4831-9625-7422 1 04-26-2019 presentation - anti-kickback ...€¦ · state fraud and abuse law...

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Federal and Missouri State Fraud and Abuse Law

MISSOURI ALLIANCE FOR HOME CARE2019 ANNUAL CONFERENCEAPRIL 26, 2019

Presented By:Thomas D. VaughnEmily M. Park235 East High StreetJefferson City, MO 65101Tom. [email protected]@huschblackwell.com

Overview1. Anti-Kickback Statute

• General Rule• Safe Harbors• Example Cases• Beneficiary Inducements

2. False Claims Act

© 2019 Husch Blackwell LLP

3. Exclusionary Authority• Mandatory• Permissive

4. Missouri Fraud and Kickback Laws

5. Stark Law• General Rule• Safe Harbors

Federal Medicare and Medicaid Anti Kickback Statute


Anti-Kickback Statute 42 U.S.C. § 1320a-7b

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General Rule

• Prohibits directly or indirectly:

Soliciting, receiving, offering, or paying

Remuneration

In return for referring for services paid by Medicare or

© 2019 Husch Blackwell LLP © 2019 Husch Blackwell LLP

Medicaid

General Rule – Cont’d

• The statute has been interpreted to cover any arrangement where one purpose of the remuneration was to obtain money for referrals or induce referrals.

I d i di f l d t h t


• Inducing or rewarding referrals does not have to be the primary purpose.

Remuneration

• Cash or cash equivalents

• The transfer of items or services for free or below fair market value

• Drinks, meals, and other treats can be considered kickbacks for referrals


kickbacks for referrals.

• The OIG has signaled its willingness to accept “good will” gifts of nominal value (i.e., logo key chains, mugs, or pens as examples) exchanged between providers, but these gifts cannot be for the purpose of inducing referrals.

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Penalties

• Violation is a felony--five years for one offense.

• $25,000 fine.

• Both fine and imprisonment.

• Exclusion from Medicare and Medicaid programs. Exclusion is mandatory for violation of a

program-related law.


program related law.

Exclusion is permissive for other violations.

• Civil money penalties equal to three times the amount of damages to the government.

• False Claims Act liability.

• Enforced by the U.S. Department of Health and Senior Services, Office of Inspector General (“OIG”).

Safe Harbors• There are statutory exceptions and regulatory “safe harbors.”

• Safe harbors are practices that the OIG has determined are unlikely to result in fraud or abuse.

• If you meet all of the requirements of a safe harbor, the OIG will not prosecute.

• But, if you do not satisfy all of the requirements, it does not il th t ti i ill l R th it ill b


necessarily mean the transaction is illegal. Rather, it will be subject to scrutiny.

• Safe harbors have evolved from the first proposed rule in 1989, final rule in 1991, others in 1992, 1993, 1994, 1996, 1999, 2000, 2001, 2002, 2005, 2006, 2007, 2013, 2014, 2016 and finally in 2018 a “request for information.” This is pretty much to gather information on how the law is affecting development of ACOs, coordination or value-based care.

Safe Harbors

• Current regulations are in 42 CFR § 1001.952

• Safe harbors have evolved from the first proposed rule in 1989, final rule in 1991, others in 1992, 1993, 1994, 1996, 1999, 2000, 2001, 2002, 2005, 2006, 2007, 2013, 2014, 2016 and


• In 2018 a “request for information” was issued by the OIG.

• The RFI is meant to gather information on how the law is affecting development of ACOs, coordination or value-based care.

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1. Investment Interests

• There are two investment Safe Harbors.

• One is for large publicly traded companies and the other is for small businesses such as limited partnerships and joint ventures.

• The large company Safe Harbor protects returns on investments such as dividend or interest income


investments such as dividend or interest income.

• The company must be registered with the SEC, the investor’s interests must be received on the same terms available to the general public, the company must have more than $50,000,000 in net tangible assets, passive investors cannot be favored over active investors, the entity cannot loan the investment money to the investor and the return must be in proportion to the investor’s capital invested.

1. Investment Interests – Cont’d

• For small business investments, a total of eight requirements must be met to qualify for the Safe Harbor.

• The requirements are: Not more than 40% of the investment interests can be held by investors who can

make or influence referral decisions or furnish goods or services to the business.

