Fraud Waste & Abuse

1. Fraud Waste & Abuse Training for First Tier, Downstream and Training for First Tier, Downstream & Related Entities February 2012

2. FWA Training Requirement The Centers for Medicare and Medicaid Services (CMS) requires Medicare Advantage and Prescription Drug Plans to provide Fraud, Waste and Abuse (FWA) training to its employees, First Tier, Downstream and Related Entities on an annual basis beginning in calendar year 2009.

3. First Tier & Downstream Entities • First Tier entities are companies that have contracted with Physicians United Plan (PUP) to provide administrative or prescription drug services to PUP’s members • Downstream entities are companies that First Tier entities sub-contract with to provide these services

4. FWA Training Requirement First Tier, Downstream and Related Entities (FDREs) can provide their own training or use training materials from one of their Medicare Advantage or Prescription Drug plans. Exception: FDREs enrolled in the Medicare program (e.g., as a DMEPOS supplier) are deemed to have met this requirement.

5. Topics • Definitions • The cost of health care fraud • Some recent cases • Fraud and abuse laws • Penalties • What are we doing? • What can I do?

6. The Cost of Health Care Fraud • By 2016, we will spend more than $4 trillion on health care each year. • Each year, more than 4 billion health insurance claims are processed in the US. The Government Accounting Office (GAO) estimates that health care fraud may be as high as 10%. • In 2011, the Department of Justice recovered $5.6 billion ($2.9 billion was health care fraud).

7. Health Care Fraud Costs Us All • Intangible costs, e.g., effect on patient care of false medical records, deaths caused by dilution of drugs • Physical risks to patients from medically unnecessary procedures • Dollars diverted from the elderly, sick, poor. • Each household pays $1000 more in higher taxes, reduced benefits, increased premiums, and more expensive doctor visits and RX ($1000 per household)

8. Scope of problem • In Fiscal Year 2010, HHS’ Office of Inspector General (HHS/OIG) excluded 3,340 individuals and entities. Among these were exclusions based on criminal convictions for crimes related to Medicare and Medicaid (894), or to other health care programs (263); for patient abuse or neglect (247); or as a result of licensure revocations (1,582).

9. Scope of problem (cont’d) • In Fiscal Year 2010, the U. S. Department of Justice (DOJ) opened 1,116 new criminal health care fraud investigations and 942 civil health care fraud investigations involving 3,300 potential defendants. • 726 defendants were convicted for health care fraud-related crimes during the year.

10. Definitions • Health care fraud is defined in Title 18, United States Code (U.S.C.) s. 1347 as knowingly and willfully executing, or attempting to execute, a scheme or artifice to defraud any health care benefit program or to obtain (by means of false or fraudulent pretenses, representations, or promises) any of the money or property owned by, or under the custody or control of, any health care benefit program.

11. Definitions(cont’d) • Abuse: Provider practices that are inconsistent with generally accepted business or medical practices and that result in any unnecessary costs or result in reimbursement for goods or services that are not medically necessary or that fail to meet professionally recognized standards for health care.

12. Definitions (cont’d) • Waste: activities involving payment or the attempt to obtain reimbursement for items or services where there was no intent to deceive or misrepresent but the outcome of poor or inefficient billing or treatment methods causes unnecessary costs to the Medicare/Medicaid/State Children’s Health Insurance Program.

13. Examples of Fraud • Billing for services that were not provided • Performing medically unnecessary services solely to obtain insurance payments • Altering claim forms, medical documentation, etc. to obtain a higher payment • Duplicate billing (deliberate) • Unbundling or “exploding” charges • Upcoding (billing for a service that costs more) • Soliciting, offering, or receiving a kickback for referral of patients in exchange for other services

14. Examples of Fraud(cont’d) • Billing for dead and jailed beneficiaries • Billing by dead doctors (companies used the identities of dead doctors to bill Medicare) • Waiving patient co-pays or deductibles • Misrepresenting non-covered services as medically necessary, e.g., billing “nose jobs” as deviated-septum repairs, routine foot care as diabetic foot care • Using another person’s ID card to obtain care

