HCAD650_Group4 FinalDraft
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GROUP 4 1
Internal Compliance Review of GoodHealth, Inc.
The purpose of this report is to present the findings of GoodHealth, Inc.’s most recent internal compliance review. After internal investigations, audits, and interviews the team found several issues that present compliance liability for the hospital group. The findings reflected the organization practices that could be interpreted as violations of the Stark and Anti-Kickback Statutes, among other regulations including reporting insufficiencies, regarding coding errors and
medical errors. Finally, the investigation found a lack of a regular peer review process for medical errors. These possible violations can lead to steep penalties that could be prevented if GoodHealth, Inc. takes the appropriate measure to stop these preventable errors from occurring in the future. The team suggests that improving self-reporting and transparency will save GoodHealth, Inc.’s stakeholders the time, money, and effort of litigation that inevitably ends in settlement. The Office of the Inspector General (OIG) has released educational materials for healthcare leaders, with the goal of assisting directors in establishing and demonstrating that, they follow “reasonable” quality oversight (OIG, n.d.). It is imperative the Board recognize the need to self report; failure to implement an internal program for compliance review and reporting
may put the organization at risk.
Stark and Anti-Kickback Laws
The Physician Self-Referral Law, which is also referred to as Stark Law, is a healthcare abuse and fraud regulation that forbids clinicians from making referrals for a number of designated health services that are funded by Medicare to any institution in which they are deemed to have a “financial relationship”. Designated health services include outpatient and inpatient hospital services, outpatient prescription drugs, home health services, prosthetic devices
and supplies, orthotics, prosthetics services, DME and supplies, parental and enteral nutrients, radiation therapy supplies and services, imaging services and radiology, outpatient, speech-
language pathology services, occupational therapy, physical therapy services, as well as clinical laboratory services (Mitchell, 2007; Tironi, 2009). “Financial relationship” in this context is interpreted by the federal government as broadly including any indirect or direct investment or ownership interests by the referring physician. It also denotes any financial interests that are held
by the immediate family members of the referring physician. The Physician Self-Referral Law is different from the Anti-Kickback Statute in that the former is not a criminal statute. Nonetheless,
the OIG, working under the Department of Health and Human Services (DHHS), has traditionally pursued civil actions against violators of the Physician Self-Referral Law. Such suits are pursued under the purview of the Civil Monetary Penalties Law (Tironi, 2009).
The hospital has leased equipment from one of its physicians, and instead of taking the equipment and placing it within the premises of the institution, the hospital has rather been referring patients directly to the private practice. There is no other way of interpreting this arrangement other than as a financial arrangement where the physician is benefiting directly by having patients being referred to his private clinic. One could argue that the hospital leased the equipment, and this is one of the exceptions as provided by the law. Albeit it is true that the hospital leased the radiology equipment, but rather than refer patients to the private practice of the radiologist, it should have placed the equipment within the hospital premises to avoid breaking the law.
GoodHealth, Inc., a major provider of healthcare services, has entered a financial arrangement with one of its physicians regarding the use of medical equipment. Specifically, the hospital has leased radiology equipment from a radiologist, and hospital staff has been referring
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patients to the radiologist’s private practice. GoodHealth, Inc. has four hospitals, which serve a huge number of people. It is assumed that with such a size, the hospital has been referring many patients to the physician’s private practice. GoodHealth, Inc. has indeed rented the equipment from the unidentified staff. Additionally, there are compliance issues regarding staff remuneration for referrals and admissions at GoodHealth, Inc. After internal audits, it was found that medical staff had been offered bonuses for increasing admissions and referrals. This is an example of abuse of Medicare and Medicaid funding for personal gain. The OIG is very clearly focusing on fraud reporting, waste and abuse violations. The definition of fraud is “the wrongful or criminal deception intended to result in financial gain” (OIG, 2018). Waste is “the careless expenditure, mismanagement, or abuse of resources to the detriment of the US government” (OIG, 2018). Abuse refers to “the excessive or improper use of
