INTRODUCTION TO HEALTH CARE FRAUD AND ABUSE 2009 AHLA/HCCA FRAUD AND COMPLIANCE PROGRAM
James G. Sheehan Medicaid Inspector General/former Associate US Attorney Albany, New York 518 473-3782 JGS05@OMIG.state.ny.us

USUAL DISCLAIMERS
• Focus on Medicare and Medicaid • Propagation is not plagiarism-if you see a good idea, I probably borrowed it • if you would like to use these slides in your own presentation, or pass them to others, feel free • JGS05@OMIG.STATE.NY.US

TRENDS IN THE LAW OF FRAUD ABUSE AND COMPLIANCE
• OLD MODEL-FRAUD-INTENTIONAL CONDUCT • OLD MODEL-ABUSE-SUSPECTED BUT
UNPROVEABLE INTENTIONAL CONDUCT;PATIENT NEGLECT OR MISTREATMENT NEW MODEL-FAILURE OF COMPLIANCE SYSTEMS AND CONTROLS NEW MODEL-”IMPROPER PAYMENT”-

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TREND IN THE LAW OF FRAUD, ABUSE, AND COMPLIANCE
• OLD MODEL:CRIMINAL PRIMARY, PROOF BEYOND • •
REASONABLE DOUBT (DOJ) RECENT MODEL:CIVIL FALSE CLAIMS ACT PRIMARYSETTLEMENT INCLUDES $, CORPORATE INTEGRITY AGREEMENT, MISDEMEANOR PLEA (OIG) NEW MODEL:DATA-DRIVEN REVIEW, RECOVERY OF IMPROPER PAYMENTS (RACs, Medicaid Integrity Contractors), FOCUS ON COMPLIANCE OUTLIERS IN PAYMENT AND QUALITY-ADMINISTRATIVE ACTION (CMS, state program integrity agencies);arbitrary and capricious

CHANGING LANGUAGE IN MEDICARE AND MEDICAID PROGRAM CONTROLS • OLD LANGUAGE-”FRAUD AND ABUSE” • NEW LANGUAGE-”PROGRAM INTEGRITY,
IMPROPER PAYMENTS” • “any payment that should not have been made or that was made in an incorrect amount “ • “Improper payments” require neither intent nor faultI

CHANGING EXPECTATIONS OF HEALTH CARE PROVIDERS (particularly large institutional providers)
• Effective compliance and internal controls
– Billing – Quality – Reporting – Credentialing – Governance – Compliance process

WHAT IS FRAUD
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– “Fraud” is intentional breach of the standard of good faith and fair dealing, as understood in the community, involving deception or breach of trust, for money (USA v. Goldblatt) – In health care practice, “fraud and abuse” has come to includes far more than the Goldblatt definition-kickbacks and Stark violations – Health care fraud, mail fraud, false statements and instruments, insurance fraud statutes – “false or fraudulent claim” in False Claims Acts (state and federal 31 U.S.C. 3729 et seq.)) – 42 CFR 433.302 definition of fraud for Medicaid

ABUSE
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WHAT IS “ABUSE”? • “ABUSE MEANS PRACTICES THAT ARE INCONSISTENT WITH SOUND . . . MEDICAL OR PROFESSIONAL PRACTICES AND WHICH RESULT IN UNNECESSARY COSTS. . ., PAYMENT FOR SERVICES NOT MEDICALLY NECESSARY, OR . . .WHICH FAIL TO MEET RECOGNIZED STANDARDS FOR HEALTH CARE.”

HOW DOES “FRAUD” DIFFER FROM “ABUSE”?
• “Fraud” requires evidence of the intent of a • specific individual “Fraud means an intentional deception or misrepresentation made by a person with the knowledge that the deception could result in some unauthorized benefit to himself or some other person. It includes any act that constitutes fraud under applicable Federal or State law. “ 42 CFR 455.2

HOW DOES “FRAUD” DIFFER FROM “ABUSE”?
• “Abuse means provider practices that are inconsistent with sound fiscal, business, or medical practices, and result in an unnecessary cost to the Medicaid program, or in reimbursement for services that are not medically necessary or that fail to meet professionally recognized standards for health care. It also includes recipient practices that result in unnecessary cost to the Medicaid program.” 42 CFR 455.2-similar provisions in state regulations-(see, e.g., 18 NYCRR 515.1 (B)) No evidence of intent of specific individual required At the beginning of an investigation, neither prosecution nor defense can know whether matter will be a fraud case, an abuse case, or no case.

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ATTORNEY AND COMPLIANCE OFFICER ROLE IN FRAUD AND ABUSE ISSUES

• How do people respond to perceived threat? • 18 U.S.C. 1512-obstruction by destruction of evidence, • • • misleading or corrupt persuasion of