a fraud and abuse potpourri

1. A Fraud and Abuse Potpourri NERVES Alice G. Gosfield, Esq. April 13, 2007

3. Overview Jim Sheehan�s view of life Who is liable when things go wrong? Other forms of liability based on quality Principles of compliance: a program not a plan The new permitted �gainsharing� and quality A new reality and a new mindset

4. EACH WAY TO GET PAID IN HEALTH CARE HAS UNIQUE FRAUD RISKS-AND SOME COMMON ONES FEE FOR SERVICE RISKS Services billed but not rendered Medically unnecessary services Double-billing Services billed at higher level or with other inappropriate code to improperly obtain more reimbursement (upcoding, unbundling, evasion of global fees) Kickbacks to other providers for patient referrals kickbacks to patients to use more services

5. FEE FOR SERVICE MODEL CASES USA V. RUTGARD-CODING AND MEDICAL NECESSITY USA V. UNIVERSITY OF MEDICINE AND DENTISTRY OF NEW JERSEY-BOTH INDIVIDUAL PHYSICIANS AND UMDNJ BILLED AND PAID FOR SAME PHYSICIAN SERVICES USA V. GREBER-KICKBACKS TO REFERRING PHYSICIANS FOR PHYSICIAN ORDERS USA EX REL. LEE V. SMITHKLINE-BILLING FOR ORDERED BUT WORTHLESS TESTS PATH PROJECT- SERVICES PERFORMED BY RESIDENTS BILLED BY ATTENDING PHYSICIANS

6. WHAT IS THE QUALITY WE ARE PAYING FOR? 1) REDUCTION OF MEDICAL ERRORS/ADVERSE EVENTS 2) IMPROVEMENT IN OUTCOMES 3) COMPLIANCE WITH PRACTICE GUIDELINES OR REQUIREMENTS 4) REDUCTION IN COST FOR SAME OUTCOME

7. CORE QUESTION:WHY (AND WHEN) FRAUD ENFORCEMENT? KNOWING CONDUCT BY INSTITUTION/GROSS AND SYSTEMIC LEADERSHIP FAILURES (Notice, warning, failure to act) INTENTIONAL ACTS BY INDIVIDUALS FALSE REPORTING, FAILURE TO REPORT APPALLING OUTCOMES WHAT WILL BE CONSEQUENCES OF OUR INVOLVEMENT?

8. Who is Liable? The corporate entity if it got the money The billing company may be The provider always is unless there�s no control over the person who did it The coder almost never is The manager could be

9. Exclusions Based on Quality Failures Items or services to patients (whether or not eligible for benefits under Medicare or Medicaid) substantially in excess of the patient�s needs (42 USC 1320a-7(b)(6)(B)) Of a quality which fails to meet professionally recognized standards of health care Most people don�t pay attention to this stuff over use standards aren�t really there (norms, criteria and standards) like CPGs Most people don�t pay attention to this stuff over use standards aren�t really there (norms, criteria and standards) like CPGs

10. Civil Money Penalties for Quality Claims for a pattern of medical items or services that a person knows or should know are not medically necessary (42 USC 1320a-7a(a)(1)(E)) Provides false or misleading information that could be expected to lead to premature discharge (42 USC 1320a-7a(a)(3)) Hospital payments to physicians to reduce services (42 USC 1320a-7-a(b)) Upcoding is a false claim Never used as far as I know Physician inctibve plans: even if the baseline was overuseUpcoding is a false claim Never used as far as I know Physician inctibve plans: even if the baseline was overuse

