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Introduction to the Health Care Regulatory Environment 2008 Mandatory Corporate Responsibility Training. Saint Joseph Mount Sterling. The Catholic Healthcare Mission
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Introduction to theHealth Care Regulatory Environment2008 Mandatory Corporate Responsibility Training Saint Joseph Mount Sterling
The Catholic Healthcare Mission Catholic healthcare was built on a foundation of integrity. Our religious sponsors brought a values-based way of living to the communities that they have served since the 1800s. Throughout our history, Catholic healthcare built relationships based upon integrity and trust. That relationship enables us to assume the challenging role of caring for those most in need, those least able to care for themselves. Today, the complexity of our world requires that healthcare organizations actively pursue, support and nurture workplace integrity. Workplace integrity is an uncompromising commitment to both legal and ethical principles and behavior. It is critical for Catholic healthcare organizations to reaffirm our total commitment to integrity in our words and actions. Even the perception of fraud or abuse undermines the public’s trust in us and our organization. We are responsible for being good stewards of public and private resources. We are entrusted with government and commercial funds to provide the necessary care and services to bene-ficiaries. We have a duty to prevent waste or abuse and to prevent or stop fraud of any kind. Introduction to theHealth Care Regulatory Environment
The Purposes of this Course • To foster and maintain a culture of integrity. • To develop individual and team character and virtue in the workplace. • To foster compliance with applicable federal and state laws and regulations. • To make sure facility policies and procedures are followed. • Healthcare facilities and professionals are challenged to follow ethical business conduct in order to maintain the public trust. Surveys indicate, however, that the general public views organized healthcare with a high level of distrust. We are committed to strengthening the public’s trust in us. But to be successful, it requires the commitment of each of us to know what is expected of us, to ask questions when we are unsure of what the right action or decision might be, and to speak up whenever we see or discover something that does not seem right.
How comfortable am I in questioning possible inappropriate or unethical behaviors in the workplace? How do my actions or lack of action, when faced with an ethical dilemma, affect the entire healthcare organization and my career? Do I encourage fellow workers to come forward with their concerns whenever they confide in me about possible problems? Ethics and compliance issues can be complex, and reporting a suspected violation is not always easy. This course will provide an overview of important issues in corporate compliance that every employee needs to consider. You Might Ask Yourself
Introduction We start the course by providing you with an understanding of key laws, rules and regulations that are some of the driving forces behind your facility’s compliance program. Then, the course will link these laws and regulations to specific operational functions and demonstrate the potential effect these functions can have on your facility’s overall compliance efforts. After completing this course, you should: • Understand several key laws and rules. • Be able to identify potential compliance issues and how they may relate to your job and the tasks you perform in your facility.
Corporate Responsibility Officer One member of the compliance team at your facility is the Compliance Officer. This individual has been assigned responsibility for developing, communicating, monitoring, and guiding compliance activities within your facility. The Compliance Officer at Saint Joseph Health System is called the Corporate Responsibility Officers, or CRO. Within this course, we will refer to this position as the CRO. It is important that you know who this person is, regardless of the specific title that is used.
Risks of Non-Compliance The risks of non-compliance will also be identified throughout this course that relate to specific laws, rules, regulations, and requirements. Some of the laws/rules that are covered in this course include: • False Claims Act • Emergency Medical Treatment and Labor Act (EMTALA) • Anti-kickback Statute • Medicare-Medicaid Anti-Fraud and Abuse Amendments of 1997 • Medicare-Medicaid Patient and Program Protection Act - Safe Harbors • Stark I - Omnibus Budget Reconciliation Act (OBRA) of 1989 & 1993 • Stark II - Omnibus Budget Reconciliation Act (OBRA) of 1993 • Balanced Budget Act of 1997 (BBA)
Navigating This Course • This course is divided into the following Study Units: • Regulatory Environment • Key Laws and Regulations • Applying Laws and Regulations • Each Study Unit contains at least one Study Section, which may be followed by a Practice Quiz. The practice quizzes are designed to help improve your understanding of the course material and are not scored. • You should plan to take approximately 1 hour to complete this course.
