HealthcareCompliance in

2014Don’t let compliance keep

you up at night!

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Your Presenters:Adam Maingotadam.maingot@akerman.com813.209.5098

Joe Ruggjoseph.rugg@akerman.com813.209.5008

Betsy Hodgeelizabeth.hodge@akerman.com813.209.5052

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Staying Off of the Radar:

Federal Fraud and Abuse Activity: National Trends

The 2014 Office of Inspector General (OIG) Work Plan

Physician Extender Risk  

The Dos and Don'ts of Deal Making:

Legal and tax dimensions in healthcare business transactions

Making the Case for Compliance:

Why physicians need a compliance plan

The seven elements of effective compliance programs

Recent developments: HIPAA, EHRs, and the ADA

Where we are headed:

Staying Off the Radar:Fraud and Abuse

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Fraud and Abuse BasicsThe Big Three:

Federal Anti-Kickback Statue (AKS)

Stark Law (Stark)

Civil False Claims Act (FCA and Reverse FCA)

Want to learn more? See: Baumann, Linda, Health Care Fraud and Abuse: Practical Perspectives, 3d Ed. Bloomberg BNA (2013)

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Fraud and Abuse ActivityFY 2013 BY THE NUMBERS:

False Claims Act Recoveries: $3.8 B ()

Health Care Fraud Recoveries $2.6 B()

Whistleblower Lawsuits : 752 ()

Whistleblower Judgments: $2.9 B()

Whistleblower payouts: $345 M()

DOJ Intervention Rate 22%()

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F&A Activity: InitiativesHEAT: Health Care Fraud Prevention and Enforcement Action Team (CRIMINAL FOCUS)Established May 2009

Expanded Data Sharing, Training and Analytics

Medicare HEAT (2007 – 2012)

724 Cases, 1,476 defendants, > $4.6B Medicare

Key areas of prosecution include

DME & PT

$223 M in false billing found

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F&A Activity: Recent CasesKyphoplasty Overbilling

To admit or not to admit?

Hospitals - $34 M to settle

$75 M previously paid

Medtronic – $75 M settlement (2008)

“Alleged Improper Promotion”

Who has vetted your device billing documentation?

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F&A Activity: Recent CasesDouble Agent Risk: New breed of whistleblower?Third party billing consultant

Retained pursuant to internal audit RFP

Consultant turned to the feds

Hospital paid DOJ $26 M to settle case

What’s an employer to do?http://www.healthlawyers.org/Members/PracticeGroups/FA/EmailAlerts/Documents/130930_MemorandumandOpinion.pdf

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F&A Activity: Recent CasesInternal Audit: Time is of the Essence

Group performed internal audit, discovered errors

Errors tracked to challenging internal process

Remediation efforts delayed by the day-to-day

Former employee saw a meal ticket

United States and Wisconsin ex rel. Keltner v. Lakeshore Medical Clinic, 2013 WL 1307013 (E.D. WI 2013)

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F&A Activity: Recent CasesThe Government: Hammer or Saw

Company used non-Medicare physician supervisors

Billed (falsely) using Care eligible NPI

Adverse Judgment: $11.1 M…Tossed!

Court: “Because [billing] regulations are not a condition of payment, they do not [implicate] the FCA, [but] are instead addressable by the administrative sanctions available … including suspension and expulsion from the Medicare program”

U.S. ex rel. Hobbs v. Medquest Associates, 711 F.3d 707 (6th Cir. April 1, 2013)

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F&A Activity: Recent CasesKickback Cases:

Settlements on the rise related to drug and device entity’s payment to physicians.

Many cases individually implicate the healthcare provider.

United States v. Jafari, (Doctor convicted of receiving cash kickbacks for diagnostic testing referrals).

Ask yourself – Would I be comfortable explaining my actions or payments to a jury of my peers?

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F&A Activity: Recent CasesStark: Still Cooking

Tuomey

Physician admission of patient for personally performed services considered a referral (BAD)

Compensation arrangements that factor in anticipated referrals implicate the Stark “volume or value” standard (BAD)

See US ex rel Drakeford v. Tuomey, 675 F.3d 394 (4th Cir. 2012)

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F&A Activity: Recent CasesHalifax: What happened

6 Physicians

678 Bed Hospital

The Problem:

Physician bonuses based on % of operating margin

Operating margin varied with the volume and value of referrals

See United States ex rel. Baklid-Kunz v. Halifax Med. Ctr., Order, no. 6:09–cv–1002–Orl–31DaB, 2012 wL 921147, at *1, *3 (M.D. Fla. Mar. 29, 2012).

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F&A Activity: Recent CasesHalifax: Why the case is significant - MedicaidNew Theory:

Halifax caused the Florida Medicaid Program to submit false claims to the federal government (in violation of the False Claims Act)

The FCA is used as a door into Stark.

Therefore Halifax caused a Stark violation.

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F&A Activity: New OIG GuidancePODS – Inherently Suspect Under AKS

What is a POD?

