Fraud and Abuse

1. Fraud and Abuse

2. What does the government care about? • Cost • Utilization (medical necessity) • Quality

3. Cost • This is controlled directly • The feds decide what they want to pay • What are the constraints on pricing?

4. Utilization (Medical Necessity) • What are the issues we have seen on medical necessity? • Is the treatment needed? • Is it experimental? • Is it effective? • Is it covered by the policy • What are the political constraints on the government in setting utilization rules?

5. Quality • Does the government care about costs? • What about when quality and cost colide? • Should patients have a right to cheaper, lower quality care? • Does the federal government directly control quality? • States? • JCAHO?

6. Fraud Issues • Was the care delivered at all? • Durable medical equipment scams • Billing for more care that was actually delivered • Was the care necessary? • Was the care unbundled? • (Charging separately for care that should be one charge) • Where kickbacks paid?

7. Related Laws • General government contracting laws • Mail and wire fraud • RICO • False Claims Act • Statutory penalties - $5-11,000 per claim • Treble damages (whichever is higher) • Qui tam - private enforcement

8. Coding • CPT codes - AMA • Some are time based, like in the Krizek case • Others are work-based • You get paid more for doing more • It does not matter how long you take • Levels 1-5 • Is it better to see a lot of patients or do a lot to each you see?

9. Why use Codes? • Uniform billing for all claims • Equalize billing across specialties • Provide incentives for more comprehensive care • Allows computerized payment • Allows tracking of medical information derived from claims forms

10. Upcoding • Anything that increases the payment for the encounter • Can be legal • Optimizing coding • Can be illegal • Work that was not do, or work that was not properly documented • Misstating the patient's medical condition

11. Conditions of Participation (COP) • The contract between the providers and CMS • If you do not comply with the COP you can be denied payment or excluded from the program • If you knowingly violate the provisions of COP it can be grounds for false claims and criminal prosecution

12. US v. Krizek • The judge thinks the doc is a good guy • Criticizes the crazy reimbursement system • Lets the doc put on evidence of standard billing practices to refute fraud charges • Thinks the law is crazy because the feds can assess $81,000,000

13. What did Krizek do wrong? • Did he actually treat the patients? • Was his treatment medically necessary? • What were the issues in billing? • Billed for 40-50 minute time code for everyone • Who did this • What was the justification? • Did the doc know?

14. Doc's Defense • He really did spend the time, he just did not spend it all on the patient • Lots of stuff you do in the office as part of the care

15. What is the Scienter requirement? • Intent to defraud? • Knowing that the claim is wrong but submitting it anyway? • Why does the statute specifically say that there is no need to prove intent to defraud? • What is the doc's certification problem?

16. District Court Ruling • Found liablity on the days when there were more than 12 codes for 50 minutes • Thought that the doc was liable, but an unfortuante system

17. Appeals Court • Makes it clear that reckless ignorance is wrong and grounds for liability under the Act • Is not sympathetic to the doc's claimed slipshod accounting

18. Is Bad Care Fraud? • US ex Rel Mikes • What would make the care fraudulent?

19. Whistleblower Provisions • Only protection if you bring suit • Not a good protection

20. Interesting issues • Bribes by device and drug companies • PATH audits (medical schools) • HCA

21. Qui Tam • Standing in the shoes of the government • 15-20% • Feds can march in • May not apply to claims against states

22. What do you tell clients about False Claims?

23. Understanding Self-Referral Laws

24. Physicians as Fiduciaries • Model Penal Code • Informed consent law • General principles • Knowledge differential • Power differential

25. Fiduciary Obligations • The physician acts as purchasing agent for the patient • Self-referral laws target incentives that encourage the physician to make certain decisions contrary to the patient's interests • Order unnecessary care or tests • Choose providers based on criteria other than the best interests of the patient

26. Why Does the Federal Government Care? • They claim to care about quality • FTC undermines this with talk about the right to buy cheap, crummy care • They care a lot about costs • Unnecessary care is wasted money and bad for the patient • It is assumed that if a kickback is necessary, the care is either worse or more expensive

27. Problems with the Federal Bias • The feds are only concerned with incentives to order more care or to steer care • They do not care if there are incentives to deny care • Big issue with HMOS and other structured plans • Underlines the problem with consumer directed care

28. The General Self-Referral Laws • There is broad statutory authority banning deals that create incentives to refer business • These deals have to be analyzed to map out the cash flow to determine what incentives the physicians see

29. The Lease Scam • Hospitals often own professional buildings • Physicians in the professional are more likely to admit patients to the hospital • Proximity • Shared services • Is the hospital providing incentives for physicians to be in their professional building? • How do you put a fair market value on proximity?

30. The Recruitment Scam • The hospital sees that there is a need for physicians with specific skills in the community • The hospital recruits a physician with a relocation package • Moving expenses • Salary support for a period of time • Does any of this obligate the physician to refer to that hospital? • What if it is the only hospital in the community?

31. The Lab Scam • There is a huge amount of money in medical lab tests • Hence my skepticism about the real causes of defensive medicine • Is the lab providing incentives to the physician? • Direct kickbacks • Subsidized services, like renting space in the physician's office • Gifts - trips to the fishing camp

32. The Hospital Investment Scam • Hospital wants to increase the flow of surgical patients • Hospital sets up surgical suite as a separate corporation and sells surgeons shares • Earnings are based on the capital contribution • What is the impact of a admitting patients on the physician's return on investment?

33. The Practice Purchase Scam • Hospital buys the physician's practice • Hires the physicians to deliver care in the new hospital practice • Is this really a sale or just a kickback scheme? • How was the business valued? • What are the terms for payment? • Is any of the payment contingent on referrals?

34. The Stark Law Approach • Start has a list of 11 defined services • Any deals that influence the ordering of these services are banned • There are a series of safe harbors for transactions that are not thought to be abusive

35. Philosophy of Stark • Simplify the law by clearly outlining the forbidden areas • Create safe harbors that can be used as models

36. Problems with Stark • Too much money in the forbidden areas • Doc and hospitals go the extra yard to game the system • Spotty to non-existent enforcement • No clear boundaries • Puts complying entities at a completive disadvantage

37. Exceptions to Stark • Physician controlled ancillary services • If the doc runs the lab and it is part of the practice, it is not covered by Stark • What is the incentive? • Is it even worse than for an outside lab?

38. Analyzing Stark Transactions • Is it a covered service? • Does it met the ancillary service exception? • Is there any financial linkage between the provider and the referring doc?

39. The Integrated Provider Exception • Integrated providers provide both medical and hospital and other services • It is OK to tell employees where to refer patients • You cannot pay employees a bonus for referrals, but they can share in the profits (gain share) • Does this exception make any sense? • Does it just provide a way for hospitals to avoid self-referral laws by buying physician's practices?