May 17, 2010

Anesthesia groups should review their compliance programs in light of the emphasis on combating fraud and abuse in the Patient Protection and Affordable Care Act (PPACA).  While physicians account for a very small part of the billions of dollars paid out erroneously each year, the risks of flunking an audit and being faced with overpayment or fraud liability outweigh the hassle of compliance for most practices.  Congress intends to pay for some of the PPACA implementation costs by stepping up fraud enforcement, both through enhanced law enforcement activities and tools and in the form of increased penalties.  Anesthesiologists should be aware of the following:

Providers must refund overpayments within 60 days

As of March 23rd, when it was enacted into law, the PPACA requires providers to report and return overpayments within 60 days of discovering the overpayment. The 60-day period begins when the provider first has knowledge of the overpayment.  Failure to report and return any overpayment within 60 days of its discovery is an automatic violation of the False Claims Act. 

Anesthesia groups should consider verifying that they are in the process of returning any known Medicare overpayments.  Any that had been identified as of March 23rd must be refunded by May 22, 2010.  Potential penalties for not reporting and returning excess payments include not just prosecution under the False Claims Act, but also Civil Money Penalties (CMPs) and even exclusion from the Medicare and Medicaid programs.

Medicare is authorized to suspend payments during an investigation of “credible allegations of fraud”

This is the PPACA provision that could bring a medical practice to its knees.  Medicare accounts for as much as 40 or 50 percent of patient care revenues in some anesthesia practices.  A complete halt in payments might cause a practice to settle quickly in order to avoid bankruptcy.

The definition of “credible allegations of fraud” and how the payment-suspension system will be implemented will have to wait for the Secretary to publish regulations.

There are new and enhanced Civil Money Penalties for healthcare fraud

• The PPACA amended the Social Security Act (basic Medicare statute) to authorize CMPs for failures to report and return overpayments within 60 days.
• Penalties for false statements in claims for payment have been increased to $50,000 for each false or fraudulent claim.
• False statements, omissions or material misrepresentations in provider enrollment applications are subject to CMPs and exclusion.
• Delaying an audit or investigation by the HHS Office of the Inspector General will cost a practice $15,000 per day.

Amendments to the False Claims Act make it harder on defendants

• The PPACA states clearly that violations of the Anti-Kickback Statute constitute false or fraudulent acts und the False Claims Act.  Prosecutors no longer need to prove a link between a kickback and the submission of a false claim.
• If alleged fraud has already been disclosed publicly, whistleblowers cannot bring a successful False Claims Act.  The PPACA narrows the definition of “public disclosure.”

Physicians can run afoul of the Anti-Kickback Statute without intending to violate the law

The federal Anti-Kickback Statute only penalizes providers for “knowing and willful” conduct.  Some courts have interpreted this legal phrase to mean that the government must prove that a defendant (1) knew that the statute prohibited the conduct in question and (2) engaged in  that conduct with the specific intent to disobey the law.  Other courts have applied a somewhat looser standard, which the PPACA adopts in adding to Section 1128B of the Social Security Act this statement:  “a person need not have actual knowledge of this section or specific intent to commit a violation of this section.”  (Yes, all that verbiage means a great deal to lawyers and defendants in a criminal courtroom.)

Compliance programs are mandatory for certain new providers

New providers or suppliers within particular industries or categories, as yet unspecified, must have a compliance program in place as a condition of enrollment in Medicare, Medicaid or CHIP. The Secretary of Health and Human Services shall establish the core elements for a compliance program and the timeline for compliance.  Until the Secretary adopts regulations, we will not know whether and when individual physicians will need to demonstrate that their practice, group or solo, has a compliance plan in place in order to obtain a Medicare provider number. 

Consider updating your compliance program to conform to Federal Sentencing Guidelines

On April 29, the U.S. Sentencing Commission published changes to the requirements for the “Effective Compliance and Ethics Program.”  Some readers may recall that the Federal Sentencing Guidelines currently form the basis of the HHS Office of the Inspector General’s compliance program guidance.  These changes have nothing to do with the PPACA, but considering whether you should update your compliance program to incorporate the new requirements makes sense as we enter an era of heightened enforcement.

The “Effective Compliance and Ethics Program” provides guidance for entities attempting to demonstrate responsible governance to reduce the impact of any criminal conviction. The amendment provides for decreases in sentences if:

1. The organization, after criminal conduct has been detected, takes reasonable steps (1) to respond appropriately to the criminal conduct and (2) to prevent further similar criminal conduct.  Such steps may include providing restitution to identifiable victims, other forms of remediation, self-reporting and cooperation with the authorities, and the use of a professional advisor to ensure adequate implementation of any modifications. 
2. The organization meets four requirements regarding the effectiveness of its compliance program and internal relationships:
1. the individual or individuals with operational responsibility for the compliance and ethics program have direct reporting obligations to the organization’s governing authority or appropriate subgroup thereof;
2. the compliance and ethics program detected the offense before discovery outside the organization or before such discovery was reasonably likely;
3. the organization promptly reported the offense to the appropriate governmental authorities; and
4. no individual with operational responsibility for the compliance and ethics program participated in, condoned, or was willfully ignorant of the offense.

Making sure that your anesthesia practice is in compliance with the Medicare rules is not simple.  The consequences of non-compliance can be so disastrous, though, that most anesthesiologists work hard to establish and follow good compliance programs.  We are always ready to help clients understand and meet their obligations, and we will continue to support all of our readers’ efforts by publishing information like that contained in this Alert.

With best wishes,

Tony Mira
President and CEO