Any physician-owned entity

that derives revenue from selling, or arranging the sale of, implantable medical devices

including a physician owned entity that designs or manufactures its own medical devices or instrumentation.

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F&A Activity: New OIG GuidancePODS – Concerns

(1) corruption of medical judgment;

(2) overutilization;

(3) increased costs to federal health care programs and beneficiaries; and

(4) unfair competition.

See “Surgeons Eyed Over Deals with Medical-Device Makers” WSJ 7/25/13 http://online.wsj.com/news/articles/SB10001424127887324263404578615971483271856

See Also, Special Fraud Alert: Physician-Owned Entities, OIG, http://oig.hhs.gov/fraud/docs/alertsandbulletins/2013/POD_Special_Fraud_Alert.pdf

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F&A Activity: New OIG GuidanceSpecial Advisory Bulletin on Effect of Exclusion NO payments by federal programs

for items and services

furnished/directed/prescribed by excluded individual (“EI”)

Providers face civil money penalties (BAD)

https://oig.hhs.gov/exclusions/files/sab-05092013.pdf

See https://oig.hhs.gov/exclusions/index.asp

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F&A Activity: New OIG GuidanceSpecial Advisory Bulletin on Effect of ExclusionScope Broadened

No EIs in executive or leadership roles

EIs cannot perform individually unbillable support functions either, including preparation of surgical trays, ambulances dispatching, etc.

Good rule of thumb, check the exclusions database for every employee, every time.

https://oig.hhs.gov/exclusions/exclusions_list.asp

Reading the Radar:The 2014 OIG Work Plan

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Describes the OIG’s new and ongoing audit and enforcement priorities for the upcoming year

Helps you identify corporate compliance risk areas

Helps focus your annual compliance goals, audits, etc.

What is the Workplan?

http://oig.hhs.gov/reports-and-publications/archives/workplan/2014/Work-Plan-2014.pdf

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Ensure Payment Accuracy

Enhance Eligibility Controls

Provide Contracting Oversight

Address Privacy and Security Issues

Minimize Fraud, Waste and Abuse

Increase Quality, Safety and Value

Secure the future of DHHS

Goals for 2014

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Two Midnight Rule (New) - physicians are instructed to admit patients for inpatient care when those patients are expected to require care that crosses at least two midnights

Defective Medical Devices (New) - OIG will review Medicare claims to identify the costs resulting from additional utilization of medical services due to defective medical device

Workplan: New ItemsHospital Topics that affect Physicians

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Provider Based Facility Billing - Provider-based status allows a subordinate facility to bill as part of the main provider. Provider-based status can result in additional Medicare payments for services furnished at provider-based facilities and may increase beneficiaries’ coinsurance liabilities.

Provider Based Clinic Billing – OIG will review and compare Medicare payments for physician office visits in provider-based clinics and free-standing clinics to determine the difference in payments made to the clinics for similar procedures.

Workplan:Hospital Topics that affect Physicians

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Analysis of salaries included in hospital cost reports- OIG will review data from Medicare cost reports and hospitals to identify salary amounts included in operating costs reported to and reimbursed by Medicare.

Hospital Privileging – OIG will examine how hospitals assess medical staff candidates prior to granting initial privileges, including verification of credentials and review of the National Practitioner Databank.

Inpatient Rehabilitation Facilities – Adverse Incident Focus

Workplan:Hospital Topics that affect Physicians

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DME: Folding walkers, transcutaneous electrical nerve stimulators (TENS), and Power Mobility Devices.

Lower Limb Prosthetics – OIG will review Medicare Part B payments for claims submitted by medical equipment suppliers for lower limb prosthetics to determine whether the requirements of CMS’s Benefits Policy Manual, Pub. No. 100-02, ch. 15, § 120, were met.

Workplan:Medical Equipment: Items that affect Physicians

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OIG will review the appropriateness of Medicare’s methodology for setting ASC payment rates under the revised payment system.

OIG will also determine whether a payment disparity exists between the ASC and hospital outpatient department payment rates for similar surgical procedures provided in both settings.

Workplan:Ambulatory surgical centers (ASCs)

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Anesthesia Service - OIG will review Medicare Part B claims for personally performed (“AA” modifier) anesthesia services for proper billing.

Chiropractors – There is increased chiropractic billing practices. Specific areas of concern relate to manual manipulation to correct subluxation and maintenance therapy (which is not covered under Medicare)

Outpatient physical therapy – focus is on independent therapists who have a high utilization rate for outpatient physical therapy services

Workplan:Related Practices

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“High-Cost Diagnostic Radiology Tests” (inferred MRIs, CTs, PETs, etc.) reviews will focus on medical necessity and increased utilization.

Electrodiagnostic Testing– Needle electromyographs and the nerve conduction studies are under the microscope to evaluate if utilization rates differ by provider specialty (uh, physiatry maybe?), diagnosis, and geographic area

Workplan:Diagnostic Testing

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Imaging Services – Payments for practice expenses are being reviewed for reasonableness.

