In a country of more than 313 million people, the pressures placed on the health care system in the United States are both enormous and complex, as Americans expect a fundamental right to first rate health care without much regard for its cost. However, the Federal and California governments are mindful of this expense and take pride in their important role in regulating health care on the West Coast. This is a guide for responding to these investigations.

1. The State Bar of California
Business Law Section 2012
Hot Topics in Health Law
Michelle L. Knowles, Esq. and
Craig B. Garner, Esq.

2. Health Care and Its Burdens
In a country of more than 313 million people,
the pressures placed on the health care system
in the United States are both enormous and
complex, as Americans expect a fundamental
right to first rate health care without much
regard for its cost.
However, the Federal and California
governments are mindful of this expense and
take pride in their important role in regulating
health care on the West Coast.

3. • We know we work in a heavily
regulated business sector; our
clients must be ready to deal
with the regulating agencies.
• Today we ll touch on a few
s p ec i fic and p r a c ti c a l
suggestions for doing just
that…

4. Alphabet Soup
BOP
HEAT CDHCS
ACHC CMS
CLIENT
OSHA IRS
OIG DOL
DOJ DEA

5. • The question today,
Are our clients
prepared for the agency
on-site visits?
• As lawyers we advise
our clients: Be ready for
these agencies to visit
you.
• Maybe they need
coaching…

6. Be Ready …
What does that mean?
• Who is the first person the agency will encounter?
• Does that person know what to do?
• Does the person know who to call?
• Who will coach them?
• How do you get the best results?

7. • Functional Area Readiness
• Logistical Plans
• Who will be the
client contact?
• How to training
• Goal Setting

8. • Proactive verse Reactive
- Operating on Logic verse Emotion
• Leads and Functional Area Assists
- Who are your best advocates?
• Efficiency
- Where to find what you re looking for

9. • How to s
- Checklists
• Rules of Engagement
- Minimum Necessary
- Documentation
• Post Visit Work
- Memos and Files

10. They re Here
To understand the scope of issues health care facilities must face on any given
day, it is important to become familiar with the building blocks that make up
today’s health care hierarchy. This includes the assortment of individuals
involved with regulation who may pop up from time to time at a hospital near
you.
This is the group that constitutes the “they” who are “here.”

11. Some of Our Welcome Guests
• Office of the Inspector General
• Medical Board of California
• Centers for Medicare & Medicaid Services
• Office of Audit Services
• Office of Evaluation and Inspections
• Joint Commission
• Licensing and Certification
• Board of Pharmacy
• Laboratory Field Services
• California Department of Public Health
• Food, Drug and Radiation Safety
• OSHPD
• Office of the State Fire Marshall
• Food and Drug Administration
• Sheriff’s Department
• Department of Justice
• Police Department
• Centers for Disease Control and Prevention
• Board of Registered Nursing
• Physician Assistant Committee
• Department of Homeland Security
• Indian Health Service
• Internal Revenue Service
...And Others

12. Remember the Primary Rule: Patients Come First
• When any federal or state agency, or another accrediting entity, arrives
for an onsite inspection, always ask for proper identification.
• It is important to remember that patient care comes first. At any time
during an onsite investigation, a medical emergency always takes
priority.

13. Know Your Compliance Organizational Structure

14. Follow the Leader...
The Compliance Officer (or Chief
Compliance Officer) is the primary
supervisor of the Hospital’s Compliance
Program.
The Compliance Officer is responsible for
overseeing the administration of the
Hospital’s Compliance Program so as to
ensure that the Hospital at all times
maintains the business integrity required
of a health care provider.

15. ...and the Leaders
The Compliance Committee advises
the Compliance Officer and assists
in monitoring the Compliance
Program.
The Compliance Committee affords
the Hospital the perspectives of
individuals with diverse knowledge
and responsibilities within the
health care field.

