Legal Limits on HME Marketing

1
Legal Limits onHME Marketing

• Carrie Bryant, Esq., CHC
• Compliance Officer
• American HomePatient
• William T. Mathias, Esq.
• Principal
• OberKaler

2
Outline of Presentation

• Background
• Legal Limits on Marketing
• Anti-kickback Statute
• Stark Self-referral Law
• False Claims Act
• Prohibition Against Beneficiary Inducements
• State Law
• HIPAA/HITECH
• Medicare Anti-solicitation Law
• Recent Guidance
• Changing Compliance Environment

3
Some Things Dont Change

• Medicare and Medicaid regulations remain
  incredibly complex

4

• There can be no doubt but that the statutes and
  provisions in question, involving the financing
  of Medicare and Medicaid, are among the most
  completely impenetrable texts within human
  experience. Indeed, one approaches them at the
  level of specificity herein demanded with dread,
  for not only are they dense reading of the most
  tortuous kind, but Congress also revisits the
  area frequently, generously cutting and pruning
  in the process and making any solid grasp of
  matters addressed merely a passing phase.

Chief Judge Ervin United States Court of
Appeals for the Fourth Circuit in Rehabilitation
Association of Virginia v. Kozlowski, 42 F. 3d
1444, 1450 (4th Circuit 1994)
5
More Things That Dont Change

• Government continues to view Fraud, Waste, and
  Abuse as a significant source of revenue
• Enforcement remains aggressive

6
Have You Seen the OIGs Website Lately?
7
Aggressive Enforcement

• From new joint DOJ/OIG website www.stopmedicarefra
  ud.gov
• A joint effort by HHS and the Department of
  Justice recovered a record 4 billion from
  fraudsters in FY2010.

8
Fighting Fraud is a Good Investment

• The return-on-investment (ROI) for Health Care
  Fraud and Abuse Control (HCFAC) program
• Since 1997, 4.9 returned for every 1.0
  expended.
• 3-year average (2008-2010), 6.8 returned for
  every 1.0 expended

9
Government Misperception of DME Industry

• Government is skeptical of DME industry
• Lack of trust
• Few bad apples have poisoned the well with
  government
• Lead to questions about the overall medical
  necessity of some DME
• Central to governments regulation and
  investigation of DME industry

10
DME Industry Feeling Undervalued
11
Government Balancing Issues

• Additional Cost
• Over, Under, and Mis-Utilization
• Quality of Care
• Access to Care
• Patients Freedom of Choice
• Competition
• Exercise of Professional Judgment

12
Anti-Kickback Statute
13
Anti-Kickback Statute

• Federal anti-kickback law generally prohibits the
  provision of any economic benefit in exchange for
  the referral of patients or business that will be
  reimbursed under any Federal health care program.
• 42 U.S.C.  1320a-7b(b).

14
Anti-Kickback Statute

• Prohibited Conduct
• Knowing willful
• Solicitation or receipt or
• Offer or payment of
• Remuneration
• In return for referring a federal health care
  program patient, or
• To induce the purchasing, leasing, or arranging
  for or recommending purchasing or leasing items
  or services paid by a federal health care program

15
Anti-Kickback Statute

• Two-way Street
• Meaning that it is just as illegal to solicit or
  accept payments for referrals, as it is to offer
  or make such payments.

16
Anti-Kickback Statute

• Penalties
• Criminal fines imprisonment
• Civil money penalty of 50,000 plus 3X the amount
  of the remuneration
• Exclusion
• False Claims Act liability
• Section 6402 (f)(1) of PPACA makes Anti-Kickback
  violations actionable under FCA

17
Relevant AKS Safe Harbors 42 C.F.R. 1001.952

• Personal Services Management Contracts Safe
  Harbor
• Employment Exception and Safe Harbor
• Space Lease Safe Harbor
• Equipment Lease Safe Harbor

18
AKS Decision Tree
1. Is there an economic benefit? If No
If Yes
2. Is there a referral or recommendation? If No
If Yes
3. Is there a statutory exception? If Yes
If No
4. Is there a safe harbor? If Yes
If No
5. Is there a potential for abuse?
If No
Go to Stark Analysis
If Yes, Problem!
19
Stark Physician Self-Referral Law
20
Stark Self-Referral Law

