Dealing with Fraud
Liquid
Professor Beharry
Health Care Policy, Law, and Ethics
March 18, 2013

Abstract This paper will evaluate how the Healthcare Qui Tam affects health care organizations while providing (4) examples of Qui Tam cases that exist in a variety of health care organizations. Other responsibilities discussed, are devising a procedure for admission into a health care facility that upholds the law about the required number of Medicare and Medicaid referrals; the ability to recommend a corporate integrity program that will mitigate incidents of fraud and assess how the recommendation will impact issues of reproduction and birth. The know how to devise a plan to protect patient information that complies with all necessary laws.

Evaluate how the Healthcare Qui Tam affects health care organizations. The Healthcare Qui Tam affects health care organizations in that well over more than 450 hospitals across the country were the subject of Medicare fraud investigations. Whether or not Medicare violations are found, the costs of responding to an investigation can be significant.
Westchester Medical Center of New York, being investigated for possible health care fraud and violations of anti-kickback laws, received a subpoena for extensive records in some thirty-seven categories going back to 1997. Millions of dollars may be spent in legal fees and other costs associated with the investigation (e.g., hiring or reassigning staff to assist with compiling requested data) (Degnan & Scoggin, 2007). According to Degnan & Scoggin (2007), where violations are found, the liability can be staggering. Where an FCA violation occurs, the federal government can recover treble damages plus civil penalties, which range from $5,500 to $11,000 per violation. Since there are sometimes hundreds, if not thousands, of transactions involved, the penalties alone can be enormous. In addition to damages and penalties, individuals and institutions found to have undermined the integrity of the Medicare or Medicaid programs also risk being excluded from participating in those programs. Other ways the Healthcare Qui Tam affects health care organization is through the false claims act. According to McCubbins & Fitzgerald (2006), The False Claims Act ("FCA") and its amendments were passed primarily to catch and curb fraud by defense contractors. However, the act has increasingly been applied to cover other types of fraud. The twenty-first century has seen numerous qui tam settlements by the health care industry a recent Fortes article stated, Health care now accounts for more than half of all whistleblower suits. The article went on to reveal that the federal government has recouped billions from pharmaceutical fraud cases and that relators have done well, too. In addition, universities and other institutions are now finding themselves defending qui tarn lawsuits based on the misuse or abuse of government grants. The Wall Street Journal recently ran a front page article dealing with university fraud and whistleblower cases. In 2004, the National Institutes of Health granted $20 billion to campus researchers, but it seems that the government grant system is fraught with abuses, with universities pledging to do one thing with their money and then spending it on something else. The United States Department of Justice has reported $20.4 million in settlements since 2003 based on alleged misconduct and fraud with regard to federal grant money. As costs have mounted, qui tam defendants have scrambled to limit the application of the law.
Provide four (4) examples of Qui Tam cases that exist in a variety of health care organizations. There are many cases that exist in a variety of health care organizations but this particular case involves the Pharmaceutical company Merck. According to West (2008), in February, drug manufacturer Merck, while not admitting wrongdoing, agreed to pay over $650 million to the U.S. Treasury to settle whistleblower allegations that it failed to pay rebates to Medicaid, and that it paid hospitals kickbacks to induce them to prescribe various drugs. Using what one industry observer called "heroin dealer economics," Merck is alleged to have offered hospitals 92 percent discounts to get patients started on its drugs in the hospital so that when discharged, they would continue on them with Medicaid footing the bill, instead of using generics or competitors' less-expensive versions. The Medicaid Drug Rebate Act, 42 U.S.C. § 1396r-8, requires drug makers to report their "best prices" to the government to make sure Medicaid gets the same discounts as other customers, but, the suit alleged, Merck did not offer Medicaid the dis-count. Merck contended that its hospital discounts were "nominal" and therefore within an exception to the reporting requirement. Since 2000, as a result of this and other cases brought by whistleblowers under the qui tam provisions of the Federal Civil False Claims Act, drug manufacturers have paid more than $4 billion to resolve allegations of Medicare and Medicaid fraud. For all areas of fraud, in the fiscal year ending September 30, 2007, alone, the United States obtained $2 billion in settlements and judgments, of which $1.45 billion is associated with suits initiated by whistleblowers under the False Claims Act's qui tam provisions. Total recoveries since 1986, when Congress substantially strengthened the act, are more than $20 billion (West, 2008). Another case involves an Executive Director of the faculty practice plan at the University of Texas Health Science Center in San Antonio. According to Stern (1999), it all came crashing down when Kready learned about serious billing improprieties at the center. The most