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Searching for Articles by John H. Fisher, II
John H. Fisher, II
Wausau Office
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Ambulatory Surgery Center Compliance Federal Settlement Raises Issues for Physician Owned Surgery Centers

Posted on September 30, 2014, Authored by John H. Fisher, II, Filed under Health Care

A Federal Whistleblower that was recently settled in the United States District Court for the Middle District of Tennessee illustrates the difficult issues involved in structuring ambulatory surgery center ("ASC") investments. Specifically, the case demonstrates how investment terms that are intended to assure compliance with the safe harbor regulations under the Medicare Anti-Kickback Statute (42 U.S.C. 1320a-7b(a)-(b)) can create evidence of non-compliance if the initial terms of the offering relate, in whole or in part, to the volume or value of expected referrals from the investor in the ASC venture. The crux of the case alleged that Meridian offered referring physicians the opportunity to invest in the local ASC operating entities at less than fair market value. The end result was that the investing physicians were paid an extremely high rate of return on their investment. The complaint alleged that the low acquisition price, together with the high rate of investment return, amounted to remuneration that was intended to induce referrals in violation of the Federal Anti?Kickback Statute. We have prepared a Blue Paper Summary of this case and an analysis of what it might mean to ambulatory surgery center investment structures. You can access the complete analysis through the following link: ASC Investment Case Analysis

The Role of Confidentiality Agreements in a Corporate Compliance Program

Posted on June 26, 2014, Authored by John H. Fisher, II, Filed under Health Care

A recent federal court decision from Pennsylvania illustrates the importance of a confidentiality agreement as part of a compliance program. The Pennsylvania court found that a confidentiality agreement that had been signed by an employee restricted the ability of the whistleblower claimant to use confidential information to support its qui tam claim under the federal False Claims Act. The whistleblower had attempted to base the False Claims Act action on information that was obtained through employment such as contracts, business data, audit reports, and other documents. The target company filed a counterclaim against the whistleblower that alleged breach of the confidentiality contract. The court refused to dismiss the counterclaim. Although there is a split on how federal courts come down on this issue, the existence of a valid confidentiality agreement can be an arrow in your quiver if you are faced with an employee's whistleblower claim. Your compliance program should include a systematic program to protect your trade secrets and confidential information. For more information about this and other health care law and compliance issues, please contact me at

Jointly Providing Health Care Fee Information to Payors

Posted on May 22, 2014, Authored by John H. Fisher, II, Filed under Health Care

As health care provider networks move down the path toward clinical integration, we are often asked to provide guidance on how information can be jointly provided to payors. The antitrust laws recognize that collective sharing of some pricing information, even by otherwise competing providers, can be beneficial and does not necessarily violate antitrust laws. However, there are significant limitations on what can be jointly provided and how the information can be shared. At the outset, it should be clarified that collective negotiations by competing providers who are not financially or clinically integrated should never take place and constitutes a per se violation of federal antitrust laws. Prohibited activities include any action in contemplation of or in furtherance of an agreement on fees or other aspects of reimbursement. It is unlawful for a non-integrated group of competing providers to agree on or suggest a central fee schedule. Any activity relating to prospective fees should be avoided. Competing providers can jointly provide information on fees currently being charged or that have been charged in the past as long as certain safeguards are implemented and strictly followed. The FTC and DOJ have stated that the joint provision of historic fee information to payors raise little anticompetitive concerns as long as the following conditions are met: Collection of fee information is managed by a third party; Any information that is made available to competing providers must be at least three (3) months old; Data provided to participating providers must meet further requirements, including: a. It must be aggregated so recipients cannot identify the prices charged by individual providers; b. There must be at least five (5) providers reporting data that goes into an integrated statistic; and c. No provider can represent more than twenty-five percent (25%) on a weighted basis for any statistical item. I normally recommend that provider groups create antitrust policies that address the provision of fee information to payors and other sensitive antitrust issues. Even an organization that is significantly clinically integrated should be concerned with the method used to convey fee information to payors. Adopting and applying specific antitrust policies is a step toward assuring antitrust compliance. Antitrust policies should include detailed processes for conveying fee information that incorporate the parameters applicable to the organization.

