Category Archives: Medicare Reimbursement Rates
You are a provider, and you accept Medicare and Medicaid. You find out that the person with whom you contracted to provide extraction services for your dental patients has been upcoding for the last few months. -or- You discover that the supervisory visits over the past year have been less than…well, nonexistent. -or- Or your licensed therapist forgot to mention that her license was revoked. What do you do?
What do you do when you unearth a potential, past overpayment to you from Medicare or Medicaid?
Number One: You do NOT hide your head!
Do not be an ostrich. First, being an ostrich will have a direct correlation with harsher penalties. Second, you may miss mandatory disclosure deadlines, which will lead to a more in-depth, concentrated, and targeted audits by the government, which will lead to harsher penalties.
As for the first (harsher penalties), not only will your potential, monetary penalties leap skyward, but knowledge (actual or should have had) could put you at risk for criminal liability or false claims liability. As for increased, monetary penalties, recent Office of Inspector General (OIG) information regarding the self disclosure protocol indicates that self disclosure could reduce the minimum multiplier to only 1.5 times the single damages versus 2-10 times the damages without self disclosure.
As for the second (missing deadlines), your penalties will be exorbitantly higher if you had or should have had actual knowledge of the overpayments and failed to act timely. Should the government, despite your lack of self disclosure, decide to audit your billings, you can count on increased scrutiny and a much more concentrated, in-depth audit. Much of the target of the audit will be what you knew (or should have) and when you knew (or should have). Do not ever think: “I will not ever get audited. I am a small fish. There are so many other providers, who are really de-frauding the system. They won’t come after me.” If you do, you will not be prepared when the audit comes a’knocking on your door – and that is just foolish. In addition, never underestimate the breadth and scope of government audits. Remember, our tax dollars provide almost unlimited resources to fund thousands of audits at a time. Being audited is not like winning the lottery, Your chances are not one in two hundred million. If you accept Medicare and/or Medicaid, your chances of an audit are almost 100%. Some providers undergo audits multiple times a year.
Knowing that the definition of “knowing” may not be Merriam Webster’s definition is also key. The legal definition of “knowing” is more broad that you would think. Section 1128J(d)(4)(A) of the Act defines “knowing” and “knowingly” as those terms are defined in 31 U.S.C. 3729(b). In that statute the terms “knowing” and “knowingly” mean that a person with respect to information—(i) has actual knowledge of the information; (ii) acts in deliberate ignorance of the truth or falsity of the information; or (iii) acts in reckless disregard of the truth or falsity of the information. 31 U.S.C. 3729(b) also states that knowing and knowingly do not require proof of specific intent to defraud.
Number Two: Contact your attorney.
It is essential that you have legal counsel throughout the self disclosure process. There are simply too many ways to botch a well-intended, self disclosure into a casus belli for the government. For example, OIG allows three options for self disclosure; however, one option requires prior approval from OIG. Your counsel needs to maintain your self disclosure between the allowable, navigational beacons.
Number Three: Act timely.
You have 60-days to report and pay. Section 1128J(d)(2) of the Social Security Act requires that a Medicare or Medicaid overpayment be reported and returned by the later of (1) the date that is 60 days after the date on which the overpayment was identified or (2) the date any corresponding cost report is due, if applicable. See blog.
If you have a Medicare issue, please continue to Number Four. If your issue is Medicaid only, please skip Number Four and go to Number Five. If your issue concerns both Medicare and Medicaid, continue with Number Four and Five (skip nothing).
Number Four: Review the OIG Self Disclosure Protocol (for Medicare).
OIG publishes a Self Disclosure Protocol. Read it. Print it. Frame it. Wear it. Memorize it.
Since 2008, OIG has resolved 235 self disclosure provider cases through settlements. In all but one of these cases, OIG released the disclosing parties from permissive exclusion without requiring any integrity measures. What that means is that, even if you self disclose, OIG has the authority to exclude you from the Medicare system. However, if you self disclose, may the odds be ever in your favor!
Number Five: Review your state’s self disclosure protocol.
