What s On Tap? Who Are the Players? 4/3/2017. Healthcare Enforcement Trends What To Do When the Government Comes Knocking?

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1 Healthcare Enforcement Trends What To Do When the Government Comes Knocking? Holly Logan Craig Sieverding 1 What s On Tap? Enforcement landscape, generally Fraud and Abuse Update o Brief primer on major laws / regulations o Trends and other areas of note Government investigations o The criminal process 2 Who Are the Players? The Medicare and Medicaid programs rely on multiple public agencies and private contractors to audit providers and help ensure program integrity o To ensure that program payments go to quality, necessary care o To prevent fraud, waste and abuse Each auditor / agent has different scope / mission o Important to understand focus and potential risks associated with each 3 1

2 Criminal Civil Administrative DOJ MFCU / Iowa AG / Local Prosecutors DOJ HHS OIG MFCU / Iowa AG DHS IME Private Relators CERT RACs & ZPICs MIPs & MICS 4 Department of Justice Department of Justice (DOJ) o Collaborates with many agencies o Audits / investigates on civil and criminal healthcare fraud cases o Enforcement agency! Principal prosecutorial agency for healthcare fraud and abuse DOJ opened 808 civil investigations / 983 criminal investigations (FY 2015) 5 Medicaid Fraud Control Unit (MFCU) Investigate and prosecute providers that defraud the Medicaid program o Also review complaints of abuse / neglect and misappropriation of patient s private funds Attorneys, investigators, and auditors o Experienced in financial investigations and prosecution of civil and criminal fraud o Enforcement agency! 6 2

3 Iowa MFCU Activity (FY 2015) Outcomes o 291 investigations o 58 indictments o 53 convictions o 11 civil settlements / judgments o $10,799,278 in recoveries Resources o $1,074,819 in grant expenditures o 10 staff 7 Office of Inspector General Office of Inspector General ( OIG ) o Designed to identify and eliminate fraud waste and abuse o Performs and supervises audits and investigations of fraud and abuse o Enforcement agency! OIG excluded 4,112 individuals (FY 2015) Imposes civil monetary penalties Demands Corporate Integrity Agreements (CIAs) 8 Major Civil Recoveries Record Breaking Recoveries o FY 16 = $4.7 billion $2.5 billion in healthcare o 845 new FCA suits in 2016 (702 qui tam) o DOJ has recovered $31 billion since

4 False Claims Act Rule = Can t knowingly present (or cause to present) a false claim to the government DOJ and private whistleblowers can bring case Significant damages: 3x amount of harm and $5,500 11,000 per false claim 10 Anti-Kickback Statute Rule = Can t offer, pay, solicit, or receive any remuneration in order to induce program business o Remuneration includes kickbacks and rebates, cash or in kind, direct or indirect o Can t induce referrals of business or the purchase, lease, order of business Numerous exceptions and safe harbors 11 Stark Law Physician Self-Referral Rule = Can t refer certain services to entity with which physician has financial relationship o Numerous safe harbors o Civil penalties 12 4

5 Who s Bringing Suits/Complaints? Employees (disgruntled and otherwise) o Compliance Officer o Chief Operating Officer o General Counsel; US v. Quest Diagnostics (2d Cir. 2013) Huh? What about attorneyclient privilege? Vendors Government 13 Data Analytics Goal: Virtually real time access to claims data o Stop pay and chase model and identify potential recoupment early Examples: o Ambulance referrals; emergency transports to inappropriate destinations (e.g. nursing facilities) o Drug screening; adding modifier-59 to claims when only a single unit may be billed 14 Focus on Fraud and Abuse Enforcement Trends o Physician Compensation o Medical Necessity o Worthless Services? o Individual accountability o Overpayments The Old Standbys o Billing for services not rendered / upcoding o Modified documentation 15 5

6 Physician Compensation Various types of compensation arrangements with physicians o Employment / professional services o Medical directorship o Staff / space lease or timeshare General rule of thumb o Actual provision of services o Fair market value / commercially reasonable o Does not account for volume / value of referrals 16 Enforcement Priority OIG Fraud Alert (June 2015) o Urged physicians to ensure that any compensation arrangements (e.g. medical directorships), reflect FMV for services actually rendered o Emphasized that compensation arrangements may violate the AKS "if even one purpose of the arrangement is to compensate a physician for his or her past or future referrals 17 Settlements OIG cited past settlements with 12 physicians for medical director / office staff arrangements o Record-setting settlements followed Columbus Reg. Healthcare Sys. - $25 million North Broward Hosp. Dist. - $69.8 million Adventist Health Sys. - $115 million Tuomey Healthcare Sys. - $72.4 million ($237 million verdict) Memorial Health Inc. - $9.8 million 18 6

7 Worthless Services OIG: If services have no real value, billing for them can be fraud On the rise, again o Absher v. Momence Meadows (7 th Cir. 2014): worth less not same as worthless o US v. Houser (11 th Cir. 2014): worthless services 10-year prison term o In Iowa? Takeaway? If egregious conduct, DOJ involved; if not, difficult to maintain claim 19 Medical Necessity Providers can only submit claims and receive payment for items and services reasonable and necessary for the diagnosis and treatment of illness or injury o Recent focus on hospice services How to determine? o Medicare / Medicaid regulations o National / local coverage determination o Professional society clinical guidelines o Expert review / opinion 20 Overpayments An overpayment occurs when a provider receives payment for services and payment is subsequently determined to not be warranted o Can result from various processes o Having an overpayment is not necessarily fraud 21 7