When Does An Overpayment Become Fraud? How Simple Inattention Can Expose You to Penalties for Fraudulent Activities

Posted on November 11, 2016, Authored by John H. Fisher, II, Filed under Health Care

If you are involved in any way in the health care system, it should be obvious by now that the government has committed ever increasing resources to the prosecution of fraud and abuse cases. Simply put, from a governmental standpoint, prosecuting fraud and abuse is good business. Every dollar the government puts into pursuing health care fraud and abuse brings a return of around 7 or 8 dollars.  That return on investment is likely to increase with the release of new inflation adjusted Federal penalties and a variety of mechanisms the government can now use to bring more cases under their radar. It is worthy to note we are not just talking about pursuing individuals who are intentionally trying to commit fraud on the system.  There are certainly clear cases where unsavory individuals create schemes to defraud the government.  What is really concerning is that well intentioned providers can be swept up in the system simply because they did not use enough diligence to detect incorrect billings or a number of other infractions.  For example, a simple overpayment can become a false claim if repayment is not made within 60 days after identification.  A provider can be deemed to have identified an overpayment by not taking reasonable steps to look for problems.  Nothing affirmative necessarily needs to be done in order to turn a simple overpayment into a false claim. There are numerous situations where unintentional activity (i.e. a billing or coding error) can result in being overpaid by the federal government under a governmental health care program. I don’t want to say this happens to everyone in the health care system, but it certainly happens to a lot of people usually as a result of some sort of neglect or misinterpretation of very complex regulations. Take for example the rules requiring physician supervision of various support personnel. These rules are extremely convoluted and it is hard to imagine that every doctor has a clear understanding of the level of supervision that is required in each situation.  Nevertheless, a billing occurs and if the proper supervision is later found to not be present and an overpayment results. The OIG might consider a false claim to have occurred if repayment is not made and the provider may be deemed to have knowledge of the supervision requirement and thus the overpayment.  This is an example of what the government considers to be “abuse.” No criminals are involved here, but an overpayment and technical abuse of the system has occurred. The manner in which this situation is dealt with becomes critically important in determining whether there is a simple correction of the situation or whether it is escalated to higher levels of culpability.  Let’s skip forward to a time when the doctor discovers a mistake has been made in the level of supervision that was provided in the past. What happens now is very important. First, let’s imagine that the doctor comes forward and admits the error to the Federal government. There is some money owed back to the governmental health program for the billings that occurred under the improperly supervised services. If the doctor lets it go without making prompt repayment the doctor’s potential exposure has just escalated into a completely different zone of risk and potential culpability. The failure to make repayment within 60 days of the doctor discovering the problem makes the Federal False Claim Act applicable.  Instead of just having to pay back the overpayment amount, the doctor is potentially exposed to three times the original overpayment plus a minimum penalty of $11,000 per claim and a maximum of nearly $22,000 per claim.  This case has now escalated from abuse into fraud. From here it is just a matter of establishing intent to make this a criminal case. This illustrates the need to continually identify risk areas where billing problems could occur.  Where risk is identified, audit and monitoring should occur to help identify anomalies.  Once discovered, problems should be dealt with promptly so a bad situation does not turn into something that has consequences that are completely unacceptable.  Most importantly, it is not a solution to whistle past the graveyard and hope the situation goes away.  These situations must be dealt with promptly, affirmatively, and decisively before they blossom into situations that are much more difficult to resolve.

When Can Violation of a Condition of Participation Result in False Claims Act Liability? Update on Escobar’s Materiality Standard

Posted on November 17, 2016, Authored by John H. Fisher, II, Filed under Health Care

In June, I published a blog article on a decision of the United States Supreme Court that appeared to change the law applicable to “false certification” in the 7th Judicial Circuit Circuit.  The Supreme Court decision in Universal Health Services v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016), (“Escobar”) opened the door to finding liability under the Federal False Claims Act for certain violations of the conditions of participation applicable to a provider under the Medicare program.  Before the Escobar decision, 7th Judicial Circuit Courts maintained that a violation of conditions of participation alone could not support a False Claims Act case.  Only a violation of separate “conditions of payment” could result in those penalties.  These cases are important because they define when the failure to meet a simple “conditions of participation” can lead to imposition of False Claims Act damages and a potential whistleblower suit. The Escobar case rejected the distinction between conditions of payment and conditions of participation.  Instead, the Escobar Court found that the Government’s decision to expressly identify a provision as a condition of payment is relevant, but not automatically dispositive.  Instead, in the Court’s opinion “what matters is not the label that the Government attaches to a requirement, but whether the defendant knowingly violated a requirement that the defendant knows is material to the Government’s payment decision.”  The Court replaced the “bright line” distinction between conditions of payment and conditions of participation with a less certain “materiality” requirement.  The Escobar Court stated that the “materiality” standard is “rigorous” and “demanding” and requires some indication that the government would not have paid the claim had it known of the deficiency.  Providers were given very little further guidance on how to apply the new “materiality” standard. Since Escobar was decided, various Federal courts have issued decisions interpreting the “materiality” requirement.  Previous law in the 7th Judicial Circuit Court was based on United States v. Sanford–Brown, Ltd., which was decided shortly before the Escobar case.  Sanford-Brown created a strict distinction between conditions of payment and conditions of participation; finding that only a breach of a condition of payment could lead to imposition of a penalty under a false implied certification theory.  After the Escobar case was decided, the U.S. Supreme Court remanded Sanford-Brown back to the 7th Judicial Circuit Court for further consideration consistent with the Escobar holding. When the 7th Judicial Circuit Court considered the case again, it found that no proof had been presented to indicate that the government’s decision to pay the applicable claim would have been any different if the applicable condition had been met.  The Court rather strictly applied the Escobar materiality standard and found that it is not enough to only show that the government would have been entitled to decline payment.  Apparently, the Court considered it important that providing accurate information was not likely to have changed the government’s payment decision.  United States v. Sanford-Brown , No. 14-2506, 2016 WL 6205746 (7th Cir. Oct. 24, 2016).