Not more than 40% of the business’s revenue in the previous year came from referrals or business brought in by investors.


The terms offered to passive investors are without regard to whether the investor can influence referrals.

Investment terms cannot be based on referrals or business generated.

Investors cannot be required to be or remain in positions to make referrals.

The business cannot give different terms to investors than to non-investors.

Investment funds cannot be loaned to a referral source by the business.

Investment returns must be in proportion to the amount of the investment.

1. Investment Interests – Cont’d

• There is a special rule where the business is located in a medically-underserved area: Not more than 50% of the investment interest can be held by investors who can make

or influence referrals.

Investment terms offered to a passive investor who can make or influence referrals must be the same as those offered to those who cannot make or influence referrals.

Investment terms offered to anyone who can make or influence referrals cannot be related to the expected volume or value of referrals


related to the expected volume or value of referrals.

The company cannot require a passive investor to be in a position to make or influence referrals to keep the investment interest.

The company cannot market to or furnish services to passive investors different than non-investors.

At least 75% of the revenue must be from persons who reside in an underserved area.

Loans cannot be made to investors of funds to make investments.

Returns on investments must be in proportion to investments.

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2. Space and Equipment Rentals and Personal Service Management Contracts

• There are three Safe Harbors for real estate rental, equipment rental and personal service and management agreements.

• The standards for these three are the same and are:

The agreement must be in writing and signed.

The agreement must specify the premises, equipment or service.

The term of the agreement must be at least a year


The term of the agreement must be at least a year.

If the rental or service is provided on a periodic basis, the agreement must specify the schedule, length and charge for the intervals.

The total rental charge or compensation must be set in advance, it must be a fair market charge and cannot take into account the value of referrals.

The total amount of space, equipment rental or services contracted for do not exceed the amount reasonably needed for business purposes.

3. Sale of Practice by Practitioner to Practitioner

• The Safe Harbor regulations protect payments which are made by a practitioner to buy the practice of another practitioner. In order to qualify for this Safe Harbor, two conditions must be met:


The sale must be completed within one year.

The selling practitioner will not be able to make referrals or generate business for the purchasing practitioner after one year.

4. Sale of Practice by Practitioner to Hospital

• There is a special safe harbor for sale of a practice by a practitioner to a hospital. These standards must be met: The sale must be completed within a three-year period.

The selling practitioner cannot be in a position to make or i fl f l t b i f th h it l


influence referrals or generate business for the hospital.

The practice being sold must be in a Health Professional Shortage Area as defined by the U.S. Department of Health and Human Services.

The purchasing hospital must engage in recruitment activities that might provide a new practitioner and will satisfy the recruitment safe harbor.

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5. Referral Services

• Payments made to a company in the business of referring people for services are protected.

• Four Standards the referral service must meet to qualify: A referral service cannot exclude anyone who meets its

qualifications for participation.

P t t th f l t b b d ti t


Payments to the referral source must be based on operating costs and cannot be based on the volume of referrals.

The referral service cannot impose any requirements on the way the referred person is treated except that some requirements can be imposed about charges.

The referral service must make certain disclosures about participants in the referral service to people who use the referral service.

5. Referral Services – Cont’d

• In 2016, the OIG made a “technical correct” to this safe harbor to clarify that any payments made to the referral service must not be based on the volume or value of any referrals to or business generated by either party for the other party.


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• The OIG believed the prior language could be interpreted to allow a referral service to adjust their fees on the basis of volume of referrals.

6. Warranties• Payments made by a manufacturer or supplier under a written

warranty are protected provided that:

The buyer must report the price reduction in its Medicare/Medicaid reporting system or claim.

The buyer must provide information from the vendor if requested by regulatory authorities.

The vendor must either: Report the price reduction on the invoice and tell the buyer about its obligations

d th t it b


under the two items above or

When the price reduction amount is not known at the time of sale, report the existence of a warranty on the invoice and the vendor must advise the buyer when the price reduction is known.

• The vendor cannot pay any expense incurred by the buyer except for the cost of the item itself. The term warranty includes an agreement by a vendor to repair or replace its own merchandise and an agreement to replace equipment supplied by another vendor.

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7. Discounts

• Safe Harbor for discounts from vendors of goods or services for which payment is made by Medicare or Medicaid.

