Don’t Keep The Change, Doc

Meaning, don’t just pocket the difference when the government overpays you for healthcare goods or services.

Recently, a medical group agreed to pay $450,000 to settle allegations that it refused to return $175,000 in overpayments that it received from federal healthcare programs like Medicare and Medicaid. Here’s the government’s press release.

The overpayments at issue tend to happen in medical practices when two insurers share responsibility for a payment, and one pays too much.

But the thing is, you have to return the surplus, whether it’s big or small; you can’t keep it, and you can’t dawdle, either. If you do, you may incur significant liability under the False Claims Act, as we’ve explained before.

The rule is that you have sixty days to return the money once you know (or should know) about the overpayment. For more on the 60-day rule, see here.

In this case, the government alleged that the medical group failed to return the money despite repeated warnings, until it learned the Justice Department was investigating. Apparently, it didn’t know that one of its employees had filed a whistleblower lawsuit, which the government joined and took over. (For more on that process, see here.) The former employee will receive $90,000 of the settlement proceeds, or twenty percent.

This isn’t the first time the feds have moved to enforce the 60-day rule, and it sure won’t be the last. They’re just getting started.

Feds Arrest Hundreds in Healthcare Raids

Last week, the federal government conducted nationwide raids of healthcare providers and facilities based on $1.3 billion in allegedly false billings.

In one day, the feds arrested 412 people in a coordinated takedown that netted 115 doctors, nurses, and other licensed professionals. The government also brought legal action to exclude 295 providers—including doctors, nurses, and pharmacists—from further participating in federal healthcare programs.

The government says the defendants schemed to defraud Medicare, Medicaid, and Tricare, which is the health-insurance program for veterans, servicemembers, and their families. It alleges that defendants billed for prescription drugs and other treatments or services that were medically unnecessary or never even provided.

The raids were spearheaded by the Department of Justice (DOJ) and the Department of Health and Human Services (HHS). Here’s DOJ’s press release about it, and here’s a factsheet by HHS that tallies up the numbers. The raids were concentrated in Florida, Texas, Michigan, California, Illinois, New York, Louisiana, and Mississippi. But they also captured targets in over two dozen other states across the country.

When Medicare Says You Can’t Sit With Us

Earlier this year, the U.S. Department of Health and Human Services issued new regulations on its power to exclude healthcare providers and suppliers from participation in a federal healthcare program. The agency excludes some 3,500 people or entities per year. You’ll want to avoid being one of them.

Here are some important takeaways.

The agency is empowered to cast a wider net. It may exclude not just the providers and suppliers who submit claims or receive payments but any person or entity that furnishes items or services for which others request or receive payment.

You can be excluded if you’re convicted of interfering with an audit. The agency doesn’t define the term “audit” for this purpose. Before, you had to have obstructed a criminal investigation, not just an audit or the like. The new rule also makes changes to the factors that extend or reduce the presumptive three-year exclusion under this provision.

You can be excluded for not providing information to support a claim even if you didn’t furnish the items or services in question. You can be excluded if you referred the items or services to others to furnish or certified that they were needed.

The agency has ten years to exclude you for false claims or illegal kickbacks. This timeframe follows the outer ten-year statute of limitations for violations of the False Claims Act. Before, there was theoretically no limit on how far back the agency could look to exclude you under these provisions.

The rule makes several changes to the aggravating and mitigating factors that extend or reduce the length of exclusions. Most of these changes affect the dollar-loss thresholds. For example, it’s now aggravating if the government’s loss amounts to $50,000 or more, when it used to be $15,000. And it’s mitigating if the loss is less than $5,000 when it used to be $1,500. Or, for excessive or unnecessary billing, it’s aggravating if the loss is $15,000 or more when that threshold used to be $1,500. Also, in most cases, it’s no longer mitigating if you provide access to care that’s otherwise not available in your area. Instead, the agency will consider that in deciding whether to exclude you rather than for how long.

You may be eligible for early reinstatement. You can request it if you were excluded because your professional license was revoked, suspended, or surrendered in a disciplinary investigation. There’s a presumption against it for the first three years that you’re excluded or for the length of your suspension or revocation, whichever is longer. There’s no such presumption if you’re still licensed in a different state or by a different licensing authority or if you were able to get a new license after full disclosure. But you’re not eligible at all if you lost your license because of patient abuse or neglect.

