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Essay: Hospital reporting – accurate, quality data

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Introduction and Background of the Case: The Patient Protection and Affordable Care Act of 2010 established a hospital value-based purchasing program under which value-based incentive payments or penalties are made in a fiscal year to hospitals that exceed or fall below the performance standards set forth by the program. This financial incentive or penalty is up to 1.5% of the annual Medicare funding received to that hospital (ACA, 2010). This program has been underway since FY2013 for most hospitals. The calculation of this payment is comprised of four areas: Patient Experience, Outcomes, Efficiency, and Clinical Process of Care. The quality measure reporting falls under the Clinical Process of care and constitutes 20% of the value based purchasing calculation. Reporting of these measures is a condition of participation for Medicare. Under this provision this data is obtained through a manual chart review often done by nurses or an individual with a clinical background. Most often this information is provided to a third party vendor who transmits the data to Quality Improvement Organization (QIO) then to The Centers for Medicare and Medicaid (CMS). The interpretation of the data requires some judgment on how to answer the individual variables which could ultimately result in intentional or unintentional false reporting. If a not-for- profit acute care hospital in Harris County, Houston Texas were to submit data to CMS for the value based purchasing quality measures that was not true and the hospital was reimbursed based on performance from these measures, would this hospital be subject to penalty under the False Claims Act?
False Claims Act and Fraud Enforcement and Recovery Act of 2009
The False Claims Act, 31 U.S.C. ?? 3729 provides civil and criminal penalties for submitting false records or claims to the government for payment or approval. The First Circuit has explained, the Act ‘attaches liability, not to underlying fraudulent activity or to the government’s wrongful payment, but to the ‘claim for payment (Rivera, 55 F.3d at 709). A claim is considered false or fraudulent if the contractor expressly certifies compliance with a contract term, statute, or regulation despite a breach or violation (U.S.C. ?? 3729(a)(1)(B) (Supp. III 2009). The Fraud Enforcement and Recovery Act of 2009 further clarified the original intent of the False Claims Act (FCA). Under Section 4 (A) (B), (G) stated that anyone who ‘knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval; knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim; knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government’
A ‘claim’ was defined as ‘any request or demand, whether under a contract or otherwise, for money or property and whether or not the United States has title to the money or property, that is presented to an officer, employee, or agent of the United States; or contractor acting on their behalf.’
In practice, the FCA has been used for fighting healthcare fraud in various methods including billing for procedures not performed, billing for non-reimbursable costs, and ‘upcoding’ to produce a higher reimbursement rate. According to Stimson (2008), prosecutors are now using this act to enforce compliance with federal healthcare quality standards. This has been stretched to the implied false certification doctrine.
Implied False Certification and Quality
Under the implied false certification, the plaintiff is vouching that its performance has complied with certain statutes or regulations not identified in the claim itself. Although, case law on the false certification theory is not clear, the following framework, identified by Brennan and Paddock (2008) can be used to apply this to quality of care:
‘ Providers certify compliance with statutes or regulation that conformance is a condition of participation. The Medicare conditions do not state compliance with the conditions is a condition of payment.
‘ Express certification does not explicitly require certification of compliance with a particular statute, but rather requires the claimant to sweepingly certify its compliance with ‘all applicable laws and regulations,’ or words to that effect, providers certify their compliance only to statutes or regulations material to the government’s decision to pay.
‘ Substandard care may be so extreme as to lead to factually false claims, or claims for worthless services.
The theory of implied false certification is based on the claim for reimbursement is vouching that performance has complied with certain statutes or regulations not identified in the claim itself (Brennan and Paddock, 2008).
This theory has been advanced outside of healthcare in the Ab Tech construction v. United States where the court held that the defendant submission of payment vouchers ‘impliedly certified on going adherence to the Small Business Administration program requirements. Although in the case, there was no mention that the vouchers were a condition of payment, but that the claimant was required to execute a separate agreement to abide by certain minority business requirements. By contracting management control of its business to a
non-minority entity, the defendant failed to meet these requirements. The court found that Ab-Tech’s active concealment of this disqualifying fact was ‘vital’ to the integrity of the program and its decision for payment. Failing to qualify as a minority business, lying about it, and seeking
payment as if the claimant was so qualified comprised ‘the essence of a false claim’ (Ab-Tech v. United States, 1994).