• A discount can include a rebate check, credit, or coupon redeemable by the seller.

• “Discount” does not include a cash payment, furnishing of one good or service without charge, or at a reduced charge in exchange for an agreement to buy another, a reduction in price which applies to one b b t t t M di M di id d ti i i ff d t


buyer but not to Medicare or Medicaid, a reduction in price offered to a beneficiary (e.g., waiver of co-insurance) or items which are covered by various other Safe Harbors.

• The requirements for the discount Safe Harbor are different for different categories of buyers.

• There is one set of requirements for cost report buyers, a separate set of requirements for HMOs and competitive medical plans and a separate set of requirements for all others.

8. Employees

• There is a Safe Harbor for amounts paid to an employee by an employer.

• Relationship must be a bona fide employer-employee relationship and not an independent contractor relationship


relationship.

• Includes part-time and full-time employees, and includes employees paid on a commission basis.

• Only covers payments to the employee for services if the services are paid for by a federal health program.

9. Group Purchasing Organizations

• Payments made by a vendor to a group purchasing organization (“GPO”) are protected if two conditions are satisfied.

The GPO must have a written agreement with each participant. If the fees are more than 3%, the agreement must state the fees.


When the buyer is a health care provider of services, the GPO must make an annual disclosure of the amount received from each vendor for purchases made on behalf of that buyer.

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10. Waiver of Co-insurance and Deductible Amounts

• Applies to hospital reductions of co-insurance and deductible amounts for patients covered by Part A or Medicaid.

• The hospital cannot later claim the reduction as a bad debt for the purpose of Medicare or Medicaid.

• The hospital must reduce or waive co-insurance or deductible regardless of the reason for admission, the length of stay, or the DRG of a patient.


p

• The reduction cannot be a part of any price reduction agreement between the hospital and a third party payor.

• Protection is also given for waivers provided to health care facilities subsidized or qualified under the Public Health Services Act and certain other grant programs.

• This Safe Harbor applies only to hospital inpatient stays and does not apply to waivers of payments under Medicare Part B.

Other Safe Harbors

• There are other safe harbors which are not used as frequently such as those for price reductions for:

health plans

practitioner recruitment

obstetrical malpractice subsidies

cooperative hospital service organizations,


ambulatory surgery centers,

ambulance replenishing,

price reductions offered to contractors with substantial risk to managed care organizations,

electronic prescribing items and services and

Federally Qualified Health Centers and Medicare Advantage Organizations.

New Safe Harbors

• Added in 2016:

Free or Discounted Local Transportation

Part D Cost-Sharing Waivers by Pharmacies – Protects certain non-routine waivers of cost-sharing amounts by pharmacies after a good faith determination the patient is in financial need

Cost Sharing Waivers for Emergency Ambulance Services –This allows waivers of patient cost-sharing amounts by state- or municipality-provided emergency ambulance services


provided emergency ambulance services

Medicare Coverage Gap Discount Program – This safe harbor allows drug manufacturers to enter into agreements with HHS to provide select beneficiaries with access to discounts on drugs at the point of sale

Federally Qualified Health Centers (FQHCs) and Medicare Advantage Organizations

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• This safe harbor is very relevant to HHAs.

• Permits free or discounted local transportation made available by an “eligible entity” to beneficiaries if certain criteria are met, including providing free transportation to “established patients” for medically necessary services within a local area.


• HHAs are “eligible entities.” The entity must have a set policy regarding the availability of transportation assistance, and it must be applied uniformly (cannot be applied based on past or anticipated volume of business). Patient financial need requirement is not required.


• Local transportation cannot be advertised.

• An “established patient” is a person who has had an appointment with the provider or supplier, or who has selected and initiated contact to schedule an appointment.

• The purpose of the transportation must be for medically necessary items or services (but it is possible this will be expanded in the future


items or services (but it is possible this will be expanded in the future for other health-related activities).

• Providers can provide transportation of a patient to a provider or supplier of services and back to the patient’s home.

• Separate criteria were established for “shuttle service” that does not include limitations contained for individual beneficiary transportation.

Anti-Kickback Enforcement


Enforcement Examples

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1. Free Discharge Planning –The Lahey Health Systems 2016 Settlement

• Lahey Health Systems, a Burlington, MA hospital organization agreed to pay the OIG $1.923 million to settle this case.

