new government focuses on fraud and abuse...

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New Government Focuses on Fraud

and Abuse Enforcement

Friday, January 29, 2016 | 1:30 PM Eastern/12:30 PM Central Sponsored by the ABA Center for Professional Development

ABA Health Law Section

Greater San Antonio Healthcare Foundation

South Texas Chapter, American College of Healthcare Executives

South Texas Chapter, Healthcare Finance Management Association


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New Government Focuses on Fraud and

Abuse Enforcement


Faculty

Moderator:

– John J. LoCurto, Assistant United States Attorney,

Affirmative Civil Enforcement-Coordinator, Western

District of Texas, San Antonio, TX

Panel Members:

– George B. Hernandez, Jr., President/CEO, University

Health System, San Antonio, TX

– Wesley D. Fountain, CFO, Methodist Healthcare

System, San Antonio, TX

– Kathy L. Poppitt, Partner, King and Spalding LLP,

Austin, TX


John J. LoCurto, Assistant United States

Attorney, Affirmative Civil Enforcement-

Coordinator, Western District of Texas,

San Antonio, TX


Enforcement By the Numbers

Health Care Fraud and Abuse Control Program FY14:

• Investment: $572 million appropriated

– $278.1 million mandatory (after sequester)

– $293.6 million discretionary

– Does not include other appropriations (e.g., $127 million

HIPAA allocation to FBI)

• Results: $3.3 billion recovered

– $2.3 billion FY14 HCF recoveries

– $1 billion prior year recoveries

– $1.9 billion returned to Medicare Trust Funds

– $27.8 billion returned since program inception (1997)

• Return: $7.70 for each $1 expended (FY12 to FY14)


Criminal Enforcement

Department of Justice FY14:

• 924 new criminal HFC investigations

opened

• Charges in 496 cases against 805

defendants

• HEAT (Health Care Fraud Prevention and

Enforcement Action Team)

– Strike Forces in 9 cities – 2 in Texas

– 165 indictments, informations, criminal complaints against

353 defendants that together billed $830M to Medicare

• What to expect?

– Ongoing commitment to criminal enforcement

– Increased focus on individual accountability


Civil Enforcement

Department of Justice 2015:

• False Claims Act (FCA) – 31 U.S.C. §§ 3729 to 3733

– Primary tool to combat fraud, waste, and abuse

– Treble damages and civil penalties

– Whistleblower actions – qui tam provision

– Separate criminal and administrative remedies

• HCF recoveries under FCA: $1.97 billion – 423 HCF qui tam actions

– $330 million paid to whistleblowers in HCF cases (before attorney’s fees!)

– In 2015, HCF accounted for majority of total FCA recoveries ($3.58 billion), qui tam suits

(632), and whistleblower awards ($597 million)

• What to expect? – Increased focus on individual accountability

– Affordable Care Act changes: • Overpayments – 60-day rule [U.S. ex rel. Kane v. Healthfirst, Inc., - F. Supp. 3d -, 2015 WL 4619686 (S.D.N.Y. 2015)]

• Kickbacks – 42 U.S.C. § 1320a-7b(g)

– More statistical sampling [U.S. ex rel. Ruckh v. Genoa Healthcare, LLC, 2015 WL 1926417 (M.D. Fla. 2015)]


Administrative Enforcement

HHS-OIG FY14:

• Investigations resulted in:

– 867 criminal actions (Medicare and Medicaid)

– 539 civil actions and agency proceedings

• Exclusions: 4,017 individuals and entities

– 1,700 related to convictions for crimes against health care programs

– 189 related to patient abuse and neglect

• What to expect?

– Increased use of administrative remedies • June, 2015 – HHS announced creation of 10-attorney team

• Focus – civil monetary penalty actions and exclusions

– Regulatory action on HCF matters

– Self disclosure protocol

– Technology and data analytics


Affordable Care Act

Key provisions for criminal HCF enforcement:

– Enhanced sentences for HCF offenses

• Intended loss

• Crimes over $1 million

– Broadened definition of federal health care offense to

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

• 18 U.S.C. 24(a)

• Proceeds subject to forfeiture

• Specified unlawful activity under money laundering statutes

– Clarified intent element of criminal HCF statute (18 U.S.C.