Regulatory Environment The healthcare regulatory environment is constantly changing. Therefore, it is important that you understand the current environment as well as how to identify potential issues. This unit will cover the following topics: • Current Regulatory Environment • Available Reference Materials • Definition of Fraud • Examples of Fraud • Definition of Abuse • Results of Government Efforts • Importance of Reporting Suspected • Healthcare Fraud and Abuse
The Current Regulatory Environment • Since 1996, total healthcare costs in the United States exceeded $1 trillion each year. In 2005, the rate of total health care spending was expected to grow 7.4%, with total healthcare spending reaching an estimated $2.0 trillion. This amount would equal 16.2% of all the money spent in our economy. • In 2005, the Center for Medicare & Medicaid Services issued a report that states a total of $12.1 billion or 5.2% of Medicare payments for the calendar year ending December 31, 2004 were improper. Of these amounts, a total of $11.2 billion were related to overpayments, and $900 million were underpayments. When fraud and abuse occurs, each of us pays for these unnecessary expenditures. Programs such as Medicare and Medicaid are funded by our tax dollars.
Unnecessary Expenditures To reduce unnecessary healthcare expenditures, the government has developed a number of programs to detect fraud and abuse. These programs primarily focus on coding and billing errors, and the provision of services that are not medically necessary. In a report issued in February 2002, former DHHS Inspector General Janet Rehnquist indicated: While the overwhelming majority of healthcare providers follow Medicare reimbursement rules and bill correctly, continued vigilance is needed to make sure providers adequately document services, bill only for services that are medically necessary and properly code claims. These problems have persisted for the past 6 years.
The Most Common Error Types • The most common types of errors that may lead to government investigations include: • Billing for non-covered services. • Incorrect coding of services provided. • Lack of documentation showing medical necessity for the services provided/billed. • Billing for services not performed. • Billing for unsupported or undocumented services. • The government’s overall goal is to protect the public and the integrity of the federally-funded healthcare programs. • Both state and federal agencies are actively involved in identifying, correcting and preventing healthcare fraud and abuse.
Statistics for 2004 Monetary Actions: • During 2004, more than $605 million in settlements, judgments, and administrative sanctions were required as a result of healthcare fraud and abuse. • Over $1.51 billion was collected (includes monies owed for prior years as well) and returned to the Medicare Trust Fund, the fund used to pay for services provided to Medicare patients. . A total of $99 million was returned to the federal government due to Medicaid recoveries. The federal government provides funds to states to operate Medicaid programs. As a result, the federal government is reimbursed when states collect payments resulting from healthcare fraud and abuse
Statistics for 2004, Continuing… Enforcement Actions: • There were 395 criminal cases filed related to healthcare fraud, involving 646 defendants. • A total of 459 defendants were convicted of healthcare fraud crimes. • Civil cases filed and pending totaled 2,230. The Department of Health and Human Services/Office of Inspector General excluded 3,293 individuals and entities from participating in government programs, including Medicare and Medicaid.
Agencies Involved in Combating Healthcare Fraud and Abuse Both state and federal agencies are actively involved in preventing fraud and abuse. Some of the federal agencies include: • DHHS (United States Department of Health and Human Services): The DHHS is the government’s principal agency for protecting our health and providing essential human services. It oversees numerous federal entitlement programs such as Medicare and Medicaid. • CMS (Centers for Medicare & Medicaid Services): CMS is one of the major operating divisions of DHHS. CMS is directly responsible for administering the day to day activities of the Medicare and Medicaid programs. This agency is formerly known as the Health Care Financing Administration or HCFA. • OIG (Office of Inspector General): The DHHS Office of Inspector General (OIG) investigates suspected fraud or abuse and performs audits, evaluations, and inspections of federal healthcare programs, primarily for Medicare. The OIG has the authority to take action against healthcare providers through various actions such as suspension, exclusion from participation in the federal healthcare programs and the requirement to pay civil monetary penalties.
Agencies Involved in Combating Healthcare Fraud and Abuse, Continuing… • DOJ (Department of Justice): The DOJ prosecutes criminal and civil cases of healthcare fraud and abuse. The Office of Special Counsel for Health Care Fraud was established to coordinate investigations conducted by the DOJ with the various offices of the U.S. Attorney and other agencies, including the OIG and MFCUs (State Medicaid Fraud Control Units). • FBI (Federal Bureau of Investigation): The FBI works with the DOJ and is involved in investigating healthcare fraud and abuse. • IRS (Internal Revenue Service): The IRS is a part of the Department of the Treasury. The IRS publishes tax regulations, which include regulations for tax-exempt facilities, and would be involved in following up on actual or potential tax fraud issues.
