Kusserow on Compliance: 2018 FCA enforcement and 10 tips for channeling whistleblowers internally

 New health care qui tam cases average 9 per week

$2.5 billion in recoveries from health care sector

75 percent of cases predicated by “Whistleblowers”

Whistleblowers are entitled to up to 25 percent of recoveries

The vast majority of False Claims Act cases are brought to the DOJ by “whistleblowers” (qui tam relators), under the qui tam provisions of the False Claims Act (FCA). In 2018, this continued to be the case. The DOJ’s Civil Division reported having 645 new qui tam actions initiated last year, at an average of 14 new cases per month. Of that total, 446 were health care cases—about nine a week average. Federal recoveries, including settlements and judgments, amounted to over $2.8 billion. Most of this, over $2.5 billion, related to health care and life sciences. FCA violations occur when someone knowingly submits a false or fraudulent claim for payment to the government.  The penalty for doing this is up to three times the amount of each claim, plus penalties as high as $21,563 per claim. Whistleblowers file cases with the DOJ on behalf of the United States as well as themselves and must provide all the evidence they have supporting the complaint. The DOJ decides to intervene (take over prosecution) or not. If the DOJ decides to intervene, the government takes the lead in prosecuting the case; and if not, the relator may proceed with the prosecution on their own in federal court.  The relator is entitled to 15 to 25 percent of the government’s recovery, plus attorneys’ fees and expenses.

The recovery results in 2108 marked the ninth consecutive years where recoveries have exceeded $2 billion. Of the health care recoveries, more than three quarters of that sum were as result of qui tam cases. Health care and life sciences settlements involved drug and device manufacturers, hospitals, Medicare Advantage plans, pharmacies, and laboratories. The largest settlement, for $625 million, was with AmerisourceBergen Corp. and its subsidiaries, and it involved resolution of allegations that it repackaged and resold cancer drugs to profit from “overfill” in the original packaging. The other major settlements also involve pharmaceutical manufacturers. In those cases, the FCA was violated as result of payment of kickbacks to induce the flow of business.  The largest case among providers involved an independent physician association that entered into a $270 million settlement with another case resulting in a $216 million settlement with the former hospital chain, Health Management Associates.

10 Tips: Channeling Whistleblowers Internally 

  1. Review/update hotline-related polices/procedures (confidentiality, anonymity, non-retaliation, duty to report, etc.)
  2. Promote the reporting of wrongdoing (newsletter, intranet, training programs, etc.)
  3. Find ways to provide feedback so that employees know reporting is taken seriously
  4. Consider engaging experts to evaluate compliance communication channels effectiveness
  5. Allegations of potential violations of law or regulations must be promptly investigated.
  6. Ensure that individuals are trained and competent to conduct prompt investigations.
  7. All cases where investigation indicates potential violations, disclose promptly
  8. Take appropriate disciplinary action against identified wrongdoers
  9. Understand CMS and OIG self-disclosure protocols that may avoid FCA investigation
  10. Ensue investigations finding of potential violations of law are promptly disclosed to the DOJ

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 © 2019 Strategic Management Services, LLC. Published with permission.

Kusserow on Compliance: Meeting sanction checking mandates

As the HHS Inspector General, I created what is now referred to as the List of Excluded Individuals and Entities (LEIE) that was followed by OIG compliance guidance documents which call for checking employees, physicians, vendors, and contractors against the LEIE. The OIG considers all claims and costs associated with an excluded party as potentially false and fraudulent and can lead to significant financial penalties and more. The OIG Special Advisory Bulletin on the Effect of Exclusion provides very useful information in assessing this risk area. CMS mandates, as a condition of enrollment, providers may not employ or contract with individuals or entities that are excluded from participation in any federal health care program and call for checking not only against the LEIE, but also the General Service Administration’s (GSA) Excluded Parties List System (EPLS), now part of the System for Award Management (SAM). CMS further called upon State Medicaid Directors to establish their own sanction data base and requires providers to check it on a monthly basis. To date, 40 states have moved to establish their own Medicaid sanction lists with other states in the process of doing the same. This has increased the sanction screening burden exponentially, not only for the compliance office but other departments as well. HR often has responsibility of sanction checking new hires and periodically current employees. Procurement is also affected because they handle the screening of vendors and contractors. The Medical Credentialing Office must ensure checking on physicians who have been granted staff privileges.  Other federal sanction databases worth screening are maintained by the DEA and FDA, as well as the Department of the Treasury Office of Foreign Assets Control (OFAC) Terrorist Watch List.

Daniel Peake, of the Compliance Resource Center (CRC), works with clients to provide a variety of CRC services that includes providing sanction checking services, as well as the investigation and resolution of potential hits. He noted that the time and resources necessary for developing and maintaining a search engine, along with regularly collecting and updating sanction information from many databases is not very cost effective. This high cost of using internal resources to develop and manage the sanction checking has resulted in the great majority of health care entities subscribing to a vendor service that provides a search engine to their established databases. Vendors can afford the high cost of maintaining the currency of the data because they amortize the costs over many clients. The problem is that that vendor quality, cost, and reliability can vary enormously.  From experience, he offered the following tips for those considering a vendor:

 

Tips on choosing a vendor search engine service

  1. Know the cost up front with a fixed rate, not based upon per click searches.
  2. Contract should permit cancelling without cause at any time, if dissatisfied.
  3. Ensure vendor has liability insurance ($ 1 to 3 million preferably).
  4. Determine other services included (e.g. policy templates, regulatory updates, etc.).
  5. Determine how much “help desk” assistance is available to resolve potential hits.