common one was a faculty physician who was billing for services performed by residents. Under Medicare Part A, residents are traditionally paid with Graduate Medical Education credits, which basically cover a resident's annual salary. Faculty doctors bill Medicare under a separate and higher fee structure. When Kready discovered the impropriety, he tried to do the right thing. But when things didn't change, he resigned in the fall of 1995 and filed a qui tam lawsuit the following spring. The case was settled after a two-and-a-half-year investigation for $17.2 million, of which Kready received $2.58 million--15 percent of the damages recovered (Stern, 1999). The government also sought to make each employee an overseer by encouraging qui tam lawsuits, a procedure in which the employee initiates legal action on behalf of the government and keeps a substantial share of the proceeds if the criminal case is successfully prosecuted (Mayer, 1995). According to Mayer (1995), healthcare organizations have not been immune to scrutiny in the past. Here are two more examples of the results of the government's pursuit of fraud, waste, abuse, and noncompliance with regulations from 1989 through 1994, taken from reports of the Inspector General of the U.S. Department of Health and Human Services: A Pennsylvania hospital was found to be submitting claims to the Medicaid program for a variety of laboratory tests, which either were not provided as claimed or represented, or were duplicate claims. To resolve its liability under the False Claims Act, the hospital agreed to pay $234,880 in penalties and restitution and to implement a three-year instructional program for its employees on the subject of proper Medicaid billing techniques. The heads of a Massachusetts health maintenance organization (HMO) and a Texas systems company, and the systems company itself, were excluded from Medicare business for 15 years. They were convicted of bribery after the HMO awarded a $20 million contract to the systems company (Mayer, 1995).
Devise a procedure for admission into a health care facility that upholds the law about the required number of Medicare and Medicaid referrals. A relevant procedure for admission into a health care facility that upholds the law about the required number of Medicare and Medicaid referrals could be devised through understanding the intricacy’s of the Stark Law. According to Rogers (1998-2013), The Stark law applies if a physician is referring Medicare beneficiaries or Medicaid recipients to an entity for the following 10 categories of designated health services, commonly referred to as “DHS”: a) clinical laboratory services; b) physical therapy, occupational therapy and speech-language pathology services; c) radiology and certain other imaging services (including ultrasound, MRI, CT and PET); d) radiation therapy services and supplies; e) durable medical equipment and supplies; f) parenteral and enteral nutrients, equipment and supplies; g) prosthetics, orthotics and prosthetic devices and supplies; h) home health services; i) outpatient prescription drugs payable by Medicare Part B; and j) inpatient and outpatient hospital services. The Stark regulations provide definitions of each of the 10 categories of DHS, and the definitions should be reviewed carefully. Many of the definitions for DHS refer to a list of procedure codes published by the Centers for Medicare and Medicaid Services (“CMS”) every calendar year — the List of CPT/HCPCS Codes Used To Describe Certain Designated Health Service Categories Under Section 1877 of the Social Security Act. 14 If a physician refers a Medicare or Medicaid patient for a procedure that appears on the List of CPT/HCPCS Codes, the physician’s referral is prohibited unless an exception applies. Other definitions for DHS, such as the definition for durable medical equipment and supplies, refer to sections of the Social Security Act or the Code of Federal Regulations. Thus, determining whether a particular service is a DHS may require additional research beyond the Stark law. The Stark Law prohibits most physician investment in and many compensation arrangements with entities that furnish certain designated health services (DHS). Under the Stark Law, 42
U.S.C. § 1395nn, if a physician (or a member of a physician’s immediate family) has a financial relationship with a health care entity that provides certain DHS, the physician may not make a DHS referral to that entity for which payment may be made under Medicare or Medicaid, unless an exception applies (Baumann, 2004). Other information retrieved bout this issue simply states that In Stark II, which was passed in 1993, Congress expanded prohibitions on referrals by physicians. Under this version of the law, physicians are not allowed to refer patients for any inpatient or outpatient hospital services if they or a member of their immediate family have a financial relationship with a referring institution that does not meet one of the law's exceptions (Sandrick, 2008). According to Sandrick (2008), the Stark III rule, which became effective on Dec. 4, 2007, makes many technical changes to the law. Among them are provisions regarding space and equipment rentals, personal service arrangements with physicians, nonmonetary compensation, and clarifications of exceptions that cover the provision of in-office ancillary services, charitable contributions made by physicians, and retention payments made to physicians; changes to the Stark law have come about as a result ofthe standard rule- making process that transforms legislation into regulation. Stark III actually completes the business of establishing the regulations for the physician self- referral law.
