OIG and CMS Voluntary Self Disclosures: Weighing the Risks and - - PowerPoint PPT Presentation

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Presenting a live 90-minute webinar with interactive Q&A

OIG and CMS Voluntary Self Disclosures: Weighing the Risks and Rewards of Self Reporting

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific THURSDAY, OCTOBER 1, 2015

Samuel C. Cohen, Esq., Arent Fox, Washington, D.C. Anjali N.C. Downs, Esq., Epstein Becker and Green, Washington, D.C. Albert W. Shay, Partner, Morgan Lewis & Bockius, Washington, D.C.

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OIG and CMS Voluntary Self- Disclosures

Weighing the Risks and Rewards of Self Reporting

Presented by

Albert W. Shay Partner, Morgan Lewis ashay@morganlewis.com (202) 739-5291 Anjali N.C. Downs Associate, Epstein Becker Green adowns@ebglaw.com (202) 861-1899 Samuel C. Cohen Associate, Arent Fox samuel.cohen@arentfox.com (202) 857-6322

6

CMS Self-Referral Disclosure Protocol (“SRDP”)

7

• Historically, CMS had limited authority to compromise
• r waive physician self-referral sanctions (or any other

claims liability) under the Stark Law

• Affordable Care Act significantly expanded CMS

authority and required the Secretary to create a Medicare self-referral disclosure protocol (ACA§6409)

• SRDP posted on CMS web site on September 23, 2010;

revised May 6, 2011

• http://www.cms.gov/PhysicianSelfReferral/65_Self_Referral_Disclosure_P

rotocol.asp#TopOfPage

• https://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral

SRDP Basics

• Applicable only to physician self-referral violations
• Does not supersede OIG Self-Disclosure Protocol (SDP)
• Violations falling under both SRDP and SDP should be

disclosed only to OIG

• Comply with CIA/CCA disclosure obligations.
• For resolution of actual and potential violations of the

physician self-referral law

• Separate from the physician self-referral advisory
• pinion process.

8

SRDP Basics

• Open to all health care providers & suppliers
• Current government audit or investigation is not a bar to

disclosure under SRDP

• CMS reserves right to refer matters to OIG or to DOJ
• Stay of ACA§6402 overpayment return requirement

until settlement, withdrawal, or removal

• Do not make interim payments to CMS

9

SRDP Process

• Preparation of Materials by Disclosing Party
• Disclosure Submission (email, original, & one copy)
• Must submit electronically for automatic stay email
• Acceptance / Request for Additional Information
• Law enforcement screening process
• CMS Review & Assessment
• Settlement Process
• “Ability to pay” consideration

10

Tips on Disclosure Submissions

• CHOWs, Mergers, & Acquisitions
• Clearly Identify Timing Issues & Contact CMS
• Assignment of Provider Agreement
• Remember: Liability remains with Provider Agreement
• Provide a complete legal analysis for each disclosed

noncompliant arrangement/relationship

• Group noncompliant events (“Clean House” Disclosure)
• Provide certifications & supporting documentation

11

Tips on Disclosure Submissions

• Demonstrate cure or termination of noncompliant

arrangement/relationship

• Remember “period of disallowance” rules
• Provide an appropriate financial analysis
• Use definition of “Referral” at 42 C.F.R. § 411.351
• Provide amounts due and owing by (1) disclosed

arrangement/relationship; (2) referring individual/entity; and (3) year

• Describe methodology used; a comment about estimates
• See SRDP FAQs

12

SRDP – FAQs

• On May 17, 2012, CMS published four SRDP FAQs

addressing:

• “Look Back” Period
• Calculating Amount Due & Owning
• Calculating Total Remuneration
• Section 6402(a) of the ACA (60 day rule)
• SRDP FAQs (pdf): https://www.cms.gov/Medicare/Fraud-and-

Abuse/PhysicianSelfReferral/Downloads/FAQsPhySelfRef.pdf

• Physician Self-Referral FAQs: https://questions.cms.gov/

13

SRDP – FAQs

• “Look Back” Period – Period during which the disclosing party may not

have been in compliance

• Calculating Amount Due & Owing – Will satisfy Section IV.B.2.a of

the SRDP by submitting a financial analysis setting forth total amount actually or potential due & owing for claims improperly submitted and paid within the time frame for reopening determinations at 42 C.F.R.§405.980(b)

