Articles Posted in Compliance

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The Detroit Free Press reported that the Detroit Medical Center has agreed to pay $30 million to the federal government to settle claims that involved violations of the Anti-Kickback Statute and Stark from improper financial relationships with referring physicians.  The majority of the relationships at issue in the DMC matter involved office lease agreements and independent contractor relationships that were either not consistent with fair market value or not in writing.  If you are a provider and would like to ensure that your relationships comply with Stark and the Anti-Kickback Statute, please contact Wachler & Associates. 

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The Department of Health and Human Services (HHS) Office of Inspector General (OIG) reported $25.9 billion of expected recoveries and savings in fiscal year (FY) 2010.  The large amount is a combination of audit receivables, investigative receivables and other legislative and cost-saving actions that OIG recommended. 

In addition, the OIG’s semiannual report documented that it initiated 647 criminal actions and 378 civil actions against individuals or entities that engaged in crimes against departmental programs.  These actions included lawsuits under the False Claims Act (FCA), the Civil Monetary Penalties Law (CMPL) settlement and other administrative recoveries related to self-disclosure. 

Finally, the report indicated the Health Care Fraud Prevention and Enforcement Action Team’s (HEAT) success in fighting fraud.  That program alone recovered $71.3 million in investigative receivables.  

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Last week, the House and Senate passed the “Red Flag Program Clarification Act of 2010.”  The Act limits the definition of “creditor” to a person who obtains or uses consumer reports in connection with a credit transaction, furnishes information to consumer reporting agencies in connection with credit transactions, or advances funds based on the recipients’ obligation to repay.  The bill excludes from the definition persons, such as health care providers, who “advance funds” by providing services before receiving payment.  Relevant government agencies, however, are permitted to designate creditors that will be subject to the Rule.  The Agencies will designate based upon the determination that the person manages accounts that are subject to a reasonably foreseeable risk of identity theft.  These designations must be made through agency rule making. 

The enforcement of the Red Flags rule has been delayed several times, with the most recent delay expiring on January 2011.  The FTC previously determined that health care providers met the definition of “creditor.”  While the Clarification Act’s revised definition would not include most health care providers, the FTC could still designate health care providers as “creditors” through the rule making process based on the risk of medical identity theft concerns previously voiced by the FTC. 

For more information on the Red Flags rule, please visit www.wachler.com or contact a Wachler & Associates attorney at 248-544-0888. 

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The United States Justice Department reported that in 2009 it collected $3 billion from pursuing health care fraud and other false claims against the federal government.  More than 80% of the recoveries were from healthcare fraud, including qui tam actions under the False Claims Act.  Bloomberg News reported that Tony West, Assistant Attorney General in charge of the Justice Department’s civil division, stated that the Justice Department would hold those who violate the federal False Claims Act accountable, whether they are a corporation or individual.  The $3 billion recovery in 2009, the second largest in history, is evidence of the aggressive nature with which the DOJ is pursuing False Claims Act violations. 

False Claims Act violations can give rise from submission of claims for services not rendered, submission of claims for services that were not medically necessary or were improperly coded and billed.  Further, as a result of the health care reform legislation, False Claims liability can attach to the retention of a known overpayment that is not refunded within 60 days of identification.  For more on the False Claims Act, or for assistance with health care regulatory or billing matters, please visit www.wachler.com or contact a Wachler & Associates attorney at 248-544-0888. 

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The device manufacturer, ELA Medical, Inc. agreed to pay the United States $9,178,000 to settle allegations that it violated the False Claims Act by giving kickbacks to cardiologists in exchange for the cardiologists ordering and causing hospitals to order ELA’s cardiac devices.  The settlement resolves a qui tam action from 2006 that was filed by a former ELA employee.  According to the allegations the cardiologists were given gifts, meals and entertainment, tickets to sporting events, travel to medical conferences, travel to Costa Rica, fishing and boating trips and payment of travel expenses for the physicians’ spouses.  In addition to the settlement payment, ELA agreed to pay $485,000 to the relator’s attorneys and ELA also agreed to enter into a Corporate Integrity Agreement with the Officer of Inspector General of the U.S. Department of Health and Human Services (OIG).  The relator’s share of the settlement amount is approximately $1.9 million.

There is also a second qui tam action pending against ELA.  The relator in that action alleges that ELA paid kickbacks to cardiologists by paying excessive compensation for training services.  The parties in the second qui tam action have reported that they are engaged in settlement discussions and that the case has been administratively closed due to those discussions. 

For more information on the False Claims Act and Anti-Kickback Statute, please visit www.wachler.com or contact a Wachler & Associates attorney at 248-544-0888.

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Last week the Office of Inspector General (OIG) issued two Advisory Opinions addressing proposed programs that could potentially implicate the anti-kickback statute and the imposition of civil monetary penalties (CMPs).

The first OIG Advisory Opinion, 10-18, analyzed a proposed program by a health system which involved post-surgical free hotel accommodations to pediatric tonsillectomy patients insured by federal healthcare programs.  The health system provides services in a rural area and consists of four facilities that provide tonsillectomies.  The proposed program would offer the free overnight stay to pediatric tonsillectomy patients who are treated at the health system’s Surgery Center.  All of the procedures performed at the Surgery Center will be by ear, nose and throat specialists (Clinic ENTs) who only perform tonsillectomies at hospitals in the Health System.  Even though the patients that stay at the adjacent hotel will be Federal healthcare program beneficiaries, neither Federal healthcare programs nor private insurers will be billed directly or indirectly for the costs.  The OIG’s Advisory Opinion listed several components of the proposed program which contributed to its determination that the program would not constitute grounds for violation of the anti-kickback statute.  These included:

– The Clinic ENTs that perform the services do not have privileges at hospitals outside the Health System and do not perform tonsillectomies at hospitals outside the Health System.

