AAOE Presentation - 2014 healthcare compliance

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The first step to building an effective compliance program is understanding the risks. Attorneys from the Akerman LLP Healthcare Practice Group will help you identify some of the most significant compliance issues facing healthcare executives today. This discussion will feature:

* Staying Off of the Radar: Outlining national trends in federal fraud and abuse activity and gaining insight from the 2014 Office of Inspector General (OIG) work plan.

* The Dos and Don'ts of Deal Making: Recognizing critical legal and tax dimensions in healthcare business transactions.

* Making the Case for Compliance: Understanding why physicians need a compliance plan, the seven elements of effective compliance programs, and compliance developments with HIPAA, electronic health records, and the Americans with Disabilities Act.

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  • The Federal AKS establishes criminal penalties with respect to any person who knowingly and willfully offers, pays , solicits or receives anything of value (known as remuneration) to induce or in return for a referral for an item or service payable under a federal health care program;The Stark law, prohibits physicians from referring Medicare and Medicaid patients to an entity for the furnishing of certain designated health services if the physician (or an immediate family member) has a financial relationship with the entity. The FCA prohibits knowingly submitting or causing to be submitted, false or fraudulent claims for payment or knowingly making, using, or causing to be made or used false records or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the government.
  • Until recently, both the federal government and private healthcare practitioners have focused their litigation and compliance advice relating to the Stark Law exclusively on Medicare. Although the case law and statutory analysis is clear that Stark is limited to Medicare the, DOJ argued in Halifax, that by engaging in the prohibited relationship and submitting claims to the Florida Medicaid program, Halifax violated the FCA by causing the Florida Medicaid program to submit false claims to the federal government, in violation of the FCA. Thus, the “false claims” alleged were not the claims submitted by the provider to Medicaid; they were the claims submitted by Medicaid to CMS for FFP.(“Halifax”), is a corporate body that operates a 678-bed Medical Center in Florida, is accused of violating the Stark Law through employment arrangements its physicians.The suit was initiated by a Halifax employee, alleging that the physicians compensation exceeded fair market value. The problem was that incentive bonuses paid to the employed physicians varied based on referrals for certain designated health services did not meet a requirement of the Stark Law exception for bona fide employment. The basis for the judgment was the observation that, even though the bonuses were distributed to each physician based on volume of personally performed services, the pool from which the bonuses were paid was equal to 15% of the operating margin of Halifax’s medical oncology program, and the program’s revenue (and thus operating margin) varied with the volume and value of DHS referrals by the physicians.
  • AAOE Presentation - 2014 healthcare compliance

