Articles Posted in Fraud & Abuse

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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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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.

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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.

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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.

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The Office of Inspector General (OIG) for the United State Department of Health and Human Services (HHS) recently released a template to assist with preparing advisory opinion requests. This template can be used to ensure that requestors include the information required for the advisory opinion process. The template lays out the basic information required for an advisory opinion request and leaves an optional section for legal analysis. Although providing a legal analysis is not required, most requests include significant legal analysis regarding why OIG should approve the arrangement and it is often the most detailed and insightful portion of a successful advisory opinion request.

Advisory opinions issued by HHS OIG are legal opinions that are issued to the requesting parties that apply OIG’s fraud and abuse authorities to the requesting parties’ current or proposed business arrangement. Since the advisory opinion is tailored to and binding on a requesting party’s current or proposed business arrangement, OIG will not advise on any hypothetical or other arrangements that the party does not actually intend to engage in. Although most advisory opinion requests seek guidance regarding the Anti-Kickback Statute (AKS) and its safe harbors, OIG is also authorized to issue advisory opinions on the application of exclusion authorities, civil monetary penalty authorities, and criminal penalties.

OIG also declines to issue opinions on general questions of interpretation, the fair market value of goods, services, or property, or the application of the Stark law or the Eliminating Kickbacks in Recovery Act (EKRA). Although advisory opinions can provide valuable guidance, requesting an advisory opinion is a completely voluntary process. Accordingly, failure to seek an advisory opinion regarding a business arrangement cannot be introduced as evidence as proof that the party violated the law.

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One of the most destructive types of audits that a Medicare provider can suffer from a Medicare contractor is a UPIC audit. A UPIC (Unified Program Integrity Contractor) is a type of Medicare contractor that combines several program integrity functions that were previously handled by different entities. The primary goal of the UPICs is to identify potential fraud; however, they are often quick to accuse providers of significant fraud and bring devastating consequences to providers without giving the providers an opportunity to respond. Even a UPIC audit for a relatively small number of claims or a relatively small dollar value should be treated as a significant investigation.

A UPIC may initiate an investigation based on several types of leads. The UPICs are authorized to use analysis of claims data to identify potential billing irregularities or suspected fraud, and this is the most frequent source of a UPIC investigation. This means that providers with unusual billing patters or high utilization are inherently more susceptible to UPIC investigations, even if these billing practices are for entirely legitimate reasons, such as a particular patient population. The UPICs may also receive referrals from other agencies and from outside sources, such as news media, interviews, or beneficiary complaints.

Once a UPIC initiates an investigation, it has many tools at its disposal. It may utilize records requests, onsite reviews at the place of business of the provider or supplier, or interviews of employees of the provider or supplier. Often UPIC audits begin as small probe audits, possible only a dozen claims valued at a few thousand dollars. These small probe audits may at first appear to be not worth defending or appealing. However, UPICs often use the results of these small probe audits to jump to the conclusion that the provider is committing fraud and, seemingly out of nowhere, suspend the provider’s Medicare payments. The UPIC may also persuade the Centers for Medicare & Medicaid Services (CMS) to revoke the provider’s Medicare billing privileges because the UPIC’s probe audits have made it appear as though the provider has a pattern of submitting claims that do not meet Medicare requirements. At this point, it may be too late to appeal the results of the earlier probe audits, leaving the provider in the unenviable position of defending itself when CMS thinks the results of the probe audits are set in stone.

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The Department of Health and Human Services (HHS) Office of Inspector General (OIG) recently issued OIG Advisory Opinion No. 22-14 that applied its November 2020 special fraud alert targeting remuneration associated with speaking arrangements funded by pharmaceutical and medical device companies.

The November 2020 special fraud alert addressed potential Anti-Kickback Statute (AKS) risks arising from paying physicians to speak at educational programs and providing benefits to  attendees. OIG outlined several factors that, if present, would increase the risk of an AKS violation.

OIG’s No. 22-14 Advisory Opinion was issued in response to an ophthalmology practice’s proposed continued education program. The practice intended to offer continued education programs to local optometrists, who may be responsible for referring approximately half of the practice’s surgical patients. Although many of the local optometrists refer their patients to the practice, the program would be available to all optometrists in the area, and there would be no obligation to refer patients to the practice after attending the program.

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