• Lahey received free services from two HHAs, Northeast Senior Health and Visiting Nurse Association of Middlesex-East, Inc.


,

• The HHAs placed discharge planners at the hospital.

• This saved the hospital the cost of hiring discharge planners.

1. Free Discharge Planning – Cont’d

• Part of the job of discharge planners is to assist patients with finding HHAs if they are in need of such services.

• Conditions of participation of a hospital require hospitals to give patients a choice of HHAs and prohibit “steering.”

• But here the HHA had the opportunity to steer patients to


• But here, the HHA had the opportunity to steer patients to their own services.

• Once Lahey realized what it was doing was wrong, it made a voluntary disclosure to the OIG. The voluntary disclosure protected itself from exclusion, but not from paying a big settlement.

2. Sponsoring Events –OIG Advisory Opinion 01-02 (Mar. 27, 2001)

• The OIG treats event sponsorship as highly suspect if they involve donations to an actual referral source.

• The OIG issued an advisory opinion in 2001 which gave a non-profit health system highly qualified approval to allow vendors of the health system to sponsor a charity golf


y p y gtournament.

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2. Sponsoring Events – Cont’d

• The OIG only approved because there was:

A legitimate fundraising event that was not organized by the health system (although it benefitted the health system),

There was a community-wide solicitation for sponsors (not just targeting vendors), and


targeting vendors), and

The request certified that the health system would not take event sponsorship into consideration in deciding whether to award or renew contracts or purchase items or services.

3. Providing Referring Physicians with Free or Below FMV Services – Amedisys, Inc. 2014

Settlement

• Amedisys, a large publicly-traded operator of HHAs and hospices, agreed to pay $150 million to settle a “whistleblower” false claims act case.

• It was alleged that between 2008-2010 some Amedisys offices billed Medicare for nursing and therapy services that were medically


g py yunnecessary or provided to patients who were not homebound.

• Also alleged improper financial relationships with referring physicians.

• Provided patient care coordinators at below fair market value to an oncology practice in Georgia.

• Amedisys signed a five-year corporate integrity agreement (“CIA”).

• CIAs are usually very burdensome with outside monitor reporting.

4. Criminal Cases for Kickbacks to Referral Sources

• Margarita Palomino, an owner of several Miami HHAs was sentenced in December 2018 to 78 months in prison and ordered to pay $4.65 million

• The defendant admitted that from January 2010 through January 2014 she accepted kickbacks in return for referral of Medicare patients, many of whom did not need HHA services.

• She also admitted to performing nursing visits and completing related


• She also admitted to performing nursing visits and completing related medical records for which she was not qualified. This defendant was licensed as a physician in Cuba, but never had a license in the USA.

• Another owner (Norma Zayas) of the same group of HHAs was sentenced to 51 months in prison and ordered to pay $4.65 million back to Medicare. She admitted that she paid patient recruiters in return for the referral of patients, many of whom did not need HHA services.

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5. Paying Physicians Based on Number of Referrals

• Two Southwest Missouri hospitals were sued in a “whistleblower” false claims case and settled with the OIG in 2017 for $34,000,000 and signed a corporate integrity agreement.

• The suit was filed by a former physician who claims that physicians were paid for oncology and infusion services in a way that took into account the value of referrals.

Th it l i th t t i l ti f th ti


• The suit claims the payment arrangement was a violation of the anti-kickback law and Stark.

• The case was settled without any admission of a violation.

• But the hospital company paid the OIG $34,000,000 and entered into a corporate integrity agreement which requires monitoring.

• The physician who filed the suit received $5,440,000 (15% of the amount the hospital agreed to pay), plus legal fees.

6. Sham Loans, Free Rental Space, Gift Cards, Stock Dividends

• U.S. ex rel. Capshaw v. White, Civil Action No. 3:12-cv-4457 (N.D. Tex.)

• In 2017, a group of hospices in Dallas, Texas entered into a $12.2 million to resolve allegations that they paid kickbacks in exchange for patient referrals. It was alleged that from 2007-2012, the hospice paid kickbacks to a physician house call company in exchange for


paid kickbacks to a physician house-call company in exchange for patient referrals. The kickbacks were in the form of sham loans, free equity interest in another entity, stock dividends, and free rental space.

