Category Archives: Criminal Medicaid Fraud
So many memos, so little time. Federal prosecutors receive guidance on how to prosecute. Maybe “guidance” is too loose a term. There is a manual to follow, and memos are just guidance until the memos are incorporated into what is known as the Justice Manual. Memos are not as binding as the Justice Manual, but memos are persuasive. For the last 22 years, the Justice Manual has not been revised to reflect the many, many memos that have been drafted to direct prosecutors on how to proceed. Until recently…
Justice Manual Revised
The Justice Manual, which is the manual that instructs federal prosecutors how to proceed in cases of Medicare and Medicaid fraud, has been revised for the first time since 1997. The Justice Manual provides internal Department of Justice (DOJ) rules.
The DOJ has new policies for detecting Medicare and Medicaid fraud and abuse. Some of these policies are just addendums to old policies. Or formal acceptance to old memos. Remember the Yates Memo? The Yates Memo directed prosecutors to indict executives, individually, of fraudulent companies instead of just going after the company.
The Yates Memo has now been codified into the Justice Manual.
Then came the Granston Memo – In a January 10, 2018, memo (the “Granston Memo”), the DOJ directed its prosecutors to more seriously consider dismissing meritless False Claims Act (“FCA”) cases brought by whistleblowers. It lists 7 (non-exhaustive) criteria for determining whether the DOJ should dismiss a qui tam lawsuit. The reasoning behind the Granston Memo is that whistleblower lawsuits have risen over 600 cases per year, but the government’s involvement has not mirrored the raise. This may indicate that many of the whistleblower lawsuits are frivolous and filed for the purpose of financial gain, even if the money is not warranted. Remember qui tam relators (people who bring lawsuits against those who mishandle tax dollars, are rewarded monetarily for their efforts…and, usually, the reward is not a de minimus amount. In turn, people are incentivized to identify fraud and abuse against the government. At least, according to the Granston Memo, the financial incentive works too well and frivolous lawsuits are too prevalent.
The Granston Memo has also been codified into the Justice Manual.
Talk about an oxymoron…the Yates Memo instructs prosecutors to pursue claims against more people, especially those in the executive positions for acts of the company. The Granston Memo instructs prosecutors to more readily dismiss frivolous FCA allegations. “You’re a wigwam. You’re a teepee. Calm down, you’re just two tents (too tense).” – a horrible joke that my husband often quips. But this horrible quote is apropos to describe the mixed messages from DOJ regarding Medicare and Medicaid fraud and abuse.
The Brand Memo, yet another memo that we saw come out of CMS, instructs prosecutors not to use noncompliance as subject to future DOJ enforcement actions. In other words, agency guidance does not cannot create binding legal requirements. Going forward, the DOJ will not enforce recommendations found in agency guidance documents in civil actions. Relatedly, DOJ will not use noncompliance with agency guidance to “presumptively or conclusively” establish violations of applicable law or regulations in affirmative civil enforcement cases.
The Brand Memo was not incorporated into the Justice Manual. It also was not repudiated.
Medicare/caid Audit Targets Broadened
Going forward, traditional health care providers will not be the only targets – Medicare Advantage plan, EHR companies, and private equity owners – will all be audited and reviewed for fraud and abuse. Expect more audits with wider nets to catch non-provider targets to increase now that the Yates Memo was codified into the Justice Manual.
Anti-Kickback Statute, Stark Law, and HIPAA Narrowed
The Stark Law (42 U.S.C. 1395nn) and the Anti-Kickback Statute (42 U.S.C. §1320a‑7b(b)) exist to minimize unneeded or over-utilization of health-care services payable by the federal government. Stark Law and the Anti-Kickback regulations criminalize, impose civil monetary penalties, or impose other legal sanctions (such as termination from Medicare) against health care providers and other individuals who violate these laws. These laws are esoteric (which is one reason that I have a job) and require careful navigation by specialized legal counsel. Accidental missteps, even minute documentation errors, can lead to harsh and expensive results.
