Federal Fraud and Abuse Enforcement in the ASC Space SCOTT R. GRUBMAN, ESQ. PARTNER CHILIVIS COCHRAN LARKINS & BEVER, LLP (ATLANTA GA) Fraud & Abuse Enforcement Landscape FBI CMS OCR MFCU DCIS DOJ HHS-OIG CMS CONTRACTORS (MACs, RACs, ZPICs) WHISTLEBLOWERS COMMERCIAL INS. COMPANIES MEDICAID & MEDICAID CONTRACTORS 1
Fraud & Abuse Enforcement Landscape Healthcare-Specific Statistics: Source: DOJ Civil Division Fraud Statistics The Statutes 2
The False Claims Act (FCA) Prohibits, among other things: Knowingly presenting, or causing to be presented, false or fraudulent claims for payment or approval Knowingly making, using, or causing to be made or used, a false record or statement material to a false or fraudulent claim Knowingly concealing or knowingly and improperly avoiding or decreasing an obligation to pay or transmit money or property to the government Retention of overpayment; 60-day rule Whistleblower ( Qui tam ) actions The False Claims Act (FCA) Consequences of violating: Treble damages, perclaim penalties (b/t $10,957 and $21,916), exclusion Knowing and knowingly includes actual knowledge, deliberate ignorance, or reckless disregard; No proof of specific intent to defraud required 3
The False Claims Act (FCA) Examples of FCA violations: Billing for medically unnecessary services Violating AKS or Stark Submitting claims for services provided by excluded persons Improper retention of overpayment for more than 60 days Lack of appropriate physician supervision The Anti-Kickback Statute (AKS) Prohibits knowingly & willfully paying, offering, soliciting or receiving remuneration in return for referral Criminal, civil & administrative remedies (including damages + penalties + exclusion) Predicate to FCA liability 4
The Anti-Kickback Statute (AKS) Applies to all federal healthcare programs except for the FEHBP. One Purpose rule Safe harbors (42 C.F.R. 1001.952) ASC Safe Harbor ASC Safe Harbor: Remuneration payment that is return on interest investment, such as dividend or interest income, made to investor in ASC General requirements (regardless of type of ASC): Must be certified ASC Patients referred to ASC by investor-physician must be fully informed of physician s investment interest Loans from ASC or other investors to physician-investors are prohibited if used to obtain investment interest Investment interests must be offered on terms not related to volume or value of referrals 5
ASC Safe Harbor General requirements (regardless of type of ASC): Amount of payment to an investor in return for investment must be directly proportional to the amount of capital investment of that investor All ancillary services must be directly & integrally related to primary procedure performed at ASC and none may be separately billed to Medicare or other FHP Neither the ASC nor physicians practicing at the ASC can discriminate against FHP beneficiaries ASC Safe Harbor If surgeon-owned or single-specialty ASC, additional requirement that at least 1/3 of each physician-investor s medical practice income for the previous year must be derived from the physician s performance of surgical procedures 6
ASC Safe Harbor If multi-specialty ASC, additional requirements that at least 1/3 of each physician-investor s medical practice income for the previous year must be derived from the physician s performance of surgical procedures, and at least 1/3 of the procedures performed by each physician investor for the previous year must be performed at the investment entity ASC Safe Harbor If hospital/physician ASC, additional requirements: All investors (other than hospital) must meet requirements above or must qualify as group practice ASC may not use space located in or owned by hospital investor unless such space is leased from the hospital in accordance with a lease that complies with the rental safe harbor ASC may not use equipment owned by or services provided by hospital unless such equipment is leased in accordance with equipment rental safe harbor and services provided in accordance with personal services & management contracts safe harbor 7
ASC Safe Harbor If hospital/physician ASC, additional requirements: Hospital may not include on its cost report or any claim for payment from a FHP any costs associated with the ASC Hospital may not be in a position to make or influence referrals directly or indirectly to any investor or ASC Other Safe Harbors Personal Services and Management Contracts Must be in writing & signed by parties Contract must cover all services agent provides to the principal and specify those services If services are periodic, sporadic, or part-time, agreement must specify exactly the schedule of such intervals, their precise length, and exact charge for such intervals 8
Other Safe Harbors Personal Services and Management Contracts Term of agreement is at least one year Aggregate compensation to be paid is set in advance, consistent with FMV, not determined in manner that takes into account volume/value of referrals Services do not otherwise violate law Aggregate services do not exceed those which are reasonably necessary to accomplish the commercially reasonable business purposes of the services Other Safe Harbors Space Rental Lease agreement in writing & signed Lease covers all of the premises leased b/t the parties and specifies the premises covered by lease If lessee has access to premises for periodic intervals only, lease must specify exact schedule of intervals, their precise length, and the exact rent for such intervals 9