a thing, or to use something in a matter contrary to the legal rules for its use” (OIG, 2018). Bonuses given to staff at the expense of the US government are a clear violation of these rules. The use of financial incentives to increase referrals can hinder the progress of transitioning healthcare services from fee-for-service to a more value-based care model. It can make providers
more likely to abuse the system by referring patients to more services than needed, which is the very reason these laws were put in place. The Anti-Kickback Law (AKS) criminalizes knowingly and willfully offering, paying, soliciting, or receiving any remuneration to induce or reward referrals of items or services reimbursable by a federal health care program such as Medicare or Medicaid (Hatfield, 2018). Rewarding employees with monetary gains for only the referrals that successfully get treated at GoodHealth, Inc. hospital violate AKS rules. Although rewarding staff for the increasing number
of admissions and referrals is normal, it becomes a problem when physicians are provided personal financial gain through the direct use of Medicare dollars. If hospital staff refer patients for services with the hospital group solely due to this incentive, there is abuse due to the fact that GoodHealth, Inc.’s practices prevent patients from getting services at other providers. Unless GoodHealth, Inc. can prove it is the only available provider of the service or at least truly the most appropriate provider these practices are in direct violation of the Anti-Kickback Laws. In the case of Carrel v. AIDS Healthcare Foundation, 898 F.3d 1267 (Aug. 7, 2018), the Eleventh Circuit highlighted the breadth of the safe harbor rules under AKS and brought clarity to this issue. In this case, the plaintiffs alleged that the Foundation violated AKS due to offering cash bonuses to employees for each HIV-positive patient they successfully directed to the Foundation for follow-up medical care (Hatfield, 2018). The current practice of rewarding physicians for admissions and referrals clearly violates the Anti-Kickback laws with an improper financial relationship between medical staff and providers.
Consequences of Violating the Stark and Anti-Kickback Laws
The need to self-report to the OIG is apparent if medical staff are being paid to increase referrals to GoodHealth, Inc. hospitals only. The civil monetary penalties (CMP) and the anti-
kickback statutes’ protection under safe harbor laws, highlight the importance of addressing these failures head on. The intricate nature of the laws, in which intent is not needed to violate the law, requires institutions to be cautious with regard to compensation arrangements with physicians. This means that even those who violate the Stark Law unknowingly are equally subject to civil penalties. Violations often result in huge penalties. Penalties include civil monetary penalties of up to $15,000 for every identified violation and $100,000 for every scheme (Wales, 2003). Other penalties include repayment of reimbursement for services and denial of payment for services. A deliberate Stark violation could lead to exclusion from
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participation from federally funded healthcare programs, including Medicare and Medicaid. The Patient Protection and Affordable Care Act (PPACA), also referred to as the ACA, requires the DHHS to institute a voluntary self-referral disclosure protocol to allow providers of medical services to report any known violations of the Stark Law. There are a number of instances where organizations have been fined heavily for violating the Stark Law within the medical care industry. For instance, in 2010, Tuomey Hospital
in Sumter, South Carolina, was found to have contravened the Stark Law and was fined $49.4 million. It was alleged that the institution violated federal law from 2004 by providing employment contracts to its physicians (Abhimanyu et al., 2015).Experts agree the first step to mitigating the liability posed to healthcare leaders is to implement an internal compliance program, that includes early reporting and analysis of adverse events (Brin, 2018).The risk of not
self-reporting is bigger than the decision to self-report to the Office of the OIG and facing the consequences. The reputational damage that the institution would incur for not self-reporting and
being discovered could be irreparable. The Board should prepare for potential forthcoming financial penalties and other criminal liability if these violations are not reported prior to the OIG
discovering.
Medical Coding Errors
For the past five years, GoodHealth, Inc. has continued to have medical coding errors. These errors are a great concern for the organization
. The continued medical billing errors at GoodHealth, Inc. have been the key reason for the recorded cases of high denial rates and compromised patient care. Some of the recorded medical coding errors are serious, as they are acts of medical abuse and fraud. These serious offenses could have the group facing federal penalties and expensive fines. The penalties imposed by the OIG on GoodHealth, Inc. include claim denials, federal penalties, fines, and imprisonment for those involved. The organization is at risk of serious federal penalties and fines, as submitting incorrect claims to the government (for Medicare or Medicaid) is a violation of the Federal Civil False Claims Act (FCA) (Chung et al., 2018).
