Sixth Circuit Finds Limits to False Claims Act 

The sixth circuit court of appeals has found that there are limits to how the False Claims Act can be used to attach health care providers.  The court ruled that the future of an Independent Diagnostic Testing Facility to assure appropriately qualified providers supervised diagnostic tests could not form the basis for a claim under the False Claims Act.

The suit has been in the courts since it was filed by a qui tam complainant in 2006.  The lower court had found that the failure of the facility to assure appropriate supervision made claims for services “false claims” to which the extreme penalties of the Federal False Claims Act could be applied?

The appellate court found that even though the provider’s activities may have violated the conditions of participation for IDTFs, they did not amount to a violation of a “condition of payment.”  Based on the distinction between conditions of participation and conditions of payment, the court refused to apply the False Claims Act.

The extent that other courts will adopt similar reasoning in other types of cases is yet to be determined.  For now, providers can take some assurance in the fact that courts may be willing to find some limitation on the ability of the government to use the rather extreme penalties under the False Claims Act to prosecute every failure to comply with a condition of participation.  Had the court upheld the lower court’s ruling, it could have resulted in significant potential exposure to health care providers who could have been subject to False Claims Act exposure for every nonconformity with conditions of participation.

CHOW Provisions – State Operations Manual – SOM 3210.1 – Determining Ownership

For certification and provider agreement purposes, the authorized official is an individual (such as independent practitioner or sole proprietor) or an appointed official (including, but not limited to, an officer, director, manager, general partner, limited partner, etc.) of a legal entity such as a corporation or general partnership who is directly responsible for the business enterprise and has been granted the legal authority to enroll it in Medicare, to make changes and/or updates to its status in the Medicare program, and to commit it to fully abide by the laws, regulations and applicable program memoranda and manual issuances of the Medicare program. This party is legally responsible for decisions and liabilities in a business management sense. The same party also bears the final responsibility for operational decisions made in the capacity of a “governing body” and for the consequences of those decisions.

Whether the owning party owns the provider enterprise premises or rents or leases them from a landlord or lessor is immaterial. Of course, if the owner enters into an agreement that allows the “landlord” to make or participate in decisions about the ongoing operation of the enterprise, this indicates that the owner has entered into either a partnership agreement or a management agency agreement instead of a property lease. A new partnership agreement constitutes a CHOW.

To determine ownership of any provider enterprise or organization, the SA determines which party (whether an individual or legal entity such as a partnership or corporation) has immediate authority for making final decisions regarding the operation of the enterprise and bears the legal responsibility for the consequences of the enterprise’s operations.

CHOW processing is necessary for program participants that have Health Benefit Agreements or Provider Agreements in the Medicare program (hospital, SNF, HHA, hospice, CORF, OPT/SP providers and CMHC) because it must be determined who the responsible party is under the agreement. For the same reason, CHOW processing is necessary for supplier participants that have category-specific agreements with the Secretary (RHC, ASC, and FQHCs) or that must file cost reports (e.g., ESRD facilities).

Somewhat less extensive CHOW processing is necessary for the remaining supplier types without agreements or cost report requirements (e.g., PXR) to ensure compliance with the statutory requirement for ownership disclosure and to ensure that the program has current, accurate records regarding participants.

Self Disclosure Protocols Revised By OIG

The Health and Human Services Office of Inspector General released revised Provider Self-Disclosure Protocol (SDP). The new protocols were released on April 16, 2013. We have not reviewed the protocols in detail at this point and will likely have further information once we review them in depth and compare to previous protocols.  It appears from an initial reading that there were changes in the scope of coverage when there is a violation of the Stark Law. There is also a minimum settlement amount.  More detailed guidelines governing what is applcable in initial submissions are also included.

Stay tuned for more information on the new self-disclosure protocols that were released by the OIG last week.

