Washington Update (which includes Baltimore) for the MaineCare & Regulatory Update HFMA Maine Chapter November 19, 2015 John VanLonkhuyzen Verrill

Transcription

1 Washington Update (which includes Baltimore) for the MaineCare & Regulatory Update HFMA Maine Chapter November 19, 2015 John VanLonkhuyzen Verrill Dana LLP

2 Topics Retrospective False Claims Act developments Including the 60-day rule and sampling Bipartisan Budget Act implications CMS issues 2016 Payment Rule Various policy guidance and fraud alerts OIG 2016 Work Plan 2

3 FY 2014 Retrospective Justice Department opened 924 new criminal health care fraud investigations, filed criminal charges in 496 cases (against 805 defendants), and obtained 734 convictions. DOJ opened 782 new civil health care fraud investigations. Nationwide, likely will be an increase in both criminal prosecutions and civil False Claims Act cases during In Maine, USAO hired several new prosecutors in 2014, we would expect more investigative activity in future.

4 2014 Retrospective Nationally, robust prosecutions of providers by HEAT Teams and Medicare Strike Forces. Nationwide Strike Force takedown June 18, 2015: 243 individuals criminally charged (46 doctors, nurses and other licensed medical professionals) Miami, Houston, Dallas, Detroit, Tampa, Brooklyn and N.O. Various health care fraud schemes charged: Home health care, mental health services, beneficiary coaching, DME, PT. Part D pharmacy fraud Medically unnecessary or non-provided procedures Kickbacks Alleged over $712 million in fraudulent Medicare claims In FY 2014, Strike Force efforts resulted in filing of charges against 228 individuals or entities, 232 criminal cases, and $441 million in investigative receivables

5 Affordable Care Act Realities Mandatory return of identified overpayments Expands RAC reviews to Part C, Part D and Medicaid Suspension of payments during an investigation of a credible allegation of fraud Increased criminal penalties (amendment to Sentencing Guidelines providing 20% to 50% longer sentences for healthcare fraud involving $1 million or more). New civil monetary penalty: obstructing OIG investigation or audit by failing to give timely access to records Expanded use of Civil Investigative Demands (CIDs) to investigate civil fraud Stark self-disclosure protocol Anti-Kickback expansion claim submitted as result of violation of AKS constitutes false claim under FCA

6 Affordable Care Act Realities Additional government strategies: Health Care Fraud Prevention Partnership (collaboration with private health insurers) Fraud Prevention System all fee for service Medicare claims now run through predictive analytic software to look for patterns or aberrations. CMS Help Prevent Fraud Campaign.

7 Monetary Recoveries, Sanctions and Penalties $2.3 billion recovered in FCA judgments and settlements involving federal health care (Medicare, Medicaid, TriCare) in FY 2014 Fifth consecutive year in which government has recovered in excess of $2 billion in such cases. $14.5 billion recovered over the last 5 years. For every $1 spent on health care fraud and abuse investigations in the last 3 years (thru FY14), government recovered $7.70 (down from $8.10 in prior rolling three years). 7

8 Monetary Recoveries, Sanctions and Penalties DOJ recovered $333 million from hospitals in FY 2014 Examples: Community Health Systems $98.15 million (billed for in-patient, should have been out-patient) Halifax Hospital Med. Ctr. & Staffing - $85 million (Stark Law violations) 8

9 Monetary Recoveries, Sanctions and Penalties HHS OIG Semi-Annual Reports: (March & Sept. FY 2014, March FY 2015) Expected recoveries of over $4.9 billion (FY 14) Approx. $835 million from audits; $4.1 billion from investigations. 971 criminal actions, 533 civil actions Exclusions of 4,017 individuals and entities from Federal health care programs (FY 14). 14,663 providers excluded from Medicare since ACA (felonies, bad address, not in compliance with CMS rules) (FY 13). First 6 months FY 15: 486 criminal actions, 326 civil actions, and 1735 more exclusions; $1.8 billion expected recoveries ($544M audit, $1.26B investigations) 9

10 Settlements under Provider Self-Disclosure Protocol FY 14 self-disclosure cases resulted in $34.4 million in HHS receivables. Most settlements seem to be less than $2 million Most are administrative, under Civil Monetary Penalties Act, not FCA E.g., Harvard Vanguard Med. Assoc. Inc. ($168,687 settlement) 10

11 HHS OIG Hospital Compliance Reviews OIG Office of Audit Services published 39 Reports in 2014; 29 so far in Most dealt with reviews conducted in Including at least nine reports on hospitals in New England. Also, report on Maine DHHS failure to implement recommendations from prior audit of nursing home overpayments 11

12 Civil False Claims Act Common issues in False Claims Act cases over the past several years: Pharmaceutical and DMEs, esp. off-label promotion and kickbacks Financial relationships between hospitals and physicians (kickbacks and Stark Law, esp. in Medicaid) Medically unnecessary procedures and defective devices/quality of care allegations Newest issues: 60-day return of overpayments; statistical sampling

