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Institutional Compliance Agreement Final Mandatory Compliance Training January 2007. Presented By: Andrew S. Quinn, Esq. Principal Compliance Concepts, Inc. Institutional Compliance Agreement (ICA). Agreement between the

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Institutional Compliance Agreement

Final Mandatory Compliance Training

January 2007

Presented By:

Andrew S. Quinn, Esq.


Compliance Concepts, Inc.

institutional compliance agreement ica
Institutional Compliance Agreement (ICA)
  • Agreement between the

Office of the Inspector General (OIG) of the DHHS



  • Entered into March 2002
  • Five Year Period
  • Obligations and Requirements
ica requires
ICA Requires:

Annual Training for all Covered Persons:

  • General
    • ICA Requirements
    • UNSOM Compliance Program and Code of Conduct
  • Specific
    • Submission of accurate claims
    • Policies and Procedures relating to accurate medical record documentation
    • Personal obligations of each individual
    • Reimbursement rules and statutes
    • Legal Sanctions
    • Relevant examples of proper and improper billing practices
ica requires4
ICA Requires:

A Compliance Structure:

  • Maintain a Billing Compliance Steering Committee
  • Employ a Director of Corporate Compliance

(James Lenhart)

    • Maintain Written Standards
    • Compliance Plan/Code of Conduct/Policies and Procedures
    • Institute Review Procedures
    • Annual Review/Employ an Independent Review Organization (IRO)
ica requires5
ICA Requires:
  • Confidential Disclosure Protocol
    • 866-671-2230 - Hotline is confidential and non-retaliatory
  • Annual Personnel Screening
    • New Physician Faculty, Billing Personnel, and other health care providers prior to or at employment
    • Annual screening of current Faculty and staff.
  • Notification of Government Investigations
  • Annual Report – including:
    • Overpayments
    • Material Billing Deficiencies
  • Documentation and record retention for six years
ica requires6
ICA Requires:

In the event of a breach / default the Penalties are:

  • $2,500/day for failure to provide reports
  • $2,500/day for failure to maintain CCO
  • $2,500/day for failure to maintain Compliance Committee
  • $2,500/day for failure to educate, and if the CCO and Compliance Committee are not doing their job
  • $1,500/day if access to information is not available to the OIG
  • $1,500/day for hiring an ineligible person
ica requires7
ICA Requires:

Material breach of the ICA

may warrant EXCLUSION

from federally funded programs

oig news

OIG Proposes To Exclude Miami Hospital from

Participation in Federal Health Care Programs

Inspector General Daniel R. Levinson announced today that the Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) notified Miami’s South Shore Hospital and Medical Center (South Shore) of an impending exclusion from Medicare, Medicaid, and all other Federal health care programs. Today’s action resulted from South Shore’s material breach of the terms of a corporate integrity agreement (CIA) it negotiated with OIG in 2002, as part of the resolution of a False Claims Act case against the hospital.

oig news9

OIG Excludes Miami Hospital from

Participation in Federal Health Care Programs

Inspector General Daniel R. Levinson announced today that the Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) is excluding Miami’s South Beach Community Hospital (South Beach), formerly known as South Shore Hospital and Medical Center, from participation in Medicare, Medicaid, and all other Federal health care programs. Today’s action resulted from South Beach’s material breach of the terms of a corporate integrity agreement (CIA) it negotiated with OIG in 2002, as part of the resolution of a False Claims Act case against the hospital.

“South Beach has committed repeated and flagrant violations of its obligations under the CIA,” said Inspector General Levinson. “This exclusion sends a clear message to the provider community that the OIG will not hesitate to pursue an action against those providers that fail to abide by their integrity agreement obligations.”


governme nt enforcement efforts
Compliance guidance and Corporate Integrity Agreements are being issued for all health care industry sectors (Physicians, Hospitals, Nursing Homes, Pharmaceutical Companies, DME Suppliers, etc. ) by the OIG (DHHS).Government Enforcement Efforts

Healthcare fraud is the #2 priority of the Department of Justice, second only to terrorism and violent crime.

Healthcare fraud is now, for the first time, a separate federal crime.

governme nt enforcement efforts12
Government Enforcement Efforts

FBI Operational Directive

“With health care expenditures rising at three times the rate of inflation, it is especially important to coordinate all investigative efforts to combat fraud within the health care system. The FBI is the primary investigative agency involved in the fight against health care fraud that has jurisdiction over both the federal and private insurance programs. With more than $1 trillion being spent in the private sector on health care and its related services, the FBI's efforts are crucial to the success of the overall program.”


U.S. Department of Justice

United States Attorney

District of Nevada


- Estimated Loss To Insurance Companies and Medicare Is Over $20 Million –

LAS VEGAS - -A California medical diagnostic testing company which operated clinics in Las Vegas, Nevada, and its two top corporate officers, have been indicted on federal health care fraud, money laundering, and tax evasion charges, announced Daniel G. Bogden, United States Attorney for the District of Nevada.

SDI FUTURE HEALTH, INC. ("SDI"), a California corporation based in Westlake Village, TODD STUART KAPLAN, age 46, of Thousand Oakes, California, and JACK BRUNK, age 48, of Newbury Park, California, were indicted by the Federal Grand Jury in Las Vegas yesterday and charged with one count of Conspiracy to Commit Health Care Fraud; 124 counts of Health Care Fraud; one count of violating the Medicare Anti-Kickback statute; one count of Conspiracy to Commit Money Laundering; and 10 counts of Attempt to Evade or Defeat Tax. They face up to 20 years in prison and fines of $250,000 on each of the Health Care Fraud and Money Laundering offenses, and up to five years in prison and fines of $250,000 on the Anti-Kickback and Tax Evasion counts.


