COMPLIANCE ISSUES FACING GROUP
PRACTICES
Growing and Operating a Large Medical Practice
Broad and Cassel
Hyatt Regency Orlando
International Airport
March 3, 2006
GABRIEL L. IMPERATO, ESQ.
Broad & Cassel
Fort Lauderdale, FL
1
OVERVIEW
1)
2)
3)
4)
5)
6)
RECENT TRENDS IN GOVERNMENT
ENFORCEMENT
PRIVATE PAYOR HEALTH CARE FRAUD
THE ANTI-KICKBACK STATUTE
THE STARK LAW
THE FALSE CLAIMS ACT
OFFICE OF INSPECTOR GENERAL WORK
PLAN
2
TRENDS IN GOVERNMENT
ENFORCEMENT
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Health Care Fraud Enforcement Continues As a Priority
and Includes Anything Whistleblowers May Target
Medicare Reform Act-Expansion of Prescription Drug
Benefit – New Fraud Opportunities
Corporate Liability and Compliance
Quality of Care
Stark Law and Anti-Kickback Violations
OIG Work Plan 2006
3
HOT TOPICS
Physician Recruitment
 Medical Directorships
 Joint Ventures
 Pharma and Medical Device Marketing
 Clinical Research

4
PHYSICIAN RECRUITMENT
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Community need (vs. hospital need)
Physician relocating practice to hospital service
area
Benefits geared to reasonable financial security
of physician in startup phase
Payout period limited to 3 years
No benefits to existing group practice beyond
actual incremental additional costs of adding
new physician
No relationship to anticipated referrals
OK to require maintenance of hospital privileges
5
MEDICAL DIRECTORSHIPS
Actual, necessary, non-duplicative
services
 Fair market value payments
 Contemporaneous time and effort
documentation
 No relationship to referrals

6
JOINT VENTURES

Issue: Excessive reward to referral sources?
 Any relationship of investment opportunity to referral
volume
 Minimal investment by referral sources
 Tracking/pressure regarding referrals
 Extraordinary returns on investment
 Required divestments/non-transferability of
investment interests
 “Shell” structures: contractual joint ventures
7
MARKETING OF PHARMACEUTICALS
AND MEDICAL DEVICES


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Discounts and remuneration to purchasers
 Educational grants
 Research grants
 “Switching” or conversion payments
Formularies and formulary support
 Relations with formulary committee members
 Formulary placement payments
Relationships with physicians
 Consulting and advisory payments
 Business courtesies and gifts
 Education/research funding
8
CLINICAL RESEARCH

NIH Guidance on Financial Conflicts of Interest
 Any relationship between outcome and compensation
 Researcher’s proprietary interest in studied product
 Equity interest in the sponsor
 Other significant compensation by sponsor
 Grants for unnecessary or duplicative research
 Cost mischarging
9
Clinical Research Grants

Commercial Sources
 Pharma and medical device
 Consultant Arrangements with Clinical Trial Sponsors
(Pharma CPG)
 Recruitment of clinical trial subjects
 Integrity of reporting of clinical trial information
 Medical treatment of clinical trial subjects

Federal Grants
 NIH and other
 Clinical Investigations time allocation
 Billing for services covered under a grant
 Recent CPG
10
Hospital Specific Billing Issues
Discharge/Transfers
 Inpatient DRG Coding

Suspect Pairings
 Pneumonia
 Septicimia
Post Acute DRGs (29 existing DRGs)
 Bill as transfer, not discharge
 OIG highlights in its semi-annual report ($116
million Medicare overpayment in 2 year period)
11
Hospital Specific Billing Issues
Outpatient PPS
Pass-through costs
 Outpatient Cardiac Rehab
Incident to/direct supervision by Physician
 Diagnostic Testing in ERs
Contemporaneous interpretations
Medically necessary?

