Independent Living

Skilled Nursing & Rehabilitation Facilities

Adult Care Facility

Community Housing

Home Care

Adult Day Care

ABOUT US | Policies & Procedures (Deficit Reduction Act)
 
SUBJECT: Deficit Reduction Act
 
 
DEPARTMENT: Corporate Compliance
 
APPROVED: ______________________________
                        Signature
 
 
EFFECTIVE DATE: 12/2011
SUPERSEDES7/2010
 
 
Purpose
The Lutheran Care Network (TLCN) is committed to complying with the requirements of Section 6032 of the Federal Deficit Reduction Act of 2005 (DRA) and to detecting and preventing fraud, waste or abuse. 
 
Policy
The Lutheran Care Network prohibits the knowing submission of a false claim for payment from a Federal or State funded health care program. This policy provides information regarding Federal and State statutes pertaining to false claims and statements, whistleblower protections under these laws and TLCN’s policies and procedures for detecting and preventing fraud, waste and abuse.
 
A. Federal and State Statutes and Whistleblower Protections—detailed information regarding these laws is outlined in Attachment A of this policy.
 
B. TLCN’s Policies and Procedures—TLCN maintains a comprehensive Compliance Program which sets forth its compliance policies and procedures for detecting and preventing fraud, waste and abuse. Information regarding TLCN’s Compliance Program is provided to employees and is available from the Compliance Office. 
 
C. Education—TLCN strives to educate its staff on fraud and abuse laws, including the importance of submitting accurate claims and reports to the Federal and State governments, as well as complying with all components of TLCN’s Compliance Program. This policy applies to TLCN employees, physicians and contractors, subcontractors or agents that, on behalf of TLCN, furnish or authorize the furnishing of health care items or services, perform billing or coding functions, or that monitor the health care provided by TLCN.
 
Procedures
 
Dissemination of Information to Employees:
 
DRA Training—Staff will be required to attend Compliance training, including a specific discussion of Federal and State fraud and abuse laws, as well as whistleblower protections and TLCN’s policies and procedures for detecting and preventing fraud, waste and abuse.  
 
Compliance Program Information—The Employee Compliance Manual will be provided to current TLCN employees, as well as to new employees at Orientation.
 
Dissemination of Information to Contractors—TLCN will disseminate DRA information and applicable law to its contractors and will require adoption of same. “Contractors” include contractors, subcontractors and agents that furnish or authorize the furnishing of health care items or services, perform billing or coding functions, or that monitor the health care provided by TLCN.
 
Revisions of DRA Information—TLCN will revise “Appendix A: Federal Deficit Reduction Act of 2005 (DRA)—Federal and State Statutes,” as necessary to comply with Federal and State regulatory changes and guidance. 
 
Reporting of Potential Fraud, Waste or Abuse—Any employee that reasonably suspects or is aware of the preparation or submission of a false claim or report or any other potential fraud, waste or abuse related to a federal or state funded health care program is required to report such information.
 
A.      Reporting Process
 
·         An employee that suspects a violation should report concerns to their Supervisor or Manager; or
 
·         The employee should report the concern to:
 
1. TLCN Corporate Compliance Hotline—877-395-4966
2. TLCN Compliance Officer—914-365-6365
 
·         Failure to report and disclose or assist in an investigation of fraud, waste or abuse is a violation of the compliance program and may result in disciplinary action.
 
B.  Non-Retaliation—any employee of TLCN that reports information regarding potential fraud, waste or abuse may do so anonymously and will be protected against retaliation for reporting the information under Federal and State law, as well as TLCN policies.
 
C.   Investigations—TLCN will promptly investigate any reports of potential or actual fraud, waste or abuse and will initiate appropriate action to correct the situation and against the employee that committed the violation.
 
Responsibilities—The Compliance Officer is responsible for administering TLCN’s Compliance Program. It is the responsibility of all TLCN employees to comply with the Compliance Program and related policies and to report any violations or potential violations of fraud, waste or abuse.
  
