Health Law Blog - Healthcare Legal Issues

US Attorney Manual Updated to Incorporate Yates Memorandum

November 1st, 2016

DOJ Directives Incorporating the Yates Principles

This is the third installment on our blog series covering the Yates memorandum and changes in Federal policy regarding prosecution of individuals for corporate wrongdoing.

In September of 2016, the DOJ issued revisions to its Manual used to provide guidance to U.S. Attorneys.  The revisions include the directives set forth in the Yates Memorandum together with subsequent clarification that was provided by the DOJ.  The revision to the Manual added a new section entitled “Focus on Individual Wrongdoers.”   The individual wrongdoer sections of the Manual cover the general principles that were set forth in the Yates Memorandum as well as revisions reflecting the new concepts regarding corporate cooperation credit, privilege assertion, and cooperation between criminal and civil enforcement authorities.

The Manual revisions should indicate the seriousness of this issue.  The Manuals are used as a primary reference by prosecutors across the country who are responsible for prosecuting corporate wrongdoing.  The revisions indicate that the DOJ is making the concepts included in the Yates memorandum into operational policy.  Agents will be judged and reviewed on their effectiveness complying with this policy.  This action is a clear indication that the Yates concepts are real.  We can expect a much higher degree of scrutiny on individual corporate wrongdoing.

As stressed in previous blog articles, companies must review their policies and procedures for investigating potential wrongdoing and implement changes that mitigate their risk in view of the new Federal policy.

Certification of Investigation of Individual Wrongdoing Under the Yates Memorandum

September 29th, 2016

Certification of Full Disclosure of Individual Wrongdoing

Certification of Investigation Individual WrongdoingIn early 2016, issues were reported that suggested that corporations may be asked by the DOJ to certify that they have disclosed all relevant information regarding potential individual liability.  According to the article, a DOJ spokesman noted that such a confirmation is necessary to ensure that companies understand that “investigations cannot end with a conclusion of corporate liability, while stopping short of identifying those who committed the underlying conduct.”  It has since been clarified by the DOJ that there is no such certification requirement though the DOJ has noted that in some cases they might request a company to clarify that all relevant facts have been disclosed as a condition of settlement.  The same statement indicates that the DOJ is not seeking perfection but rather a general attitude of cooperation when considering whether to credit the company with cooperation.

So what does this all mean?  Will a company that is under investigation be asked by Federal prosecutors to certify that they have disclosed all relevant information relating to individual liability before being able to settle with the DOJ or other enforcement agency?  The answer to that question is a definite…maybe.  DOJ is very artful in its public proclamations.  Its statement that there is no “requirement” for requesting a certification is correct.  Viewed from that angle, there is no “requirement” for the whole Federal policy reflected in the Yates Memorandum.  It is rather clearly going to be up to the specific prosecutor.  If a prosecutor feels that he or she needs a certification to assure that the company has established the basis for cooperation credit, you can expect to be asked for a certification.

My guess is that certifications will become standard operating procedure.  Just put yourself in the position of a prosecutor whose boss just came out with a new, very strict policy regarding individual responsibility.  This policy requires a company to investigate and disclose individual wrongdoing in order to receive some element of forgiveness in the process.  I think you are going to back that up with a certification from the company, don’t you.  You are going to want the company to put it clearly in writing; signed, sealed, delivered; maybe even notarized.  If it turns out to be wrong and you are catching a hard time from your boss, you are going to want to be able to seek recourse from the party that lied to you.  Don’t you think?

How Should Compliance Process Integrate the Yates Memorandum?

September 29th, 2016

Compliance Process and the Yates Memorandum?

Yates Memorandum Compliance Investigation ProcessThe controversial Yates memorandum is one of the most significant policy changes to ever come out of the Department of Justice.  Companies in virtually every industry should be examining their practices in view of the significant shift in emphasis of Federal prosecutors.

Here are a few points that suggest actions that should be taken by compliance officers and other corporate officers in reaction with the new Federal policy.

1.     The Yates memorandum is a “board-worthy” issue.  Board members and upper management must all be advised of the new DOJ position and the impact on their responsibilities and the compliance process.  The stakes involved in corporate wrongdoing have clearly been raised by Federal prosecutors.  This is serious business.

