In this article published by the Wall Street Journal, Michael J.Widmer says that despite the "false claims of ideologues, academics, and politicians," Massachusetts' health-reform law has been remarkably successful. Widmer says the number of individuals with health-insurance coverage in Massachusetts has increased by more than 400,000 and the incremental cost to taxpayers has been modest and consistent with projections.
The Department of Justice and Congress are working together to beef up the government's ability to fight healthcare fraud. Assistant Attorney General Tony West told the Senate Judiciary Committee the DOJ "cannot combat this fraud alone." That same day, Sen. Ted Kaufman (D-DL) introduced the Health Care Fraud Enforcement Act, which includes changing sentencing guidelines for criminals convicted of healthcare fraud, making punishments "commensurate with costs" of the fraud, and increasing whistleblower payments.
President Obama recently promised that his plans for healthcare reform would include cracking down on fraud. Even before such plans were announced, a recent HealthLeaders Media article noted that state Medicaid Fraud Control Units recovered $1.3 billion in court-ordered restitution, fines, civil settlements, and penalties for fiscal year 2008.
Another provision of the new regulations for federal contractors requires most contractors, within 90 days after contract award, to have an "ongoing" business ethics awareness and compliance program that includes specific training; and to establish an "Internal Control System" with standards and procedures to enable timely discovery of "improper conduct."
If your organization holds a federal healthcare contract, recent changes in federal regulations have tightened up ethics requirements. For example, a government contractor with a healthcare contract over $5 million is now required, within 30 days after contract award, to have a written Code of Business Ethics and Conduct, and to make a copy of this Code available to each employee engaged in performance of the contract. In addition, even if you don't actually hold a contract, per se, but simply bill for Medicaid and Medicare as a participating provider, all signs point to increased scrutiny of company ethics plans and practices.
The price for relaxed vigilance can be steep. The government's arsenal in combating false billings and other mischarging includes both the criminal and civil False Claims Acts, the False Statements Act, and the Program Fraud Civil Remedies Act, among others. The recent settlement by Pfizer of a $2.3 billion dollar lawsuit is just the latest example of the danger posed by "whistleblower" suits to healthcare companies who let down their guard when it comes to ethics.
The best defense against a whistleblower suit or government inquiry is, of course, a strong offense. Strong internal controls and layers of auditing and oversight make it much more likely that a potential problem can be avoided or caught early enough to take corrective action and avoid major repercussions. Moreover, a company with a solid ethics program that includes clear policies, controls, and training will be in a much stronger position in case an allegation of financial wrongdoing is asserted; the existence and adequacy of a company's ethics program and training are among the first things that government investigators review when allegations of ethical improprieties arise.
These programs and procedures are the first step in trying to avoid a situation in which your company is accused of false billings or other false claims. If, however, such a charge is made, either in a call to a company fraud hotline or by the U.S. Department of Justice, the vast majority of companies elect to launch an intensive internal investigation. Especially if events have reached the point where a federal prosecutor or investigator is involved, a credible, thorough internal investigation is a key part of a company's cooperation with the government to determine the veracity of an allegation, which employees knew of or engaged in the alleged conduct, and the extent of any damages incurred by the government.
Because such investigations are costly, as is the requisite follow-up and negotiations with the government, companies are advised to invest the time and resources to reduce the chance of an allegation arising in the first place. While high profile cases like the recent Pfizer settlement and the convictions last year that emerged following the bankruptcy of National Century Financial Enterprises came about as a result of intentionally fraudulent activities, the healthcare industry is characterized by such complex billing protocols that an organization can easily run afoul of legal requirements inadvertently.
The current economic slowdown may be a good time to take stock of your current ethics programs and procedures. In addition to the economic slowdown, we are also in the "lull before the storm" of healthcare reform. While we clearly don't know exactly what those reforms will be as of today, whatever reforms are eventually enacted will undoubtedly rely heavily on achieving cost savings from administrative efficiencies as well as cracking down aggressively on fraud and abuse.
While the focus will remain on organizations that intentionally and knowingly perpetrate fraudulent activities, the financial pressure to pay for expanded benefits will likely result in increased attention on all providers. So if you don't have an existing Code of Business Ethics at the present time, it's probably time to begin thinking about it.
Scott Honiberg is president and Jeff Weinstein is of counsel at Potomac Health Associates, Inc. They can be reached at S.Honiberg@PHAInc.comor J.Weinstein@PHAInc.com, respectively.For information on how you can contribute to HealthLeaders Media online, please read ourEditorial Guidelines.
When legislation occurs anyone on the receiving end of it can usually anticipate money going out, not coming in. And at first blush it seemed that the Red Flags Rule would be no different. But there's a sunny side to complying with this Rule, which was supposed to take effect Nov. 1 and was delayed until June 1: There's minimal cost to implementing this rule and the return on this investment could reduce your bad debt.
Nationally hospitals average 5% bad debt or charity, but in these economic times that number is likely growing. One reason that number may be on the upswing is medical identity theft. The Federal Trade Commission estimates that nearly 5% of the nine million Americans who are victims of identity theft will experience some form of medical identity theft, according to their 2007 survey.