11. Where Does Compliance Come From? Federal sentencing guidelines HIPAA impacts: �knew or should know� Acts in deliberate ignorance of the truth or falsity of the claim Acts in reckless disregard of the truth No proof of specific intent is required Case law on intent Not everything is even an overpayment Anesthesiologist affiliated versus Sullivan Krizek a psychiatrist was charged with "upcoding" where he billed many visits at 45-50 minutes when they involved only 20-30 minutes face to face with the patient. The court makes a number of interesting observations about false claims liability including the following: �". The government's theory of liability is plainly unfair and unjustified. Medical doctors should be appropriately reimbursed for services legitimately provided. They should be given clear guidance as to what services are reimbursable. The system should be fair. The system should not be so arbitrary, so perverse, as to subject a doctor whose annual income during the relevant period averaged between $100,000 and $120,000 to potential liability in excess of $80 million because telephone calls were made in one room rather than another." Court ordered an outside consultant to review the 8,002 claims at issue, assuming that no more than 12 sessions a day could be legitimate, and to calculate a false claims penalty on that basis. The court found the physician did act in reckless disregard of the veracity of the claims. Six figure liability was imposed. (909 F. Supp. 32 (D.D.C. 1995) (CCH �43, 983)) � 3. U.S. v. Erickson, � 2. Fraud versusAnesthesiologist affiliated versus Sullivan Krizek a psychiatrist was charged with "upcoding" where he billed many visits at 45-50 minutes when they involved only 20-30 minutes face to face with the patient. The court makes a number of interesting observations about false claims liability including the following: �". The government's theory of liability is plainly unfair and unjustified. Medical doctors should be appropriately reimbursed for services legitimately provided. They should be given clear guidance as to what services are reimbursable. The system should be fair. The system should not be so arbitrary, so perverse, as to subject a doctor whose annual income during the relevant period averaged between $100,000 and $120,000 to potential liability in excess of $80 million because telephone calls were made in one room rather than another." Court ordered an outside consultant to review the 8,002 claims at issue, assuming that no more than 12 sessions a day could be legitimate, and to calculate a false claims penalty on that basis. The court found the physician did act in reckless disregard of the veracity of the claims. Six figure liability was imposed. (909 F. Supp. 32 (D.D.C. 1995) (CCH �43, 983)) � 3. U.S. v. Erickson, � 2. Fraud versus

12. How do they decide false claims liability? Notice to the provider? Clarity of the rule Pervasiveness and magnitude of the claims Is there a compliance plan Have they taken previous steps to rectify Has there been agency or program guidance Have there been prior audits Other information

13. The Quality/Compliance Nexus The point of compliance: 1. Do it right. 2. If you make a mess clean it up. Where compliance is today: 1. eternal internal self-inspection and reporting 2. �gotcha� Shifting the focus of compliance to reflect quality concerns with programmatic integration strengthens both (see AGG Note)

14. Principles of Compliance Be the little red hen Walk the walk: Don�t spawn whistleblowers Prioritize using the three questions: What makes me think we are doing it right or wrong? What will it take to fix it? How will we know it stays fixed?

15. Seven Elements Standards and procedures (but it�s not what you write; it�s what you do) Specific individuals, high up, have responsibility: write in the active voice Use due care not to engage with those �with a propensity� to bad behavior: due diligence Communication and training

16. The Rest Monitor and audit over time and provide mechanisms to report (hot lines) Disciplinary mechanisms: the lipid nurse If �an offense� is detected take steps to respond Read the risk areas and the work plans

17. Can compliance really help you? Quality is job 1 Even false claims issues relate to risk management which includes clinical risk management Related issues: utilization (med nec); antitrust (clin integration); privacy

18. Making a New Reality Review quality relevant enforcement challenges and get them into the compliance program Make use of Stark provision: 42 CFR 411.357(o) Think about the new �gainsharing� Practice UFT-A � use CPGs more Focus on medical necessity

19. Keep in mind Do you want it on the front page of the paper? What kind of snapshot will a prosecutor make of this in 30 seconds to a jury of people who haven�t graduated high school? What would your Mom say? Not asking doesn�t make it right Everyone does it doesn�t count Can you do better?

20. �Choose your own adventure�

21. �The Quality/Compliance Nexus: Moving Toward Programmatic Integration�, AGG Note, July, 2003; http://www.gosfield.com/notes/index.hml "Legal Mandates for Physician Quality: Beyond Risk Management" HEALTH LAW HANDBOOK 2001 ed., West Group pp. 286-321