Category Archives: Fraud and Abuse

November 29, 2016

Beware Gifts to Providers, Patients or Other Referral Sources

By Kim Stanger, Holland & Hart LLP

At this time of year, healthcare providers may want to give gifts to referring providers, patients or other sources of business; however, such gifts may violate federal and state fraud and abuse laws and result in fines—or worse—to both the giver and recipient. Here are some guidelines to ensure your gift giving does not get you in trouble with the government.

1. Gifts To Referral Sources. The federal Anti-Kickback Statute (“AKS”) prohibits soliciting, offering, giving, or receiving remuneration in exchange for referrals for items or services covered by federal healthcare programs (e.g., Medicare and Medicaid) unless the arrangement fits within a regulatory exception. (42 USC 1320a-7b(b)). AKS violations are felonies, and may result in criminal and civil penalties, False Claims Act liability, and exclusion from Medicare and Medicaid programs. The AKS is violated if “one purpose” of the remuneration is to induce federal program referrals, including gifts to referring practitioners or program beneficiaries to encourage or reward their business. (OIG Adv. Op. 12-14). Significantly, the AKS applies to both the giver and recipient; thus, soliciting or receiving gifts from vendors or other providers may expose the recipient to liability. The OIG has suggested that “nominal” gifts would not create much AKS risk, but offers no guidance as to what is “nominal”. (65 FR 59441). The AKS does not expressly apply to referrals for private pay business, but the OIG has warned that offering remuneration to obtain private pay referrals may also induce federal program business and thereby violate the AKS. (OIG Adv. Op. 12-06). In addition, offering gifts to induce or reward private pay business may violate state laws, including state laws prohibiting kickbacks, rebates, or fee splitting. (See, e.g., Idaho Code 41-348 and 54-1814). In short, you should not give or accept gifts to or from referral sources (especially those referring federal program business) unless the gift is truly nominal, is clearly and completely unrelated to past or future referrals, or is very unlikely to influence referrals. Continue reading

November 10, 2015

TRICARE Claims Processing Suspension

by Ellen Bonner, Callaway Bonner Law LLC (Guest Author)

Warning: TRICARE Claims Processing Suspension May Occur During Health Care Fraud Investigations for Compounding Pharmacy Prescriptions

Yesterday, the Wall Street Journal (WSJ) reported on a significant federal investigation regarding compounding pharmacies and compound pharmaceutical prescriptions for TRICARE beneficiaries in at least four states. TRICARE, the federal health benefit program under the Defense Health Agency, provides health care benefits for more than 9.5 million current and retired members of the uniformed services and their families. TRICARE health care fraud allegations can result not only in civil and criminal sanctions, but also in TRICARE claims processing temporary suspensions, as well as provider exclusion and termination from TRICARE and other federal healthcare programs.

Health Care Fraud: Civil and Criminal Action

According to the WSJ there were four civil fraud settlements by Florida pharmacies last month that will soon be reported. These settlements – amounting to $12.8 million – are based upon allegations of falsely billing TRICARE for expensive pharmaceutical creams and gels to treat pain, scars, and other ailments. The WSJ reported that federal prosecutors are pursuing “numerous criminal investigations,” and the U.S. Attorney for the Middle District of Florida anticipates filing criminal charges in early 2016 against pharmacies, drug marketers, and physicians cited in the settlements. Separate Justice Department investigations on compounding pharmacies are ongoing in California, Mississippi, and Texas. Continue reading

July 10, 2015

Appellate Court Affirms $237 Million Award Against Hospital for Stark Law Violations

by Teresa Locke, Holland & Hart LLP

The Fourth Circuit Court of Appeals recently issued an alarming decision affirming a $237 million judgment against Tuomey Healthcare Systems, a nonprofit hospital located in a small, largely rural South Carolina community that is a federally-designated medically underserved area. The judgment resulted from a jury’s finding that Tuomey submitted 21,730 false claims to Medicare for reimbursement knowing that the claims were generated through part-time physician employment contracts that violated the referral constraints found in the Stark Law. The decision clarifies that hospital “facility fees” associated with outpatient procedures performed by physicians constitute “referrals” under the Stark Law even when the “referring” physician is personally performing the outpatient procedure. The false claims themselves had a total value of $39 million, but with automatic treble damages and civil penalties in the minimum amount for each violation, the resulting judgment was for $237 million. Despite its affirmance of the judgment, the Fourth Circuit panel recognized “the troubling picture this case paints: An impenetrably complex set of laws and regulations that will result in a likely death sentence for a community hospital in an already medically underserved area.” U.S. ex rel. Drakeford v. Tuomey.

