Fraud & AbuseTraining for First Tier,

Downstream and Related Entities

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Purpose of this TrainingThe Centers for Medicare and Medicaid Services

(CMS) requires Medicare Advantage and Prescription Drug Plans to provide Fraud, Waste and Abuse (FWA) training to its employees, First Tier, Downstream and Related Entities on an annual basis beginning in calendar year 2009.

First Tier, Downstream and Related Entities can provide their own training or use training materials from one of their Medicare Advantage or Prescription Drug plans.

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First Tier & Downstream Entities• First Tier entities are companies that

have contracted with Physicians United Plan (PUP) to provide administrative or prescription drug services to PUP’s members

• Downstream entities are companies that First Tier entities sub-contract with to provide these services

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Topics• Definitions• The cost of health care fraud• Some recent cases• Fraud and abuse laws• Penalties• What are we doing?• What can I do?

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The Cost of Health Care Fraud • In 2007, the US spent $2.26 trillion on health

care (16% of gross domestic product). • By 2016, we will spend more than $4 trillion

on health care. • The National Health Care Anti-Fraud

Association estimates that 3% is lost to fraud. • The Government Accounting Office (GAO) and

other government sources estimate it may be as high as 10%.

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Health Care Fraud Costs Us All• Intangible costs, e.g., effect on patient care

of false medical records, deaths caused by dilution of drugs

• Physical risks to patients from medically unnecessary procedures

• Dollars diverted from the elderly, sick, poor.• Each household pays $1000 more in higher

taxes, reduced benefits, increased premiums, and more expensive doctor visits and RX ($1000 per household)

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Scope of problemFor fiscal year 2008, the US Department of Health and Human Services Office of Inspector-General (OIG) reported: • exclusion of 3,129 individuals and entities for

fraud or abuse• 575 criminal actions • 342 civil actions • Savings/expected recovery of >$20.4 billion

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• Health care fraud is defined in Title 18, United States Code (U.S.C.) s. 1347 as knowingly and willfully executing, or attempting to execute, a scheme or artifice to defraud any health care benefit program or to obtain (by means of false or fraudulent pretenses, representations, or promises) any of the money or property owned by, or under the custody or control of, any health care benefit program.

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Definitions

Definitions (cont’d)

• Abuse: Provider practices that are inconsistent with generally accepted business or medical practices and that result in any unnecessary costs or result in reimbursement for goods or services that are not medically necessary or that fail to meet professionally recognized standards for health care.

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Definitions (cont’d)

• Waste: activities involving payment or the attempt to obtain reimbursement for items or services where there was no intent to deceive or misrepresent but the outcome of poor or inefficient billing or treatment methods causes unnecessary costs to the Medicare/Medicaid/State Children’s Health Insurance Program.

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Examples of Fraud• Billing for services that were not provided • Performing medically unnecessary services solely

to obtain insurance payments• Altering claim forms, medical documentation, etc.

to obtain a higher payment• Duplicate billing (deliberate)• Unbundling or “exploding” charges• Upcoding (billing for a service that costs more)• Soliciting, offering, or receiving a kickback for

referral of patients in exchange for other services

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Examples of Fraud (cont’d)

• Billing for dead and jailed beneficiaries• Billing by dead doctors (on 7/9/08, the US Senate

Permanent Subcommittee on Investigations estimated that Medicare paid $60.3 to $92.8 million to companies that used the UPINs of dead doctors)

• Waiving patient co-pays or deductibles• Misrepresenting non-covered services as medically

necessary, e.g., billing “nose jobs” as deviated-septum repairs, routine foot care as diabetic foot care

• Using another person’s ID card to obtain care

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Examples of Part D (Prescription Drug) FraudCan be at member, pharmacy, prescriber,PBM, wholesaler or manufacturer level:• Pharmacy dispensing a generic but billing for

a brand• Patient selling drugs back to the pharmacy

for pharmacy to re-sell• Prescription forging/altering, identity theft,

theft of prescription pads (member)

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Examples of Part D fraud (cont’d)• Inappropriate Formulary decisions (PBM)• Inappropriate marketing of drugs,

improper incentives to physicians to prescribe medically unnecessary drugs/brand names (manufacturer)

