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Legal Limits on HME Marketing. Carrie Bryant, Esq., CHC Compliance Officer American HomePatient William T. Mathias, Esq. Principal Ober|Kaler. Outline of Presentation. Background Legal Limits on Marketing Anti-kickback Statute Stark Self-referral Law False Claims Act
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Legal Limits onHME Marketing Carrie Bryant, Esq., CHC Compliance Officer American HomePatient William T. Mathias, Esq. Principal Ober|Kaler
Outline of Presentation • Background • Legal Limits on Marketing • Anti-kickback Statute • Stark Self-referral Law • False Claims Act • Prohibition Against Beneficiary Inducements • State Law • HIPAA/HITECH • Medicare Anti-solicitation Law • Recent Guidance • Changing Compliance Environment
Some Things Don’t Change • Medicare and Medicaid regulations remain incredibly complex
“There can be no doubt but that the statutes and provisions in question, involving the financing of Medicare and Medicaid, are among the most completely impenetrable texts within human experience. Indeed, one approaches them at the level of specificity herein demanded with dread, for not only are they dense reading of the most tortuous kind, but Congress also revisits the area frequently, generously cutting and pruning in the process and making any solid grasp of matters addressed merely a passing phase.” — Chief Judge Ervin United States Court of Appeals for the Fourth Circuit in Rehabilitation Association of Virginia v. Kozlowski, 42 F. 3d 1444, 1450 (4th Circuit 1994)
More Things That Don’t Change • Government continues to view Fraud, Waste, and Abuse as a significant source of revenue • Enforcement remains aggressive
Aggressive Enforcement • From new joint DOJ/OIG website www.stopmedicarefraud.gov • “A joint effort by HHS and the Department of Justice recovered a record $4 billion from fraudsters in FY2010.”
Fighting Fraud is a Good Investment • The return-on-investment (ROI) for Health Care Fraud and Abuse Control (HCFAC) program • Since 1997, $4.9 returned for every $1.0 expended. • 3-year average (2008-2010), $6.8 returned for every $1.0 expended
Government [Mis]perception of DME Industry • Government is skeptical of DME industry • Lack of trust • Few bad apples have poisoned the well with government • Lead to questions about the overall medical necessity of some DME • Central to government’s regulation and investigation of DME industry
Government Balancing Issues • Additional Cost • Over, Under, and Mis-Utilization • Quality of Care • Access to Care • Patients’ Freedom of Choice • Competition • Exercise of Professional Judgment
Anti-Kickback Statute • Federal anti-kickback law generally prohibits the provision of any economic benefit in exchange for the referral of patients or business that will be reimbursed under any Federal health care program. • 42 U.S.C. § 1320a-7b(b).
Anti-Kickback Statute • Prohibited Conduct • Knowing & willful • Solicitation or receipt or • Offer or payment of • Remuneration • In return for referring a federal health care program patient, or • To induce the purchasing, leasing, or arranging for or recommending purchasing or leasing items or services paid by a federal health care program
Anti-Kickback Statute • “Two-way Street” • Meaning that it is just as illegal to solicit or accept payments for referrals, as it is to offer or make such payments.
Anti-Kickback Statute • Penalties • Criminal fines & imprisonment • Civil money penalty of $50,000 plus 3X the amount of the remuneration • Exclusion • False Claims Act liability • Section 6402 (f)(1) of PPACA makes Anti-Kickback violations actionable under FCA
Relevant AKS Safe Harbors [42 C.F.R. § 1001.952] • Personal Services & Management Contracts Safe Harbor • Employment Exception and Safe Harbor • Space Lease Safe Harbor • Equipment Lease Safe Harbor
AKS Decision Tree If Yes, Problem!
Stark Self-Referral Law • The federal Stark physician self-referral law generally prohibits a physician from making referrals to an entity for any of eleven (11) designated health services if the physician (or an immediate family member) has a “financial relationship” with the entity. • 42 U.S.C. § 1395nn
Stark Self-Referral Law • Physician may not refer: • Medicare [or Medicaid] patients • For “designated health services” • to an entity with which the physician or • an immediate family member has • a “financial relationship” • Ownership interest – through equity or debt • Compensation arrangement • Unless the relationship fits in an exception
Stark Self-Referral Law • “Designated health services” • Clinical laboratory • DME • Orthotics & Prosthetics • PEN • Home Health • Radiology • Radiation Therapy • PT/OT • Inpatient Hospital Services • Outpatient Hospital services • Outpatient drugs
Stark Self-Referral Law • Penalties • Denial of Payment • $15,000 per service • 2X damages • Exclusion • False Claims Act liability
Relevant Stark Exceptions • Personal services • Employment • Space rentals • Equipment rentals • Fair market value compensation • Non-monetary compensation (<$359 in 2011)
Relevant Stark Exceptions (cont.) • In-office Ancillary Services Exception • Limited exception for DMEPOS items • Canes, crutches, walkers, and folding wheelchairs • Blood glucose monitors • Infusion pumps that are DME (not infusion pumps used for parenteral and enteral nutrition) • No other DME covered by this exception
Stark Decision Tree 1. Is there a physician or immediate family member? If No If Yes 2. Is there a direct or indirect financial relationship? If No If Yes 3. Is there a referral? If No If Yes 4. Is there a designated health service? If No If Yes 5. Is there a statutory exception? If Yes If No 6. Is there a regulatory exception? If Yes If No, Problem! Okay!