Proposed CMS Rules Suggest Possible Future Changes To E.H.R. Donation Rules

The proposed regulations that were recently released by CMS and the OIG relating to electronic health record donations, provides a glimpse of what may be expected in the future.  Both agencies refer to concerns over “data lock” situations and donation agreements entered with clinical laboratories, DME companies, and other ancillary providers.  Although neither agency placed limitations on these arrangements in the current proposed rules, they both make it clear that they are looking closely at who should be a qualified donor under the donation regulations.

As they currently stand, the only effect of the proposed regulations would be (i) to extend the donation agreement sunshine deadline from December 31, 2013 to December 31, 2016, and (ii) to remove the requirement that software include electronic prescribing.  However, comment was solicited in other areas that make it pretty clear that we should expect the final rules to include other changes.

CMS appears to be considering what approach to take to address reports of clinical laboratories, DME providers and other ancillary providers using the Stark Law exception to enter into abusive arrangements.  CMS suggests that they may exclude certain classes of providers from being qualified donors.  They also allude to the possibility of adding an additional set of requirements to prohibit “data lock” situations.  They appear to be considering taking one or both approaches when final regulations are released.

For now, comments can be made to the proposed regulations.  Providers who have an interest in this issue might want to consider submitting comments in response to the OIG and/or CMS proposed regulations.  In the meantime, the discussions coming from the regulatory agencies cast a shadow over donation arrangements with many ancillary providers.  Even though the arrangements meet Stark Law and safe harbor provisions at the present time, it is not clear whether arrangements that are entered before the issuance of final regulations will qualify to permit extension of donation benefits beyond the first Sunset date of December 31, 2013.

Nursing Home Compliance Plan Risk Areas Identified in OIG Guidance from 2000

The OIG Guidance to Nursing Homes relative to their compliance plans was issued in 2000.  That document contained the elements that the OIG felt that Nursing Homes should consider in their compliance plans.  Now that the date has passed and nursing facilities and skilled nursing facilities are required to have adopted effective compliance programs, I thought it might be useful to list some of the risk factors that the OIG felt were important in 2000.  Obviously, these factors are not all inclusive and additional risk areas have been identified since that time.  Yet, the items identified in the 2000 OIG Guidance remains a viable starting point to assist facilities in identifiying risk areas that need to be addressed in their compliance programs.

Important Statement from the OIG – This factor should be specifically mentioned in all nursing home compliance plans:

The OIG believes that a nursing facility’s compliance policies should start with a statement that affirms the facility’s commitment to providing the care and services necessary to attain or maintain the resident’s ‘‘highest practicable physical, mental and psychosocial well-being.’’

Additional Factors Relative to Quality

• accurate assessment of each resident’s functional capacity and a comprehensive care plan that includes measurable objectives and timetables to meet the resident’s medical, nursing, and mental and psychosocial needs;
• inappropriate or insufficient treatment and services to address residents’ clinical conditions, including pressure ulcers, dehydration, malnutrition, incontinence of the bladder, and mental or psychosocial problems;
• failure to accommodate individual resident needs and preferences;
• failure to properly prescribe, administer and monitor prescription drug usage;
• inadequate staffing levels or insufficiently trained or supervised staff to provide medical, nursing, and related services;
• failure to provide appropriate therapy services;
• failure to provide appropriate services to assist residents with activities of daily living (e.g., feeding, dressing, bathing, etc.);
• failure to provide an ongoing activities program to meet the individual needs of all residents; and
• failure to report incidents of mistreatment, neglect, or abuse to the administrator of the facility and other officials as required by law.

Residents Rights.  To protect the rights of each resident, the OIG recommends that a provider address the following risk areas as part of its compliance policies:

•   discriminatory admission or improper denial of access to care;
• verbal, mental or physical abuse, corporal punishment and involuntary seclusion;
• inappropriate use of physical or chemical restraints;
• failure to ensure that residents have personal privacy and access to their personal records upon request and that the privacy and confidentiality of those records are protected;
• denial of a resident’s right to participate in care and treatment decisions;
• failure to safeguard residents’ financial affairs.

