Improving Integrity in Nursing Centers Susan Edwards Reed Smith LLP AHCA/NCAL s General Counsel Goals of this webinar Introduce you to AHCA/NCAL s Fraud and Abuse Toolkit Provide you with a basic understanding of the complex web of federal fraud and abuse laws and regulations Learn how federal agencies and contractors enforce those laws and regulations Give you some tips for what you should do if a government investigator walks in the door 2 1
Overview of AHCA/NCAL s Fraud and Abuse Toolkit AHCA/NCAL worked with Reed Smith LLP to develop a written Fraud and Abuse Toolkit which both strives to give you an understanding of federal fraud and abuse laws and regulations and provide you with practical tools (e.g., checklists and forms) The Toolkit will be available shortly and you will receive an email from AHCA/NCAL when it is available 3 Agenda for Today s Discussion Why an understanding of the fraud and abuse laws and regulations is important Defining fraud and abuse What federal and state agencies monitor and enforce fraud and abuse Overview of various fraud and abuse laws How improper payments and fraud may occur Who the Medicare and Medicaid contractors are What to do when a government inspector walks in the door 4 2
Why is an understanding of the fraud and abuse laws and regulations is important? An understanding of federal fraud and abuse laws and regulations will allow you to comply with such laws and regulations Compliance with such laws and regulations: Ensures that you are providing high-quality, patient-centered care free from inappropriate influences Protects your reputation in your community Protects your care center s license Protects your care center s revenue Protects your care center s valuable management and clinical resources so you can focus on high-quality patient care Avoids administrative, monetary, civil and criminal fraud and abuse liabilities 5 Why is an understanding of the fraud and abuse laws and regulations is important? The government is actively enforcing fraud and abuse laws against health care providers, including post-acute providers In FY2013, the U.S. Department of Justice recovered $2.6 billion related to health care fraud Increase in number of whistleblowers bringing False Claims Act lawsuits 6 3
Why is a compliance program important? Under the Affordable Care Act ( ACA ), a nursing care center must have in operation a Compliance and Ethics Program In addition, such a compliance program: Helps your care center respond to increasingly specific requests from insurance carriers, lenders and accountants regarding your care center s compliance efforts and program; and Helps your care center provide compliance-related information to other providers (e.g., ACOs, Medicaid managed care organizations, networks) 7 What is fraud? What is abuse? Fraud The intentional deception or misrepresentation that the individual knows to be false or does not believe to be true and the individual makes knowing that the deception could result in some unauthorized benefit to him/her or some other person. Abuse Billing Medicare for services that are not covered or are not correctly coded. 8 4
Program Integrity Mistake Inefficiencies Bending the rules Reckless Disregard Conscious Indifference Intentional Deception Error Waste Abuse Fraud 9 Examples of Fraud Intentionally billing Medicare or Medicaid for a patient discharged from a care center A kickback from a pharmacy services provider such as free goods and services not integral to the pharmacy s services as a requirement to contract with the pharmacy services provider Knowingly billing Medicare or Medicaid for items or services that a patient or resident does not receive Intentionally double-billing the Medicare and Medicaid program (or another third-party payer)intentionally inflating minutes of rehabilitation therapy received by a patient to achieve a higher reimbursement level 10 5
What federal agencies monitor and enforce fraud and abuse? U.S. Department of Justice ( DOJ ) Office of Inspector General ( OIG ) at HHS Federal Bureau of Investigation ( FBI ) U.S. Department of Health & Human Services ( HHS ) Centers for Medicare & Medicaid Services ( CMS ) Medicaid Inspector General ( MIG ) Medicaid Fraud Control Unit ( MFCU ) 11 Overview of Federal Fraud and Abuse Laws False Claims Act Anti-kickback statute Federal Physician Self-Referral Law ( Stark Law ) Exclusion statute Civil Monetary Penalties Law ( CMPL ) Beneficiary Inducement Prohibition Anti-Supplementation Provisions Deficit Reduction Act of 2005 ( DRA ) Requirements 12 6
False Claims Act Civil and criminal statute The federal False Claims Act imposes liability on any person or corporation who knowingly presents, or causes to be presented, a false or fraudulent claim for payment to the federal government Used by government to impose substantial monetary fines in a wide variety of cases involving allegations of some form of fraud or abuse involving Medicare, Medicaid and other federal health care programs Treble Damages and $5,500 - $11,000 per claim Qui Tam Provisions Cases under qui tam filed under seal Government decides whether to intervene Relator s or whistleblower s rewards depend in part upon whether government intervenes Many parallel state false claims act laws exist 13 False Claims Act Examples Examples of recent False Claims Act allegations involving nursing care centers: Rehabilitation therapy provider paying kickbacks (in the form of an upfront payment and a percentage of revenue granted for each therapy referral) to nursing care center operator in exchange for contracts to provide therapy to the operator s nursing facilities. A nursing care center providing excessive, medically unnecessary, or otherwise non-reimbursable physical, occupational, and speech therapy services, intending to achieve higher Medicare reimbursement for patients. 14 7