While every state differs slightly in self disclosure protocol, it is surprising how similar the protocol is state-to-state. In order to find your state’s self disclosure protocol, simply Google: “[insert your state] Medicaid provider self disclosure protocol.” In most cases, you will find that your state’s protocol is less burdensome than OIG’s.
On the state-side, you will also find that the benefits of self disclosure, generally, are even better than the benefits from the federal government. In most states, self disclosure results in no penalties (as long as you follow the correct protocol and do not hide anything).
Number Six: Draft your self disclosure report.
Your self disclosure report must contain certain criteria. Review the Federal Registrar for everything that needs to be included.
It is important to remember that you are only responsible for self disclosures going back six years (on the federal side).
Mail the report to:
330 Independence Avenue, Room 5527
Washington, DC 20201
Or you can self disclose online at this link.
Class Action Lawsuit Alleges Right to Inpatient Hospital Stays: Hospitals Are Damned If They Do…and Don’t!
Hospitals – “Lend me your ears; I come to warn you, not to praise RACs. The evil that RACs do lives after them; The good is oft interred with their appeals; So let it be with lawsuits.” – Julius Caesar, with modifications by me.
A class action lawsuit is pending against U.S. Health and Human Services (HHS) alleging that the Center for Medicare and Medicaid Services (CMS) encourages (or bullies) hospitals to place patients in observation status (covered by Medicare Part B), rather than admitting them as patients (covered by Medicare Part A). The Complaint alleges that the treatments while in observation status are consistent with the treatments if the patients were admitted as inpatients; however, Medicare Part B reimbursements are lower, forcing the patient to pay more out-of-pocket expenses without recourse.
The United States District Court for the District of Connecticut refused to dismiss the class action case on February 8, 2017, giving the legal arguments within the Complaint some legal standing, at least, holding that the material facts alleged warrant investigation.
The issue of admitting patients versus keeping them in observation has been a hot topic for hospitals for years. If you recall, Recovery Audit Contractors (RACs) specifically target patient admissions. See blog and blog. RAC audits of hospital short-stays is now one of the most RAC-reviewed issues. In fiscal year 2014, RACs “recouped” from hospitals $1.2 billion in allegedly improper inpatient claims. RACs do not, however, review outpatient claims to determine whether they should have been paid as inpatient.
On May 4, 2016, CMS paused its reviews of inpatient stays to determine the appropriateness of Medicare Part A payment. On September 12, 2016, CMS resumed them, but with more stringent rules on the auditors’ part. For example, auditors cannot audit claims more than the six-month look-back period from the date of admission.
Prior to September 2016, hospitals would often have no recourse when a claim is denied because the timely filing limits will have passed. The exception was if the hospital joined the Medicare Part A/Part B rebilling demonstration project. But to join the program, hospitals would forfeit their right to appeal – leaving them with no option but to re-file the claim as an outpatient claim.
With increased scrutiny, including RAC audits, on hospital inpatient stays, the class action lawsuit, Alexander et al. v. Cochran, alleges that HHS pressures hospitals to place patients in observation rather than admitting them. The decision states that “Identical services provided to patients on observation status are covered under Medicare Part B, instead of Part A, and are therefore reimbursed at a lower rate. Allegedly, the plaintiffs lost thousands of dollars in coverage—of both hospital services and subsequent skilled nursing care—as a result of being placed on observation status during their hospital stays.” In other words, the decision to place on observation status rather than admit as an inpatient has significant financial consequences for the patient. But that decision does not affect what treatment or medical services the hospital can provide.
While official Medicare policy allows the physicians to determine the inpatient v. observation status, RAC audits come behind and question that discretion. The Medicare Policy states that “the decision to admit a patient is a complex medical judgment.” Ch. 1 § 10. By contrast, CMS considers the determination as to whether services are properly billed and paid as inpatient or outpatient to be a regulatory matter. In an effort to avoid claim denials and recoupments, plaintiffs allege that hospitals automatically place the patients in observation and rely on computer algorithms or “commercial screening tools.”
In a deposition, a RAC official admitted that if the claim being reviewed meets the “commercial screening tool” requirements, then the RAC would find the inpatient status is appropriate, as long as there is a technically valid order. No wonder hospitals are relying on these commercial screening tools more and more! It is only logical and self-preserving!