§ 1347) and Anti-Kickback Statute (42 U.S.C. 42 U.S.C. §

1320a-7b) – knowledge of statute not required

– Added subpoena power in patient abuse and neglect

investigations


Affordable Care Act (continued)

Key provisions for civil HCF enforcement:

– Anti-Kickback Statute violations:

• Claims tainted by kickbacks are per se false under

False Claims Act

• 42 U.S.C. § 1320a-7b(g)

– Overpayments:

• 42 U.S.C. § 1320a-7k(d)

• 60-day rule – overpayment must be reported and

returned within 60 days of identification

• Possible basis for “reverse” false claims liability

– 31 U.S.C. § 3729(a)(1)(G)

– Overpayment = obligation under False Claims Act


Affordable Care Act (continued)

Key provisions for administrative HCF enforcement:

– Added funding – est. $350M over time

– Mandatory compliance program – Medicare/Medicaid

– Increased provider screening

– Enhanced ability to suspend payment:

• New standard – “credible allegation” of fraud

• 42 C.F.R. § 405.371

– Increase data sharing

– Expanded RAC program:

• Medicare Parts C and D

• Medicaid


Legislative Activity

• Bipartisan support for HCF enforcement

• Example: Patient Access and Medicare

Protection Act

• Bipartisan group of sponsors

• Signed into law December 28, 2015

• Section 8 –criminal penalties up to 10

years and/or a fine of up to $500,000 for

buying/selling beneficiary or provider

identification numbers

• Section 9 – HHS to develop plan to

encourage increased data sharing

between federal government and state

Medicare programs to better identify

fraud, waste, and abuse


Regulatory Activity

Example: HHS-OIG solicits new

kickback safe harbors

– Issued December 23, 2015

– 80 Fed. Reg. 79803-02

– Calls for proposals for

developing new and modifying

existing safe harbor provisions

under the Anti-Kickback

Statute, 42 U.S.C. § 1320a-7b


Affordable Care Act requires

compliance programs:

• Section 6401

• Condition of enrollment in

Medicare/Medicaid

• Applies to providers of medical

services, supplies, or other

items

• Extension of HHS-OIG initiative

– www.oig.hhs.gov/compliance

Compliance Programs

*Affordable Care Act Provider Compliance Programs:

Getting Started Webinar

Medicare Learning Network

June 17, 2014/June 26, 2014


George B. Hernandez, Jr., President/CEO,

University Health System, San Antonio,

TX


“A Leadership Approach

to Compliance, Fraud and Abuse”

DATE


WHAT

HOW

WHY

Start with “Why”

Simon Sinek TED Talk:

Start with Why


Abby loves reading to her dad and is one of the brightest

children in her 1st grade, despite suffering a massive brain injury

in a car crash when she was 6 months old.


The Parker triplets can now run together, after Matthew received his

second kidney transplant at University Hospital. His 1st grade teacher

was his “perfect match” living donor.


Addressing Compliance Through

Leadership

• Setting the bar for excellence not just

compliance-


Defining Leadership


Get the Right People on the Bus

• Healthcare is complex!

• You can’t do it alone!

• Your System Can’t afford the wrong people!


Leadership Framework

The Health System plans its goals and

objectives with the following aims:

• Improve quality, safety and outcomes

• Improve the patient experience

• Improve efficiency, and

• Improve access to care


Develop a Culture of Discipline


Magnet: The “Gold Standard” in patient care

5% of U.S. hospitals

U.S. News & World Report:

#1 in San Antonio

#6 in Texas

Top 50 in the U.S. for Nephrology

CNOR Strong Certified

National Quality Measures

for Breast Centers™

Focus on Excellent. Achieving Results.

U.S. HHSC 2009 - 2014

Executive Director’s Award 2013 Excellence through Diversity

Award

Specialized care:

Good health, safety &

supporting our community:

Technology, employee learning & efficiency:

http://www.facs.org/cancer/


Be Diligent

Environmental Triggers

• Meeting Analysists’

Expectations

• Compensation and

Incentives

• Pressure to Reach

Goals

Possible Signs

• Abuse and intimidation

• Lying to employees, customers or vendors

• Employee interests above organizational interests

• Violation of safety regulations

Remember Compliance May Not Trigger

Your Ethical Framework


“Must Do” Checklist

• Set the right tone & lead by example

• Foster safe mechanisms of communication

• Invest in education & training

• Develop a matrix of compliance issues

• Develop the team and plan for succession

• Establish effective internal controls

• Stay informed and learn from experts


Thank You

References:

Collins, James C. Good to Great: Why Some Companies Make the Leap--and Others

Don't. New York, NY: Harper Business, 2001.

