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Financial Laws & Regulations

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False Claims Act
The False Claims Act was established to prevent intentionally inaccurate claims against or to the government for property or money. This applies to all federal programs, although it is applied to health care most frequently due, in part, to the large dollar amounts involved1, but also to the volume of claims regarding health care made to the federal government each year.
There are five elements pertaining to the establishment of a false claim under the False Claims Act; 1) a claim for property or money is made; 2) the claim is against or to a department or agency of the United States; 3) the claim was false, fictitious or fraudulent; 4) the organization, or persons representing the organization, must have known at the time that claim was false, fictitious or fraudulent; and 5) the false, fictitious or fraudulent claim was material.2
Qui Tam. When an individual (relator) brings a lawsuit against an organization claiming violation of the False Claims Act, this is considered a “qui tam” action. A relator’s knowledge, used to bring about a qui tam suit, “must not be public knowledge but information that would not otherwise be available without the qui tam suit.”1 The relator, often referred to as a “whistleblower”, receives a portion of any settlement amount dictated by the results of a qui tam suit. This incentive was established by the False Claims Act and encourages individuals to assist the government in identification of fraud.1
HIPAA Privacy Standards
To encourage the establishment of an electronic information system for all health-related information, the Health Insurance Portability and Accountability Act of 1996 (HIPAA) intended to establish standards for the electronic transmission of certain health information. Entities “covered” under HIPAA include healthcare providers, health plans, and healthcare clearinghouses, and any business associate of these entities. Violations of HIPAA standards are subject to criminal and civil penalties. HIPAA privacy standards were designed to accomplish three broad objectives.1
Define and Limit. The first broad objective of HIPAA’s privacy standards is to define and limit the circumstances in which entities use and disclose Patient Health Information (PHI). Patient health information encompasses a patient’s health, the provision of health care to the patient, or the payment for health care services rendered to the patient.1 This objective was established to help ensure patients are not discriminated against in any aspect of their lives, due to health-related issues. It empowers individuals to pursue resolution for their health concerns, without fear of release of information and the potential resulting discrimination.
Establish Individual Rights. The second broad objective of HIPAA’s privacy standards is to establish certain individual rights regarding PHI. Every individual has certain rights regarding their health information. Rights include the privilege to request restrictions on certain uses and disclosures of PHI, the right to amend their PHI, and the right to receive an accounting of disclosures of PHI. Patients are also given the right to receive a “Notice of Privacy Practices” from their healthcare provider, which outlines the organization’s legal requirements in regards to PHI.1
Adopt Administrative Safeguards. Lastly, the third broad objective of HIPAA’s privacy standards is to require covered entities to adopt administrative safeguards to protect the confidentiality and privacy of PHI. Covered entities must adopt organization-wide policies and procedures which safeguard the privacy of patients and their health information. All stakeholders of the organization should be educated and trained regarding these policies and procedures to mitigate risk of the organization violating HIPAA privacy standards.

Stark Law
The Stark Law prohibit physician referrals to entities in which the physician has a financial interest, direct or indirect, including ownership, investment, and compensation relationships.1 Stark Law is intended to prevent physicians from making decisions for patients based on their financial gain and, instead, to always do what is in the best interest of the patient. The law designates ten specific health services (DHS) for which providers with financial interest with the potential referred entity are prohibited from referring patients to. These include 1) clinical laboratory services; 2) physical therapy, occupational therapy, and speech-language pathology services; 3) radiology and certain other imaging services; 4) radiation therapy services and supplies; 5) durable medical equipment and supplies; 6) parenteral and enteral nutrients, equipment, and supplies; 7) prosthetics, orthotics, and prosthetic devices; 8) home health services and supplies; 9) outpatient prescription drugs; and 10) inpatient and outpatient hospital services.
The Emergency Medical Treatment and Active Labor Act (EMTALA) governs whether a patient may be refused treatment or transferred from one hospital to another when he is in an unstable medical condition. EMTALA applies only to hospitals, which have a provider agreement with a government payer, such as the Centers for Medicare & Medicaid Services, or the Veterans Health Administration, and is intended to prevent discrimination at hospitals of presenting patients based on their ability to pay or because they are covered under the Medicare or Medicaid programs. “Law provides that any patient who ‘comes to the emergency department’ of a ‘participating hospital’ must be provided with ‘an appropriate medical screening examination’ to determine if he or she is suffering from an ‘emergency medical condition’. If he is, the hospital is obligated to either provide him with treatment until he is stable or to transfer him to another hospital in conformance with the statute’s directives.”3

1. Cleverley, William O., James Cleverley, Paula Song. Essentials of Health Care Finance, 7th
Edition. Jones & Bartlett Learning. VitalBook file.
2. False Claims Act (2015). Retrieved from database/false-claims-act. 3. Fosmire, M. Sean (2009, October 10). Retrieved from

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