HOSPITAL COMPLIANCE POTENTIAL IMPLICATION OF FRAUD AND ABUSE LAWS AND REGULATIONS FOR HOSPITALS

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1 HOSPITAL COMPLIANCE H C C A R E G I O N A L C O N F E R E N C E A P R I L 2 8, S A N J U A N, P U E R T O R I C O S A N C H E Z B E T A N C E S, S I F R E & M U Ñ O Z N O Y A, C S P J A I M E S I F R E R O D R Í G U E Z, E S Q. M A R T A E. V I L Á B Á E Z, E S Q. POTENTIAL IMPLICATION OF FRAUD AND ABUSE LAWS AND REGULATIONS FOR HOSPITALS For hospitals, the potential liability for possible fraud and abuse is present in nearly all of the business transactions and routine processes that are an inherent part of their operations. From incidental benefits to medical staff members to lease agreements for rentals of space and equipment From the installation of systems to facilitate the interoperability of electronic health record modules to the purchase of surgical implants 1

2 POTENTIAL FRAUD AND ABUSE IN HOSPITALS Due to the large number of transactions that may involve liability under the rules against fraud and abuse, to the exposure to criminal and civil penalties for those involved and the officers of hospitals, as well as due to the possible exclusion from participation in Medicare and other federal healthcare programs, among other reasons, it is recommended that hospitals develop and implement compliance programs, which in turn should include both detection and prevention aspects. Voluntary Compliance Programs for Hospitals O I G C O M P L I A N C E P R O G R A M G U I D A N C E F O R H O S P I T A L S, ; O I G S U P P L E M E N T A L C O M P L I A N C E P R O G R A M G U I D A N C E F O R H O S P I T A L S,

3 Voluntary Hospital Compliance Programs Since 1998, OIG recommends and encourages that private sector hospitals voluntarily adopt compliance programs in order to protect their operations from "fraud" and "abuse. OIG Compliance Program Guidelines for Hospitals (63 FR 8987 February 23, 1998) OIG Supplemental Compliance Program Guidance for Hospitals (70 FR 4858 January 31, 2005) Voluntary Hospital Compliance Programs The Joint Commission does not require mandatory hospital compliance programs. HIPAA, HITECH, Stark and the Anti-Kickback Statute do not require mandatory hospital compliance programs. The Secretary of Health Rule and Regulation Number 117 to Regulate the Licensing, Operation and Maintenance of Hospitals in the Commonwealth of Puerto Rico (in effect since January 19, 2005) does not require mandatory compliance programs. 3

4 Voluntary Hospital Compliance Programs Since 2010, under the Patient Protection and Affordable Care Act (ACA), HHS has the authority delegated in law to require that providers and suppliers of Medicare, Medicaid and other federal programs adopt mandatory compliance programs. However, to date, the Centers for Medicare and Medicaid Services (CMS) have not issued proposed rules to require that hospitals adopt mandatory compliance programs, while other providers such as Medicare Advantage and skilled nursing facilities must have them. Seven Elements of Hospital Compliance Program OIG Compliance Program Guidance for Hospitals Written Policies and Procedures and Written Codes of Conduct Designation of Chief Compliance Officer and creati0n of a Corporate Compliance Committee Education and Training Programs for All Affected Employees February 23, 1998 Process to Receive Complaints such as a Hotline and Procedures to Protect Anonymity and Whistleblowers from Retaliation System to Respond to Allegations of Improper or Illegal Activities Audits and Other Evaluation Techniques to Monitor Compliance Investigation and Remediation of Identified Systemic Problems and Development of Policies Addressing Non-Employment or Retention of Sanctioned [Excluded] Individuals 4

5 SAMPLE CONTENTS OF HOSPITAL COMPLIANCE PROGRAM POLICIES AND PROCEDURES Appointment of Compliance Officer and of Corporate Compliance Committee; Audits and Monitoring; Reports to the Executive Committee and the Board of Directors; Audits and Monitoring Plans; Self-Referrals and Kickbacks; Compliance Program and Code of Conduct; Conflict of Interests; Contracts; SAMPLE CONTENTS OF HOSPITAL COMPLIANCE PROGRAM POLICIES AND PROCEDURES (CONT.) Discipline; Education to Employees; Exit Interview; Exclusions; Disciplinary Measures for Compliance Violations; Implementation of Investigations concerning Allegations of Non-Compliance; Prevention of Non-Compliance; Investigation of Complaints of Alleged Violations; 5

