Articles Posted in Compliance

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HHS Office of Inspector General (OIG) has released a new analysis of claims paid under the COVID-19 Uninsured Program. OIG reportedly identified a few dozen instances where the program reimbursed healthcare providers for services provided to patients who ended up having health insurance coverage. OIG generally assigned responsibility for these payments to the private contractor who administered the program, but nonetheless encouraged audits and recovery from the healthcare providers who received payments.

The COVID-19 Uninsured Program was created in early 2020 in response to provide reimbursement for providers who treated uninsured patients for COVID-19. The program was part of the larger Provider Relief Fund and paid claims up until April 2022, when it ran out of money. Altogether the Program paid out approximately $24.5 billion in claims. The program was overseen by the Health Resources and Services Administration (HRSA), but the day-to-day administration and claims processing functions were contracted to Optum Pay, a subsidiary of Optum Bank.

According to OIG (which did not refer to Optum Pay by name in its report, referring only to “HRSA’s contractor”), the contractor processing claims under the program indicated that it would check the insurance status of patients for whom claims were submitted, but in fact only checked insurance status when the patient’s Social Security Number (SSN) was included on the claim. HRSA did not require SSNs on such claims and so the majority of claims did not include SSNs and were not screened by the contractor prior to payment. Instead, HRSA’s contractor relied on the attestation by providers that the patient did not have health insurance coverage.

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The False Claims Act (FCA) was enacted during the Civil War to impose civil liability on anyone who knowingly acts in defrauding governmental programs. Healthcare fraud has been a leading source of FCA violations for several years, leading to $1.7 billion in settlements and judgments in the last fiscal year alone. Healthcare providers and suppliers who participate in Medicare and Medicaid programs are at risk for FCA violation allegations and must take measures to ensure compliance with these programs by following proper billing procedures. Notably, violations can carry significant consequences, as they impose treble damages and significant per-claim penalties which increase each year with inflation. Cases for violations of the Anti-Kickback Statute (AKS), Physician Self-Referral Law (Stark Law), and other regulatory and compliance requirements are often brought as FCA cases.

Healthcare providers and suppliers who knowingly submit false claims or fail to pay back money owed to the government may be in violation of the FCA. The FCA also carries a whistleblower provision, which allows private citizens to bring qui tam actions against providers and suppliers who have allegedly violated the Act. The government then may intervene in the action, allowing the whistleblower to recover a portion of the recovery. Qui tam actions encompass a considerable portion of FCA litigation and have broadened the scope of the FCA significantly, increasing the risk of violation allegations for healthcare providers and suppliers.

On June 1st, 2023, the Supreme Court issued a unanimous decision in two consolidated FCA cases, U.S. ex rel. Schutte v. Supervalu Inc. and U.S. ex rel. Thomas Proctor v. Safeway, Inc., ruling that a defendant’s knowledge of a claim’s falsity refers to a subjective standard regarding what the defendant believed at the time it submitted the claims- not what an objectively reasonable person might have known or believed or what may later become reasonable in light of later facts or analysis. This ruling can generally be seen as an expansion of the “knowing” standard under the FCA and should caution healthcare providers and suppliers to take steps to ensure their knowledge and beliefs surrounding submission of claims to Medicare and Medicaid are compliant with these programs and are documented at the time claims are submitted, especially where there is a question of regulatory interpretation or ambiguity. Documentation of this knowledge in the form of written policies and procedures may be especially salient in ensuring compliance. Furthermore, if compliance issues or potential violations are raised, healthcare providers and suppliers should take immediate action to address and rectify them.

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The many ways in which a provider might be removed from the Medicare program are often a source of confusion and consternation for Medicare-enrolled healthcare providers and suppliers. Sometimes a Medicare revocation or suspension may occur unexpectedly and devastate a provider’s business. Sometimes a provider will voluntarily leave the Medicare program in an attempt to avoid inevitable sanctions. Each of these is a distinct mechanism and should be considered separately.

