Your quick-start guide to the OIG Exclusion List

If you’re looking to a temporary staffing agency to help your facility through a nursing staff crunch, don’t forget to ask, “Do you check the HHS OIG’s Excluded Providers List”?

Premier Medical Staffing, Inc. and Southern New Hampshire Medical Center (SNHMC) have learned that lesson the hard way, and have agreed to pay a total of $123,400 to settle false claims allegations, according to this release for the U.S. Attorney for the District of New Hampshire.

Why the ‘false’ claims? Both the temporary medical staffing agency and a non-profit acute care hospital employed a certified nursing assistant (CNA) who had been excluded from federal health care programs. Therefore the claims they submitted to federal health programs that involved her services were technically ‘false.’

Premier, which employed the excluded individual between December 2004 and June 2006, paid $90,000 to settle allegations. SNHMC employed the same CNA between February 2002 and September 2007, and it paid $33,400 to settle the false claims.

When one considers the sheer number of CNAs and other clinical staff it takes to run a hospital, it’s not all that surprising that an excluded individual or two can slip through the cracks during a background check. What is an ‘excluded individual?’ Read on …

By and large, the exclusion prohibits hospitals and health care facilities from billing or receiving payment for the services rendered by an individual or entity that the OIG has ‘blacklisted.’ The  OIG’s Exclusions Program page states that “bases for exclusion include convictions for program-related fraud and patient abuse, licensing board actions and default on Health Education Assistance Loans.” Thankfully, the excluded CNA in New Hampshire did not harm any patients, the U.S. Attorney’s release notes.

If you want to submit claims to Medicare, Medicaid or any other federal health program, you have to check the OIG’s Exclusion list because, as the web site explains:

•    “No payment will be made by any Federal health care program for any items or services furnished, ordered, or prescribed by an excluded individual or entity.”
•    “No program payment will be made for anything that an excluded person furnishes, orders, or prescribes.”
•    “There is a limited exception to exclusions for the provision of certain emergency items or services not provided in a hospital emergency room.”

And the good news is, protecting your facility is just a click away. You can verify your health care recruits’ status by linking to the OIG’s list of excluded providers.

Tip: Create a new hire checklist that excludes a stop at the OIG’s page, as well as harder-to-forget steps such as valid ID and W2.

Passed by Congress or not, ‘health reform’ at the regulatory level is making your compliance job a lot harder. Learn how to protect your health care organization.

Hospital billing consultant knew exactly how to blow the whistle — and gets $613,000 for his trouble.

Brookhaven Memorial Hospital Medical Center in Long Island, NY will pay the federal government $2.92 (excluding interest) to settle Medicare billing fraud allegations involving outlier payments.

What’s the problem with false claims for outlier payments? Part of the Medicare-provided reimbursement to hospitals is the “outlier payment,” which is basically an additional reimbursement paid to cover unusually expensive treatment and procedure costs incurred by the health care institutions. Brookhaven allegedly overcharged “for cases that were not extraordinarily costly and for which outlier payments should not have been paid,” stated the Department of Justice in a news release.

Who was this ‘professional whistleblower?’

Whistleblower Anthony Kite, who originally filed the qui tam lawsuit in 2005, was a former hospital billing consultant from New Jersey. The false claims act rewards the qui tam relator by giving him a share in the recovery, and Kite will get about $613,000 plus interest as share in the settlement proceeds for the Brookhaven settlement alone. Kite was not a Brookhaven employee, but rather, “appears to be a professional whistleblower working with a Washington-based law firm specializing in qui tam whistleblower cases,” according to The Health Care Bulletin, published online by Bricker & Eckler LLP.

Kite implicated several other New Jersey-based hospitals with the same outlier fraud allegation, including Warren Hospital in Phillipsburg, Bayonne Medical Center in Bayonne, Cathedral Healthcare System in Newark, and Raritan Bay Medical Center in Perth Amboy, according to the Bulletin. These institutions have since settled their cases.

