A Compliance Officer’s Perspective on the Fraud & Abuse Provisions Under PPACA

1. A Compliance Officer’s Perspective on the Fraud & Abuse Provisions Under PPACA Metro NY HFMA October 29, 2010

2. Program Integrity – On Steroids! • Includes aggressive provisions on identifying and punishing perceived fraud and abuse • Significant changes to current criminal and civil enforcement provisions • It’s not just about billing – it’s about relationships and transparency as well • Data takes center stage

3. Expands Criminal Health Care Fraud • PPACA amends the Health Care Fraud Statute • Now, the Government does not need to prove that the defendant had actual knowledge of the health care fraud statue or a specific intent to violate its provisions • Includes violations of AKS, the Food, Drug & Cosmetic Act, and certain provisions of ERISA

4. Let’s Start With the Basics – Compliance Plans are Now Mandatory • “Certain providers” (to be defined) will have to establish compliance programs in order to enroll in Medicare, Medicaid and CHIP. • The compliance program must include “core elements” (to be defined) • The timeline for implementation of these programs will be determined by the Secretary

5. I have a compliance program – what does this mean for me? • Will the HHS “core elements” agree with the 7/8 elements currently in the compliance program? • Will there be a definition of “effectiveness”? Will my program pass muster? • Do I review my program now, or do I wait for HHS to promulgate rules?

6. Medicare and Medicaid Program Integrity Provisions • Continues where the May 2009 Fraud Enforcement & Recovery Act (“FERA”) Amendments to the False Claims Act left off • FERA expanded the definition of false claim to include retention of overpayments even if there was no “false claim” • If an organization or individual “knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government”, there can be liability under the FCA. (31 U.S.C. 3729(a)(1)(G) )

7. Section 6402(d) – Medicare and Medicaid Program Integrity Provisions (or why you won’t sleep at night) Reporting and Returning of Overpayments • Must report and return by the later of • 60 days after the date the overpayment was identified; or • The date any corresponding cost report is due, if applicable • Must notify the Secretary, State, intermediary, contractor or carrier in writing of the reason of the overpayment

8. Overpayments? Define “overpayments”… • The obvious – overpayments on claims • The not so obvious – • Payments for services in violation of the Stark law, with certain exceptions • Payments for services where the order for the service was induced by a kickback • Credit balances • Services provided by excluded persons, or by excluded ordering providers

9. What about… • Inaccurate “present on admission” indicators • Split billing for readmissions within 30 days • Errors with transfer vs. discharge coding • Billing for “never events” • Cost report reconciliation

10. Where does the Compliance Department Start? • Sit down with Patient Accounts now and review your processes regarding credit balances, reconciling accounts, etc. • Make sure you are copied on all pre- and post-payment review requests. Become part of the ADR response process. Understand your trends. Now.

11. Know Your Data. Mine Your Data. • CMS is developing a “Integrated Data Repository” (“IDR”) to bring all Medicare claims data in one centralized repository • Will be used to identify trends, outliers, clinically inconsistent and high volume billings • OIG and DOJ will have access • Stay ahead of the curve and analyze your own data

12. Don’t Forget Stark • HHS, in cooperation with the OIG, is required to establish a Stark-only self disclosure protocol within six months • HHS will have discretion to reduce penalties as a result of the self-disclosure • No new physician owned hospitals will qualify for the whole hospital exception after 12/31/2010 • Physician-owed hospitals will have annual reporting requirements to HHS and disclosure requirements to patients (ownership/investment interest of the referring and/or treating physician, if applicable)

13. Stark & In-Office Ancillary Services Exception Disclosures • Referring physicians must provide additional patient notification when making referrals for MRI, CT or PET services • Must notify patients that services can be obtained from sources other than those associated with the referring physician, and • Must provide a list of suppliers in the area that perform the same services • Provision is retroactive to services furnished beginning 1/1/2010 (!)