Portable X-ray Equipment – OIG will review transportation and set up costs, qualifications of the technologists who performed the services, and ordering practitioner

Workplan:Diagnostic Testing

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The Mainstay: E/M Services – Medicare contractors have noted an increased frequency of medical records with identical documentation across services. (Ahem… Betsy)

Noncompliance with assignment rules and excessive billing of beneficiaries

Physicians—Place-of-service coding errors – OIG will review physicians’ coding on Medicare Part B claims for services

Idle Physician Review - CMS may deactivate physicians’ billing privileges if they do not submit claims for 12 consecutive months.

Workplan:Physicians

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Provider Eligibility. OIG will review providers and suppliers that received Medicare payments after CMS referred them to the Department of the Treasury for failing to return overpayments

Secondary Payor Review. General Review

Medicaid Credit Balances - We will review providers’ patient accounts to determine whether there are Medicaid overpayments in accounts with credit balances. (Reverse False Claims Act)

Medicaid NCCI – OIG will review selected States’ implementation of the NCCI edits for Medicaid claims.

Workplan:Errata:

Mid-level Providers/Non-physician Practitioners

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State Statutes

Legislative History (look at Staff Analysis)

State Administrative Code (Agency Rules)

Agency Declaratory Opinions/Statements

Agency Administrative Orders or ALJ Rulings

Medicare / Medicaid Reimbursement Manuals

State Case Law

Federal Case Law

NPPs: BasicsWhat You Care About

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NPP Practice is primarily governed by each individual state’s scope of practice

restrictions.

PAs:

http://www.aapa.org/the_pa_profession/federal_and_state_affairs/resources/item.aspx?id=755

NPPs: Basics

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NPs:

http://www.aanp.org/component/content/article/66-legislation-regulation/state-practice-environment/1380-state-practice-by-type

NPPs: Basics

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Medicare Eligibility - PA must have:

Graduated from an accredited Commission on Accreditation of Allied Health Education Programs

Passed the National Commission on Certification of Physician Assistants national certification examination that

Possess state licensure

NPPs: PA Services

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Medicare Coverage - Svcs:

Would be “Phy Svcs” if rendered by MD/DO

Performed under general supervision of Phy

Supervising Phy must be immediately available

Not physically present (unless state law)

Svcs not otherwise excluded from coverage (by statute)

NPPs: PA Services

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Billing - PA must have:

PA must have own NPI

Cannot collect direct from Medicare (contra NP)

Svcs billed by PA’s employer using PA NPI

PA can own interest in employer/practice

PA can be officer of employer/practice

PAs may not organize/incorporate to bill direct

Leasing Agency/Staffing Agency not qualified employer

NPPs: PA Services

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Payment –

Claims are made on an assignment basis

to a qualified W-2 employer;

as a 1099 independent contractor

Claims are paid the lesser of :

80% of the actual charge OR

85% of the physician Medicare fee schedule

Assistant at Surgery (More than ancillary services)

13.6% of amount paid to physician

NPPs: PA Services

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Medicare Coverage - Svcs:

Performed in collaboration with Phy (protocols?)

Within scope of professional expertise

direction & supervision provided

Physician does not need to be present**

**Subject to state law

NPPs: NP Services

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Medicare Eligibility - NP must :

Be a registered professional nurse

Possess state licensure

AND Satisfy (1) of the following: Obtained Care Privileges

After 1/1/03

Certified as a NP by National Certifying Body +

Master or Doctor of Nursing

Before 1/1/03

Certified as a NP by National Certifying Body

Before 1/1/01

NPPs: NP Services

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Billing - NP must have:

NP must have own NPI

Can collect direct from Medicare (contra PA)

Svcs billed by NP or NP’s employer using NP NP

NPPs: NP Services

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Payment –

Claims are paid the lesser of :

80% of the actual charge OR

85% of the physician Medicare fee schedule

When services furnished to hospital inpatients/outpatient are billed NP direct, they are unbundled and made direct to the NP

Assistant at Surgery (More than ancillary services)

13.6% of amount paid to physician

NPPs: NP Services

DOS AND DON’TS OF DEAL

MAKING

Joseph W.N. Rugg

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Keeping your healthcare

transaction healthy

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Deals can take place in many ways and in many forms, from the simple and routine to the complex.

Lease of rental space or equipment

Employment and independent contractor arrangements

Removing or adding a partner in a medical practice

Selling, buying, or merging a medical practice

Managing a medical practice

Serving as a medical director of a outpatient clinic, hospital department, lab, surgery center, etc.

What do we mean by “Deals”?

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(cont.)

Selling or buying supplies, equipment, software, etc.

Marketing healthcare services

Borrowing or lending money

Joint venturing to perform medical services or own a medical facility

What do we mean by “Deals”?

