AB IN WEEK 7

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Chapter 18: Corporate Compliance

Fundamentals of Law for Health Informatics and Information Management, Third Edition

Compliance

Refers to adherence to federal statutes and regulations designed to

Prevent unjust financial enrichment

Patient privacy breaches by healthcare providers or organizations

Fraud and Abuse

Fraud

A false representation of fact

A failure to disclose a fact that is material (relevant) to a healthcare transaction

Damage to another party that reasonably relies on the misrepresentation or failure to disclose

Fraud and Abuse (continued)

Abuse

Inconsistent handling of sound fiscal, business, or medical practices resulting in

Unnecessary costs to the program

Improper payment

Services that fail to meet professionally recognized standards of care or are medically unnecessary

Services that directly or indirectly result in adverse patient outcomes or delays in appropriate diagnosis or treatment

Most Common Types of Fraud

Billing for services that were never rendered

Billing for more expensive services or procedures than were actually provided—upcoding

Performing medically unnecessary services

Misrepresenting noncovered treatments as medically necessary

Falsifying a patient’s diagnosis to justify tests or procedures

Unbundling

Billing patients more than the copay amount for services

Accepting kickbacks for patient referrals

Waiving patient copays or deductibles and overbilling the health plan (NHCAA)

To Combat Fraud and Abuse

Revenue cycle management

Supervision of all administrative and clinical functions that contribute to the capture, management, and collection of patient service revenues

Role of documentation

Documentation must support the billing

Claims, requests for reimbursement, and supporting documentation must be complete and accurate

Reflect reasonable and necessary services ordered by an appropriately licensed medical professional

Key Federal Fraud Statutes

False Claims Act (FCA) (31 USC 3729)

Primary litigation tool for combating fraud, contains both criminal and civil provisions

Qui tam (whistleblower)

Private persons known as relators may enforce the FCA by filing a complaint, under seal, alleging fraud committed against government.

Provides protection to qui tam relators who are discharged, demoted, suspended, threatened, harassed, or in any other way discriminated against

False Claims Act (FCA) (31 USC 3729)

What constitutes a false claim?

Must establish that the claim was false or fraudulent

Furnishing inaccurate or misleading information

FCA has been extended to cover quality of care cases

False Claims Act (FCA) (31 USC 3729)

The Knowing Standard

Provider must have knowingly submitted the false claim

FCA defines “knowing” and “knowingly” to mean that a person:

Has actual knowledge of falsity of information

Acts in deliberate ignorance of truth or falsity of information

Acts in reckless disregard of truth or falsity of information

Key Federal Fraud Statutes

Fraud Enforcement and Recovery Act of 2009: Revisions to FCA

Expanded potential for liability under FCA and also expanded government’s investigative powers

FCA penalties apply to “any person who knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval,” regardless of to whom the claim was made

Definition of a “claim” expanded to broaden the types of payments that fall within the scope of FCA

Fraud Enforcement and Recovery Act of 2009: Revisions to FCA

Established that FCA penalties apply to “any person who knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim”

Expanded antiretaliation protections for whistleblowers

Expanded US attorney general’s authority to issue civil investigative demands

Broadened the federal government’s authority to share documents obtained through subpoena with qui tam relators and other parties

Patient Protection and Affordable Care Act: Revisions to the FCA

Known as the health reform bill

Further amends the FCA by allowing private individuals more successful in filing false claims lawsuits

Broadened the definition of “original source” to allow public disclosure defense to be overcome if individual bringing suit possesses knowledge that adds to publicly disclosed information

Clarified retention of overpayments

Federal Anti-Kickback Statute (42 USC 1320a-7b)

Establishes criminal penalties for individuals and entities that knowingly and willfully offer, pay, solicit, or receive remuneration in order to induce business for which payment may be made under any federal healthcare program

Remuneration: Defined broadly to include the transfer of anything of value, directly or indirectly, overtly or covertly, in cash or in kind

Violation constitutes a felony punishable by a fine of up to $25,000, imprisonment for up to five years, or both

Clearly prohibits payments for patient referrals

Federal Anti-Kickback Statute (42 USC 1320a-7b) (continued)

Statutory exceptions created to protect legitimate business arrangements

Discounts that are properly disclosed and reflected in the costs claimed

Payments by an employer to an employee for provision of covered items and services

Certain risk-sharing arrangements

Waivers of coinsurance amounts in connection with certain federally qualified healthcare centers

Federal Anti-Kickback Statute (42 USC 1320a-7b) (continued)

Safe harbors: Activities that are not subject to prosecution and protect the organization from civil or criminal penalties

Investments in certain large or small entities

Investments in entities in underserved areas

Space and equipment rental

Common theme: To protect certain arrangements in which commercially reasonable items or services are exchanged for fair market value compensation

Safe Harbor for EHRs

Are intended to protect beneficial arrangements that would eliminate perceived barriers to the adoption of EHRs without creating undue risk that the arrangements might be used to induce or reward the generation of Federal healthcare program business (HHS OIG 2006, 2013a).

Figure 18.1 lists the safe harbors for EHRs

Civil Monetary Penalties (CMP)

Provides administrative remedies

Authorizes secretary and inspector general of HHS to impose CMPs, assessment, and program exclusions on individuals and entities whose wrongdoing caused injury to HHS programs or their beneficiaries

Up to $50,000 per violation and treble damages

The Federal Civil Penalties Inflation Adjustment Improvements Act of 2015, part of the Bipartisan Budget Act (Pub. L. 114-74), required federal agencies to update the level of their civil monetary penalties to account for inflation, with automatic annual adjustments thereafter.

