Category Archives: Fraud

Medicare Investigations for False Claims Act Violations

Whenever you receive correspondence with letterhead from the Department of Justice, Attorney General’s office, you know it’s important and you better take note.

DOJ, AG

A Civil or Criminal Investigative Demand is serious. Getting any communication from the U.S. Department of Justice can be a bit unnerving. That’s particularly true for Medicare and Medicaid providers receiving a Civil Investigative Demand (“CID”) for documents and testimony.  

A CID is a tool used by the Justice Department (“DOJ”) to investigate potential violations of the False Claims Act (“FCA”). See blog. The DOJ can issue a CID whenever the DOJ has “reason to believe that any person may be in possession, custody, or control of any documentary material or information relevant to a false claims law investigation.” The bottom line is that the DOJ uses CIDs to obtain documents and identify potential witnesses so they can bring FCA suits against the recipient or others.

What is the False Claims Act anyway?

It’s a broad statute that punishes many things, one of which is making false statements to the government in connection with a claim for payment from the government. The DOJ often uses CIDs to investigate medical providers who seek payment from Medicare and Medicaid. 

Just because the Investigative Demand is labeled “civil” does not mean that the investigation is only civil; it could take a turn towards criminal. In other words, something sparked the DOJ’s attention, but, perhaps there were no allegations of criminal action, the investigation could start and the investigator could uncover something they consider criminal. An investigation earmarked as civil can turn criminal with the uncovering of one document.

On the other hand, the investigator could review all the documents and conclude that there is not even a civil violation. Very rarely, do the investigators contact you to tell you that the investigation is over and no violation was found. Most of the time, you are put on notice that you are being investigated, then hear nothing from the investigator in perpetuity.

Recently, I had an investigator inform me that the review of. my client was complete, and the file was being closed. But that’s the only time in 22 years that I was informed that nothing noncompliant was found. Usually, time just passes.

If you are found to have violated the FCA, the government can triple the amount of penalties, so the numbers get very high very quickly.

The Justice Department obtained more than $5.6 billion in settlements and judgments from civil cases involving fraud and false claims against the government in the fiscal year ending Sept. 30, 2021. This is the second largest annual total in False Claims Act history, and the largest since 2014. Settlement and judgments since 1986, when Congress substantially strengthened the civil False Claims Act, now total more than $70 billion.

A much lesser known provision of the FCA is the reverse one. Not to blow everyones’ minds, but there is also a “reverse false claims” provision of the False Claims Act.  The reverse false claims provision permits the government or relators to pursue defendants who are alleged to have hidden or reduced an obligation to pay the government through false statements, or who have violated the 60-day payment rule’s obligation to return “identified overpayments.”   These claims typically have been raised in the context of cost reporting, Medicare Part C, or related to alleged failures to fulfill obligations under the 60-day payment rule.  The government and relators have increasingly relied on the reverse false claims provision to support stand-alone claims or have used it in conjunction with affirmative false claims.  However, because the reverse false claims provision is very lightly used compared to affirmative false claims provisions, there is a dearth of case law defining it or exploring its parameters.   The case law that does exist is primarily from district courts and, as the survey of case law contained herein illustrates, there is little guidance from the Circuit Courts or the U.S. Supreme Court.

Intent or deliberate disregard is required to prove the false claims act – reverse and regular.

Failure to respond to a CID completely could warrant criminal contempt. This is especially important to note, as civil investigate demand sounds much less important than a subpoena. But a CID is, in essence, a subpoena. Immediately, implement a “legal hold” upon receipt of the CID, and don’t forget to avoid producing privileged documents.

After the investigation is complete, if there are violations of the FCA uncovered, you will receive correspondence that states in “all-caps” and bold font:

Rule 408 FOR SETTLEMENT PURPOSES ONLY 

FRE 408 prohibits the use of settlement negotiations as evidence. After reviewing the offer, get with your legal counsel to discuss next steps.

Defenses Against Medicare/caid Audits: Arm Yourself!

Auditors are overzealous. I am not telling you anything you don’t know. Auditors cast wide nets to catch a few minnows. Occasionally, they catch a bass. But, for the most part, innocent, health care providers get caught in the overzealous, metaphoric net. What auditors and judges and basically the human population doesn’t understand is that accusing providers of “credible allegations of fraud” and alleged overpayments, when unfounded, has a profound and negative impact. First, the providers are forced to hire legal counsel at an extremely high cost. Their reputations and names get dragged through the mud because providers are guilty until they are proved innocent. Then, once they prove that there is no fraud or noncompliant documents, the wrongly accused providers are left with no recourse.

