Gain the competitive advantage in increasingly high-stakes long term care defense at ACI’s 3rd Annual Forum on Preventing and Defending Long Term Care Litigation, the only conference that brings together a supreme in-house presence on the faculty, the top defense firms, and experienced jurists from around the country. Designed for both networking and masters-level strategy sharing, this is the leading forum in which to learn winning strategies to comply with the dense thicket of laws and regulations facing the LTC industry, avoid costly litigation altogether and to mount a complete and formidable defense if forced to do so.

1. AMERICAN CONFERENCE INSTITUTE
3RD ANNUAL FORUM ON PREVENTING AND
DEFENDING LONG TERM CARE LITIGATION
JANUARY 23, 2013, MIAMI, FLORIDA
Stephen Siegel, Esq.
Broad and Cassel, Miami, FL
Linda A. Baumann
Arent Fox LLP
Glenn P. Hendrix
Arnall Golden Gregory LLP
Norris Cunningham
Indianapolis, IN

2. PREPARING FOR UNPRECEDENTED
FRAUD & ABUSE SCRUTINY IN THE
LONG TERM CARE SETTING POSTHEALTHCARE REFORM
Stephen Siegel, Esq.
Broad and Cassel, Miami, FL
gimperato@broadandcassel.com

3. The Current Hostile Environment
3






Criminal and civil enforcement risks
Administrative and regulatory enforcement risksSanctions, Audits and Overpayments
Whistleblowers
Federal and state enforcement
Media and public scrutiny
Compliance program challenges and risks

4. False Claims Act
4
Q: When Willie Horton was asked why he robbed
banks, what was his response?
A: That’s where they keep the money

5. False Claims Act
5

Google “nursing home qui tam” –
AttorneysForWhistleblowers.com
WhistleblowersAganistFraud.com
quitam-lawyer.com
quitamteam.com
fightforvictims.com

6. Elements of an FCA Offense
6
 The Defendant must:

Submit a claim (or cause a claim to be submitted)

To the “Government”

That is false or fraudulent

Knowing of its falsity

Seeking payment from the Federal treasury

Damages (maybe)

7. False Claims Act
31 U.S.C. § 3719
7
7 bases for FCA liability. The most common ones are:
Knowingly presenting, or causing to be presented, to the Government
a false or fraudulent claim for payment
Knowingly making, using, or causing to be made or used, a false
record or statement material to get a false or fraudulent claim
paid
Knowingly making, using, or causing to be made or used, a false
record or statement material to an obligation to pay or transmit
money or property to the Government, or knowingly concealing
or avoiding or decreasing an obligation to pay or transmit
money or property to the government
Conspiring to commit a violation of the False Claims Act

8. Knowing & Knowingly
8

No proof of specific intent to defraud is required

The Government need only show person:

Had “actual knowledge of the information”; or

acted in “deliberate ignorance” of the truth or falsity
of the information; or

acted in “reckless disregard” of the truth or falsity of
the information

9. Penalties
9
 Civil
penalty from $5,500 to $11,500 per false
claim
 Three
times the amount of damages which the
Government sustained

10. Qui Tam Actions & Government
Intervention
10



A private person (“Relator”) may bring a False Claim
Act action under the qui tam provisions of the FCA –
The Whistleblower
Government may intervene in a suit brought by
Relator (about 25% of cases, 3-400 per year)
Relationship between Relator and Government

Collaborators in recovery of money (Relator receives
15% -30% of recovery if govt intervenes)

11. Qui Tam Actions & Government
Intervention
Vast majority of actions are brought by private parties,
including:
Fired administrators
Disgruntled nurses
Unhappy LPNs
Frustrated staff
NOTE: RETALIATION is not permitted

12. Types of FCA Cases
12

Unbundling

Services not rendered

Upcoding

Submitting false or inflated cost reports

Quality of care (“standard of care”/”worthless claims”)

False claims based on Stark/Anti-Kickback violation (“Tainted
Claims”

13. Affordable Care Act
False Claims Act Amendments
13


Liability for overpayments and failure to return a
known overpayment within 60 days from
identification-return of known overpayment an
affirmative and express obligation
A violation of the Federal Anti-Kickback Statute
constitutes a false or fraudulent claim under the False
Claims Act

14. PHYSICIAN SELF-REFERRAL
the “STARK LAW”
14
 A prohibition on physician self-referrals
 If a physician (or immediate family member) has a direct or
indirect financial relationship (ownership or compensation) with
an entity that provides designated health services (“DHS”), the
physician cannot refer the patient to the entity for DHS and the
entity cannot submit a claim for the DHS, unless the financial
relationship fits an exception
 Violations are per se, do not need knowledge or intent
 NOTE: There is an Advisory Opinion process

15. Penalties
15
 Nonpayment of claims to entity submitting claims
 Civil Money Penalties of $15,000 for each service rendered
plus an assessment of three time the amount claims
 Penalty of up to $100,000 for “circumvention scheme”
 FCA liability for submission of false claims resulting from Stark
prohibited referral.