12
Hospital Billing/Medical Necessity
Issues

Coronary Artery Stents
Medically necessary
Multiple procedures
70% now drug eluting stents ($ 4,859 extra
payment on OPPS)
13
Hospital and Physicians – Medical
Necessity Conundrum
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Physicians decide what is medically necessary
Staff Physicians not employed by hospital
Independent Peer Review function
Overutilization? Patient Care/Safety
United Memorial Hospital/Corporate Liability
Redding Hospital/Physician and Corporate
Liability
14
Physician Billing Issues
E&M coding (perennial target - $ 23 billion
in 2001)
 Consultations
 Use of -25 Modifier (E&M service
unrelated to procedure code on same day)
 Place of Service coding errors

15
Physician Billing Issues
Medical Necessity of Diagnostic Tests
 Radiation Therapy Management Services
One billable unit for every five sessions
 Services and Suppliers “Incident to”
 Training and billing Reviews for physician
practices
Essential in OIG’s view

16
PHARMACEUTICAL FRAUD
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Medicaid Rebates – Best Price Violations
Price Manipulation (“AWP”/”ASP”)
Promotion of Off Label Use
Relationships with Health Care Professionals
and Inducements to Prescribe
Marketing Schemes
Pharmacy Benefit Managers and Switching
Arrangements and Contract Kickbacks
Shorting Prescriptions and Drugs Returned to
Stock
Secondary Market and Internet Purchases
17
Quality of Care
Hospital/Physician Services
Cardiac Catheterization Procedures
Hospital/Medical Staff Responsibility
 Quality of Care in Nursing Homes
Services Not Provided
“Deficient” Services vs. “Worthless” Services
 Physician Services

18
CORPORATE LIABILITY,
COMPLIANCE AND GOVERNANCE

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HIPPA 96” and Corporate Scandals
The New Era of Corporate Responsibility
Sarbanes-Oxley Act of 2002
United States Sentencing Guideline
Amendments of 2004
Department of Justice Principles of Federal
Prosecution of Business Organizations
19
SARBANES-OXLEY AND THE SENTINEL
EFFECT ON HEALTH CARE ORGANIZATIONS

Public Companies – Governance and Integrity of
Reporting Financial Information

Private Companies – Fiduciary Obligations of Board of
Directors and Shareholder Derivative Liability

Not-for-Profit Organizations – Fiduciary Obligations and
Attorney General Oversight

Caremark Decision – All Organizations
20
SENTENCING GUIDELINE AMENDMENTS
RAISE THE STAKES FOR BUSINESS
ORGANIZATIONS
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Codification of Principles of the Caremark Decision
Oversight and Responsibility of the Board of Directors
and High Level Personnel of the Organization
Board Knowledge About the Content and Operation of
the Compliance Program to Prevent and Detect
Violations of the Law
Board Exercises Reasonable Oversight with Respect to
Implementation and Effectiveness of the Compliance
Program
Risk Assessment as an Essential Component of Design
Implementation of an Effective Compliance Program
Assessment of Likely Compliance Risks Given an
Organization’s Business Activities
21
UNITED STATES SENTENCING GUIDELINE AMENDMENTS AND
DEPARTMENT OF JUSTICE PRINCIPLES OF FEDERAL PROSECUTION OF
BUSINESS ORGANIZATIONS
“COOPERATION” OR “UNCONDITIONAL SURRENDER”
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Voluntary Disclosure and Self-Reporting as Quasi Mandatory
Function of Cooperation
Cooperation in Investigating Business Organizations Own
Wrongdoing
Effects Charging Decision Against Business Organization
Effects Scope of Liability for Business Organization
Effects Sentence under Sentencing Guidelines
Business Organization’s Cannot Run the Risk of Failing to
Have an Effective Compliance and Governance Program
Failure to Detect and Prevent Wrongful Conduct will Result in
Consequences for Any Business Organization in Current
Compliance Environment
22
Corporate Integrity Agreements
A part of global criminal and/or civil settlement
 May represent OIG’s opinion on the
organization’s compliance programs
 7 significant elements of an effective compliance
program, including:
Specific training language
Focused audits/reviews
Independence of Compliance Officer
 Annual Reporting Requirements Under CIA

