TURN YOURSELF IN?

CMS has been developing voluntary disclosure protocols for anti-referral and Stark Law violations. On the surface these voluntary disclosure protocols (VDPs) appear to be an elegant solution, particularly when your “violation” is a minor or technical violation, or is one that is simply not your fault. As with everything in healthcare seemingly, these VDPs have complexities and dangers which need to be carefully examined before you undertake this process. Remember that CMS sees errors as fraud, and an attempt to limit a discussion to a particular area may result in a claim of failure to cooperate. When you first suspect you may have an issue with Stark or anti-referral, I suggest that you do the following:

(1) Conduct an investigation and set limits/parameters for your initial investigation, whether internally undertaken, using outside auditors or counsel. This self-audit needs to be cost effective, practical, but also needs to cover a period and a range of payments that will be sufficient to convince CMS of the validity of the self-audit.

(2) Since disclosures of refunds and overpayments must be submitted within sixty days of the date on which it is identified, the time pressures on self-audits and reporting are intense. The first problem is deciding when an overpayment is identified. Is it the mere suspicion identification, or is when the audit is complete? This time compression means there needs to be clear responsibility, internally, for the self-audit.

(3) Determine your probable exposure. Not only in the problem you may have initially sought to determine, but whether any additional areas, likely to lead to additional exposure, have been identified. While Stark normally uses a six year statute of limitations, some CMS look-backs are proposed for longer periods.

(4) Determine any factors that may support a reduction in your liability. CMS considers a number of factors, including the timeliness of disclosure, level of cooperation, your financial position matters and other matters. Determine if any of these apply.

(5) Craft a VDP very carefully so that it discloses what must be disclosed but does not unnecessarily make harmful disclosures. This submission will include your self-audit results, estimate of amount due and requests for reductions for good behavior. Errors in your VDP will likely indicate to CMS that your self-audit cannot be relied upon.

In summary, VDPs can be useful and they are an opportunity to do much good or to do much harm to your efforts to limit the damage from overpayments or refunds.

FALSE CLAIMS AND INDEPENDENT CONTRACTORS

Until 2003, Medicare rules prohibited payment for covered services to anyone other than the patient, an enrolled individual or the Medicare provider that was a physician or an employer of a physician under a contractual arrangement. Beginning in 2003, the Medicare Modernization Act allowed Medicare reassignment rules which allowed an independent contractor to assign his/her/it’s right for Medicare payment to an entity who would collect the sums, and in the meantime, would pay the independent contractor just like healthcare provider doctor employees were paid. CMS imposed additional rules upon independent contractor arraignments and you should remember in these situations, unlike direct employee relationships, under an independent contractor arrangement you will be jointly and severely responsible for any Medicaid overpayment to the entity billing Medicare. There is no clear reason why an employee of a healthcare entity should have a different level of personal responsibility than an independent contractor if neither is involved in the billing activity. This is particularly so in a large entity arrangement, where both the employee and the independent contractor may have zero ability to monitor any Medicare billing.

If you are an independent contractor, including acting as an independent contractor medical director or similar arrangement, you should have your contracts reviewed to make sure that the entity will reimburse you for any personal liability for its billing errors.

HAPPY 2nd BIRTHDAY!

Healthcare reform, at least in this version, is celebrating its 2nd anniversary. 2011 and 2012 are generally years of preparation and rule making for the full implementation of healthcare reform, which is generally scheduled for 2013 and 2014. Assuming that the United States Supreme Court does not block further implementation of healthcare reform or any significant part in the current legal challenges, the third and fourth years of healthcare reform should be even more exciting. Whether you agree with the current form of healthcare reform, or oppose it, it is unfortunate that two years after passage of this act that the discussion continues to be primarily political and legal instead of addressing the quality and efficiency of healthcare.

This newsletter is edited by Paul Wallace, a member of the American Bar Association Healthcare Law Section and the American Health Lawyers Association who has been representing physicians and healthcare practices for over 25 years. Mr. Wallace assists physicians in health practices in contract items, federal legal compliance, creation of practice entities, estate and wealth planning and similar issues. Please feel free to call if you have any questions about this newsletter or any other matter at (812) 402-1600 or pwallace@joneswallace.com.