Federal Physician Self-Referral Statute (the Stark Law)

Prohibits physicians from ordering designated health services for Medicare (and to some extent Medicaid) patients from entities with which the physician, or an immediate family member has a financial relationship

Exclusions

Services that are reimbursed by Medicare as part of a composite rate

Certain referral relationships are permitted, such as a request by a pathologist for clinical diagnostic laboratory tests.

Physician services exception

In-office ancillary services

Financial arrangements between academic institutions and their affiliated hospitals and physicians

Figure 18.2 lists the designated health services under the Stark Law

Figure 18.3 lists Stark Law exceptions to the referral prohibition

pp. 448 of the text lists changes based on the 2016 Medicare fee schedule to add 2 new exceptions

Sherman Antitrust Act

Illegal to restrain trade through contracts or conspiracies, and they prohibit price fixing and mergers that lessen competition

Federal Trade Commission (FTC) and the Department of Justice enforce these laws

Healthcare mergers and joint ventures and credentialing and peer review processes must be carefully handled to avoid anti-trust issues

HIPAA—Expanded OIG

Sanction authorities

Application of CMP provisions beyond those funded by HHS to include all federal healthcare programs (e.g., Tricare, Veterans Affairs, and Public Health Service)

Strengthened the OIG’s CMP penalties for violations under Medicare and state healthcare programs

Deficit Reduction Act of 2005

Transitioned compliance programs from voluntary to mandatory

Contains employee education about FCR provision

Written policy must provide

Detailed information about the FCA

Administrative remedies for false claims and statements

Any state laws pertaining to civil or criminal penalties for false claims and statements

Whistleblower protections

Detailed provisions regarding the entity’s policies and procedures for detecting and preventing fraud, waste, and abuse

Employee education provision, which requires any entity that annually receives or makes at least $5 million in Medicaid payments to establish written policies for all employees of the entity (including management) and for any contractor or agent of the entity

Patient Protection and Affordable Care Act (ACA)

Expanded funding of enforcement efforts

Expansion of RACs to Medicare Part C & D and Medicaid

Added penalties

Requiring Medicare and Medicaid overpayments to be returned in 60 days

More information on pages 450-452 if you want to cover more detail

OIG List of Excluded Individuals and Entities

Medicare fraud

Patient abuse or neglect

Felony convictions related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of a healthcare item or service

Felony convictions for unlawful manufacture, distribution, prescription, or dispensing of controlled substances

OIG has the discretion to impose exclusions for other reasons

High-Risk Areas for Potential Fraud and Abuse

Billing for noncovered services

Altered claim forms

Duplicate billing

Misrepresentation of facts on claim form

Failing to return overpayments

Unbundling

Billing for medically unnecessary services

Overcoding or upcoding

Billing for items or services not rendered

False cost reports

Healthcare Fraud and Abuse Control (HCFAC) program

Goal to coordinate state, federal, and local fraud and abuse activities

Healthcare Fraud Prevention Partnership (HFPP) goal is to be proactive in identifying fraud

Healthcare Fraud Prevention and Enforcement Action Team (HEAT)

CMS—Center for Program Integrity

Fraud Prevention System (FPS)

Comprehensive Error Rate Testing (CERT) Program

MACs

Program Integrity Contractors

Role of Department of Justice (DOJ)

Root out fraud and safeguard taxpayers from illegal conduct

Works in collaboration with a number of other federal agencies to investigate and prosecute fraudulent activities

Role of the Office of the Inspector General (OIG)

OIG office: Responsibility to report program and management problems to both the HHS Secretary and Congress, along with recommendations to correct them.

Annual OIG Work Plan outlines new and ongoing review activities

Fraud alerts and advisory opinions

Corporate Compliance Programs

Evolved from 1991 US Sentencing Commission’s Federal Sentencing Guidelines

Fines and penalties reduced to organizations found guilty of fraud if organization has a fraud prevention and detection program in place

Helps organizations identify problems and improve performance and avoid a corporate integrity agreement (program imposed by government with oversight and outside expert involvement)

Program requires a compliance officer: Responsible for overseeing processes that promote an organization’s ethical business practices and its conformity to federal, state, and private payer program requirements

Corporate Compliance Programs

Hospitals

Clinical laboratories

Home health agencies

Third-party medical milling companies

Durable medical equipment providers

Hospices

Medicare+Choice organizations

Nursing facilities

Ambulance suppliers

Individual and small group physician practices

Pharmaceutical manufacturers

Recipients of US Public Health Service (PHS) research awards

Part D plan sponsors (included in the Medicare Prescription Drug, Improvement and Modernization Act of 2003)

Who should have compliance programs place?

Guidelines offer Seven Steps for an Effective Compliance Program

Establish compliance standards and procedures that are reasonably capable of reducing criminal conduct

Assign responsibility to oversee compliance with the standards and procedures to specific individual(s)

Use due care to avoid delegation of substantial discretionary authority to an individual

Communicate the standards and procedures to all

Achieve compliance with the standards through monitoring and auditing

Enforce standards through appropriate disciplinary mechanisms

Respond appropriately to any offense detected to prevent similar offenses in the future

Figure 18.5 in text

Elements of a Corporate Compliance Program

Compliance programs should be tailored specifically to individual organization but should at least include elements that address

Corporate code of conduct

Policies and procedures (practice standards)

Education and training

Auditing and monitoring

Offense detection and corrective action initiatives

Enforcing disciplinary standards through well-publicized guidelines