Chapter 6: Fraud

Penalties

-Civil Money Penalty -Permissive and Mandatory Exclusion -Violation of Anti-Kickback Statute is considered a felony.

Damages as a result of falsification of records

-Claim civil liability -Provider could lose Medicare and Medicaid funding

Healthcare Fruad

-Deception for personal gain -Acts characterized by intentional deception -Financial drain on the healthcare system -Knowingly presenting a false claim for payment -Making a false record to get a false claim paid -Conspiring to defraud the government -Making a false record to avoid an obligation to pay or transmit property to the government

Falsification of Records

-Falsification is grounds for criminal prosecution. -Damages as a result of falsification of records

Red Flag Rules

-Federal trade commission (FTC) issued to prevent identity theft (targets= banks, credit card companies, certain retailers) -Focused on "creditors" which was interpreted to include physician offices and hospitals since care is provided and payment is rendered at a later date. -In 2010, a clarification was issued that only a specific type of business (creditor) would be covered by the rules - if you obtain and use a customer's credit report, or advance a consumer money not related to a service already rendered.

HIPAA Enhanced F&A prosecution resources

-Fraud and Abuse Control Program -Medicare Integrity Program -Beneficiary Incentive Program -Health care Fraud and Abuse Data Collection Program

Enron Scandal= Corporate Fraud

-In response: Sarbanes Oxley Act of 2002 was created. -Created standards for U.S. public companies' boards and management -May effect public hospitals' management and the public disclosure of financial records. -Includes a section which "mandates that senior executives take individual responsibility for the accuracy and completeness of corporate financial reports".

Types of fraud and abuse

-Most common in healthcare: the areas of false claims and billing practices -Upcoding -Unbundling -Billing for services that were medically unnecessary -Double-billing -Billing for services that were not rendered

Law Enforcement

-Office of Inspector General -Defense Criminal Investigative Service -FBI

Federal Anti-Kickback Statute

-Outlaws the offer or solicitation of compensation in exchange for referrals. -Many states followed suit and now state laws prohibit kickbacks of any kind.

Serona (Oct 2005)

-Paid $704 million and $567 million for false claims involving: Kickbacks paid to MDs to prescribe a drug Kickbacks paid to specialist pharmacies for recommending drugs Illegal off-label marketing of the drug

HCA (December 2000)

-Paid $731 million for false claims involving: Medically unnecessary lab tests Upcoding medical problems Billing for nonreimbursable advertising and costs Kickbacks was also alleged -HCA also paid $631 million in June 2003 for: Kickbacks Cost Report Fraud

Tenet Healthcare (July 2006)

-Paid $900 million for false claims involving: Kickbacks paid to MDs in exchange for referrals Manipulation of outlier payments Upcoding Bill Padding

1st and only Healthcare CEO to be tried under the Sarbanes Oxley Act

-Richard Scrushy, CEO of Healthsouth -$2.7 billion fraud -5 Healthsouth CFO's pled guilty to fraud and implicated Scrushy, later Scrushy was acquitted on all counts, but... -4 months later, he (along with the governor of Alabama) was found guilty of bribery, mail fraud and obstruction of justice. Scrushy had arranged a deal to donate $500,000 in donations to the governor's campaign for a state lottery in exchange for a seat on a state hospital regulatory board. -Sentenced to 82 months in federal prison, 3 years probation and was ordered to pay $2.87 Billion in damages. He served 70 month sentence in Beaumont, TX. -Update- Mr. Scrushy was moved in April 2012 from federal prison to a halfway house then finally in June was released to his home.

False Claims Act

-Specifically used in Medicare and Medicaid cases for fraudulent claims -If the provider knowingly made a false statement to get paid or knowingly submitted a false claim -OR if the provider was deliberately ignorant of the truth or acted with reckless disregard of the truth

Upcoding

-Submitting a claim with a code that will pay more than what was actually done. (common in CPT office visit codes) -Example: Billing a regular checkup visit that would be $60 at the extended checkup rate of $100.