2.     Significant committees should be advised and integrate these principles into their activities.

3.     Internal investigation process must be amended in a number of ways, some specific to new steps that are required to be taken and to stress the importance of investigating individual wrongdoing.

4.     The process and flow of addressing internal investigations must be reviewed and in many cases revised to meet the new requirements.  A new triage step must be added to the analysis of the investigation process to determine whether there is any potential individual wrongdoing that should be investigated and disclosed.

5.     The dynamics between lower level wrongdoers and the company may be changed because of the increased probability of individual prosecution and the need for the company to disclose all information relating to individual liability.   This will require companies to investigate employees much more frequently.

6.     The need to assure that UpJohn warnings are provided to employees who may have individual liability is increased.  This should be reflected with specific provisions in the investigation process.   It is critical that evidence obtained through internal investigation not be “contaminated” by not giving proper notifications to subjects.  Contamination of evidence could have a negative impact on eligibility for cooperation credit from Federal prosecutors.

7.     Investigation process and procedures need to be reviewed and made air tight.  Detailed investigation steps should be laid out in the investigation policy and supporting documents.  The UpJohn process should be memorialized in investigation policies and procedures to reflect the need for companies to take more intense actions to investigate employees.  No specific changes are required in the UpJohn process, but the process must be well defined and systematized.  Many companies do not specifically address the need to give UpJohn warnings in their investigation policies.

8.     Investigation reports must cover each and every potential subject of the investigation and all relevant information should be disclosed in the report.   The investigation of each potential subject must be taken to a conclusion regarding potential individual wrongdoing.

9.    Yates requires a complicated privilege analysis which should also be considered for inclusion in policies and procedures.  Clarification provided by Federal prosecutors following issuance of the initial Yates Memorandum provides a degree of guidance about what information can be privileged and what cannot.

10.     Broad knowledge of the new Federal focus on individual accountability should be provided within the organization.  Employees and contractors should be advised of the new investigation policies and processes that will apply if an investigation is necessary.  All should understand what will occur if they become the subject of a Federal or internal investigation.

11.    Corporate liability will be influenced by the compliance process, tone from the top, effectiveness of the compliance process and other indications of an effective compliance program.  Individual liability will be largely based on the elements of the potential infraction.  Investigation process must include an analysis of the elements of the potential infraction with respect to each potential subject of an investigation.  Investigation reports and forms should be adjusted to assure that these standards are consistently maintained.  Evidence should be organized and attributed to each applicable subject in support of investigative conclusions.

12.    Compliance officers must educate individuals within the organization regarding the seriousness of these developments.  The best outcome is that individuals will take their role in preventing wrongdoing more seriously and will proactively operate in a manner that makes it unlikely that wrongdoing will ever occur.

For more information regarding the Yates Memorandum and other compliance and health law issues, stay tuned to our blog.

New Federal Prosecution Standards Require Revisions to Investigation Policies

September 27th, 2016

Impact of the Yates Memorandum on Civil Enforcement Liability

Yate Investigation Policy RevisionThe infamous Yates Memorandum revised Federal prosecutorial policy to place more of a focus on individual wrongdoing. Federal prosecutors now have clear directions from the top of the DOJ to consider individual liability prior to resolving any investigation or reaching settlement with respect to corporate wrongdoing. The Yates memorandum extends beyond federal agents who are considering criminal charges against companys or individuals. The Memorandum specifically states that the concept of consideration of individual liability should extend to governmental subdivisions that are responsible for assessing potential civil liability, monetary penalties, program exclusion and other remedies short of criminal prosecution. Government actors are compelled to consider individual monetary responsibility regardless of whether or not the individual has the ability to satisfy the potential award.

Clearly the stakes have gone up for individuals who are involved in companies that commit wrongdoing. In order to receive benefits of having cooperated with governmental investigators, a company must provide all information relevant to individual liability. This requires the company to conduct a robust internal investigation of all potential subjects and to bring the investigation to resolution with respect to each such individual. As a practical matter, when allegations of wrondoing are made, a company investigation will need to broadly consider potential wrongdoing of any employee for which there is any reasonable basis to believe may have been involved in wrongdoing. The incentive of the company will be to be overly broad in its consideration of potential investigatory subjects. This means that corporate employees are exposed to a much higher risk of coming onto the radar of a possible internal investigation. If the individual raises to the level of being a possible “subject,” the investigation will go even further.

