Post on 11-Jan-2016
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New Pitfalls in Health Care Transactions
~~~Fraud & Abuse Perspective
Bill MathiasBill Mathias410-347-7667410-347-7667
wtmathias@ober.comwtmathias@ober.com
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Some Things Don’t Change
Medicare and Medicaid regulations remain incredibly complicated
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“There can be no doubt but that the statutes and provisions in question, involving the financing of Medicare and Medicaid, are among the most completely impenetrable texts within human experience. Indeed, one approaches them at the level of specificity herein demanded with dread, for not only are they dense reading of the most tortuous kind, but Congress also revisits the area frequently, generously cutting and pruning in the process and making any solid grasp of matters addressed merely a passing phase.”
— Chief Judge ErvinUnited States Court of Appeals for the fourth Circuit in Rehabilitation Association of Virginia v. Kozlowski, 42 F. 3d 1444, 1450 (4th Circuit 1994)
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More Things Never Change
Government continues to view Fraud, Waste, and Abuse as a significant source of revenue
Enforcement remains aggressive
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Have You Seen the OIG’s Website Lately?
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Aggressive Enforcement
From new joint DOJ/OIG website www.stopmedicarefraud.gov– “A joint effort by HHS and the
Department of Justice recovered a record $4 billion from fraudsters in FY2010.”
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Fighting Fraud is Good Investment
The return-on-investment (ROI) for Health Care Fraud and Abuse Control (HCFAC) program– Since 1997, $4.9 returned for every
$1.0 expended.– 3-year average (2008-2010), $6.8
returned for every $1.0 expended
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Federal Fraud & Abuse Laws
Anti-Kickback Statute Stark Physician Self-Referral Law Various Civil Monetary Penalties
– Prohibition against inducements to beneficiaries
– Prohibition against hospitals paying inducements to physicians to limit care
False Claims Act
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Areas of Government Concern in Fraud & Abuse Law
Additional Cost Over, Under, and Mis-Utilization Quality of Care Access to Care Patients’ Freedom of Choice Competition Exercise of Professional Judgment
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State Fraud & Abuse Laws
Don’t forget about state laws– State fraud and abuse laws– State mini-Stark laws– Fee splitting prohibitions– Certificate of Need (CON)– State Licensure– Corporate practice of medicine
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Fraud & Abuse Laws in Healthcare Transactions
Beginning Middle End
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In the Beginning...
Need to analyze overall structure of the transaction to make sure the deal is consistent with fraud and abuse laws
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In the middle...
Need to conduct detailed due diligence to avoid fraud and abuse liability
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In the end...
Need to have a plan for operating in compliance with fraud and abuse laws– PPACA to require mandatory
compliance program
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Healthcare Industry Feeling Undervalued
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Anti-Kickback Statute
Federal anti-kickback law generally prohibits the provision of any economic benefit in exchange for the referral of patients or business that will be reimbursed under any Federal health care program.– 42 U.S.C. § 1320a-7b(b).
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What’s New withAnti-Kickback Statute
PPACA expressly makes Anti-Kickback violations actionable under the FCA
PPACA legislatively overrules Hanlester with respect to intent– “With respect to violations of this
section, a person need not have actual knowledge of this section or specific intent to commit a violation of this section.”
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AKS Decision Tree
1. Is there an economic benefit? If No
If Yes
2. Is there a referral or recommendation?
If No
If Yes
3. Is there a statutory exception? If Yes
If No
4. Is there a safe harbor? If Yes
If No
5. Is there a potential for abuse?
If No
Go to Stark Analysis
If Yes, Problem!
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Stark Self-Referral Law
The federal Stark physician self-referral law generally prohibits a physician from making referrals to an entity for any of eleven (11) designated health services if the physician (or an immediate family member) has a “financial relationship” with the entity. – 42 U.S.C. § 1395nn
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What’s New withthe Stark Law
Over past few years, changes to Stark law have limited possibilities for joint venture with physicians– “Stand in the shoes” (10/1/08)– Percentage-based compensation and
“per click” (10/1/09)– “Under arrangement” services –
revised definition of “entity” (10/1/09)
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PPACA Provisions Affecting Stark
Overpayments Stark self-disclosure authority Stark in office ancillary disclosure
requirement Restrictions on physician
investments in hospitals
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Stark Decision Tree
If No
If Yes
Okay!
If Yes
If Yes
If Yes
If Yes
6. Is there a regulatory exception?
If Yes5. Is there a statutory exception?
If No4. Is there a designated health service?
If No3. Is there a referral?
If No2. Is there a direct or indirect financial relationship?
If No1. Is there a physician or immediate family member?
If No, Problem!
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False Claims Act
Potential liability remains enormous in healthcare context
Liability– 3X Damages– $5,500 to $11,000 per claim
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DEFENSE CONTRACTOR
$100,000 damages X 3 = $300,000
12 (# of claims) X $11,000 = $132,000
Total liability = $432,000
Sample Penalty Calculation
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HEALTH CARE PROVIDER
$100,000 damages X 3 = $300,000
2000 (# of claims) X $11,000 =$22,000,000
Total Liability = $22,300,000
Sample Penalty Calculation
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FERA Amendments
Revised FCA to codified “reverse false claims”
– it is now illegal to “knowingly conceal…or knowingly and improperly avoid…or decrease…an obligation to pay or transmit money or property to the Government…”
»31 U.S.C. §3729(a)(1)(G)
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60-day Overpayment Rule
PPACA requires reporting and repayment of overpayments within 60 day of identification (or due date of next cost report, if applicable)– What’s “identification”?
Violations actionable under FCA
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Self-Disclosure
OIG Voluntary Disclosure Protocol CMS Stark Self-Disclosure Protocol MAC Disclosure
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Risk/Reward ofSelf-Disclosure
Eliminate potential overpayment recoupment and FCA exposure
Can be costly– $$$– Time
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Self-Disclosure Deal Points
What to disclose? Who to disclose it to? Disclosure by seller or buyer? Allow sufficient time to resolve
disclosure How definitive is your deal?
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“Health Care in the New Millennium”
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Questions?
Bill MathiasBill MathiasOber|Kaler410-347-7667
wtmathias@ober.com