    1. 1. Healthcare Compliance in 2014 Don’t let compliance keep you up at night!
    2. 2. Your Presenters: Adam Maingot adam.maingot@akerman.com 813.209.5098 Joe Rugg joseph.rugg@akerman.com 813.209.5008 Betsy Hodge elizabeth.hodge@akerman.com 813.209.5052 Akerman | 2
    3. 3. Where we are headed: 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 Akerman | 3
    4. 4. Staying Off the Radar: Fraud and Abuse
    5. 5. Fraud and Abuse Basics The 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) Akerman | 5
    6. 6. Fraud and Abuse Activity FY 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% () Akerman | 6
    7. 7. F&A Activity: Initiatives HEAT: 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 Akerman | 7
    8. 8. F&A Activity: Recent Cases Kyphoplasty 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? Akerman | 8
    9. 9. F&A Activity: Recent Cases Double 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/Doc uments/130930_MemorandumandOpinion.pdf Akerman | 9
    10. 10. F&A Activity: Recent Cases Internal 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) Akerman | 10
    11. 11. F&A Activity: Recent Cases The 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) Akerman | 11
    12. 12. F&A Activity: Recent Cases Kickback 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? Akerman | 12
    13. 13. F&A Activity: Recent Cases Stark: 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) Akerman | 13
    14. 14. F&A Activity: Recent Cases Halifax: 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). Akerman | 14
    15. 15. F&A Activity: Recent Cases Halifax: Why the case is significant - Medicaid New 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. Akerman | 15
    16. 16. F&A Activity: New OIG Guidance Suspect Under AKS PODS – Inherently 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. Akerman | 16
    17. 17. F&A Activity: New OIG Guidance PODS – 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/SB100014241278873242634045786159 71483271856 See Also, Special Fraud Alert: Physician-Owned Entities, OIG, http://oig.hhs.gov/fraud/docs/alertsandbulletins/2013/POD_Special_Fraud_ Alert.pdf Akerman | 17
    18. 18. F&A Activity: New OIG Guidance Bulletin on Effect of Exclusion Special Advisory  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 Akerman | 18
    19. 19. F&A Activity: New OIG Guidance Bulletin on Effect of Exclusion Special Advisory Scope 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 Akerman | 19
    20. 20. Reading the Radar: The 2014 OIG Work Plan
    21. 21. What is the Workplan?  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. http://oig.hhs.gov/reports-and-publications/archives/workplan/2014/Work-Plan2014.pdf Akerman | 21
    22. 22. Goals for 2014  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 Akerman | 22
    23. 23. Workplan: New Items Hospital Topics that affect Physicians 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 Akerman | 23
    24. 24. Workplan: Hospital Topics that affect Physicians 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 providerbased 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. Akerman | 24
    25. 25. Workplan: Hospital Topics that affect Physicians 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 Akerman | 25
    26. 26. Workplan: Medical Equipment: Items that affect Physicians 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. Akerman | 26
    27. 27. Workplan: Ambulatory surgical centers (ASCs) 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. Akerman | 27
    28. 28. Workplan: Related Practices 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 Akerman | 28
    29. 29. Workplan: Diagnostic Testing ―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 Akerman | 29
    30. 30. Workplan: Diagnostic Testing 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 Akerman | 30
    31. 31. Workplan: Physicians 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. Akerman | 31
    32. 32. Workplan: Errata: 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. Akerman | 32
    33. 33. Mid-level Providers/ Non-physician Practitioners
    34. 34. NPPs: Basics What You Care About 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 Akerman | 34
    35. 35. NPPs: Basics 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 Akerman | 35
    36. 36. NPPs: Basics NPs: http://www.aanp.org/component/content/article/66legislation-regulation/state-practiceenvironment/1380-state-practice-by-type Akerman | 36
    37. 37. NPPs: PA Services 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 Akerman | 37
    38. 38. NPPs: PA Services 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) Akerman | 38
    39. 39. NPPs: PA Services 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 Akerman | 39
    40. 40. NPPs: PA Services 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 Akerman | 40
    41. 41. NPPs: NP Services 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 Akerman | 41
    42. 42. NPPs: NP Services 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 Akerman | 42
    43. 43. NPPs: NP Services 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 Akerman | 43
    44. 44. NPPs: NP Services 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 Akerman | 44
    45. 45. DOS AND DON’TS OF DEAL MAKING Keeping your healthcare transaction healthy Joseph W.N. Rugg 28214455.pptx
    46. 46. What do we mean by “Deals”? 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. Akerman | 46
    47. 47. What do we mean by “Deals”? (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 Akerman | 47
    48. 48. Increased Deal Making in Healthcare 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) Akerman | 48
    49. 49. Increased Deal Making in Healthcare (cont.)  Need for improved practice management  Need to recruit quality physicians and NPPs  Need to develop exit strategy and practice transition (succession planning) Akerman | 49
    50. 50. Future of Orthopaedics 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.) Akerman | 50
    51. 51. 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. Akerman | 51
    52. 52. 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. Akerman | 52
    53. 53. OIG’s Interest in Healthcare Deals Akerman | 53
    54. 54. OIG Roadmap – Medical Directorships 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. Akerman | 54
    55. 55. OIG Roadmap – Consulting Fees 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. Akerman | 55
    56. 56. Doing Deals with Hospitals Types 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) Akerman | 56
    57. 57. Doing Deals with Other Physicians Types 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 Akerman | 57
    58. 58. Doing Deals with Other Third Parties Types 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) Akerman | 58
    59. 59. Healthcare Laws Affecting Deals  Anti-Kickback Statute  Physician Self-Referral/Stark Statute  Antitrust Laws  Income Tax Laws * Always look to see whether there are similar state laws. Akerman | 59
    60. 60. Deal Related Compliance Issues 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 Akerman | 60
