Hot Topics in Health Care Law


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In a country of more than 313 million people, the pressures placed on the health care system in the United States are both enormous and complex, as Americans expect a fundamental right to first rate health care without much regard for its cost.

However, the Federal and California governments are mindful of this expense and
take pride in their important role in regulating health care on the West Coast. This is a guide for responding to these investigations.

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Hot Topics in Health Care Law

  1. 1. The State Bar of CaliforniaBusiness Law Section 2012 Hot Topics in Health Law Michelle L. Knowles, Esq. and Craig B. Garner, Esq.
  2. 2. Health Care and Its Burdens In a country of more than 313 million people, the pressures placed on the health care system in the United States are both enormous and complex, as Americans expect a fundamental right to first rate health care without much regard for its cost.  However, the Federal and California governments are mindful of this expense and take pride in their important role in regulating health care on the West Coast.
  3. 3. •  We know we work in a heavily regulated business sector; our clients must be ready to deal with the regulating agencies.•  Today we ll touch on a few s p ec i fic and p r a c ti c a l suggestions for doing just that…
  5. 5. •  The question today, Are our clients prepared for the agency on-site visits? •  As lawyers we advise our clients: Be ready for these agencies to visit you. •  Maybe they need coaching…
  6. 6. Be Ready … What does that mean? •  Who is the first person the agency will encounter?•  Does that person know what to do?•  Does the person know who to call?•  Who will coach them?•  How do you get the best results?
  7. 7. •  Functional Area Readiness•  Logistical Plans•  Who will be the
 client contact?•  How to training•  Goal Setting
  8. 8. •  Proactive verse Reactive - Operating on Logic verse Emotion •  Leads and Functional Area Assists - Who are your best advocates? •  Efficiency - Where to find what you re looking for
  9. 9. •  How to s - Checklists •  Rules of Engagement - Minimum Necessary - Documentation•  Post Visit Work - Memos and Files
  10. 10. They re HereTo understand the scope of issues health care facilities must face on any givenday, it is important to become familiar with the building blocks that make uptoday’s health care hierarchy. This includes the assortment of individualsinvolved with regulation who may pop up from time to time at a hospital nearyou.This is the group that constitutes the “they” who are “here.”
  11. 11. Some of Our Welcome Guests•  Office of the Inspector General •  Medical Board of California•  Centers for Medicare & Medicaid Services •  Office of Audit Services •  Office of Evaluation and Inspections•  Joint Commission •  Licensing and Certification•  Board of Pharmacy •  Laboratory Field Services•  California Department of Public Health •  Food, Drug and Radiation Safety•  OSHPD •  Office of the State Fire Marshall•  Food and Drug Administration •  Sheriff’s Department•  Department of Justice •  Police Department•  Centers for Disease Control and Prevention •  Board of Registered Nursing •  Physician Assistant Committee•  Department of Homeland Security •  Indian Health Service•  Internal Revenue Service ...And Others
  12. 12. Remember the Primary Rule: Patients Come First•  When any federal or state agency, or another accrediting entity, arrives for an onsite inspection, always ask for proper identification.•  It is important to remember that patient care comes first. At any time during an onsite investigation, a medical emergency always takes priority.
  13. 13. Know Your Compliance Organizational Structure
  14. 14. Follow the Leader...
The Compliance Officer (or ChiefCompliance Officer) is the primarysupervisor of the Hospital’s ComplianceProgram. The Compliance Officer is responsible foroverseeing the administration of theHospital’s Compliance Program so as toensure that the Hospital at all timesmaintains the business integrity requiredof a health care provider.
  15. 15. ...and the Leaders The Compliance Committee advises the Compliance Officer and assists in monitoring the Compliance Program. The Compliance Committee affords the Hospital the perspectives of individuals with diverse knowledge and responsibilities within the health care field.
  16. 16. Know the Basic Purposes of a Compliance Program
• Promote Standards and Procedures• Ensure Proper Oversight• Educate and Train• Report Infractions as Appropriate• Enforce Compliance and Disclose/Discipline as Appropriate• Monitor and Audit• Investigate and Correct
  17. 17. The Role of the Employee
A Hospital employee’s familiarity with the required Compliance Program is animportant factor in evaluating his or her performance. Hospital is committed toperiodically training employees regarding its Compliance Program, includingspecifically Hospital managers and supervisors involved in any medical claimsprocesses. To further this goal, Hospital will:• Discuss, as applicable, the compliance policies and legal requirementsdescribed in this Compliance Program with all supervised personnel.• Inform all supervised personnel that strict adherence to this ComplianceProgram is a condition of continued employment.• Inform all supervised personnel that disciplinary action will be taken,including possible termination of employment or contractor status, forviolation of this Compliance Program.