In a health care world in which collaboration among providers is being pushed and recommended, the Anti-Kickback, Stark, and HIPAA laws are antiquated and fail to recognize the current world. Existing federal health-care fraud and abuse laws create a “silo effect” that requires mapping and separating financial interests of health-care providers in order to ensure that patient referrals cannot be tainted by self-interest. Under Stark, a strict liability law, physicians cannot make a referral for the provision of “designated health services” to an entity with which they have a financial relationship (unless one of approximately 30 exceptions applies). In other words, for example, a hospital cannot refer patients to the home health care company that the hospital owns.
Going forward – and this has not happened yet – regulators and the Department will begin to claw back some of the more strict requirements of the Stark, Anti-Kickback, and HIPAA regulations to decrease the “silo effect” and allow providers to collaborate more on an individual’s whole health method. I had an example of this changing of the tide recently with my broken leg debacle. See blog. After an emergency surgery on my leg by an orthopedic surgeon because of a contracted infection in my wound, my primary care physician (PCP) called to check on me. My PCP had nothing to do with my leg surgery, or, to my knowledge, was never informed of it. But because of new technology that allows patient’s records to be accessed by multiple providers in various health care systems or practices, my PCP was informed of my surgery and added it to my chart. This never could have happened 20 years ago. But this sharing of medical records with other providers could have serious HIPAA implications if some restrictions of HIPAA are not removed.
In sum, if you haven’t had the pleasure of reading the Justice Manual in a while, now would be an appropriate time to do so since it has been revised for the first time in 22 years. This blog does not enumerate all the revisions to the Justice Manual. So it is important that you are familiar with the changes…or know someone who is.
Silence Can Be Deadly: Can You Be Held Responsible for Medicare/caid Billings Errors That You Never Knew Existed?
You submit a claim for medically necessary services for a Medicaid recipient. Let’s say you provide behavioral health care services and prescribe medication for people who suffer from schizophrenia or bipolar. One member of your staff (a PA) prescribes Abilify to a child – perfectly acceptable treatment for schizophrenia. The child suffers a seizure and dies. It is discovered, unbeknownst to you, as the owner of the agency, that the staff member prescribing the medication was not appropriately supervised. You are shocked. You are dismayed. You are terrified.
Sure enough, someone tattles on you and a qui tam lawsuit is filed against your agency.
A qui tam (kwee tam) lawsuit is Latin for “who as well,” a lawsuit brought by a private citizen (popularly called a “whistleblower”) against a person or company who is believed to have violated the law in the performance of a contract with the government or in violation of a government regulation, when there is a statute which provides for a penalty for such violations. The whistleblower in qui tam lawsuits can be awarded a lot of money, which is why whistleblowers bring the lawsuits.
In other words, a qui tam lawsuit filed against you is bad…very bad.
You are looking at six figures, easily, in attorneys’ fees, years of litigation, endless sleepless nights, and a high dose of Prozac. All because one of your staff was not properly licensed and could not prescribe medication without supervision. And you had no idea…
Wait…what? Isn’t “intent” or, legally, “scienter” a requirement to prove fraud?? You mean that I could be prosecuted for fraud when I had zero intent to commit fraud, plus, I didn’t even know it was occurring?
This is what happened to Universal Health Services, Inc.’s subsidiary that provided behavioral health care services in Massachusetts. Universal Health Serv. v. United States ex rel. Escobar, 136 S.Ct. 1989 (2016).
The Court of Appeals for the First Circuit held that each time a billing party submits a claim, it implicitly communicates that it conformed to the relevant program requirements, such that it was entitled to receive payment. Every claim implicitly promised compliance of every law!
Imagine the slippery slope with this decision – a multi-state company with offices across the nation bills millions to Medicare and Medicaid monthly. Executive management is in Rhode Island. An office in Tampa fails to check the criminal background of its employees for a period of a year, but in all other ways complies with the regulations and renders medically necessary services that entire year. According to the 1st Circuit opinion, the company could be liable for fraud and the false claims act, resulting in millions of dollars of penalties.
Did it matter to the judge in this case that the company was large? What if it were a small company with one office and four staff?
Juxtapose the 7th Circuit which held only express (or affirmative) falsehoods can render a claim “false” or “fraudulent.” In other words, you can only be held liable for fraud if you purposely or affirmatively acted.
The Supreme Court (last year) held that the implied false certification theory can, at least in some circumstances, provide a basis for liability.
