The United States has filed a complaint against a California skilled nursing facility (SNF) chain, one of its owners, and seven of the SNF’s owned or operated by the chain. The complaint alleges that the defendants entered into medical directorship agreements with certain physicians that purported to provide compensation for administrative services, but in reality, were vehicles for payment of kickbacks to induce the physicians to refer patients to the seven SNFs.
The Anti-Kickback Statute prohibits offering or paying anything of value to encourage the referral of items or services covered by federal healthcare programs. The United States specifically alleges that the defendants hired certain physicians who promised in advance to refer a large number of patients to the SNFs, paid physicians in proportion to the number of expected referrals, and terminated physicians who did not refer enough patients.
On one occasion, an employee of the California SNF chain told one of its owners that two physicians were being hired because “they are promising at least 10 patients for $2000 per month.” On another occasion, one of the owners complained that if the chain’s employees did not pay medical directors promptly each month, “these doctors will not give us patients.” On a different occasion, an employee of the chain told one of its owners that because, “lately there are no real referrals” from one of the medical directors, “I am planning to say goodbye to him.”
The Acting United States Attorney Tracy L. Wilson stated, “The payment of kickbacks to physicians for referrals turns patients into commodities that can be traded.” In addition, she stated, “Profits should not dictate medical decisions, which is why it is illegal to pay for referrals that can cloud physicians’ medical judgment.”
This case was initially filed in December 2015 by the previous vice president of operations and chief operating officer of the California SNF chain, under the whistleblower provisions of the False Claims Act. Those provisions authorize private parties to sue on behalf of the United States for false claims and share in any recovery. The Act permits the United States to intervene and take over the lawsuit, as it has done here in part. Those who violate the Act are subject to treble damages and applicable penalties.
The United States’ intervention in this matter illustrates the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement of government funds can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).
Compliance Perspective
Issue
The focus of a compliance and ethics program is on protecting government funds from fraud, waste, and abuse, and detecting criminal, civil, and administrative violations while promoting quality of care. The Centers for Medicare & Medicaid Services (CMS) requires skilled nursing facilities to have a compliance and ethics program that is effective in this effort. The Compliance and Ethics Committee, when operated appropriately, will assist in detecting false claims, HIPPA breaches, illegal kickbacks, and other violations. It is imperative that every facility has an effective Compliance and Ethics Officer and Committee to reduce the likelihood of healthcare fraud, waste, and abuse of government funds. More information is available in the Med-Net Corporate Compliance and Ethics Manual, Chapter 1, Compliance and Ethics Program.
Discussion Points
- Review your policies and procedures for operating an effective Compliance and Ethics Program. In addition, review your policy and procedure for preventing and reporting a false claim or anti-kickback statute violation. Update your policies and procedures as needed.
- Train all staff on your compliance and ethics policies and procedures upon hire and at least annually. Also, train all staff on the False Claims Act and Anti-kickback Statute and what can be considered a false claim or kickback. Include information on how to report concerns and suspected violations, and that prompt reporting is mandatory. Document that these trainings occurred and file the signed document in each employee’s education file.
- Periodically audit staff to ensure that they are aware of what should be done if they suspect a false claim or illegal kickback has occurred, whether intentionally or unintentionally. Conduct audits of documentation and billing routinely to prevent and detect errors before they progress to a false claim. Also, periodically perform audits to ensure all are aware of compliance and ethics concerns and their knowledge of to whom or where they can report any concerns of compliance and ethics violations.
FOR MORE INFORMATION ON THIS TOPIC VIEW: FRAUD MODULE 3 – MASTERING LEGAL IMPLICATIONS AND ANTITRUST LAWS and MEDICAL DIRECTOR CONTRACTS IN A NURSING FACILITY.