  18. 18. Code of ConductHospital s Code of Conduct is the keystone of its corporate integrity philosophyand communicates its ethical business standards. The Code of Conduct serves as a cultural compass for staff, management,vendors, volunteers and others who interact with Hospital. hile the Compliance Program is aWpartnership within the Hospitalcommunity designed to helpemployees make the right businesschoices, the Code of Conduct servesas its centerpiece.
  19. 19. Search Warrants
  20. 20. Search Warrant GuidelinesHospital employees shall cooperate with a search warrant and shall respond instrict accordance with the facility guidelines.Employees should do nothing to obstruct or interfere with an ongoing search.Any employee receiving notice of a searchwarrant should immediately contact the Office ofGeneral Counsel and the Compliance Officer, aswell as the designated person responsible for thefacility.
  21. 21. Search Warrant Guidelines, ContinuedIf government agents arrive to conduct a search, theyshould be in possession of the actual search warrant. The search warrant and any attachments theretodefine the areas that may be searched pursuant tothe warrant and provide information about theactivity the government is investigating. The target of the search warrant (a hospital facility,for example) has an absolute right to immediatelyobtain a copy of the search warrant documents.
  22. 22. Do Not Interfere With a SearchUnder no circumstances should an employee attempt to interfere in any waywith the conduct of a search, the examination of any particular area, or theseizure of equipment, documents, or other physical evidence. Should equipment or records necessary to the care of patients be seized,notify the designated facility official immediately.Do not volunteer to escort agents into areas they have not asked to inspect. No effort should be made to obstruct a search, but neither should anyemployee offer extra services not included in a warrant.
  23. 23. Communicating Compliance Issues Hospital’s Compliance Hotline: 1-800-123-4567 A disclosure program should always promote the fact that participation can bedone anonymously, and without fear of retaliation of any kind whatsoever.
  24. 24. Communicating Compliance Issues, Continued•  Encourage open lines of communication between the Compliance Officer and the facility or facilities, as well as between the Compliance Officer and the Compliance Committee. •  Promote an environment at health care facilities where employees can direct questions about a statute, regulation, or compliance policy to the Compliance Officer. •  Establish telephone “Hotlines” for use by personnel and employees, as well as the Hospital or facility community, to report concerns or possible wrongdoing regarding compliance issues, as well as matters relating to serious concerns about patient care.•  Afford individuals the opportunity to submit compliance-related questions or complaints in writing.
  25. 25. Communicating Compliance Issues, Continued•  Compliance programs must prohibit retaliatory action against any person for making a report regarding compliance, whether anonymous or otherwise. •  However, personnel cannot use complaints to the Compliance Officer to insulate themselves from the consequences of their own wrongdoing or misconduct. •  Providing false or deceptive reports may be grounds for termination. •  Self-reporting may be considered a mitigating factor if a person makes a forthright disclosure of an error or violation of this Compliance Program.
  26. 26. Communicating Compliance Issues, Continued•  Calls to the Compliance Hotline are answered by an independent contractor, not by facility employees. •  All calls are treated confidentially and are not traced. The caller need not provide his or her name. A Compliance Officer or designee investigates all calls and letters and initiates follow-up actions as appropriate.•  Communications through the Compliance Hotline and letters mailed to the Compliance Officer are treated as privileged to the extent permitted by applicable law. •  The possibility does exist that the identity of a person making a report may become known, or that governmental authorities or a court may compel disclosure of the name of the person making the report.
  27. 27. RACs•  Recovery Audit Contractor (RAC) Program: This program began as a three-year demonstration using RACs to detect and correct improper payments within Medicare. •  The original goal of the demonstration program was to determine whether the use of RACs would be a cost-effective way to maintain the integrity of Medicare by ensuring that provider payments were correct.
  28. 28. RACs, Continued•  The original RAC demonstration program was successful, ending with more than $1.03 billion recovered. According to CMS, approximately 96% of these payments were overpayments collected from providers, 85% of which were collected from hospital providers. The remaining 4% were underpayments. •  Under the Medicare Prescription Drug, Improvement, and Modernization Act (MMA), RACs received a portion of the overpayments they discovered and recovered, even if their determination was ultimately overruled.•  Additionally, RACs were not required to engage the services of a medical director when assessing medical necessity claims. They could request an unlimited number of medical records from a particular provider, and were only required to perform limited reporting on the problem areas they identified.