Available Reference Materials Medicare and Medicaid program laws and regulations are long and complex. • To help healthcare facilities understand and apply these laws and regulations, the Department of Health and Human Services/Office of Inspector General (DHHS/OIG) publishes many reference materials that are available in hardcopy on the OIG’s website (www.oig.hhs.gov). Some of these materials include: • OIG Model Compliance Program Guidances: Various publications that identify recommendations by the OIG listing steps healthcare providers can take to help promote compliance. • Fraud Alerts and Special Advisory Bulletins: Guidance on specific issues or topics that have been identified by the OIG as problem areas. • Advisory Opinions: Answers to questions asked by healthcare providers to determine if certain arrangements or processes would be acceptable and in compliance with federal regulations. • OIG Annual Work Plan:Identifies specific issues and areas of focus for upcoming OIG reviews, audits and investigations. • Federal Register and Regulatory Advisory Information: Identifies proposed and new regulations that will affect healthcare providers.
Available Reference Materials, Continuing… CMS also has a variety of resources to help healthcare providers. • One of these resources is the CMS Quarterly Provider Update. This reference includes information such as proposed regulatory changes and updates. • “Open Door Forums” The forums provide specific information related to Medicare and Medicaid programs and includes representatives from CMS. • As a result of these actions, it is hoped providers will be able to prepare for new requirements and better understand Medicare regulations and instructions. More information regarding the Quarterly Updates, Open Door Forums, and other resources may be found on the CMS website at www.cms.hhs.gov.
Commitment to Complying with Laws Saint Joseph Health System, Saint Joseph Mount Sterling, and you must be committed to making sure our practices comply with all relevant federal and state laws, including fraud and abuse laws, with an emphasis on proper billing and coding practices.
Definition of Fraud There are two kinds of fraud. • Criminal fraud can be defined as an intentional deception or misrepresentation of facts, figures, or documentation, with the intention of gaining an unauthorized benefit. • Civil fraud, such as that defined under the False Claims Act, is not only intentional acts, but may also include acts taken in deliberate ignorance or reckless disregard of the law. Fraud schemes can range from those performed by individuals acting alone to broad-based activities by institutions or groups of individuals. Fraud may also include offering or accepting kickbacks (payments, bribes, rebates, etc.) that are made in exchange for Medicare or Medicaid patient referrals.
Deliberate ignorance includes situations where a person chooses to ignore information that may be necessary or important. For example, a billing manager chooses not to read Medicare bulletins because she knows if she does, she may find regulations that must be addressed. Reckless disregardincludes choices made by the facility that cause incorrect information to be listed on the claim form. For example, a facility implements a new accounts receivable system. During testing, it is discovered that certain services on the claim contain inaccurate information. However, since most of the system is working properly, the facility chooses to implement the new system, even though incorrect claims may be submitted.
Steps to Take to Avoid Fraud To avoid possible fraud, you should: • Stay current on all regulatory information and updates. If information is published, providers are expected to know this information. An example would be Medicare bulletins issued by carriers or fiscal intermediaries, or program memorandums issued by CMS. • Be aware of recurring problems, especially payment denials, as these can be signs of possible false claims. • Be careful when implementing new procedures or processes to improve efficiency. Although it may work for most situations, if the change causes incorrect claims to be issued, it may result in fraud. • Watch for new processes that are implemented because “everyone else is doing it.” Just because everyone else is doing it does not make it right. You need to see if there are any issues that can cause a problem for your facility and then decide the right steps to take.