In effect, Federal policy regarding prosecution and civil remedies has placed the company’s compliance program in the position of having to broadly consider potential wrongdoing of its employees whenever issues are identified. This is not only to avoid potential criminal exposure, but also to mitigate potential claims for civil liability under the False Claims Act, monetary penalty regulations and other possible civil exposure. This change in Federal policy has a number of impacts on the compliance and ethics program of the company. Of primary importance is the process that is used by the company to investigate employees and contractors who are potential individual wrongdoers. In the past, corporate employees could normally rely on not being the target of criminal or civil liability because the focus was largely on corporate liability. Investigation policies were naturally geared toward gathering information from employees who were more or less alligned with the interests of the company. This dynamic has now changed. A company will much more frequently be in a position of having to hunt for individual wrongdoing and disclosing that wrongdoing to governmental investigators as a condition of receiving cooperation benefits.

This makes it significantly more important for the compliance program to include detailed and standardized processes for conducting internal investigations and reporting the results. Frankly, most compliance investigation policies are not adequately robust to mitigate risk under the new Federal enforcement regimen. Company compliance officers should be reviewing their investigation policies now to bring them up to the standards that are required under the new Federal policy. The standardized investigation process should be defined in detail. There should be detailed requirements for providing corporate “Upjohn” warnings to employees who are questioned. Guidelines for maintaining privilege should also be considered among other items.

Perhaps most importantly, companies should not be lulled into thinking that nothing has changed. The change in federal enforcement policy is an issue that must be brought to corporate management, compliance committees, and the board of directors. In short, this is a “board-worthy” issue that requires action to be taken to at least review, and in most cases make significant revisions, to investigation policies and perhaps other aspects of the corporation’s compliance program.

John Fisher, CHC, CCEP

Telemedicine Medicare Reimbursement Expansion Proposed

September 9th, 2016

Telemedicine Reimbursement; 8 New Codes Proposed by CMS

The Center for Medicare and Medicaid Services (CMS) has released proposed regulations that would increase telehealth coverage. The proposed regulations would add 8 new CPT codes to the list of Medicare covered telehealth encounters. If adopted, the new codes would be available beginning January 1, 2017. by 8 new Current Procedural Terminology (CPT) codes for services beginning January 1, 2017. This is part of the proposed rule making for Part B physician and practitioner services. Four of the new codes involve services related to end-stage renal disease (90969, 90970, 90968, 90967). Two new temporary codes are proposed for critical care evaluation and management (GTTT1, GTTT2). Lastly, two codes are proposed related to explanation and discussion of advance directives (99497, 99498).

The rue has a comment period and the new codes are not effective until January 1, 2017 even if adopted in final form.

What Is The Different Between Fraud, Abuse, and Criminal Conduct

September 1st, 2016

Fraud, Abuse, Over-payment – When Does a Mistake Become Fraud?

Fraud Abuse OverpaymentIf you are involved in any way in the health care system, it should be obvious by now that the government has committed ever increasing resources to the prosecution of fraud and abuse cases. Simply put, from a governmental standpoint, prosecuting fraud and abuse is good business. Every dollar that the government puts into pursuing health care fraud and abuse brings a return of around 7 or 8 dollars. If you are in business what do you do if you know that you can invest $1 and obtain a consistent $7 return on that investment; you spend the $1 as many times as you can. That is exactly what the government is doing when it comes to health care fraud and abuse. It is worthy of note that we are not just talking about pursuing criminals when we talk about health care fraud and abuse.