16. Know the Basic Purposes of a Compliance Program
• Promote Standards and Procedures
• Ensure Proper Oversight
• Educate and Train
• Report Infractions as Appropriate
• Enforce Compliance and Disclose/
Discipline as Appropriate
• Monitor and Audit
• Investigate and Correct

17. The Role of the Employee
A Hospital employee’s familiarity with the required Compliance Program is an
important factor in evaluating his or her performance. Hospital is committed to
periodically training employees regarding its Compliance Program, including
specifically Hospital managers and supervisors involved in any medical claims
processes. To further this goal, Hospital will:
• Discuss, as applicable, the compliance policies and legal requirements
described in this Compliance Program with all supervised personnel.
• Inform all supervised personnel that strict adherence to this Compliance
Program is a condition of continued employment.
• Inform all supervised personnel that disciplinary action will be taken,
including possible termination of employment or contractor status, for
violation of this Compliance Program.

18. Code of Conduct
Hospital s Code of Conduct is the keystone of its corporate integrity philosophy
and communicates its ethical business standards.
The Code of Conduct serves as a cultural compass for staff, management,
vendors, volunteers and others who interact with Hospital.
hile the Compliance Program is a
W
partnership within the Hospital
community designed to help
employees make the right business
choices, the Code of Conduct serves
as its centerpiece.

19. Search Warrants

20. Search Warrant Guidelines
Hospital employees shall cooperate with a search warrant and shall respond in
strict accordance with the facility guidelines.
Employees should do nothing to obstruct or interfere with an ongoing search.
Any employee receiving notice of a search
warrant should immediately contact the Office of
General Counsel and the Compliance Officer, as
well as the designated person responsible for the
facility.

21. Search Warrant Guidelines, Continued
If government agents arrive to conduct a search, they
should be in possession of the actual search warrant.
The search warrant and any attachments thereto
define the areas that may be searched pursuant to
the warrant and provide information about the
activity the government is investigating.
The target of the search warrant (a hospital facility,
for example) has an absolute right to immediately
obtain a copy of the search warrant documents.

22. Do Not Interfere With a Search
Under no circumstances should an employee attempt to interfere in any way
with the conduct of a search, the examination of any particular area, or the
seizure of equipment, documents, or other physical evidence.
Should equipment or records necessary to the care of patients be seized,
notify the designated facility official immediately.
Do not volunteer to escort agents into areas they have not asked to inspect.
No effort should be made to obstruct a search, but neither should any
employee offer extra services not included in a warrant.

23. Communicating Compliance Issues
Hospital’s
Compliance Hotline:
1-800-123-4567
A disclosure program should always promote the fact that participation can be
done anonymously, and without fear of retaliation of any kind whatsoever.

24. Communicating Compliance Issues, Continued
• Encourage open lines of communication between the Compliance Officer
and the facility or facilities, as well as between the Compliance Officer
and the Compliance Committee.
• Promote an environment at health care facilities where employees can
direct questions about a statute, regulation, or compliance policy to the
Compliance Officer.
• Establish telephone “Hotlines” for use by personnel and employees, as
well as the Hospital or facility community, to report concerns or
possible wrongdoing regarding compliance issues, as well as matters
relating to serious concerns about patient care.
• Afford individuals the opportunity to submit compliance-related
questions or complaints in writing.

25. Communicating Compliance Issues, Continued
• Compliance programs must prohibit retaliatory action against any
person for making a report regarding compliance, whether anonymous
or otherwise.
• However, personnel cannot use complaints to the Compliance Officer to
insulate themselves from the consequences of their own wrongdoing or
misconduct.
• Providing false or deceptive reports may be grounds for termination.
• Self-reporting may be considered a mitigating factor if a person makes
a forthright disclosure of an error or violation of this Compliance
Program.

26. Communicating Compliance Issues, Continued
• Calls to the Compliance Hotline are answered by an independent
contractor, not by facility employees.
• All calls are treated confidentially and are not traced. The caller need
not provide his or her name. A Compliance Officer or designee
investigates all calls and letters and initiates follow-up actions as
appropriate.
• Communications through the Compliance Hotline and letters mailed to
the Compliance Officer are treated as privileged to the extent permitted
by applicable law.
• The possibility does exist that the identity of a person making a report
may become known, or that governmental authorities or a court may
compel disclosure of the name of the person making the report.

27. RACs
• Recovery Audit Contractor (RAC)
Program: This program began as a
three-year demonstration using RACs
to detect and correct improper
payments within Medicare.
• The original goal of the demonstration
program was to determine whether the
use of RACs would be a cost-effective
way to maintain the integrity of
Medicare by ensuring that provider
payments were correct.

28. RACs, Continued
• The original RAC demonstration program was successful, ending with
more than $1.03 billion recovered. According to CMS, approximately 96%
of these payments were overpayments collected from providers, 85% of
which were collected from hospital providers. The remaining 4% were
underpayments.
• Under the Medicare Prescription Drug, Improvement, and Modernization
Act (MMA), RACs received a portion of the overpayments they
discovered and recovered, even if their determination was ultimately
overruled.
• Additionally, RACs were not required to engage the services of a
medical director when assessing medical necessity claims. They could
request an unlimited number of medical records from a particular
provider, and were only required to perform limited reporting on the
problem areas they identified.

29. MACs
• Medicare Administrative Contractors (MACs):
Groups that process Part A and Part B claims.
MACs oversee claim completion and accuracy.
• Due to the scope of this review, CMS believes
MACs will be able to review discrepancies
between the two sets of claims, revise
payments and/or increase denials.
CMS Vision for the Future of MACs:
(https://www.cms.gov/MedicareContractingReform/
04_VisionofFutureFeeforServiceMedicareEnvironment.asp#TopOfPage)

30. MICs
Medicaid Integrity Contractors (MICs): MICs review Medicaid claims in search
of inappropriate payments or fraud. MICs also audit Medicaid claims and
identify overpayments and areas of high risk for payment errors or fraud. Some
possible targets include the following:
• Services provided after the death of a
beneficiary
• Duplicate claims
• Unbundling of services
• Outpatient claims with service dates
that overlap dates of an inpatient stay

31. MICs, Continued
MICs also review medical records to verify that paid claims were for the
following services:
• Services actually provided and properly documented in accordance
with medical necessity
• Services billed properly, using correct and appropriate diagnosis and
procedure codes
• Covered services
• Services paid for in accordance with federal and state laws,
regulations and policies

32. ZPICs
Zone Program Integrity Contractors (ZPICs): Formerly known as Program
Safeguard Contractors (PSCs), ZPICs serve the same jurisdictions as Medicare
Administrative Contractors. ZPICs conduct investigations, aid law enforcement
and conduct audits of Medicare advantage plans.
The goals of the ZPIC s data analysis program are to identify provider billing
practices and services that pose the greatest financial risk to Medicare. The
data analysis program seeks to:
• Identify areas of potential error that pose the greatest risk.
• Establish a baseline so contractors can recognize unusual trends,
utilization changes, or outright schemes designed to maximize
reimbursement unlawfully.

33. ZPICs, Continued
• Identify a need for local coverage determinations (LCD) (https://
www.cms.gov/DeterminationProcess/04_LCDs.asp) (42 U.S.C. § 1395ff).
• Identify claim review strategies to prevent or address potential errors.
• Produce innovation in reviewing utilization or billing patterns that
highlight potential errors.
• Identify over-utilization of high volume or high cost services.
• Identify program areas and/or specific providers for fraud
investigations.

34. About the OIG
OIG website (http://oig.hhs.gov/)
OIG Organizational Chart (http://oig.hhs.gov/about-oig/organization-chart/
index.asp)
The Data Bank (National Practitioner Data Bank and Healthcare Integrity and
Protection Data Bank) (http://www.npdb-hipdb.hrsa.gov)
HEAT (Stop Medicare Fraud) (http://www.stopmedicarefraud.gov/)
HHS website (http://www.hhs.gov/)

35. Additional Resources from the Federal Government
A Roadmap for New Physicians (Avoiding Medicare and Medicaid Fraud and
Abuse) (http://oig.hhs.gov/compliance/physician-education/
roadmap_web_version.pdf)
Patient Protection and Affordable Care Act (http://www.gpo.gov/fdsys/pkg/
PLAW-111publ148/pdf/PLAW-111publ148.pdf)
Provider Compliance Training Slides (http://oig.hhs.gov/compliance/provider-
compliance-training/files/Provider-Compliance-Training-Presentationv2.pdf)
Federal Health Care Fraud and Abuse Laws (http://oig.hhs.gov/compliance/
provider-compliance-training/files/HandoutLegalCitations508.pdf)
35

36. Additional Resources from the Federal Government
Comparison of Anti-Kickback and Stark Laws (http://oig.hhs.gov/
compliance/provider-compliance-training/files
StarkandAKSChartHandout508.pdf)
Common Physician Self Referral Law Exceptions (http://oig.hhs.gov/
compliance/provider-compliance-training/files/
PhysicianSelfReferralExceptionHandout508r2.pdf)
Common Anti-Kickback Safe Harbors (http://oig.hhs.gov/compliance/
provider-compliance-training/files/ListofAKSSafeHarbors508.pdf)
OIG Advisory Opinions (http://oig.hhs.gov/compliance/advisory-opinions/
index.asp)

37. Michelle L. Knowles, Esq.
Chief Legal Officer, Compliance Officer and Director of Human Resources for A-
Med Health Care
Michelle leads the legal, regulatory compliance, and human resource efforts of A-
Med Health Care, a privately owned specialty pharmacy and disposable medical
supply company based in Huntington Beach, CA.
Michelle has been integral in the development and implementation of corporate
strategies taking A-Med Health Care from a small to a medium-sized company
with significant share in the California specialty pharmacy and medical supply
market, expanding business lines and building national opportunities. Michelle
joined A-Med Health Care in 2004, after working in private practice, having spent
time as an associate with Friedman Stroffe & Gerard, P.C. in Irvine, CA, and earlier
as a Senior Tax Specialist at KPMG. Michelle’s private practice experience spanned
general corporate work, intellectual property (trademark and copyright), and
health care regulation.
Michelle graduated magna cum laude and valedictorian of the Class of 2000 of
Chapman University School of Law, and was the Editor-in-Chief of the Chapman
Law Review. She earned her B.A. in Business Management from California State
University, Fullerton. Michelle is a member of the Health Care Law Committee, a
sub-committee of the Business Law Section of the California Bar, and a Board
Member of the California Association of Medical Product Suppliers.

38. Craig B. Garner
Craig is an attorney, health care consultant and adjunct professor of law, specializing
in issues surrounding modern American health care and the ways it should be
managed in its current climate of reform. Between 2002 and 2011, Craig was the
Chief Executive Officer at Coast Plaza Hospital, where he was responsible for
administration and oversight of this general acute care hospital providing services to
the City of Norwalk and surrounding communities in southeast Los Angeles County.
Craig serves on the advisory board for the College of Osteopathic Medicine of the
Pacific, Western University of Health Sciences, the Board of Directors of the Los
Angeles Opera, and the Board of Visitors of Seaver College at Pepperdine University.
Craig is also on the Health Law Committee of the Business Law Section of the State
Bar of California, and he is a Fellow Designate with the American College of
Healthcare Executives.
1299 Ocean Avenue, Suite 400
Santa Monica, CA 90401
T. (310) 458-1560
E. craig@craiggarner.com
W. www.craiggarner.com