U.S. Department of Justice

United States Attorney

District of Nevada


It was further part of the scheme to defraud that the SDI defendants induced physicians, including Las Vegas physicians, to accept remuneration or "kickbacks" from SDI in exchange for referring patients to SDI labs. The remuneration took the form of:

(1) assigning SDI employees [referred to as Health Service Coordinators (HSCs)] to work, free of charge, in the offices of physicians;

(2) direct cash payments under the guise of medical director fees;

(3) gifts of expensive sports memorabilia; and

(4) assignment of fees.

SDI allegedly used their HSC's to evaluate patients for sleep studies and to write prescriptions for medically unnecessary tests. The prescriptions were often written by the HSC without any evaluation of the patient's medical condition by a physician and without the presence of any signs and symptoms indicating a medical need for the sleep studies or heart monitoring.


U.S. Department of Justice

United States Attorney

District of Nevada


SDI defendants also allegedly pressured patients to make appointments at SDI clinics, and informed them that their treating physicians had ordered the sleep studies.

No Las Vegas physicians are specifically charged in the Indictment; however, it is alleged that between January 1999 and January 2002, the SDI defendants entered into agreements with physicians A, B, C, D, and E, who were physicians practicing in Las Vegas, and that the agreements called for payment of kickbacks in return for referrals to SDI.

During the relevant time frame, SDI treated in excess of 15,000 patients. The estimated loss to the victims is approximately $22 million.

The Indictment alleges that if convicted, the defendants shall forfeit approximately $24 million to the United States, because the monies were derived from the proceeds of their offenses.


Department of Justice

October 12 , 2005


In the latest legal action targeting "rent-a-patient" scams, two medical doctors have been charged with health care fraud for allegedly performing unnecessary medical procedures on patients who were compensated with money or other benefits.

A federal grand jury in Los Angeles yesterday indicted the two doctors, as well as the Bel Air Surgical Institute, on conspiracy and health care fraud charges for allegedly submitting fraudulent bills to numerous private insurance companies and for allegedly providing false patient records to support those fraudulent bills.

The 17-count indictment outlines a scheme in which Bahna allegedly hired "marketers" who oversaw the recruitment of people who had private health insurance and were willing to undergo unnecessary surgical proceedures in exchange for cash or discounted cosmetic surgery procedures. The procedures performed by the doctors at the Bel Air Surgical Institute included Esophagogastroduodenscopy (EGD), colonoscopy, sinus surgeries, laparoscopy and thoracic sympathectomy, which is commonly called "sweaty palm surgery."

According to the indictment, those willing to undergo the unneeded procedures were promised $300 for EGDs and colonoscopies and up to $1,200 for sweaty palm surgery.

Patients were instructed by recruiters to describe false and exaggerated symptoms which were used to create medical charts used to make the surgical procedures appear to be justified.



Court vindicates Nevada doctor in latest twist of fraud case

A federal judge ruled that a physician was abiding by Medicare's advice in submitting claims for pulmonary stress tests. The government is pursuing an appeal.

By Amy Lynn Sorrel, AMNews staff. Sept. 4, 2006.

Wired witnesses, tapped phones and whistle-blowers. This may sound like plot features in a spy movie, but it's real life for Nevada physician R.D. Prabhu, MD. The federal government has been investigating the internist and pulmonology specialist on and off for more than 13 years.

Dr. Prabhu's story just took a new turn. A federal court in July found that the government's fraud charges didn't hold up because the doctor was just following Medicare instructions.

The Justice Dept. accused Dr. Prabhu of knowingly submitting unlawful bills for simple pulmonary stress tests as part of a pulmonary rehabilitation program. The government alleged that the doctor had violated the False Claims Act because the tests were not covered by Medicare and because he had failed to document their medical necessity for some patients.

But the U.S. District Court for the District of Nevada found that "Dr. Prabhu has always acted in good faith in seeking to understand the government's rules ... in an area rife with confusion."

The decision is a rare victory for doctors, said Robert S. Salcido, a Washington, D.C.-based attorney for Dr. Prabhu. Physicians are often forced to settle such disputes with the government, even when they believe they are acting appropriately, because the financial stakes are so high.


Nevada U.S. attorney given walking papersBy FRANCIS MCCABE REVIEW-JOURNAL Daniel Bogden

The Bush administration has forced Daniel Bogden out of his position as U.S. attorney for the District of Nevada, Nevada's two senators said Sunday.

It was unclear whether Bogden was fired or asked to resign and for what reason. Exactly when it all happened also was unknown Sunday. Repeated attempts to contact Bogden and his office were unsuccessful. The Review-Journal's phone calls to his spokeswoman, Natalie Collins, were not returned by Sunday night.

But a source inside the Nevada U.S. attorney's office said Bogden was seen as indecisive, secretive and insular. Morale in the Southern Nevada office was low and that was partly Bogden's fault and partly the result of inadequate staffing and funding from the Justice Department, the source said.

The Nevada U.S. attorney's office also had at least three major setbacks in Las Vegas last year.

Also in February, U.S. District Judge Robert Jones dismissed charges against Dr. R.D. Prabhu, a politically active Las Vegas pulmonologist. Prosecutors had alleged that Prabhu had submitted false Medicare claims. He had faced a potential penalty of $22 million.

U.S. attorney has had ups and downs while in office


The Department of Health and Human Services


The Department of Justice

Health Care Fraud and Abuse Control Program

Annual Report For FY 2005



Overall Recoveries

  • During this fiscal year, the Federal Government won or negotiated approximately $1.47 billion in judgments and settlements, and it attained additional administrative impositions in health care fraud cases and proceedings. The Medicare Trust Fund received transfers of nearly $1.55 billion during this period as a result of these efforts, as well as those of preceding years, in addition to $63.64 million in federal Medicaid money similarly transferred to CMS as a result of these efforts.
accomplishments cont
Accomplishments (cont.)