That's where the Red Flags Rule comes in. The Rule requires certain businesses and organizations, including hospitals and other healthcare providers, to develop a written program to spot the warning signs — or "red flags" — of identity theft.
"Healthcare providers must develop and implement programs to detect, prevent, and mitigate identity theft and medical fraud," says Randy Berry, CPA, vice president of Columbus Healthcare & Safety Consultant, LLC and author of Red Flag Rule Compliance for Health Care Providers.
First the cost of implementing the Red Flag Rules is generally well under $1,000 not $10,000 if training in-house, and depending on the size of the facility it may be in the hundreds, Berry says. That's chump change when you compare it to the hundreds of thousands of dollars it took for most hospitals to comply with HIPAA. Here's a quick look at the potential costs:
Training — If you delegate an in-house staff member to train your team, you'll lose a few hours of their time but won't add to the overall cost. Alternatively, you can hire a consultant to train your team and that will cost your facility a few thousand dollars.
Time — There is time lost for your staff to train, estimate 45 minutes or less for this mandatory training to take place.
Paper — First you need to write the policy and procedure (and get your board to sign off on it) then you'll need to make it available to your staff via hard or electronic copy.
Fines — If you fail to implement the Red Flags Rule you are subject to fines. There is a Federal fine of $2,500 per occurrence of identity theft, and in many states there is an additional $1,000 per occurrence. Also, be warned that while the FTC may not have the staff to verify compliance with this regulation at all facilities, there's speculation that the federal government my tack this on with other audits.
Bad Press — This is where the public relations team has an opportunity. Failing to comply with this regulation is a PR nightmare. Bad press about identity theft at a hospital doesn't endear your facility to the community. However, the reverse is also true and a good PR team should consider promoting your efforts to prevent identity theft as a huge benefit to the community.
Second, the two regulations target different areas of patient information. The Red Flags Rule is designed to protect the patients billing and personal information (e.g., social security number and health insurance identification) while the HIPAA regulation focuses on the privacy and security of patient medical records (e.g., diagnosis information and medical history).
But back to your bottom line, where the Red Flags Rule may help hospitals is with medical identity theft and fraud prevention. Medical identity theft is slightly different than Medicare fraud, though they do intertwine. One definition of medical identity theft is when a patient's Medicare/Medicaid insurance information is stolen and another individual uses this information for their treatment. When the victim of the theft goes to use their benefits, they find them exhausted.
Additionally the patient's medical records may be affected, as they may now contain information pertaining to the identity thief. This could result in incorrect treatment or diagnose. Medicare fraud can cover anything from falsifying bills to creating fake patients. For a more comprehensive look at the distinctions in these categories, read "Medical Identity Theft: The Information Crime that Can Kill You".
Aside from the cost both these crimes cause to your patients, the hospital is also left in the financial-lurch. When the insurance company catches the claim by the identity thief, they can refuse to reimburse the hospital. The hospital loses all the dollars associated with that visit and that increases bad debt. If taken seriously and implemented well, the Red Flags Rule should help healthcare organizations screen out more of these fraudulent activities.
Consider this; Berry recounts a story of one facility he worked with in which a patient presented in need of a gall bladder operation. Unbeknownst to the facility, the patient provided them with her sister's Medicare card to have the procedure done. In this instance, an astute physician happened to recognize the name of the patient as an individual that he had already operated on for the same procedure. So, the facility was able to catch the fraud prior to performing the surgery. However, had the physician not recognized the name, the facility would've been left footing the bill when Medicare rejected the claim. The physician saved the day by luck, but with the Red Flags Rule the patient may have been screened before things made it that far.
"It's critical if you are billing through Medicare and Medicaid that you are doing your due diligence," says Berry. Perhaps the simplest way of heading off potential losses (of identity and profits) is to ask for a driver's license when the patient provides their insurance card — and photocopy both cards for your files.
"When an identity has been stolen and that individual has obtained medical care that comes at a cost to the patient and the healthcare provider. Asking for a driver's license is an easy thing to do," Berry adds.
The areas to concentrate your Red Flag Rule training on are the billing and admissions departments. Seemingly simple information requests may actually be the ones that cause problems, such as a change of address request. Hospital bills and insurance information are diverted to the fraudulent patient, leaving the victim of identity theft unaware that anything is taking place. When a change is made, facilities could also send a letter to the previous address announcing the change. A few minor tweaks in the regular processes can add up to cost savings over time. Additionally, after completing the training, staying in compliance with the rules should only add a few extra minutes of per day to your team's plate.
Unfortunately there are no hard numbers as to how much financial loss this Rule may prevent for hospitals, but if you put the Red Flags Rule into action and your hospital decreases the number of rejected and unpaid claims, you will most assuredly see a dip in your bad debt. Don't wait for the legislation to formally take effect before you take action; your hospital only stands to gain ground (and money) by implementing these preventative measures as soon as possible.
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Healthcare unions aren't initiating as many organizing elections now as they have in recent years, but a new study shows that when organized labor picks a target, they usually win.
