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HEADLINES
Wednesday,
November 4, 2009
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On
The Front Lines
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Journal of Health Care Compliance September/October 2009 Volume 11, Number 5
In addition to regularly featured columns such as HIPAA, electronic resources, and compliance and quality, the September/October 2009 issue of the Journal of Health Care Compliance includes the following articles:
- Self-discovered Overpayments: Do I Have to Give the Money Back?, written by Donald H. Romano, discusses various civil and criminal statutes and an entity's obligation to self-report and refund overpayments.
- Inside Criminal Minds, written by Allan P. DeKaye, looks at those that have committed health care fraud and examines the traits that may lead to criminal behavior.
- Cultural Competency Compliance Issues in Health Care, written by Maria B.J. Chun, focuses on the federal and state requirements for health care entities related to cultural competency.
- Compliance with CMS "Never Event" Billing Requirements, written by Lisa M. Silveria, discusses the need to develop a multidisciplinary approach to remain compliant with "never event" billing requirements.
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The CCH HIPAA Security Guide October 2009 update
- Administration and enforcement of the Security Rules has been delegated to the HHS Office for Civil Rights (OCR), effective August 2009. Previously delegated to CMS, the move consolidates Privacy and Security Rules enforcement. OCR already enforces the Privacy
Rules, and the added responsibility is expected to increase efficiencies in the department’s efforts to ensure that health information privacy is protected, according to a press release from HHS.
- A consumer information organization called Consumers Checkbook was not entitled to HHS’ records for all Medicare claims submitted by physicians during 2004 because the records are
exempt from disclosure under the Freedom of Information Act (FOIA), according to the U.S. Court of Appeals for the D.C. Circuit.
- Effective September 23, 2009, HHS updated its guidance on security technology based on public comments. The update was part of the HHS interim final rule with request for comments on
breach notification issued on August 24, 2009.
- The FTC also published a final rule on August 25, 2009, effective September 24, 2009, regarding breach notification requirements for personal health records (PHR) vendors that are not
‘‘covered entities’’ or ‘‘business associates’’ under the Privacy Rules.
- To avoid overlap with the HHS regulations, HIPAA-covered entities and entities that engage in activities as business associates of HIPAA-covered entities will be subject only to HHS’ rule and not the
FTC’s rule.
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Headlines
Implementation of Part D e-prescribing surveyed by CMS
As required by the Medicare Prescription
Drug, Improvement, and Modernization Act of 2003, CMS established
electronic prescribing standards to facilitate the communication of
prescription information among prescribers (e.g., physicians), Part
D plan sponsors, and dispensers (e.g., pharmacies). Three of these
standards enable the flow of eligibility, medication history, and
formulary and benefits information between plan sponsors and prescribers
at the point of care.
These plan-to-prescriber standards are (1) Accredited Standards
Committee X12N 270/271, (2) SCRIPT 8.1, and (3) Formulary & Benefits
Standard 1.0. The Formulary & Benefits Standard 1.0 consists of
four components: (1) Formulary Status List, (2) Formulary Alternatives
List, (3) Coverage List, and (4) Copayment List.
CMS required that plan sponsors implement two standards by January
2006 and the remaining standard by April 2009. Between August and
September 2008, the Office of Inspector General (OIG) surveyed all
Part D plan sponsors for plan year 2008 to determine the extent of
their implementation of the standards. The OIG received responses
from 262 plan sponsors for a 94 percent response rate.
Survey results. The OIG survey found that: (1)
nearly 80 percent of plan sponsors reported at least partial plan-to-prescriber
connectivity but few reported complete connectivity; (2) problems
implementing Formulary & Benefits Standard 1.0 limit complete
plan-to-prescriber connectivity; and (3) only 5.0 percent of plan
sponsors reported no plan-to-dispenser connectivity.
