1. Health Care Reform: New Fraud and Abuse Provisions Kim C. Stanger Hawley Troxell LLP (5/10)

2. The small print… This is overview of selected provisions in law. This is overview of selected provisions in law. The law and general requirements are subject to change as new regulations issue or the law is amended. The law and general requirements are subject to change as new regulations issue or the law is amended. Participants should review the law and corresponding regulations when seeking to comply. Participants should review the law and corresponding regulations when seeking to comply. This presentation is given for educational purposes only; it does not constitute legal advice. This presentation is given for educational purposes only; it does not constitute legal advice. This presentation does not establish an attorney-client relationship. This presentation does not establish an attorney-client relationship. The opinions expressed are those of the speaker; they do not necessarily represent the position of the Hospital Cooperative or Hawley Troxell LLP. The opinions expressed are those of the speaker; they do not necessarily represent the position of the Hospital Cooperative or Hawley Troxell LLP.

3. Patient Protection and Affordable Care Act (“PPACA”)

4. PPACA: Overview Cost of health care reform estimated at $940 billion over 10 years. Cost of health care reform estimated at $940 billion over 10 years. “[M]ost of [health care reform] can be paid for by finding savings within the existing health care system, a system that is currently full of waste and abuse.” “[M]ost of [health care reform] can be paid for by finding savings within the existing health care system, a system that is currently full of waste and abuse.” –Pres. Obama

5. PPACA Fraud and Abuse Provisions Shorten time for submitting claims. Shorten time for submitting claims. Require report and repayment of overpayments. Require report and repayment of overpayments. Impose additional requirements for enrollment. Impose additional requirements for enrollment. Strengthen and expand current fraud and abuse laws. Strengthen and expand current fraud and abuse laws. Expand government and RAC authority for investigations. Expand government and RAC authority for investigations. Create new rules for certain providers. Create new rules for certain providers. Require states to implement similar measures. Require states to implement similar measures.

6. PPACA Fraud and Abuse Provisions

7. Reduced Time for Submitting Claims For services furnished on or after 1/1/10, must submit claims to Medicare parts A and B within one calendar year from date of service. For services furnished on or after 1/1/10, must submit claims to Medicare parts A and B within one calendar year from date of service. For services furnished before 1/1/10, must submit claims by 12/31/10. For services furnished before 1/1/10, must submit claims by 12/31/10. HHS may issue regulatory exceptions to one- year limit. HHS may issue regulatory exceptions to one- year limit. (PPACA 6404)

8. Include NPI By January 1, 2011, providers and suppliers must include National Provider Identifier (“NPI”) on By January 1, 2011, providers and suppliers must include National Provider Identifier (“NPI”) on –Application for enrollment, and –All claims for payment. HHS to issue regulations. HHS to issue regulations. (PPACA 6402)

9. Report and Repay Overpayments “Overpayment” = funds a person receives or retains to which person is not entitled after reconciliation. “Overpayment” = funds a person receives or retains to which person is not entitled after reconciliation. Providers and suppliers must: Providers and suppliers must: –Report and return overpayments to HHS, the state, or contractor by the later of:  60 days after the date the overpayment was identified, or  The date the corresponding cost report is due. –Provide written explanation of reason for overpayment. (PPACA 6402)

10. Report and Repay Overpayments Retaining overpayment after deadline for reporting and returning overpayment is an “obligation” under False Claims Act. Retaining overpayment after deadline for reporting and returning overpayment is an “obligation” under False Claims Act. “Knowing” failure to report and return overpayments by the date due may result in penalties under: “Knowing” failure to report and return overpayments by the date due may result in penalties under: –False Claims Act –Civil Monetary Penalties Law.

11. False Claims Act Prohibits Prohibits –knowingly submitting false claim for payment to federal government, or –Concealing, avoiding, or decreasing an obligation to pay to the federal government. (31 USC 3729 et seq.)

12. False Claims Act Penalties Penalties –$5,500 to $11,000 penalty per false claim –3x amount claimed Private whistleblowers may assert qui tam lawsuits. Private whistleblowers may assert qui tam lawsuits. –Receive percentage of recovery –Prevailing party may recover costs and fees (31 USC 3729 et seq.)