The latest Semi-Annual Labor Activity in Health Care Report found that unions won 75% of representation elections held in healthcare in the first six months of 2009.
"That tells me the unions are getting more efficient and adept at organizing. They are laying the groundwork and making sure they have a winner," says James G. Trivisonno, president of IRI Consultants, which compiled the report for the American Society for Healthcare Human Resources Administration.
"Every day the union has people coming to their door saying they are upset about something at their employer. The union has to separate the wheat from the chaff," he says. "It's an investment of between $2,000 and $3,000 per worker to organize, so they look for vulnerabilities and they look for emotional issues. Oftentimes pay and benefits don't generate that emotion. It's things like management treatment, communication, engagement, some kind of triggering incident. Sometimes it's race, or a safety and security beef. All of that is full of emotion and they are tough to deal with once you get that monkey on your back."
Trivisonno's report finds that 10 states accounted for 84% of all organizing petition drives in the first six months of the year, with California, New York, Massachusetts, and Michigan in the vanguard, and all of those states have large concentrations of healthcare employees.
"Traditionally right-to-work states have had less to be worried about," he says. "Though in the past Texas and Florida had little to be worried about but if you look at the last few years they have become targets."
Unions' success is not relegated only to the healthcare sector. The prolonged and deep recession is being blamed—or credited—with union growth across a broad swath of industrial sectors, according to the IRI report.
Trivisonno notes that organized labor in all industrial sectors won 65% of their organizing elections in the first six months of 2009.
"Non-healthcare union elections typically hover at around 50% and now they're at 65%," Trivisonno says. "In fact, last year, as a percentage of the total workforce, union density increased. They've actually added net numbers. That hasn't happened since the 1950s."
Now, as the nation appears, at least on paper, to be emerging from the deepest recession since the 1930s, Trivisonno says history shows that unions are poised to make even greater gains.
"The thing that we have seen in recessions is that people are willing to bite the bullet on the way down, accept benefits changes, etc., but once the economy bottoms out and starts coming back employees say, 'I was with you on the way down. Now I want mine back,'" Trivisonno says.
"The problem is that most organizations will wait as they are coming back on the other side for sustained evidence of growth before they will provide pay increases or add benefits. When the economy bottoms out, and the recession ends is when the greatest amount of union organizing occurs."
Remember that these successful organizing elections have occurred before the labor-friendly Obama Administration and a Democratic Congress have moved on the Employee Free Choice Act. Trivisonno says that bill, regarded by many to be the most important pro-labor legislation in 50 years, will greatly enhance union membership, and is further evidence that the pendulum is swinging labor's way.
"It makes you wonder, if they win 75% of the elections, why do they need EFCA?" he says.
There is no one-size-fits-all reason why one hospital is targeted by unions, and another hospital isn't.
"There are various levels of vulnerability. I don't know there is a single vulnerability because there is a whole host of ways unions can approach an employer and leverage those vulnerabilities," Trivisonno says. "Generally, when there is a well-run organization and the culture is enlightened and more fully developed with communication and engagement with workers, those create a firewall that hospitals can build upon."
(The Semi-Annual Labor Activity in Health Care Report is available for ASHRRA members, or can be purchased at www.ashhra.org.)
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John Rivers, president and CEO of the Arizona Hospital and Healthcare Association, has announced that he will retire on Jan. 13, 2011, his 65th birthday. Rivers has led the hospital advocacy organization since 1986. The association's board of directors has appointed a committee that will conduct the search for a new CEO.
Florida Gov. Charlie Crist has appointed Thomas W. Arnold as secretary of the Agency for Health Care Administration, which oversees the state's $18 billion Medicaid program. Arnold, 60, who had been serving as AHCA's chief of staff since 2008, replaces Holly Benson, who resigned. Arnold has spent his career in public health administration. He was the state Medicaid director with AHCA from 2004 to 2007. He also served in the Florida Department of Health as deputy state health officer in 2008, deputy secretary from 2003 to 2004 and director of administration from 1998 to 2003.
John Tooker, MD, has announced that he will step down as executive vice president/CEO of the American College of Physicians, the nation's largest medical specialty organization and the second-largest physician group. ACP's Board of Regents will form a search committee to select a replacement for Tooker, a process that is anticipated to take approximately six to 12 months. After serving as deputy executive vice president and COO of the organization since 1995, Tooker became EVP and CEO on July 1, 2002. During his tenure, ACP's membership increased by more than 12%.
Healthcare investment bank Cain Brothers & Company has named Robert J. Fraiman, Jr., 51, president/CEO, effective Jan. 1, 2010. The bank's founder, James E. Cain, will continue on the firm's executive committee and remain engaged with clients and in business outreach. Founder Dan Cain will remain chairman of the board and will also remain engaged with clients. The bank also named Jill Frew as managing director.
Tony Armada, president/CEO of Henry Ford Hospital and Health Network, is resigning Nov. 20 to become president of Advocate Lutheran General Hospital in Park Ridge, IL. Advocate Lutheran General Hospital, a 492-bed hospital, is part of 11-hospital Advocate Health Care. At Henry Ford, Armada oversaw an 802-bed hospital and a network of 27 medical centers.
