Maricopa County

Special Health Care District

Board of Directors Executive Session

November 25, 2013 11:30 a.m.

Agenda

Agendas are available within 24 hours of each meeting in the Office of the Board, Maricopa Medical Center, Administration Bldg, 2nd Floor 2601 E. Roosevelt, Phoenix, AZ 85008, Monday through Friday between the hours of 8:00 a.m. and 5:00 p.m. Accommodations for Individuals with Disabilities, alternative format materials, sign language interpretation, and assistive listening devices are available upon 72 hours advance notice through the Office of the Board, Maricopa Medical Center, Administration Bldg, 2nd Floor 2601 E. Roosevelt, Phoenix, Arizona 85008, (602) 344- 5177. To the extent possible, additional reasonable accommodations will be made available within the time constraints of the request. 11/21/2013 9:41 AM

Maricopa Medical Center Administration Building Auditoriums 1 and 2 2601 E. Roosevelt Phoenix, AZ 85008 Clerk’s Office 602-344-5177 Fax 602-344-0892

Monday, November 25, 2013 11:30 a.m.

If you wish to address the Board, please complete a speaker’s slip and deliver it to the Clerk of the Board. If you have anything you wish distributed to the Board and included in the official record, please hand it to the Clerk who will distribute the information to the Board Members and Maricopa Integrated Health System Senior Staff. Speakers are limited to (3) three minutes. (NOTE: One or more of the members of the Board of Directors of the Maricopa County Special Health Care District will attend either in person or by telephone conference call or video communications.) Pursuant to A.R.S. § 38-431.03(A)(3), or any applicable and relevant state or federal law, the Board may vote to recess into an Executive Session for the purpose of obtaining legal advice from the Board’s attorney or attorneys on any matter listed on the agenda. Pursuant to A.R.S. § 38-431.03(A)(4), or any applicable and relevant state or federal law, the Board may vote to recess into an Executive Session for the purpose of consulting with its attorneys to consider its position and instruct its attorneys regarding the Board’s position regarding any contracts that are subject to negotiations, in pending or contemplated litigation, or in settlement discussions conducted in order to avoid or resolve litigation, and that are listed on the General Session agenda for discussion or action or both. The Board also may wish to discuss any items listed for Executive Session discussion in General Session, or the Board may wish to take action in General Session on any items listed for discussion in Executive Session. To do so, the Board will recess Executive Session on any particular item and reconvene General Session to discuss that item or to take action on such item.

ITEMS MAY BE DISCUSSED IN A DIFFERENT SEQUENCE

Call to Order Roll Call Call to the Public This is the time for the public to comment. The Board of Directors may not discuss items that are not specifically identified on the agenda. Therefore, pursuant to A.R.S. § 38-431.01(H), action taken as a result of public comment will be limited to directing staff to study the matter, responding to any criticism or scheduling a matter for further consideration and decision at a later date.

AGENDA – Executive Session

Board of Directors of the Maricopa County Special Health Care District

Board Members Mary A. Harden, R.N., Chair, District 1 Mark Dewane, Vice Chair, District 2 Susan Gerard, Director, District 3 Elbert Bicknell, Director, District 4 Terence McMahon, Director, District 5

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General Session, Presentation, Discussion and Action: 1. Compliance Training for Board of Directors 25 min Eric Royal, MIHS, Director of Compliance Motion to Recess General Session and Convene in Executive Session Executive Session: E-1 Personnel Matters; A.R.S. § 38-431.03(A)(1): Discussion or consideration of employment,

assignment, appointment, promotion, demotion, dismissal, salaries, disciplining or resignation of a public officer; Fiscal Year 2013 Performance of Melanie Talbot, Executive Director of Board Operations/Clerk of the Board 5 min

E-2 Legal Advice; Contracts Subject to Negotiations; Records Exempt by Law from Public Inspection; A.R.S. § 38-431.03(A)(3); A.R.S.§ 38-431.03(A)(4) and A.R.S. § 38-431.03(A)(2)1: Maricopa County Special Health Care District strategic planning regarding behavioral, educational, and clinical and educational health initiatives, business, contractual and product service line strategies, and financial, budget, and operational strategies 30 min 1 Exemptions based upon A.R.S. § 48-5541.01(M)(4) (c) and (d) records or other matters, the disclosure of which would cause

demonstrable and material harm and would place the district at a competitive disadvantage in the marketplace; or violate any exception, privilege or confidentiality granted or imposed by statute or common law.