15. Examples of Part D (Prescription Drug) Fraud Can be at member, pharmacy, prescriber, PBM, wholesaler or manufacturer level: • Pharmacy dispensing a generic but billing for a brand • Patient selling drugs back to the pharmacy for pharmacy to re-sell • Prescription forging/altering, identity theft, theft of prescription pads (member)

16. Examples of Part D fraud (cont’d) • Inappropriate Formulary decisions (PBM) • Inappropriate marketing of drugs, improper incentives to physicians to prescribe medically unnecessary drugs/brand names (manufacturer) • Counterfeit/adulterated drugs through black/grey market (wholesaler)

17. Examples of Abuse • Charging in excess for services/supplies • Providing medically unnecessary services • Providing services that do not meet professionally recognized standards • Submitting bills to Medicare instead of the primary insurer • Violating the Medicare Allowable Actual Charge limits or the Medicare Limiting Charge

18. Difference between Fraud & Abuse • Abuse results from practices that directly/indirectly result in unnecessary cost. • Fraud requires evidence of intent to defraud, i.e., acts were committed knowingly, willfully and intentionally. • Abusive billing practices may not result from “intent” or it may be impossible to prove that the intent to defraud existed; however under certain circumstances, these types of practices may develop into fraud if there is evidence of the subject knowingly and willfully conducting an abusive practice.

19. Recent Florida cases March 2011 - 20 People Indicted in Florida for Health Care Fraud Scheme Involving Approximately $200 Million in Medicare Billing 20 individuals, including 3 doctors, were charged with fraudulently billing Medicare for approximately $200 million for mental health services that were medically unnecessary or not provided at all.   Some defendants paid kickbacks to patient brokers and owners and operators of halfway houses and assisted living facilities in exchange for delivering patients to their facilities. 

20. Recent Florida cases March 2011 A Miami doctor was sentenced to 24 months in prison and ordered to pay $22 million. He admitted to taking bribes and kickbacks from patient recruiters and home health agencies in return for signing bogus prescriptions and medical certifications for home care. The home health agencies would then bill Medicare for home care which was never provided or medically unnecessary.

21. Recent Florida cases(cont’d) March 2011 – Leader of Florida-based Medicare Fraud Ring Sentenced to Prison A Florida, individual pleaded guilty to operating a health care fraud scheme targeting Medicare Advantage Plans. The defendant set up clinics in different states to offer infusion therapy, injection therapy and other expensive medical treatment for cancer, HIV and AIDS.

22. Recent Florida cases(cont’d) • None of the clinics had any actual location or staff; they existed only on paper and used a UPS mailbox as their address. They submitted false claims to many Medicare Advantage plans, including Aetna, Cigna, Humana and United. • The clinics used real Medicare beneficiaries’ names, social security numbers and dates of birth that they illegally obtained. The claims included diagnoses that the Medicare beneficiaries did not have and listed expensive infusion therapy services that were never performed.

23. Fraud in the Managed Care Setting • Marketing (agent misrepresentation/ misleading marketing materials) • Enrollment (e.g., beneficiary misrepresentation about residence) • Utilization Management • Claims • Risk Adjustment Data • Prescription Drug (Part D) program

24. Fraud and Abuse laws • False Claims Act (FCA), 31 U.S.C., s. 3729 • Florida False Claims Act, F.S. 817.234 • Anti-Kickback Statute 42 U.S.C. s. 1320a-7b(b) • Physician Self-Referral (“Stark”) Statute, 42 U.S.C. s. 1395nn • Deficit Reduction Act of 2005 • HIPAA of 1996, Title 18, Section 1347 • Fraud Enforcement and Recovery Act of 2009 (FERA).

