August 22, 2016

An anesthesiologist recently received a several-year prison sentence for prescribing controlled substances without a legitimate medical reason. One of this physician’s patients died from taking hydrocodone, which the physician had prescribed for no legitimate medical purpose.

This is an extreme case involving criminal behavior. Still, any allegation of Medicare or Medicaid fraud or abuse surely ranks at the top of an anesthesiologist’s—any physician’s--list of nightmare scenarios. It behooves anesthesiologists, as well as nurse anesthetists and anesthesia practice managers, to know the “red flags” of fraud and abuse that could lead to civil, criminal or enforcement liability. Failure to understand current laws or how to take the appropriate steps could expose you to risk without your even realizing it.

Did you know, for example, that the Affordable Care Act (ACA) requires physicians to establish a compliance program and to designate a compliance coordinator in their practices? Or that the ACA established an Open Payments System that requires pharmaceutical and medical device manufacturers to report any payments they have made to professional practitioners, and that this data is available on the internet?

The Centers for Medicare and Medicaid Services (CMS) has published a 20-page booklet, Avoiding Medicare Fraud & Abuse: A Roadmap for Physicians , which offers physicians a primer on current laws, along with a compendium of resources for finding assistance with problems and answers to questions, information on reporting suspected fraud and abuse, and links to educational videos and other publications and materials.

Federal Laws

In brief, physicians should know about the following fraud and abuse laws:

The Federal False Claims Act (FCA)—imposes civil liability for knowingly submitting or causing the submission of a false or fraudulent claim. Civil penalties can include fines up to three times the amount of damages sustained by the government and an additional charge of up to $21,563 per false claim. Criminal penalties may include fines, imprisonment or both.

According to the United States Department of Justice (DOJ), of the $3.5 billion recovered through the FCA in 2015, more than half--$1.9 billion--came from the healthcare sector. Since 2009, $16.5 billion have been recovered in healthcare fraud and returned to federal healthcare programs. In 2015, hospitals were involved in nearly $330 million in settlements and judgments. Nearly 500 hospitals paid settlements totaling $250 million for allegedly implanting cardiac devices in Medicare patients contrary to CMS criteria and/or without the involvement of a cardiologist.

In an article in Becker’s Hospital Review, Brian Roark of Bass, Berry & Sims highlighted some of the key factors that are likely to continue to play a role in FCA outcomes. Among others, these include the use of extrapolation, which allows the government to extrapolate findings from statistically significant samples of claims to similar claims for payment, a method that he believes raises questions of fairness from the physician’s perspective; and physician compensation, which was the focus of cases against North Broward Hospital District and Adventist Health. (See below for more information.) In the North Broward case, a physician whistleblower alleged that the health system tracked the monetary value of physician referrals and pressured other physicians to maintain referral volume.

The Overpayments Rule, mandated by the ACA and discussed in depth in our eAlert of February 22, 2016, requires an entity to report an overpayment from the state or federal government within 60 days of the date on which the overpayment is identified. In 2011, a physician brought suit against his employer, Continuum Health, regarding 900 claims that had possibly been submitted in error. It took the health system two years rather than the required 60 days to return the overpayments. The 2015 ruling by federal district court in New York City reinforces that an overpayment is identified from the time a healthcare provider has discovered or been notified of an overpayment or should have discovered an overpayment through “reasonable diligence.”

As stated in the eAlert, “Compliance with the new regulations explaining the requirement is important because physicians who do not meet the 60-day deadline could be subject to False Claims Act or Civil Monetary Penalties Law liability (treble damages plus $11,000 per claim, civil monetary penalties, and exclusion from the Medicare and Medicaid programs). CMS stresses that all providers and suppliers are subject to the statutory requirements of the ACA and could face potential liability even if the conduct falls outside the scope of the final rule.” Further, “The physician cannot rely on the ‘ostrich defense.’ CMS specifies in its commentary that ‘If the requirement to report and return overpayments only applied to situations where providers or suppliers had actual knowledge of the existence of an overpayment, then these entities could easily avoid returning improperly received payments and the purpose of the section would be defeated.’”

The Anti-Kickback Statute (AKS)—makes it unlawful for a physician to knowingly and willfully offer, pay, solicit or receive remuneration in exchange for referrals and services reimbursable by federal programs. Arrangements that satisfy safe harbor regulations may not be subject to the statute.

According to an article in Health Care Law Today, a blog published by Foley & Lardner LLP:

The AKS has broad application to all types of arrangements involving physicians. One reason for this is that, under the statute, the term referral doesn’t have the traditional medical practice meaning (i.e., sending a patient to a specialist or sub-specialist for a second opinion or management of a specific problem). It has perhaps the broadest conceivable meaning that includes traditional referrals but also recommending, purchasing, leasing, ordering or arranging for any good, facility, service or item for which payment may be made in whole or in part by a federal health care program. All things physicians do on a daily basis on their patients’ behalf.

The Physician Self-Referral Law (Stark Law)—prohibits a physician from making referrals for certain Medicare and Medicaid services to an entity in which the physician or an immediate family member has an investment/ownership interest or compensation agreement. Services provided in violation of the Stark Law are not reimbursable by Medicare or Medicaid.

