Articles Posted in Fraud & Abuse

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In August 2023, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) announced its strategic plan to investigate the life cycle of Medicare and Medicaid managed care contracts. OIG’s plan will scrutinize these contracts from inception through enrollment, reimbursement, services, and renewal. In order to address fraud, waste, and abuse risks, the goal of OIG’s plan is to hold accountable Medicare Advantage organizations (MAOs) and Medicaid managed care organizations (MCOs).

Currently, more than half of Medicare enrollees and more than 80% of Medicaid enrollees are covered by managed care programs. In order to oversee the approximate $700 billion that the federal government spent on managed care programs in 2022, OIG has set out four phases of managed care that it intends to investigate: (1) plan establishment and contracting, (2) enrollment, (3) payment, and (4) provision of services.

In the first phase, OIG intends to review activities that occur when the Centers for Medicare & Medicaid Services (CMS) or states initially establish or renew managed care contracts. In this contract review phase, OIG will evaluate whether MAOs and MCOs are providing the government with accurate information, including in their bids, and abiding by the contract terms for their plan design, service offerings, and coverage area. In the second phase, OIG will review enrollment processes. Specifically, OIG will focus on potentially aggressive marketing campaigns and inaccurate information collection.

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The Centers for Medicare & Medicaid Services (CMS) recently announced that it intends to increase scrutiny on hospice providers as a result of increased reports and CMS findings suggesting potential hospice services fraud. CMS stated that it is strengthening its hospice program integrity strategy through actions such as site visits and proposed regulations to minimize impacts to Medicare beneficiaries.

As part of this revitalized focus on hospice integrity, CMS has highlighted several observed situations that it views with heightened scrutiny. Certain reports cited by CMS have supposedly identified instances of hospices certifying patients for hospice care when they were not terminally ill and providing little to no services to patients. CMS has also indicated that the listed address for some hospices appears to be non-operational. One particular alleged trend CMS has focused on is known as “churn and burn,” where a new hospice opens and starts billing, but once that hospice is audited or reaches its statutory yearly payment limit, it shuts down, keeps the money, buys a new Medicare billing number, transfers its patients over to the new Medicare billing number, and starts billing again.

In response to these purported findings, CMS embarked on a nationwide hospice site visit program, making unannounced site visits to every Medicare-enrolled hospice. As of mid-August 2023, CMS has visited over 7,000 hospices, and indicated that nearly 400 hospices are being considered for potential administrative action as a result. While many of these hospices may very well be able to demonstrate compliance with Medicare requirements, if CMS finds grounds to conclude that a hospice is allegedly non-compliant, this may result in significant consequences such as suspension or revocation. Further, CMS has noted that rapid hospice growth trends in four states – Arizona, California, Nevada, and Texas – has led the Centers to implement a provisional period of enhanced oversight in these states. During this provisional period, CMS plans to conduct medical reviews before making payments on claims submitted by newly enrolling hospices.

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The Department of Health and Human Services (HHS) Office of Inspector General (OIG) issued a final rule (Final Rule) on June 27, 2023, which implements statutory provisions for specific individuals or entities subject to the information blocking requirements established by the 21st Century Cures Act (Cures Act). The Cures Act imposes civil money penalties (CMP) of up to $1 million per violation of information blocking, which is defined as “a practice that interferes with, prevents, or materially discourages access, exchange, or use of electric health information,” except as required by law or covered by an exception.

The Final Rule authorizes HHS to impose CMPs, assessments, and exclusions on individuals and entities that engage in alleged fraud or other misconduct related to HHS grants, contracts, and other agreements, as well as increases the maximum penalties for certain CMP violations. OIG may impose CMPs of up to $1 million per violation of information blocking on a health information technology (Health IT) developer of certified health IT or a health information network or health information exchange (HIN/HIE), as those terms are defined by OIG.

Penalties may be imposed on certified Health IT developers and HIN/HIEs that do not actually interfere with access, exchange, or use of electronic health information (EHI) if the requisite intent is present. Specifically, such individual or entity may have CMP exposure under the Final Rule if it knew or should have known that a practice was likely to interfere with access, exchange, or use of EHI. Additionally, OIG has clarified that a discrete action by an actor that implicates information blocking would be viewed as a single violation. Thus, it appears that the number of violations will be directly connected to the number of discrete acts.

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The Department of Health and Human Services (HHS) Office of Inspector General (OIG) released Advisory Opinion 23-04 (Advisory Opinion) on July 11, 2023, addressing arrangements between online healthcare directories and certain third-party websites (Directories) with federal healthcare program beneficiaries. In the Advisory Opinion, the OIG declined to impose sanctions on healthcare provider Directories offering these sort of advertising services to providers.

Under the proposed arrangement, healthcare provider Directories are serving as marketplaces in which users and potential patients can book medical appointments with physicians and other healthcare providers (Providers) who are listed on the online Directories. Patients can filter their results by searching for different types of medical providers, and the Directories generate personalized results using a proprietary algorithm.

Although no fee is charged to the patients for using the directory, Providers pay a fee to be included in the directory through an array of payment methods. Whenever potential patients click on a Provider’s profile during their searches, a “per-click” fee is charged to Providers. A “per-booking” fee is also charged to Providers for each new patient the Providers receive through the Directory which may vary in amount based on location, specialty, and other factors impacting the fair market value of the marketing service. Providers can also set spending caps, which would remove the Providers from the directory once a certain amount of booking fees has been met.

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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 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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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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Healthcare providers have seen a disturbing rise in audits by Medicare Unified Program Integrity Contractors (UPICs). The stated purpose for the UPICs is to investigate instances of suspected fraud, waste, and abuse in Medicare or Medicaid claims. However, UPICs are often over-zealous in alleging fraud where there is none, thereby causing devastating consequences for Medicare providers.

Like the Medicare Administrative Contractors (MACs), Recovery Audit Contractors (RACs), and the now-defunct Zone Program Integrity Contractors (ZPICs), UPICs are government contractors that have been tasked by the Centers for Medicare & Medicaid Services (CMS) to review claims submitted by Medicare providers and identify alleged overpayment to providers. Currently, the companies that hold contracts to act as UPICs are CoventBridge Inc., Qlarant Integrity Solutions, LLC, and SafeGuard Services.  However, UPIC investigations are different from other types of Medicare audits because the UPICs are meant to specifically seek out fraud and a UPIC investigation is more likely to lead to collateral consequences, such as a suspension of Medicare payments or a revocation of Medicare billing privileges.

A UPIC investigation often follows the same trajectory. First, the UPIC will conduct a series of probe audits of the provider. These may seem inconsequential because they involve only a few claims or a small dollar value at issue. Second, the UPIC will deny nearly every claim it reviews and indicate that it has found a “credible allegation of fraud.” Third, the UPIC will lead CMS to suspend the provider’s Medicare payments. Around the same time as the Notice of Suspension, the UPIC will request additional medical records, usually for significantly more claims than before. Fourth, and usually several months later, the UPIC will issue another set of audit findings. This final audit will often include a statistical extrapolation and demand a significant repayment, often in the hundreds of thousands or millions of dollars. In some cases, the UPIC can also lead CMS to revoke the provider’s Medicare billing privileges.

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