1. TOTA Mountain Central Conference 2014 Sugar Land Marriott Town Square 16090 City Walk - Sugar Land, TX November 7, 2014 at 4:00 p.m. Health Care Fraud

2. 2 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Disclaimer The views expressed by the participants in this program are not those of the participants’ employers, their clients, or any other organization. The opinions expressed do not constitute legal advice, or risk management advice. The views discussed are for educational purposes only, and provided only for use during this session.

3. 3 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Your Speaker Richard Y. Cheng, OTR, JD Anderson Kill P.C. ph. 972-728-8753 rcheng@andersonkill.com

4. 4 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Presentation Overview  Healthcare Fraud Statistics  Investigations  Potentially Problematic Conduct  Sanctions  Civil and Administrative Statutes  Criminal Statutes  Stark  Responding to Government Inquiries  Protective Measures

5. 5 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Annual Loss Due to Health Care Fraud-FY 2013  Federal government won or negotiated $2.6 billion for healthcare fraud.  Medicare Trust Fund received transfers of $2.85 billion, including over $576 million in Medicaid.  Over $25.9 billion since program started in 1997.

6. 6 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. 2012 Federal Healthcare Statistics  1013 New Criminal Cases Opened (1910 Defendants)  2014 Open Criminal Investigations (3535 Defendants)  80 Cases Filed (843 Defendants)  718 Convicted  1083 Civil Investigations Opened  1079 Pending Civil Cases  3214 Exclusions (Individuals and Entities)

7. 7 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Investigations  Federal Government—CMS, OIG and DOJ  State Government—Texas Health and Human Commission OIG & AG.  Private Insurers and intermediaries  Whistleblowers/Qui Tam –state and federal. Main reason for FCA and Stark Law violations.  State Licensing Boards—may lead to referral to other state agencies which could result in further investigations.

8. 8 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Most Common Conduct  Services not rendered—documentation and time provided.  Up-coding—non-existing upgrade procedure or beyond what is necessary  Unbundling—common in clinical laboratory settings  False medical necessity certification  Kickbacks/Improper relationships  Retention of overpayments

9. 9 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Inducements to Beneficiaries, Referral Sources and Employees  Offers of gifts or gratuities to beneficiaries  Cost-sharing waivers and discounts  Free Transportation  Preventative care service  Gifts to referral sources  Payments Based on Production/Commissions  Co-pay waivers

10. 10 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Billing  Inadequate resolution of overpayments  Lack of integrity in computer systems  Software programs that encourage billing personnel to insert data in fields suggesting services were rendered  Knowing misuse of provider ID numbers  Outpatient services with inpatient stay  Billing for discharge instead of transfer  Improper use of modifiers  Internal coding practices  Coding without supporting clinical documentation—”Assumption Coding”  Altering documentation  Billing for services provided by unqualified or unlicensed personnel

11. 11 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Quality of Care  Sufficient Staffing  Comprehensive Care Plan  Appropriate Medication  Safety  Services rendered EXAMPLE: In Texas, the AG Medicaid Fraud Control Unit investigates patient neglect and abuse if the provider is a Medicaid provider and receiving Medicaid funds.

12. 12 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Home Health  Over utilization and under utilization regarding number of visits or length of home health coverage  Knowingly billing for inadequate or substandard care  Billing for unallowable costs of home health coordination  Unqualified personnel  False dating of amendments  Falsified plans of care  Forged beneficiary signatures  Discriminatory admission and discharge  Knowing misuse of provider certification numbers  Duplication of services  Knowing or reckless disregard of willing and able caregivers  Licensing requirements and Medicare Conditions of Participation (CoP)  Knowing failure to return overpayments

13. 13 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Skilled Nursing Facilities/Nursing Facilities  Services not rendered  Medical necessity  Double billing  Unbundling  False cost reports--Medicare-certified institutional providers are required to submit an annual cost report to a Medicare Administrative Contractor (MAC).  Standard of care  Kickbacks

14. 14 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Sanctions  Administrative  Civil—corporate integrity agreement (CIA) and on-going monitoring  Monetary hold/suspension of payments  License renewal  Exclusions  Criminal—money and prison time  Forfeitures—seize assets, accounts and property  State Board—license suspension/revocation

15. 15 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Exclusion/Suspension of Payments/Revocation of Enrollment  Mandatory Exclusion--OIG is required by law to exclude from participation in all Federal health care programs  Permissive Exclusion--OIG has discretion to exclude individuals and entities on a number of grounds, including misdemeanor convictions related to health care fraud other than Medicare or a State health program, fraud in a program (other than a health care program) funded by any Federal, State or local government agency  Suspension—”credible allegation of fraud” (state and federal)  Revocation of Enrollment—home health if fail to maintain or produce documents

