Unit 3 Lesson 9 Textbook Reading
Primary Federal Fraud and Abuse Laws
- False Claims Act - Anti-Kickback Statute - Physician Self-Referral Act (Stark Law) - Exclusion Statute - Emergency Medical Treatment and Active Labor Act (EMTALA)
Penalties for false claims are now adjusted for inflation on a regular basis, so the fines will continue to increase over time. Considering that every single incorrect billing code on a patient's medical record can count as a separate false claim, the potential penalties for false claims are enormous. Keep in mind that many states have also passed their own false claims acts for claims submitted to Medicaid and to private insurers, so organizations must stay vigilant to comply with both federal and state regulations, which may differ somewhat.
Example below
The Anti-Kickback Statute (AKS) is a criminal law that prohibits health care providers from paying any "remuneration" to anyone to encourage patient referrals, or directly to a patient to encourage patients to use that provider, when the services provided to the patient are paid for by the federal government. The purpose of the AKS is to prevent overutilization of health care services, undue increases in health care costs, corruption of medical decision making on behalf of patients, and unfair competition among health care providers. Although it is quite common in many nonmedical industries to reward people who refer business to you or to provide incentives for clients to buy your product or services, in health care it is illegal and is severely punished because it is considered to interfere with patients obtaining the best quality of care most effectively and economically. Remuneration can be in many forms that might not seem obvious at first glance.
For example, if one health care organization owns a clinical building that has radiology and laboratory services in it, it would be illegal to rent office space to independent physicians at a reduced rent in exchange for referring patients to the radiology center and the laboratory for tests, which both generate income for the company that owns the building. Likewise, it would be a violation of this statute for a physician to tell all patients that the physician will waive the patient's copay amount and accept as payment only the amount that the insurance will reimburse, because this might induce patients to choose that physician on the basis of cost rather than quality of care, and it might unfairly disadvantage physicians who do not offer such a discount.
The Physician Self-Referral Law, also known as the Stark Law, was enacted in several stages specifically to prevent physicians from exploiting federal health care insurance programs to gain more money for themselves at the expense of the program and the patients. The Stark Law "prohibits physicians from referring patients [for specific health care services in] which the physician [or a family member] has a financial interest"
For example, many physicians invest in clinical laboratories, diagnostic imaging facilities, physical therapy groups, or medical office buildings, with the expectation that those investments will earn them a financial return. The federal government considers that this introduces a conflict of interest for the physician, who should be referring patients to the best and most economic service, rather than thinking about how sending patients to their own businesses will earn them more money. Examples of violations of the Stark Laws include paying a physician for a referral and a hospital renting clinical office space to a physician at a price below fair market value. Physicians who receive benefits not given to other doctors or staff may be considered in violation of the rule, because they would gain a financial advantage over other physicians, all at the expense of the federal government program.
The EMTALA obligation begins as soon as a person appears anywhere on hospital property, including the adjacent sidewalk or parking lot. The patient does not have to actually come through the doors of the emergency room to be protected by EMTALA, nor does the patient need to specifically say they want to receive treatment—the very fact that a person who is experiencing a health crisis appears in the vicinity of a hospital is considered to be a request for treatment, especially if the person is in such distress that they are not capable of making a specific request.
For example, the Cambridge Health Alliance (CHA) agreed to pay $90,000 for an EMTALA violation when a woman came to one of their hospitals during an acute asthma attack and could not gain access to the emergency room through the locked ambulance bay doors. The woman phoned 911 before collapsing on a bench outside the emergency room doors and going into cardiac arrest, where EMS later found her. CHA failed to adequately search for the woman on hospital property after they received a message from the 911 operator, much less provide a medical screening exam or stabilizing treatment. The woman died 6 days later.
The Emergency Medical Treatment and Active Labor Act (EMTALA) was enacted in 1986 to prevent hospitals from refusing treatment or transferring to another facility patients who have emergency conditions or are in labor, but who don't have insurance. It is also known as the Anti-Dumping Act, because it was designed to prevent hospitals from "dumping" patients they didn't want on other hospitals. EMTALA applies to all hospitals that receive any payments from Medicare, which includes almost all hospitals in the U.S. EMTALA also applies to any person, not just Medicare beneficiaries, who come to an emergency room seeking care.