• Calculating Total Remuneration – Will satisfy Section IV.B.2.c of the

SRDP by disclosing total remuneration received by a physician based upon the time frame for reopening determinations at 42 C.F.R.§405.980(b)

• 42 C.F.R.§405.980(b) – A contractor may reopen an initial

determination on its own motion within 4 years from the date of the determination for good cause

14

SRDP – FAQs

• Section 6402(a) of the ACA
• Combined with the Fraud Enforcement and Recovery Act of 2009

(“FERA”), creates FCA liability for knowingly retaining (i.e., not reporting and returning) any overpayment within 60 days of the date on which the

• verpayment was identified
• Proposed rule implementing Section 6402(a) included proposed revisions

to the reopening regulations

• “However, until the proposed rule [see 77 FR 9179] is finalized, providers

and suppliers of services disclosing actual or potential violations . . . under the [SRDP] may perform the financial analyses required under section IV.B.2 of the SRDP using the applicable time frame and requirements for reopenings established in the existing reopening regulations at 42 C.F.R. § 405.980(b).”

15

Resolutions Under the SRDP

• CMS is not bound by disclosing party’s conclusions
• CMS is not obligated to resolve a disclosure in any

particular manner

• No appeal rights for disclosed claims resolved through

the SRDP

• If removed/withdraw, disclosing party may appeal any

subsequent overpayment demand

• Resolutions are only of CMS authorities
• No CMP or FCA release via the SRDP

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Resolutions Under the SRDP

• Reductions are based on facts and circumstances of

disclosed actual or potential violation(s), including:

• The nature and extent of the improper or illegal practice
• The timeliness of the self-disclosure
• The cooperation in providing additional information related

to the disclosure

• The litigation risk associated with the matter disclosed
• The financial position of the disclosing party
• Should you make a settlement offer?

17

Number of Settlement under the SRDP by Year

• 2011: 3
• 2012: 14
• 2013: 24
• 2014: 24
• 2015: 4 (as of 9/16)
• Why such small numbers in 2015?

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Settled SRDP Disclosures

• Since establishing the SRDP, 69 settlements
• Average settlement by year:
• 2011: approximately $242,353 (but skewed)
• 2013: approximately $78,000
• 2013: approximately $195,000
• 2014: approximately $125,000
• 2015 (as of 09/16): approximately $200,000
• Largest Settlement: $584,700
• Smallest Settlement: $60.00
• More Information about SRDP settlements:

https://www.cms.gov/Medicare/Fraud-and- Abuse/PhysicianSelfReferral/Self-Referral-Disclosure-Protocol- Settlements.html

19

SRDP Challenges and Developments

• Increasing number of self-disclosures and increasing backlogs
• In 2014, CMS updated its estimates - doubled the average

number of self-disclosures it anticipated receiving annually and doubled the estimated time for review of each disclosure submission

• CMS requested comments on establishing expedited SRDP

review process for certain disclosures that have no indicia of fraud and that involve common arrangements, such as leasing and personal service arrangements

20

New SRDP Instructions

• On March 4, 2015, CMS issued special instructions for SRDP submissions

involving solely noncompliance with 42 CFR § 411.362(b)(3)(ii)(C) (requiring physician-owned hospitals and rural providers to disclose on any public website and in any public advertisement that the hospital is owned or invested in by physicians)

• https://www.cms.gov/Medicare/Fraud-and-

Abuse/PhysicianSelfReferral/Downloads/Disclosures-Noncompliance- Instructions.pdf

• The information to be submitted with the disclosure includes identifying

information for the hospital, period(s) of noncompliance, and certifications regarding the hospital’s period of noncompliance

• Requested information does not include Medicare referral calculations

21

2016 Physician Fee Schedule Proposed Rule

Notable proposals included:

• Clarifications

“In Writing” Requirement: formal agreement or a single document not

• required. A collection of documents, including contemporaneous

documents evidencing the course of conduct between the parties, may satisfy the writing requirement of the exceptions that require that an arrangement be set out in writing. 42 C.F.R. §411.357(a), (b), (d), (e), (h), (l), (p), (r), (t), (v), and (w).

Term requirement in Comp Arrangements: exceptions requiring a term

• f at least one year may be met so long as the “arrangement clearly

establishes a business relationship that will last for at least 1 year.” A formal agreement that sets forth the term of the agreement is not

• necessary. 42 C.F.R. §411.357(a), (b), and (d).

