Avoiding the Pitfalls of Fraud, Waste & Abuse Compliance

Avoiding the Pitfalls of Fraud, Waste & Abuse Compliance MPA Winter CE + Ski January 12th, 2014 Jason Walker-Crawford, R.Ph. – PAAS National®, Inc.

Learning Objectives • Discuss the Medicare Part D requirements for Fraud, Waste & Abuse Compliance (FWAC). • Discuss penalties for non-compliance with FWAC. • Provide advice and tools for pharmacies to meet compliance requirements.

History of FWAC • Federal False Claims Act (FCA) • Enacted post-Civil War • Heavily amended in 1986 • Amended multiple times • Criminal felony to submit a false claim for payment from Federal funds • Medicare, Medicaid, TriCare, Federal Employee Program (FEP), grants, etc. • Includes making or using a false statement

History of FWAC • FCA cont. • Criminal penalties • Civil Money Penalties (CMPs) • Up to treble (triple) damages • Qui Tam provisions • Incentives of up to 30% of settlement or judgment may be awarded to whistleblowers • Protections in place to protect whistleblowers from retaliation of any kind

Pharmacist as Whistleblower • Bernard Lisitza – former independent pharmacy owner and pharmacist • Worked for Omnicare • Also did temp work at CVS and Walgreens • Filed multiple Qui Tam lawsuits against Omnicare, CVS, Walgreens and Johnson & Johnson • Lawsuits have recovered billions of dollars in Federal funds • Has been awarded more than $31 million

History of FWAC • Federal Anti-Kickback Statute • 42 U.S.C. § 1320 • Effective 1972 • Prohibits providing or receiving a “kickback” for referral of any product or service paid by Medicare or Medicaid • Any remuneration • Safe Harbors • 5 years in prison • Fines up to $25,000 • CMPs up to $50,000 • Exclusion

History of FWAC • Anti-Kickback Statute cont. • OIG maintains list of Safe Harbor regulations • More than 20 published • Must follow regulations exactly to be “safe” • OIG will provide advisory opinions in situations that do not meet regulations • Based on facts provided • Only opinion • Doesn’t mean practice is legal • OIG likely not to prosecute

History of FWAC • Stark Statute • 42 U.S.C § 1395nn • “Stark I” – OBRA 1989 • “Stark II” – OBRA 1993 • AKA Physician Self-Referral Law • Prevent financial incentives for unnecessary medical services • Prohibits ordering or referring medical services with a financial incentive (ownership) • Provides for CMP and treble damages

Violation of Stark/Anti-Kickback • NY medical practice – 2013 • Agreed to pay $1,140,260 • Paid remuneration to patients in the form of “points” • Points redeemable under program for additional medical services and products

History of FWAC • Public Law 104-191, Health Insurance Portability and Accountability Act (HIPAA) of 1996 • Established the Health Care Fraud and Abuse Control (HCFAC) Program • Public and private health care • Under joint direction of the Department of Health and Human Services (HHS), Office of the Inspector General (OIG) and the Attorney General • Coordinates Federal, State and local law enforcement

History of FWAC • Medicare Modernization Act (MMA) of 2003 • Created Medicare prescription drug program (Part D) • Requires plan sponsors to have a compliance program • Covers general compliance and FWAC • Plan sponsors must assure that their employees, contractors and first-tier, downstream and related entities (FDRs) meet requirements • Pharmacies are FDRs

History of FWAC • Deficit Reduction Act (DRA) of 2005 • Enhanced the Federal False Claims Act (FCA) • Provides financial incentives to States to pass their own FCA • Required FWAC requirements for any entity with $5 million or more in revenue per year from Medicaid

History of FWAC • MT False Claims Act • MT Code Ann. §§ 17-8-401 through 17-8-413 • Originally enacted 2005 • Amended 2009 and 2013 • Approved by OIG October 24th, 2013 • OIG approval provides incentive to State • Min penalty of $5,500 up to $11,000 per incident • Two to three times damages (claim amount) • Costs

History of FWAC • American Recovery and Reinvestment Act (ARRA) of 2009 (Stimulus) • Health Information Technology for Economic and Clinical Health (HITECH) Act • Enhanced HIPAA • Introduced Breach Notification requirements • Increased CMPs • Up to $1.5 million per violation per year • Omnibus Final Rule • Effective March 26th, 2013

History of FWAC • Health Care Fraud Enforcement and Action Teams (HEAT) • Began May 9, 2009 • http://www.stopmedicarefraud.gov • CMS, FBI, DEA, OIG, State and local law enforcement • Medicare Fraud Strike Force, nine cities • Baton Rouge, LA; Brooklyn, NY; Chicago, IL; Dallas, TX; Detroit, MI; Houston, TX; Los Angeles, CA; Miami-Dade, FL; Tampa Bay, FL • In 2011, HEAT coordinated fraud takedown of $530 million in fraudulent billing

History of FWAC • Patient Protection and Affordable Care Act (ACA) of 2010 (Obamacare) • Expanded the Recovery Audit Contractor (RAC) program to include Medicaid and Medicare Part C and D • Additional $350 million to fight FWA • Expected to be budget neutral • FWA Recovery ≥ Enforcement Cost

History of FWAC • ACA Cont. • Increased provider/supplier review • Site visits, background checks, licensure checks, fingerprinting • False applications may lead to exclusion from all Federal programs • Medicaid termination for unpaid overpayments • Suspension of payments if fraud is expected!

