Articles Posted in Fraud & Abuse

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A revocation of Medicare billing privileges can have devastating impacts on a healthcare provider. Not only does a revocation render the provider unable to bill the Medicare program for a period of time, but it can have wide-ranging impacts on a provider’s practical ability to operate or to practice in their chosen field.

Medicare billing privileges can be revoked for twenty-two enumerated reasons, including non-compliance with Medicare enrollment requirements, felony convictions, and failure to respond to requests for medical records. A recent expansion of CMS’s revocation authority also updated the ability to revoke a provider for an “abuse of billing privileges” to include a pattern or practice of submitting claims that do not meet Medicare requirements. In some cases, the Medicare Administrative Contractor (MAC) gathers the information and determines to revoke a provider. In other cases, the MAC forwards the information to the Centers for Medicare & Medicaid Services (CMS) and CMS makes the revocation determination. The revocation may be based on a prior interaction with the MAC or CMS, such as a prior audit of the provider. The provider may not necessarily be told during this interaction that it can lead to a revocation of billing privileges.

When CMS or a MAC revokes billing privileges, they will set a reenrollment bar, which dictates how long a provider must wait before it can reapply for Medicare billing privileges. CMS recently expanded its authority to set the reenrollment bar. In general, reenrollment bars may now be set between 1 and 10 years, depending on the circumstances, although certain provisions allow for longer bars. CMS may also decide to place a revoked provider on the CMS Preclusion List. The Preclusion List labels the provider a “bad actor” and cuts off their ability to bill Medicare Part C and Part D. A Medicare revocation or placement on the Preclusion List may also impact contracts outside the Medicare program. For example, commercial carriers may terminate participation agreements with a provider based on a Medicare revocation or placement on the Preclusion List.

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On January 12, 2021, the Department of Health and Human Services (HHS) issued sweeping new directives regarding the procedures the Department will follow when relying on guidance documents, initiating enforcement actions, making jurisdictional determinations, and allowing prior notice and opportunity to be heard on agency determinations. These directives apply to civil and administrative enforcement proceedings and adjudications and take effect immediately.

First, HHS directed that the Department may not use guidance documents to impose binding requirements or prohibitions on persons outside of the executive branch except as authorized by law or expressly incorporated into a contract. That is, noncompliance with a standard or practice found only in a guidance document will not constitute a violation of the applicable statute or regulation. Further, the Department may refer to a guidance document in a civil enforcement action only if it has notified the public of the guidance in advance.

Second, HHS directed that the Department will only apply standards and practices, including in initiating a civil enforcement action or making an agency decision, that have been publicly stated in a way that would not cause unfair surprise. Of note, HHS defined “unfair surprise” to include when the Department initiates litigation following a lengthy period of conspicuous inaction.

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On November 20, 2020, the Centers for Medicare & Medicaid Services (CMS) released the final rules amending the Stark Law and Anti-Kickback Statutes (AKS).  Efforts to clarify these outdated laws began in 2018, with the goal to reduce regulatory obstacles for care coordination, following a general move toward value-based care. The Stark Law and AKS were initially created for a fee-for-service healthcare system, where there are financial incentives to provide more services to patients. However, the current U.S. healthcare system is shifting towards rewarding providers for keeping patients healthy and providing quality care, focusing on the value a payment has to a patient rather than the amount of services billed. The final rules offer increased flexibility to providers, reduce administrative burdens, and emphasize the interests of the patient.

The Physician Self-Referral Law, or the Stark Law, was initially enacted to prohibit physicians from making referrals to entities in which the physician has a financial relationship. The ambiguous language in the Stark Law created uncertainty as to whether certain relationships might violate the law and discouraged potential innovative relationships. As such, the final rule creates exceptions to the self-referral prohibitions for specific value-based payment arrangements among various providers and suppliers, and offers new guidance for providers with a financial relationship governed by the Stark Law. Under the rule, a value-based arrangement is one that provides at least one value-based activity to a patient between the value-based enterprise and at least one of its participants, or the participants in the same value-based enterprise. A value-based activity can mean the provision of a service, an action, or refraining from taking an action, so long as the activity is reasonably curated to achieve a value-based purpose. The exceptions apply to all patients, not just Medicare beneficiaries. The final rule creates three new exceptions to the Stark Law:

  1. Value-based arrangements for participants in a value-based enterprise that is financially responsible for, and assumes the entire prospective financial risk, for the cost of all related patient care items and services for every patient;
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On November 16, 2020, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) released a special fraud alert targeting remuneration associated with speaking arrangements paid for by pharmaceutical and medical device companies. The alert addressed both honoraria paid to the speaking physician and benefits provided to attendees, such as meals or alcohol.

