOULD HAVE ONE STATE BASED EXCLUSIONS STATE BASED EXCLUSIONS QUALITY/OUTCOMES QUALITY/OUTCOMES MANDATORY REPORTING MANDATORY REPORTING NEVER EVENTS/READMISSIONS NEVER EVENTS/READMISSIONS

25. FREE STUFF FROM New York- OMIG website- WWW.OMIG.State.ny.us Model compliance programs-hospitals, managed care (coming soon) Over 1000 provider audit reports, detailing findings in specific industry 70 page work plan issued 4/24/09-shared with other states and CMS, OIG Listserv New York excluded provider list Disclosure protocol Job openings

26. WANT A COPY-OR MAKE A COMMENT JGS05@OMIG.state.ny.us 518 473-3782