This case was originally filed in 2011, and the Court of Appeals overturned the district court’s dismissal and remanded it back to the district court for consideration of the due process claims. In this case, the Court of Appeals held that the plaintiffs could establish a protected property interest if they proved their allegation “that the Secretary—acting through CMS—has effectively established fixed and objective criteria for when to admit Medicare beneficiaries as ‘inpatients,’ and that, notwithstanding the Medicare Policy Manual’s guidance, hospitals apply these criteria when making admissions decisions, rather than relying on the judgment of their treating physicians.”
HHS argues that that the undisputed fact that a physician makes the initial patient status determination on the basis of clinical judgment is enough to demonstrate that there is no due process property interest at stake.
The court disagreed and found too many material facts in dispute to dismiss the case.
Significant discovery will be explored as to the extent to which hospitals rely on commercial screening tools. Also whether the commercial screening tools are applied equally to private insureds versus Medicare patients.
Significant discovery will be explored on whether the hospital’s physicians challenge changing a patient from inpatient to observation.
Significant discovery will be explored as to the extent that CMS policy influences hospital decision-making.
Hospitals need to follow this case closely. If, in fact, RAC audits and CMS policy is influencing hospitals to issue patients as observation status instead of inpatient, expect changes to come – regardless the outcome of the case.
As for inpatient hospital stays, could this lawsuit give Medicare patients the right to appeal a hospital’s decision to place the patient in observation status? A possible, future scenario is a physician places a patient in observation. The patient appeals and gets admitted. Then hospital’s claim is denied because the RAC determines that the patient should have been in observation, not inpatient. Will the hospitals be damned if they do, damned if they don’t?
In the meantime:
Hospitals and physicians at hospitals: Review your policy regarding determining inpatient versus observation status. Review specific patient files that were admitted as inpatient. Was a commercial screening tool used? Is there adequate documentation that the physician made an independent decision to admit the patient? Hold educational seminars for your physicians. Educate! And have an attorney on retainer – this issue will be litigated.
Our newly appointed DHHS Secretary comes with a fancy and distinguished curriculum vitae. Dr. Mandy Cohen, DHHS’ newly appointed Secretary by Gov. Roy Cooper, is trained as an internal medicine physician. She is 38 (younger than I am) and has no known ties to North Carolina. She grew up in New York; her mother was a nurse practitioner. She is also a sharp contrast from our former, appointed, DHHS Secretary Aldona Wos. See blog.
Prior to the appointment as our DHHS Secretary, Dr. Cohen was the Chief Operating Officer and Chief of Staff at the Centers for Medicare and Medicaid Services (CMS). Prior to acting as the COO of CMS, she was Principal Deputy Director of the Center for Consumer Information and Insurance Oversight (CCIIO) at CMS where she oversaw the Health Insurance Marketplace and private insurance market regulation. Prior to her work at CCIIO, she served as a Senior Advisor to the Administrator coordinating Affordable Care Act implementation activities.
Did she ever practice medicine?
Prior to acting as Senior Advisor to the Administrator, Dr. Cohen was the Director of Stakeholder Engagement for the CMS Innovation Center, where she investigated new payment and care delivery models.
Dr. Cohen received her Bachelor’s degree in policy analysis and management from Cornell University, 2000. She obtained her Master’s degree in health administration from Harvard University School of Public Health, 2004, and her Medical degree from Yale University School of Medicine, 2005.
She started as a resident physician at Massachusetts General Hospital from 2005 through 2008, then was deputy director for comprehensive women’s health services at the Department of Veterans Affairs from July 2008 through July 2009. From 2009 through 2011, she was executive director of the Doctors for America, a group that promoted the idea that any federal health reform proposal ought to include a government-run “public option” health insurance program for the uninsured.
Again, I was perplexed. Did she ever practice medicine? Does she even have a current medical license?
This is what I found:
It appears that Dr. Cohen was issued a medical license in 2007, but allowed it to expire in 2012 – most likely, because she was no longer providing medical services and was climbing the regulatory and political ladder.