As of November 2009, four other hospitals had settled the qui tam cases brought in by Kite. These are:

- Cooper University Hospital in Camden, New Jersey (settled for $3.85 million);

- St Vincent Hospital in Erie, Pennsylvania (settled for $1.9 million);

- St Joseph Healthcare System Inc in Paterson, New Jersey (settled for $1.75 million).

Available on CD: How to protect your health care organization from Kite and his ilk.

Plus, why it’s easier than ever for folks to become whistleblowers.

If you don’t know what a reverse false claim is, it’s time to figure it out.

With the Fraud Enforcement and Recovery Act (FERA), which became law in May 2009, Congress amended the False Claims Act to cover situations when providers knowingly retain Medicare or Medicaid overpayments.

This article explores overpayments, the last of the three areas that Robert W. Markette Jr., a partner with Gilliland & Markette LLP, identified in a recent presentation, “Prepare for Unseen Liabilities: FCA, FERA, and Their Impact on Health Care,” as compliance hot spots for providers under FERA.

In past weeks, we addressed subcontractors’ liability under the FCA and FERA and the application of the FCA to Medicaid claims.

Prior to FERA, the feds would only come after you for reverse false claims if you used a false statement or some other affirmative action to conceal the overpayment, said Markette. But now, under FERA, you can be liable if you avoid an obligation to return money to the government, he explained. “Knowingly and improperly retaining an overpayment becomes a false claim.”

One issue for providers in this is that Congress does not define “knowingly and improperly” in FERA. “If you and the government disagree about whether you have an overpayment, when does that become a false claim?” asked Markette. “It is not clear.”

Err on the side of caution, he advised. “At this point, it’s safe to say Congress intended reverse false claims liability to be much broader than in the original statute.” He called this “disconcerting” and said that we’re probably not going to find out how reverse false claims liability works until some qui tams move through the system.

Qui Tam Liability Expanded

And that could be sooner than you might expect: Qui tam actions — law suits brought by third parties (relators) who turn the case over the feds for prosecution — will be easier to bring under FERA as well, he noted. That’s because FERA provides for new remedies for whistleblowers, who are usually the relators in these cases.

Contractors and their agents are now treated the same as employees for the purposes of whistleblower protection. “They are protected from being ‘discharged, demoted, suspended, threatened, harassed, or otherwise discriminated against in the terms and conditions of employment,’” Markette pointed out.

This could mean that if a provider becomes aware that a subcontractor has become a whistleblower, you can’t sever the relationship with that subcontractor by terminating your contract with it. There is now “a broader category of individuals who are protected,” he said. And thus a broader category of people who could bring qui tam suits.

But Congress didn’t stop there. The feds were having trouble filing new claims because of the backlog of cases they wanted to intervene in. In the years since the case was first filed, other alleged violations might have occurred, and the feds want to be able to add claims to the original, but because of a six-year statute of limitations, they couldn’t add anything older than that.

FERA changes that by making it easier for the government to intervene in qui tam false claims suits. “Government claims now ‘relate back’ to the original claim under a much broader standard,” Markette pointed out. “FERA made it easier for the government to add new claims.”

“This will make it harder for providers who are sued,” he said. “It will allow the government to circumvent the statute of limitations if the government wants to intervene later.”

Got Compliance?

“In addition to these risk areas, if history is any indicator, FERA is likely to lead to an expansion of FCA generally,” he said. This will make compliance even more important, especially in regard to whistle blowers.”

One way to protect yourself is to make sure your compliance plan has a process in place for contacting the payers of your Medicare and Medicaid claims. You need to be identifying and documenting possible overpayments, which will cut in your favor should there be an issue over your intent to retain an overpayment. “It’s hard to argue that you’re wrong if you document that you’ve been trying to give it back,” said Markette.

Markette’s FCA and FERA lessons are available on CD here.

Don’t rely overly on the employment exception — or discount a competitor’s ability to stir up trouble.

Covenant Medical Center in Waterloo, Iowa, recently agreed to fork over a hefty $4.5 million to settle a federal False Claims Act lawsuit involving alleged Stark law violations. The case provides a potential harbinger of things to come and some “lessons learned” for hospitals and physicians trying to survive a growing government crackdown on fraud and abuse.

