Long Term Care Litigation - Conference Materials


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Gain the competitive advantage in increasingly high-stakes long term care defense at ACI’s 3rd Annual Forum on Preventing and Defending Long Term Care Litigation, the only conference that brings together a supreme in-house presence on the faculty, the top defense firms, and experienced jurists from around the country. Designed for both networking and masters-level strategy sharing, this is the leading forum in which to learn winning strategies to comply with the dense thicket of laws and regulations facing the LTC industry, avoid costly litigation altogether and to mount a complete and formidable defense if forced to do so.

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Long Term Care Litigation - Conference Materials

  1. 1. AMERICAN CONFERENCE INSTITUTE 3RD ANNUAL FORUM ON PREVENTING AND DEFENDING LONG TERM CARE LITIGATION JANUARY 23, 2013, MIAMI, FLORIDA Stephen Siegel, Esq. Broad and Cassel, Miami, FL Linda A. Baumann Arent Fox LLP Glenn P. Hendrix Arnall Golden Gregory LLP Norris Cunningham Indianapolis, IN
  3. 3. The Current Hostile Environment 3       Criminal and civil enforcement risks Administrative and regulatory enforcement risksSanctions, Audits and Overpayments Whistleblowers Federal and state enforcement Media and public scrutiny Compliance program challenges and risks
  4. 4. False Claims Act 4 Q: When Willie Horton was asked why he robbed banks, what was his response? A: That’s where they keep the money
  5. 5. False Claims Act 5  Google “nursing home qui tam” – AttorneysForWhistleblowers.com WhistleblowersAganistFraud.com quitam-lawyer.com quitamteam.com fightforvictims.com
  6. 6. Elements of an FCA Offense 6  The Defendant must:  Submit a claim (or cause a claim to be submitted)  To the “Government”  That is false or fraudulent  Knowing of its falsity  Seeking payment from the Federal treasury  Damages (maybe)
  7. 7. False Claims Act 31 U.S.C. § 3719 7 7 bases for FCA liability. The most common ones are: Knowingly presenting, or causing to be presented, to the Government a false or fraudulent claim for payment Knowingly making, using, or causing to be made or used, a false record or statement material to get a false or fraudulent claim paid Knowingly making, using, or causing to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly concealing or avoiding or decreasing an obligation to pay or transmit money or property to the government Conspiring to commit a violation of the False Claims Act
  8. 8. Knowing & Knowingly 8  No proof of specific intent to defraud is required  The Government need only show person:  Had “actual knowledge of the information”; or  acted in “deliberate ignorance” of the truth or falsity of the information; or  acted in “reckless disregard” of the truth or falsity of the information
  9. 9. Penalties 9  Civil penalty from $5,500 to $11,500 per false claim  Three times the amount of damages which the Government sustained
  10. 10. Qui Tam Actions & Government Intervention 10    A private person (“Relator”) may bring a False Claim Act action under the qui tam provisions of the FCA – The Whistleblower Government may intervene in a suit brought by Relator (about 25% of cases, 3-400 per year) Relationship between Relator and Government  Collaborators in recovery of money (Relator receives 15% -30% of recovery if govt intervenes)
  11. 11. Qui Tam Actions & Government Intervention Vast majority of actions are brought by private parties, including: Fired administrators Disgruntled nurses Unhappy LPNs Frustrated staff NOTE: RETALIATION is not permitted
  12. 12. Types of FCA Cases 12  Unbundling  Services not rendered  Upcoding  Submitting false or inflated cost reports  Quality of care (“standard of care”/”worthless claims”)  False claims based on Stark/Anti-Kickback violation (“Tainted Claims”
  13. 13. Affordable Care Act False Claims Act Amendments 13   Liability for overpayments and failure to return a known overpayment within 60 days from identification-return of known overpayment an affirmative and express obligation A violation of the Federal Anti-Kickback Statute constitutes a false or fraudulent claim under the False Claims Act
  14. 14. PHYSICIAN SELF-REFERRAL the “STARK LAW” 14  A prohibition on physician self-referrals  If a physician (or immediate family member) has a direct or indirect financial relationship (ownership or compensation) with an entity that provides designated health services (“DHS”), the physician cannot refer the patient to the entity for DHS and the entity cannot submit a claim for the DHS, unless the financial relationship fits an exception  Violations are per se, do not need knowledge or intent  NOTE: There is an Advisory Opinion process
  15. 15. Penalties 15  Nonpayment of claims to entity submitting claims  Civil Money Penalties of $15,000 for each service rendered plus an assessment of three time the amount claims  Penalty of up to $100,000 for “circumvention scheme”  FCA liability for submission of false claims resulting from Stark prohibited referral.