16. Types of Designated Health Care
Service (“DHS”)
16
 Clinical laboratory
 Parenteral and enteral
 Physical therapy
nutrients, equipment and
 Occupational therapy
supplies
 Radiology and Imaging Services  Prosthetics, orthotics and
(MRI, CAT, scan, ultrasound)
prosthetic devices and
supplies
 Durable medical equipment
and supplies
 Home health services
 Outpatient prescription
drugs
 Inpatient and outpatient
hospital services

17. What is a Financial Relationship?
16
 Nearly any type of investment or compensation agreement
between the referring physician and the DHS entity will quality
as a financial arrangement under the Stark law
Examples:
 Stock ownership
 Partnership interest
 Rental contract
 Personal service contract
 Salary
 Compensation agreements can be direct or indirect
 Exceptions for certain indirect compensation arrangements

18. Exceptions
18
 Compliance is mandatory
 Some exceptions:

In-office ancillary services

Personal physician services by member of group practice

Pre-paid health plan

Certain publicly traded securities

Rural provider (investment interests)

Rental of office space and equipment

Bona fide employment

Personal services arrangement

Physician recruitment

19. Anti-Kickback Statute
19


Felony to knowingly and willfully offer, pay, solicit, or receive
anything of value in return for a referral, or to induce
generation of business reimbursable under a Federal health
care program [42 U.S.C. § 1320a-7b(b)].
Per ACA § 6402(f) No actual knowledge (if there is “reckless
disregard” or “deliberate ignorance”) or specific intent to
commit a violation of AKS

20. Elements
20
Remuneration, i.e., anything of value, in cash or in
kind, direct or indirect
Offered, paid, solicited, or received
Knowingly (actual, deliberate ignorance, wanton
disregard) and willfully
To induce or in exchange for Federal program
referrals/business

21. To Induce Federal Program Referrals
21
 Any Federal health care program, including Medicaid and
Medicare
 A nexus between payments and referrals
 Covers any act that is intended to influence and cause referrals
to a Federal health care program
 One purpose test and culpability can be established without a
showing of specific intent to violate the statutory prohibitions

22. Fines and Penalties
22
The Government may elect to proceed:
Criminally (DOJ):
 Felony, imprisonment up to 5 years and a fine up to $25,000 or both
 Mandatory exclusion from participating in Federal health care programs
Civilly (OIG):
 Violation constitutes a false or fraudulent claim under the Civil False
Claims Act
 Penalties are same as under False Claims Act
 Controversial, yet expanding use of the FCA
Administratively (OIG)
$50,000 per violation + treble damages
Discretionary exclusion

23. Exceptions and Safe Harbors
23
 Many harmless business arrangements may be subject to the
statute
 Approximately 24 exceptions (“Safe Harbors”) have been
created by the OIG
 Compliance is voluntary
 Must meet all conditions to qualify for Safe Harbor protection
 Is substantial compliance enough?

24. Guidance on the Anti-Kickback
Statute (cont’d.)
24
 Fraud Alerts and Special Advisory Bulletins
 Preamble to the Safe Harbor Regulations
 Compliance Program Guidance’s
 Advisory Opinions
 www.oig.hhs.gov

25. Difference Between Anti-Kickback
Statute and the Stark Law
25
Physician referrals only
No “knowingly and willfully standard” – strict liability
Involves Designated Health Services (“DHS”)
Physician/”Immediate Family Member” on both sides
of the transaction

26. QUESTIONS?

27. LONG TERM CARE FRAUD & ABUSE
RISKS:
FALSE CLAIMS ACT CASES INVOLVING
POOR QUALITY OF CARE
Linda A. Baumann
Arent Fox LLP
1717 K St NW
Washington, DC 20036
linda.baumann@arentfox.com

28. FCA Quality of Care Cases
28


Generally involve allegations that quality of care was
so poor that any claim for reimbursement is “false”
Submitting “false” claims for reimbursement subjects
nursing home to potential False Claims Act liability

29. FCA Quality of Care Theories
29
Three theories typically used in FCA quality of care cases

Express false certification (legally false claim)

Implied false certification (legally false claim)

Worthless services (factually false claim)

30. Express False Certification
30
Theory:

Provider makes affirmative statement of compliance with a
statute or regulation

Provider’s statement was false

Government requires statement (certification) of compliance
as condition of payment

See, e.g., Mikes v. Straus, 274 F.3d 687 (2d. Cir. 2001)

31. Express False Certification
31
Examples of forms that have been alleged to create express certifications
of compliance

Medicare Enrollment Application for Institutional Providers


“I understand that payment of a claim by Medicare is conditioned upon the claim and
the underlying transaction complying with such laws, regulations and program
instructions … and on the provider’s compliance with all applicable conditions of
participation in Medicare.”
Medicaid provider agreement

“The provider agrees to provide covered services … in accordance with all applicable
federal and state laws, regulations, policies and procedures relating to
the provision of medical services according to Title XIX [of the Social Security Act]”

Claims forms

“This claim, to the best of my knowledge, is correct and complete.”

32. Express False Certification
32
Forms that have been alleged to create express certifications
of compliance con’t

Annual cost reports


Health Insurance Benefit Agreement, Form CMS-1561


“I am familiar with the laws and regulations regarding the provision of health
care services, and that the services identified in this cost report were
provided in compliance with such laws and regulations.”
“In order to receive payment under title XVIII of the Social Security Act,
[provider] agrees to conform to the provision of [section 1866 of the SSA]
and applicable provision in 42 CFR.”
EDI enrollment form

Provider will “submit claims that are accurate, complete, and truthful.”