6 SAMPLE CONTENTS OF HOSPITAL COMPLIANCE PROGRAM POLICIES AND PROCEDURES (CONT.) Governmental Investigations; EMTALA Provisions; Notices to Agents and Independent Contractors; Prevention of Fraud, Waste and Abuse; Appeal and Hearing Proceedings; Investigation of Fraud, Waste and Abuse; Complaints and Lawsuits; Recruitment of Family Members; Referrals and No Selection of Health Care Provider on the Part of the Patient; SAMPLE CONTENTS OF HOSPITAL COMPLIANCE PROGRAM POLICIES AND PROCEDURES (CONT.) Relationships with Vendors and Professional or Business Courtesy Matters; Hotline for Complaints; Employee s Duty to Comply with Compliance Policies and Procedures; Retention and Disposal of Documents Related to the Corporate Compliance Program. 6

7 OIG Special Fraud Alerts O I G S P E C I A L F R A U D A L E R T P H Y S I C I A N - O W N E D E N T I T I E S M A R C H 2 6, ; O I G S P E C I A L F R A U D A L E R T : H O S P I T A L I N C E N T I V E S T O P H Y S I C I A N S : M A Y OIG Special Fraud Alert: Physician-Owned Entities March 26, 2013 Addresses physician-owned entities that derive revenue from selling, or arranging for the sale of, implantable medical devices ordered by their physician-owners for use in procedures such physician-owners perform on their own patients at hospitals or ambulatory surgical centers. Related to the Anti - kickback Statute Focuses on the specific attributes and practices of Physician-Owned Distributorships ( PODs ) that OIG believes produce substantial fraud and abuse risk and pose dangers to patient safety. 7

8 OIG Special Fraud Alert: Physician-Owned Entities Lawfulness of any particular POD under the Antikickback Statute depends on the intent of the parties as evidenced by its legal structure, operational safeguards and actual conduct of its investors, management entities, suppliers and customer during the operations. OIG views PODs as inherently suspect. The opportunity for a referring physician to earn a profit, including through an investment in an entity for which he or she generates business could constitute illegal remuneration under the Anti-kickback Statute. OIG Special Fraud Alert: Physician-Owned Entities Inherently suspect under Size of the investment offered to each physician varies with the expected or actual volume or value of devices used. Distributions are not made in proportion to ownership interest or different prices are paid because of the expected or actual volume or value of devices used. the Anti-Kickback Statute: Physician-owners condition their referrals to hospitals on their purchase of POD s devices. Physician-owners are required, pressured or actively encouraged to refer, recommend or arrange for the purchase of the devices sold by the POD or face negative repercussions. 8

9 OIG Special Fraud Alert: Physician-Owned Entities Inherently suspect under POD retains the right to repurchase a physician-owner s interest for the physician s failure or inability to refer, recommend, or arrange for the purchase of POD devices the Anti-Kickback Statute: POD is a shell entity POD does not maintain continues oversight of all distribution functions Upon hospital s request for disclosure of conflicts of interest, the POD s physician-owners fail to inform or actively conceal their ownership interest. OIG Special Fraud Alert Hospital Incentives to Physicians May 1992 Suspect Hospital Incentive Arrangements Payment of any sort of incentive by the hospital each time a physician refers a patient to the hospital. Use of free of significantly discounted office space or equipment. 59 Fed. Reg. 65,375 (Dec. 19, 1994) Provision of free or significantly discounted billing, nursing or other staff services. Free training for physician s office staff in such areas as management techniques, CPT coding and laboratory techniques. 9

10 OIG Special Fraud Alert Hospital Incentives to Physicians May 1992 Suspect Hospital Incentive Arrangements Guarantees which provide, that, if the physician s income fails to reach a predetermined level, the hospital will supplement the remainder up to a certain amount. Low-interest or interestfree loans, or loans that may be forgiven, if a physician refers patients to the hospital. 59 Fed. Reg. 65,375 (Dec. 19, 1994) Payment of the cost of a physician s travel and expenses for conferences. Payment for a physician s continued education courses. Coverage on hospital s group health insurance plans at an inappropriately low cost to the physician. Payment for services which require few, if any, substantive duties by the physician, or in excess of the fair market value of the services rendered. Update of the Physician Self-Referral Regulations to Accommodate Delivery and Payment System Reform, to Reduce Burden and to Facilitate Compliance M E D I C A R E P H Y S I C I A N F E E S C H E D U L E W I T H F I N A L R U L E T O A M E N D C M S R E G U L A T I O N S I M P L E M E N T I N G A N D I N T E R P R E T I N G T H E S T A R K L A W - N O V E M B E R 1 6,

11 CMS Final Rule of November 16, 2015 Two new Stark Law Exceptions Financial Assistance to Practices For the recruitment of primary care nonphysician practitioners; Permits hospitals to provide financial assistance to a physician or a physician group to recruit a non-physician practitioner. Timeshare Agreements Intended to enable arrangements where a physician obtains a right to use the premises, equipment, personnel, items, supplies or services on a limited or as-needed basis. CMS Final Rule of November 16, 2015 Amendments Signature Requirement It is clarified that the written requirement is the same for the exceptions of rental of office space and of equipment (such as lease agreements ) and for arrangements such those in the personal services exception. Term Requirement The arrangement or agreement under the space rental and equipment rental exceptions must, in fact, last for one year or more; a formal contract with an explicit term provision may not be, generally, necessary. 11