16. 16 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. False Claims Act (31 USC § 3729)  Knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval  Knowingly make, uses, or causes to be made, a false record or statement material to a false or fraudulent claim  Has possession, custody, or control of property or money used, or to be used, by the Government and knowingly delivers, or causes to be delivered, less property than all of that money or property  Knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government  Conspires to do the above acts

17. 17 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Whistleblower/Qui Tam Actions (31 USC § 3730)  Private parties can bring actions in the name of the United States  Recover 15%-30%, attorneys fees and costs  Main source of investigations for healthcare fraud

18. 18 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Civil Monetary Penalty Laws (42 USC § 1320-7a)  Knowingly (or should know) presenting a claim for services or items not provided  Knowingly (or should know) presenting a claim for services or items that are not medically necessary  Knowingly (or should know) being an office/entity, holding ownership/ control or managing employees of a CMS excluded entity  Knowingly (or should know) presenting a claim that violates Medicare assignment requirement, Medicaid rules or Medicare participation.  Arranging or contracting with an individual or entity that the person knows or should know is excluded  Offering remuneration to Medicare or state health beneficiary that is likely to influence the beneficiary  Violating the federal or any state based Anti-kickback statutes

19. 19 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Health Care Fraud (18 USC § 1347)  To knowingly and willfully execute or attempt to execute, a scheme –  To defraud any health care benefit program, or  To obtain, by means of false or fraudulent, or pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any health care benefit program

20. 20 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Criminal False Claims Act (18 USC § 287)  A defendant presented a claim against the US or any agency or department of the US  The claim was false, fictitious or fraudulent, AND  The defendant knew the claim was false, fictitious or fraudulent.

21. 21 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. False Statements (18 USC § 1001)  A statement,  That is false,  Material,  Made knowingly and willfully, AND  In a matter within the jurisdiction of a department or agency of the US

22. 22 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Anti-Kickback Statute (42 USC § 1320-7b)  Knowing and willful conduct involving the solicitation, receipt, offer or payment of any kind of remuneration in return for referring, directly or indirectly, an individual or for recommending or arranging the purchase, lease or ordering of an item or service that may be wholly or partially paid for by any federal health care program.  Person need not have actual knowledge of this section or specific intent to violate this section.  Texas Anti-solicitation Statute—broader and goes beyond government healthcare programs and includes private insurance payer sources.

23. 23 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Penalties for Violating Anti-Kickback Statute  Criminal Statute  Felony  Not more than 5 years, not more than $25,000 cash, or both per violation  Civil Sanctions  Exclusion for Medicare/Medicaid  Civil Monetary Penalty (“CMP”) of up to $50,000 plus damages of up to 3x the amount of the kickback.

24. 24 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Intent  Pre-PPACA—an individual must have actual knowledge of, and the specific intent to, violate the AKS.  Post-PPACA—a person need NOT have actual knowledge of the AKS or have a specific intent to commit an AKS violation; still requires knowing and willful intent.

25. 25 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Texas Patient Solicitation Act (“TPSA”)  Person knowingly offers to pay or agrees to accept, directly or indirectly, overtly or covertly any remuneration in case or in kind to or from another for securing or soliciting a patient or patronage for or from a person licensed, certified, or registered by a state health care regulatory agency.

26. 26 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Potential Kickback Violations  Routine waivers of co-pays or deductibles (aka cost-share waivers).  Joint ventures with Medicare/Medicaid pay  Hospital arrangements—credentialing, medical directors, recruitment and retention  Prescription Drug Marketing—inducement by manufacturer (e.g. frequent flier program or research grant)  Lab discounts—additional work done, direct benefits or discount on composite rate.  Home health, skilled nursing facilities/nursing facilities, hospices and ambulances.  Office rental  Gifts to Medicare/Medicaid Beneficiaries

27. 27 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Texas Criminal Statutes  Medicaid Fraud—Texas Penal Code § 35A.01 and 35A.02  Theft—Texas Penal Code § 31.03  Securing Execution of document by deception—Texas Penal Code § 32.4  Any other applicable statute

28. 28 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Stark Self-Referral Prohibitions 42 USC § 1395nn—Elements  The existence of a “financial relationship” between a physician or immediate family member  A referral by that physician (or a group practice referral if the physician controls referrals by the group practice)  To an entity providing designated health services (DHS), AND  The absence of an applicable exception

29. 29 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Stark—Key Definitions  Financial Interest—includes both direct and indirect ownership and investment interest and compensation arrangements  Ownership or investment interest—may be through equity, debt, or other means, and includes an interest in an equity that holds an ownership or investment interest in any entity that furnishes DHS  Compensation Arrangement—is any arrangement involving remuneration, as defined in the regulations, whether direct or indirect, between a physician (or a member of a physician’s immediate family) and an entity.

