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Getting Long-Term Lost with Compliance for Long Term Care? OIG Has A Roadmap

Long Term Care (“LTC”) facilities have been a renewed area of focus for regulators in recent years, due to changes in Medicare and the potential for harm to a vulnerable population at the hands of bad actors. In April of 2019, for instance, the U.S. Department of Health & Human Services Office of Inspector General (“OIG”) put out a Data Brief with the ominous headline, “Trends in Deficiencies at Nursing Homes Show That Improvements Are Needed To Ensure the Health and Safety of Residents.” Unfortunately, this renewed focus exponentially increases the need for a push to instill compliance as a key tenet of a facility’s culture. Luckily, in 2000 and again in 2008, the OIG released a very clear roadmap for compliance that’s still reliable today. We’ll hit some of the highlights.

Anti-Kickback Statute

The Anti-Kickback Statute bans the “Soliciting, receiving, offering or paying remuneration (including any kickback, bribe, or rebate) in return for referrals for (or the purchasing, ordering, arranging or recommendation of) services that are paid in whole or in part under a federal health care program (which includes the Medicare program).” It prevents referrals for a kickback, and the difficulty is that these arrangements aren’t always clear. The OIG guidance from 2008 provides some helpful inquiries, however. Here’s what they say:

  • “Does the nursing facility (or its affiliates or representatives) provide anything of value to persons or entities in a position to influence or generate Federal health care program business for the nursing facility (or its affiliates) directly or indirectly?
  • Does the nursing facility (or its affiliates or representatives) receive anything of value from persons or entities for which the nursing facility generates Federal health care program business, directly or indirectly?
  • Could one purpose of an arrangement be to induce or reward the generation of business payable in whole or in part by a Federal health care program?
  • Any arrangement for which the answer to any of these inquiries is affirmative implicates the anti-kickback statute and requires careful scrutiny.” 73 FR 56832-02

The Anti-Kickback Statute does provide for voluntary safe harbors for certain agreements, such as investments, space rental, and employment, but the agreement must be fully compliant and fall fully within the safe harbor to be beyond the purview of the act.

False Claims Act

In Fiscal Year 2018, the Department of Justice recovered a total of $2.8 billion in settlements and judgments from civil fraud and False Claims Act cases (down from $3.7 billion in FY 2017). Of that, $2.5 billion was recovered from cases involving healthcare providers (up from $2.4 billion in FY 2017). Since the False Claims Act was strengthened in 1986, the government has recovered almost $60 billion from healthcare providers.

What makes the False Claims Act such a formidable tool is the use of Qui Tam actions. In a Qui Tam action, a whistleblower (known as a relator) sues an organization on behalf of the U.S. government for violations of the False Claims Act. If the relator wins the suit, he/she gets a share of the recovery. This means that all of your employees are potential Qui Tam relators, and they can make money off of your failures of compliance.

Something else that turns the False Claims Act into a minefield for healthcare providers in general is the now-codified doctrine of “Reverse False Claims” – the failure to identify and return overpayments by Medicaid and Medicare. The “60-day rule” gives you 60 days to return the overpayment from the latter of (a) the time when the overpayment is identified or (b) the due date of a corresponding cost report.

An overpayment has not been “identified” for purposes of the rule until the provider has “through reasonable diligence” quantified the overpayment, although this reasonable diligence should take no more than six months from the receipt of credible information, barring extraordinary circumstances.

The 60-day rule only applies to overpayments identified within 6 years after they were received.

Stark Law

The Stark Law is a potential trap for even the most compliant long-term care facility for one reason: it requires no intent on the part of the facility to violate the law in order for a violation to have occurred. A physician making a referral for certain designated health services payable by Medicare to an entity in which the physician (or a member of his or her immediate family) has a financial relationship is prohibited, unless an exception applies.

Again, OIG guidance is helpful in analyzing potentially fraught transactions, this time providing a three-part test:

  • “Is there a referral (including, but not limited to, ordering a service for a resident) from a physician for a designated health service? If not, there is no physician self-referral issue. If yes, then the next inquiry is:
  • Does the physician (or an immediate family member) have a direct or indirect financial relationship with the nursing facility? A financial relationship can be created by ownership, investment, or compensation; it need not relate to the furnishing of DHS. If there is no financial relationship, there is no physician self-referral issue. If there is a financial relationship, the next inquiry is:
  • Does the financial relationship fit in an exception? If not, the statute is violated.” 73 FR 56832-02

The guidelines also provide a framework for setting up systemic measures to guard against Stark Law violations:

“First, many of the potentially applicable exceptions require written, signed agreements between the parties. Nursing facilities should enter into appropriate written agreements with physicians. In addition, nursing facilities should review their contracting processes to ensure that they obtain and maintain signed agreements covering all time periods for which an arrangement is in place.

Second, many exceptions require fair-market value compensation for items and services actually needed and rendered. Thus, nursing facilities should have appropriate processes for making and documenting reasonable, consistent, and objective determinations of fair-market value and for ensuring that needed items and services are furnished or rendered.

Nursing facilities should also implement systems to track non-monetary compensation provided annually to referring physicians (such as free parking or gifts) and ensure that such compensation does not exceed limits set forth in the physician self-referral regulations.” 73 FR 56832-02.

Compliance Guidance Straight from the Regulators

There are several other areas of concern, and the OIG sets out helpful inquiries for all of them. Compliance officers for long term care facilities should read and re-read all of the guidance published by the OIG – it’s a genuinely helpful resource for navigating compliance for long term care facilities. And once those individuals are done reading the guidance, give us a call – we can help make sense of compliance.

Chris S

Christopher J. Shaughnessy is a member at McBrayer law.  Mr. Shaughnessy concentrates his practice area in healthcare law and is located in the firm’s Lexington office.  He can be reached at cshaughnessy@mcbrayerfirm.com or at
(859) 231-8780, ext. 1251, or contact any of the attorneys at McBrayer.  We take a team approach to deliver effective counsel to all our clients, so other attorneys in the firm may perform these services as well.  

This article does not constitute legal advice.

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