22

2016 Physician Fee Schedule Proposed Rule

• Clarifications

 Holdover Policy: extends the holdover period—perhaps even indefinitely—provided the holdover continues on the same terms and conditions as the original arrangement and continues to meet FMV

• requirements. 42 C.F.R. § 411.357(a), (b), and (d).
• New Exceptions

Timeshare Arrangements: protect instances when a hospital or physician

• rganization leases on a timeshare basis to a physician and permits

predominantly evaluation and management services, and certain CLIA- waived tests. 42 C.F.R. §411.357(y).

23

Stark and Medicaid

• All Children’s Health System Decision
• Since pediatric environment, nearly all Federal health care program claims

were paid by Medicaid

• Original Stark Law applied only to Medicare claims, but has since grown to

(potentially) encompass Medicaid

• Federal government pays “Federal Financial Participation” (FFP) to states

when they pay a Medicaid claim

• Court ruled that All Children’s caused, through its tainted Stark claims, the

State of Florida to improperly claim and receive FFP, thus violating the Stark Law and FCA

• “In other words, CMS cannot pay FFP for services provided under

Medicaid if the payment would be prohibited under Medicare due to an illegal referral in violation of the Stark Amendment.”

24

OIG Self-Disclosure Protocol (“SDP”)

• First published in 1998 “to establish a process for health care providers to

voluntarily identify, disclose and resolve instances of potential fraud involving the Federal health care programs”

• Subsequent open letters provided additional guidance
• In April 2013, the OIG updated the SDP
• As of April 2013, the OIG has had recoveries of more than $280 million
• For reporting period October 1, 2014 – March 31, 2015 the OIG recovered
• ver $19.5 million

25

Why Self-Disclose?

• Reduced damages and/or penalties
• Less likelihood government will pursue criminal action or adverse

administrative actions

• Decreased risk of whistleblower action
• Coordination among agencies to resolve self-disclosed matters
• Demonstrates commitment to compliance

26

Disclosure Importance and Benefits

• “…[G]ood faith disclosure of potential fraud and cooperation with the OIG’s

review and resolution process are typically indications of a robust and effective compliance program.”

• Tolling of the Statute of Limitations
• Presumption against requiring CIAs
• Lower multiplier – generally a minimum of 1.5
• Timing – expedited resolution (less than 12 months from acceptance of SDP)
• Electronic submission

27

Challenges

• Tightened timeframe
• Internal investigations and damages calculations must be submitted within 90

days from initial submission (previously 90 days from acceptance into protocol)

• Resources
• Time
• Staff
• Expensive

28

Who Can Participate in the SDP?

• All health care providers, supplier, or other individuals/entities subject to

OIG’s CMP authorities (42 C.F.R. Part 1003), including:

• Presenting or causing to be presented claims to a Federal health care program

that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent

• Violating the anti-kickback statute (42 U.S.C. § 1320a-7b(b)) by knowingly and

willfully: (1) offering or paying remuneration to induce the referral of Federal health care program business; or (2) soliciting or receiving remuneration in return for the referral of Federal health care program business

• Presenting or causing to be presented a claim that the person knows or should

know is for a service for which payment may not be made under the Stark Law

• Not limited to specific industries, specialties, types of services
• Those already under government inquiry or subject to a CIA are not

precluded from submitting under the SDP

29

What Type of Conduct Can Be Disclosed?

• Conduct that potentially violates Federal criminal, civil or administrative laws

for which CMPs are authorized

• Disclosing party “must acknowledge that the conduct is a potential violation”

and must identify the specific laws that are implicated

• Disclosing parties “should not refer broadly to, for example, ‘Federal laws, rules,

and regulations’ or ‘the Social Security Act.’”

• Statements such as “‘the Government may think there is a violation, but we

disagree’ raise questions about whether the matter is appropriate for the SDP.”

