IOWA ASSOCIATION OF
COMMUNITY PROVIDERS
2015 CONVENTION
BrownWinick Law Firm
666 Grand Avenue, Suite 2000
Des Moines, IA 50309-2510
Website: www.brownwinick.com
BLOG: www.brownwinick.com/BLOGHealthLaw
1
COST REPORTING
PITFALLS
Jim Wilkes
Brighton Consulting Group
E-mail: jim@bcgdatanet.net
319-626-4710 Ext. 232
2
Proper Cost Reporting



Cost reports supply valuable information not only to
CMS, but the provider as well
 Calculates costs per visit including all provider
costs. Highlights the required charge structure to
cover total cost of services
Some services may be cost settled (vaccines)
CMS utilizes cost report data for decision making.
Rebasing of the PPS payments can be affected by
poor cost report data
3
Who has to file?


Medicare Certified
Iowa Medicaid?
If providing EPSDT, a new cost report format
has been created by IME
4
1. Accrual Basis of Accounting


Revenue is recorded in the period when it is
earned, regardless of when payment is
received. (reporting accounts receivable)
Expenses are recorded in the period in which
they are ordered and utilized, regardless of
when they are paid.
CMS-Pub. 15-1
5
2. Chart of Accounts



The provider’s chart of accounts should be complete and extensive enough to
cover all different types of services the provider performs
The provider should not try to “fit” revenue or expenses into categories.
Separate services should have complete expense and revenue accounts to
identify all revenue and costs related to a common service type.
 Skilled Nursing
 Physical Therapy
 Occupational Therapy
 Speech therapy
 Medical Supplies
 Pharmacy
 Medical Social Services
 Home Health Aide
 Private Duty
 Homemaker
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3. Identify Supplies by Routine
or Non-Routine

Routine

Non-Routine
Supplies ordered in bulk & utilized for patients in small
quantities not patient specific
Not charged out on claims
Specifically ordered for a particular patient’s illness or injury
Identified for use on the particular patient in medical records
Ordered by the physician
Charged on patient’s claim
Examples: Wound Care Dressings, I.V. Supplies, Ostomy
Supplies, Catheters
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4. Proper Segregation of Revenue,
Costs, and Service Visits

Revenue should be identified by payer source and service type

Expenses identified by service type
 Medicare PPS
 Medicaid PPS, Waiver, EPSDT, etc…
 Private Pay visits – Nurse, HHA, Homemaker, live in
 Therapy
 Supplies
 Skilled Nursing – wages, benefits, travel, contract staff
 HHA – wages, benefits, travel, contract staff
 Contract services split – PT, OT, ST
 Supplies – routine, billable (non-routine), prescription meds, over the
counter

Accurate Visit Records
 Statistics regarding visits by service types very important
 Visit statistics should match claim data
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5. Related Party Disclosure




Transparency regarding the certified agency’s business practice very important
Avoid fraud, waste, & abuse!
 CMS looking for non-competitive wages/prices paid to related parties
Are there any expenses recorded on the agency’s cost report that are related to
ownership or management of the agency?
 Is an owner an employee or contracted vendor? Payments directly to an owner,
director, or anyone related to an owner or director?
Spouse, ex-spouse
Child, step child
Grand child
Sibling, Step sibling
Parent, step parent
In-law?
 Any Vendor related to an owner or director in any way?
Related individual own the therapy company, medical supplier, pharmacy,
others?
If you are wondering, report it!
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Cost Report Certification