  16. 16. Types of Designated Health Care Service (“DHS”) 16  Clinical laboratory  Parenteral and enteral  Physical therapy nutrients, equipment and  Occupational therapy supplies  Radiology and Imaging Services  Prosthetics, orthotics and (MRI, CAT, scan, ultrasound) prosthetic devices and supplies  Durable medical equipment and supplies  Home health services  Outpatient prescription drugs  Inpatient and outpatient hospital services
  17. 17. What is a Financial Relationship? 16  Nearly any type of investment or compensation agreement between the referring physician and the DHS entity will quality as a financial arrangement under the Stark law Examples:  Stock ownership  Partnership interest  Rental contract  Personal service contract  Salary  Compensation agreements can be direct or indirect  Exceptions for certain indirect compensation arrangements
  18. 18. Exceptions 18  Compliance is mandatory  Some exceptions:  In-office ancillary services  Personal physician services by member of group practice  Pre-paid health plan  Certain publicly traded securities  Rural provider (investment interests)  Rental of office space and equipment  Bona fide employment  Personal services arrangement  Physician recruitment
  19. 19. Anti-Kickback Statute 19   Felony to knowingly and willfully offer, pay, solicit, or receive anything of value in return for a referral, or to induce generation of business reimbursable under a Federal health care program [42 U.S.C. § 1320a-7b(b)]. Per ACA § 6402(f) No actual knowledge (if there is “reckless disregard” or “deliberate ignorance”) or specific intent to commit a violation of AKS
  20. 20. Elements 20 Remuneration, i.e., anything of value, in cash or in kind, direct or indirect Offered, paid, solicited, or received Knowingly (actual, deliberate ignorance, wanton disregard) and willfully To induce or in exchange for Federal program referrals/business
  21. 21. To Induce Federal Program Referrals 21  Any Federal health care program, including Medicaid and Medicare  A nexus between payments and referrals  Covers any act that is intended to influence and cause referrals to a Federal health care program  One purpose test and culpability can be established without a showing of specific intent to violate the statutory prohibitions
  22. 22. Fines and Penalties 22 The Government may elect to proceed: Criminally (DOJ):  Felony, imprisonment up to 5 years and a fine up to $25,000 or both  Mandatory exclusion from participating in Federal health care programs Civilly (OIG):  Violation constitutes a false or fraudulent claim under the Civil False Claims Act  Penalties are same as under False Claims Act  Controversial, yet expanding use of the FCA Administratively (OIG) $50,000 per violation + treble damages Discretionary exclusion
  23. 23. Exceptions and Safe Harbors 23  Many harmless business arrangements may be subject to the statute  Approximately 24 exceptions (“Safe Harbors”) have been created by the OIG  Compliance is voluntary  Must meet all conditions to qualify for Safe Harbor protection  Is substantial compliance enough?
  24. 24. Guidance on the Anti-Kickback Statute (cont’d.) 24  Fraud Alerts and Special Advisory Bulletins  Preamble to the Safe Harbor Regulations  Compliance Program Guidance’s  Advisory Opinions  www.oig.hhs.gov
  25. 25. Difference Between Anti-Kickback Statute and the Stark Law 25 Physician referrals only No “knowingly and willfully standard” – strict liability Involves Designated Health Services (“DHS”) Physician/”Immediate Family Member” on both sides of the transaction
  26. 26. QUESTIONS?
  27. 27. LONG TERM CARE FRAUD & ABUSE RISKS: FALSE CLAIMS ACT CASES INVOLVING POOR QUALITY OF CARE Linda A. Baumann Arent Fox LLP 1717 K St NW Washington, DC 20036 linda.baumann@arentfox.com
  28. 28. FCA Quality of Care Cases 28   Generally involve allegations that quality of care was so poor that any claim for reimbursement is “false” Submitting “false” claims for reimbursement subjects nursing home to potential False Claims Act liability
  29. 29. FCA Quality of Care Theories 29 Three theories typically used in FCA quality of care cases  Express false certification (legally false claim)  Implied false certification (legally false claim)  Worthless services (factually false claim)
  30. 30. Express False Certification 30 Theory:  Provider makes affirmative statement of compliance with a statute or regulation  Provider’s statement was false  Government requires statement (certification) of compliance as condition of payment  See, e.g., Mikes v. Straus, 274 F.3d 687 (2d. Cir. 2001)
  31. 31. Express False Certification 31 Examples of forms that have been alleged to create express certifications of compliance  Medicare Enrollment Application for Institutional Providers   “I understand that payment of a claim by Medicare is conditioned upon the claim and the underlying transaction complying with such laws, regulations and program instructions … and on the provider’s compliance with all applicable conditions of participation in Medicare.” Medicaid provider agreement  “The provider agrees to provide covered services … in accordance with all applicable federal and state laws, regulations, policies and procedures relating to the provision of medical services according to Title XIX [of the Social Security Act]”  Claims forms  “This claim, to the best of my knowledge, is correct and complete.”
  32. 32. Express False Certification 32 Forms that have been alleged to create express certifications of compliance con’t  Annual cost reports   Health Insurance Benefit Agreement, Form CMS-1561   “I am familiar with the laws and regulations regarding the provision of health care services, and that the services identified in this cost report were provided in compliance with such laws and regulations.” “In order to receive payment under title XVIII of the Social Security Act, [provider] agrees to conform to the provision of [section 1866 of the SSA] and applicable provision in 42 CFR.” EDI enrollment form  Provider will “submit claims that are accurate, complete, and truthful.”
