Health Law Blog - Healthcare Legal Issues

Archive for April, 2017

Using Self-Disclosure Protocols – CMS and OIG Self Disclosure Process

Tuesday, April 11th, 2017

Self-Disclosure Has Become a Normal Part of the Compliance Process

As the OIG and CMS make self-disclosure easier for providers, we have noticed an increase in the rate of cases that are being filed.  Assisting providers in making decisions whether to self-disclose, conducting internal investigations, and guiding the self-disclosure process when appropriate has become a large part of our compliance practice.  Here are just a few of the articles and other resources that we have released regarding self-disclosure issues:

Exercising Reasonable Care to Identify and Address Potential Overpayments

Criminal Exposure for Failing to Repay Known Overpayment

When to Use the OIG’s Self Disclosure Protocols

Excluded Party Cases Dominate OIG Published Self Disclosure Settlements

Self-Disclosure Process – Voluntary Self Disclosure Decisions are not Always Easy

When Does An Overpayment Become Fraud? How Simple Inattention Can Expose You to Penalties for Fraudulent Activities

Provider Self-Disclosure Decisions – Voluntary Disclosure Process

Provider Self Disclosure Process

For more information on the self-disclosure process and legal updates impacting the process, watch this space.

Compliance Program Best Practices Review of Effectiveness

Monday, April 3rd, 2017

Now Is The Time To Re-Examine Compliance “Best Practices” In Your Organization

Historically, compliance programs have not been per se mandatory.  However, most larger health care organizations have established formal compliance programs to foster an atmosphere of compliance and to take advantage of possible benefits under the Federal Sentencing Guidelines.  The Patient Protection and Affordable Care Act of 2010 has made compliance programs mandatory for many providers.  The exact scope of what type of provider will be required to establish formal compliance programs has not yet been set in stone by the Office of Inspector General.  However, it can probably be expected that most providers will be required to formalize their compliance efforts.

Institutional health care compliance has been growing for well over a decade now.  Compliance is becoming of major importance to health care providers of all nature and size.  The OIG has promoted compliance programs by releasing compliance guidance covering a number of industries, including billing companies, physician practices, hospitals, home health agencies, long term care facilities, ambulatory surgery centers and others.  Smaller providers who have previously not had the establishment of formal compliance programs on their radar will now be required to adopt formal plans.

It is not enough to simply adopt a compliance plan, place it on a shelf, and let it collect dust.  A compliance program requires active monitoring.  There are seven basic elements that are necessary for a compliance program to meet regulatory requirements and the requirements under the Federal Sentencing Guidelines.  The seven primary elements of an effective compliance program include:

  • The establishment of written compliance policies and procedures;
  • The designation of a high ranking individual within the organization to serve as compliance officer;
  • The establishment of an effective training and education program for all levels of personnel;
  • The establishment of effective lines of communication, such as a compliance hotline, to enable individuals within the organization to report compliance breaches;
  • Performing ongoing internal auditing and monitoring
  • The creation of a system that enforces breaches of the compliance program including appropriate discipline and corrective measures
  • The establishment of effective measures to respond to compliance problems that are detected.

An effective compliance program establishes an atmosphere of compliance that permeates the entire organization.  A compliance program should be tailored to the specific circumstances of the provider.  The program should also feed and grow on itself.  As problems are detected appropriate changes should be made to the program and related policies and procedures.

Mandatory compliance programs also highlight the importance of compliance on larger institutions who may have already adopted formal programs.  These institutions should take the signal that compliance is of growing importance.   Providers who have already adopted compliance plans should take the opportunity to dust them off and re-examine the role of compliance within their organization.  Now is the time to increase the focus on compliance and assure that compliance is an active system rather than a written plan that is sitting on the shelf.