• The federal Stark physician self-referral law
  generally prohibits a physician from making
  referrals to an entity for any of eleven (11)
  designated health services if the physician (or
  an immediate family member) has a financial
  relationship with the entity.
• 42 U.S.C.  1395nn

21
Stark Self-Referral Law

• Physician may not refer
• Medicare or Medicaid patients
• For designated health services
• to an entity with which the physician or
• an immediate family member has
• a financial relationship
• Ownership interest through equity or debt
• Compensation arrangement
• Unless the relationship fits in an exception

22
Stark Self-Referral Law

• Designated health services
• Clinical laboratory
• DME
• Orthotics Prosthetics
• PEN
• Home Health
• Radiology
• Radiation Therapy
• PT/OT
• Inpatient Hospital Services
• Outpatient Hospital services
• Outpatient drugs

23
Stark Self-Referral Law

• Penalties
• Denial of Payment
• 15,000 per service
• 2X damages
• Exclusion
• False Claims Act liability

24
Relevant Stark Exceptions

• Personal services
• Employment
• Space rentals
• Equipment rentals
• Fair market value compensation
• Non-monetary compensation (lt359 in 2011)

25
Relevant Stark Exceptions (cont.)

• In-office Ancillary Services Exception
• Limited exception for DMEPOS items
• Canes, crutches, walkers, and folding wheelchairs
• Blood glucose monitors
• Infusion pumps that are DME (not infusion pumps
  used for parenteral and enteral nutrition)
• No other DME covered by this exception

26
Stark Decision Tree
If No
1. Is there a physician or immediate family
member?
If Yes
2. Is there a direct or indirect financial
relationship?
If No
If Yes
If No
3. Is there a referral?
If Yes
If No
4. Is there a designated health service?
If Yes
If Yes
5. Is there a statutory exception?
If No
6. Is there a regulatory exception?
If Yes
If No, Problem!
Okay!
27
False Claims Act
28
Federal False Claims Act

• Prohibits
• filing, or causing to be filed
• false or fraudulent claims
• Using false statement to conceal, avoid or
  decrease a government obligation
• Intent
• Intent to defraud not required
• Filing claims with reckless disregard of their
  truth or falsity is sufficient
• Liability
• 3X Damages
• 5,500 to 11,000 per claim

29
Prohibition Against Beneficiary Inducements
30
Prohibition Against Beneficiary Inducements

• Prohibits offering or paying remuneration to any
  Medicare or Medicaid beneficiary that the offeror
  knows, or should know, is likely to influence the
  recipient to order an item from a particular
  supplier.
• 42 U.S.C.  1320a-7a(a)
• Exception for items of nominal value 10 per
  item and 50 per beneficiary per year

31
State Laws
32
State Laws

• Dont forget about state laws
• State fraud and abuse laws
• State mini-Stark laws
• Fee splitting prohibitions
• Patient brokering laws
• State licensing laws
• Corporate practice of medicine
• State False Claims Acts

33
Health Insurance Portability and Accountability
Act (HIPAA)
NOT HIPPO
34
HIPAA/Privacy

• HIPAA requires covered entities to adhere to
  certain basic requirements aimed at protecting
  the privacy of protected health information
  (PHI)

35
HIPAA/PHI

• Protected Health Information
• Information related to past, present, or future
  physical or mental health condition or provision
  of health care services and
• Information related to payment for health care
  services.
• Information can be linked to a particular
  individual.
• Information regardless of form or medium
  (electronic, written, or verbal).

36
HIPAA/Uses Disclosures

• PHI may not be used or disclosed unless use or
  disclosure is specifically permitted by HIPAA or
  authorized by patient.
• Permitted Uses and Disclosures include
• Treatment
• Payment
• Health Care Operations
• Other uses and disclosures as specified in Notice
  of Privacy Practices

37
HIPAA/Original Definitionof Marketing

• Marketing means
• To make a communication about a product or
  service that encourages recipients of the
  communication to purchase or use the product or
  service....

