Ohio Hospital Association

Compliance Update

May 21, 2003
www.ohanet.org

The Office of Inspector General of the U.S. Department of Health and Human Services (OIG) has teamed with the American Health Lawyers Association to publish a corporate responsibility and compliance resource for health care boards of directors.  The guide includes information about a director’s or trustee’s fiduciary duty and duty of care, along with suggested questions related to corporate compliance for board members to ask the management team in order to demonstrate appropriate oversight.

Click here to download a copy of the publication.

Below are summaries of recent OIG advisory opinions.  The OIG issues advisory opinions in an attempt to provide meaningful advice on the application of the anti-kickback statute and other OIG sanction statutes in specific situations. However, the OIG emphasizes that, “advisory opinions are binding and may legally be relied upon only by the requestor. Since each opinion will apply legal standards to a set of facts involving certain known persons who provide specific statements about key factual issues, no third parties are bound nor may they legally rely on these advisory opinions.”  Yet, the opinions often offer valuable insight into the OIG’s analysis of various fact patterns and often identify OIG enforcement positions and policies.

      In Advisory Opinion 03-6, the OIG affirms it will not impose sanctions on a medical center that provides below-market physician services to a county-owned women’s health clinic.  Under the proposed arrangement, the medical center will relocate its OB/Gyn residency program to the clinic, agree to provide inpatient hospital services to clinic patients, and to accept as payment-in-full an amount equal to the additional costs over its existing residency program.  In its analysis, the OIG found the public benefit of the arrangement outweighs the minimal risks of abuse.

       The OIG will not impose sanctions on a renal dialysis facility or hospital district that enters into an arrangement for hemodialysis services and equipment in Advisory Opinion 03-7.  Under the proposed arrangement, the hospital district will subcontract the delivery of acute hemodialysis services to the contractor, arrange for chronic hemodialysis services at no cost to the hospital district and sell the district’s ten hemodialysis machines to the contractor at fair market value.  Although the OIG expresses suspicion about tying the referral of indigent patients to paying business, this particular arrangement poses a minimal risk of program fraud or abuse.

The OIG refuses to approve the parties’ proposed arrangement for a distinct part inpatient rehabilitation unit within a general acute care hospital in Advisory Opinion 03-8.  At issue is the agreement under which the management company would develop and operate the unit for a “per patient per day” fee paid by the hospital.  The OIG warns that per patient or similar payment arrangements are disfavored under the anti-kickback statute and may lead to overutilization and lengthy stays.

The OIG expanded on a 1989 Special Fraud Alert by issuing a Special Advisory Bulletin on contractual joint ventures April 23.  The Bulletin focuses on certain complex contractual joint ventures that use shell companies and subcontracts with freestanding providers of related health services to disguise illegal kickbacks.  The OIG warns these arrangements, which have been proliferating, potentially violate the anti-kickback statute. 

Arrangements under which a health care provider in one line of business expands into a related line by contracting with an existing provider of the related item or service – usually a competitor -- particularly trouble the OIG.  A hospital-related example offered by the OIG involves:

A hospital establishes a subsidiary to provide DME.  The new subsidiary enters into a contract with an existing DME company to operate the new subsidiary and to provide the new subsidiary with DME inventory.  The existing DME company already provides DME services comparable to those provided by the new hospital DME subsidiary and bills insurers and patients for them.

Common elements of problem arrangements identified by the OIG include:

Ø        The owner expands into a related line of business, which is dependent on referrals from, or other business generated by, the owner’s existing business.

Ø        The owner neither operates the new business itself nor commits substantial financial, capital, or human resources to the venture.

Ø        The manager/supplier is an established provider of the same services as the owner’s new line of business.

Ø        The owner and the manager/supplier share in the economic benefit of the owner’s new business.

Aggregate payments to the manager/supplier typically vary with the value or volume of business generated for the new business.

Ohio Attorney General Jim Petro announced that Ohio has joined with other member states of the National Association of Medicaid Fraud Control Units (NAMFCU) in a settlement with GlaxoSmithKline and Bayer Corporation for violations of federal Medicaid drug rebate rules.  The drug companies failed to report “best price” information and pay sufficient rebates to the state Medicaid programs through a drug repackaging scheme.  The drugs involved included Flonase, Paxil and Adalat CC.   

Ohio’s share of the settlement is $16 million, some of which will be returned to the Attorney General’s Health Care Fraud Unit.  Click here to read the Attorney General’s press release.