• It was also alleged that from 2007-2014, kickbacks were paid to medical providers for referrals using cash, gift cards, and other valuable items.

7. Physician Shareholders – Allied Health Care Corporation 2009 Settlement

• In 2009, Allied agreed to settle a case with the OIG which alleged that two physicians that were shareholders of Allied made referrals to two home health agencies that were wholly owned subsidiaries of allied


of allied.

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Beneficiary Inducement Prohibition, 42 U.S.C. § 1320a-7a(a)(5)

• Providing remuneration to a beneficiary that to influence the beneficiary’s selection of a particular provider for an item or service covered by a Federal health care program violates both the anti-kickback statute and a separate statute prohibiting beneficiary inducements.

• Exceptions:• Any of the statutory exceptions or regulatory safe harbors under the Anti-Kickback Statute;


• Certain waivers of coinsurance and deductibles;

• Incentives that promote delivery of preventive care;

• Other remuneration that promotes access to care and poses low risk of harm to patients and the Federal programs;

• Coupons, rebates, or other rewards given by retailors to all patients regardless of insurer.

• Gifts to beneficiaries less than $15 in value (not to exceed $75 annually) are not considered “remuneration” for purposes of the beneficiary inducement prohibition.

False Claims Act


General Rule

• Civil and criminal Civil – 31 U.S.C. § 3729 et seq.

Criminal – 18 U.S.C. § 287

• Illegal to knowingly present to the government a false or fraudulent claim for payment or approval

• “Knowing” is:


Knowing is:• Actual knowledge

• Acts in deliberate ignorance or reckless disregard of the truth or falsity of information

• No requirement of intent to defraud

• The Affordable Care Act added liability on those who do not repay any identified overpayment within 60 days.

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Penalties

• Penalties for false claims include:

• Civil money penalties, plus three times the government’s actual damages

• Fines up to $250 000; and/or


Fines up to $250,000; and/or

• Imprisonment for up to five (5) years.

Qui Tam Cases

• Most FCA cases originate as qui tam cases.

A private party (“relator”) brings a civil action on behalf of the United States alleging FCA violations.

The relator must be an original source of the information; the individual must have direct and independent knowledge of the violation, has voluntarily shared the information with the government, and the government has not filed a civil action regarding the information. This requirement is not satisfied if the information was publicly disclosed.


q p y

• Once the qui tam suit is filed, the government can intervene.

• Relators get their attorney’s fees and a percentage of recovery:

15-25 percent if the government intervenes

25-30 percent if the government does not intervene

• Employees are most often the qui tam relators and receive whistleblower protection under the law.

Example Cases

• Many cases are based on failure to comply with Anti-Kickback Statute or Stark law (discussed later)

• Other cases are based on the failure to


Other cases are based on the failure to comply with various requirements for reimbursement.

• There is FCA liability if you employ someone who has been excluded

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Example Cases – Cont’d

• Physician Certifications – U.S. ex rel. Prather v. Brookdale Senior Living Communities, Inc., 892 F.3d 822 (6th Cir. 2018)

Brookdale was a HHA. A physician certification is required for home health services.

An employee of Brookdale filed a qui tam complaint, alleging Brookdale submitted false claims by failing to timely obtain physician certifications.

The relator was employed by Brookdale to review claims prior to their submission t M di f t d f th l i i i h i i


to Medicare for payment, and many of the claims were missing physician certifications.

District court dismissed because the employee failed to allege that timely physician certifications were “material” to the government decision to pay claims. On appeal, the 6th Circuit reversed because:

(1) the physician certification requirement is an express condition of payment; and

(2) the relator alleged that the government paid the claims submitted by Brookdale without knowledge of the non-compliance, making the government’s continued payments irrelevant.


• Failure to follow plans of care – U.S. v. Visiting Nurse Serv. of New York, No. 14-CV-5739 (AJN), 2017 WL 5515860 (S.D.N.Y. Sept. 26, 2017).

• Kickbacks for patient referrals and claims for unqualified patients – U.S. v. Addus HomeCare Corp., No. 13 CV 9059,


2017 WL 467673 (N.D. Ill. Feb. 3, 2017)

• Forging physician signatures – U.S. v. Dynamic Visions, Inc., No. 11-695 (CKK), 2016 WL 7115946 (D.D.C. Dec. 6, 2016)


• Hospice Certification Cases Cases brought alleging hospices certified patients who were not

eligible for hospice, thereby violating the False Claims Act.

