​Nov. 22, 2009, marked a significant milestone for Tamar Abell. It was the end of a 10-year ordeal that cost her family’s skilled nursing facility business more than $2 million in settlement costs and legal fees, not to mention numerous sleepless nights and hundreds of hours of paperwork.

It began in the spring of 2000: After three decades of successfully owning and operating nursing facilities, one of Abell’s properties was hit with an investigation prompted by the allegations of a “whistleblower” who recently had been fired from the company.

The U.S. Health and Human Services (HHS) Office of Inspector General (OIG) spent four years investigating the facility before a lawsuit was filed. Each of the business owners—Abell, her husband, brother, and father—were sued by the federal government under the civil False Claims Act (FCA) and placed under a quality-of-care corporate integrity agreement (CIA) that required federal officials to monitor each of of the company’s facilities for a period of five years.

It never occurred to Abell that she would be sued. “I considered myself to be a ‘typical’ mom and pop provider,” she says. “I thought everything was going well. I thought this only happened to the big companies."

Making matters worse, the facility under investigation had been managed by Abell’s company for only 16 months when at least a dozen federal officials marched into the lobby with subpoenas in hand. What’s more, the facility itself was unlike any other she had managed before. Having “grown up” with skilled nursing facilities, this particular building, which served inner-city young adults with mental illnesses, was a very different ballgame.

“We knew going in that this was not going to be easy, but we did make improvements, and we had just had a good survey,” says Abell.

But by the time they pulled out of the facility, just 18 months in, it was too late.

Abell’s story does have a happy ending, but it serves as a cautionary tale of how earnest the federal government has become in its efforts to crack down on fraud, waste, and abuse in the Medicare and Medicaid programs. OIG and the U.S. Department of Justice (DOJ), as well as the Office of the U.S. Attorney General (AG), the Centers for Medicare & Medicaid Services (CMS), and most of the states have intensified their efforts in unprecedented ways to recoup overpayments, prevent billing errors and upcoding, and snag more onerous perpetrators in the act of billing for services never rendered or for deceased beneficiaries.

Turning Lemons Into Lemonade

Implementing the CIA was arguably one of the most challenging aspects of her family’s entire calamity, says Abell, but it was also one of the best things that has happened to her business. “The OIG monitors were extremely helpful throughout the entire process,” she says. “They really helped us grow; they were really unbelievable consultants.”
In fact, says Abell, her business has never before run as well as it does now. A CIA is typically negotiated as part of the settlement agreement with OIG in cases brought against health care providers under the FCA.
In some cases, OIG will agree to allow a provider’s continued participation in Medicare and Medicaid in exchange for the imposition of a CIA, which is what Abell did.
In addition to writing quarterly or monthly reports to OIG, CIAs may require providers and their staff to undergo rigorous training and education. In Abell’s case, her CIA required all direct care workers in each of the company’s facilities to be trained within the first 120 days of the program and annually thereafter.
But tracking and monitoring the training programs for so many employees became unwieldy for Abell. So she created a solution that eventually became a separate—and successful—business.
“I couldn’t figure out how to manage training all those people, so I developed an online training and tracking system that records who has been trained, when they were trained, and what tests they took,” she says. As she likes to say, “I made lemonade from lemons.”
 In 2009, Abell launched Upstairs Solutions, a company that helps senior care facilities educate staff to ensure compliance and mitigate risk. Abell has also recounted her harrowing experience to other long term care owners and operators in an effort to raise awareness about how susceptible providers are to government investigations.
“There isn’t an operator in the country who can’t be the next one. I don’t care how big, how small; everybody’s vulnerable and accountable,” Abell says. But because she took advantage of OIG’s help and implemented a company-wide compliance program, the likelihood of her facing another OIG investigation or lawsuit has been minimized.

Now Is The Time

 As a result, Abell is now a strong advocate of every nursing facility adopting a corporate compliance program (CCP) “before someone else makes you put [one] in place.” Hers is one of many examples driving defense attorneys’ efforts to implement CCPs for their nursing facility clients.

