© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1

2 Chapter 14: Health Care Fraud and Abuse

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 3 Introduction Billions of dollars are lost from fraud and abuse in health care Federal and state legislatures have taken action: –Additional laws to address the problem –Increased enforcement efforts Increased scrutiny from private insurers as well as the news media HIM role to mange many risk areas

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4 Fraud and Abuse Defined –False misrepresentation of facts –Made knowingly and willfully –Relied upon to another’s detriment –May be in the form of words or conduct In health care, provider or organization –Misrepresents facts to government or third party payer –Facts appear legal and customary

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 5 Fraud and Abuse: Forms False claims and billing practices –Upcoding: Billing for higher level of service than what was actually rendered and receiving higher rate –Unbundling Submitting separate bills for each component of procedure to get higher reimbursement Stark violation: referral of patient to a facility in which provider has financial interest Kickbacks: referral of patient to another provider in exchange for compensation

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 6 Fraud and Abuse: Major Laws False Claims Act (FCA) –Enacted during Civil War to protect Union government from paying for products and services not provided –Violation To knowingly submit a false or fraudulent claim to government in order to get paid Intentional act: knew or should have known claim was false –Healthcare: making false claims to government Medicare and Medicaid

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 7 Fraud and Abuse: Major Laws Qui tam actions –FCA claim typically brought as qui tam action –Allow private plaintiffs (relator) to sue on behalf of U.S. government –Will receive a portion of recovery if successful –Relator files suit; government may intervene –Whistleblowers: Relator who is current or former employee Has knowledge about fraud and abuse

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 8 Fraud and Abuse: Major Laws Anti-kickback statutes –Prohibits payment in exchange for referrals of federally payable services (Medicare) –State laws also prohibit payment for referrals for services of managed care and insurers. –Paying a physician for referrals violates state and federal law Below cost testing in exchange for referrals Partnerships allowing for profit sharing OIG lists exceptions – “safe harbors”

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 9 Fraud and Abuse: Major Laws Physician self-referral prohibitions (Stark) Stark I prohibits referral of Medicare patients –To clinical lab in which physician or a member of his family has financial interest Stark II extended prohibition broadly to include other designated health services –Durable medical equipment, occupational and physical therapy, home health, hospital services

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10 Fraud and Abuse: Major Laws Mail and wire fraud statutes –Prohibit use of postal service or commercial wire services to advance a fraud –Business practices involve routine use of mail or wire –Organization involved in fraud may also be found to violate these laws –Violation is a felony: fine, imprisonment, or both

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 11 Fraud and Abuse: Major Laws Civil money penalty law –Federal government may apply this law to other violations –Department of Health and Human Services Permitted to recover money damages For false or fraudulent claims –Health care provider must make restitution to government, plus Fines up to three times the amount of damages Additional fines, not to exceed $10,000

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 12 Fraud and Abuse: Major Laws Permissive and mandatory exclusion from Medicare/Medicaid program participation –Federal statutes –Criminal or other program violations may result in exclusion of provider or organization from participation in Medicare All other federally financed health care programs –Significant deterrent: not economically feasible to forgo service to Medicare beneficiaries

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 13 Fraud and Abuse: Major Laws HIPAA includes focus on fraud and abuse –Modifies civil money penalty law to include Upcoding and claims for medically unnecessary services Waiver of co-insurance to influence patients Submitting claims after being excluded from Medicare –Criminalizes disclosure of individually identifiable health information Where intent is personal gain and malicious harm

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 14 Fraud and Abuse: Major Laws HIPAA: enhanced resources to combat fraud –Fraud and Abuse Control Program Operated with DOJ and OIG Investigate health care related services –Medicare Integrity Program Contracts with private companies to assist in protection from fraud –Beneficiary Incentive Program Encourages patient reporting of suspected fraud/abuse –Health Care Fraud and Abuse Data Collect Program Database in coordination with NPDB

