Physicians face increased scrutiny, penalties under health care reform law

Sweeping legislation stiffens penalties for kickbacks and false claims and requires companies to disclose all compensation furnished to physicians.

Alan E. Reider

Ophthalmologists must prepare themselves and their practices for changes to health care legislation designed to reduce fraud and increase the transparency of corporate-physician relationships.

During a combined general session at Hawaiian Eye 2011 and Retina 2011, Alan E. Reider, JD, MPH, outlined some of the more notable changes forthcoming under the Patient Protection and Affordable Care Act.

“The first and most significant portion of health care reform is increased funding over the next 10 years for enforcers,” Mr. Reider said.

Funding for the enforcement of existing statutes will be increased $350 million over 10 years, Mr. Reider, OSN Regulatory/Legislative Section Editor, said.

“That’s a lot of investigators, a lot of auditors, a lot of prosecutors and a lot of grief, because we have Congress beating on the administration, saying you’re not doing enough, and now part of health care reform legislation is going to increase enforcement activity dramatically,” he said.

Mr. Reider recommended that all ophthalmologists perform annual billing and coding reviews, confirm that contractual relationships with referral sources comply with the latest rulings, and assure that financial relationships with pharmaceutical and device companies are proper.

Anti-Kickback Statute and False Claims Act

Mr. Reider said there is a potent amendment to the Anti-Kickback Statute, which makes it a crime to offer or pay or solicit or receive anything of value in exchange for the referral of a patient for services covered by Medicare, Medicaid or any federal health care program. Mr. Reider explained that to address limitations imposed by court decisions on the successful prosecutions of these cases, Congress eliminated the requirement that a party had to knowingly and intentionally violate the statute.

“Now the new legislation reduces the burden of prosecutors, making it much easier to prosecute under the Anti-Kickback Statute,” he said. “So, while we have all heard about how we need to be careful about it, the practical reality is ... I feel, that this change will result in an increase in cases or a threat of an increase.”

The legislation also expanded the False Claims Act. Under the law, violators who file false claims are liable for three times the damages plus penalties of $5,500 to $11,000 per claim. The new legislation confirmed that a violation of the Anti-Kickback Statute also generates a violation of the False Claims Act, Mr. Reider said.

And now, known overpayments can be considered false claims under the newly expanded law.

“If you have a payment which you know to have been an overpayment and you sit on it for more than 60 days, that overpayment turns into a false claim, subject again to the triple damages provision … as well as a penalty of between $5,500 and $11,000,” Mr. Reider said.

Physicians should engage qualified professionals to assist with coding and billing, he said.

“This is your biggest area of risk,” Mr. Reider said. “Get somebody to help you. You didn’t go to medical school to learn how to code. You went to medical school to help treat patients. Let the coders help you learn how to deal with coding.”

Recovery Audit Contractors

Under the Recovery Audit Contractor (RAC) program, independent contractors are hired by the federal government to audit Medicare claims and root out improper payments.

“These are entities that receive contracts from the federal government to go out and find overpayments,” Mr. Reider said. “Then they get to keep a portion of them.”

In 2007, 97% of improper payments pinpointed by RACs were overpayments and 3% were underpayments, Mr. Reider said.

RAC auditors are paid exclusively for recovering overpayments and receive nothing for identifying underpayments.

“These contractors are outrageously aggressive,” Mr. Reider said.

A physician who is identified as having received an overpayment can expect to receive a letter informing him or her of the overpayment and another letter demanding reimbursement of the money.

“You will then have the right to go through the Medicare appeal process, which is a lengthy and very unsatisfying process,” Mr. Reider said. “So, the best thing you can do is make sure you don’t get hit in the first place.”

Suspension of Medicare payments

The legislation authorizes Medicare to suspend payments with credible evidence of fraud based on data mining and anonymous calls to a telephone hotline; Mr. Reider characterized such evidence as spurious.

“That’s credible evidence? That’s frightening. That’s not credible evidence,” he said.

Compliance plans and sunshine provision

Also under the health care reform law, physicians will be required to have compliance plans in place to enroll in Medicare and Medicaid.

“It’s going to happen,” Mr. Reider said. “Don’t wait until the last minute to establish a compliance program.”

In addition, the health care law includes a physician payment sunshine provision that will require drug, device, biologic and supply manufacturers to disclose all compensation furnished to physicians.

“The language of the statute is extremely broad,” he said. “It’s not just payments for serving as a clinical investigator or as a speaker or as a consultant. It’s a very broadly based statute that’s designed to essentially say that if you have a financial relationship with any of these companies, be prepared to have it made public. And it will be made public.”

Companies must begin submitting disclosures to the Department of Health and Human Services in 2013. – by Matt Hasson, Cara Hvisdas and David W. Mullin

• Alan E. Reider, JD, MPH, can be reached at Arnold & Porter LLP, 555 12th St. NW, Washington, DC 20004-1206; 202-942-6496; email: alan.reider@aporter.com.
• Disclosure: Mr. Reider has no relevant financial interests to disclose.