What’s the big deal? • Why are there some many different laws all about FWA? • It’s all about the money!

Health Care Expenditures • In 2012, health care expenditures have been estimated to be $2.82 trillion = 17.6% GDP • In 2020, health care expenditures are projected to be $4.6 trillion = 19.8% GDP • Fraud is estimated to be 3-10% of total dollars spent (National Health Care Anti-Fraud Association/FBI) • Waste is estimated to be 20-30% of total dollars spent (HHS-OIG Daniel Levinson, Inspector General – Keynote address 2012 Health Care Compliance Associations)

HHS Announces Record Breaking Recoveries – February 11, 2013 • Joint efforts to combat Health Care Fraud resulted in a record $4.2 billion in 2012 • ROI of $7.90 per dollar spent over last 3 years • Enforcement efforts have recovered $14.9 billion in the last four years, compared to $6.7 billion over the prior four years.

OIG Semiannual Report to Congress – Spring 2013 • First half of FY 2013 (October 2012 – March 2013) • Recoveries of $3.8 billion • 1,661 new individuals or entities excluded from Federal programs.

What is Fraud? • Knowingly and willfully executing, or attempting to execute, a scheme or artifice to defraud any health care benefit program or to obtain (by means of false or fraudulent pretenses, representations, or promises) any of the money or property owned by, or under the custody or control of, a health care benefit program. • 18 U.S.C. Section 1347

Examples of Possible Fraud • Intentionally submitting false information in order to get money or a benefit • Billing for items that were not purchased or picked up • Prescription forging, altering or shorting • Switching to a more expensive dosage form to increase the amount of reimbursement • Submitting claims for entire amount on partial fills were the balance is not picked up

Chain Drug Store settles for $35 million • In 2008 a major drug chain settled for $35 million for switching Medicaid patients from tablets to capsules of the same drug to increase the amount they were reimbursed • Another major drug store chain paid $21.1 million to settle the same claim for submitting more expensive Ranitidine capsules instead of tablets • The qui tam plaintiff received $4.3 million for his share of the federal and state settlement

What is Waste? • Waste is the overutilization of services, or other practices that, directly or indirectly, result in unnecessary costs to the Medicare program. Waste is generally not considered to be caused by criminally negligent actions but rather the misuse of resources. (CMS, Prescription Drug Benefit Manual Chapter 9 – Compliance Program Guidelines, Section 20) • Waste is a misuse of resources or to spend carelessly

Examples of Possible Waste • Overbilled quantities – submitting for a quantity larger than what is allowed by the plan or ordered by the prescriber • Dispensing a 90 day supply that is discontinued after 30 days • Billing an incorrect day supply resulting in the patient receiving a larger quantity than allowed • Dispensing a 60 gram tube of ointment when a 15 gram tube would be sufficient • Auto-refills when the previous supplies not exhausted

What Waste Looks Like $11,000 of unused medication from mail order

What is Abuse? • Abuse includes actions that may, directly or indirectly result in: unnecessary costs to the Medicare program, improper payment, payment for services that fail to meet professionally recognized standards of care, or services that are medically unnecessary. Abuse involves payment for items or services when there is no legal entitlement to that payment and the provider. • Abuse may involve obtaining an improper payment, but does not require the same intent and knowledge as fraud.

Examples of Possible Abuse • Using an override code to force a claim to go through early • Filling a prescription after expiration • Splitting prescriptions to obtain additional dispensing fees • Changing to an incorrect diagnosis code in order to receive payment

Fraud vs. Abuse • Did you do it intentionally? • Can you prove that you didn’t? • Repeated abuses are often considered to be intentional frauds in the eyes of the auditors • Once or twice = oops • Twenty = Fraud

Basics of FWAC • Prevent! Detect! Correct! • Required to adopt and implement an effective compliance program • CMS requires 7 core elements • 33 sub-elements • Much more than just training!

The 7 core elements are: • Written Policies, Procedures and Standards of Conduct; • Compliance Officer, Compliance Committee and High Level Oversight; • Effective Training and Education; • Effective Lines of Communication; • Well Publicized Disciplinary Standards; • Effective System for Routine Monitoring and Identification of Compliance Risks; and • Procedures and System for Prompt Response to Compliance Issues

Element I:Written Policies, Procedures and Standards of Conduct • Standards of Conduct • AKA “Code of Conduct” (CoC) • State the principles and values by which you operate • Expectation that ALL employees will act in an ethical manner • Noncompliance and potential FWA is reported • Reported issues are addressed and corrected • Compliance is everyone’s responsibility!

