Articles Posted in Fraud & Abuse

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As part of the 2022 Medicare Physician Fee Schedule Proposed Rule, the Centers for Medicare & Medicaid Services (CMS) has proposed to significantly expand its authority to deny or revoke a provider’s or supplier’s Medicare billing privileges.

First, CMS proposed to modify the conditions that it considers when determining whether to revoke a provider for an “abuse of billing privileges.” CMS currently has the authority to revoke a provider’s or supplier’s enrollment for an “abuse of billing privileges,” defined as a pattern or practice of submitting claims that do not meet Medicare requirements. CMS has previously asserted that as few as three non-compliance claims can constitute such a pattern, However, in the current proposal, CMS expressed concern that the existing factors it uses to make such a determination may prevent it from acting against providers or suppliers who enroll in Medicare and engage in short-term periods of high-volume, non-compliant billing. CMS proposed to revise one factor, the percentage of submitted claims that were denied, to instead focus on the percentage of claim denials out of claim submissions during a limited period, such as a single month. CMS also proposed to remove three factors the agency deems largely irrelevant to determining the existence of a pattern or practice of improper billing. Specifically, the agency proposed to remove factors that focus on the reason for the claim denial, the length of time over which the pattern has continued, and the length of time a provider or supplier has been enrolled in Medicare. CMS proposed one new factor that considers the type of improper billing along with any aggravating or mitigating conditions in each case.

CMS also proposed to expand its authority to deny or revoke a provider’s or supplier’s enrollment if any healthcare, administrative, or management services personnel furnishing services payable by any federal health care program is excluded by the OIG, such as a billing specialist, accountant, or human resources specialist. CMS asserted that this proposal would align its authority with a 2013 OIG Special Advisory Bulletin prohibiting a provider or supplier from employing excluded individuals to furnish management or administrative services payable by any federal health care program.

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The August 12, 2021 issue of the Medical Learning Network (MLN) Connects newsletter indicates that CMS is planning to resume the Targeted Probe and Educate (TPE) audit program. CMS temporarily suspended pre-payment reviews under the TPE program in response to the Covid-19 public health emergency (PHE) in March 2020. While CMS authorized Medicare Administrative Contractors (MACs) to resume post-payment audits in August 2020, TPE pre-payment reviews generally remained suspended.

The MLN Newsletter does not offer specific information as to when CMS will officially resume TPE audits. The Newsletter also does not indicate whether CMS will focus on new TPE audits or whether the agency intends to resume existing TPE reviews that were suspended at the beginning of the PHE. In a June 2021 Q&A by Palmetto GBA, one of the MACs, Palmetto stated that they “do not have an expected date for TPE to return.” Other MACs have yet to update their websites to reflect CMS’s announcement. However, it appears CMS has given the MACs the go-ahead to resume paused TPE reviews and initiate new reviews.

A TPE review consists of up to three rounds of claims review, with education to the provider after each round. A provider or supplier navigating a TPE review should take care to comply with the program’s requirements and timelines and should be aware of the potential consequences of a review. A TPE review can take months or years to resolve and can have devastating impacts on a provider’s business, up to and including revocation of Medicare billing privileges and placement on the CMS Preclusion List. Closely monitoring the process of the TPE review can be critical to a successful resolution. For more information about TPE reviews, please see our previous blog on Responding to a Targeted Probe and Educate Review.

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The Pharmaceutical Research and Manufacturers of America (PhRMA) issued an updated August 2021 Code on Interaction with Health Care Professionals, which takes effect January 1, 2022. Section 7 of the PhRMA Code’s guidance on speaker programs largely echoes a Special Fraud Alert regarding health care speaker programs which was issued by the Department of Health and Human Services’ (HHS) Office of Inspector General (OIG) in November 2020. The focus here is on programs where health care professionals (HCPs) participate in company-sponsored speaker programs in order to help educate and inform other health care professionals about the benefits, risks, and appropriate uses of company medicines. Similarly to the Special Fraud Alert, the PhRMA Code raises significant concerns about companies offering or paying remuneration (and HCPs soliciting or receiving remuneration) in connection with speaker programs in violation of health care fraud and abuse laws, such as the Anti-Kickback Statute.