 

For more information, contact Daniel Peake at (dpeake@complianceresource.com) (703-236-9854).

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.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2019 Strategic Management Services, LLC. Published with permission.

Kusserow on Compliance: New anti-kickback law for clinical labs

– Law creates new compliance risk areas for 2019

– Compensation of sales personnel affected

– Not limited to federal health care programs

For the new year, compliance officers should recall Congress passing into law the Eliminating Kickbacks in Recovery Act of 2018 (EKRA), which became effective October 24, 2018. It applies to Medicare and Medicaid, as well as many commercial health insurance plans. It has the effect of eliminating “safe harbors” used by clinical labs in marketing services. The law was intended to be part of the effort to target the national opioid crisis. It makes it a criminal offense to solicit or receive any remuneration, directly or indirectly, in return for referring a patient or patronage to a recovery home, clinical treatment facility or clinical laboratory; or to offer or pay a kickback to “induce” a referral of an individual to a recovery home, clinical treatment facility or clinical laboratory, or in exchange for an individual using the services of a recovery home, clinical treatment facility or clinical laboratory. Penalties for each violation can include a fine of up to $200,000 and imprisonment of up to 10 years. The law has seven “safe harbors,” some of which are similar to the safe harbors under the federal Anti-Kickback Statute that is generally applicable to Medicare and Medicaid services, however the safe harbor for employees and independent contractors under the law expressly excludes from safe harbor protection any payment made to an employee or independent contractor that is determined or varies by:

  • the number of individuals referred;
  • the number of tests or procedures performed; or
  • the amount billed or received.

The EKRA adds an all payor (public and private) provision that enables the federal government to monitor provider arrangements intended to generate business for any laboratory services, not only those related to individuals in treatment for substance abuse disorders, payable by a federal health care program or commercial health insurer.

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.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2018 Strategic Management Services, LLC. Published with permission.

Kusserow on Compliance: Understanding and addressing whistleblowers

The vast majority of the cases resolved by the Civil Division of the Department of Justice (DOJ) were cases brought by “whistleblowers” under the qui tam provision of the False Claims Act (FCA). Whistleblowers are responsible for an even higher percentage of cases resulting in OIG Corporate Integrity Agreements (CIAs). Although most compliance officers are well aware of this program, many remain unclear as to how the process works. Tom Herrmann, J.D., who served over 20 years in the Office of Counsel to the OIG and as an Appellate Judge for the Medicare Appeals Board, explained that Congress permitted a whisltleblower called the “Relator” to file a case with the DOJ under the FCA.  Since this provision of law went into effect in 1986, there have been over 10,000 qui tam cases filed with a current average of one such case being filed every day of the year. The intent was to create incentives for private parties to detect and pursue fraud under the FCA. In return for reporting this information, Relators receive a portion (usually about 15 to 25 percent) of any recovered damages.  Once the lawsuit is filed, it is placed “under seal”, meaning that it is kept secret from everyone but the government, in order to give the DOJ enough time to investigate the allegations in deciding whether to join (“intervene”) in the case. Intervention by the DOJ occurs only in about one in five qui tam lawsuits, leaving whistleblowers the option to pursue cases on their own, however the chances of success are much lower than in cases when the government joins. Most successful qui tam cases are resolved through settlement negotiations rather than a court trial, although trials may occur.

Kash Chopra, J.D., noted that the overwhelming number of cases that result in a CIA, arise from whistleblowers and these, in turn, are based upon violations of the federal Anti-Kickback Statute (AKS). It is the government’s position that all claims arising from a corrupt arrangement violating the AKS or in some cases, the Stark Law, are considered fraudulent. This is even when the services rendered were needed and provided appropriately.  She advises here clients that the best ways to manage the whistleblower risk is to ensure that they are channeled through internal communication channels and their complaints are promptly evaluated, investigated, and resolved.  It is worth considering the following:

  1. Using outside experts to independently audit arrangements with physicians and evaluate compliance communication channel effectiveness.
  2. Ensuring a 24/7 hotline operated externally by experts in recognizing health care compliance issues.
  3. Reviewing/updating hotline-related polices/procedures (confidentiality, anonymity, non-retaliation, duty to report, etc.).
  4. Making sure that the duty to report suspected wrongdoing is explained in the Code, policies and training.
  5. Having trained and competent people on hand to conduct prompt and competent investigations of matters raised through the hotline.
  6. Moving quickly to use CMS and OIG self disclosure protocols when there is credible evidence of violations; and not wait until the DOJ gets involved.

For more information on this subject, Kashish Parikh-Chopra can be reached at kchopra@strategicm.com or via telephone at (703) 535-1413.

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.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2018 Strategic Management Services, LLC. Published with permission.