Whistleblower To Get $17M+ of Omnicare $124M False Claims Settlement

June 26, 2014

Former employee turned whistleblower Donald Gale will receive $17.24 million of the $124.24 million that the U.S.’ largest provider of pharmaceuticals and pharmacy services to nursing homes, Omnicare, Inc. has agreed to pay to settle charges that Omnicare violated the Anti-Kickback Statute by offering improper financial incentives to skilled nursing facilities in return for their continued selection of Omnicare to provide pharmaceuticals and pharmacy services to their residents. The settlement announced June 25, 2014 by the Department of Justice (DOJ) highlights the growing risks that health care organizations using aggressive marketing incentive programs face to whistleblower, Department of Justice and other investigations.

According to DOJ, the Omnicare settlement resolves allegations that “Omnicare provided improper discounts in return for the opportunity to provide medication to Medicare and Medicaid beneficiaries” in violation of the Anti-Kickback Statute.  The settlement resolves allegations initially brought by two whistleblowers that Omnicare submitted false claims by entering into below-cost contracts to supply prescription medication and other pharmaceutical drugs to skilled nursing facilities and their resident patients to induce the facilities to select Omnicare as their pharmacy provider.  The facilities were participating providers under agreements with Medicare and Medicaid.   In addition to the facilities’ own claims for reimbursement from Medicare for short-term rehabilitation treatment rendered to patients, Omnicare submitted additional claims for reimbursement to Medicare and Medicaid for drugs Omnicare supplied.

The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid and other federally funded programs as a means of helping to ensure that the selection of health care providers and suppliers is not compromised by improper financial incentives and is instead based on the best interests of the patient. This settlement illustrates both the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative and the critical role that current or former employees or other whistleblowers often play in the successful investigation and prosecution of these cases.

The HEAT initiative announced in May 2009 by Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius makes heavy use of whistleblowers to uncover potential violations and then uses the False Claims Act and other expanded investigatory and enforcement tools granted by Congress to nail providers.

In conducting its war against health care fraud, Federal officials credited new tools created under the Patient Protection & Affordable Care Act (Affordable Care Act) with aiding their health care fraud investigation and enforcement efforts.   Legal reforms and new resources granted under the Affordable Care Act and various other legal changes have beefed up the fraud detection and fighting powers of Federal health care fraud investigators and prosecutors.  Examples of these new tools include:

  • Tough new rules and sentences for criminals
  • Enhanced screening and other enrollment requirements
  • Increased coordination of fraud prevention efforts
  • Health Care Fraud Prevention and Enforcement Action Team (HEAT)
  • New focus on compliance and prevention
  • Expanded overpayment recovery efforts
  • New durable medical equipment (DME) requirements
  • An additional $350 million over 10 years to ramp up anti-fraud efforts
  • Greater oversight of private insurance abuses
  • Senior Medicare Patrols

The continuing success of these and other federal health care fraud investigation and enforcement efforts continue to prove the need for health care providers and payers to strengthen their compliance practices and documentation to avoid getting caught in the ever tightening health care fraud dragnet.  Since January 2009, the Justice Department has recovered a total of more than $19.5 billion through False Claims Act cases, with more than $13.9 billion of that amount recovered in cases involving fraud against federal health care programs. In announcing the settlement, Justice Department officials sent strong warnings to other health care providers and suppliers about the dangers of providing or accepting improper discounts or other improper incentives as part of their business marketing strategies. “Health care providers who seek to profit from providing illegal financial benefits will be held accountable,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “Schemes such as this one undermine the health care system and take advantage of elderly nursing home residents.”  Meanwhile, Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, said “Nursing homes should select their pharmacy provider based on the best quality, service and cost to the residents, not based on improper discounts to the nursing facility.”

Any quick look at the DOJ’s enforcement record shows its acting on these promises.  For instance, in addition to the Omnicare settlement, DOJ also announced on June 25 the guilty plea of a physician and the sentencing on an ambulance company owner on health care fraud charges.  See Huntersville Physician Pleads Guilty To Health Care Fraud and Tax Fraud and Agrees To Pay $6.2 Million to Settle Civil Fraud Claims;  Ambulance Company Co-Owner Sentenced To 13 1/2 Years for Health Care Fraud Scheme.

 Health Care Providers Must Act To Manage Risks

In response to the growing emphasis and effectiveness of Federal officials in investigating and taking action against health care providers and organizations, health care providers covered by federal false claims, referral, kickback and other health care fraud laws should consider auditing the adequacy of existing practices, tightening training, oversight and controls on billing and other regulated conduct, reaffirming their commitment to compliance to workforce members and constituents and taking other appropriate steps to help prevent, detect and timely redress health care fraud exposures within their organization and to position their organization to respond and defend against potential investigations or charges.

For More Information Or Assistance

If you need assistance reviewing or responding to these or other health care related risk management, compliance, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer, may be able to help. Vice President of the North Texas Health Care Compliance Professionals Association, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health industry clients about these and other matters. Her experience includes advising hospitals, nursing home, home health, rehabilitation and other health care providers and health industry clients to establish and administer compliance and risk management policies; prevent, conduct and investigate, and respond to peer review and other quality concerns; and to respond to Board of Medicine, Department of Aging & Disability, Drug Enforcement Agency, OCR Privacy and Civil Rights, HHS, DOD and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns.

A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns. Her insights on these and other related matters appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.  You can get more information about her health industry experience here. If you need assistance responding to concerns about the matters discussed in this publication or other health care concerns, wish to obtain information about arranging for training or presentations by Ms. Stamer, wish to suggest a topic for a future program or update, or wish to request other information or materials, please contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

If you or someone else you know would like to receive future updates about developments on these and other concerns from Ms. Stamer, see here.

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here. For important information concerning this communication click here.

THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS.  ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

©2014 Cynthia Marcotte Stamer.  Non-exclusive license to republish granted to Solutions Law Press.  All other rights reserved.


CMS Proposes Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Pre-Authorization Rule

May 28, 2014

July 28, 2014 is the deadline for concerned persons to comment on the Centers for Medicare & Medicaid Services (CMS) proposed rule requiring prior authorization for certain durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS).  The proposed rule available for review at http://www.gpo.gov/fdsys/pkg/FR-2014-05-28/pdf/2014-12245.pdf would establish a prior authorization process for certain durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) items that are frequently subject to unnecessary utilization and would add a contractor’s decision regarding prior authorization of coverage of DMEPOS items to the list of actions that are not initial determinations and therefore not appealable.

For More Information Or Assistance

If you need assistance reviewing or responding to these or other health care related risk management, compliance, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer, may be able to help. Vice President of the North Texas Health Care Compliance Professionals Association, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health industry clients about these and other matters. Her experience includes advising hospitals, nursing home, home health, rehabilitation and other health care providers and health industry clients to establish and administer compliance and risk management policies; prevent, conduct and investigate, and respond to peer review and other quality concerns; and to respond to Board of Medicine, Department of Aging & Disability, Drug Enforcement Agency, OCR Privacy and Civil Rights, HHS, DOD and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns.

A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns. Her insights on these and other related matters appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.  You can get more information about her health industry experience here. If you need assistance responding to concerns about the matters discussed in this publication or other health care concerns, wish to obtain information about arranging for training or presentations by Ms. Stamer, wish to suggest a topic for a future program or update, or wish to request other information or materials, please contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

If you or someone else you know would like to receive future updates about developments on these and other concerns from Ms. Stamer, see here.

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here. For important information concerning this communication click here.

THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS.  ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

©2014 Cynthia Marcotte Stamer, P.C. Non-exclusive license to republish granted to Solutions Law Press.  All other rights reserved.


Medicare Fraud Strike Force Nails 90 Individuals For Almost $260 Million In False Billing Including 16 Doctors

May 13, 2014

27 Medical Professionals Charged with Health Care Fraud

A nationwide takedown by Medicare Fraud Strike Force operations in six cities today (May 13, 2014) resulted in charges against 90 individuals, including 27 doctors, nurses and other medical professionals, for alleged participation in Medicare fraud schemes involving approximately $260 million in false billings, according to U.S. Attorney General Eric Holder and Department of Health and Human Services (HHS) Secretary Kathleen Sebelius.  The announcement reminds U.S. health care providers that the Obama Administration continues to target health care providers in its campaign against health care fraud.

The seventh coordinated national Medicare fraud takedown by the Medicare Fraud Strike Force operations team of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), Federal officials filed charges that accuse the defendants of various health care fraud-related crimes, including conspiracy to commit health care fraud, violations of the anti-kickback statutes and money laundering.  The charges are based on a variety of alleged fraud schemes involving various medical treatments and services, including home health care, mental health services, psychotherapy, physical and occupational therapy, durable medical equipment and pharmacy fraud.

Among the defendants charged were 27 medical professionals, including 16 doctors, who Federal officials charge included doctors billing for services that were never rendered, supply companies providing motorized wheelchairs that were never needed, and recruiters paying kickbacks to get Medicare billing numbers of patients.  According to court documents, the defendants allegedly participated in schemes to submit claims to Medicare for treatments that were medically unnecessary and often never provided.  In many cases, court documents allege that patient recruiters, Medicare beneficiaries and other co-conspirators were paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could then submit fraudulent bills to Medicare for services that were medically unnecessary or never performed.  Collectively, the doctors, nurses, licensed medical professionals, health care company owners and others charged are accused of conspiring to submit approximately $260 million in fraudulent billings.

In Miami, a total of 50 defendants were charged today and yesterday for their alleged participation in various fraud schemes involving approximately $65.5 million in false billings for home health care and mental health services, and pharmacy fraud.  In one case, two defendants were charged in connection with a $23 million pharmacy kickback and laundering scheme.  Court documents allege that the defendants solicited kickbacks from a pharmacy owner for Medicare beneficiary information, which was used to bill for drugs that were never dispensed.  The kickbacks were concealed as bi-weekly payments under a sham services contract and were laundered through shell entities owned by the defendants.

Eleven individuals were charged by the Houston Medicare Strike Force.  Five Houston-area physicians were charged with conspiring to bill Medicare for medically unnecessary home health services.  According to court documents, the defendant doctors were paid by two co-conspirators to sign off on home health care services that were not necessary and often never provided.

Eight defendants were charged in Los Angeles for their roles in schemes to defraud Medicare of approximately $32 million.  In one case, a doctor was charged for causing almost $24 million in losses to Medicare through his own fraudulent billing and referrals for durable medical equipment, including over 1,000 expensive power wheelchairs, and home health services that were not medically necessary and often not provided.

In Detroit, seven defendants were charged for their roles in fraud schemes involving approximately $30 million in false claims for medically unnecessary services, including home health services, psychotherapy and infusion therapy.  In one case, four individuals, including a doctor, were charged in a sophisticated $28 million fraud scheme, where the physician billed for expensive tests, physical therapy and injections that were not necessary and not provided.  Court documents allege that when the physician’s billings raised red flags, he was put on payment review by Medicare.  He was allegedly able to continue his scheme and evade detection by continuing to bill using the billing information of other Medicare providers, sometimes without their knowledge.

In Tampa, Florida, seven individuals were charged in a variety of schemes, ranging from fraudulent physical therapy billings to a scheme involving millions of dollars in physician services and tests that never occurred.  In one case, five individuals were charged for their alleged roles in a $12 million health care fraud and money laundering scheme that involved billing Medicare using names of beneficiaries from Miami-Dade County for services purportedly provided in Tampa area clinics, 280 miles away.  The defendants then allegedly laundered the proceeds through a number of transactions involving several shell entities.

In Brooklyn, New York, the Strike Force announced an indictment against Syed Imran Ahmed, M.D., in connection with his alleged $85 million scheme involving billings for surgeries that never occurred; Dr. Ahmed had been arrested last month and charged by complaint.  Dr. Ahmed has charged with health care fraud and making false statements.  In addition, the Brooklyn Strike Force charged six other individuals, including a physician and two billers who allegedly concocted a $14.4 million scheme in which they recruited elderly Medicare beneficiaries and billed Medicare for medically unnecessary vitamin infusions, diagnostic tests and physical and occupational therapy supposedly provided to these patients.

The cases announced today are being prosecuted and investigated by Medicare Fraud Strike Force teams comprised of attorneys from the Fraud Section of the Justice Department’s Criminal Division and from the U.S. Attorney’s Offices for the Southern District of Florida, the Eastern District of Michigan, the Eastern District of New York, the Southern District of Texas, the Central District of California, the Middle District of Louisiana, the Northern District of Illinois and the Middle District of Florida; and agents from the FBI, HHS-OIG and state Medicaid Fraud Control Units.

The HEAT Strike Force is a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. The joint Department of Justice and HHS Medicare Fraud Strike Force is a multi-agency team of federal, state and local investigators designed to combat Medicare fraud through the use of Medicare data analysis techniques and an increased focus on community policing.  Almost 400 law enforcement agents from the FBI, HHS-OIG, multiple Medicaid Fraud Control Units and other federal, state and local law enforcement agencies participated in today’s takedown.