The crux: The U.S. government claimed that Covenant submitted false claims to Medicare because it had gravely overpaid five employed physicians who referred patients to the hospital for services — a verboten practice under the physician self-referral Stark law. In a news release announcing the settlement agreement, the Department of Justice noted that the Covenant physicians ranked among the best paid hospital-employed physicians not only in Iowa, but nationwide.

As for the physicians’ fate: The DOJ doesn’t anticipate any sanctions being brought against the physicians in the case, Bob Teig, assistant U.S. attorney told Eli’s Medicare Compliance & Reimbursement Alert.

That doesn’t mean, however, that the government couldn’t impose a civil or criminal penalty against both the hospital and physician in Stark cases, warns attorney Wayne J. Miller, with the Compliance Law Group in Los Angeles.

“The physician risks losing status as a Medicare provider and/or there could be licensure and other actions at the state level that could follow.”

Case Portends 2 Troubling Trends

The Covenant case sounds a warning knell for two key reasons, say legal experts. For one, the government targeted employment relationships, which it typically hasn’t done under Stark or as  kickbacks, observes attorney William Mathias, with Ober Kaler, Grimes & Shriver in Baltimore, Md. Secondly, a disgruntled competitor of Covenant reportedly stirred up the legal trouble for the not-for-profit medical center. Mathias says that based on the background he’s heard, the competitor saw that Covenant’s IRS form showed Covenant was “giving its physicians a much better deal than the competitor” was giving its physicians. “It wasn’t a qui tam suit,” however, he adds. “The hospital reportedly complained to Senator [Charles] Grassley and to other government officials.”

Mathias predicts that we will see “more and more” of this type of activity on the part of competing providers. “Healthcare providers trying to go through a lot of hoops to comply with the law feel frustrated when they feel like their competitors” gain unfair advantage by ignoring the law, he notes.

Some providers, of course, are also invested in leveling a crowded playing field. “Encouraging the government to investigate [a competitor] is often an option in a very competitive healthcare market,” says Miller.

3 Take-Home Messages You Can’t Miss

To stay out of competitors’ and the government’s crosshairs for Stark violations, hospitals and physicians should cover the following bases.

1. Always perform a fair market analysis of physician compensation. To meet the employment exception under Stark, the employment compensation has to be “consistent with fair market value” (FMV), explains Miller. And “the Covenant case indicates very clearly that the government and the courts are not going to ignore FMV in employment compensation arrangements.”

Best practices: If the physicians’ compensation is above the 50th percentile, there should be “clear, specific, documented reasons for the higher payment tied to quality or productivity – never to referrals,” urges attorney Steve Lokensgard, special counsel with Faegre & Benson LLP in Minneapolis.

It’s also a good idea to obtain the fair market value evaluation from a competent company that uses the appropriate factors in making the determination, advises attorney Andrew Wachler, with Wachler and Associates in Royal Oaks, Mich.

2. Document outlier situations very carefully. “There are factors that justify higher salaries, but the actual documentation showing why is critical,” says attorney Lisa Ohrin, with Sonnenschein, Nath & Rosenthal LLP in Washington, D.C. For example, she’s aware of one case where a doctor started a phenomenal “top notch specialty program at a hospital where you would never expect to see that level of care.” Thus, “you could justify why his salary was in the 75th to 90th percentile range.”

Ohrin thinks, however, that hospitals sometimes tend to shrug off higher salaries. People will say, “‘Well, it was an arm’s length negotiation. We wanted Dr. X and he wouldn’t come for less than $800,000,’” she notes. “But if everyone else like him or her is getting $400,000, that could be a problem.”

Bottom line: If the hospital is paying a physician “huge amounts of money” and lacks a “a rock-solid [FMV] analysis from a third party — and perhaps additional documentation regarding the hospital’s needs and the physician’s credentials and value to the hospital and its patients” — it’s going to be vulnerable, says Ohrin.

3. Be prepared for a competitor-turned-complainant.

If you suspect that a competitor “wants to denigrate your operation to authorities,” one option is to seek guidance about your conduct through a formal or informal opinion from the government, suggests Miller. “Otherwise, the best approach is to be prepared at all times for an unannounced government audit or investigation.”