            The audits generally result in similar reasoning for denials. For instance,

  1. Lacks medical necessity. Defense: The treating physician rule. Deference must be given to the treating physician, not the desk reviewer who has never seen the patient.
  2. Canned notes: Defense: While canned notes are not desirable, it is not against the law. There is no statute, regulation, or rule against canned notes. Canned notes are just not best practices. But, in reality, when you serve a certain population, the notes are going to be similar.
  3. X-rays tend to be denied for the sole reason that there are no identifying notes on the X-ray. Or the printed copy of the X-ray you submit to the auditors is unreadable. Defense/Proactive measure: When you submit an X-ray, include a brief note as to the DOS and consumer.
  4. Signature illegible; therefore, no proof of provider being properly trained and qualified. Defense: This one is easy; you just show proof of trainings, but to head off the issue, print your name under your signature or have it embedded into your EHR.
  5. Documentation nitpicking. The time, date, or other small omissions result in many a denial. Defense: There is no requirement for documents to be perfect. The SSA provides defenses for providers, such as “waiver of liability” and “providers without fault.” The “waiver of liability” defense provides that even if payment for claims is deemed not reasonable and necessary, payment may be rendered if the provider did not know and could not have been reasonably expected to know that payment would not be made.

Whenever a client tells me – let’s concede these claims because he/she believes the auditors to be right, I say, let me review it. With so many defenses, I rarely concede any claims. See blog for more details.

Medicare Provider Appeals: Premature Recoupment Is Not OK!

A ZPIC audited a client of mine a few years ago and found an alleged overpayment of over $7 million. Prior to them hiring my team, they obtained a preliminary injunction in federal court – like I always preach to do – remember, that between the levels 2 and 3 of a Medicare provider appeal, CMS can recoup the alleged overpayment. This is sheer balderdash; the government should not be able to recoup funds that the provider, most likely, doesn’t owe. But this is the law. I guess we need to petition Congress to change this tomfoolery.

Going back to the case, an injunction stops the premature recoupments, but it does nothing regarding the actual alleged overpayments. In fact, the very reason that you can go to federal court based on an administrative action is because the injunction is ancillary to the merits of the contested case. Otherwise, you would have to exhaust your administrative remedies.

Here, we asserted, the premature recoupments (1) violated its rights to procedural due process, (2) infringed its substantive due-process rights, (3) established an “ultra vires” cause of action, and (4) entitled it to a “preservation of rights” injunction under the Administrative Procedure Act, 5 U.S.C. §§ 704–05. We won the battle, but not the war. To date, we have no date for an administrative law judge (“ALJ”) – or level 3 – hearing on the merits.

For those of you who have participated in a third-level, Medicare provider appeal will know that, many times, no one shows for the other side. The other side being the entity claiming that you owe $7million. For such an outlandish claim of $7 million, would you not think that the side protesting that you owe $7 million would appear and try to prove it? At my most recent ALJ hearing, no one appeared for the government. Literally, my client – a facility in NJ that serves the MS population – me and the ALJ were the only participants. Are the auditors so falsely confident that they believe their audits speaks for itself?

In this particular case, the questionable issue was whether the MS provider’s consumers met the qualifications for the skilled rehabilitation due to no exacerbated physical issues. However, we all know from the Jimmo settlement, that having exacerbated issues or improvement is not a requirement to requiring skilled rehab versus exercising with your spouse. The ALJ actually said – “I cannot believe this issue has gotten this far.” I agree.

Instead of Orange, Medicare Advantage Audits Are the New Black

In case you didn’t know, instead of orange, Medicare Advantage is the new black. Since MA plans are paid more for sicker patients, there are huge incentives to fabricate co-morbidities that may or may not exist.

Medicare Advantage will be the next most audited arena. Home health, BH, and the two-midnight rule had held the gold medal for highest number of audits, but MA will soon prevail.