From what I could find, Dr. Cohen practiced medicine (with a fully-certified license) from June 20, 2007, through July 2009 (assuming that she practiced medicine while acting as the deputy director for comprehensive women’s health services at the Department of Veterans Affairs).
Let me be crystal clear: It is not my contention that Dr. Cohen is not qualified to act as our Secretary to DHHS because she seemingly only practiced medicine (fully-licensed) for two years. Her political and policy experience is impressive. I am only saying that, to the extent that Dr. Cohen is being touted as a perfect fit for our new Secretary because of her medical experience, let’s not make much ado of her practicing medicine for two years.
That said, regardless Dr. Cohen’s practical medical experience, anyone who has been the COO of CMS must have intricate knowledge of Medicare and Medicaid and the essential understanding of the relationship between NC DHHS and the federal government. In this regard, Cooper hit a homerun with this appointment.
Herein lies the conundrum with Dr. Cohen’s appointment as DHHS Secretary:
Is there a conflict of interest?
During Cooper’s first week in office, our new Governor sought permission, unilaterally, from the federal government to expand Medicaid as outlined in the Affordable Care Act. This was on January 6, 2017.
To which agency does Gov. Cooper’s request to expand Medicaid go? Answer: CMS. Who was the COO of CMS on January 6, 2017? Answer: Cohen. When did Cohen resign from CMS? January 12, 2017.
On January 14, 2017, a federal judge stayed any action to expand Medicaid pending a determination of Cooper’s legal authority to do so. But Gov. Cooper had already announced his appointment of Dr. Cohen as Secretary of DHHS, who is and has been a strong proponent of the ACA. You can read one of Dr. Cohen’s statements on the ACA here.
In fact, regardless your political stance on Medicaid expansion, Gov. Cooper’s unilateral request to expand Medicaid without the General Assembly is a violation of NC S.L. 2013-5, which states:
SECTION 3. The State will not expand the State’s Medicaid eligibility under the Medicaid expansion provided in the Affordable Care Act, P.L. 111-148, as amended, for which the enforcement was ruled unconstitutional by the U.S. Supreme Court in National Federation of Independent Business, et al. v. Sebelius, Secretary of Health and Human Services, et al., 132 S. Ct. 2566 (2012). No department, agency, or institution of this State shall attempt to expand the Medicaid eligibility standards provided in S.L. 2011-145, as amended, or elsewhere in State law, unless directed to do so by the General Assembly.
Obviously, if Gov. Cooper’s tactic were to somehow circumvent S.L. 2013-5 and reach CMS before January 20, 2017, when the Trump administration took over, the federal judge blockaded that from happening with its stay on January 14, 2017.
But is it a bit sticky that Gov. Cooper appointed the COO of CMS, while she was still COO of CMS, to act as our Secretary of DHHS, and requested CMS for Medicaid expansion (in violation of NC law) while Cohen was acting COO?
You tell me.
I did find an uplifting quotation from Dr. Cohen from a 2009 interview with a National Journal reporter:
“There’s a lot of uncompensated work going on, so there has to be a component that goes beyond just fee-for service… But you don’t want a situation where doctors have to be the one to take on all the risk of taking care of a patient. Asking someone to take on financial risk in a small practice is very concerning.” -Dr. Mandy Cohen
When you have a Medicare appeal, it is not uncommon for the appeal process to last years and years – up to 3-6 years in some cases. There has been a backlog of approximately 800,000+ Medicare appeals (almost 1 million), which, with no change, would take 11 years to vet.
A Federal Court Judge says – that is not good enough!
Judge James Boasburg Ordered that the Medicare appeal backlog be eliminated in the following stages:
- 30% reduction from the current backlog by Dec. 31, 2017 (approximately a 300,000 case reduction within 1 year);
- 60% reduction from the current backlog by Dec. 31, 2018;
- 90% reduction from the current backlog by Dec. 31, 2019; and
- Elimination of the backlog of cases by Dec. 31, 2020;
A Medicare appeal has 5 steps. See blog. The backlog is at the Administrative Law Judge (ALJ) level – or, Level 3.