No quid pro quo: “It’s not typically effective to try to make a counter claim against a whistleblowing competitor to divert a review of your practice,” Miller cautions. That strategy can be viewed “as retaliation or as an attempt to deflect the fact-finding.” However, “a provider under review can certainly ask an auditor to question the motivation of a competitor making a claim,” he adds.

© Eli’s Medicare Compliance & Reimbursement Alert.

AUDIO TRAINING EVENT ON NOVEMBER 19th: Stark II — Are you in compliance? Referral Changes You Need to Know.

A Detroit-area physical therapist (PT) has learned the hard way that fraudulently billing Medicare will eventually catch up with you.

According to an Aug. 26 press release from the FBI’s Detroit office, the PT pleaded guilty to creating fake therapy files and signing progress notes documenting services that were never actually performed.

The PT, along with several coconspirators, admitted that he falsified claims that were billed to Medicare totaling about $1.6 million, for which Medicare reimbursed $772,800. The PT faces up to 10 years in prison and a $250,000 fine.

AUDIO TRAINING EVENT: Survive your audits. Therapy documentation advice for right now.

Wikipedia photographer: Jarrett Campbell of Cary, NC

Plus, 4 steps that protect you from whistleblowing competitors

Quick. Think ‘whistleblower’ and ‘qui tam.’ Bet you think ‘disgruntled employee.’ But some health care providers are finding that their competitors are the ones brewing qui tam lawsuits.

Example: Little Rock, Ark.-based for-profit Hospice Home Care Inc. (HHC) is learning that lesson the hard way, thanks to a qui tam suit filed by non-profit competitor Arkansas Hospice Inc., also of Little Rock. Arkansas Hospice filed the qui tam complaint in 2004, but the suit was just joined by the government and unsealed in federal court last month.

In the original qui tam filing obtained by Eli, Arkansas Hospice alleges that HHC billed for patients who resided in nursing homes at the general inpatient (GIP) level when they really only qualified for — and HHC only furnished — routine hospice care. HHC used the GIP billing to tell patients and referral sources that the patients wouldn’t have to pay for their nursing home costs, because room and board would be covered under the GIP payment.

Background: In 2004, Medicare paid about $500 a day for GIP while routine hospice care was reimbursed at about $125 per day, Arkansas U.S. Attorney Jane Duke notes in a release.

So far, government prosecutors have reviewed records for 34 patients and found 257 allegedly false claims totaling $1.4 million in overpayments for unnecessary and unprovided GIP, Duke says.

After families of HHC patients told Arkansas Hospice about their concerns,the hospice spent about $25,000 to $30,000 investigating the matter before filing a lawsuit, CEO Michael Aureli told the Arkansas Business news-paper. Arkansas Hospice and HHC didn’t respond to requests for comment by press time.

The bad press from the lawsuit will probably hurt the Arkansas hospice industry overall, Aureli told the newspaper. But the hospice felt it had an obligation to file the suit.

Competitors aren’t the first place home care providers suspect potential whistleblowers to come from. “Many providers focus on employees — especially disgruntled former employees — as the source of qui tam suits,” notes Washington, D.C.-based health care attorney Elizabeth Hogue.

But competitor-driven lawsuits are more common than some providers realize, notes attorney Joel Hamme with Powers Pyles Sutter & Verville in Washington, D.C. “I would suspect that competitors are the second- or third-biggest source of qui tam actions after employees and perhaps consumers,” Hamme tells Eli. “After all, employees, competitors, and consumers are the ones most likely to know of and have familiarity with a provider’s services and practices.”

The reason there aren’t more competitor-filed qui tam suits is probably because providers don’t like the idea of  getting their hands dirty in a prolonged whistleblower case, says attorney Robert Markette Jr. with Gilliland & Markette in Indianapolis. Many providers prefer to report their concerns to authorities such as a state Medicare fraud unit or the HHS Office of Inspector General and move on, he notes.