Other Safe Harbors Space Rental Lease is for at least one year Aggregate rental charge set in advance, consistent with FMV, does not take into account volume or value of referrals Aggregate space rented does not exceed what is reasonably necessary to accomplish reasonable business purpose of rental Other Safe Harbors Equipment Rental Lease agreement in writing & signed Lease covers all equipment leased b/t the parties and specifies equipment covered by lease If lessee can use equipment for periodic intervals only, lease must specify exact schedule of intervals, their precise length, and the exact rent for such intervals 10
Other Safe Harbors Equipment Rental Lease is for at least one year Aggregate rental charge set in advance, consistent with FMV, does not take into account volume or value of referrals Aggregate equipment rental does not exceed what is reasonably necessary to accomplish reasonable business purpose of rental ASC-Related Advisory Opinions Advisory Opinion 12-06: Unfavorable opinion regarding anesthesia company model Advisory Opinion 09-09: Favorable opinion regarding proposed joint venture involving ownership of ASC by hospital and physicians Advisory Opinion 08-08: Favorable opinion regarding investment in ASC by group of surgeons and healthcare corporation that owns hospitals 11
ASC-Related Advisory Opinions Advisory Opinion 07-05: Unfavorable opinion regarding proposal for certain physician investors in established ASC to sell portion of ownership interests to local hospital Advisory Opinion 03-5: Unfavorable opinion regarding ASC jointly owned by hospital and multi-specialty group practice where a number of physicians would not personally use ASC Advisory Opinion 03-2: Favorable opinion regarding medical center s proposed acquisition of ownership interest in established singlespecialty ASC Advisory Opinion 01-17: Favorable opinion regarding ASC jointly owned by hospital & group of ophthalmologists where ASC also leases operating room & reception area from hospital Examples of Enforcement in ASC Space 2016: Sweet Dreams Nurse Anesthesia Group pays over $1M to settle FCA whistleblower suit. Suit alleged that SDNA violated FCA by paying kickbacks to ASCs, including by agreeing to fund the construction of ASC, and providing ASCs with drugs & supplies that are bundled in ASC fee 2015: ASC and owner-physician agree to pay $4M and to be excluded for 5 years for billing Medicare for unnecessary Mohs surgery at ASC 2014: Meridian Surgical Partners pays $5.1M to settle whistleblower FCA case alleging kickbacks disguised as investment interests Complaint alleged no safe harbor treatment b/c investment interests sold below FMV and terms of arrangement were tied to volume of referrals 12
Examples of Enforcement in ASC Space AmSurg Corp: Pending whistleblower case alleging FCA liability based on surgeons in ASC not performing required pre-surgical assessments Numerous investigations involving anesthesia operations in ASCs Remuneration from anesthesia provider to ASC (e.g., services, equipment, discounted or free drugs) Examples of Enforcement in ASC Space Medicare Claims Processing Manual, Ch. 14, Sec. 10.2: ASC payment includes: Nursing, technician, and related services; Use of the facility where the surgical procedures are performed; Any laboratory testing performed under a CLIA certificate of waiver; Drugs and biologicals; Medical and surgical supplies; Equipment; Surgical dressings; Implanted prosthetic devices; Implanted DME and related accessories/supplies; Splint and casts and related devices; Radiology services; Administrative, recordkeeping and housekeeping items and services; Materials, including supplies and equipment for the administration and monitoring of anesthesia; and Supervision of the services of an anesthetist by the operating surgeon. 13
The Stark Law AKA the physician self-referral law The Rule: If physician (or immediate family member) has financial relationship with entity (e.g. hospital), physician may not make referral to entity for designated health service ( DHS ) and entity may not submit claims for such services. Applies to Medicare and Medicaid Strict liability (no intent required) Can lead to FCA liability, CMPs, exclusion 42 U.S.C. 1395nn The Stark Law ASC services are NOT designated health services for purposes of Stark and, therefore, Stark does not apply in ASC setting so long as ASC does not provide separately billable DHS (services that are separately billed and that are not part of ASC composite rate) Designated Health Services = Lab services, therapy services, radiology/imaging, DME, prosthetics & orthotics, home health services, outpatient Rx drugs, inpatient & outpatient hospital services. Stark has numerous exceptions similar to AKS safe harbors 14
Proactive Compliance Tips All arrangements b/t ASC and referral source (e.g., physician) should be designed to fit within a safe harbor, if possible All arrangements b/t ASC and referral recipient (e.g., anesthesia group) should be reviewed by counsel to ensure AKS compliance Make sure that ASC is paying for any item that is included in Medicare s facility fee Proactive Compliance Tips Build an effective compliance program: (1) Implement written policies, procedures & standards of conduct (2) Designate a compliance officer and compliance committee (3) Conduct effective training & education (4) Develop effective lines of communication (5) Conduct internal monitoring and auditing (6) Enforce standards through well-publicized disciplinary guidelines (7) Respond promptly to detected offenses and undertake corrective action Seven Fundamental Elements of an Effective Compliance Program (HHS-OIG) 15
Questions? Scott R. Grubman, Esq. (404) 262-6505 sgrubman@cclblaw.com 16