Eventually, any health care organization with an effective compliance program is very likely to discover an issue that raises potential liability and requires disclosure to a government entity. While we largely discuss False Claims Act (FCA) litigation and defense issues on this blog, a complementary issue is how to address matters that raise potential liability risks for an organization proactively.

On August 11, 2017, a group of affiliated home health providers in Tennessee (referred to collectively as “Home Health Providers”) entered into an FCA settlement agreement with the US Department of Justice (DOJ) and the US Department of Health and Human Services Office of Inspector General (OIG) for $1.8 million to resolve self-disclosed, potential violations of the Stark Law, the Federal Anti-Kickback Statute, and a failure to meet certain Medicare coverage and payment requirements for home health services. This settlement agreement underscores the strategic considerations that providers must weigh as they face self-disclosing potential violations to the US government. Continue Reading DOJ Settlement with Home Health Providers Underscores Strategic Considerations for Self-Disclosure

Following on the Department of Health and Human Services Office of Inspector General’s (OIG) June announcement that it would begin updating its public-facing Work Plan on a monthly basis, OIG released its first update to add 14 new topics to the Work Plan on July 17. As the health care industry knows, OIG Work Plan sets forth various projects that the OIG’s Office of Audit Services (OAS) and Office of Evaluation and Inspections (OEI) are currently undertaking or planning to undertake in the future. Previously, OIG updated its Work Plan to reflect adjustments once or twice each year. In a stated effort to increase transparency in its audit and inspection work, OIG changed its practices to begin issuing monthly updates.

The 14 topics all describe new OAS audit work, much of which is focused on Medicare and Medicaid issues. Several areas appear to lend themselves to data-mining, such cross-checking claims between Medicare Parts A and B or providers of concurrent services. For example, the OIG aims to:

  1. Evaluate whether certain Medicare Part B payments for ambulance services are subject to Medicare Part A skilled nursing facility (SNF) consolidated billing requirements (i.e. the SNF received payment for the ambulance transport as part of the Part A payment, and thus was responsible for paying the ambulance provider);
  2. Compare Medicare Part B and Part A claims to check for overlapping claims between home health agencies and/or hospices and outside providers;
  3. Investigate the validity of Medicare payments for telehealth services provided at distant sites that do not have corresponding originating site claims; and
  4. Examine Medicare payments to hospital outpatient providers for non-physician outpatient services provided under the inpatient prospective payment system.

OIG also proposed two more wide-ranging programmatic reviews. First, OIG plans to conduct a study to identify “common characteristics” of “at risk” home health agency providers in an effort to target pre-and post-payment claim reviews. This OAS study appears to be a follow-up to an OEI study issued in June 2016 of “selected characteristics commonly found in OIG-investigated cases of home health fraud.” Second, OIG plans to review hospital electronic medical record incentive payments for compliance with Medicare’s meaningful use requirements. OIG’s continued examination of EMR incentive payments follows on OAS’ June 2017 report estimating that between May 2011 and June 2014, over $729 million was paid to hospitals and physicians who did not comply with the incentive program requirements.

For a full list of the 14 additional inquiries, visit the OIG’s Work Plan website.

On May 31, 2017, the US Department of Justice announced a Settlement Agreement under which eClinicalWorks, a vendor of electronic health record software, agreed to pay $155 million and enter into a five-year Corporate Integrity Agreement to resolve allegations that it caused its customers to submit false claims for Medicare and Medicaid meaningful use payments in violation of the False Claims Act.

Read the full article.

Released on March 27, 2017, the Compliance Program Resource Guide (Resource Guide), jointly prepared by the US Department of Health and Human Services Office of Inspector General (OIG) and the Health Care Compliance Association (HCCA) reflects the result of a “roundtable” meeting on January 17, 2017, of OIG staff and compliance professionals “to discuss ways to measure the effectiveness of compliance programs.” The resulting Resource Guide document catalogues the roundtable’s brainstorming discussions to “…provide a large number of ideas for measuring the various elements of a compliance program…to give health care organizations as many ideas as possible, to be broad enough to help any type of organization, and let the organization choose which ones best suit its needs.”

Here are a few main takeaways from the Resource Guide:

  • Ideas for Auditing: The Resource Guide contributes to the critical conversation about how to evaluate compliance program effectiveness by listing additional ideas on what to audit and how to audit those areas. The items listed in the Resource Guide generally center on ideas on auditing and monitoring compliance program elements, such as periodically reviewing training and policies and procedures to ensure that they are up-to-date, understandable to staff and accurately reflect the business process as performed in practice. Legal and compliance can use this document to identify those particular elements that may be most applicable to their individual organization.

