2011 FRAUD & ABUSE UPDATE John Hellow Hooper, Lundy & Bookman, PC All views expressed in the seminar materials and in the speakers’ presentation are personal views and do not represent the formal positions of Hooper, Lundy & Bookman, Inc. or any of its clients. The speakers expressly reserve the right to freely advocate other positions in other forums.

2 Patient Protection and Affordable Care Act (“PPACA”)  Public focus on PPACA insurance reforms, most of them not effective until 2014  But PPACA once again increased fraud and abuse protections and expanded self- reporting requirements, with many effective NOW

3 PPACA Fraud & Abuse Provisions  New 60-day deadline for reporting and refunding of overpayments  Revised False Claim Act (FCA) public disclosure bar  Clarified knowledge requirement for health care fraud crimes, including Anti- Kickback Statute (AKS) violations  New Stark Law provisions regarding physician-owned hospitals and voluntary disclosure protocol

4 PPACA Fraud & Abuse Provisions  New Civil Monetary Penalties (CMPs) for various health care law violations  New DHHS authority to temporarily withhold payments to providers under investigation for fraud  New mandatory Medicare & Medicaid provider exclusion requirements

Overpayment Reporting & Refunding  Effective March 23, 2010, all Medicare and Medicaid overpayments must be reported and refunded to the applicable payor within the later of: "60 days after the date on which the overpayment was identified;" or "the date any corresponding cost report is due."

Overpayment Reporting & Refunding  “Overpayments" are defined as "any funds that a person receives or retains under [Medicare] or [Medicaid] to which the person, after applicable reconciliation, is not entitled;”  An overpayment “retained by a person after the deadline for reporting and returning the overpayment" is also an "obligation" for purposes of the federal False Claims Act (FCA).

7 From Overpayment To False Claim  In 2009, the FCA was revised to impose civil liability on any person who “knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government;”  Other FCA revisions defined an “obligation” as including “retention of an overpayment” and no longer required any claim or statement about such obligation to be submitted to government as an essential element of a reverse false claim

Overpayments: FAQs and Some Answers  When is an overpayment “identified?” for purposes of the 60-day clock?  Does the 60-day rule require an identified overpayment to be reported if its amount is still unknown?  Must any overpayment arising before March 23, 2010 and identified on or after March 23, 2010 be reported and refunded within 60 days?  How does the 60-day rule apply to interim payments subject to the cost report reconciliation process?

FCA Changes The PPACA revises the FCA’s “public disclosure/original source” bar to:  Limit public disclosure sources to a federal hearing, administrative report, audit, or investigation (while retaining a congressional and Government Accounting Office report, hearing, audit, or investigation, and the news media as public disclosure sources)

FCA Changes  Require an “original source” to have "knowledge that is independent of and materially adds to the publicly disclosed allegations“  Even if “public disclosure/original source” bar applies, the district court may not dismiss the action without the government’s consent

AKS Changes  In order to obtain an AKS conviction, the government must prove that a person “knowingly and willfully” violated the statute  The PPACA clarifies that this intent standard does not require a person to have actual knowledge that his conduct violates the AKS or have a specific intent to violate the AKS  The PPACA also provides that any claim “resulting from” an AKS violation is a false claim within the meaning of the FCA

Stark Changes  Effective December 31, 2010, the Stark Law exception permitting some physician-owned hospitals will be eliminated, no such new hospitals will be allowed, and existing physician- owned hospitals will be prohibited from expanding many aspects of the facility including beds, procedure rooms, and operating rooms, or increasing the percentage of physician ownership  DHHS must develop self-disclosure protocols for Stark violations by no later than September 2010

Withholding of Payment  DHHS is now authorized to withhold payments to a provider where there is a “credible allegation” of fraud  DHHS must promulgate regulations defining when there is a “credible allegation of fraud” for the purpose of a withhold

New Civil Monetary Penalties  $50,000 + treble damages for knowingly making false statements, omission, misrepresentation of a material fact in any federal healthcare program application, bid, or contract  $50,000 for each false record or statement used for payment from federal healthcare program (FCA-type provision)  $15,000 per day for failure to grant timely access, upon reasonable request, to OIG for audits, investigations, evaluations, etc.

Mandatory Exclusions A state must terminate a provider from its Medicaid program if:  The provider is terminated by Medicare or a Medicaid program in another state; or  The provider owns, controls, or manages a provider: That has delinquent unpaid overpayments; Is suspended, excluded, or terminated from participation; or Is affiliated with a suspended, excluded, or terminated individual or entity

Permissive Exclusions DHHS may now exclude a hospital from participation in federal healthcare programs if:  The hospital k nowingly makes a false statement, omission, or misrepresentation of material fact in any application, agreement, bid, or contract to participate or enroll in a federal healthcare program  The hospital intentionally obstructs a Medicare/Medicaid program audit or investigation

Mandatory C ompliance Plans  DHHS can now require designated providers to have compliance programs in place as a condition of program participation.  Plan requirement will almost certainly be applied to hospitals

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