Risk Management and Legal Issues: Integrated Delivery SystemsRoie RennertHPA 836

Agenda

Introduction

Defining the issues

False Claims

Anti-trust violations

Kickback fraud

Lessons learned

Introduction• Integrated delivery systems are healthcare

organizations that essentially offer “cradle-to-grave” services for patients (Enthoven, 2009).• Labor delivery, primary care services, specialty services,

hospice, etc. • Provide a vertical continuum of services to a population

or community.• Typically large organizations with several hospitals,

several hundred beds, and even several thousand employees (Enthoven, 2009).

• Given the size of the affiliated hospitals, number of employees, and the scope of rendered services, there is potential for legal issues.

Defining the Issues• False Claims

• Instances where a healthcare or other administrative organization presents the government a fraudulent or false claim for payment; uses a false record to receive a false claim or payment; conspires with other entities to put forth a false claim; or uses a falsified statements or service records to conceal or avoid payments owed to the government (Page & Fields, 2011).

• Anti-trust Violations• Anti-trust laws protect the free market and are used to ensure fair trade and competition.

Violations occur when competitors conspire and use combined market power to interfere with fair-market competition (Hammer & Sage, 2009).

• Examples include: price fixing, contract rigging, and monopolization.

• Kick-back fraud• Anti-kickback regulations pertain to the relationship between the hospital and the

physician. Regulations are in place to ensure that the hospital is not simply paying physicians for referrals (Paige & Fields, 2011).

• Examples include: paying physician outside of contracted rates and paying a physician group for referrals

False Claims – Why is it an issue?• False claims can be used to deceive patients and payors for

monetary gain. Medicare spends roughly $220 billion on hospital and physician services annually (Kaiser Family Foundation, 2015). Medicare and Medicaid are often the victims of false claims.

• Common types of false claims include: • Billing for services not rendered• Billing for more expensive procedures than actually performed• Falsifying a patients diagnosis to perform more costly medically

unnecessary services (Page & Fields, 2011)• Government recovered ~ $3.5 billion in settlements under

the False Claims Act in 2015 (Powderly, 2015). • Department of Justice (DOJ) has recovered roughly $26.4

billion in false claims cases since 2009 (Powderly, 2015).

False Claims – What areas are affected?• Affected areas may vary depending on the billing

physician. In the case of an Integrated Delivery System, the holding may be liable for false claims. • HCA Holdings (Health Corporation of America) paid $15.8

million in October of 2015 for overbilling Medicare on implanted cardiac devices (MacDonald, 2015).

• False claim injustices occur outside of Integrated Delivery Systems as well. Other entities have been found guilty of breaching the false claims act:• Bostwick Laboratories (Diagnostic groups) (Iandolo, 2016)• Tacoma Physician Group (Physician group) (Roberts, 2014)• Deaconness Home Health Inc (Home health agency)

(Powderly, 2015)

False Claims – What regulatory bodies are involved?• The Joint Commission • The Center for Medicaid and Medicare

Services (CMS)• The United States Department of Justice

(DOJ)• The Committee on Oversight and

Government Reform

False Claims – Who would be a clarifying resource?• Legal Counsel

• Counsel within the hospital could offer advice and clarification there is foul play by filing false claims. Counsel may also offer necessary legal steps to ensure limited liability for the organization as a whole.

• Center for Medicaid and Medicare Services (CMS):• There are professionals within CMS who are familiar with ICD-10. These

persons may be able to justify or invalidate the need for specific billed services (Department of Health and Human Services, 2014).

• Consulting physician and/or specialist:• In the event that you believe there are false claims being filed, you may

consult a physician or specialist in the field of the individual making the claims.

• Consulting an outside source could offer validation for the need or lack of need for the claim. Consulting physicians can also reduce liability for the organization; they would serve as a proof that the organization was internally investigating.

Antitrust violations – Why is it an issue?• Antitrust laws in healthcare aim to protect competition

within healthcare and prevent uncompetitive behavior. • Mergers and acquisitions increased by 18% between

2013 and 2014 (Gamble, 2015). • With the growing prominence of Accountable Care

Organizations (ACOs), anti-trust laws must be carefully navigated. • The Affordable Care Act has encouraged health care providers

to merge in order to contain costs and assume financial and clinical responsibility over a population.

• The Federal Trade Commission (FTC) has challenged several hospital acquisitions on the basis of excessive market power (Gamble, 2015).