The district courts in these cases have all held that a mere difference of opinion of an expert witness is not enough to prove falsity. There must be objective falsehoods (i.e., physicians

i i ki kb k lt ti /f l ifi ti f ti t d


receiving kickbacks, alteration/falsification of patient records, phantom patients, etc.)

Druding v. Care Alternatives, Inc., No. CV 08-2126(JBS/AMD), 2018 WL 4629514 (D.N.J. Sept. 26, 2018)

U.S. v. AseraCare, Inc., Case, 176 F. Supp. 3d 1282 (N.D. Ala. Mar. 31, 2016)

U.S. ex rel. Wall v. Vista Hospice Care, Inc., Case No. 2:12-CV-245-KOB, 2016 WL 3449833 (N.D. Tex. June 20, 2016)

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Exclusionary Authority


Exclusionary Authority

Mandatory Exclusion

• 42 U.S.C. 1320a-7(a)(1) provides for a mandatory exclusion from Medicare and Medicaid of “any individual or entity that has been convicted of a criminal offense related to the delivery of an item or service” under Medicare or Medicaid.

• 42 U S C § 1320a-3(a) also provides mandatory


42 U.S.C. § 1320a 3(a) also provides mandatory exclusion for those who have: Been convicted of any offense related to patient abuse;

Been convicted of any offense related to health care fraud;

Been convicted of a felony offense related to controlled substances.

Permissive Authority• 42 U.S.C. § 1320a-7(b) states that the Secretary of HHS may exclude

several categories of individuals and entities.

• Permissive exclusions are provided for individuals and entities which:

Are convicted of a fraud offense (misdemeanor or felony) after August 21, 1996 (e.g., theft or embezzlement);

Are convicted of obstruction of an investigation of a crime that could result in mandatory or permissive exclusion;


Are convicted of a misdemeanor offense related to controlled substances;

Have a license suspended or revoked due to professional incompetence, professional performance, or financial integrity or who surrenders a license during disciplinary proceedings;

Have been excluded or suspended from other programs such as any federal program (DOD, VA) or state programs;

Have submitted claims for excessive or unnecessary services;

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Permissive Authority – Cont’d The Secretary of HHS has determined that the person violated the anti-

kickback law (42 U.S.C. § 1320a-7a, 1320a-7b, or 1320a-8). Note: If the provider is convicted of an anti-kickback violation, the provider is subject

to mandatory exclusion. Permissive exclusion only applies to a person not convicted, about which the Secretary of HHS would make such a determination.

The Secretary of HHS may exclude any provider which has “certain individuals” (as defined below) Holding any of the following positions:


• A direct or indirect 5% or more ownership interest;

• An officer, director, agent or “managing employee”;

• Any person who held one of the above positions but no longer does because of a transfer of ownership in contemplation of exclusion.

For this purpose, “certain individuals” are those who fall into any one or more of the following categories:

• A person who was convicted of any of the offenses for which there is a mandatory or permissive exclusion;

• A person who had a civil monetary penalty imposed against him/her;

• A person who was excluded.

Missouri Anti-Fraud and


and Anti-Kickback Laws

Missouri Anti-Fraud and Anti-Kickback Laws

• Offering, making, soliciting, or receiving a kickback for Medicaid referral is illegal. §§ 198.145, 198.148, RSMo.

• Making a false statement to qualify or be certified is illegal. §198.155, RSMo.

Th t t t f d b th D t t f H lth d


• These statutes are enforced by the Department of Health and Senior Services. No appellate cases since law passed in 1979.

• Both types of violations are class D felonies. § 198.158 RSMo.

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Missouri Anti-Fraud and Anti-Kickback Laws – Cont’d

• Missouri False Claims Law

Effective in 1994

Created the Medicaid Fraud Control Unit in the Missouri Attorney General’s Office (“AG”).

Codified at § 191.900 et seq. RSMo.

§ 191.905.1 prohibits making a false statement to receive health care


§ p gpayment. Includes false representations that health care was medically necessary.

Concealing information.

