Kusserow on Compliance: OIG imposed penalties for noncompliance with corporate integrity agreements

Health care organizations continue to enter into corporate integrity agreements (CIAs) with the HHS Office of Inspector General (OIG) in exchange for the OIG not seeking an exclusion from participation in federal health care programs. There are serious “stipulated penalties” or, in the case of a material breach, possible exclusion from Medicare and Medicaid for non-compliance with CIA terms and conditions.

Carrie Kusserow, a nationally recognized expert on CIA compliance, found that a real “game changer” has been the inclusion of certifications in CIAs by members of the board, executive leadership, and compliance officers. Under the CIA, there are stipulated penalties for false certifications.  Furthermore, they could also be considered a material false statement or representation implicating the False Claims Act. To take away any defenses to false certifications by board members, the OIG requires they engage a compliance expert to assist them in meeting their obligations. The expert reports must be included with those provided to the OIG. This places direct burden on board members for compliance with the CIA and subjects them to personal peril for non-compliance.  This, in turn, adds pressure on the compliance officer and executive leadership to be able to evidence meeting all the compliance obligations.  Many boards and executive leadership members wake up after a CIA is signed to realize how much must be done to meet the tight deadlines required under the agreement.

Stipulated penalties

Stipulated penalties include:

  • Daily penalties for failure to (a) comply with terms and conditions related to the compliance program; (b) engage and use an independent review organization (IRO); (c) submit a complete implementation report, annual report, or any certifications on time; and (d) submit any mandated claims review report.
  • $50,000 per false certification in (a) implementation reports, (b) annual reports, and (c) other OIG requested documentation.
  • $1,000 per day for each compliance failure with any obligation of the CIA.

Material breaches

Material breaches include:

  • Not responding to an OIG demand letter;
  • Not reporting a reportable event;
  • Not taking corrective action of CIA violations;
  • Not making appropriate refunds of overpayments;
  • Not responding to demands for stipulated penalties payments; and
  • Not engaging and using an IRO.

Enforcement actions

Tom Herrmann, J.D., former executive in the Office of Counsel to the Inspector General and an appellate judge for the Medicare Appeals Board, notes an organization can request a hearing before an HHS administrative law judge to dispute the OIG’s determination of noncompliance resulting in a stipulated penalty or exclusion, but this rarely proves to be a viable alternative. The OIG is not reluctant to use its authority to enforce compliance with CIAs and noted the following recent examples of enforcement actions taken by the agency for violations of CIA terms and conditions:

  1. Special Care Hospital Management Corp. and its CEO paid $30,000 for failure to conduct legal review of new, renewed, and existing focus arrangements and to timely submit its first annual report.
  2. Kindred Healthcare paid $3,073,961 for failing to correct improper billing practices in the fourth year of its CIA.
  3. A Maryland cardiology practice and physicians paid $2,800 for failure to timely submit its second annual report.
  4. A North Carolina physician paid $10,000 for not prominently posting the HHS OIG Fraud Hotline telephone number; failing to provide the required amount of compliance training within 60 days of the CIA; not screening employees and contractors; and submitting the implementation report late.
  5. Roberts Physical and Aquatic Therapy and its owner were excluded for six years for failing to report and to repay an IRO-identified overpayment and stipulated penalties.
  6. A pain management company was excluded for five years for not paying stipulated penalties of $34,000 and $239,961.80 in overpayments identified by its IRO.
  7. A Florida physician paid $20,000.00 for late submission of his first annual report.
  8. A renal dialysis company paid $450,000 for failure to comply with focus arrangements procedures and requirements.
  9. A Florida physician paid $12,000 for failure to: timely submit his third quarterly claims review report, provide training, retain an IRO, perform sanction screening, and timely submit an implementation report.
  10. A health services company was excluded for failing to timely retain an IRO and had to retain a quality monitor and extension on its CIA.
  11. A sleep clinic paid $5,000 for failure to disclose two reportable events involving the Anti-Kickback Statute.
  12. A Florida medical device company paid $15,000 for failure to: screen employees and contractors, distribute revised policies and procedures, and provide parties to focus arrangements with a copy of its code and Anti-Kickback Statute policies and procedures.
  13. A Puerto Rican physician paid $6,300 for failure to engage a new IRO within 60 days of terminating his previous one.
  14. A Maryland practice management company was penalized for failure to timely submit an implementation report and thereafter filed for bankruptcy.
  15. A health management company was excluded for failure to: implement compliance policies and procedures; report quality of care reportable events; develop and maintain a disclosure program and log; hire regional dental directors; perform onsite review; report and refund overpayments; conduct training and education; provide accurate certifications; and report quality of care reportable events.
  16. A pain management company, ambulatory center, and owner paid $5,000 for failure to designate and maintain a compliance contact, as required.
  17. A California hospital paid $105,000 for failing to comply with arrangements procedures and focus arrangements requirements.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2017 Strategic Management Services, LLC. Published with permission.