Antitrust violations – Why is it an issue? (cont.)• St. Luke’s in Boise, Idaho, ordered to unwind its acquisition

of Saltzer Medical Group due to anti-market competitive presence (Ellison, 2015). • The judge ruled that “the transaction was designed to improve

healthcare outcomes and to improve quality of care, and that those goals would probably be achieved,” but ultimately sided with the FTC (Ellison, 2015).

• Ohio based ProMedica Health System is challenging a court decision which nullified its merger with St. Lukes. The FTC brought about the case, maintaining that the merger would disturb competition in Lucas County (Ellison, 2015). • The case has been appealed to the Supreme Court. According to

ProMedica counsel, "it will be the first time in decades the Supreme Court has weighed in on the antitrust aspects of a merger,“(Ellison, 2015).

Antitrust violations – What areas are affected? • Accountable Care Organizations (ACOs)

• Difficulty establishing a boundary for hospitals merging to form ACO’s in an effort to lower costs and improve quality. Increased market share could result in price fixing (Ellsion, 2015).

• Insurance Companies• As healthcare organizations grow larger, they are able to care for a

larger number of patients. As a result, these hospitals and corporations have elevated bargaining power which may be at a cost to the consumer and insurer (Maiuro, 2015).

• Small to Medium Sized Hospitals• The current healthcare climate is to merge and grow larger in order

to combat shrinking operating margins and an unpredictable regulatory environment. Small to medium sized hospitals may be at a loss as the line between illegal and legal mergers becomes muddled (Maiuro, 2015).

Antitrust violations – what regulatory bodies are involved? • The Federal Trade Commission (FTC)• The Department of Justice (DOJ)

(Images from United States Department of Justice and Federal Trade Commission Wikipedia Page)

Antitrust violations – who would be a clarifying resource?• Legal Counsel• Could provide legal advice as to whether a merger or

affiliation with an outside group would constitute anti-trust violations.

• Federal Trade Commission• After applying for a merger with the State, organizations

could seek the input of the FTC as to whether a proposed merger would breach anti-trust laws.

• Department of Justice• If you suspect an organization (whether it is your

employer) is conducting illegal anti-trust activities, you could seek the help of the DOJ in resolving the issue.

Kick-back fraud – why is it an issue?• Anti-kickback laws limit the physician hospital

relationship, and attempt to keep a patient – not physician – centered approach to finding the correct individual to render patient care (Page & Fields, 2011).

• Kickbacks can increase costs, influence clinical decision making, and adversely affect the quality of patient care received (Bellamy, 2014).

Kick-back fraud – why is it an issue? (cont.)• Illegal referral networks and reward systems can

and are used for the financial and competitive gain of physicians and health care organizations. • Tuomey Healthcare Systems and Palmetto Health to pay

$72.4 million in a government settlement for illegally paying physicians for referrals (Powderly, 2015)• Angels Medical Center paid a penalty of $10 million for

providing kickbacks to patient recruiters enlisting homeless individuals (Page & Fields, 2011).

Kick-back fraud – what areas are affected?• Kick-back fraud is not exclusive to integrated

delivery systems, and has shown to occur in various healthcare settings (Staton, 2015).

• A recent claim against the pharmaceutical giant Novartis settled for $390 million (originally a $3.3 billion case) for anti-kickback violations (Staton, 2015). • Novartis was accused of offering special discounts on a

translplant drug in a battle with competitor Roche.• Anti-kickback violations can occur in any arena

that involves federal healthcare funding (Page & Fields, 2011).

Kick-back fraud – what regulatory bodies are involved?• State Attorney Generals • The Department of Justice • The Center for Medicaid and Medicare

Services • The American Medical Association (AMA)

Anti-kickback violations – who would be a clarifying resource?• Consulting Services• In the event a delivery system believes it is paying a physician too

much, and may be suspected of kickback violations, it can bring in a consulting firm to justify salaries and provide recent data on salary trends.

• Whistleblower Protection• When uncovering a kickback scheme, it may be difficult to testify

against peers and employers. Whistleblower organizations may help overcome associated stress of providing testimony, and can also provide the necessary resources to see justice (Bachman, 2016).

• Center for Medicaid and Medicare Services • Often times Medicare and Medicaid are victims of kickback violations,

as federal dollars are spent on incentivizing professionals. • Individuals at CMS may be able to assist individuals suspecting

kickbacks within their organization.

Lessons Learned• Federal anti-trust laws may interfere with

healthcare’s goal of reducing costs and improving quality, as the “bigger is better” mantra comes under state and federal scrutiny.