It mandates that any health care facility that has a dedicated emergency room must, within the capacity of the facility, provide an appropriate medical screening exam to any individual who comes to an emergency room seeking screening or treatment for a medical condition. If the medical screening exam is performed and shows an emergency condition exists, the patient must be either treated and discharged, or have their emergency condition stabilized before the patient may be transferred to another health care facility that has the ability to provide appropriate treatment.
The CMS has the authority to enforce EMTALA and can impose financial penalties on providers who do not comply. In addition, the OIG has separate authority to impose civil monetary penalties for EMTALA violations. Violators may incur monetary penalties of up to $50,000 per violation and be excluded from participating in Medicare and Medicaid, which means that the entire hospital would be prevented from billing CMS for care provided to any Medicare or Medicaid beneficiaries.
More often, the hospital works with CMS and OIG to establish an effective compliance program so that hospital employees are well educated in the provisions of EMTALA and the hospital functions to provide care in compliance with EMTALA and other regulations.
After the medical screening exam has been performed and the emergent condition has been stabilized, the emergency room staff may discuss financial or insurance information with the patient. As long as the treatment is not delayed, hospitals may continue the registration process and request payment information.
Note that EMTALA is not a medical malpractice law, as medical malpractice is handled separately through tort law. EMTALA is primarily intended to make sure that patients in the middle of a health crisis have adequate access to immediate emergency care.
The False Claims Act (FCA), also called the Lincoln Law, was enacted in 1863 by the federal government as the primary civil remedy against contractors who defrauded the federal government by charging for highly inferior materials, supplies, and food they supplied to the Union Army during the Civil War.
Since then, the FCA has been the federal government's main tool for combatting fraud against the federal government, particularly in health care where the federal government is one of the major purchasers of health care service through the Medicare and Medicaid programs.
In 1986, the first major amendments were added to the FCA, making the act a powerful tool against fraud with stiffer penalties and the addition of a provision that allowed private citizens, called qui tam relators, to be "whistleblowers" on fraud they have discovered by bringing suit on behalf of the federal government in exchange for a share of the money recovered (more later in this chapter).
The 1986 amendments also removed the requirement that there be specific intent to defraud the federal government. Now, the government need only show that the claim submitted was false and the claim was submitted knowingly. When health care providers submit claims for government program reimbursement, such as Medicare, they are implicitly stating that they have complied with various regulations, such as state facility licensing, that are not actually part of the requirements for payment from Medicare.
The CMP Law authorizes CMPs for a great variety of health care fraud violations under other laws and regulations.
The CMP Law provides for different amounts of penalties and assessments based on the type of violation and an annual adjustment in costs to account for inflation. That is, the CMP is inflation-adjusted each year, so it continues to rise; in 2018 the minimum penalty was raised to $11,181.
The CMPs are in addition to other fines and penalties that may be imposed for violating a specific law.
The addition of these triple penalties can make the cost of a fraud and abuse violation astronomical.
For example, in a May 2018 case, the FBI, the Office of the Inspector General, and the state of Texas together indicted a doctor in Texas for a $240 million health care fraud and an international money laundering scheme, in which he allegedly administered chemotherapy and other toxic medications to children, elderly, and disabled patients based on false diagnoses. Because many of the children were insured under Medicaid, a state program, and the elderly were insured under Medicare, a federal program, the doctor was investigated by both state and federal authorities. As the Justice Department comment in their news release:
The allegations that [the physician] violated his oath to do no harm by administering unnecessary chemotherapy and other toxic medications to patients with serious diseases — including some of the most vulnerable victims imaginable — are almost beyond comprehension. ...His patients trusted him and presumed his integrity; in return he allegedly engaged in a scheme of false diagnoses and bogus courses of treatment, and doled out prescriptions for unnecessary and harmful medications, all for his personal financial gain and with no regard for patient well-being. HHS-OIG will always pursue criminals masquerading as legitimate physicians, weed them out, and seek the harshest possible punishment, particularly when patient harm is a factor...[health care fraud] is a growing and serious crime that impacts every city and small town in the nation. ...This investigation highlights an even greater concern presented by health care fraud than the significant financial losses—the physical and emotional harm suffered by the patients and their families
Fraud is an intentional act of deception, where a person deliberately provides false information or mispresents information that the person knows not to be true, in order to gain a benefit for that person. By contrast, abuse is an improper act that may be unintentional but is not consistent with standard medical or business practices, such as providing unnecessary medical tests or treatment or providing care that does not comply with professional standards. As it is usually not clear whether a person or organization intended to lie or defraud a payer, investigations will always look for both fraud and abuse when they are investigating a potential violation of regulations.