  33. 33. Implied False Certification 33 Theory:  Act of submitting a claim for reimbursement implies compliance with governing federal rules that are a precondition to payment  Provider submits a claim  Provider does not (and is not required to) affirmatively state compliance with a federal rule  Provider does not comply with the federal rule  Compliance with the federal rule is a precondition to payment
  34. 34. Implied False Certification 34 Ab-Tech Construction, Inc. v. U.S., 31 Fed. Cl. 429 (Fed. Cl. 1994), aff’d, 57 F.3d 1084 (Fed. Cir. 1995)  Submission of payment vouchers with correct amount were false claims under the FCA because they represented implied certification by company of continued adherence to eligibility requirements for participating in Small Business Administration program
  35. 35. False Certification Cases 35 Potential Defenses  Scienter: did defendant know that the claims submitted were false or act in reckless disregard?  Language of the certification  In Mikes v. Straus, where the spirometry tests did not meet ATS guidelines, the court found that the regulatory language that required the government to pay only if services were “medically necessary,” related to the level, not the quality, of services provided
  36. 36. False Certification Cases 36 Potential Defenses con’t  Underlying statute or regulation does not expressly state that the provider must comply in order to be paid   Frequently cited 42 U.S.C. 1320c-5(a) relates to quality of care but not payment (according to Mikes v. Straus court) Nursing home conditions of participation are not directly tied to reimbursement   See, e.g., Landers v. Baptist Mem. Health Care Corp., 525 F.Supp.2d 972( 2007) But see US ex rel. Sanchez-Smith v. AHS Tulsa Reg. Med. Ctr , 754 F.Supp.2d 1270 (ND OK 2010) (OK active treatment requirements maybe conditions of payment)
  37. 37. False Certification Cases 37 Potential Defenses con’t  Helpful language in case law, e.g., Mikes v Straus:  “Not all instances of regulatory noncompliance will cause a claim to become false”  “Permitting qui tam plaintiffs to assert that defendants’ quality of care failed to meet medical standards would promote federalization of medical malpractice”
  38. 38. False Certification Cases 38 Potential Defenses con’t  Government reimbursement is not conditioned on perfect compliance  HHS often has other remedies to address imperfect compliance, such as required corrective action, civil monetary penalties, temporary government management, suspension or exclusion, and the discretion on which and when to use them  Qui tam plaintiffs should not be allowed to use the FCA to supplant HHS’s regulatory discretion, see, e.g., U.S. ex rel. Swan v. Covenant Care, Inc., 279 F.Supp.2d 1212 (E.D.Cal. 2002)
  39. 39. Worthless Services 39 Theory  The provision of extremely poor quality service is the functional equivalent of providing no service at all  Note the 2013 OIG Work Plan project related to monitoring the quality of care in skilled nursing facilities. A report is due out in FY 2013 and enforcement may increase thereafter
  40. 40. Worthless Services 40 Where is the dividing line between low quality care and care so poor that it essentially is worthless?  Some courts have held that ordinary negligence or malpractice are different than worthless services    A plaintiff must present facts demonstrating (i) the provision of entirely “worthless services” or (ii) at a minimum, the provision of grossly negligent services related to a particular standard of care or regulatory requirement, see, Sanchez-Smith v. AHS Tulsa Reg’l Med. Ctr., 754 F.Supp.2d 1270 A challenge to the level of care and amount of services provided to patients due to understaffing was not an allegation that neglect was so severe that patients were receiving worthless care, see Covenant Care Courts do not want to federalize medical malpractice claims
  41. 41. Worthless Services 41 Theory is relatively straightforward when a provider bills for an individual act of care that is deficient  More difficult to apply theory when provider receives per diem/bundled payment covering multiple services  Must prove that facility did not provide minimum level of care necessary under its obligation to the federal government  A provider commits fraud “[a]t some very blurry point” when it fails to perform the minimum necessary care activities required to promote the patient’s quality of life and still presents claims for reimbursement See, e.g., U.S. v. NHC Health Care Corp., 163 F.Supp. 2d 1051 (W.D. Mo. 2001)
  42. 42. Worthless Services 42 Potential Defenses  Provision of some services to patient under bundled payment may defeat claim  Even assuming that bundled payment was exclusively for therapy services and acknowledging that provision of therapy did not meet active treatment regulations, no false claim for worthless services because patient received at least some of the care for which provider billed, including some therapy care. See Sanchez-Smith v. AHS Tulsa Reg’l Med. Ctr.
  43. 43. Worthless Services 43 Potential Defenses  Courts have held that a dispute over the appropriate standard of care is not necessarily a violation of the FCA  Medical center’s failure to conform with Medicare’s conditions of participation or other applicable standards of care, if proven, would not be sufficient on its own to create genuine issue of material fact as to a worthless services claim, see. e.g., Landers v. Baptist Mem. Health Care Corp.
