Fraud Risks Between Nursing Homes and Hospice Providers

Relationships between hospices and nursing homes are a particular area of concern.  OIG is inherently suspicious of benefits that hospices may provide to nursing homes in order to gain hospice referrals of nursing home patients.  For example, if a hospice provides services to nursing home patients that are normally provided by the nursing home, the benefit could be deemed to be a “kickback” for referrals.  Hospices should have clear policies and procedures regarding the scope of services to be provided to nursing home patients.  Any formal agreement with a nursing home should be carefully scrutinized to assure compliance and provision should be added agreeing to the appropriate scope of care that is to be provided to nursing home patients.

Government focus on hospice providers should heighten awareness to these issues.  Hospices must make certain that they have formal compliance programs in place and that the compliance program is actively operated to identify and address risk.  Certainly, the risks identified above should be addressed by all hospice providers.  There are a broad range of additional items that should be actively addressed.  Additionally, all elements of the compliance program should be fully operationalized.  Even the most robust compliance program will not necessarily detect all compliance problems.  It is important that hospice providers are able to demonstrate that they are continually monitoring risk and operating their program.  When undetected programs come to light, the hospice provider will be able to show that reasonable steps are routinely taken to identify and correct problems.  This will go a long ways toward reducing potential exposure, even in cases where risk is not detected through the program.

Period of Disallowance Under the Stark Law 

When considering making self disclosure of arrangements under the Stark Law, the concept of “period of disallowance” is of central importance.  The period if disallowance generally refers to the period of timing during which a compensation arrangement is out of compliance with a Stark Law requirement.

To understand this concept, it is important to understand what the Stark Law prohibits.  The Stark Law prohibits an entity, such as a hospital, from billing for certain “designated health services” when a disqualifying compensation arrangement exists between the entity and a physician.  During the period of disallowance, designated health service cannot be billed and are not considered to be an overpayment if billed and received.

When an entity makes a self disclosure, it is essentially admitting that a Stark Law violation took place.  Amounts collected during the period of disallowance must be returned to the government as an overpayment.

CMS regulations define an outside limit for when the period of disallowance can be deemed to have ended.  Different rules apply depending on whether the arrangement involves excess compensation.  For example, on cases involving excess compensation, the period of disallowance can be assured to have ended when the unqualifying arrangement is brought back into compliance and repayment of excess compensation is made.  However, CMS recognizes that every case is different and that there are cases when repayment will never be possible or compliance can never be completely attained.

CMS rules create an “outside time” when the parties can be assured that the period of disallowance will be deemed to have ended.  Each case is judged on its own facts and circumstances and the parties can argue that the period of disallowance has ended before repayment is made.  This permits DHS providers to take advantage of the self disclosure process in cases where they have no legal basis to require the physician to return the excess compensation.

In any event, issues regarding the period if disallowance must be addressed whenever Stark Law self disclosure is being considered by a health care provider.

Home Health and Hospice in the Crosshairs

Governmental Enforcement Actions Against Post Acute Care Providers

Home health agencies and hospices are seeing a rapidly accelerating level of scrutiny by federal and state regulatory agencies.  Post acute providers need to take note of increased enforcement action and examine their level of readiness to undergo audit and review.  These organizations need to brush off their compliance and audit programs and take steps necessary to avoid the disruption and financial exposure that inevitably occurs when the government discovers a problem.

Compliance programs should create a systematic process to identify areas of risk that are specific to the type of provider and the specific nature of their operations.  A good place for providers to begin the risk identification process is to review OIG annual work plans, recent enforcement actions, newly enacted legislation and other external indications of areas of concern to regulators.

HHS officials have publicly stated that home health and hospices are areas of concern.  Sources of increased scrutiny include state survey agencies, CMS program integrity review organizations, the Office of Inspector General, Department of Justice and a variety of other agencies.  Regulators are widely using statistical analysis to identify potential outlier billings that may require further review.  Some reviews arise when whistleblowers such as employees or others bring qui tam actions or make complaints to government agencies.

Hospice Compliance Reviews – OIG Focus On Hospice Admissions

The OIG has repeatedly expressed suspicion about hospice relationships with nursing homes and admission of “marginal” hospice patients who reside in nursing homes.  Hospices should routinely monitor their percentage of patients who reside in nursing homes and audit admission decisions relative to those patients.  This is an area of frequent review and hospices should assure that each nursing home/hospice patient meets admission criteria.

OIG also expressed concern over hospice marketing materials that could lead to inappropriate admissions.  Marketing materials should accurately describe the nature of hospice care and the criteria that must be met to receive hospice benefits.  Of particular importance is assuring that marketing materials clearly describe the requirement that the patient forgo any curative treatment in order to maintain eligibility for hospice benefits.