The part-time employment contracts at issue in Tuomey allowed the physicians to maintain their private practices, but required them to perform all outpatient surgical procedures exclusively at the hospital. The contracts had multiple compensation components, two of which proved problematic under Stark. First, each physician was paid an annual guaranteed base salary which was adjusted from year to year based on the amount the physician collected from all services rendered the previous year. Second, the bulk of the physicians’ compensation was earned in the form of a productivity bonus, which paid the physicians 80% of the amount of their collections for that year. Continue reading

June 25, 2014

Waiving Copays and Deductibles

by Kim C. Stanger, Holland & Hart LLP

Providers sometimes waive patients’ cost-sharing amounts (e.g., copays or deductibles) as an accommodation to the patient, professional courtesy, employee benefit, and/or a marketing ploy; however, doing so may violate fraud and abuse laws and/or payor contracts. From a payor’s perspective, waiving cost-sharing amounts creates two problems. First, payors often contract with providers to pay based in part on the provider’s usual charges. The Office of Inspector General (“OIG”) has argued that a provider who routinely waives copays is misrepresenting its actual charges. Second, and more importantly, payors require copays to discourage overutilization and reduce costs. Waiving copays and deductibles removes the disincentive for utilization, thereby potentially increasing payor costs. Accordingly, federal and state laws as well as payor contracts generally prohibit waiving cost-sharing absent genuine financial hardship.

Federal Programs. Waiving copays and deductibles for government program beneficiaries implicates at least the following laws:

1. Monetary Penalties Law. The federal Civil Monetary Penalties Law (“CMPL”) prohibits offering or transferring remuneration to federal program beneficiaries if the provider knows or should know that the remuneration is likely to influence the beneficiary to order or receive items or services payable by federal or state healthcare programs (e.g., Medicare) from a particular provider. (42 USC 1320a-7a(a)(5)). Violations may result in penalties of $10,000 per item or service provided, treble damages, repayment of amounts paid, and exclusion from federal programs. (Id.; 42 CFR 1003.102). The CMPL specifically defines “remuneration” to include waivers of copays and deductibles. (42 USC 1320a-7a(i)).

Continue reading

May 12, 2014

Idaho Law re Prescribing Without an Examination

by Melissa Starry

As has been widely reported, the Idaho Board of Medicine recently sanctioned a physician for prescribing a common antibiotic over the phone without a prior examination or established patient relationship. This short alert will, hopefully, clear up some of the misunderstanding caused by the media reports.

General Prohibition. Idaho Code § 54-1733 states:

a prescription drug order for a legend drug is not valid unless it is issued for a legitimate medical purpose arising from a prescriber-patient relationship which includes a documented patient evaluation adequate to establish diagnoses and identify underlying conditions and/or contraindications to the treatment. Treatment, including issuing a prescription drug order, based solely on an online questionnaire or consultation outside of an ongoing clinical relationship does not constitute a legitimate medical purpose.

(Idaho Code § 54-1733(1)). As in other states, the Idaho statute was passed to address standard of care concerns resulting from internet pharmacies and “tel-a-doctor” companies. A violation of the statute constitutes unprofessional conduct which may subject the practitioner to adverse licensure action. (Id. at § 54-1733(5)). Continue reading

November 11, 2013

Gifts to Referral Sources and Patients

by Kim Stanger, Holland & Hart LLP

At this time of year, many healthcare professionals want to give gifts to patients, physicians, or other referral sources to show their appreciation, but doing so may violate federal and state fraud and abuse laws. Here are some guidelines to ensure your gift giving does not get you in trouble with the government.

