STARK AND FRAUD AND ABUSE UPDATE

KATHRYN MIDBOE DARLING, Speaker

KATHRYN H. ASTARITA

Brown McCarroll & Oaks Hartline

111 Congress Avenue, Suite 1400

Austin, TX 78701-4043

(512) 479-9742

THE SYNOPSES AND ANALYSES OF LEGISLATION AND REGULATIONS CONTAINED IN THIS ARTICLE ARE NOT INTENDED AS EXHAUSTIVE STUDIES OF THE LAW. THE SPECIFIC PROVISIONS SELECTED WERE SELECTED BECAUSE THE AUTHOR THOUGHT THEY MAY BE OF INTEREST IN CONNECTION WITH THIS ARTICLE. THERE ARE LITERALLY HUNDREDS OF OTHER PROVISIONS WHICH ARE NOT ADDRESSED EVEN THOUGH THEY MAY HAVE BEEN FAIRLY INCLUDED AS PROVISIONS RELATING TO MEDICARE/MEDICAID FRAUD AND ABUSE. INFORMATION REGARDING OIG AND DOJ INITIATIVES IS ATTRIBUTED TO MEMORANDA AND/OR DOCUMENTS PUBLISHED BY THE AGENCIES.

ADVANCED HEALTH LAW 1998

January 22-23, 1998

Houston, Texas

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Table of Contents

I. FRAUD AND ABUSE PROVISIONS OF THE BALANCED BUDGET ACT OF 1997 1

A. Exclusions From The Programs 1

1. Three Strikes and You're Out -- 4301 1

2. Exclusion of an Entity Controlled by a Family Member or Member of a

Household of an Excluded Individual -- 4303 1

B. Civil Monetary Penalties 1

1. Civil Monetary Penalties (CMP) for Persons Who Contract with Excluded

Individuals -- 4304 1

2. Increases for CMPs for Fraud and Abuse Violations -- 4304 1

3. Civil Monetary Penalty for Health Plans -- 4331 1

C. Refusal To Contract With Convicted Felons 1

D. Improvements In Protecting Program Integrity 1

1. Toll-free Number -- 4311 1

2. Additional EOB Information 1

3. Provision of Employer ID Numbers and Social Security Numbers 2

4. Prohibiting Unnecessary and Wasteful Medicare Payments for Certain Items. 2

E. Advisory Opinions -- 4314 2

F. Granny's Advisor Goes To Jail -- 4734 2

G. Bankruptcy 2

II. FRAUD AND ABUSE PROVISIONS OF THE HEALTH INSURANCE PORTABILITY

AND ACCOUNTABILITY ACT OF 1996 2

A. Enforcement Initiatives 2

1. The Fraud and Abuse Control Program ("Program") 2

2. Medicare Integrity Program ("MIP") 2

3. Funding the Enforcement Efforts. 2

4. Beneficiary Initiatives 3

B. Advisory Opinions 3

C. Sanctions 3

1. Changes to Mandatory Exclusions from the Medicare Program (and Medicaid) 3

2. Changes to Permissive Exclusions from the Medicare Program (and Medicaid) 3

3. Civil Monetary Penalties (CMP) 3

4. Level of Intent Required for CMPs 4

D. Negotiated Rulemaking For Additional Exception To Anti-kickback Statute 4

E. All Payer Criminal Fraud Provisions 4

F. Granny Goes To Jail 5

III. QUI TAM SUITS 5

A. The Federal Statute 5

B. Texas Qui Tam Legislation 5

C. U.S. ex rel. Riley v. St. Luke's Episcopal Hospital, Houston, Texas 6

IV. SEMI-ANNUAL REPORTS FROM OIG 6

A. Fraud And Abuse Control Program. 6

V. FEDERAL GOVERNMENT INVESTIGATIONS 7

A. Operation Restore Trust 7

B. Operation Labscam 8

C. Diagnosis Related Group 72 Hour Project 10

D. Operation Bad Bundle 10

E. Path Initiative 11

F. Pneumonia DRG Upcoding Project 12

G. Transfer Discharge 12

H. Training Contractors To Focus On Patterns 12

I. Incontinence Care Fraud - Project "04" 12

J. National Exclusions Project - Project Weed "QT" 12

VI. MEDICAID 12

A. Reimbursement For Clinical Laboratory Tests 12

1. Payments in 14 States 13

2. Eight-State Review 13

VII. KEY OIG FRAUD ALERTS AND ADVISORY OPINIONS 13

A. OIG Fraud Alerts 13

1. Joint Venture Arrangements (August 1989); 59 Fed. Reg. 65372

(December 19, 1994) 13

2. Routine Waiver of Copayments and Deductibles Under Medicare Part B

(May, 1991); 59 Fed. Reg. 65374 (December 19, 1994). 13

3. Hospital Incentives To Physicians (May, 1992); 59 Fed. Reg. 65374

(December 19, 1994). 14

4. Prescription Drug Marketing Schemes (August, 1994); 59 Fed. Reg. 65376

(December 19, 1994). 14

5. Arrangements for the Provision of Clinical Lab Services (October, 1994);

59 Fed. Reg. 65377 (December 19, 1994). 14

6. Home Health Fraud (June, 1995); 60 Fed. Reg. 40847 (August, 1995). 14

7. Providing Medical Supplies to Nursing Facilities (August, 1995);

60 Fed. Reg. 40849 (August, 1995). 15

8. Providing Services to Nursing Facilities (June, 1996); 61 Fed. Reg. 30623 15

B. OIG Advisory Opinions 15

1. Use of Consultants to Maximize Billings - OIG 97-01 (December, 1996). 15

2. Nuclear Medicine Locations and Licenses - OIG 97-02 (December, 1996). 15

3. Incorrect Use of Current Procedural Terminology Codes for Psychotherapy

Services - OIG 97-03 (January, 1997). 16

4. Whether Declining To Pursue Collection Of Copayments From Certain

Patients Who Have Employer-Sponsored Medicare Complimentary Coverage

Would Result In Sanctions Under HIPAA Or The Anti-Kickback Statute -

OIG 97-04 (09/25/97). 16

5. Outpatient Radiology Imaging Center Joint Venture - OIG 97-05

(October 6, 1997). 16

6. Proposed Arrangement For Restocking Ambulance Supplies And Medicine

Free Of Charge - OIG 97-06 (October 8, 1997). 17

VIII. LIBRARY 17