25. Federal False Claims Act Known as the “Lincoln Law”, covers fraud involving any federally funded contract/program. Imposes civil liability on any person who: • Knowingly presents, or causes to be presented, to an officer or an employee of the United States government a false or fraudulent claim for payment or approval; • Knowingly makes, uses, or causes to be made or used a false record or statement to get a false or fraudulent claim paid or approved by the government; or • Conspires to defraud the government by getting a false or fraudulent claim allowed or paid

26. False Claims Act(cont’d) Key word is “knowingly” • “Knowingly” does not require proof of specific intent to defraud the government. • “Actual knowledge of the information” or acting “in deliberate ignorance of the truth or falsity of the information” or “in reckless disregard of the truth or falsity of the information” is enough.

27. False Claims Act (cont’d) Amended in 1986 to increase the penalties and qui tam awards: • Civil monetary penalty: $5500- to 11,000- per false claim • Treble damages • OIG sanction/exclusion from participation in federal health care programs

28. False Claims Act(cont’d) A False Claims Act case can be brought by: • The Attorney General in federal court • A private citizen (whistleblower) in federal court on behalf of the government (“qui tam” action) The complaint is filed under seal, and the DOJ may decide to intervene and take over the case. • If the DOJ does not, the private citizen may continue the case. If money is recovered, the whistleblower gets 15% - 25% (more if DOJ does not take over the case).

29. False Claims Act(cont’d) Qui Tam recoveries Since 1986 the Government has recovered an estimated $27 billion dollars under the Federal False Claims Act. In 2010 alone, the Government recovered $3 billion dollars. Of that $3 billion, about $2.5 billion was health care related.

30. Florida False Claims Act • Florida’s FCA closely mirrors the Federal FCA • Whistleblowers can bring qui tam action if the fraud involves Medicaid or other state-funded programs. • If a state FCA’s whistleblower provisions are at least as effective as the federal FCA, the state gets a 10% increase in their share of Medicaid fraud recoveries (Florida’s FCA currently does not qualify)

31. Deficit Reduction Act • Requires Medicaid programs to look for FWA • Mandate procedures on FWA • Requires employers who receive more than $5 million per year in Medicaid payments to train their staff on the False Claims Act, qui tam lawsuits and FWA program • Creates incentive for states to have their own whistleblower laws

32. Anti-Kickback Statute It is a felony to knowingly and willfully to offer, pay, solicit, or receive any remuneration to induce or reward referrals of items or services paid in whole or in part by a federal health care program. “Remuneration” includes transfer of anything of value, directly or indirectly, overtly or covertly, in cash or in kind.

33. Physician Self-Referral Prohibition Statute (“Stark law”) The “Stark Law” prohibits a physician from making a referral for certain designated health services to an entity in which the physician (or a member of his/her family) has an ownership/investment interest or with which he or she has a compensation arrangement, unless an exception applies.

34. HIPAA HIPAA established health care fraud as a federal criminal offense and increased the penalties. • Forfeiture of property derived, directly or indirectly, from gross proceeds traceable to the commission of the offense • Imprisonment for up to 10 years/up to 20 years if the violation results in “bodily injury”/life if patient dies

35. HIPAA(cont’d) • Created funding for states to fight fraud and abuse; Florida used the money for the South Florida Health Care Fraud Center. • HIPAA s.203(b)(1) created the Medicare Incentive Reward Program (IRP). to encourage reporting of sanctionable activities. IRP will pay a reward for information that leads to a minimum recovery of $100 from a party determined by CMS to have committed sanctionable offenses.

36. Fraud Enforcement and Recovery Act of 2009 • In May 2009, President Obama signed into law the Fraud Enforcement and Recovery Act (“FERA”) of 2009. • Boosts federal government’s power to investigate and prosecute any financial fraud against the govt. and expands liability under the False Claims Act.