• Kickback laws can publicize multi-million dollar settlements, however, many kickback and fraud violations get swept under the rug due to fear of whistleblowing (Bachman, 2016).

Lessons Learned (cont.)• In order to avoid foul play, fraudulent claims,

and illegal incentive structures, it is necessary to facilitate a culture of openness and psychological safety where individuals feel free to express their concerns for legal issues.

• To be a successful administrator from a legal sense, you must know all the technicalities and nuances of relevant laws to your occupation. Many activities that seem ethical may in fact be illegal in the eyes of the law.

References• Bachman, R. (2016, January 6). Record Mega-Settlements May Attract More

Whistleblowers. Retrieved January 16, 2016, from http://www.jdsupra.com/legalnews/record-mega-settlements-may-attract-66633/

• Bellamy. (2014, September 11). Understanding Risk: Fraud and Abuse Laws. Retrieved January 15, 2016, from http://www.apta.org/ReducingRisk/UnderstandingRisk/FraudAbuse/

• Department of Health and Human Services, Medicare Fraud and Abuse. (2014, August 1). Retrieved January 15, 2016, from https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/downloads/Fraud_and_Abuse.pdf

• Department of Justice, Health Care Advocacy. (n.d.). Retrieved January 16, 2016, from http://www.justice.gov/atr/health-care

• Ellison, A. (2015, January 30). 5 healthcare antitrust cases to watch in 2015. Retrieved January 16, 2016, from http://www.beckershospitalreview.com/legal-regulatory-issues/5-healthcare-antitrust-cases-to-watch-in-2015.html

• Enthoven. (2009, December 1). Integrated delivery systems: The cure for fragmentation. Retrieved January 17, 2016, from http://www.ncbi.nlm.nih.gov/pubmed/20088632

• Gamble, M. (2014, January 30). The St. Luke's Antitrust Case: 10 Things to Know. Retrieved January 16, 2016, from http://www.beckershospitalreview.com/legal-regulatory-issues/the-st-luke-s-antitrust-case-10-things-to-know.html

References (cont.)• Hammer, & Sage. (2003, November 1). Critical Issues In Hospital Antitrust Law. Retrieved

January 15, 2016, from http://content.healthaffairs.org/content/22/6/88.full• Iandolo, M. (2016, January 12). DOJ reaches $3.75 million agreement with doctor over

alleged violations of False Claims Act. Retrieved January 17, 2016, from http://legalnewsline.com/stories/510657600-doj-reaches-3-75-million-agreement-with-doctor-over-alleged-violations-of-false-claims-act

• Kaiser Family Foundation, The Facts on Medicare Spending and Financing. (2015, July 24). Retrieved January 15, 2016, from http://kff.org/medicare/fact-sheet/medicare-spending-and-financing-fact-sheet/

• MacDonald, I. (2015, October 30). DOJ settles with 450 hospitals for $250M over False Claims Act allegations. Retrieved January 16, 2016, from http://www.fiercehealthcare.com/story/doj-settles-450-hospitals-250m-over-false-claims-act-allegations/2015-10-30

• Maiuro, L. (2015, June 1). Antitrust Principals and Integrated Health Care: Implications for Consumers and Health Care Organizations. Retrieved January 17, 2016, from http://www.chcf.org/~/media/MEDIA LIBRARY Files/PDF/PDF A/PDF AntitrustPrinciplesWhitePaper.pdf

• Page & Fields (2011, March 14). 13 Legal Issues for Hospitals and Health Systems. Retrieved January 16, 2016, from http://www.beckershospitalreview.com/hospital-management-administration/13-legal-issues-for-hospitals-and-health-systems.html

References (cont.)• Powderly, H. (2015, December 7). Healthcare fraud in 2015: Running

Lists. Retrieved January 17, 2016, from http://www.healthcarefinancenews.com/slideshow/biggest-healthcare-frauds-2015-running-list?p=0

• Roberts. (2014, April 30). Tacoma physicians group to pay state $259k in alleged overbilling case. Retrieved January 17, 2016, from http://www.thenewstribune.com/news/business/article25868074.htm

• Staton, T. (2015, October 27). Novartis shells out $390M to settle specialty pharmacy kickback claims. Retrieved January 16, 2016, from http://www.fiercepharma.com/story/novartis-shells-out-390m-settle-specialty-pharmacy-kickback-claims/2015-10-27

• United States Department of Justice. (n.d.). Retrieved January 16, 2016, from https://en.wikipedia.org/wiki/United_States_Department_of_Justice