Why the urgency? “There are some very real dangers to health care companies out there, and there are some very real benefits to the protections provided by a corporate compliance program,” says Dan Small, a trial and health care partner with the Boston and Miami offices of Holland & Knight.
According to nearly any expert with knowledge of the long term care industry, CCPs are the best defense against government accusations of fraud.
Small says some studies of CCPs have found that nursing facilities with strong compliance programs are better run, have reduced capital costs, and have less expensive liability insurance rates. In fact, he says, the government has used some cases where there is either a lack of a compliance program, or a deficient one, to demonstrate that “any company that is in the health care industry and does not have a compliance program, is almost, per se, recklessly disregarding their obligations under the law.”
OIG also favors the idea. A recent guidance document suggests that all long term care providers should establish and maintain effective compliance programs with the goal of improving quality of care and services.
Resistance to adopting a CCP most likely comes from two sources, says Small. Some have a hard time believing that an industry that is as highly regulated as nursing facilities would need yet another layer of regulation on top of it.
“The truth is, you have to layer on a compliance program precisely because we’re one of most heavily regulated industries in the country,” he says.
The other hurdle to getting providers to implement compliance programs is cost. Owners and operators often see a CCP as an expense rather than an investment. “But it’s one of the best investments a facility can make,” says Small.
Both whistleblowers and the government will use any violation of those regulations as evidence that someone is committing fraud, he adds. “It puts people that don’t have a compliance program in a very dangerous situation.”
Small also touts an additional benefit for facility owners who are selling a property. “Acquiring parties are taking a strong look at a compliance program during the due diligence process,” he says. “Because if you buy a facility that has poor compliance practices, you’re buying the unknown: investigations and potential FCA risks.”

Focus Is On Fraud

Driving the heightened interest in CCPs is the government’s renewed fervor to root out wasteful spending, overpayments, overbilling, and criminal activity.
In an effort to recoup dollars back into the system, state and federal watchdogs have turned their attention to nursing facilities, home health agencies, and durable medical equipment suppliers with an eye on the tremendous potential for cost savings that preventing and prosecuting fraud can bring.
Behind the eagerness to ferret out and return funds to the government is the fact that fraud has become big business for criminals—so big, in fact, that organized crime leaders have gotten into the game.
Although no one is certain what the exact figure is, the National Health Care Anti-Fraud Association estimates that some $60 billion, or about 3 percent of total annual health care spending, is drained from the Medicaid, Medicare, and other government-sponsored health care programs each year thanks to fraud, waste, and abuse.
In testimony before a Senate committee hearing last May, Malcolm Sparrow, a professor at Harvard’s John F. Kennedy School of Government, asserted that the “units of measure for losses due to health care fraud and abuse in this country are hundreds of billions of dollars per year. We just don’t know the first digit. It might be as low as one hundred billion. More likely two or three. Possibly four or five. But whatever that first digit is, it has 11 zeroes after it,” he said.
Sparrow, who is considered to be a leading expert on the topic, emphasized that reining in such losses “warrants a great deal of serious attention.” He advised committee members that defeating fraud would take drastic measures, including the use of “surveillance, arrest, or dawn raids.”
With the potential for savings and recoupment so great, pressure has also come from the executive branch in the form of promises. During a joint session of Congress last year, President Obama pledged to fight health care fraud and alluded to using the recoupments to cover the cost of health care reform.

