Fraud and Abuse in Healthcare

A collection of flashcards focusing on the vocabulary and key concepts related to fraud and abuse in healthcare, including laws, regulations, and practices.

Fraud

The intentional act of deceiving.

For ex - if a doctor’s office knowingly (intentionally) bills Medicare for Mr. Smith’s right leg surgery on two separate occasions, this is fraudulent practice

Abuse

An unintentional act that is inconsistent with standard practice.

For ex - if a doctor’s office unintentionally bills Medicare for Mr. Smith’s right leg surgery on two separate occasions, but this is not their normal practice, then this is abuse

Up-coding

Purposefully charging more than what is allowable or what procedures were performed.

Under-coding

Charging less than what should be charged for a procedure.

False Claims Act

A federal law that imposes liability on persons and companies who defraud governmental programs. Primary tool used by govt to protect them from fraud

This act relies on the premise of qui tam (whistleblower) that allows healthy people who are not affiliated with the govt to file actions on behalf of the govt against agencies taking advantage of people

Recovery Audit Contractors (RAC)

A program that identifies and recovers improper Medicare payments made to healthcare providers under fee-for-service (FFS) medicare plans.

C<S recovery auditors reviewed, audited, and identified Medicare payments between 2003-07. When the program ended, 693.6 mill was recovered in false claims on behalf of CMS

Health Care Fraud Prevention and Enforcement Action Team (HEAT)

An initiative created in 2009 to combat health care fraud and continue the RAC program. By 2012 HEAT had collected 4.2 bill in taxpayer dollars from ppl and companies who attempted to defraud federal health programs serving seniors and taxpayers or who sought payments to which they were not entitled.

For ex - transport orgs are permitted to bill Medicare for older adult transport to doc’s office. What was fraudulent if that they also billed for stops to the pharmacy that did not occur, and for which they are not permitted to bill.

Criminal Disclosure Provisions

Laws that impose penalties on those who conceal or fail to disclose fraudulent claims.

Physician Self-Referral Laws

Laws that prevent conflicts of interest in patient referrals.

Physician self-referral

a physician referring a patient to a medical facility in which the physician has a financial interest, be it ownership, investment, or a structured compensation arrangement. Critics argue that this practice is an inherent conflict of interest, because the physician benefits from the physician’s own referral.

2015 Office of Inspector General issued a fraud alert targeting physician compensation arrangements with hospitals and health systems.

Stark Law applies to the following designated health services:

• Clinical laboratory services

• Physical therapy services

• Occupational therapy services

• Outpatient speech-language pathology

• Radiology and certain other imaging services

• Radiation therapy services and supplies

• Durable medical equipment and supplies

• Parenteral and enteral nutrients, equipment and supplies

• Prosthetics, orthotics and prosthetic devices and supplies

• home health services

Stark I Laws

Developed in 1992, initial laws regulated physician referrals for laboratory services when a financial interest exists.

3 distinct actions determine Stark I violations; not all are needed at once

Paying a physician for a referral for lab services. one physician cannot pay another for any referrals of patients received

A hospital offering rental space for lab services must do so at fair market value. If physician looking for space is offered below market value, Stark I violation

A physician cannot receive benefits that are not also given to other doctors osr staff. If they do, then a Stark I violation has occurred. For instance, a doctor cannot receive a bonus at the end of the year if one if not given to other doctors following a policy for bonus allotment. Otherwise - this bonus can be viewed as a kick back for having to pay full market rent value.

Stark II Laws

Expanded regulations that apply Stark I violations to all ancillary services.

Stark II violations include:

• The three violations listed with Stark I, plus;

• If a physician discovers after the fact that they violated the Stark law, and is aware of payment received from Medicare, that physician is subject to potential criminal liability if the error is not disclosed; and

• If a physician or immediate family member has a financial relationship with an entity (primary owner or major financial partner), the physician MAY NOT refer Medicare and Medicaid patients to that entity for services without offering CHOICE. Meaning, a physician can refer to this location for services, but not exclusively.

Anti-Kickback Regulations

Laws intended to prevent conflicts of interest related to patient referrals for Medicare patients.