Five hospitals will pay over $4.15 million to settle charges they upcoded pneumonia and septicemia diagnoses for Medicare patients. Upcoding continues to be a focus of investigations, especially related to these diagnoses. A physician group practice at a teaching hospital has agreed to pay $35 million in reimbursement, penalties and fines under the false claims act for fraud, obstruction of justice, and improper documentation. A facility conducted an audit and identified overpayments. While the overpayments were refunded, steps were not taken to correct the problems identified in the audit. As a result, ongoing false claims were submitted. The facility must now repay the government $16 million and enter into a corporate integrity agreement (CIA) because they should have known charges were being sent in error. Examples of Fraud
A urologist was sentenced to 51 months in jail and surrender of his medical license for billing at least 32 patients and their insurance companies for a drug he did not actually provide. The charges also included improperly selling the drug. Four pharmaceutical companies will pay over $400 million in penalties and fines for failing to properly disclose and pay rebates on prescription drugs to various state Medicaid programs. A large rehabilitation services provider will enter into a 5-year corporate integrity agreement and pay $325 million plus interest to resolve charges of false cost reports and false claims. The charges claim the provider: Improperly billed outpatient physical therapy services without a physician certified plan of care Provided physical therapy services with unlicensed providers, and Billed individual visits when group services were performed. Examples of Fraud, Continuing…
A surgeon was found guilty of 90 counts of Medicare fraud and ordered to pay over $850,000 for billing the Medicare program for services he did not provide. The surgeon documented information in patient’s medical charts and billing records that never happened. He also sent claims to Medicare for services that were never performed. A home health agency agreed to pay $8 million and enter a 5-year corporate integrity agreement related to false claims to Medicare, Medicaid, TRICARE and CHAMPUS. The charges stated the agency submitted claims for services not provided by a qualified person or not provided at all, did not have physician orders and plans of care, failed to demonstrate patient's homebound status, and did not complete or improperly coded the OASIS evaluation. Examples of Fraud, Continuing…
Definition of Abuse… Abuse can occur: • When a facility performs tasks that do not make good medical, business or financial sense. AND • These practices result in unnecessary costs, improper reimbursement, or reimbursement for medically unnecessary or inadequate services from the federally funded healthcare programs. Fraud and abuse also exists in commercial insurance (non-federally funded programs).
A hospital has two fee schedules in place for outpatient visits. For the same level of service, one fee schedule lists the charge at $100. The other fee schedule lists the same service at $75. When Medicare patients are seen, the $100 fee schedule is used. All other patients are charged the $75 fee schedule. A physician sees a Medicare patient with a complaint of a cold. The physician performs a comprehensive examination, and orders a chest x-ray and extensive laboratory work when all that is needed is a problem focused history and examination. All of these medically unnecessary services are billed to Medicare. Examples of Abuse
A hospital does not have a procedure in place to complete the Medicare Secondary Payer (MSP) forms. As a result, claims are frequently billed to Medicare when another payer should be billed before Medicare is billed. A physician charges Medicare patients an additional fee (e.g.; concierge care or boutique medicine) for services that are already covered and paid by Medicare. For example, one physician charged patients an extra $600 for additional consultation time, coordinating care with other healthcare providers, and extra time spent on patient care as part of a “Personal Health Care Medical Care Contract.” Examples of Abuse, Continuing…
Results of Government Efforts The government has increased the resources available to identify and correct healthcare fraud and abuse. These resources include additional staff in several state and federal government agencies and departments. Since 1996, the federal government estimates there has been more than a 60% reduction in improper payments for the Medicare program. One of the key factors that contributed to this reduction is an increased awareness by facilities and providers of the federal False Claims Act and cases involving violations of the False Claims Act.