13 Developments Under the False Claims Act Increased FCA filings in federal court for health care fraud continue. DOJ reported more than 700 new FCA qui tam (whistleblower) lawsuits in each of FY 2013 and All new qui tam FCA cases are reviewed for potential criminal conduct by Medicare Strike Force State False Claims Act enforcement is increasing around the country (but no Maine statute) State Attorneys General hiring outside counsel to investigate, data-mine, & bring suit Some good news: Supreme Court decision on statute of limitations in civil FCA cases, Kellogg Brown & Root v. Carter (May 26, 2015)

14 FCA Developments the 60-day rule Failure to Return Identified Overpayments Within 60 Days: ACA created 60-day rule requirement to report and repay identified overpayments within 60 days, and defined that as an obligation for the FCA. ACA also amended FCA to make making knowing retention of overpayment itself a false claim. June 2014, DOJ intervened in Kane v. Healthfirst, a qui tam FCA action alleging that certain New York hospitals failed to refund Medicaid overpayments within 60 days of identifying them. Overpayments were caused by software coding errors of a Medicaid managed care administrator (hospitals not responsible). Hospital employee generated a spreadsheet listing over 900 likely overpayments (claims that contained the bad code) & circulated to management; four days later he was terminated; hospital did nothing further with analysis & did not disclose or repay except as individual claims were identified by NY State Controller District Court ruled for government on defendant s motion to dismiss Likely to settle 14

15 FCA Developments the 60-day Rule Failure to Return identified Overpayments Within 60 Days: This is an enforcement priority by the DOJ. Other similar cases are being investigated by DOJ, including one in Massachusetts involving a hospital. Kane decision illustrates the need for health care providers to diligently investigate potential Medicare and Medicaid overpayments that come to their attention and to take appropriate remedial action. Raises issue of when does the 60-day clock start running? Continuum of identification : first whiff of trouble? Somewhere during on-going investigation? Only when fully quantified? Compare Kane court and CMS-- 15

16 FCA Developments the 60-day Rule 2012 Proposed Rule (Parts A, B): identified if actual knowledge of the existence of the overpayment or acts in reckless disregard or deliberate ignorance of the overpayment. Timeline extended in Feb. 2015, revised rule reportedly sent to OMB recently; expected by Feb Final Rule (Parts C, D): identified when the MA organization has determined, or should have determined through the exercise of reasonable diligence, that the MA organization has received an overpayment Kane court: identified when a provider is put on notice of a potential overpayment, rather than at the moment when an overpayment is conclusively ascertained [as defendant argued] Much stricter court suggested relying on discretion of qui tam plaintiffs and DOJ! 16

17 FCA Developments sampled claims Method of proof through statistical sampling Proposed in various cases over the past few years Theory: allows efficient trials of huge numbers of claims where individual claim by claim proof prohibitive in cost and time Being invoked in liability as well as damages Two recent cases: 17

18 FCA Developments sampled claims U.S. v. AseraCare (N.D.Ala.) AseraCare 60 hospices in 19 states Allegedly billed Medicare for ineligible patients who did not have prognosis of less than 6 months to live Bifurcated trial Phase 1 (10 weeks) jury found 104/121 claims false Sample selected from 2181 patients billed for over one year 18

19 FCA Developments sampled claims District judge granted new trial (phase 1) Had incorrectly instructed jury Had not instructed jury that: FCA requires proof of objective falsehood; and Mere difference of opinion among physicians, without more, is not enough to show falsity Suggested would entertain summary judgment motion by AseraCare 19

20 FCA Developments sampled claims U.S. ex rel. Michaels v. Agape Senior Community, Inc., et al. (U.S.C.A. 4 th Cir.) Relators claimed nursing home operator submitted false claims regarding hospice care and other healthcare services USG declined to intervene Relators and defendants reached settlement; USG opposed Litigation in district court 20

21 FCA Developments sampled claims District court ruled: Plaintiffs could not use statistical sampling because claim by claim review expensive but not impossible Estimates: 10-20K patients; 50-60K claims; plaintiffs said review cost $1600-$3600/patient total some $16-36M Could not accept settlement without US approval even though US had not intervened Certified both questions to Court of Appeals Court of Appeals accepted both questions 21

22 FCA Developments Stark Violations Hospital Compensation Arrangements with Physicians as Stark Law Violations A number of high profile cases have been brought by DOJ. DOJ appears to contend that a hospital s compensation to an employed physician is commercially unreasonable if the compensation paid the physician exceeds the net income of the physician s practice. DOJ s litigation position appears to recognize limited exceptions (e.g., large indigent or Medicaid caseload; required service for hospital licensure or certification purposes) 22