13. False Claims Act Changes Prior “public disclosure” not a bar to qui tam action. Prior “public disclosure” not a bar to qui tam action. –No dismissal required if government opposes dismissal. –Public disclosure is limited to federal actions, e.g.,  Federal criminal, civil and administrative actions.  Federal reports, hearings, audits or investigations.  News media and perhaps social media.  Not state proceedings and private litigation. To be “original source,” qui tam relator To be “original source,” qui tam relator –Must provide info to govt prior to public disclosure, and –Info must be independent of and materially add to publicly disclosed allegations. –Not required to have direct and independent knowledge. (PPACA 1303)

14. Civil Monetary Penalties Law Prohibits specified conduct, e.g., Prohibits specified conduct, e.g., –Submitting false or fraudulent claims, or claims for unnecessary services –Offering inducements to program beneficiaries –Contract with excluded provider –Etc. Penalties generally include Penalties generally include –$10,000 to $50,000 penalty, depending on violation –3x amount claimed –Exclusion from govt programs (42 USC 1320a-7a)

15. Civil Monetary Penalties Law Changes Expanded to prohibit: Expanded to prohibit: –Failing to report and return known overpayment.  Penalties up to $10,000 per violation  3x damages  Exclusion from govt programs –Knowingly making false statement in application, bid, or contract to participate or enroll in a federal health care program.  Penalties up to $50,000 per violation  Exclusion from govt programs. (PPACA 6402, 6408)

16. Civil Monetary Penalties Law Expanded to prohibit: Expanded to prohibit: –Ordering or prescribing items or services when person ordering or prescribing is excluded from federal health care program. –Failing to grant OIG timely access for audits, investigations, evaluations upon reasonable request.  Penalties up to $15,000 per day. (PPACA 6402(d), 6408)

17. Civil Monetary Penalties Law New exceptions: New exceptions: –Programs that promote access to care and pose a low risk of harm to patients and health care programs. –Coupons, rebates and other rewards from a retailer that are offered to general public not tied to items reimbursed under Medicare/Medicaid. –Unadvertised items or services for free or less than fair market value based on financial need. –Part D plan waiver for first fill copayment for a generic Part D drug. (PPACA 6402)

18. Stark Self-Referral Law If a physician (or their family member) has a financial relationship with an entity: If a physician (or their family member) has a financial relationship with an entity: –The physician may not refer patients to that entity for designated health services, and –The entity may not bill Medicare for such designated health services unless the referral or financial relationship is structured to fit within a regulatory exception. (42 USC 1395nn; 42 CFR 411.350)

19. Stark Self-Referral Law Penalties Penalties –No payment for services provided per improper referral –Repayment of payments improperly received –Civil penalties  $15,000 per improper referral/claim  $100,000 per scheme (42 USC 1395nn; 42 CFR 411.350)

20. Stark Changes: In-Office Ancillary Services To qualify for in-office ancillary services exception, if provider refers patient for MRI, CT, or PET scan performed in physician’s office, physician must: To qualify for in-office ancillary services exception, if provider refers patient for MRI, CT, or PET scan performed in physician’s office, physician must: –Notify patient that patient may obtain the services from other suppliers, and –List of other suppliers where patient resides that can provide the service. HHS may expand list of affected services. HHS may expand list of affected services. Applies to referrals after 1/1/10. Applies to referrals after 1/1/10. (PPACA 6003)

21. Stark Changes: Physician-Owned Hospitals To qualify for “whole hospital” and “rural provider” exceptions, physician-owned hospitals: To qualify for “whole hospital” and “rural provider” exceptions, physician-owned hospitals: –Must have physician ownership and provider number by 12/31/10. –Cannot convert from ASC or increase percentage of total value of physician ownership or investment after 3/23/10. –Cannot expand number of operating rooms, procedure rooms, and beds after 3/23/10. Exception for certain high Medicaid hospitals. Exception for certain high Medicaid hospitals. Regulations due 1/1/12. Regulations due 1/1/12. (PPACA 6001, 10601; Reconciliation Act 1106)

22. Stark Changes: Physician-Owned Hospitals Must comply with additional reporting duties, e.g., Must comply with additional reporting duties, e.g., –Submit annual report to HHS identifying physician owners and investors. –Referring physician owners must notify patients of:  Referring physician’s ownership interest  Treating physician’s ownership interest. –Disclose that hospital is owned by physicians in  Hospital website  Public advertising. –If hospital does not have physician on site 24/7,  Notify patient of such fact prior to admission  Obtain patient’s written acknowledgement of fact. (PPACA 6001, 10601; Reconciliation Act 1106)