  29. 29. MACs•  Medicare Administrative Contractors (MACs): Groups that process Part A and Part B claims. MACs oversee claim completion and accuracy. •  Due to the scope of this review, CMS believes MACs will be able to review discrepancies between the two sets of claims, revise payments and/or increase denials. CMS Vision for the Future of MACs: ( 04_VisionofFutureFeeforServiceMedicareEnvironment.asp#TopOfPage)
  30. 30. MICsMedicaid Integrity Contractors (MICs): MICs review Medicaid claims in searchof inappropriate payments or fraud. MICs also audit Medicaid claims andidentify overpayments and areas of high risk for payment errors or fraud. Somepossible targets include the following:•  Services provided after the death of a beneficiary•  Duplicate claims•  Unbundling of services•  Outpatient claims with service dates that overlap dates of an inpatient stay
  31. 31. MICs, ContinuedMICs also review medical records to verify that paid claims were for thefollowing services: •  Services actually provided and properly documented in accordance with medical necessity •  Services billed properly, using correct and appropriate diagnosis and procedure codes •  Covered services •  Services paid for in accordance with federal and state laws, regulations and policies
  32. 32. ZPICsZone Program Integrity Contractors (ZPICs): Formerly known as ProgramSafeguard Contractors (PSCs), ZPICs serve the same jurisdictions as MedicareAdministrative Contractors. ZPICs conduct investigations, aid law enforcementand conduct audits of Medicare advantage plans. The goals of the ZPIC s data analysis program are to identify provider billingpractices and services that pose the greatest financial risk to Medicare. Thedata analysis program seeks to:• Identify areas of potential error that pose the greatest risk.• Establish a baseline so contractors can recognize unusual trends,utilization changes, or outright schemes designed to maximizereimbursement unlawfully.
  33. 33. ZPICs, Continued •  Identify a need for local coverage determinations (LCD) (https:// (42 U.S.C. § 1395ff). •  Identify claim review strategies to prevent or address potential errors. •  Produce innovation in reviewing utilization or billing patterns that highlight potential errors. •  Identify over-utilization of high volume or high cost services. •  Identify program areas and/or specific providers for fraud investigations.
  34. 34. About the OIG OIG website ( OIG Organizational Chart ( index.asp) The Data Bank (National Practitioner Data Bank and Healthcare Integrity and Protection Data Bank) ( HEAT (Stop Medicare Fraud) ( HHS website (
  35. 35. Additional Resources from the Federal GovernmentA Roadmap for New Physicians (Avoiding Medicare and Medicaid Fraud andAbuse) ( Protection and Affordable Care Act ( Compliance Training Slides ( Health Care Fraud and Abuse Laws ( 35
  36. 36. Additional Resources from the Federal GovernmentComparison of Anti-Kickback and Stark Laws ( Physician Self Referral Law Exceptions ( Anti-Kickback Safe Harbors ( Advisory Opinions (
  37. 37. Michelle L. Knowles, Esq. Chief Legal Officer, Compliance Officer and Director of Human Resources for A- Med Health Care Michelle leads the legal, regulatory compliance, and human resource efforts of A- Med Health Care, a privately owned specialty pharmacy and disposable medical supply company based in Huntington Beach, CA. Michelle has been integral in the development and implementation of corporate strategies taking A-Med Health Care from a small to a medium-sized company with significant share in the California specialty pharmacy and medical supply market, expanding business lines and building national opportunities. Michelle joined A-Med Health Care in 2004, after working in private practice, having spent time as an associate with Friedman Stroffe & Gerard, P.C. in Irvine, CA, and earlier as a Senior Tax Specialist at KPMG. Michelle’s private practice experience spanned general corporate work, intellectual property (trademark and copyright), and health care regulation. Michelle graduated magna cum laude and valedictorian of the Class of 2000 of Chapman University School of Law, and was the Editor-in-Chief of the Chapman Law Review. She earned her B.A. in Business Management from California State University, Fullerton. Michelle is a member of the Health Care Law Committee, a sub-committee of the Business Law Section of the California Bar, and a Board Member of the California Association of Medical Product Suppliers.
  38. 38. Craig B. GarnerCraig is an attorney, health care consultant and adjunct professor of law, specializingin issues surrounding modern American health care and the ways it should bemanaged in its current climate of reform. Between 2002 and 2011, Craig was theChief Executive Officer at Coast Plaza Hospital, where he was   responsible foradministration and oversight of this general acute care hospital providing services tothe City of Norwalk and surrounding communities in southeast Los Angeles County. Craig serves on the advisory board for the College of Osteopathic Medicine of thePacific, Western University of Health Sciences, the Board of Directors of the LosAngeles Opera, and the Board of Visitors of Seaver College at Pepperdine University.Craig is also on the Health Law Committee of the Business Law Section of the StateBar of California, and he is a Fellow Designate with the American College ofHealthcare Executives. 1299 Ocean Avenue, Suite 400 Santa Monica, CA 90401 T. (310) 458-1560 E. W.