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State and federal regulators nationwide are combating health care fraud and abuse with heightened rigor. One of the growing hot-button enforcement areas is Medicaid program compliance.
This Update provides a summary of some recent developments which highlight the government’s focus on Medicaid compliance issues, and offers practical recommendations for hospitals to identify and prevent potential Medicaid compliance issues.
New Jersey False Claims Act and Office of Medicaid Inspector General
New Jersey recently enacted its own state-level False Claims Act (the “NJFCA”). The NJFCA mirrors the Federal False Claims Act by providing for treble damages and rewarding and facilitating qui tam actions for false or fraudulent Medicaid claims. The enactment of the NJFCA will likely entitle New Jersey to receive 10% of the federal portion of Medicaid recoveries under the Federal Deficit Reduction Act. Therefore, there are strong incentives for both qui tam plaintiffs and New Jersey’s Attorney General’s Office to pursue alleged Medicaid fraud.
New Jersey has also postured itself to more aggressively combat Medicaid fraud through its recent appointment of its first ever Medicaid Inspector General, who will oversee New Jersey’s Office of Medicaid Inspector General. This office is charged with ensuring the integrity of the Medicaid program by preventing and investigating Medicaid fraud and abuse, and recovering improperly obtained Medicaid funds from providers. It is likely that the New Jersey office will look to other states – such as New York (see below) – for guidance on enforcement initiatives and priorities.
New York State OMIG 2008-2009 Medicaid Work Plan
The New York Office of the Medicaid Inspector General (the “NYOMIG”) recently issued its Work Plan for combating Medicaid fraud. It involves extensive provider audits, including a review of provider billing practices and internal compliance efforts.
The NYOMIG will also collect and analyze data in order to identify other practices that may lead to Medicaid overpayments. The NYOMIG will target improper provider billing practices and arrangements that violate the Stark law and the Anti-Kickback Statute, and plans to scrutinize the following areas relating to hospitals:
• ambulatory surgical services provided in hospitals, to ensure that documentation justifies performance of the procedures in an ambulatory setting;
• hospitals’ financial records, to ensure that Medicaid is a payor of last resort and that hospitals pay back to Medicaid any reimbursement received from other payors for the same services;
• uncompensated care, to determine whether DSH payments were appropriately claimed and paid; and
• hospital-based physician compensation arrangements -- focusing on both (i) duplicate payments for direct patient care services, and (ii) the purpose and reasonableness of administrative services provided by physicians.
State MFCUs Recover Over $1.1 Billion in 2007
In its annual report on State Medicaid Fraud Control Units (“MFCUs”), the federal Office of the Inspector General (the “OIG”) stated that recoveries by all state MFCUs exceeded $1.1 billion dollars for fiscal year 2007. This figure has grown steadily since 2004, when the total recoveries were approximately $572 million.
OIG Supplements Nursing Facility Compliance Program Guidance
The Supplemental Guidance recently issued by the OIG for nursing facilities expands on several existing OIG concerns, including:
• arrangements where goods or services are provided to a potential referral source at less than fair market value; and
• sham physician services arrangements.
In addition, the Supplemental Guidance identifies a new area of OIG concern regarding improper reserve bed arrangements between hospitals and nursing facilities. The OIG is concerned about payments from a hospital to a nursing facility that are:
• more than the actual cost to the nursing facility of holding an empty bed;
• made for the nursing facility’s “lost opportunity”; and/or
• for more beds than the hospital legitimately needs.
Although the Supplemental Guidance is geared towards nursing facilities, reserve bed arrangements implicate hospitals, and the other two issues apply equally to hospitals.
Practical Recommendations
These enforcement developments emphasize the need for hospitals to implement measures to ensure that their arrangements and operations comply with Medicaid rules. In this regard, hospitals should consider the following practical compliance recommendations:
• Review and update the hospital’s compliance program policies and audit areas to address the Medicaid issues referenced above. Audit these areas and take internal corrective actions where necessary. Document all such efforts.
• Ensure that hospital personnel are trained on Medicaid compliance issues, such as those identified above, and document all such efforts.
• All hospital services arrangements (including physician agreements) should:
(i) be set forth in a written contract with fair market value compensation;
(ii) involve legitimate services that are actually provided and documented (i.e., recorded in logs);
(iii) not be tied in any way to the volume or value of referrals;
(iv) be reviewed periodically by an independent consultant to confirm fair market value; and
(v) be reviewed on an ongoing basis, and modified if necessary, to ensure that they comply with any amendments to the Stark or fraud and abuse laws.
© Sills Cummis & Gross P.C.
© Copyright 2012 Sills Cummis & Gross P.C.About the Author