• Counterfeit/adulterated drugs through black/grey market (wholesaler)

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Examples of Abuse• Charging in excess for services/supplies• Providing medically unnecessary services• Providing services that do not meet

professionally recognized standards• Submitting bills to Medicare instead of the

primary insurer• Violating the Medicare Allowable Actual

Charge limits or the Medicare Limiting Charge

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Difference between Fraud & Abuse• Abuse results from practices that directly/indirectly

result in unnecessary cost.• Fraud requires evidence of intent to defraud, i.e., acts

were committed knowingly, willfully and intentionally.• Abusive billing practices may not result from “intent”

or it may be impossible to prove that the intent to defraud existed; however under certain circumstances, these types of practices may develop into fraud if there is evidence of the subject knowingly and willfully conducting an abusive practice.

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Recent Florida casesOctober 9, 2009, Department of Justice3 Miami-Dade County, Fla., residents indicted in connection

with an alleged $2.3 million Medicare fraud scheme operated out of a Detroit-area clinic that purported to specialize in providing injection and infusion therapies.

August 7, 2009, U.S. Attorney, Southern District of FloridaFederal Judge Sentences Defendants Who Perpetrated $10.9

Million Medicare Fraud HIV Infusion Scheme

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Recent Florida cases (cont’d)August 17, 2009, U.S. Attorney, Southern District of FloridaDurable Medical Equipment Company Owner Convicted In Medicare

Fraud Scheme for fraudulent DME billing. DME prescriptions were not signed by doctors; DME was not provided as claimed; some DME claims were for dead people.

October 9, 2008, U.S. Attorney, Southern District of Florida Chiropractor and 2 Others Charged in Medicare Fraud Scheme

(defendants solicited accident victims and persons to "stage" accidents to file fraudulent insurance claims on non-existent and exaggerated personal injuries).

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Recent Florida cases (cont’d)September 29, 2008, Department of JusticeWalgreens Pays $9.9 million to Settle Medicaid Prescription

Drug Allegations

January 4, 2008, OIG websiteShands Hospital paid fine of $119,838 for employing an

individual that the OIG alleges Shands knew or should have known had been excluded from participation in Federal health care programs

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Fraud in the Managed Care Setting• Marketing (agent misrepresentation/

misleading marketing materials)• Enrollment (e.g., beneficiary

misrepresentation about residence)• Utilization Management • Claims• Risk Adjustment Data • Prescription Drug (Part D) program

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Fraud and Abuse laws • False Claims Act (FCA), 31 U.S.C., s. 3729 • Florida False Claims Act, F.S. 817.234• Anti-Kickback Statute 42 U.S.C. s. 1320a-7b(b)• Physician Self-Referral (“Stark”) Statute, 42

U.S.C. s. 1395nn• Deficit Reduction Act of 2005• HIPAA of 1996, Title 18, Section 1347 • Fraud Enforcement and Recovery Act of 2009

(FERA).

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Federal False Claims ActKnown as the “Lincoln Law”, covers fraud involving any federally funded contract/program. Imposes civil liability on any person who:• Knowingly presents, or causes to be presented, to an

officer or an employee of the United States government a false or fraudulent claim for payment or approval;

• Knowingly makes, uses, or causes to be made or used a false record or statement to get a false or fraudulent claim paid or approved by the government; or

• Conspires to defraud the government by getting a false or fraudulent claim allowed or paid

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False Claims Act (cont’d)

Key word is “knowingly”! • “Knowingly” does not require proof of

specific intent to defraud the government. • “Actual knowledge of the information” or

acting “in deliberate ignorance of the truth or falsity of the information” or “in reckless disregard of the truth or falsity of the information” is enough.

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False Claims Act (cont’d)

Amended in 1986 to increase the penalties and qui tam

awards: • Civil monetary penalty: $5500- to 11,000- per false

claim• Treble damages• OIG sanction/exclusion from participation in federal

health care programs

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False Claims Act (cont’d)

A False Claims Act case can be brought by:

• The Attorney General in federal court• A private citizen (whistleblower) in federal court on

behalf of the government (“qui tam” action) The complaint is filed under seal, and the DOJ may decide to intervene and take over the case.