23
Independence of the
Compliance Officer
Dual responsibility of compliance officers
are increasingly suspect to the OIG at
large organizations
 Sufficient commitment of resources
 Reporting to Board of Directors/Trustees
 CCO Subordinate to General Counsel or
CFO Not Favored by OIG

24
OIG Expectations:
Compliance Training
Broad based compliance program training
 Extensive and specific training for risk
areas
 Document training
 Efforts made to train physicians
 Technology training
 Essential for effective compliance
programs

25
Private Payor Fraud
 What
is Private Payor Insurance
Fraud?
Fraud against those who pay for
private heath insurance coverage
26
Federal Statutes Prohibiting Private
Payor Insurance Fraud
Mail Fraud
 Wire Fraud
 Fraud against health care benefit plans
 Conspiracy to commit fraud through false
claims and false statements
 Fraud under the RICO statute

27
Federal Prosecutions involving Fraud
Against Private Persons

Examples
 US v. Posner, D.C., et. Al (S.D. Fla.)
Mail fraud; 18 U.S.C. § 1341; Wire fraud; 18 U.S.C. §1343;
and Conspiracy; 18 U.S.C. § 371 – for submission of claims to
private payors for services not rendered, not rendered as
claimed and for medically unnecessary services
 US v. Individual Chiropractor
Health care fraud; 18 U.S.C. § 1347; Conspiracy; 18 U.S.C. §
371 – for claims for services in accordance with a standard
treatment protocol lasting approximately three months
regardless of the patient injuries or the medical necessity of
the treatment protocol, and for submission of claims for
medical, chiropractic and therapeutic services which were not
performed during the treatment protocol and/or never occurred
28
Private Payor Attempts to Limit Fraud and
Abuse through State Legislation

Examples:
Florida legislation regulating activities under
the personal injury protection program –
limiting solicitation of patients; imposition of
Medical Director responsibilities on personal
injury medical clinics
Licensure and registration of clinics and
denial of payment for unlicensed or
unregistered clinics by private health plans
29
Examples of Private Payor Positions
in Civil Litigation
Violations of federal or state false claims
statutes
 Violations of federal or state Anti-Kickback and
self-referral laws
 Violations of state law governing insurance and
provider relationships
 Submission of claims which are allegedly
medically unnecessary and/or unreasonable

30
Private Payor Affirmative Litigation Against
Providers in State and Federal Courts

Examples:
 State Farm Mutual Automobile Insurance Company v. Universal Medical
Center of South Florida, Inc. (Dade County, Court of Appeal) – Denial of
payment because physical therapy performed by medical assistants (not
licensed physical therapists) provided under physician supervision is
prohibited under State law.
 State Farm Mutual Automobile Insurance Company v. Comprehensive
Medical Group, Inc., et al (N.D. Illinois) – Complaint by insurance company
against multiple providers for false and fraudulent claims for worthless and
unnecessary diagnostic tests rendered to victims of automobile accidents on
an a nation-wide scale.
 Medically unnecessary diagnostic tests of no clinic value
 Misleading diagnostic findings
 False claims for multiple procedure codes
 Diagnostic studies rendered to maximize profit without regard to medical
necessity
 Spinal ultra sounds; somotosensory evoke potential; dermatome evoke
potentials; and nerve conduction velocity studies, having no clinical
value in confirming or excluding the existence of nerve root injury or
location of neurological dysfunction or inflammation
 Purpose of performing the test is merely for financial gain
31
REVIEW OF PAYMENT & REFERRAL
RELATIONSHIPS UNDER
STATE AND FEDERAL LAW
32
I. THE ANTI-KICKBACK STATUTE
42 USC § 1320a-7b(b)(2)
It is unlawful to knowingly and willfully offer or pay any remuneration
(including any kickback, bribe, or rebate) directly or indirectly, overtly
or covertly, in cash or in kind to any person to induce such person-(A) to refer an individual to a person for the furnishing or
arranging for the furnishing of any item or service for which payment
may be made in whole or in part under a Federal health care
program, or
(B) to purchase, lease, order, or arrange for or recommend
purchasing, leasing, or ordering any good, facility, service, or item
for which payment may be made in whole or in part under a Federal
health care program.
33
The Anti-Kickback Statute
What It All Means? - Prohibits anyone from
purposefully offering, soliciting, or
receiving anything of value to generate
referrals for items or services payable by
any Federal health care program.
 42 States and D.C. have enacted antikickback statutes