Since their inception in March 2007, Strike Force operations in nine locations have charged almost 1,900 defendants who collectively have falsely billed the Medicare program for almost $6 billion.  Overall, since its inception, the Department of Justice’s Medicare Fraud Strike Force has charged nearly 1,900 individuals involved in approximately $6 billion of fraud.  We are committed to using every tool at our disposal to prevent, deter, and prosecute health care fraud.  In addition, CMS, working in conjunction with HHS-OIG, has suspended enrollments of high-risk providers in five Strike force locations and has removed over 17,000 providers from the Medicare program since 2011.

“Medicare is a sacred compact with our nation’s seniors, and to protect it, we must remain aggressive in combating fraud,” said Attorney General Holder.  “This nationwide Medicare Strike Force takedown represents another important step forward in our ongoing fight to safeguard taxpayer resources and to ensure the integrity of essential health care programs.  Department of Justice will not tolerate these activities.  And we will continue working alongside the Department of Health and Human Services – as well as federal, state, and local partners – to use every appropriate tool and available resource to find, stop, and punish those who seek to take advantage of their fellow citizens.”

In conducting its war against health care fraud, Federal officials credited new tools created under the Patient Protection & Affordable Care Act (Affordable Care Act) with aiding their health care fraud investigation and enforcement efforts.   Legal reforms and new resources granted under the Affordable Care Act and various other legal changes have beefed up the fraud detection and fighting powers of Federal health care fraud investigators and prosecutors.  Examples of these new tools include:

  • Tough new rules and sentences for criminals
  • Enhanced screening and other enrollment requirements
  • Increased coordination of fraud prevention efforts
  • Health Care Fraud Prevention and Enforcement Action Team (HEAT)
  • New focus on compliance and prevention
  • Expanded overpayment recovery efforts
  • New durable medical equipment (DME) requirements
  • An additional $350 million over 10 years to ramp up anti-fraud efforts
  • Greater oversight of private insurance abuses
  • Senior Medicare Patrols

“The Affordable Care Act has given us additional tools to preserve Medicare and protect the tens of millions of Americans who rely on it each day,” said Secretary Sebelius.  “By expanding our authority to suspend Medicare payments and reimbursements when fraud is suspected, the law allows us to better preserve the system and save taxpayer dollars.  Today we’re sending a strong, clear message to anyone seeking to defraud Medicare: You will get caught and you will pay the price.  We will protect a sacred trust and an earned guarantee.”

The continuing success of these and other federal health care fraud investigation and enforcement efforts continue to demonstrate the need for health care providers and payers to strengthen their compliance practices and documentation to avoid getting caught in the ever tightening health care fraud dragnet.

Health Care Providers Must Act To Manage Risks

In response to the growing emphasis and effectiveness of Federal officials in investigating and taking action against health care providers and organizations, health care providers covered by federal false claims, referral, kickback and other health care fraud laws should consider auditing the adequacy of existing practices, tightening training, oversight and controls on billing and other regulated conduct, reaffirming their commitment to compliance to workforce members and constituents and taking other appropriate steps to help prevent, detect and timely redress health care fraud exposures within their organization and to position their organization to respond and defend against potential investigations or charges.

For More Information Or Assistance

If you need assistance reviewing or responding to these or other health care related risk management, compliance, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer, may be able to help. Vice President of the North Texas Health Care Compliance Professionals Association, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health industry clients about these and other matters. Her experience includes advising hospitals, nursing home, home health, rehabilitation and other health care providers and health industry clients to establish and administer compliance and risk management policies; prevent, conduct and investigate, and respond to peer review and other quality concerns; and to respond to Board of Medicine, Department of Aging & Disability, Drug Enforcement Agency, OCR Privacy and Civil Rights, HHS, DOD and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns.

A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns. Her insights on these and other related matters appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.  You can get more information about her health industry experience here. If you need assistance responding to concerns about the matters discussed in this publication or other health care concerns, wish to obtain information about arranging for training or presentations by Ms. Stamer, wish to suggest a topic for a future program or update, or wish to request other information or materials, please contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

If you or someone else you know would like to receive future updates about developments on these and other concerns from Ms. Stamer, see here.

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here. For important information concerning this communication click here.

THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS.  ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

©2014 Cynthia Marcotte Stamer, P.C. Non-exclusive license to republish granted to Solutions Law Press.  All other rights reserved.


Latest OCR Resolution Agreement Hits Public Health Department, Shows Needs To Stay Up-To-Date

March 16, 2014

Health Department HIPAA Violations Cost County $250,000, Requires Sweeping HIPAA Reforms

Hear Update On Resolution Agreement & Other New HIPAA Developments At 3/18 North Texas Healthcare Professionals Association Meeting – 

RSVP here by Noon on March 17, 2014

Skagit County, Washington will pay a $215,000 monetary settlement and work closely with the Department of Health and Human Services (HHS) Office of Civil Rights (OCR) to correct deficiencies in its HIPAA compliance program to settle potential violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy, Security, and Breach Notification Rules by the Skagit County Public Health Department (Health Department) under a Resolution Agreement announced by OCR on March 7, 2014.  The Resolution Agreement makes clear the need for health care providers, health plans, health care clearinghouses and their business associates to update and maintain their policies and practices in compliance with the constantly evolving OCR guidance and resolution agreements, as well as to timely investigate and report breaches.   Interested persons are invited to hear a briefing on a series of new developments including this latest Resolution Agreement at the March 18, 2014 North Texas Healthcare Professionals Association Meeting.

OCR investigated the Health Department after receiving a breach report that unknown parties accessed money receipts with electronic protected health information (ePHI) of seven individuals after the ePHI had been inadvertently moved to a publicly accessible server maintained by the County.

OCR reports its investigation revealed a broader exposure of protected health information involved in the incident, which included the ePHI of 1,581 individuals. Many of the accessible files involved sensitive information, including protected health information about the testing and treatment of infectious diseases.

OCR’s investigation further uncovered general and widespread non-compliance by Skagit County with the HIPAA Privacy, Security, and Breach Notification Rules.

Specifically, the Resolution Agreement between OCR and the Health Department states that OCR found the following conduct occurred (“Covered Conduct”).

  • From approximately September 14, 2011 until September 28, 2011, Skagit County disclosed the ePHI of 1,581 individuals in violation of the Privacy Rule by providing access to ePHI on its public web server;
  • From      November 28, 2011 until present, Skagit County failed to provide notification as required by the Breach Notification Rule to all of the individuals for whom it knew or should have known that the privacy or security of the individual’s ePHI had been compromised as a result of the breach incident;
  • From April 20, 2005 until present, Skagit County failed to implement sufficient policies and procedures to prevent, detect, contain, and correct security violations;
  • From April 20, 2005 until June 1, 2012, Skagit County failed to implement and  maintain in written or electronic form policies and procedures reasonably designed to ensure compliance with the Security Rule; and
  • From April 20, 2005 until present, Skagit County failed to provide security awareness  and training to all workforce members, including its Information Security staff members, as necessary and appropriate for the workforce members to carry out their functions within Skagit County.

To resolve OCR’s allegations of these breaches, Skagit County agrees under the Resolution Agreement to pay HHS $215,000.00 and to ensure that the Health Department implements a series of corrective actions.  Among other things, the Resolution Agreement requires that the Health Department:

  • Provide substitute Breach Notification to individuals not previously notified of the breach of their ePHI in accordance with the Resolution Agreement
  • Revise to the satisfaction of OCR and adopt revised accounting for disclosure, hybrid entity designations, policies on safeguarding PHI, including its sample business associate agreements;
  • Conduct an accurate and thorough assessment of the potential risks and vulnerabilities to the confidentiality, integrity, and availability of electronic protected health information (ePHI) held by the covered health care components of Skagit County as identified in its hybrid entity documentation approved by HHS and implement security measures sufficient to reduce the risks and vulnerabilities identified in the risk analysis to a reasonable and appropriate level.
  • Create and revise, as necessary, written policies and procedures for its covered health care components to comply with the Federal standards that govern the privacy, security, and breach notification of individually identifiable health information;
  • Comply with strict workforce training requirements;
  • Notify and OCR of the occurrence of some reported breaches, its investigation and corrective actions;
  • Provide a summary of the reported events and the status of any corrective and preventative action relating to all such Reportable Events; and
  • Provide OCR with an attestation signed by an officer of Skagit County attesting that he or she has reviewed the Annual Report, has made a reasonable inquiry regarding its content and believes that, upon such inquiry, the information is accurate and truthful.

In addition to bringing its policies and practices up to date with OCR regulations in effect at the time of the breach that resulted in the Resolution Agreement, the Health Department also will have to update its polic9ies and practices to meet changes to OCR’s HIPAA rules that have taken effect since the breach under the revised rules published by OCR in its Modifications to the HIPAA Privacy, Security, Enforcement, and Breach Notification Rules Under the Health Information Technology for Economic and Clinical Health Act and the Genetic Information Nondiscrimination Act; Other Modifications to the HIPAA Rules; Final Rule (Omnibus Final Rule) OCR published January 25, 2013 as well as a series of recently issued OCR rules such as the following:

With OCR stepping up both audits and enforcement and penalties for violations higher than ever since the HITECH Act amended HIPAA, Covered Entities and business associates should act quickly to review and update their policies, practices and training to implement any adjustments needed to maintain compliance and manage other risks under these ever-evolving HIPAA standards.

Covered Entities & Business Associates Should Review & Tighten Practices in Response To Resolution Agreement & Other New Guidance

Other covered entities and their business associates should carefully evaluate and tighten their existing practices in response to the Resolution Agreement and other recent guidance.  In the past, OCR officials have stated it expects that other health care providers, health plans, health care clearinghouses and their business associates will review resolution agreements like this one along with other emerging OCR guidance and update their practices as necessary to address concerns within their own organization that might be similar to those reflected in the applicable resolution agreement.  The Resolution Agreement documents this expectation by specifically incorporating this requirement as part of its terms.

When conducting these efforts, Covered Entities and business associates not only carefully watch for and react promptly to new OCR guidance and enforcement actions, but also document their commitment and ongoing compliance and risk management activities to help support their ability to show their organization maintains the necessary “culture of compliance” commitment needed to mitigate risks in the event of a breach or other HIPAA violation and take well-documented, reasonable steps to encourage their business associates to do the same.    When carrying out these activities, most covered entities and business associates also will want to take steps to monitor potential responsibilities and exposures under other federal and state laws like the privacy and data security requirements that often apply to personal financial information, trade secrets or other sensitive data under applicable federal and state laws and judicial precedent.

Hear Stamer’s Update On Resolution Agreement & Other New HIPAA Developments At 3/18 North Texas Healthcare Professionals Association Meeting

Scribe for the American Bar Association Annual Agency Meeting with OCR for the fourth year, attorney Cynthia Marcotte Stamer will overview these and other HIPAA developments when she presents “Tutoring On OCR’s Latest HIPAA Homework” at the North Texas Healthcare Professionals Association Study Group Luncheon on Tuesday,  March 18, 2014 from 11:30 p.m. to 1:00 p.m. at the offices of the Dallas Ft Worth Hospital Council, 250 Decker Drive, Irving, TX 75062-2706.  A complimentary luncheon will be served to guests to who register in advance.  There is no charge to particulate but space is limited.  RSVP here by Noon on March 17, 2014.

For More Information Or Assistance

If you need assistance reviewing or responding to these or other health care related risk management, compliance, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer, may be able to help. Vice President of the North Texas Health Care Compliance Professionals Association, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health industry clients about these and other matters. Her experience includes advising hospitals, nursing home, home health, rehabilitation and other health care providers and health industry clients to establish and administer compliance and risk management policies; prevent, conduct and investigate, and respond to peer review and other quality concerns; and to respond to Board of Medicine, Department of Aging & Disability, Drug Enforcement Agency, OCR Privacy and Civil Rights, HHS, DOD and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns.

A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns. Her presentations and programs include a wide range of other workshops, programs and publications on fraud and other compliance, operational and risk management, and other health industry matters.

Her insights on these and other related matters appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.  You can get more information about her health industry experience here. If you need assistance responding to concerns about the matters discussed in this publication or other health care concerns, wish to obtain information about arranging for training or presentations by Ms. Stamer, wish to suggest a topic for a future program or update, or wish to request other information or materials, please contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

If you or someone else you know would like to receive future updates about developments on these and other concerns from Ms. Stamer, see  here.

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here. For important information about this communication click here. 

THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS.  ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

©2014 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press.  All other rights reserved.


OCR Assigns More HIPAA Compliance Work To Health Care Providers

March 5, 2014

Think your health care organization or health plan has health care privacy covered?  Think again.