The thinking is that a half truth is a lie. Which is correct…but is it fraud? A classic example of an actionable half-truth in contract law is the seller who reveals that there may be two new roads near a property he is selling, but fails to disclose that a third potential road might bisect the property.
The False Claims Act imposes civil liability on “any person who . . . knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval.” §3729(a)(1)(A). Here’s the prob-lem-o: Congress never defined what is “false.”
Here is what the Supreme Court had to say about the unlicensed social worker:
“So too here, by submitting claims for payment using payment codes that corresponded to specific counseling services, Universal Health represented that it had provided individual therapy, family therapy, preventive medication counseling, and other types of treatment. Moreover, Arbour staff members allegedly made further representations in submitting Medicaid reimbursement claims by using National Provider Identification numbers corresponding to specific job titles. And these representations were clearly misleading in context. Anyone informed that a social worker at a Massachusetts mental health clinic provided a teenage patient with individual counseling services would probably—but wrongly—conclude that the clinic had complied with core Massachusetts Medicaid requirements (1) that a counselor “treating children [is] required to have specialized training and experience in children’s services,” 130 Code Mass. Regs. §429.422, and also (2) that, at a minimum, the social worker possesses the prescribed qualifications for the job, §429.424(C). By using payment and other codes that conveyed this information without disclosing Arbour’s many violations of basic staff and licensing requirements for mental health facilities, Universal Health’s claims constituted misrepresentations.””
In English, this means that: With the act of submitting a Medicaid claim, you are promising that you have followed all rules, including the licensure status required for rendering that service.
The Court held that:
The issue is whether a defendant should face False Claims Act liability only if it fails to disclose the violation of a contractual, statutory, or regulatory provision that the Government expressly designated a condition of payment. The Court concluded that the FCA does not impose this limit on liability. But it also held that not every undisclosed violation of an express condition of payment automatically triggers liability. It matters whether the omission was material.
The Supreme Court determined that not all statutory or regulatory violations are material, disagreeing with the government and the 1st Circuit.
But the Court never made a decision regarding Universal Health Services, Inc. Instead, it vacated the 1st Circuit and remanded the case for reconsideration of whether respondents have sufficiently pleaded a False Claims Act violation. But in doing so, the Court gave guidance as to its opinion. It wrote: “This case centers on allegations of fraud, not medical malpractice.”
What that one sentence tells me is that the Supreme Court does not want to create liability for any and every regulatory omission/mistake on a Medicaid claim. Mistakes happen. People are human. Apparently, even the Supreme Court knows that…
All health care providers are under serious scrutiny, that is, if they take Medicaid. In Atlanta, GA, a dentist, Dr. Oluwatoyin Solarin was sentenced to a year and six months for filing false claims worth nearly $1 million. She pled guilty, and, I would assume, she had an attorney who recommended that she plead guilty. But were her claims actually false? Did she hire a criminal attorney or a Medicaid attorney? Because the answers could be the difference between being behind bars and freedom.
Dr. Solarin was accused of billing for and receiving payments for dental claims while she was not at the office. U.S. Attorney John Horn stated that “Solarin cheated the Medicaid program by submitting fraudulent claims, even billing the government for procedures she allegedly performed at the same time she was out of the country.”
I receive phone calls all the time from people who are under investigation for Medicare/caid fraud. What spurred on this particular blog was a phone call from (let’s call him) Dr. Jake, a dentist. He, similar to Dr. Solarin, was under investigation for Medicaid fraud by the federal government. By the time Dr. Jake called me, his investigation was well on its way, and his Medicaid reimbursements had been suspended due to credible allegations of fraud for almost a year. He was accused of billing for and receiving payments for dental services while he was on vacation…or sick…or otherwise indisposed. He hired one of the top criminal attorneys, who advised him to take a plea deal for a suspended jail sentence and monetary recompense.
But, wait, he says to me. I didn’t do anything wrong. Why should I have to admit to a felony charge and be punished for doing nothing wrong?
I said, let me guess, Jake. You were the rendering dentist – as in, your NPI number was on the billed claim – but you hired a temporary dentist to stand in your place while you were on vacation, sick, or otherwise indisposed?
How did you know? Jake asks.
Because I understand Medicaid billing.