33. Implied False Certification
33
Theory:
 Act
of submitting a claim for reimbursement implies
compliance with governing federal rules that are a
precondition to payment
 Provider
submits a claim
 Provider does not (and is not required to) affirmatively state
compliance with a federal rule
 Provider does not comply with the federal rule
 Compliance with the federal rule is a precondition to payment

34. Implied False Certification
34
Ab-Tech Construction, Inc. v. U.S., 31 Fed. Cl. 429 (Fed. Cl.
1994), aff’d, 57 F.3d 1084 (Fed. Cir. 1995)
 Submission
of payment vouchers with correct amount
were false claims under the FCA because they
represented implied certification by company of
continued adherence to eligibility requirements for
participating in Small Business Administration program

35. False Certification Cases
35
Potential Defenses

Scienter: did defendant know that the claims submitted were
false or act in reckless disregard?

Language of the certification
 In Mikes v. Straus, where the spirometry tests did not meet
ATS guidelines, the court found that the regulatory language
that required the government to pay only if services were
“medically necessary,” related to the level, not the quality,
of services provided

36. False Certification Cases
36
Potential Defenses con’t

Underlying statute or regulation does not expressly state
that the provider must comply in order to be paid


Frequently cited 42 U.S.C. 1320c-5(a) relates to quality of care but
not payment (according to Mikes v. Straus court)
Nursing home conditions of participation are not directly tied to
reimbursement


See, e.g., Landers v. Baptist Mem. Health Care Corp., 525 F.Supp.2d 972(
2007)
But see US ex rel. Sanchez-Smith v. AHS Tulsa Reg. Med. Ctr , 754 F.Supp.2d
1270 (ND OK 2010) (OK active treatment requirements maybe conditions
of payment)

37. False Certification Cases
37
Potential Defenses con’t

Helpful language in case law, e.g., Mikes v Straus:

“Not all instances of regulatory noncompliance will cause a claim to
become false”

“Permitting qui tam plaintiffs to assert that defendants’ quality of
care failed to meet medical standards would promote federalization
of medical malpractice”

38. False Certification Cases
38
Potential Defenses con’t

Government reimbursement is not conditioned on perfect
compliance

HHS often has other remedies to address imperfect compliance,
such as required corrective action, civil monetary penalties,
temporary government management, suspension or exclusion, and
the discretion on which and when to use them

Qui tam plaintiffs should not be allowed to use the FCA to
supplant HHS’s regulatory discretion, see, e.g., U.S. ex rel. Swan
v. Covenant Care, Inc., 279 F.Supp.2d 1212 (E.D.Cal. 2002)

39. Worthless Services
39
Theory
 The
provision of extremely poor quality service is the
functional equivalent of providing no service at all

Note the 2013 OIG Work Plan project related to monitoring the quality of
care in skilled nursing facilities. A report is due out in FY 2013 and
enforcement may increase thereafter

40. Worthless Services
40
Where is the dividing line between low quality care and care so
poor that it essentially is worthless?

Some courts have held that ordinary negligence or malpractice are
different than worthless services



A plaintiff must present facts demonstrating (i) the provision of entirely
“worthless services” or (ii) at a minimum, the provision of grossly negligent
services related to a particular standard of care or regulatory requirement,
see, Sanchez-Smith v. AHS Tulsa Reg’l Med. Ctr., 754 F.Supp.2d 1270
A challenge to the level of care and amount of services provided to patients
due to understaffing was not an allegation that neglect was so severe that
patients were receiving worthless care, see Covenant Care
Courts do not want to federalize medical malpractice claims

41. Worthless Services
41
Theory is relatively straightforward when a provider bills for an
individual act of care that is deficient
 More difficult to apply theory when provider receives per
diem/bundled payment covering multiple services

Must prove that facility did not provide minimum level of care necessary
under its obligation to the federal government
 A provider commits fraud “[a]t some very blurry point” when it fails to
perform the minimum necessary care activities required to promote
the patient’s quality of life and still presents claims for reimbursement
See, e.g., U.S. v. NHC Health Care Corp., 163 F.Supp. 2d 1051 (W.D.
Mo. 2001)

42. Worthless Services
42
Potential Defenses

Provision of some services to patient under bundled payment may
defeat claim

Even assuming that bundled payment was exclusively for therapy
services and acknowledging that provision of therapy did not meet
active treatment regulations, no false claim for worthless services
because patient received at least some of the care for which provider
billed, including some therapy care. See Sanchez-Smith v. AHS Tulsa
Reg’l Med. Ctr.

43. Worthless Services
43
Potential Defenses

Courts have held that a dispute over the appropriate standard of care
is not necessarily a violation of the FCA

Medical center’s failure to conform with Medicare’s conditions of
participation or other applicable standards of care, if proven, would
not be sufficient on its own to create genuine issue of material fact as
to a worthless services claim, see. e.g., Landers v. Baptist Mem. Health
Care Corp.