A series of supplemental guidance issued by the Department of Health & Human Services Office of Civil Rights (OCR) in recent weeks is giving health care providers, health plans, health care clearinghouses (Covered Entities) and their business associates even more to do in reviewing and updating their policies, practices and training for handing protected health information (PHI) beyond bringing their policies and practices into line with OCR’s restatement and update to the Modifications to the HIPAA Privacy, Security, Enforcement, and Breach Notification Rules Under the Health Information Technology for Economic and Clinical Health Act and the Genetic Information Nondiscrimination Act; Other Modifications to the HIPAA Rules; Final Rule (Omnibus Final Rule) OCR published January 25, 2013.

Covered Entities generally have been required to comply with most requirements the Omnibus Final Rule’s restated regulations restating OCR’s regulations implementing the Health Insurance Portability & Accountability Act (HIPAA) Privacy, Security and Breach Notification Rules to reflect HIPAA amendments enacted by the Health Information Technology for Economic and Clinical Health (HITECH) Act since the Omnibus Final Rule took effect on March 26, 2013 and to have updated business associate agreements in place since September 23, 2013.  Meanwhile, the Omnibus Final Rule generally has required business associates have updated business associate agreements in place and otherwise to have come into compliance with all of the applicable requirements of the Omnibus Final Rule since September 23, 2013.  Although these deadlines are long past, many Covered Entities and business associates have yet to complete the policy, process and training updates required to comply with the modifications implemented in    the Omnibus Final Rule.

Even if a Covered Entity or business associate completed the updates required to comply with the Omnibus Final Rule, however, recent supplemental guidance published by OCR means that most organizations now have even more work to do on HIPAA compliance. This includes the following supplemental guidance concerning its interpretation and enforcement of HIPAA against Covered Entities and business associates published by OCR since January 1, 2014 alone:

Beyond this 2014 guidance, Covered Entities and their business associates also should look at enforcement actions and data as well as other guidance OCR issued during 2013 after publishing the Omnibus Final Rule such as:

With OCR stepping up both audits and enforcement and penalties for violations higher than ever since the HITECH Act amended HIPAA, Covered Entities and business associates should act quickly to review and update their policies, practices and training to implement any adjustments needed to maintain compliance and manage other risks under these ever-evolving HIPAA standards.

When conducting these efforts, Covered Entities and business associates not only carefully watch for and react promptly to new OCR guidance and enforcement actions, but also document their commitment and ongoing compliance and risk management activities to help support their ability to demonstrate their organization maintains the necessary “culture of compliance” commitment needed to mitigate risks in the event of a breach or other HIPAA violation and take well-documented, reasonable steps to encourage their business associates to do the same.    When carrying out these activities, most covered entities and business associates also will want to take steps to monitor potential responsibilities and exposures under other federal and state laws like the privacy and data security requirements that often apply to personal financial information, trade secrets or other sensitive data under applicable federal and state laws and judicial precedent.

For More Information Or Assistance

If you need assistance reviewing or responding to these or other health care related risk management, compliance, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer, may be able to help. Vice President of the North Texas Health Care Compliance Professionals Association, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health industry clients about these and other matters. Her experience includes advising hospitals, nursing home, home health, rehabilitation and other health care providers and health industry clients to establish and administer compliance and risk management policies; prevent, conduct and investigate, and respond to peer review and other quality concerns; and to respond to Board of Medicine, Department of Aging & Disability, Drug Enforcement Agency, OCR Privacy and Civil Rights, HHS, DOD and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns.

A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns. Her presentations and programs include a wide range of other workshops, programs and publications on fraud and other compliance, operational and risk management, and other health industry matters.

Her insights on these and other related matters appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.  You can get more information about her health industry experience here. If you need assistance responding to concerns about the matters discussed in this publication or other health care concerns, wish to obtain information about arranging for training or presentations by Ms. Stamer, wish to suggest a topic for a future program or update, or wish to request other information or materials, please contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

If you or someone else you know would like to receive future updates about developments on these and other concerns from Ms. Stamer, see  here.

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here. For important information about this communication click here. 

THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS.  ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

©2014 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press.  All other rights reserved.


Federal Health Care Fraud Enforcement Recouped Record $4.3 Billion in FY 2013

March 4, 2014

Health care providers got another reminder last week of their ever-growing exposure to federal health care fraud detection and enforcement efforts.  The joint federal health care fraud enforcement efforts of the Departments of Justice (DOJ) and Health and Human Services (HHS) set new records for recoveries in Fiscal Year (FY) 2013, according to the newly released annual Health Care Fraud and Abuse (HCFAC) Program Report (the “Fraud Report”).

Record Breaking Fraud Recoveries In FY 2013 Highlight Health Care Fraud Enforcement Risk

According to the Fraud Report, the government’s health care fraud prevention and enforcement efforts recovered a record-breaking $4.3 billion in taxpayer dollars in Fiscal Year (FY) 2013, up from $4.2 billion in FY 2012, from individuals and companies who attempted to defraud federal health programs serving seniors or who sought payments from taxpayers to which they were not entitled.  Over the last five years, the Fraud Report says administration’s enforcement efforts have recovered $19.2 billion, up from $9.4 billion over the prior five-year period.  Since the inception of the program in1997, the HCFAC Program has returned more than $25.9 billion to the Medicare Trust Funds and treasury.

These reported recoveries show the commitment and growing success of federal health care fraud detection, investigation and enforcement efforts targeting providers and others in health care.  This is the fifth consecutive year that the program has increased recoveries over the past year, climbing from $2 billion in FY 2008 to over $4 billion every year since FY 2011.

Recoveries Show Providers Big & Growing

The DOJ and HHS credit the success of these efforts largely to the joint Health Care Fraud Prevention and Enforcement Action Team (HEAT) program DOJ and HHS created in 2009 to target health care fraud and reforms passed as part of the Patient Protection and Affordable Care Act (ACA) that aid government investigation and enforcement efforts.

DOJ and HHS have used HEAT and expanded powers in ACA to strengthen and grow their join fraud detection and enforcement efforts.  ACA reforms have strengthened these efforts by giving the agencies new tools.

Among other things, ACA empowered HHS to:

  • Suspend payments to providers and suppliers based on credible allegations of fraud in Medicare and Medicaid;
  • Impose a temporary moratorium on Medicare, Medicaid, and CHIP enrollment on providers and suppliers when necessary to help prevent or fight fraud, waste, and abuse without impeding beneficiaries’ access to care.
  • Strengthen and build on current provider enrollment and screening procedures to more accurately assure that fraudulent providers are not gaming the system and that only qualified  health care providers and suppliers are allowed to enroll in and bill Medicare, Medicaid and CHIP;
  • Terminate providers from Medicaid and CHIP when they have been terminated by Medicare or by another state Medicaid program or CHIP;
  • Require provider compliance programs, now required under the Affordable Care Act, that will ensure providers are aware of and comply with CMS program requirements.

These tools make it easier for HHS to detect and prevent potential questionable activities, as well as aid DOJ and HHS in investigating and prosecuting suspected fraud or other misconduct.  The agencies tout their use of these tools along with their heightened enforcement and coordination for the growing success of their health care fraud detection and prosecution efforts.

“With these extraordinary recoveries, and the record-high rate of return on investment we’ve achieved on our comprehensive health care fraud enforcement efforts, we’re sending a strong message to those who would take advantage of their fellow citizens, target vulnerable populations, and commit fraud on federal health care programs,” said Attorney General Eric Holder.  “Thanks to initiatives like HEAT, our work to combat fraud has never been more cooperative or more effective.  And our unprecedented commitment to holding criminals accountable, and securing remarkable results for American taxpayers, is paying dividends.”

“These impressive recoveries for the American taxpayer are just one aspect of the comprehensive anti-fraud strategy we have implemented since the passage of the Affordable Care Act,” said HHS Secretary Sebelius.  “We’ve cracked down on tens of thousands health care providers suspected of Medicare fraud. New enrollment screening techniques are proving effective in preventing high risk providers from getting into the system, and the new computer analytics system that detects and stops fraudulent billing before money ever goes out the door is accomplishing positive results – all of which are adding to savings for the Medicare Trust Fund.”

Federal officials also give credit to new new authorities given to them by the Affordable Care Act that help HHS and the Centers for Medicare & Medicaid Services (CMS) to detect and target heatlh care fraud.

In FY 2013, CMS announced the first use of its temporary moratoria authority granted by the    Affordable Care Act.  The action stopped enrollment of new home health or ambulance enrollments in three fraud hot spots around the country, allowing CMS and its law enforcement partners to remove bad actors from the program while blocking provider entry or re-entry into these already over-supplied markets.

The Justice Department and HHS have improved their coordination through HEAT and are currently operating Medicare Fraud Strike Force teams in nine areas across the country. The strike force teams use advanced data analysis techniques to identify high-billing levels in health care fraud hot spots so that interagency teams can target emerging or migrating schemes as well as chronic fraud by criminals masquerading as health care providers or suppliers. The Justice Department’s enforcement of the civil False Claims Act and the Federal Food, Drug and Cosmetic Act has produced similar record-breaking results.  These combined efforts coordinated under HEAT have expanded local partnerships and helped educate Medicare beneficiaries about how to protect themselves against fraud.

In Fiscal Year 2013, the strike force secured records in the number of cases filed (137), individuals charged (345), guilty pleas secured (234) and jury trial convictions (46). Beyond these remarkable results, the defendants who were charged and sentenced are facing significant time in prison – an average of 52 months in prison for those sentenced in FY 2013, and an average of 47 months in prison for those sentenced since 2007.

In FY 2013, the Justice Department opened 1,013 new criminal health care fraud investigations involving 1,910 potential defendants, and a total of 718 defendants were convicted of health care fraud-related crimes during the year.  The department also opened 1,083 new civil health care fraud investigations.

The strike force coordinated a takedown in May 2013 that resulted in charges by eight strike force cities against 89 individuals, including doctors, nurses and other licensed medical professionals, for their alleged participation in Medicare fraud schemes involving approximately $223 million in false billings. As a part of the May 2013 takedown, HHS also suspended or took other administrative action against 18 providers using authority under the health care law to suspend payments until an investigation is complete.

In FY 2013, the strike force secured records in the number of cases filed (137), individuals charged (345), guilty pleas secured (234) and jury trial convictions (48). Beyond these remarkable results, the defendants who were charged and sentenced are facing significant time in prison – an average of 52 months in prison for those sentenced in FY 2013, and an average of 47 months in prison for those sentenced since 2007.

In March 2011, CMS began an ambitious project to revalidate all 1.5 million Medicare enrolled providers and suppliers under the Affordable Care Act screening requirements. As of September 2013, more than 535,000 providers were subject to the new screening requirements and over 225,000 lost the ability to bill Medicare due to the Affordable Care Act requirements and other proactive initiatives.  Since the Affordable Care Act, CMS has also revoked 14,663 providers and suppliers’ ability to bill the Medicare program. These providers were removed from the program because they had felony convictions, were not operational at the address CMS had on file, or were not in compliance with CMS rules.

HHS and the Justice Department are leading historic efforts with the private sector to bring innovation to the fight against health care fraud. In addition to real-time data and information exchanges with the private sector, CMS’ Program Integrity Command Center worked with the HHS Office of the Inspector General and the FBI to conduct 93 missions to detect, investigate, and reduce improper payments in FY 2013.

From May 2013 through August 2013, CMS led an outreach and education campaign targeted to specific communities where Medicare fraud is more prevalent.  This multimedia campaign included national television, radio, and print outreach and resulted in an increased awareness of how to detect and report Medicare fraud.

These and other activities make it more important than ever that hospitals, physicians and other health care providers participating in Medicare, Medicaid or other federal health care programs tighten their compliance and risk management practices and processes to manage their exposures.

Providers Urged To Act To Manage Risks

In response to the growing emphasis and effectiveness of Federal officials in investigating and taking action against health care providers and organizations, health care providers covered by federal false claims, referral, kickback and other health care fraud laws should consider auditing the adequacy of existing practices, tightening training, oversight and controls on billing and other regulated conduct, reaffirming their commitment to compliance to workforce members and constituents and taking other appropriate steps to help prevent, detect and timely redress health care fraud exposures within their organization and to position their organization to respond and defend against potential investigations or charges.

For More Information Or Assistance

If you need assistance reviewing or responding to these or other health care related risk management, compliance, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer, may be able to help. Vice President of the North Texas Health Care Compliance Professionals Association, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health industry clients about these and other matters. Her experience includes advising hospitals, nursing home, home health, rehabilitation and other health care providers and health industry clients to establish and administer compliance and risk management policies; prevent, conduct and investigate, and respond to peer review and other quality concerns; and to respond to Board of Medicine, Department of Aging & Disability, Drug Enforcement Agency, OCR Privacy and Civil Rights, HHS, DOD and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns.

A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns. Her presentations and programs include a wide range of other workshops, programs and publications on fraud and other compliance, operational and risk management, and other health industry matters.

Her insights on these and other related matters appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.  You can get more information about her health industry experience here. If you need assistance responding to concerns about the matters discussed in this publication or other health care concerns, wish to obtain information about arranging for training or presentations by Ms. Stamer, wish to suggest a topic for a future program or update, or wish to request other information or materials, please contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

If you or someone else you know would like to receive future updates about developments on these and other concerns from Ms. Stamer, see  here.