Individual certifying the cost report is attesting to:
Being familiar with the laws and regulations
regarding the provision of health services and that
the services reported in the cost report were
provided in compliance with such laws and
regulations.
The cost report was examined by the person
certifying and accurately reflects the revenue,
expenses, and services performed by the provider
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Change is normal
Education is Important
Jim Wilkes
Brighton Consulting Group
jim@bcgdatanet.net
319-626-4710 ext 232
11
QUESTIONS
12
MEDICAID FRAUD, WASTE,
AND ABUSE
Catherine C. Cownie: cownie@brownwinick.com
Adam J. Freed: freed@brownwinick.com
Kelly D. Hamborg: hamborg@brownwinick.com
Michael E. Jenkins: jenkins@brownwinick.com
Website: www.brownwinick.com
BLOG: www.brownwinick.com/BLOGHealthLaw
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THE MEDICAID FRAUD, WASTE AND ABUSE
REGULATORY ENFORCEMENT LANDSCAPE
-RESPONDING TO INVESTIGATIONS
Catherine C. Cownie and Adam J. Freed
BrownWinick
666 Grand Avenue, Suite 2000
Des Moines, IA 50309-2510
Telephone: 515-242-2400
E-mail: cownie@brownwinick.com
freed@brownwinick.com
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Overview

The problem of healthcare fraud, waste,
and abuse (“FWA”)

Iowa’s regulatory framework

Observations on enforcement actions

Responding to investigations
15
Increasing Enforcement Action
Nationwide
16
Prevalence of Fraud in American
Health Care
The National Health Care Anti-Fraud
Association (NHCAA) estimates that
between 3 and 10 percent of the nation’s
annual benefits paid for health care were
paid for fraudulent or abusive submissions.
17
2014 Medicaid Fraud Control Unit
Enforcement Actions in Iowa
• 270 Investigations
• 48 Individuals charged/indicted
• 33 for Fraud
• 15 for Abuse or Neglect
• $24.4 Million Total Recoveries
18
Recent Enforcement Actions
19
Recent Enforcement Actions
20
Recent Enforcement Actions
21
Causes of Fraud, Waste, and Abuse

Lots of Money in the System

Complex Services Provided

Service Recipients are not the Payors
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Intentional
Fraud, Waste, and Abuse
 Unscrupulous Owners
 Unscrupulous Employees
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Unintentional
Fraud, Waste, and Abuse

Complex and/or Ambiguous Rules

Inconsistent Practices among Payors

Different Rules Between States

Confusion/Mistakes that Occur when Transition
between Information Technology Systems

Loss of Institutional Knowledge/Staff Turnover

Forays into New Lines of Business
24
Types and Examples of
Fraudulent and Abusive Practices
 Billing for Services Not Performed
• Avoiding this problem is often self-explanatory, but
certain situations may be more complicated.
• Important to check benefits manual.
• Honest disclosure of the situation is best practice for avoiding
any problems with the carrier.
25
Types and Examples of
Fraudulent and Abusive Practices
 Upcoding
• Upcoding occurs when a coding procedure with a
more extensive degree of difficulty is used than what
was actually provided.
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Types and Examples of
Fraudulent and Abusive Practices
 Waiver of Co-Payments
• Co-payments are considered essential
element of cost structure in the contract
between the insured and the insurance
carrier.
• Waiving co-payments arguably encourages
more usage of the coverage than would
normally occur, distorting the cost structure of
the insurance.
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Types and Examples of
Fraudulent and Abusive Practices
 Waiver of Deductibles
• As with co-payments, deductibles are
considered an essential element of an
insurance carrier’s cost structure.
• Waiver of deductibles arguably encourages
more usage of coverage, potentially distorting
cost structure.
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Types and Examples of
Fraudulent and Abusive Practices
 Altering Dates of Service
• The date a procedure is performed is
important, as it relates to patient eligibility
requirements and waiting periods.
• It is fraudulent to send a claim for treatment
using a date other than the actual date of
service.
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Types and Examples of
Fraudulent and Abusive Practices
 Misrepresenting Patient Identities
• Providing a service for one patient but
sending in a claim for a different person is
fraud.
30
Types and Examples of
Fraudulent and Abusive Practices
 Not Disclosing Existence of Additional
Primary Coverage
• Patients covered by more than one health
plan may receive benefits from all plans.
• Sending in multiple claims to different carriers
as if they were each the primary carrier is
considered fraudulent.
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Types and Examples of
Fraudulent and Abusive Practices
 Performing Unnecessary Services
• Performing and billing for services that were
not needed or providing additional services or
procedures beyond what is required by the
patient’s condition is considered fraudulent.
32
Types and Examples of
Fraudulent and Abusive Practices
 Misrepresentation of Services
• Involves changing the code to increase the
amount of the claim.
33
State of Iowa Fraud, Waste, and
Abuse Regulatory Framework