Case: False Entries in Operative Report

-Surgeon omitted a true entry in his operative report by not indicating that a non-physician assisted in a patient's surgery; surgeon indicted for falsification of records. -VA treatment records falsified, probe finds

Compliance

-The efforts to establish a culture that promotes prevention, detection, and resolution of conduct that does not follow the law (state, federal etc.) -Is for much more than just preventing fraud and abuse, but is KEY to preventing fraud and abuse. -OIG provides compliance guidelines -In some instances, providers who were found guilty of fraud and abuse, but established an effective compliance program as a result, had their fines reduced. -In other instances, development of a compliance program was part of the penalty in addition to the fines. -All hospitals are required to have a compliance officer.

2 South Florida Physicians were found guilty of violating Stark

-They received Miami Dolphins tickets, gifts, meals -Their punishment was $65,000 and $57,000

Fraud and Abuse

-When Medicare and Medicaid became involved, the government became involved! -Fraud and Abuse: a false misrepresentation of fact that is relied on by another to the person's detriment and is a departure from reasonable use. -This misrepresentation is done intentionally to the government or insurance companies' detriment. -US v. Patel

Qui Tam (AKA Whisteblowers)

-Where a private plaintiff (an employee of the organization) sues the organization on behalf of the US government in a violation of FCA claim. -May also be a patient whose insurance benefits were used fraudulently. If money is recovered, the private plaintiff gets a portion of the recovered money. Estimated at around 25-30% of the total recovery. -Literal translation of Qui Tam is "he who sues in this matter for the king as well as for himself".

Compliance Guidelines

-Written standards of conduct and Policies and Procedures -Designation of a Chief Compliance Officer -Regular, effective education and training -A complaint process -Response system for allegations of non-compliance and disciplinary actions -Audits to monitor compliance -Investigation and corrective action

Proving fraud need to establish

1. The defendant engaged in a scheme constituting a systemic course of conduct. 2. The defendant did so with the intent to defraud more than one person. 3. The defendant obtained property from one or more persons, at least one of whom has been identified.

Permissive and Mandatory Exclusion

A provider found in violation may be excluded from a governmental program (cannot accept Medicare and Medicaid patients). This would pretty much put a provider out of business.

Fraud and Ethics

Behind every healthcare fraud is a LACK OF ETHICAL BEHAVIOR

Double-billing

Billing twice for a service that was rendered only once

"Designated Health Service"

Broadened it to include, durable medical equipment, clinical laboratories, OT, PT, hospital services, radiology, nutrition, home health etc etc etc

Health care Fraud and Abuse Data Collection Program

Coordinated with the National Practitioner Data Bank

Civil Money Penalty

DHHS can recover money for false or fraudulent claims. The provider could be fined up to three times the amount of damages, plus an additional fine of $50,000.

Beneficiary Incentive Program

Encourages Medicare patients to report fraud

Defense Criminal Investigative Service

Investigates fraud schemes against the military's health insurance programs (VA)

FBI

May act in conjunction with OIG, DCIS, or a whistleblower or on their own to investigate fraud and abuse

Office of Inspector General

Part of DHHS, investigates fraud and abuse claims

STARK 2

Physicians cannot refer a patient to a "designated health service" where he/she or a family member has a financial stake.

STARK 1

Physicians cannot refer a patient to a laboratory where he/she or a family member has a financial stake.

"Even the most diligent law enforcement efforts cannot root out all the fraud, given the large number of health care providers that bill Medicare."

Senator Charles Grassley (1986), referring to Qui Tam regulations which govern payment by Medicare

"Setting a rogue to catch a rogue....is the safest and most expeditious way...of bringing rogues to justice"

Senator Jacob Howard (1863), referring to Qui Tam regulations which governed fraud by contractors against the Union

Unbundling

When a procedure has a bundled code for all aspects of the procedure and the organization separates each aspect and bills individually for it. Lab tests that are bundled (CBC), individually billed for.