CMS Puts Out New Physician Self-Referral Disclosure Protocol

If you’re a healthcare provider or supplier, take note.

Starting June 1, 2017, there is a new process for self-reporting actual or potential violations of the Stark Law to the Centers for Medicare & Medicaid Services.

Remember, Stark says that doctors can’t refer certain, designated health services that are payable by Medicare or Medicaid to entities in which they have a financial interest. The same goes if an immediate family member is the one with the financial interest. The entity that receives the referral can’t bill for those services, either. But exceptions apply.

Why in the world would you self-report? Well, if there is discretion to keep you in the program, your cooperation will go a long way. You’ll pay less in penalties. You’ll reduce or eliminate your liability for not reporting and returning the overpayments sooner. And you’ll probably put the matter behind you more quickly than if the government gets wind of it.

Now, there’s a new way to do it. Up to this point, you would submit your self-disclosure to CMS by letter. From June 1, you must submit a packet of forms and enclosures that you certify. You should submit all information necessary for the agency to analyze the actual or potential violation. You may also submit a cover letter with additional, relevant information.

You’re well-advised not to do any of this without appropriate counsel.

The new protocol doesn’t apply to non-Stark-related disclosures of potential fraud, waste, or abuse involving a federal healthcare program.

So if you wish to disclose actual or potential violations of other laws like the Anti-Kickback Statute, you should use a separate process for it.

After you talk to your lawyer.

 

CMS Issues Final “Overpayments” Rule for Medicare Parts A and B

Speaking of healthcare—providers, suppliers, and other stakeholders should take note that, last week, the Centers for Medicare & Medicaid Services (CMS) published its long-awaited final rule for reporting and returning overpayments under Medicare Parts A and B.

The rule defines “overpayments” to include any funds you receive or retain that you’re not entitled to after applicable reconciliation. The CMS published its rule for Medicare Parts C and D two years ago, and there’s no rule for Medicaid yet. With or without an administrative rule, however, you’re still subject to a statutory 60-day rule under the Affordable Care Act.

The rule confirms that you must report and return an overpayment within sixty days of the date on which you “identify” it or by the due date of any corresponding cost report, if applicable, whichever is later. After that, the overpayment becomes an obligation that you owe the government, and it triggers liability under the False Claims Act and the Civil Monetary Penalties Law, among other consequences.

The rule provides that you identify an overpayment when you either have or should have, through the exercise of reasonable diligence, both determined that you received an overpayment and been able to quantify its amount to a reasonable degree of certainty.

What’s reasonable diligence? The agency deems it to include both (1) reactive investigations by qualified individuals in response to credible information about a potential overpayment; and (2) proactive compliance activities by qualified individuals to screen for overpayments.

Once alerted to a potential overpayment, you have up to six months to complete your investigation, except in extraordinary circumstances; then the 60-day clock begins to run.

How far back do you need to look? The rule says six years, which is consistent with the base statute of limitations under the False Claims Act.

The rule goes into effect on March 14, 2016. You can read the text and extensive commentary for yourself here.

Medicare’s New Fraud Prevention System Begins to Yield Savings

This summer not only marked the 50th anniversary of the birth of our national Medicare and Medicaid programs; it also marked the fourth anniversary of the launch of Medicare’s experiment with predictive analytics, and it delivered some report cards on the system’s third full year of implementation and use.

The Fraud Prevention System (FPS), as it’s called, was legislated into existence by the Small Business Jobs Act of 2010, which directed the Department of Health and Human Services to use predictive analytics to analyze claims in real time, identify improper ones, and prevent their payment. See 42 U.S.C. § 1320a-7m. The Department’s Centers for Medicare & Medicaid Services (CMS) then contracted with Northrop Grumman and others to develop and implement the FPS, and CMS has been reporting on the results since. The law also directed the Department’s Office of Inspector General (OIG) to certify the system’s actual and projected savings as well as its return on investment.

In July, CMS reported that the FPS had identified or prevented $454 million in improper payments in 2014 and $820 million in total for its first three years. According to the agency, the $454 million tally in 2014 represented a nearly ten-to-one return on investment for the year. The 2014 tally was also more than 80% higher than the savings from the second year and nearly quadruple the savings from the first year.

