Fraud & Abuse

Published on: August 9, 2023

OIG Declines to Impose Sanctions on Online Healthcare Directories

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.

Published on: June 28, 2023

U.S. Supreme Court Expands Scope of the False Claims Act, Includes What Provider Believed When It Submitted the Claim

by Wachler & Associates, P.C.

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 1^st, 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.

Published on: June 19, 2023

OIG Announces New Work Plan Items for June

by Wachler & Associates, P.C.

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.

Published on: June 13, 2023

OIG Releases Semiannual Report to Congress

by Wachler & Associates, P.C.

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.

Published on: May 30, 2023

New FAQs Expand OIG Guidance

by Wachler & Associates, P.C.

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.

Published on: May 15, 2023

Can Physicians Invest in ASCs?

by Wachler & Associates, P.C.

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.

Published on: January 26, 2023

UPIC Audits on the Rise

by Wachler & Associates, P.C.

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.

Published on: January 19, 2023

OIG Advisory Opinion Approves Arrangement Involving NP Services Provided by Hospital

by Wachler & Associates, P.C.

Recently, in Advisory Opinion 22-20, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) approved an acute care hospital’s arrangement in which its employed nurse practitioners (NPs) perform certain services that the patients’ primary care physicians traditionally perform. This opinion may present opportunities for providers because it represents a departure from OIG’s typical approach to arrangements involving remuneration from a hospital to a referring physician and demonstrates OIG’s emphasis on healthcare providers offering quality care to federal healthcare program beneficiaries. However, it must be noted that this opinion’s efficacy is limited only to the federal Anti-Kickback Statute. Other laws, such as the federal physician self-referral law or Stark Law, may pose significant risk factors to similar arrangements. Also, Advisory Opinions are only binding on OIG in regarding the specific arrangements review, but they can be a source of guidance regarding other arrangements.

Under the proposed arrangement, the Requestor is an acute care hospital that provides inpatient and outpatient hospital-based services and which seeks to use its employed NPs to perform various tasks for the patients, who are inpatients or in observation status in two designated medical units and who are admitted by physicians that participate in the Requestor’s program. Participating physicians are predominantly primary care physicians, although the hospital makes the services available for all physicians who regularly admit patients to the designated medical units. The hospital does not take into account a physician’s volume or value of referrals in considering the physician for participation.

The arrangement is limited to two general care units and does not extend to surgical or specialty care units. Under the arrangement, the NPs perform various tasks in communication and collaboration with the physicians that the physicians would normally perform. Such tasks include initiating plans of care, educating patients and families, and arranging for follow-up laboratory or imaging studies, among others. The patients seen by the NPs are under active evaluation and require ongoing medical attention, thus the arrangement allows them to be diagnosed and treated more quickly. The treating physicians remain ultimately responsible for the patients’ care and must still round on their patients daily. The physicians also cannot bill for the NPs’ services. The hospital neither makes payments to the treating physicians under the arrangement nor separately bills any payor for the NPs’ services.

Published on: November 21, 2022

OIG Updates Work Plan for November 2022

by Wachler & Associates, P.C.

The Department of Health and Human Services (HHS) Office of Inspector General (OIG) announced several new changes in its Work Plan update for November 2022. The OIG Work Plan forecasts the projects that OIG plans to implement over the foreseeable future. These projects usually include OIG audits and evaluations. Below are the highlights from the Work Plan update of which providers and suppliers should take notice.

First, OIG will conduct a targeted audit of Medicaid nursing facilities’ use of funds related to direct patient care. In carrying out this audit, OIG plans to select three facilities in selected states to determine what percentage of Medicaid nursing facility revenue is being expended on direct patient care. The three facilities selected for review will be composed of one of each of the following types: for-profit, not-for-profit, and governmental.

Second, OIG will perform a nationwide audit of inpatient rehabilitation facilities (IRFs). In prior years, IRF claims audits and Hospital Compliance audits that include IRF claims have revealed alleged high error rates related to IRF stays which did not support that the IRF care was reasonable and necessary in accordance with Medicare requirements. In response to these findings, IRF stakeholders have asserted that Medicare audit contractors and OIG have misconstrued the IRF coverage regulations. OIG plans to utilize this planned nationwide audit to better understand which claims IRFs believe are properly payable by Medicare and whether there are areas in which CMS can clarify Medicare IRF claims payment criteria. This audit will be an independent performance audit in accordance with Generally Accepted Government Auditing Standards.

Published on: November 14, 2022

NPDB Reporting Obligations Reinforced by Recent Court Decision

by Wachler & Associates, P.C.

Recently, a federal court in Oregon held that healthcare entities, including hospitals, are legally obligated to report to the National Practitioner Data Bank (NPDB) where a practitioner surrenders their clinical privileges while under investigation, even if the physician did not know that he or she was under investigation.

The Department of Health and Human Services (HHS) originally established the NPDB pursuant to the Health Care Quality Improvement Act of 1986 (HCQIA) in order to collect and release certain information relating to the professional competence and conduct of physicians, dentists, and other healthcare practitioners. Under the Act, healthcare entities, particularly hospitals, are generally required to disclose the acceptance of the surrender of clinical privileges of a physician while the physician is under an investigation by the hospital relating to alleged incompetence or improper professional conduct. The overarching goal of this provision was to close a loophole where physicians under investigation and healthcare entities would resort to “plea bargains” in which a physician agreed to such a surrender in return for the healthcare entity’s promise not to inform other healthcare entities about the circumstances of the physician’s surrender of privileges.

In the recent case, a hospital reported to the NPDB that a physician surrendered his privileges with the hospital while the physician was under investigation. The physician sought a preliminary injunction ordering the hospital to withdraw the report and argued that the report was false because he was not under investigation when he surrendered his privileges since the hospital officials allegedly failed to comply with the hospital’s policies before an investigation had begun. The court stated that for NPDB reporting purposes, the term “investigation” is not controlled by how that term may be defined in a healthcare entity’s bylaws or policies. Rather, that term is viewed expansively for NPDB reporting purposes, and is considered to run from the start of a general inquiry until a final decision on a clinical privileges action is reached. Notably, the court implied that the result would be the same even if the physician was not aware that he was under investigation, since there is no requirement in the context of NPDB reporting that the healthcare practitioner be notified or aware of the investigation. Thus, the court ultimately disagreed with the physician and upheld the hospital’s report.