12 CMS Final Rule of November 16, 2015 Amendments Holdover Arrangements Space rental, equipment rental and personal service exceptions arrangements are allowed indefinite holdovers when certain safeguards are met and all elements of the exception are satisfied during the holdover period. Temporary Non-Compliance with Signature Requirement 90-day grace period to comply regardless of whether the failure to comply was inadvertent. Criteria for implementing section 1128(b)(7) exclusion authority O N A P R I L 1 8, , D H H S - O I G P U B L I S H E D N E W C R I T E R I A R E G A R D I N G W H E N A N I N D I V I D U A L O R E N T I T Y M A Y B E E X C L U D E D F R O M P A R T I C I P A T I O N I N F E D E R A L H E A L T H C A R E P R O G R A M S F O R E N G A G I N G I N C O N D U C T P R O H I B I T E D B Y S E C T I O N S A O R B T H E R E V I S E D P O L I C Y S T A T E M E N T S U P E R S E D E S A N D R E P L A C E S T H E F E D E R A L R E G I S T E R N O T I C E 12

13 April 18, 2016 Criteria for Implementing Section 1128(b)(7) Exclusion Authority in the Context of False Claims Act matters OIG Presumption in favor of exclusion In determining whether to exercise its discretion to exclude OIG presumes that some period of exclusion should be imposed against an individual or entity who has defrauded Medicare or any other Federal health care program. May be rebuttable based on non-binding factors OIG evaluates health care fraud cases on a continuum with a risk spectrum in which the highest risk usually entails exclusion and the lower risk involves the release of the authority (selfdisclosure). April 18, 2016 Criteria for Implementing Section 1128(b)(7) Exclusion Authority Risk Spectrum Scale Highest Risk Exclusion Heightened Scrutiny Unilateral Monitoring Integrity Obligations No Further Action Lower Risk Release (Cooperative and Good- Faith Self-Disclosure) Tools to mitigate compliance risks integrity obligations Corporate Integrity Agreements ( CIA ) Unilateral Monitoring Providing information to the public Making referrals to the Centers for Medicare and Medicaid Services ( CMS ) for claims reviews 13

14 April 18, 2016 Criteria for Implementing Section 1128(b)(7) Exclusion Authority Relatively low financial harm/no egregious conduct Neither exclusion nor integrity obligations may be deemed necessary in the absence of egregious conduct such as patient harm or intentional fraud, [and when there is a] relatively low financial harm[ ]. OIG consideration of the financial loss to Federal health care programs Whether the person is an individual or a small entity (with 50 or fewer employees or independent contractors) Whether the person is a successor owner Other facts and circumstances relevant to the situation April 18, 2016 Criteria for Implementing Section 1128(b)(7) Exclusion Authority Successor Exclusion and/or Integrity Obligations Evaluation New owner purchased the entity after the fraudulent conduct occurred; Has an existing compliance program; Does not have previous history of wrongdoing or fraud settlements with the United States; Took appropriate steps to address the predecessor s misconduct and reduce the risk of future misconduct; And, can demonstrate other facts and circumstances as relevant to each unique situation. 14

15 April 18, 2016 Criteria for Implementing Section 1128(b)(7) Exclusion Authority Release of exclusion without requiring integrity obligations When the person selfdiscloses the fraudulent conduct, cooperatively and in good-faith, to OIG. When the person agrees to robust integrity obligations with a State or the Department of Justice and OIG determines these obligations are sufficient to protect the Federal health care programs. April 18, 2016 Criteria for Implementing Section 1128(b)(7) Exclusion Authority Factors to be considered in deciding whether to exclude a person or pursue alternative remedies Whether the person is a sole source of essential specialized items or services in a community or provides items or services for which there are no alternative or comparable resources Nature and circumstances of conduct (adverse impact on individuals, financial loss, leadership role, history of prior fraudulent conduct) 15

16 April 18, 2016 Criteria for Implementing Section 1128(b)(7) Exclusion Authority Factors to be considered in deciding whether to exclude a person or to pursue alternative remedies Conduct during investigation (internal investigation, cooperation resolution) Significant ameliorative efforts (significant changes in the entity) History of compliance (significant self-disclosures made appropriately and in good faith to OIG, CMS for Stark Law disclosures or CMS contractors for nonfraud overpayments) Absence of a compliance program that incorporates the U.S. Sentencing Commission Guidelines Manual s seven elements of an effective compliance program indicates higher risk. 16