Institutional Compliance Agreement Final Mandatory Compliance Training January 2007

1. Institutional Compliance Agreement Final Mandatory Compliance Training January 2007 Presented By: Andrew S. Quinn, Esq. Principal Compliance Concepts, Inc. www.complianceconcepts.com

2. Institutional Compliance Agreement (ICA) • Agreement between the Office of the Inspector General (OIG) of the DHHS and UNSOM • Entered into March 2002 • Five Year Period • Obligations and Requirements

3. ICA Requires: Annual Training for all Covered Persons: • General • ICA Requirements • UNSOM Compliance Program and Code of Conduct • Specific • Submission of accurate claims • Policies and Procedures relating to accurate medical record documentation • Personal obligations of each individual • Reimbursement rules and statutes • Legal Sanctions • Relevant examples of proper and improper billing practices

4. ICA Requires: A Compliance Structure: • Maintain a Billing Compliance Steering Committee • Employ a Director of Corporate Compliance (James Lenhart) • Maintain Written Standards • Compliance Plan/Code of Conduct/Policies and Procedures • Institute Review Procedures • Annual Review/Employ an Independent Review Organization (IRO)

5. ICA Requires: • Confidential Disclosure Protocol • 866-671-2230 - Hotline is confidential and non-retaliatory • Annual Personnel Screening • New Physician Faculty, Billing Personnel, and other health care providers prior to or at employment • Annual screening of current Faculty and staff. • Notification of Government Investigations • Annual Report – including: • Overpayments • Material Billing Deficiencies • Documentation and record retention for six years

6. ICA Requires: In the event of a breach / default the Penalties are: • $2,500/day for failure to provide reports • $2,500/day for failure to maintain CCO • $2,500/day for failure to maintain Compliance Committee • $2,500/day for failure to educate, and if the CCO and Compliance Committee are not doing their job • $1,500/day if access to information is not available to the OIG • $1,500/day for hiring an ineligible person

7. ICA Requires: Material breach of the ICA may warrant EXCLUSION from federally funded programs

8. OIG NEWS OIG Proposes To Exclude Miami Hospital from Participation in Federal Health Care Programs Inspector General Daniel R. Levinson announced today that the Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) notified Miami’s South Shore Hospital and Medical Center (South Shore) of an impending exclusion from Medicare, Medicaid, and all other Federal health care programs. Today’s action resulted from South Shore’s material breach of the terms of a corporate integrity agreement (CIA) it negotiated with OIG in 2002, as part of the resolution of a False Claims Act case against the hospital.

9. OIG NEWS OIG Excludes Miami Hospital from Participation in Federal Health Care Programs Inspector General Daniel R. Levinson announced today that the Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) is excluding Miami’s South Beach Community Hospital (South Beach), formerly known as South Shore Hospital and Medical Center, from participation in Medicare, Medicaid, and all other Federal health care programs. Today’s action resulted from South Beach’s material breach of the terms of a corporate integrity agreement (CIA) it negotiated with OIG in 2002, as part of the resolution of a False Claims Act case against the hospital. “South Beach has committed repeated and flagrant violations of its obligations under the CIA,” said Inspector General Levinson. “This exclusion sends a clear message to the provider community that the OIG will not hesitate to pursue an action against those providers that fail to abide by their integrity agreement obligations.” .

10. Compliance guidance and Corporate Integrity Agreements are being issued for all health care industry sectors (Physicians, Hospitals, Nursing Homes, Pharmaceutical Companies, DME Suppliers, etc. ) by the OIG (DHHS). Government Enforcement Efforts Healthcare fraud is the #2 priority of the Department of Justice, second only to terrorism and violent crime. Healthcare fraud is now, for the first time, a separate federal crime.

11. CMS Estimates $100 Billion In “Payment Errors” Annually

12. Government Enforcement Efforts FBI Operational Directive “With health care expenditures rising at three times the rate of inflation, it is especially important to coordinate all investigative efforts to combat fraud within the health care system. The FBI is the primary investigative agency involved in the fight against health care fraud that has jurisdiction over both the federal and private insurance programs. With more than $1 trillion being spent in the private sector on health care and its related services, the FBI's efforts are crucial to the success of the overall program.”

