Current Trends in State Enforcement of Health Care Laws

1. Current Trends in State Enforcement of Health Care Laws Allen Pope, Director of the Indiana Medicaid Fraud Control Unit Nicholas Gonzales, Deputy Attorney General

2. Disclaimer • All views and opinions expressed today are views and opinions of this speaker in this speaker’s private and personal capacity. These views and opinions should not necessarily be attributed to the State of Indiana, Office of Attorney General.

3. Overview • Exclusions and Licensing • Qui Tams: An Introduction • Quality of Care • Provider Specific Watch Lists • Other States

4. Federal Exclusion Program &State Licensing

5. What is it? • $1,950,000.00 • $98,685.88 • $54,318.81 • $48,8691.21

6. What is it? OIG has authority to exclude from participation in Medicare, Medicaid, and other Federal health care programs individuals and entities who have engaged in fraud or abuse, and to impose civil money penalties (CMPs) for certain misconduct related to Federal health care programs. Mandatory Exclusion—Conviction relating to patient abuse or neglect, Felony conviction relating to health care fraud, Felony conviction relating to controlled substance. Permissive Exclusion—Misdemeanor conviction relating to health care fraud, Conviction relating to fraud in non-health care programs, Misdemeanor conviction relating to controlled substance, License revocation or suspension, Default on health education loan or scholarship obligations. Separate from a licensing issue.

7. Mandatory Exclusions

8. Permissive Exclusions Please go to the website for the complete list.

9. What is it? Effect of Exclusion for Providers: No payment will be made by any Federal health care program for any items or services furnished, ordered, or prescribed by an excluded individual or entity. No program payment will be made for anything that an excluded person furnishes, orders, or prescribes. Administrative and management services.

10. What is it? CMP liability up to $10,000 for each item or service furnished by excluded individual or entity and listed on a claim submitted for Federal program reimbursement. Assessment of up to three times the amount claimed. Program exclusion may be imposed. Excluded person must apply for reinstatement.

11. What is it? State Penalties 12-15-23 et seq. $500 per claim 5-11-5.5 et seq. $5,000 per claim

12. What is it? Link to discussion of exclusion program http://oig.hhs.gov/fraud/exclusions.html Link to Online Searchable Database for checking http://exclusions.oig.hhs.gov/

15. Practices MFCU Has Seen Exclusion discussed in compliance program that is distributed to employees Requirement to inform employer of exclusion. Check all employees, agents, vendors, and contractors against list prior to hire and at least annually. Aliases and former names on Application for Employment Asking if ever excluded on application

16. Exclusion Program Violation If you find an exclusion violation: Report violation to HHS/OIG Report violation to Indiana MFCU, 1-800-382-1039

17. Licensing Why should you make sure you and your employees renew your license? Criminal Penalties Civil Penalties

19. CNAs 42 C.F.R. §483.156 requires, “[t]he State must establish and maintain a registry of nurse aides that meets the requirements of this section.”

20. Penalties Indiana Code §12-15-21-3 states, “(4) . . . deny payment to a provider for services provided to an individual or claimed to be provided to an individual if the office after investigation finds any of the following: . . . (F) The claim rises out of an act or practice prohibited by law or by rules of the secretary.”

21. Penalties Continued Overpayment Treble Damages Investigative Costs $500 to $5,000 per Claim

22. Qui Tams:Basic Overview

23. What is a qui tam? • Derives from the Latin phrase "[he] who sues in this matter for the king as [well as] for himself" • Called the Lincoln law • Civil War

24. Federal Action, State Action or Both • Federal False Claims Act, 31 U.S.C. Section 3729 et seq. • Federal Court • Pendant Jurisdiction • Indiana False Claims Act, Indiana Code Section 5-11-5.5 et seq. • Federal or State Court

25. Ind. Code Section 5-11-5.5 et seq. • Allows for a private individual, or “whistleblower”, with knowledge of past or present fraud committed against Indiana to bring suit on its behalf. • July 1st, 2005 passed

26. Who can be a whistleblower? • Direct and independent knowledge of the information that is the basis of the action • Federal Government calls this the original source

27. Procedure—Indiana False Claims Statute • Complaint Under Seal • Must be proper venue (Marion County, county in which Plaintiff resides, county in which Defendant resides; Marion county is catch all) • Relator serves complaint and a disclosure statement on the government which describes all relevant material evidence and information the person possesses • Possibly file under pseudonym (i.e. John or Jane Doe) • Under Seal • Under Seal for 120 days • Procedures to keep from public

28. Procedure—Indiana False Claims Statute • During Seal Period • Investigation by Attorney General’s Office • Interviews of Relator and Potential Witnesses • Document Review • All without revealing complaint to Defendant • Seal Extensions • For good cause, Attorney General or Inspector General may move court to extend seal

29. Procedure—Indiana False Claims Statute - Intervening • Government may decide to Intervene • If the government decides to intervene, it will essentially take over the case • The government will lead the investigation • The government will lead the litigation • The government may decide not to intervene • Relator is welcome to go forward with the case by himself/herself

30. Procedure Indiana False Claims Statute Cont. • Possibly lose job; however, retaliation provisions in the Act • Investigations typically take several years • Continue action even if State declines intervention

31. Penalties • Penalties • Civil penalty of at least $5,000 and • For up to three times the amount of damages sustained by the State

32. Intent • Does one have to show that the company was intentionally trying to defraud the government? NO • "Knowing", "knowingly", or "known" means that a person, regarding information:            (A) has actual knowledge of the information;            (B) acts in deliberate ignorance of the truth or falsity of the information; or            (C) acts in reckless disregard of the truth or falsity of the information.

