DOJ comes for executive in Tenet fraud case

A former senior executive of Tenet Healthcare Corporation is facing charges for his alleged role in a fraud scheme that resulted in Tenet and its subsidiaries billing Medicaid programs more than $400 million over a thirteen-year period. The Department of Justice (DOJ) charged the former senior vice president of operations for Tenet’s Southern States Region and former CEO of North Fulton Medical Center with mail, health care, and major fraud. The executive pleaded not guilty to his alleged role in the scheme, which involved the payment of bribes to prenatal clinics in exchange for referrals of undocumented, pregnant Medicaid patients to Tenet Health System Medical, Inc. (THSM) hospitals, including North Fulton Medical, Atlanta Medical Center, Inc., Spalding Regional Medical Center, Inc., and Hilton Head Hospital.

Tenet, Atlanta Medical, and North Fulton Medical entered into a $513 million settlement in October 2016 to resolve criminal and civil charges; the settlement included the hospitals’ agreement to forfeit more than $145 million in Medicaid payments for unlawful referrals. Atlanta Medical and North Fulton Medical allegedly participated in the scheme while subject to a 2006 corporate integrity agreement (CIA) with the HHS Office of Inspector General (OIG). THSM and its subsidiaries entered into a three-year non-prosecution agreement, as well (see Corporations, beware: Tenet Healthcare to pay $513M to settle kickback charges, October 4, 2016).

In addition to the general scheme involving the payment of bribes and kickbacks from 2000 through 2013, Tenet operated an affiliated billing center than allegedly assisted in processing Medicaid billings for payment from 2007 through 2013. The DOJ alleges that the executive “took affirmative steps to conceal the scheme,” by working around internal accounting controls; falsifying books, records, and reports; and falsely certifying to the OIG that Tenet was complying with the terms of the CIA and Medicare and Medicaid requirements while knowing that Tenet was paying for illegal referrals.

Kusserow on Compliance: HHS Office of Inspector General adopts new Anti-kickback safe harbors

In a Final rule effective January 6, 2017, the HHS Office of Inspector General OIG amended the rules to the Anti-Kickback Statute (AKS) by adding new safe harbors that protect certain payment practices and business arrangements from sanctions under the AKS. The law provides criminal penalties for individuals or entities that knowingly and willfully offer, pay, solicit, or receive remuneration in order to induce or reward the referral of business reimbursable under federal health care programs. This law was so broad that, as Inspector General, I requested Congress to create an administrative alternative. Upon enactment, I was permitted to identify and create safe harbors that would identify practices that would not result in enforcement actions.  The changes created additional safe harbors that enhance flexibility for providers and others to engage in health care business arrangements to improve efficiency and access to quality care while protecting programs and patients from fraud and abuse. They include:

Changes to existing safe harbors for cost-sharing waivers. Changes were made to the definition of the term “remuneration,” allowing the waiver or reduction of certain patient cost-sharing obligations. Previously, there were cost-sharing waiver exceptions that included waivers for some amounts owed for inpatient hospital services, and amounts owed by individuals who qualified for subsidized services or amounts paid to federally qualified health care centers or certain other qualified health care facilities. The new rule expands these existing safe harbors to cover cost-sharing waivers issued to beneficiaries in all federal health care programs, which includs Medicare, Medicaid, the State Children’s Health Insurance Program (SCHIP), TRICARE, the Veterans Health Administration (VHA) program, and the Indian Health Service (IHS) program.

Waivers or reductions by pharmacies. Pharmacies will now be allowed to reduce or waive cost-sharing amounts imposed under a federal health care program if the waivers or reductions are not offered as part of an advertisement or solicitation which could result in abusive steering of patients. Waivers or reductions offered to certain individuals eligible for Medicare Part D subsidies need only meet the no-advertising, no-solicitation requirement to fall within this safe harbor. For waivers or reductions offered to individuals not eligible for subsidies, the pharmacy must meet several additional requirements. It must not routinely waive or reduce cost-sharing amounts, and must only waive the cost-sharing amounts “after determining in good faith that the individual is in financial need or after failing to collect the cost-sharing amounts after making reasonable collection efforts.”  Providers should note that this rule only applies to pharmacies, and thus would not allow a physician to waive cost-sharing for Part B drugs.

Waivers or reductions for emergency ambulance services. Cost-sharing reductions or waivers for emergency ambulance services will now be allowed, but extend only to emergency ambulance services furnished by a state, municipality, or federally recognized Indian tribe. However, they must not take into account insurance or financial status of the beneficiary, nor can the ambulance provider shift costs to a federal health care program.

Free or discounted shuttle service and local transportation. A new safe harbor will allow eligible entities to provide free or discounted local transportation or shuttle services, as long as they meet defined requirements. An eligible entity is any individual or entity, except for individuals or entities (or family members or others acting on their behalf) that primarily supply health care items, such as durable medical equipment suppliers, pharmaceutical companies, and pharmacies. Transportation is divided into two categories: (1) a “shuttle service” provided by an eligible entity and (2)other transportation offered to federal health care program beneficiaries. Eligible entities must meet five standards: (1) have the availability of the free or discounted local transportation services set forth in a policy, applied uniformly and consistently and not determined in a manner related to volume or value of federal health care business; (2) not be air, luxury, or ambulance-level transportation; (3) not market or advertise the services, nor market health care items and services during the course of transportation, or pay drivers on a per-beneficiary-transported basis; (4) only make the transportation available to established patients; and (5) bear the cost of the transportation services and not shift the burden onto federal health care programs, other payers, or individuals. Simply put, hospitals and other eligible entities will be able to provide some forms of transport services for their patients without fear of violating the AKS, so long as they meet the applicable safe harbor requirements laid out above.

Protected remuneration between FQHCs and Medicare Advantage. Another safe harbor was created that will protect any remuneration between a federally qualified health center (FQHC) (or an entity controlled by such a health center) and a Medicare Advantage (MA) organization pursuant to a written agreement required by regulations. The payment to the FQHC must not be less than the level and amount of payment that the MA organization would make to a non-FQHC entity. Provision of free space by the FQHC to the MA organization would not be covered by the safe harbor, because arrangements must be related to MA plan enrollees being treated at the FQHC. Similarly, financial support from the MA to the FQHC for outreach services or infrastructure costs, for example, would not be covered.

Medicare Coverage Gap Discount Program. A new safe harbor was created that supplements the already-existing statutorily-based Medicare Coverage Gap Discount Program, which allows prescription drug manufacturers to enter into an agreement with HHS to provide access to discounts on drugs at the point of sale. “Applicable drugs” furnished to “applicable beneficiaries” under the Medicare Coverage Gap Discount Program will not be considered remuneration. The rule requires manufacturers to be “in compliance with the requirements of the Medicare Coverage Gap Discount Program,” rather than “in full compliance with all requirements” of the program. “A manufacturer that knowingly and willfully provided discounts without complying with the requirements of the Medicare Coverage Gap Discount Program could be subject to sanctions.”

Technical revision of the AKS. There is in the Final rule a technical correction pertaining to referral services, whereby the language was changed inadvertently in 2002 to say “. . . business otherwise generated by either party for the referral service . . .” and is now changed back to the 1999 language, “. . . business otherwise generated by either party for the other party”.

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 © 2016 Strategic Management Services, LLC. Published with permission.