23. Stark Changes: Physician-Owned Hospitals Cannot condition physician’s ownership/investment on referrals. Cannot condition physician’s ownership/investment on referrals. Cannot offer physician owner/investor more favorable ownership opportunities than a person who is not a physician owner/investor. Cannot offer physician owner/investor more favorable ownership opportunities than a person who is not a physician owner/investor. Hospital cannot guarantee, make payment, or subsidize loan to physician or group to acquire ownership/investment interest. Hospital cannot guarantee, make payment, or subsidize loan to physician or group to acquire ownership/investment interest. Returns distributed based on ownership/investment interests. Returns distributed based on ownership/investment interests. Other requirements. Other requirements. (PPACA 6001, 10601; Reconciliation Act 1106)

24. Stark Changes: Self-Disclosure Protocol HHS must establish a self-disclosure protocol by 9/23/10 for reporting Stark violations, including: HHS must establish a self-disclosure protocol by 9/23/10 for reporting Stark violations, including: –Agency to whom disclosures may be reported, and –Process for corporate integrity and compliance agreements. Separate from advisory opinion process. Separate from advisory opinion process. (PPACA 6409)

25. Stark Changes: Compromise re Penalties HHS is authorized to settle Stark violations for less than full statutory penalties if participate in self-disclosure protocol. HHS is authorized to settle Stark violations for less than full statutory penalties if participate in self-disclosure protocol. Factors to consider include: Factors to consider include: –Nature and extent of illegal or improper practice –Timeliness of self-disclosure –Cooperation in providing information –Other factors HHS deems relevant. (PPACA 6409)

26. Anti-Kickback Statute Prohibits individuals or entities from knowingly and willfully offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid or any other federally funded program unless fit within regulatory exception. Prohibits individuals or entities from knowingly and willfully offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid or any other federally funded program unless fit within regulatory exception. (42 USC 1320a-7b; 42 CFR 1001.952)

27. Anti-Kickback Statute Penalties Penalties –Felony –5 years in prison –$25,000 fine –$50,000 civil administrative penalty –Exclusion from Medicare/Medicaid

28. Anti-Kickback Statute Changes May violate statute even if: May violate statute even if: –You did not know of AKS –You did not intend to violate AKS –Rejects Hanlester v. Shalala (9 th Cir. 1995) *Ignorance of the law is no longer a defense.

29. Anti-Kickback Statute Changes: AKS Violation = FCA Violation Anti-Kickback Statute Criminal statute Criminal statute Beyond reasonable doubt standard Beyond reasonable doubt standard 5 years in prison 5 years in prison $25,000 fine $25,000 fine Exclusion from Medicare/Medicaid Exclusion from Medicare/Medicaid False Claims Act Civil statute Civil statute Preponderance of evidence standard Preponderance of evidence standard Civil penalties Civil penalties –$5,500 to $11,000 per claim –3x amount claimed Qui tam lawsuit Qui tam lawsuit

30. Increased Funding for Enforcement $100 million in 2011 $100 million in 2011 $250 million through 2016. $250 million through 2016.

31. OIG Investigative Authority Providers who fail to grant timely access to records may be fined $15,000 for each day that access is denied. Providers who fail to grant timely access to records may be fined $15,000 for each day that access is denied. OIG may obtain information from providers and beneficiaries. OIG may obtain information from providers and beneficiaries. OIG may subpoena witnesses to testify in exclusion cases. OIG may subpoena witnesses to testify in exclusion cases. OIG may access databases. OIG may access databases. –Government databases integrated to facilitate data matching, mining and sharing. (PPACA 6402, 6408)

32. RAC Audits States must implement RAC audits for Medicaid by 12/31/2010. States must implement RAC audits for Medicaid by 12/31/2010. –RACs paid according to amount recovered. Medicare Parts C and D will be subject to RAC audits. Medicare Parts C and D will be subject to RAC audits. (PPACA 6411)

33. Suspension of Payments Pending Investigation HHS may suspend payments to a provider pending an investigation of a credible allegation of fraud against the provider. HHS may suspend payments to a provider pending an investigation of a credible allegation of fraud against the provider. HHS shall withhold FPP from state if state Medicaid does not suspend payment. HHS shall withhold FPP from state if state Medicaid does not suspend payment. CMS must consult with OIG to determine whether there is a credible allegation of fraud. CMS must consult with OIG to determine whether there is a credible allegation of fraud. (PPACA 6402)