30. 30 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Stark—Designated Health Services (DHS)  Clinical lab services  OT, PT, and outpatient SLP services  Radiology and certain other imaging services  Radiation therapy services and supplies  DME and supplies  Parenteral and enteral nutrients, equipment and supplies  Prosthetic, orthotics and prosthetic devices and supplies  Home Health Services  Outpatient Prescription Drugs  Inpatient and outpatient hospital services

31. 31 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Statutory Exceptions  Discounts  Employee-Employee  Group Purchasing  Waivers of Part B Coinsurance  Managed Care Plans  Pharmacy Waivers/Part D Cost-sharing  Federally Qualified Health Centers (“FQHCs”) and Medicare Advantage Organization  FQHCs and Donor  E-prescribing—must meet standards adopted by the Secretary of DHHS

32. 32 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Regulatory Safe Harbors  Investment Interests  Space rental  Equipment rental  Personal services and management contracts  Sale of practice  Referral services  Warranties  Discounts  Employees  Investments in group practices  Many more….

33. 33 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Patient Protection and Affordable Care Act—Self Reporting re Stark Violations  § 6409 of ACA –requirement to establish a protocol for the disclosure of actual or potential violations of Stark. Secretary/CMS is authorized to reduce amounts due and owing for all violations.  Some risks involved with self reporting and exceptions.

34. 34 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Obstruction of Justice  Do not destroy documents  Do not withhold documents  Do not alter documents  Do not tell employees not to talk to the government  Do not tell employees what to say  Do not lie or misrepresent anything

35. 35 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Document Hold  Memo  Inform everyone there is an audit or investigation  No paper or electronic data (emails) should be altered or deleted  Nothing transferred  Automatic deletion policy—suspend  Certification from employees  Personal computers/phones

36. 36 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Proactive Measures  Compliance program  Ethics policies  Internal reporting policies and incentives  Compliance officer/consultant  Training on coding, charting and billing  Internal audits  P & P for handling investigations  Physician monitoring  Supplier monitoring  Legal reviews  Document discussions with the government

37. 37 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Recent Cases  Alliance Healthcare—plea entered on 2/21/13; husband and wife sentenced to 37 months for roles in $1.3 health care fraud conspiracy. Ordered to pay restitution of $853,702.  Thaw/Kincaid—plea entered 7/20/13; owners of hyberbaric oxygen therapy companies pled guilty to conspiracy to commit health care fraud. Pled to 5 years in prison, $250k fine or twice pecuniary gain/loss to victim, restitution. Sentencing 11/13/13.  Cyparian Akamnonu—plea entered 9/5/13; sentenced to 10 years in prison and ordered to pay $25M in restitution. Co-defendants had trial 1/13/14. Case involved recruiting beneficiaries to receive home health care services for which they did not qualify.  Euless Healthcare Corp.—defendants convicted of conspiracy to commit health care fraud. One defendant, Comfort Gates, was sentenced on 11/4/13 to 72 months in prison and ordered to pay restitution of $830K.

38. 38 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved. Thank You! Richard Y. Cheng is a shareholder at Anderson Kill, based in the Dallas, TX office. He focuses his practice in the healthcare and hospitality industries, with particular concentration in the long-term care and rehabilitation industries, serving skilled nursing facilities, assisted living facilities, home health agencies, hospices and rehabilitation providers. He counsels clients with respect to corporate transactions, healthcare insurance recovery, and regulatory and compliance matters. Richard won the 2011 Dallas Business Journal Best Corporate Counsel Rising Star award, was recognized twice as a finalist for the D CEO Magazine/ACC best corporate counsel award, awarded the National Diversity Council Legal Diversity Champion Award in 2012, received the 2011 and 2012 TOTA Distinguished Service awards and recognized by Texas Tech HSC for the 2010 Distinguished Alumni Award. Prior to his legal career, Richard worked as a licensed occupational therapist in Dallas, Texas. He has served as an adjunct faculty at Saint Catherine University, Nova Southeastern University, has presented at multiple conferences and lobbied in Washington D.C. through the AOTA. Richard has published extensively on legal matters concerning the occupational therapy industry and healthcare. He was the former author of "Legal Line," a column in ADVANCE for OT and authored a legal chapter (Legal Dimension in Occupational Therapy) in the textbook "OT Manager, 5th Edition."

39. 39 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved.

40. 40 1039964v1 © 2014 Anderson Kill P.C. All Rights Reserved.