Question

Happy Hospice House (“HHH”) is a non-profit provider of hospice services in fourteen states, including Delaware. HHH contracts with Medicare and Medicaid to provide such services. Approximately 93 percent of HHH’s clients are enrolled in Medicare and approximately 4 percent of HHH’s clients are enrolled in Medicaid.

In order for a patient to be admitted to hospice care and be eligible for hospice benefits, the patient must be certified as being terminally ill. “Terminally ill means that the individual has a medical prognosis that his or her life expectancy is 6 months or less if the illness runs its normal course.” Pursuant to federal regulations, a hospice must obtain written certification of terminal illness for each of certain periods in which a patient is admitted to hospice care. In other words, a hospice must not only certify a patient's initial eligibility for hospice care, but also must regularly certify that patient's continued eligibility for hospice care.

In 2009, HHH undertook three new initiatives to increase its “census,” the number of patients enrolled in its hospices. First, HHH told its employees to certify patients for hospice care who were not terminally ill. For example, HHH encouraged its employees to diagnose patients with Alzheimer's disease, dementia, or “failure to thrive.” Since these are nebulous diagnoses, they allowed HHH employees to justify continued hospice care. If an employee or physician refused to certify a patient as terminally ill and therefore eligible for hospice care, HHH would turn to another employee or physician to do so. While several employees complained about these practices to their superiors, HHH terminated their employment.

Second, both to encourage patients to enroll and to keep enrolled patients from revoking HHH enrollment, HHH offered them extra durable medical equipment supplies, extra nursing and staff visits, and other extra benefits. For example, patient L.B. received about $1,500 in assistance to pay for electric bills, groceries, and having his hot water heater fixed. L.B. later won a gift card from HHH in a contest for referring other patients to HHH.

Third, HHH ordered a set package of durable medical equipment for each patient who was enrolled. In other words, each time a patient was signed up with HHH, HHH would automatically order that patient a bedside commode, a bedside table, a walker, a wheelchair, oxygen, a hospital bed, and a specialized mattress, regardless of whether the patient needed all of this equipment. In return for ordering this equipment, HHH would receive bulk discounts from Med-Depot. HHH paid a discounted rate to Med-Depot for the supplies, in exchange for using Med-Depot as its exclusive medical supply vendor.

Part 1: Assess HHH's false claims act liability.

Part 2: Did HHH or Med-Depot violate the anti-kickback statute?

Pat 3: Should changes be made to the current regulatory scheme in health care to better protect against fraud, waste and abuse?

Answer 1

ANSWER

Part 1: Assess HHH's false claims act liability.

As per the case study

In 2009, HHH undertook three new initiatives to increase its “census,” the number of patients enrolled in its hospices.

First, HHH told its employees to certify patients for hospice care who were not terminally ill. For example, HHH encouraged its employees to diagnose patients with Alzheimer's disease, dementia, or “failure to thrive.

If an employee or physician refused to certify a patient as terminally ill and therefore eligible for hospice care, HHH would turn to another employee or physician to do so. While several employees complained about these practices to their superiors, HHH terminated their employment

The federal False Claims Act protects employees who report a violation under the False Claims Act from discrimination, harassment, suspension or termination of employment as a result of reporting possible fraud.

In this context, while several employees complained about these practices to their superiors, HHH terminated their employment. Hence HHH is liable for Federal False Claims Act.

Second, both to encourage patients to enroll and to keep enrolled patients from revoking HHH enrollment, HHH offered them extra durable medical equipment supplies, extra nursing and staff visits, and other extra benefits like , about $1,500 in assistance to pay for electric bills, groceries, and having his hot water heater fixed. L.B. later won a gift card from HHH in a contest for referring other patients to HHH.

The False Claim Act is a federal law that makes it a crime for any person or organization to knowingly make a false record or file a false claim regarding any federal health care program, which includes any plan or program that provides health benefits.

Here HHH has made false record by preventing revoking of enrolled patients.

Third, HHH ordered a set package of durable medical equipment for each patient who was enrolled. In other words, each time a patient was signed up with HHH, HHH would automatically order that patient a bedside commode, a bedside table, a walker, a wheelchair, oxygen, a hospital bed, and a specialized mattress, regardless of whether the patient needed all of this equipment.

In return for this, HHH received bulk discounts from Med-Depot.

This is an Example of false claims including billing for services not provided, billing for the same service more than once or making false statements to obtain payment for services.

Hence under this HHH becomes liable for False Claim Act.

False Claims Act. The False Claims Act (FCA), also called the "Lincoln Law", is an American federal law that imposes liability on persons and companies (typically federal contractors) who defraud governmental programs. It is the federal Government's primary litigation tool in combating fraud against the Government

False Claims Act
The False Claim Act is a federal law that makes it a crime for any person or organization to knowingly make a false record or file a false claim regarding any federal health care program, which includes any plan or program that provides health benefits, whether directly, through insurance or otherwise, which is funded directly, in whole or in part, by the United States Government or any state healthcare system. Knowingly includes having actual knowledge that a claim is false or acting with “reckless disregard” as to whether a claim is false.

