AHLA Medicare & Medicaid Institute

1. AHLA Medicare & Medicaid Institute Conditions of Participation as a basis for Overpayments, Refunds and False Claims Timothy P. Blanchard Robert A. Hussar James G. Sheehan

2. Advanced Session Agenda • Background • Conditions of Participation • Conditions of Payment • Case Law • Provider Certifications • New Developments, Threats and Opportunities • Case Studies

3. What are COPs? • The COPs define specific quality standards that providers shall meet to participate in the Medicare program. . . . If during a review, any contractor believes that a provider does not comply with conditions of participation, the reviewer shall not deny payment solely for this reason. • Medicare Program Integrity Manual, CMS-Pub. 100-08, Chapter 3, § 3.1A (emphasis added).

4. Where are COPs? • Medicare Regulations • “Conditions of Participation,”“Conditions for Coverage,”“Conditions of Certification” • Medicare Statute 42 U.S.C. § 1320c-5(a)(6) • Economically and only when medically necessary; • Of quality meeting professionally-recognized standards; • Supported by evidence of medical necessity/quality • Medicaid Statute and Regulations 42 C.F.R. § 482.1 • PPACA “Condition of Enrollment”

5. PPACA Conditions of Enrollment • On or after the date of implementation determined by the Secretary under subparagraph (C), a provider of medical or other items or services or supplier within a particular industry sector or category shall, as a condition of enrollment in the program under this title, title XIX, or title XXI, establish a compliance program that contains the core elements established under subparagraph (B) with respect to that provider or supplier and industry or category. • 42 USC § 1395cc(j)(8)(A) • See PPACA § 6401

6. What are Conditions of Payment? • Submission of a claim • Medicare payment shall not be made. . . • If excluded from coverage, 42 USC § 1395y • Unless documented as required, 42 USC § 1395l(e) • If prohibited Stark self-referral, 42 USC § 1395nn • Implications of provider certifications • Evolving government positions and policy

7. U.S. ex rel. Mikes v. Straus (2001) • Noncompliance Basis for FCA Liability • “[A] claim is ‘false’ only if the Government or other customer would not pay the claim if the facts about the misconduct alleged to have occurred were known.” • “[I]t would be anomalous to find liability when the alleged noncompliance would not have influenced the government's decision to pay.”

8. U.S. ex rel. Mikes v. Straus (2001) • COPs vs. “conditions of payment” • Statutory language and statutory design • Established administrative process • Remedies other than payment denial • Opportunities to cure • Plans of Correction • Corrective Action Plans

9. CMS Claim-Form Certifications • CMS-1500 (and electronic X12N Health Care Claim: Professional (837)) • I certify that the services shown on this form were medically indicated and necessary for the health of the patient and were personally furnished by me or were furnished incident to my professional service by my employee under my immediate personal supervision, except as otherwise expressly permitted by Medicare or CHAMPUS regulations. • See also CMS-1450 (i.e., UB-04)

10. Mikes’Certification Analytical Framework • Factually false incorrect description of goods/services provided or claim for goods/services never provided • Legally false“compliance with a statute or regulation as a condition of governmental payment.” • Express false certification– specific representations in the claim form certification • Implied false certification – Appropriate only when underlying statute or regulation expressly states that provider must comply in order to be paid and defendant billed knowing that payment expressly was precluded because of noncompliance by the defendant.

11. U.S. ex rel. Hutcheson v. Blackstone (2011) • The First Circuit rejected: • Well-established analytical framework from Mikes • District Court holding that conditions of payment “cannot be hidden in an enrollment form” • Conclusion that “conditions of payment” must be specifically stated in statute or regulations • Court looks to certifications in provider agreements, CMS 855 forms and cost reports • Creates potential mandatory refund exposure for providers for even unknown acts of third parties

12. AKS Compliance Condition of Payment? • Effective March 23, 2010: “a claim that includes items or services resulting from a violation of [AKS] constitutes a false or fraudulent claim for purposes [of FCA].” • 42 U.S.C. § 1320a-7b(g) • But does that mean it is a “condition of payment” or just a statutorily designated false claim? • Are AKS-tainted payments “overpayments”?

13. AKS Compliance Condition of Payment? • Prior to PPACA, the First Circuit in Hutcheson thought it was “abundantly clear that AKS compliance is a precondition of Medicare payment” • Based on the language of: • Medicare Provider Agreement • Cost Report Certifications • But is that what they say?

14. CMS Cost Reports – Worksheet S • MISREPRESENTATION OR FALSIFICATION OF ANY INFORMATION CONTAINED IN THIS COST REPORT MAY BE PUNISHABLE BY CRIMINAL, CIVIL AND ADMINISTRATIVE ACTION, FINE AND/OR IMPRISONMENT UNDER FEDERAL LAW. FURTHERMORE, IF SERVICES IDENTIFIED IN THIS REPORT WERE PROVIDED OR PROCURED THROUGH THE PAYMENT DIRECTLY OR INDIRECTLY OF A KICKBACK OR WERE OTHERWISE ILLEGAL, CRIMINAL, CIVIL AND ADMINISTRATIVE ACTION, FINES AND/OR IMPRISONMENT MAY RESULT. (Emphasis added.)

15. Cost Report Certification by Provider I HEREBY CERTIFY that I have read the above statement and that I have examined the accompanying . . . cost report and the Balance Sheet and Statement of Revenue and Expenses prepared by [Provider] for the cost reporting period beginning [_] and ending [_] and to the best of my knowledge and belief, it is a true, correct and complete statement prepared from the books and records of the provider in accordance with applicable instructions, except as noted. I further certify that I am familiar with the laws and regulations regarding the provision of health care services, and that the health care services identified in this cost report were provided in compliance with such laws and regulations.

16. CMS-855A Certification • I agree to abide by the Medicare laws, regulations and program instructions that apply to this provider. . . . I understand that payment of a claim by Medicare is conditioned upon the claim and the underlying transaction complying with such laws, regulations, and program instructions (including, but not limited to, the Federal anti-kickback statute and the Stark law), and on the provider’s compliance with all applicable conditions of participation in Medicare. (Emphasis added.)

17. Overpayment Refund Exposure • Do AKS violations anywhere along the supply chain render Medicare payments to hospitals for tainted items or services “overpayments”? • If so, providers would be obligated to report and return those payments within 60 days of identification. • FCA exposure: 42 U.S.C. § 1320a-7k(d) • OIG sanctions: 42 U.S.C. § 1320a–7a(a)(10)

18. Case Studies

19. Questions Timothy P. Blanchard Blanchard Manning LLP Box 490, Orcas WA 98280 360.376.2292 tim@blanchardmanning.com Robert A. HussarManatt, Phelps & Phillips, LLP30 S Pearl St, 12th FloorAlbany, NY  12207(518) 431-6730 Directrhussar@manatt.com James G. SheehanChief Integrity Officer/Executive Deputy Commissioner New York City Human Resources Administration250 Church Street, 6th FloorNew York, NY 10013Office: (212) 274-5600  sheehanj@hra.nyc.gov