• If conduct is Stark only, then must go to CMS
• Cannot request an opinion from OIG regarding whether a violation has
• ccurred
• SDP is not available for a matter that does not involve potential violations of

Federal criminal, civil, or administrative law for which CMPs are authorized

30

What Goes Into a Disclosure – Requirements for All Disclosures

• Internal investigation and written submission
• General information related to provider
• Background and details related to conduct being disclosed
• Types of claims, period of noncompliance, relevant personnel and their roles
• What laws were violated
• Damages estimate, or quantification
• Corrective action
• Knowledge of government inquiry
• Certification

31

Requirements for Conduct Involving False Billing

• Must conduct a review to estimate the improper amount paid (“damages”),

consisting of a review of either:

• All the claims affected by the disclosed matter, or
• A statistically valid random sample of the claims (at least 100 items) that can be

projected to the population of claims affected by the matter

• Damages estimates may not include reductions
• OIG will verify the calculation of damages
• The report of findings must include, at a minimum:
• Review objective
• Population
• Sources of data
• Personnel qualifications
• Characteristics measured

32 32

Requirements for Conduct Involving Excluded Persons

• In addition to the general information, the disclosure must include:
• The identity of the excluded individual and any provider identification number
• The job duties performed by that individual
• The dates of the individual’s employment or contractual relationship
• A description of any background checks that the disclosing party completed
• A description of the disclosing party’s screening process and any flaw or

breakdown in the process

• A description of how the conduct was discovered
• A description of any corrective action
• Calculating damages:
• Items or services separately billed – must include total amounts claimed and paid
• Items or services not billed separately – estimate using total costs of

employment/contracting during the exclusion multiplied by the disclosing party’s revenue-based Federal health care program payor mix

33

Requirements for Conduct Involving the AKS and Stark Law

• Narrative must include a concise statement of all details directly relevant to

the disclosed conduct and a specific analysis of why each disclosed arrangement potentially violates the AKS and Stark Laws, including:

• Participant’s identities;
• Their relationship to one another to the extent the relationship effects potential

liability;

• The payment arrangements; and
• The dates during which each suspect arrangement occurred
• Types of information OIG finds helpful:
• How FMV was determined and why now in question
• Why required payments from referral sources, under leases or other contracts,

were not timely made or collected or did not conform to the negotiated agreement and how long such lapses existed

• Why the arrangement was arguably not commercially reasonable

34

Calculating Damages for Conduct Involving the AKS and Stark Law

• Must submit an estimate of the amount paid by Federal health care

programs for the items or services associated with potential violations

• May use the methodology described for conduct involving false billing to

calculate an estimate or identify another reliable methodology to calculate the claims-based estimate

• The methodology must be described in the report
• Must include the total amount of remuneration involved in each

arrangement

• OIG generally exercises its broad discretion “by compromising [their] CMP

authorities for an amount based upon a multiplier of the remuneration conferred by the referral recipient to the individual or entity making the referral.”

35

Resolution

• Cooperation is essential
• OIG coordination with DOJ
• Civil matters
• Criminal matters
• OIG Coordination with SRDP
• Minimum settlement amounts
• “For kick-back related submissions accepted into the SDP, OIG will require a

minimum $50,000 settlement amount to resolve the matter.”

• Financial inability to pay
• Overpayment reconciliation
• FOIA Implications of disclosure

36

Examples of Recent Settlements

• Abode Healthcare, Inc.,
• Issue: Documentation did not support hospice eligibility
• Period: October 1, 2009 – April 30, 2013
• Settlement Amount: $2,674,895
• Physicians Immunodiagnostic Laboratory, Inc.
• Issue: Billing for services provided by an excluded individual
• Period: May 20, 2008 – November 9, 2012
• Settlement Amount: $1,386,816

37

Examples of Recent Settlements (continued)

• Arrowhead Cardiology Medical Group, Inc.
• Issue: Submitting improper claims for telemetry services
• Period: December 6, 2006 – July 9, 2013
• Settlement: $485,217
• St. Agnes Healthcare, Inc. d/b/a St. Agnes Hospital
• Issue: Lease arrangement potentially violating AKS and Stark Law
• Period: December 1, 2001 – September 30, 2009
• $1,414,248

38

Best Practices for Self-Disclosure

• Timing
• Determining whether self-disclosure is appropriate
• To whom should the self-disclosure be made?
• Potential risks of making a self-disclosure
• Preserving privileged communications

39

Timing – 60 Day Rule

• 2009: FERA imposed False Claims Act liability for failing to meet

an “obligation” to return money to the government

• 31 U.S.C.§3729(a)(1)(G):
• “Any person who …knowingly makes, uses, or causes to be made or used,

a false record or statement material to an obligation to pay or transmit money or property to the Government or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government …” (emphasis added)