The Ohio Department of Job and Family Services (ODJFS) has released an updated Medicaid General Information Handbook, available at http://www.state.oh.us/odjfs/ohp/bhpp/handbook/index.stm.  The handbook is intended to serve all Medicaid providers as a general companion to the provider-specific rules available at http://dynaweb.odjfs.state.oh.us:6336/dynaweb.  The revised handbook incorporates all policy updates up to July 2002, and includes general information on coverage, medical necessity, patient liability for medical services, provider agreements, and medical review.

In a related issue, ODJFS states it is reconsidering the decision to distribute policy and manual updates solely electronically.  Last Fall, the department announced that starting in January, it would no longer mail hard copies of manual letters and handbook updates, and instead would direct all interested parties to its Web site for Medicaid coverage and reimbursement updates.  Based on a number of comments at a public meeting on the change, ODJFS has decided to revisit its “paper transmittal reduction plan,” and will send a revised proposal within the next few weeks.  It is expected ODJFS will allow subscribers the option to receive updates off the Internet, or by CD-ROM or hard copy, and will phase in the change over the second quarter of 2003. (Charles Cataline, charlesc@ohanet.org)

OHA Compliance Briefing Series Continues

The 2003 series of OHA Compliance Telephone Briefing Seminars continues through the summer.  Each one-hour session runs from 11:00 a.m. until noon and features topics identified by members of the OHA Compliance Officers Network (you!).  OHA’s Center for Education has registration information.  The schedule of remaining topics and speakers are: 

May 13 Provider Based Determinations              Gretchen McBeath, Esq., Bricker & Eckler, LLP

June 5   APC Compliance Issues                           Deborah Sheets, Plante & Moran, LLP 

July 8            Compliance Program Effectiveness            John Steiner, Jr., Esq., Cleveland Clinic Health System

Sept. 9            Compliance Issues for SNFs                Carol Rolf, Esq., Rolf & Goffman

Oct. 14            Handling Overpayments to    Avoid False Claims        Robert Liles, Esq., Martyn & Liles, PLLC

Spring is the Time for OHA Educational Seminars

OHA is sponsoring several compliance-related educational seminars in the next few months. Below is a description of just a few sessions – Contact OHA’s Center for Education (614/221-7614) for more information and registration materials!

      Interventional Radiology & Catheterization Laboratory: Coding, Billing & Reimbursement

May 7, 2003, 8:30 a.m. – 4:00 p.m., Radisson Airport Hotel, Columbus

      Emergency Department:  APCs and EMTALA

May 8, 2003, 8:30 a.m. – 4:00 p.m., Radisson Airport Hotel, Columbus

    Evaluating and Preparing for Provider-Based Status

Part 1: May 13, 2003, 1:00 p.m. – 2:30 p.m.; Part 2: May 15, 2003, 1:00 p.m. – 2:30 p.m., Telephone Seminar/Web Conference

Clinical Documentation: Keys to Compliance

June 19, 2003, 8:30 a.m. – 4:00 p.m., Holiday Inn East, Columbus

   Hospital Emergency Depart Operational Essentials: The Relationship of Risk Management and Customer Service

June 20, 2003, 8:30 a.m. – 3:45 p.m., Holiday Inn East, Columbus

 Compliance Officers Luncheon at the OHA Annual Meeting

Mark your calendar now for the 2003 OHA Annual Meeting in Columbus June 9 &10.  Separate tracts will feature sessions on compliance, billing, HIPAA, fraud and abuse issues and more!  And registration for the two-day conference packed with continuing education for OHA members is only $65!  In addition, the OHA Compliance Officers Network will be meeting for lunch with featured speakers addressing the topic of Ohio’s state law prohibitions on physician self referral June 9 from noon until 1:15 p.m. – a separate registration fee is required – and all are invited!   Contact OHA’s Center for Education (614/221-7614) for more information. 

The Centers for Medicare and Medicaid Services (CMS) Medicare Coverage Database: http://www.cms.hhs.gov/coverage/. The Medicare Coverage Database offers comprehensive coverage information and answers to coverage policy questions. The database allows users to search National Coverage Determinations, National Coverage Analyses, and Local Medical Review Policies.

“In qui tam cases the rough difference between double and triple damages may well serve not to punish, but to quicken the self-interest of some private plaintiff who can spot violations and start litigating to compensate the Government, while benefiting himself as well.”

-Cook County, Il v. U. S. ex rel. Chandler
 No. 01-1572, 538 U.S. ____, ____ (2003)
Justice Souter on behalf of the unanimous Court