Sinek, Simon. Start with Why: How Great Leaders Inspire Everyone to Take Action. New

York: Portfolio, 2009.

14 year-old Caden from

Kerrville, TX.

Trauma survivor.

Runs track and plays

basketball with his

prosthetic leg.


Wesley D. Fountain, CFO, Methodist

Healthcare System, San Antonio, TX


Ethics and Compliance Program

DATE


Effective Compliance Programs



Background

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwilqPfh_aTKAhUBZyYKHUtoC_oQjRwIBw&url=http://www.ganintegrity.com/questions-the-general-counselchief-compliance-officer-should-consider-after-the-yates-memo/&bvm=bv.111396085,d.eWE&psig=AFQjCNG5b85KnRhEZo4V9hYr5k4BkNzvsQ&ust=1452712456283890


Establishing an Effective Ethics and

Compliance Program

1. The Ethics and Compliance Officer

• Perception as a leader not a police officer

• Diplomacy on behalf of ethics and

compliance program



Compliance Program

2. Engagement with the Ethics and Compliance Program

• All staff and partners

• Facility Ethics and Compliance Officers/Facility

Privacy Officers/Facility Ethics and Compliance

Committees/Facility Information Security

• Division Ethics and Compliance Officer/Division

Information Security Officer

• HCA Ethics and Compliance

• Ethics and Compliance Committee of the MHS

Governing Board

• MHS Governing Board



Compliance Program

3. Be Innovative

• Innovation can lead to a new ways to

measure performance



Compliance Program

4. Solicit and Consider Input from Staff

• Practical realities of daily operations must

be built into a compliance program


Elements of an

Effective Compliance Program

5. Learn from your Critics

• Understand potentially competing goals

• Keep up with new business activities


Elements of an

Effective Compliance Program

6. Set the Tone at the Top

• Leaders as drivers of compliance program rather

than laws and regulations


Kathy L. Poppitt, Partner, King and

Spalding LLP, Austin, TX


Who Is The Government?

GOVERNMENT

US Attorneys

Office

State Attorneys

General Office

Fed. Employee

Health Benefits

Program

OIG CMS

FBI DOJ

DEA FBI

FDA HHS


Enforcement Climate: DOJ Enters Compliance

• November 3, 2015, DOJ names Hui Chen as new “Compliance Counsel”

(with Pharma experience at Pfizer), who will reportedly provide expert

guidance to Fraud Section prosecutors regarding corporate compliance

programs and remediation efforts.


Congressional Action Enhancing FCA

Penalties

• Bipartisan Budget Act of 2015 includes the “Federal Civil Penalties Inflation

Adjustment Act Improvements Act of 2015

• Requires agencies to update civil monetary penalties to account for inflation

• FCA penalties of between $5,500 and $11,000 last updated 1999

• Will only exacerbate constitutional concerns in penalties-heavy FCA cases

and increase the government’s and relators’ settlement leverage


Federal HHS OIG

• The Department of Health and Human Services Office of Inspector General

recently released its 2016 Work Plan.

• OIG's annual Work Plan summarizes new and ongoing reviews and

activities that OIG plans to pursue with respect to HHS programs and

operations during the current fiscal year and beyond.

• The OIG was created to detect fraud, waste, and abuse; to identify

opportunities to improve healthcare program economy; and to hold

"accountable those who do not meet program requirements or who violated

Federal health care laws."

• The OIG conducts audits and investigation, and can impose civil monetary

penalties where appropriate.


Federal HHS OIG

• As a summary of some of the OIG's current enforcement initiatives, the

Work Plan can serve as a useful resource for companies to use in planning

internal audits and in training.

• OIG once again listed an extensive list of priorities for hospitals in 2016,

many of which are continuations from the 2015 Work Plan. The Plan places

a priority on the reconciliation of outlier payments and new inpatient

admission criteria, which implicates the "two midnight policy.“

• OIG once again stated that they would make reviewing Medicare costs

associated with defective medical devices a priority.

• This year, the OIG added a new priority for determining whether Medicare

payments for replaced medical devices were made in accordance with

Medicare requirements.