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here. For important information about this communication click here. 

THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS.  ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

©2014 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press.  All other rights reserved.


2/28/14 Deadline To Submit Quality Data for 2013 PQRS-Medicare EHR Incentive Pilot

January 17, 2014

February 28, 2014 is the deadline for any eligible professional participating or wishes to participate in the 2013 PQRS-Medicare EHR Incentive Pilot to submit its quality data.  Eligible providers wishing to participate in the pilot must submit 12 months of CQM data by February 28, 2014 at 11:59 pm ET.  The system is currently open to accept this data so eligible professionals wishing to participate should complete the collection and submission of this data as soon as possible.

Steps to Successfully Participate
To successfully participate in the pilot, you must do the following by February 28, 2014:

  1. Register      for an IACS account (for EHR submission only)
  2. Indicate      intent to report CQMs using pilot in EHR Registration & Attestation      System
  3. Generate      required reporting files
  4. Test data      submission
  5. Submit      quality data

Eligible professionals that cannot submit their CQM data for 12 months electronically through PQRS must return to the EHR Attestation System and deselect the electronic reporting option.  Please note: if a provider does not submit its 2013 quality data or deselect the electronic reporting option in the EHR Attestation System, CMS says the provider will not receive an EHR incentive payment.

For More Information
For further guidance on the 2013 PQRS-Medicare EHR Incentive Pilot, eligible providers should read the Participation Guide and Quick-Reference Guide.

For More Information Or Assistance

If you need assistance reviewing or responding to these or other health care related risk management, compliance, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer, may be able to help. Vice President of the North Texas Health Care Compliance Professionals Association, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health industry clients about these and other matters. Her experience includes advising hospitals, nursing home, home health, rehabilitation and other health care providers and health industry clients to establish and administer compliance and risk management policies; prevent, conduct and investigate, and respond to peer review and other quality concerns; and to respond to Board of Medicine, Department of Aging & Disability, Drug Enforcement Agency, OCR Privacy and Civil Rights, HHS, DOD and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns.

A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns. Her presentations and programs include How to Ensure That Your Organization Is In Compliance With Regulations Governing Discrimination, as well as a wide range of other workshops, programs and publications on discrimination and cultural diversity, as well as a broad range of compliance, operational and risk management, and other health industry matters.

Her insights on these and other related matters appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.  You can get more information about her health industry experience here. If you need assistance responding to concerns about the matters discussed in this publication or other health care concerns, wish to obtain information about arranging for training or presentations by Ms. Stamer, wish to suggest a topic for a future program or update, or wish to request other information or materials, please contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

If you or someone else you know would like to receive future updates about developments on these and other concerns from Ms. Stamer, see  here.

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here. For important information about this communication click here. 

THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS.  ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

©2014 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press.  All other rights reserved.


Final CMS Rule To Expand Medicaid Support For Community & Home-Based Care

January 12, 2014

New Rule Expands Medicaid Coverage For Community Living For Disabled Aging Adults

Caregivers and service providers caring the Medicaid-eligible aging or disabled individuals will want to check out the new final rule on Home and Community-Based Services published by the Department of Health & Human Services (HHS) Centers for Medicare & Medicaid Services (CMS) on Friday, January 10.  See Final Rule: Home and Community-Based Services (“Final Rule”).

HHS views the Final Rule as supporting its Community Living Initiative, which seeks to expand and improve community services in order to allow aging and disabled people to live, work, and participate in the greater community.  The Initiative reflects the growing community support for helping aging and disabled individuals to avoid institutionalization and instead “age in place” by offering broader care options, developing community services that extend options for disabled and aging persons to live independently, and other actions that support the ability of individuals to live safely within community rather than institutional settings.  In announcing the Final Rule, HHS Secretary Kathleen Sebelius. “Today’s announcement will help ensure that all people participating in Medicaid home and community-based services programs have full access to the benefits of community living.”

The Final Rule  expands the conditions under which Medicaid provides coverage for home and community-based services as an alternative to institutional care for older.. adults covered by Medicaid.  Among other things, the Final Rule defines home and community-based settings and implements new flexibility authorized by the Patient Protection and Affordable Care Act (ACA) that gives states additional options as part of their State Plan Option to expand home and community-based services and to target services to specific populations under the provisions of Section 1915(i) on home and community-based services. It also amends the 1915(c) home and community-based services waiver program to add new person-centered planning requirements, allow states to combine multiple target populations in one waiver, and streamlines waiver administration. The final rule also includes a transitional period for states to adjust their programs to meet the new home and community-based services settings requirements.  CMS says technical assistance will also be available for states.

Service providers and community agencies caring for Medicaid-eligible populations will want to check out these new rules for insights on helping the aging and disabled covered by Medicaid and their families to adapt care plans in response to the new options that the Final Rule may afford.

For more information about Home and Community-Based Services available under Medicaid, see here. For information about the HHS Community Living Initiative, see hereFor additional resources, persons interested in these and other aging in place trends and resources may want to contact the author of this update, Cynthia Marcotte Stamer, who regularly speaks and writes on these concerns.

For More Information Or Assistance

If you need assistance reviewing or responding to these or other health care related risk management, compliance, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer, may be able to help. Vice President of the North Texas Health Care Compliance Professionals Association, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health industry clients about these and other matters. Her experience includes advising hospitals, nursing home, home health, rehabilitation and other health care providers and health industry clients to establish and administer compliance and risk management policies; prevent, conduct and investigate, and respond to peer review and other quality concerns; and to respond to Board of Medicine, Department of Aging & Disability, Drug Enforcement Agency, OCR Privacy and Civil Rights, HHS, DOD and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns.

A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns. Her presentations and programs include How to Ensure That Your Organization Is In Compliance With Regulations Governing Discrimination, as well as a wide range of other workshops, programs and publications on discrimination and cultural diversity, as well as a broad range of compliance, operational and risk management, and other health industry matters.

Her insights on these and other related matters appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.  You can get more information about her health industry experience here. If you need assistance responding to concerns about the matters discussed in this publication or other health care concerns, wish to obtain information about arranging for training or presentations by Ms. Stamer, wish to suggest a topic for a future program or update, or wish to request other information or materials, please contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

If you or someone else you know would like to receive future updates about developments on these and other concerns from Ms. Stamer, see  here.

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here. For important information about this communication click here. 

THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS.  ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

©2014 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press.  All other rights reserved.


Abbott Labs, Sisters of Charity Paying More Than $9M In Two Anti-Kickback Settlements

January 2, 2014

The Justice Department’s recovery of more than $9 million in two physician kickback settlements during the last week of December, 2013 sends another strong warning to health care providers and physicians of the risks of structuring physician compensation or other arrangements that run afoul of the federal Anti-kickback Statute, STARK Law or False Claims Act   Health care providers and physicians or others who may be receiving or seeking compensation or other benefits prohibited by these and other federal or state health care fraud laws should seek advice and assistance from experienced qualified legal counsel to structure or review any proposed or existing transactions that could create these risks.

The two settlements both stem from alleged payments of kickbacks to physicians to induce referrals in contravention of federal health care fraud laws.

On December 31, 2013, DOJ announced that Butte, Montana based St. James Healthcare (St. James) and its Denver-based parent company, Sisters of Charity of Leavenworth Health System (Sisters of Charity), have agreed to pay $3.85 million to resolve allegations that they violated the Anti-Kickback Statute, the Stark Law and the False Claims Act by improperly providing financial benefits to physicians and physician groups that made referrals to the hospital.  Colorado Health Care Organization and One of Its Montana Hospitals to Pay $3.85 Million for Allegedly Providing Financial Benefits to Referring Physicians and Physician Groups.

The St. James settlement announcement follows DOJ’s December 27, 2013 announcement that pharmaceutical giant Abbot Laboratories has agreed to pay the United States $5.475 million to resolve allegations that it violated the False Claims Act by paying kickbacks to induce doctors to implant the company’s carotid, biliary and peripheral vascular products. U.S. Department of Justice.  Abbott Laboratories Pays U.S. $5.475 Million to Settle Claims That Company Paid Kickbacks to Physicians.

St. James/Sisters of Charity Settlement

The settlement with St. James and Sisters of Charity resolves DOJ charges that they provided various improper financial incentives to physicians and physician groups involved in a joint venture with St. James to own and run a medical office building on the St. James campus.  These incentives included a payment to the joint venture that increased the share values for the physicians and physician groups in the joint venture and resulted in below fair market value lease rates for the physicians renting space in the medical office building.  Additional incentives provided by St. James and Sisters of Charity included below fair market value lease rates for the land upon which the medical office building was constructed and other below fair market value arrangements related to shared facilities, use and maintenance.  These issues were disclosed by St. James and Sisters of Charity to the government.  To resolve their liability, St. James and the Sisters of Charity will pay $3.85 millions to the U.S. Government.

In announcing the settlement, U.S. Attorney for the District of Montana Michael W. Cotter cautioned other heath care providers to review their own transactions and to take the rules seriously, stating.  “We are encouraged that hospitals like St. James Healthcare are taking these issues seriously by reviewing their operations and making disclosures to the government where necessary.”

Abbott Laboratories Settlement

The Abbott Laboratories settlement requires it to pay the U.S. $5.475 million to resolve allegations that Abbott Laboratories knowingly paid prominent physicians for teaching assignments, speaking engagements and conferences with the expectation that these physicians would arrange for the hospitals with which they were affiliated to purchase Abbott’s carotid, biliary and peripheral vascular products in violation of the Anti-Kickback Act and caused the submission of false claims to Medicare for the procedures using these Abbott products .

The settlement resolves allegations originally brought in a lawsuit filed by Steven Peters and Douglas Gray, former Abbott employees, under the qui tam provision of the False Claims Act.  See United States ex rel. Peters et al. v. Abbott Laboratories, Inc., Civil Action No. 3:09-CV-430 (E.D. Tenn.).   The False Claims Act allows whistleblowers to file suit on behalf of the United States for false claims and share in any recovery   Whistleblower claims are a major tool in the enforcement efforts and success of the DOJ in its campaign to find and prosecute health care fraud.  As part of the Abbott Laboratory’s settlement, the two whistleblowers will receive a total payment of more than $1 million.

Settlements Reflect Heightened Enforcement Risks For Health Care Providers Participating In Kickback Arrangements

Health care providers offering or providing illegal or otherwise aggressive inducements to physicians or others for referrals of health care services covered by Medicare, Medicaid or other federal health care programs should heed the settlements as a warning.  The two settlements illustrate the growing emphasis on the investigation and enforcement of Anti-Kickback, STARK and False Claims Act laws against health care providers by the DOJ and Department of Health & Human Services (HHS). The Anti-Kickback Statute prohibits the provision of remuneration with the intent to induce referrals of government health care program business unless the transaction falls within one of the safe harbors or otherwise qualifies as exempt from the prohibition.  The Stark Law restricts financial relationships that hospitals or other designated health care providers may enter into with physicians who refer patients to them unless the arrangement meets the criteria to qualify as exempt from the prohibition. When either of these two prohibitions is violated, billing for services for care rendered creates additional fraud law exposures.  Federal law prohibits payment by federal health care programs of medical claims that result from arrangements that violate the Anti-Kickback Statute or the Stark Law. The settlements announced this week both stemmed from civil prosecutions by the Justice Department.  However, violations of these health care fraud laws also may result in criminal prosecutions.

DOJ, HHS and other federal and state agencies acting through the Medicare Fraud Strike Force activities conducted as part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), federal RAC audits and other actions hunting for, and increasingly finding an prosecuting health care providers and others who participate in transactions that violate these and other federal health care fraud laws as part of efforts to control health care costs and expenditures.  HEAT is a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.  The joint Department of Justice-HHS Medicare Fraud Strike Force is a multi-agency team of federal, state and local investigators designed to combat Medicare fraud through the use of Medicare data analysis techniques and an increased focus on community policing.  Since its announcement, the Strike Force has used the combined resources of agents from the FBI, HHS-Office of Inspector General (HHS-OIG), multiple Medicaid Fraud Control Units, and other state and local law enforcement agencies to investigate and prosecute a rising number of organizations and individuals throughout the industry for alleged violations of Federal health care fraud prohibitions.

The effectiveness of these Federal efforts to deter, find and prosecute false claims and other perceived abuses of Federal health care law has been significantly strengthened since Congress passed the Patient Protection & Affordable Care Act (Affordable Care Act).  Among other things, ACA empowered HHS to:

  • Suspend payments to providers and suppliers based on credible allegations of fraud in Medicare and Medicaid;
  • Impose a temporary moratorium on Medicare, Medicaid, and CHIP enrollment on providers and suppliers when necessary to help prevent or fight fraud, waste, and abuse without impeding beneficiaries’ access to care.
  • Strengthen and build on current provider enrollment and screening procedures to more accurately assure that fraudulent providers are not gaming the system and that only qualified  health care providers and suppliers are allowed to enroll in and bill Medicare, Medicaid and CHIP;
  • Terminate providers from Medicaid and CHIP when they have been terminated by Medicare or by another state Medicaid program or CHIP;
  • Require provider compliance programs, now required under the Affordable Care Act, that will ensure providers are aware of and comply with CMS program requirements.