38
HIPAA/Exceptions to Definition of Marketing

• Definition of marketing does not include
• communications to describe a health-related
  product or service (or payment for such product
  or service) that is provided by, or included in a
  plan of benefits of, the covered entity making
  the communication
• communications for treatment of the individual
• communications for case management or care
  coordination for the individual, or to direct or
  recommend alternative treatments, therapies,
  health care providers, or settings of care to the
  individual

39
HIPAA/HITECH Changesto Marketing

• HITECH Act made changes to the definition of
  Marketing
• Where covered entity receives direct or indirect
  payment marketing communication not considered
  health care operation (so patient authorization
  required)
• Limited exceptions
• Communication regarding a currently prescribed
  drug or biological (for which payment must be
  reasonable)
• Communication made by business associate
  according to the terms of business associate
  agreement.
• Direct or indirect payment does not include
  payment for treatment.

40
HIPAA/HITECH Changes to Marketing Proposed Rule

• PROPOSED Rule not final
• Differentiates between treatment and
  marketing communications
• Under PROPOSED Rule
• Notice of potentially subsidized treatment
  communications must be included in notice of
  privacy practices with opt-out procedure
• Communication must identify what is subsidized.

41
HIPAA/HITECH Changes to Marketing Proposed Rule

• Examples
• Manufacturer pays practice to send out flier to
  all patients advertising new device Marketing
• Manufacturer pays practice to send out notice of
  new device to all patients whose treatment might
  be benefited by new device Unclear
• Manufacturer pays practice to send out notice of
  new device to those patients that the practice
  (not the manufacturer) identifies as patients who
  could benefit from new device Treatment

42
HIPAA/Marketing Authorizations

• If covered entitys activities are marketing,
  the covered entity must obtain an individuals
  authorization to use or disclose his/her
  information
• An authorization is not required
• if the marketing is a face-to-face
  communication made by a covered entity to an
  individual or
• the marketing is the provision of a promotional
  gift of nominal value provided by the covered
  entity.
• 45 C.F.R. 164.508(a)(3)(i)(A)(B).

43
Medicare Anti-solicitation Law
44
Medicare Anti-solicitation Law42 U.S.C.
 1395m(a)(17)

• Prohibits suppliers from contacting Medicare
  beneficiaries by telephone regarding covered
  items unless
• Beneficiary has given supplier written permission
• Supplier has previously provided the covered item
  to the beneficiary and contact relates to such
  covered item
• Supplier has furnished a covered item to
  beneficiary in last 15 months, then contact may
  relate to any covered item

45
OIG Special Fraud Alert on DME Telemarketing
46
OIG Special Fraud Alert on DME Telemarketing

• First issued in 2003
• 68 Fed. Reg. 10254 (Mar. 4, 2003)
• Updated in 2010
• 75 Fed. Reg. 2105 (Jan. 14, 2010)
• Reflects OIG concerns about DME telemarketing

47
Original Fraud Alert onDME Telemarketing

• OIG reiterated the statutory telemarketing
  prohibitions
• OIG emphasized that suppliers cannot do
  indirectly that which they are prohibited from
  doing directly.
• DMEPOS supplier cannot hire an unrelated
  marketing entity to make unsolicited telephone
  calls to Medicare beneficiaries to market their
  products or services.

48
Updated Fraud Alert on DME Telemarketing

• Largely repeated prior Alert
• Added a concern about DME suppliers contacting
  beneficiaries based solely on treating
  physicians preliminary verbal or written order
• Added reference to criminal and civil penalties
  for using interstate telephone calls as part of
  fraud scheme

49
Additional Guidance onDME Telemarketing

• On February 17, 2010, OIG posted letter with CMS
  FAQs
• FAQs provide some helpful guidance but do not
  fully resolve issue

50
Additional Guidance onDME Telemarketing

• Not unsolicited to return beneficiarys phone
  call
• Not unsolicited if physician contacts supplier
  on behalf of beneficiary with beneficiarys
  knowledge
• Does supplier need to collect documentation from
  physician reflecting beneficiarys knowledge that
  physician would contact supplier?
• No, but it is business decision by supplier to
  collect such documentation.
• Supplier cannot ask beneficiary about other items
  during initial call, but may on subsequent call
  if beneficiary becomes a customer

51
Practical Guidance
52
Practical Guidance

• Various laws impose restrictions on HME marketing
  activities.
• Compliance with 1 law does not necessarily result
  in compliance with other laws.