Certainly there are a lot of criminals out there who are intentionally trying to steal from the system through fraudulent schemes. Fraud and abuse encompasses a much broader type of activity. There are numerous situations where unintentional activity (i.e. a billing or coding error) can result in being overpaid by the federal government under a governmental health care program. I don’t want to say that this happens to everyone in the health care system; but it certainly happens to a lot of people, usually as a result of some sort of neglect or misinterpretation of some very complex regulations. Take for example the supervision rules that are discussed in another article in this newsletter. They are extremely convoluted and it is hard to imagine who every doctor could have it clear in his or her mind which rules apply and exactly what is required in each specific instance. Nevertheless, a billing occurs and if the proper supervision is later found to not be present, an over-payment results. This is an example of what the government considers to be “abuse.” No criminals are involved here, but an over-payment and technical abuse of the system has occurred.

The manner in which this situation is dealt with becomes critically important in determining whether there is a simple correction of the situation or whether it is escalated to higher levels of culpability; whether the simple inadvertent abuse becomes fraud. Let’s skip forward to a time when the doctor discovers that a mistake has been made in the level of supervision that was provided in the past. What happens now it very important. First, lets imagine that the doctor comes forward and admits the error. There is some money owed back to the governmental health program. This part of it will never go away. But lets say that the doctor lets it slide for half of a year and does nothing. Under current law, the doctor’s potential exposure has just escalated into a completely different zone of risk and potential culpability. Federal law says that the Federal False Claims Act applies if an over-payment is not corrected within 60 days after discovery. There are a lot to technical rules about when an over-payment is deemed to have been discovered. I am not going to get into that right now.  the doctor is potentially exposed to three times the original over-payment. But that is not the extent of it. The doctor is also exposed to additional damages in the amount of $11,000 per claim; for every individual service claim that resulted from the initial mistake in complying with the supervision regulations. This case has now escalated from abuse into fraud. From here it is just a matter of establishing intent to make this a criminal case.

“Incident to” Billing Rules Clarified by CMS for 2016

September 1st, 2016

Recent Changes to Medicare “Incident To” Billing Rules

incident to billing rules supervision requirementMedicare permits a physician to bill for certain services that are furnished by a nurse practitioner or other auxiliary personnel under what is referred to as the “incident to” billing rules.  The “incident to” rules permit services or supplies furnished as an integral, although incidental, part of the physician’s personal professional services in the course of diagnosis or treatment of an injury or illness to be reimbursed at 100% of the physician fee schedule, even if the service is not directly furnished by the billing physician.

A significant requirement to permit the services of physician extenders to be billed as “incident to” services requires direct personal supervision by the physician. The supervising physician does not necessarily need to be present in the same room where the procedure is being performed.  The “direct supervision” standard requires the supervising physician to be “physically present in the office suite and immediately available to furnish assistance and direction” during the time when the  auxiliary personnel is providing the service.

The 2016 Medicare physician payment rule provided some clarification on how the direct  supervision requirement under the “incident to” billing rules operates.  The new rule clarifies that the physician who directly supervises the applicable auxiliary personnel is the only party that can bill the service of the auxiliary personnel as “incident to” his or her service.  CMS considers this to be a clarification of its longstanding policy, but many providers will see this as a new restriction on the application of the “incident to” rules.

To understand the significance of this “clarification,” it is useful to note that more than one physician is often involved in the care of a patient.  It is not uncommon for one physician to visit the patient and order a test or procedure that is supervised by another physician.  Prior to this “clarification,” the physician that originally ordered the service might have billed the service as “incident to” even though another physician actually supervised the performance of the service.  The revised regulatory language clarified that this is not permitted and that only the physician that is actually present in the office suite and supervises the service can bill for the service as “incident to” their service.  When making a claim for services billed “incident to” a physician’s services, the billing number of the physician that actually supervises the performance of the service must be used rather than that of the ordering physician.

CMS clarifies the reasoning behind this rule as follows: “[B]illing practitioners should have a personal role in, and responsibility for, furnishing services for which they are billing and receiving payment as an incident to their own professional service.”

In view of this regulatory clarification, providers may wish to reexamine their billing process and procedures to clarify the correct billing for “incident to” services.  Staff should also be trained on the proper supervision of services that are billed under the “incident to” rules.

False Claims Act Liability – Conditions of Participation and Conditions of Payment

June 24th, 2016

7th Circuit Law on False Certification Completely Changed Overnight

False claims act supreme courtUp until June 16, 2016, the law in the 7th Circuit was very clear; violations of conditions of participation did not support a potential False Claims Act claim.  Only violation of a specific condition of payment could support potential liability.