Program Accomplishments

  • Working together, HHS/OIG, DOJ and their law enforcement partners have brought to successful conclusion the investigation and prosecution of numerous health care fraud schemes. During FY 2005, the many significant HCFAC Program accomplishments included the following:
accomplishments cont22
Accomplishments (cont.)

Pharmaceutical Fraud

  • GlaxoSmithKline paid the United States $140 million to settle allegations of fraudulent drug pricing and marketing that resulted in the submission of inflated claims to Medicare, Medicaid, and other federally funded health care programs. The United States alleged that GlaxoSmithKline, one of the world’s largest pharmaceutical manufacturers, reported inflated prices for the drugs, Zofran and Kytril, knowing that those prices would be used by federal programs to set reimbursement rates. GlaxoSmithKline used the artificial spread between the reported, inflated prices and its customers’ significantly lower actual cost to purchase the drugs as a marketing tool.
accomplishments cont23
Accomplishments (cont.)

Pharmaceutical Distribution Fraud

  • An individual based in Las Vegas, Nevada who sold prescription drugs and controlled substances over the internet was convicted by a jury of 17 felony counts and sentenced to 120 months in prison. The defendant shipped the drugs to his customers in the United States through a German business he owned called CFF Pharma Consult. One of the drugs the defendant sold online was Flunitrazepam, commonly known as Rohypnol, or the “date rape drug.” The drugs the defendant sold were shipped from Germany to the United States through the use of forged and fraudulent documents designed to deceive employees of the United States Customs Service and the Food and Drug Administration (FDA). In addition to the ten-year prison sentence, the court ordered forfeiture of the defendant’s home valued at $285,000 because it was used to facilitate the drug offenses. A co-defendant also pleaded guilty to conspiracy to defraud and was sentenced to 37 months in prison.
accomplishments cont24
Accomplishments (cont.)

Pharmaceutical Distribution Fraud

  • As reported in the HCFAC Report for FY 2004, after a jury trial, a Texas pharmacist was convicted for his role in distributing hydrocodone and other controlled substances via his web-based pharmacy. The pharmacist has been sentenced to 20 years in prison. Customers had only to complete a short on-line questionnaire to receive the controlled substances. The pharmacist and his co-conspirators found doctors, paid per prescription, who were willing to sign thousands of prescriptions without ever seeing the patients. The scheme netted over $8 million in sales. This marked the first time that the kingpin statute was used to prosecute an internet pharmacy.
accomplishments cont25
Accomplishments (cont.)

Hospital Fraud

  • HealthSouth Corporation paid the United States $327 million to settle allegations of fraud against Medicare and other federally insured health care programs. The United States alleged that HealthSouth, the nation’s largest provider of rehabilitative medicine services, engaged in three major schemes to defraud the government. The first, comprising $170 million of the settlement amount, resolved HealthSouth’s alleged false claims for outpatient physical therapy services that were not properly supported by certified plans of care, administered by licensed physical therapists, or for one-on-one therapy as represented. Another $65 million resolved claims that HealthSouth engaged in accounting fraud which resulted in overbilling Medicare on hospital cost reports.
accomplishments cont26
Accomplishments (cont.)

Dialysis Fraud

  • Gambro Healthcare paid the United States $310 million to resolve allegations concerning the submission of false claims to Medicare and Medicaid in connection with dialysis services. The allegations against Gambro included: providing home dialysis patients with equipment and supplies through a sham durable medical equipment (DME) company to increase Medicare reimbursement; billing for phantom supplies; billing for ancillary medications and services that were not medically necessary – a requirement for Medicare reimbursement; and paying kickbacks to physicians for referring patients to Gambro clinics in violation of the Medicare Anti-Kickback Statute.
accomplishments cont27
Accomplishments (cont.)

False Claims by a Research University

  • The University of Alabama at Birmingham and two related entities will pay the United States $3.39 million to settle allegations that they violated the False Claims Act (FCA) with respect to claims submitted in connection with the school’s health science research activities. The settlement resolves allegations that, in completing applications for federal health science research grants, the school overstated the percentage of work effort that the researchers were able to devote to the grant. It was also alleged that the university, and the entity through which its medical school faculty provide clinical services, unlawfully billed Medicare for clinical research trials that were also billed to the sponsor of research grants.
accomplishments cont28
Accomplishments (cont.)

Physician Fraud

  • A Virginia physician specializing in pain management was sentenced to 25 years imprisonment and ordered to pay a $1 million fine for his conviction on drug distribution charges and drug trafficking that resulted in one death and serious injuries to others. During the six-week trial, the Government demonstrated that he performed perfunctory exams on patients, and then facilitated the patients’ demand for excessive amounts of controlled substances, including OxyContin. Evidence showed that the physician knew that patients were abusing the controlled substances, or selling them to others.
the difference between fraud and abuse
The Difference Between Fraud and Abuse
  • Fraud is an intentional deception or misrepresentationMisrepresentation of services – upcoding, miscoding, unbundlingBilling for services not medically necessaryKickbacksFalsifying recordsFiling inappropriate cost reports
  • Abuse – Lacks intentRecording diagnosis codes improperlyRecording dates of services provided incorrectlyAdjusting bad debts improperlyAdjusting the depreciation of assets that have been fully depreciated

The Office of Inspector General Clarifies “Fraudulent vs. Erroneous”

First: The OIG believes that the great majority of medical professionals are working ethically to render high quality care and to submit proper claims to Medicare.