OIG Proposes New Civil Monetary Penalty Rules

Posted on May 19, 2014, Authored by John H. Fisher, II, Filed under Health Care

On May 12, 2014, the Office of Inspector General (OIG) published a proposed rule that would amend the civil monetary penalty (CMP) rules of the OIG to incorporate new CMP authorities, clarify existing authorities, and reorganize regulations on civil money penalties, assessments, and exclusions. The proposed regulations are intended by the OIG to update regulations to codify the changes made by the Affordable Care Act of 2010 (ACA). The ACA significantly expanded the OIG's authority over health care fraud and abuse in federal health care programs. The proposed regulations effectuate and define the OIG's expanded fraud and abuse authorities covering the following: Failure to grant OIG timely access to records; Ordering or prescribing while excluded; Making false statements, omissions, or misrepresentations in an enrollment application; Failure to report and return an overpayment; and Making or using a false record or statement that is material to a false or fraudulent claim. In addition, the OIG proposes new regulations that define the method for calculating overpayments that are made where a provider employs an excluded party. There is currently some degree of uncertainty on how a provider should calculate an overpayment when the excluded party is not a "directly billing" provider. The OIG proposal would be consistent with the "cost of employment" method that is suggested in the Revised Self Disclosure Protocol that was released by the OIG on April 17, 2013.

CMS Releases the First Comprehensive Overhaul of Nursing Home Conditions of Participation in Over 25 Years

Posted on November 2, 2016, Authored by John H. Fisher, II, Filed under Health Care