• If the DOJ does not, the private citizen may continue the case. If money is recovered, the whistleblower gets 15% - 25% (more if DOJ does not take over the case).

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False Claims Act (cont’d)

From 1986 to 2006:• Qui tam lawsuits brought under the FCA have returned

> $11 billion to the government • Recoveries resulting from all qui tam and non-qui tam

cases brought under the FCA total $18.1 billion. • Whistleblower rewards for qui tam cases exceed $1.79

billion.• In fiscal year 2006, qui tam lawsuits resulted in

recoveries of $1.4 billion. Whistleblowers received rewards that totaled $198 million. (Source: US DOJ statistics)

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Florida False Claims Act• Florida’s FCA closely mirrors the Federal FCA • Whistleblowers can bring qui tam action if

the fraud involves Medicaid or other state-funded programs.

• If a state FCA’s whistleblower provisions are at least as effective as the federal FCA, the state gets a 10% increase in their share of Medicaid fraud recoveries (Florida’s FCA currently does not qualify)

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Deficit Reduction Act• Requires Medicaid programs to look for FWA• Mandate procedures on FWA• Requires employers who receive more than $5

million per year in Medicaid payments to train their staff on the False Claims Act, qui tam lawsuits and FWA program

• Creates incentive for states to have their own whistleblower laws

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Anti-Kickback StatuteIt is a felony to knowingly and willfully to offer, pay, solicit, or receive any remuneration to induce or reward referrals of items or services paid in whole or in part by a federal health care program. “Remuneration” includes transfer of anything of value, directly or indirectly, overtly or covertly, in cash or in kind.

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Physician Self-Referral Prohibition StatuteThe “Stark Law” prohibits a physician from making a referral for certain designated health services to an entity in which the physician (or a member of his/her family) has an ownership/investment interest or with which he or she has a compensation arrangement, unless an exception applies.

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HIPAAHIPAA established health care fraud asa federal criminal offense and increasedthe penalties.• Forfeiture of property derived, directly or

indirectly, from gross proceeds traceable to the commission of the offense

• Imprisonment for up to 10 years/up to 20 years if the violation results in “bodily injury”/life if patient dies

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HIPAA (cont’d)

• Created funding for states to fight fraud and abuse; Florida used the money for the South Florida Health Care Fraud Center.

• HIPAA s.203(b)(1) created the Medicare Incentive Reward Program (IRP). to encourage reporting of sanctionable activities. IRP will pay a reward for information that leads to a minimum recovery of $100 from a party determined by CMS to have committed sanctionable offenses.

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Fraud Enforcement and Recovery Act of 2009• In May 2009, President Obama signed

into law the Fraud Enforcement and Recovery Act (“FERA”) of 2009.

• Boosts federal government’s power to investigate and prosecute any financial fraud against the govt. and expands liability under the False Claims Act.

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Enforcement Agencies• Office of Inspector-General (OIG)• Federal Bureau of Investigation (FBI)• Federal Department of Justice (DOJ)• Postal Inspectors (mail fraud)• United States Attorneys• Medicaid Fraud Control Unit• AHCA Bureau of Medicaid Program Integrity • MEDICs (Medicare Integrity Contractors)• Quality Improvement Organizations (QIO)

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Sanctions• Civil or criminal prosecution• Fines/Civil Monetary Penalty

($10K/violation)• Restitution• Imprisonment• Administrative sanctions (exclusion,

Corporate Integrity Agreement)• Treble damages

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PUP’s FWA Program• PUP’s claims software (Virtual Examiner) can detect:

Upcoding Unbundling (e.g., billing for separate lab tests

that should be billed as a lab panel) Duplicate billing Weekly visits for blood pressure checks for a

patient with medically treated and stable hypertension

Billing a hysterectomy for a male patient Inappropriate place of service for a procedure

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PUP’s • Prescription Solutions , our Pharmacy Benefit

Manager, uses software to detect trends, raise red flags (e..g, sudden spike in certain claims

• Fraud awareness training for staff, providers, members

• Review OIG/GSA sanctions list (providers/employees)• Compliance program to establish an environment

that promotes prevention, detection and resolution of conduct that does not conform to legal, ethical or program requirements