A primary focus of the PhRMA Code’s speaker program guidance involves situations where attendees of such programs are offered meals incident to attendance. In general, the Code explains that incidental meals of modest value may be offered to attendees of company-sponsored speaker programs, subject to some non-exhaustive principles. The purpose of the speaker program should be to present substantive educational information designed to help address a bona fide educational need among attendees, taking into account recent substantive changes in relevant information or the importance of the availability of such educational programming. According to the PhRMA Code, only those with a bona fide educational need for the information should be invited and incidental meals furnished to attendees must be modest as judged by local standards, as well as subordinate in focus to the educational presentation. Companies should not pay for or provide alcohol in connection with the speaker program. Speaker programs should occur in a venue and manner conducive to informational communication, and a company representative should be physically present. Luxury resorts, high-end restaurants, and entertainment, sporting, or other recreational venues or events are cautioned against. Repeat attendance at a speaker program on the same or substantially the same topic is generally not appropriate, unless the attendee has a bona fide educational need to receive the information presented, including attendance by speakers as participants after speaking at such programs. Friends, significant others, family members, and other guests of a speaker or an invited attendee are not appropriate attendees unless such individuals have an independent, bona fide educational need to receive the information presented. To note, the PhRMA Code does not address attendance at a speaker program that does not include an incidental meal to the attendee.

The PhRMA Code also sets out four general principles that apply to companies’ retention of HCPs as speakers at company-sponsored speaker programs. First, HCPs may be engaged by companies as speakers for company-sponsored speaker programs to help educate and inform other HCPs who have an independent, bona fide educational need to receive information about the benefits, risks, and appropriate uses of company medicine and related disease states. Second, company decision regarding the selection or retention of HCPs as speakers should be made based on defined criteria such as general medical expertise, reputation, knowledge, experience regarding a particular therapeutic area, and communication skills. Third, HCPs engaged by the company as speakers should also participate in company-sponsored speaker training programs because the Food and Drug Administration (FDA) holds companies accountable for the presentation of their speakers. Finally, any compensation or reimbursement made to HCPs in conjunction with a speaking arrangement (including company-sponsored speaker training) should be reasonable, based on fair market value, and should not take into account the volume or value of past business that may have been, or potential future business that could be, generated for the company by the HCP. The PhRMA Code further cautions companies and speakers to be clear about the distinction between health care professional speaker programs and continued medical education programs. Health care providers should keep these guidelines in mind when designing company-sponsored HCP speaker programs.

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Congress recently proposed changes to the False Claims Act (“FCA”) that would make it easier for the government to prove certain noncompliance was “material” and therefore a violation of the FCA. These changes appear to be a response to the landmark Escobar decision regarding materiality under the FCA.

Originally introduced to address unscrupulous government contractors during the Civil War, the FCA has become a popular tool for prosecuting alleged healthcare fraud. In general, the FCA imposes civil liability for knowingly submitting false claims to the government. Importantly, the FCA carries severe consequences, including treble damages and a per-claim penalty that increases each year with inflation ($11,803 per claim for 2021). The FCA also allows individuals to initiate the prosecution under a qui tam action, in which the government may decide to intervene and wherein the individual is entitled to a share of the government’s recovery.

Under the “implied false certification” theory of FCA liability, liability attaches where a provider submits a claim for payment that makes specific representations about the goods or services provided, but knowingly fails to disclose the defendant’s noncompliance with a statutory, regulatory, or contractual requirement. In 2016, in the Escobar case, the United States Supreme Court held that any misrepresentation about compliance with a statutory, regulatory, or contractual requirement must be “material” to the government’s decision to pay the claim in order to give rise to liability under the FCA. Materiality under Escobar is a demanding standard and cannot be met merely because the government has designated a requirement to be a condition of payment.

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The Centers for Medicare and Medicaid Services’ (CMS) FY 2022 Budget Justification request to Congress indicates a greater focus on audit activities, including a doubling of CMS’ medical review budget, and an effort to decrease the number of claim denials overturned through the Medicare appeals process. While still in the proposal phase, the budget justification provides a glimpse into CMS’ priorities for the coming fiscal year. Specifically, CMS requests $96.7 million to be used as discretionary funding for medical review activities, which represents an increase of $50.5 million above the FY 2021 Enacted level. Medical review activities can be conducted pre-payment or post-payment and concentrate on areas identified through a variety of means, including targeted data analysis, Comprehensive Error Rate Testing (CERT) results, and oversight agency findings that indicate allegedly questionable billing patterns.

