Dorland Webinar Slide Managed Care

publisher of Case In Point Magazine, CIP Weeklyand Case Management Resource Guide

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Fraud and AbuseA Managed Care Perspective

By Susan Kohler


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Agenda

• Laws Regulating Managed Care• Roles of Managed Care• Defining Fraud and Abuse• Identification and Investigations• Notification to Providers• Provider Responsibilities


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Laws Regulating Managed Care (Medicare/Medicaid)

• False Claims Act, 18 U.S.C. § 287 – submitting false claim(s) to a Managed Care Org to receive reimbursement for services – Felony Conviction: up to 5yrs in prison, $250,000 for individual;

$500,000 for corporation– Misdemeanor Conviction: $100,000.00 for an individual and

$200,000.00 for corporation

• False Statements Act, 18 U.S.C. §1001 – Submitting false statements to Managed Care Org– Penalty: $10,000 or 5 yrs in prison or both

– Can be assessed for every violation


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False Statements Act 42 U.S.C. §1035 (New)- whoever knowingly and willfully falsifies, conceals or covers up by any trick scheme or device a material fact or makes any materially false, fictitious or fraudulent statements or representations, or uses any materially false writing or document with knowledge of the falsity, in connection with the delivery of or payment for health care benefits – More specific language than False Statements Act– Liable for a fine, imprisonment of not more than 5 years, or both


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Laws Regulating Managed Care (Medicare/Medicaid)Social Security Act: 42 U.S.C. § 132Oa-7b(a), (b),(c),(d)-• False statements in connection with services paid for in whole or part by a

“Federal Health Care Program”; Whoever knowingly and willfully makes a false statement shall be guilty of a felony

• Covering up an event which affects receipt of payment• Submitting claim for services when person was not licensed• Prohibits from knowingly and willfully soliciting or receiving any renumeration

(kickbacks, bribes or rebates), directly or indirectly in return for referring an individual to a person for the furnishing or arranging of furnishing any item or service for which payment is made under the Medicaid Act or a State health care program

• Mandatory exclusion of providers in Medicaid and Medicare upon felony conviction

The penalty for any violation is a fine of not more than $25,000.00 or imprisonment of not more than 5 years, or both.


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• Federal Mail and Wire Fraud: 18 U.S.C. §1341, 1343 - Provider use of mail or other communication in a scheme to defraud or further defraud. – Each conviction for mail or wire fraud is punishable by a fine of up to

$1,000.00, a prison term of up to five years, or both.– Can be added on to other charges

• Health Care Fraud, 42 U.S.C. §1347§1341, 1343 – Knowingly or willfully executing or attempting to execute a scheme to defraud the government.– Penalty -a fine or imprisonment for not more than 10 years, or both.


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New Laws• PPACA = Patient Protection and Affordable Care Act -

On March 23,2010 President Obama signed into law H.R. 3590, PPACA.

• FERA = Fraud Enforcement and Recovery Act, signed by the President in May, 2009.– Mandatory reporting, repayment, and explanation of overpayments by

“persons”– Retention of overpayment beyond 60 days is a false claim (invokes penalties

and whistleblower provisions)– Mandatory compliance plans(first in nursing homes, later in other providers)


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Overpayments• ‘‘(B) OVERPAYMENT—The term

‘‘overpayment’’ means any funds that a person receives or retains under title XVIII (Medicare) or XIX (Medicaid) to which the person, after applicable reconciliation, is not entitled under such title”

• “funds” not “benefit”

• A “person” (which includes corporations and partnerships) who has “received” or “retained” the overpayment

• Focus on “receipt”; payment need not come directly from Medicaid; if “person” “retains” overpayment due the program, violation occurs

• “person” includes a managed care plan or an individual program enrollee as well as a program provider or supplier

• Critical Date: when overpayment identified, not when payment received


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Enforcement• PPACA 6402(d)(3) “ENFORCEMENT” — Any overpayment retained by a

person after the deadline for reporting and returning the overpayment under paragraph (2) is an obligation (as defined in section 3729(b)(3) of title 31, United States Code) for purposes of section 3729 of such title. (False Claims Act)

• False Claims Act imposes liability for a person who “knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government” new 31 U.S.C. 3729(a)(1) (G) added by FERA

• “knowingly” includes reckless disregard, deliberate ignorance • An overpayment which is timely reported and explained will not give rise

to FCA liability even if the provider is unable to repay it within 60 days, unless there is evidence of improper “avoidance”


