Category Archives: Anti-Kickback

OIG Announces Proposed AKS and CMP Regulations

On October 3, 2014, the Office of the Inspector General (“OIG”) issued a proposed rule codifying into regulation several statutory changes to the Antikickback Statute (“AKS”) and the Civil Monetary Penalty (“CMP”) Law. Nearly all of these changes broaden permissible arrangements for certain health care and health service providers. The OIG is seeking public comment regarding how to best balance the promotion of beneficial arrangements that enhance the efficient and effective delivery of health care and promote the best interests of patients, while simultaneously avoiding payment arrangements that risk abuse of Federal health care programs or program beneficiaries. Comments about these proposed regulations are due to the OIG no later than December 2, 2014 at 5:00 p.m. EST. The proposed regulations in their entirety are available here. Selected proposed changes are described below.

Antikickback Regulations

1.   Cost-Sharing Waiver Safe Harbors. The OIG proposes to codify as regulations AKS safe harbors for certain cost-sharing waivers determined to be low risk to Federal health care programs.

a.   Safe Harbor for Part D Cost-Sharing Waivers by Pharmacies. A pharmacy waiving Part D cost-sharing for a beneficiary would qualify for the safe harbor when:
(i) the waiver is not advertised or part of a solicitation;
(ii) the pharmacy does not routinely waive the cost sharing; and
(iii) before waiving cost-sharing, the pharmacy either determines in good faith that the beneficiary has a financial need or the pharmacy fails to collect the cost-sharing amount after making a reasonable effort to do so.
Conditions (ii) and (iii) do not apply to a subsidy-eligible individual.

b.   Safe Harbor for Cost-Sharing Waivers for Emergency Ambulance Services. Emergency ambulance providers and suppliers that are paid by Medicare fee-for-service and are owned and operated by a State, a political subdivision, or a Federally recognized Indian tribe would receive AKS safe harbor protection for arrangements when:
(i) the ambulance provider or supplier is the Medicare Part B provider or supplier of the services;                                                                                                        (ii) the waiver is offered uniformly, without regard to patient-specific factors;
(iii) the waiver is not the furnishing of free services paid for by a government entity; and
(iv) the provider or supplier bears the cost of the waiver.

2.   AKS Remuneration Exceptions. The OIG proposes to codify as regulations two recent statutory exceptions to the definition of remuneration.

a.   Medicare Coverage Gap Discount Program Exception. Applicable drugs provided at a discount to applicable beneficiaries under the Medicare Coverage Gap Discount Program would be excepted from the AKS definition of remuneration if the drug manufacturer is a compliant participant in the Medicare Coverage Gap Discount Program.

b.   Local Transportation Services Exception. Excepted from the AKS definition of remuneration would be free or discounted local (no more than 25 miles away) transportation made available by an individual or entity to established patients who are Federal health care program beneficiaries for the purpose of obtaining medically necessary items or services when:
(i) the individual or entity providing the transportation services does not primarily supply health care items and bears the cost of the transportation services;
(ii) the availability of transportation services is not determined in a manner related to the volume or value of Federal health care program business;
(iii) the transportation services are not air, luxury, or ambulance-level services; and
(iv) the transportation services are not marketed or advertised and drivers or others arranging the transportation are not paid per beneficiary transported.

Civil Monetary Penalty Regulations

1.   CMP Remuneration Exceptions. The OIG proposes to codify as regulations recent statutory exceptions to the CMP rule definition of remuneration. The proposed regulations additionally provide proposed definitions of terms intended to help interpret these exceptions. Proposed exceptions to the CMP rule definition of remuneration include:

(a)   Reductions by a hospital of the copayment amount for covered outpatient department services to no less than 20% of the Medicare outpatient department fee schedule.

(b)   Remuneration promoting access to care and posing a low risk of harm to patients and Federal health care programs.