14. Section 6102 - Nursing Home Compliance, Enforcement and Training • Nursing homes must implement compliance and ethics programs within 36 months after the enactment of PPACA, pursuant to HHS regulations • HHS will evaluate the “effectiveness” of these programs within 3 years of the regulations • Must also implement QA and PI programs

15. Section 6102 - Nursing Home Compliance, Enforcement and Training • For self-reported deficiencies corrected within 10 days, CMS will discount civil monetary penalties • Will be greater transparency regarding staffing data reported for Nursing Home Compare (direct care staffing information; hours of care provided per staff category per resident per day, etc.) • Will be modification of cost reports providing wage and benefit detail by level of staff

16. Compliance Implications • Many nursing facilities combine quality and compliance into one department – will it be time to separate out the two functions? • Criminal background checking (including fingerprinting) is a pervasive theme in the legislation – how robust are your procedures?

17. The Compliance Officer’s Nightmare – Civil Investigative Demands (CIDs) • FERA permitted the Attorney General to delegate authority for issuance of CIDs which allow requests for documents, interrogatories, the taking of sworn testimony, etc. (like a subpoena, but not a subpoena) • Also allowed the Government to share information gleaned from the CIDs with qui tam relators • The Dept of Justice on March 24, 2010 published a final rule to allow all US Attorneys General the authority to issue CIDs

18. New Civil Monetary Penalties • Failing to provide timely access to OIG for audits, evaluations or inspections ($15K/day) • Knowingly making, using or causing to be made or used a false record or statement material to a false claim ($50K) • Knowingly making a false statement on an enrollment application, bid or contract ($50K) • Ordering or prescribing services during the period where the person ordering has been excluded ($50K)

19. Additional HHS-OIG Authority • Expanded subpoena authority • Administrative penalties on beneficiaries • Exclusion authority • Authority to obtain “any supporting documentation necessary” for program integrity • Penalties for Medicare Advantage & Part D Plans (retro to 1/1/2010)

20. Program Integrity • RAC Expansion (12/31/2010) • Medicaid • Medicare Parts C & D • Screening Requirements • Licensure, possible criminal background • Enhanced Oversight (new providers & suppliers) • Increased Provider Screening & Disclosure Requirements • Any current or previous affiliation with a provider or supplier with uncollected debt, payment suspension, exclusion or had billing privileges denied or revoked • Temporary Moratorium on Enrollment of New Providers or Suppliers

21. More Program Integrity • Home Health • Physicians must document a face-to-face encounter between the MD and the patient within “a reasonable period of time” (undefined) for Part A • Physicians must document a face-to-face encounter during the 6-month period prior to certifying patient eligibility for Part B • Must be a physician encounter

22. Still More Program Integrity • DME • Provider must document a face-to-face encounter during the 6-month period prior to certifying patient eligibility • Provider may be a physician, physician assistant, nurse practitioner or clinical nurse specialist

23. Physician Payment Sunshine Provisions • Beginning March 31, 2013, manufacturers of drugs, devices, biologicals or medical devices must report payments or other “transfers of value” made to “covered recipients (including physicians & teaching hospitals) during calendar year 2012 • Manufacturers and GPOs must report any ownership or investment interests that a physician or member of the physician’s immediate family holds in that entity, exclusive of publicly-traded securities or mutual funds • There will be civil monetary penalties for failure to report timely

24. Other Areas of Consideration • Prescription Drug Sample Transparency • PBM Transparency • 340B Program Compliance • FCA & Health Exchanges • FCA Public Disclosure Bar & Qui Tam Relators

25. In Summary – The Compliance Officer in the Age of PPACA must be… • An auditor • A policy maker • A listener • A trainer • A data miner • A document manager • A reporter • An overseer of quality • A _______ (fill in the blank)

26. Thank You and Good Luck! Laurie Radler Navigant Consulting, Inc. 90 Park Avenue, 10thFloor New York, NY 10016 Tel: 646-227-4475 Fax: 646-227-4229 laurie.radler@navigantconsulting.com