On October 4, 2016, the Center for Medicare and Medicaid Services (CMS) published a final rule to revise the requirements that Long-Term Care facilities must meet to participate in the Medicare and Medicaid programs. CMS states that the revisions to nursing home regulations are intended to reflect the substantial advances that have been made in the theory and practice of service delivery and safety. The revisions are part of efforts by CMS to achieve broad-based improvements in the quality of health care and in patient safety, while at the same time reducing procedural burdens on providers.  Whether the new regulations actually meet the last of these goals is open to question because the new regulations will require nursing homes to modify their policies, procedures and operations to meet these new Federal standards. The final regulations are the first comprehensive review and update to nursing home conditions of participation since 1991.  CMS cites significant developments and innovations in resident care and quality assessment practices and changes in the clinical complexity of nursing home residents since the last major regulatory revisions as providing significant reason to revise the regulations.  What resulted is a comprehensive revision of both the content and organization to the regulations that govern nursing facilities. Many of the revised requirements are aimed at aligning requirements with current clinical practice standards to improve resident safety along with the quality and effectiveness of care and services delivered to residents. The following contain a high level description of some major provisions of the new regulations.  Each of these areas contain significant new requirements and/or revisions to past requirements.  For more detail please consult the full regulations.  Some of the general areas covered by the new regulations include the following: Resident Abuse, Neglect and Exploitation.  Nursing facilities are now affirmatively required to report allegations of abusive conduct toward residents.  Facilities are also prohibited from employing individuals who have had disciplinary action taken against their professional license by a state licensure body as a result of a finding of abuse, neglect, mistreatment of residents or misappropriation of their property.  This standard will require nursing facilities to modify their employment screening requirements to assure that state past disciplinary records are obtained and reviewed prior to retaining staff. Admission, Transfer, and Discharge Rights.  The new regulations require that transfer or discharge be documented in the patient’s medical chart and that specific information be shared with the provider or facility who receives the transferred resident. Resident Assessments.  The new regulations clarify requirements for appropriate coordination of a resident’s assessment with the Preadmission Screening and Resident Review (PASARR) program under Medicaid. Comprehensive Person-Centered Care Planning.  A new section is added to § 483.21 which requires nursing facilities to develop and implement a baseline care plan for each resident.  The baseline plan must be developed within 48 hours of a patient’s admission and must include the instructions needed to provide effective and person-centered care meeting professional standards of quality care. A nurse aide and a member of the food and nutrition services staff are required members of the interdisciplinary team that develops the comprehensive care plan. Discharge Planning Process.  The new regulations require nursing facilities to develop and implement a discharge planning process that focuses on the resident’s discharge goals and prepares residents to be active partners in post-discharge care, in effective transitions, and in the reduction of factors leading to preventable re-admissions. Discharge planning requirements that were mandated under the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act) have also been integrated into discharge planning requirements. Quality of Care Requirements.  The regulations reiterate general quality standards that are required to be followed by nursing facilities.  Facilities must assure that each resident receive and the facility provide the necessary care and services to attain or maintain the highest practicable physical, mental, and psychosocial well-being, consistent with the resident’s comprehensive assessment and plan of care. Quality of Life.  Based on the comprehensive assessment of a resident, Facilities are required to ensure that residents receive treatment and care in accordance with professional standards of practice, the comprehensive person-centered care plan, and the residents’ choices. Physician Services.  The new regulations permit attending physicians to delegate dietary orders to qualified dietitians or other clinically qualified nutrition professionals and therapy orders to therapists. Nursing Services.  Competency requirements have been added for determining the sufficiency of nursing staff.  Nursing staffing requirements are based on a facility assessment and must include factors such as the number of residents, resident acuity, range of diagnoses, and the content of individual care plans. Behavioral Health Services.  New requirements are added focusing on the need to provide the necessary behavioral health care and services to residents, in accordance with their comprehensive assessment and plan of care.  Changes are made to minimum educational requirements for a social worker. Pharmacy Services.  Pharmacists are required to review a resident’s medical chart during each monthly drug regimen review. Existing requirements regarding ‘‘antipsychotic’’ drugs have been adjusted to refer to ‘‘psychotropic’’ drugs and define ‘‘psychotropic drug’’ to include drugs that affect brain activities associated with mental processes and behavior. Several provisions have been added that are intended to reduce or eliminate the need for psychotropic drugs, if not clinically contraindicated. Dental Services.  Skilled nursing facilities and nursing facilities are prohibited from charging Medicare residents for the loss or damage of dentures that is determined to be the responsibility of the facility.  Facilities are required to implement policies that detail when the loss or damage of dentures is the facility’s responsibility. Nursing facilities are also required to assist residents who are eligible to apply for reimbursement of dental services under the Medicaid state plan. Except in extraordinary circumstances, a referral for lost or damaged dentures must be made within 3 business days. Food and Nutrition Services.  Facilities are required to provide residents with a nourishing, palatable, well-balanced diet that meets their daily nutritional and special dietary needs.  Preferences of each resident must be taken into consideration. Facilities are required to employ sufficient staff with the appropriate competencies and skills sets to carry out the functions of dietary services. This includes the requirements that a director of food and nutrition services be designated. Facility-Wide Assessment Requirement.  Facilities are required to conduct, document, and annually review a facility-wide assessment to determine what resources are necessary to care for residents competently during both day-to-day operations and emergencies. Facilities are required to address in the facility assessment the facility’s resident population (that is, number of residents, overall types of care and staff competencies required by the residents, and cultural aspects), resources (for example, equipment, and overall personnel), and a facility-based and community-based risk assessment. Binding Arbitration Agreements. Facilities are prohibited from entering into binding arbitration with a resident or their representative until after a dispute arises between the parties. This requirement essentially prohibits the use of pre-dispute arbitration requirements. Quality Assurance and Performance Improvement (QAPI).  All LTC facilities are required to develop, implement, and maintain an effective comprehensive, data-driven QAPI program that focuses on systems of care, outcomes of care and quality of life. Infection Control.  Facilities are required to develop an Infection Prevention and Control Program (IPCP) that includes an Antibiotic Stewardship Program and designate at least one Infection Preventionist (IP). Compliance and Ethics Program.  Nursing facilities are required to have in effect a compliance and ethics program that has established written compliance and ethics standards, policies and procedures that are capable of reducing the prospect of criminal, civil, and administrative violations in accordance with section 1128I(b) of the Act.  These provisions implement the requirement under the Affordable Care Act which required CMS to develop the requirements for nursing home compliance programs. Physical Environment.   Facilities that are constructed, re-constructed, or newly certified after the effective date of this regulation may accommodate no more than two residents in a bedroom and contain a bathroom equipped with at least a commode and sink in each room. Training Requirements.  New provisions are added that define what constitutes an effective training program for all new and existing staff, individuals providing services under a contractual arrangement, and volunteers, consistent with their expected roles.

