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Law Outlines Health Care Fraud and Abuse Outlines

Health Care Fraud And Abuse Outline

Updated Health Care Fraud And Abuse Notes

Health Care Fraud and Abuse Outlines

Health Care Fraud and Abuse

Approximately 26 pages

...

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  1. Introduction

    1. Fraud & Abuse: Defined

      1. “Fraud”

        1. Definition – “theft by deception” – making false statements or representations of material facts to obtain some benefit or payment for which no entitlement would otherwise exist

        2. Examples – knowingly billing for services that were not furnished and/or supplies not provided; knowingly altering claims forms and/or receipts to receive a higher payment amount

      2. “Abuse”

        1. Definition – “gaming the system” – practices that, directly or indirectly, result in unnecessary costs to Medicare/Medicaid

        2. Examples – misusing codes on a claim; charging excessively for services or supplies; billing for services that were not medically necessary

    2. Recent examples from DOJ

      1. Schemes, providers, pharma, nursing homes, health systems

        1. e.g., Teva Pharmaceuticals & inflating Rx prices

          1. Cause submission of false claims to Medicaid; state Medicaid programmes establish reimbursement rates for Rx based on AWPs reported by Rx manufacturers; inflated AWPs causes government to set reimbursement rates for above actual prices paid to them by their customers such as retail pharmacies; retailer would then allegedly “market the spread” in an effort to induce higher sales

          2. “Market the spread” – when a pharma company gives doctors a certain Rx price (AWP) they have an obligation to self-report AWP so Medicare/Medicaid knows what to reimburse – allegations that doctors are encouraged to prescribe Rx to pocket reimbursement


  1. “The Big 3”

    1. Anti-Kickback Statute (AKS), 42 USC § 1320a-7b(b)(1), (2) – criminal liability

[Prohibits financial incentives that encourage excessive or unnecessary use of government-paid health care]

3 required AKS elements:

Intentionally

(knowingly, willfully)

+

payment of remuneration

(offers, pays, solicits, receives)

+

to induce/refer

=

violation of AKS if not within statutory exception or safe harbors

Questions to Ask

- Is the person or entity in a position to generate business?

- Is the product or service reimbursed by federal health care programmes?

- Is one purpose of this arrangement to generate additional business?

Safeguards

- Maintain affirmative and meaningful patient choice (including description of alternative treatments)

- Disclosure of relationships or arrangement

- No referral or requirement for referral clauses

- Ex ante determination of fee schedule governed by FMV

- Ongoing monitoring, record retention, timesheets

  1. Statute

    1. Definition – An individual or entity that “knowingly and willfully solicits, receives, offers or pays any remuneration (including any kickback, bribe or rebate)” in “return for” or “to induce” referrals or services (business) reimbursable by the federal government

      1. PPACA – Reduces the burden of proof – adds “[w]ith respect to violations of this section, a person need not have actually knowledge of this section or specific intent to commit a violation of this section”

      2. FCA liability – PPACA amendments codify the false certification theory and provide that an AKS violation constitutes a FCA claim

    2. Statutory Exceptions, 42 USC § 1320a-7b(b)(3) – discounts, bona fide employment relationships – different from safe harbors

    3. Safe Harbors, 42 CFR § 1001.952 – Certain arrangements or practices not subject to prosecution under AKS; however, strict requirements may be difficult to satisfy in many instances. (* = both exception & safe harbor)

(a) investment interests

(b) space rental

(c) equipment rental

(d) personal services and management contracts

(e) sale of practice

(f) referral services

(g) warranties

(h) discounts*

(i) employees*

(j) group purchasing organizations*

(k) waiver of beneficiary coinsurance and deductible amounts*

(l) increased coverage, reduced cost-sharing amounts, or reduced premium amounts offered by health plans

(m) price reductions offered to health plans

(n) practitioner recruitment

(o) obstetrical malpractice insurance subsidies

(p) investments in group practices

(r) ambulatory surgical centers

(s) referral arrangements for specialty services

(t) price reductions offered to eligible managed care organizations

(u) price reductions offered by contractors with substantial financial risk to managed care organizations

(v) ambulance replenishing

(w) health centers

(x) electronic prescribing items and services

(y) electronic health record items and services

  1. Penalty – Fines up to $25K, imprisonment up to 5 years, or both; , and mandatory exclusion

    1. Violation of AKS means potential imposition of CMPs or exclusion

  1. Cases

    1. Element 1: Intent

Clarity and Codification

PPACA

Person need not have actual knowledge of this section or specific intent to commit a violation of this section (individual does not have to know of the statute, nor intend to violate it, but must know conduct is unlawful).
Neufeld Jain Starks Davis and McClatchey Hanlester
“Willful” only requires a purpose to commit a wrongful act, no specific intent to violate the law required Heightened mens rea only means that D knew conduct was wrongful, no proof needed that he knew his conduct violated a known legal duty Willfully means the act was committed voluntarily and purposely, with the specific intent to do something the law forbids, that is with a bad purpose, either to disobey or disregard the law Act was committed voluntarily and purposely with the specific intent to do something the law forbids; with bad purpose or to disobey or disregard the law (1) D must know that the Anti-Kickback Act prohibits offering or paying remuneration to induce referrals, and (2) D must engage in prohibited conduct with the specific intent to disobey the law

  1. HANLESTER v. SHALALA (9th Cir. 1995)

    1. Holding: “The legislative history demonstrates that Congress, by use of the phrase ‘knowingly and willfully’ to describe the type of conduct prohibited under the anti-kickback laws, intended to shield from prosecution only those whose conduct was ‘while improper, was...

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