44. FCA Case Examples
Worthless Services
44
U.S. v. GMS Management-Tucker (E.D. Pa. 1996)

First worthless service case

Nursing facility allegedly violated the FCA by billing
Medicare & Medicaid for grossly inadequate wound care
and nutritional services

Company settled for $575,000 and compliance obligations

45. FCA Case Examples
Worthless Services
45
U.S. v. Chester Care Center (E.D. Pa. 1998)

Nursing facility allegedly provided deficient care that rose
to the level of patient abuse

Allegations included scalding a patient to death by placing
him in 138-degree bathwater, and failing to properly
monitor diabetes patients, tend to patients’ nutritional needs
and provide appropriate wound care

Company settled for $500,000

46. FCA Case Examples
Worthless Services
46
Life Care Center of Lawrenceville, GA (N.D.Ga., filed 2002)

Qui tam lawsuit (by family members of patients) alleging failure to
provide appropriate nursing care resulting in premature death of
several residents

Allegations included understaffing, inadequate training, high staff
turnover, and an ineffective medical director

In 2005, Company settled for $2.5 million and agreed to independent
monitor for five years

47. FCA Case Examples
Worthless Services
47
U.S. ex rel. Academy Health Ctr. Inc. v. Hyperion
Foundation, Inc. (S.D.Miss, filed 2009, unsealed 2012)

Qui tam lawsuit by owner and landlord of leased facility alleging
consistent failure by nursing home to provide essential nursing services to
residents beginning in Oct. 2005




Rationing of items required for basic resident needs, e.g., oxygen bottles and garbage
bags
Facility is chronically short-staffed; some nurses must provide direct care to over 30
residents
Medicare and Medicaid billed for services that were either nonexistent
or so deficient that they were “effectively worthless.”
Funds intended for resident care allegedly diverted to other entities

48. FCA Case Examples
Worthless Services
48
Hyperion Foundation con’t
 Other
allegations
 Officer/director
of Hyperion excluded from participation in
Medicare
 Failure to disclose all individuals with ownership/controlling
interest as required by law
 Nationwide scheme

49. FCA Case Examples
Worthless Services
49
Golden Living: U.S. & State of GA ex rel. Micca v.
GGNSC Holdings, LLC (N.D.Ga., filed 2010)

Qui tam lawsuit alleging that two Atlanta-area Golden Living Center nursing
facilities provided patients with worthless wound care services from 2006 to
2011 that resulted in severe harm to patients

In Jan. 2013, company settled by agreeing to pay $613,300 and enter into a
CIA covering six Atlanta-area facilities, which included an independent monitor
for five years

The relator was a physician who was the Medical Director at one of the facilities
for over 10 years (before his termination) and who is the attending physician for
several current residents

Case brought under federal and state false claims act statutes

50. FCA Case Examples
Worthless Services
50
Golden Living con’t

The relator cited the following statutes and regulations, among others, to
support his “worthless services” claim
 42 U.S.C. § 1320c-5(a)(2) –provider services must meet
professionally recognized standards of care
 42 U.S.C. § 1320a-7(b)(6)(B) – provider may be excluded from
Medicare for submitting claims for care that does not meet
professional standards
 42 U.S.C. § 1396r(b)(1)(A) – nursing facility care must promote
maintenance or enhancement of resident quality of life
 42 U.S.C. 1396r(b)(4)(A)(vii) – nursing facility services must meet
professional standards of quality
 42 C.F.R. § 483.1 et seq. – requirements for Medicare and Medicaid
participation

51. FCA Case Examples
Worthless Services
51
U.S. v. Villaspring (E.D.Ky., filed 2011)

U.S. filed FCA complaint alleging that Villaspring Health Care Center
billed for worthless services from 2004 to 2008
 Worthless services allegedly rendered to numerous patients due to
staffing shortages resulting in, e.g., medication errors, poor nutrition,
inadequate wound care, and death

“Services that were worthless, in that they were not provided or
rendered, were deficient, inadequate, substandard, and did not
promote the maintenance or enhancement of the quality of life of the
residents” and were of a quality that failed to meet professionally
recognized standards of health care

52. FCA Case Examples
Worthless Services
52
Villaspring con’t


Facility received almost $16 million from Medicare and Medicaid in
2004-08
 Complaint names 6 residents who received deficient care
 Facility received $108,000 for their care
 Complaint doesn’t specify if all services they received were
“worthless”
CEO/majority owner and parent company also named as defendants

53. Case Examples – Related Cases
53
U.S. v. Houser (N.D.Ga. 2012)
 GA
nursing home operator convicted for tax fraud and
health care fraud conspiracy (under appeal)
 First criminal case in which defendant convicted after
trial in federal court under, inter alia, worthless services
theory
 Allegations of food shortages, leaking roofs, lack of
nursing & housekeeping supplies, poor sanitary
conditions, major staff shortages, & safety concerns

54. Case Examples – Related Cases
54
U.S. v. Houser cont’d
 Nursing
homes closed by State in 2007
 Defendant sentenced to 20 years in prison and
ordered to pay $6.7 million in restitution to Medicare
and Medicaid and $872,000 to the IRS.

