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DOJ Intends to Increase Healthcare Fraud Penalties By Almost 100%

healthcare fraudThe Department of Justice (“DOJ”) recently announced that it intends to increase healthcare fraud penalties under the False Claims Act (“FCA”) on claims assessed after August 1, 2016.

DOJ’s Justification For The Increase

FCA penalties can already be high since penalties are assessed per-claim. Each false claim presented to the government can be a separate violation. The DOJ’s Interim Final Rule would increase the minimum per-claim penalty from $5,500 to $10,781 and maximum per-claim penalty from $11,000 to $21,563.

This is a steep increase over 96%. While there was a 10% cap on the amount the penalties could increase, that law was amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (“2015 Act”). The 2015 Act also included a one-time “catch up provision” requiring the first increase be based changes in the consumer price index since the year the penalties were established.

What The Increase Means To Healthcare Providers

This increase could incentivize whistle-blowers to identify false claims because the whistle-blower may be able to keep a percentage of the money recovered. Healthcare providers billing the government need to ensure that all their practice’s policies and procedures adhere with federal and state regulations. Proactive and preventive measures are the best way to stay out of the government’s cross hairs for fraud.

How To Ensure Federal and State Compliance

We can help. Our attorneys have extensive experience in analyzing and bringing into compliance healthcare providers’ policies and procedures. We’ve helped hundred of providers – from small, independent providers to large national corporations ensure compliance with regulations such as the Anti-Kickback Statute and Stark. Contact DJ Jeyaram at DJ@JeyLaw.com or 678.325.3872 or Jonathan Anderson at Janderson@JeyLaw.com.

CMS Proposes 2 New Stark Exceptions

drIf adopted, the new exceptions will provide physicians with more options when setting up financial arrangements with hospitals.

On July 15, the Centers for Medicare & Medicaid Services (CMS) published several proposed changes to the Stark regulations as well as two new exceptions. The changes made pursuant to the proposed rule would clarify certain requirements which must be met for many of the Stark Law exceptions.

One notable change would impact several Stark exceptions (e.g., office space and equipment rental, personal service arrangements, physician recruitment arrangements, etc.) which require that an arrangement be either “in writing” or memorialized in a “written agreement.” If adopted, the proposal would make the writing requirement uniform throughout by replacing “written agreement” with “in writing.” CMS’s comments further clarify that a formal contract is not required. Rather, if under the circumstances it is appropriate, the writing requirement may be satisfied with a collection of “contemporaneous documents evidencing the course of conduct between the parties.”

CMS also provides clarification on how to satisfy Stark exception requirements that are conditioned on having an arrangement that lasts at least one year. According to CMS, a “formal contract or other document with an explicit ‘term’ provision is generally not necessary to satisfy the [one-year-term] element.” An arrangement that lasts at least one year satisfies the requirement.

The two new Stark Law exceptions involve payments related to employment of non-physician practitioners and timeshare arrangements for the use of office space, equipment, supplies, etc. The first exception would allow hospitals, Federally Qualified Health Centers and Rural Health Centers to subsidize physicians for the cost to employ physician assistants, nurse practitioners, clinical nurse specialists and certified nurse midwives up to a certain amount. The goal of the proposed exception is to promote the expansion of access to primary care services.

The other proposed exception would protect timeshare arrangements if certain requirements are met. Such arrangements would need to be between a hospital or physician organization (licensor) and a physician (licensee) for the use of the licensor’s premises, equipment, personnel, items, supplies, or services. Additionally, the licensed premises, equipment, personnel, items, supplies, and services would need to be used predominantly for evaluation and management services to patients of the physician.

If adopted, the new exceptions will provide physicians with more options when setting up financial arrangements with hospitals. However, CMS also clarifies and broadens certain limitations — the percentage of a hospital that may be owned by physicians will now encompass all physician owners, regardless of whether a physician owner refers patients to the hospital.

The CMS publication can be read here.

If you have any questions about the CMS guidance and proposed changes, our attorneys can help. Please contact Danielle Hildebrand at dhildebrand@jeylaw.com at 678-325-3872

 

Physicians’ Compensation For Certain Referrals Could Violate Anti-Kickback Statue

Anti-KickbackOIG Reminds Physicians That They Will Be Held Liable For Illegal Payments Under The Anti-kickback Statute

On June 9, the Department of Health and Human Services Office of Inspector General (OIG) issued a Special Fraud Alert warning against potential liability for physicians who enter into certain financial arrangements with healthcare institutions.

The Fraud Alert states that “if even one purpose of the arrangement is to compensate a physician for his or her past or future referrals” the compensation arrangement would violate the federal Anti-kickback statute.

The Fraud Alert discussed a recent settlement regarding an arrangement between several physicians and a healthcare institution. It emphasized that the following factors resulted in an OIG determination that there was improper remuneration:

  • Payments to physicians took into account the physician’s volume or value of referrals and did not reflect fair market value for the services performed
  • Physicians did not actually provide the services called for under the arrangement
  • The arrangement relieved the physician of a financial burden that such physician would have otherwise incurred, e.g., a healthcare institution paid for the physician’s office staff at his or her practice

Although the Fraud Alert does not change any existing laws, it is a reminder that physicians (not just the hospitals) will be held liable for illegal payments. Physicians should heed OIG’s warning and ensure that arrangements with healthcare institutions do not violate any laws. All arrangements must not only comply with the federal Anti-kickback statute, but also other fraud and abuse laws such as the Stark Law, the Civil Money Penalties Law (CMP Law), and the state law Stark and Anti-kickback counterparts.

The Special Fraud Alert can be found here.

If you are a physician with questions about a current or proposed arrangement with a healthcare institution, please call Danielle Hildebrand or DJ Jeyaram at 678-325-3872 for legal counsel.

Healthcare Providers Need To Examine Billing Practices To Ensure Compliance

healthcare fraudLast month, the Department of Health and Human Services released its annual report for the Health Care Fraud and Abuse Control Program. According to the report, in 2014 more than 900 new criminal health care fraud investigations were opened by the Department of Justice. There was a slight increase in the number of criminal cases and convictions from last year, with 496 cases and 735 defendants convicted of criminal health care fraud. Civil cases alone resulted in $2.3 Billion in settlements and judgments.

The government’s press release reiterated that detecting and eliminating fraud and abuse continues to be a top priority. The government attributes its high recoveries to a change in strategy which uses real-time data analysis to detect fraud more quickly. The Centers for Medicare and Medicaid currently uses advanced analytics on Medicare fee-for-service claims. The goal of this is to detect aberrant and suspicious billing patterns which would then trigger an investigation or enforcement action by the government.

Now is the time to for Medicare and Medicaid providers to review their billing practices and financial relationships to ensure that they are compliant with federal laws. Charges against providers were made under the False Claims Act, as well as Anti-Kickback Statute, the Stark Law (Physician Self-Referral Law), and other federal laws.

The full annual report is available at www.oig.hhs.gov/publications/hcfac.asp.

If you have any questions about the legality of your billing practices or financial relationships, please contact DJ Jeyaram at DJ@jeylaw.com or Danielle Hildebrand at dhildebrand@jeylaw.com.