34
Purpose of the Law
Prevent the corruption of medical decisionmaking
 Prevent the overutilization of items or
services
 Prevent unfair competition

35
Elements

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Remuneration
Offered, Paid, Solicited, or Received
Knowingly & Willfully
To Induce or In Exchange for Federal
Program Referrals
36
Remuneration
Anything of value
 “In-cash or in-kind”
 Paid directly or indirectly
 Examples: cash, free goods or services,
discounts, below market rent, relief of
financial obligations

37
Offered, Paid, Solicited, or Received
Different Perspectives – Payors and
Payees
 “It Takes Two To Tango”
 Old Focus: Payors Subject to Prosecution
 New Focus: Payees (usually doctors)

38
To Induce Federal Program Referrals
Any Federal Health Care program
 A nexus between payments and referrals
 Covers any act that is intended to
influence and cause referrals to a Federal
Health Care program
 One purpose test

39
Knowingly & Willfully


The Anti-Kickback law requires that the individual have a particular
“state of mind”, acting with knowledge and purpose when committing
the offense
This “Knowingly & Willfully” requirement has been interpreted
differently by the various Circuit Courts:
 9th Circuit: Must have knowledge of the Anti-Kickback statute and
have specific intent to violate the statute
 8th Circuit: Mere knowledge that the conduct was “wrongful”
satisfies the “Knowingly & Willfully” standard
 11th Circuit: Must show that one acted with an intent to “disobey
or disregard” the law
40
Fines and Penalties

The Government may elect to proceed:
Criminally:
 Felony, Imprisonment up to 5 Years & a fine up to $25,000, or both
 Mandatory exclusion from participating in Federal Health Care programs
 Brought by the DOJ
Civilly:
 Violation is based on express or implied certification of compliance with violations
of the Anti-Kickback and Starks statutes
 Penalties are same as under False Claims Act (more later)
 Controversial, yet expanding use of the FCA
Administratively:
 Monetary penalty of $ 50,000 per violation & assessment of up to three times the
remuneration involved
 Discretionary exclusion from participating in Federal Health Care programs
 Brought by the OIG
41
Exceptions and Safe Harbors
Many harmless business arrangements
may be subject to the Statute
 Approximately 24 Exceptions (“SafeHarbors”) have been created by the OIG
 Compliance is Voluntary
 Must meet all conditions to qualify for Safe
Harbor protection
 Is substantial compliance enough?

42
Statutory Exceptions

The 5 exceptions that have been enacted
by Congress:
1)Discounts and other price reductions
2)Payments to employees
3)An amount paid by a vendor of goods or
services to a group purchasing agent
4)Waiver of Part B co-payments by Federally
qualified health centers
5)“Shared Risk” exception
43
Regulatory Safe Harbors
Investments in large entities
 Investments in small entities
 Investments in small entities in
underserved areas
 Investments in group practices
 Investments in ambulatory surgical centers
(ASCs)

44
Additional Safe Harbors
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Space and Rental Equipment
Personal Services and
management contracts
Employees
Discounts
Managed Care
Managed Care
“shared risk” arrangements
Practitioner recruiting in
underserved areas
Ambulance restocking
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Sale of practice
Referral services
Warranties
Group purchasing
organizations
Routine waiver of co-payments
and deductibles
Subsidies for obstetrical
malpractice insurance in
underserved areas
Cooperative Hospital Services
Organizations
Specialty referral
arrangements between
providers
45
Guidance on the Anti-Kickback Statute