A revocation of Medicare billing privileges, commonly called a “Medicare revocation,” is a forced removal of a provider’s participation in and ability to bill the Medicare program. There are approximately two dozen grounds on which a provider’s billing privileges may be revoked, from noncompliance with Medicare program requirements (as simple as a missed signature on an insurance policy) up to abuse of billing privileges and patient harm. A revocation may be retroactive and take effect sometime in the past, before the provider is notified, or it may take effect sometime in the future, such as 30 days after the provider is notified. A Medicare revocation will be accompanied by a reenrollment bar of one to twenty years and often placement on the CMS Preclusion List. A Medicare revocation is subject to an appeals process, but most of the process is stacked heavily against the provider and it is important for the provider to be active in their response as early in the process as possible.

A suspension of Medicare billing privileges, commonly called a “Medicare suspension,” is a temporary suspension of a provider’s ability to bill the Medicare program. They are often imposed pursuant to a review or an audit where a Medicare contractor has alleged that the provider has committed some form of fraud. Suspensions are often imposed with immediate effect and sometimes without prior notice to the provider. Although suspensions are meant to be temporary, they are of undefined duration and often last for months without a specific end date, suffocating a provider’s business as effectively as a revocation. Medicare suspensions are technically subject to a truncated appeals process, but, although the suspension appeal process should still be pursued, the process is effectively meaningless and suspensions are generally best addressed through contesting the audit that supposedly identified fraudulent claims. However, it is worth noting that Medicare will often suspend a provider long before giving the provider the results of the underlying audit or the opportunity to appeal those results.

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The Department of Health and Human Services (HHS) Office of Inspector General (OIG) regularly performs risk and priority analyses of the various HHS programs and identifies areas of focus on a monthly basis. Amongst the items released in June, OIG has included: Nationwide Audits of Medicare Part C High-Risk Diagnosis Codes, Medicare Payments for Clinical Diagnostic Laboratory Tests in 2022, State Medicaid Agencies’ Perspectives of Managed Care Plans’ Referral of Fraud, and Audit of Selected, High-Risk Medicare Hospice General Inpatient Services. Providers should be prepared for the potential of increased audits and scrutiny based on these OIG projects.

Nationwide Audits of Medicare Part C High-Risk Diagnosis Codes have been deemed a work plan item due to the alleged risk of improper payment amounts as a result of miscoded diagnoses. Medicare Advantage (Medicare Part C) organizations are required by law to submit risk adjustment data to CMS, and payments to these organizations are based on this data. Miscoding of diagnoses can result in increased payments to Medicare Advantage organizations. OIG states it will be focusing its audit on diagnoses that it believes are high risk for being miscoded.

OIG has identified Medicare Payments for Clinical Diagnostic Laboratory Tests in 2022 as a work plan item in order to ensure compliance with the Protecting Access to Medicare Act of 2014 (PAMA). PAMA requires CMS to set payment rates for lab tests, which are based on current private health care market rates. PAMA also requires CMS to publish annual analyses of the top 25 tests based on Medicare Part B spending. OIG plans to review the published CMS data and issue its yearly report by 2024.

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The Office of Inspector General (OIG) for the Department of Health and Human Services (HHS) recently released the Semiannual Report to Congress for the 6-month period ending from October 1, 2022, to March 21, 2023. The report can provide insight regarding OIG’s current focus and enforcement priorities. Currently, OIG appears to be focused on skilled nursing facilities, COVID-19 related enforcement, and cybersecurity. In the OIG’s report, the OIG presented OIG expected recoveries, criminal and civil actions, and other statistics, including accomplishments for the fiscal year 2023 to date.  Specifically, in its strategic plan, OIG focused on the following: 1)  combatting alleged fraud, waste, and abuse and holding alleged wrongdoers accountable; 2) promoting quality, safety, and value in HHS programs and for HHS beneficiaries; and 3) advancing excellence and innovation.