55. Case Examples – Related Cases
55
Spay v. CVS Caremark Corp. (E.D.Pa., filed 2009, unsealed 2012)




Relator alleges worthless services and false certification in the Medicare
Part D context
Motion to dismiss denied by federal district court in PA in Dec. 2012
Alleged false certification that each prescription drug event (PDE) claim
submitted was true, accurate, and complete
Worthless services allegation that numerous PDE claims submitted where
government was not provided with the bundle of services it paid for and
that were required by regulation (i.e., concurrent drug utilization review)

56. QUESTIONS?

57. Liability for Too Much Care?
DOJ Rehab RUGs Billing Investigations
American Conference Institute
Preventing & Defending LTC Litigation
January 22, 2013
Glenn P. Hendrix
Arnall Golden Gregory LLP
(404) 873-8692
Glenn.Hendrix@agg.com

58. Background: Medicare RUGs
58


Medicare sets out five rehabilitation categories for nursing
home patients, called “Resource Utilization Groups” (RUGs),
which provide for increasing levels of rehabilitation and a
corresponding increase in the daily reimbursement for care:
Minute thresholds for rehabilitation RUG subcategories:
 Ultra High (“RU”) -- minimum of 720 min./week
 Very High (“RV”) – minimum of 500 min./week
 High (“RH”) – minimum of 325 min./week
 Medium (“RM”) -- minimum of 150 min./week
 Low (“RL”) -- minimum of 45 min./week

59. The Roadmap
The OIG’s Dec. 2010 Report
59


OIG report on “Questionable Billing By Skilled Nursing
Facilities” analyzed SNF billing practices between 2006
and 2008
Identified three “questionable” billing practices:
(1) Excessive billing of ultra high (RU) therapy RUGS
(2) Too many residents identified as needing a high level
of assistance with ADLs, and
(3) Keeping residents longer than medically necessary as
evidenced by unusually long average lengths of stay.

60. Industry Trends Per the OIG
60


Between 2006 and 2008
 SNF patient population age and diagnoses distribution
remained constant.
 Yet the percentage of patients with ultra-high (RU)
therapy RUG levels jumped, especially in for-profit
SNFs.
 Thus, an additional $5 billion spent on ultra high therapy
RUGs, even though “beneficiaries’ ages and diagnoses
at admission were largely unchanged from 2006 to
2008.”
OIG Report, “Questionable Billing by Skilled Nursing
Facilities,” Dec. 2010.

61. Higher RUGs in For-Profits
61




For-profit SNFs – higher RUGs than non-profit SNFs.
Large chains more likely to bill RU than small chain or independently-owned for-profit SNFs
For-profit SNFs -- longer average lengths of stay (ALOS)
than non-profit SNFs.
 Non-profit SNF ALOS – ranged from 23 days to 24 days
 For-profit SNF ALOS -- ranged from 28 days
(independents) to 31 days (large chains).
Billing by for-profits purchased by large chains changed
post-acquisition, sometimes as much as 9%.

62. Nov. 2012 OIG Report
62

Nov. 2012 OIG report -- “Inappropriate Payments to Skilled Nursing
Facilities Cost Medicare More than One Billion Dollars in 2009” -claimed that:
 SNFs billed an estimated 25% of claims in error in 2009 and
Medicare inappropriately paid $1.5 billion for these claims
(representing 5.6% of the total $26.9 billion that paid by Medicare
to SNFs);
 Incorrect classification of beneficiaries into RUGs categories
resulted in a net of $1.2 billion in inappropriately upcoded
Medicare payments;
 SNFs reported inaccurate information to Medicare on at least one
MDS item for 47% of the claims;
 SNFs provided more therapy than necessary to Medicare patients.

63. Enforcement Actions
63



ZPIC and RAC audits
OIG investigations overseen by Department of Justice
(DOJ) with view toward an FCA lawsuit:
 OIG subpoena for records, including massive email
productions
 Seeking emails showing pressure on therapists to hit
certain RUG targets
 Interviews of former employees
 Therapist bonuses tied to RUG utilization
 Medical record review
Statistical extrapolation

64. The Life Care Case
64



On Nov. 28, 2012, the DOJ intervened in qui tam actions in E.D.TN
against Life Care Centers of America, Inc. (“Life Care”).
Whistleblower cases filed in 2008. Investigation commenced in 2009.
Government alleges that Life Care billed nearly 68% of Medicare
rehab days at the RU level, as compared to an RU average of 35%
nationwide) and systematically maximized RU-level billings by:
 “Aggressively push[ing] its facilities and therapists to get as many of
its Medicare beneficiaries into the Ultra High RUG [resource
utilization group] level as possible.”
 “Setting aggressive Ultra High related targets that were completely
unrelated to its beneficiaries’ actual conditions, diagnoses, or needs.”

65. Life Care Complaint (cont’d)
65







“Reinforc[ing] those targets at corporate meetings and presentations,
through regular emails from or visits by corporate personnel, through
employee performance evaluations.”
“Imposing action plans on underperforming facilities.”
“Punish[ing] those facilities and employees that failed to meet its Ultra
High targets or that complained about corporate pressure.”
“Reward[ing] and applaud[ing] those that met its targets.”
“Frequently overr[iding] or ignor[ing] the recommendations of its own
therapists and unnecessarily delay[ing] discharging beneficiaries from its
facilities.”
“Pressur[ing] its facilities and therapists to extend their Medicare
beneficiaries’ stays … to maximize Medicare revenue.”
“Provid[ing] excessive amounts of therapy that were not medically
reasonable or necessary.”