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Physicians are being pushed more and more to explore and enter into different types of transactions in order to respond and survive:

Declining physician incomes, reduced reimbursement and other payment reforms (e.g., bundled payments, performance-based payments)

Need to add revenue sources

Increased overhead (including purchasing and/or replacing EHR systems and malpractice insurance costs)

Increased Deal Making in Healthcare

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(cont.)

Need for improved practice management

Need to recruit quality physicians and NPPs

Need to develop exit strategy and practice transition (succession planning)

Increased Deal Making in Healthcare

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Question from Becker’s Hospital Review: Is it possible for orthopedic surgeons to stay in a solo or small group practice these days?

Nicholas Janiga, Manager at HealthCare Appraisers : Given the regulatory environment and significant level of fixed costs necessary to run a physician practice. A small practice is very uncommon these days. They must implement electronic health records, have the appropriate staffing levels, consider the cost of in-office diagnostic imaging, etc. All of those expenses involve significant economies of scale, likely leading the solo physician to join a larger independent physician practice or seek hospital employment. (Similar concerns were discussed at the 2012 Fall Meeting of the AAOS Board of Councilors.)

Future of Orthopaedics

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10 Recent Deals in Orthopaedics Cleveland Clinic, The CORE Institute, OrthoCarolina, and

Rothman Institute (Ohio 2013) formed the clinically integrated Orthopedic PHO.

Evangelical Community Hospital (Pennsylvania 2013) acquired SUN Orthopaedic Group, Inc., the region’s premier bone and joint specialists.

Mercy Health (Ohio 2013) added 18 orthopaedic and sports medicine physicians to its team.

The Cardinal Orthopaedic Institute and Ohio Orthopedic Center of Excellence (Ohio 2013) merged their physician practices.

Appalachian Orthopedic Center (Pennsylvania 2014) merged its practice with the Orthopedic Institute of Pennsylvania.

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10 Recent Deals in Orthopaedics Danbury Orthopedics (Connecticut 2013) merged with New

Milford Orthopedic Associates.

Pennsylvania Orthopaedic Center (Pennsylvania 2013) merged with Premier Orthopaedic and Sports Medicine Associates.

Nebraska Orthopaedic Associates (Nebraska 2014) merged with OrthoWest Orthopaedic & Sports Medicine Specialists.

Centers for Advanced Orthopaedics (Virginia, D.C., Maryland, Pennsylvania 2013) resulted from the combination of 25 independent practices.

Regent Surgical Health (Colorado 2013) entered into an ASC joint venture partnership with the physician partners of Loveland Surgery Center.

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OIG’s Interest in Healthcare Deals

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Two orthopaedic surgeons had medical directorships with a company that operated a diagnostic imaging center, a rehabilitation facility, and an ambulatory surgery center. Under their medical directorship agreements, the company provided the physicians with valuable compensation, including free use of the corporate jet,, which required the physicians to render limited services in return. The agreements with the physicians called for redundant or unnecessary services and served to encourage the physicians to refer their patients to the facilities operated by the company.

The physicians paid $450,000 and $250,000 to settle the cases.

OIG Roadmap – Medical Directorships

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Four orthopaedic device manufacturers paid $311 million to settle kickback and false claims allegations that the companies bribed surgeons to recommend their hip and knee surgical implant products. The companies awarded physicians with vacations, gifts, and annual “consulting fees” as high as $200,000 in return for the physicians’ endorsements of their implants or use of them in operations.

Many of the individual orthopaedic surgeons at the receiving end of the kickbacks became the subject of ongoing investigations by the Government. One orthopedic surgeon recently paid $650,000 to resolve allegations that the physician accepted payments from device manufacturers to use their hip and knee implants.

OIG Roadmap – Consulting Fees

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Doing Deals with HospitalsTypes of physician-hospital deals:

Hospital acquisition of practice and employment of the physicians by hospital or hospital-controlled entity

Employment without practice acquisition

Co-management, specialty service, and medical director engagements with hospitals, pursuant to which physicians remain independent

Formation of a physician-hospital ACO or other network, pursuant to which physicians remain independent

Joint venture arrangements (e.g., ASC development)

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Doing Deals with Other PhysiciansTypes of physician-physician deals:

Acquisition/merger of practices (single and multi-specialty)

Employment without practice acquisition

Joint venture arrangements for specialized services (e.g., ASCs, IDTFs, real estate)

Formation of a physician-based ACO or other types of provider networks

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Doing Deals with Other Third PartiesTypes of physician-third party deals:

Sale of all or part or practice with management arrangement (e.g., PPM companies, cath lab development)

Investment/partnership in ancillary or specialty health services (e.g., DME, compounding pharmacy, MSOs, ALFs, urgent care centers)

Consulting and Medical Director relationships

Other business opportunities (e.g., medical property real estate development, employee leasing, joint branding of products)

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Anti-Kickback Statute Physician Self-Referral/Stark Statute Antitrust Laws Income Tax Laws

* Always look to see whether there are similar state laws.