During this reporting period, the OIG issued 62 audit reports and 19 evaluation reports, with expected recoveries by audit work at $200.1 million and $277.2 million in questioned costs based on OIG’s findings of alleged violations, costs not supported by proper documentation, or unreasonable and unnecessary expenditures of funds. OIG also made 213 new audits and evaluation recommendations. Additionally, the OIG’s investigative work led to $892.3 million in expected investigative recoveries, 345 criminal actions, civil actions against 324 individuals and entities, and exclusions of 1,365 individuals and entities from Federal health care programs.

A top priority for the OIG was to improve nursing home care to better protect nursing home residents by understanding what drives nursing home performance, prioritizing quality of care and quality of life for residents, and establishing that the entities responsible for oversight both detect and remedy any problems quickly. Another goal of the OIG is to protect enrollees from prescription drug abuse and safeguard health care services for individuals suffering from substance abuse disorders.

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The Department of Health and Human Services (HHS) Office of Inspector General (OIG) recently announced that it is offering a new frequently asked question (FAQ) process to provide informal feedback to healthcare providers regarding an expanded set of topics. OIG already offers FAQs and responses on a number of topics, including advisory opinions, contractor self-disclosures, corporate integrity agreements, and exclusions. During the beginning of the COVID-19 public health emergency (PHE), OIG also implemented a FAQ process to provide informal guidance on certain arrangements that are directly connected to the PHE and that implicate OIG’s administrative enforcement authorities. Now, OIG is expanding its informal guidance umbrella even further.

The topics that OIG is expanding its informal guidance to cover include the following:

  • General questions regarding the Federal Anti-Kickback Statute, the civil monetary penalty (CMP) provision prohibiting certain remuneration to Medicare and State healthcare program beneficiaries (Beneficiary Inducements CMP), and OIG’s administrative enforcement authorities in connection with these statutes.
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The Centers for Medicare & Medicaid Services (CMS) recently announced that it is planning to launch a new iteration of PECOS in Summer 2023. Dubbed “PECOS 2.0”, the new provider system aims to make the Medicare enrollment and revalidation processes faster and more efficient.

According to CMS, PECOS 2.0 will modernize Medicare enrollment management and allow providers to accomplish more tasks electronically. Some of these changes include faster applications using pre-population information, one application to update multiple enrollments, faster and easier revalidation processes, and the ability to track application status in real-time. CMS has also stated that provider data and records in current PECOS will transfer to PECOS 2.0 seamlessly. Applications currently in progress can be continued in PECOS 2.0, and applications previously closed will be available but will include limited information. All records transferred from current PECOS to PECOS 2.0 will be noted as such to make them easily identifiable. Additionally, providers’ login credentials will not be affected, and providers will still be able to log in to PECOS 2.0 using their Identity & Access (I&A) username and password.

With PECOS 2.0, providers will gain the benefit of consolidated applications, which is a combined application that updates and handles multiple enrollments. Consolidated applications will make it easier for providers to submit changes across multiple similar enrollments and multiple Medicare Administrative Contractors (MACs). When a provider submits a consolidated application that would normally require sending information to two different MACs, PECOS 2.0 will automatically separate the application and send the appropriate information to the relevant MACs. To ensure compliance with varying state requirements, PECOS 2.0 is also introducing a smart error process check which reviews and validates information for correctness as applications are completed. Moreover, there is no additional fee for consolidated applications. Whether providers choose to submit a consolidated application that covers multiple enrollments or an individual application for each enrollment, the fees will be the same and application fees will be automatically determined by each application.

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Physician investment in an ambulatory surgical center (ASC) can implicate federal and state fraud, waste, and abuse statutes, including the federal Anti-Kickback Statute (AKS). Such investment may be permissible, but requires careful regulatory analysis and structuring of the arrangement.

The AKS prohibits a person from knowingly offering, paying, soliciting, or receiving anything of value to induce or reward referrals for services covered by a federal healthcare program. Due to the breadth of the statute, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) was required to release a number of “safe harbors,” where conduct that might otherwise implicate the AKS would nonetheless be protected from prosecution.

Physician investment in an ASC implicates the AKS where the physician refers to the ASC. The rationale behind this part of the statute is that the physician may refer patients to the ASC for this physician’s own financial gain as an investor in the ASC, rather than for the good of the patient or the necessity of the procedure.