OIG has taken the position that the fees paid to speakers and the benefits provided to attendees may constitute unlawful “remuneration” under the Anti-Kickback Statute (AKS) meant to induce or reward referrals. Pursuant to the AKS, it is unlawful to knowingly and willfully solicit, receive, offer, or pay any remuneration to induce or reward, among other things, referrals for, or orders of, items or services reimbursable by a Federal health care program. According to OIG, pharmaceutical and medical device companies paid nearly $2 billion to physicians and health care professionals for speaker-related services in 2017, 2018, and 2019 combined.

OIG clarified that not every physician speaking arrangement violates the AKS and that it does not intend to discourage meaningful training or education. However, OIG outlined several factors that, in OIG’s view, increase the risk that an arrangement could violate the AKS. These factors include:

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On October 21, 2020, Purdue Pharma pled guilty to three criminal charges as part of their $8 billion settlement surrounding the drug OxyContin, a drug that Purdue produced. The charges included: one count of conspiracy to defraud the United States and to violate the Food, Drug, and Cosmetic Act, and two counts of conspiracy to violate the Anti-Kickback Statute. OxyContin was one of the highly addictive opioids that has been blamed for starting the national opioid epidemic, which has been linked to over 470,000 deaths in the United States in the past twenty years.

In addition to admitting that Purdue purposefully impeded the Drug Enforcement Administration, Purdue also admitted to violating the Anti-Kickback Statute. The Anti-Kickback Statute prohibits any physician or other individual from knowingly offering, paying, or soliciting remuneration to induce business payable by Medicare or Medicaid. Through a misleading program, Purdue induced physicians with payments to write more OxyContin prescriptions. Purdue also induced physicians to utilize an electronic health record that would influence the prescription of pain medicine, especially OxyContin.

In addition to admission of the above criminal charges, Purdue also entered a civil settlement with the government. The settlement will resolve the allegation that Purdue caused false claims to be submitted to government programs, in violation of the False Claims Act. It also civilly resolved Anti-Kickback Statute violations.

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The Centers for Medicare and Medicaid Services (“CMS”) expanded its Targeted Probe and Educate (“TPE”) program on October 1, 2017. The goal of the TPE program is to help providers be more cognizant of their billing practices so that they may provide improved services in the future.

TPE review is a process where providers who have high denial rates or unusual billing practices compared to other providers in their field are reviewed. Simple claim errors are typically why providers have high denial rates. Some examples of these errors include: missing a physician signature, encounter notes not fully supporting eligibility, documentation not meeting medical necessity, or missing/incomplete certifications or recertification.

When a provider is chosen for the program, they receive a letter from their Medicare Administrative Contractor (MAC). The TPE process involves an initial review, or “probe,” of 20-40 claims. If it is determined that the provider is non-compliant, a targeted, one-on-one education session will be offered to address errors found in the claims reviewed. Conversely, providers who are found to be compliant will not be reviewed again for at least one year. After the education session, providers have 45 days to make changes and improve. Those providers who continue to have high error rates after the first round must then proceed with a second round of reviewed claims and education. If high error rates continue, a third round will commence. After three rounds of TPE, if the provider continues to be non-compliant, they will be referred to CMS for further action. A provider can be removed from the review process at any point if they sufficiently demonstrate a significant reduction in their error rates.

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During a hearing on July 17, 2018, Department of Health and Human Services (HHS) Deputy Secretary Eric Hargan announced that HHS is interested in reforming the Stark law and the Anti-Kickback Statute (AKS). As value-based care is becoming more prominent in the healthcare system, coordinated care between providers is a necessity; but the Stark law and AKS are considered an impediment to coordinated care. Hargan contends that since the Stark law was created in a fee-for-service context, it “may unduly limit ways that physicians and healthcare providers can coordinate patient care [in a value-based system].”

HHS’s push for reform comes out of the “Regulatory Sprint to Coordinated Care,” which is an initiative launched by CMS that seeks to remove barriers to coordinated care while still upholding laws and rules that keep patients safe. According to Hargan, HHS is working on creating administrative rules to address these barriers.