Attachment A:  FEDERAL DEFICIT REDUCTION ACT OF 2005 (DRA)- FEDERAL & STATE STATUTES
 
The following is a summary of the Federal & New York False Claims Acts, the Program Fraud Civil Remedies Act and other relevant State laws.
 
I. Federal False Claims Act & New York False Claims Act (FCA)
 
The Federal False Claims Act, 31 USC §3279, et seq, and the New York False Claims Act,
State Finance Law §187-194, establishes liability for any person who engages in certain acts, including:
 
·         knowingly presenting or causing to be presented a false or fraudulent claim to the
Federal, State or local government for payment;
·         knowingly making, using, or causing to be made or used, a false statement to get a false or fraudulent claim paid by the Federal, State or local government;
·         conspiring to defraud the Federal, State or local government by getting a false or
fraudulent claim allowed or paid; or
·         knowingly making, using, or causing a false statement to conceal, avoid or decrease an
obligation to pay money to the Federal, State or local government.
 
Under the Federal & NY False Claims Acts, a person acts “knowingly” if s/he:
 
·         has actual knowledge of the information;
·         acts in deliberate ignorance of the truth or falsity of the information; or
·         acts in reckless disregard of the truth or falsity of the information.
 
There is no requirement that the person specifically intended to defraud the government through his or her actions. 
 
Under the Federal False Claims Act, a “claim” is any request or demand for money or property if the Federal, State or local government provides any portion of the money or property in question. This includes requests or demands submitted to a contractor of the Government and includes Medicaid and Medicare claims.
 
A violation of the Federal False Claims Act results in a civil penalty between $5,500 and
$11,000 for each false claim submitted, plus up to three times the amount of the damages
sustained by the Government because of the violation. In addition, the United States
Department of Health and Human Services (HHS) Office of the Inspector General (OIG) may exclude the violator from participation in Federal health care programs.
 
A violation of the NY False Claims Act results in a civil penalty between $6,000 and $12,000 for each false claim submitted, plus three times the amount of damages sustained by the State and three times the amount of damages sustained by a local government because of the violation.
 
In sum, the FCA imposes liability on any person who submits a claim to the government that
s/he knows or should know is false. An example may be a physician billing Medicare/ Medicaid for medical services not provided. The FCA also imposes liability on an individual who may knowingly submit a false record in order to obtain payment from the government. An example may be a government contractor who submits false records that indicate compliance with contractual or regulatory requirements. The third area of liability includes those instances in which someone may obtain money from the government to which he may not be entitled and then uses false statements or records in order to retain the money. An example of this so- called “reverse false claim” may include a hospital that obtains interim payments from Medicare throughout the year and then knowingly files a false cost report at the end of the year in order to avoid making a refund to the Medicare program.
 
In general, under the Federal & NY False Claims Acts, private parties may bring an action on behalf of the United States. These private parties, known as “qui tam relators” or “whistleblowers”, may share in a percentage of the proceeds from an FCA action or settlement. Both the Federal & NY False Claims Acts
 
 
provide that when the Federal, State or local government intervenes in the lawsuit, the qui tam relator, with some exceptions, shall receive at least 15% but not more than 25% of the proceeds of the FCA action,
 
depending upon the extent to which the relator substantially contributed to the prosecution of the action. When the Federal, State or local government does not intervene, the relator shall receive an amount that the court decides is reasonable and shall be not less than 25% and not more than 30%.
 
In addition, under both the Federal and NY False Claims Acts, an employee who is discharged, demoted, suspended, threatened, harassed or in any other manner discriminated against in the terms and conditions of employment as a result of the furtherance of an action under the FCA is entitled to all relief necessary to make the individual whole. Remedies include reinstatement with comparable seniority as the qui tam relator would have had but for the discrimination, two times the amount of any back pay plus interest and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorneys’ fees. At the same time, though, any person who brings a clearly frivolous case can be held liable for the defendant’s attorney’s fees and costs.
 