Anti-Kickback Statute Prohibits: Knowingly and willfully Paying or offering, soliciting or receiving Remuneration (anything of value) To induce another to Refer, purchase or order, arrange for or recommend Federal health care program patients or business UNLESS a statutory exception or regulatory safe harbor protects the arrangement Parallel state anti-kickback statutes exist 15 Anti-Kickback Statute Potential Penalties Criminal sanctions (per violation): Up to 5 years imprisonment Up to $25,000 fine Mandatory exclusion from federal health care programs Civil sanctions (per violation): $50,000 civil monetary penalties Treble damages Permissive exclusion Potential collateral consequences: Potential federal False Claims Act liability Up to $11,000 per claim Treble damages Private whistleblowers Per statute, a violation of the AKS is a false claim for purposes of the federal False Claims Act 16 8
Federal Physician Self-Referral Law ( Stark Law ) A physician is prohibited from making a referral for designated health services, payable by Medicare, to an entity with which the physician or an immediate family member has a financial relationship Financial relationship ownership or investment interest or compensation arrangement Financial relationship direct or indirect Referral does not include personally performed services The entity furnishing DHS is prohibited from billing a claim to Medicare for DHS furnished pursuant to a prohibited referral Unless an exception applies 17 Exclusion statute The exclusion-related statutory provisions require or permit the OIG to exclude any individual or entity from participating in all federal health care programs as a result of specified conduct Mandatory exclusion Permissive exclusion Exclusion is the death knell for most providers, since they rely on federal health care program (e.g., Medicare and Medicaid) revenue 18 9
Civil Monetary Penalties Law ( CMPL ) The CMPL is a provision included in the Social Security Act that authorizes the secretary of HHS, who has delegated most authority to the OIG, to seek civil monetary penalties (CMPs) and assessments against individuals or entities for a wide variety of fraudulent and wrongful conduct Such conduct includes: Making a false or fraudulent claim to a federal health care program for an item or service that was not provided Violating the federal anti-kickback statute Violating the federal Stark Law 19 Beneficiary Inducement Prohibition The OIG may impose monetary penalties on individuals or entities who offer remuneration to Medicare or Medicaid beneficiaries to influence them to use their services Some statutory and regulatory exceptions Inexpensive gifts or services permitted 20 10
Anti-Supplementation Provisions Prohibit Medicare and Medicaid providers from charging any amount above and beyond what Medicare or Medicaid pays for a covered service Do not preclude a provider from charging additional amounts for services not covered by Medicaid or Medicare 21 Deficit Reduction Act of 2005 (DRA) Requirements Requires entities receiving at least $5 million in annual Medicaid payments to do a number of things, including establish written policies for all employees, contractors and agents that provide detailed information about: The federal False Claims Act Administrative remedies for false claims Any comparable state laws pertaining to civil and criminal penalties for false claims and statements Whistleblower protections An entity that receives at least $5 million in annual Medicaid payments must also have written policies that include detailed provisions regarding the entity s policies and procedures for detecting and preventing fraud, waste, and abuse 22 11
Comment Regarding State Fraud and Abuse Enforcement 23 How Improper Payments and Fraud Occur Services with no or insufficient documentation Improper reporting in minimum data set (MDS) and improperly upcoding patients Resource Utilization Group (RUG) assignments Providing services that are not reasonable and necessary Billing for services never provided Worthless services Anti-kickback statute violation 24 12
Who are the Medicare and Medicaid contractors? Medicare Administrative Contractors ( MACs ) Zone Program Integrity Contractors ( ZPICs ) Comprehensive Error Rate Testing Contractors ( CERT ) Supplemental Medical Review Contractor ( SMRC ) Recovery Auditors ( RAs ), also known as Recovery Audit Contractors ( RACs ) Payment Error Rate Measurement ( PERM ) Medicaid Integrity Contractors ( MICs ) 25 Focus on Two Contractors: ZPICs and RAs/RACs ZPICs Conduct investigations and data analysis Goal: detect fraud and abuse in the Medicare program Different from other contractors because primary goal is identification of fraud ZPICs may refer cases to federal law enforcement agencies (OIG/DOJ) for review, which may lead to the initiation of civil or criminal proceedings. RAs/RACs Medicare and Medicaid auditing program that examines past provider s past claims to search for and recover overpayments May demand payment from the provider through a demand letter 26 13
What to do when a government inspector walks in the door A nursing care center needs to have a process and written policy related to situations when a government agent visits and presents a search warrant, subpoena, civil investigative demand, authorized investigative demand or other legal document. Basic procedures: Follow the instructions in the legal request when you receive a legal document from a government agent If a government agent does not produce a search warrant, subpoena, or investigative demand, you have the right not to provide any information to the government In practice, generally advisable to comply with the request to the extent possible. Do not respond to an oral request to produce documents; there could be issues later as to what was requested Ask that all such requests be in writing (e.g., an email) In all situations involving government audits or investigations, follow the guidance in your care center compliance program, including prompt notification of the compliance officer, legal counsel or his/her designee 27 Other Tools in AHCA/NCAL Fraud and Abuse Toolkit Checklists General contract review checklist Exclusion screening checklist Compliance education/ training program checklist Sample documents Compliance Program Certification Exit Interview form A list of resources to help you stay informed of issues your care center may face 28 14
Any Questions? Dianne De La Mare AHCA/NCAL Vice President of Legal Affairs +1 202.898.2830 ddmare@ahca.org Susan Edwards Reed Smith LLP Associate +1 202.414.9261 saedwards@reedsmith.org 29 15