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 15 Fraud and Abuse: Major Laws Deficit Reduction Act of 2005 –Mandates compliance programs for some institutions –Requires education of staff on administrative remedies to FCA –Adds resources to combat fraud –Provides financial incentives to states to adopt laws similar to FCA

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16 Fraud and Abuse: Major Laws American Recovery and Reinvestment Act of 2009 (ARRA) –Strengthens enforcement of HIPAA –Business associates covered by HIPAA rule Must meet administrative, technical, and physical safeguard requirements Subject to civil and criminal penalties for violation –Clarifies who is accountable for wrongful disclosure of PHI Individuals and health care entities may be prosecuted

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 17 Fraud and Abuse: Law Enforcement Agencies Shared responsibility to prosecute Office of Inspector General (OIG) –Part of Department of Health and Human Services –Authorized to conduct investigations of fraud Civil, administrative, and criminal Investigations Associated with federal Medicare and Medicaid –OIG initiatives have been very successful –Recover alleged overpayments from improper claims

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 18 Fraud and Abuse: Law Enforcement Agencies OIG’s strong approach criticized –Concerns that sometimes error is an honest mistake and not intentional fraud –DHHS created preventative programs Operated by CMS Promote use of correct coding methodologies Program to reduce payment error rates With OIG, publish guidelines to clarify regulations CMS website contains materials

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 19 Fraud and Abuse: Law Enforcement Agencies Federal Bureau of Investigation (FBI) –Widest responsibility to investigate health care fraud –Authority extends beyond any one program –May work with OIG, DCIS, postal service and CMS –Investigates public or whistleblower complaints State Attorney Generals may also bring civil actions related to fraud and abuse Investigations extend over several years –Obtain documents through subpoenas/search warrant –Interviews

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 20 Fraud and Abuse: Law Enforcement Agencies Health information manager role –Duty to cooperate with investigation –Obligation to notify legal counsel of agent’s requests –Legal counsel will guide response Completion of investigation –Result may be finding of wrong doing –Agency work with U.S. Attorney to prosecute –To avoid trial, settlement may be made

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 21 Fraud and Abuse: Compliance Programs Compliance efforts build a culture that promotes adherence to laws Programs –Establish effective internal controls –Promote prevention, detection, and resolution of acts that do not comply with law –Ensure that federal, state, and private health plan program requirements are met

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 22 Fraud and Abuse: Compliance Programs May be grounded in –Ethics-based approach Compliance is the right thing to do Encourage good behavior Demonstrates commitment to responsible corporate conduct –Minimum legal requirements approach Conform to laws to avoid punishment Fear of getting caught

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 23 Fraud and Abuse: Compliance Programs No matter the approach, effective program –Reduces exposure to penalties/sanctions –Improves provider efficiency and effectiveness –Includes development of centralized mechanism to distribute legal and regulatory directives HIM role to ensure compliance through –Focus on documentation processes –Proper use of diagnostic and procedural codes –Responsible management of health information

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 24 Fraud and Abuse: Compliance Programs Key elements –Written standards of conduct –Designation of Chief Compliance Officer –Education and training programs –Process for receiving complaints of violations –Develop system to respond to allegations of improper acts and enforce disciplinary actions –Audit and evaluate to monitor compliance –Investigate and correct problems

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 25 Fraud and Abuse: Compliance Programs Practice of corporate compliance usually voluntary Certain requirements are mandatory –Deficit Reduction Act requires educational program if receive $5 million or more from Medicare –Red Flag Rules (FTC) require programs to prevent, detect, and respond to identify theft –Corporate integrity agreements

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 26 Fraud and Abuse: Compliance Programs Corporate integrity agreements –Financial settlements with health care providers accused of fraud and abuse –Specify rules of conduct to be followed to remedy wrong doing –Monitoring and reporting requirements –More stringent and expensive than compliance program

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 27 Fraud and Abuse: Compliance Programs Technology to combat fraud –Advanced analytics software Interoperable electronic exchange between providers Enables examination of data to detect fraud Validates claim before making payment –Automated coding software Assigns correct code based on guidelines and reporting rules Prevents submission of fraudulent codes for payment