II. Federal Program Fraud Civil Remedies Act of 1986
 
The Program Fraud Civil Remedies Act of 1986, 31 USC §§3801, et seq, is similar to the False
Claims Act, establishing an administrative remedy against any person who presents or causes
to be presented a claim or written statement that the person knows or has reason to know is
false, fictitious, or fraudulent to certain Federal agencies, including HHS, and again, includes
Medicaid and Medicare claims.
 
Similar to the False Claims Act, a person who “knows or has reason to know” is defined as one who:
 
·         has actual knowledge of the information;
·         acts in deliberate ignorance of the truth or falsity of the information; or
·         acts in reckless disregard of the truth or falsity of the information.
 
Once again, there is no necessary proof of specific intent to defraud the government. Unlike the False Claims Act, however, a violation of this law occurs when a false claim is submitted, not when it is paid.
 
A violation of the Program Fraud Civil Remedies Act can result in a civil monetary penalty of up to $5,500 per false claim and an assessment of twice the amount of the false claim. The penalty can be imposed through an administrative hearing after investigation by HHS and approval by the United States Attorney General.
 
III. Additional New York State Laws
 
There are additional New York State laws, both civil/administrative and criminal, that prohibit false claims. Some apply to recipient false claims and some apply to provider false claims. While most are specific to healthcare or Medicaid, some of the “common law” crimes apply to areas of interaction with the government.
 
Under New York Social Services Law §145, §145-b & §145-c, it is a misdemeanor to knowingly make a false statement or representation, or to deliberately conceal any material fact, or engage in any other fraudulent scheme or device, to obtain or attempt to obtain payments under the New York State Medicaid program. For a violation of this law, the local Social services district or the State has a right to recover civil damages equal to three times the amount by which any figure is falsely overstated. In the case of non-monetary false statements, the local Social Service district or State may recover three times the damages (or $5,000, whichever is greater) sustained by the government due to the violation.
 
The law also empowers the New York State Department of Health to impose a monetary penalty on any person who, among other actions, causes Medicaid payments to be made if the person knew or had reason to know that:
·         the payment involved care, services, or supplies that were medically improper,
unnecessary, or excessive;
·         the care, services or supplies were not provided as claimed;
·         the person who ordered or prescribed the improper, unnecessary, or excessive care,
services, or supplies was suspended or excluded from the Medicaid program at the time
the care, services, or supplies were furnished; or
·         the services or supplies were not, in fact, provided.
 
The monetary penalty shall not exceed $2,000 for each item or service in question, unless a
penalty under the section has been imposed within the previous five years, in which case the penalty shall not exceed $7500 per item or service.
 
If a person applies for or receives Medicaid by intentionally making a false or misleading
statement or by intending to do so, the person’s and his/her family’s needs are not taken into account for a period of 6 months upon the first offense; for a period of 12 months upon the second offense or an offense for which benefits have already been received totaling over $3,900; and for 5 years upon 4 or more offenses.
 
Under New York Social Services Law §366-b, any person who attempts to obtain Medicaid by means of a false statement, concealment, impersonation or other fraudulent means and any person who, with intent to defraud, presents for allowance or payment any false or fraudulent claim for furnishing services or merchandise, or knowingly submits false information for the purpose of obtaining compensation greater than that to which s/he is legally entitled for furnishing services or merchandise shall be guilty of a class A misdemeanor. If such an act constitutes a violation of a provision of the penal law of the state of New York, the person committing the act shall be punished in accordance with the penalties fixed by such law.
 
Under New York Penal Law §155, the crime of larceny applies to a person who, with intent to deprive another of his property, obtains, takes or withholds the property by means of trick, embezzlement, false pretense, false promise, including a scheme to defraud or other similar behavior. This law has been applies to Medicaid fraud cases.
 
·         4th degree grand larceny (Class E felony) involves property valued over $1,000
·         3rd degree grand larceny (Class D felony) involves property valued over $3,000.
·         2nd degree grand larceny (Class C felony) involves property valued over $50,000
·         1st degree grand larceny (Class B felony) involves property valued over $1 million.
 