In its Abbott Laboratories settlement announcement, DOJ touted the HEAT efforts with resulting in the recovery of a total of more than $17 billion through False Claims Act cases, with more than $12.2 billion of that amount recovered in cases involving fraud against federal health care programs.

Act To Manage Risks

In response to the growing emphasis and effectiveness of Federal officials in investigating and taking action against health care providers and organizations, health care providers covered by federal false claims, referral, kickback and other health care fraud laws should consider auditing the adequacy of existing practices, tightening training, oversight and controls on billing and other regulated conduct, reaffirming their commitment to compliance to workforce members and constituents and taking other appropriate steps to help prevent, detect and timely redress health care fraud exposures within their organization and to position their organization to respond and defend against potential investigations or charges.

For More Information Or Assistance

If you need assistance reviewing or responding to these or other health care related risk management, compliance, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer, may be able to help. Vice President of the North Texas Health Care Compliance Professionals Association, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health industry clients about these and other matters. Her experience includes advising hospitals, nursing home, home health, rehabilitation and other health care providers and health industry clients to establish and administer compliance and risk management policies; prevent, conduct and investigate, and respond to peer review and other quality concerns; and to respond to Board of Medicine, Department of Aging & Disability, Drug Enforcement Agency, OCR Privacy and Civil Rights, HHS, DOD and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns.

A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns. Her presentations and programs include How to Ensure That Your Organization Is In Compliance With Regulations Governing Discrimination, as well as a wide range of other workshops, programs and publications on discrimination and cultural diversity, as well as a broad range of compliance, operational and risk management, and other health industry matters.

Her insights on these and other related matters appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.  You can get more information about her health industry experience here. If you need assistance responding to concerns about the matters discussed in this publication or other health care concerns, wish to obtain information about arranging for training or presentations by Ms. Stamer, wish to suggest a topic for a future program or update, or wish to request other information or materials, please contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

If you or someone else you know would like to receive future updates about developments on these and other concerns from Ms. Stamer, see  here.

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here. For important information about this communication click here. 

THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS.  ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

©2014 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press.  All other rights reserved.


IRS Publishes 2014 Branded Prescription Drug Fee Guidance

August 5, 2013

The Internal Revenue Service (IRS) today released Notice 2013-51. “Branded Prescription Drug Fee; Guidance for the 2014 Fee Year,” which contains guidance on the branded prescription drug fee imposed under section 9008 of the Patient Protection and Affordable Care Act (ACA) for the 2014 fee year.

Branded Prescription Drug Fee Background

ACA requires that covered entities that engage in the business of manufacturing or importing branded prescription drugs pay the branded prescription drug fee.  The Branded Prescription Drug Fee Regulations in 26 C.F.R. Part 51, published on August 18, 2011 (76 FR 51245), provide the method by which each covered entity’s annual fee is calculated. These regulations also define terms for the administration of the fee.

Regulation section 51.2T(g) defines fee year as the calendar year in which the fee for a particular sales year must be paid and section 51.2T(m) defines sales year as the second calendar year preceding the fee year.

Section 51.3T of the Regulation requires that annually, each covered entity may submit a completed Form 8947, “Report of Branded Prescription Drug Information,” in accordance with the instructions for the form. Generally, the form solicits information from covered entities on National Drug Codes, orphan drugs, designated entities, rebates, and other information specified by the form or its instructions. The form is to be filed by the date prescribed in guidance published in the Internal Revenue Bulletin.

Section 51.6T provides that for each sales year the Internal Revenue Service (IRS) will make a preliminary fee calculation for each covered entity and will tell each covered entity of this calculation by the date prescribed in guidance published in the Internal Revenue Bulletin. This notification will also include additional prescribed information. As used in this notice, “notice of preliminary fee calculation” includes the additional prescribed information.

Section 51.7T provides that upon receipt of its preliminary fee calculation, each covered entity will have an opportunity to dispute this calculation by submitting to the IRS an error report with prescribed information. Sections 51.7T(b) and (c) set out the information that a covered entity must submit to support each asserted error. Section 51.7T(d) provides that each covered entity must submit  reports and error reports, if anyin the form and way required by the IRS.

Section 51.8T provides that the IRS will send each covered entity its final fee calculation no later than August 31st of each fee year and also provides that covered entities must pay their fee by September 30th of the fee year.

2014 Deadlines & Procedures

Notice 2013-51 provides guidance for covered entities for 2014 on:

  • Submission of Form 8947, “Report of Branded Prescription Drug Information,”
  • The time and manner for notifying covered entities of their preliminary fee calculation,
  • The time and manner for submitting error reports for the dispute resolution process; and
  • The time for notifying covered entities of their final fee calculation.

For the 2014 fee year, the Notice states that a covered entity that chooses to submit Form 8947 must file the form by November 1, 2013.

For the 2014 fee year, the Notice states that the IRS will mail each covered entity a paper notice of its preliminary fee calculation by March 3, 2014. This mailing will include a National Drug Code (NDC) attachment (NDC attachment) that lists the covered entity’s NDCs and the sales data reported to the IRS by each government program pursuant to Regulation section 51.4T.

A covered entity may request that the IRS send a CD-ROM with the NDC attachment in Microsoft Excel format. The covered entity must make this request by February 17, 2014. The Notice instructs that this request must be made either by telephone to Ingrid Taylor at (908) 301-2118 or Mi Lim at (312) 292-3775 (not toll-free calls) or by email to it.bpd.fee@irs.gov. If a covered entity makes this request timely, the notice says the IRS will mail the covered entity its notice of preliminary fee calculation on paper and the NDC attachment on paper and CD-ROM by March 3, 2014.

For the 2014 fee year, the Notice also states a covered entity that chooses to submit an error report regarding its preliminary fee calculation must mail the error report by May 15, 2014. When the IRS mails each covered entity a notice of its preliminary fee calculation by March 3, 2014, the IRS will also send each covered entity a template on a CD-ROM that the covered entity must use to prepare its error report. All completed templates and the supporting documentation must be submitted on a CD-ROM and sent by mail as instructed in the Notice.

The Notice also indicates that the IRS will notify each covered entity of its final fee calculation for 2014 by August 29, 2014, after which each covered entity must pay this fee by September 30, 2014 in accordance with Regulation section 51.8T(c),

 

For More Information Or Assistance

If you need assistance responding to regulatory, enforcement or other developments, reviewing or tightening your policies and procedures, conducting training or audits, responding to or defending an investigation or other enforcement action or with other health care related risk management, compliance, training, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer, may be able to help. Vice President of the North Texas Health Care Compliance Professionals Association, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health industry clients about these and other matters. Her experience includes advising hospitals, nursing home, home health, rehabilitation and other health care providers and health industry clients to establish and administer compliance and risk management policies; prevent, conduct and investigate, and respond to peer review and other quality concerns; and to respond to Board of Medicine, Department of Aging & Disability, Drug Enforcement Agency, OCR Privacy and Civil Rights, HHS, DOD and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns. Her presentations and programs include How to Ensure That Your Organization Is In Compliance With Regulations Governing Discrimination, as well as a wide range of other workshops, programs and publications on discrimination and cultural diversity, as well as a broad range of compliance, operational and risk management, and other health industry matters. Her insights on these and other related matters appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.  You can get more information about her health industry experience here. If you need assistance responding to concerns about the matters discussed in this publication or other health care concerns, wish to obtain information about arranging for training or presentations by Ms. Stamer, wish to suggest a topic for a future program or update, or wish to request other information or materials, please contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here. If you or someone else you know would like to receive future updates about developments on these and other concerns from Ms. Stamer, see  here.

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here. For important information concerning this communication click here.  THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS.  ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.  

©2013 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press.  All other rights reserved.


CMS Publishes FY 2014 Final Inpatient Psychiatric Facility Prospective Payment Rule

August 5, 2013

Medicare payments to inpatient psychiatric facilities (IPFs) will rise by 2.3% for fiscal year (FY) 2014 under the final Inpatient Psychiatric Facilities Prospective Payment System (PPS) Updated for Fiscal Year Beginning October 1, 2013 (FY 2013) posted by the Centers for Medicare & Medicaid Services (CMS) July 29 here.

The notice updates the prospective payment rates for Medicare inpatient hospital services provided by inpatient psychiatric facilitates for discharges occurring during the fiscal year (FY) beginning October 1, 2013 through September 30, 2014.

Highlights of the final 2014 IPFPPS adjustments under  42 CFR 412.428 include the following:

  • The FY 2008-based Rehabilitation, Psychiatric, and Long Term Care (RPL) market basket update of 2.6 percent adjusted by a 0.1 percentage point reduction as required by section 1886(s)(2)(A)(ii) of the Social Security Act (the Act) and a 0.5 percentage point reduction for economy-wide productivity as required by section 1886(s)(2)(A)(i) of the Act.
  • The fixed dollar loss threshold amount in order to maintain the appropriate outlier
  • percentage.
  • The electroconvulsive therapy payment by a factor specified by CMS.
  • The national urban and rural cost-to-charge ratio medians and ceilings.
  • The cost of living adjustment factors for IPFs located in Alaska and Hawaii, if
  • appropriate.
  • The description of the ICD-9-CM and MS-DRG classification changes discussed in
  • the annual update to the hospital inpatient PPS regulations.
  • Use of the best available hospital wage index and information regarding whether an adjustment to the Federal per diem base rate is needed to maintain budget neutrality.
  • The MS-DRG listing and comorbidity categories to reflect the ICD-9-CM revisions effective October 1, 2013.
  • Retaining the 17 percent adjustment for IPFs located in rural areas, the 1.31 adjustment factor for IPFs with a qualifying emergency department, the coefficient value of 0.5150 for the teaching adjustment to the Federal per diem rate, the MS-DRG adjustment factors and comorbidity adjustment factors currently paid to IPFs for FY 2013.

IPFs, their operators, management and investors should review the new rules, update their practices and budgets and make other arrangements to respond effectively to the Rule.

For More Information Or Assistance

If you need assistance responding to regulatory, enforcement or other developments, reviewing or tightening your policies and procedures, conducting training or audits, responding to or defending an investigation or other enforcement action or with other health care related risk management, compliance, training, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer, may be able to help. Vice President of the North Texas Health Care Compliance Professionals Association, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health industry clients about these and other matters. Her experience includes advising hospitals, nursing home, home health, rehabilitation and other health care providers and health industry clients to establish and administer compliance and risk management policies; prevent, conduct and investigate, and respond to peer review and other quality concerns; and to respond to Board of Medicine, Department of Aging & Disability, Drug Enforcement Agency, OCR Privacy and Civil Rights, HHS, DOD and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns. Her presentations and programs include How to Ensure That Your Organization Is In Compliance With Regulations Governing Discrimination, as well as a wide range of other workshops, programs and publications on discrimination and cultural diversity, as well as a broad range of compliance, operational and risk management, and other health industry matters. Her insights on these and other related matters appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.  You can get more information about her health industry experience here. If you need assistance responding to concerns about the matters discussed in this publication or other health care concerns, wish to obtain information about arranging for training or presentations by Ms. Stamer, wish to suggest a topic for a future program or update, or wish to request other information or materials, please contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here. If you or someone else you know would like to receive future updates about developments on these and other concerns from Ms. Stamer, see  here.

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law

 

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here. For important information concerning this communication click here.  THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS.  ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.  

©2013 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press.  All other rights reserved.


CMS Publishes FY 2014 Final Inpatient Psychiatric Facility Prospective Payment Rule

August 1, 2013

Medicare payments to inpatient psychiatric facilities (IPFs) will rise by 2.3% for fiscal year (FY) 2014 under the final Inpatient Psychiatric Facilities Prospective Payment System (PPS) Updated for Fiscal Year Beginning October 1, 2013 (FY 2013) posted by the Centers for Medicare & Medicaid Services (CMS) July 29 here.

The notice updates the prospective payment rates for Medicare inpatient hospital services provided by inpatient psychiatric facilitates for discharges occurring during the fiscal year (FY) beginning October 1, 2013 through September 30, 2014.

