Articles Posted in Compliance

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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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The Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) published an advisory opinion regarding the Anti-Kickback Statute.  The OIG concluded that the Anti-Kickback Statute would not be implicated where a charitable donation is made in the name of a healthcare provider, so long as the healthcare provider does not receive a tax deduction or other monetary benefit from the donation.

The request of the advisory opinion created an online scheduling website for certain manufacturers (pharmaceutical, medical and diagnostic) to schedule a time to meet with healthcare providers to educate the providers about new products.  Although the manufacturers would pay a fee for the time, healthcare providers would not be paid for their availability, nor would they have to pay to participate.  Rather, healthcare providers would designate a public charity to receive donations “in name of” the healthcare provider.  Restrictions on the donation include, the healthcare provider will not be entitled to a tax deductions or other monetary benefit from the donation and neither the healthcare provider nor a member of the healthcare provider’s family may be closely affiliated with the charity (i.e. serve on the charity’s board or be employed by the charity). 

In its conclusion that this arrangement would not violate the Anti-Kickback Statute, the OIG stressed that the healthcare provider must not receive any form of remuneration, including tax incentives.  In addition, the OIG noted that the requestor had put in place several safeguards to ensure that the program was not abused.

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The Office of Inspector General (OIG) of the Department of Health & Human Services (HHS) issued two advisory opinions.

The first advisory opinion released by the OIG involves a continuing care retirement community’s proposed rewards program for referrals by current residents and employees. The OIG determined that the proposed arrangement would not be a violation of the Anti-Kickback Statute, and thus would not subject the requestor to administrative sanctions.

The requestor for the OIG’s opinion on the proposed arrangement operates continuing care retirement communities (CCRCs). The CCRCs provide three levels of care: independent living, assisted living, and skilled nursing. Although continuing care residents have a contractual right to move to a higher level of care, a 2005 actuarial study conducted by the requestor found that two-thirds of those who enter the CCRCs at the independent living level are not expected to become residents of the community’s skilled nursing units. The CCRCs do not provide health care, nor do they participate in Federal health care programs.

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Section 6401 of the Patient Protection and Affordable Care Act (PPACA) grants the Secretary of the Department of Health and Human Services (the “Secretary”) the authority to require health care providers to adopt compliance programs as a condition of participation in the Medicare, Medicaid and CHIP programs. Before the PPACA, a corporate compliance program was only mandatory for a healthcare provider or supplier that was operating under a Corporate Integrity Agreement or had a contract with the federal government that exceeded $5 million and lasted longer than 120 days.

Although section 6401 lacks specific direction to the Secretary with regard to the health care providers that will be subject to the mandatory compliance programs and the core elements of the programs, the section gives the Secretary the authority to make these decisions. One exception to the lack of specific direction is found in section 6102 of PPACA. That section requires skilled nursing facilities (SNFs) and other nursing facilities to establish compliance programs. According to the language in section 6102, the SNF program must be “reasonably designed, implemented, and enforced so that it will be generally effective in preventing and detecting criminal, civil and administrative violations under this Act and in promoting quality of care.” The section lists eight required components of the compliance program, and requires that the programs be in place by March 2013. The eight required components include:

  • Compliance standards and procedures must be adopted and followed by employees and other agents in a position to reduce criminal, civil and administrative violations under the PPACA.
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    A bill in Florida’s Senate would target Medicaid fraud through the creation of a Fraud Strike Force and the expansion of the Medicaid Fraud Control Unit (MFCU) within the Florida Attorney General’s (AG’s) office. The Fraud Strike Force would direct state and local authorities to work together to more effectively investigate and prosecute Medicaid fraud and abuse. The strike force’s work begins in January 2011. It will consist of eleven state officials that will eventually recommend the best measures to coordinate state resources. The MFCU’s expansion in the Attorney General’s office includes the creation of positions committed to identifying and prosecuting Medicaid managed care fraud.

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

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