The Office of Inspector General Clarifies “Fraudulent vs. Erroneous”

Second: Under the law, physicians are not subject to civil or criminal penalties for innocent errors, or even negligence. The primary enforcement too, the civil False Claims Act, covers only “actual knowledge, reckless disregard, or deliberate ignorance.


The Office of Inspector General Clarifies “Fraudulent vs. Erroneous”

Third: Even the best physicians and their staffs make billing mistake and errors through inadvertence or negligence. When billing errors, honest mistakes, or negligence result in erroneous claims, the physician practice will be asked to return the funds erroneously claimed but without penalties.

risk areas of oig concern
Billing for services not rendered or not documented

Providing medically unnecessary services

Billing for services rendered but not covered


“DRG creep”


Billing outpatient services for inpatient stays (72-hour rule)

Teaching physician and resident/supervision requirements

Duplicate or erroneous billing

False cost reports

Billing for discharges in lieu of transfer

Contractual Agreements between Hospitals and Physician not grounded in fair market valuation

Risk Areas of OIG Concern

These problems can be caused by intentional or unintentional behavior

risk areas of oig concern cont
Risk Areas of OIG Concern (cont.)
  • Patients’ freedom of choice
  • Credit balances -- failing to refund
  • Hospital incentives that violate anti-kickback laws and regulations
  • Joint ventures
  • Stark self-referral law violations
  • Knowing failure to provide covered services or necessary care to HMO members
  • Patient “dumping”
gao study
GAO Study

Recently, GAO made 300 test calls to 34 call centers operated by Medicare Carriers throughout the United States. GAO concluded that only 4% of the responses received were complete and correct.

anatomy of a healthcare fraud investigation
Anatomy of a Healthcare Fraud Investigation


OIG US Postal State Medicaid Agency

FBI Treasury Competitor

DEA Lawyers Employee

IRS Patient Neighbor

Carrier Ex-Spouse Whistleblower


Referred for Prosecution


Civil Monetary Penalties

Permissive Exclusion

Mandatory Exclusion





U.S. Attorney’s Office

Civil Investigative Demands

Grand Jury


File False Claims Act Complaint

Health Care Fraud Task Force



investigative techniques
Investigative Techniques

Computer Cross-Matching:

  • UPIN #’s
  • Date of Death
  • E&M Levels
  • Credit Card Activity / Reports
  • GPS/Parking Gates
  • Interstate Passes
  • Service Billed/Patient Condition
  • OR Logs/Anesthesia Roster
  • Generic v. Name Brand (ARCOS)
  • ALS vs. BLS
investigative techniques cont
Investigative Techniques (cont.)
  • “Demand” Letters
  • Body Wires
  • Subpoenas
  • Search Warrants
  • Grand Jury Testimony
  • Wire Taps
  • Interviews
  • Surveillance
  • “Undercover” Patients
investigative techniques cont39
Investigative Techniques (cont.)
  • The following types of reviews may require a provider to supply documentation which can lead to further investigation.
focused medical review fmr
Focused Medical Review (FMR)
  • In recent years carriers have been required to focus on patterns of unnecessary services and improper or incorrect billing. In order to achieve this, carriers have formed Focused Medical Review (FMR) units.
  • The objectives of these FMR units are to maximize program protection and to conduct a cost-effective medical review. This translates to concentration of review efforts on Medicare bills and claims that are most likely to be for services that are unnecessary.
focused medical review fmr41
Focused Medical Review (FMR)
  • Potential problems are identified from bi-annual CMS reports generated from the national history database that compare our carrier frequencies against national frequencies.
  • The FMR units analyze these procedures where there are frequencies that are grossly out of line with the national statistics. Reviews that uncover actual problems are referred to the Benefit Integrity Support Center (BISC).
complex medical review audits cmra
CMRA consists primarily of pre-pay chart reviews of randomly selected medical records. Edits are established on any codes or procedures that have been specifically targeted.

Documentation must support the service code billed, the level of service billed, and the reasonableness and necessity of the service.

Complex Medical Review Audits (CMRA)
complex medical review audits cmra43
Pre-payment review of medical records can be, but are not limited to:

Specifically targeted or abused CPT codes

Randomly selected providers seeking new UPIN numbers

Providers who seem to be billing incorrect code(s)

Providers who appear to be abusive because they are either not rendering the service they bill for, or they consistently bill for a higher level service than provided.

Complex Medical Review Audits (CMRA)
comprehensive medical review cmr
Comprehensive Medical Review (CMR)
  • Comprehensive Medical Review (CMR) consists of postpayment medical reviews of a provider’s claims and medical documentation.
  • A CMR may be initiated based on historical data collected during an analysis of Medicare claims. Often a CMR requires a statistical sampling of claims and allows for projection of sample overpayments to the universe of claims.
comprehensive medical review cmr45
Comprehensive Medical Review (CMR)

The following are some of the reasons a provider may be reviewed in a postpayment CMR:

  • Failure to submit requested medical documentation
  • Over utilization
  • Continuous improper coding
  • Submitting altered documentation
  • Alerts from other carriers, intermediaries, peer review organizations, or internal carrier payment staff referrals
  • Non-compliance with provider enrollment or certification, physician orders, or similar requirements
Carrier and FI Reviews may also be the result of a Random Audit. These are usually triggered by programs such as:

Comprehensive Error Rate Testing (CERT)

The CERT program measures the error rate for claims submitted to Carriers, Durable Medical Equipment Regional Carriers (DMERCs), and Fiscal Intermediaries (FIs). The CERT methodology includes:

Randomly selecting a sample of approximately 120,000 submitted claims

Requesting medical records from providers who submitted the claims

Reviewing the claims and medical records for compliance with Medicare coverage, coding and billing rules

Recovery Audit Contractors (RAC)

CMS provides the following overview of the RAC process:

RACs receive a data file from CMS containing National Claims History (NCH) data about claims that have been processed in the appropriate state based on the RAC contract. The RACs will receive a data file updating the NCH data on a monthly basis.