Self Disclosure and Repayment: Employment of Excluded Party

Posted on May 19, 2014, Authored by John H. Fisher, II, Filed under Health Care

One area it is relatively common to find compliance infractions involves the employment of individuals by a health care provider who may be listed on the list of parties who are excluded from federal health care programs. Most providers have integrated routine background checks and excluded party searches into their hiring program. Occasionally, an excluded individual may slip past, only to be discovered on a subsequent routine follow-up database search. It is recommended that providers search the OIG list on a monthly basis for all employees. Payment may not be made under a federal health care program for items or services "furnished, ordered, or prescribed" by excluded individuals or entities. If a provider employs an excluded provider and receives reimbursement for his or her services, the reimbursement received will be an overpayment under federal law. Additionally, receipt of such reimbursement can involve civil monetary penalties. If a provider discovers that an excluded individual has been employed, the usual course is to make a self disclosure to the federal government using existing self-disclosure protocols. In most cases, using the self-disclosure protocol will minimize the financial and other risks to the provider who employed the excluded individual. The decision and method of making the self disclosure are very important and require assistance from experienced legal counsel. This is not an area where providers should "go at it alone." When making a self disclosure, the provider is required to identify the total amounts claimed and paid by the federal health care programs for those items or services that were provided by the excluded individual. When the excluded individual generates specific billings attributable to his or her services, identifying the amount of overpayment is fairly straightforward. It is more difficult to identify the amount of overpayment when there is no specific billing attributable to the excluded provider. Revised self-disclosure protocols which were issued by the Office of Inspector General acknowledge the difficulty that arises where there is no direct billing attributable to an excluded provider. Example of typical situations include services furnished by nurses, respiratory therapists, and billing and other administrative personnel, the damages amounts can be difficult to quantify. In cases such as those identified above, the OIG suggests the provider utilize the total costs of employment or contracting the excluded party for the period of time during the exclusion to estimate the value of the items and services provided by that excluded individual. Total costs of employment are then multiplied by the percentage of revenues attributable to federal health care programs to determine the amount of costs that are properly allocated to federal health care programs. In the general, the OIG will look at the resulting amount as a proxy for the amount of damages to the federal health care programs resulting from the employment of the excluded individual for purposes of working out a self disclosure settlement. Additional details are provided on the various elements that go into this calculation. As in all cases involving self disclosure, the disclosing party should undertake a complete investigation of the situation prior to making a disclosure. The compliance file should be appropriately documented. Consideration should be given to whether the investigation should take place under the attorney-client privilege. These considerations are beyond the scope of this article as are the other details involved in the investigation process or the self-disclosure process. Providers should be mindful of the fact that employment of an excluded party is a serious compliance situation. The issue should be handled judiciously. In most, if not all cases, self disclosure is the best route for providers to take when it is discovered that an employee has been excluded. The strategy for making the self disclosure and the approach taken by the provider will greatly impact the outcome.

CMS Changes Meaningful Use Timeline

Posted on May 21, 2014, Authored by John H. Fisher, II, Filed under Health Care

The Centers for Medicare and Medicaid Services (CMS) issued a new proposed rule today that changes the timeline for meaningful use electronic health record (EHR) technology. The new proposed rule would be consistent with previous CMS announcement regarding extension of Stage 2 and Stage 3 timelines. The proposed rule recognizes the difficulties that software vendors appear to be having making changes to their software platforms to accommodate upgrades to Stage 2 criteria. The proposed rule gives providers some degree of flexibility in meeting meaningful use criteria. Providers are permitted to use criteria from 2013 upgrade enhancements, to attest to compliance with the 2014 criteria. The proposed rule would also add an additional year to the Stage 2 phase and would delay the commencement of Stage 3 until 2017. The proposed rule is the most recent step that CMS has taken in recognition of some of the difficulties that are being encountered by software vendors. Recent action by CMS also recognized a possible exemption that providers could use if they are delayed in implementing meaningful use as a result of vendor delays.

HHS Releases Inflation Adjusted Federal Civil Penalties

Posted on December 1, 2016, Authored by John H. Fisher, II, Filed under Health Care

The Department of Health and Human Services has issued new interim final rules to adjust a variety of Federal Civil Penalties for inflation.  The Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 required the agency to promulgate a “catch-up adjustment” in these penalties through an interim final rule.  Additionally, HHS agencies were instructed to update their civil monetary penalty-specific regulations to include a cross-reference to the new adjusted penalty amounts. Many of the upward adjustments in civil penalties were substantial because they had not been updated in a number of years.  For example, maximum “per claim” penalties under the False Claims Act were increased from $11,000 per claim to nearly $25,000 per claim.  Increases of this nature substantially increase the stakes for health care providers and other businesses that make claims to the Federal government.  In areas such as health care, where numerous claims may be submitted every day, the calculation of penalties can quickly become astronomical.  This provides more impetus on providers to actively operate compliance programs to identify potential False Claims Act risks and fashion corrective actions where warranted. Ruder Ware has created a table of revised Federal Penalties which can be downloaded in PDF format.

