Below is a brief summary of several recent healthcare fraud and compliance developments which are significant, as well as practical recommendations for hospitals as a result.
Revised Corporate Charging Guidelines
The Department of Justice (“DOJ”) recently issued a revised version of its corporate charging guidelines, which govern how federal prosecutors prosecute companies, including hospitals. The revisions dramatically change prior DOJ practices.
Prosecutors can no longer request that organizations disclose attorney work product materials or waive attorney client privilege, and cannot consider whether an entity has disclosed such materials in evaluating whether it has “cooperated” with a DOJ investigation.
The Guidelines also prohibit prior government practices which discouraged formal, written joint defense agreements, and which allowed the DOJ to consider whether an organization is advancing defense costs of its employees.
The change to the DOJ Guidelines should give healthcare organizations more comfort in conducting internal investigations and exchanging information with other subjects or targets of government investigations.
The Guidelines also incorporate the important requirements, previously contained only in internal DOJ memos, instructing prosecutors to consider the effectiveness of an organization’s compliance program, and the extent of board involvement, when investigating and prosecuting corporate misconduct.
Staten Island University Hospital Settlement
Staten Island University Hospital (“SIUH”) agreed to pay the federal government and the State of New York a total of $88.9 million to settle claims that it violated both the federal and state false claims acts. The settlement is the largest ever for an individual hospital.
The settlement addresses allegations made by whistleblowers, as well as issues self-reported by the hospital. Of the total settlement, $37 million covers allegations that SIUH inflated the number of medical residents on its cost reports and improperly billed Medicare and Medicaid for providing psychiatric treatment to patients in unlicensed beds.
In addition, $25 million covers allegations in a qui tam suit filed by the widow of an SIUH cancer patient who claimed that the hospital fraudulently billed Medicare for stereotactic radiosurgery treatments, using incorrect billing codes to improperly obtain Medicare reimbursement.
Another $26 million went to settle allegations made by SIUH’s former Director of Chemical Dependency Services that the hospital submitted fraudulent claims to Medicare and Medicaid for inpatient substance abuse detoxification treatment provided to patients in 12 beds which were located in a locked, concealed wing of the hospital.
Contractual Joint Venture Advisory Opinion
The OIG recently issued an advisory opinion regarding a proposed block lease by urology groups of space, equipment and personnel to provide IMRT radiation therapy, from a physician practice that provides IMRT in a freestanding facility. The urology groups would not directly perform the actual treatments, but they would bill for both the professional and technical components of the IMRT treatments.
Although the urology groups would commit very little resources, they could realize profits from the IMRT treatments, and could ensure such profits by referring to the facility (and recommending IMRT to patients over other treatment options).
The OIG views the arrangement as a suspect contractual joint venture as outlined in its 2003 Special Advisory Bulletin (which focuses on providers expanding into a new service line which is dependent on their own referrals).
These developments serve as a reminder that enforcement activities directed at health care providers are not slowing down. To reduce enforcement risks, hospitals should consider the following:
1. Conduct annual internal audits of the “effectiveness” of your compliance program, identifying areas requiring improvement, and present a report of such audits to the Board.
2. At least once every 2-3 years, have an independent, experienced outside firm audit the “effectiveness” of your compliance program, and present a report of such audits to the Board, along with a plan to implement any recommended modifications.
3. Periodically review all arrangements with physicians and other healthcare providers to ensure their compliance with federal and state law (with a focus on the commercial reasonableness and fair market value of physician contracts, and also any arrangements involving a new service line).
4. Each year, conduct billing audits of:
(i) all new services;
(ii) your facility’s top 10-20 DRGs/APCs (both in terms of volume and revenues); and (iii) services which the OIG and other enforcement agencies have identified as areas of focus.
5. With regard to billing audits and contract reviews, to the extent issues are identified which require further investigation at the direction of legal counsel, such investigations can be protected by the attorney-client privilege.
6. Keep in mind that all persons affiliated with your organization – nurses, physicians, managers and vendors – are potential whistleblowers who have an incentive to disclose misconduct that may be occurring at your facility. Thus, encourage prompt reporting to the compliance department.
© Sills Cummis & Gross P.C.© Copyright 2013 Sills Cummis & Gross P.C.