• Hotline

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PUP’s FWA Program (cont’d)

PUP’s FWA Program (cont’d)

• Agent oversight and monitoring of marketing activities

• Report suspected fraud to OIG when there is a reasonable basis to suspect that someone:

• Intentionally engaged in improper billing• Submitted improper claims with actual knowledge that they

were false• Submitted improper claims with reckless disregard or

deliberate ignorance of their truth or falsity• Work with MEDIC (CMS Medicare Integrity

Contractor) on prescription drug FWA cases

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PUP’s FWA Program (cont’d)

• Work with PUP’s contractors and delegated entities to:– Implement policies and procedures to

address FWA– Assist contractors and delegated entities

with their own FWA awareness training– Report all suspected FWA cases to PUP– Protect employees and others who

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What can I do?• Know your department’s P&Ps• Watch for suspicious activity, red flags• Educate providers/members/vendors• Report suspicious activity• Audits/checks and balance• Bring suggestions for preventing FWA• No retaliation against employees who

report in good faith

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Where to find additional info:• National Healthcare Anti-Fraud Association www.nhcaa.org• CMS website www.cms.hhs.gov• OIG website www.oig.hhs.gov• OIG exclusions www.oig.hhs.gov/fraud/exclusions/html• MLN website www.cms.hhs.gov/MLNGenInfo• Health Care Fraud Prevention and Enforcement Action Team

(HEAT) website www.stopmedicarefraud.gov

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Review Questions1. The effort to prevent and detect fraud

is___________________.

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a. Primarily the responsibility of state and federal law enforcement agencies (OIG, FBI, DOJ, MFCU)

b. A cooperative effort involving CMS, Medicare beneficiaries, providers, health plans, QIOs, MEDICs, in addition to state and federal law enforcement agencies (OIG, FBI, DOJ, MFC)

Review Questions2. Those making false statements and

receiving kickbacks, bribes and rebates in relation to the Medicare program may be determined to be guilty of a felony and may be fined or imprisoned, or both.

• True• False

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Review Questions3. The following are potential elements of civil

prosecutions and penalties:

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a. Civil monetary penalty (CMP) b. Penalty for up to 3 times the amount claimed

for each item or service.c. Exclusion from federally funded programs for a

specified number of years.d. Signing a Corporate Integrity Agreement which

subjects the entity to federal monitoring.e. All of the above

Review Questions4. Neither Medicare nor PUP will pay a provider

who has been excluded by the OIG from participation in federal health care programs.

• True• False

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Review Questions5. Fraud is:

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a. An unintentional act that results in unnecessary cost

b. Intentionally, or knowingly and willfully attempting to execute a scheme to falsely obtain money

c. An intentional act that results in unnecessary cost

d. Unintentionally or unknowingly attempting to falsely obtain money

e. B and Cf. A and D

Review Questions 6. The ________________ prohibits a physician

from making a referral for certain designated health services to an entity in which the physician (or a member of his/her family) has an ownership/ investment interest or with which he or she has a compensation arrangement, unless an exception applies.

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a. The Anti-Kickback Statuteb. The “Stark” Statute

Review Questions7. The _____________ has the authority to exclude

(sanction) providers or suppliers who have been convicted of health care-related offenses.

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a. Social Security Actb. Medicare Programc. Medicare Integrity Programd. Office of Inspector-General (OIG)e. Federal Bureau of Investigation (FBI)

Review Questions8. The ____________ pays an incentive award to

individuals who provide information on Medicare fraud and abuse or other sanctionable activities.

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a. Medicare Incentive Reward Programb. Medicare Trust Fundc. Social Security Actd. HIPAA Public Law

Review Questions9. Which of the following are examples of abuse?

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a. Charging in excess for services/suppliesb. Providing medically unnecessary servicesc. Providing services that do not meet

professionally accepted standardsd. Submitting bills to Medicare that are the

responsibility of other insurerse. All of the above

Review Questions10. PUP’s Virtual Examiner software can detect:

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a. Upcodingb. Inappropriate bundling and unbundling c. Duplicate billingd. Services rendered to a person of the wrong

gender e. Inappropriate place of service for a procedure f. All of the above