Medicare Compliance & Reimbursement

Hint: Though they both deal with referrals, Stark and AKS are not the same.

As the OIG and their cohorts home in on criminals who abuse CMS and its programs, the need for a greater understanding of the nuances of Medicare fraud increases, especially if you want to avoid the heat.

Refresher: There are three main areas of concern where providers may unwittingly violate the rules: The Anti-Kickback Statute (AKS); the Physician Self-Referral Law, more commonly known as the Stark Law; and the False Claims Act (FCA). The AKS and the Stark Law focus on referral issues, but the two federal mandates are different, with one specifically focused on physicians and the other more far reaching. The FCA targets practices who willfully file improper claims.

Take A Look At Kickbacks

Kickbacks refer to any acceptance of reward, incentive, or payment for a referral from anyone, or in technical terms, “patient referrals or the generation of business involving any item or service payable by the Federal healthcare programs,” the Anti-Kickback Statute (AKS) states. You run the risk of both civil and criminal charges under the AKS, which makes kickbacks more detrimental to the offender than referral fraud.

Consider this scenario: If the owner of the lab you send your patients to offers you “incentives” for referring them, that is considered a kickback. In this kind of situation, cash rewards, gifts, vacations, and even discounted services or supplies are considered kickbacks.

Labs, suppliers, drug companies, hospitals, home health agencies, and more pursue physicians for their referrals — and offer big inducements for the kickback. However, it’s important to note that some providers can avoid penalties if they have an arrangement in place under one of the OIG’s safe harbors (Medicare Reimbursement and Compliance, Vol.42, No.24).

Fine breakdown: Monetary damages for engaging in kickback fraud vary depending on the level of severity, but “civil penalties for violating the AKS may include penalties of up to $50,000 per kickback plus three times the amount of kickback,” according to the Medicare Learning Network fraud and abuse fact sheet. Criminal penalties may, however, include fines, incarceration, and exclusion from the Medicare, Medicaid, and state health programs.

How Is Stark Different?

Self-referral fraud is a little tricky and falls under the Physician Self-Referral Law or Stark Law. The federal rule “prohibits physicians from referring patients to receive ‘designated health services’ payable by Medicare or Medicaid from entities with which the physician or an immediate family member has a financial relationship, unless an exception applies,” the guidance says.

For example: If you have partial interest in another healthcare company or service, you cannot exclusively refer patients to the firm unless you have a documented exception.

For those who get caught making a prohibited referral, you can expect a civil suit to follow with punishments ranging from fines, forced refunds, Civil Monetary Penalties (CMPs) up to $15,000 for each service, and program exclusions.

Here’s how they differ: “Stark applies only to physicians, while AKS is applicable to anyone,” reminds attorney John E. Morrone, Esq, a partner at Frier Levitt Attorneys at Law in New York, New York. “Stark’s fundamental focus is to prevent physicians (except in particular circumstances) from making referrals to entities with which they have a financial relationship.”

He adds however that the “AKS is violated when a payment is made based on the ‘volume or value of referrals’ with the term ‘referral’ being interpreted such that a sale’s rep delivering a prescription to a pharmacy could be considered a referral.”

“For example, AKS is a criminal statute, while Stark is not,” points out attorney Michael D. Bossenbroek, Esq. of Wachler & Associates, P.C. in Royal Oak, Michigan. “However, Stark is a strict liability statute, meaning intent is not required, but AKS has an intent requirement.”

Practical details: The laws are not administered by the same federal agencies. “Stark applies to Designated Health Services (DHS), but the AKS is not so limited,” Bossenbroek says. “Stark involves physician self-referral, but the AKS does not apply only to physician referral arrangements.”

He continues, “Also, both laws have their respective exceptions or safe harbors which, while often similar, may have different elements. Ultimately, it is important to give attention to both laws when analyzing their applicability, and not collapse the two together.”

Remember False Claims Penalties Add Up Fast

The impacts of the FCA can be devastating for any practice, particularly since a gray area exists between what CMS terms “deliberate ignorance” and “accidental oversight.” And the penalties are incredibly high per violation both financially and personally.

Nuts and bolts: False claims encompass things as varied as upcoding to a code that pays more, double-billing, and unbundling codes to be paid for single codes at a higher rate. Other reasons that might land you in hot water under the FCA are for billing Medicare for services that were never rendered, provided by unqualified staff or administered by excluded providers. However, the number-one reason for most false claims relates to medical necessity or the lack thereof.

The damage: If you’re found guilty of submitting false Medicare claims, the financial penalties can be steep. In addition to paying back what you were paid out for the fraudulent claims, you may have to shell out some cash to cover your fines. “Civil penalties for violating the FCA may include fines of up to three times the amount of damages sustained by the Government as a result of the false claims plus up to $21,563 per false claim led,” notes a Medicare Learning Network fact sheet on the subject.

Criminal record: Though the FCA fines are a civil penalty, the mandate also includes a statute for criminal offenses, which carries with it substantial fines and possible imprisonment for individuals and entities found guilty.

What to do: “Prevention is the best cure,” advises Morrone. Compliance preparation helps you avoid claims issues, especially those that lead to denials, audits, and indictments. Consider these tips from Morrone to combat improper claims:

• Implement a robust compliance plan
• Understand proper billing and coding standards
• Stay abreast of regulatory changes
• Participate in Medicare educational forums
• Utilize Medicare Learning Network releases

It’s easy to discuss the reasons why false claims happen and how to confront them, but managing compliance risks practice-wide takes the efforts of both provider and coder and needs to include education on false claims and federal updates. “If the focus is prospective compliance, then education and training about the relevant Medicare policies coupled with written policies and procedures is a good, if generic, foundation,” says Bossenbroek.

60-day rule: “Providers should also be educated on compliance with the 60-day overpayment rule so that they know what it means to identify an overpayment and what to do when the providers identify an overpayment,” recommends Bossenbroek.

He adds, “Compliance with the 60-day overpayment rule, and also awareness of the related Stark self-referral disclosure protocol, could mean the difference between an overpayment and significant FCA exposure.”

Get Legal Help Upfront

If you find yourself under audit for one of the big three healthcare compliance blunders, seek experienced legal help before it turns into something that can destroy your livelihood. Health law is complicated and requires more than a glance at the MLN texts and downloaded legal forms from the OIG.

As you research the best health law expert for your particular practice needs, Morrone suggests you “ask about experience in particular matters such as, (i) defending cases before the DOJ; (ii) advising on Stark and AKS; (iii) conducting Medicare Audits and appeals; and (iv) the experience and background of particular attorneys.”

State experience: It’s important that your team understand federal statutes and laws, but don’t forget to inquire about local and state interests, dealings with your Medicare Administrative Contractor, and knowledge of Medicaid and state health programs, too. “AKS and Stark laws are complex, so experience advising clients about those laws, and any related state laws, should be a top priority in the search for legal counsel,” says Bossenbroek.

Resource: For a look at the Medicare Learning Network’s fact sheet, “Avoiding Medicare’s Fraud and Abuse: A Roadmap for Physicians,” visit www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/Downloads/Avoiding_Medicare_FandA_Physicians_FactSheet_905645.pdf.