8 Processes That Can Lead to Overpayments Billing for services of individual o Not provided o Performed by unlicensed / excluded provider o Not medically necessary Billing for services of entity o Not appropriately credentialed o Owned / operated by excluded individuals 22 Enforcement Action If known to federal and state agencies, agencies may o Initiate proceedings to recoup (demand) o Other administrative remedies, incl. suspension of payments / participation o File criminal / civil case If unknown to federal and state agencies, agencies expect that you report and return 23 The Rule Must report and return overpayments within 60 days of identifying the overpayment o Or when corresponding cost report is due You identify an overpayment when you have or should have determined the presence and amount of the overpayment 24 8

9 Handling Overpayments If have credible report of overpayment, perform reasonably diligent investigation o Timeframe? Most will take at most 6 months; some exceptions, incl. with large volume of claims o Lookback? 6 years BUT indication that overpayment issue not present for that entire time period? o Large set of claims? Piecemeal not expected; can use statistical sampling 25 Individual Accountability In recent years, DOJ has been forecasting that individuals responsible for corporate wrongdoing will be held accountable o Commitment to criminal investigations and prosecutions... from FCA allegations (Sept 2014) o One of the most effective ways to combat corporate misconduct is by seeking accountability from the individuals who perpetuated the wrongdoing (Sept 2015) 26 Key Steps To Pursuing Individual Accountability From Yates Memo, now part of US Attorney Manual: o Cooperation credit only if all relevant facts and individuals involved are disclosed o Directed the attorneys to focus on individuals from the inception of the investigation o Coordination between Civil and Criminal Divisions 27 9

10 Key Steps (cont d) o No individual liability addressed in corporate resolution absent extraordinary circumstances BUT corporate cases shouldn t be resolved without a plan for individual cases o Civil attorneys must focus on individuals and evaluate suit based on factors other than ability to pay 28 Documentation Still An Issue Documentation of services have different requirements; generally o The faintest ink is better than the clearest memory o Document accurately, timely and completely Key: Only proper / legal alteration of the record (late entry, proper authentication) o Initial and date changes o Identify author 29 Excluded Individuals Rule: Don t employ or contract with excluded individuals Easy target o State and federal agencies are conducting onsite audits and data mining o What are providers doing? How often and on whom? 30 10

11 HHS-OIG Exclusions 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, ,017 4,112 3,131 3, Exclusions 31 What To Do If Government Comes Knocking? Government contact can come in different forms: o Documentation, e.g. audit requests (for internal audit or for records to produce for government audit) Including subpoenas o In person, FBI / search warrant on premises Know what agency is contacting you o Appreciate how the agency is contacting you 32 Preliminary Questions / Steps Do you have a policy/procedure in place regarding government inquiries? If potential enforcement action (or you are not clear), call your lawyer. Who speaks for the company? Do your employees know their rights? 33 11

12 Subpoenas Delivered by mail or in person Does not require immediate response Contact counsel and plan a response Timely response to a subpoena is essential Custodian of records is responsible to respond Your counsel may negotiate timing and scope of response 34 Other Document Requests Informal request for information: o Do not fall for this o May violate HIPAA & privacy laws o Contact your lawyer and have her request a subpoena Routine and target audit letters / requests for on-site visits Search warrants 35 Criminal Investigations Stages: o The government gets interested o Document gathering and examination o Informal interviews o Grand jury investigation o Grand jury indictment o The stages overlap o It can take a long time 36 12

13 How Do You Know There is an Investigation? Anything from a grand jury Interviews by DOJ or MFCU Search warrant Event that triggers government interest The government tells you You tell the government 37 Categories of Persons in the Investigation Witnesses Subjects Targets 38 When treating a patient, abstain from all intentional wrongdoing and harm --Hippocrates 39 13

14 40 18 U.S.C. 1503(a) Whoever corruptly influences, obstructs, or impedes, or endeavors to influence, obstruct, or impede, the due administration of justice, shall be punished 41 Wait a Minute. We Need How Many Lawyers? Targets and subjects must be separately represented. This applies to the company as well. Witnesses can be jointly represented. Take care about using in-house counsel. Company can and sometimes must pay for counsel for officers, directors, employees

15 What to Do: Perform a Parallel Investigation Why: Provides a realistic evaluation of exposure. Permits a credible presentation to the government before the charging decision. Strategy: Respond before the government makes a charging decision. You are preparing for trial. Rationale: The time between indictment and trial is short. 43 What to Do: Perform a Parallel Investigation How: o Follow the same path as the government: Documents, then witnesses. o Time is of the essence. o Use outside counsel. 44 What to Do: Be Careful with the Parallel Investigation Corporate cooperation with the government is often the key to avoiding an indictment. Cooperation often means sharing the results of an internal investigation including a waiver of all privileges. Can pit the company and its officers/employees against each other

16 What to Do: Make the Case Before Charges are Filed May head off prosecution or limit its scope. Avoids undoing the government s commitment to the case. No civil vs. criminal bargaining. Credibility is your biggest asset. 46 High-Level Takeaways Compliance needs to be a top priority Devote the resources Make sure there s a compliance culture o Everyone must play by the same rules o Includes physicians, providers, referral sources, administrators, key employees Contact your lawyer immediately after the government contacts you 47 Compliance Tips Identify potential sources of obligations to repay Evaluate current compliance policies Monitor receivables Read work plan Listen, investigate, and call your lawyer when anyone tells you there is a problem 48 16

17 Thank You Holly Logan Craig Sieverding