Advisory Opinions from the OIG
 A party may request advice on the law, concerning 1)
remuneration within the meaning of the law, 2)
whether they are meeting one of the law’s exceptions
or safe harbors, or whether their arrangement
warrants the imposition of a sanction
 Recent Advisory Opinions on Gainsharing
arrangements


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
Fraud Alerts and Special Advisory Bulletins
Preamble to the Safe Harbor Regulations
Compliance Program Guidance's
www.oig.hhs.gov
46
The Stark Law



Section 1877 of the Social Security Act, 42
U.S.C 1395nn
The law is complicated and consists of the
original statute (Stark I) and the amended
provisions (Stark II)
Most Stark II regulations went into effect in
2002, but some are still pending
47
The Stark Law
A Prohibition on Physician Self-Referrals
If a physician (or immediate family member)
has a direct or indirect financial relationship
(ownership or compensation) with an entity
that provides designated health services
(“DHS”), the physician cannot refer the patient
to the entity for DHS and the entity cannot
submit a claim for the DHS, unless the
financial relationship fits in an exception
48
Penalties
Nonpayment of claims
 Civil Money Penalties of $ 15,000 for each
service rendered plus an Assessment of
three times the amount claimed
 Penalty of up to $100,000 for
“Circumvention Scheme”
 Don’t Forget FCA Liability

49
Difference Between Anti-Kickback
Statute and The Stark Law
 Physician Referrals only
 No “Knowingly and Willfully Standard” –
Strict Liability
 Involves Designated Health Services
(DHS)
50
Types of Designated Health Care
Service (DHS)
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Clinical laboratory
Physical therapy
Occupational therapy
Radiology and Imaging Services (MRI, CAT scan, ultrasound)
Radiation therapy & supplies
Durable medical equipment and supplies
Parenteral and enteral nutrients, equipment and supplied
Prosthetics, orthotics, and prosthetic devices and supplies
Home health services
Outpatient prescription drugs
Inpatient and outpatient hospital services
51
What is a Financial Relationship

Nearly any type of investment or compensation
agreement between the referring physician and the DHS
entity will qualify as a financial arrangement under the
Stark law
Examples:
 Stock Ownership
 Partnership Interest
 Rental Contract
 Personal Service Contract
 Salary

Compensation agreements can be Direct or Indirect
 Exceptions for certain indirect compensation arrangements
52
Exceptions

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Compliance Is Mandatory
Types of Exceptions:
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In-office ancillary services
Personal Physician Services by Member of Group Practice
Pre-Paid Health Plan
Certain Publicly Traded Securities
Rural provider (investment interests)
Hospital Ownership (must be in the “whole” hospital)
Rental of Office Space and Equipment
Bona Fide Employment
Personal Services Arrangement
Physician Recruitment
Fair Market Value Payment by Physicians
53
Additional Exceptions
Added in January 2002
 Fair Market Value
compensation arrangements
 Academic medical center
arrangements
 Implants provided in an ASC
(Implants are DHS, but are not
included in the bundled
Medicare ASC payment)
 EPO and other dialysis-related
drugs furnished in or by an
ESRD facility
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Preventing screening tests,
immunizations, and vaccines
Eyeglasses and contact lenses
following cataract surgery
Non-monetary compensation
up to $300
Medical staff incidental
benefits provided by a hospital
Risk sharing arrangements
Compliance training
Indirect compensation
arrangements
54
The False Claims Act
31 U.S.C. § 3729, the False Claims Act (“FCA”) sets forth
seven bases for liability. The most common ones are:
1.
2.
3.
4.
Knowingly presenting, or causing to be presented, to the
Government a false or fraudulent claim for payment
Knowingly making, using, or causing to be made or used, a
false record or statement to get a false or fraudulent claim
paid
Conspiring to defraud the Government by getting a false or
fraudulent claim allowed or paid
Knowingly making, using, or causing to be made or used, a
false record or statement to conceal, avoid, or decrease an
obligation to pay or transmit money or property to the
Government
55
Elements of an FCA Offense