That all changed with a decision of the United States Supreme Court that was issued on June 16, 2016.  In a case arising out of the Massachusetts Medicaid program, the Supreme Court held that under the right circumstances, the violation of a condition of participation can give rise to False Claims Act liability.  Universal Health Services v. United States ex rel. Escobar, http://www.scotusblog.com/case-files/cases/universal-health-services-v-united-states-ex-rel-escobar/

In rejecting the distinction between conditions of payment and conditions of participation.  Instead, in the Court’s opinion “what matters is not the label that the Government attaches to a requirement, but whether the defendant knowingly violated a requirement that the defendant knows is material to the Government’s payment decision.”

When evaluating the FCA’s materiality requirement, the Government’s decision to expressly identify a provision as a condition of payment is relevant, but not automatically dispositive.  A misrepresentation cannot be deemed material merely because the Government designates compliance with a particular requirement as a condition of payment.  Nor is the government’s option to decline to pay if it knew of the defendant’s noncompliance sufficient for a finding of materiality.  Materiality also cannot be found where the noncompliance is minor or insubstantial.

The net effect of the decision is to case uncertainty over the false certification analysis.  At least in the 7th Circuit, prior to the Court’s decision, we at least knew that only failures in condition of payment could support potential False Claims Act liability.  Simple violation’s of conditions of participation could not support such a claim.  Now we are told that violation of a condition of participation can result in a False Claim if it is “material” to the Government’s payment decision.  The standard no requires analysis of each situation under the “materiality” requirement.

People in the health care industry know that violations of conditions of participation happen frequently.  Facilities often receive citations, and must correct deficiencies.  When those deficiencies can result in False Claims is now quite nebulous.

CMS Releases Final Rules Under Medicare Shared Savings Program

June 21st, 2016
  • final aco rule revision 2016 msspMSSP Final Rules Revision ACO Requirements Under Shared Savings Program – 2016 Revised MSSP Regulations Issues

On June 10, just in time for my birthday (thanks CMS), the Centers for Medicare & Medicaid Services (CMS) released final rules amending the regulatory requirement applicable to the Medicare Shared Savings Program (MSSP). The Final Rules that were published on June 10, 2016 state the intent to encourage additional participation in the program and to ease financial burdens on participating Accountable Care Organizations (ACOs). The regulations attempt to provide incentives for existing ACOS to renew their participation and elect to pursue higher levels of risk. The revised rules reflect an element of additional flexibility that ACOs may be able to take advantage of when transitioning between participation tracks.

There are a variety of changes in the new regulations. A few of these changes include:

  • Clarifications regarding times that shared savings and shared loss claims may be re-opened by CMS.
  • Changes in how benchmarks will be calculated beginning in 2017. (Increasing consideration of regional Medicare expenditures total population health of the population that is assigned to the ACO).
  • Adoption of adjustments based on average fee-for-service Medicare expenditures applicable to the relevant regional service area for purposes of calculating benchmark adjustments. County-by-county averages will be utilized for expenditures attributable to the total cost of services to beneficiaries within the applicable county.
  • Adoption of risk-adjustment factors when revising an ACO’s benchmarks. Risk adjustment is to be based on the relative health status of the ACO’s assigned population.
  • Revision of the manner in which CMS performs truncating and trending calculations.

The new rules clarify that CMS has the authority to reopen and make revisions to MSSP payments in cases of fraud and for other similar reasons. Even when fraud does not exist, CMS will have four years after providing notice of initial determination of shared savings or loss to reopen and revise for any good cause. Unfortunately, there is not definition of what constitutes “good cause” in the new rules. In comments, CMS indicates that it will excercise this authority where there evidence that was previously unavailable evidence that indicates error in the original determination or where previously available evidence is clearly determined to have been relied on erroneously. This rather broad “reopening” authority presents significant financial uncertainty for ACOs.

Under the new rules, ACOs will now be able to remain in Track 1 for a fourth year before transitioning into Tracks 2 and 3 which involve higher degrees of risk. Additionally, ACOs that choose to progress to higher risk tracks will be able to have their benchmark recalculation deferred for an additional year. These changes are being made to make it easier for ACOs to transition to higher risk tracks.