34. Recovery from Related Providers HHS may recover payments from providers and suppliers that share same tax identification number as entity with past-due obligation to Medicare. HHS may recover payments from providers and suppliers that share same tax identification number as entity with past-due obligation to Medicare. Applies even if they have different billing number or NPI. Applies even if they have different billing number or NPI. (PPACA 6401)

35. Mandatory Compliance Plans Providers will be required to have compliance plans as condition to enrollment and re-enrollment. Providers will be required to have compliance plans as condition to enrollment and re-enrollment. HHS will determine HHS will determine –Timing re industry sectors –Applicable standards for compliance plans. (PPACA 6401)

36. Enrollment Process HHS must implement screening process for enrollees in Medicare, Medicaid, and CHIP by 9/23/10. HHS must implement screening process for enrollees in Medicare, Medicaid, and CHIP by 9/23/10. –Licensure checks –Maybe background checks, fingerprints, unannounced site visits, database inquiries, etc. Screening applies to: Screening applies to: –New enrollees: by 3/23/11 –Current enrollees: by 3/23/12 –Revalidation: by 9/23/10 (PPACA 6401)

37. Enrollment Process Institutional providers will be charged a $500 enrollment fee beginning 2010. Institutional providers will be charged a $500 enrollment fee beginning 2010. –Subject to CPI adjustment –Hardship exemptions may be available. (PPACA 6401)

38. Enrollment Process Enrollees must disclose info about affiliates with uncollected debt, that have been excluded from govt programs, or had billing privileges denied. Enrollees must disclose info about affiliates with uncollected debt, that have been excluded from govt programs, or had billing privileges denied. –HHS may deny enrollment based on affiliation. Remember HHS may impose penalties for false statements in enrollment process, including: Remember HHS may impose penalties for false statements in enrollment process, including: –$50,000 civil monetary penalty per false statement, or –Exclusion from govt program. (PPACA 6401, 6402)

39. Enrollment Process HHS may subject certain enrollees to oversight during provisional period lasting 30 days to one year. HHS may subject certain enrollees to oversight during provisional period lasting 30 days to one year. –Prepayment reviews –Payment caps –Others as HHS deems appropriate. HHS may place moratorium on enrollment of certain providers or categories if necessary to prevent waste, fraud or abuse. HHS may place moratorium on enrollment of certain providers or categories if necessary to prevent waste, fraud or abuse. –Not subject to judicial review. (PPACA 6401)

40. 501(c)(3) Tax-Exempt Hospitals

41. Must conduct community needs assessment at least every 3 years and implement strategy. Must conduct community needs assessment at least every 3 years and implement strategy. Effective for tax year beginning 3/23/12. Effective for tax year beginning 3/23/12. HHS to review community needs assessment at least once every 3 years. HHS to review community needs assessment at least once every 3 years. Violations may result in: Violations may result in: –$50,000 excise tax –Loss of tax exempt status? (PPACA 9007)

42. 501(c)(3) Tax-Exempt Hospitals Must establish financial assistance policy. Must establish financial assistance policy. –Amount billed to qualified patients cannot exceed amount billed to patients with insurance. –Cannot take extraordinary collection actions until determine whether patient qualifies under policy. –Must provide emergency care without regard to ability to pay. (PPACA 9007)

43. DME and Home Health Services Physicians who order DME or certify home health services must be enrolled in Medicare to receive payment. Physicians who order DME or certify home health services must be enrolled in Medicare to receive payment. Physicians or midlevels must have face-to-face encounter with a patient prior to ordering DME or certifying home health services. Physicians or midlevels must have face-to-face encounter with a patient prior to ordering DME or certifying home health services. –May conduct encounter by telemedicine. –Must document encounter as condition of payment. (PPACA 6407, 10605)

44. DME and Home Health Services HHS may revoke enrollment for physicians and suppliers who fail to maintain and, upon request, provide access to documentation related to: HHS may revoke enrollment for physicians and suppliers who fail to maintain and, upon request, provide access to documentation related to: –Written orders or claims for DME –Certifications for home health services –Other high risk items designated by HHS. (PPACA 6406)