The Defendant must:
Submit a claim (or cause a claim to be
submitted)
To the Government
That is false or fraudulent
Knowing of its falsity
Seeking payment from the federal treasury
Damages (Maybe)
56
Knowing & Knowingly
No proof or specific intent to defraud is
required
 The Government need only show Person:

Had “actual knowledge of the information”; or
Person acted in “deliberate ignorance” of the
truth or falsity of the information; or
Person acted in “reckless disregard” of the
truth or falsity of the information
57
Penalties
1.
2.
Civil penalty of no less than $5,500 and
no more than $ 11,000 per false claim
Three times the amount of damages
which the Government sustained
58
DEPARTMENT OF JUSTICE
INVESTIGATIVE GUIDELINES

Were false claims submitted by a provider with
knowledge of their falsity?
 Was there actual or constructive notice of the rule or policy on
which a potential case would be based?
 Was the rule or policy clear?
 Does the size of the false claim support inference of knowledge
or inference of mistake?
 What plans did the provider make to adhere to the rules?
 Are there any past remedial efforts?
 Did the provider receive guidance by program agents on the
issue?
 Have there been previous audits to the provider of same or
similar billing errors?
59
Qui Tam Actions & Government Intervention
A private person (“Relator”) may bring a
False Claim Act actions under the qui tam
provisions of the FCA – The Whistleblower
 Government may intervene in a suit
brought by Relator
 The relationship between Relator and
Government

60
FCA Statistics
If the government intervenes and obtains recovery, the
Relator receives between 15% and 25% of the proceeds
 Since 1986, of all of the qui tam actions filed, the
average yearly intervention rate has been about 25%
(approximately 300-400 cases)
 About $1.5 billion of the $1.7 billion in health care FCA
recoveries in FY’ 03 were from whistleblowers
 Recoveries Have Increased (higher penalties and
publicity)
 Whistleblower protection is provided to those that take
lawful actions in furtherance of the qui tam suit, including
investigation, initiation, testimony for, or assistance in the
action

61
Role of the OIG in FCA Cases

May assist in the Investigation
Settles as client agency on behalf of HHS
Permissive exclusion authority
May waive exclusion authority in exchange for
Corporate Integrity Agreement
- Monitoring and Annual Reports
- Successor Liability
62
Types of FCA Cases
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Unbundling (billing single service as if one service)
Services not rendered
Billing for items or services that are not covered
Upcoding
Duplicate billing
Submitting false or inflated cost reports
Quality of Care (“standard of care claims” or “worthless claims”)
Research Grant and Clinical Trial Fraud
Actions under the Food, Drug & Cosmetic Act
 misbranding & adulteration of drugs and promotion of off label use
 False Claims Act cases based on violations of the Stark Law
and/or the Anti-Kickback Statute (“Tainted Claims”)
63
OFFICE OF INSPECTOR GENERAL
WORK PLAN
2006
64
OIG Work Plan

Articulates areas of high compliance risk

Priorities for enforcement activity

Identify Federal Health Program vulnerabilities

Road map for compliance program effectiveness and
auditing and monitoring agenda for health care
organizations

Work plan assists in identification and focus for
compliance efforts for health care organizations.
65
Medicare Hospitals – Areas of Focus for
OIG Work Plan 2006
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Adjustments for Graduate Medical Education Payments
Payments for Observation Services versus Inpatient Admissions for Dialysis Services
Medical Education Payments for Dental and Podiatry Residents
Nursing and Allied Health Education Payments
Inpatient Prospective Payment System Wage Indices
Inpatient Rehabilitation Facilities Payments
Inpatient Hospital Payments for New Technologies
Inpatient Psychiatric Hospitals
Inpatient Rehabilitation Payments – Late Assessments
Long Term Care Hospital Payments
Critical Access Hospitals
Organ Acquisition Costs
Rebates Paid to Hospitals
Coronary Artery Stents
Outpatient Outlier and Other Charge-Related Issues
Outpatient Department Payments
Unbundling of Hospital Outpatient Services
“Inpatient Only” Services Performed in an Outpatient Setting
Diagnosis-Related Group Coding
Hospital Reporting of Restraint-Related Deaths
66
Medicare Hospitals – Area of Focus
Added to OIG Work Plan 2006