Competitors also usually want the prohibited practice to stop hurting their own business, but they aren’t as interested in gaining financially from a lawsuit as individual relators are, Markette believes. And they often hope for a quicker resolution from enforcement versus litigious means, since whistleblower suits can drag on for years.

Try this: Often the quickest route to resolution can be contacting the offending party directly, Hogue advises clients. Letting them know that you’re aware of their behavior and explaining why it is wrong can sometimes stop it in its tracks.

Competitors also usually lack the specific claims knowledge that former employees use to file qui tam suits. Instead, they hear about the provider’s relationships with referral sources and have grounds for anti-kickback statute charges, Markette adds.

Head Off Qui Tam Actions With These Steps

To protect yourself against whistleblower lawsuits originating with your competitors, follow this expert advice:

1. Perform a self-evaluation for compliance.

Competitor whistleblower suits generally get filed because a provider is performing some improper action that is hurting the competitor’s business, Hamme points out. Thus, smart providers will “examine any and all areas that give them a real or potential competitive or financial advantage over others in the same market area,” he recommends. Then they should “ascertain that any such advantage is legitimate and reasonable.”

Bonus: This can help you assess your marketing efforts as well, he adds. To determine legitimacy, ask yourself questions like whether higher levels of care are necessary and whether that necessity is documented, he says.

2. Take competitor reports seriously. If you receive a call from a competitor calling you out on a certain practice, your first impulse may be to tell them off. But you should take the call seriously and respond appropriately to head off fraud reports to authorities or whistleblower suits like this one, Hogue cautions.

You should promise to investigate the alleged impropriety and get back to the caller with the truth, Hogue advises. Or, if you know the practice to be lawful, you can explain why it is so.

Hogue encourages clients to avoid bad press and take their concerns directly to the affected parties. “When providers engage in fraud, it hurts everyone in the industry,” Hogue says. Especially in this environment of health care reform and looming funding cuts, “Congress and regulators are looking for any excuse to slash funding.”

3. Stand up to improper practices. In today’s competitive environment, providers are tempted to follow another provider’s example when a referral source such as a physician or nursing home tells them “everyone’s doing it.”

“You should be strong enough to say ‘no,” Markette exhorts. For example, just because another hospice is paying a nursing home more than fair market value for room and board doesn’t mean it’s OK for you to do it,  too.

The short-term gains aren’t worth the long-term consequences, Markette warns. “You’re going to get caught.”Upset competitors will turn to the authorities or the courts for justice. Under the False Claims Act, you could wind up paying $1 million for $100,000 worth of claims due to restitution, penalties assessed per claim, and treble damage levels.

“A conspiracy only works when everyone’s happy,” Markette stresses. When you have a competitive advantage over another provider due to questionable practices, that entity isn’t happy.

4. Don’t forget your compliance plan. You should codify your whistleblower-prevention practices in your compliance plan, Markette advises. Also include how you will respond when you learn of other providers’ improper practices.

© Medicare Compliance & Reimbursement.

Texas Medical Center

Lesson Learned: Health care providers in medical centers harbor fraudsters in their midst —and increased federal scrutiny.

If you’re a health care provider near a university medical center or big city hospital system, get ready to take some summer HEAT. CMS’s and the Department of Justice’s “Health Care Fraud Prevention and Enforcement Action Team is looking for big money in false claims that come out of urban areas like Houston, Miami, Detroit and Los Angeles, reports The Houston Chronicle.

In one week, six health care scams in urban areas made headlines, and together, the cases represent $285 million in false billings. “This is an astounding amount,” said Houston’s FBI spokeswoman Pat Villafranca. The $285 million is more than four times the amount stolen during robberies of U.S. banks during all of 2008, she added, according to the Chronicle.

HEAT is taking aim at areas with the highest number of billing anomalies, because there’s more money saved when they stop a scam. “The Texas Medical Center may attract individuals intent on committing fraud who think they might more easily ‘blend in’ among the legitimate practices,” FBI officials said, according to the Chronicle.

The 3 scams uncovered in Houston: a pill mill that submitted false Medicare claims, a PT clinic that paid patients to sign blank Medicare forms, and a psychologist who billed for services he never performed on 67 patients … More from The Houston Chronicle.