Assuming that claims have not been suppressed because of an ongoing post payment medical review investigation, an ongoing fraud or benefit integrity investigation or a potential criminal investigation, or inclusion in the CERT sample, the RAC will continue with the identification and recoupment process.

Program for Evaluating Payment Patterns Electronic Report (PEPPER)
    • PEPPER is an electronic data report containing hospital-specific Medicare claims data statistics for target areas that have been identified by the Centers for Medicare & Medicaid Services (CMS) as at high risk for payment errors. These target areas include one-day stays, hospital readmissions and several DRGs that have historically been associated with payment errors.
    • PEPPER contains data for the most recent three full fiscal years and the current fiscal year to date. The data in PEPPER are updated quarterly.
data mining utilized by medicaid fraud control units
Data Mining Utilized By Medicaid Fraud Control Units
  • MFCUs have joined with CMS to uncover billing anomalies by comparing Medicaid and Medicare bills to see if a provider billed both programs for the same service
  • Pilot Medicare-Medicaid (Medi-Medi) data match to identify time bandits looking to identify providers who bill the programs for more than 24 hours a day
  • Program was launched in CA in 2001 and it saved $58 million
health care fraud 18 u s c 1347
Health Care Fraud (18 U.S.C. § 1347)

It is a crime to knowingly and willfully execute (or attempt to execute) a scheme to defraud any health care benefit program, or to obtain money or property from a health care benefit program, through a false representation. This law applies not only to federal healthcare programs but to most other types of benefit programs, such as commercial health insurance plans.

health care fraud 18 u s c 134751
Health Care Fraud (18 U.S.C. § 1347)

Examples of conduct that frequently give rise to liability include the following:

  • Billing for services never provided to patients.
  • “Upcoding” - billing for more extensive services than were actually rendered.
  • Falsely certifying that services were medically necessary.

Note: On every HCFA 1500 claim form, a physician must certify that the services rendered were medically necessary for the health of the beneficiary.

health care fraud 18 u s c 134752
Health Care Fraud (18 U.S.C. § 1347)

Examples (Continued)

  • “Unbundling” - billing for each component of the service instead of billing an all-inclusive code.
  • Billing for non-covered services as if covered.
  • Flagrant and persistent over utilization of medical services with little or no regard for results, the patient’s aliments, condition, or medical needs.
  • Consistent use of improper or inappropriate billing codes, such as billing for the same level of service or diagnosis code irrespective of the services rendered in the individual case.
stark law
Stark Law

Government regulation which restricts physicians from referring their Medicare patients to health organizations in which they have a financial interest

Prohibits a physician from making referrals (or establishing plans of care) for certain “designated health services” when those services were:

  • Furnished by an entity with which the physician or an immediate family member has a financial relationship
  • Reimbursed by Medicare
  • And no Stark Law exception applied
stark law54
Stark Law

Examples of violations of the Stark Law include the following:

  • A physician works in a medical clinic and also owns a free-standing laboratory located in the same city. The physician referred all orders for laboratory tests on her patients to the laboratory she owned.
  • A doctor agreed to serve as the medical director of Home Health Agency (HHA) for which he was paid a sum substantially above the fair market value for his services. In return, he routinely referred his Medicare and Medicaid patients to HHA for home health services.
  • A physician received a monthly stipend of $500 from a local hospital to assist him in meeting practice expenses. The doctor performed no specific services for the stipend and had no obligation to repay the hospital. The doctor referred patients to the hospital for inpatient surgery.
legal sanctions
Legal Sanctions

Stark Law

  • Refunds of payment
  • $15,000 per claim
  • $100,000 for “circumvention” schemes
  • No “intent” to violate necessary (Civil Statute)
the anti kickback statute
The Anti-Kickback Statute


  • The knowing and willful receipt of anything of value in exchange for a referral or which is intended to induce a referral for the furnishing of any item or service for which payment is made under a federal healthcare program
  • The offer or receipt of anything in value in exchange for or which is intended to induce the purchase, lease, order or arranging for or recommending the purchase, lease or order of any good, facility, service or item for which payment may be made under a federal healthcare program
the anti kickback statute57
The Anti-Kickback Statute

The following are examples of conduct that violate the Anti-Kickback Statute:

  • Routinely waiving co-payments or deductibles for patients without determining if the patient has financial hardship.
  • Accepting payments to sign Certificates of Medical Necessity for durable medical equipment for patients never examined.
  • A home health agency disguises referral fees as salaries by paying a physician for services either never rendered or in excess of fair market value for the services rendered.
  • Payment by a hospital or other facility to a physician for each patient the hospital or facility admits
  • Payment by a hospital for medical director services in excess of fair market value.
the anti kickback statute58
The Anti-Kickback Statute
  • Free or discounted office space or equipment;
  • Free or discounted billing, nursing, or other staff services;
  • Income guarantees;
  • Low-interest or interest-free loans, including “forgiven’ loans;
  • Payments for physician services that involve few substantive duties or exceed fair market value; and/or
  • Payment for physician continuing medical education courses, or travel and expense payments to attend conferences
government s weapon of choice
Government’s “Weapon of Choice”

False Claims Act (FCA) – (31U.S.C.3729-3733)

A false claim is a claim for payment of services that were not provided specifically as presented, or for which the provider is otherwise not entitled to payment.

false claims act provides
False Claims Act Provides:

A person who knowingly submits a false or fraudulent claim to the government, or makes a false statement to get such a claim approved, is liable for both damages and penalties.