This backlog is largely attributable to the Medicare Recovery Audit Contractor (RAC) programs. In 2010, the federal government implemented the RAC program to recoup allegedly improper Medicare reimbursement payments. The RAC program (for both Medicare and Medicaid) has been criticized for being overly broad and burdensome and “nit picking,” insignificant paperwork errors. See blog.
While the RAC program has recovered a substantial sum of alleged overpayments, concurrently, it has cost health care providers an infinite amount of money to defend the allegations and has left Health and Human Services (HHS) with little funds to adjudicate the number of Medicare appeals, which increase every year. The number of Medicare appeals filed in fiscal year 2011 was 59,600. In fiscal year 2013, that number boomed to more than 384,000. Today, close to 1 million Medicare appeals stand in wait. The statutory adjudication deadline for appeals at the ALJ level is 90 days, yet the average Medicare appeal can last over 546 days.
The American Hospital Association (AHA) said – enough is enough!
AHA sued HHS’ Secretary Sylvia Burwell in 2014, but the case was dismissed. AHA appealed the District Court’s Decision to the Court of Appeals, which reversed the dismissal and gave the District Court guidance on how the backlog could be remedied.
Finally, last week, on December 5, 2016, the District Court published its Opinion and set forth the above referenced mandated dates for eliminating the Medicare appeal backlog.
While, administratively, the case was dismissed, the District Court retained “jurisdiction in order to review the required status reports and rule on any challenges to unmet deadlines.”
In non-legalese, the Court said “The case is over, but we will be watching you and can enforce this Decision should it be violated.”
This is a win for all health care providers that accept Medicare.
Dr. Isaac Kojo Anakwah Thompson, a Florida primary care physician, was sentenced in July 2016 to 4 years in prison and a subsequent two years of supervised release. Dr. Thompson pled guilty to health care fraud. He was further ordered to pay restitution in the amount of $2,114,332.33. Ouch!! What did he do?
According to the Department of Justice, Dr. Thompson falsely reported that 387 of his clients suffered from ankylosing spondylitis when they did not.
Question: How does faking a patient’s disease make a physician money???
Answer: Hierarchal condition category (HCC) coding. Wait, what?
Basically, Medicare Advantage assigns HCC coding to each patient depending on the severity of their illnesses. Higher HCC scores equals substantially higher monthly capitation payments from Medicare to the managed care organization (MCO). In turn, the MCO will pay physicians more who have more extremely sick patients (higher HCC codes).
Ankylosing spondylitis is a form of arthritis that causes inflammation and damage at the joints; eventually, the inflamed spinal joints can become fused, or joined together so they can’t move independently. It’s a rare disease, affecting 1 in 1000 people. And, importantly, it sports a high HCC code.
In this case, the Office of Inspector General (OIG) found it odd that, between 2006-2010, Dr. Thompson diagnosed 387 Medicare Advantage beneficiaries with ankylosing spondylitis and treated them with such rare disease. To which, I say, if you’re going to defraud the Medicare system, choose common, fabricated diseases (kidding – it’s called sarcasm – I always have to add a disclaimer for people with no humor).
According to the Department of Justice, none or very few of Dr. Thompson’s 387 consumers actually had ankylosing spondylitis.
My issue is as follows: Doesn’t the managed care organization (MCO) share in some of the punishment? Shouldn’t the MCO have to repay the financial benefit it reaped from Dr. Thompson?? Shouldn’t the MCO have a duty to report such oddities?
Let me explain:
In Florida, Humana acted as the MCO. Every dollar that Dr. Thompson received was funneled through Humana. Humana would pay Dr. Thompson a monthly capitation fee from Medicare Advantage based on his patient’s hierarchal condition category (HCC) coding. Increasing even just one patient’s HCC code means more bucks for Dr. Thompson. Remember, according to the DOJ, he increased 387 patients’ HCC codes.
Dr. Thompson reported these diagnoses to Humana, which in turn reported them to Medicare. Consequently, Medicare paid approximately $2.1 million in excess capitation fees to Humana, approximately 80% of which went to Dr. Thompson.