Recommendations. OIG recommends that CMS ensure
that plan sponsors completely implement the plan-to-prescriber and
plan-to-dispenser standards. To achieve this, CMS could continue to
educate plan sponsors about e-prescribing requirements, clarify e-prescribing
standards exemptions, or use corrective action plans and civil monetary
penalties to bring plan sponsors into compliance. OIG also recommends
that CMS collaborate with plan sponsors, pharmaceutical benefits managers,
and standards-development organizations to address batch-processing
problems. CMS could also consider pilot-testing a real-time standard
that enables plan sponsors to transmit beneficiary-specific formulary
and benefits information.
OIG Report, No. OEI-05-08-00320, Oct.
2009
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Creation of exclusive nephrology practice did not constitute monopolization, 10th Circuit concludes
A nonprofit hospital did not create
a monopoly in violation of the antitrust laws when it established
a new practice as the exclusive provider of nephrology services and
denied admitting privileges to other nephrologists, according to the
U.S. Court of Appeals for the Tenth Circuit. The district court properly
granted summary judgment to the hospital because the hospital had
no antitrust duty to share its facilities with another physician at
the expense of its own nephrology practice, its failure to share its
facilities was evidence of competitive conduct. In addition, whatever
injury the physician suffered from his exclusion from the hospital
staff was not one remedied by antitrust laws.
Antitrust analysis. The physician filed a complaint
alleging that the hospital's refusal to grant staff privileges to
nephrologists other than those employed by the hospital amounted to
monopolization. The hospital's refusal to share its facilities with
the physician does not constitute anticompetitive conduct sufficient
to sustain a claim for monopolization, the court stated, adding that
the hospital is entitled to recoup its investment without sharing
its facilities with a competitor. Further, the members of the community
have greater access to nephrology services and more options. Finally,
the evidence showed that the hospital refused to deal with the physician
to avoid an unprofitable relationship and to protect and maximize
the chances of profitability in the short term, the court said. In
addition, by asking the court to order the hospital to grant him privileges,
the physician sought to share rather than undo the hospital's alleged
monopoly, the court concluded.
Four Corners Nephrology, 10th Cir.,
Sept. 29, 2009, Health Care Compliance Reporter, ¶800,744
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New tips offered to prevent identity theft and Medicare fraud
New tips and information to help seniors
and Medicare beneficiaries were recently introduced by HHS Secretary
Sebelius, Assistant Attorney General Tony West, and Inspector General
Daniel R. Levinson.
Brochure. The new tips and a printable brochure
were produced by the HHS Officer of the Inspector General and are
available at http://www.stopmedicarefraud.gov/.
Identity theft. The materials include steps to
help “deter, detect, and defend” against medical identity
theft. The brochure reminds beneficiaries to beware of offers of free
medical equipment, services, or goods in exchange for their Medicare
numbers, and also encourages beneficiaries to regularly review their
Medicare Summary Notices, Explanations of Benefits statements, and
medical bills for suspicious charges and to report suspected problems.
The brochure also describes common fraud schemes, such as people who
offer free services, groceries, transportation, or other items in
exchange for beneficiaries' Medicare numbers, or telephone marketers
who claim to be from Medicare or Social Security and ask for payment
over the phone or Internet.
Medicare fraud. Other efforts to prevent Medicare
fraud include the Health Care Fraud Prevention and Enforcement Action
Team (HEAT), which identify, investigate, and prosecute ongoing fraud
with data analysis techniques and community policing. HEAT's efforts
have expanded from South Florida and Los Angeles to additional cities
including Detroit and Houston. Beginning October 1, 2009, CMS required
all durable medical equipment suppliers, except for pharmacies, to
be certified by Medicare, to assure beneficiaries that their suppliers
are valid businesses.
CCH Chicago Bureau, Oct. 15, 2009
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Tenth Circuit affirms dismissal of qui tam action for pleading deficiencies
The district court properly dismissed
a case manager's qui tam suit under the False Claims
Act (FCA) against a corporation that operated several long-term care
facilities for mentally retarded adults because the case manager failed
to either state a claim or plead the allegations with particularity.