31 U.S.C. 3729(a)

To violate the False Claims Act, a provider must have demonstrated one of the following:
  • Knowledge
  • Deliberate ignorance
  • Reckless disregard

Penalty for violation of the FCA:

  • $5,500 to $11,000 for each false claim
  • Possible triple damages
  • Possible criminal charges
government s position
Government’s Position
  • To establish liability under the FCA, the government must establish that a claim was “false” utilizing a civil standard of proof (not intent to defraud “beyond a reasonable” doubt, but the “knew or should have known” standard).
  • As such, a physician, or similar provider, does not have to deliberately intend to defraud the government to be liable.
  • Liability can be imposed on a provider who has deliberately or recklessly chosen to ignore the “truth or falsity” of a claim for payment.
examples of deliberate ignorance or reckless disregard
Examples of “Deliberate Ignorance” or “Reckless Disregard”
  • Physician ignores provider update bulletins and, as such, does not inform his/her staff of changes in Medicare billing guidelines or update his/her billing systems.
  • Physician assigns billing function to an untrained office person without inquiring whether the employee has the requisite knowledge and training to accurately file such claims.
examples of possible violations of the fca
Examples of Possible Violations of the FCA:
  • Claims for services never provided.
  • Altering diagnoses for payment purposes.
  • Claims for higher levels of service than documented.
  • Claims for services provided by unlicensed individuals.
united states v lorenzo
United States v. Lorenzo


  • $130,000 in reimbursement for submitting 3,683 Claims
  • $392,000 Demanded by government to settle case

(FCA amount x 3)

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United States v. Lorenzo

After verdict – Federal judge ordered payment in the amount of $18,415,000 from Dr. Lorenzo.


False Claims Act Update & Alert 

Taxpayers Against Fraud Education Fund | Washington, D.C. | WWW.TAF.ORGOctober 4, 2006Record Fraud Recoveries Under the False Claims Act20-Year Old Law One of Nation's Most Effective

Fiscal Year 2006 will be a record year for False Claims Act recoveries, says Taxpayers Against Fraud, which estimates total settlements and judgments will top $3.142 billion. This figure does not include more than $200 million in settlements which have been announced by companies but not yet green-lighted by the U.S. Department of Justice.Notes Jim Moorman, President of Taxpayers Against Fraud, "We have seen extraordinary fraud settlements this year. The whistleblowers, investigators, and private and Department of Justice attorneys that have worked on these cases deserve a huge thank you from the American people."

Moorman notes that 80 percent of all successfully resolved FCA cases are brought to the government by whistleblowers, and while the amount of money being recovered is going up, the actual number of cases being settled has not.  This is because the U.S. Department of Justice's Civil Division has not been given the resources to handle its False Claims Act case load.  "The folks at DOJ are working very hard, but they need more resources from Congress and the Administration."

fca recoveries
FCA Recoveries

To date, False Claims Act, judgments and settlements have totaled over $23 billion.


False Claims Act Update & AlertTaxpayers Against Fraud Education Fund | Washington, D.C. | WWW.TAF.ORGFebruary 3, 2006

Congress Creates New Tools to Fight Medicaid FraudWith passage of the Deficit Reduction Omnibus Reconciliation Act of 2005 (S.1932), Congress has forged two new tools to combat Medicaid fraud.  Incentives for State FCA's:  Section 6031 of the new budget reconciliation bill would increase state awards from False Claims Act litigation by 10 percentage points if the state has adopted a state False Claims Act law as strong as the federal version.  For example, if a state's federal matching rate is 57 percent, it would typically receive only 43 percent of the amount recovered from the fraudfeasor. However, if the State has enacted a qualifying False Claims Act, its share of any recovery would increase by 10 percentage points, to 53 percent of any amount received under its False Claims Act. (In this example, the states share of the recovery effectively increases by 23 percent!) Required False Claims Act Education: Section 6032 of the new budget reconciliation bill requires any entity that receives or makes annual Medicaid payments of $5 million or more to include in their employee handbook a detailed discussion of the provisions of the federal and states False Claims Acts, including the rights of whistleblowers.

physicians at teaching hospitals path
Physicians at Teaching Hospitals (PATH)
  • The PATH regulations are national regulations governing reimbursement to physicians in teaching settings and are intended to verify compliance with the Medicare rules to ensure that all claims accurately reflect the level of service provided to the patient.
  • To receive Medicare Part B reimbursement (professional fees), in a teaching setting, the Attending / Teaching Physician must personally provide the service or have been present when the resident furnished the care. The Attending’s presence and participation must be documented in the medical record.

“Presence and Participation”

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Physicians at Teaching Hospitals (PATH)

Apply to the Following Services:

  • Evaluation and Management (E&M) Services
  • Surgical Services
  • Minor Procedures
  • High Risk Diagnostic and Therapeutic Procedures
  • Time Based Codes
  • Maternity Services
  • Anesthesia Services
  • Radiology and Pathology Services

Obstruction of Criminal Investigations of

Health Care Offenses (18 U.S.C. 1518)

Knowingly and willfully prevent or attempt to mislead or delay communication of records relating to a Federal health care offense to a criminal investigator.

u s v university of washington school of medicine
U.S. v. University of Washington School of Medicine
  • PATH Investigation
  • Began as a Whistleblower case
  • 4 year investigation by FBI and other federal agencies
  • Civil Settlement


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U.S. v. University of Washington School of Medicine

Criminal Charges:

  • Chairman of the Department of Neurological Services pled guilty to “obstructing the communication of information to a criminal investigator”
  • Ordered to pay $100,000 restitution – Publish Article – 5 years probation
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U.S. v. University of Washington School of Medicine

Criminal Charges (cont):

  • Head of the Nephrology Section of the Department of Medicine pled guilty to a felony count of mail fraud for submitting a $124 bill for dialysis treatment at which he was not present

“Dr. Winn obstructed the investigation by a) instructing witnesses in the investigation to omit statements that would incriminate him; b) deliberately providing false exculpatory information to witnesses with the intent that they would provide that false information to those conducting the investigation; c) persuading witnesses to make material misrepresentations of facts to those conducting the investigation so that they would not provide information that incriminated him; and further d) by creating an atmosphere of fear and intimidation within the Department of Neurological Surgery.”