23 Stark on One Slide No physician ownership of a DHS entity Any compensation must reflect FMV for bona fide services actually provided No compensation may be based, even in part, on the volume or value of the physician s referrals of DHS Put the deal/arrangement in writing; renew on time Many very technical requirements each of which must be satisfied Arrangements permitted under Stark might still implicate the anti-kickback statute, and vice versa 23

24 Stark good news CMS has recently issued Final Regulations simplifying some technical aspects of Stark, clarifying regulatory terminology and requirements, and establishing two new exceptions 24

25 FCA Developments - Stark Violations Hospital Compensation Arrangements with Physicians as Stark Law Violations U.S. ex rel. Drakeford v. Tuomey. Tuomey 242-bed non-chain community hospital with $200 million annual revenues Over 20,000 claims alleged to be false based on Stark law violations On first appeal, the 4th Circuit held: that the hospital charge generated by a personally performed service by a physician is a referral. that physicians should be compensated for the services performed and not for referrals

26 FCA Developments - Stark Violations In Tuomey, the 4th Circuit defined the issue for the jury as whether the contracts between the hospital and physicians on their face took into account the volume or value of referrals. DOJ argued that physician compensation that is based on a percentage of collections for personally performed physician services takes into account the volume/value of DHS referrals On remand, retrial, jury found 21,730 claims false, $39M damages Result: $237 million in damages and penalties

27 Toumey the saga finally ends Second appeal, Tuomey lost on all issues Decision July 2, 2015 Judgment would presumably bankrupt the system Settled for $72.4M (Oct. 2015) Following Toumey, expect large hospital settlements 27

28 Toumey the fallout Three other very recent qui tam settlements: U.S. ex rel. Barker v. Columbus Reg. HCS & Pappas (U.S. Dist. Ct. Ga.) Relator - former hospital executive; Dr. Pappas - medical oncologist Allegations: Upcoding at cancer center, encouraged by payment incentives Stark/AKS violations excessive compensation for medical directorship, paid in part for services performed by others Settlement: Hospital: $25 million, plus contingency up to $10 million Corporate integrity agreement Physician: $425,000 28

29 Toumey the fallout North Broward Hospital District Allegations: physician compensation above FMV and commercially unreasonable because over 90 th percentile per compensation surveys and generated practice losses for Broward; Compensation not financially self-sustaining unless also included facility fee, so took into account volume and value of referrals Settled for $69.5 million (Sept. 2015) 29

30 Toumey the fallout Adventist Health System (44 hospitals in 10 states) Allegations Typical Stark law violations Car leases $710,000 bonuses to 3-day/week dermatologist Some upcoding, improper billing Settled for $118.7 million (Sept. 2015) 30

31 Stark Law Developments Application of Stark to Medicaid Historically, neither CMS, industry nor experienced counsel thought the Stark self referral prohibition applied to Medicaid absent a state law. Stark law itself only prohibits Medicare referrals. CMS self disclosure protocol does not require disclosure of Medicaid referrals DOJ has taken an opposite position. A number of recent cases finding Medicaid referrals from tainted Stark relationships violate FCA Theory: making referral or Medicaid claim causes state to falsely claim prohibited federal financial participation 31

32 Exclusions Special Advisory Bulletin issued May federal exclusions in 2014 Mostly for convictions for crimes relating to Medicare or Medicaid programs, for patient abuse or neglect, or as a result of license revocation Maine DHHS Division of Audit Office of Program Integrity seems to be issuing more MaineCare exclusion notices even where relevant board would allow continued practice New OIG unit of 10 attorneys to specialize in exclusions, CMPs Area of risk -- How are you ensuring not employing or using excluded persons?

33 Implications of 2015 Budget Deal Bipartisan Budget Act of 2015 Enacted Nov. 2, 2015 Significant limitations on off-campus hospital outpatient departments Various other changes 33

34 Bipartisan Budget Act of 2015 Section 603 amends SSA 1833(t) to exclude from Medicare s hospital outpatient prospective payment system (OPPS) any services furnished at off-campus outpatient department of hospital billed after Jan 1, 2017 Grandfathers off-campus OPT that billed for services before enactment with caveat Exception for dedicated emergency department Various provisions will need to be clarified by CMS 34

35 Bipartisan Budget Act of 2015 Here s how it works (thanks to BakerHostetler): Off-Campus Dept. reimbursement schedule: Date OCD created and billed: Reimbursement for services before 1/1/2017 Reimbursement for services after 1/1/2017 Before 11/2/2015 As hospital OPD As hospital OPD Between 11/2/2015 and 1/1/2017 On or after 1/1/2017 As hospital OPD n/a Not as hospital OPD; under otherwise applicable methods, e.g., physician FFS Not as hospital OPD; under otherwise applicable methods, e.g., physician FFS 35