As an example, last week- a New York health insurance plan for seniors, along with amedical analytics company the insurer is affiliated with, was accused by the Justice Department of committing health care fraud to the tune of tens of millions of dollars. The dollar amounts are exceedingly high, which also attracts auditors, especially the auditors who are paid on contingency fee, which is almost all the auditors.

CMS pays Medicare Advantage plans using a complex formula called a “risk score,” which is intended to render higher rates for sicker patients and less for those in good health. The data mining company combed electronic medical records to identify missed diagnoses — pocketing up to 20% of new revenue it generated for the health plan. But the Department of Justice alleges that DxID’s reviews triggered “tens of millions” of dollars in overcharges when those missing diagnoses were filled in with exaggerations of how sick patients were or with charges for medical conditions the patients did not have. “All problems are boring until they’re your own.” – Red

MA plans have grown to now cover more than 40% of all Medicare beneficiaries, so too has fraud and abuse. A 2020 OIG report found that MA paid $2.6 billion a year for diagnoses unrelated to any clinical services.

Diagnoses fraud is the main issue that auditors are focusing on. Juxtapose the other alphabet soup auditors – MACs, SMRCs, UPICs, ZPICs, MCOs, TPEs, RACs – they concentrate on documentation nitpicking. I had a client accused of FWA for using purple ink. “Yeah I said stupid twice, only to emphasize how stupid that is!” – Pennsatucky. Other examples include purported failing of writing the times “in or out” when the CPT code definition includes the amount of time.

Audits will be ramping up, especially since HHS has reduced the Medicare appeals backlog at the Administrative Judge Level by 79 percent, which puts the department on track to clear the backlog by the end of the 2022 fiscal year.

 As of June 30, 2021, the end of the third quarter of FY 2021, HHS had 86,063 pending appeals remaining at OMHA, according to the latest status report, acquired by the American Hospital Association. The department started with 426,594 appeals. This is progress!!

Medicare Provider Appeals: “Get Thee to an ALJ!”

Get thee to a nunnery!” screamed Hamlet to Ophelia in frustration of his mother marrying Claudius so quickly after his father’s death. Similarly any provider who has undergone a Medicare appeal understands the frustration of getting the appeal to the administrative law judge level (the 3rd level). It takes years to do so, and it is the imperative step instead of the lower level rubber stamps. “Get thee to an ALJ!”

Per regulation, once you appeal an alleged Medicare overpayment, no recoupment of the disputed funds occurs until after you receive the second level review, which is usually the QIC upholding the overpayment. It is no secret that the Medicare provider appeals’ level one and two are basically an automatic approval process of the decision to recoup. “Something is rotten in the state of Denmark.” Hence, the importance of the ALJ level.

There are 5 levels of Medicare appeals available to providers:

  • Redetermination
  • Reconsideration
  • Administrative Law Judge (ALJ)
  • Departmental Appeals Board (DAB) Review
  • Federal Court (Judicial) Review

The third level is the level in which you present your case to an ALJ, who is an impartial independent tribunal. Unfortunately, right now, it takes about five years between levels two and three, although with CMS hiring 70 new ALJs, the Office of Medicare Hearings and Appeals (OMHA) is optimistic that the backlog will quickly dissipate. Last week, I attended an ALJ hearing for a client based on an audit conducted in 2016. Five years later, we finally presented to the ALJ. When the ALJ was presented with our evidence which clearly demonstrated that the provider should not pay anything, he actually said, “I’m shocked this issue got this far.” As in, this should have been reversed before this level. “O what a noble mind is here o’erthrown!”

In many cases, a premature recoupment of funds in dispute will financially destroy the health care provider, which should not be the purpose of any overpayment nor the consequence of any fraud, waste, and abuse program. We are talking about documentation nit-picking. Not fraud. Such as services notes signed late, according to best practices. Or quibbles about medical necessity or the definition of in patient and the two-midnight rule.

You have all probably read my blogs about the Family Rehab case that came out in TX in 2019. A Court found that Family Rehab, a health care facility, which faced a $7 million alleged overpayment required an injunction. The Judge Ordered that CMS be enjoined from prematurely recouping Medicare reimbursements from Family Rehab. Now, be mindful, the Judge did not enjoin CMS the first time Family Rehab requested an injunction; Superior Court initially dismissed the case for lack of jurisdiction based on failure to exhaust its administrative remedies. But instead of giving up, which is what most providers would do when faced with a dismissed injunction request due to emotional turmoil and finances. “To be, or not to be: that is the question:” Instead, Family Rehab appealed the dismissal to the Court of Appeals and won. The 5th Circuit held that Superior Court does have jurisdiction to hear a collateral challenge on both procedural due process grounds as well as an ultra vires action. On remand, Family Rehab successfully obtained a permanent injunction.