The courts are supporting healthcare in cases such as Mikes v. Straus, where a claim for payment is legally false when ‘only where a party certifies compliance with a statute or regulation as a condition to governmental payment’ Stimson (2008). In this case the plaintiff also cited 42 U.S.C. ?? 1320c-5(a) which provides a section on ‘meets professionally recognized standards of health care.’ The standard involved a physician who alleged his former employer was violating Medicare regulations by failing to calibrate medical devices, then violated the FCA by submitting reimbursement claims using those devices (Mikes v. Straus, 2001). Several courts have held or suggested that ‘a false certification of compliance with a statute or regulation cannot serve as the basis for a qui tam action under the FCA unless payment is conditioned on that certification’ (Klass and Holt, 2011).
The quality indicators that are utilized in value based purchasing have been established and tested as the ‘standard of care’ and are required as a condition of participation in the program as well as a reimbursement mechanism. Stimson (2008) cites other cases similar to Mikes such as ‘Landers, 2007 WL 4380006, at *3-*5, United States ex rel. Conner v. Salina Reg’l Health Ctr., Inc., 459 F. Supp. 2d 1081, 1086-87 (D. Kan. 2006); Sweeney v. ManorCare Health Servs., Inc., Civ. Action No. C03-5320RJB, 2005 WL 4030950, at *4-*5 (W.D.Wash. Mar. 4, 2005); United States ex rel. Swan v. Covenant Care, Inc., 279 F. Supp. 2d 1212, 1221-22 (E.D. Cal. 2002); United States ex rel. Swafford v. Borgess Med. Ctr., 98 F. Supp. 2d 822, 827-28 (W.D. Mich. 2000), aff’d, 24 F. App’x 491 (6th Cir. 2001)’ that follow this trend. Reporting health care quality data may be a condition of payment under Mikes v. Straus. This is because regulations authorize private-sector QIO’s to review the services furnished by physicians and hospitals for medical necessity and quality. The QIO for Texas is Texas Medical Foundation. Reporting quality measures occurs though a process utilizing QNet that transmits the information to the QIO on behalf of the hospital. The QIO provides a feedback report to the institution and allows 30 calendar days to attest to the data. During this time a hospital must review the data transmitted and determine if there are any changes or updates in the files. If there are no changes, this information is transmitted to CMS. 42 C.F.R. ?? 476.78(b) directs providers submitting Medicare claims to furnish health care quality data to QIOs:
‘ Health care providers that submit Medicare claims must cooperate in the assumption and conduct of QIO.
‘ Provide patient care data and other pertinent data to the QIO at the time the QIO is collecting review to make the determinations if the requirements have been met
The language of this provision might support a FCA action for impliedly falsely certifying the accuracy of quality data.
While the act in question would occur in Texas, there has not been much evidence from the state level supporting quality reporting and the application of the FCA. However, there is precedence of use of the FCA in quality reporting in other states. The Office of the U.S. Attorney for the Eastern District of Pennsylvania, which has settled FCA quality investigations with at least fifteen nursing homes and one hospital (Brennan and Paddock, 2008). In addition, FCA healthcare quality matters have been initiated in eight states including: Connecticut, Delaware, Florida, Georgia, Illinois, Louisiana, Michigan, and Missouri. According to Brennan and Paddock (2008) this has resulted in have netted at least $16.6 million in restitution and settlements.
Connection of Quality Reporting and Compliance
From an organizational structure perspective, most hospitals have created a Compliance Department that oversees federal regulation and accreditation. The role of compliance programs is to review documentation to assess whether claims are prepared and submitted according to the highest standards and in compliance with applicable laws, rules, guidelines, and institutional policies. These laws are focused around addressing health care fraud, waste, and abuse, including the FCA. Historically, there has been little reason for compliance and revenue to interact with risk and quality (Schindler, 2008). However, because of the union of quality and reimbursement, the use of the FCA has necessitated the involvement of compliance in partnership with quality reporting. Quality data has now become a focus of critical attention of compliance due to these new regulations. Established policies have been created and enforced to prevent fraud issues, such as the ones at MD Anderson Cancer Center titled ‘Fraud, Waste and Abuse Policy’. This policy has a ‘zero tolerance’ toward any illegal/unethical activity or knowing, intentional, or willing noncompliance. This policy ensures that workforce members aware that to prevent fraud, waste, and abuse of federal and state funds, both federal and the State of Texas false claims laws (Tex. Gov’t. Code ?? 554.002) provide for stiff civil, criminal, and administrative penalties for violations of such laws. The policy goes beyond the federal law and also discusses Texas law which includes the penalties for fraud, abuse, and waste related to the Medicaid program. Therefore, reporting undocumented or unsubstantiated quality data for federal quality measures could potentially fall under both of these laws and may involve multiple fines depending upon the funding source of the individual in question. In addition, it is a violation of institutional policy and could result in termination as well as full prosecution by the law.