False Claims Act Basics – Known Overpayment Becomes False Claim

Posted on November 11, 2016, Authored by John H. Fisher, II, Filed under Health Care

The Federal False Claims Act (“FCA”) provides a very strong enforcement tool to the federal government.  The FCA also provides the opportunity for whistleblowers to bring “qui tam” cases and collect a portion of the recovery where false claims are proved against the federal government. FCA recovery was originally intended to provide a remedy against unscrupulous civil war profiteers.  Penalties were enhanced when the FCA was dragged off the shelf in the 1980s in reaction to some of the overpricing of government contracts selling supplies to the federal government. Recently, the FCA has become one of the government’s prime enforcement tools to deter fraud in the federal health care programs. Historically, the FCA has been available when a health care provider falsely bills for covered services.  Triple damages and a $22,000 per claim penalty provide a strong deterrent in an industry that may make hundreds of claims per day. Recent legislation has expanded FCA liability to claims that the provider knows resulted in an overpayment if the provider does not make repayment within 60 days of obtaining knowledge of the wrongfully billed amount.  Some of the potential applications of this that makes a simple overpayment a false claim has generated much discussion among health care lawyers and compliance officers alike.  An organization deemed to have knowledge of the overpayment has been the subject of much speculation due to the ambiguities that exist in the new rule. It may be helpful to frame this discussion by touching on the general requirements that must be met in order to prove any claim under the Federal False Claims Act.  The three general elements that must be proved include: The submission of a claim to the federal government. In the health care context, the claim will normally be submitted to a government health program. The claim must be false. The claim must have been submitted knowingly.  Actual knowledge that the claim was false will always prove the knowledge requirement.  However, a FCA case can also be built around the submission of a claim with “reckless disregard” for its truth or falsity. Recent health care legislation, in particular the Fraud Enforcement Recovery Act of 2009, greatly expanded the scope of the FCA.  The FCA is now applicable to a wide variety of situations that would not have previously been covered.  For example, the failure to return an identified overpayment now becomes a false claim.  The potential remedies that a provider may face for not promptly repaying known overpayments creates a strong incentive for health care providers to monitor and audit their claims and set up processes that will catch improper billing that could ripen into the FCA. Reckless disregard or hiding your head in the sand like an ostrich is no longer a way to avoid massive potential FCA liability.  Compliance programs need to be amended appropriately to address the new potential legal and financial risk presented by these new penalties.  The compliance program should require active identification of potential risk areas.  Based on identification of risks, an audit program should be implemented to identify any potential compliance infractions.  Once identified, affirmative actions should be taken to correct the situation, make appropriate repayment, and/or self-disclose the violation to the government.

Provider Self-Disclosure Decisions – Voluntary Disclosure Process

Posted on November 11, 2016, Authored by John H. Fisher, II, Filed under Health Care