In addition to the federal law, the state has adopted similar laws under the Michigan Medicaid False Claims Act (MMFCA). The MMFCA is designed to prevent fraud, kickbacks and conspiracies in connection with the Medicaid program.

Examples of false claims include billing for services not provided, billing for the same service more than once or making false statements to obtain payment for services.

Penalties under the False Claims Act

• Violations under the federal False Claims Act can result in significant fines and penalties. Financial penalties to the person or organization includes recovery of three times the amount of the false claim(s), plus an additional penalty of $5,500.00 to $11,000.00 per claim.
• Violation of the MMFCA constitutes a felony punishable by imprisonment, or a fine of $50,000 or less, or both, for each violation. A person who receives a benefit, by reason of fraud; makes a fraudulent statement; or knowingly conceals a material fact is liable to the state for a civil penalty equal to the full amount received plus triple damages.

Whistleblower Protection under the False Claims Act

The federal False Claims Act protects employees who report a violation under the False Claims Act from discrimination, harassment, suspension or termination of employment as a result of reporting possible fraud.

Employees who report fraud and consequently suffer discrimination may be awarded

• (1) two times their back pay plus interest,
• (2) reinstatement of their position without loss of seniority and
• (3) compensation for any costs or damages they incurred.

Part 2: Did HHH or Med-Depot violate the anti-kickback statute?

In this context HHH violates Anti-kickback statute by encouraging patients to enroll and to keep enrolled patients from revoking HHH enrollment and by offering them extra durable medical equipment supplies, extra nursing and staff visits, and other extra benefits like offering $1,500 in assistance to pay for electric bills, groceries, and having their hot water heater fixed and for encouraging incentives for referring other patients to HHH.

The federal Anti-Kickback Statute is a healthcare fraud and abuse statute that prohibits the exchange of remuneration—which the statute defines broadly as anything of value—for referrals for services that are payable by a federal program, which, in the context of healthcare providers, is Medicare.

• Classic examples of violations of Anti-kickback and Stark laws include: ... Drug companies paying kickbacks to insurers to get on their formularies; Payments by specialty pharmacies, DME suppliers, therapy centers, nursing homes, etc. to patient recruiters or to patients directly.
• Examples of prohibited kickbacks include receiving financial incentives for referrals, free or very low rent for office space, or excessive compensation for medical directorships. Other kickbacks include waving copayments, either routinely or on a selective case-by-case basis.

The Centers for Medicare and Medicaid Services (CMS) claims that kickbacks have led to overutilization and increased costs of healthcare services, corruption of medical decision making, steering patients away from valid services or therapies and unfair, non-competitive service delivery.

Possible penalties for violating the AKS include:

Fines of up to $25,000, up to five years in jail, and exclusion from Medicare and Medicaid care program business.

Pat 3: Should changes be made to the current regulatory scheme in health care to better protect against fraud, waste and abuse?

Yes, it is necessary to update and ake necessary changes in the current regulatory scheme to better protect against fraud, waste and abuse. Rather, strict compliance and adherence to the formulated norms are necessary. Recently certain updates are made in respective areas.

Health Care Fraud is defined as any deliberate and dishonest act committed with the knowledge that it could result in an unauthorized benefit to the person committing the act or someone else who is similarly not entitled to the benefit.

Health care fraud includes health insurance fraud, drug fraud, and medical fraud. Health insurance fraud occurs when a company or an individual defrauds an insurer or government health care program, such as Medicare (United States) or equivalent State programs.

While providers may or may not intend to commit healthcare fraud and abuse crimes, the federal government is as strict as ever with cracking down on fraud schemes.

• · HHS recently reiterated its commitment to preventing healthcare fraud and abuse. The federal department stated   last year that CMS (Centers for Medicare & Medicaid Services) implemented a proactive approach to fraud protection, eliminating its previous pay-and-chase method.
• · The federal department now uses predictive analytics to prevent false medical bills before providers receive payments. CMS also upped its efforts to screen providers properly for enrollment in federal healthcare programs.
• · Providers may find that Medicare and Medicaid officials are scrutinizing claim submissions more than ever to detect potential improper billing practices.
• · To prevent an organization from participating in healthcare fraud and abuse activities, providers should understand key healthcare fraud laws, implement a compliance program, and improve medical billing and business operations processes.