Highlights of the final 2014 IPFPPS adjustments under  42 CFR 412.428 include the following:

  • The FY 2008-based Rehabilitation, Psychiatric, and Long Term Care (RPL) market basket update of 2.6 percent adjusted by a 0.1 percentage point reduction as required by section 1886(s)(2)(A)(ii) of the Social Security Act (the Act) and a 0.5 percentage point reduction for economy-wide productivity as required by section 1886(s)(2)(A)(i) of the Act.
  • The fixed dollar loss threshold amount in order to maintain the appropriate outlier
  • percentage.
  • The electroconvulsive therapy payment by a factor specified by CMS.
  • The national urban and rural cost-to-charge ratio medians and ceilings.
  • The cost of living adjustment factors for IPFs located in Alaska and Hawaii, if
  • appropriate.
  • The description of the ICD-9-CM and MS-DRG classification changes discussed in
  • the annual update to the hospital inpatient PPS regulations.
  • Use of the best available hospital wage index and information regarding whether an adjustment to the Federal per diem base rate is needed to maintain budget neutrality.
  • The MS-DRG listing and comorbidity categories to reflect the ICD-9-CM revisions effective October 1, 2013.
  • Retaining the 17 percent adjustment for IPFs located in rural areas, the 1.31 adjustment factor for IPFs with a qualifying emergency department, the coefficient value of 0.5150 for the teaching adjustment to the Federal per diem rate, the MS-DRG adjustment factors and comorbidity adjustment factors currently paid to IPFs for FY 2013.

IPFs, their operators, management and investors should review the new rules, update their practices and budgets and make other arrangements to respond effectively to the Rule.

For More Information Or Assistance

If you need assistance responding to regulatory, enforcement or other developments, reviewing or tightening your policies and procedures, conducting training or audits, responding to or defending an investigation or other enforcement action or with other health care related risk management, compliance, training, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer, may be able to help. Vice President of the North Texas Health Care Compliance Professionals Association, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health industry clients about these and other matters. Her experience includes advising hospitals, nursing home, home health, rehabilitation and other health care providers and health industry clients to establish and administer compliance and risk management policies; prevent, conduct and investigate, and respond to peer review and other quality concerns; and to respond to Board of Medicine, Department of Aging & Disability, Drug Enforcement Agency, OCR Privacy and Civil Rights, HHS, DOD and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns. Her presentations and programs include How to Ensure That Your Organization Is In Compliance With Regulations Governing Discrimination, as well as a wide range of other workshops, programs and publications on discrimination and cultural diversity, as well as a broad range of compliance, operational and risk management, and other health industry matters. Her insights on these and other related matters appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.  You can get more information about her health industry experience here. If you need assistance responding to concerns about the matters discussed in this publication or other health care concerns, wish to obtain information about arranging for training or presentations by Ms. Stamer, wish to suggest a topic for a future program or update, or wish to request other information or materials, please contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here. If you or someone else you know would like to receive future updates about developments on these and other concerns from Ms. Stamer, see  here.

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here. For important information concerning this communication click here.  THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS.  ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.  

©2013 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press.  All other rights reserved.


CMS Publishes FY 2014 Final Inpatient Rehab Facility Prospective Payment Rule

August 1, 2013

Inpatient Rehabilitation Facilities (IRFs) take note.  The Centers for Medicare & Medicaid Services yesterday (July 31, 2013) published its final Inpatient Rehabilitation Facility (IRF), Inpatient Rehabilitation Facility Prospective Payment System for Federal Fiscal Year 2014 Final Rule (Rule). The Rule, which with its preamble is 272 pages, among other things:

  • Updates the prospective payment rates for (IRFs) for federal fiscal year (FY) 2014 (for discharges occurring on or after October 1, 2013 and on or before September 30, 2014) as required by the statute.
  • Revises the list of diagnosis codes that may be counted toward an IRF’s “60 percent rule” compliance calculation to determine “presumptive compliance,” update the IRF facility-level adjustment factors using an enhanced estimation methodology;
  • Revises sections of the Inpatient Rehabilitation Facility-Patient Assessment Instrument,
  • Revises requirements for acute care hospitals that have IRF units;
  • Clarifies the IRF regulation text regarding limitation of review;
  • Updates references to previously changed sections in the regulations text; and
  • Revises and updates quality measures and reporting requirements under the IRF quality reporting program.

The regulatory amendments in this Rule generally are effective as follows:

  • Its revisions to the list of diagnosis codes used to determine presumptive compliance under the “60 percent rule” are applicable for compliance review periods beginning on or after October 1, 2014; and
  • The updated IRF prospective payment rates are applicable for IRF discharges occurring on or after October 1, 2013 and on or before September 30, 2014 (FY 2014).
  • The changes to the Inpatient Rehabilitation Facility-Patient Assessment Instrument, the amendments to §412.25, and the revised and updated quality measures and reporting requirements under the IRF quality reporting program are applicable for IRF discharges occurring on or after October 1, 2014.

IRFs, their operators, management and investors should review the new rules, update their practices and budgets and make other arrangements to respond effectively to the Rule.

For More Information Or Assistance

If you need assistance responding to regulatory, enforcement or other developments, reviewing or tightening your policies and procedures, conducting training or audits, responding to or defending an investigation or other enforcement action or with other health care related risk management, compliance, training, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer, may be able to help. Vice President of the North Texas Health Care Compliance Professionals Association, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health industry clients about these and other matters. Her experience includes advising hospitals, nursing home, home health, rehabilitation and other health care providers and health industry clients to establish and administer compliance and risk management policies; prevent, conduct and investigate, and respond to peer review and other quality concerns; and to respond to Board of Medicine, Department of Aging & Disability, Drug Enforcement Agency, OCR Privacy and Civil Rights, HHS, DOD and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns. Her presentations and programs include How to Ensure That Your Organization Is In Compliance With Regulations Governing Discrimination, as well as a wide range of other workshops, programs and publications on discrimination and cultural diversity, as well as a broad range of compliance, operational and risk management, and other health industry matters. Her insights on these and other related matters appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.  You can get more information about her health industry experience here. If you need assistance responding to concerns about the matters discussed in this publication or other health care concerns, wish to obtain information about arranging for training or presentations by Ms. Stamer, wish to suggest a topic for a future program or update, or wish to request other information or materials, please contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here. If you or someone else you know would like to receive future updates about developments on these and other concerns from Ms. Stamer, see  here.

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here. For important information concerning this communication click here.  THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS.  ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.  

©2013 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press.  All other rights reserved.


Tighten Disability Compliance To Avoid ADA Suits, Program Disqualification & Other Risks

July 30, 2013

The Department of Justice’s July 29, 2013 announcement that it is suing Dr. Hal Brown and Primary Care of the Treasure Coast of Vero Beach, Florida (PCTC) for violating the Americans With Disabilities Act (ADA) by discriminating and retaliating against two deaf patients reminds physicians, clinics, hospitals and other health industry providers, their landlords, and other vendors to tighten their understanding, practices of federal and state disability discrimination laws to avoid getting nailed for improper discrimination.   Following on the Department of Health & Human Service’s recently announced exclusion of a physician that illegally discriminated against a HIV-positive patient, health care providers are on notice that Federal officials are gunning for health care providers who illegally discriminate against patients and others with disabilities.

With the Justice Department, HHS and others targeting discrimination in the health care industry, physicians and their practices, clinics, hospitals and other private and public health care providers, and their landlords and other vendors should update their understanding of disability discrimination responsibilities and exposures, and then review and tighten policies, practices, workforce training and oversight, and other risk management and compliance practice to help prevent and mitigate exposures to disability and other discrimination claims.

Health Care Providers & Industry Under Fire For Disability Discrimination

While the heavy emphasis generally placed upon the enforcement of disability laws by the Obama Administration has heightened the risks of all U.S. businesses, health care providers are particularly at risk to disability discrimination liability as a result of the Barrier-Free Health Care Initiative of the Justice Department and related health industry disability enforcement initiatives of HHS and other federal agencies.

Health care provider, like other U.S. businesses, face sweeping responsibilities under the various federal laws such as the public accommodation and other disability discrimination prohibitions of the ADA, Section 504, the Civil Rights Act and various other laws. Section 504 of the Rehabilitation Act generally requires recipients of Medicare, Medicaid, HUD, Department of Education, welfare and most other federal assistance programs funds including health care, education, housing services providers, state and local governments to ensure that qualified individuals with disabilities have equal access to programs, services, or activities receiving federal financial assistance.

The ADA extends the prohibition against disability discrimination to private providers and other businesses as well as state and local governments including but not limited to health care providers reimbursed by Medicare, Medicaid or various other federal programs.  Rather, the ADA requirements and disability discrimination prohibitions generally apply to all U.S. health care and other businesses even if they do not receive federal financial assistance.  Under the ADA, health care providers and other covered businesses generally have a duty other to ensure that qualified individuals with disabilities have equal access to their programs, services or activities.  In many instances, these federal discrimination laws both prohibit discrimination and require health care and other regulated businesses to put in place reasonable accommodations needed to ensure that their services are accessible and available to persons with disabilities.

Specifically under the ADA:

  • The public accommodation provisions generally both prohibit discrimination against individuals with disabilities when delivering health care or other services, as well as require health industry and other businesses to provide reasonable accommodations to individuals with disabilities unless the health care provider proves its actions are defensible under an exception to these general rules.
  • The employment discrimination provisions generally prohibit health care industry and other employers from discriminating against qualified individuals with a disability and require employers to provide reasonable accommodations for disabled workers unless the health care provider can prove that its conduct qualifies under one of the allowable exceptions to the general prohibition against discrimination.
  • The anti-retaliation rules prohibit retaliation against an individual because he opposes an act that is unlawful under the ADA or because he made a charge, testified, assisted or participated in any way in an investigation, proceeding or hearing under the ADA.  These provisions also make it unlawful to coerce, intimidate, threaten or interfere with any individual exercising their rights protected by the ADA.

Meanwhile the Civil Rights Act and other laws prohibit discrimination based on national origin, race, sex, age, religion and various other grounds.  These federal rules impact almost all public and private health care providers as well as a broad range housing and related service providers.

Justice Department ADA Suit Against Brown & PCTC

The ADA lawsuit against Dr. Brown and PCTC comes on the heels of the Justice Department’s Celebration of the 23rd Anniversary of the ADA last week and is an example of one of a growing number of lawsuits and other actions against health care providers resulting from the Justice Department “Barrier-Free Health Care Initiative”  and related Department of Health & Human Services (HHS) enforcement efforts focusing on ensuring access to health care for individuals with disabilities.

The Department of Justice suit charges Dr. Brown and PCTC with violating the public accommodation and anti-retaliation provisions of ADA by discriminating against a deaf couple, Susan and James Liese by discriminating against a deaf couple, Susan and James Liese and then retaliating against the couple for engaging in activities protected under the ADA.

According to the Justice Department’s complaint, Dr. Brown and PCTC terminated Mr. and Mrs. Liese as patients because the couple pursued ADA claims against a hospital located next door to and affiliated with PCTC for not providing effective communication during an emergency surgery.  The complaint alleges that after learning that the Lieses threatened the hospital with an ADA suit based on failure to provide sign language interpreter services, PCTC and Dr. Brown, who was the Liese’s primary doctor at PCTC, immediately terminated the Lieses as patients.

The Justice Department says this termination of the Lieses as patients violated the ADA.  According to Jocelyn Samuels, Acting Assistant Attorney General for the Civil Rights Division, “A person cannot be terminated as a patient because he or she asserts the right to effective communication at a hospital.”

While it remains to be seen if the Justice Department will be successful in its suit against Dr. Brown and PCTC, it has experienced significant success in disability discrimination actions against other health care providers.

Justice Department Barrier-Free Health Care Initiative Successes Growing

Justice Department suits like the ADA suit against Dr. Brown and PCTC are increasingly common and successful.

While the Justice Department across the years has prosecuted various health care providers for illegal discrimination under the ADA, it has turned up the heat with its nationwide Barrier-Free Health Care Initiative.  According to the Justice Department, it intends that the prosecutions under the Barrier-Free Health Care Initiative to focus and leverage the Justice Department’s resources together and send a clear message that disability discrimination in health care is illegal and unacceptable.

Since the Justice Department announced its Barrier-Free Health Care Initiative last year, for instance, the Justice Department has entered into 18 settlements under the Barrier-Free Health Care Initiative.  These include three agreements requiring health care providers to provide auxiliary aids and services, including sign language interpreters, to individuals who are deaf to ensure effective communication in health care settings including two settlements in the last month.

On June 27, 2013, the U.S. Attorney’s Office for the Western District of Tennessee announced that Heart Center of Memphis has agreed to provide qualified sign language and oral interpreters as well as other auxiliary aids and services to patients who are deaf, have hearing loss or have speech disabilities to resolve a Justice Department complaint charging the Heart Center violated the ADA by telling a deaf patient that it was his responsibility to arrange a sign language interpreter for his appointment.  After several unsuccessful attempts to get the Heart Center to provide a qualified sign language interpreter as required by law, the patient cancelled his appointment.