Misuse of hospice inpatient care is also prominent on the OIG’s radar.  Medical records of inpatients are vulnerable to review by the government to confirm the appropriateness of inpatient hospice benefits.  Hospices should add review of inpatient care admissions to their list of audit and review items if they have not already done so.

Block Leasing of Ancillary Services – Risks Under The Anti-Kickback Statute

Physician groups will often look for ways to share the expenses of excess capacity of high cost center ancillary services.  One approach that is sometimes considered is leasing the ancillary center to another physician group. 2009 changes to the Stark Regulations established new requirements for part-time leasing arrangements.  “Per use” arrangements are now prohibited under the Stark Law which applies when the ancillary service is categorized as a designated health service under the Stark Law.  Comments to the 2009 Stark Regulations maintained an opening to permit some  “block leasing” or “time sharing” arrangements.  CMS left open the parameters that must be met making compliance a bit tricky.  But block leasing arrangements are at least possible in theory under the Stark Law.  Until a few years back, block leasing arrangements were a relatively common way to permit separate physician groups to, in effect, share an ancillary service line. An OIG Advisory Opinion that was issued in 2010 cast a significant shadow on block leasing arrangements; including those arrangements that previously appeared to be legitimated under the Stark Law.  The 2010 Advisory Opinion refused to endorse a block leasing arrangement between two physician groups.

OIG Advisory Opinion 08-10, an oncology group asked the OIG to approve a block lease of  a radiation therapy facility to various different urology groups.  The block lease included all equipment, facility, and staff necessary for the urology group to provide radiation therapy services for their own patients.  The block leasing arrangements were structured in a manner suggested by CMS comments to be legitimate under the Stark Law.   Even though the arrangement likely complied with the Stark Law, the OIG raised concern and refused to endorse the arrangement under the Anti-Kickback Statute.  The OIG expressed concern that the block lease was nothing more than a  vehicle to permit the urology groups to profit from their referrals for radiation therapy services.  The OIG seemed to focus on many of the same factors that it had previously identified in joint venture arrangements.  For example, the OIG pointed to the fact that the oncology group was an existing provider of radiation therapy services and that the urology group was a natural referral source for those services.  Viewed from this angle, the OIG considered the block leasing arrangement to be nothing more than a cleaver way to compensate the urology group for its referrals.

The OIG noted that the opportunity for the urology groups to profit from radiation services amounted to “remuneration” under the anti-Kickback Statute.  The OIG looked past the fact that at least part of the arrangement complied with a safe harbor and instead focused on the overall “big picture” of the arrangement.

Advisory Opinion 08-10 related to a radiation therapy center.  The reasoning in 08-10 applies equally to all types of ancillary services.  Because the OIG’s concerns arise from the Anti-Kickback Statute, the concept is not limited to “designated health services” under the Stark Law.  Leasing any ancillary service and providing the opportunity for a physician group to profit from billings for that service are called into question by the opinion.

 Initial Antitrust Market Analysis In Provider Affiliations

Antitrust analysis of potential integrated provider groups necessarily requires identification of the applicable market.  Market share issues cannot be addressed without first knowing the market parameters.  Market analysis has both a geographic and a product component.  In the health care area, the product component involves the specialty area of the physician or other provider involved.  The market may include a specific specialty or may be subject to expansion when there is a degree of functional overlap between specialties.

The geographic nature of the market can involve an extremely complex analysis.  From a planning perspective, it is generally most prudent to begin with the most restrictive definition of the geographic model.  If the network meets market standards based on a conservative market definition, further analysis is not required.  Geographic market definition can be expanded from the most conservative parameters as an exercise in risk assessment.  Based on the degree of market expansion, determinations can be made regarding elements of risk which will in turn help assess whether more complete market definition and analysis is required as a risk assessment tool.  The more conservative market definition is generally where regulators will begin their analysis and is a useful starting point for initial antitrust risk assessment.

Once the market is defined, there needs to be some analysis of the market share that will be represented by the combined group.  The number of physicians in the applicable market can be examined but does not necessarily lead to an accurate indication of market share in any given specialty.  The reality is that not all providers in a given specialty market are “equal” from an antitrust market share perspective.  The degree of market share between similarly qualified providers can be extensive.

Parties who are in the planning stages need to gather enough information to get some feel for market share without spending the money to engage an economist to do a full analysis.  Some cases will be clear on one side or the other.  If the initial conservative analysis does not indicate significant market share problems, the planning can move forward knowing that antitrust exposure is extremely low.  If the conservative market analysis indicates that the merger would result in significant market share, further analysis is required in order to identify and mitigate antitrust risk.