Health care law enforcement is using a stunning arsenal of federal laws to target physicians for fraud and abuse.
Congress has armed health care law enforcement officials with a stunning arsenal of federal laws which, along with state laws, are directed at finding, punishing, and deterring fraud and abuse. To much dismay, physicians are among the main targets. The laws are complex, the potential penalties severe and the regulations are changing on a daily basis – making it essential that neurosurgical practices keep up-to-speed with these rapidly shifting rules.
These laws broadly proscribe activities, some of which may have been undertaken in good faith. Significantly, these statutes also have provided the Office of Inspector General (OIG) with extremely broad powers to penalize or exclude physicians from the Medicare and Medicaid programs by mandating the exclusion of all providers convicted of program-related crimes. Granting this authority to the OIG has significantly reduced physicians’ procedural rights.
Under Examination: The Program
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) established a national Health Care Fraud and Abuse Control Program (the Program) under the joint direction of the Attorney General and the Secretary of the Department of Health and Human Services (HHS). Acting through the Department’s OIG, the Program is designed to coordinate federal, state and local law enforcement activities with respect to health care fraud and abuse.
According to the HHS 1999 Annual Report, the federal government won or negotiated more than $524 million in judgements, settlements and administrative impositions in health care fraud cases last year. The report also states that a National Health Care Task Force has been organized to promote information sharing and collaboration among the many federal, state and local entities involved in combating health care fraud.
The Program’s central role is the prevention of health care fraud and abuse. The Program’s efforts include the promulgation of formal advisory opinions to industry on proposed business practices, industry-specific program compliance guidance, special fraud alerts, corporate integrity agreements with providers who settle allegations of fraud, and beneficiary and provider education and outreach. HHS states that the Program has reaped significant benefits. For example, the most recent audit of Medicare payment errors showed a $10.6 billion, or 45 percent drop, in improper fee-for-service payments over the last two years.
Strict Laws, Steep Penalties
Two reports were issued in 1997 that fueled the increased federal focus on fraud enforcement activities. The General Accounting Office (GAO), in March 1997, issued its report “Medicaid Fraud and Abuse-Stronger Actions Needed to Remove Excluded Providers From Federal Health Programs.” Soon after, the first full-scale audit by the OIG of the Health Care Financing Administration (HCFA) found an estimated $23 billion in improper payments under Medicare fee-for-service in 1996. This information emboldened Congress to act and produced even more heavy-handed enforcement laws.
Unfortunately, procedural safeguards are limited when physicians are facing the possibility of sanctions. The system dispenses with the right to a full trial with a criminal burden of proof, as well as the right to a jury, and replaces it with a “streamlined” administrative mechanism whereby the OIG may exclude a physician upon its finding that facts exist to support its determination. A jury is not provided in OIG hearings.
To be sure that physicians comply with fraud and abuse regulations, the penalties are severe (life imprisonment). Similarly, the hardship imposed by large fines is well known. What is not as clear is that an exclusion sanction can be devastating. An exclusion sanction goes to the heart of a physician’s practice and reputation. It directly impacts a physician’s ability to maintain medical staff privileges,, to contract with managed care plans, to obtain professional liability insurance and to maintain relationships and patterns of practice for the referrals of any patients whatsoever.
Pursuant to an amendment in the Medicare and Medicaid Patient and Program Protection Act, 42 U.S.C. §1395y(e), the law prohibits any Medicare provider or practitioner for billing for services rendered at the direction or on the prescription of a physician who has been excluded from the Medicare program. Such a sanction may destroy a physician’s ability to practice medicine.
Compounding the problem is the OIG, who is expressly authorized to exclude any individual who commits an act that is punishable as a criminal offense or subject to a monetary penalty. (42 U.S.C. §1320a-7(b)(7).)
Uncovering Fraud and Abuse in Physician Practice
The OIG learns of alleged fraud and abuse through a variety of sources. Investigations are often triggered by complaints from beneficiaries, competitors, employees (or former employees), former spouses or information received from fiscal intermediaries and undercover agents. The OIG is actively soliciting reports of suspected fraud and abuse via “Special Fraud Alerts” which inform providers of an “Inspector General Hotline” – a service that offers a confidential means for reporting individuals suspected of violating federal statuses. (The hotline can be accessed at 800-HHS-TIPS.)
Furthermore, the False Claims Act (FCA), 31 U.S.C. §3729 (FCA) is a significant enforcement tool. The Act permits whistle blowers who bring actions on behalf of the federal government to recover damages sustained by the submission of false claims, to recover up to 30 percent of the total penalty imposed. Prosecutors prefer this enforcement tool, as it allows the government to collect treble damages for false claims violations, and often carries stiffer penalties than the fraud provisions set forth in the Medicare and Medicaid laws.
Moreover, the FCA does not require the government to prove that wrongdoers acted intentionally to defraud the government. Instead, the prosecutors need only show that the wrongdoer has actual knowledge that the information is false or acts in reckless disregard or ignorance of the truth or falsity of the information.
Moreover, guidelines were proposed by the Department of Justice (DOJ) to make it tougher to bring FCA actions in response to congressional pressure. However, the initial assessments of how the DOJ is operating this new guidance is disturbing. A Government Affairs Office (GAO) report recently stated that “The DOJ’s process for assessing the U.S. Attorney’s Office compliance may be superficial.” Accordingly, the GAO recommended that the DOJ improve its oversight of U.S. Attorney General Offices.
Patient’s Role in the Battle
Beneficiaries (patients) have been enlisted to report information concerning individuals (physicians) and entities involved in violation of federal health care fraud and abuse provisions. In fact, patients can receive monetary rewards for information that leads to the recovery of Medicare funds. Congress further enlisted the help of beneficiaries by mandating that each explanation of benefits form contain a notice that states they are entitled to an itemized statement and that they can report any errors or questionable charges.