Making a claim for more valuable procedure than actually performed.

§ 191.905.2 is similar to federal anti-kickback prohibition.

Provides for all exceptions and safe harbors permitted under federal anti-kickback law. § 191.905.5.


Applies to Medicare, Medicaid, or any Medicaid waiver.

Would apply to broad range of services if Medicaid waiver application filed by the State of Missouri is okayed.

Carry severe criminal penalties which, if imposed, will result in mandatory exclusion of the facility from the Medicare and


in mandatory exclusion of the facility from the Medicare and Medicaid programs.

Because of these severe consequences, it is necessary for facilities to protect their rights during an investigation by the AG.


The Act provides in § 191.910 that the AG shall have all the powers provided in §§407.040 to 407.090 in connection with his investigation of violations of the Act.

Those sections in the Merchandizing Practices Act deal with Civil Investigative Demands (“CID”) and the rights and obligations of both the AG and the person receiving a CID.

Under § 407.070, RSMo a person has at least twenty (20) days after a CID is served or the return date specified in the CID whichever period is shorter to petition to


or the return date specified in the CID, whichever period is shorter, to petition to extend the return date.

The provisions which apply to a CID apply to a subpoena served by the AG under §191.910.

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Stark Law aka


Physician Self-Referral Law

Background – original Stark Act, 42 U.S.C. § 1395nn

• Original law effective January 1, 1992, applied only to clinical laboratory services.

• Law is named for Fortney “Pete” Stark, Congressman from California (now retired).

N l ff ti 1/1/95 42 U S C § 1395


• New law effective 1/1/95, 42 U.S.C. § 1395nn, as amended.

• Applies to Medicare/Medicaid as of January 1, 1995.

General Rule

• Prohibits a physician from: Making a referral

To an entity

In which the physician or immediate family member has a financial relationship


p

For a designated health service (DHS)

For which payment may be made under Medicare or Medicaid

• Financial relationship can be created by: Ownership or investment interest.

Contract or compensation arrangement.

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“Designated Health Care Services”

• Clinical laboratory services.

• Physical and occupational therapy.

• Radiology and other imaging services.

• Radiation therapy services.

• Durable medical equipment.


• Parenteral and enteral nutrients, equipment, and supplies.

• Prosthetics, orthotics, and prosthetic devices.

• Home health services.

• Outpatient prescription drugs.

• Inpatient and outpatient hospital services.

• Others as may be added by regulation.

“Referral”

• A request by a physician for, or ordering of, or certifying the need for designated health services

• A request for a consultation with another physician and any test or procedure ordered by or performed by the other physician

Th t bli h t f l f b h i i th t


• The establishment of a plan of care by a physician that includes the provision of designated health services.

• The general rule also states that a claim cannot be made for any goods or services referral in violation of the Stark law.

Exceptions

• With Stark, we have “exceptions” instead of “safe harbors.”

• The exceptions are in regulations in 42 CFR § 411.350 through §411.389.

• The first group of exceptions applies to both ownership or investment interests and compensation arrangements.

1. In-office ancillary services.• In order to constitute “in-office ancillary services ” the services must be performed


In order to constitute in office ancillary services, the services must be performed either by the referring physician or another physician in the same group practice.

• The services could also be performed by employees of the group practice if they are supervised by the referring physician or a physician in the group practice.

• The services must be furnished in the building where the referring physician or other members of his or her group practice provides physician services.

• The services must be billed by the group practice.

• Other requirements apply.

2. Prepaid health plans.

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Exceptions That Apply to Compensation Arrangements

1. Publicly traded stocks or mutual funds

The stock must be issued by a corporation with stockholders’ equity of $75 million and must be listed on the New York, American, or a regional exchange or, if a foreign stock, must be listed on a recognized foreign market.

2. Rural providers

Rural means not in an standard metropolitan statistical area (“SMSA”)


Rural means not in an standard metropolitan statistical area ( SMSA ) as defined by OMB. The services must be provided in rural area.

“Substantially all” patients must live in rural area.

3. Ownership of hospital

There is an exception for an ownership interest in a hospital.

There is a complicated list of requirements to meet this exception.