Excerpt from Press Release of the United States Attorney's Office

false claims act bingo
False Claims Act “BINGO”
  • Anti-kickback and Stark violations can, and many times do, lead to violations of the False Claims Act.
  • Theory – By making the referral that is contravention of Anti-Kickback or Stark, the claim should never have been submitted.
  • Basically – Claim based on improper referral = false claim.
top 10 outpatient billing errors

Bundled Services

Facility Information

Beneficiary Eligibility

Medical Necessity

Provider Identification Number Missing

Medicare Secondary payer (MSP):

Non-Covered Services

Unique Provider Identification Number (UPIN)


Top 10 Outpatient Billing Errors
what payors want
What Payors Want

Payors (including MEDICARE) require reasonable documentation to ensure that services provided are consistent with coverage. Information is often requested to validate the following:

  • Site of service (often reimbursement varies)
  • Medical necessity and appropriateness of the diagnostic and/or therapeutic services provided
  • Accurate reporting that services were provided at the level claimed
general principals of documentation
General Principals of Documentation
  • Physician orders should be documented before a service is performed
  • An addendum should be dated and timed the day the information is added to the medical record and not dated for the date the service was provided
  • A service should be documented when it is provided in order to maintain an accurate record (timeliness)
  • Confidentiality of the medical record should be fully maintained consistent with the requirements of medical ethics and law
oig publishes target areas yearly
OIG Publishes “Target Areas” Yearly

The Department of Health and Human Services Office of Inspector General (OIG) has published its 2007 Work Plan. The Work Plan outlines the OIG’s priorities for the fiscal year, including areas likely to be targeted for audits.

Following are some of the areas included in the Work Plan that affect physicians:

review of evaluation and management services during global surgery periods
Review of Evaluation and Management Services During Global Surgery Periods
  • We will determine whether (1) physicians received separate payments for evaluation and management (E&M) services provided during the global surgery period and (2) industry practices related to the number of E&M services provided during the global surgery period have changed since the global surgery fee concept was initially developed in 1992. Under the global surgery fee concept, physicians bill a single fee for all their services usually associated with a surgical procedure and related E&M services provided during the global surgery period. E&M services related to the surgery provided during the global period should not be billed for and paid separately by Medicare. The global surgery fee includes payment for a certain number of E&M services provided during the global surgery period.
advanced imaging services in physician offices
Advanced Imaging Services in Physician Offices
  • This review will examine the appropriateness of imaging services provided in physician offices. From 1999 to 2005, utilization of advanced imaging services, such as MRI, PET, and CT scans, has grown on average by 20 percent per year. In 2005 Medicare allowed charges of over $7 billion for these services. This review will examine the nature of the growth of these services over this period including examination of billing patterns in certain geographic areas and practice settings.
violations of assignment rules by medicare providers
Violations of Assignment Rules by Medicare Providers
  • We will examine the extent to which providers are billing beneficiaries in excess of amounts allowed by Medicare requirements. Providers must accept Medicare’s payment and beneficiary copayment, known as the Medicare allowed amount, as payment in full for all covered services. Providers cannot bill beneficiaries for amounts in excess of the Medicare allowed amount. We will also assess beneficiary awareness of their rights and responsibilities regarding potential billing violations and Medicare coverage guidelines.
medicare reimbursement for polysomnography
Medicare Reimbursement for Polysomnography
  • This study will determine the factors contributing to the rise in Medicare reimbursement for polysomnography. Medicare reimbursement for polysomnograpy increased nearly 175 percent in 4 years, rising from $62 million in 2001 to $170 million in 2004. The study will also examine the appropriateness of services billed to Medicare.
issues identified for investigation
Issues Identified for Investigation
  • Coding of E&M Services

OIG will examine physician coding of E&M services for aberrant coding patterns, high volume of high level codes resulting in greater Medicare reimbursement.

  • Consultations

OIG will examine the appropriateness of billing these services and the reasons for inappropriately billed services.

consults require
Consults Require:
  • A requesting physician, identified by name.(Remember the UPIN number of the requesting physician is required on your bill)
  • Your documented note in the medical record

(Consults require all three elements including History, Exam, Medical decision making to qualify as a consult)

  • Report back to the requesting physician of your findings
    • Inpatient – your documented note is present in the chart
    • Outpatient – a written report sent to the requesting physician, a copy should be on file in the patients chart
Place of Service Errors

OIG will examine whether place of service was properly coded on submitted claims. There are different levels of payment depending on where services are performed. Higher payment is made for place of service “11”, a physicians office.

  • Long Distance Physician Claims

All billable services require a face to face encounter with the patient. OIG will examine the distance between the Doctor providing services and the patients home location. (Example: Doctor is in New York and patient lives in Florida).

  • Billing for Diagnostic Tests

Specifically nerve conduction studies due to a 37% increase in allowed amounts for these tests.

Services and Supplies Incident to Physicians Services

OIG will examine these services because incident to services are paid at 100% of the Physician fee schedule and must be provided by an employee of the Physician under the Physicians direct supervision.

Direct supervision is defined as the physician must be present within the office suite, and immediately available throughout the service.