66. Life Care Complaint – Clinical
Allegations
66


Government alleges that Life Care billed for ultrahigh therapy that “sometimes
jeopardized the health of Medicare patients who were imminently terminal,
fatigued, sick, or otherwise medically unstable.”
Cites ten patient examples, including:
“Patient D was a 92-year-old resident of Life Care of Orlando in Florida who was
dying of metastatic cancer (melanoma) that had spread to his brain and lungs.
Patient D had received palliative radiation therapy and was becoming weaker and
more medically fragile after that treatment. Nevertheless, Life Care therapists
recorded at least two hours a day of therapy in all three disciplines at the Ultra
High level for Patient D from July 24, 2007, until his death on August 8, 2007. Two
days before Patient D’s death, he was spitting out blood. Life Care therapists,
however, still recorded 48 minutes of physical therapy, 47 minutes of occupational
therapy, and 30 minutes of speech therapy that very day. The day Patient D died,
Life Care therapists recorded 35 minutes of physical therapy and had him
scheduled for occupational therapy later in the day.”

67. The Other Side of the Story Problems with the
Government’s World View
67



The OIG’s understanding that SNF resident characteristics upon
admission have not changed since 2006 is wrong.
The OIG report ignores SNF resident characteristics upon discharge
(i.e., outcomes and benefits of therapy). Solely focused on resident
characteristics upon admission.
The OIG’s macro conclusion that medically unnecessary rehab is
widespread is based solely on statistical trends, except for the
following statement:
“OIG audits of 5 SNFs found that 20 to 94% of sampled claims
from 2002 through 2004 were medically unnecessary, were
submitted at an inappropriate payment rate, or were insufficiently
documented.”

68. SNF Patients Are Not the Same As In
2006
68

SNF residents did change even per OIG Report (App. C,
Table C-1):




1.9% increase in younger beneficiaries (< 70 years of age)
2.5% decrease in young-old beneficiaries (<70 years of age,
but > 85 years of age)
Care involving use of rehab procedures – 12.1% ► 17%
OIG’s focus on primary hospital diagnosis fails to
recognize that patients have many “types” of diagnoses
impacting the need for rehab.

69. SNF Patients Are Not the Same As In
2006
69

Even CMS disagreed with OIG recommendation of reliance on
hospital diagnosis for determining proper amount of therapy:
 Hospital diagnosis may not be the primary reason for postacute SNF services. “[T]he hospital diagnosis may not be the
primary reason for post-acute services… [T]herapy utilization in
acute care hospitals would not be an accurate indicator of postacute therapy needs… [and] CMS has also examined [Part B
claims] and has determined that diagnosis is not a good
indicator for the type or amount of therapy services a Medicare
beneficiary should receive.” (emphasis added)

70. The OIG’s Macro
Medical Necessity Data is Wrong
70


OIG report relied solely on trending data, except this statement:
“OIG audits of 5 SNFs found that 20 to 94% of sampled claims
from 2002 through 2004 were medically unnecessary, were
submitted at an inappropriate payment rate, or were insufficiently
documented.”
Yet …
 2 of the 5 audits focused on infusion therapy, not rehab
 OIG found all 5 providers had substantial overpayments;
however, CMS did not agree and issued denials to only 4
 At least 2 of the 4 providers appealed and received fully
favorable judgments from CMS for the vast majority of the
claims

71. How Much Therapy is Too Much?
71



“Each resident must receive and the facility must provide the
necessary care and services to attain or maintain the highest
practicable physical, mental, and psychosocial well-being, in
accordance with the comprehensive assessment and plan of
care.” 42 U.S.C. § 1395i-3(b)(4)(A)(i).
SNFs must ensure that “a resident’s abilities in activities of
daily living do not diminish unless circumstances of the
individual’s clinical condition demonstrate that diminution was
unavoidable.” 42 C.F.R. § 483.25(a)(1).
SNF surveys consider whether each resident “obtains optimal
improvement or does not deteriorate within the limits of a
resident’s right to refuse treatment….”

72. Amount of Therapy Should Be Tied To
Outcomes
72



Proper question – not whether rehab is increasing, but whether
better outcomes are resulting from the increased rehab.
OIG Report ignores this question, looking only at the “inputs”
(increased revenue for therapy), with no consideration of the
“outputs.”
Regardless of whether the condition of residents entering SNFs has
changed since 2006, have outcomes changed?
 Increased discharges to home?
 Reduced re-hospitalizations within 30 days of discharge?
 AHCA beginning to study the issue on an industry-wide basis, but
available macro data is limited.

73. Intensive Therapy Improves Outcomes,
Including:
73

Greater than expected gains in ADL tasks for stroke patients. Gerben DeJong, Susan
Horn, Randall Smout, Wenqiang Tian, Koen Putman & Julie Gassaway. Joint Replacement Outcomes on Discharge from
Skilled Nursing & Inpatient Rehabilitation Facilities. Archives of Physical Medicine & Rehabilitation (2009) 90 (8): 12841296.

