Law & Ethics

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Chapter 14:
Health Care Fraud
and Abuse

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Introduction

• Billions of dollars are lost from fraud and abuse in health care
• Federal and state legislatures have
  taken action:
• Additional laws to address the problem
• Increased enforcement efforts
• Increased scrutiny from private insurers as well as the news media
• HIM role to mange many risk areas

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Fraud and Abuse

• Defined
• False misrepresentation of facts
• Made knowingly and willfully
• Relied upon to another’s detriment
• May be in the form of words or conduct
• In health care, provider or organization
• Misrepresents facts to government or third party payer
• Facts appear legal and customary

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Fraud and Abuse: Forms

• False claims and billing practices
• Upcoding:
• Billing for higher level of service than what was actually rendered and receiving higher rate
• Unbundling
• Submitting separate bills for each component of procedure to get higher reimbursement
• Stark violation: referral of patient to a facility in which provider has financial interest
• Kickbacks: referral of patient to another provider in exchange for compensation

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Fraud and Abuse:
Major Laws

• False Claims Act (FCA)
• Enacted during Civil War to protect Union government from paying for products and services not provided
• Violation
• To knowingly submit a false or fraudulent claim to government in order to get paid
• Intentional act: knew or should have known claim was false
• Healthcare: making false claims to government
• Medicare and Medicaid

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Fraud and Abuse:
Major Laws

• Qui tam actions
• FCA claim typically brought as qui tam action
• Allow private plaintiffs (relator) to sue on behalf of U.S. government
• Will receive a portion of recovery if successful
• Relator files suit; government may intervene
• Whistleblowers:
• Relator who is current or former employee
• Has knowledge about fraud and abuse

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Fraud and Abuse:
Major Laws

• Anti-kickback statutes
• Prohibits payment in exchange for referrals of federally payable services (Medicare)
• State laws also prohibit payment for referrals for services of managed care and insurers.
• Paying a physician for referrals violates state and federal law
• Below cost testing in exchange for referrals
• Partnerships allowing for profit sharing
• OIG lists exceptions – “safe harbors”

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Fraud and Abuse:
Major Laws

• Physician self-referral prohibitions (Stark)
• Stark I prohibits referral of Medicare patients
• To clinical lab in which physician or a member of his family has financial interest
• Stark II extended prohibition broadly to include other designated health services
• Durable medical equipment, occupational and physical therapy, home health, hospital services

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Fraud and Abuse:
Major Laws

• Mail and wire fraud statutes
• Prohibit use of postal service or commercial wire services to advance a fraud
• Business practices involve routine use of mail or wire
• Organization involved in fraud may also be found to violate these laws
• Violation is a felony: fine, imprisonment,
  or both

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Fraud and Abuse:
Major Laws

• Civil money penalty law
• Federal government may apply this law to other violations
• Department of Health and Human Services
• Permitted to recover money damages
• For false or fraudulent claims
• Health care provider must make restitution to government, plus
• Fines up to three times the amount of damages
• Additional fines, not to exceed $10,000

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Fraud and Abuse:
Major Laws

• Permissive and mandatory exclusion from Medicare/Medicaid program participation
• Federal statutes
• Criminal or other program violations may result in exclusion of provider or organization from participation in
• Medicare
• All other federally financed health care programs
• Significant deterrent: not economically feasible to forgo service to Medicare beneficiaries

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Fraud and Abuse:
Major Laws

• HIPAA includes focus on fraud and abuse
• Modifies civil money penalty law to include
• Upcoding and claims for medically
  unnecessary services
• Waiver of co-insurance to influence patients
• Submitting claims after being excluded from Medicare
• Criminalizes disclosure of individually identifiable health information
• Where intent is personal gain and malicious harm

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Fraud and Abuse:
Major Laws

• HIPAA: enhanced resources to combat fraud
• Fraud and Abuse Control Program
• Operated with DOJ and OIG
• Investigate health care related services
• Medicare Integrity Program
• Contracts with private companies to assist in protection
  from fraud
• Beneficiary Incentive Program
• Encourages patient reporting of suspected fraud/abuse
• Health Care Fraud and Abuse Data Collect Program
• Database in coordination with NPDB

