Tips for avoiding fraud and abuse liability – Part II

By Christina A. Hughes, JD, MPH, Megan La Suer, JD, MHA, and Robert M. Portman, JD, MPP, February 1, 2022

Every month, DermWorld covers legal issues in “Legally Speaking.” This month’s authors are health care attorneys with Powers Pyles Sutter & Verville in Washington, D.C. Portman is also general counsel for the AAD and AADA. Read part 1 of this series.

The federal government has enacted several laws to combat health care fraud and abuse, including the False Claims Act (FCA), the Anti-Kickback Statute (AKS), and the prohibition on physician self-referral (widely known as the Stark Law). The FCA applies to any party who knowingly (or with deliberate ignorance or reckless disregard) submits or causes to be submitted false claims for reimbursement or payment by a federal health care program.

Generally, the most common way of triggering liability under the FCA for health care providers is to run afoul of either the AKS or the Stark Law. The FCA can be combined with these other anti-fraud statutes and allows private parties to bring whistleblower actions on behalf the federal government, known as qui tam cases.

Last month, we provided an overview of the federal fraud and abuse laws. In this article, we discuss new risk areas that dermatologists should be aware of, and general steps a dermatologist can take to minimize compliance risk.

Are there new areas of risk to be concerned about?

Health care is an ever-changing industry, and new compliance concerns arise accordingly. In recent months and years, there are three areas of note for dermatologists — telemedicine, compliance with COVID-19 Stark Law waiver requirements, and changes in productivity bonus rules under the Stark Law.

Before the COVID-19 public health emergency (PHE), the provision of dermatology services via telehealth was limited. Moreover, federal and state health care programs had strict restrictions on both (1) the location where services could be reimbursed and (2) the amount of reimbursement. One silver lining of the PHE has been the rapid expansion of the use of telehealth, making it easier for individuals to access health care in a safe environment. The dramatic uptick in telehealth services led to the issuance of multiple waivers of regulatory requirements and implementation of flexibilities to allow providers to continue to provide services during the PHE. The waivers and relaxations include easing of HIPAA enforcement, allowing health care providers to reduce or waive cost-sharing amounts for telehealth visits in cases of the Medicare beneficiary’s financial hardship, and lifting certain restrictions for Medicare coverage of telehealth services.

This expansion has also led to increased concerns about potential abuse of telehealth services. To that end, the OIG has announced at least seven different national audits, evaluations, and inspections of telemedicine services under the Medicare and Medicaid programs. The OIG’s goal for the audits is to provide objective findings and recommendations that can further inform policymakers and other stakeholders when considering what telehealth flexibilities should be permanent.

It is important for dermatologists to be aware of evolving regulations of telehealth. Many federal waivers and flexibilities are set to expire at the end of the PHE. Federal and state agencies and private payers need to figure out how to move forward and what guardrails need to be in place to prevent fraud and abuse involving telehealth. Dermatologists that began providing telehealth services during the PHE should consider reviewing their policies and procedures to ensure they are able to maintain a compliant telehealth program that adequately addresses pre-COVID-19 federal and state telehealth requirements.

Related to the waivers for telemedicine, OIG also issued a specific blanket waiver for the requirements of the Stark Law during the PHE. The waiver covers health care providers who furnish items or services to Medicare and Medicaid beneficiaries in good faith but, as a result of the COVID-19 pandemic, are unable to comply with the Stark Law requirements. Such noncompliance would normally render the items and services non-reimbursable, but under the waiver the claims may still be submitted and paid without sanction. For dermatologists who may have entered into new arrangements with hospitals during the PHE or who had existing arrangements pre-COVID-19 for which the terms were altered during the PHE, most of these changes are probably covered by the blanket waiver — though this certainly should be confirmed. In addition, when the PHE ends, the allowance for non-compliance under the waiver comes to an end and the terms of any continuing arrangement must be brought into compliance with the requirements of the Stark Law.

Can a dermatologist’s relationship with their patients also create liability?