The directors breached their responsibility to ensure that the coding and billing process is free of errors. The errors at GoodHealth, Inc. have continued for five years, which indicates failure on the part of the directors to identify the problem and address the same (Howard & Reddy, 2018). From the audit, medical coding errors in GoodHealth, Inc. were diverse and with different implications on the hospital. Some of the commonly identified medical coding errors include sloppy documentation, missed information, up-bundling, upcoding, under-coding, duplicate billing, overusing the modifier 22-increased procedural services, improper infusion and
hydration codes reporting, and telemedicine coding errors.
The organization should self-report all cases of coding and billing errors. The lack of reporting of the medical coding errors further complicates the matter thus putting the organization at risk of further action (Howard & Reddy, 2018). GoodHealth, Inc. needs to carry out an extensive audit to unearth all medical coding errors and report the same to the OIG. GoodHealth, Inc. failed to put in place a mechanism to minimize the number of recorded medical
coding errors. Self-reporting is one of the key requirements for organizations when dealing with incidences of coding and billing errors. Therefore, the directors should be held accountable. Medical Errors and Peer Review Requirements
Medical errors occur when an overseeing healthcare professional treats a patient with an inappropriate method of care or fails to perform a method of care correctly. It is important for healthcare providers and organizations to notify others when a medical error happens. It is also
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important for the providers and organizations to investigate and share those findings with others. This can help prevent the same mistakes from occurring in the organization again, as well as preventing them from occurring in another organization (Poorolajal et al., 2015). The OIG estimated that more than 130,000 Medicare beneficiaries experienced adverse events in a single month, with some of the most egregious not even being reported (Shaw, 2012). Implementation of an internal system-wide approach allows for an internal quality control and improvement program. Although medical errors do not necessarily equal negligence, “corporate liability” holds hospitals liable for institutional actions that fail to screen for incompetent providers, fail to maintain high-quality standards, fail to implement a quality compliance process, or fail to provide proper equipment (Alvandi, 2016).
The Board should work alongside the Chief Compliance Officer to keep abreast of current compliance trends, these numbers can be used to provide critical feedback to GoodHealth, Inc.’s staff. It is the role of healthcare leaders to create efficient and reliable systems that ensure patient safety. The Journal of Oncology released an article that listed certain responsibilities that hospitals and other institutions should follow when an adverse event occurs due to a medical error: Investigate the cause of errors, disclose error to patient and apologize when appropriate, foster a culture of error prevention (Rodriguez et al., 2009). By implementing a methodological approach to adverse events, including those caused by medical errors, the hospital can create an environment where staff feel empowered to keep each other compliant. Physicians should feel confident in disclosing the adverse events to the patient, family, and the institutional authorities; honesty upholds the integrity of the healthcare provider and the patient (Rodriguez et al., 2009).
The Joint Commission on Accreditation of Healthcare Organizations’s (JCAHO) policy requires hospitals and healthcare institutions to identify and respond to adverse events (Rodriguez et al., 2009). The policy states that a timely root cause analysis and implementation of a harm reduction-corrective action plan, along with reporting is an institutional obligation (Rodriguez et al., 2009). The use of new technology and incorporation of different service types require investigation of incidents in which medical errors occur; not with the purpose of assigning blame but to prevent recurrences. Researcher’s note that what patients want most, when a medical error occurs, is information about the error, assurance it will not reoccur, and an apology from the institution and provider (Rodriguez et al., 2009). GoodHealth, Inc. should not only be investigating the causes of medical errors throughout the institution but reporting them to
the appropriate authorities when warranted. Although penalties for medical errors fall under state
regulations, many states are making laws with a specific intent on patient safety. For example, in Maryland the law requires hospitals to report errors within 5 days or 24 hours if the patient experiences a serious injury; the state then reports these errors publicly, failing to meet these requirements not only give a bad reputation but can be punished with financial penalties (consumer reports, 2011). The institution should establish guidelines that explain the importance
of apologizing to patients when errors have occurred, especially if the state will be making errors
public.
Similarly, conducting peer reviews are critical in ensuring compliance with accreditation through the JCAHO. It is vital that physicians conduct these reviews in order to ensure our standard of quality care is met (Vyas & Hozain, 2014). It is shown that hospitals failing to complete peer reviews in a timely manner leads to underreporting and in turn, patient harm (Levine & Wolfe, 2009). In an attempt to protect patients from physician harm, the National Practitioner Data Bank (NPDB) was created under the Health Care Quality Improvement Act of
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1986. It required any healthcare organization to report when a physician’s privileges have been revoked for a period greater than 30 days for anything involving medical competency or conduct.