36 Bipartisan Budget Act of 2015 Other changes: Tricky accounting to fudge Part B beneficiary payments ACA auto-enrollment requirement for large employers repealed Annual 2% reduction in Medicare provider reimbursement extended to 2025 CMP and other penalties increased 36

37 Final 2016 Payment Rules CMS finalized 2016 payment rules for physicians, hospitals and other providers on Oct. 30, 2015 Clarified two-midnight rule Payment and policy changes for hospital OPDs (OPPS) and ASCs Various other changes 37

38 Final 2016 Payment Rules Selected policy and payment changes: OPPS: -0.3% OPPS lab services: conversion factor -2.0% ASC payment classifications being restructured; Removing certain codes for ASC covered ancillary services ASC payments: adjusted CPI-U factor 0.3% Change in transition payments for former Medicaredependent small rural hospitals 38

39 Recent policy pronouncements Fraud Alert: Physician Compensation Arrangements May Result in Significant Liability Issued by OIG, June 9, 2015 Focuses on physician liability under AKS Highlights 12 enforcement actions Third physician fraud alert in just over two years Signals enforcement priority 39

40 2015 OIG Fraud Alert About half internists & family practitioners, some orthopedic surgeons, urologists, gastroenterologist, occupational health Paid for medical directorships or office staff Salaries or monthly payments Either (1) took account of volume or value of referrals or (2) not FMV for services actually contemplated & provided Settlements ranged from $50,000 - $200,000; one voluntary 3-year exclusion 40

41 Other OIG Alerts Information blocking - Neither EHR donors nor anyone on their behalf may limit or restrict use, compatibility or interoperability of donated EHR items or services with other EHR or e- prescribing systems lose safe harbor to AKS Information blocking by providers 41

42 OIG Advisory Opinions Free introductory visits by home health providers not kickbacks under circumstances (#15-12) Large healthcare system can, under certain conditions, provide free transport to patients without incurring kickback liability (#15-13) 42

43 US DOJ Policy Memorandum Deputy Attorney General Yates Memo: Individual Accountability for Corporate Wrongdoing Issued Sept. 9, 2015 Instructions to DOJ prosecutors and civil attorneys Applies to criminal and civil investigations and cases Reiterates some policies, changes some, sets out some best practices 43

44 DAG Memo Six Principles To be eligible for any cooperation credit, corporations must provide to the Department all relevant facts about the individuals involved in corporate misconduct Enhanced on criminal side Applies to civil side to get reduction in CMPs or FCA cases Both criminal and civil corporate investigations should focus on individuals from the inception of the investigation Criminal and civil attorneys handling corporate investigations should be in routine communications with each other 44

45 DAG Memo Six Principles (cont.) Absent extraordinary circumstances, no corporate resolution will provide protection from criminal or civil liability for any individuals Corporate cases should not be resolved without a clear plan to resolve related individual case before the statute of limitation expires and declinations as to individuals in such cases must be memorialized Civil attorneys should consistently focus on individuals as well as the company and evaluate whether to bring suit against an individual based on considerations beyond that individual s ability to pay 45

46 OIG 2016 Work Plan HHS Office of Inspector General released FY 2016 Work Plan on November 2, 2015 More than 40 areas of new focus New areas of emphasis, including security of EHR, implementation of ICD-10, and drug pricing 46

47 OIG 2016 Work Plan Newly planned reports/oversight on Medicare reimbursement, including: Physician home visits Ventilators & respiratory devices replaced medical devices OPT care during IPT visits Orthotic braces SNF care (esp. admission requirements) Prolonged services during check-ups at physician offices Hospice care (esp. certifications, staff licensing) 47

48 OIG 2016 Work Plan Medicare Hospital Audit Activities (new/revised) OIG will Determine number of provider-based facilities owned by hospitals Determine whither payments for replaced medical devices were appropriate Review whether acute care hospital OPT claims for services provided during IPT stays were allowable Review CMS validation of hospital quality reporting data 48

49 OIG 2016 Work Plan Areas of continued hospital audit activity: Reconciliation of outlier payments Use of OPT and IPT stays under the 2-midnight rule Analysis of salaries included in cost reports Review of hospital wage data used to calculate Medicare payments Comparison of provider-based and freestanding clinics Nationwide review of card catheterizations & endomyocardial biopsies Duplicate GME and indirect ME payments Outpatient dental claims 49

50 OIG 2016 Work Plan Nursing homes: review compliance with SNF prospective payments system Hospices: assess appropriateness of hospices general inpatient care claims Other providers: review quality oversight of ASCs; review select orders/referrals by physicians for compliance with requirements; review Part B anesthesia claims; review physician claims for evaluation and management home visits and prolonged evaluation and management office visits appropriate 50

51 Questions? Thank you! Jeff Heidt (617) John VanLonkhuyzen (207)