Heightened Activity

Federal agencies are also working together in new ways to ramp up their data sharing and enforcement activities in an effort to better detect and identify fraudulent providers. HHS, for example, recently joined forces with the Office of the U.S. Attorney General last May to launch the Health Care Fraud Prevention and Enforcement Action Team, or HEAT, which deploys “top-level” DOJ and HHS officials to both prevent fraud and enforce current anti-fraud laws around the country.
HEAT has made some headway in its early stages, according to Tony West, assistant U.S. attorney general, who testified last October before the Senate Judiciary Committee.
“We are actively analyzing data in unprecedented coordination between our two agencies, and in as real time as possible, to identify fraud ‘hot spots’ and expand Strike Force operations to those areas where there is the most need,” West said.
Already under way is enhanced training of prosecutors and investigators on enforcement measures; increased compliance training for providers to prevent honest mistakes and help stop potential fraud before it happens; and efforts to educate the public about ways they can assist DOJ in detecting, preventing, and prosecuting fraud.
Click HERE to learn about how the various agencies have joined forces to fight fraud in Medicare and Medicaid.
OIG investigators are also implementing “state-of-the-art” technology to identify and analyze potential fraud with unprecedented speed and efficiency, said West.
According to OIG, the use of this technology has enabled federal law enforcement officials to obtain “electronic evidence” that previously took months to analyze using traditional investigative tools.

Consider A Compliance Program

Industry advocates like the American Health Care Association (AHCA) have kept track of this flurry of anti-fraud efforts over the past few years and concluded that its members would benefit from more guidance about how to implement a CCP. As a result, the organization launched a series of Webinars aimed at guiding providers through the process of planning, implementing, and maintaining a compliance program.
At least one dozen presentations on AHCA’s Web site illustrate the importance of adopting a CCP and drive home the idea that planning and developing one is key to its effectiveness. CCPs need to be well-implemented and monitored on a regular basis, and they must be embraced by the company’s leadership, according to Ken Burgess, a health care attorney with Poyner Spruill in Raleigh, N.C., who worked closely with AHCA to develop the Webinars.
Effective compliance programs take the commitment of the company owners, managers, and board of directors as well, he says. “Whether your company and facilities are owned by a single individual, a partnership, or corporate shareholders, and whether your managing body is small or large, those folks have to dedicate sufficient resources to the program on a daily basis.”
Burgess likens the implementation of a CCP to “designing, building, maintaining, and repairing a house.”
“The construction of any house begins with a planning and design process,” Burgess says. “So does an
effective compliance program.”
A CCP should be viewed as two separate components, he adds: the physical structure—the elements that govern the operation of a CCP—and the furniture and appliances inside the house—the substantive laws and policies that ensure compliance.

Mitigating Factors

Chris Myers, a partner at Holland & Knight and editor of “The Corporate Compliance Answer Book 2009,” says one of the first things a nursing facility operator should do when creating a CCP is to review the OIG guidance documents that identify risk areas for long term care providers. “This guidance identifies risk areas that should be addressed and walks through the elements of an effective compliance program,” says Myers.
Another important document to review is published by the U.S. Sentencing Commission. It was originally designed for use in criminal sentencing, but is now used by organizations hoping to avoid being investigated for, or convicted of, criminal activity, according to Myers.
“[It] is beneficial to providers because it provides guidelines on factors that may be considered either mitigating or exacerbating in determining the appropriate sentence,” he says. The manual contains a series of calculations, based on the seriousness of an offense, “and the most favorable mitigating factor [in sentencing] is whether or not you have an effective corporate compliance program,” says Myers. “It uses a detailed outline of what an effective compliance program should look like.”
Another important element of a CCP, says Myers, is that it be risk based. “It should be designed and implemented to address the particular legal and regulatory compliance risks that affect a business,” he says. “And so for nursing facilities, since Medicare billing regulations are high up on the list, a compliance program needs to address those things.”
Myers says that most well-run compliance programs begin with a risk assessment whereby the facility identifies the legal and regulatory provisions that affect the business and how it is conducted.
“Providers also should look at their relationships with various government agencies, whether it’s Medicaid or Medicare or private insurance,” he says. “You need to list the various regulations that affect your business and determine if you have or need to develop special policies and procedures that will help you comply with that particular set of regulations.”
Once a facility has a written set of policies and procedures, the staff must be trained, Myers adds. “They need to know what they’re supposed to do, how to comply with the policies, and where to go for questions,” he says.