Conclusion and Policy Applications
It is uncertain at this point if the FCA would directly apply to quality reporting for value based purchasing. However there is precedence for this from the cases reviewed. Because the law is relatively new, this theory has not been tested.
Tying payment to quality data reported can dramatically increase the incentive for hospitals to falsely report data. This incentive is to misrepresent data to obtain a higher reimbursement or to avoid the penalties for lower performance. This can be compared to some of the corporate scandals in early 2000, when companies reported higher than actual earnings because the compensation paid to management was tied directly to what was reported (Jennings, 2006).
According to Schindler (2009), value based purchasing could lead to the reinvigoration of the implied certification theory. This is because quality data serves two functions under value based purchasing. First is the traditional role of assuring that a facility meets the conditions of participation. Second, it becomes a ‘deciding factor’ in the Medicare reimbursement received. ‘When reimbursement is based on the level of quality, it changes to the ‘implied’ statement: ‘The government should pay us ‘X’ dollars because we achieved the following standards’ (Schindler, 2009).
It is speculated that value based purchasing will give the government a reason to constantly expand the list of quality measures it considers important for the purpose of establishing reimbursement (Schindler, 2009). This has been evidenced by the incremental measures added and modified over the last 10 years. Reporting began in 2001 with a set of three groups of measures (heart failure, acute myocardial infarction, and community acquired pneumonia). This list has grown to include Surgical Care Improvement Measures, Stroke Measures, Venus Thromboembolism measures and several outcomes based measures including central line associated bloodstream infection (CLABSI) and catheter associated urinary tract infections (CAUTI). All of which are now part of the value based purchasing program.
In the era of value based purchasing, it takes a multidisciplinary approach of risk, quality, revenue and compliance to ensure that a hospital can attest to accurate quality data. If not we may see a dramatic increase in the FCA claims presented to the legal system.

1. 42 U.S.C.?? 3001 Patient Protection and Affordable Care Act
2. United States v. Rivera, 55 F.3d at 709 (First Cir. 1995)
3. 3131 U.S.C. ?? 3729 (b)(2)(A)(Supp. III 2009)
4. Stimson, Alston & Bird LLP. (2008). The False Claims Act: A Proper Tool For Enforcing Health Care Quality Standards? Washington Legal Foundation. Working Paper No. 156.
5. Brennan, J., & Paddock, M. (2008). Limitations on the Use of the False Claims Act to Enforce Quality of Care Standards. Journal of Health Sciences and Law.Vol. 2, No.1
6. Ab-Tech Construction v. United States, 31 Fed Cl.429 (1994) aff’d, 57 F.3rd 1084 (Fed Cir., 1995)
7. Mikes v. Straus, 274 F.3rd 687,699 (2nd Cir. 2001)
8. Klass, G. & Holt, M. (2011). Implied Certification Under the False Claims Act. Georgetown Business, Economics and Regulatory Law Research Paper No. 11-03.
10. 42 U.S.C. ?? 1320c-5(a)
11. 42 C.F.R. ?? 476.78(b)
12. MD Anderson Cancer Center. (2011). Fraud, Waste, and Abuse Policy. Houston, TX.
13. Schindler. (2009). Pay for Performance, Quality of Care and the Revitalization of the False Claims Act. Health Matrix.
14. Tex. Gov’t. Code ?? 554.002
15. Jennings, M. (2006). The Seven Signs of Ethical Collapse: How to Spot Moral Meltdowns in Companies Before It’s Too Late.

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