Fraud and Abuse
Fraud and abuse in health care is multi-faceted and complex. Medical practices considering a transaction with fraud and abuse implications are encouraged to seek the advice of legal counsel familiar with these laws and supporting regulations, advisories, policy statements, and fraud alerts.
The Fraud and Abuse Anti-Kickback law, 42 USC 1320a-7b, and the Stark Ethics-in-Patient Referral law, 42 USC 1395nn, are the most prominent pieces of fraud and abuse legislation. The Federal Civil False Claims Act, 31 USC 3829-3733, also is a significant fraud and abuse statute that physician practices should be aware of.
The Anti-Kickback law, an intent-based criminal statute, says that any person who knowingly and willfully offers or pays any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind to any person to induce such person to refer an individual to a person for the furnishing or arranging for the furnishing of any item or service or to purchase, lease, order, or arrange for or recommend purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under Medicare, Medicaid or other federal health programs violates federal law and is subject to criminal penalties, civil money penalties, and program exclusion.
The Stark law, a civil statute, prohibits physicians from billing for Medicare or Medicaid services flowing from a prohibited referral. Physicians may not refer Medicare and, in certain instances, Medicaid patients to an entity for defined designated health services (DHS) if the physician or an immediate family member of the physician has a financial relationship with the entity unless an exception applies. "Designated health services" include clinical lab; physical therapy; occupational therapy; radiology; radiation therapy services and supplies; durable medical equipment and supplies; parental and enteral nutrients, equipment and supplies; prosthetics, orthotics, and prosethetic devices and supplies; outpatient prescription drugs; and inpatient and outpatient hospital services. Stark I addressed only clinical labs; Stark II addresses the remainder of the designated health services.
Both the Anti-Kickback statute and the Stark law must be examined to assure legality of an anticipated transaction; a legal transaction under the Anti-Kickback statute may be illegal under the Stark law and vice versa.
The definitions and exceptions under each of these statutes and their implementing regulations are critical. In addition to exceptions, enforcement regulations under the Anti-Kickback statute have identified certain "safe harbors." A "safe harbor" specifies various payment and business practices that potentially implicate otherwise prohibited inducements but are somewhat innocuous. To date the OIG has identified 22 safe harbors. 42 CFR 1001.952. The OIG has said that an arrangement that meets an applicable safe harbor generally is fully protected from both criminal and civil liability under the Anti-Kickback statute yet failure to come fully within a safe harbor does not necessarily mean that the transaction is illegal.
The federal Department of Health and Human Services (HHS) enjoys enforcement authority for both of these laws; the Office of Inspector General (OIG), is the primary enforcement agency for violations of the Anti-Kickback statute and the Centers for Medicare and Medicaid Services (CMS) is the primary enforcement authority for Stark violations. The Department of Justice (DOJ) has enforcement authority for criminal violations of the fraud and abuse laws.
The False Claims law imposes liability upon anyone who 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.
The most informative resource on the Anti-Kickback statute is the OIG. Go to http://oig.hhs.gov and search the site.
- OIG Seeks Proposals for Additional Safe Harbors ( December 9, 2005). The OIG is required by federal law to annually solicit proposals for new or modified safe harbors and special fraud alerts under the Anti-Kickback law. By publication in the December 9, 2005Federal Register, the OIG is giving the public the opportunity suggest new subjects for a safe harbor or fraud alert. The deadline for submission is February 7, 2006.
- Compliance Program Guidance for Individual and Small Group Physician Practices ( September 25, 2000). This voluntary guidance document identifies four (4) areas of compliance risk for physicians: 1) proper coding and billing; 2) ensuring that services are reasonable and necessary; 3) proper documentation; and 4) avoiding improper inducements, kickbacks, and self-referrals. The OIG has focused its audits and investigations of physician practices in these four areas.
- Supplemental Compliance Program Guidance for Hospitals ( January 31, 2005).
- Hospital Discounts Offered to Patients Who Cannot Afford to Pay Their Hospital Bills (February 2004) and Special Advisory Bulletin re: Offering Gifts and Other Inducements to Beneficiaries (August 2002).
- OIG's Provider Self-Disclosure Protocol (October 30, 1998). This document sets forth protocol for making voluntary disclosures of program abuses and subsequent cooperation with the OIG.
- OIG Compliance Program Guidance for Pharmaceutical Manufacturers (April 2003. This guidance document is considered useful for the health industry, including hospitals and physicians.
- Fraud Alert re:Rental of Space in Physician Offices by Persons or Entities to Which Physicians Refer (February 2000).
- Fraud Alert re: Hospital Incentives to Referring Physicians (December 1994).
- Testimony of Lewis Morris, OIG Chief Counsel, before the House Ways and Means Subcommittee on Health re: Gainsharing ( October 7, 2005).
- OIG Advisory Opinion re: Proposed Hospital Subsidy of Physicians' Malpractice Insurance Costs ( January 6, 2005).
- Proposed SafeHarbor for Certain Electronic Prescribing Arrangements ( October 11, 2005).
- Proposed SafeHarbor for Federally Qualified Health Centers ( July 1, 2005).
- Fraud Alerts, Bulletins, and SafeHarbors.
To locate CMS resources, go to http://www.cms.hhs.gov/ and search the site.
- Proposed Exception under Stark for Certain Electronic Prescribing and Electronic Health Records Arrangements ( October 11, 2005).
- Stark II Exception re: Professional Courtesy Discounts Offered Physicians by Hospitals (Consult regulations, 42 CFR 1395nn)
- Stark II Exception re: Physician Recruitment (Consult regulations, 42 CFR 1395nn)
- Stark II Exception re: Malpractice Insurance Premium Support * SpecialtyHospital Advisory Opinions and Recommendations to Congress
The American Medical Association offers a range of documents addressing the fraud and abuse laws.
Go to http://www.ama-assn.org and search the site.
- "Federal Fraud and Abuse Laws," a quick overview for physicians
- "Professional Courtesy in the Health Care Fraud and Abuse Context," explores AMA ethics and implications of the Anti-Kickback and Stark laws on professional courtesy practices.
Operation Restore Trust
This program, funded by Congress, focuses on fraudulent Medicare billing schemes by warning senior beneficiaries not to give out their Medicare number, to read their Medicare billing summaries, and to follow-up if a bill appears incorrect.
Go to www.StopMedicareScams.org
IMS Letter re: Wellmark's SUI Efforts
Health insurers also watch for fraud. The BlueCross BlueShield Association touts its efforts at detecting and eliminating fraud. IMS met with Wellmark officials regarding its special investigations unit (SUI) and fraud initiatives to emphasize fairness in reporting and process considerations for physicians. View the two letters (PDF 28KB) of correspondence.