  44. 44. FCA Case Examples Worthless Services 44 U.S. v. GMS Management-Tucker (E.D. Pa. 1996)  First worthless service case  Nursing facility allegedly violated the FCA by billing Medicare & Medicaid for grossly inadequate wound care and nutritional services  Company settled for $575,000 and compliance obligations
  45. 45. FCA Case Examples Worthless Services 45 U.S. v. Chester Care Center (E.D. Pa. 1998)  Nursing facility allegedly provided deficient care that rose to the level of patient abuse  Allegations included scalding a patient to death by placing him in 138-degree bathwater, and failing to properly monitor diabetes patients, tend to patients’ nutritional needs and provide appropriate wound care  Company settled for $500,000
  46. 46. FCA Case Examples Worthless Services 46 Life Care Center of Lawrenceville, GA (N.D.Ga., filed 2002)  Qui tam lawsuit (by family members of patients) alleging failure to provide appropriate nursing care resulting in premature death of several residents  Allegations included understaffing, inadequate training, high staff turnover, and an ineffective medical director  In 2005, Company settled for $2.5 million and agreed to independent monitor for five years
  47. 47. FCA Case Examples Worthless Services 47 U.S. ex rel. Academy Health Ctr. Inc. v. Hyperion Foundation, Inc. (S.D.Miss, filed 2009, unsealed 2012)  Qui tam lawsuit by owner and landlord of leased facility alleging consistent failure by nursing home to provide essential nursing services to residents beginning in Oct. 2005     Rationing of items required for basic resident needs, e.g., oxygen bottles and garbage bags Facility is chronically short-staffed; some nurses must provide direct care to over 30 residents Medicare and Medicaid billed for services that were either nonexistent or so deficient that they were “effectively worthless.” Funds intended for resident care allegedly diverted to other entities
  48. 48. FCA Case Examples Worthless Services 48 Hyperion Foundation con’t  Other allegations  Officer/director of Hyperion excluded from participation in Medicare  Failure to disclose all individuals with ownership/controlling interest as required by law  Nationwide scheme
  49. 49. FCA Case Examples Worthless Services 49 Golden Living: U.S. & State of GA ex rel. Micca v. GGNSC Holdings, LLC (N.D.Ga., filed 2010)  Qui tam lawsuit alleging that two Atlanta-area Golden Living Center nursing facilities provided patients with worthless wound care services from 2006 to 2011 that resulted in severe harm to patients  In Jan. 2013, company settled by agreeing to pay $613,300 and enter into a CIA covering six Atlanta-area facilities, which included an independent monitor for five years  The relator was a physician who was the Medical Director at one of the facilities for over 10 years (before his termination) and who is the attending physician for several current residents  Case brought under federal and state false claims act statutes
  50. 50. FCA Case Examples Worthless Services 50 Golden Living con’t  The relator cited the following statutes and regulations, among others, to support his “worthless services” claim  42 U.S.C. § 1320c-5(a)(2) –provider services must meet professionally recognized standards of care  42 U.S.C. § 1320a-7(b)(6)(B) – provider may be excluded from Medicare for submitting claims for care that does not meet professional standards  42 U.S.C. § 1396r(b)(1)(A) – nursing facility care must promote maintenance or enhancement of resident quality of life  42 U.S.C. 1396r(b)(4)(A)(vii) – nursing facility services must meet professional standards of quality  42 C.F.R. § 483.1 et seq. – requirements for Medicare and Medicaid participation
  51. 51. FCA Case Examples Worthless Services 51 U.S. v. Villaspring (E.D.Ky., filed 2011)  U.S. filed FCA complaint alleging that Villaspring Health Care Center billed for worthless services from 2004 to 2008  Worthless services allegedly rendered to numerous patients due to staffing shortages resulting in, e.g., medication errors, poor nutrition, inadequate wound care, and death  “Services that were worthless, in that they were not provided or rendered, were deficient, inadequate, substandard, and did not promote the maintenance or enhancement of the quality of life of the residents” and were of a quality that failed to meet professionally recognized standards of health care
  52. 52. FCA Case Examples Worthless Services 52 Villaspring con’t   Facility received almost $16 million from Medicare and Medicaid in 2004-08  Complaint names 6 residents who received deficient care  Facility received $108,000 for their care  Complaint doesn’t specify if all services they received were “worthless” CEO/majority owner and parent company also named as defendants
  53. 53. Case Examples – Related Cases 53 U.S. v. Houser (N.D.Ga. 2012)  GA nursing home operator convicted for tax fraud and health care fraud conspiracy (under appeal)  First criminal case in which defendant convicted after trial in federal court under, inter alia, worthless services theory  Allegations of food shortages, leaking roofs, lack of nursing & housekeeping supplies, poor sanitary conditions, major staff shortages, & safety concerns
  54. 54. Case Examples – Related Cases 54 U.S. v. Houser cont’d  Nursing homes closed by State in 2007  Defendant sentenced to 20 years in prison and ordered to pay $6.7 million in restitution to Medicare and Medicaid and $872,000 to the IRS.
  55. 55. Case Examples – Related Cases 55 Spay v. CVS Caremark Corp. (E.D.Pa., filed 2009, unsealed 2012)     Relator alleges worthless services and false certification in the Medicare Part D context Motion to dismiss denied by federal district court in PA in Dec. 2012 Alleged false certification that each prescription drug event (PDE) claim submitted was true, accurate, and complete Worthless services allegation that numerous PDE claims submitted where government was not provided with the bundle of services it paid for and that were required by regulation (i.e., concurrent drug utilization review)
  56. 56. QUESTIONS?