On June 26, 2013, the U.S. Attorney’s Office for the Northern District of Georgia announced it had reached a disability discrimination settlement agreement with Midtown Neurology P.C.  The settlement resolved a complaint alleging that Midtown Neurology P.C. failed to provide, over multiple appointments, a qualified sign language interpreter for a patient who is deaf.   At one appointment, the patient underwent a painful neurological test.  Because there was no interpreter, the patient could not communicate that she was frightened and in pain, and that she wanted the doctor to stop the procedure.  Under the agreement, Midtown Neurology P.C. will provide auxiliary aids and services, including qualified interpreters, to individuals who are deaf or hard of hearing where necessary to ensure effective communication.

In previous months, the Justice Department also has reached settlement agreements resolving charges health care providers violated the ADA by failing to provide interpreters or other accommodations for deaf or other communication impaired patients with Burke Health and Rehabilitation Center (May 3, 2013); Monadnock Community Hospital (April 5, 2013); Manassas Health and Rehab Center (April 5, 2013); Gainesville Health and Rehab Center (April 5, 2013); the Center for Orthopaedic and Sports Medicine, Inc. (April 5, 2013); Northern Ohio Medical Specialists (April 5, 2013); Northshore University Healthsystems (June 28, 2012); Steven Senica, M.D., and Senica Bruneau, Ltd. (June 11, 2012); Trinity Regional Medical Center and Trinity Health Systems (March 29, 2012); Henry Ford Health System (February 1, 2012); and Cheshire Medical Center, Keene Health Alliance, and Dartmouth-Hitchcock Clinic D/B/A Dartmouth-Hitchcock Keene (October 31, 2011)

In addition, the Justice Department also particularly is aggressive in prosecuting health care providers that discriminate against individuals with HIV.  In the past six months, the Department reports it has reached five settlement agreements with medical providers to address HIV discrimination.

For instance, the Justice Department on July 26, 2013 announced that Barix Clinics, an organization that operates bariatric treatment facilities in Michigan and Pennsylvania, will pay $35,000 to victim-complainants and a $10,000 civil penalty, train its staff on the ADA and implement an anti-discrimination policy to settle Justice Department charges that Barix Clinics unlawfully refused to perform bariatric surgery on a man at its Langhorne, Pa., facility because he has HIV.  The Department also determined that Barix Clinics cancelled bariatric surgery for another individual at its Ypsilanti, Michigan facility because he has HIV.

The Barix Clinic settlement added to a long list of earlier settlements of ADA charges stemming from discrimination against HIV patients including Glenbeigh (settlement regarding exclusion of an individual from an alcohol treatment program because of the side effects of his HIV medication, March 13, 2013); Woodlawn Family Dentistry (dentist office’s unequal treatment of people with HIV in the scheduling of future dental appointments, February 12, 2013); Castlewood Treatment Center (eating disorder clinic’s refusal to treat a woman for a serious eating disorder because she has HIV, February 6, 2013); and Fayetteville Pain Center (unlawful exclusion of a person with HIV from treatment, January 31, 2013).

While most announced Justice Department settlements involve the denial of interpreters to deaf or other communication impaired patients and discrimination in the treatment of HIV patients, the Justice Department also has shown a willingness to prosecute health care providers who engage in other types of disability discrimination.  For instance, on April 3, 2012, the Justice Department reached a settlement with Richard Noren, M.D., Henry Kurzydlowski, M.D., and Pain Care Consultant, Inc., which resolved charges that they violated the ADA by failing to make reasonable changes to policies, practices, and procedures to enable a child with diabetes to participate in summer camp.  Furthermore, although not necessarily reflected in the currently published, officially announced settlements of the Justice Department, health care providers have reported that the Justice Department and HHS also have become increasingly aggressive in investigating disability claims of visually or other physically, cognitively, or emotionally disabled patients arising from the failure of health care providers to accommodate their need for support or comfort animals.

Justice Department Plans To Keep Heat On Health Care Providers

All signs are that the Justice Department intends to continue, if not expand its Barrier-Free Health Care Initiatives.  In fact, the suit against Dr. Brown and PCTC comes on the heels of the Justice Department’s filing of an ADA disabilities discrimination lawsuit against the State of Florida alleging the state is in violation of the ADA in its administration of its service system for children with significant medical needs.

The Justice Department lawsuit against the State of Florida charges that Florida’s programs have resulted in nearly 200 children with disabilities being unnecessarily segregated in nursing facilities which should be served in their family homes or other community-based settings.  The Justice Department further alleges that the state’s policies and practices place other children with significant medical needs in the community at serious risk of institutionalization in nursing facilities.  The department’s complaint seeks declaratory and injunctive relief, as well as compensatory damages for affected children.

“Florida must ensure that children with significant medical needs are not isolated in nursing facilities, away from their families and communities,” said Eve Hill, Deputy Assistant Attorney General for the Civil Rights Division.  “Children have a right to grow up with their families, among their friends and in their own communities.  This is the promise of the ADA’s integration mandate as articulated by the Supreme Court in Olmstead.  The violations the department has identified are serious, systemic and ongoing and require comprehensive relief for these children and their families.”

Health Industry Disability Discrimination Risks:  Beyond The Justice Department

While private plaintiffs as well as the Justice Department and other agencies increasingly successfully sue health care providers for violating the ADA and other disability discrimination laws, the often significant damages and defense costs that often arise from these suits are only part of the exposure that health care providers should consider and manage.  Among other things, health care providers accused or found to engage in disability discrimination also generally also risk significant adverse publicity, loss or curtailment of federal or state program participation, reimbursement or other contractual or administrative penalties, licensing board and accreditation sanctions, burdensome corrective action and ongoing reporting and oversight and other consequences.

Perhaps most notably, HHS also is stepping up enforcement against health care providers that discriminate against the disabled.  Like the actions of the Justice Department, many of these enforcement actions focus heavily on discrimination against HIV patients as well as deaf or other individuals whose disabilities impairs their ability to communicate effectively with health care providers.

For instance, on July 18, 2013, HHS announced the termination of Medicaid funding to a California surgeon who intentionally discriminated against an HIV-positive patient by refusing to perform much-needed back surgery. The HHS Departmental Appeals Board concluded that the surgeon violated Section 504 of the Rehabilitation Act of 1973, which prohibits disability discrimination by health care providers who receive federal funds. The order follows an Office for Civil Rights (OCR) investigation of a complaint filed by a patient who alleged that the surgeon refused to perform back surgery after learning that the patient was HIV-positive. OCR found that the surgeon discriminated against the patient on the basis of his HIV status in violation of federal civil rights laws. See HHS Press Release; HHS Departmental Appeals Board Decision; OCR Violation Letter of Findings.

HHS’s exclusion of the surgeon from federal program participation is part of a long-standing policy of OCR of pursuing disability discrimination actions against providers that discriminate against patients with HIV.  For instance OCR previously has announced that an Austin, Texas orthopedic surgeon had agreed to ensure that individuals living with HIV/AIDS have equal access to appropriate medical treatment in order to resolve charges brought in an OCR Violation Letter of Finding charging the surgeon with violating the Rehabilitation Act by refusing to perform knee surgery on an HIV-positive patient.  See Settlement Agreement.

OCR, like the Justice Department, also is aggressive in pursuing Rehabilitation Act claims against health care providers for failing to provide interpreters or other appropriate accommodations for deaf or other patients with disabilities that impair their ability to communicate. In March, for instance, OCR announced a settlement agreement with national senior care provider, Genesis HealthCare (Genesis) which resolved an OCR complaint that Genesis violated Section 504 of the Rehabilitation Act by failing to provide a qualified interpreter to a resident at its skilled nursing facility in Randallstown, Maryland. See, Genesis Settlement.

OCR construes Section 504 of the Rehabilitation Act of 1973, as among other things requiring that facilities take appropriate steps to ensure effective communications with individuals. According to OCR, throughout the patient’s stay at the facility, an OCR investigation showed center staff relied on written notes and gestures to communicate with the resident, even while conducting a comprehensive psychiatric evaluation with him.  Moreover, by not being provided a qualified interpreter, evaluations of his care and discussions on the effects of his numerous medications and the risks caused by not following recommended treatments and prescription protocols had harmful effects on the patient’s overall health status.  According to OCR Director Leon Rodriguez, “This patient’s care was unnecessarily and significantly compromised by the stark absence of interpreter services.” OCR concluded that in order for the patient and staff to be able to communicate effectively with each other regarding treatment, a qualified sign language interpreter would have been necessary.

Under the terms of the agreement, Genesis must require all facilities to provide interpreters and other suitable communications accommodations to language disabled patients, form an auxiliary aids and services hotline; create an advisory committee to provide guidance and direction on how to best communicate with the deaf and hard of hearing community; designate a monitor to conduct a self-assessment and obtain feedback from deaf and hard of hearing individuals and advocates and conduct outreach to promote awareness of hearing impairments and services that are available for deaf and hard of hearing individuals.  In addition Genesis will be required to pay monetary penalties for noncompliance with any terms of the agreement.

In announcing the Genesis settlement, Director Rodriguez warned, “My office continues its enforcement activities and work with providers, particularly large health care systems like Genesis, to make certain that compliance with nondiscrimination laws is a system wide obligation.

The Genesis Agreement is typical of a multitude of settlements resulting from OCR enforcement against health care providers for failing to accommodate deaf, speech or other communication impaired patients.  See, e.g. Cattaraugus County Department of Aging Settlement Agreement; District of Columbia Children and Family Services Agency Settlement Agreement (February 8, 2013); Memorial Health System Colorado Springs  Voluntary Resolution Agreement (November 7, 2012); Advanced Dialysis Centers Settlement Agreement (February  17, 2012).

When evaluating the need to provide interpreters, health care providers also should consider the advisability of offering interpreters for patients whose primary language is not English.  OCR’s discrimination enforcement efforts often extend to other language impaired persons such as English as a Second Language patients.  In addition to its efforts on behalf of individuals with disabilities impacting their ability to communicate, OCR recently announced a national initiative under which it will conduct compliance reviews of critical access hospitals as part of its efforts to strengthen language access for individuals whose primary language is not English.  See OCR Launches Nationwide Compliance Review Initiative To Strengthen Language Access Programs At Critical Access Hospitals.

Health care providers also should ensure that their take appropriate steps to accommodate other disabilities.  For instance, the use of support animals by veterans, children, and other patients with physical, emotional or cognitive disorders on the rise, health care providers need to ensure that their policies, practices, training, facilities leases and other vendor contracts, posting and other arrangements are updated to accommodate patients requiring the use of support or comfort animals.  OCR’s enforcement actions already have extended to protection of the rights of disabled individuals to have the aid and assistance of their service animals when receiving services from health care providers.  For instance, under a settlement agreement with the St. Mercy Medical Center (Mercy) in Fort Smith, Arkansas resolving an OCR complaint that it violated Section 504 and the Rehabilitation Act of 1973, Mercy committed to revise it policies and procedures to comply with Section 504 and to provide staff comprehensive training on their obligations to provide services without discrimination to qualified persons with disabilities. This settlement follows an OCR investigation into a complaint filed by an individual whose service animal was not allowed to go with him into the hospital.  See, Mercy Settlement Agreement. This recent newscast video highlights how the failure to update postings, training, and other practices could result in a host of negative publicity and enforcement actions from refusing or limiting the ability of a person with a disability to have the support of his comfort animal within a health care facility. North Texas Vet Cries Foul After Service Dog Rejection.  This type of adverse publicity not only can do serious damage to a health care provider’s public image, it also is likely to trigger the type of investigation that lead to the Mercy enforcement action.

Other Disability Discrimination Risks

Defending or paying to settle a disability discrimination charge brought by a private plaintiff, OCR or another agency, or others tends to be financially, operationally and politically costly for a health care organization or public housing provider.  In addition to the expanding readiness of OCR, the Justice Department and other agencies to pursue investigations and enforcement of disability discrimination and other laws, physicians and other licensed professionals can expect that they may face disciplinary action by their applicable licensing boards, whose rules typically now make disability or other wrongful discrimination against patients a violation of their rules.  Meanwhile, the failure of health care organizations to effectively maintain processes to appropriately include and care for disabled other patients or constituents with special needs also can increase negligence exposure, undermine Joint Commission and other quality ratings, undermine efforts to qualify for public or private grant, partnerships or other similar arrangements, and create negative perceptions in the community.

Act To Manage & Mitigate Disability Risks

In the face of these growing risks ,  physicians, hospitals and their medical staffs, and other health care providers should review and tighten their policies, leases and other vendor contracts, practices and training to minimize their exposure to prosecution or other sanctions for disability discrimination.

In light of the expanding readiness of OCR, the Justice Department and other agencies to investigate and take action against health care providers for potential violations of the ADA, Section 504 and other federal discrimination and civil rights laws, health care organizations and their leaders should review and tighten their policies, practices, training, documentation, investigation, redress, discipline and other nondiscrimination policies and procedures.

Given a series of recent changes in the provisions of the ADA, discrimination regulations, and enforcement standards, this process generally should begin by reviewing the health care provider’s understanding and policies regarding disability and other discrimination to ensure that they comply with current legal and credentialing requirements and standards.  Once the organization confirms its understanding of current rules is up-to-date, the health care provider also should critically evaluate its operations to identify where its postings, policies, training, practices and operations need to be updated or tightened to meet these standards or avoid other risks.