37. Enforcement Agencies Work with each other and citizens who report FWA: • Office of Inspector-General (OIG) • Federal Bureau of Investigation (FBI) • Federal Department of Justice (DOJ) • Postal Inspectors (mail fraud) • United States Attorneys • Medicaid Fraud Control Unit • AHCA Bureau of Medicaid Program Integrity • MEDICs (Medicare Integrity Contractors) • Quality Improvement Organizations (QIO)

38. Enforcement Agencies (cont’d) • In 2009, OIG, CMS and DOJ joined together to form Health Care Fraud Prevention and Enforcement Action Team (HEAT) strike forces. • HEAT brings together investigators from different federal and state agencies. • HEAT operates in 9 major US cities.

39. Sanctions • Civil or criminal prosecution • Fines/Civil Monetary Penalty ($10K/violation) • Restitution • Imprisonment • Administrative sanctions (exclusion, Corporate Integrity Agreement) • Triple damages

40. PUP’s FWA Program • PUP’s claims software (Virtual Examiner) can detect: • Upcoding • Unbundling (e.g., billing for separate lab tests that should be billed as a lab panel) • Duplicate billing • Weekly visits for blood pressure checks for a patient with medically treated and stable hypertension • Billing a hysterectomy for a male patient • Inappropriate place of service for a procedure

41. PUP’s FWA Program (cont’d) • PUP’s Pharmacy Benefit Manager uses software to detect trends, raise red flags (e..g, sudden spike in certain claims • Fraud awareness training for staff, providers, members • Review OIG/GSA sanctions list (providers/employees) • Compliance program to establish an environment that promotes prevention, detection and resolution of conduct that does not conform to legal, ethical or program requirements

42. PUP’s FWAProgram(cont’d) • Report suspected fraud to OIG when there is a reasonable basis to suspect that someone: • Intentionally engaged in improper billing • Submitted improper claims with actual knowledge that they were false • Submitted improper claims with reckless disregard or deliberate ignorance of their truth or falsity

43. PUP’s FWAProgram(cont’d) • Monitor agent and marketing activities • Participate in MEDIC (CMS Medicare Integrity Contractor) to exchange information/report FWA cases • Analyze claims/utilization reports to detect FWA trends/patterns • Educate beneficiaries on reporting FWA • Hotline

44. PUP’s FWAProgram(cont’d) • Work with first tier and downstream entities to: • Implement policies and procedures to address FWA • Conduct FWA awareness training • Encourage employees and members to report suspected FWA • Protect employees and others who report FWA

45. What can I do? • Know your department’s P&Ps • Watch for suspicious activity, red flags • Educate providers/members/vendors • Report suspicious activity • Conduct audits to detect abuse • Bring suggestions for preventing FWA • No retaliation against employees who report in good faith

46. Where to find additional info: • National Health Care Anti-Fraud Association ww.nhcaa.org • CMS website www.cms.hhs.gov • OIG website www.oig.hhs.gov • OIG exclusions www.oig.hhs.gov/fraud/exclusions/html • MLN website www.cms.hhs.gov/MLNGenInfo • Health Care Fraud Prevention and Enforcement Action Team (HEAT) website www.stopmedicarefraud.gov

47. Review Questions • The effort to prevent and detect fraud is___________________. • Exclusively the responsibility of the federal government • A cooperative effort involving state and federal law enforcement agencies (CMS, OIG, FBI, DOJ), the MEDIC working with citizens, Medicare beneficiaries, providers and health plans.

48. ReviewQuestions • Those making false statements and receiving kickbacks, bribes and rebates in relation to the Medicare program may be determined to be guilty of a felony and may be fined or imprisoned, or both. • True • False 48

49. Review Questions 3. The following are potential elements of civil prosecutions and penalties: • Civil monetary penalty (CMP) • Triple damages (penalty up to 3 times the amount claimed) for each item or service. • Exclusion from federally funded programs for a specified number of years. • Signing a Corporate Integrity Agreement which subjects the entity to federal monitoring. • All of the above

50. Review Questions • Neither Medicare nor PUP will pay a provider who has been excluded by the OIG from participation in federal health care programs. • True • False