Laws
•
•
•
•
Federal Laws
State Laws
Administrative Rules
Guidance
Enforcement Organizations and Offices
•
•
•
•
•
•
Iowa Medicaid Enterprise Program Integrity
Office of Inspector General
DIA Medicaid Fraud Control Unit (“MFCU”)
Attorney General’s Office
US Attorney’s Office
County Attorneys
34
Iowa Health Care FWA Laws –
The Big Three



Affordable Care Act
Iowa False Claims Act
S.F. 357
35
Affordable Care Act



Shifts focus of oversight from “pay and
chase” model to “shut off the tap” model
Tap is Shut off on a “Credible Allegation
of Fraud”
Partial Payments can be Restored on a
Showing of “Good Cause”
36
Affordable Care Act (Cont.)

ACA requires states to suspend payment
upon credible allegation of fraud.
• States risk losing funding for noncompliance.


“Good cause” is narrowly defined.
Providers have administrative appeal
rights and judicial review.
• BUT, consider the impact of payment
suspension during appeal.
37
Iowa False Claims Act






First enacted on July 1, 2010 (amended effective
July 1, 2011)
Mirrors the Federal False Claims Act
Penalties for anyone who “knowingly presents, or
causes to be presented, a false or fraudulent claim
for payment or approval.”
Triple Damages
Civil Monetary Penalties
Whistleblower Provisions
38
Medicaid Program Integrity
(S.F. 357)





Unanimously passed Iowa Legislature, signed by
Governor on April 5, 2013.
Provides authority for Iowa Medicaid Program
Integrity.
Largely mirrors ACA’s 60-day overpayment report
and return requirement.
Failure to report and return an overpayment within
60 days constitutes a false claim.
Establishes statute of limitations (generally 5 years
from the date of payment).
39
Medicaid Program Integrity
(S.F. 357) (Cont.)

State can place provider in receivership.

Third parties can be held liable (cost report
preparers, billers, etc.).

Civil monetary penalties of up to $50,000 per claim
for specified “intentional and purposeful” acts.

DHS to maintain a website with sanctioned provider
list.
40
Observations

Heightened enforcement activity.

Some turnover of key staff.
•

Departure of Head of Program Integrity
Cooperative environment for unintentional violations.
41
Responding to
Inquiries and Investigations
 You have the right to consent to an interview or to
decline to be interviewed.
• There is no such thing as an “off-the-record” interview with
the government!
 You have right to legal counsel during all interviews.
 If you consent to interview, provide full and truthful
information.
 Responding to inquiries and investigations is key –
ignoring inquiries may make matters worse.
 Cooperation and communication is critical.
42
Responding to
Inquiries and Investigations




(cont.)
Do NOT destroy documents.
Instruct employees NOT to alter or
destroy documents.
Do NOT threaten, harass, or intimidate
potential witnesses.
Do NOT fabricate testimony with
employees to “get the story straight.”
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Avoiding
Investigations