HEAT

• In May 2009, the Department of Justice (DOJ) and the Department of

Health and Human Services (HHS) announced creation of the Health Care

Fraud Prevention and Enforcement Action Team (HEAT) to gather

resources and focus on cooperation to help prevent waste, fraud and

abuse in the Medicare and Medicaid programs, and crack down on the

fraud perpetrators.

• June 2015 - Authorities detailed 16 arrests in six cases targeting purported

false billings, kickbacks and theft involving healthcare providers across

South Texas — part of a nationwide crackdown.

• The six cases, billed as the “South Texas Health Care Fraud Takedown,”

represented $7 million in federal insurance payments that prosecutors said

resulted from false billings and kickbacks by healthcare providers across the

region.


State HHSC OIG

• The “integrity initiative,” to be launched later this year by the Office of

Inspector General at the Texas Health and Human Services Commission,

will encourage Medicaid providers to report issues to the state.

• The HHSC OIG was created in 2003 to investigate fraud, waste and abuse

in state-administered benefits: Medicaid; the Supplemental Nutrition

Assistance Program (SNAP), or food stamps; Children’s Medicaid, or CHIP;

the Women, Infants and Children (WIC) nutrition program; and Temporary

Assistance for Needy Families, or TANF.

• OIG investigators look into either one of two types of overpayments: those

made to health care providers and those made to recipients. Overpayments

can occur through a simple error or by design — either by the beneficiary or

the provider.


Payment Audits Landscape

CMS contractors in the current audit landscape

• Medicare Administrative Contractors (MACs)

• Zone Program Integrity Contractors (ZPICs)

• Recovery Audit Contractors (RACs) - Medicare RACs & Medicaid

RACs

• Medicaid Integrity Contractors (MICs)

• Office of Inspector General (OIG) audits

State Medicaid Audits


Increased Focus on Individual Accountability

• “A corporation is just a corporate fiction…It’s run by people and one

of the things we are turning our attention to now is trying to find ways

to hold corporate officials responsible for the misconduct of their

subordinates”

Lew Morris, OIG Inspector General PBS Nightly Business Report, March 2010

• More focus on discretionary exclusion of any “officer or managing

employee” of any entity convicted of fraud in connection with delivery of

health care item or service (including misdemeanor)

• No conviction of individual required

• No knowledge/intent element for the individual to be excluded


Yates Memo

• September 2015 Yates Memorandum signals a renewed focus

on individual prosecutions for corporate wrongdoing.

• Provides six key steps ‘to most effectively pursue the individuals

responsible for corporate wrongs.” In sum:

1. The strong DOJ presumption is one of individual prosecution in

every case;

2. There will be much more civil/criminal coordination than before;

and

3. Internal investigations will be more scrutinized than ever and

therefore will need to be more thorough and independent.


Elements of A Compliance Plan

The organization must periodically assess the risk of improper conduct as part of design, implementation, and modification of the Compliance Program

Areas of significant concern should be used as a starting point for a manufacturer’s legal review of its particular practices and for development of policies and procedures to reduce or eliminate potential risk

Risk assessment

The organization must implement written standards and procedures to prevent and detect improper conduct

Compliance

standards and

procedures

Defines roles, responsibilities and reporting lines for Compliance Program personnel

The organization has designated a Compliance Officer and Compliance Committee to be accountable

Knowledgeable

leadership and

governing authority;

high-level direction

Element Guideline Overview

The organization must use reasonable efforts not to include within the substantial authority personnel of the organization any individual whom the organization knew, or should have known through the exercise of due diligence, has engaged in illegal activities or other conduct inconsistent with an effective Compliance Program

Due diligence in

authority personnel


Elements of A Compliance Plan

The organization must take reasonable steps to: monitor and audit to detect improper conduct; periodically evaluate the effectiveness of the Compliance Program; and establish an internal system to report or seek guidance regarding potential or actual improper conduct

Monitoring, auditing,

self-evaluation, and

reporting systems

The organization must promote and enforce its program consistently and through appropriate incentives and disciplinary measures

Consistent

discipline and

appropriate

incentives

The organization must take reasonable steps to respond appropriately to the improper conduct and to prevent further similar conduct after improper conduct has occurred

Appropriate

response and

modification

Communication and

training

The organization must develop effect lines of communication to enable employees to easily ask questions and report potential problems

The organization must communicate periodically its standards and procedures and other aspects of the Compliance Program by conducting effective training programs