Healthcare Laws Affecting Deals

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Anti-Kickback Statute Must make the analysis if money or other

consideration is changing hands and patient referrals are involved that are reimbursed by Medicare, Medicaid, or other specified state of federal programs.

Applies to both sides of a transaction. OIG Fraud Alerts and Advisory Opinions Safe Harbors (e.g., investment, compensation,

leases) Examples of possible kickback violations:

Renting unneeded space from a referral source or paying a greater than FMV rent

Paying a marketing person a percentage of business generated Allowing a referral source to invest in a deal at a discount or

providing financing Entering into a joint venture or other contractual arrangement in

order to provide new services that result in sharing revenues generated by one’s referrals

Deal Related Compliance Issues

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Stark Law

Must make the analysis if money or other consideration is changing hands and patient referrals are involved that are reimbursed by Medicare, Medicaid, or other specified state or federal programs. Applies to the physician and the DHS entity. Exceptions (group practice, employment and

lease agreements, recruitment, isolated transactions, etc.)

Examples of possible Stark violations: A referring physician’s spouse having an ownership interest in a

DHS entity. Hospital renting space to a referring physician at a discount. Intra-medical group referrals when physicians do not constitute

a group Hospital reimbursing too much for recruiting new physician Paying for purchased practice over time

Deal Related Compliance Issues

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Antitrust Laws Must make the analysis if physicians and/or other

healthcare providers enter into a transaction that may have the effect of reducing (or threatening to reduce) competition.

Applies to everyone involved in the deal. FTC/DOJ Statements of Enforcement Policy and

Analytical Principles Relating to Healthcare “Per se” and “rule of reason” analysis Safety Zones Exceptions (clinically integrated and

financial risk sharing networks)

Deal Related Compliance Issues

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Antitrust Laws (Cont.)

Examples of possible antitrust violations: IPA members sharing price info and/or negotiating

reimbursement directly.

Networks having more than 20%/30% of specialists for a given market

Physicians unionizing

Deal Related Compliance Issues

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Income Tax Laws Must make the analysis if one of the parties to a

transaction is a tax exempt entity and a non-tax exempt person is being paid or otherwise benefits from the tax exempt entity. Avoid inurement to private individuals.

Applies to the tax exempt entity (typically a hospital)

Revenue Ruling 98-15; Tax Exempt Audit Guidelines

Examples of possible violations: Purchases a physician practice or pays to recruit new physician.

Enters into joint venture with for-profit entity to operate an ASC.

Enters into an exclusive provider agreement to manage a hospital’s department with a term greater than three years.

Enters into arrangement with a for-profit entity to do a business venture unrelated to healthcare.

Deal Related Compliance Issues

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State Laws Must always make the analysis. Applies to all parties. Examples of possible state law issues/violations:

Failure to meet change of ownership, CON, or other licensing requirements.

Engaging in the corporate practice of medicine.

Fee splitting.

Patient self-referral, kickback, restraint of trade requirements.

Tax exempt requirements.

Professional practice statutes and regulations.

Deal Related Compliance Issues

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Rules of Thumb for Healthcare DealsRULE #1: Just because a proposed deal makes sense and would be appropriate in a business other than healthcare, doesn’t mean it’s legal. (Corollary -- Just because everyone is doing it, doesn’t mean it’s legal.)

RULE #2: Determining the legality of a healthcare deal can be complicated, time consuming, expensive, and inconclusive.

RULE #3: The risks of doing an illegal healthcare deal far outweigh the benefits.

RULE #4: Get professional help early in the deal.

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Steps in Doing a Deal (Correctly)Step 1 – Describe and Understand the Deal

Why?

What is it that is hoped to be accomplished?

Why is that a good outcome?

Does it make sense? I.e., is it commercially reasonable?

Is the deal more than just about referrals and money?

What happens if a regulator “follows the money”?

How will the deal affect others – patients, employees, physicians, competitors, the community, etc.?

What are the tax effects?

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Steps in Doing a Deal (Correctly)Step 1 – Describe and Understand the Deal (continued)

Engage legal, accounting, valuation, and other professional consultants early in the process to review the proposed deal.

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Steps in Doing a Deal (Correctly)Step 2 – Identify the parties to the deal

Who is involved (medical professionals, background)?

Why are they involved?

What do they bring to the deal?

When did they get involved?

Who got them involved?

What does each party hope to achieve?

Are the goals reasonable?

Are the goals legal and ethical?

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Steps in Doing a Deal (Correctly)Step 3 – Identify the governmental agencies that have authority over the deal

Are there any notices or approvals required?

What are the licensing requirements?

Will a change in control occur?

Is a new provider application/number needed?

Is a CON needed? An inspection?

What effects will the deal have on any accreditation needed by the parties?

What is the timing of agency requirements vs. closing the deal?