13. U.S. Department of Justice United States Attorney District of Nevada DIAGNOSTIC LABORATORY INDICTED FOR FRAUD & ILLEGAL KICKBACKS TO NEVADA PHYSICIANS - Estimated Loss To Insurance Companies and Medicare Is Over $20 Million – LAS VEGAS - -A California medical diagnostic testing company which operated clinics in Las Vegas, Nevada, and its two top corporate officers, have been indicted on federal health care fraud, money laundering, and tax evasion charges, announced Daniel G. Bogden, United States Attorney for the District of Nevada. SDI FUTURE HEALTH, INC. ("SDI"), a California corporation based in Westlake Village, TODD STUART KAPLAN, age 46, of Thousand Oakes, California, and JACK BRUNK, age 48, of Newbury Park, California, were indicted by the Federal Grand Jury in Las Vegas yesterday and charged with one count of Conspiracy to Commit Health Care Fraud; 124 counts of Health Care Fraud; one count of violating the Medicare Anti-Kickback statute; one count of Conspiracy to Commit Money Laundering; and 10 counts of Attempt to Evade or Defeat Tax. They face up to 20 years in prison and fines of $250,000 on each of the Health Care Fraud and Money Laundering offenses, and up to five years in prison and fines of $250,000 on the Anti-Kickback and Tax Evasion counts.

14. U.S. Department of Justice United States Attorney District of Nevada (Continued) It was further part of the scheme to defraud that the SDI defendants induced physicians, including Las Vegas physicians, to accept remuneration or "kickbacks" from SDI in exchange for referring patients to SDI labs. The remuneration took the form of: (1) assigning SDI employees [referred to as Health Service Coordinators (HSCs)] to work, free of charge, in the offices of physicians; (2) direct cash payments under the guise of medical director fees; (3) gifts of expensive sports memorabilia; and (4) assignment of fees. SDI allegedly used their HSC's to evaluate patients for sleep studies and to write prescriptions for medically unnecessary tests. The prescriptions were often written by the HSC without any evaluation of the patient's medical condition by a physician and without the presence of any signs and symptoms indicating a medical need for the sleep studies or heart monitoring.

15. U.S. Department of Justice United States Attorney District of Nevada (Continued) SDI defendants also allegedly pressured patients to make appointments at SDI clinics, and informed them that their treating physicians had ordered the sleep studies. No Las Vegas physicians are specifically charged in the Indictment; however, it is alleged that between January 1999 and January 2002, the SDI defendants entered into agreements with physicians A, B, C, D, and E, who were physicians practicing in Las Vegas, and that the agreements called for payment of kickbacks in return for referrals to SDI. During the relevant time frame, SDI treated in excess of 15,000 patients. The estimated loss to the victims is approximately $22 million. The Indictment alleges that if convicted, the defendants shall forfeit approximately $24 million to the United States, because the monies were derived from the proceeds of their offenses.

16. Department of Justice October 12 , 2005 TWO DOCTORS INDICTED IN 'RENT-A-PATIENT' SCHEME THAT BILLED INSURANCE COMPANIES FOR UNNECESSARY SURGERIES In the latest legal action targeting "rent-a-patient" scams, two medical doctors have been charged with health care fraud for allegedly performing unnecessary medical procedures on patients who were compensated with money or other benefits. A federal grand jury in Los Angeles yesterday indicted the two doctors, as well as the Bel Air Surgical Institute, on conspiracy and health care fraud charges for allegedly submitting fraudulent bills to numerous private insurance companies and for allegedly providing false patient records to support those fraudulent bills. The 17-count indictment outlines a scheme in which Bahna allegedly hired "marketers" who oversaw the recruitment of people who had private health insurance and were willing to undergo unnecessary surgical proceedures in exchange for cash or discounted cosmetic surgery procedures. The procedures performed by the doctors at the Bel Air Surgical Institute included Esophagogastroduodenscopy (EGD), colonoscopy, sinus surgeries, laparoscopy and thoracic sympathectomy, which is commonly called "sweaty palm surgery." According to the indictment, those willing to undergo the unneeded procedures were promised $300 for EGDs and colonoscopies and up to $1,200 for sweaty palm surgery. Patients were instructed by recruiters to describe false and exaggerated symptoms which were used to create medical charts used to make the surgical procedures appear to be justified.

