CodeMap® Compliance Briefing: 11/21/2008
Recently, the Office of Inspector General of HHS (OIG) has reported an ever-increasing number of enforcement actions, settlements, and penalties arising from the commission of prohibited conduct by health care providers. Many of these enforcement actions are resulting from conduct that we often identify and discuss in our briefings, teleconferences, and publications. Today, we will review the OIG's use of civil monetary penalties, one of the agencies primary enforcement tools, as well as examine the types of activities that have become the targets of the OIG's investigations and subsequent enforcement actions. As always, please email any questions, comments, or suggestions for future CodeMap Compliance Briefings.
Gregory Root, Esq.
Civil Monetary Penalties
by: Gregory Root, Esq.
The Social Security Act and accompanying regulations allow the OIG to seek civil monetary penalties for a long and varied list of prohibited conduct (42 CFR §1003.102). These penalties range from $5,000 to $100,000 for each wrongful act. As is typical of most health care enforcement actions, providers often choose to settle allegations of wrongdoing to avoid full assessment of the potential fines and penalties. Unfortunately, the significant amount of most civil monetary penalties places the settling party in a poor negotiating position. Examples of activities that may give rise to the imposition of civil monetary penalties include:
the submission of false or fraudulent claims to federally funded health care programs;
the employment of individuals that been convicted of a health care crime, disbarred, or excluded from participation in the Medicare and/or Medicaid programs;
violations of federal anti-kickback provisions;
violations of the Stark II Self-Referral Prohibitions; and
the submission of claims for medically unnecessary tests or services.
Employing Sanctioned Individuals
Hospitals and other providers that employ individuals that have been disbarred or excluded from participation in federal health care programs face significant civil monetary penalties. As the following two cases demonstrate, all providers should effectively screen employees as part of the their ongoing compliance programs.
In July 2008, the OIG reported that a well-known hospital in New York had agreed to pay $132,000 to settle allegations the hospital had employed three individuals that it knew or should have known were excluded from participation in federal health care programs. During the same month, the OIG also reported a settlement with a southern Illinois health system that allegedly employed one individual that the system knew or should have known was excluded from participation in federal health care programs. The health system paid dearly by agreeing to a $562,021 settlement.
Violations of Anti-Kickback Provisions
Most providers are aware of the Federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b). To review, the anti-kickback statute prohibits anyone from either paying or being paid any form of compensation in exchange for referrals of any patients or specimens that are covered by a federally funded health care program (e.g., Medicare or Medicaid). As the next case demonstrates, the civil monetary penalty law provides for significant sanctions for providers that violate federal anti-kickback provisions.
All compliance programs should include numerous safeguards to prevent the submission of claims for tests and/or services that are medically unnecessary. Without these safeguards, providers may be exposed to significant liability due to the civil monetary penalties law. As this next case demonstrates, submitting claims to Medicare for medically unnecessary services can be very expensive.
In May of this year, a South Carolina health system agreed to pay $780,000 to settle allegations that the provider organization violated anti-kickback provisions. The government alleged that the health system implicated these provisions by routinely providing information systems services and support to referring physician practices. The arrangements did not achieve safe harbor protection because the health system provided the services without written contracts and did not bill or collect fair market fees from the referral sources.
Violations of the Stark II Self-Referral Prohibitions
Likewise, the civil monetary penalties law provides for significant sanctions against providers that violate the Stark II Self-Referral Prohibitions. As a reminder, Stark II prohibits physicians from referring patients of Medicare and/or Medicaid to providers of designated health services, if the physician or an immediate family member maintains a financial relationship with the designated health service provider (42 U.S.C. § 1395nn).
In August 2008, the OIG announced it had reached a settlement with a Florida clinical laboratory and a Florida physician for alleged violations of Stark II. The arrangement between the physician and the laboratory ran afoul of Stark II because the physician's brother owned the laboratory. As part of the settlement, the physician agreed to pay $100,000.
Submitting Claims for Medically Unnecessary Services
In one of the bigger settlements of 2008, the OIG reported that an Arkansas hospital agreed to pay $1,142,973 to settle allegations of submitting claims for medically unnecessary hospital services.
It is important to note that all the above cases, as well as many others, were settled in this year alone. Also remember that in addition to the hefty penalties authorized by the civil monetary penalty law, the OIG also has the ability to exclude providers from participating in federally funded health care programs.