healthcare fraud and Abuse Continues In Fiscal Year 2005: • The OIG identified almost $1.6 billion in money due as a result of investigations and $1.2 billion in overpayments as a result of audits. • A total of 3,806 individuals and entities were excluded from participating in the federal healthcare programs. • The OIG filed 537 criminal actions against individuals or entities that engaged in crimes against programs of the Department of Health and Human Services. Today, investigations continue and new settlements are published almost daily
A hospital will pay $4.2 million and enter a 5 year CIA for allegedly submitting claims to Medicare for clinical laboratory services that were unbundled, upcoded, and/or double billed. The hospital was also required to hire a new compliance team. A Texas salesperson for a Medicare provider was sentenced to 46 months in prison and ordered to repay $1.4 million for health care fraud. The salesperson forged the names of physicians on certificates of medical necessity. Recent Landmark Settlements Some of the recent settlements resulting from healthcare fraud and abuse provide a better understanding of the scope of the government’s effort to track down and correct abuses in the federal healthcare programs
A hospital corporation agreed to pay $631 million plus interest to the federal government. Several government agencies participated in the investigations and found possible kickbacks and false claims to Medicare, Medicaid and TRICARE, including false cost reports. As a result of these investigations, the corporation has agreed to maintain the existing corporate integrity agreement (CIA) until 2009. A physician will pay a $7,500 fine and spend three years in jail for obstruction of justice and mail fraud. The physician performed limited exams that did not support the prescriptions used by a durable medical equipment (DME) company to bill for equipment. The physician also signed blank certificates of medical necessity, which is improper according to Medicare requirements Recent Landmark Settlements, Continuing…
A RN was sentenced to 33 months in jail and ordered to pay $352,000 for health care fraud and illegal kickback activity. The nurse had been excluded from the state’s Medicaid program. However, she owned a temporary agency that supplied employees to nursing homes and other facilities treating Medicaid and Medicare residents. She also provided services to patients during this time and bribed employees at nursing homes to obtain business. In December 2004, a healthcare company agreed to pay almost $350,000 for possible violations of the Civil Monetary Penalties Law. The OIG claimed the company employed individuals they knew or should have known were excluded from participation in federal health care programs. Recent Landmark Settlements, Continuing…
Importance of Reporting Suspected Healthcare Fraud and Abuse • Identifying potential fraud and abuse situations before they become serious enough to result in an investigation must be a priority for everyone. You should use the reporting options provided at SJMS, such as • Your direct supervisor, manager, or director • Corp[prate Responsibility Officer (CRO) • Fraud hotline (Ethics at Work line) • If you have a question regarding the actions of a co-worker, a physician, or management, do not hesitate to bring it to the attention of your supervisor or the CRO. While everyone will make mistakes from time to time, your co-workers and you all should be working together to make your facility a more efficient and compliant healthcare provider.
Strict adherence to the laws and guidelines when providing healthcare services and submitting claims for these services is important, however, it is not the only reason we are emphasizing the need for compliance. By focusing on compliance, you also can: Improve operations and make them more efficient. Maintain your commitment to the community by providing the highest quality medical services. Prevent an incident that might result in an investigation. Other Reasons for Compliance
Key Laws and Regulations This unit will cover the following topics: • False Claims Act • Anti-kickback Statute • Stark Laws
False Claims Act The federal False Claims Act or FCA was first implemented during the Civil War to prevent fraud and abuse by government contractors. In healthcare, the False Claims Act is one of the most frequently used laws when fraud and abuse is identified. • This study section will cover the following topics: • Applicability of the Law • Overview of the Provisions • Consequences of Non-Compliance • Applicability of the Law • Common Violations: What Is a “False Claim?”
Consider This Example Annie works in the billing department and notices that every time she processes claims for a certain group of physicians, the same high level Evaluation and Management (E&M) code is assigned for all new patients. It seems odd to her that these physicians always use the same E&M code because she knows there are many different E&M codes for new patient services and the one being assigned results in higher payments. Does this indicate a problem? What should Annie do next?
Answer: Annie should ask her supervisor or Corporate Responsibility Officer (CRO) since she is not sure if this is a problem. On the surface, it may seem that these physicians are purposely coding the claims to receive higher reimbursement. However, it may not be that clear-cut. Maybe these physicians treat a majority of very sick patients and using the higher level E&M code is correct. The government is monitoring our industry closely for situations exactly like this. Therefore, it is important that you understand the concept of a false claim so you can identify situations where SJMS and you may be at risk for submitting false claims.
Overview of the Provisions • The False Claims Act (FCA) covers fraud related to claims paid by any federal or state program such as Medicare and Medicaid. The following actions may result in violations of the False Claims Act: • Submitting a false claim for payment. • Causing a false claim to be submitted for payment. • Using a false medical record or statement to get a claim paid. • Working with others to get a false claim paid. • Using a false record to conceal, decrease, or avoid an obligation to the government. This is known as a “reverse false claim.”
False Claims Act Penalties • The False Claims Act is one of the most effective tools in fighting Medicare and Medicaid fraud and abuse. The statute states that a person or facility that violates the Act must repay three times the amount of the payment received for the false claim plus a mandatory penalty. The minimum mandatory penalty is $5,500 and the maximum is $11,000 for each false claim submitted.
What Is a “False Claim? The most common situations that may be a sign of a false claim are: • Billing for services not provided. • Changing the patient’s diagnosis to receive payment without supporting documentation. • Billing individual CPT codes for tests that should be reported under one CPT code that includes all of the tests (”unbundling” charges). • Billing for a higher-level service than the service actually furnished (”upcoding”). • Falsifying statements in the medical • record to receive payment. • Failing to properly identify credit • balances on the quarterly credit • balance report.