Organizations would also benefit from considering the questions listed in the new compliance program guidance issued in February by the US Department of Justice (DOJ) Criminal Division’s Fraud Section, “Evaluation of Corporate Compliance Programs” (DOJ Guidance), as part of examining compliance program effectiveness. (We covered the DOJ Guidance previously.) Health care organizations may also use the various provider-specific compliance program guidance documents created by OIG over the years as another source for ideas on what to measure.

  • Not a Mandate: The Resource Guide is very clear that it is not intended to be a “best practice”, a template, or a “‘checklist’ to be applied wholesale to assess a compliance program.” This clarification is an important one since there is the potential for the Resource Guide to be (incorrectly) viewed by qui tam relators or others as creating de facto compliance program requirements or OIG recommendations.
  • How to Measure: The Resource Guide does not delve into how or who should undertake or contribute to the effectiveness review. Who conducts the review is a question that may have legal significance given the nature of a particular issue. General counsel and the chief compliance officer should consider this issue as part of the organization’s ongoing compliance program review. It may be valuable to include the organization’s regular outside white collar counsel to comment on such critical, relevant legal considerations as the proper conduct of an internal investigation; preserving the attorney-client privilege in appropriate situations; coordinating communications between legal, compliance and internal audit personnel; and applying “lessons learned” from the practices of qui tam relators and their counsel. Outside consultants may also have useful expertise and insight to contribute. In some situations, the organization may want to undertake a compliance program assessment conducted under attorney-client privilege as part of advising the executive team and the board audit and compliance committee.

Perhaps the greatest benefit of the Resource Guide is the extent to which it serves as a catalyst for closer, coordinated consideration of the metrics by which compliance program effectiveness may be measured by legal and compliance personnel and the audit and compliance committee. The Resource Guide is one of several resources that can be referenced by the general counsel and the chief compliance officer as they work together to support the organization’s audit and compliance committee in reviewing compliance program effectiveness.

With health care becoming more consumer-driven, health care providers and health plans are wrestling with how to incentivize patients to participate in health promotion programs and treatment plans. As payments are increasingly being tied to quality outcomes, a provider’s ability to engage and improve patients’ access to care may both improve patient outcomes and increase providers’ payments. In December 2016, the Office of Inspector General of the US Department of Health and Human Services (OIG) issued a final regulation implementing new “safe harbors” for certain patient incentive arrangements and programs, and released its first Advisory Opinion (AO) under the new regulation in March 2017. Together, the new regulation and AO provide guardrails for how patient engagement and access incentives can be structured to avoid penalties under the federal civil monetary penalty statute (CMP) and the anti-kickback statute (AKS).

Read the full article.

The Office of Inspector General (OIG) recently published a final rule regarding its exclusion authorities. The final rule goes into effect March 21, 2017, and expands OIG’s authority to exclude certain individuals and entities from participating in federal health care programs under section 1128 of the Social Security Act.

Read full article.

The Department of Justice (DOJ) doubled-down on emphasizing corporate compliance programs with new guidance from the Criminal Division Fraud Section with the “Evaluation of Corporate Compliance Programs” (Criteria).  This document, released February 8 without much fanfare, contains a long list of benchmarks that DOJ says it will use to evaluate the effectiveness of an organization’s compliance program.  The Criteria may publicize the factors Hui Chen, the Criminal Division’s 2015 compliance counsel hire, uses to evaluate compliance programs.  The Criteria also provides practical guidance on how organizations can evaluate their compliance programs.  This document operationalizes DOJ’s Principles of Federal Prosecution of Business Organizations (knows as the “Filip Factors”), which stated that the existence and effectiveness of a corporation’s preexisting compliance program is a factor that the DOJ will review in considering prosecution decisions.

The Guidance contains 11 topics that shift the analysis among examining how the alleged misconduct could have occurred, the organization’s response to the alleged misconduct, and the current state of the compliance program.  One entire category, titled “Analysis and Remediation of Underlying Misconduct,” has an obvious focus.  But, the other categories contain questions that touch on each of the three themes.  For example, the “Policies and Procedures” category asks questions about the process for implementing and designing new policies, whether existing policies addressed the alleged misconduct, what policies or processes could have prevented the alleged misconduct, and whether the policies/processes of the company have improved today.  Other categories examine the company’s historic and current risk assessment process and internal auditing, training and communications, internal reporting and investigations, and employee incentives and discipline.  DOJ also discusses management of third parties acting on behalf of the company and, in the case of a successor owner, the due diligence process and on-boarding of the new company into the broader organization. Continue Reading DOJ Releases Detailed Criteria for Evaluating Compliance Programs