17. GOVERNMENT & MEDICINE Court vindicates Nevada doctor in latest twist of fraud case A federal judge ruled that a physician was abiding by Medicare's advice in submitting claims for pulmonary stress tests. The government is pursuing an appeal. By Amy Lynn Sorrel, AMNews staff. Sept. 4, 2006. Wired witnesses, tapped phones and whistle-blowers. This may sound like plot features in a spy movie, but it's real life for Nevada physician R.D. Prabhu, MD. The federal government has been investigating the internist and pulmonology specialist on and off for more than 13 years. Dr. Prabhu's story just took a new turn. A federal court in July found that the government's fraud charges didn't hold up because the doctor was just following Medicare instructions. The Justice Dept. accused Dr. Prabhu of knowingly submitting unlawful bills for simple pulmonary stress tests as part of a pulmonary rehabilitation program. The government alleged that the doctor had violated the False Claims Act because the tests were not covered by Medicare and because he had failed to document their medical necessity for some patients. But the U.S. District Court for the District of Nevada found that "Dr. Prabhu has always acted in good faith in seeking to understand the government's rules ... in an area rife with confusion." The decision is a rare victory for doctors, said Robert S. Salcido, a Washington, D.C.-based attorney for Dr. Prabhu. Physicians are often forced to settle such disputes with the government, even when they believe they are acting appropriately, because the financial stakes are so high.

18. Nevada U.S. attorney given walking papersBy FRANCIS MCCABE REVIEW-JOURNAL Daniel Bogden The Bush administration has forced Daniel Bogden out of his position as U.S. attorney for the District of Nevada, Nevada's two senators said Sunday. It was unclear whether Bogden was fired or asked to resign and for what reason. Exactly when it all happened also was unknown Sunday. Repeated attempts to contact Bogden and his office were unsuccessful. The Review-Journal's phone calls to his spokeswoman, Natalie Collins, were not returned by Sunday night. But a source inside the Nevada U.S. attorney's office said Bogden was seen as indecisive, secretive and insular. Morale in the Southern Nevada office was low and that was partly Bogden's fault and partly the result of inadequate staffing and funding from the Justice Department, the source said. The Nevada U.S. attorney's office also had at least three major setbacks in Las Vegas last year. Also in February, U.S. District Judge Robert Jones dismissed charges against Dr. R.D. Prabhu, a politically active Las Vegas pulmonologist. Prosecutors had alleged that Prabhu had submitted false Medicare claims. He had faced a potential penalty of $22 million. U.S. attorney has had ups and downs while in office

19. The Department of Health and Human Services And The Department of Justice Health Care Fraud and Abuse Control Program Annual Report For FY 2005 AUGUST 2006

20. Accomplishments Overall Recoveries • During this fiscal year, the Federal Government won or negotiated approximately $1.47 billion in judgments and settlements, and it attained additional administrative impositions in health care fraud cases and proceedings. The Medicare Trust Fund received transfers of nearly $1.55 billion during this period as a result of these efforts, as well as those of preceding years, in addition to $63.64 million in federal Medicaid money similarly transferred to CMS as a result of these efforts.