After the case manager had worked for the corporation for 5 years,
the corporation terminated her employment. The case manager's suit
alleged that: (1) the corporation had presented false and fraudulent
claims to the government under the Medicare, Medicaid, and Social
Security programs; (2) used false or fraudulent records; (3) conspired
to get false or fraudulent claims paid; and (4) terminated her employment
in retaliation for reporting these false claims. The district court
granted the corporation's motion to dismiss due to its pleading deficiencies.
The case manager subsequently appealed to the Tenth Circuit Court
of Appeals.
Failure to plead with particularity. The case manager
alleged a scheme in which the corporation submitted bills at the beginning
of each month to patients and to Medicare, Medicaid, and Social Security
Administration programs seeking payment for services to be performed
for patients during that month before services were even provided.
However, the case manager failed to supply any specific details concerning
any particular false claim for payment submitted or how the scheme
was implemented.
Another claim alleged that the corporation billed the government
for reimbursement at the per diem rate for days after patients died;
when patients were absent from the facility; and when a patient moved
out a state, among other things. The claim however omitted any details
concerning the dates and amounts involved, which specific government
programs were not reimbursed after the alleged patient deaths, the
number of times the alleged overbilling occurred, or the estimate
of the total number of patients involved.
Failure to state a claim. The Tenth Circuit affirmed
the dismissal of the remaining claims because all of them failed to
state a claim.
U.S. ex rel. Lacy v. New Horizons, Inc., 10th Cir.,
Oct. 9, 2009, Health Care Compliance Reporter ¶800,751
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False Claims Act suit involving sham DME company survives dismissal
A district court granted in part and
denied in part motions to dismiss a qui tam complaint
alleging that a durable medical equipment (DME) supplier, its parent
company, a sham DME company, and several nursing home
chains violated the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b),
and the False Claims Act (FCA), 31 U.S.C. § 3729, et
seq., because certain claims satisfied the pleading requirements
of Federal Rules of Civil Procedure 9(b) and 12(b)(6), while the remaining
claims did not. The complaint alleged an arrangement in which, among
other things: (1) the DME supplier submitted claims for DME services
in nursing homes under the supplier number of a sham DME company owned
by a nursing home chain, (2) the nursing home chain profited substantially
from the sham company's Medicare reimbursements, and (3) the DME supplier
and its parent received valuable referrals from the nursing home chain.
Pleading with particularity. The district court
dismissed certain FCA claims because they failed to satisfy Rule 9(b)'s
requirement to plead with sufficient particularity. For example, the
complaint failed to allege any fraudulent conduct on the part of two
nursing homes named in the complaint, and also failed to identify
by name all of the nursing home entities that engaged in kickback
schemes. Other FCA claims in the complaint did pass muster under Rule
9(b) by alleging the who, what, when, where and how
of each claim.
Stating a claim. The district court also dismissed
certain claims in the complaint because they failed to satisfy Rule
12(b)(6)'s requirement to state a claim upon which relief could be
granted. The false records claims relating to the nursing home chain
or the supplier's alleged conspiracy with their wholly-owned subsidiaries
were dismissed because a parent corporation and its wholly owned subsidiary
were legally incapable of forming a conspiracy with one another. Other
claims, however, did survive dismissal under Rule 12(b)(6), such as
the claim that the DME supplier, its parent, and the sham company
violated the FCA by filing or causing to file false Medicare certification
statements that the sham company would be in compliance with the law.
The complaint alleged that the sham company knew that, at the time
it signed the certifications, it intended to conduct kickback schemes
in conjunction with the DME supplier, its parent, and a nursing home
chain.
U.S. ex rel Jamison. v. McKesson Corp., N.D. Miss., Sept. 29, 2009,
Health Care Compliance Reporter, ¶800,743
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Upward sentencing adjustments require actual pecuniary loss by victims
The sentence of a business owner who
was convicted of health care fraud was vacated and remanded because
the district court erred in sentencing when it based an upward victim
adjustment on individuals who suffered no pecuniary harm.