Take notice of erratic employee
behavior.
• Employees insist on controlling files.
• Employees fail to follow internal policies.
• Employees engage in erratic and secretive
•
•

behavior.
Employees refuse to take vacation.
Sudden employee lifestyle changes.
Investigate suspicious activity.
44
QUESTIONS
45
Anti-Kickback Statute
Kelly D. Hamborg
BrownWinick
666 Grand Avenue, Suite 2000
Des Moines, IA 50309-2510
Telephone: 515-242-2447
Facsimile: 515-323-8547
E-mail: hamborg@brownwinick.com
46
Anti-Kickback Statute Elements
 Federal Criminal Statute, Prohibits
• Knowingly and willfully
• Soliciting, receiving, offering or paying remuneration
(directly or indirectly, in cash or in kind)
• Overtly or covertly
• In order to induce referrals of goods or services
reimbursable under federal health care programs (i.e.,
Medicare and Medicaid)
47
Anti-Kickback Statute
• Referrals
• Referral of a patient or the purchasing, leasing,
ordering (or arranging for or recommending the
purchasing, leasing, or ordering) of any good,
facility, service or item if any portion of that
patient’s care or the cost of the good, facility,
service or item may be paid in whole or in part by
a federal health care program
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Anti-Kickback Statute (cont.)

Remuneration
• Direct payment of cash or loans
• Anything of value, whether tangible or
intangible
• Free items and/or services
• A reduction or discount
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Anti-Kickback Statute - Intent
• A criminal statute, with a specific intent
requirement
• Knowing and willful
• Affordable Care Act – Intent to violate
the law, but not necessarily an intent to
violate the Anti-Kickback statute itself
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Anti-Kickback Statute
Federal Health Care Programs
• Goods or services reimbursable under
federal health care programs
(Medicare); or
• State health care programs funded by
the federal government (Medicaid)
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Anti-Kickback Statute
Penalties & Consequences



Individuals and corporations are liable under the statute
Criminal liability to parties on both sides of an impermissible “kickback”
transaction
Criminal Penalties - Felony
•
•
Up to five years imprisonment for each offense
Fine of up to $25,000 (for each illegal payment)

Mandatory exclusion from Medicare and Medicaid programs

False Claims Act Liability

Civil Administrative Penalties
•
Civil monetary penalty of $50,000 per violation
•
Treble damages in the amount of the kickback
•
Qui-Tam (whistle-blower) actions
52
Anti-Kickback Statute
Public Interest Concerns
• Increased risk of over-utilization
• Corruption of medical decision-making
• Increased costs to federal health care
programs
• Unfair competition
53
Common Transactions Potentially
Subject to the Anti-Kickback Statute






Equipment or space leases
Personal Services arrangements with physicians or
others in a position to refer
Waiver of patient copayments and deductibles
Gifts, entertainment and courtesies to referral
sources
Marketing arrangements
Free use of products
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Anti-Kickback Statute
Exceptions and Safe Harbors
Business arrangements which satisfy a statutory exception or regulatory
safe harbor are protected from liability under the Anti-Kickback Statute.
Where an arrangement does not satisfy an exception or safe harbor, it
may be reviewed to determine whether it is likely to result in the types of
abuses the Anti-Kickback Statute is designed to combat.
Safe Harbor Concepts:

Written agreements

Remuneration based on fair market value
•

Value that would be assigned to the service or item in question by individuals
or entities who have an arms-length relationship
Not based on volume or value of referrals
55
Anti-Kickback Statute
Regulatory Safe Harbors









Space rental
Equipment rental
Personal service and
management contracts
Investment interests in
publicly traded companies
Sale of practice
Referral services
Warranties
Discounts
Employees





Group purchasing
arrangements
Certain waivers of Part A
coinsurance
Increased coverage, reduced
cost sharing amounts or
reduced premium amounts
offered by certain health plans
Price reductions offered to
certain health plans
Investment interests in
underserved areas
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Anti-Kickback Statute
Regulatory Safe Harbors (cont.)