The good, reassuring news about that “old dog” fraud and abuse as it enters an age of payment reform is that criminal liability for fraud still requires a specific intent to defraud the federal health care programs, anti-kickback liability still requires actual knowledge of at least the wrongfulness, if not the illegality, of the financial transaction with a referral source, and civil False Claims Act liability for Stark Law violations still requires actual knowledge, a reckless disregard for, or deliberate ignorance of the Stark Law violation. This should mean that good faith and diligent efforts to comply with law, including seeking and following legal counsel, still go a long way in managing an organization’s and individual executive’s risk under the fraud and abuse laws. The bad, unsettling news about fraud and abuse in an age of payment reform, however, is that (1) anxiety about reform and stagnating and declining physician incomes are propelling a spike in transactions between health systems and physicians at a time when qui tam plaintiffs and the law firms that represent them are aggressively challenging the legitimacy and common structures for these transactions; and (2) the Stark Law is largely indifferent to the good faith intentions of health systems to integrate and enter into coordinated care arrangements with physicians, and continues to impose on health systems heavy burdens of proof that the arrangements comply with ambiguous standards like fair market value, volume or value and commercial reasonableness. While financial transactions incident to the Centers for Medicare and Medicaid Services’ (CMS) innovative care delivery and payment initiatives, such as accountable care organizations (ACOs), medical homes and bundled payment arrangements can be protected by the fraud and abuse/Stark waivers discussed in Part B below, there are many other common transactions and arrangements with physicians still operating in a fee-for-service environment  (such as practice acquisitions, employment, “gainsharing,” service line co-management, pay-for-quality and non-ACO clinically integrated networks) that are not protected by the waivers. During this period of transition to transformation of the health delivery and payment system, the key areas of risk for health systems are their burdens of proof on the ‘big three” issues of:

  • Fair market value,
  • Volume or value, and
  • Commercial reasonableness.

Each is discussed separately below, and the industry practices for managing these risks. Please note that none of these practices are necessarily “best” or “normative” practices, but are what we have observed.

Read the full article here.

The past three months have seen a flurry of advisory opinion activity from the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG). The majority of this activity focuses on patient assistance programs (PAPs) as donors and organizations continue to have questions about OIG’s most recent PAP guidance. While none of these opinions or modifications are dramatically new on their face, together they provide valuable insight into the types of facts that can mitigate the OIG’s general concerns with tailored disease funds.

Typically, sponsored by pharmaceutical manufacturers and/or independent charity organizations with industry donors, PAPs provide financial assistance or free prescription drugs to low income individuals. Some PAPs are also structured to provide assistance to patients with a specific disease, like cancer or Crohn’s disease. As PAPs have the potential to be used by manufacturers to subsidize the purchase of their own products, or to improperly steer a patient’s drug selection, they can trigger scrutiny under the federal Anti-Kickback Statute (AKS) and Beneficiary Inducement Civil Monetary Penalty (CMP), among other laws. Not surprisingly, the OIG is more comfortable with bona fide charitable programs that are not drug-specific and that reflect other characteristics demonstrating a broad patient focus, rather than those reflecting a drug or pharmaceutical manufacturer focus.

Historically, the OIG has treated PAPs as important safety nets for patients who face chronic illnesses and high drug costs. The OIG issued a special advisory bulletin (SAB) in 2005 confirming that PAPs could help ensure patients had access to and could afford their medically necessary drugs. The OIG’s guidance evolved with its May 2014 SAB, which addressed the growing trend of independent charity PAPs establishing or operating specific disease funds that limit assistance to a subset of available products. The OIG articulated a concern with such PAPs, and indicated that it would view such programs as having a higher baseline risk of abuse when their assistance was limited to only a subset of available FDA-approved products for treatment of the disease. The OIG advised PAPs to define disease funds in accordance with widely recognized clinical standards and in a manner that covered a broad spectrum of products and manifestations of the disease (e.g., without reference to specific symptoms, drug stages, treatment types, severity of symptoms or other “narrowing” factors).

Consistent with this guidance, the OIG began issuing new advisory opinions and modifications of previous opinions in January 2015. The OIG’s opinions and modifications posted in the past three months are also consistent with this standard, but importantly add nuanced factors and exceptions that appear to show a more refined stance on specific disease funds. In December, the OIG posted a modification of Advisory Opinion 07-11, concerning a PAP that provided support for patients experiencing a specific symptom of cancer. In January, the OIG posted two new advisory opinions that addressed a PAP tailored to support patients with two specific diseases (a type of cancer and a type of chronic kidney disease) and a PAP providing support to needy patients with Stage 3 or Stage 4 of a specific disease, respectively. Also in January, the OIG posted a modification of Advisory Opinion 04-15, which addressed a PAP that maintained a disease fund limited to patients with certain metastatic cancers. While all of these specific disease funds may appear inconsistent with the OIG’s 2014 SAB, in each instance the OIG found that the tailored funds presented a low risk of abuse and merited a favorable opinion given the safeguards each employed.