Aside from the regulatory hurdles that the Stark law imposes on coordinated care, HHS is also concerned about the strict liability aspect of the Stark law. Strict liability imposes civil liability with monetary penalties onto the provider, regardless of the intent underlying the Stark law violation arises from an accident. HHS believes that strict liability turns providers away from entering into coordinated care arrangements, because the complexity of the Stark law may cause providers to violate it unintentionally and become liable. A suggested change from HHS is to define “noncompliance” in a clearer manner, which would allow providers to feel more at ease with participating in coordinated care.

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On May 24, 2018, the U.S. Department of Justice announced a $23.85 million settlement with Pfizer, Inc., to settle anti-kickback claims against the company. The settlement arose after an investigation led by U.S. Attorney Andrew Lelling, which looked into the drug industry’s support of patient assistance charities. Pfizer is now among a group of multiple drug companies (Celgene Corp., Aegerion Pharmaceuticals, and Jazz Pharmaceuticals) who have settled with the Department of Justice for their use of patient assistance charities. Pfizer also signed a five-year monitoring agreement with the Department of Health and Human Services Office of Inspector General, and is required to implement measures to ensure that its arrangements with patient assistance charities are in compliance with the law

Pfizer was allegedly using an “independent” charity to pay illegal kickbacks to Medicare patients, covering out of pocket costs for prescription drugs. Pfizer made donations to Patient Access Network Foundation (PAN), a copay assistance nonprofit organization, and used a specialty pharmacy, Advanced Care Scripts, to direct Medicare patients taking its drugs toward the foundation to cover their copays.

The scheme centered around three drugs, two for kidney cancer (Sutent and Inyalta), and one for arrhythmia (Tikosyn). Pfizer was allegedly aware that PAN used their donations to cover the copays of patients taking these drugs. In fact, PAN and the pharmacy would notify Pfizer when patients using these drugs got the copay assistance. Price increases of the drugs were concealed from patients but left Medicare with a higher bill.

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On December 22, 2017, the U.S. Department of Justice (DOJ) announced a $32.3 million settlement (the Settlement) with Kmart Corporation, to settle False Claim Act (FCA) allegations against the company. The Settlement was based upon allegations that Kmart’s in-store pharmacies misled government payers by knowingly failing to report discounted prices and representing its drug prices as being higher than what was offered to the general public. Per the Settlement, Kmart does not admit to any wrongdoing.

The Settlement arises from a whistleblower suit filed in 2008. The suit alleged that Kmart failed to report discounted drug prices to Medicare Part D, Medicaid, and TRICARE. To determine reimbursement rates for medications, the government generally relies on a pharmacy’s “usual and customary prices” charged to consumers. According to the allegations, Kmart offered discounts to certain cash-paying customers but did not disclose those discounted prices when reporting its pricing to the government. Kmart argued that the special discount prices offered to a limited consumer base did not constitute “usual and customary” costs, but this argument was rejected in favor of increased transparency by pharmacies.

The Settlement sends a message to pharmacies regarding the importance of transparency, and that even prices offered only to a limited number of patients should be reported to the government. According to Acting Assistant Attorney General Chad Readler of the DOJ, “This settlement should put pharmacies on notice that there will be consequences if they attempt to improperly increase payments from taxpayer-funded health programs by masking the true prices that they charge the general public for the same drugs.” The whistleblower who brought the original suit will receive $9.3 million of the $32.3 million settlement, potentially sending a strong message to prospective whistleblowers as well.

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In July 2017, the Department of Health and Human Services Office of Inspector General (OIG) revealed its plans to review the $14.6 billion in incentive payments the Centers of Medicare and Medicaid Services (CMS) made to hospitals between January 1, 2011 and December 31, 2016, pursuant to Medicare’s electronic health record (EHR) technology program. The OIG plans to review these payments in order to identify errors and inaccuracies which may have resulted in overpayments to hospitals

This announcement comes less than a month after the June report from the OIG, titled “Medicare Paid Hundreds of Millions in Electronic Health Record Incentive Payments That Did Not Comply with Federal Requirements (the “Report”) (an official OIG summary is available here). The Report was based upon a review of EHR Incentive Program payments made to 100 professionals, which found 14 improper payments in the amount of $291,222. Extrapolating these results, the OIG estimated a total of $729.4 million in improper payments to the over 250,000 EHR incentive eligible providers in the CMS system. According to the OIG, the $729 million figure is roughly 12% of the total payments made in connection with the EHR incentive program. A majority of the 14 improper payments discovered during the OIG’s review were based on providers failing to maintain accurate and detailed records—an issue which often arises with Medicare overpayments.

The OIG completed its report by making several recommendations to CMS:

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