Patient referral conflict refers to the prevention of payment or other remuneration as an inducement to refer Medicare patients for treatment or services. For instance, it is illegal for an org to tell Dr. Smith to agree to accept Medicare patients in exchange for new office furniture. However, after the passage of the Stark laws, the anti-kickback regulations were updated again to include penalties. Both criminal and civil penalties for violations were imposed.

Unfortunately, these regulations were so strict many providers were wrongly accused of illegal acts. As a result, CMS enacted Safe Harbor Regulations

Safe Harbor Regulations

Regulations developed in 1987 to clarify acceptable practices under the Anti-Kickback Regulations, updated again in 1991 for Stark law passage. Originally intended to give “immunity” for certain business practices that the Anti-kickback regulations considered to be civil and criminal violations. For ex—surgeons who were also investors in a surgical center could perform surgery in that center on a patient, even if they referred them there. Several standards were outlined

Safe Harbor for surgeon-owned (investor) specialty center (single specialty)

1/3 of each physician-investor’s medical practice income for the previous year must be derived from the physician’s performance of surgical procedures at the ASC in which they are an investor. This assures that the physician’s investment actually represents an ownership and extension of the physician’s office

For ex - if a cardiologist wants to open a same day surgical center for cardiac catheter procedures, 1/3 of that physician’s income must come from the surgical procedures generated at that center; thus demonstrating ownership in the center’s service

safe harbor for multi-surgeon-owned (investors) centers (multi-specialty)

At least 1/3 of the physician’s surgical procedures are performed at the ASC in which they are investing. This prohibits passive investment from different specialties. Passive investment means a physician will give their money to invest in the center and receive dividends in return on their investment. In other words, the investing physician will not perform the surgical work that brings in revenue for the advancement of the business

for ex - a same-day surgical center, performing many different types of procedures encompassing diff specialties can be owned by a multitude of specialty physicians. those physicians then become the physicians performing the surgeries. they can, thereby, demonstrate that 1/3 of their income is derived from the ASC. this prohibits other doctors (passive investors) who want to “invest” as a stockholder and receive payment dividends, but who do not want to commit to the service delivery

safe harbor for physicians who practice in a hospital

can invest in the hospital’s healthcare facilities without violation of a safe harbor law. there is no physician income requirement as in other safe harbor investor scenarios as the location is owned by the hospital not the physician

for ex - a surgeon working at the hospital may want to contribute to the fundraising effort for a new surgical robotic device. the surgeon does not own it or receive aditional compensation for using it. the hospital owns the device and physician receives their normal salary not directly tied to the use of the device. in this scenarios, the surgeon is simply donating to the fundraiser. the safe harbor regulations do not apply to the physician bc the hospital is the fundraiser according to ethical regulations and not additionally compensating the physician for donating money.

safe harbor for non-surgical ambulatory care centers

such as radiation and oncology facilities are exempt from Safe Harbor laws.

for ex - a non-surgical ambulatory care center such as a pain clinic must comply with the anti-kickback regulations of 1972, they are not covered within the scope of the updated regulations. this allows physicians the ability to invest in these facilities without penalty.

Internal Control

A process designed to assure the reliability of financial reporting, effective operations, and compliance with laws.

Five components:

1. Control environment sets the tone of an org. It is the foundation for all other components of internal control, providing discipline and structure

2. Risk assessment is the entity’s ID and analysis of relevant risks to achievement of its objectives, forming a basis for determining how the risks should be managed

3. Control activities are policies and procedures to help ensure that management directives are carried out. Monitor contract compliance (generally civil law violations)

4. Information and communication are the ID, capture, and exchange of info in a form and time frame that enables people to carry out their responsibilities

5. Monitoring is a process that assesses the quality of internal control performances over time.

Management Responsibilities

Assures:

• Reliability of financial reporting

• Effectiveness and efficiency of operations

• Compliance with applicable laws and regulations

Internal control of compliance programs are now the responsibility of the board, upper management and other internal personnel

Components of Internal Control

Control environment, risk assessment, control activities, information and communication, and monitoring.