    61. 61. Deal Related Compliance Issues 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 Akerman | 61
    62. 62. Deal Related Compliance Issues 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) Akerman | 62
    63. 63. Deal Related Compliance Issues 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 Akerman | 63
    64. 64. Deal Related Compliance Issues 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. Akerman | 64
    65. 65. Deal Related Compliance Issues 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. Akerman | 65
    66. 66. Rules of Thumb for Healthcare Deals RULE #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. Akerman | 66
    67. 67. 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? Akerman | 67
    68. 68. 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. Akerman | 68
    69. 69. 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? Akerman | 69
    70. 70. 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? Akerman | 70
    71. 71. 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? Akerman | 71
    72. 72. Steps in Doing a Deal (Correctly) Step 5 – Identify the due diligence requirements Remember 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, liens  Contracts and commitments, leases  Employees and benefit plans  Taxes  Insurance  Litigation Akerman | 72
    73. 73. 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 transaction  Equipment and inventories  Cost reports, inspections, regulatory correspondence  Quality of care, malpractice claims/insurance  Patients records, EHR compatibility, billing software  Managed care/provider agreements, liability, assignability  Subcontractors/suppliers Akerman | 73
    74. 74. 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. Akerman | 74
    75. 75. 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. Akerman | 75
    76. 76. How to Screw up the Deal There 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 Akerman | 76
    77. 77. 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 Akerman | 77
    78. 78. WHY DO I NEED A COMPLIANCE PLAN? ELIZABETH F. HODGE 28214455.pptx
    79. 79. Why do I need a compliance plan? 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). Akerman | 79
    80. 80. Fraud, Waste and Abuse  Fraud  Waste includes the obtaining of something of value through intentional misrepresentation or concealment of material facts 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 Akerman | 80
    81. 81. Federal Fraud and Abuse Laws  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. Akerman | 81
    82. 82. 7 Components of an Effective Compliance Program 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. Akerman | 82
    83. 83. 7 Components of an Effective Compliance Program 5. Respond appropriately to detected offenses and develop corrective action. 6. Develop open lines of communication. 7. Enforce disciplinary standards through well- publicized guidelines. Akerman | 83
    84. 84. OIG Compliance Program for Small Group Practices  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 Akerman | 84
    85. 85. Auditing and Monitoring  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 Akerman | 85
    86. 86. Establish Practice Standards and Procedures Risk Areas Identify Specific  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 Akerman | 86
    87. 87. Designation of a Compliance Officer/Contact(s)  In-house Compliance officer  In-house compliance contacts  Outsource compliance function Akerman | 87
    88. 88. Conducting Appropriate Training and Education 1. Compliance Training 2. Coding and Billing Training 3. Format of Training 4. Continuing Education Akerman | 88
    89. 89. Responding to Detected Offenses and Developing Corrective Action Initiatives  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 Akerman | 89
    90. 90. Developing Open Lines of Communication  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 Akerman | 90
    91. 91. Enforcement Through Well-Publicized Guidelines  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) Akerman | 91
    92. 92. Enforcement Through Well-Publicized Guidelines Excellent Resources: 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 Akerman | 92
    93. 93. Hot Right Now… Americans with Disabilities Act HIPAA Electronic Health Records
    94. 94. Americans with Disabilities Act  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 Akerman | 94
    95. 95. Americans with Disabilities Act (ADA) may not discriminate on the basis of  Providers 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 Akerman | 95
    96. 96. Barner-Free Health Care  Stepped up ADA enforcement Initiative  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 Akerman | 96
    97. 97. Settlements Under Barner-Free Health Care Initiative  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 Akerman | 97
    98. 98. Settlements Under Barner-Free Health Care Initiative  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 Akerman | 98
    99. 99. HIPAA
    100. 100. WHY SHOULD I CARE ABOUT HIPAA? civil penalties under Omnibus Rule 1. Increased • 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 Akerman | 100
    101. 101. WHY SHOULD I CARE ABOUT HIPAA? 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 Akerman | 101
    102. 102. HIPAA ENFORCEMENT  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 Akerman | 102
    103. 103. HIPAA ENFORCEMENT  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 Akerman | 103
    104. 104. HIPAA ENFORCEMENT  Eye and Ear Practice: $1.5 million settlement; Corrective Action Plan • OCR investigated following theft of unencrypted personal laptop containing ePHI 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 Akerman | 104
    105. 105. HIPAA ENFORCEMENT  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 Akerman | 105
    106. 106. Phoenix Cardiac Surgery, P.C.  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 Akerman | 106
    107. 107. Phoenix Cardiac Surgery, PC. – Corrective Action Plan  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 Akerman | 107
    108. 108. Phoenix Cardiac Surgery, P.C. – Corrective Action Plan 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 Akerman | 108
    109. 109. HIPAA RESOURCES 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”) Akerman | 109
    110. 110. HIPAA Compliance Takeaways 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 Akerman | 110
    111. 111. Electronic Health Records
    112. 112. Electronic Health Records 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 Akerman | 112
    113. 113. Electronic Health Records  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 Akerman | 113
    114. 114. EHR Documentation 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 Akerman | 114
    115. 115. EHR Documentation 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” Akerman | 115
    116. 116. Steps to Prepare for EHR Incentive Payment Audit  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 Akerman | 116

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