(c)   Retailer rewards programs consisting of coupons, rebates, or other rewards from a retailer offering items or services on equal terms to all members of the public and which are not tied to the provision of other items or services reimbursed in any part by Medicare or an applicable State health care program.

(d)   The offer of certain items or services for free or at less than fair market value after making a good faith determination that the recipient is in financial need and when the items or services are not advertised.

(e)   Certain copayment waivers for the first fill of a covered Part D generic drug for beneficiaries enrolled in the Medicare Prescription Drug Plan or the Medicare Advantage Part D Plan.

2.   Gainsharing Prohibition. The OIG proposes codify the statutory gainsharing prohibition that forbids hospitals from knowingly making a payment to a physician as an inducement to reduce or limit services provided to Medicare or Medicaid beneficiaries under the care of that physician. In doing so, the OIG acknowledges that it seeks to strike a balance that interprets the prohibition broadly enough to protect Federal health care program beneficiaries, and narrowly enough to allow low risk programs that further the goal of delivering high quality health care at a lower cost. Furthermore, in the proposed regulations the OIG acknowledges that it has previously allowed certain gainsharing arrangements through its advisory opinion process and that it seeks comment regarding an interpretation of the statute that permits the implementation of low risk, beneficial gainsharing arrangements.

If you have questions about these proposed regulations, or about fraud and abuse compliance for Federal health care program participants generally, contact Heather E. Baird, or any member of the Benesch Health Care Department.

One Of The Country’s Largest Hospital Organizations to Pay $98.15 Million Settlement on False Claims Act Allegations

On Monday, August 4, 2014, The Department of Justice announced that Community Health Systems (“CHS”), the nation’s largest operator of acute care hospitals, agreed to pay $98.15 million to settle nine whistleblower lawsuits alleging that the company violated the False Claims Act between January 2005 and December 2010. The whistleblowers alleged that CHS knowingly billed Medicare, Medicaid, and TRICARE for medically unnecessary inpatient admissions rather than the lower outpatient or observation rates at 119 hospitals. Additionally, allegations were made that services were rendered to patients at one of CHS’s hospitals in Laredo, Texas by a physician who was offered a medical directorship in violation of the physician self-referral law, known as the Stark Law.

Under the settlement, CHS entered into a five-year Corporate Integrity Agreement requiring it to retain independent review organizations to review the accuracy of the claims for inpatient services under federal health care programs, and to engage in significant compliance efforts over the next five years.

The allegations against CHS are particularly notable in light of new regulations such as the two-midnight rule, which took effect October 1, 2013. The two-midnight rule requires that physicians deem a patient’s condition as serious enough to require at least two overnight stays in order to qualify for Medicare reimbursement under inpatient rates. Patients who aren’t formally admitted may remain under outpatient or observation status. Emergency and internal medicine physicians often struggle to get the right designation and status for the patient. The federal government has delayed enforcement of the rule until March 31, 2015 at which time hospitals may face financial penalties if auditors determine the hospital could have met the patient’s needs in an outpatient setting.

For more information on the CHS settlement, the two-midnight rule, the Stark Law, the Anti-Kickback Statute, or related fraud and abuse issues, please feel free to contact Daniel Meier or any member of our health care practice group for a further discussion.

You can find a more extensive discussion about the CHS settlement, the impact of observation status on patients and the two-midnight rule in the following Client Bulletin.

OIG Publishes Special Fraud Alert Regarding Laboratory Payments To Referring Physicians – Some Arrangements May Violate the Anti-Kickback Statute

The laboratory market has become quite competitive in recent years, raising compliance concerns and investigations into lab relationships with referring physicians. Accordingly, on June 25, 2014, the OIG released a Special Fraud Alert (the “Fraud Alert”) which provides guidance about two different types of suspect arrangements: (1) Blood-Specimen Collection; and (2) Registry Payments. The concerns raised here by the OIG involve referring physicians receiving payments from laboratories who may not even be aware that these arrangements are violating the Anti-Kickback Statute due to their complicated nature.