The clinical issues supposedly in support of the overpayment are silly. In Family Rehab’s case, the ZPIC claims homebound criteria was not met when it is clearly met by a reasonable review of the documents.

Homebound is defined as:

Criteria One:

The patient must either:

  • Because of illness or injury, need the aid of supportive devices such as crutches, canes, wheelchairs, and walkers; the use of special transportation; or the assistance of another person in order to leave their place of residence

OR

  • Have a condition such that leaving his or her home is medically contraindicated.

If the patient meets one of the Criteria One conditions, then the patient must ALSO meet two additional requirements in Criteria Two below:

Criteria Two:

  • There must exist a normal inability to leave home;

AND

  • Leaving home must require a considerable and taxing effort.

In one of the claims that the ZPIC found no homebound status, the consumer was legally blind and in a wheelchair! The injunction hinged on the Court’s finding that because the ALJ stage is critical in decreasing the risk of erroneous deprivation, an injunction was necessary. I look forward to the ALJ hearing. “The rest is silence.”

Audits Surge with Medicare Advantage and TPE Audits Increased!

Everyone knows about audits of health care providers. But what about the billing companies? Or a data-analytics company? In a complaint filed last week, a New York data-mining company DxID is accused of allegedly helping a Medicare Advantage program game federal billing regulations in a way that enabled the plan to overcharge for patient treatment. As you know, Medicare Advantage plans are paid more for sicker patients. Supposedly, DxID combed medical records for “missed” diagnoses. For example, adding major depression to an otherwise happy consumer. A few years ago, I won an injunction for a provider who 100% relied on the billing company to bill. Because this company aggressively upcoded, we used the victims’ rights statutes in the SSA to defend the provider. And it worked. Providers often forget about the safety net found in the victims’ rights statutes if they wholly rely on a billing company.

This DXID complaint cites medical conditions that it says either were exaggerated or weren’t supported by the medical records, such as billing for treating allegedly unsupported claims for renal failure, the most severe form of chronic kidney disease. The Justice Department is seeking treble damages in the False Claims Act suit, plus an unspecified civil penalty for each violation of the law.

Medicare Advantage has been the target of multiple government investigations, Justice Department and whistleblower lawsuits and Medicare audits. One 2020 report estimated improper payments to the plans topped $16 billion the previous year. In July, the Justice Department consolidated six such cases against Kaiser Permanente health plans. In August, California-based Sutter Health agreed to pay $90 million to settle a similar fraud case. Previous settlements have totaled more than $300 million.

Breaking news: Targeted Probe and Educate audits (TPE) resumed September 1, 2021. Due to COVID, TPE audits had been suspended. Unlike recovery audits, the stated goal of TPE audits is to help providers reduce claim denials and appeals with one-on-one education focused on the documentation and coding of the services they provide. TPE audits are conducted by MACs. While originally limited in scope to hospital inpatient admissions and home health claims, CMS expanded the program to allow MACs to perform TPE audits of all Medicare providers for all items and services billed to Medicare. Beware the TPE audits; they are not as friendly as they purport. A TPE audit can result in a 100 percent prepay review, extrapolation, referral to a Recovery Auditor, or other action, so a carefully crafted response to a TPE audit is critical.  

The TPE audit process begins when a provider receives a “Notice of Review” letter from the MAC which states the reasons the provider has been selected for review and requests 20-40 records be produced. Once the records are produced, the MAC will review the 20-40 claims against the supporting medical records and send the provider a letter detailing the results of their review. If the claims are found to be compliant, the TPE audit ends and the provider cannot be selected for review again for a year unless the MAC detects significant changes in provider billing. However, if the claims are found not to be compliant, the MAC will invite the provider to a one-on-one education session specific to the provider’s documentation and coding practices. The provider is then given 45 days to make changes and a second round of 20-40 records will be requested with dates of service no earlier than 45 days after the one-on-one education. 