45. Long Term Care Providers Additional reporting and notification requirements Additional reporting and notification requirements Mandatory compliance, quality assurance, and performance improvement programs Mandatory compliance, quality assurance, and performance improvement programs Website information Website information Background checks and fingerprinting Background checks and fingerprinting Staff training Staff training Complaint processes Complaint processes New demonstration projects New demonstration projects (PPACA 6101-6105, 6111, 6121, 6201)

46. Transparency Reports: Drug Samples to Physicians Drug manufacturers and distributors must report samples distributed to physicians beginning 4/1/12. Drug manufacturers and distributors must report samples distributed to physicians beginning 4/1/12. (PPACA 6004)

47. Transparency Reports: Physician Payments or Ownership Drug and device manufacturers must report beginning 3/31/13: Drug and device manufacturers must report beginning 3/31/13:  Payments or transfers of value to physicians or teaching hospital  Physician or family members’ ownership or investment Subject to certain exceptions. Subject to certain exceptions. Penalties Penalties –If not “knowing”: $1,000 to $10,000 per payment; up to $150,000 total annually. –If “knowing”: $10,000 to $100,000 per payment; up to $1,000,000 total annually. (PPACA 6002)

48. Medical Malpractice Limits Appropriates $50 million in grants to states to develop, implement, and evaluate alternatives to current tort litigation. Appropriates $50 million in grants to states to develop, implement, and evaluate alternatives to current tort litigation. (PPACA 10607)

49. Responding to PPACA

50. Take action to timely submit claims. Take action to timely submit claims. –Pre-1/1/10 claims by 12/31/10. –Post-1/1/10 claims within 1 year Revitalize compliance efforts. Revitalize compliance efforts. –Compliance plan –Auditing and monitoring –Responding to suspected violations –Document actions Report and repay within 60 days. Report and repay within 60 days. –Put in place process of evaluation –Document actions

51. Responding to PPACA Review physician transactions to ensure compliance with Stark and AKS. Review physician transactions to ensure compliance with Stark and AKS. –Written contracts –Current contracts –Fair market value for legitimate services –Compensation set in advance –Not based on referrals If transactions are non-compliant, consider If transactions are non-compliant, consider –Repayment obligations –Self-disclosure protocol.

52. Responding to PPACA Monitor physician’s compliance. Monitor physician’s compliance. –General compliance activities for employed physicians. –Orders or certifications for DME and home health services. –Notice re in-office ancillary services. –Ownership or investment in specialty hospitals, including:  Expansions  Required notices

53. Responding to PPACA Consider capitalizing on new compliance exceptions. Consider capitalizing on new compliance exceptions. –Programs that increase access to care but do not create waste, fraud, or abuse, e.g., transportation programs. –Others?

54. Responding to PPACA Consider corporate structures and affiliations. Consider corporate structures and affiliations. –May be liable for affiliated entities’ obligations. –May be subject to penalties for violations of owned entities. If contemplating enrollment of new entity, may want to do so before new enrollment processes take effect. If contemplating enrollment of new entity, may want to do so before new enrollment processes take effect.

55. Responding to PPACA Tax exempt hospitals, begin working on Tax exempt hospitals, begin working on –Community needs assessment –Financial assistance policy –Charges for emergency medical care.

56. Responding to PPACA If offer DME or home health services, ensure compliance with new requirements. If offer DME or home health services, ensure compliance with new requirements. –Written orders from qualified provider –Maintain documentation

57. Responding to PPACA Watch for new regulations as they come out. Watch for new regulations as they come out. Consider coordination with association and getting involved in policy or rulemaking. Consider coordination with association and getting involved in policy or rulemaking. –State Medicaid changes –Malpractice reform –Other?

58. Resources AHA Summary of Health Care Reform AHA Summary of Health Care Reform OIG Supplemental Compliance Program Guidance for Hospitals OIG Supplemental Compliance Program Guidance for Hospitals IHA Sample Compliance Plan IHA Sample Compliance Plan Hawley Troxell Client Updates Hawley Troxell Client Updates –kstanger@hawleytroxell.com kstanger@hawleytroxell.com –208-388-4843 Tons of stuff on internet Tons of stuff on internet

59. Questions? Kim C. Stanger (208) 388-4843 kcstanger@hawleytroxell.com