E-3 Personnel Matters; A.R.S. § 38-431.03(A)(1): Discussion or consideration of employment, assignment, promotion, demotion, dismissal, disciplining or resignation of a public officer. Fiscal Year Assignments and Performance Goals for Steve Purves, Maricopa Integrated Health System President & Chief Executive Officer 30 min Recess Executive Session and Reconvene in General Session General Session Presentation, Discussion and Action: Adjourn

Maricopa County

Special Health Care District

Board of Directors Executive Session

November 25, 2013

Item 1.

1MIHS

Maricopa Integrated Health System Office of Corporate Compliance

Board of Directors Training

Presented byPresented by

Eric M. Royal, JD, MPHEric M. Royal, JD, MPH

Director of Corporate Director of Corporate ComplianceCompliance

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2MIHS

Objectives for Session 2

• Objectives of training session 2:– Review Training Session 1

– Understand the laws pertaining to Fraud, Waste, and Abuse

– Review the False Claims Act, Anti Kickback Statute, and Stark Law

– Review enforcement actions pertaining to Fraud, Waste, and Abuse

– Review MIHS activities to prevent fraud and abuse

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3MIHS

Review from Session 1

• Overview of training session 1:– The OIG 7 Elements of an Effective Hospital

Compliance Program

– The need for a compliance program• OIG and Federal Sentencing Guidelines

• Detect, prevent, and mitigate fraud, waste, and abuse

• Ensure compliance with legal and regulatory laws

– The Board’s role for engagement in Compliance

– The MIHS Code of Conduct and Ethics

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4MIHS

OIG Requirements for an Effective Hospital Compliance Program

• 7 Elements of an Effective Hospital Compliance Program

1. Written Code of Conduct and written policies and procedures

2. Designation of a Chief Compliance Officer and an appropriate oversight committee for compliance

3. Development of regular annual training for employees

4. Creating a process for employees to report (anonymously as well) compliance issues and questions

5. Sanctions for violating compliance policies

6. Auditing to monitor compliance and reduce risk

7. Investigating and remediating detected problems4

5MIHS

False Claims Act

The False Claims Act (FCA) was passed in 1863. The FCA provided both criminal and civil penalties, contained a qui tam provision, and permitted a whistleblower to collect 50% of the damages.[Qui Tam is derived from the Latin phrase- “Qui tam pro domino rege quam pro se ipso,“ which means "Who sues on behalf of the King, as well as for Himself“. Of note, a person who brings a whistleblower suit is known as a “relator”.]

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6MIHS

False Claims Act

• The FCA permits private citizens with knowledge of false claims against the government to bring a lawsuit on behalf of the United States and to share in any recovery.

31 U.S.C. §

3729-3733

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7MIHS

False Claims Act

• What are examples of false claims? – Billing for a service that was not provided– Providing a sub-standard service– Inflating costs in order to be reimbursed– Performing and billing for a service that was

not medically reasonable and necessary– Paying physicians for referrals

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8MIHS

FCA Case Study- Shands HealthCare

• (August 2013) Shands HealthCare in Florida agreed to pay $26 million to resolve allegations that its hospitals billed government health programs for inpatient claims that should have been coded as less expensive outpatient services. The false claims were submitted from 2003-2008.

• The whistle-blower was a consultant hired by Shands to audit its billing practices.

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9MIHS

FCA Case Study - Parkland Memorial Hospital

• (May 2013) Parkland agreed to pay $1.42 million in fines and agreed to enter into a 5-year corporate integrity agreement (CIA). The Department of Justice alleged that Parkland submitted false claims from 2007-2011 involving:

(1) consultations that were never requested by a patient’s treating physicians and/or lacked medical necessity;

(2) services related to the inappropriate supervision of residents and/or lacked medical necessity;

(3) up-coded and inflated evaluation and management services;

(4) inpatient rehabilitation stays that did not meet billing requirements.

• The whistle-blower was an attending physician at Parkland hospital who received 30% of the settlement .• The CIA requires Parkland’s Board of Managers to be responsible for matters pertaining to Compliance.

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10MIHS

FCA Case Study - Vanderbilt Medical Center

• (September 2013) Three former attending physicians at Vanderbilt filed a whistleblower suit alleging that physicians were not present during key and critical portions of procedures performed by residents. The physicians further alleged that attending physicians were overbooked for procedures and were sometimes geographical unavailable to supervise residents.

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11MIHS

FCA Case Study- Vanderbilt Medical Center

• Further allegations were that after a 2008 internal audit exposed the billing practice, Vanderbilt designed, created and implemented a proprietary electronic record system which produced documentation to support the alleged false claims.

• "Vanderbilt's electronic record keeping system lists back- up surgeons who are purportedly available to cover the procedures of attending surgeons during times when those surgeons have more than one ongoing operation." "However, those covering surgeons are not actually responsible for those surgeries. Indeed, they are never in the operating suite and are frequently not even in the hospital during their scheduled coverage."