  57. 57. Liability for Too Much Care? DOJ Rehab RUGs Billing Investigations American Conference Institute Preventing & Defending LTC Litigation January 22, 2013 Glenn P. Hendrix Arnall Golden Gregory LLP (404) 873-8692 Glenn.Hendrix@agg.com
  58. 58. Background: Medicare RUGs 58   Medicare sets out five rehabilitation categories for nursing home patients, called “Resource Utilization Groups” (RUGs), which provide for increasing levels of rehabilitation and a corresponding increase in the daily reimbursement for care: Minute thresholds for rehabilitation RUG subcategories:  Ultra High (“RU”) -- minimum of 720 min./week  Very High (“RV”) – minimum of 500 min./week  High (“RH”) – minimum of 325 min./week  Medium (“RM”) -- minimum of 150 min./week  Low (“RL”) -- minimum of 45 min./week
  59. 59. The Roadmap The OIG’s Dec. 2010 Report 59   OIG report on “Questionable Billing By Skilled Nursing Facilities” analyzed SNF billing practices between 2006 and 2008 Identified three “questionable” billing practices: (1) Excessive billing of ultra high (RU) therapy RUGS (2) Too many residents identified as needing a high level of assistance with ADLs, and (3) Keeping residents longer than medically necessary as evidenced by unusually long average lengths of stay.
  60. 60. Industry Trends Per the OIG 60   Between 2006 and 2008  SNF patient population age and diagnoses distribution remained constant.  Yet the percentage of patients with ultra-high (RU) therapy RUG levels jumped, especially in for-profit SNFs.  Thus, an additional $5 billion spent on ultra high therapy RUGs, even though “beneficiaries’ ages and diagnoses at admission were largely unchanged from 2006 to 2008.” OIG Report, “Questionable Billing by Skilled Nursing Facilities,” Dec. 2010.
  61. 61. Higher RUGs in For-Profits 61     For-profit SNFs – higher RUGs than non-profit SNFs. Large chains more likely to bill RU than small chain or independently-owned for-profit SNFs For-profit SNFs -- longer average lengths of stay (ALOS) than non-profit SNFs.  Non-profit SNF ALOS – ranged from 23 days to 24 days  For-profit SNF ALOS -- ranged from 28 days (independents) to 31 days (large chains). Billing by for-profits purchased by large chains changed post-acquisition, sometimes as much as 9%.
  62. 62. Nov. 2012 OIG Report 62  Nov. 2012 OIG report -- “Inappropriate Payments to Skilled Nursing Facilities Cost Medicare More than One Billion Dollars in 2009” -claimed that:  SNFs billed an estimated 25% of claims in error in 2009 and Medicare inappropriately paid $1.5 billion for these claims (representing 5.6% of the total $26.9 billion that paid by Medicare to SNFs);  Incorrect classification of beneficiaries into RUGs categories resulted in a net of $1.2 billion in inappropriately upcoded Medicare payments;  SNFs reported inaccurate information to Medicare on at least one MDS item for 47% of the claims;  SNFs provided more therapy than necessary to Medicare patients.
  63. 63. Enforcement Actions 63    ZPIC and RAC audits OIG investigations overseen by Department of Justice (DOJ) with view toward an FCA lawsuit:  OIG subpoena for records, including massive email productions  Seeking emails showing pressure on therapists to hit certain RUG targets  Interviews of former employees  Therapist bonuses tied to RUG utilization  Medical record review Statistical extrapolation
  64. 64. The Life Care Case 64    On Nov. 28, 2012, the DOJ intervened in qui tam actions in E.D.TN against Life Care Centers of America, Inc. (“Life Care”). Whistleblower cases filed in 2008. Investigation commenced in 2009. Government alleges that Life Care billed nearly 68% of Medicare rehab days at the RU level, as compared to an RU average of 35% nationwide) and systematically maximized RU-level billings by:  “Aggressively push[ing] its facilities and therapists to get as many of its Medicare beneficiaries into the Ultra High RUG [resource utilization group] level as possible.”  “Setting aggressive Ultra High related targets that were completely unrelated to its beneficiaries’ actual conditions, diagnoses, or needs.”
  65. 65. Life Care Complaint (cont’d) 65        “Reinforc[ing] those targets at corporate meetings and presentations, through regular emails from or visits by corporate personnel, through employee performance evaluations.” “Imposing action plans on underperforming facilities.” “Punish[ing] those facilities and employees that failed to meet its Ultra High targets or that complained about corporate pressure.” “Reward[ing] and applaud[ing] those that met its targets.” “Frequently overr[iding] or ignor[ing] the recommendations of its own therapists and unnecessarily delay[ing] discharging beneficiaries from its facilities.” “Pressur[ing] its facilities and therapists to extend their Medicare beneficiaries’ stays … to maximize Medicare revenue.” “Provid[ing] excessive amounts of therapy that were not medically reasonable or necessary.”