Since April 1, 1999, this notice has provided patients with a statement of their right to request an itemized form for Medicare items and a description of the program to collect information on Medicare fraud and abuse. As part of the program, the OIG has established a toll-free telephone number for the receipt of complaints and information about waste, fraud and abuse or billing of services under Medicare. HCFA also provides a lengthy list of fraud tips for beneficiaries, which can be found on their Web site www.hcfa.gov/medicare/fraud/suspici2.htm. In addition, HCFA and the American Association of Retired Persons (AARP) arre actively training volunteers to seek out fraudulent billing practices.
Federal Medicare and Medicaid law provides for both civil and criminal sanctions for those activities that violate the provisions that Congress loosely categorized as “fraud and abuse.” A number of these provisions go far beyond the traditional concepts of “fraud.” Neurosurgeons should be sufficiently familiar with these laws in order to avoid the risk of getting sanctioned. Civil sanctions of engaging in Medicare and Medicaid fraud and abuse come in three forms: 1) mandatory exclusion, (2) discretionary exclusion, and (3) civil monetary penalties. Criminal provisions are contained within 42 U.S.C. §1320a-7b and prohibit a variety of acts and practices.
For example, a provision of the statute may make it a felony for any person, including a physician, to intentionally fail to disclose that he or she has received overpayment from a federal health program, even if the provider was not responsible for causing the overpayment. Such individuals, if convicted, may be guilty of a felony and be fined up to $25,000, imprisoned for up to five years, or both.
Spotlight on False Claims
Congress has identified five separate activities, which may constitute “false claims” and may be punishable as a criminal offense. Some examples of conduct, which are prohibited under this law include: misrepresenting the services actually rendered, such as increasing the level of an office visit, or falsely certifying that certain services were medically necessary when they were not. Proper documentation and coding of evaluation and management services (E&M) is crucial to avoid these problems. Violations of the FCA carry a civil penalty of between $5,000-$10,000 for each false claim submitted, plus three times the amount of damages incurred by the government, as well as the cost of a civil action.
Moreover, HIPAA defined several new federal criminal offenses applicable to activities involving both public and private health plans. Health care fraud is now a specific federal offense that Congress has defined as “knowingly and willfully defrauding any health care benefit program or obtaining, by any means, false or fraudulent pretense, money or property owned by or under the custody and control of any health care program” (18 U.S.C. §1347). Persons who violate this law face imprisonment, fines or both.
According to the Physician Compliance Alert, the Clinton budget proposal for FY 2001 points toward an increasingly intense fraud and abuse campaign. Most of the increases follow HIPAA mandates, but several new initiatives would clamp down on providers in the name of cutting fraud and abuse. The Program is an overarching budget item that pays for health care investigation and prosecution by the DOJ, FBI, OIG and HCFA. The budget would rise to $950 million under the President’s proposal, up 9.5 percent from 2000. One new policy proposal included in the budget envisages putting 100 government auditors on-site at Medicare contractors. With this occurring, it is only a matter of time, according to many experts, before an honest billing mistake is labeled as fraud.
Model Compliance Program
The OIG is now developing a model physician compliance plan. The agency states that it intends to incorporate in its plan a scaled back version of the seven core elements it included in previously published compliance guidelines for hospitals, clinical labs, third-party billing companies and others. Neurosurgical practices around the country might consider drafting their own plans now, especially since the government is aggressively prosecuting fraud and it may be several months before the OIG model is available.
Neurological practices would be well advised to develop compliance plans that address the following elements:
- Authority, oversight and commitment to compliance by an individual or a committee are key. The effectiveness of a compliance plan is measured by outcome, noot process. Without a committed staff that fully understands how the compliance plan governs their daily lives, the program won’t reasonably deter wrongdoing.
- Training and education is another element. Training should be provided to physicians and office managers, for their actions impact the accuracy of claims.
- Standards of procedures to assist in compliance should be addressed and include policies on federal and state fraud and abuse laws, as well as reimbursement principles involved with coding.
- Monitoring and auditing the standards and procedures should be done by the practice.
- Mechanisms to enforce and discipline should be in place.
- Response and prevention is accomplished by a reasonable review of current employees and contractors. This will help prevent employing or doing business with individuals who have a propensity to engage in inappropriate activities.
- The compliance program should be tailored to meet your needs, especially since no one compliance program fits all.
Practices also can obtain direction from OIG’s Compliance Program Guidance for Third-Party Medical Billing Companies. The risk areas outlined in this publication include 17 different items, including: billing for items or services not actually documented; unbundling; up-coding; inappropriate balance billing; inadequate resolution of overpayments; lack of integrity in computer systems; failure to maintain the confidentiality of records; knowing misuse of provider identification numbers; outpatient services rendered in connection with inpatient stays; duplicate billing in attempt to gain duplicate payment; billing for discharge in lieu of transfer; failure to properly use modifiers; billing company incentives that violate the Anti-Kickback Statute; joint ventures; routine waiver of co-payments and billing third party insurance only; and discounts and professional courtesy.
What Does This Mean For You?
Neurosurgeons must understand that the fraud and abuse laws are an ever-present reality, which must be understood and dealt with. Physicians with the best of intentions may find a compliance program necessary, since the laws and regulations are complex and constantly changing. By initiating a compliance program, neurosurgeons can ensure that their co-workers understand the applicable requirements, and their responsibility to adhere to them. Each neurosurgeon needs to make an assessment as to whether to adopt a formal program by considering, among other issues, the size of the group, the ability of the group to commit and live by a plan if established, and the confidence level in what currently is in place. To do less, at this time, does not seem to be prudent.