The OIG explained that it is concerned about arrangements in which a lab pays a physician more than fair market value (“FMV”) for the physician’s services or for services the lab does not actually need or for which the physician is compensated. The four major concerns typically associated with kickbacks involving labs include: (1) corruption of medical judgment; (2) overutilization; (3) increased costs to the Federal health care programs and beneficiaries; and (4) unfair competition. These concerns arise because arrangements with labs could induce physicians to order tests from a lab that provides them with payment, rather than utilizing laboratories that provide the best, most clinically appropriate service. Indeed, the choice of which laboratory to use and whether to even order lab tests are decided by or at least strongly influenced by the physician. Continue reading

Supplemental Special Advisory Bulletin Clarifies OIG Positions on Independent Charity Patient Assistance Programs

Introduction

The OIG has released a Supplemental Special Advisory Bulletin that “reiterates and amplifies” previous OIG Special Advisory Bulletin guidance from 2005. Pharmaceutical manufacturers and Patient Assistance Programs that provide independent, charitable support for patients’ drug expenses (PAPs) should be aware of this supplemental guidance, as the OIG notes that it may modify some previously-issued favorable advisory opinions. Specifically, in this bulletin the OIG expands on its previous guidance regarding disease funds, eligible recipients, and the conduct of donors.

Background

PAPs provide cost-sharing assistance for patients who cannot afford their prescription medications. Continue reading

Long Island Radiology Group Settles FCA Allegations That It Billed Medicaid And Medicare For Unnecessary Tests For $15.5M

A company operating diagnostic testing facilities in New York has agreed to pay $13.65 million to the federal government and $1.85 million to New York and New Jersey for a total of $15.5 million in penalties to settle claims it falsely billed federal and state health care programs for tests that were not performed or not medically necessary and for paying kickbacks to physicians. The company denies liability for the allegations that are part of the settlement.

The settlement resolves allegations that between 1999 and 2010 the radiology group submitted false claims to Medicare and state Medicaid programs in New Jersey and New York for Three Dimensional reconstructions of CT scans that, according to the complaint, were medically unnecessary, were not ordered by the treating physicians, and in some cases were never actually performed or interpreted.  These scans are often used in orthopedic, cardiovascular and neurologic imaging, including to visualize complex fractures, tumors in the lungs or soft tissues, and cardiac issues.  In addition, the group allegedly submitted false billings for expensive imaging services, including retroperitoneal ultrasounds, Doppler scans, transrectal ultrasounds and pelvic x-rays.  These imaging services allegedly resulted in a total of more than 40,000 false claims made to the New York Medicaid program. Continue reading

Office of Inspector General Issues Strategic Plan

The Office of the Inspector General (“OIG”) issued a 2014-2018 strategic plan including outlining the visions, goals, and priorities of that office for the upcoming several years. The plan sets forth four goals: 1. Fight fraud, waste and abuse; 2. Promote quality, safety, and value; 3. Secure the future; and 4. Advance excellence and innovation. Each goals is identified with several priority areas that support the stated goal. The report can be found at the OIG’s website http://go.us.gov/WdbV

OIG Publishes Special Fraud Alert regarding Physician-Owned Distributors (“PODs”) – Describes PODs as “Inherently Suspect”

Over the last several years, there has been a noted proliferation in the growth of physician-owned distributors (“PODs”). Along with this growth has come increased scrutiny and speculation as to the legality of PODs, with highly vocal critics and proponents on both sides of the debate. In fact, the Office of the Inspector General’s (“OIG”) 2013 Work Plan noted that the OIG planned to examine PODs in connection with reports of high utilization of spinal implants by hospitals associated with PODs.

Accordingly, on March 26, 2013, the OIG released a Special Fraud Alert (the “Fraud Alert”) which provides long-awaited guidance concerning the legality of PODs. Continue reading