Federal False Claims Act • Prohibits • filing, or causing to be filed • “false or fraudulent” claims • Using false statement to “conceal, avoid or decrease” a government obligation • Intent • “Intent to defraud” not required • Filing claims with “reckless disregard” of their truth or falsity is sufficient • Liability • 3X Damages • $5,500 to $11,000 per claim
Prohibition Against Beneficiary Inducements • Prohibits offering or paying remuneration to any Medicare or Medicaid beneficiary that the offeror knows, or should know, is likely to influence the recipient to order an item from a particular supplier. • 42 U.S.C. § 1320a-7a(a) • Exception for items of nominal value – $10 per item and $50 per beneficiary per year
State Laws • Don’t forget about state laws • State fraud and abuse laws • State mini-Stark laws • Fee splitting prohibitions • Patient brokering laws • State licensing laws • Corporate practice of medicine • State False Claims Acts
HIPAA/Privacy • HIPAA requires “covered entities” to adhere to certain basic requirements aimed at protecting the privacy of “protected health information” (PHI)
HIPAA/PHI • Protected Health Information • Information related to past, present, or future physical or mental health condition or provision of health care services –and– • Information related to payment for health care services. • Information can be linked to a particular individual. • Information regardless of form or medium (electronic, written, or verbal).
HIPAA/Uses & Disclosures • PHI may not be used or disclosed unless use or disclosure is specifically permitted by HIPAA or authorized by patient. • Permitted Uses and Disclosures include: • Treatment • Payment • Health Care Operations • Other uses and disclosures as specified in Notice of Privacy Practices
HIPAA/Original Definitionof Marketing • Marketing means: • “To make a communication about a product or service that encourages recipients of the communication to purchase or use the product or service....”
HIPAA/Exceptions to Definition of Marketing • Definition of marketing does not include: • communications to describe a health-related product or service (or payment for such product or service) that is provided by, or included in a plan of benefits of, the covered entity making the communication • communications for treatment of the individual • communications for case management or care coordination for the individual, or to direct or recommend alternative treatments, therapies, health care providers, or settings of care to the individual
HIPAA/HITECH Changesto Marketing • HITECH Act made changes to the definition of “Marketing” • Where covered entity receives “direct or indirect payment” marketing communication not considered “health care operation” (so patient authorization required) • Limited exceptions : • Communication regarding a currently prescribed drug or biological (for which payment must be “reasonable”) • Communication made by business associate according to the terms of business associate agreement. • “Direct or indirect payment” does not include payment for treatment.
HIPAA/HITECH Changes to Marketing – Proposed Rule • PROPOSED Rule – not final • Differentiates between “treatment” and “marketing” communications • Under PROPOSED Rule • Notice of potentially subsidized treatment communications must be included in notice of privacy practices with opt-out procedure • Communication must identify what is subsidized.
HIPAA/HITECH Changes to Marketing – Proposed Rule • Examples: • Manufacturer pays practice to send out flier to all patients advertising new device – Marketing • Manufacturer pays practice to send out notice of new device to all patients whose treatment might be benefited by new device – Unclear • Manufacturer pays practice to send out notice of new device to those patients that the practice (not the manufacturer) identifies as patients who could benefit from new device – Treatment
HIPAA/Marketing & Authorizations • If covered entity’s activities are “marketing,” the covered entity must obtain an individual’s authorization to use or disclose his/her information • An authorization is not required: • if the marketing is a “face-to-face” communication made by a covered entity to an individual; or • the marketing is the provision of a promotional gift of nominal value provided by the covered entity. • 45 C.F.R. §§ 164.508(a)(3)(i)(A)&(B).
Medicare Anti-solicitation Law[42 U.S.C. § 1395m(a)(17)] • Prohibits suppliers from contacting Medicare beneficiaries by telephone regarding covered items unless: • Beneficiary has given supplier written permission • Supplier has previously provided the covered item to the beneficiary and contact relates to such covered item • Supplier has furnished a covered item to beneficiary in last 15 months, then contact may relate to any covered item
OIG Special Fraud Alert on DME Telemarketing • First issued in 2003 • 68 Fed. Reg. 10254 (Mar. 4, 2003) • Updated in 2010 • 75 Fed. Reg. 2105 (Jan. 14, 2010) • Reflects OIG concerns about DME telemarketing
Original Fraud Alert onDME Telemarketing • OIG reiterated the statutory telemarketing prohibitions • OIG emphasized that “suppliers cannot do indirectly that which they are prohibited from doing directly.” • DMEPOS supplier cannot hire an unrelated marketing entity to make unsolicited telephone calls to Medicare beneficiaries to market their products or services.
Updated Fraud Alert on DME Telemarketing • Largely repeated prior Alert • Added a concern about DME suppliers contacting beneficiaries based solely on treating physicians’ preliminary verbal or written order • Added reference to criminal and civil penalties for using interstate telephone calls as part of fraud scheme
Additional Guidance onDME Telemarketing • On February 17, 2010, OIG posted letter with CMS FAQs • FAQs provide some helpful guidance but do not fully resolve issue
Additional Guidance onDME Telemarketing • Not “unsolicited” to return beneficiary’s phone call • Not “unsolicited” if physician contacts supplier on behalf of beneficiary with beneficiary’s knowledge • Does supplier need to collect documentation from physician reflecting beneficiary’s knowledge that physician would contact supplier? • No, but it is business decision by supplier to collect such documentation. • Supplier cannot ask beneficiary about other items during initial call, but may on subsequent call if beneficiary becomes a customer