33. Whistleblower Reward • Whistleblower Reward • If state prevails in the action, and State intervened • At least 15% and not more than 25% of the proceeds of the action or settlement, plus reasonable attorney’s fees and an amount to cover expenses and costs of bringing action • Changes to 25% not more than 30% if Attorney General or Inspector General does not intervene

34. Whistleblower Examples • Merck settlement—February 2008 • $650 Million • Disgruntled whistleblower ignored by bosses received $68 million

35. Whistleblower Examples • Eli Lilly settlement—January 2009 • $1.42 Billion • Nine whistleblowers share $79 million

36. Whistleblower Examples • Pfizer settlement—September 2009 • $2.4 Billion • $102 Million divided between whistleblowers • John Kopchinski: $51,500,999 • Stefan Kruszewski: $29,013,420 • Ronald Rainero: $9,321,369 • Glenn DeMott: $7,431,505 • Dana Spencer: $2,743,637 • Blair Collins: $2,354,582

37. Whistleblower Examples • Warner-Lambert - 2009 • $430 Million Settlement • David Franklin – $26.6 Million

38. Indiana’s Benefits • Various groups have estimated that 10-20% of all government healthcare claims should not be paid • Indiana spends approximately $6 billion on Medicaid a year. Nationwide spending about $340 billion • Relators help uncover fraud that the government may not normally find

39. Examples of Common Qui Tam Claims • Off Label Marketing • Anti-Kickback Statute • Average Wholesale Price • Upcoding • Billing for Services not Rendered

40. Off-Label Marketing • 18 U.S.C. Section 371 • FDA approves drugs before they are put out in the market. FDA decides a drugs label or indication, meaning what medical conditions the drug will be used to treat • Law prohibits manufacturers from marketing the drug for any other use besides what the FDA has approved. This includes frequency of use, patient population, and dosing • In contrast, physicians may prescribe drugs even though they have not been approved by the FDA for this use (off-label” use)

41. Examples Off-Label • Recent Pfizer Settlement • Bextra FDA Approved Indications: Osteoarthritis, adult rheumatoid arthritis, Primary dismennorhea • Off-label Uses Promoted: Acute pain, various types of surgical pain, dosages above approved maximum

42. Anti-Kickback • 42 U.S.C. Section 1320a-7b • Prohibits the offer or receipt of certain remunerations in return for referrals or recommending purchase of supplies and services reimbursable under government health care programs • Example: Drug manufacturer offering a doctor free vacation for prescribing their drug

43. Average Wholesale Price • The Sticker Price • The average price that the wholesaler sells a drug to pharmacies, doctors and hospitals. The government typically receives a discount from this, thus if the amount is inflated, the government may be paying too much for the drug

44. Average Wholesale Price Examples • Big Pharma sells Big Drug to pharmacies and hospitals for $2.00 a pill. Big Pharma informs the government that its AWP is $3.00 a pill. Typically the government receives a discount of 20% of the AWP. In this situation, the government is paying $2.40 instead of $1.60. Each pill is costing the government $0.80 more than it should.

45. Upcoding • Health care provider submits a claim to the government for a procedure that was more expensive than the procedure that was actually performed • Example: Hospital charges an inpatient procedure code when it should be billing an outpatient procedure code as patients leave immediately after receiving the procedure

46. Billing for Services Not Rendered • Health care provider submits claim to the Government for a service that was not actually rendered by the provider • Example: A dentist bills for a tooth extraction of tooth 22. However, the patient still has tooth 22 when seen by a subsequent dentist

47. Best Price • If a drug manufacturer would like to sell drugs to the Medicaid program, they have to give the Medicaid program the lowest price to which the manufacturer sells to drug wholesalers, pharmacists, HMOs, Group Purchasing Organizations, and other private sector customers • Manufacturers have offered their drugs at prices below the Best Price offered to Medicaid to induce sales to private companies • The pharmaceutical companies conceal these discounts so as to avoid having to provide rebates to Medicaid to match the discounted price they are providing to private insurers, wholesalers, pharmacists and businesses.

48. Other Types • Over-utilization (Add-ons) • Unbundling • Billing multiple agencies for the same service • Substitution of cheaper alternatives • Stealing patient medications

49. Other Types of Fraud, Continued… • Differential Billing • Billing Medicaid higher than private insurance • Duplicate Claims • Billing for services not medically necessary • Stark • Gaming

50. Quality of Care