21. Accomplishments (cont.) Program Accomplishments • Working together, HHS/OIG, DOJ and their law enforcement partners have brought to successful conclusion the investigation and prosecution of numerous health care fraud schemes. During FY 2005, the many significant HCFAC Program accomplishments included the following:

22. Accomplishments (cont.) Pharmaceutical Fraud • GlaxoSmithKline paid the United States $140 million to settle allegations of fraudulent drug pricing and marketing that resulted in the submission of inflated claims to Medicare, Medicaid, and other federally funded health care programs. The United States alleged that GlaxoSmithKline, one of the world’s largest pharmaceutical manufacturers, reported inflated prices for the drugs, Zofran and Kytril, knowing that those prices would be used by federal programs to set reimbursement rates. GlaxoSmithKline used the artificial spread between the reported, inflated prices and its customers’ significantly lower actual cost to purchase the drugs as a marketing tool.

23. Accomplishments (cont.) Pharmaceutical Distribution Fraud • An individual based in Las Vegas, Nevada who sold prescription drugs and controlled substances over the internet was convicted by a jury of 17 felony counts and sentenced to 120 months in prison. The defendant shipped the drugs to his customers in the United States through a German business he owned called CFF Pharma Consult. One of the drugs the defendant sold online was Flunitrazepam, commonly known as Rohypnol, or the “date rape drug.” The drugs the defendant sold were shipped from Germany to the United States through the use of forged and fraudulent documents designed to deceive employees of the United States Customs Service and the Food and Drug Administration (FDA). In addition to the ten-year prison sentence, the court ordered forfeiture of the defendant’s home valued at $285,000 because it was used to facilitate the drug offenses. A co-defendant also pleaded guilty to conspiracy to defraud and was sentenced to 37 months in prison.

24. Accomplishments (cont.) Pharmaceutical Distribution Fraud • As reported in the HCFAC Report for FY 2004, after a jury trial, a Texas pharmacist was convicted for his role in distributing hydrocodone and other controlled substances via his web-based pharmacy. The pharmacist has been sentenced to 20 years in prison. Customers had only to complete a short on-line questionnaire to receive the controlled substances. The pharmacist and his co-conspirators found doctors, paid per prescription, who were willing to sign thousands of prescriptions without ever seeing the patients. The scheme netted over $8 million in sales. This marked the first time that the kingpin statute was used to prosecute an internet pharmacy.

25. Accomplishments (cont.) Hospital Fraud • HealthSouth Corporation paid the United States $327 million to settle allegations of fraud against Medicare and other federally insured health care programs. The United States alleged that HealthSouth, the nation’s largest provider of rehabilitative medicine services, engaged in three major schemes to defraud the government. The first, comprising $170 million of the settlement amount, resolved HealthSouth’s alleged false claims for outpatient physical therapy services that were not properly supported by certified plans of care, administered by licensed physical therapists, or for one-on-one therapy as represented. Another $65 million resolved claims that HealthSouth engaged in accounting fraud which resulted in overbilling Medicare on hospital cost reports.

26. Accomplishments (cont.) Dialysis Fraud • Gambro Healthcare paid the United States $310 million to resolve allegations concerning the submission of false claims to Medicare and Medicaid in connection with dialysis services. The allegations against Gambro included: providing home dialysis patients with equipment and supplies through a sham durable medical equipment (DME) company to increase Medicare reimbursement; billing for phantom supplies; billing for ancillary medications and services that were not medically necessary – a requirement for Medicare reimbursement; and paying kickbacks to physicians for referring patients to Gambro clinics in violation of the Medicare Anti-Kickback Statute.

27. Accomplishments (cont.) False Claims by a Research University • The University of Alabama at Birmingham and two related entities will pay the United States $3.39 million to settle allegations that they violated the False Claims Act (FCA) with respect to claims submitted in connection with the school’s health science research activities. The settlement resolves allegations that, in completing applications for federal health science research grants, the school overstated the percentage of work effort that the researchers were able to devote to the grant. It was also alleged that the university, and the entity through which its medical school faculty provide clinical services, unlawfully billed Medicare for clinical research trials that were also billed to the sponsor of research grants.