Settlements for Stark Law violations were paid in 2015 by Adventist Health System ($115 million, including allegations of miscoding to obtain higher Medicare and Medicaid reimbursements), North Broward Hospital District ($69.5 million for allegedly providing compensation to nine employed physicians that exceeded the fair market value of their services), and Columbus Regional Healthcare System and Dr. Andrew Pippas ($25 million plus contingent payments up to an additional $10 million for allegations of submitting claims that misrepresented services provided).

In November of last year, HHS issued several changes and exceptions to the Stark Law. Discussed in National Law Review, these include the following:

• A new “assistance to compensate a nonphysician practitioner” exception, which allows remuneration from a hospital to a physician to recruit a physician assistant, nurse practitioner, clinical nurse specialist, certified nurse midwife, clinical social worker or clinical psychologist
• A new “timeshare arrangements” exception, covering use of premises, equipment, personnel, items, supplies or services
• Clarification on the one-year term requirement for office space rental, equipment rental and personal service arrangements exceptions
• Clarification regarding “split bill” arrangements, which notes that split bill arrangements do not involve remuneration between physicians and health services entities for items and services such as examination rooms, nurses and supplies

The Criminal Health Care Fraud Statute—prohibits a physician from knowingly and willfully executing, or attempting to execute, a scheme for the delivery of or payment for healthcare services to defraud a healthcare benefits program.

On June 22, DOJ announced the largest sweep in history by the Medicare Fraud Strike Force, an investigation that led to criminal charges against 301 individuals in 36 federal districts, including 61 physicians, nurses and other licensed medical professionals, for alleged participation in schemes involving approximately $900 million in fraudulent billings.

According to a DOJ press release, the defendants “allegedly participated in schemes to submit claims to Medicare and Medicaid for treatments that were medically unnecessary and often never provided. In many cases, patient recruiters, Medicare beneficiaries and other co-conspirators were allegedly paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could then submit fraudulent bills to Medicare.”

The Exclusion Statute—requires the OIG to exclude from participating in federally-funded healthcare programs any physician who has been convicted of felony Medicare fraud or any other Medicare-related offense; patient abuse or neglect; other healthcare-related fraud, theft or other financial misconduct; or unlawful manufacture, prescribing or dispensing of controlled substances. Exclusions can also be imposed by OIG for misdemeanor healthcare fraud, controlled substance distribution and other types of convictions.

If passed, the Fighting Medicare Fraud Act of 2016, (H.R. 5267) introduced on May 17, 2016 by Representatives Lois Frankel (D-Fla.) and William Keating (D-Mass.) would expand the OIG’s authority to exclude from participation in federal programs the owners, officers and managing employees of sanctioned providers. The bill reflects the federal government’s efforts to hold individuals as well as organizations responsible for fraud.

A memo issued last September by Deputy Attorney General Sally Quillian Yates outlines the DOJ’s efforts to hold individuals accountable for corporate wrongdoing. The memo states: “Both criminal and civil corporate investigations should focus on individuals from the inception of the investigation. . . Because a corporation acts only through individuals, investigating the conduct of individuals is the most efficient and effective way to determine the facts and extent of any corporate misconduct.” The memo also states that companies must provide the names of individuals involved in the fraud, regardless of their position within the company, in order to be eligible for cooperation credit.

The Civil Monetary Penalties Law—authorizes penalties for healthcare fraud violations ranging from $10,000 to $50,000 per violation. Penalties can also include assessments of up to three times the amount claimed for services or the amount of remuneration offered, received, solicited or paid.

It is in a physician’s best interest to screen potential employees and contractors to ensure they have not been excluded from federal health programs, according to the 2015 CMS Laws Against Healthcare Fraud Resource Guide. According to the publication, a physician could be subject to CMP liability if the employee who has been excluded provides services payable by a federal program.

Open Payments Program

The new CMS Roadmap for Physicians also contains an overview of the Open Payments Program, which requires pharmaceutical, medical device and other companies to publicly report their gifts and payments to physicians. Mandated by the ACA, the public reporting of this data is part of an effort to increase the transparency of the relationships between physicians and teaching hospitals and drug and medical equipment and device manufacturers. Although physicians are not required to submit information themselves to the Open Payments database, CMS encourages physicians to track their own payments in order to ensure the integrity of the Open Payments data and offers a number of apps to assist with tracking.

According to CMS data, reported in an article in Modern Healthcare, approximately 620,000 physicians and 1,100 teaching hospitals received $7.52 billion in payments and ownership and investment interests in 2015 (an increase from the 2014 total of $7.49 billion).

The program has drawn criticism from the American Medical Association and other organizations for, among other things, not implementing sufficient methods to ensure the accuracy of the data submitted by manufacturers. CMS is accepting written comments about the program through September 6 and held an Open Door Forum on August 2.

Conclusion

Protecting yourself from allegations of fraud and abuse has become a more complicated matter. It is worth your while to spend some time to make sure you understand the current laws and know what to do if you find yourself in a problematic relationship or discover practices that you now realize do not comply with the law. ABC clients: Please do not hesitate to contact your account manager if you have any questions or need assistance.

With best wishes,

Tony Mira
President and CEO