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Steps in Doing a Deal (Correctly)Step 4 – Identify the third party payors that will be involved

Are the services to be performed as a result of the deal reimbursed by Medicare?

Medicaid?

Other federal or state programs?

Commercial payors?

What credentialing/provider applications are needed?

Do any payors have special requirements that must be satisfied before closing the deal?

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Steps in Doing a Deal (Correctly)Step 5 – Identify the due diligence requirementsRemember that a healthcare deal starts like any other deal, and the parties must do their basic due diligence about each other Entity organization and ownership Legal authority Financial statements, assets and liabilities, liensContracts and commitments, leasesEmployees and benefit plansTaxes InsuranceLitigation

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Steps in Doing a Deal (Correctly)Step 6 – Identify the healthcare due diligence requirements

What other items items of due diligence are required by the applicable healthcare laws and regulations?

Licenses and requirements applying to transactionEquipment and inventoriesCost reports, inspections, regulatory correspondence

Quality of care, malpractice claims/insurancePatients records, EHR compatibility, billing software

Managed care/provider agreements, liability, assignability

Subcontractors/suppliers

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Steps in Doing a Deal (Correctly)Step 6 – Identify the healthcare due diligence requirements (continued)

Fair market value

Commercial reasonableness

These are the critical underpinnings of every healthcare deal. What is being given, what is being received, and is it commercially reasonable?

Get an opinion from a qualified healthcare valuation expert to support the FMV.

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Steps in Doing a Deal (Correctly)Step 7 – Document the Deal

Documentation is a critical step in protecting the parties, achieving the goals of the deal, and meeting compliance requirements.

Should the parties enter into a nonbinding letter of intent/memorandum of understanding?

Pros – helps the parties determine whether there has been a meeting of the minds prior to devoting substantial time and expense and helps manage expectations and reduce surprises.

Cons – can consume an inordinate amount of time prior to due diligence being completed and lock the parties into unrealistic positions.

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How to Screw up the DealThere are many ways to screw up a deal. Here are just a few:

Not putting together the right team

Not understanding the emotional buy-in necessary

Not getting the critical deal breakers on the table

Letting the wrong people dominate the discussions

Being a hog

Never stop negotiating

Not getting the right advisors involved early enough

Changing the deal without discussing the change first

Not managing expectations

Failing to disclose important facts in due diligence

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How to Screw up the Deal Not paying attention to the letter of intent

Relying on others to deal with the details

Not having the right people involved in the due diligence process

Not keeping your team informed

Not listening

Not talking to critical third parties until too late

Over committing and establishing unreasonable deadlines

Not evaluating the tax effects

Not understanding the compliance requirements or ignoring them

WHY DO I NEEDA COMPLIANCE

PLAN?

ELIZABETH F. HODGE

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ANSWER:

It’s the right thing to do.

The Federal Sentencing Guidelines provide for reduced penalties for medical practices with “an effective program to prevent and detect violations of law.”

The Patient Protection and Affordable Care Act requires physicians who treat Medicare and Medicaid patients to establish a compliance program (2010).

Why do I need a compliance plan?

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Fraud includes the obtaining of something of value through intentional misrepresentation or

concealment of material facts

Waste includes the incurring of unnecessary costs as a result of deficient management,

practices, systems, or controls

Abuse includes any practice that is not consistent with the goals of providing patients with

services that (1) are medically necessary, (2) meet professionally recognized standards,

and (3) are fairly priced

Fraud, Waste and Abuse

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The False Claims Act

The Anti-Kickback Statute

The Physician Self-Referral Statute (“Stark”)

The Exclusion Authorities

The Civil Monetary Penalties Law

* But don’t forget about similar state laws.

Federal Fraud and Abuse Laws

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1. Conduct internal auditing and monitoring.

2. Implement compliance and practice standards.

3. Designate a compliance officer or contact.

4. Conduct appropriate training and education.

7 Components of an Effective Compliance Program

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5. Respond appropriately to detected offenses and develop corrective action.

6. Develop open lines of communication.

7. Enforce disciplinary standards through well-publicized guidelines.

7 Components of an Effective Compliance Program

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Issued in 2000 but still relevant today

Step by step approach to implementing voluntary compliance plan

65 Federal Register 59434 (Oct. 5, 2000)

http://org-hhs.gov/authorities/docs/physician.pdf

OIG Compliance Program for Small Group Practices

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Periodically review practice’s standards and procedures.

Claims submission audit to review bills and medical records for compliance with coding, billing, band documentation requirements.

o baseline audit with periodic audits thereafter

Appropriately respond if audit identifies issue

Auditing and Monitoring

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Identify Specific Risk Areas

coding and billing

reasonable and necessary services

documentation

improper inducements, kickbacks and self-referrals

Retention of Records

look to Medicare requirements

look to state law

Establish Practice Standards and Procedures

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In-house Compliance officer

In-house compliance contacts

Outsource compliance function

Designation of a Compliance Officer/Contact(s)

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1. Compliance Training

2. Coding and Billing Training

3. Format of Training

4. Continuing Education

Conducting Appropriate Training and Education

Akerman | 89

Establish monitors and warning indicators

Include steps for prompt referral or disclosure to appropriate Government authority or law enforcement agency – AFTER consulting your lawyer

Full internal assessment of all reports of detected violations

Provisions to ensure that violation is not compounded once discovered

Periodically review and modify compliance program

Responding to Detected Offenses and Developing Corrective Action Initiatives

Akerman | 90

Prevent and Discuss - why did problem happen?

