Snitching for dollars

I'm excited to be writing this column, which is directed toward EMS managers and administrators. EMS has two distinct sides: patient care and the business of running an ambulance service. There's a need for a place dedicated to the business side of the industry, and I hope you find that place here. In an effort to ensure that you do, we are asking that you be a part of this column. Please e-mail questions, comments or topics for discussion to nancy.perry@cygnusb2b.com.

In addition to this month's topic, we direct readers to a pair of articles on recently released Office of Inspector General reports. These discuss the findings of two OIG studies of the ambulance industry: one that found $402 million in overpayments to the industry in general (mostly for nonemergent services), and another that found a $21 million overpayment related to in-patient transports. To read these articles, visit www.emsresponder.com.

To hear more from Chris Kelly, click here to listen to his podcast.

The Deficit Reduction Act (DRA) contains a provision, effective January 1, 2007, that will directly affect some ambulance service providers. It requires that any entity that receives more than $5 million in Medicaid funds during a calendar year provide False Claims Act training to all of its employees.

The provision's purpose is to curb Medicaid fraud by educating employees on what is considered a violation of the Act, and to advise them that by turning in offenders (or "blowing the whistle"), they are protected and can even receive a share of any recovered money. The statute allows these "whistle-blowers" to receive 15%-30% of the total amount recovered, which often reaches well into the millions.

The $5 million threshold limits this provision to only rather large entities-that's why it only directly affects some providers. However, due to employee turnover, the education provided by these larger entities (for example, hospital-based services) will likely trickle down into all areas of healthcare services. One result could be employees who are more aware of the False Claims Act (FCA) than their management, which is not the goal. In order to avoid that possibility, we all need to be aware of the basics of the FCA. As we've explained previously, the FCA applies to municipalities and county governments (see False Claims Act Applies to Local Government in the June 2003 issue of EMS Magazine); therefore, this will affect both private and public services.

The FCA has become a key to healthcare financial enforcement for the government, and its incentives to whistle-blowers make it lucrative for the private sector as well. Revised in the mid 1980s, the FCA has been utilized more and more since, with court filings under the statute basically doubling each year since 1988. Now, with this federally mandated training, the FCA is sure to become even more widely used as a recoupment tool for fraud/abuse and overpayments. Make no mistake, there's a line between fraud and mere overpayment, but if a whistle-blower wants a portion of the recovery (a bounty, so to speak), that line can, and sometimes does, get blurred or even erased.

Here's an example of the FCA in action: On October 5, 2006, the Justice Department announced a settlement with American Medical Response Inc. (AMR) under the False Claims Act. There were actually no false claims identified in the press release describing the settlement, but AMR had allegedly been offering discounts in exchange for other business (Anti-Kickback Act violations). The whistle-blowers, two former AMR employees, made a case under the FCA and were allowed to recover damages on behalf of the government-and, pursuant to the FCA statute, they received a percentage of that recovery. The case cost AMR $9 million and rewarded the whistle-blowers with $1.62 million, or 18% of the amount recovered by the government.

Obviously, if your company does more than $5 million in Medicaid business, you should immediately begin considering how the DRA will affect you. But even if you don't currently rise to that level of Medicaid transports, you still need to be aware of the FCA and its potential applications. A good Medicare/Medicaid compliance program is the best defense against the FCA and opportunistic whistle-blowers. (I say opportunistic because an employee who knows of the FCA's reward provisions has more motivation to expose even an unintentional error to the government in order to get a share of the proceeds than to go to his employer and advise them of the problem so it can be fixed. While of course not all employees would act that way, it only takes one FCA claim to do a tremendous amount of damage to your financial standing and reputation.)

Related Articles:

• Medicare to Recover $21 Million in Ambulance Overpayments for Inpatients
  The ambulance industry is going to continue to be a target as long as studies such as these find significant errors and overpayments.
• OIG Report: Ambulance Industry Overpaid $402 Million
  If your service is running nonemergent transports, carefully consider these patients and their need for ambulance transportation.

To hear more from Chris Kelly, click here to listen to his podcast.

G. Christopher Kelly is an attorney practicing in Atlanta, GA. Chris focuses on federal laws and regulations as they relate to the healthcare industry and specifically to the ambulance industry. He also lectures and advises ambulance company clients across the U.S. Contact him at chris@emscltd.com.