Adjustments for Graduate Medical Education Payments

Payments for Observation Services versus Inpatient Admissions for
Dialysis Services

Inpatient Hospital Payments for New Technologies

Inpatient Psychiatric Hospitals

Outpatient Department Payments

Unbundling of Hospital Outpatient Services

“Inpatient Only” Services Performed in an Outpatient Setting
67
Medicare Hospitals – Areas of Focus
Continued from OIG Work Plan 2005












Medical Education Payments for Dental and Podiatry Residents
Nursing and Allied Health Education Payments
Inpatient Prospective Payment System Wage Indices
Inpatient Rehabilitation Facilities Payments
Long Term Care Hospital Payments
Critical Access Hospitals
Organ Acquisition Costs
Rebates Paid to Hospitals
Coronary Artery Stents
Outpatient Outlier and Other Charge-Related Issues
Diagnosis-Related Group Coding
Hospital Reporting of Restraint-Related Deaths
68
Deleted From OIG Work Plan 2005 and Not
Included in OIG Work Plan 2006

Quality of Improvement Organization Mediation of Beneficiary Complaints

Graduate Medical Education Voluntary Supervision in Non-hospital Settings

Postacute Care Transfers

Inpatient Outlier and Other Charge-Related Issues

Consecutive Inpatient Stays

Level of Care in Long-Term Care Hospitals

Outpatient Cardiac Rehabilitation Services

Lifetime Reserve Days
69
NEW FOCUS AREA FOR HOSPITALS
IN 2006 WORK PLAN
Only seven (7) focus areas in OIG Work Plan 2006 are areas not previously
identified in prior work plans. The most important areas of focus, from a
liability perspective, are as follows:
 Payments for observation services versus inpatient admissions for
dialysis services
 Payment for interrupted stays and outlier payments at inpatient
psychiatric hospitals
 Payments for hospital outpatient departments for multiple procedures,
repeat procedures and global services
 Unbundling of hospital outpatient procedures
 The most important recurring areas of focus in 2006 OIG Work Plan are as
follows:
 Outlier payments to hospital outpatient departments
 Hospital reporting of restraint related deaths
 Medicaid diagnosis related group payment for hospital services within
three days of admission.

70
RISK AREAS FOR PHYSICIANS
NEW FOCUS AREAS IN OIG WORK PLAN 2006
1.
2.
Duplicate physical therapy claims
Payment to physicians for initial preventative physical examinations pursuant to
coverage under the Medicare Modernization Act
Recurring Focus Areas
1.
2.
3.
4.
5.
6.
7.
8.
9.
Propriety of contractual relationships between physicians and billing companies
Payments to physicians employed at VA hospitals
Physician hospice care plan oversight
Excluded physicians ordering or performing services
In office pathology services
Cardiography professional and technical component billing
Authorization, medical necessity and physician certification for physical and
occupational therapy services
Medical necessity of physician office mental health services
Medical necessity of wound care services and claims by physicians.
71
OTHER AREAS OF
PHYSICIAN CONCERN
1.
Medical necessity for coronary artery stents
2.
Medical necessity of rehabilitation and infusion therapy services in
nursing home
3.
Medical necessity and excessive billing of imaging and laboratory
services in nursing homes
4.
Medical necessity and receipt of DME
5.
Reimbursement for Medicare drug benefit
6.
Focus on physician services in Independent Diagnostic Testing Facilities
(“IDTF’s”) regarding appropriate supervision and licensure of personnel
performing tests
7.
Medical necessity of CORF services
8.
Inappropriate payments and utilization of covered preventative care
services
9.
Physician prescribing of drugs, such as Oxycontin
72
Office of Inspector General
Office of Investigations (“OI”)