Unfortunately, yes. Among other things, HIPAA gives the OIG the authority to impose civil monetary penalties (CMPs) against individuals or entities that offer value to a program beneficiary that they know or should know will influence the beneficiary’s decision to order or receive items or services covered by Medicare or Medicaid from a particular provider, practitioner, or supplier. These CMPs are in addition to any liability that may arise under the AKS for the same actions. The prohibition on beneficiary inducement applies to waivers of beneficiary cost-sharing responsibilities and transfer of items or services for free or for other than fair market value. However, the definition of remuneration excludes, among other things, waivers of copayments and deductibles in specific circumstances (primarily for low-income beneficiaries) and incentives given to promote the delivery of preventive care. “Incentives given to promote the delivery of preventive care” have been broadly understood to cover preventative screenings provided to potential patients, including skin cancer screenings, as long as certain standards are followed.

Among the key factors to consider in determining whether offering or participating in free screening services is permissible are the following:

• The incentive must bear a rational relationship to a preventive care service unless they are of nominal value.

• If follow-up, non-preventive care appointments are being made in conjunction with the screening test, an inference may be drawn that the free screening test was an inducement to choose the sponsor of the tests as a provider of other covered services.

• A price reduction in a covered preventive service is permissible, including a waiver of a copayment obligation for a preventive care service or by offering care as a free community service.

• Incentives to promote preventive care may not be excessive in relation to the value of the preventive care service itself or the future health care costs reasonably expected to be avoided as a result of the preventive care.

• Covered incentives must be known before the beneficiary makes a choice of a provider for a particular service. Incentives that are not advertised or otherwise disclosed to a beneficiary before the service is provided are not covered by the rule.

Thus, dermatologists who provide free skin cancer screenings should be careful not to routinely schedule participants who are Medicare or Medicaid beneficiaries for follow-up treatment. Rather, these individuals should be encouraged to see their regular dermatologist. Alternatively, the screening dermatologist could provide the participant with a list of dermatologists in the area, which could include the screening dermatologist.

What general steps can a dermatologist take to minimize compliance risk?

As noted previously, many arrangements that carry risk for dermatologists are subject to the Stark Law. For those arrangements, identifying and meeting the requirements of an applicable Stark exception is critical. For many of the Stark exceptions, the criteria for compliance will require a signed, written agreement and fair market value compensation that does not vary with or take into account the volume or value of referrals or other business generated between the two parties. For arrangements that do not involve DHS, the compliance analysis is more complicated, based on the specific facts and circumstances of the arrangement. Some key considerations for assessing compliance risk include:

• “Remuneration” is anything of value, not just monetary compensation;

• If even one purpose of the arrangement is to steer referrals to the source of the remuneration, then the AKS may be implicated, even if other purposes are also intended; and

• The remuneration must be sufficient to actually serve as an inducement to make or steer referrals.

This can be a very difficult analysis to make, and the best step a physician can take in ensuring compliance when entering into new arrangements is to enlist the assistance of legal counsel in reviewing the proposal. For existing arrangements, ensuring continued compliance can be aided with annual review to ensure they have not expired and remain fair market value.

What can be done if a problem is discovered?

First and foremost, the dermatologist should immediately contact counsel to review the arrangement and assess whether there is an issue. If the arrangement is determined to be noncompliant, legal counsel can provide recommendations for next steps.

Generally, the Medicare and Medicaid programs are covered by the 60-Day Report and Repay requirement. Under the “60-Day Rule,” providers who have credible evidence that an overpayment exists, such as when an arrangement is discovered to be noncompliant with the Stark Law or AKS making certain claims unpayable, have up to six months to investigate and 60 days to refund any identified overpayments. To comply with these requirements, physicians have two main options: voluntary refund through the physician’s Medicare Administrative Contractor or self-disclosure to either CMS or OIG through their protocols. Legal counsel can assist the dermatologist in determining the best course of action.

Conclusion

Compliance with federal fraud and abuse laws can be complex but is critically important. This article touches on a few of the key issues for dermatologists but cannot adequately cover the breadth and depth of either the Stark Law or the AKS, nor has the article addressed possibly applicable state laws. For dermatologists with many external arrangements, investment in legal counsel may be the best insurance policy. For those dermatologists with less need for ongoing assistance, being aware of the potential pitfalls is the first step to avoiding them.

This article is provided for informational and educational purposes and is not intended to provide legal advice and should not be relied upon as such. Readers should consult with their personal attorneys for legal advice regarding the subject matter of this article.

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