The decision whether or not to voluntarily disclose non-compliance to the government can be very difficult.  Not every case is clear. Clearly not every situation where there has been a billing error amounts to fraud or wrongdoing requiring use of the self-disclosure protocol.  Many overpayments that are identified through audit can be dealt with at the intermediary level.  Where investigation raises questions about whether incorrect bills are “knowingly” submitted, the self-disclosure process may provide some mitigation of potential loss.  Situations where the provider perhaps “should have known” raise more difficult issues of analysis. The Office of Inspector General’s self-disclosure process is available when there is a potential violation of Federal law that could result in the imposition of Civil Monetary Penalties (CMP).  A simple determination that a billing error may have led to an overpayment is generally not covered by the protocol.  It is only when the error presents potential CMP’s that the protocol can be used to self-disclose the violation to the Federal government.  For example, self-disclosure might be considered where an overpayment is not repaid within 60 days after discovery by the provider or where there is a violation of the anti-kickback statute discovered. The situation is also complicated because a potential whistleblower may view a situation much differently than a provider who finds what it believes to be an innocent mistake through the audit process.  A provider may sincerely believe that there was no “wrongdoing” and that a simple mistake has been identified.  Finding such a mistake may actually be evidence the provider’s compliance efforts are working.  On the other hand, there is a whole legal profession out there now that is advertising for people to come forward as whistleblowers.  With potential recovery under the False Claims Act of three times the overpayment plus up to $22,000 per claim, whistleblower lawyers have strong incentive to attempt to turn what the provider believes to be an innocent mistake into a false claim.  The damage calculation creates a big payday for whistleblower plaintiffs and their lawyer, who take these cases on a contingency fee basis. Generally speaking when errors are discovered the provider’s best bet is to be forthright and deal with the matter “head on.”  A complete internal investigation should be conducted to determine the precise nature of the issues and to identify the extent of wrongdoing.  Based on the outcome of the investigation, the provider can determine whether a simple repayment can be used or whether there may be reason to go through the formal self-disclosure process. Anyone who has worked with reimbursement rules will realize that payment policies, rules and regulations are not always clear.  It is often difficult to determine whether there is even a violation of applicable rules or whether an overpayment actually exists.  Legal ambiguities further complicate the self-disclosure decision.  The precise nature of any legal ambiguities involved in the specific case need to be completely documented.  If a decision is made that there has been no wrongdoing, the legal analysis should be laid out in writing and in detail and a reasonable judgment should be made regarding the interpretation of applicable legal standards.  If self-disclosure is made in situations involving legal ambiguities, those ambiguities should be explained in detail as part of the self-disclosure. In the end, a provider facing potential self-disclosure must follow a reasonable process to make a reasoned decision in the face of significant risk and uncertainty. Perhaps most importantly, it is never a good alternative to pretend the situation will never be discovered or brought to light.  These cases can arise in strange and unexpected ways.  It is best to assume a discovered compliance violation will eventually be brought to light.  In most cases it is advantageous for the provider to affirmatively bring the matter forward rather than waiting for the government or a whistleblower to bring a claim.  When that happens, it is much more difficult to resolve the issue.

Messenger Model Contracting - A Structure of the Past

Posted on May 19, 2014, Authored by John H. Fisher, II, Filed under Health Care

There are many organizations around the country that use a messenger model as a managed care contracting mechanism. Under the messenger model, an intermediary is used to shuttle offers from managed care organizations to individual providers who sign on to the network. Messenger model networks should not be confused with clinically integrated systems. Clinical integration requires the network entity to perform a much more robust range of services and requires providers to make a much more serious commitment to comply with system standards. In fact, messenger model networks are inherently non-integrated and are normally used because of perceived difficulty and expense involved in the clinical integration process. Messenger model networks are largely ineffective at achieving quality or efficiency enhancements, largely due to the very limited activity that the messenger can undertake. In order to remain compliant with antitrust laws, the messenger can do little more than convey offers from payors to network providers. A messenger cannot become involved in negotiation of fees on behalf of providers. The limited function of the messenger creates a very real risk of violating the antitrust laws. Over time, a messenger may begin to push the envelope and cross over into performing activities that may cause a per se violation of the antitrust laws. Even if the messengers procedures are carefully established at inception, changing circumstances or lack of ongoing legal support may lead to subtle changes in activity over time. These issues tend to not arise until there is an impasse with a payor or someone is adversely impacted by the network. By that time, there could be a very long history of noncompliant messenger activity. Unfortunately, inappropriate activities by the messenger can have a negative legal impact on the individual provider members. After all, the crux of the antitrust laws is focused on agreements between competing providers (i.e., competing network physicians). For these reasons (along with others), it is generally acknowledged that the messenger model is a structure of the past. As payment mechanisms shift away from traditional fee for service payment toward global, bundled, episodic, shared saving, and even capitated payments, the messenger model becomes even more unworkable and obsolete. For this reason, most messenger models are now exploring ways to achieve higher levels of clinical integration between providers. Ruder Ware is actively involved in advising provider groups on the transition to clinical integration.

Lincoln’s Law Becomes Even More Absurd When Applied to the Health Care Industry

Posted on November 3, 2016, Authored by John H. Fisher, II, Filed under Health Care