Element I:Written Policies, Procedures and Standards of Conduct • Policies and Procedures • Detailed and Specific • Describe operations of Compliance Program • Reporting structure • Training requirements • Investigation and remediation

Element I:Written Policies, Procedures and Standards of Conduct • Distribution of P&P and Code of Conduct • Compliance program not effective unless distributed to employees • Within 90 days of hire • Updates • Annually • Can distribute manually or electronic • Need proof of distribution • Signed acknowledgement

Element II: Compliance Officer, Compliance Committee and High Level Oversight • Compliance Officer • Should be full-time employee • Experience with compliance • Recommend manager or direct report • Duties: • Aware of daily activities • Develop and Implement compliance program • Coordinate internal reviews and investigations • Maintain reporting mechanisms • Exclusion list checking

Element II: Compliance Officer, Compliance Committee and High Level Oversight • Compliance Committee and Governing Body • Oversee and advise Compliance Officer and Program • Plan sponsors = large committees, varied backgrounds • FDRs = may be the Compliance Officer + Owner and/or Managers

Element II: Compliance Officer, Compliance Committee and High Level Oversight • Senior Management Involvement • Senior management must be involved with Compliance Program to be effective • Ensure Compliance Officer has credibility, authority and resources needed to operate the program • Compliance Officer must report to senior management any compliance issues

Element III: Effective Training and Education • General Compliance Training • ALL Employees (includes temps and volunteers) • Within 90 days of hire and annually • Classroom, online or attestation that have read and received CoC and P&P • Must have proof of training (sign-in, attestation or certificates)

Element III: Effective Training and Education • General Compliance Training cont. • Contents of training: • Review of P&P and CoC • Identifying potential noncompliance (examples) • Reporting noncompliance • Review disciplinary policies • Disclosing conflicts of interest • Confidentiality (HIPAA/HITECH)

Element III: Effective Training and Education • Fraud, Waste and Abuse Training • Only requirement deemed to have been met thru Part B accreditation • Only employees that are involved in the administration or delivery of Medicare benefits • Within 90 days of hire and annually • May be required as corrective action to noncompliant employees • May be tailored to specific job functions • Sponsors required to provide training to FDRs • May use CMS’ FWA training module

Element III: Effective Training and Education • Fraud, Waste and Abuse Training cont. • Contents of Training: • Laws and regulations (False Claims Act, Anti-Kickback statute, HIPAA/HITECH, etc.) • Reporting FWA • Protections for reporting FWA • Types of FWA (examples) • Maintain training records for 10 years • Time, attendance, topic, certificates and/or test scores

Element IV: Effective Lines of Communication • Effective Lines of Communication Among the Compliance Officer, Compliance Committee, Employees, Governing Body and FDRs • Ways to communicate information from the Compliance Officer to others • Officer’s name, location, and contact information • Changes to P&P, CoC, laws and regulations • Methods of communication • Written, email, website, or meetings

Element IV: Effective Lines of Communication • Communication and Reporting Mechanisms • Must have P&P and CoC that requires reporting of suspected or detected noncompliance or FWA • Must maintain confidentiality • Allow anonymous reporting • Prohibit retaliation or retribution (no-tolerance policy) • User friendly, easy to access

Element IV: Effective Lines of Communication • Enrollee Communications and Education • Plan sponsor requirement only • Must educate Medicare enrollees on identifying and reporting potential FWA

Element V:Well-Publicized Disciplinary Standards • Disciplinary Standards • Clear and specific disciplinary standards • Contents: • Expectation to report noncompliant, unethical or illegal behavior • Participate in required training • Timely, consistent and effective enforcement • Disciplinary action must be appropriate to seriousness of the violation • Retraining, suspension, termination

Element V:Well-Publicized Disciplinary Standards • Methods to Publicize Disciplinary Standards • Must publicize disciplinary standards to all employees • Methods: • Newsletters • Staff Meetings • General Compliance Training • Intranet • Posters

Element V:Well-Publicized Disciplinary Standards • Enforcing Disciplinary Standards • Maintain records for 10 years • Date reported • Description of violation • Date of investigation • Summary of findings • Disciplinary action taken and date • CMS encourages that de-identified disciplinary actions be reported to employees • Demonstrate importance of Disciplinary Standards

Element VI: Effective System for Routine Monitoring, Auditing and Identification of Compliance Risks • Routine Monitoring and Auditing • Compliance Officer must conduct • Monitoring = regular review of operations to ensure compliance • Auditing = formal review based on a set of standards (P&P, laws and regulations) • Address areas at risk

Element VI: Effective System for Routine Monitoring, Auditing and Identification of Compliance Risks • Development of a System to Identify Compliance Risks • Conduct an assessment of risk • Complexity of work • Past compliance issues (audit results) • Chapter 7 – Quality Assurance • Credentialing

Avoiding the Pitfalls of Fraud, Waste & Abuse Compliance