• “Obligation” defined as “an established duty, whether or not fixed, arising

from an express or implied contractual, grantor-grantee, or licensor- licensee relationship, from a fee-based or similar relationship, from statute or regulation, or from the retention of any overpayment…” (emphasis added)

40

Timing – 60 Day Rule

• ACA§6402(a)
• Person who has received an overpayment must:
• Report and return the overpayment to the appropriate person (e.g.,

CMS, State, contractor, etc.); and

• Notify the person to whom the overpayment was returned of the

reason for the overpayment in writing

• Deadline for reporting and returning is the later of:
• The date which is 60 days after the date on which the overpayment

was identified; or

• The date any corresponding cost report is due, if applicable

41

Timing – 60 Day Rule

• Results of combining FERA and ACA§6402(a)
• Failure to report and return an “identified” overpayment within 60 days

creates an obligation under the FCA

• Thus, FCA liability created for knowingly retaining (i.e., not reporting and

returning) any overpayment within 60 days of the date on which the

• verpayment was “identified”

42

Timing – 60 Day Rule

• Determining when an overpayment has been “identified”
• U.S. ex rel. Kane v. Health First Inc., 2015 WL 4619686 (S.D.N.Y. Aug. 3, 2015)
• Overpayment is identified “when a provider is put on notice of a potential
• verpayment, rather than the moment when an overpayment is conclusively

ascertained”

• Congress intended FCA liability to attach where “there is an established duty

to pay money to the government, even if the precise amount due has yet to be determined”

• Operational Issue: Are you able to decide if and to whom a self-disclosure is

required (and to make the required self-disclosure) within 60 days of becoming aware of a potential overpayment?

43

Is Self-Disclosure is Appropriate?

• Is the matter a potential violation of the law?
• Is there an alternative to disclosure?
• Matters exclusively involving overpayments or errors that do not suggest that

violations of law have occurred should be brought to the attention of the Medicare Administrative Contractor

• Operating under a Corporate Integrity Agreement?

44

Considerations

• Scope
• Isolated or systemic
• Circumstances surrounding intent
• Explanations and defenses
• Dollars involved
• Effectiveness of review of compliance program
• Trust for, and relationship with, local and national enforcement people vs.

MAC

• Risks of disclosing vs. Risks of not disclosing

45

Who Should Receive the Self-Disclosure: OIG SDP vs. CMS SRDP

ISSUE OIG SDP CMS SRDP Who can use each Protocol? Any health care provider DHS entity with

• verpayment liability

What Conduct is Eligible? Any matter that potentially violates federal criminal, civil or administrative laws Only actual or potential Stark Law Violations Options for Disclosing DOJ may choose to participate in settlement or provider may request FCA release CMS only and only if seeking a release of (g)(1)

• verpayment liability

Estimating Liability Some guidance in OIG’s Open Letters and elsewhere regarding OIG’s general methodology on arriving at a settlement amount based

• n the conduct at issue

Very little understanding of CMS’ approach to arriving at a settlement amount

46

Who Should Receive the Self-Disclosure: OIG SDP vs. CMS SRDP

ISSUE OIG SDP CMS SRDP Timing of Disclosure 60 day overpayment refund rule Can disclose and conclude investigation and damages calculation within 90 days

• f initial submission

60-day repayment refund rule Consider a rolling disclosure Anticipated Releases Civil Monetary Penalties Program Exclusion False Claims Act (DOJ) Program Fraud Civil Remedies (DOJ) Overpayment Liability

47

• What about disclosing to the Department of Justice (Main Justice,

local AUSAs)?

Potential Risks of Self-Disclosure

• Tension between government’s and provider’s perspective of appropriate

level of cooperation

• Government looks for candor, flexibility, demonstrated attitude of compliance
• Government follow-up investigation uncovering non-disclosed compliance
• Repayment may not be enough—settlement with multiplier
• Referral to DOJ
• Government enforcement trends
• Criminal liability
• Individual liability
• Self-disclosure potentially not a public disclosure under FCA

48

Preserving Privileged Communications

• Consideration of Waiver of Attorney-Client Privilege and Work Product

Protection

• Legal files re: investigation
• Materials previously designated as privileged/protected
• Witness interviews
• Consultants' and auditors' work papers
• Internal audit materials

49