28. Accomplishments (cont.) Physician Fraud • A Virginia physician specializing in pain management was sentenced to 25 years imprisonment and ordered to pay a $1 million fine for his conviction on drug distribution charges and drug trafficking that resulted in one death and serious injuries to others. During the six-week trial, the Government demonstrated that he performed perfunctory exams on patients, and then facilitated the patients’ demand for excessive amounts of controlled substances, including OxyContin. Evidence showed that the physician knew that patients were abusing the controlled substances, or selling them to others.

29. The Difference Between Fraud and Abuse • Fraud is an intentional deception or misrepresentationMisrepresentation of services – upcoding, miscoding, unbundlingBilling for services not medically necessaryKickbacksFalsifying recordsFiling inappropriate cost reports • Abuse – Lacks intentRecording diagnosis codes improperlyRecording dates of services provided incorrectlyAdjusting bad debts improperlyAdjusting the depreciation of assets that have been fully depreciated

30. The Office of Inspector General Clarifies “Fraudulent vs. Erroneous” First: The OIG believes that the great majority of medical professionals are working ethically to render high quality care and to submit proper claims to Medicare.

31. The Office of Inspector General Clarifies “Fraudulent vs. Erroneous” Second: Under the law, physicians are not subject to civil or criminal penalties for innocent errors, or even negligence. The primary enforcement too, the civil False Claims Act, covers only “actual knowledge, reckless disregard, or deliberate ignorance.

32. The Office of Inspector General Clarifies “Fraudulent vs. Erroneous” Third: Even the best physicians and their staffs make billing mistake and errors through inadvertence or negligence. When billing errors, honest mistakes, or negligence result in erroneous claims, the physician practice will be asked to return the funds erroneously claimed but without penalties.

33. Billing for services not rendered or not documented Providing medically unnecessary services Billing for services rendered but not covered Upcoding “DRG creep” Unbundling Billing outpatient services for inpatient stays (72-hour rule) Teaching physician and resident/supervision requirements Duplicate or erroneous billing False cost reports Billing for discharges in lieu of transfer Contractual Agreements between Hospitals and Physician not grounded in fair market valuation Risk Areas of OIG Concern These problems can be caused by intentional or unintentional behavior

34. Risk Areas of OIG Concern (cont.) • Patients’ freedom of choice • Credit balances -- failing to refund • Hospital incentives that violate anti-kickback laws and regulations • Joint ventures • Stark self-referral law violations • Knowing failure to provide covered services or necessary care to HMO members • Patient “dumping”

35. GAO Study Recently, GAO made 300 test calls to 34 call centers operated by Medicare Carriers throughout the United States. GAO concluded that only 4% of the responses received were complete and correct.

36. Anatomy of a Healthcare Fraud Investigation CASE SOURCES OIG US Postal State Medicaid Agency FBI Treasury Competitor DEA Lawyers Employee IRS Patient Neighbor Carrier Ex-Spouse Whistleblower 1-800-HHS-TIPS Referred for Prosecution HHS OIG Civil Monetary Penalties Permissive Exclusion Mandatory Exclusion Criminal Investigation Civil Investigation U.S. Attorney’s Office Civil Investigative Demands Grand Jury Indictment File False Claims Act Complaint Health Care Fraud Task Force Judgment/Settlement Conviction

37. Investigative Techniques Computer Cross-Matching: • UPIN #’s • Date of Death • E&M Levels • Credit Card Activity / Reports • GPS/Parking Gates • Interstate Passes • Service Billed/Patient Condition • OR Logs/Anesthesia Roster • Generic v. Name Brand (ARCOS) • ALS vs. BLS

38. Investigative Techniques (cont.) • “Demand” Letters • Body Wires • Subpoenas • Search Warrants • Grand Jury Testimony • Wire Taps • Interviews • Surveillance • “Undercover” Patients

39. Investigative Techniques (cont.) • The following types of reviews may require a provider to supply documentation which can lead to further investigation.

40. Focused Medical Review (FMR) • In recent years carriers have been required to focus on patterns of unnecessary services and improper or incorrect billing. In order to achieve this, carriers have formed Focused Medical Review (FMR) units. • The objectives of these FMR units are to maximize program protection and to conduct a cost-effective medical review. This translates to concentration of review efforts on Medicare bills and claims that are most likely to be for services that are unnecessary.