Exceptions That Apply to Ownership / Investment Interests

1. Rental of Office Space• Nearly the same as the safe harbor under the anti-kickback law.

• To qualify for the exception, the rental must meet the following standards:

There must be a written rental or lease agreement signed by the parties


There must be a written rental or lease agreement signed by the parties which describes the space covered.

The term of the agreement must be at least a year.

The agreement must have commercially reasonable terms even if there were no referrals.

Exceptions That Apply to Ownership / Investment Interests – Cont’d

The amount of rented space must not exceed space which is necessary and reasonable for the legitimate business purpose. The space must be used exclusively by the lessee when used by the lessee. However, the lessee can make payments for common areas on a proportional basis.

The rental payments must be set in advance, must be consistent with fair market value and cannot be determined in any way that takes the


fair market value, and cannot be determined in any way that takes the volume of referrals into consideration. The rental cannot be based on a “per click” or similar use formula.

If a lease expires, a holdover lease is acceptable if:

The original lease satisfied the requirements.

The holdover lease is on the same terms as the original lease.

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2. Rental of Equipment• To qualify for this exception, the rental or lease agreement must

comply with the requirements for rental of office space

• Except: there is no limitation on the requirement that the equipment must be used exclusively by the lessee


must be used exclusively by the lessee.


3. Employment Arrangements• For bona fide employment (W-2 employees for whom the employer

makes FICA contributions) arrangements between a health care provider and the referring physician,

• Requirements:

The arrangement has to be for identifiable services


The arrangement has to be for identifiable services.

The amount of pay to the physician must be consistent with fair market value and not take into account referrals. (However, a physician may be paid a productivity bonus based on services performed by the physician personally.)

The pay must be commercially reasonable even if there were no referrals.

The pay can include a productivity bonus based on services performed by the physician (or his/her immediate family member).


4. Personal Services Arrangements• This exception is similar to the personal services safe harbor.

• These arrangements must meet the following standards: The arrangement must be in writing, signed by the parties, and

specify the services to be provided.


p y p

The arrangement must cover all the services to be provided by the physician or an immediate family member of the physician. If there are other arrangements between the parties, all the arrangements must be cross-referenced or incorporated into a master list of all such arrangements.

The total of services contracted for cannot exceed the services that are reasonable and necessary for the business purposes of the arrangement.

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The term of the arrangement must be for at least a year.

The pay must be set in advance, not exceed fair market value, and not be determined based upon referrals.

The services do not involve promotion or counseling of unlawful arrangements.


If the arrangement expires after the 1-year term, a holdover arrangement is acceptable if:

The original arrangement satisfied the requirements.

The holdover arrangement is on the same terms as the expired arrangement.


5. Physician Incentive Plan

• An incentive pay plan between a physician and a contractor, pay can be based on the volume of referrals if:

If no pay is made to reduce or limit medically necessary i


services.

The contractor provides any information which may be requested by the Secretary of the Department of Health and Human Services.

The pay plan satisfies other regulatory requirements.


Other Exceptions

• Isolated transactions, such as one-time sale of property or practice. Several conditions apply.

• Payments by a physician for goods or services provided at fair


market value.

• There are several other exceptions for retention payments in underserved community-wide health information systems (for electronic records), electronic prescribing items and services, electronic health records, items and services, assistance by a hospital to a physician to pay a non-physician practitioner.

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Sanctions

• Stark II is Civil and Not Criminal

• Denial of Medicare or Medicaid payment.

• Refunds of claims filed in violation of Stark II.

• Civil penalty of up to $15,000 per claim if defendant knew or should have known the claim was in violation of Stark II


have known the claim was in violation of Stark II.

• Civil penalty of up to $100,000 for each scheme and exclusion from Medicare and Medicaid if principal purpose of plan was to provide referrals in violation of law.

• False Claims Act liability.

Compare / Contrast to Anti-Kickback

• Anti-kickback focuses on the money flow and the intentions of the parties.

• Stark II looks only at patient flow without regard to intent.

• The laws are related but 100% separate.


• You can comply with one and violate the other.

Questions?


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Thomas D. VaughnThomas D. Vaughn573.761.1108

[email protected]


www.huschblackwell.com

Emily M. ParkEmily M. Park573.761.1120

[email protected]

Thank You


Thank You


4831-9625-7422 1 04-26-2019 presentation - anti-kickback ...€¦ · state fraud and abuse law...

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