CMS contracts with Medicare Administrative Contractors (MACs) to perform analysis of claims data to identify atypical billing patterns and perform claims review, including medical reviews. The FY 2022 request supports ongoing medical review operations, including Targeted Probe and Educate (TPE) reviews, which CMS temporarily suspended for a portion of 2020 in response to the Public Health Emergency (PHE). CMS recently announced in June 2021 that MACs are authorized to begin conducting post-payment medical reviews for dates of service during and after March 2020. CMS states that the FY 2022 Budget Justification “proposes to significantly increase funding to allow MACs to conduct additional review in FY 2022.” MAC medical reviews were previously limited to dates of service prior to March 2020, which means we can expect to see MACs begin audits of claims submitted during the PHE.

The FY 2022 Budget Justification also would allocate $19 million to the Supplemental Medical Review Contactor (SMRC) to conduct SMRC audits, which provide support for a variety of tasks meant to lower the improper payment rates and increase efficiencies of the medical review function of Medicare. SMRC audits were similarly paused for a period of time during 2020 in response to the PHE. In FY 2020, the SMRC reviewed approximately 80,197 claims, whereas CMS expects the SMRC to review 792,800 claims in FY 2022. So, providers may also anticipate increased SMRC medical reviews.

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On July 13, 2021, the Centers for Medicare and Medicaid Services (CMS) released a Proposed Rule that includes amendments to  the regulations surrounding the Physician Self-Referral Law, also known as the Stark Law. The Proposed Rule seeks to revise the definition of “indirect compensation arrangement” (ICA) to bring it back in line with the previous definition of ICA as it existed prior to the latest Stark Law rulemaking, “Modernizing and Clarifying the Physician Self-Referral Regulations” (MCR Final Rule), issued on December 2, 2020. Additionally, the Proposed Rule seeks to define the term “unit’ and the phrase “services that are personally performed” for purposes of the ICA definition.

The Stark Law generally prohibits physicians from referring designated health services (DHS) payable by Medicare or Medicaid to an entity with which the physician (or an immediate family member) has a financial relationship unless an exception is met. With the MCR Final Rule, CMS introduced a further definitional requirement to the definition of ICA: that the “individual unit of compensation” received by the physician (or an immediate family member) must either (i) not be fair market value; or (ii) include the physician’s referrals as a variable that impacts compensation. By adding this definitional requirement, the MCR Final Rule effectively further narrowed the regulatory definition of ICA. In the Proposed Rule, CMS states that the MCR Final Rule inadvertently omitted language from the ICA definition which would have ensured that a subset of potentially abusive financial relationships would have continued to satisfy the definition of ICA. Under the Proposed Rule, the ICA definitional requirement added by the MCR Final Rule would be effective only if the compensation received by the physician would be for the physician’s own personally performed services.

In response to providers’ concerns about the scope and practical application of the phrase “individual unit of compensation,” CMS seeks to provide some clarity by defining the phrase in the Proposed Rule. CMS proposes to define an individual unit either in terms of service, where all compensation is based solely on the service provided, or in terms of time, in all other cases, where any one basis of the physician’s compensation is time-based. CMS also proposes to introduce regulatory language to aid in the application of the ICA definition when the physician receives compensation for personally performed services by stating services personally performed by a physician “do not include services that are performed by any person other the physician ….” At this time, it is unclear whether this proposed language would include services performed by an employee, but provided incident to the physician’s personally performed services. The Proposed Rule is open for public comment until September 13, 2021.

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The opportunity for expanded use of telehealth services spurred by the COVID-19 pandemic provided many individuals with greater access to healthcare services and allowed providers to furnish patient care in safe environments. However, this expansion has led to potential abuse concerns, prompting the Department of Health and Human Services (HHS) Office of Inspector General (OIG) to issue a statement announcing that OIG is conducting seven different audits, evaluations, and inspections of telehealth services under the Medicare and Medicaid programs.