It was estimated by the NPDB that each year approximately 5,000 reports would be filed each year. However, the healthcare industry felt this number would be much higher at approximately 10,000 reports per year. Both institutions were wrong and only about 650 reports are filed per year. The OIG did a study on the NPDB after three years in operation and found that
reporting rates could in fact affect the quality of care administered. If physician review was conducted correctly, the American Hospital Association, American Medical Association, Joint Commission on Accreditation of Healthcare Organizations, Center for Medicare and Medicaid Services, and the OIG believe the number of reports would be much higher. This is a cause of concern and makes the NPDB believe healthcare organizations are not fulfilling the public trust (Levine & Wolfe, 2009).
Failure to report violations directly violates the HealthCare Quality Improvement Act of 1986. For example, the FBI conducted a raid of Redding Medical Center in Redding, California in October of 2002; this was due to a whistleblower complaint that physicians may have been conducting unnecessary surgeries. In June 2008, it was found that more than 600 unnecessary surgeries had been conducted on patients in seven years. It was decided that if peer reviews would have been conducted in a timely manner, many of those surgeries could have been avoided. This would have saved the lives of hundreds of people who died or were injured from unnecessary bypass or valve surgeries. By failing to conduct peer reviews, hundreds of lives were affected, and the hospital had to pay out $54 million for a federal case and $395 million to the families in a civil lawsuit. Both the Joint Commission and the California Medical Institute for
Medical Quality found that there were peer review deficiencies that violated the Joint Commission’s standards (Levine & Wolfe, 2009).
In another case in Cambridge, Massachusetts, a surgeon left the operating room seven hours into surgery with the incision open for 35 minutes to run to the bank and cash his paycheck. It was found that prior to this surgery he had a history or disruptive behavior and some
run-ins with law. In 2001, a surgeon in Hawaii completed spine surgery on a patient using a screwdriver instead of a titanium rod, and the patient needed three more surgeries to correct the issue, which ended up resulting in his death. Prior to this surgery, the surgeon was facing charges
for drug addiction and incompetence and he had a suspended medical license in Oklahoma as well as a revoked medical license in Texas. If effective peer reviews were to have occurred, these
surgeons would have been reported to the NPDB and subsequently prevented from operating on all of these patients (Levine & Wolfe, 2009). Therefore, it is crucial we conduct peer reviews in a
timely manner and report to OIG any errors to ensure the quality of care we are providing, and prevent any of our noncompliant physicians from providing inadequate or harmful care to other patients at other institutions in the future.
Conclusion
The fiduciary duties require that a Board of Directors or directors act in the best interest of the company and in good faith. Among the main duties is to account for secret profits, to avoid exceeding the powers of the company, and to avoid conflict of interest. From this scenario,
the directors were unable to identify the clear conflict of interest in the arrangement made between the management and the physician. Such lapses could have been flagged earlier had the Board played its role conclusively. Whatever repercussions the institution will face are partly
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attributable to the Board’s laxity at its oversight role in the hospital. Even though much of the blame falls on the management, the Board equally is to blame.
The main objective of enacting the Stark and Anti-Kickback Laws was to prevent the monopolization of referral sources. This means physicians and other healthcare staff are prohibited from inappropriately benefiting from referrals. The analysis is clear that GoodHealth, Inc. has contravened the Stack Law and its bonuses to staff pose a clear kickback if only given for in-house referral. The medical coding errors further identify other areas of reporting need; and finally, the medical error reporting and peer review process of the institution has been found extremely lacking. Self-reporting is a key requirement for organizations, especially regarding incidences of possible Stark and Anti-Kickback Laws, billing code and medical errors. Therefore, the directors should be aware of their corporate liability and act accordingly.
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References
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Levine, A., & Wolfe, S. (2009, May 27). Hospitals drop the ball on physician oversight: Failure of hospitals to discipline and report doctors endangers patients. https://www.citizen.org/wp-content/uploads/migration/18731.pdf
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