Implement clear “open door” policy between physicians, compliance personal and employees

Use less formal communication techniques:

• Conspicuous notice in common areas

• Compliance bulletin board where everyone in practice can receive up-to-date compliance information

• Post HHS-OIG Hotline telephone # (1-800-HHS- - TIPS)

No retribution against those reporting erroneous or fraudulent conduct

Developing Open Lines of Communication

Akerman | 91

Incorporate measures to ensure that practice employees understand the consequences for non-compliant behavior

• enforcement and discipline procedures for violations

• add credibility and integrity to compliance program

Consistent and appropriate sanctions, including termination

Flexibility for mitigating or aggravating circumstances

Include disciplinary guidelines in in-house training

Remember the List of Excluded Individuals and Entities (LEIE)

Enforcement Through Well-Publicized Guidelines

Akerman | 92

CMS Roadmap booklet, roadmap powerpoint and roadmap speaker notes

http://oig.hhs.gov/compliance/physician-education/index.asp

Compliance Plan Guidance for Small Group Practices:

http://oig.hhs.gov/compliance/compliance-guidance/index.asp

Enforcement Through Well-Publicized GuidelinesExcellent Resources:

Hot Right Now…

Americans with Disabilities ActHIPAAElectronic Health Records

Akerman | 94

Requires access to medical care services and the facilities where the services are provided

Medical offices and private hospitals are covered as places of public accommodation

Public hospitals and clinics and medical offices operated by state and local governments are covered as programs of public entities

Americans with Disabilities Act

Akerman | 95

Providers may not discriminate on the basis of disability in the full and equal enjoyment goods, services, facilities, privileges, advantages and accommodations

Discrimination includes failing to take necessary steps to prevent exclusion, denied services, segregation, or varied treatment of disabled persons due to the absence of auxiliary aids and required services

Americans with Disabilities Act (ADA)

Akerman | 96

Stepped up ADA enforcement

Government agencies pursuing providers who:

• fail to provide adequate services or access to persons with disabilities – especially those who are deaf/hard of hearing and those with HIV/AIDS

• Fail to provide adequate services to those who are not proficient in the English language

http://www.ada.gov/usao-agreements.htm

Barner-Free Health Care Initiative

Akerman | 97

Twenty-one settlements since 2012

• Nine involve physician practices

• Other settlements involve hospitals, skilled nursing facilities, pharmacies, alcohol treatment program

April 5, 2013 settlement with orthopedic practice over failure to provide auxiliary aids and services, including sign language interpreters

• agreement not to discriminate against persons with disabilities

• provide persons who are deaf with auxiliary aids and services, including sign language interpreters, where necessary to ensure effective communication free of charge to patient

Settlements Under Barner-Free Health Care Initiative

Akerman | 98

April 5, 2013 settlement …• establish list of qualified sign

language interpreters• conduct training for all

employees• keep log of all request for

auxiliary aids and services• post notice that auxiliary aids

and services are available• pay $15,000 damages

Settlements Under Barner-Free Health Care Initiative

HIPAA

Akerman | 100

1. Increased civil penalties under Omnibus Rule

• minimum $100/violation if did not know

• maximum $50,000/violation

• annual cap of $1.5 million for identical violations

2. Reputational harm

• HHS office for Civil Rights (“OCR”) Wall of Shame

• media exposure

WHY SHOULD I CARE ABOUT HIPAA?

Akerman | 101

3. Cost to investigate, mitigate damages, provide notice

• recent Ponemon Institute calculated that a breach costs healthcare providers $233 per lost record

4. Increased enforcement activity by HHS Office for Civil Rights, State Attorneys General, and the Federal Trade Commission

5. Potential lawsuits over failing to protect PHI

WHY SHOULD I CARE ABOUT HIPAA?

