Law Offices of JOSEPH J. LABARBERA, P.C.

WARNING: The Office of the Inspector General of HHS (OIG) and the NYS Office of the Medicaid Inspector General (OMIG) have indicated intent to commence aggressive pursuit of the tools afforded them to recover money for the Medicare and Medicaid programs. The  NYS OMIG has indicated that January 2011 will see an increased effort to address the changes discussed below, including amendments in the Federal Health Reform Law. Note, even the well intentioned are targeted and mere clerical record keeping errors can be compounded into penalties, violations and fines if not addressed.    

Even Unknowing Violations of the Anti-kickback Law (the “AKL”) Are Now Prosecutable

The anti-kickback law (AKL) has been amended to provide that a violation may be established without evidence that the potential violator knew of the law and/or intended to violate it. The AKL makes it a crime or civil violation, to accept or receive remuneration (cash or in kind) in connection with the ordering or provision of any services for which payment is sought under Medicare, Medicaid and/or other Federally funded health care programs. Something as simple as a cross referral arrangement could constitute illegal remuneration.  Now, even unknowing violations of the AKL could result in penalties including imprisonment, significant fines and program exclusion. This makes it paramount that all contracts and arrangements be reviewed for compliance with the statute. The amendment effectively eliminates holdings in previous court decisions requiring proof of knowledge and intent, such as in the now famous Hanlester case.

In a similar vein, the intent and knowledge requirement has been eliminated from the Health Care Fraud Criminal Statutes which have been amended to include violations of the AKL, some provisions of ERISA and the Food Drug and Cosmetic Act. Eff. 3/23/2010

Anti-kickback Law Violation Becomes a Violation of the False Claims Act (the “FCA”)

Codifying what most believed to be the prevailing interpretation of the law on the subject, the amendment specifically provides that a violation of the Anti-kickback Laws qualifies as a false or fraudulent claim under the FCA. The FCA centers upon the submission of claims seeking payment from Federal health care programs. Not only does the FCA (most states including new York have adopted their own version of the FCA) call for significant penalties such as minimum fines, treble damages and exclusion, it also has the much feared qui tam provisions where private citizens (called “qui tam relators”) can initiate actions for false claims against potential violators and share in the recovery of monies from false or fraudulent claim actions. Violation of the AKL is now officially extended as an available action for qui tam relators.

Previously a qui tam relator’s action under the FCA was barred and subject to automatic dismissal, as a jurisdictional matter, if there was public disclosure of the subject matter (e.g. the qui tam relator’s knowledge was other than as an original source from direct and independent knowledge of the facts and not previously disclosed by or derived from a public disclosure). The amendment modifies the bar so that it will not operate automatically where the government opposes dismissal. The amendment also modified the “direct and independent requirement” so that knowledge no longer need be direct and independent. It is now sufficient if the relator provides the information to the government before public disclosure or discloses information not previously disclosed, but which is independent of and materially adds to previously publicly disclosed information. In conjunction with this, public disclosures were defined not to include State audits, reports, actions and proceedings and private legal actions. This of course increases materially the number of information sources and potential qui tam relators in an area of the law already saturated with law firms specializing in representing qui tam relators. Eff. 3/23/2010

Self Disclosure Programs   

Federal and State self disclosure protocols for reporting actual or potential violations of applicable Federal and State health care laws have been promulgated. The use of these programs can be the difference between simple reimbursement and a prosecution both criminally and civilly with resultant fines, imprisonment and program exclusion. Where problems are found, these programs should be given immediate consideration.

How Do Practices Protect Themselves?

The best protection is having an active compliance plan in your practice requiring annual internal reviews and including compliance with both voluntary and mandatory disclosure programs. Further, if you have a compliance plan in place, it is incumbent upon compliance officers to assure that it is functioning in a meaningful and effective manner and to document same. 

In NYS any practice generating $500,000 or more in billing in a 12 month period to Medicaid in NYS a qualified compliance plan is mandatory. NOTE: The $500,000 minimum to require a compliance plan under NYS Medicaid is interpreted to include both direct payments and payments precipitated through orders written for which Medicaid pays, such as pharmaceuticals, lab tests, specialist services, radiology, referrals for home health care, etc… It is therefore not difficult for a physician’s practice to exceed the minimum, even where actual direct reimbursement to the practice, whether fee for service and/or managed care, falls well below the minimum.   

The OIG and the OMIG in NYS both have access to new and more efficient software making it easier to indentify inconsistencies and errors. Further, NYS OMIG representatives have indicated that OMIG will consider any practice which has not refunded an overpayment to be suspicious.

The information in this newsletter is for educational purposes only and not intended to constitute legal advice. Each issue or matter should be analyzed with respect to the reader’s individual requirements, facts and circumstances with experienced legal counsel.