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Under the Medicare Part C or Medicare Advantage (MA) program, the Centers for Medicare & Medicaid Services (CMS) contract with Medicare Advantage Organizations (MAOs), typically private insurance companies, that administer MA health plans to Medicare beneficiaries as an alternative to traditional Medicare. Enrollment in MA plan has steadily grown in the last several years, and currently roughly half of all Medicare beneficiaries are enrolled in an MA plan. Further, federal authorities recently accused MAOs of overcharging the Medicare program by millions of dollars. Increased scrutiny of MAOs could lead to more stringent review of claims submitted by providers and MAOs may take greater action against providers through overbearing audits in an effort to offset losses. In any event, providers can likely expect MA plans to increase their audit activity of healthcare providers.

Some of the most popular MA health plans are administered by Humana, UnitedHealthcare, Aetna, BlueCross BlueShield, and Cigna. Audits by MA plans differ from audits conducted by Medicare or those conducted pursuant to commercial insurance plans, but MA plans are governed primarily by the provider’s participation agreement with the MA plan. As part of a provider’s participation contract, MA plans generally have the right to audit a provider’s claims. MA plans may audit providers for a number of reasons, such as suspicions of alleged upcoding, overutilization, irregularities, or fraud and abuse. A provider’s contract with the MA plan will generally prescribe a limited lookback period that restricts how far back in time the plan can review claims for audit purposes. The contract will generally also prescribe the policies and procedures which the plan must follow when conducting audits. However, state laws may affect the extent to which MA plans can audit providers by providing for conflicting maximum lookback periods or imposing other limitations. Notably, health plans may use these audits to retroactively deny a number of claims, which may then be extrapolated over several years of service, resulting in significant alleged overpayments against the provider. This may further result in serious actions such as recoupment, mandatory prior authorization, or even removal from the MA plan’s network of providers. Additionally, certain adverse actions imposed by MA plans may serve as the basis for even further consequences from CMS, such as suspension or termination from the Medicare program. Given the rapid growth of MA plans, providers should be aware of their rights and responsibilities regarding the most common MA plan audits, as well as be proactive in their compliance efforts.

For over 35 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters, and our attorneys can assist providers and suppliers in understanding new developments in healthcare law and regulation. If you or your healthcare entity has any questions pertaining to Medicare Advantage audits or healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or

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During the COVID-19 pandemic, demand for COVID-19 testing increased dramatically and many clinical laboratories either began operations or rapidly increased testing capacity to meet this demand. As the pandemic ends and the demand for COVID-19 testing fades, clinical labs are scaling back capacity for COVID-19 testing, pursuing other lines of business, or closing down entirely. These transitions may raise several regulatory issues for a clinical lab to consider. Note this is not a comprehensive list, but an overview of some common issues.

Did the lab bill Medicare, the HRSA Uninsured Program, or other federal healthcare programs? Federal authorities have indicated that claims for pandemic-related services or claims to pandemic-related programs will be a focus of fraud, waste, and abuse enforcement actions for years after the pandemic. The end of the pandemic or the end of widespread COVID-19 testing will likely not be the end of the need for regulatory compliance.

Was the lab in-network or out-of-network with payors? Commercial insurers have also increased scrutiny of claims for COVID-19 testing. During the public health emergency (PHE), commercial insurers were required by federal law to cover certain COVID-19 tests and insurers incurred significant costs providing such coverage. However, insurers have begun auditing labs and demanding significant repayments of claims for COVID-19 testing. A lab that is in-network with a payor will likely have rights and obligations in regard to such a dispute dictated by its participation agreement with the payor. However, many labs billed for COVID-19 testing while out-of-network, which may put the lab in a stronger position during a dispute because the payor likely does not have a contractual mechanism to collect an overpayment. Also, labs that stop billing a paying may want to consider formally ending their participation or enrollment with a payor. Especially in the case of Medicare, simply ceasing compliance with enrollment requirements can lead to an involuntary termination or revocation, which can have significant collateral consequences.

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