Investment interests in

ambulatory surgery centers
Investment interests in group

practices composed exclusively
of active investors who are

licensed health care
professionals

Rural practitioners recruitment
incentives
Obstetrical malpractice insurance
subsidiaries
Referral agreement for specialty
services
Cooperative hospital service
organizations
Ambulance replenishment
arrangements
Electronic prescribing and
electronic medical records;
Federally Qualified health centers
57
Anti-Kickback Statute
Facts and Circumstances Analysis




How does the arrangement harm federal programs
or patients?
Does it increase costs?
Does it negatively affect medical judgment?
Does it hinder proper reporting of costs?
58
QUESTIONS
59
Investigating and Reporting
an Overpayment
A Case Study
Michael E. Jenkins
666 Grand Avenue, Suite 2000
Des Moines, IA 50309
Telephone: 515-242-2418
Facsimile: 515-323-8518
Email: jenkins@brownwinick.com
60
Overview





Discovery of Possible Overpayment
Investigation of Overpayment
Developing Reporting Plan
Negotiating with the State
Reporting and Repayment
61
Profile of Fictional Behavioral Health


Nonprofit, multi-function, behavioral
health provider
serving several
hundred clients and their families in
northeast Iowa
Staff of approximately 200 employees
and contractors
62
Discovery of Potential
Overpayment
 Psychiatrist retires in 2012 and Fictional
Behavioral Health uses telemed psych services for
all of 2013
 Organization merges with another provider with a
different federal tax id number in early 2014
 Merged Organization hires new psychiatrist
 Relatively new billing manager instructs all staff to
bill new doctor’s first visits with patients as “new”
patient visits instead of “established” patient visits
(CPT Code 99204 rather than 99214)
63
Discovery of Potential
Overpayment (cont.)
 Billing manager attends correct coding seminar in
July 2014 and learns that the method used to bill
these E/M codes for “new” patients was incorrect;
CMS publishes clear guidelines on “new” vs.
“established” patients,
https://questions.cms.gov/faq.php?id=5005&faqId=
1969
 Billing manager alerts executive management that
this mistake has been made
64
Investigation



Billing manager puts a hold on the submission of
any new claims pending the outcome of the
investigation
Provider reviews billing claims and remittance
advices to determine the extent of the
overpayment
For each patient, the overpayment equals the
difference in the amount paid by Medicaid for the
incorrectly billed code and the correct code
65
Investigation (cont.)



Fictional Behavioral Health had billed 400
encounters with the incorrect code
The difference in payment between the incorrect
code and the correct code is $20
Fictional Behavioral Health has identified an
overpayment of $8,000
66
Developing a Reporting Plan



Know that 60 day clock is ticking, and
whistleblower actions can be initiated up until
the point of settlement or acceptance of the
overpayment
Consider impact of overpayment on cash
flow of the organization
Consider whether organization can definitely
identify the extent of the overpayment
67
Developing a Plan of Correction



What written policies and procedures need to
be put in place to prevent a similar
overpayment
How will the organization monitor compliance
with the new policies and procedures
Are there other payors that may have
overpaid?
68
Engage State Officials



Anonymously discuss proposed terms of
reporting and repaying of the
overpayment with attorneys for the state
Begin to engage staff in Medicaid
Program Integrity
Prepare for a possible investigation by
the Medicaid Fraud Control Unit
69
Report and Repay Overpayment


Prepare overpayment cover letter
Submit overpayment report and
repayment
70
QUESTIONS
71
Website: www.brownwinick.com
Toll Free Phone Number: 1-888-282-3515
OFFICE LOCATIONS:
666 Grand Avenue, Suite 2000
Des Moines, Iowa 50309-2510
Telephone: (515) 242-2400
Facsimile: (515) 283-0231
616 Franklin Place
Pella, Iowa 50219
Telephone: (641) 628-4513
Facsimile: (641) 628-8494
DISCLAIMER: No oral or written statement made by BrownWinick attorneys should
be interpreted by the recipient as suggesting a need to obtain legal counsel from
BrownWinick or any other firm, nor as suggesting a need to take legal action. Do not
attempt to solve individual problems upon the basis of general information provided
by any BrownWinick attorney, as slight changes in fact situations may cause a
material change in legal result.
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