Certain Recent Recommendations

Centers for Medicare & Medicaid Services (CMS)

• · Medicare Parts A & B CMS should seek legislative authority to change Medicare’s method for paying for therapy in skilled nursing facilities (SNFs).
• · CMS should implement the statutory mandate requiring surety bonds for home health agencies that enroll in Medicare and consider implementing the requirement for other providers.
• · CMS should analyze the potential impacts of counting time spent as an outpatient toward the 3- night requirement for SNF services so that beneficiaries receiving similar hospital care have similar access to these services
• · .CMS should take steps to tie payment for hospice care to beneficiary care needs and quality of care to ensure that services rendered adequately serve beneficiaries’ needs, seeking statutory authority if necessary.
• · CMS should seek legislative authority to modify how coinsurance is calculated for outpatient services received at critical access hospitals (CAHs).
• · CMS should continue to work with the Accredited Standards Committee to ensure that the Device Identifier is included on the next version of claim forms and to require hospitals to use certain condition codes on claims for reporting device replacement procedures.
• · CMS should continue coordinating with the Agency for Healthcare Research and Quality (AHRQ) to raise awareness of adverse events in rehabilitation hospitals and work to reduce harm to patients.
• · CMS should facilitate State Medicaid agencies’ efforts to screen new and existing providers by ensuring the accessibility and quality of Medicare’s enrollment data.
• · CMS should work with States to ensure that plans’ networks are adequate and ensure timely access to care for Medicaid managed care enrollees.
• · CMS should require each State Medicaid agency to report all terminated providers.

Administration for Children and Families (ACF)

• · ACF should request that States examine the effectiveness of their program integrity and fraudfighting activities in their Child Care Development Fund (CCDF) programs.
• · ACF should resolve recurring Head Start Single Audit Findings.

Food and Drug Administration (FDA)

• · FDA should use its Strategic Coordinated Oversight of Recall Execution (SCORE) initiative to establish set timeframes, expedite decisionmaking and move recall cases forward, and improve electronic recall data.
• · FDA should take appropriate action against all food facilities with significant inspection violations.

IMPLEMENTING A COMPLIANCE PROGRAM TO IDENTIFY AND PREVENT HEALTHCARE FRAUD

Developing a strong compliance program is key to preventing healthcare fraud and abuse activities.

A strong compliance program should “establish a culture within a hospital that promotes prevention, detection and resolution of instances of conduct that do not conform to Federal and State law, and Federal, State and private payer healthcare program requirements, as well as the hospital’s ethical and business policies,” the HHS Office of the Inspector General (OIG) stated  in official compliance guidance geared towards the hospital setting.

The OIG also suggested that providers implement the following components:

• Development and distribution of written conduct standards and policies that promote the hospital’s commitment to compliance (e.g., by including compliance adherence as part of staff evaluations) and that address areas of potential fraud, such as claims management and financial relationships with other providers
• Appointment of a Chief Compliance Officer and other compliance staff charged with operating and monitoring the compliance program and reporting to the hospital’s governing body
• Implementation of continuous education and training for staff
• Maintenance of a process to receive healthcare fraud reports and complaints, such as a hotline, and the development of procedures to protect anonymity and whistleblowers from retaliation
• Establishment of a system to respond to healthcare fraud and abuse accusations and appropriate disciplinary actions against staff who violate compliance policies and laws
• Use of audits and/or evaluations to track compliance adherence and help reduce issues
• Investigation and remediation of systemic problems and the establishment of policies to address if staff involved are retained or terminated

Additionally, OIG recently published a resource for hospitals and providers to evaluate the effectiveness of their compliance programs. The resource explains how healthcare organizations across the size spectrum can evaluate standards and policies, administration, stakeholder screening and assessments, training, internal reporting system monitoring, non-compliance discipline, and investigations and remedial measures.

ADDRESSING DOCUMENTATION, CODING, AND BILLING PROCESSES TO AVOID MISCONDUCT

While a compliance program is the foundation for healthcare fraud and abuse prevention, providers should also consider improving their medical billing and coding processes.

Clinical Documentation is the basis upon which payers reimburse providers for their services. Inaccurate and inappropriate coding can lead to potential healthcare fraud and abuse investigations.

Common clinical documentation and coding issues include billing for the following:

• Services that were not rendered
• Medically unnecessary procedures
• Services performed by an improperly supervised or unqualified employee
• Procedures or tests of such low quality they are deemed worthless
• Separate services already included in a global fee, such as an evaluation and management (E&M) code service the day after surgery.

CMS has advised providers to be particularly mindful of upcoding, or requesting a higher reimbursement rate for services that do not merit that level of compensation. Providers may upcode claims in order to maximize their claims reimbursement.

To avoid illegal kickback schemes with investment partners, the federal agency recommends that providers ask the following questions:

• Is the investment interest for a nominal capital contribution?
• Will the provider’s ownership share be greater than his share of the total capital contributions made to the venture?
• Is the investment venture promising the provider high rates of return for little or no financial risk?
• Is the investment venture, or any possible business partner, offering to loan the provider money to make his capital contribution?
• Is the partner asking the provider to guarantee patient referrals or item orders?
• Does the provider believe he will be more likely to refer patients for services provided by the venture just because he made the investment?
• Will the venture have enough capital from other sources to fund its operations?

Providers should ask themselves similar questions if healthcare vendors approach them with free samples, business opportunities, and incentives.

As the healthcare industry moves to new care delivery and claims reimbursement standards, healthcare fraud and abuse regulations will likely evolve as well. Providers should ensure their organizations stay up-to-date and comply with new regulations to prevent potential fraud investigations.

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