Because OIG is investigating providers specific to telemedicine, these audits will review remote patient monitoring, virtual check-ins, and e-visits. An OIG report issued in April 2018 concluded that 31% of the sample claims reviewed did not meet the Medicare conditions for payment for telehealth services. That report was prior to the broad expansion of telemedicine from the COVID -19 pandemic. Providers who have billed for telehealth services during the public health emergency (PHE) should be prepared to undergo audits of those claims.

Current OIG telemedicine audit projects include:

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A healthcare practice or other provider or supplier receives a letter from their Medicare Administrative Contractor (MAC). The letter notifies the provider that they have been selected for a Targeted Probe and Educate (TPE) review. This initial letter, the Notice of Review, likely does not include any specific records requests but indicates that the MAC will request records at a later date. The letter may briefly describe the TPE process as including three rounds of claims review with education after each round. This letter will likely warn that, if a provider/supplier fails to improve the accuracy of its claims after three rounds, the MAC will refer the provider/supplier to CMS for additional action, such as prepayment review, extrapolation of overpayments, referral to a RAC, or other disciplinary action.

A provider or supplier navigating a TPE review should take care to comply with the program’s requirements and timelines and should be aware of the potential consequences of a review. A TPE review can take months or years to resolve and can have devastating impacts on a provider’s business, up to and including revocation of Medicare billing privileges and placement on the CMS Preclusion List.

After the Notice of Review, the MAC will send Additional Documentation Requests (ADR) for 20-40 claims. However, these ADRs may be indistinguishable from any other, with no indication of the added importance of being pursuant to a TPE audit. The ADRs will require a response within 45 days. After the provider submits the documentation, the MAC is required to provide direct one-on-one education to the provider. The MAC will then issue a letter that outlines its findings. If a high number of claims are denied, the MAC will proceed to a second round of review of 20-40 claims and education. If a high number of claims are denied again, the MAC will proceed to a third round.

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The Centers for Medicare & Medicaid Services (CMS) contracts with a Supplemental Medical Review Contractor (SMRC) who provides support for a variety of tasks aimed at lowering improper payment rates and increasing efficiencies of the medical review functions of the Medicare and Medicaid programs. Noridian Healthcare Solutions was selected as the SMRC in 2018. The SMRC conducts nationwide medical reviews of Medicare Parts A and B, DMEPOS, and Medicaid claims to determine whether claims follow coverage, coding, payment, and billing requirements. The focus of the medical reviews may include areas identified by CMS data analysis, the Comprehensive Error Rate Testing (CERT) program, professional organizations, and federal oversight agencies. At the request of CMS, the SMRC may also carry out other special projects to protect the Medicare Trust Fund.

SMRC audits are referred to as projects and there are three categories of SMRC project reviews:

  • Healthcare Fraud Prevention Partnership (HFPP) Review: Based on fraud, waste, and abuse trends identified by the HFPP.
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In May 2021, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) added several new items to its work plan. The OIG work plan sets forth various projects including OIG audits and evaluations that are underway or that OIG plans to address during the fiscal year and beyond. These are some of the highlights of the new additions to the work plan of which providers and suppliers should be aware.

First, OIG will audit payments made to healthcare providers under the general distributions of the Provider Relief Fund. This includes approximately $92 billion across all three phases of the general distributions. Provider who received these funds were required to meet certain requirements, such as submitting revenue information and supporting documentation to the Health Resources and Services Administration (HRSA), which used this information to determine eligibility and payments. OIG will perform a series of audits of funds related to the three phases of the General Distribution to determine whether payments were: (1) correctly calculated for providers that applied for these payments, (2) supported by appropriate and reasonable documentation, and (3) made to eligible providers.

Second, OIG will conduct a nationwide, three-part study of the effects of the COVID-19 pandemic on nursing homes. The first part will analyze the extent to which Medicare beneficiaries residing in nursing homes were diagnosed with COVID-19 and describe the characteristics of those who were at greater risk. The second part will describe the characteristics of the nursing homes that were hardest hit by the pandemic (i.e., homes with high numbers of beneficiaries who had COVID-19). The third part will describe the strategies nursing homes used to mitigate the unprecedented challenges of COVID-19.

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