Element Guideline Overview


The Choice To Self Report

• The DOJ Self-Disclosure To Report The Following:

– False Claims Act Violations

– 60 Day Overpayment Rule

• The OIG Self-Disclosure Protocol To Report The Following:

– Instances of potential fraud involving Federal health care programs (as

defined in 42 U.S.C. § 1320a-7b(f))

– All providers subject to 42 C.F.R. Part 1003 may use

– Cases resolved under the Civil Monetary Penalties Law, 42 U.S.C. §

1320a-7a, and Exclusion Statute, 42 U.S.C. § 1320a-7(b)(7) Have to

acknowledge potential liability; no admission necessary


The Choice To Self-Report

Matters Ineligible For OIG Self-Disclosure Protocol:

• Overpayments, errors, or negligence Should be resolved with the contractor

• Requests for an opinion on whether a potential violation has occurred

Request advisory opinion from Industry Guidance Branch

• Stark Law - only matters Must be submitted to CMS through the Self-

Referral Disclosure Protocol

• OIG can resolve if “colorable” violation of the Anti-Kickback Statute (“AKS”)

42 U.S.C. § 1320a-7b(b)


The Choice To Self-Report

• The CMS Self-Referral Disclosure Protocol

• Section 6409 of the Affordable Care Act SRDP enables “health care

providers of services and suppliers to disclose an actual or potential

violation of section 1877 of the Social Security Act (the Stark Law).”

– Authorizes the Secretary to reduce the amount due and owing for

violations of section 1877 of the Act. In reducing the amount due and

owing, the Secretary may consider:

– The nature and extent of the improper or illegal practice

– The timeliness of such self-disclosure

– Cooperation in providing additional information

– Other factors the Secretary deems appropriate


Privileges In Litigation

Attorney-Client Privilege

(1) Attorney-client relationship

(2) Attorney acting in capacity as attorney

(3) Communication made in confidence between

the attorney and client

(4) For the purpose of securing legal advice


Privileges In Litigation

Work Product Doctrine

(1) Documents and tangible things

(2) Prepared in anticipation of litigation

(3) By or for a party’s attorney are protected

against discovery unless the party seeking

disclosure can demonstrate:

(a) substantial need and

(b) that it would experience undue

hardship without discovery.


Privilege Issues In Government Investigations

• Privilege issues are raised when information is

requested and/or provided to the government in

the context of a government investigation.

– Waiver

– Upjohn



Waiver

• Most federal courts have rejected the concept of

“selective waiver,” the idea that a party can

disclose information to one party (i.e., the

government) without waiving privilege with

regard to other parties (i.e., the relator).

• Parties often incorrectly expect that work product

or other information disclosed to the government

will be treated more confidentially than if

disclosed to private parties.



Upjohn – The Basics (Cont’d)

• Clear “Upjohn warnings” are essential and

can assist in:

– Minimizing inadvertent disclosure of privileged

company information by employees, either to

the government or other third parties

– Reducing risk of government inquiry or

litigation challenges based on employee

claims regarding expectation of confidentiality


Best Practices

• Emails and Other Communication

– Simply labeling a document “Privileged and Confidential – Attorney-

Client Privilege” is not a sufficient basis to claim the privilege.

– Likewise, sending non-privileged information through an attorney (or cc-

ing the attorney on an email) does not make the communication

privileged.

– Routine Compliance correspondence may be copied to the Legal

Department for information purposes, but should not be considered

privileged.

– Non-routine requests by Compliance for legal assistance should be

separately communicated to the Legal Department, marked privileged,

and only copied to management on a need-to-know basis.


Best Practices

• Privileged Reviews by the Legal Department

– Once a matter has been referred to Legal, the internal review or

investigation should be led by the lawyer (in consultation with

Compliance).

– Legal should report the results of its privileged review to Compliance.

– The Legal review and advice should remain privileged and shared only

on a need-to-know basis.

– Compliance’s implementation of any action plan following the Legal

review would not normally be privileged.


Best Practices

• Proactive Steps

– Train management on the appropriate use of emails

– Deliver Upjohn warnings in connection with employee

interviews

– Document and communicate the legal purpose of

internal investigations


Questions

• Live audience in San Antonio can

approach the microphone placed

in front of the panel to ask

questions.

• Webinar audience can ask

questions through the A&Q tab.


Questions?


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