Positive gains in functional status and overall reductions in the cost of care for
long-term care residents. Rita Bode, Allen Heinemann, Patrick Semik &Trudy Mallinson, Relative Importance
of Rehabilitation Therapy Characteristics on Functional Outcomes for Persons with Stroke, Stroke 2004, 35:2537-2542;
Gert Kwakkel, Robert C. Wagenaar, Tim Koelman, Gustaaf Lankhorst & Johan Koetsier. Effects of Intensity of
Rehabilitation After Stroke, Stroke (1997), 28: 1150-1556.

Improvements by at least one stage in mobility and ADL functional
independence for patients with stroke, orthopedic conditions, and
cardiovascular/pulmonary conditions. BR Przbylski, ED Dumont, ME Watkins, SA
Warren, AP Beaulne, & DA Lier. Outcomes of enhanced physical and occupational therapy service in a nursing home
setting, Archives of Physical Medicine and Rehabilitation (1996), 77(6): 554-561.

Good clinical outcomes in severe cognitively impaired patients.
Carol Barnes, Douglas
Conner, Lil Legault, Nora Reznickova & Cynthia Harrison-Felix. Rehabilitation Outcomes in Cognitively Impaired Patients
Admitted to Skilled Nursing Facilities from the Community, Archives of Physical Medicine & Rehabilitation (2004); 85: 16021607.

74. Intensive Rehab Improves Outcomes
74
•
Study of physical therapy by Chiodo et al. (1992) shows that functional
gains were seen in:

88% of patients receiving high-intensity physical therapy

33% of patients receiving moderate-intensity physical therapy

13% of patients receiving minimal-intensity therapy
Laura K. Chiodo, Meghan B. Gerety, Cynthia D. Mulrow, Mary C. Rhodes, and Michael R. Tuley. The Impact of Physical
Therapy on Nursing Home Patient Outcomes, Physical Therapy (1992); 72: 168-175.

Increased therapy hours are strongly associated with increased
Functional Independence Measure (FIM) gains.
Carol Barnes, Douglas Conner, Lil Legault, Nora Reznickova, and Cynthia Harrison-Felix. Rehabilitation Outcomes in
Cognitively Impaired Patients Admitted to Skilled Nursing Facilities from the Community, Archives of Physical Medicine and
Rehabilitation (2004); 85: 1602-1607.

75. Intensive Rehab Improves Outcomes
75

More intense therapy is associated with increased community discharge:

participation in rehabilitation therapy increases the likelihood of discharge home
by 54% to 78%.

more intensive therapy (i.e., >330 minutes per week) increases the likelihood of
discharge home two-fold.
Walter Wodchis, Gary Teare, Gary Naglie, Susan Bronskill, Sudeep Gill, Michael Hillmar, Geoff Anderson, Paula
Rochon, & Brant Fries. Skilled Nursing Facility Rehabilitation and Discharge to Home After Stroke, Archives of Physical
Medicine and Rehabilitation (2005); 86: 442-448.

More intensive rehab results in increased community discharges. Anne Deutsch, Carl Granger,
Allen Heinemann, Roger Fiedler, Gerben DeJong, Robert Kane & Maurizio Trevisan, Poststroke Rehabilitation: Outcomes and
Reimbursement of Inpatient Rehabilitation Facilities and Subacute Rehabilitation Programs, Stroke 20056, 37:1477-1482;
Gerben DeJong, Ching-Hui Hsieh, Julie Gassaway, Susan Horn, Randall Smout, Koen Putman, Roberta James, Michael Brown,
Elizabeth Newman & Mary Foley. Characterizing Rehabilitation Services for Patients with Knee and Hip Replacement in Skilled
Nursing Facilities and Inpatient Rehabilitation Facilities, Archives of Physical Medicine and Rehabilitation (2009) 90(8): 12691283.

Therapy use positively related to community discharge and negatively related to
mortality. Greg Arling, Arthur Williams, Donna Kopp. Therapy Use and Discharge Outcomes for Elderly Nursing Home
Residents, Gerontologist (2000), 40(5):587-595; P Langhorne, R Wagenaar, and C Partridge. Physiotherapy after stroke: more
is better?, Physiotherapy Research International (1996); 1(2): 75-88.

76. Setting Substitution
76




Limited access to IRFs more SNF patients want intensive,
short-term rehab (since 2004 there has been a 26%
reduction in IRF census)
Limited access to LTCHs more SNF patients admitted
directly from hospital with complex medical needs
Increased home and community-based service fewer SNF
patients are long term care residents
Increased access to home health  fewer SNF patients
requiring < 8 hours of skilled care

77. OIG Completely Ignored the “After” Picture
77

Are better outcomes the result of the increased therapy?
 Increased discharges to home?
 Higher FIM scores?
 Reduced re-hospitalization within 30 days of discharge?

78. What’s Next?
78




Several active ongoing DOJ investigations. Some will
become FCA actions.
Copycat qui tam cases.
Reimbursement changes.
Changes in clinical approach?