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Role of Managed Care Organizations• Develop comprehensive internal programs to prevent and

detect fraud and abuse• Recover overpayments related to fraudulent/abusive actions.• Comply with all reporting and other anti-fraud requirements• Report suspected cases of fraud/abuse to the State Medicaid

Agency , CMS and OIG• Cooperate with MFCUs/DA and other agencies that conduct

investigations.• Provide for exchange of information and strategies with State,

MFCU, DA for addressing fraud/abuse, as well as allowing access to documents and other available information related to program violations


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Defining Abuse• Abuse = “provider practices that

are inconsistent with sound fiscal, business or medical practices and result in unnecessary cost to the Medicaid /Medicare program, or in reimbursement for services that are not medically necessary, or that fail to meet professionally recognized standards for health care. It also includes beneficiary practices that result in unnecessary costs to the Medicaid /Medicare program.”(42 CFR 455.2)

• Abuse” does not require intentional conduct-it is measured by objective measures–Medically unnecessary care–Care that fails to meet recognized professional standards–“provider practices that are inconsistent with sound fiscal . . practices”– no accounts receivable transaction reports (capturing accounting treatment of amounts billed to and paid from multiple payors)–failing to bill other payors


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Examples of Abuse

• Charging in excess for services/supplies• Submitting claims not in compliance with billing

guidelines (CPT and CCI rules)• Providing medically unnecessary services• Providing services that do not meet professionally

recognized standards • Submitting bills to Medicare/Medicaid or Managed

Care Org instead of the primary insurer


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Defining Fraud

• Fraud = “an intentional deception or misrepresentation made by a person with the knowledge that the deception could result in some unauthorized benefit to himself or some other person.” (42 CFR 455.2)


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Examples of Fraud• Knowingly billing for services that were

not provided • Performing medically unnecessary

services solely to obtain insurance payments

• Altering claim forms, medical documentation, etc. to obtain a higher payment

• Duplicate billing (deliberate)• Unbundling or “exploding” charges

(i.e. Lab tests)• Upcoding (billing for services at higher

level than performed)• Soliciting, offering, or receiving a

kickback for referral of patients in exchange for other services

• Billing for dead and jailed beneficiaries

• Billing by deceased doctors• Waiving patient co-pays or

deductibles• Misrepresenting non-covered

services as medically necessary, (i.e. billing routine foot care as diabetic foot care)

• Using another person’s ID card to obtain care


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Abuse vs. Fraud – Understanding the Difference

• Abuse results from practices that directly/indirectly result in unnecessary cost.

• Abusive billing practices may not result from “intent” or it may be impossible to prove that the intent to defraud existed.

• Abuse may develop into fraud if there is evidence of the subject knowingly and willfully conducting an abusive practice.

• Fraud requires evidence of intent to defraud, i.e., acts were committed knowingly, willfully and intentionally.


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Identification and Investigation

Investigation– Claim analysis

• Over/underutilization• Setting of care• Medical Necessity• Volume of visits/day

– Statistical comparison to peers

– Medical Record review

Identification– Fraud Hotline (internal

and external sources)– Data Mining– Notification from State

Medicaid, CMS, OIG– Member notifications

Medicaid and Medicare providers have an obligation to cooperate


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Medical Record Review• Compares services billed to the procedures

and services noted in medical records• Records should support CPT and Correct Coding

Initiative Guidelines• Should identify actual services rendered• Should support intensity of services • Dates of Service

• Any discrepancies noted in a sample size are statistically applied to all claims submitted


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Notification to Provider• Summary Report shared with Provider

– Comparison to peers– Medical Record findings– Estimated overpayments based on statistical

sampling

• Provider has opportunity to respond• Recovery of overpayments• Education and Training• On-going monitoring• Reporting to State, CMS and OIG


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Provider Responsibilities

• Notify Managed Care Org of overpayments• Cooperate with Managed Care Org, CMS, Medicaid• Return overpayments• Education on Fraud and Abuse Prevention

– Governing Laws– Medical Record Documentation– Training billing staff

• Self-audits


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Summary• Federal Laws Regulate Managed Care Orgs

and the providers submitting claims• Managed Care Orgs obligated to investigate

and report Fraud and Abuse• Providers obligated to know the law, report

overpayments, ensure appropriate services rendered, ensure accuracy of billing and educate staff on requirements.

• Everyone in health care is accountable!


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Dorland Webinar Slide Managed Care