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Fraud and Abuse:
Major Laws

• Deficit Reduction Act of 2005
• Mandates compliance programs for some institutions
• Requires education of staff on administrative remedies to FCA
• Adds resources to combat fraud
• Provides financial incentives to states to adopt laws similar to FCA

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Fraud and Abuse:
Major Laws

• American Recovery and Reinvestment Act of 2009 (ARRA)
• Strengthens enforcement of HIPAA
• Business associates covered by HIPAA rule
• Must meet administrative, technical, and physical safeguard requirements
• Subject to civil and criminal penalties for violation
• Clarifies who is accountable for wrongful disclosure
  of PHI
• Individuals and health care entities may be prosecuted

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Fraud and Abuse:
Law Enforcement Agencies

• Shared responsibility to prosecute
• Office of Inspector General (OIG)
• Part of Department of Health and
  Human Services
• Authorized to conduct investigations of fraud
• Civil, administrative, and criminal Investigations
• Associated with federal Medicare and Medicaid
• OIG initiatives have been very successful
• Recover alleged overpayments from
  improper claims

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Fraud and Abuse:
Law Enforcement Agencies

• OIG’s strong approach criticized
• Concerns that sometimes error is an honest mistake and not intentional fraud
• DHHS created preventative programs
• Operated by CMS
• Promote use of correct coding methodologies
• Program to reduce payment error rates
• With OIG, publish guidelines to clarify regulations
• CMS website contains materials

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Fraud and Abuse:
Law Enforcement Agencies

• Federal Bureau of Investigation (FBI)
• Widest responsibility to investigate health care fraud
• Authority extends beyond any one program
• May work with OIG, DCIS, postal service and CMS
• Investigates public or whistleblower complaints
• State Attorney Generals may also bring civil actions related to fraud and abuse
• Investigations extend over several years
• Obtain documents through subpoenas/search warrant
• Interviews

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Fraud and Abuse:
Law Enforcement Agencies

• Health information manager role
• Duty to cooperate with investigation
• Obligation to notify legal counsel of
  agent’s requests
• Legal counsel will guide response
• Completion of investigation
• Result may be finding of wrong doing
• Agency work with U.S. Attorney to prosecute
• To avoid trial, settlement may be made

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Fraud and Abuse:
Compliance Programs

• Compliance efforts build a culture that promotes adherence to laws
• Programs
• Establish effective internal controls
• Promote prevention, detection, and resolution of acts that do not comply with law
• Ensure that federal, state, and private health plan program requirements are met

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Fraud and Abuse:
Compliance Programs

• May be grounded in
• Ethics-based approach
• Compliance is the right thing to do
• Encourage good behavior
• Demonstrates commitment to responsible corporate conduct
• Minimum legal requirements approach
• Conform to laws to avoid punishment
• Fear of getting caught

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Fraud and Abuse:
Compliance Programs

• No matter the approach, effective program
• Reduces exposure to penalties/sanctions
• Improves provider efficiency and effectiveness
• Includes development of centralized mechanism to distribute legal and regulatory directives
• HIM role to ensure compliance through
• Focus on documentation processes
• Proper use of diagnostic and procedural codes
• Responsible management of health information

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Fraud and Abuse:
Compliance Programs

• Key elements
• Written standards of conduct
• Designation of Chief Compliance Officer
• Education and training programs
• Process for receiving complaints of violations
• Develop system to respond to allegations of improper acts and enforce disciplinary actions
• Audit and evaluate to monitor compliance
• Investigate and correct problems

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Fraud and Abuse:
Compliance Programs

• Practice of corporate compliance
  usually voluntary
• Certain requirements are mandatory
• Deficit Reduction Act requires educational program if receive $5 million or more
  from Medicare
• Red Flag Rules (FTC) require programs to prevent, detect, and respond to identify theft
• Corporate integrity agreements

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Fraud and Abuse:
Compliance Programs

• Corporate integrity agreements
• Financial settlements with health care providers accused of fraud and abuse
• Specify rules of conduct to be followed to remedy wrong doing
• Monitoring and reporting requirements
• More stringent and expensive than compliance program

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Fraud and Abuse:
Compliance Programs

• Technology to combat fraud
• Advanced analytics software
• Interoperable electronic exchange
  between providers
• Enables examination of data to detect fraud
• Validates claim before making payment
• Automated coding software
• Assigns correct code based on guidelines and reporting rules
• Prevents submission of fraudulent codes
  for payment