53
Practical Guidance
HIPAA Marketing Restrictions Medicare Telemarketing Prohibition
Face-to-Face Communications OK OK
Written communication without using protected health information (PHI) OK OK
Written communication using PHI Depends on content Describing health related products OK Treatment OK Care coordination or recommending alternative treatments or settings OK Selling item unrelated to treatment NO (need authorization) OK
54
Practical Guidance
HIPAA Marketing Restrictions Medicare Telemarketing Prohibition
Telephone call to current patient Depends on content Describing health related products OK Treatment OK Care coordination or recommending alternative treatments or settings OK Selling item unrelated to treatment NO (need authorization) OK
55
Practical Guidance
HIPAA Marketing Restrictions Medicare Telemarketing Prohibition
Telephone call to former patient Depends on content Describing health related products OK Treatment OK Care coordination or recommending alternative treatments or settings OK Selling item unrelated to treatment NO (need authorization) Depends on circumstances Patient has given written permission OK Contacting patient only regarding covered item previously furnished by Company OK. Contacting regarding furnishing a different covered item OK if within 15 months of when Company furnished service to patient.
56
Recent Guidance
57
Advisory Opinions 10-23 10-24

• OIG analyzed 2 different, but related
  arrangements between sleep testing provider and
  hospital
• OIG rejected proposed arrangement with part-time
  marketing and per-click payments
• OIG approved proposed arrangement with full-time
  marketing and fixed, annual fees
• Not all such arrangements are illegal
• High standard for favorable advisory opinion
• Helpful discussion of risks associated with
  under arrangements transactions

58
Advisory Opinion 11-06

• OIG analyzed payments for electronically
  receiving and responding to referral requests
  from hospitals through online post-acute care
  referral service.
• OIG found that the payments did not meet referral
  services safe harbor because they were not
  assessed uniformly and were not based solely on
  cost of operating referral service.
• OIG issued unfavorable opinion out of concern
  that payments created an uneven playing field
  and that payments could be an unlawful
  pay-to-play fee.
• Many hospitals participate in online post-acute
  care referral services and need to re-assess
  those relationships in light of this Opinion.

59
Advisory Opinion 11-08

• OIG analyzed existing and proposed CPAP set up
  arrangements between DME supplier and IDTF.
• OIG issued unfavorable opinion.
• With regard to existing arrangement, the OIG
  found that carve out of Federal business was
  not sufficient protection for favorable advisory
  opinion.
• With regard to proposed arrangement, the OIG
  reiterated longstanding concerns about
  arrangements between DME suppliers and IDTFs as
  potential referral sources.

60
Advisory Opinion 11-08

• Opinion represents warning about CPAP set-up
  services arrangements
• ... but does not rule out possibility that such
  arrangements could be appropriately structured.
• Keys will be existence of a legitimate business
  purpose of arrangement and FMV of payments.

61
Changing Compliance Environment
62
60-Day Repayment Requirement

• 6402 of PPACA requires reporting and repayment
  of overpayments within 60 days of identification
  (or due date of next cost report, if applicable)
• Whats identification?
• Violations actionable under FCA
• Regulatory guidance will be forthcoming... (or so
  weve heard)
• Absent guidance, providers must struggle to come
  up with practical approaches to complying with
  the 60-day requirement.

63
Monthly Exclusion Checking

• Seriously.... every month
• Growing number of State Medicaid Programs are
  requiring monthly screening of current employees
  and contractors.
• See TennCare Policy PI 11-002 (effective
  6/22/2011)
• State Medicaid Director Letter instructed states
  to require providers to search the HHS-OIG
  website monthly to capture exclusions and
  reinstatements that have occurred since the last
  search.
• HHS-OIG CIAs still only require annual screening.

64
Mandatory Compliance Programs

• Its coming.... eventually.
• 6401 of PPACA makes compliance programs
  mandatory....
• ....but only after implementing regulations
  establish the core elements for mandatory
  compliance programs
• Growing numbers of providers are establishing (or
  updating) compliance programs in anticipation of
  them becoming mandatory.

65
Whats Next?

• OIG/DOJ increased emphasis on pursuing individual
  liability for fraud and abuse perpetrated by
  health care entities
• Goal is to alter the cost-benefit calculus of
  the corporate executives who run these companies
• Increasingly aggressive federal/state enforcement
• Qui Tam Relators driving government priorities
• Increasing importance of comprehensive and
  aggressive corporate compliance efforts

66
Be careful out there
67
Questions?
Carrie Bryant, Esq., CHC Compliance
Officer American HomePatient William T. Mathias,
Esq. Principal OberKaler