The most common forms of fraud and abuse are providers billing for services that were not provided or were not medically necessary (false claims); submitting duplicate bills; assigning a billing code for more costly services than the physician provided to receive higher reimbursement; and receiving compensation (kickbacks) for referring patients to another physician, laboratory, or other health care service. Although we will look at each of the fraud and abuse laws individually below, keep in mind that it is possible to for a health care organization to violate multiple laws at the same time with a single action, and the organization can be penalized for all of those violations, making the penalties stack up.
Even with the funding provided for agencies to fight fraud and abuse, the federal government is understaffed for detecting and investigating all instances of fraud and abuse; instead, it also relies on civilians as their eyes and ears for detecting and reporting potential fraud and abuse. Under the FCA, qui tam (Latin for "who as well") is used to indicate that the plaintiff is bringing the action on behalf of the government as well as himself.
This individual is also known as a "whistleblower" or a "relator." The qui tam provision has been key to getting individuals to come forward with information about potential false claims, as it offers large monetary incentives to the whistleblower and protection from retaliation by the organization that is reported to the government for false claims. Most suits filed under the FCA are initiated by whistleblowers, with more than 700 people filing FCA suits every year.
True or False The history of compliance as it relates to health care fraud and abuse dates to the Civil War.
True
CMPs may assess up to three times the amount claimed for each item or service or up to three times the amount of remuneration offered, paid, solicited, or received.
Violations supporting CMPL actions include violating the Anti-Kickback Statute; presenting a claim you know, or should know, is for an item or service not provided as claimed or is false and fraudulent; or presenting a claim you know, or should know, is for an item or service for which Medicare will not pay.
Primary Federal Fraud and Abuse Laws Physician Self-Referral Act (Stark Law)
a. Civil law that prohibits physicians from referring patient to designated services that the physician has a financial interest in b. Overpayment/refund obligation c. Civil monetary penalties & program exclusion for knowing d. violations e. Potential $15,000 CMP for each service f. Circumvention schemes punishable by $100,000 civil money penalty g. Civil assessment of up to three times the amount claimed
Primary Federal Fraud and Abuse Laws False Claims Act
a. Federal government's primary civil remedy for fraudulent claims. b. Providers who make improper claims are fined $10,957 to $21,916 per claim. c. The Act is also applied to improper billing, claims for services not rendered, unnecessary services, misrepresenting credentials, and substandard quality of care.
Primary Federal Fraud and Abuse Laws Anti-Kickback Statute
a. Makes it a crime for anyone to knowingly and willfully offer, pay, solicit, or receive any remuneration directly or indirectly to induce or reward referrals of items or services reimbursed by a federal health care program. b. Criminal penalties: up to $25,000 fine per claim plus 5-year prison term c. Civil penalties: up to $74,792 (in 2017) per kickback plus three times the amount of the kickback d. Exclusion from participation in Medicare and Medicaid
The OIG is required to exclude from participation in all federal health care programs any person or organization that is convicted of Medicare or Medicaid fraud, as well as any other offenses related to the delivery of items or services under Medicare or Medicaid.
Anyone who has been convicted of patient abuse or neglect is also precluded from participating in any federal health care program. Felony convictions for other health care-related fraud, theft, or other financial misconduct, or felony convictions for unlawful manufacture, distribution, prescription, or dispensing of controlled substances likewise require exclusion from participation in any federal health care program.