In this case, it is reasonable to expect that Humana had knowledge that Dr. Thompson reported abnormally high HCCs for his patients. For comparison, ankylosing spondylitis has an HCC score of 0.364, which is more than an aortic aneurysm and three times as high as diabetes. Plus, look at the amount of money that the MCO paid Dr. Thompson. Surely, it appeared irregular.
What, if anything, is the MCO’s duty to report physicians with an abnormally high number of high HCC codes? If you have knowledge of someone committing a crime and you do nothing, isn’t that called aiding and abetting?
With the publication of the Yates memo, I expect to see CMS holding MCOs and other state agencies accountable for the actions of its providers. Not to say that the MCOs should actively, independently investigate Medicare/caid fraud, but to notify the Human Services Department (HSD) if abnormalities exist, especially if as blatant as one doctor with 387 patients suffering from ankylosing spondylitis.
Turning Medicare Into a Premium Support System: Frequently Asked Questions — The Henry J. Kaiser Family Foundation
Premium support is a general term used to describe an approach to reform Medicare that aims to reduce the growth in Medicare spending. These FAQs raise and discuss basic questions about the possible effects of a premium support system for Medicare beneficiaries, the federal budget, health care providers, and private health plans.
Throughout the history of health care, payors and payees of Medicare/caid have existed in separate silos. In fact, the two have combated – the relationship has not always been stellar.
Looking into my crystal ball; however, all will not be as it is now [that’s clear as mud!].
Now, and in the upcoming years, there will be a massive shift to integrate payors and payees under the same roof. Competition drives this movement. So does the uncertainty in the health care market. This means that under one umbrella may be the providers and the paying entities.
Why is this a concern? First – Any healthcare entity that submits claims to the federal government, whether it be a provider or payor, must comply with the fraud and abuse statutes. As such, there is a potential to run afoul of federal and state regulations regulating the business of health care. Payors know their rules; providers know their rules…And those rules are dissimilar; and, at times, conflicting. The opportunity to screw up is endemic.
Second – With the new responsibilities mandated by the Yates Memo, these new relationships could create awkward situations in which the head of the payor department could have knowledge (or should have knowledge) of an [alleged] overpayment, but because of the politics at the company or self-interest in the preservation of his or her career, the head may not want to disclose such overpayment. With the 60-day rule, the head’s hesitation could cost the company.
The Affordable Care Act (ACA) reinvented health care in so many ways. Remember, the ACA is supposed to be self-funding. Taxes were not to increase due to its inception. Instead, health care providers fund the ACA through post payment and prepayment audits, ZPIC audits, CERTs, MFCU, MICs, RACs, and PERMs.
The ACA also made a whole new commercially-insured population subject to the False Claims Act. False statements are now being investigated in connection with Medical Loss Ratios, justifications for rate increases, risk corridor calculations, or risk adjustment submissions.
CMS imposes a duty to detect fraud, waste, and abuse (FWA). But what if you’re looking at your own partners?
The chart above depicts “old school” Medicare payment options for physicians and other health care providers. In our Brave New World, the arrows will be criss-crossed (applesauce), because when the payors and the payees merge, the reimbursements, the billing, and the regulatory supervision will be underneath the same roof. It’ll be the game of “chicken” taken to a whole new level…with prison and financial penalties for the loser.
Since 2011, kickback issues have exponentially grown. The Anti-Kickback Statute makes it a criminal offense for a provider to give “remuneration” to a physician in order to compensate the physician for past referrals or to induce future referrals of patients to the provider for items or services that are reimbursed, in whole or in part, by Medicare or Medicaid.
Imagine when payors and payees are owned by the same entity! Plus, the ACA amended the kickback statutes to eliminate the prong requiring actual knowledge or intent. Now you can be convicted of anti kickback issues without any actual knowledge it was ever occurring!!
Now we have the “one purpose test,” which holds that a payment or offer of remuneration violates the Anti-Kickback Statute so long as part of the purpose of a payment to a physician or other referral source by a provider or supplier is an inducement for past or future referrals. United States v. Borrasi, 2011 WL 1663373 (7th Cir. May 4, 2011).