Penal Law §175 contains four crimes related to filing false information or claims, which have been applied in Medicaid fraud prosecutions:
 
·         Falsifying business records, involving entering false information, omitting material
information or altering an enterprise’s business records with the intent to defraud is a
Class A misdemeanor.
·         Falsifying records in the 1st degree, which includes the elements above and the intent to
commit another crime or conceal its commission is a Class E felony.
·         Offering a false instrument for filing in the 2nd degree, which involves presenting a written
instrument (including a claim for payment) to a public office knowing that it contains false
information, is a Class A misdemeanor.
·         Offering a false instrument for filing in the 1st degree, which includes the elements above
and the intent to defraud the state or a political subdivision is a Class E felony.
 
Penal Law §176 contains six crimes and applies to claims for health insurance payment,
including Medicaid:
 
·         5th degree insurance fraud (Class A misdemeanor) involves intentionally filing a health
insurance claim knowing that it is false.
·         4th degree insurance fraud (Class E felony) is filing a false insurance claim for over
$1,000.
·         3rd degree insurance fraud (Class D felony) is filing a false insurance claim for over
$3,000
·         2nd degree insurance fraud (Class C felony) is filing a false insurance claim for over
$50,000.
·         1st degree insurance fraud (Class B felony) is filing a false insurance claim for over
$1 Million
·         Aggravated insurance fraud (Class D felony) is committing insurance fraud more than
once.
 
In addition, New York Penal Law §177 establishes the crime of Health Care Fraud. A person commits such a crime when, with the intent to defraud Medicaid (or other health plans, including non-governmental plans), s/he knowingly and willfully provides false information or omits material information for the purpose of requesting payment for a health care item or service and, as a result of the false information or omission, receives such a payment in an amount to which s/he is not entitled. Health Care Fraud is punished with fines and jail time based on the amount of payment inappropriately received due to the commission of the crime; the higher the payments in a one year period, the more severe the punishments, which currently range up to 25 years if more than $1 million in improper payments are involved.
 
·         5th degree health care fraud (Class A misdemeanor) is knowingly filing, with intent to
defraud, a claim for payment that intentionally has false information or omissions.
·         4th degree health care fraud (Class E felony) is filing false claims and annually receiving
over $3,000 in the aggregate
·         3rd degree health care fraud (Class D felony) is filing false claims and annually receiving
over $10,000 in the aggregate.
·         2nd degree health care fraud (Class C felony) is filing false claims and annually receiving
over $50,000 in the aggregate.
·         1st degree health care fraud (Class B felony) is filing false claims and annually receiving
over $1 million in the aggregate.
 
New York law also affords protections to employees who may notice and report inappropriate activities. Under New York Labor Laws §740 & §741, an employer shall not take any retaliatory personnel action against an employee because the employee:
 
·         discloses, or threatens to disclose to a supervisor or to a public body an activity, policy
or practice of the employer that is in violation of law, rule or regulation which violation
creates and presents a substantial and specific danger to the public health or safety,
constitutes improper quality of patient care or constitutes health care fraud;
·         provides information to, or testifies before, any public body conducting an investigation,
hearing or inquiry into any such violation of a law, rule or regulation by such employer; or
·         objects to, or refuses to participate in any such activity, policy or practice in violation of a
law, rule or regulation.
 
To bring an action under this provision, the employee must first bring the alleged violation to the attention of the employer and give the employer a reasonable opportunity to correct the allegedly unlawful practice, unless the danger is imminent to the public or patient and the employee believes in good faith that reporting to a supervisor would not result in corrective action. The law allows employees who are the subject of a retaliatory action to bring a civil action in court and seek relief such as injunctive relief to restrain continued retaliation; reinstatement, back-pay and compensation of reasonable costs. If the employer is a health
provider and the court finds that the employer’s retaliatory action was in bad faith, it may impose a civil penalty of $10,000 on the employer. The law also provides that employees who bring an action without basis in law or fact may be held liable to the employer for its attorney’s fees and costs.