  66. 66. Life Care Complaint – Clinical Allegations 66   Government alleges that Life Care billed for ultrahigh therapy that “sometimes jeopardized the health of Medicare patients who were imminently terminal, fatigued, sick, or otherwise medically unstable.” Cites ten patient examples, including: “Patient D was a 92-year-old resident of Life Care of Orlando in Florida who was dying of metastatic cancer (melanoma) that had spread to his brain and lungs. Patient D had received palliative radiation therapy and was becoming weaker and more medically fragile after that treatment. Nevertheless, Life Care therapists recorded at least two hours a day of therapy in all three disciplines at the Ultra High level for Patient D from July 24, 2007, until his death on August 8, 2007. Two days before Patient D’s death, he was spitting out blood. Life Care therapists, however, still recorded 48 minutes of physical therapy, 47 minutes of occupational therapy, and 30 minutes of speech therapy that very day. The day Patient D died, Life Care therapists recorded 35 minutes of physical therapy and had him scheduled for occupational therapy later in the day.”
  67. 67. The Other Side of the Story Problems with the Government’s World View 67    The OIG’s understanding that SNF resident characteristics upon admission have not changed since 2006 is wrong. The OIG report ignores SNF resident characteristics upon discharge (i.e., outcomes and benefits of therapy). Solely focused on resident characteristics upon admission. The OIG’s macro conclusion that medically unnecessary rehab is widespread is based solely on statistical trends, except for the following statement: “OIG audits of 5 SNFs found that 20 to 94% of sampled claims from 2002 through 2004 were medically unnecessary, were submitted at an inappropriate payment rate, or were insufficiently documented.”
  68. 68. SNF Patients Are Not the Same As In 2006 68  SNF residents did change even per OIG Report (App. C, Table C-1):     1.9% increase in younger beneficiaries (< 70 years of age) 2.5% decrease in young-old beneficiaries (<70 years of age, but > 85 years of age) Care involving use of rehab procedures – 12.1% ► 17% OIG’s focus on primary hospital diagnosis fails to recognize that patients have many “types” of diagnoses impacting the need for rehab.
  69. 69. SNF Patients Are Not the Same As In 2006 69  Even CMS disagreed with OIG recommendation of reliance on hospital diagnosis for determining proper amount of therapy:  Hospital diagnosis may not be the primary reason for postacute SNF services. “[T]he hospital diagnosis may not be the primary reason for post-acute services… [T]herapy utilization in acute care hospitals would not be an accurate indicator of postacute therapy needs… [and] CMS has also examined [Part B claims] and has determined that diagnosis is not a good indicator for the type or amount of therapy services a Medicare beneficiary should receive.” (emphasis added)
  70. 70. The OIG’s Macro Medical Necessity Data is Wrong 70   OIG report relied solely on trending data, except this statement: “OIG audits of 5 SNFs found that 20 to 94% of sampled claims from 2002 through 2004 were medically unnecessary, were submitted at an inappropriate payment rate, or were insufficiently documented.” Yet …  2 of the 5 audits focused on infusion therapy, not rehab  OIG found all 5 providers had substantial overpayments; however, CMS did not agree and issued denials to only 4  At least 2 of the 4 providers appealed and received fully favorable judgments from CMS for the vast majority of the claims
  71. 71. How Much Therapy is Too Much? 71    “Each resident must receive and the facility must provide the necessary care and services to attain or maintain the highest practicable physical, mental, and psychosocial well-being, in accordance with the comprehensive assessment and plan of care.” 42 U.S.C. § 1395i-3(b)(4)(A)(i). SNFs must ensure that “a resident’s abilities in activities of daily living do not diminish unless circumstances of the individual’s clinical condition demonstrate that diminution was unavoidable.” 42 C.F.R. § 483.25(a)(1). SNF surveys consider whether each resident “obtains optimal improvement or does not deteriorate within the limits of a resident’s right to refuse treatment….”
  72. 72. Amount of Therapy Should Be Tied To Outcomes 72    Proper question – not whether rehab is increasing, but whether better outcomes are resulting from the increased rehab. OIG Report ignores this question, looking only at the “inputs” (increased revenue for therapy), with no consideration of the “outputs.” Regardless of whether the condition of residents entering SNFs has changed since 2006, have outcomes changed?  Increased discharges to home?  Reduced re-hospitalizations within 30 days of discharge?  AHCA beginning to study the issue on an industry-wide basis, but available macro data is limited.