There are statutory exceptions. But these exceptions differ depending on whether you are a payor or payee – see the potential criss-cross applesauce?
And, BTW, which types of health care services are bound by the anti kickback statutes?
- Clinical laboratory services;
- Physical therapy services;
- Occupation therapy services;
- Radiology services (including MRIs, Ultrasounds, and CAT scans);
- Radiation therapy and supplies;
- Durable medical equipment and supplies;
- Parenteral and enteral nutrients, equipment, and supplies;
- Prosthetics, orthotics, and prosthetic devices and supplies;
- Home health services;
- Outpatient prescription drugs; and
- Inpatient and outpatient hospital services.
Imagine a building. Inside is a primary care physician (PCP), a pediatrician, a home health agency, and a psychiatrist. Can the PCP refer to the home health agency? Can a hospital refer to a home care agency? What if one of the Board of Directors sit on both entities?
The keys to avoiding the anti kickback pitfalls is threefold: (1) fair market value (FMV); (2) arm’s length transactions; and (3) money cannot be germane to referrals.
However, there is no one acceptable way to determine FMV. Hire an objective appraiser. While hiring an objective appraiser does not establish accuracy, it can demonstrate a good faith attempt.
Number One Rule for Merging/Acquiring/Creating New Partnerships in our new Brave New World of health care?
Your attorney should be your new BFF!! (Unless she already is).
The Yates memo? Sadly, we aren’t talking about William Butler Yates, who is one of my favorite poets:
TURNING and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.
Surely some revelation is at hand;
Surely the Second Coming is at hand…Part of The Second Coming
Ok, so maybe it is a little melodramatic to compare the Yates memo from the Office of the Deputy Attorney General to the end of the world, the drowning of innocence, and The Second Coming, but I made analogies in past blogs that had stretched and, dare I say, hyberbolized the situation.
What is the Yates memo?
The Yates memo is a memorandum written by Sally Quillian Yates, Deputy Attorney General for the U.S. Dept. of Justice, dated September 9, 2015.
It basically outlines how federal investigations for corporate fraud or misconduct should be conducted and what will be expected from the corporation getting investigated. It was not written specifically about health care providers; it is a general memo outlining the investigations of corporate wrongdoing across the board. But it is germane to health care providers.
By far the most scary and daunting item discussed within the Yates memo is the DOJ’s interest in indicting individuals within corporations as well as the corporate entities itself, i.e., the executives…the management. Individual accountability.
No more Lehman Brothers fallout with former CEO Dick Fuld leaving the catastrophe with a mansion in Greenwich, Conn., a 40+ acre ranch in Sun Valley, Idaho, as well as a five-bedroom home in Jupiter Island, Fla. Fuld may have or may not have been a player in the downfall of Lehman Brothers. But the Yates Memo was not published back in 2008.
The Yates Memo outlines 6 steps to strengthen audits for corporate compliance:
- To be eligible for any cooperation credit, corporations must provide to the DOJ all relevant facts about individuals involved in corporate misconduct.
- Both criminal and civil corporate investigations should focus on individuals from the inception of the investigation.
- Criminal and civil attorneys handling corporate investigations should be in routine communication with one another.
- Absent extraordinary circumstances, no corporate resolution will provide protection from criminal or civil liability for any individuals.
- Corporate cases should not be resolved without a clear plan to resolve related individual cases before the statute of limitations expires and declinations as to individuals in such cases must be memorialized.
- Civil attorneys should consistently focus on individuals as well as the company and evaluate whether to bring suit against an individual based on considerations beyond that individual’s ability to pay.
So why write about now – over 6 months after it was disseminated?
First, since its dissemination, a few points have been clarified that were otherwise in question.
About a month after its publication, U.S. Assistant Attorney General Leslie Caldwell emphasized the Yates memo’s requirement that corporations must disclose all relevant facts regarding misconduct to receive cooperation credit. Caldwell went so far to say that companies must affirmatively seek relevant facts regarding misconduct.