79. QUESTIONS?

80. Preparing for Unprecedented Fraud & Abuse Scrutiny in the Long Term Care
Setting Post-Healthcare Reform
COMPLIANCE

81. COMPLIANCE
Patient Protection and Accountable Care Act of 2010
§ 6102 requires Medicare participating skilled nursing facilities
must have an operational compliance plan no later than March
23, 2013
(2 years after PPACA’s enactment)
The program must be “effective in detecting and preventing
criminal, civil, and administrative violation” and
“promoting quality of care”

82. COMPLIANCE
7 components of a SNF compliance plan:
1.
2.
3.
4.
5.
6.
7.
Standards & procedures “reasonably capable of reducing the prospect”
of criminal, civil and administrative violations
Assignment of overall compliance program oversight to “high-level
personnel” with “sufficient resources and authority” to assure compliance
Exercise of “due care” not to delegate “substantial authority” to persons
the facility knows or should know have a “propensity to engage in
criminal, civil, or administrative violations”
Effective communications of compliance standards and procedures
throughout the organization
Consistent enforcement of appropriate disciplinary measures, including
for failure to detect an offense
Following detection of an offense, reasonable responses to prevent
further similar offenses
Periodic reassessment of the plan and modification to reflect changes in
the organization and the law

83. COMPLIANCE
Compliance Policies to look for:
1.
Written standards of conduct
2.
Education of new and re-education of all employees & vendors
3.
Procedure for investigating allegations
4.
Establishment of an effective “hot-line”
5.
Effective medical necessity review
6.
Credit balances/bad debt policies
7.
Records retention and HIPAA compliance
8.
Claims/cost report auditing
9.
No retaliation
10.
Screening for excluded/debarred staff/vendors

84. COMPLIANCE
Why an effective compliance plan is important
1.
2.
3.
4.
5.
6.
Absence of an effective compliance plan is a violation of the conditions
of participation
An effective compliance plan can ensure that- facility and staff meet standards of care
- no false claims were “knowingly” submitted
- there is adequate documentation of items and services provided
Enables the facility to become aware of and address small problems
before they become “bet the farm” disasters
Reduce both the risk of violations as well as the sanctions when something
happens
Enhances the image of the facility as attempting to “do the right thing”
Provides evidence of effort to mitigate, when you need to show that
“stuff just happens”

85. ELDER JUSTICE ACT
Norris
Cunningham
Hall, Render, Killian, Heath and Lyman

86. Elder Justice Act
(Section 1150B of Patient Protection and Affordable Care Act of 2010)

Background
 The
Elder Justice Act was established by the Patient
Protection and Affordable Care Act of 2010. It applies
to “long-term care facilities,” defined as residential care
providers that arrange for, or directly provide, long term
care. This includes nursing facilities, skilled nursing
facilities, hospice programs operating in SNF/NFs, and
intermediate care facilities for the mentally retarded
(ICFs/MR). The Act applies only to entities that receive at
least $10,000 of Federal funds annually

87. Elder Justice Act (continued)
(Section 1150B of Patient Protection and Affordable Care Act of 2010)

Background
 The
Act does not apply to assisted living facilities
 The Act broadens the scope of who is required to report
suspected abuse, and imposes affirmative obligations on
facilities to provide annual training to “covered
individuals”, to post a conspicuous notice, and to develop
additional internal policies.

88. Elder Justice Act (continued)
*Section 1150B of Patient Protection and Affordable Care Act of 2010

Reporting Requirements
 “Covered
Individuals” are required to report any
reasonable suspicion of crimes committed against
residents of the facility
 “Covered Individuals” include anyone who is an owner,
operator, employee, manager, agent, or contractor of the
facility. All covered individuals with knowledge of the
incident must report.
 The obligation to report is on individuals, not the facility.

89. Elder Justice Act (continued)
*Section 1150B of Patient Protection and Affordable Care Act of 2010

Reporting Requirements
 Reporting
should occur if the events that cause the
reasonable suspicion of crime result in serious bodily
injury, a report must be made immediately, but no later
than two hours after forming the suspicion.
 If the events that cause the reasonable suspicion of crime
do not result in serious bodily injury, a report must be
made no later than 24-hours after forming the suspicion.
 Reporting may be done by calling, faxing, or emailing
both local law enforcement and the state survey agency.

90. Elder Justice Act (continued)
*Section 1150B of Patient Protection and Affordable Care Act of 2010

Penalties
 Failure
to report subjects “Covered Individual” to CMP
of not more than $200,000.
 If failure to report exacerbates the harm to the victim or
results in harm to another individual, then CMP is
$300,000.
 Exclusion from Federal Healthcare Programs

91. Elder Justice Act (continued)
*Section 1150B of Patient Protection and Affordable Care Act of 2010

Retaliation: A long term care facility may not…
 Discharge,
demote, suspend, threaten, harass, or deny
promotion, or any employment related benefit or in any
manner discriminated against an employee for lawful
acts done to the employee; or
 File a complaint or a report against a nurse of employee
for making a report, or causing a report to be made, or
taking steps in furtherance of a report

92. Elder Justice Act (continued)
*Section 1150B of Patient Protection and Affordable Care Act of 2010

Penalities for Retaliation
 CMP
of not more than $200,000.
 Exclusion from Federal Healthcare Programs for 2 years
 Both of the above

93. Elder Justice Act (continued)
*Section 1150B of Patient Protection and Affordable Care Act of 2010

Questions Re Elder Justice Act:
 To
whom does it apply?
EVERYONE! (Except facility attorneys?)
 What actions are reportable?
 When do “reasonable suspicions” exist?
 What level of injury is “serious bodily injury”?
 What is “lawful conduct”?
 What conduct constitutes retaliation?

94. QUESTIONS?