In December 2018, Congress passed the Eliminating Kickbacks in Recovery Act of 2018 which expands the scope of the AKS and is specifically designed to address the current opioid addiction epidemic in the United States (DOJ, 2019). This statute makes it a criminal offense to (1) solicit or receive remuneration (i.e., bribes, kickbacks, or rebates) in exchange for referring a patient to a clinical treatment facility, which is any non-hospital licensed facility providing substance abuse treatment, or laboratory; or (2) pay any remuneration to induce referrals to a recovery home, clinical treatment facility, or laboratory. While the AKS applied only to services paid for by federally-funded programs; this new statute applies to all referrals, not just ones related to treatment for opioid additions, and extends to services paid for by private insurers and not just Medicare and Medicaid. The penalty for each violation is a maximum of $200,000 and 10 years in prison.
Because the AKS imposes such stiff penalties and opens the possibility of simultaneous investigation and liability under the FCA, the OIG has established a protocol for health care entities to self-disclose potential violations to the OIG. Although self-disclosure does not take away all risk of having to pay penalties, the potential benefits of self-disclosure are huge. For example, self-disclosure may help the organization avoid criminal liability, minimize civil liability, neutralize qui tam suits, and avoid the imposition of Corporate Integrity Agreements imposed by the OIG.
Most of the civil fraud and abuse statutes have matching criminal statutes that can also be applied. For example, there is also a criminal FCA (Title 18 U.S.C. § 287) which includes imprisonment and criminal fines for submitting false claims, and company executives and boards of directors can be prosecuted and penalized for actions taken by employees of the company.
Submitting false claims to the federal government can become a criminal offense when it involves additional elements beyond the civil offense, for example, a conspiracy to defraud the government, mail fraud (mailing claims to the government) or wire fraud (faxing or digitally transmitting claims) as part of the false statement to the federal government or making misrepresentations when obtaining certification for health care facility.
Sometimes through no fault of the provider, that implied representation may not be completely accurate, giving rise to theoretical liability under the FCA. The U.S. Supreme Court's 2016 ruling in Universal Health Services, Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 changed the way that courts now interpret and apply the FCA. In this case, the parents of a teenaged girl who suffered a fatal reaction to medication after receiving treatment at a mental health facility in Massachusetts alleged that the facility's noncompliance with state staffing and licensing requirements made the facility's claims for Medicaid payment false claims, subject to the FCA. The Supreme Court's ruling in the case, commonly referred to as "Escobar," simultaneously made two important changes in the standards of proof required for finding a health care provider liable for a false claim under the FCA, which never specifically defines "false" or "falsehood." The Escobar ruling validated a concept of implied false certification theory of liability, meaning that when a health care provider submits a claim for providing a service, the provider can be liable for incorrectly implying that the provider has compl
That means that even minor errors or inaccuracy in record keeping could be interpreted under the FCA as false claims. At the same time, Escobar established a much more stringent requirement for establishing that a claim is false, by changing the ways that courts interpret whether the false statement was material to the federal government's decision to pay the claim. Thus, Escobar has protected many health care providers from being found in violation of the FCA by making it harder for qui tam relators to file cases based on minor errors and inaccuracies in record keeping. Now qui tam relators and federal government agencies must prove that a false claim was a critical component in the federal government's payment decision. Courts throughout the U.S. are still grappling with how to interpret and apply the Supreme Court's ruling in Escobar, so the impact of Escobar on health care providers differs by region.
Although the wording of the Stark Law refers only to services that are paid for by Medicare, in recent case law,
courts have interpreted that language to extend to any services that are paid for by state Medicaid agencies as well, because the federal government partially funds those programs
Considering that federal health care programs pay almost one third of all expenditures on health care each year, which totaled $3.5 trillion in 2017, or $10,739 per person, ________________.
exclusion from participation in those programs is a financial disaster for a health care organization.
To guard against violating the provisions of EMTALA, hospitals should:
■ Train all clinical, administrative, and contract staff in the EMTALA requirements, refresh their training periodically, and document that staff have received this training and understand how to apply it in the daily functioning of the hospital. ■ Ensure all patients who have an emergent condition and either refuse, decline, or withdraw from treatment are offered a medical screening exam and stabilizing treatment before they leave the hospital. The patient's refusal of treatment must be documented. ■ Ensure emergency room staff understand all statutory rules regarding transfer of patients to another facility. ■ Enforce the requirement that prevents staff from asking for financial and accounting information before the medical screening exam has been completed and the patient is stabilized.
