Understanding fraud and abuse laws key to adherence

October 18, 2019

Five key laws every physician should be aware of

Healthcare fraud is big business, which is why federal and state agencies are continuing their efforts to root out instances of fraud and abuse.

During the 2016-17 fiscal year, the Department of Justice (DOJ) recovered more than $2.4 billion in settlements and judgments for allegedly fraudulent practices in Medicare, Medicaid and Tricare.It was the eighth consecutive year the DOJ has recovered more than $2 billion.

Numbers vary widely, but most estimates put healthcare fraud at between 3 percent and 10 percent of total billings. Even at the conservative end of the scale, that’s an eye-opening share of the $3.3 trillion spent in the U.S. on healthcare during 2016.

Five dominant federal laws govern billing practices to protect payers and the public from fraudulent practices and self-referrals, with both monetary penalties and jail time possible depending on the infraction and its severity. They are the False Claims Act (FCA), the Anti-Kickback Statute (AKS), the Physician Self-Referral Law (Stark law), the Exclusion Authorities and the Civil Monetary Penalties Law (CMPL).

The legislation continues to change, so physicians should review the applicable standards to help ensure they stays on the right side of the law.

False Claims Act
Even unknowingly submitting a false claim to Medicare or Medicaid is a potential violation of the False Claims Act. Each instance could result in a fine of up to three times the amount of loss, plus $10,957 to $21,916 per claim. Depending on the type of claim, it could violate the Stark law or be referred for criminal prosecution.

In addition to civil violations, the False Claims Act also includes a criminal component (18 U.S.C. § 287) that covers the more egregious violations that can result in prison time in addition to fines.

A former partner in a Florida pain management clinic recently pleaded guilty to taking kickbacks and faces a jail sentence in addition to a $2.8 million civil settlement with the DoJ (See Civil Monetary Penalties Law, below). In another recent case, a Kentucky nursing home operator agreed to a $30 million settlement related to its policies related to therapy service for residents.

Anti-Kickback Statute
Paying for referrals is a crime for both the entity that pays for the referral and for the one that receives it. The payment doesn’t need to be cash but could be anything of value. For physicians, a consultancy agreement with a hefty price tag where the physician does little or nothing could be construed as a kickback, for example. Paid-referral arrangements are a common violation.

A little-known part of the Bipartisan Budget Act of 2018 increased the fines for knowing or intentional violations, quadrupling them to $100,000 per violation and doubling potential jail time to 10 years.

Several recent actions involving home health include the owner of a Michigan agency pleading guilty to paying kickbacks to recruiters who steered business to his firm. Based on services from those referrals, Medicare estimates an $8 million loss over a 10-year period.

Physician Self-Referral Law
Also referred to as the Stark Law, the legislation prohibits physicians from referring patients for “designated health services” payable by Medicare or Medicaid to entities where the physician or an immediate family member has a financial interest. Civil penalties can be more than $23,000 per violation and result in a provider being excluded from federal healthcare programs.

Exceptions can be granted, which has been increasingly the case as the Centers for Medicare & Medicaid Services explores alternative care and payment models such as accountable care organizations.The recent budget act loosened technical reporting requirements while keeping the spirit of the law intact. In June, CMS Administrator Seema Verma reiterated in a blog post that the agency is seeking input on how the Stark Law may limit value-based care arrangements.

Two California urologists agreed to pay more than $1 million for violations of the Stark Law and False Claims Act for soliciting other urologists to refer patients to a facility the two physicians owned.

Exclusion statute
The Office of Inspector General (OIG) of the U.S. Department of Health and Human Services maintains a list of excluded entities. Consider it a mandated black list of individuals and entities that are barred from participating in federal healthcare programs.
There are exceptions, but conviction for any of the following results in placement on the OIG list: Medicare/Medicaid fraud, patient abuse or neglect, felony conviction for other healthcare fraud and felony conviction related to controlled substances.

Healthcare providers are required to ensure that employees and contractors serving in any capacity aren’t on the exclusion list if they are providing services for federal payers. The penalties are stiff: a hefty fine per incident plus up to three times the dollar amount of each disputed claim.

Civil monetary penalties law
The federal budget doubled the dollar amount of civil monetary penalties (CMPs) that can accompany infractions. Violations of the False Claims Act, the Anti-Kickback Statute or the Physician Self-Referral Law can also trigger civil penalties. Likewise, hiring an excluded provider or entity can bring a civil fine to the person/company that used the excluded provider.

Everyone in a medical practice, a pharmacy, a hospital, a home health agency or any other healthcare provider or facility should be responsible for ensuring compliance with these statutes.

Billing professionals often are the last line of defense against False Claims Act allegations example, but everyone has a role to play. Every patient is different, and so is every claim.

If an overwhelming majority of patients are billed for the highest level of care possible, that should be a red flag. A greater than usual instance of durable medical supply orders? Billers should be aware of that, too. A disproportionate number of home health referrals from one physician or group practice is another potential warning sign.

While there may be perfectly good reasons why any of the above scenarios reflect accurate billing, your reputation and the reputation of your company are potentially at stake.

Andria Jacobs is Chief Operating Officer at PCG Software, Inc. in Las Vegas, NV.