For example, Hospital X is accused of Medicare fraud, waste, and abuse (FWA) in the amount of $15 million. The Yates memo dictates that management at the hospital proactively investigate the allegations and report its findings to the federal government. The memo mandates that the hospital “show all its cards” and turn itself in prior to making any defense.
The problem here is that FWA is such a subjective determination.
What if a hospital bills Medicare for inplantable cardioverter defibrillator, or ICD, for patients that had coronary bypass surgery or angioplasty within 90 days or a heart attack within 40 days? What if the heart attack was never documented? What if the heart attack was so minor that it lasted under 100 milliseconds?
The Medicare National Coverage Determinations are so esoteric that your average Medicare auditor could very well cite a hospital for billing for an ICD even when the patient’s heart attack lasted under 100 milliseconds.
Yet, according to the Yates memo, the hospital is required to present all relevant facts before any defense. What if the hospital’s billing person is over zealous in detecting mis-billings? The hospital could very well have a legal defense as to why the alleged mis-billing is actually compliant. What about a company’s right to seek counsel and defend itself? The Yates memo may require the company to turn over attorney-client privilege.
The second point that has been clarified since the Yates’ memo’s publication came from Yates herself.
Yates remarks that there will be a presumption that the company has access to identify culpable individuals unless they can make an affirmative showing that the company does not have access to it or are legally prohibited from producing it.
Why should this matter? It’s only a memo, right?
Since its publication, the DOJ codified it into the revised U.S. Attorneys’ Manual, including the two clarifying remarks. Since its inception, the heads of companies have been targeted.
A case was brought against David Bostwick, the founder, owner and chief executive officer of Bostwick Laboratories for allegedly provided incentives to treating physicians in exchange for referrals of patients who would then be subjected to these tests.
When the pharmaceutical company Warner Chilcott was investigated for health care fraud prosecutors also went after W. Carl Reichel, the former president, for his alleged involvement in the company’s kickback scheme.
Prior to the Yates’ memo, it was uncommon for health care fraud investigations to involve criminal charges or civil resolutions against individual executives.
The Second Coming?
It may feel that way to executives of health care companies accused of fraud, waste, and abuse.
The Centers for Medicare & Medicaid Services released its final rule today on the return of overpayments. The final rule requires providers and suppliers receiving funds under the Medicare/Medicaid program to report and return overpayments within 60 days of identifying the overpayment, or the date a corresponding cost report is due, whichever is later. As published in the February 12, 2016 Federal Register, the final rule clarifies the meaning of overpayment identification, the required lookback period, and the methods available for reporting and returning identified overpayments to CMS. See https://www.federalregister.gov/articles/2016/02/12/2016-02789/medicare-program-reporting-and-returning-of-overpayments.
The point in time in which an overpayment is identified is significant because it triggers the start of the 60-day period in which overpayments must be returned. CMS originally proposed that an overpayment is identified only when “the person has actual knowledge of the existence of the overpayment or acts in reckless disregard or deliberate ignorance of the overpayment.” The final rule changes the meaning of identification, stating that “a person has identified an overpayment when the person has or should have, through the exercise of reasonable diligence, determined that the person has received an overpayment and quantified the amount of the overpayment. The change places a burden on healthcare providers and suppliers to have reasonable policies and programs in place which monitor the receipt of Medicare/Medicaid payments.
6-Year Lookback Period
The final rule also softens the period for which health care providers and suppliers may be liable for the return of overpayments. As the rule was originally proposed, CMS required a 10-year lookback period, consistent with the False Claims Act. Now, overpayments must be reported and returned only if a person identifies the overpayment within six years of the date the overpayment was received.
Guidance in Reporting and Returning Overpayments
The final rule provides that providers and suppliers must use an applicable claims adjustment, credit balance, self-reported refund, or other appropriate process to satisfy the obligation to report and return overpayments. If a health care provider or supplier has reported a self-identified overpayment to either the Self-Referral Disclosure Protocol managed by CMS or the Self-Disclosure Protocol managed by the Office of the Inspector General (OIG), the provider or supplier is considered to be in compliance with the provisions of this rule as long as they are actively engaged in the respective protocol.
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