  73. 73. Intensive Therapy Improves Outcomes, Including: 73  Greater than expected gains in ADL tasks for stroke patients. Gerben DeJong, Susan Horn, Randall Smout, Wenqiang Tian, Koen Putman & Julie Gassaway. Joint Replacement Outcomes on Discharge from Skilled Nursing & Inpatient Rehabilitation Facilities. Archives of Physical Medicine & Rehabilitation (2009) 90 (8): 12841296.  Positive gains in functional status and overall reductions in the cost of care for long-term care residents. Rita Bode, Allen Heinemann, Patrick Semik &Trudy Mallinson, Relative Importance of Rehabilitation Therapy Characteristics on Functional Outcomes for Persons with Stroke, Stroke 2004, 35:2537-2542; Gert Kwakkel, Robert C. Wagenaar, Tim Koelman, Gustaaf Lankhorst & Johan Koetsier. Effects of Intensity of Rehabilitation After Stroke, Stroke (1997), 28: 1150-1556.  Improvements by at least one stage in mobility and ADL functional independence for patients with stroke, orthopedic conditions, and cardiovascular/pulmonary conditions. BR Przbylski, ED Dumont, ME Watkins, SA Warren, AP Beaulne, & DA Lier. Outcomes of enhanced physical and occupational therapy service in a nursing home setting, Archives of Physical Medicine and Rehabilitation (1996), 77(6): 554-561.  Good clinical outcomes in severe cognitively impaired patients. Carol Barnes, Douglas Conner, Lil Legault, Nora Reznickova & Cynthia Harrison-Felix. Rehabilitation Outcomes in Cognitively Impaired Patients Admitted to Skilled Nursing Facilities from the Community, Archives of Physical Medicine & Rehabilitation (2004); 85: 16021607.
  74. 74. Intensive Rehab Improves Outcomes 74 • Study of physical therapy by Chiodo et al. (1992) shows that functional gains were seen in:  88% of patients receiving high-intensity physical therapy  33% of patients receiving moderate-intensity physical therapy  13% of patients receiving minimal-intensity therapy Laura K. Chiodo, Meghan B. Gerety, Cynthia D. Mulrow, Mary C. Rhodes, and Michael R. Tuley. The Impact of Physical Therapy on Nursing Home Patient Outcomes, Physical Therapy (1992); 72: 168-175.  Increased therapy hours are strongly associated with increased Functional Independence Measure (FIM) gains. Carol Barnes, Douglas Conner, Lil Legault, Nora Reznickova, and Cynthia Harrison-Felix. Rehabilitation Outcomes in Cognitively Impaired Patients Admitted to Skilled Nursing Facilities from the Community, Archives of Physical Medicine and Rehabilitation (2004); 85: 1602-1607.
  75. 75. Intensive Rehab Improves Outcomes 75  More intense therapy is associated with increased community discharge:  participation in rehabilitation therapy increases the likelihood of discharge home by 54% to 78%.  more intensive therapy (i.e., >330 minutes per week) increases the likelihood of discharge home two-fold. Walter Wodchis, Gary Teare, Gary Naglie, Susan Bronskill, Sudeep Gill, Michael Hillmar, Geoff Anderson, Paula Rochon, & Brant Fries. Skilled Nursing Facility Rehabilitation and Discharge to Home After Stroke, Archives of Physical Medicine and Rehabilitation (2005); 86: 442-448.  More intensive rehab results in increased community discharges. Anne Deutsch, Carl Granger, Allen Heinemann, Roger Fiedler, Gerben DeJong, Robert Kane & Maurizio Trevisan, Poststroke Rehabilitation: Outcomes and Reimbursement of Inpatient Rehabilitation Facilities and Subacute Rehabilitation Programs, Stroke 20056, 37:1477-1482; Gerben DeJong, Ching-Hui Hsieh, Julie Gassaway, Susan Horn, Randall Smout, Koen Putman, Roberta James, Michael Brown, Elizabeth Newman & Mary Foley. Characterizing Rehabilitation Services for Patients with Knee and Hip Replacement in Skilled Nursing Facilities and Inpatient Rehabilitation Facilities, Archives of Physical Medicine and Rehabilitation (2009) 90(8): 12691283.  Therapy use positively related to community discharge and negatively related to mortality. Greg Arling, Arthur Williams, Donna Kopp. Therapy Use and Discharge Outcomes for Elderly Nursing Home Residents, Gerontologist (2000), 40(5):587-595; P Langhorne, R Wagenaar, and C Partridge. Physiotherapy after stroke: more is better?, Physiotherapy Research International (1996); 1(2): 75-88.
  76. 76. Setting Substitution 76     Limited access to IRFs more SNF patients want intensive, short-term rehab (since 2004 there has been a 26% reduction in IRF census) Limited access to LTCHs more SNF patients admitted directly from hospital with complex medical needs Increased home and community-based service fewer SNF patients are long term care residents Increased access to home health  fewer SNF patients requiring < 8 hours of skilled care
  77. 77. OIG Completely Ignored the “After” Picture 77  Are better outcomes the result of the increased therapy?  Increased discharges to home?  Higher FIM scores?  Reduced re-hospitalization within 30 days of discharge?
  78. 78. What’s Next? 78     Several active ongoing DOJ investigations. Some will become FCA actions. Copycat qui tam cases. Reimbursement changes. Changes in clinical approach?
  79. 79. QUESTIONS?