Criminal Exposure for Failing to Repay Known Overpayment

Monday, April 3rd, 2017

Known Overpayments can Implicate Criminal Statutes

failing to repay overpaymentWe hear a lot about potential liability under the False Claims Act for the failure to repay overpayments within 60 days after discovery. Focus on the 60 day rule has taken some of the focus away from the potential for criminal charges for retaining known overpayments. Section 1128B(a)(3) of the Social Security Act (42 U.S.C. § 1320a-7b(a)(3)) makes it a crime to conceal or fail to disclose any occurrence that affects the initial or conued right to any benefit payment. A violations of the statutes requires a showing that the charged individual have knowledge of the event affecting the right to the applicable benefit. A violation of the statute is a felony and is punishable by a maximum of five years in prison and a fine of $250,000 for individuals or $500,000 for corporations.

The Office of Inspector General has applied this statute, even in cases where the overpayment occurs innocently but a party fails to repayment an overpayment after receiving knowledge. This type of situation is clearly subject to the False Claims Act where repayment is not made within 60 days. Criminal responsibility is also a potential; particularly when a decision is made not to repay after learning about the existence of an overpayment. Criminal exposure is present for the entity as well as the individuals who are responsible for failing to make repayment of a known overpayment. There is an element of ambiguity regarding application of the criminal component, but this has not stopped prosecutors from asserting the statute in the past.

The Federal Criminal False Claims Statute (18 U.S.C. § 287) can also apply to impose potential criminal liability.  That statute applies potential criminal liability on any person who “makes or presents” any claim to an agency of the U.S. Government “knowing such claim to be false, fictitious, or fraudulent.”   This statute can lead to potential 5 years imprisonment plus potential criminal penalties.   Conspiracies to violate the Federal Criminal Claims Statute impose double penealties on participants.  Failing to disclose and repay known overpayments could form the basis of a violation of this statutes as well.

Other criminal statutes could potentially apply to the failure to repay known overpayments.  Mention of these above statutes is not intended to be an exhaustive list of potential exposure.

Differential Valuations and the Anti-kickback Statute

Monday, April 3rd, 2017

Ambulatory Surgery Case Demonstrates Differential Value Theory of Renumeration

ASC Fraud and Abuse RemunerationA relatively recent case involving buy-in terms in an ambulatory surgery center demonstrates how different valuations for referral sources and non-referral sources can be evidence of remuneration under the Medicare Anti-Kickback Statute (42 U.S.C. § 1320a-7b(a)-(b)).  The case also demonstrates how the initial investment terms that favor referral sources can foreclose reliance on safe harbor regulations.

The case involved an ambulatory surgery center management company what purchased an interest in an ambulatory surgery center.  The company then offered shares of the company for investment to physicians who were in a position to refer surgical cases to the surgery center.  The physician investment was structured to meet the terms of the safe harbor regulations for ambulatory surgery center investments (“ASC Safe Harbors”).  The ASC Safe Harbors provide protection from remuneration that is received by a referring physician as a return on investment as long as the physician meets certain minimum practice revenue and surgical volume requirements. Physician investors must generally receive at least 1/3 of their practice income from the provision of surgical procedures and perform at least 1/3 of their surgical procedures in the center in which they hold an investment interest.

The problem with the way that the investment interest was structured was the different valuation that applied to the purchase that was made by the management company and the investment offer made to the referring physicians.  The management company purchased its investment at a much higher price than was offered to the physicians.  The differential valuation violated a threshold requirement of the safe harbor regulations that prohibits the initial investment interest to be based, in whole or in part, on the volume or value of referrals that the investor might make to the entity.  It was very difficult for the parties to justify the different value applied to physician investment.  The only apparent difference appeared to be that the physician investors were the referral sources for the surgery center.

This case specifically involved an ambulatory surgery center investment but the concept of differential valuation could apply in other situations involving the Anti-Kickback Statute.  Different values paid to or received from referral sources and non-referral sources can suggest that at least one of the reasons for the differential is the volume or value of potential referrals.  This points out a general area of risk assessment for all health care providers.  Areas where different pricing is applied to referral sources and non-referral sources could signify a potential violation of the Anti-Kickback Statute.

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

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