1. Gifts To Referral Sources. The federal Anti-Kickback Statute (“AKS”) prohibits soliciting, offering, giving, or receiving remuneration in exchange for referrals for items or services covered by federal healthcare programs (e.g., Medicare and Medicaid) unless the arrangement fits within a regulatory exception. (42 USC 1320a-7b(b)). AKS violations are felonies, and may result in criminal and civil penalties, False Claims Act liability, and exclusion from Medicare and Medicaid programs. The AKS is violated if one purpose of the remuneration is to induce federal program referrals, including gifts to referring practitioners or program beneficiaries to encourage or reward their business. (OIG Adv. Op. 12-14). Moreover, the AKS applies to both the giver and recipient. The OIG has suggested that “nominal” gifts would not create much AKS risk, but offers no guidance as to what is “nominal”. (65 FR 59441). The AKS does not expressly apply to referrals for private pay business, but the OIG has warned that offering remuneration to obtain private pay referrals may also induce federal program business and thereby violate the AKS. (OIG Adv. Op. 12-06). In addition, offering gifts to induce or reward private pay business may violate state laws, including state laws prohibiting kickbacks, rebates, or fee splitting. In short, you should not give or accept gifts to or from referral sources (especially those referring federal program business) unless the gift is truly nominal, is clearly and completely unrelated to past or future referrals, or is very unlikely to influence referrals. Continue reading

August 22, 2012

Obama Administration Announces Fraud Prevention Partnership

By Bill Mercer

Last month, Secretary Sebelius and Attorney General Holder announced a new collaboration with health insurance companies to provide both government and private payer claims data to a third-party to detect overpayments and fraud.

http://www.hhs.gov/news/press/2012pres/07/20120726a.html

http://www.justice.gov/opa/pr/2012/July/12-ag-926.html

By pooling claims data and having the third-party analyst look for suspicious billing patterns, the federal government and participating insurers believe outliers would be readily identifiable.  Claims data which appear to suggest the existence of fraud or overpayments would be referred to federal law enforcement for further investigation.

By commingling claims information from private insurers, Medicaid, and Medicare, the Administration believes it could detect, for example, a provider who bills all payers for more than 24 hours in a day or bills the same claims to multiple insurers.  Attorney General Holder’s statement [http://www.justice.gov/iso/opa/ag/speeches/2012/ag-speech-120726.html] refers to the prospect of detecting claims made to multiple public and/or private insurance plans for the same patient on the same day in more than one city.

A number of private sector participants have volunteered to participate in the partnership, including:

America’s Health Insurance Plans

Amerigroup Corp.

Blue Cross and Blue Shield Association

Blue Cross and Blue Shield of Louisiana

Humana Inc.

Independence Blue Cross

Travelers

Tufts Health Plan

UnitedHealth Group

WellPoint Inc.

Significant details necessary to the creation of a functional partnership have yet to be resolved.  According to the HHS press release, the Executive Board and two committees will meet for the first time next month.  The initial work plan is also a work-in-progress.

The partnership received support from Senator Coburn and Senator Hatch, who wrote to the Acting Administrator of CMS that “this is an effort which is long overdue.”  [http://www.coburn.senate.gov/public/index.cfm?a=Files.Serve&File_id=b3d5048d-a395-49af-b4ac-2c2b65b9a4a0]  The lack of detail in the Administration’s rollout of the initiative generated a series of follow-up questions from Senators Coburn and Hatch.  They have asked for responses on the following issues by the end of August:

“Specifics regarding exactly how this collaboration will work including what entities will be involved, whether HHS/CMS or another entity will be overseeing the effort and a timeline for expected key milestones of the effort.

A step-by-step explanation of how the information will be shared (e.g., what systems will be used to transmit the data), what authorities allow the exchange of information, what impediments exist to sharing information (e.g., statutory language) and where the information will be stored/analyzed.

A description of the third party who will be analyzing the data, as well as an explanation of how that entity will be selected and what their capabilities are to integrate and analyze such a large amount of information.

Specifics regarding what will happen when leads are identified, how that information will be disseminated, and what the process will be for following up on those leads.”