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On September 23, 2010 the Centers for Medicare and Medicaid Services (CMS) published the Medicare self-referral protocol (SRDP).  The SRDP was established by sec. 6409 of the Affordable Care Act (ACA) which required the Secretary of Health and Human Services to establish a Medicare self-referral program that affords providers of services and suppliers the opportunity to self-disclose actual or potential violations of the physician self-referral statute.  The SRDP is open to all health care providers of services and suppliers, whether individuals or entities, and is not limited to a particular industry, medical specialty or type of service.  The purpose of the SRDP is to facilitate the resolution of matters that the disclosing party reasonably assesses are actual or potential violations of the Stark Law.  Thus, disclosing parties should make a submission to the SRDP only with the intention of resolving its overpayment liability exposure for conduct it identified.  CMS will evaluate the facts and circumstances surrounding the disclosed conduct to determine an appropriate solution.  It is important to note that CMS is not obligated to follow conclusions made by a disclosing party regarding the matter and has no obligation to resolve the matter in a particular way.

The disclosing party must submit the disclosure electronically and submit an original and 1 copy by mail to the Division of Technical Payment Policy.  Information required to be in the disclosure includes: (1) description of actual or potential violation(s); (2) financial analysis; (3) a signed certification stating that best to the individual’s knowledge, the information provided contains truthful information and is based on a good faith effort to bring the matter to CMS’s attention.

For more information on the SRDP or for assistance with Stark compliance measures please call a Wachler & Associates attorney at 248-544-0888.

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A manufacturer of cochlear implants (“Requestor”) inquired whether a Proposed Arrangement would violate the Anti-Kickback Statute and result in civil monetary penalties.  The Office of the Inspector General for the Department of Health and Human Services (OIG) concluded that the Proposed Arrangement presents more than a minimal risk of violation of the Anti-Kickback Statute.

Cochlear implants are devices, covered by the Medicare and Medicaid programs, which assist patients’ ability to hear.  The implants consist of both internal and external components.  The internal component of the device is surgically implanted and following the implantation an audiologist must program the external sound processor.  Patients may choose the cochlear implant device and this choice may be influenced by the patient’s audiologist or surgeon.  The Requestor warranties the external component and operates a toll-free telephone line for customer’s questions and concerns about their product.  However, since customers often contact the Clinics for assistance with their devices, Clinics will provide troubleshooting services (Services) pursuant to the Requestor’s established process.

The Proposed Arrangement would operate pursuant to a written agreement between the Requestor and the Clinics.  The Requestor would compensate the Clinics $37 per occurrence for the Services.  The compensated Services would include those provided the Requestor under the customer’s warranty.  The Requestor affirmed that the fee was consistent with the fair market value and that Clinics would be prohibited from billing third-party payors or patients for the services.  These services would not be marketed to the patients. 

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The U.S. Department of Health and Human Services Office of Inspector General (OIG) recently issued two Advisory Opinions.  The first Advisory Opinion, AO 10-12, found that an arrangement between a grant program operated by a nonprofit, tax exempt charitable organization that provides grants to brain tumor patients who require financial assistance for the costs of drugs and/or devices would not result in civil monetary penalties (CMPs) even though the arrangement could cause prohibited remuneration under the Anti-Kickback Statute.

Although the funding for the grants comes from manufacturers of drugs and devices used to treat brain tumors and other conditions covered by the program, the OIG found sufficient safeguards in the system that mitigate the risk of improper influence.  First, the grant program will award assistance to beneficiaries based on objective criteria.  The assistance will not limit the patient’s ability to choose a provider, practitioner or supplier because the patient will have already made these choices prior to receiving the assistance.  In addition, no donor will exert control over the Foundation or affect the Foundation’s decision to award assistance.  Donors will not receive data that would allow it to determine the correlation between its donations and the use of its products or services.

In the second Advisory Opinion, AO 10-13, the OIG determined that it would not impose administrative sanctions for the provision of free insurance pre-authorization services because the arrangement included sufficient safeguards to reduce the risk that the free services would be inducements for referrals.  The proposed arrangement involved a hospital addressing requests from insurers for the pre-authorization of diagnostic imaging services before they are completed by the hospital.  The pre-authorization services would be provided by the hospital free of charge and without regard to the volume and/or value of any physician referrals.

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The Office of Inspector General (OIG) for the Department of Health and Human Services recently announced a discovery that during the time period from July 15, 2010 through August 4, 2010 the search/verification function on the online searchable List of Excluded Individuals/Entities (LEIE) was not working properly.  Therefore, health care providers who conducted searches during this time period are advised to repeat the searches because it is possible that searches may have resulted in false negative results, i.e. individuals and/or entities that are actually excluded may have shown up as not excluded.

Medicare providers who contract with or employ excluded providers are subject to civil monetary penalties, nonpayment for services and possible exclusion themselves.

For more information regarding obligations to search the excluded providers list as well as other compliance issues, please contact a Wachler & Associates attorney 248-544-0888.

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