41. Focused Medical Review (FMR) • Potential problems are identified from bi-annual CMS reports generated from the national history database that compare our carrier frequencies against national frequencies. • The FMR units analyze these procedures where there are frequencies that are grossly out of line with the national statistics. Reviews that uncover actual problems are referred to the Benefit Integrity Support Center (BISC).

42. CMRA consists primarily of pre-pay chart reviews of randomly selected medical records. Edits are established on any codes or procedures that have been specifically targeted. Documentation must support the service code billed, the level of service billed, and the reasonableness and necessity of the service. Complex Medical Review Audits (CMRA)

43. Pre-payment review of medical records can be, but are not limited to: Specifically targeted or abused CPT codes Randomly selected providers seeking new UPIN numbers Providers who seem to be billing incorrect code(s) Providers who appear to be abusive because they are either not rendering the service they bill for, or they consistently bill for a higher level service than provided. Complex Medical Review Audits (CMRA)

44. Comprehensive Medical Review (CMR) • Comprehensive Medical Review (CMR) consists of postpayment medical reviews of a provider’s claims and medical documentation. • A CMR may be initiated based on historical data collected during an analysis of Medicare claims. Often a CMR requires a statistical sampling of claims and allows for projection of sample overpayments to the universe of claims.

45. Comprehensive Medical Review (CMR) The following are some of the reasons a provider may be reviewed in a postpayment CMR: • Failure to submit requested medical documentation • Over utilization • Continuous improper coding • Submitting altered documentation • Alerts from other carriers, intermediaries, peer review organizations, or internal carrier payment staff referrals • Non-compliance with provider enrollment or certification, physician orders, or similar requirements

46. Carrier and FI Reviews may also be the result of a Random Audit. These are usually triggered by programs such as: Comprehensive Error Rate Testing (CERT) The CERT program measures the error rate for claims submitted to Carriers, Durable Medical Equipment Regional Carriers (DMERCs), and Fiscal Intermediaries (FIs). The CERT methodology includes: Randomly selecting a sample of approximately 120,000 submitted claims Requesting medical records from providers who submitted the claims Reviewing the claims and medical records for compliance with Medicare coverage, coding and billing rules

47. Recovery Audit Contractors (RAC) CMS provides the following overview of the RAC process: RACs receive a data file from CMS containing National Claims History (NCH) data about claims that have been processed in the appropriate state based on the RAC contract. The RACs will receive a data file updating the NCH data on a monthly basis. Assuming that claims have not been suppressed because of an ongoing post payment medical review investigation, an ongoing fraud or benefit integrity investigation or a potential criminal investigation, or inclusion in the CERT sample, the RAC will continue with the identification and recoupment process.

48. Program for Evaluating Payment Patterns Electronic Report (PEPPER) • PEPPER is an electronic data report containing hospital-specific Medicare claims data statistics for target areas that have been identified by the Centers for Medicare & Medicaid Services (CMS) as at high risk for payment errors. These target areas include one-day stays, hospital readmissions and several DRGs that have historically been associated with payment errors. • PEPPER contains data for the most recent three full fiscal years and the current fiscal year to date. The data in PEPPER are updated quarterly.

49. Data Mining Utilized By Medicaid Fraud Control Units • MFCUs have joined with CMS to uncover billing anomalies by comparing Medicaid and Medicare bills to see if a provider billed both programs for the same service • Pilot Medicare-Medicaid (Medi-Medi) data match to identify time bandits looking to identify providers who bill the programs for more than 24 hours a day • Program was launched in CA in 2001 and it saved $58 million

50. Health Care Fraud (18 U.S.C. § 1347) It is a crime to knowingly and willfully execute (or attempt to execute) a scheme to defraud any health care benefit program, or to obtain money or property from a health care benefit program, through a false representation. This law applies not only to federal healthcare programs but to most other types of benefit programs, such as commercial health insurance plans.