Recommend a corporate integrity program that will mitigate incidents of fraud and assess how the recommendation will impact issues of reproduction and birth. As a CNO in a large Health center, it is my responsibility to recommend a corporate integrity program that will mitigate incidents of fraud and assess how the recommendation will impact issues of reproduction and birth; a CIU better known as corporate integrity unit will be implemented. Establishing an effective integrity unit requires support from the top, as well as close attention to resource, infrastructure, and other requirements. Attending to these areas can help organizations create a strong foundation for companywide integrity (Biegelman, Leinicke,
Ostrosky, & Rexroad, 2007). Obtaining top managements support is very important in the obtainment of aim or purpose; this corporate integrity program will mitigate incidents of fraud and assess how the recommendation will impact issues of reproduction and birth. According to Biegelman, Leinicke, Ostrosky, & Rexroad (2007), to ensure the unit's success, Organizations need to designate a CTU champion to lead the initiative. In most cases, the internal audit director is best suited for this role. Audit directors are strongly positioned to convince executive leadership of the need for a CIU because of them audit department's independence, its responsibilities for monitoring internal controls, and its traditional involvement in investigating suspected frauds. The director needs to sell the CIU concept to the company's chief financial officer (CFO), chief executive officer (CEO), and other senior leaders, as well as the audit committee. It is a good idea to partner with internal auditing; CIU personnel traditionally have been housed in corporate security departments, which focus on preventing asset misappropriations, maintaining physical security over assets, and overseeing executive protection. This approach, however, omits a dedicated focus on the prevention, deterrence, and detection of fraud in the financial reporting process and the controls therein. Organizations can ensure increased attention on financial reporting integrity by housing CIU personnel within the internal audit department. That way, for example, if the auditors discovered a potential financial fraud in the course of their duties, they would have the CIU personnel immediately at their disposal to follow up and investigate. Moreover, CIU personnel typically possess expertise in proactive fraud auditing techniques and in assessing the internal controls needed to prevent fraud (Biegelman, Leinicke,
Ostrosky, & Rexroad, 2007).
Devise a plan to protect patient information that complies with all necessary laws. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) is my plan as a CNO to protect patient information that complies with all necessary laws; the long awaited final rules on the privacy of individual health information is not mandatory until February 2003, but the final rules even now are setting the healthcare industry standard for privacy. Although by statute HIPAA does not establish a private right of action, which limits the scope of rulemaking to government and public regulatory activity, the final rules establish a de facto healthcare privacy standard to which healthcare organizations can expect to be held in private actions as well (Hellerstein, 2001). According to Hellerstein (2001), the policy makers in Washington read the comments, listened to industry organizations, and made a serious effort to provide for individual privacy needs, while allowing the healthcare industry to continue in its primary mission of healthcare delivery. For individuals, protections on the use of individual health information for treatment, payment, and healthcare operations have been added in the form of consent requirements. For the healthcare industry, the most onerous provisions concerning business partner relations and the implementation of the minimum necessary standard have been removed (See sidebar). Many confusing issues have been clarified, and ambiguities have generally been resolved to the benefit of those providing care and trying to get paid for it. There are naysayers on both sides of the fence, of course, a fact we interpret as supporting the view that a reasonable middle ground may have been reached. Continuing on to the issue of whether or not the plan will protect patient information and comply with all the necessary laws will be discussed further; According to Robinson (2001), State laws governing confidentiality that are more stringent than the final privacy standards will continue to apply. In addition, the final rule does not preempt state laws that require certain disclosures of health information, such as disclosures for "civic" purposes.

Referrals
Degnan, J. M., & Scoggin, S. A. (2007). AVOIDING HEALTH CARE QUI TAM ACTIONS. Defense Counsel Journal, 74(4), 385-389.
McCubbins, T. F., & Fitzgerald, T. I. (2006). As False Claim Penalties Mount, Defendants Scramble for Answers Qui Tam Liability, 31 U.S.C. § 3729 et seq. Business Lawyer, 62(1), 103-133.
West, R. (2008). Being a Qui Tam Whistleblower. Business Law Today, 17(5), 31-37. Stern, A. L. (1999). When You Hear That Whistle Blowing. Trustee, 52(6), 6. Mayer, C. (1995). Preventing fraud and abuse fallout. Hfm (Healthcare Financial Management), 49(4), 40. .

Sandrick, K. (2008). Stark Laws: Then and Now. Trustee, 61(2), 33-35.