Akerman | 102

Dermatology Practice - $150,000 Settlement, Corrective Action Plan

• OCR investigated following theft of unencrypted thumb drive containing e-PHI of 2,200 patients

• No Security Rule Risk Assessment, no policies and procedures in place to address breach notification

HIPAA ENFORCEMENT

Akerman | 103

Pathology Practices - $140,000 Settlement

• Massachusetts Attorney General fine due to improper disposal of paper medical records of 67,000 residents

• Failed to have appropriate safeguards in place to protect PHI provided to Business Associate; no BAA

HIPAA ENFORCEMENT

Akerman | 104

Eye and Ear Practice: $1.5 million settlement; Corrective Action Plan

• OCR investigated following theft of unencrypted personal laptop containing e-PHI of patients and research subjects

• No Security Rule Risk Assessment; failure to implement security measures to ensure confidentiality of e-PHI; failure to implement policies and procedures

HIPAA ENFORCEMENT

Akerman | 105

Cardiology Practice: $100,000 Settlement; Corrective Action Plan

• OCR investigated after report that practice was posting clinical and surgical appointments on publicly accessible Internet-based calendar

• No Security Rule Risk Assessment; failure to implement policies and procedures; failure to conduct and document employee training; failure to identify security officer; failure to obtain business associate agreements

HIPAA ENFORCEMENT

Akerman | 106

Physician practice agreed to pay $100,000 and take corrective action

• owned by 2 physicians (not limited to the big guys)

Physician practice was posting clinical and surgical appointments for patients on an Internet-based calendar that was publicly accessible

Office for Civil Rights (OCR) found practice had implemented few policies and procedures to comply with HIPAA Privacy and Security Rules

• also found practice had limited safeguards in place to protect patients’ e-PHI

• did not have Security Officer

• did not train employees

• did not have Business Associate Agreements in place

Phoenix Cardiac Surgery, P.C.

Akerman | 107

Develop, maintain and revise written policies and procedures that are consistent with HIPAA Privacy and Security Rules

Provide the policies and procedures to OCR for review and make any recommended changes within 30 days

Implement policies and procedures within 30 days of OCR approval

Distribute policies to all workforce members and obtain written certification from every employee

Assess, update, and revise, as necessary, the policies and procedures at least annually

Phoenix Cardiac Surgery, PC. – Corrective Action Plan

Akerman | 108

New Policies and procedures must include:

an accurate and thorough risk assessment of potential risks and vulnerabilities to the confidentiality, integrity, and availability of electronic PHI

risk management plan that implements security measures sufficient to reduce risks and vulnerabilities to electronic PHI to a reasonable and appropriate level

identification of security official

satisfactory assurances that each business associate that receives, transmits, maintains or stores PHI will appropriately safeguard e-PHI

technical safeguards to limit access to those with access rights

encryption or other adequate safeguard for e-PHI being transmitted to or from portable device

training of workforce members

Phoenix Cardiac Surgery, P.C. – Corrective Action Plan

Akerman | 109

http://www.hhs.gov/ocr/privacy/

http://www.hhs.gov/ocr/privacy/hipaa/enforcement/examples/index.html

(information on settlements)

http://www.hhs.gov/ocr/privacy/hipaa/understanding/training/index.html

(training materials)

http://www.hhs.gov/ocr/privacy/hipaa/administrtive/breachnotificationrule/breachtool.html

(the “Wall of Shame”)

HIPAA RESOURCES

Akerman | 110

1. Conduct Security Rule Risk Assessment

identify where e-PHI lives and potential exposures/threats

2. Implement risk management policies and procedures based on risk assessment

3. Repeat #1 and #2 at least annually

4. Develop plan to respond to breach before breach occurs

5. Encrypt e-PHI whenever possible

6. Control use of portable devices

7. Read new HIPAA resolution agreements to learn what OCR is requiring in Corrective Action Plan

HIPAA Compliance Takeaways

Electronic Health Records

Akerman | 112

Audits to determine compliance with attestation for incentive payments:

• current Medicare and Medicaid incentive payments being audited

• repayment of incentive payments

In 2014, HHS OIG will audit covered entities receiving EHR incentive payments and their business associates to determine whether they adequately protect e-PHI created or maintained by certified EHR technology

• audit will include cloud service providers and other downstream service providers

Electronic Health Records

Akerman | 113

Audits to determine compliance with attestation for incentive payments• Medicare and Medicaid incentive payments

being audited• repayment of incentive payments• denial or incentive payment if pre-payment

review Increased focus on documentation issues with

EHRs• OIG is investigating the increased frequency of

medical records with identical documentation across services (2014 OIG Workplan)

• concern with upcoding as a result of use of EHRs

• CMS may issue guidance on use of copy-paste function

Electronic Health Records

Akerman | 114

Two recent reports by OIG highlight potential issues with EHR documentation that could make it easier to commit fraud:

1. Copy-pasting (cloning)

• inaccurate information may enter patient record

• inappropriate charges may be billed

• need to review information each time to be sure it is current and correct

EHR Documentation

Akerman | 115

Two recent OIG reports…

2. Over documentation

• inserting false or irrelevant documentation to create appearance of support for billing higher level services

• beware of “auto-populate”

EHR Documentation

Akerman | 116

Take screen shots to document compliance on the date of attestation

Maintain screen shots for at least 6 years Complete the EHR Technology and

Security Plan for Safeguarding Technology and Patient Information

Work with compliance counsel to have compliance program pre-audited

Steps to Prepare for EHR Incentive Payment Audit