OIG Allows for Cost Sharing Arrangement between Ambulance Providers and Municipal Dispatch

Recently the OIG issued an advisory opinion in favor of a municipal fire department’s plan to share costs for dispatch-related EMS services with local hospitals’ ambulance providers. OIG explained that this arrangement did not warrant administrative sanctions, although it nonetheless has the potential to generate prohibited remuneration under the Anti-Kickback Statute if the requisite intent to induce referrals was present.

The city’s fire department administers the emergency medical services (“EMS”) component of the 911 dispatch system, including assisting with decisions on critical care for patients and ambulance transport destinations (the “Services”). Historically, the fire department was responsible for all of the costs associated with the Services. However, under the proposed arrangement, the local hospitals would bear a portion of the costs for personnel to administer the dispatch system. Specifically, the fire department would use data from the previous year on the costs for the Services and the number of scheduled tours to each hospital to determine each hospital’s pro rata share of the costs for the coming year.

The proposed arrangement implicates the Anti-Kickback Statute because it requires the hospitals—each potential referral recipients from the dispatch service—to pay a portion of the costs for the dispatch as a condition for providing EMS services in the city, some of which are reimbursable by Medicare and Medicaid. OIG concluded, however, that a number of factors helped to mitigate the risk of fraud and abuse.

First, OIG explained that the sharing of costs was part of a comprehensive scheme by the city to manage EMS services and that the arrangement would ensure that municipalities were flexible enough to organize local EMS systems efficiently and economically. Second, OIG determined that the arrangement would ensure that hospitals paid a proportionate share of the costs and therefore the hospitals would not be overpaying their referral sources.  Third, the amount due from a particular hospital would not be tied, directly or indirectly, to the volume or value of referrals it received because the costs would be pro-rata based on the number of scheduled tours.  Fourth, OIG found that the arrangement did not increase the risk of overutilization of services because it was limited to EMS and would not change the existing dispatch procedures.  Finally, the arrangement would not have an adverse impact on competition because it would permit all hospitals in the area to participate in the dispatch system.

Notably, OIG emphasized that it might have found the arrangement improper if the hospitals were paying the city or fire department anything not directly related to the provision of EMS, such as free or reduced cost equipment.

OIG Posts Health Care Compliance Training Videos

OIG recently posted a video of its Healthcare Fraud Prevention and Enforcement Action Team ("HEAT") training in Washington, D.C. on health care compliance and fraud prevention.  The training provides guidance to health care providers, compliance officers, and their legal counsel regarding health care fraud and abuse requirements and the fundamentals of compliance programs, as well as tips on navigating CMS when facing compliance issues and the government's various health care fraud enforcement initiatives.

OIG Unveils Most Wanted List

Showing a continued resolve to combat health care fraud and abuse, the Office of Inspector General (OIG) has launched a Most Wanted Fugitives List.  In an effort to engage the public in fighting health care fraud and abuse, the list identifies more than 170 individuals alleged to have committed health care fraud-related crimes.  According to the OIG's press release, the top ten individuals on this list have cost taxpayers over $124 million.  This announcement comes on the heels of the January 24, 2011 joint announcement by the U.S. Departments of Justice and Health and Human Services that the federal government recovered more than $4 billion taxpayer dollars in fiscal year 2010 from it's health care fraud prevention and enforcement efforts.  If the OIG's plan works and the public pitches in on the enforcement front as a result of the Most Wanted Fugitives List, 2011 could be another very busy year for the federal government's health care fraud and abuse team.




Government Intensifies Health Care Fraud Enforcement Efforts

Health care fraud and abuse enforcement is always on our minds and our clients' minds, but yesterday HHS and DOJ gave health care providers even more to consider when evaluating their own fraud and abuse compliance efforts.

HHS and DOJ announced the highest annual recovery amount ever from health care providers as a result of the federal government's fraud and abuse enforcement efforts.  According to the annual Health Care Fraud and Abuse Control Program ("HCFAC") report released yesterday, the government’s health care fraud prevention and enforcement efforts recovered a staggering $4 billion from health care providers in fiscal year 2010.

This year's $4 billion recovery amount is up 50% from 2009.  To further put this $4 billion into context,  the HCFAC has returned $18 billion total to the Medicare Trust Fund since its inception in 1997.  This increased recovery is due, at least in part, to the recently employed enforcement teams such as the Health Care Fraud Prevention & Enforcement Action Team ("HEAT") and the Medicare Fraud Strike Force.  In addition to these criminal enforcement recoveries, the government also obtained more than $2.5 billion in civil health care matters brought under the False Claims Act, which is the largest in the history of the DOJ. 

HHS also announced yesterday new rules authorized by PPACA (or the Affordable Care Act) that will further intensify the government's efforts to fight fraud, waste and abuse in Medicare and Medicaid.  Not only does PPACA provide an additional $350 million for HCFAC activities, but the rules include new provider screening and enfocement measures and gives the government the authority to suspend payments to providers when credible allegations of fraud are being investigated.  These provisions--particularly the suspension of payment during investigations--are likely to have a significant impact on providers in the coming years.  These regulations take effect March 25, 2011.

Although these recovery amounts seem high compared to previous years, health care providers should expect that recoveries may increase even further in coming years with the government's sharpened focus on health care fraud and abuse.

OIG Collects $26 Billion in Health Care Fraud Recoveries and Savings

The Department of Health & Human Services ("HHS") Office of Inspector General ("OIG") recently reported in its Semiannual Report that for fiscal year ("FY") 2010 it expected recoveries and savings of approximately $25.9 billion, which includes $3.8 billion in investigative receivables and $1.1 billion in audit receivables.  The other $21 billion included in the total amount includes various cost-saving actions supported by OIG's recommendations in audits and evaluations.  The FY 2010 expected recoveries and savings were more than FY 2009, when OIG reported savings and expected recoveries of $21 billion.

In addition, OIG reported exclusions of 3,340 individuals and entities from participation in Medicare or other federal health care programs in the 2010 fiscal year.  OIG initiated 647 criminal lawsuits and 378 civil lawsuits against individuals and entities for violations of health care laws and regulations.

OIG focused particularly in the Semiannual Report on the successes of its Medicare Fraud Strike Force teams, which coordinate with federal, state, and local law enforcement to investigate health care fraud.  The Strike Force participated in an unprecedented takedown in seven cities that resulted in charges against 94 doctors, health care company owners, executives, and others for more than $251 million in alleged false billing.

Another highlight of fraud enforcement in FY 2010 was the $520 million that AstraZeneca agreed to pay the government to settle alleged false claims violations for kickbacks it allegedly offered to doctors in connection with unapproved uses of AstraZeneca's drug Seroquel.

Pharma Giant Agrees to Half-Billion Dollar Settlement for Kickback Claims

The Connecticut Attorney General announced yesterday that the Office of the Inspector General and several states have settled with Novartis, the pharmaceutical giant, for criminal and civil claims that Novartis committed kickbacks and off-label marketing involving several of its drugs.  According to the allegations by the government, Novartis had marketed the drug Trileptal, an anti-epileptic medication, beyond its FDA-approved uses to boost sales and paid physicians compensation for prescribing the drug.

Under the settlement terms, Novartis will pay the states and the federal government a total of $237.5 million in damages and penalties for losses to state and federal health care programs, and another $185 million to resolve criminal allegations.

Novartis must also enter into a five-year Corporate Integrity Agreement with the OIG, ensuring that OIG will be monitoring Novartis' every move going forward.