Billing Issues.

billing for items or services not rendered or provided as claimed;

• submitting claims for equipment, medical supplies and services that are medically unnecessary;
• submitting claims to Medicare Part A for residents who are not eligible for Part A coverage;
• duplicate billing;
• failing to identify and refund credit balances;
• submitting claims for items or services not ordered;
• knowingly billing for inadequate or substandard care;
• providing misleading information about a resident’s medical condition on the MDS or otherwise providing inaccurate information used to determine the RUG assigned to the resident;
• upcoding the level of service provided;
• billing for individual items or services when they either are included in the facility’s per diem rate or are of the type of item or service that must be billed as a unit and may not be unbundled;
• billing residents for items or services that are included in the per diem rate or otherwise covered by the third-party payor;
• altering documentation or forging a physician signature on documents used to verify that services were ordered and/ or provided;
• failing to maintain sufficient documentation to support the diagnosis, justify treatment, document the course of treatment and results, and promote continuity of care;
• false cost reports;
• routinely waiving coinsurance or deductible amounts without a good faith determination that the resident is in financial need, or absent reasonable efforts to collect the cost-sharing amount;
• agreements between the facility and a hospital, home health agency, or hospice that involve the referral or transfer of any resident to or by the nursing home;
• soliciting, accepting or offering any gift or gratuity of more than nominal value to or from residents, potential referral sources, and other individuals and entities with which the nursing facility has a business relationship;
• conditioning admission or continued stay at a facility on a third-party guarantee of payment, or soliciting payment for services covered by Medicaid, in addition to any amount required to be paid under the State Medicaid plan;
• arrangements between a nursing facility and a hospital under which the facility will only accept a Medicare beneficiary on the condition that the hospital pays the facility an amount over and above what the facility would receive through PPS;
• financial arrangements with physicians, including the facility’s medical director;
• arrangements with vendors that result in the nursing facility receiving non-covered items (such as disposable adult diapers) at below market prices or no charge, provided the facility orders Medicare-reimbursed products;
• soliciting or receiving items of value in exchange for providing the supplier access to residents’ medical records and other information needed to bill Medicare;
•  joint ventures with entities supplying goods or services;
•  swapping.

Reimbursement Rules for Telemedicine Slow to Develop

The absence of consistent, comprehensive reimbursement policies has historically been one of the most serious obstacles to the development of telemedicine.  Without uniformity in reimbursement it is much more difficult for providers to develop economically self-sustaining telemedicine programs.  If reimbursement is inconsistent, providers must look to other factors, such as enhancement of efficiencies, to justify the development of new telemedicine technologies.  We are beginning to see changes in state and federal reimbursement for telehealth services, but changes are coming slowly.

All health care reimbursement policy is disjointed between a variety of federal agencies, state governments, and various types of private health care payors.  Reimbursement policies play an important role in determining the rate which new modes of providing care can develop.  CMS policy often sets some of the general rules that other payors look to when setting their reimbursement policies.  Unfortunately, in the area of telehealth coverage, CMS has not taken a progressive approach to developing a reimbursement policy.  Some progress has been made toward expanding Medicare coverage.  Yet, Medicare coverage is still severely limited and is only (with very few exceptions) available to patients that are located in specific rural areas.

Many state Medicaid programs, including Wisconsin’s Badger Care Program, provide more expansive coverage of services that are provided using telemedicine technologies.  Other states have more restrictive coverage.  Private insurance policies vary widely.  Some states have passed laws that mandate telemedicine coverage.  Even of the states that have passed mandatory laws, the nature and scope of the mandate differ widely.

Unfortunately, this inconsistency and unpredictability in reimbursement serves as an impediment to development in telemedicine.  Even when a telemedicine program is developed, reimbursement inconsistencies increase administrative burdens involved with billing for services.  The inconsistencies also necessarily increase compliance risk if the provider is not up to date and accurate as to the reimbursement rules that are applicable.