Investigation, enforcement: recent developments.

This is the first of a two-part article. Part two will appear in next month's issue.

THE PAST YEAR SAW AT LEAST THREE MAJOR DEVELOPMENTS OF which long term care providers should be aware in 2000 and beyond. They are: a shift in the focus and intensity of its enforcement activities, new and revised regulatory exceptions to the federal anti-kickback prohibition, and published guidance on how to construct a nursing facility compliance program. This article will focus on the latest investigation and enforcement initiatives.

Enforcement agencies recovered more money from the health care industry in settlements and fines in the first two months of 2000--more than $660 million, at least $175 million from the long term care industry--than it did in all of 1999. What's more, President Clinton's proposed budget contains almost $16 million in new funding for oversight of nursing homes. This means more surveyors, investigators, and prosecutors.

Meanwhile, the federal government has several new legislative, regulatory, and administrative tools in its enforcement arsenal. One has been provided by the Ticket to Work and Work Incentives Improvement Act of 1999 (TWWIIA), which authorizes state Medicaid Fraud Control Units (MFCUs) to also investigate nursing homes for Medicare fraud. Although MFCUs must proceed "upon the approval of the inspector general of the relevant federal agency" and can only investigate fraud that "is primarily related to the state plan."

The assisted living industry, which has considered itself less susceptible to enforcement initiatives because its facilities are often not Medicare-or Medicaid-certified, are also subject to these new tools. TWWIIA authorizes MFCUs to review complaints of abuse or neglect relating to board-and-care facilities, including non-Medicaid ones, and to "[act] upon such complaints under the criminal laws of the State" or "[refer] such complaints to other State agencies for action." It is likely that local legislatures will pass laws enabling MFCUs to use this new tool.

The Office of Inspector General (OIG) of the Department of Health and Human Services also has some new enforcement tools at its disposal. It can assess civil monetary penalties for a greater number of violations and exclude providers from Medicare if they conduct business with excluded individuals or their immediate family members, or engage in certain other illegal activities.

The prosecution of providers under the federal False Claims Act--and in particular charges that poor care billed to the government constitutes a false claim--has proven to be one of the government's more powerful enforcement tools. A significant number of such recoveries made over the past year involved cases in which FCA violations were alleged by qui tam relators, or whistleblowers, on the government's behalf. The U.S. Supreme Court has agreed to review the constitutionality of private persons prosecuting qui tam suits when the United States does not intervene, and providers eagerly await its decision (see "Whistleblowers' wings clipped by Fifth Circuit," CLTC, January 2000).

Published this past fall, the OIG's Work Plan for Fiscal Year 2000 outlines some of the investigative and enforcement initiatives that the agency plans to use to root out fraud and abuse in long term care transactions. Providers should review the document, available at [less than]www.hhs.gov/oig[greater than], to determine whether their current operations and future business plans are consistent with federal health care program rules and regulations that will be subject to government scrutiny.

The OIG has published a new fraud alert on space leases in physician offices applicable to arrangements where outside suppliers lease space and sometimes related equipment and services from referring physicians.

The following are some of the plan's major initiatives:

* Skilled nursing facility coverage after unnecessary hospital stays. The OIG will study whether the Medicare program wrongfully pays for skilled nursing care in situations where the qualifying hospital stay is determined not to be medically necessary.

* Nursing home resident assessments. The study will review the processes used to perform assessments, the extent to which they are used to develop plans of care, and their effect on payment accuracy.

* Role of the medical director, The OIG study will review how nursing homes have interpreted and implemented the role of the nursing home medical director. The agency will also review how the utilization of nursing home medical directors affects quality of care.

* Quality assessment and assurance committees. Nursing facilities are required to maintain a quality assessment and assurance committee comprised of the DON, a physician, and at least three staff members. The OIG will examine the role and effectiveness of these committees in assuring quality of care. Although HCFA currently requires surveyors to determine whether a facility has a quality assessment assurance committee and whether that committee has the capacity to identify, respond to, and evaluate quality of care issues, the surveyors are not required to evaluate the effectiveness of the committees.

* Nurse aide training. Current Medicare laws require that nurse aides complete training and competency evaluation programs within four months of employment at a nursing facility unless the individual has otherwise been deemed competent. The QIG will review whether these requirements are being followed.

* Family members' take on nursing home care. The OIG believes that family members who visit nursing home residents have a valuable perspective on the quality of care that is being delivered. It will therefore conduct mall surveys soliciting the opinions of Medicare and Medicaid beneficiaries' family members on the quality of care provided to beneficiaries in nursing homes.

* Access to skilled nursing facilily care. The OIG is concerned that under the prospective payment system (PPS), some Medicare beneficiaries may be unable to find a skilled nursing facility (SNF) placement because the anticipated cost of their care is potentially too expensive. The agency is studying the effect that the PPS is having on access to SNF services, and has already published several reports on its findings.

* Routine physician visits. An OIG analysis of five states revealed that, in 1998, physicians billed for more nursing home services than they could possibly have performed in a normal workday and that it cost Medicare more than $120 million for those visits. The agency will study whether there is a need to establish procedural controls over Medicare payments for routine visits by physicians.

* Therapy services. A sample review of therapy services in one state revealed significant evidence of medically unnecessary services and other problematic issues related to the provision of therapy. The OIG will review the medical necessity of physical and occupational therapy services provided to residents.

* Ancillary medical supplies. The OIG will investigate whether SNFs have misclassified unallowable routine costs and claimed them as ancillary medical supplies. If it determines that routine costs were misclassified as ancillary, the agency will seek to quantify the financial impact of such errors and possibly recommend procedural changes to eliminate or reduce future misclassification errors.

Howard L. Sollins is an attorney with the Baltimore and Washington D.C. firm of Ober Kaler Grimes & Shriver. Nathaniel Hartland, a paralegal at the firm assisted in the preparation of this article.