The OIG, however, certified that we can reasonably expect to realize only $133 million of the $454 million in 2014 savings: $86 million from investigations that the FPS initiated and $47 million from its contributions to existing ones. The rest represents potential savings that we may not realize and shouldn’t wait on with bated breath.

But that shouldn’t reflect poorly on the FPS. According to the OIG’s report, nearly all of the reduction in savings comes from cases that resulted in one of three actions: a referral to law enforcement for criminal prosecution (which accounted for over 40% of the savings that we may never see); a revocation of a provider’s billing privileges (which accounted for nearly 19% of such savings); or an attempt to recover an overpayment (36%). The first two categories tend to include more egregious cases where the money may already be gone, but that doesn’t mean the FPS wasn’t useful. The third category, overpayments, is one in which the government’s recovery rate should improve over time, as we’ve touched on before.

Overall, even the OIG’s adjusted savings of $133 million reflected a return on investment of $2.84 for every dollar spent on the FPS in 2014, and that ain’t bad. The ROI also improved significantly from the year before, when it returned only $1.34 on the dollar.

Ultimately, the OIG gave the system and its prospects a thumbs-up.

Still, not everyone’s happy. Some bemoan all the fuss over the FPS when the government has recovered far more by using outside auditors who hunt for improper payments and take a percentage of what they recover.

But then again, we’re just getting started with this stuff.

Another Massive Medicare-Fraud Roundup

In case you missed it, two weeks ago, the federal Medicare Fraud Strike Force announced a nationwide sweep that ensnared 243 people for their alleged participation in fraudulent schemes to bill Medicare over $700 million. The individual cases are not all related, but the coordinated takedown was the largest we’ve seen so far—both in the number of targets and in the dollar amount of alleged loss. Among the targets were nineteen doctors and 27 nurses or other, licensed medical professionals.

The Medicare Fraud Strike Force is a joint task force of the Department of Justice and the Department of Health and Human Services that prosecutes fraud, waste, and abuse in the Medicare program. Since 2007, it has brought cases against 2,300 people and expanded its base operations to nine cities: Baton Rouge, Brooklyn, Chicago, Dallas, Detroit, Houston, Los Angeles, Miami, and Tampa.

This time around, the Strike Force descended on seventeen cities across Florida, Texas, Michigan, Louisiana, New York, and California. Miami alone accounted for 73 defendants.

The charges include healthcare fraud, illegal kickbacks, money laundering, and aggravated identity theft (which we recently covered here). They allege schemes involving home health care, physical therapy, psychotherapy, durable medical equipment, and pharmacies.

According to Attorney General Loretta Lynch, “the defendants … billed for equipment that wasn’t provided, for care that wasn’t needed, and for services that weren’t rendered.”

At least 44 of the targets were charged in connection with Medicare Part D, the prescription-drug-benefit program, which is the fastest-growing part of Medicare and thus a rising priority of enforcement. These charges include billing for drugs that either were not dispensed, were expired or adulterated, or were trafficked in for illegitimate use.

Here’s the Justice Department’s press release.

An Active Forecast for Healthcare Enforcement

Here is a good summary of the state of affairs when it comes to healthcare fraud and compliance. The bottom line is it continues to be a high priority for government.

The highlights?

  1. Follow the money. For fiscal year 2015, Congress more than doubled the funding of the government’s Health Care Fraud and Abuse Control program to $672 million. The HCFAC, as it were, was created under HIPAA to join the Department of Justice and Department of Health and Human Services in leading efforts at all levels—federal, state, and local—to address healthcare fraud, waste, or abuse. The new funding means more money for agents, prosecutors, and data analytics, including predictive analytics, to help bring cases.
  2. Let the sunshine in. It may not be the Age of Aquarius, but the Sunshine Act has spotlighted the relationships among physicians and vendors, and CMS has begun to publish Medicare claims and utilization data. It’s the dawning of a new world, and the greater scrutiny and transparency suggest greater activity to come by plaintiffs both public and private. Which brings us to the next point.
  3. Listen for the whistle. In 1987, there were 30 whistleblower lawsuits brought under the False Claims Act; since 2000, the number’s closer to 400 per year, and the past two years have seen more than 700 apiece. Meanwhile, the Justice Department announced last fall that the criminal division would automatically review new whistleblower lawsuits alongside the civil division rather than wait for the civil division to refer a case for prosecution. In other words, the filing of a whistleblower lawsuit now opens, in essence, a parallel civil-criminal investigation.

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