  80. 80. Preparing for Unprecedented Fraud & Abuse Scrutiny in the Long Term Care Setting Post-Healthcare Reform COMPLIANCE
  81. 81. COMPLIANCE Patient Protection and Accountable Care Act of 2010 § 6102 requires Medicare participating skilled nursing facilities must have an operational compliance plan no later than March 23, 2013 (2 years after PPACA’s enactment) The program must be “effective in detecting and preventing criminal, civil, and administrative violation” and “promoting quality of care”
  82. 82. COMPLIANCE 7 components of a SNF compliance plan: 1. 2. 3. 4. 5. 6. 7. Standards & procedures “reasonably capable of reducing the prospect” of criminal, civil and administrative violations Assignment of overall compliance program oversight to “high-level personnel” with “sufficient resources and authority” to assure compliance Exercise of “due care” not to delegate “substantial authority” to persons the facility knows or should know have a “propensity to engage in criminal, civil, or administrative violations” Effective communications of compliance standards and procedures throughout the organization Consistent enforcement of appropriate disciplinary measures, including for failure to detect an offense Following detection of an offense, reasonable responses to prevent further similar offenses Periodic reassessment of the plan and modification to reflect changes in the organization and the law
  83. 83. COMPLIANCE Compliance Policies to look for: 1. Written standards of conduct 2. Education of new and re-education of all employees & vendors 3. Procedure for investigating allegations 4. Establishment of an effective “hot-line” 5. Effective medical necessity review 6. Credit balances/bad debt policies 7. Records retention and HIPAA compliance 8. Claims/cost report auditing 9. No retaliation 10. Screening for excluded/debarred staff/vendors
  84. 84. COMPLIANCE Why an effective compliance plan is important 1. 2. 3. 4. 5. 6. Absence of an effective compliance plan is a violation of the conditions of participation An effective compliance plan can ensure that- facility and staff meet standards of care - no false claims were “knowingly” submitted - there is adequate documentation of items and services provided Enables the facility to become aware of and address small problems before they become “bet the farm” disasters Reduce both the risk of violations as well as the sanctions when something happens Enhances the image of the facility as attempting to “do the right thing” Provides evidence of effort to mitigate, when you need to show that “stuff just happens”
  85. 85. ELDER JUSTICE ACT Norris Cunningham Hall, Render, Killian, Heath and Lyman
  86. 86. Elder Justice Act (Section 1150B of Patient Protection and Affordable Care Act of 2010)  Background  The Elder Justice Act was established by the Patient Protection and Affordable Care Act of 2010. It applies to “long-term care facilities,” defined as residential care providers that arrange for, or directly provide, long term care. This includes nursing facilities, skilled nursing facilities, hospice programs operating in SNF/NFs, and intermediate care facilities for the mentally retarded (ICFs/MR). The Act applies only to entities that receive at least $10,000 of Federal funds annually
  87. 87. Elder Justice Act (continued) (Section 1150B of Patient Protection and Affordable Care Act of 2010)  Background  The Act does not apply to assisted living facilities  The Act broadens the scope of who is required to report suspected abuse, and imposes affirmative obligations on facilities to provide annual training to “covered individuals”, to post a conspicuous notice, and to develop additional internal policies.
  88. 88. Elder Justice Act (continued) *Section 1150B of Patient Protection and Affordable Care Act of 2010  Reporting Requirements  “Covered Individuals” are required to report any reasonable suspicion of crimes committed against residents of the facility  “Covered Individuals” include anyone who is an owner, operator, employee, manager, agent, or contractor of the facility. All covered individuals with knowledge of the incident must report.  The obligation to report is on individuals, not the facility.
  89. 89. Elder Justice Act (continued) *Section 1150B of Patient Protection and Affordable Care Act of 2010  Reporting Requirements  Reporting should occur if the events that cause the reasonable suspicion of crime result in serious bodily injury, a report must be made immediately, but no later than two hours after forming the suspicion.  If the events that cause the reasonable suspicion of crime do not result in serious bodily injury, a report must be made no later than 24-hours after forming the suspicion.  Reporting may be done by calling, faxing, or emailing both local law enforcement and the state survey agency.
  90. 90. Elder Justice Act (continued) *Section 1150B of Patient Protection and Affordable Care Act of 2010  Penalties  Failure to report subjects “Covered Individual” to CMP of not more than $200,000.  If failure to report exacerbates the harm to the victim or results in harm to another individual, then CMP is $300,000.  Exclusion from Federal Healthcare Programs
  91. 91. Elder Justice Act (continued) *Section 1150B of Patient Protection and Affordable Care Act of 2010  Retaliation: A long term care facility may not…  Discharge, demote, suspend, threaten, harass, or deny promotion, or any employment related benefit or in any manner discriminated against an employee for lawful acts done to the employee; or  File a complaint or a report against a nurse of employee for making a report, or causing a report to be made, or taking steps in furtherance of a report
  92. 92. Elder Justice Act (continued) *Section 1150B of Patient Protection and Affordable Care Act of 2010  Penalities for Retaliation  CMP of not more than $200,000.  Exclusion from Federal Healthcare Programs for 2 years  Both of the above
  93. 93. Elder Justice Act (continued) *Section 1150B of Patient Protection and Affordable Care Act of 2010  Questions Re Elder Justice Act:  To whom does it apply? EVERYONE! (Except facility attorneys?)  What actions are reportable?  When do “reasonable suspicions” exist?  What level of injury is “serious bodily injury”?  What is “lawful conduct”?  What conduct constitutes retaliation?
  94. 94. QUESTIONS?
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