A Word About The False Claims Act

An effective, well-implemented, and well-run compliance program is the best defense against one of the most powerful tools the government has to fight fraud—the civil FCA.
The statute imposes liability on persons who knowingly present—or cause to be presented—false or fraudulent claims to the United States, knowingly make false records or statements to get false or fraudulent claims paid, or conspire to defraud the government by getting a false or fraudulent claim paid. It also provides for treble damages plus penalties of $5,500 to $11,000 for each false claim.
It has been a very potent weapon in the government’s arsenal against fraud, Myers stresses, and it presents some “extraordinary challenges to long term care facilities because any disgruntled employee who believes that there has been fraud in billing or any other related areas can bring one of these cases,” he says.
The bad news is that the FCA just became more powerful, thanks to the passage of the Federal Enforcement and Recovery Act last year.
Myers advises providers to be “very concerned” about the amendment. First, it expands the presentment of claims component to cover claims submitted to government contractors or grantees, as long as they are paid with federal money. Since Medicaid is a joint federal and state program, claims presented to Medicaid may now be subject to the FCA.
Click HERE for more information about the government's various fraud, waste, and abuse prevention and prosecution strategies under the Medicare and Medicaid programs.

Other Changes

Another major change to the FCA pertains to how DOJ shares information with a qui tam whistleblower’s counsel within the context of an FCA case.
“It used to be that DOJ would hold things close to the vest,” Myers says. “Now they are expressly permitted to share information with the [whistleblower’s] counsel and with state and local health care agencies that want to get involved.”
Yet another FCA amendment worth noting is something called “reverse false claims.” This means that if a nursing facility discovers a billing inaccuracy that results in receiving an overpayment, even if the mistake that led to the overpayment was completely innocent, the facility must return the money or be subject to an FCA suit.
“Even if you didn’t do anything fraudulent, it entitles the government to bring a reverse false claim suit,”
Myers says. “It makes it easier for whistleblowers to proceed but makes it more difficult to defend against these kinds of claims.”
The qui tam bar is “all excited about these changes because they think it will increase liability and increase their opportunities to bring cases,” Myers says.
Also related to the FCA is a growing trend among the various agencies to pay attention to quality-of-care issues, Myers says. “Nursing facilities in particular are vulnerable to these kinds of claims. For example, if a nursing home bills for services and the residents receive poor quality of care, DOJ now uses that situation to assert false claim liability.”
Abell’s case was among the first quality-of-care FCA suits to be brought against a small nursing facility.
Additional FCA amendments pertaining to long term care providers are as follows:
  • Allows for government complaints, for the purposes of the statute of limitations, to “relate back” to the filing date of the complaint originally made by the whistleblower;
  • Expands whistleblower protections to include contractors and agents, in addition to employees; and Allows for designees of the attorney general to issue a civil investigative demand, which is similar to a subpeona.
States are also collaborating more and more often with federal entities to bring suits against nursing facilities
and other health care providers, says Myers.
The Deficit Reduction Act of 2005 encourages states to enact an FCA law that is as stringent as the federal one. Once a state has done so, it can retain an extra 10 percent of recovered Medicaid funds. As a result, 32 states and the District of Columbia have enacted false claims acts.
The government’s many and varied efforts to step up health care fraud-fighting capabilities must not be taken lightly by long term care providers, both Small and Myers stress. “With nursing homes, you have an industry that is so heavily regulated and is now facing another tidal wave of regulation,” says Small.
“And part of the problem more globally here is that with everyone talking about health care reform and talking about how much money will be saved by fighting fraud against Medicare and Medicaid, it puts an enormous amount of pressure on the agencies to develop the kinds of programs we’re talking about,” he says.
“People have to understand that this is not going away; the government is going to put a lot of time and money and energy into these programs because of a commitment at the highest levels, and it’s been promised at the highest levels that they would yield extraordinary results.”
For more information: Go to AHCA’s compliance website at:  www.ahcancal.org/facility_operations/complianceprogram/pages
Meg LaPorte is Provider's managing editor.