Since each individual line item on a claim form can be one false claim, one claim form can have many false claims. Claims should be reviewed prior to submission so errors are corrected before the claims are sent for payment. Although the examples above apply to coding, billing, and reporting errors, every department within the facility can have an effect on a claim, from proper registration to accurate entry of charges.
Examples of Possible False Claims • Billing for services not provided: An order is entered into the laboratory system for a chemistry test. However, the test was not performed. The test is not cancelled and the charges are billed to Medicare. • Changing a diagnosis without supporting documentation: A billing clerk receives a denial from Medicare stating a service is not medically necessary. She looks up diagnoses that are covered for the service and changes the diagnosis on the claim to match one of the covered diagnoses. • Unbundling: A physician in a clinic treats a broken ankle and applies a cast for the patient. Separate charges are billed for the treatment of the ankle and the cast procedure. • Billing a higher level of service than provided: A nurse in a doctor’s office provides a minimal office visit and documents the services provided in the patient’s medical record. Charges are billed for a higher level physician visit. • Falsifying statements: A patient fails to show up for an appointment. A physician documents the patient was seen in the medical record to receive payment for the time that was scheduled for the patient.
Consequences of Non-Compliance There are many reasons why a facility needs to be especially aware of false claims issues. Some of the penalties may include: • Exclusion from participation in the federal healthcare programs. As a result, the provider or facility cannot bill for services rendered to patients in the Medicare, Medicaid or any other federal healthcare program. • A mandatory Corporate Integrity Agreement (CIA) that requires the healthcare provider or facility to submit annual reports about the facility’s compliance program and activities to the OIG. • Civil liabilities and repayment penalties. • Criminal liabilities, repayment penalties, and/or the possibility of serving time in jail
Not only may the facility or hospital be held responsible, but physicians, other healthcare providers and you, as an individual, also may face the same penalties. All employees and providers should work as a team to help the facility comply with all patient care, data capture and claims processing rules and regulations. In Summary
Practice Quiz - False Claims Act • What is Upcoding? • Submitting charges for a higher level of service than was actually provided. • Billing with 2 or more CPT codes when a single code should be used. • Submitting charges for a lower level of service than was actually provided. • Submitting charges several times to the same payer. • What is the maximum monetary penalty amount for submitting a single false claim? • $1,000 • $10,000 • $5,500 • $11,000 3. What can the government require as part of a settlement for possible False Claims Act violations? • The government will forgive the provider as long as there are no further problems. • The provider will automatically be sent to jail. • The provider will be required to read all Medicare bulletins. • The provider may be required to enter into a Corporate Integrity Agreement or CIA.
False Claims Act Answers 1. The correct answer is: Submitting charges for a higher level of service than was actually provided. Billing with two or more CPT codes when a single code should be used is called unbundling. Downcoding is billing at a lower level of service than was actually provided, and duplicate claims may exist if charges are improperly submitted to the same payer multiple times. 2. The correct answer is: $11,000. In addition, the provider must pay three times the amount of the payment received for each false claim submitted. 3. The correct answer is: The provider may be required to enter into a Corporate Integrity Agreement or CIA. Specific terms and conditions listed in the CIA must be followed to prevent further action or investigation by the government.
The following topics will be covered: Applicability of the Statute Overview of the Provisions Incentives Applied to Physicians Waiver of Coinsurance and Deductibles Consequences of Non-Compliance Anti-kickback Statute Congress enacted the Anti-kickback statute to prevent providers from profiting by making referrals in exchange for payment or other items of value. This section provides an introduction to these provisions and how they are applied.
Applicability of the Statute Consider this example: • Sam works in the accounts payable department and notices that when he processes checks for Medical Director fees, Dr. Marks (the Cardiology Medical Director) receives a payment of $5,000 each month while the other Medical Directors only receive $1,000 each month. It seems odd to him that this is the only physician who receives this higher amount. Then Sam remembers that Dr. Marks refers lots of patients to the facility - more than the other Medical Directors. Maybe this is why Dr. Marks gets a higher Medical Director fee? Does this indicate a problem? What should Sam do next?