OI Conducts Investigations of Fraud and Misconduct and Health Care
Fraud

Identifies Systematic Weaknesses in Vulnerable Program Areas and
Recommends Management, Regulatory and Legislative Corrective Action

Provides Investigative Assistance in Criminal and Civil False Claims, Civil
Money Penalty and Exclusion Cases

Responds to Thousands of Complaints of Health Care Fraud from
Various Sources, including “Whistleblowers”

Provider Self-Disclosure Program

False Claims and Anti-Kickback Violations
73
Office of Inspector General
Office of Legal Counsel (“OCIG”)
Resolution of Civil False Claims Act cases and
negotiation of Corporate Integrity Agreements (“CIA”)
 Providers compliance with Corporate Integrity
Agreements
 Industry Guidance: Advisory Opinions and Fraud Alerts
 Development of regulations, including safe harbors to the
Anti-Kickback Statute
 Enforcement of the Civil Money Penalty and Exclusion
Statutes
 Enforcement of the Patient Anti-Dumping Statute

74
HOSPICE
75
Hospice Providers

Hospice providers meet quality of care
standards
Provider oversight activities and quality of
care
Evaluate arrangements between Hospice and
nursing homes
76
Excluded Providers

Evaluating the extent to which Medicare is billed
for Part B services ordered by providers
excluded from the Medicare program

Part of physician section, but effects Medicare
Part B Services
 Home Health
 DME
 Outpatient radiology
 Laboratories
77
DRG Coding
 Analysis
of “aberrant” coding patterns
78
Home Health
79
Outlier Payments

Long term high intensity cases where episode of
care costs exceed threshold amount.
 Evaluate the frequency of outliers
Analysis
Payment is based on CMI and historical average
number of visits for a given diagnosis
 Rural areas tend to have higher number of visits
per episode than urban

80
Enhanced Payment

Evaluate payment to HHA for therapy services

Number and duration of therapy services
Analysis
 Following certain orthopedic procedures patients are
required to go home with therapy services rather than be
directly admitted to rehabilitation hospital
 Places HHAs between rock and hard place
 Accurate coding of diagnoses for patients being treated
by HHA
 Completion of OASIS forms
81
Other HHA Topics

Survey certifications regarding quality of
care
Performed by the State
Follow-up on deficiencies in the nature
of “cyclical non-compliance”
82
Skilled Nursing Facilities
83
Rehab and Infusion Therapy
 Analysis of whether rehab and infusion therapy services
were:
 Medically necessary
 Adequately supported in documentation
 Actually provided
 Analysis




Analyze MDs assessment data
Diagnosis coding
Facility
Professional
 Professional billings
84
Imaging and Laboratory Services
Evaluate the medical necessity and excessive
billing for imaging and laboratory services
provided to nursing home residents
 Evaluate a sample of services and examine
utilization patterns

Data Analysis
 Diagnosis coding on claims
 MDs data
 Quality of Care
85
Other Topics
Consolidated billing
 Payments for Day of Discharge
 Consecutive Inpatient Stays
 Deficiency Trends

 Quality of Care
Enforcement Action Against Noncompliant
Nursing Homes
 Compliance with Complaint Investigations

 Immediate jeopardy
 Actual harm
86
Medical Equipment &
Supplies
87
DME for Home Health

Medical necessity of durable medical equipment and
supplies
Analysis
 OASIS data
 Post orthopedic surgery cases receiving therapy?
 Relationship between HHA and DME Company
88
DME Other Topics

Medical Necessity
 Therapeutic Footware


Pricing of equipment and supplies
Home Glucose Testing Supplies
 Test strips
 Lancets
Analysis
 Utilization of test strips
 Based on type of diabetes
 Diagnosis coding
– Insulin dependent
– Non-insulin dependent
89
Other Topics






Laboratory services during inpatient stays
Part B radiology services provided to inpatients
Separately billable lab services under ESRD
Lab proficiency testing
Quality of care in dialysis facilities
Ambulance services
 Ground
 Hospital inpatients
90
THE END
91