In carrying out these activities, organizations and their leaders should keep in mind the critical role of training and oversight of staff and contractors plays in promoting and maintaining required operational compliance with these requirements.  Reported settlements reflect that the liability trigger often is discriminatory conduct by staff, contractors, or landlords in violation of both the law and the organization’s own policies.

To meet and maintain the necessary operational compliance with these requirements, organizations should both adopt and policies against prohibited discrimination and take the necessary steps to institutionalize compliance with these policies by providing ongoing staff and vendor training and oversight, contracting for and monitoring vendor compliance and other actions.  Organizations also should take advantage of opportunities to identify and resolve potential compliance concerns by revising patient and other processes and procedures to enhance the ability of the organization to learn about and redress potential charges without government intervention.

For More Information Or Assistance

If you need assistance reviewing or tightening your policies and procedures, conducting training or audits, responding to or defending an investigation or other enforcement action or with other health care related risk management, compliance, training, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer, may be able to help. Vice President of the North Texas Health Care Compliance Professionals Association, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health industry clients about these and other matters. Her experience includes advising hospitals, nursing home, home health, rehabilitation and other health care providers and health industry clients to establish and administer compliance and risk management policies; prevent, conduct and investigate, and respond to peer review and other quality concerns; and to respond to Board of Medicine, Department of Aging & Disability, Drug Enforcement Agency, OCR Privacy and Civil Rights, HHS, DOD and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns.

A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns. Her presentations and programs include How to Ensure That Your Organization Is In Compliance With Regulations Governing Discrimination, as well as a wide range of other workshops, programs and publications on discrimination and cultural diversity, as well as a broad range of compliance, operational and risk management, and other health industry matters.

Her insights on these and other related matters appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.  You can get more information about her health industry experience here. If you need assistance responding to concerns about the matters discussed in this publication or other health care concerns, wish to obtain information about arranging for training or presentations by Ms. Stamer, wish to suggest a topic for a future program or update, or wish to request other information or materials, please contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

If you or someone else you know would like to receive future updates about developments on these and other concerns from Ms. Stamer, see  here. About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here. For important information concerning this communication click here. 

THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS.  ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

 

©2013 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press.  All other rights reserved.


Hollywood Pavillion & Other Fraud Convictions Show Individuals Risk Prison Time For Health Care Fraud Involvement

July 6, 2013

Convictions Show Growing Fraud Enforcement Risks Reach Broadly To Broad Range Of Actors

Do you love your health care organization enough to go to jail?  With federal and state prosecutors stepping up health care fraud investigation and enforcement, this is a question that individuals leading, working or investing in health care organizations increasingly need to seriously consider.

As federal and state officials continue to ramp up their war on health care fraud, the ever-growing list of criminal convictions of individuals found to have participate in or tolerated prohibited billing, referral or other activities prohibited under federal or state health care fraud laws are intended to both punish the guilty and send a strong message to others throughout the industry: Don’t Do The Crime If You Don’t Want To Serve The Time!

Hollywood Pavilion Convictions

The July 28 federal jury conviction of four individuals for their involvement in nearly $70 million of fraudulent Medicare billings by Hollywood Pavilion (HP), a Miami-area mental health care hospital is the latest case in point.  The successful prosecutions shows again the readiness of the Justice Department to prosecute individuals at all levels of organizations for their participation in health care fraud activities even after obtaining criminal convictions, civil settlements, and program disqualification or other administrative consequences against the health care organizations, their leaders, employees and others that participate illegal schemes that defraud federal health care programs like Medicare, private health insurance plans or both.

In the verdicts announced July 28 stemmed from the Justice Department’s prosecution of the  former Chief Executive Officer, the former in-patient clinical director, former head of  intensive outpatient care and former director of physical therapy for various health care fraud, wire fraud and other charges for their participation in a massive scheme that attempted to defraud the United States of approximately $70 million by taking advantage of Medicare beneficiaries.

Federal officials originally announced charges against the four defendants as part of high-profile sting and takedown by the Medicare Fraud Strike Force of 91 individuals across the nation for their alleged involvement in submitting approximately $430 million in false billings to federal health care programs. See Indictment of 91 Shows Growing Heath Care Fraud Enforcement Risk.

The convictions resulted after the Justice Department tried the defendants with illegally paying bribes to a network of patient recruiters, falsifying documents and other criminal conduct in violation of federal health care fraud, wire fraud and other laws.  Based on evidence presented at trial, the federal jury found:

  • Karen Kallen-Zury, 59, and Daisy Miller, 44, each guilty of one count of conspiracy to commit wire fraud and health care fraud, five substantive counts of wire fraud and two substantive counts of health care fraud;
  • Michele Petrie, 64, guilty of one count of conspiracy to commit wire fraud and health care fraud and three substantive counts of wire fraud;
  • Kallen-Zury, Miller, Petrie and a fourth defendant, Christian Coloma, 49, of one count of conspiracy to pay bribes in connection with Medicare; and
  • Kallen-Zury and Coloma also each guilty of five substantive counts of paying bribes.

The convictions resulted after Federal prosecutors charged the four defendants and one other individual with participating and aiding HP to illegally bill Medicare for nearly $70 million for services that were not properly rendered, for patients that did not qualify for the services being billed and for claims for patients procured through bribes and kickbacks from at least 2003 through at least August 2012.

At trial, Federal prosecutors claimed that the defendants and their co-conspirators caused the submission of false and fraudulent claims to Medicare through HP, a state-licensed psychiatric hospital located in Hollywood that purportedly provided, among other things, inpatient psychiatric care and intensive outpatient psychiatric care.  Prosecutors claimed the defendants paid illegal bribes and kickbacks to patient brokers in order to obtain Medicare beneficiaries as patients at HP who did not qualify for psychiatric treatment, then illegally submitted claims to Medicare for those patients who were procured through bribes and kickbacks.

Among other things, Federal prosecutors charged and introduced evidence that:

  • Karen Kallen-Zury, the CEO and registered agent of HP, attempted to conceal the payment of bribes and kickbacks by creating false documents to make it appear as if legitimate services were being rendered;
  • Miller, the clinical director of HP’s inpatient facility, and Petrie, the head of HP’s intensive outpatient program, facilitated the payment of bribes to patient recruiters and oversaw the fraudulent admissions and treatment of unqualified patients;
  • Coloma, the director of physical therapy for an entity associated with HP, facilitated the payment of bribes and kickbacks, and he supervised the creation of false documents to conceal the bribery scheme.

All four defendants now are awaiting sentencing.

Zealous Investigation & Prosecution Part of National Anti-Health Care Fraud Campaign

These and other convictions provide tangible proof of the growing success of the efforts to zealously investigate and prosecute health fraud by the Justice Department, HHS and other federal officials under their joint the Health Care Fraud Prevention & Enforcement Action Team (HEAT), Medicare Fraud Strike Force and other anti-fraud efforts.   The joint Department of Justice-HHS Medicare Fraud Strike Force that lead to these charges and convictions is a multi-agency team of federal, state and local investigators designed to combat Medicare fraud through the use of Medicare data analysis techniques and an increased focus on community policing.  Since its announcement, the Strike Force has used the combined resources of agents from the FBI, HHS-Office of Inspector General (HHS-OIG), multiple Medicaid Fraud Control Units, and other state and local law enforcement agencies to investigate and prosecute a rising number of organizations and individuals throughout the industry for alleged violations of Federal health care fraud prohibitions.

In recent years, Congress has amended the False Claims Act and enacted other reforms that give the Justice Department and other federal officials working in these anti-fraud efforts new tools that they are using to strengthen the effectiveness of their anti-fraud investigation and prosecution efforts.  See Health Care Fraud Enforcement Packs New Heat.

Empowered by these and other new tools, the Justice Department and other participants in the HEAT and Medicare Fraud Strike Force increasingly are successful in prosecuting and convicting health care providers and others for participating in activities and schemes that violate federal or state health care fraud, referral, anti-kickback or other federal or state laws.  See, e.g., North Texas Medical Supply Company Owner Indicted For Health Care Fraud Now Also Charged With Immigration Fraud; Former Houston Texas Physician Gets 70 Month Prison Sentence For Fraud ConvictionEuless Healthcare Corporation Owner, Associates Face Conspiracy And Health Care Fraud Charges For Alleged Submission Of $700,000+ In Fraudulent Health Care Claims; Former Manager 9th Employee Sentenced For Involvement In Maxim Medicare False Claims Action; Detroit-Area Foot Doctor Pleads Guilty to Medicare Fraud Scheme; Merck To Pay $950 Million To Settle Vioxx® Off-Label Marketing ChargesIndeed, since the jury rendered its July 28 verdict, Justice Department officials already have announced several other prosecutorial successes.  See, e.g.,Los Angeles Medical Supply Company Owner Sentenced to Five Years in Prison for $8.4 Million Medicare Fraud Scheme; Los Angeles-Area Doctor and Patient Recruiter Plead Guilty to Participating in a Power Wheelchair Scheme That Defrauded Medicare of Over $10.1 MillionOwner of Rehabilitation Facility Pleads Guilty to Mail Fraud Charge; Local Oncology Practice Sentenced To Pay Millions for Medicare Fraud

In addition to criminal prosecutions, the HHS Centers for Medicare and Medicaid Services, working with the HHS-OIG, are using a wide range of new and old tools in their campaign against what they perceive as fraudulent providers and to deter other perceived aggressiveness by health care providers and organizations.  See e.g., U.S. to use software to crack down on Medicare, Medicaid, CHIP fraud;   Health Care Fraud Enforcement Packs New Heat; OIG Shares Key Insights On When Owners, Officers & Managers Face OIG Program Exclusion Based On Health Care Entity Misconduct; OIG Launch of Health Care Fraud “Most Wanted” List Sign of Enforcement Risks; CMS Delegated Lead Responsibility For Development of New Affordable Care Act-Required Medicare Self-Referral Disclosure Protocol; HHS announces Rules Implementing Tools Added By Affordable Care Act to Prevent Federal Health Program Fraud.

The effectiveness of these Federal efforts to deter, find and prosecute false claims and other perceived abuses of Federal health care law has been significantly strengthened since Congress passed the Patient Protection & Affordable Care Act (Affordable Care Act).  Among other things, ACA empowered HHS to:

  • Suspend payments to providers and suppliers based on credible allegations of fraud in Medicare and Medicaid;
  • Impose a temporary moratorium on Medicare, Medicaid, and CHIP enrollment on providers and suppliers when necessary to help prevent or fight fraud, waste, and abuse without impeding beneficiaries’ access to care.
  • Strengthen and build on current provider enrollment and screening procedures to more accurately assure that fraudulent providers are not gaming the system and that only qualified  health care providers and suppliers are allowed to enroll in and bill Medicare, Medicaid and CHIP;
  • Terminate providers from Medicaid and CHIP when they have been terminated by Medicare or by another state Medicaid program or CHIP;
  • Require provider compliance programs, now required under the Affordable Care Act, that will ensure providers are aware of and comply with CMS program requirements.

See HHS announces Rules Implementing Tools Added By Affordable Care Act to Prevent Federal Health Program Fraud.

Act To Manage Risks

In response to the growing emphasis and effectiveness of Federal officials in wielding these and other tools against health care providers and organizations, health care providers covered by federal false claims, referral, kickback and other health care fraud laws should consider auditing the adequacy of existing practices, tightening training, oversight and controls on billing and other regulated conduct, reaffirming their commitment to compliance to workforce members and constituents and taking other appropriate steps to help prevent, detect and timely redress health care fraud exposures within their organization and to position their organization to respond and defend against potential investigations or charges.

For More Information Or Assistance

If you need assistance reviewing or responding to these or other health care related risk management, compliance, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer, may be able to help. Vice President of the North Texas Health Care Compliance Professionals Association, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health industry clients about these and other matters. Her experience includes advising hospitals, nursing home, home health, rehabilitation and other health care providers and health industry clients to establish and administer compliance and risk management policies; prevent, conduct and investigate, and respond to peer review and other quality concerns; and to respond to Board of Medicine, Department of Aging & Disability, Drug Enforcement Agency, OCR Privacy and Civil Rights, HHS, DOD and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns.

A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns. Her presentations and programs include a wide range of compliance, risk management and other workshops, programs and publications.

Her insights on these and other related matters appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.  You can get more information about her health industry experience here. If you need assistance responding to concerns about the matters discussed in this publication or other health care concerns, wish to obtain information about arranging for training or presentations by Ms. Stamer, wish to suggest a topic for a future program or update, or wish to request other information or materials, please contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

If you or someone else you know would like to receive future updates about developments on these and other concerns from Ms. Stamer, see  here.

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here. For important information concerning this communication click here. 

THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS.  ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

©2013 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press.  All other rights reserved.


Follow

Get every new post delivered to your Inbox.

Join 616 other followers

%d bloggers like this: