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Fraud Implications of Violations of Patients' Rights to
Freedom of Choice of Providers

By Elizabeth E. Hogue, Esq.

Once again regulators have indicated that they are serious about patients' right to freedom of choice of providers. Specifically, the Office of the Inspector General (OIG) of the U.S. Department of Health and Human Services published draft supplemental compliance guidance for hospitals on June 8, 2004. This supplemental guidance includes requirements related to patients' right to freedom of choice of providers as described below.

Specifically, issues related to freedom of choice in the following:

"When referring to home health agencies, hospitals must comply with section 1861(ee)(2)(D) and (H) of the Act, requiring that Medicare participating hospitals, as part of the discharge planning process, (i) share with each beneficiary a list of Medicare-certified home health agencies that serve the beneficiary's geographic area and that request to be listed and (ii) identify any home health agency in which the hospital has a disclosable financial interest or that has a financial interest in the hospital."

Based upon the above, the OIG has indicated a clear willingness to treat violations of the requirements of the Balanced Budget Act as a form of fraud and/or abuse of the Programs.

The OIG also indicated that it has authority to exclude any individual or entity from participation in the Federal health care programs if the they provide unnecessary items or services i.e. items or services in excess of the needs of patients or substandard items or services i.e. items or services of a quality which fails to meet professionally recognized standards of health care. The OIG further stated that neither knowledge or intent is required for exclusion under this provision. The exclusion can be based upon unnecessary or substandard items or services provided to any patient, even if that patient is not a Medicare or Medicaid beneficiary.

The OIG went on to state that violations of Medicare hospital conditions of participation (COP's), including those that govern discharge planning, or any other applicable standards of care may result in either over or under utilization of services and sanctions by the OIG. It is logical to include that applicable standards of care also include the requirements of the Balanced Budget Act of 1997.

Consequently, hospitals that violate applicable standards of care related to patients' right to freedom of choice of providers and discharge planning may be subject to sanctions by the OIG.

It is also important for all providers to be aware that there is now an impressive array of tools available to them for use in dealing with referral issues, including:

• Assisting patients to pursue violations of their common law rights to freedom of choice of providers regardless of payor source or type of care rendered primarily through the use of signed statements that describe violations.
   
• Assisting patients to pursue violations of two (2) federal statutes that guarantee Medicare and Medicaid patients, except waiver patients, the right to freedom of choice of providers primarily through the use of signed statements that describe violations.
   
• Reports to the Centers for Medicare and Medicaid Services (CMS) regional and central offices of violations of patients' right to freedom of choice of providers by providers who participate in the Medicare/Medicaid Programs.
   
• Reports to state surveyors about violations of patients' rights who treat such information as complaints and conduct surveys of hospital and other providers that may result in Statements of Deficiencies, corrective action and follow up surveys.
   
• Reports to the OIG of violations of patients' rights to freedom of choice of providers and/or violations of applicable standards of care which may result in sanctions against providers.

Providers should also be aware that a number of these avenues are available to providers who do not participate in the Medicare Program.

Although the OIG's supplemental guidance focuses on hospitals' compliance, it is also important for providers to bear in mind that other types of providers sometimes violate patients' right to freedom of choice of providers, including physicians. It is reasonable to conclude that the OIG would be willing to sanctions all types of providers for violations of patients' right to freedom of choice of providers.

There are in increasing number of avenues for both patients and providers to pursue violations of patients' right to freedom of choice of providers. Providers of all types should be proactive when they encounter such violations.

(To obtain more information about this topic in a book entitled, Medicare/Medicaid Fraud and Abuse, A Practical Guide for Providers, send a check for $30.00, including shipping and handling, made out to Elizabeth E. Hogue, Esq. to the address that appears below.)

Copyright, 2004.

Elizabeth E. Hogue, Esq.

All rights reserved.

Elizabeth E. Hogue, Esq.
15118 Liberty Grove
Burtonsville, Maryland 20866
Office: 301-421-0143
Fax: 301-421-1699