The provider will be given three rounds of TPE to pass. Do not use all three rounds; get it right the first time. If the provider fails pass after three rounds, they will be referred to CMS for further action. With MA, TPE, and audits of data-analytics companies ramping up, 2022 is going to be an audit frenzy.

OIG Opens Fire on Telehealth Claims during COVID

They’re here….

Steven Spielberg actually directed Poltergeist, crew member confirms | The  Independent | The Independent

The audits of telehealth during COVID. OIG is conducting, at least, seven (7) nationwide audits of providers specific to telemedicine. These audits will review remote patient monitoring, virtual check-ins, and e-visits. In 2018, OIG issued a report regarding a 31% error rate of claims for telehealth – and that report was prior to the explosion of telemedicine in 2020 due to COVID. All providers who have billed telehealth during the public health emergency (“PHE”) should be prepared to undergo audits of those claims.

The following audit projects are as follows:

  • Audits of behavioral health care telehealth in Medicaid managed care;
  • Audits of Medicare Part B telehealth services during PHE;
  • Audits of home health services provided as telehealth during the PHE;
  • Audits of home health agencies’ challenges and strategies in responding to the PHE;
  • Medicare telehealth services during PHE: Program Integrity Risks;
  • Audits of telehealth services in Medicare Parts B (non-institutional services) and C (managed care) during the COVID-19 pandemic;
  • Medicaid: Telehealth expansion during PHE.

Recently added to the “chopping block” of audits via OIG include Medicare payments for clinical diagnostic laboratory tests in 2020. OIG will also audit for accuracy of place-of-service codes on claims for Medicare Part B physician services when beneficiaries are inpatients under Part A. As it always seems is the case, home health and behavioral health care are big, red targets for all audits. Over the pandemic, telehealth became the “new norm.” Audits on telehealth will be forthcoming. Specifically in behavioral health, OIG announced that it will audit Medicaid applied behavior analysis for children diagnosed with autism.

On another note, I recently had a client undergo a meaningful use audit. Everyone knows the government provides incentives for using electronic records. In order to qualify for a meaningful use incentive you must meet 9 criteria. If you fail one criterion, you owe the money back. One of the biggest issue physicians have faced in an audit is demonstrating the “yes/no” requirements that call for attestation proving the security risk analysis was successfully met. In this particular case, opposing counsel was a GA state AG. The attorney told me that he had zero authority to negotiate the penalty amount. It was the first time another lawyer told me that the penalty was basically a “strict liability” issue, and since the funds were federal, the State of GA had no authority to reduce or remove the penalty. But there is an appeal process. It made no sense. In this case, the doctor didn’t want to pursue litigation. So, reluctantly, we paid. I am wondering if any of my readers have encountered this issue of no negotiations for meaningful use penalties.

“5 Minutes With” Knicole Emanuel from Practus LLP

I had the pleasure of being interviewed a second time on Legal Buzz. Thanks, Alex!!

The Grey Area Between Civil and Criminal Fraud

This segment is rated ‘F’ for fraud. It is not for the meek of heart. How many of you have read a newspaper or seen the news about Medicare and Medicaid provider fraudsters? There is a grey area between civil and criminal prosecutions of fraud. Some innocent providers get caught in the wide, fraud net because counsel doesn’t understand the idiosyncrasies of Medicare regulations.

Health care fraud GENERALLY exists as one of the following:

  1. Billing for services not rendered;
  2. Billing for a non-covered service as a covered service;
  3. Misrepresenting the DOS
  4. Misrepresenting location of service;
  5. Misrepresenting provider of service
  6. Waiving deductibles and/or co-payments
  7. Incorrect reporting of diagnoses or procedures;
  8. Overutilization of services;
  9. Kickbacks/referrals for money
  10. False or unnecessary issuance of prescription drugs

To err is human. Or so Alexander Pope says. I am here to attest that many of those accused providers are innocent and victims of unspecialized criminal attorneys.

One plastic surgeon knows this only too well. Quick anecdote:

Doctor was audited for removing lesions from the eye area and accused of billing for removing cancerous lesions even when the biopsies came back benign. Yet Medicare instructs physicians to NOT go back and change a CPT code after the fact. The physician is supposed to make an educated guess as to whether the lesion removed is benign or malignant. There are no crystal balls so he makes an educated determination.