When Congress originally passed the False Claims Act (31 USC §§ 3729-3733), no one had the health care system in mind.  The False Claims Act was also commonly referred to as the “Lincoln Law”.  The original law was focused on unscrupulous vendors who provided overpriced and often faulty supplies to the military during the Civil War.  In modern times, the False Claims Act has been commonly applied when claims are made under Federal health care programs.  The application of the law that was originally intended to penalize war profiteers leads to draconian results when applied to the health care industry where numerous smaller claims are made by a provider every day.  However, because this law has become a significant source of revenue for the Federal government, we are not likely to see any politicians running to adjust the law to make it consistent with the realities of the modern health care system. The Lincoln Law was unique in several ways.  The law created “qui tam” rights that permit individuals to bring suit alleging false claims and to retain a portion of the award.  The amount of potential award available to a qui tam claimant depends on whether the government chooses to take over the case after it is brought.  With Federal remedies of nearly $22,000 per claim, potential claimants have a real chance for a payday.  In fact, private litigants are often even more inflexible than the Federal government when it comes to settling a potential fraud claim. The False Claims Act was strengthened in 1986 in response to some of the much publicized $1,000 toilet seats and other abuses with respect to companies supplying the United States military.  The 1986 amendments to the False Claims Act provided for treble damages plus civil penalties of between $5,000 and $11,000 per claim.  These legislative changes were intended to add real incentive for “qui tam” litigants to bring fraud claims.  Just a few months ago the per claim penalty under the False Claims Act was increased to a minimum of $11,000 and a maximum of nearly $22,000. The health care industry was never the real target of the False Claims Act.  In fact, when the original “Lincoln Law” was passed in the 1860’s, there was no federal health care program in existence.  From the inception of the False Claims Act through the 1986 amendments, the primary target had been the suppliers to the defense industry.  The defense industry generally makes claims on a monthly or other periodic basis for large amounts of supplies.  Although the 1986 amendments added substantial penalties for making false claims, the impact on the defense industry does not come close to matching the impact on health care providers. In health care, a single hospital may make hundreds of claims to the federal government per day.  False claim allegations can cover a number of years, greatly increasing the number and value of claims that may be at issue.  When treble damages plus $11,000 to $22,000 per claim are applied on top of the actual amount of a “fraudulent” claim, the obligation amount can become staggering. When coupled with new regulations that impute False Claims Act liability based on the failure to repay an overpayment, the result can be really quite absurd and greatly disproportionate to the level of culpability involved.  For example, a simple overpayment created by a routine billing error that is not properly identified can result in potential False Claims Act liability in the millions of dollars.  Under new Federal law, failure to repay a known overpayment within 60 days creates a False Claim.  However, actual knowledge is not required.  Identification of the overpayment can be imputed if the provider should have discovered the overpayment. Even though the False Claims Act was not originally designed to target the health care industry, there does not seem to be any momentum toward mitigating these extreme results.  To the contrary, the government is quite content to leave these disproportionate penalties in place as part of its effort to reduce cost of health care (and to generate additional revenues) by assessing astronomical fines against health care providers and to hold these penalties over their heads to force health care providers to take extreme actions to prevent compliance problems.  The government is taking a “return on investment” approach to health care fraud enforcement.  The False Claims Act allows the government to put its thumb on the scale in the “return on investment” game.  The qui tam provisions provide the government with “quasi agents” who may be disgruntled employees or others who can scout out potential claims, bring them to the government's attention, and take a piece of the financial reward. Providers have only one real way to reduce the disproportionate impact of the False Claims Act on their operations.  This is to create an effective compliance program that proactively detects problems so they can be addressed and corrected before they create excessive risk.  Compliance programs are an outgrowth of the federal sentencing guidelines that permit reduced corporate penalties for fraud if an “effective” compliance program will actually reduce the risk of a violation occurring or depending because it forces the organization to proactively look for compliance problems and correct them before they become insurmountable.  An effective compliance program will also include regular training to staff which also reduces the risk of compliance problems.

Provider Self Disclosure Process

Posted on May 22, 2014, Authored by John H. Fisher, II, Filed under Health Care

A growing area of the health care legal practice involves counseling clients on issues that could require self disclosure under OIG or CMS procedures. The Office of Inspector General has procedures that a provider may follow to disclose possible violations of the Anti-Kickback Statute or other federal laws. Providers have the opportunity to avoid much more serious consequences that could arise from federal prosecution or civil action. The Center for Medicare and Medicaid Services has a similar procedure that can be used to disclose and settle violations of the federal Stark Law There are a number of factors that providers must consider when deciding whether to use either self disclosure process. The first factor is always to determine whether a violation of any applicable law has occurred. The answer to the threshold question is oftentimes not as clear as one would hope in situations that can result in such serious consequences. Even if the compliance problem is clear, it is often difficult to determine the extent of the problem or the amount of overpayment that might be at issue. If you encounter a situation that you believe may involve a compliance infraction, it is best to obtain professional advice on the process to follow that will reduce your risk of exposure. Not every error in billing requires you to use the self disclosure process. Knowing when the formal process should be used can be difficult and generally requires a documented investigation of all facts and circumstances. I have posted a number of blog articles on our health law blog which you can read to get further background on the self disclosure process. Links to some of my past articles on this topic follows: New 2013 Self Disclosure Protocols OIG Self Disclosure Protocol Revisions Explained Voluntary Self Disclosure Decisions Can Be Complicated Stark Law Self Disclosures Through 2013 Stark Law Period of Disallowance

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