 

Population Health Management and Clinical Integration

June 13th, 2016

Population Health ManagementPopulation Health Management and Clinical Integration – The Center of the Reformed Health Care System

Population health management is bigger than ever now that health reform has become ingrained in our health care system.  The concept of population health management is not necessarily new.  Related concepts emerged in the 1990s when capitated reimbursement gained some converts.  It was known then that in order to succeed under fixed levels of total compensation required systems to be developed to make people healthier while at the same time managing cost and resource utilization.  When a network took on capitation, it knew that it had to look at its patients as a population.  This was a change from the fee-for- service mindset that was previously and subsequently predominant in the health care system.  I think it is fair to say that there were very few organizations that successfully applied population management standards under alternative payment systems in the 1990s.  We very quickly saw capitation fall into the background because, with a few exceptions, the system just did not have it figured out yet how to view and manage population health.

Population health management has come a long way since those early efforts in the 1990s.  The concept is again front stage, but this time organizations have a head start building on what was learned in the past.  Technology and data analysis has become much more sophisticated and commonplace.  Technology is a necessary component of managing a population health and quality.  Evidence based medicine supports population management by collecting and applying baseline data, comparing data to other baselines, helping to structure evidence based care protocols based on current medical outcomes studies, and the ability to measure the success of an applied process or protocol.  This move toward technological support of population management was behind the move to virtually mandate electronic health records through legislation and regulations.  This technological infrastructure now serves as the backbone to permit data to be extracted in support of evidence-based population health management.

Population management is being embraced by forward looking organizations that have a vision of the future.  It can be quite an adjustment to make the changes that are necessary to indicate success under a population management system.  The old system rewarded providing more services that were reimbursed on a fee for service basis.  The old fee-for-service model is changing rapidly.  Overall population quality, outcomes and cost efficiency are now taking front seat.  Some providers who did very well under the old system can have difficulty adjusting their practice patterns to adjust to the new regimen.  More service led to more revenues under the old system.  Under population management, more is not always better.  Concepts of “more” are being replaced by concepts of “appropriate.”  Appropriate levels of service performed in appropriate service locations, by appropriate providers.

Hospitals, health care system, physician groups and others are finding it necessary to adapt to a new world in which providers are rewarded for meeting quality objectives for their entire patient population.   Where volume used to be king, efficiency and quality have now taken over the health care kingdom.

Our health care practice is normally a great indicator of trends in the industry.  In the 90′s we did a lot of provider integration work.  This work has now come full circle and is again a major part of our health care practice.  Our health law practice is involved creating clinically integrated organizations that are equipped to manage population health on several fronts.  This is an exciting process for our health law team as we are on the cutting edge of the hottest issues in health care.  We are creating new health care systems that include new collaborative relationships between providers.  We are applying these concepts in unique and creative ways.  This creative process results in a very exciting legal practice.

We will be posting a series on clinical integration in which we share some f our experience applying population management and evidence-based evidence standards to a number of specific types of organizations.  We will touch on some of the legal, business and operational challenges that we have encountered.

Grab our rss feed and come along for the journey as we cover “clinical integration in the new millennium.”

About the Author

John H. Fisher

Health Care Counsel
Ruder Ware, L.L.S.C.
500 First Street, Suite 8000
P.O. Box 8050
Wausau, WI 54402-8050

Tel 715.845.4336
Fax 715.845.2718

Ruder Ware is a member of Meritas Law Firms Worldwide

Search
Disclaimer
The Health Care Law Blog is made available by Ruder Ware for educational purposes and to provide a general understanding of some of the legal issues relating to the health care industry. This site does not provide specific legal advice and you should not use the information contained on this site to address your specific situation without consulting with legal counsel that is well versed in health care law and regulation. By using the Health Care Law Blog site you understand that there is no attorney client relationship between you and Ruder Ware or any individual attorney. Postings on this site do not represent the views of our clients. This site links to other information resources on the Internet; these sites are not endorsed or supported by Ruder Ware, and Ruder Ware does not vouch for the accuracy or reliability of any information provided therein. For further information regarding the articles on this blog, contact Ruder Ware through our primary website.