Presentation Outline

I. Legal authority for initiating private and governmental causes of action with respect to provider fraud and abuse

II. Governmental v. private payer activities with respect to provider fraud and abuse

1. Programs such as Medicare, Medicaid and CHAMPUS believe they have a direct, contractual relationship with physicians providing services to program beneficiaries in each state. Based on this relationship, Medicare, Medicaid and CHAMPUS contractors are much more likely than private third-party payers to pursue fraud and abuse cases involving providers and suppliers.
2. Conversely, most private third-party payers view their relationship to be between the insurance company and the individual policyholder (patient). Therefore, private payers are much more likely to pursue only blatant examples of provider fraud and abuse.
3. The recent rejuvenation of the managed care industry in the private sector, however, has resulted in an increase in private payer audits and, therefore, an increase in cases moving through the nation's court systems involving allegations of fraud and abuse.

III. The role of Medicare carriers and the Office of Inspector General (OIG) in identifying and pursuing allegations of fraud and abuse

1. Medicare Carriers
   1. The Social Security Act requires carriers to apply "safeguards against unnecessary utilization of services furnished by providers."
      • The Medicare Carriers Manual (MCM) instructs carriers to conduct prepayment and postpayment "medical reviews" to identify inappropriate, medically unnecessary or excessive services and to take action when a questionable practice pattern is found.
      • Prepayment Review -- Medicare carriers use prepayment utilization screens to ensure that Medicare pays only for medically necessary services. Prepayment screens may include either manual or automated edits designed to suspend the processing of Part B claims involving services that meet specific criteria developed by HCFA or the Medicare carrier to identify questionable services raising coverage or medical necessity issues.
      • Postpayment Reviews -- used by Medicare carriers to identify potential fraudulent or abusive practices that warrant additional review.
      • Service Verification Reviews -- Medicare carriers are required to periodically contact beneficiaries to verify that billed services have been rendered.
      • Payment Review Program -- systematic review of physicians or other Part B providers to identify those who receive high income from Medicare or whose practices appear to be statistically aberrant.
      • Comparative Performance Report Program -- compares the coding and billing patterns of physicians for various services or procedures to billing norms for all physicians in the same specialty and locality.
      • IL 372 (PATH) Audits -- IL 372 requires that carriers make periodic checks of patient records (including examination of admission, progress and discharge notes) to verify that physician services to patients furnished by teaching physicians in a teaching hospital meet the appropriate attending physician coverage criteria.

ii.   Corrective actions

1.      Warning letters

2.      Educational contact

3.      Overpayment assessment and recovery

4.      Prepayment flagging of the physician's claims

5.      Peer group or Peer Review Organization (PRO) referral

iii.   Cases may be referred to the Inspector General if the practice pattern is not corrected within 12 months.

b.   OIG Inspection Programs

i.   The Office of Analysis and Inspections (OAI), a division under the OIG, plans and coordinates a routine inspection program to assess the vulnerability of Department of Health and Human Services programs to fraud and abuse.


ii.   The OAI recommends changes in program policy, regulations and laws to improve early detection of fraud, waste and abuse.


iii.   The OAI also operates the OIG Hotline that solicits complaints and information about fraud and abuse.

IV. Fraud and Abuse Audits

1. Involves the coordination of multiple agencies, including Medicare carriers, the HCFA Regional Offices, the OIG, state Medicaid agencies, state Medicaid fraud units, and peer review organizations.
2. Abuse - "Incidents or practices of providers, physicians, or suppliers of services which, although not usually considered fraudulent, are inconsistent with accepted sound medical, business or fiscal practices, directly or indirectly resulting in unnecessary costs to the program, improper reimbursement, or program reimbursement for services which fail to meet professionally recognized standards of care or which are medically unnecessary." (Medicare Carriers Manual, §14006.1)
   