  • Coding of Medicaid Physician Services

OIG will examine Medicaid claims against the CCI edits to identify Medicaid savings and duplicate physician services.

Billing Service Companies:

OIG will review the relationships between billing companies and physicians as well as other Medicare providers to identify the types of arrangements in place and their impact on physician billing.



To determine if services billed to Medicare as consultations were coded correctly and documented adequately.


Medicare allowed $3.3 billion for consultations in 2001. The Current Procedural Terminology (CPT) defines a consultation as “ . . . a type of service provided by a physician whose opinion or advice regarding evaluation and/or management of a specific problem is requested by another physician or other appropriate source.” A consultation differs from similar evaluation and management services in that a consultation involves a specific request for help with a particular diagnosis or course of treatment on a limited basis, while an office or inpatient visit lacks such a request and can involve ongoing care of a patient.



Medicare allowed approximately $1.1 billion more in 2001 than it should have for services that were billed as consultations.

Approximately 75 percent of services billed as consultations and allowed by Medicare in 2001 did not meet all applicable program requirements, resulting in $1.1 billion in improper payments. Services billed as consultations often did not meet Medicare’s definition of a consultation (19 percent - $191 million), were billed as the wrong type or level of consultation (47 percent - $613 million), or were not substantiated by documentation (9 percent - $260 million). Consultations billed at the highest billing level (the most complex services, which generate the highest reimbursements under the physician fee schedule) and follow-up inpatient consultations were particularly problematic; approximately 95 percent of each were miscoded.



Our review showed that services billed to Medicare as consultations often were not actually consultations, were coded as the incorrect type or level of consultation, or were not substantiated by documentation. Although CMS clarified the difference between office visits and consultations in an October 2003 update to section 15506 of the Medicare Carriers Manual, the distinctions among the types and levels of consultations were not addressed. Therefore, we recommend that, through its Medicare carriers, CMS educate physicians and other health care practitioners about the criteria and proper billing for all types and levels of consultations with emphasis on the highest billing levels and follow-up inpatient consultations.

In addition, we have forwarded information on the miscoded and undocumented services identified in our sample to CMS for appropriate actions.

top 10 outpatient billing errors101

Bundled Services

Facility Information

Beneficiary Eligibility

Medical Necessity

Provider Identification Number Missing

Medicare Secondary payer (MSP):

Non-Covered Services

Unique Provider Identification Number (UPIN):


Top 10 Outpatient Billing Errors
essentials of medical chart audit
Essentials Of Medical Chart Audit
  • Note must be legible.
  • Note should be signed and signature must be legible.
  • Documentation is the basis for all payments

“if it is not documented, it wasn’t done.”

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Essentials Of Medical Chart Audit
  • ALL requirements of the necessary key components must be documented to be counted towards choosing a level of care by the OIG.
    • During an audit, go back and look for ANYTHING to support a billed service
      • Interview Docs and Nurses
      • Shadow Charts
      • Know everything you can, so no surprises arise!
your obligation for accurate claims submission
Your Obligation for Accurate Claims Submission
  • Billing personnel may encounter uncertainties as to whether particular health care services are covered, or the appropriate manner in which to claim reimbursement for services. In such circumstances, personnel shall first bring the issue to the attention of their supervisor who, if uncertainty still exists, shall discuss the issue with the Compliance Officer.
  • Any UNSOM employee or affiliate who identifies any potential billing or reimbursement discrepancies with respect to claims already submitted to government or private payers are required to report immediately those discrepancies either to an immediate supervisor or to the Compliance Officer.
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Your Obligation for Accurate Claims Submission
  • Claims submission personnel shall report immediately to their supervisor any claims handling instruction received from payers, either verbally or in writing, which is inconsistent with current UNSOM billing policy or procedures
  • Supervisors, in turn, shall bring such reports promptly to the attention of the applicable entity’s business or office manager and the Compliance Officer for immediate resolution
  • Any questions regarding billing requirements should be directed to your immediate billing supervisor or the Compliance Officer
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Your Obligation for Accurate Claims Submission
  • Whenever speaking to a carrier, fiscal intermediary, or private payer, all claims personnel must document the date and the purpose of the call, the person spoken to, the telephone number of the person, and a summary of the conversation to ensure a written record of such contacts.
  • Best practices for recording this information generally indicate keeping a log or specific binder for holding the documentation. These logs or binders should never be destroyed without the permission of the Compliance Officer.
unsom compliance plan
UNSOM Compliance Plan
  • Policy Guidelines
    • University of Nevada School of Medicine will only bill for professional services actually provided
    • Faculty, other health professionals, and billing personnel have a responsibility to be knowledgeable about the requirements for billing Federal Health Care programs.
code of conduct
Code of Conduct
  • Quality of care
  • Comply with the law
  • Ask for help:
    • Departmental Supervisor or Compliance Leaders
    • UNSOM Vice Dean and Compliance Officer – James Lenhart, M.D.
    • UNSOM Director of Billing Compliance – Tammy Boring
  • Obligation to report suspect activity
  • Honor confidences
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Code of Conduct:

Report Conduct that Concerns You

  • Consequences
    • Disciplinary action, including termination
    • Monetary penalties and possible exclusion from federal healthcare programs.
    • Compliance is only effective with the active participation of everyone
compliance results from the actions taken by all faculty and staff
Compliance results from the actions taken by all Faculty and Staff:
  • Physicians / Nurse Practitioners / Physician Assistants
  • Reception and Registration
  • Departmental Administrators
  • Billing Staff
    • Billing Methodology and Systems
    • Patient Financial Account Systems
  • Documentation
  • Electronic record keeping

Compliant Behavior = Due Diligence = Defense to FCA cases and other allegations of fraud, waste and abuse

Thank you for your attention

– and may we never meet again.