In its Modification of Advisory Opinion 04-15, the OIG noted two factors that minimized the risk that the tailored disease fund could be leveraged by donors. First, the specific symptom of cancer was treatable by 62 different drugs made by 26 different manufacturers, so the program would not be supporting only one specific manufacturer or drug by tailoring its assistance to patients with the symptom. Second, and most importantly to the OIG, the PAP would not limit assistance through the fund just to drugs to treat that symptom; instead, the PAP would provide assistance for all medications prescribed for the qualifying patient’s underlying cancer and related symptoms. By certifying that the PAP would extend its support to underlying and related medical needs of patients with this symptom, the disease fund essentially agreed to expand the practical impact of the fund.

This “broadening” of support from otherwise narrowly defined disease funds can also be seen in the OIG’s other recent advisory opinions on the subject. In Opinions 15-16 and 15-17, for example, the OIG noted its favorable opinion was based in part on the PAPs’ representations that there were several different drugs made by various manufacturers currently available to treat each of the specific diseases and that the PAPs would, at a minimum, assist patients with all FDA-approved drugs to treat each disease (and, for the fund supporting patients with Stages 3 or 4 of the disease, would not limit the financial assistance to drugs expressly approved for advanced stages of the disease). In its Modification of Opinion 07-11, the PAP also noted that its support would not be limited to drugs expressly approved for the metastatic stage of the cancer. These opinions also include PAP certifications that if any of the PAP’s future disease funds would result in supporting only one FDA-approved drug treatment or one manufacturer, the PAP will also support the other medical needs of patients with the disease, including co-payment support for all prescription medication prescribed for the management and treatment of the patient’s disease (like pain and anti-nausea medications).

While the OIG continues to reiterate the potential risks posed by disease funds that are tailored to specific symptoms, severity of symptoms, method of drug administration, stages of a disease, or types of drug treatment, its recent opinions and modifications illustrate several exceptions to this general position. This recent flurry of OIG activity may be a good prompt for organizations with PAPs to review any specific disease funds in light of these most recent opinions.

RehabCare, the nation’s largest provider of nursing home rehabilitation services, agreed to pay $125 million on January 12 to settle claims under the False Claims Act (FCA) in connection with allegations that it caused its skilled nursing facility customers to submit false claims to Medicare for therapy services. In connection with the settlement, RehabCare entered into a corporate integrity agreement (CIA) with the Office of Inspector General (OIG). The provider’s companies, RehabCare Group, Inc. and RehabCare Group East, Inc. (RehabCare), have been subsidiaries of Kindred Healthcare, Inc. (Kindred) since their merger in 2011 with a Kindred subsidiary. In a press release, Kindred stated that it agreed to the settlement without any admission of wrongdoing in order to provide clarity for contract customers, shareholders and government oversight entities.

The government’s unsealed Complaint in Intervention alleged that RehabCare manipulated the amount and type of patient therapy to achieve a higher Medicare reimbursement level than was warranted for the patient. Skilled nursing facilities are reimbursed by Medicare by resource utility groups (RUGs), which reflect the anticipated costs associated with providing nursing and rehabilitation services to beneficiaries with similar characteristics or resource needs. A patient’s RUG is assigned based upon the time and type of therapy provided to the patient during a seven-day reference period, and the amount of reimbursement is tied to the RUG level that is determined during that reference period.

The CIA, which applies to both RehabCare and Kindred, has a five-year term and, among other requirements, provides for the development of staff training regarding the accurate use of RUGs, documentation of therapy services, coordination of care and other requirements for the provision of therapy. In addition, Kindred must engage an independent review organization to conduct annual medical necessity and appropriateness reviews related to contracted rehabilitation services. The CIA also requires the submission of annual reports that include certifications as to compliance with applicable federal health care program requirements and with the CIA from several executives of RehabCare and with executives of Kindred who have direct oversight responsibilities for RehabCare, including the compliance officer, CEO and CFO of Kindred.

The case was originally brought via a qui tam lawsuit filed by two former employees of RehabCare.  These individuals will receive approximately $24 million as their share of the recovery.

A copy of the DOJ press release is available here.