The owner had established a business which purported to provide
psychological counseling services, and set himself up to be reimbursed
for providing eligible services to Indiana Medicaid recipients by
using an enrollment application that bore the signature of a doctor
who never signed the application.
The owner billed Medicaid for over 84,000 counseling sessions
using the identification numbers of over 2,500 Medicaid recipients,
unbeknownst to them. The owner was ultimately convicted of health
fraud and was sentenced the statutory maximum, 120 months.
The ruling that he was responsible for the $9 million he billed
to Medicaid was not in error, in light of the fact that the enrollment
documents listed him as the only owner or manager of the business,
and that he managed all of the money.
The owner's argument that, assuming his claims were fraudulent,
he received 25 percent less than the amount he billed also failed.
The fact that Medicaid denied some claims does not nullify his intent
to recover the full amounts he billed Medicaid. However, contrary
to the government's assertion, the owner's crime had only two victims—Indiana
Medicaid and CMS—not the 2,500 individuals whose Medicaid numbers
he used. Loss is defined as pecuniary harm that is monetary in nature;
accordingly, the individuals whose numbers he used to bill were not
victims, as none of them actually paid for a service they did not
receive. Therefore, while the owner's conviction of health care fraud
was not in error, no upward adjustment of the owner's sentence should
have been made.
U.S. v. Sutton, 7th Cir., Sept. 28,
2009, Health Care Compliance Reporter, ¶800,742
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On The Front Lines
RACs and HEAT and TARP – Oh, My! –Part 1
by Michael E. Clark, JD
Whether health care professionals and providers know
it or not, they face escalating legal dangers that increase the likelihood
of serious consequences. In this two part article, the author discusses
five recent developments that have created this dangerous environment
for those working in the health care industry.
While it may be an overstatement to
call the situation a “perfect storm,” the following are
five recent developments that have created this dangerous environment
for those working in the industry:
- The Obama Administration’s efforts to revamp how
healthcare is financed in this country, along with the renewed regulatory
focus on controlling healthcare costs and ramping up anti-fraud and
abuse efforts, including more focused federal investigations and prosecutions
of healthcare providers in major metropolitan areas considered to
be rampant with Medicare and Medicaid fraud as part of the U.S. Department
of Justice’s Health Care Fraud Prevention and Enforcement Action
Team;
- Increasing numbers of audits conducted by bounty hunter
auditors operating as part of the Recovery Audit Contractor (“RAC”)
program approved by the Centers for Medicare and Medicaid Services
(“CMS”);
- Heightened compliance and reporting obligations for federal
contractors imposed by Federal Acquisition Regulation (“FAR”)
52.203-13 (“Contractor Code of Business Ethics and Conduct”)
which put a new mandatory disclosure policy into operation;
- Strict terms and conditions tied to funds obtained from
stimulus funds provided under the Emergency Economic Stabilization
Act of 2008’s Troubled Assets Relief Program (“TARP”);
and
- Substantial amendments to the federal
civil False Claims Act (“FCA”) will make it easier for
whistleblower actions to be brought and succeed under the FCA’s
qui tam provisions.
Part I of this article examines the first two of the five developments:
(1) the Obama Administration's efforts to reform healthcare, with
an emphasis on the federal government's need to control costs through
the prevention and prosecution of healthcare fraud; and (2) the RAC
program's efforts to detect and correct improper Medicare payments
by collecting overpayments and paying back underpayments to providers.
Part II examines the final three developments: (3) federal contractors'
compliance obligations under the Federal Acquisition Regulations,
including the new self-reporting obligations; (4) the conditions on
the stimulus funds under the Troubled Asset Relief Program; and (5)
amendments to the federal civil False Claims Act that expand liability
on certain claims and extend the statute of limitations, among other
things.
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