Since plastic surgery is highly specialized and the physician is highly educated. Deference should be given to the physician regardless.

This plastic surgeon was accused of upcoding and billing for services not rendered. He performed biopsies around the eye of possible, cancerous lesions. Once removed, he would send the samples to lab. Meanwhile, before knowing whether the samples were cancerous, because he believed them to be cancerous, billed for removal of cancerous lesion to Medicare. Correct coding for skin procedures is not impossible. 

In a Local Coverage Determination (“LCD”), beginning 2008, Medicare instructed physicians to not go back and change codes depending on the pathology. “If a benign skin lesion excision was performed, report the applicable CPT code, even if final pathology demonstrates a malignant or carcinoma diagnosis for the lesion removed. The final pathology does not change the CPT code of the procedure performed.” See LCD: Removal of Benign Skin Lesions, 2008. This plastic surgeon relied on CMS’ Medicare regulations and policies, including the Medicare Provider Manual and LCD 2008, which are published by the government and on which Dr. relied.

Doctor hired two criminal attorneys who did not specialize in Medicare. Doctor gets charged, and attorneys convince him to plead guilty claiming that he cannot fight the government. And that the government will seize his property if he doesn’t settle.

He pled guilty to a crime that he did not do. He paid millions in restitution, was under house arrest for 15 months, the Medical Board revoked his medical license, and he lost his career.

The lesson here is always fight the government. But choose wisely with whom you fight.

Medicaid Fraud Control Units Performed Poorly During the Pandemic: Expect MFCU Oversight to Increase

OIG just published its annual survey of how well or poor MFCUs across the country performed in 2020, during the ongoing COVID pandemic. Each State has its own Medicaid Fraud Control Unit (“MFCU”) to prosecute criminal and civil fraud in its respective State. I promise you, you do not want MFCU to be calling or subpoena-ing you unexpectedly. The MFCUs reported that the pandemic created significant challenges for staff, operations, and court proceedings, which led to lower case outcomes in FY 2020. But during this past “lower than expected” recovery year, the MFCUs still recovered over $1 billion from health care providers. It was a 48% drop.

2020 MFCU Statistics at a Glance

As MFCUs initially moved to a telework environment, some staff reported experiencing challenges conducting work because of limitations with computer equipment and network infrastructure. Field work was also limited. To help protect staff and members of the public from the pandemic, MFCUs reported curtailing some in-person field work, such as interviews of witnesses and suspects. These activities were further limited because of an initial lack of personal protective equipment that was needed in order to conduct similar activities in nursing homes and other facilities. Basically, COVID made for a bad recovery year by the MFCUs. Courts were closed for a while as well, slowing the prosecutorial process.

The report further demonstrated how lucrative the MFCU agencies are, despite the pandemic. For every $1 dollar spent on the administration of a MFCU, the MFCUs rake in $3.36. In 2020, the MFCUs excluded 928 individuals or entities. There were 786 civil settlements and judgments; the vast majority of judgments were pharmaceutical manufacturers. Convictions decreased drastically from 1,564 in 2019 to 1,017 convictions in 2020.  Interestingly, looking at the types of providers convicted or penalized, the vast majority were personal care services attendants and agencies. Five times higher than the next highest provider type – nurses: LPN, RNs, NPs, and PAs.

And the award goes to Maine’s MFCU – The Maine MFCU received the Inspector General’s Award for Excellence in Fighting Fraud, Waste, and Abuse for its high number of case outcomes across a mix of case types.

OIG also established the desired performance indicators for 2021. OIG expects the MFCUs to maintain an indictment rate of 19% and a conviction rate of 89.1%.

The OIG Report Foreshadows 2021 MFCU Actions:

  1. Hospice: Expect audits. $0 was recovered in 2020.
  2. Fraud convictions increased for cardiologists and emergency medicine. Expect these areas to be more highly scrutinized, especially given all the COVID exceptions and rule amendments last year.
  3. Expect a MFCU rally. The pandemic may not be over, but with increased vaccines and after a down year, MFCUs will be bulls in the upcoming year as opposed to last year’s forced, lamb-like actions due to the pandemic.

While Medicare is strictly a federal program, Medicaid is funded with federal and State tax dollars. Therefore, each State’s regulations germane to Medicaid can vary. Medicaid fraud can be prosecuted as a federal or a State crime.