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12MIHS

FCA and AKS Case Study

• November 2010, St. Joseph Medical Center in Baltimore, MD agreed to pay $22 million in fines to settle allegations that it submitted false claims and received payment from federal health benefit programs between Jan. 1, 2008, and May 12, 2009, for medically unnecessary stents performed by a cardiologist.

• Whistleblowers were three cardiologists . 12

13MIHS

False Claims Act- Penalties

• Federal and State of Arizona False Claims Act

– Federal penalties- The Department of Justice may go to court to recover the following penalties from MIHS or MIHS Personnel:

• a) a civil penalty of not less than $5,500 and not more than $11,000; plus

• b) three (3) times the amount of damages to the U.S. Government as a result of the actions by MIHS or the individual(s).

• Arizona Civil Penalties– Civil penalties may be assessed against MIHS or MIHS Personnel by the State of Arizona in

an amount:

– a) not to exceed $2,000 for each item or service claimed; plus

– b) two (2) times the amount of damages resulting from each item or service claimed.

*Federal and Arizona Law protects whistleblowers from retaliation.

*Sentencing guideline penalties can increase if retaliation occurs.

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14MIHS

MIHS False Claims Policy

• What does the MIHS FCA policy address?– Federal and Arizona laws related to the submission of false claims– Federal and Arizona penalties for individuals and organizations that file

false claims– Federal and Arizona laws that provide protection to whistleblowers– MIHS Non-Retaliation Policy and methods for reporting suspected false

claims• What does the MIHS FCA policy say?

– MIHS will not submit false or misleading documents or claims to Federal or state government, agencies, or contractors.

– All MIHS Personnel have an obligation to ensure that all claims or documentation submitted to all payors, (especially for Medicare and Medicaid), are complete and accurate

– Any person who identifies a false claim and reports it, is protected from retaliation by Federal law, Arizona law, and the MIHS Non-retaliation Policy

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15MIHS

Anti-Kickback Statue

• Federal Anti-kickback Law. The Social Security Act’s illegal remuneration provisions (the “Anti-kickback Statute”) prohibit the offer, payment, solicitation or receipt of remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash or in kind, for (a) the referral of patients or arranging for the referral of patients to receive services for which payment may be made in whole or in part under a government-sponsored federal health care program, which includes Medicare, Medicaid and TRICARE (formerly CHAMPUS, which provides benefits to dependents of members of the uniformed services) and any state healthcare program, or (b) the purchase, lease, order, or arranging for the purchase, lease or order of any good, facility, service or item for which payment may be made under a government-sponsored health care program.

• 42 U.S.C. §

1320a-7b(b)

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16MIHS

Anti-Kickback Statute

• The Anti-Kickback Statute contains both criminal and civil sanctions, which are enforced by the Office of Inspector General (“OIG”) of HHS and the United States Department of Justice. The criminal sanctions for a conviction under the Anti-kickback Statute are imprisonment for not more than five years, a fine of not more than $50,000 for each offense, or both, with higher penalties potentially being imposed under the Federal Sentencing Guidelines.

• In addition to the imposition of criminal sanctions, the Secretary of HHS may exclude any person or entity that commits an act prohibited by the Anti- Kickback Statute from participation in the Medicare program, and may also direct states to exclude that person from participation in state health care programs. Violators of the Anti-kickback Statute may be subject to a civil money penalty of $50,000 for each prohibited act, and up to three times the total amount of remuneration offered, paid, solicited, or received, without regard to whether a portion of such remuneration was offered, paid, solicited, or received for a lawful purpose.

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17MIHS

Anti-Kickback Statute

• Submission of a claim for services or items generated in violation of the Anti-kickback Statute constitutes a false or fraudulent claim and may be subject to additional penalties under the federal False Claims Act.

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18MIHS

FCA Case Study- St. Joseph Medical Center

• St. Joseph Medical Center in Baltimore, MD paid $22 million and entered into a 5-year corporate integrity agreement to settle allegations that it violated the Anti- Kickback statue, Stark Law, and the False Claims Act. The allegations resolved in the settlement include the payment of kickbacks to a cardiology practice group under the guise of professional services agreements, in return for the group’s referrals to the medical center for cardiovascular procedures, including cardiac surgery and interventional cardiology procedures, over the period from Jan. 1, 1996, to Jan. 1, 2006. The settlement agreement resolves issues relating to 11 professional services agreements between the group and St. Joseph under which group received payments above fair market value, for services not rendered or that were not commercially reasonable and were entered into for the purpose of inducing referrals by the group to St. Joseph.

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19MIHS

AKS and Patient Inducement

• Gifts to patients- Must be nominal in value, $10 per gift per patient, $50 in the aggregate per patient per year. Check with Compliance before you give incentives to patients.