   
3. Examples of Medicare program abuse -
   1. Excessive charges for services or supplies
   2. Claims for services not medically necessary or, if medically necessary, not to the extent rendered
   3. Breeches of assignment agreements
   4. Exceeding limiting charge amounts
   5. Billing Medicare patients at a higher and different fee schedule amount than for non-Medicare patients
   6. Improper billing practices
   7. Routine waivers of patient copayments and deductibles
      
      
4. Fraud - "An intentional deception or misrepresentation which the individual knows to be false or does not believe to be true, and makes knowing that the deception could result in some unauthorized benefit to himself/herself or some other person." (Medicare Carriers Manual §14006.2)
5. Examples of fraud -
   1. Billing for services or supplies not provided

              ii.   Provider claim forms altered to obtain a higher reimbursement amount

             iii.   False representation with respect to the nature of services
                   rendered, charges for services rendered, identify of the person
                   receiving or providing the services, dates of service, etc.

             iv.   Repeated violations of participation agreements, assignment agreements, or 
                    limiting charge ceilings

              v.   The principal difference between fraud reviews and abuse reviews
                    is that abuse situations involve the propriety or medical necessity of
                    billed services, whereas fraud investigations center on determining
                    whether billed services were actually rendered.

V. Sources of potential fraud and abuse cases

1. Complaints or tips received by mail, telephone, in person or on referral from a Social Security Administration field officer
2. Referrals from the HCFA Regional Office, components of the OIG and other agencies or sources
3. Aberrant billing and/or coding behavior detected through the Medicare carriers' internal controls, prepayment screens, postpayment and other reviews, audits and inspections

VI. Statutory provisions and penalties for violations

1. Criminal statutes and penalties
   1. Social Security Act §1128B, 42 USC 1320a - 7b
      1.   $25,000 fine, imprisonment for up to 5 years, or both

               ii.  Civil statutes and penalties

1.   The Secretary of Health and Human Services has the authority to exclude physicians and other providers from Medicare and state health programs for program-related abuses.

2.   The Civil Money Penalties Law (Social Security Act §1128A, 42 USC 1320a - 7a) provides the Secretary of Health and Human Services with the authority to levy civil fines for fraudulently submitted Medicare and Medicaid reimbursement claims without initiating proceedings in the courts.

a.   Violators may be fined up to $10,000 for each item or service fraudulently claimed;

b.   Violators may be assessed a penalty of up to twice the amount claimed for each item or service; and

c.   Violators may be suspended from participation in the Medicare and Medicaid programs.

3.   The False Claims Act (31 U.S.C. §3729) imposes civil liability on persons or corporations who, among other things:

a.   Knowingly present or cause to be presented a false or fraudulent claim for payment to the United States;

b.   Knowingly use a false record or statement to obtain payment on a false or fraudulent claim paid by the United States; or

c.    Engage in a conspiracy to defraud the United States to obtain allowance for or payment of a false or fraudulent claim.

The False Claims Act defines knowing or knowingly as having actual knowledge of the falsity of the claim, acting in deliberate ignorance of the truth or the falsity of the claim, or acting in reckless disregard of the truth or falsity of the claim. Specific intent to defraud is not required.

Violations of the False Claims Act are subject to civil monetary penalties of $5,000 to $10,000 for each false claim filed, plus treble damages.

VII. Detection of health care fraud and abuse remains a "top priority" of the U.S. Attorney General’s Office and the U.S. Office of Inspector General

1. OIG will increase staffing from 800 employees to over 1,700 (by 2002)
2. OIG Office of Investigation will have a presence in all 50 states by 2002
3. Department of Justice has added 160 new civil and criminal prosecutors

VIII. Physicians at Teaching Hospitals (PATH) Settlements

1. University of Pennsylvania (1995) $30 million
2. Thomas Jefferson University (1996) $12 million
3. University of Virginia (1997) $8.6 million
4. Emory University (1998) $4.5 million
5. UT San Antonio (1998) $20 million