• We cannot pay or otherwise improperly induce patients to utilize our services.

• (42 U.S.C. §

1320a-7a(a)(5))

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20MIHS

Stark Law

• Federal Physician Self-Referral Law. Provisions of the Social Security Act commonly referred to as the Stark Law prohibit referrals by a physician of Medicare and Medicaid beneficiaries to providers for a broad range of health services if the physician (or his or her immediate family member) has an ownership or other financial arrangement with the provider, unless an exception applies. The “designated health services” to which the Stark Law applies include all inpatient and outpatient services provided by hospitals. Hospitals cannot bill for services they provide as a result of referrals that are made in violation of the Stark Law.

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21MIHS

Stark Law

• A violation of the Stark Law may result in a denial of payment, require refunds to the Medicare program and its beneficiaries, civil monetary penalties of up to $15,000 for each violation, civil monetary penalties of up to $100,000 for certain “circumvention schemes,” and exclusion from participation in Medicare, Medicaid, and other federal programs. Violations of the Stark Law may also be actionable as violations of the federal False Claims Act. (i.e. St. Joseph Medical Center)

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22MIHS

Stark Law

• The Stark Law is a strict liability offense enabling the government to enforce this law more intensely.

• There is no exception for technical violations even though such violations may be harmless. The primary concern for health care organizations is that once any violation occurs, the government views all referrals thereafter as prohibited.

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23MIHS

Stark Law

• Financial relationships with referring physicians must comply with Stark.

• Written contract

• Fair market value for services provided

• Commercially reasonably purpose

• Lease requirements (space and equipment)

• Transactions must not take into account the volume and value of actual or anticipated referrals

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24MIHS

Stark Law Enforcement examples

• HCA Inc., September 2012 — $16.5 Million

According to the settlement agreement between HCA and the federal government, HCA was required to pay $16.5 million for violations involving the FCA, Stark Law and the Anti-Kickback Statute. HCA, through its Parkridge Medical Center and HCA Physician Services, had entered into financial transactions with Diagnostic Associates, which were intended to induce physician members to refer.

The crux of the violation occurred when Parkridge leased office space from Diagnostic physicians at a rental rate in excess of fair market value.

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25MIHS

Stark Law enforcement examples

• Intermountain Healthcare Inc., March 2013 — $25.5 Million

Intermountain settled with the US Department of Justice for $25.5 million regarding potential Stark Law violations. Intermountain voluntary disclosed financial relationships with physicians who referred patients to Intermountain in mid-2009.

The financial relationships spanned nearly a decade and included bonus structures, which took into account the volume and value of referrals, lease agreements with physicians for office space which were not written, executed and/or may not have been consistent with fair market value.

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26MIHS

Stark Law enforcement examples

• Adventist Health/White Memorial Medical Center, May 2013 — $14.1 Million

The DOJ and Adventist Health agreed upon a $14.1 million settlement to resolve FCA allegations. According to the settlement, Adventist Health and its affiliated hospital White Memorial Medical Center settled due to allegations that physicians were being improperly compensated.

In particular, White Memorial had been transferring assets to physicians who referred patients to the facility at less than fair market value. In addition, White Memorial compensated physicians at above fair market value for teaching services at their family practice residency site.

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27MIHS

Toumey Healthcare System- Whistlblower case

• Toumey was found to have violated the Stark Law and the FCA by improperly compensating physicians to ensure the physicians would refer their patients to Toumey and not to an independent ambulatory surgery center.

• Specifically Toumey paid 131% of professional fees to the physicians in part-time arrangements. The DOJ argued that this compensation exceeded fair market value and was used to keep referrals from the physicians.

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28MIHS

Toumey Healthcare System- Summary of Litigation

• The jury found that Toumey’s financial arrangements with the physicians violated the Stark Law. As such Toumey knowingly submitted professional and facility fee claims to Medicare pursuant to a Stark prohibited referral which violated the FCA.

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29MIHS

Toumey Healthcare System- Damages

• Toumey was found to have submitted 21,730 claims over a 5 year period totaling $39,313,065.

• The Court imposed the statutory minimum civil penalty of $5,500 per claim which equaled $119.5 million.

• In September of 2013, Toumey was ordered to pay $237.5 million for both the Stark and FCA violations.

• Toumey is appealing the order and is rumored to be in settlement discussions with the DOJ.

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30MIHS

MIHS

• MIHS has a closed medical staff

• Contract with DMG must comply with Stark– FMV for Compensation

– Compensation must not take into account volume or value of actual or potential referrals

– Leases for space and equipment must meet Stark requirements

– Commercially reasonable

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