When my car breaks down, I go to a mechanic, not a podiatrist. The same is true for health care providers undergoing investigation for Medicare/caid fraud – you need a Medicare/caid expert. A criminal attorney,most likely, will not understand the Medicare/caid policy on locum tenens. Or the legal limitations of Medicaid suspensions and the administrative route to get the suspension lifted. Or the good cause exception to suspensions.
Don’t get me wrong, I am not advocating that, when under criminal, health care fraud investigation, you should not hire a criminal attorney. Absolutely, you will want a criminal attorney. But you will also want a Medicare/caid attorney.
What is Locum tenens? It is a Latin phrase that means temporary substitute. Physicians and dentists hire locum tenens when they go on vacation or if they fall ill. It is similar to a substitute teacher. Some days I would love to hire a locum tenens for me. When a doctor or dentist hires a temporary substitute, usually that substitute is paid by the hour or by the services rendered. If the payor is Medicare or Medicaid, the substitute is not expected to submit the billing and wait to be reimbursed. The substitute is paid for the day(s) work, and the practice/physician/dentist bills Medicare/caid, which is reimbursed. For billing purposes, this could create a claim with the rendering NPI number as Dr. Jake, while Dr. Sub Sally actually rendered the service, because Dr. Jake was in the Bahamas. It would almost look like Dr. Jake were billing for services billing the government for procedures he allegedly performed at the same time he was out of the country.
Going back to Dr. Jake…had Dr. Jake hired a Medicare/caid attorney a year ago, when his suspension was first implemented, he may have be getting reimbursed by Medicaid this whole past year – just by asking for a good cause exception or by filing an injunction lifting the suspension. His Medicaid/care attorney could have enlightened the investigators on locum tenens, and, perhaps, the charges would have been dropped, once the billing was understood.
Going back to Dr. Solarin who pled guilty to accusations of billing for services while out of the country…what if it were just a locum tenens problem?
Dr. Isaac Kojo Anakwah Thompson, a Florida primary care physician, was sentenced in July 2016 to 4 years in prison and a subsequent two years of supervised release. Dr. Thompson pled guilty to health care fraud. He was further ordered to pay restitution in the amount of $2,114,332.33. Ouch!! What did he do?
According to the Department of Justice, Dr. Thompson falsely reported that 387 of his clients suffered from ankylosing spondylitis when they did not.
Question: How does faking a patient’s disease make a physician money???
Answer: Hierarchal condition category (HCC) coding. Wait, what?
Basically, Medicare Advantage assigns HCC coding to each patient depending on the severity of their illnesses. Higher HCC scores equals substantially higher monthly capitation payments from Medicare to the managed care organization (MCO). In turn, the MCO will pay physicians more who have more extremely sick patients (higher HCC codes).
Ankylosing spondylitis is a form of arthritis that causes inflammation and damage at the joints; eventually, the inflamed spinal joints can become fused, or joined together so they can’t move independently. It’s a rare disease, affecting 1 in 1000 people. And, importantly, it sports a high HCC code.
In this case, the Office of Inspector General (OIG) found it odd that, between 2006-2010, Dr. Thompson diagnosed 387 Medicare Advantage beneficiaries with ankylosing spondylitis and treated them with such rare disease. To which, I say, if you’re going to defraud the Medicare system, choose common, fabricated diseases (kidding – it’s called sarcasm – I always have to add a disclaimer for people with no humor).
According to the Department of Justice, none or very few of Dr. Thompson’s 387 consumers actually had ankylosing spondylitis.
My issue is as follows: Doesn’t the managed care organization (MCO) share in some of the punishment? Shouldn’t the MCO have to repay the financial benefit it reaped from Dr. Thompson?? Shouldn’t the MCO have a duty to report such oddities?
Let me explain:
In Florida, Humana acted as the MCO. Every dollar that Dr. Thompson received was funneled through Humana. Humana would pay Dr. Thompson a monthly capitation fee from Medicare Advantage based on his patient’s hierarchal condition category (HCC) coding. Increasing even just one patient’s HCC code means more bucks for Dr. Thompson. Remember, according to the DOJ, he increased 387 patients’ HCC codes.
Dr. Thompson reported these diagnoses to Humana, which in turn reported them to Medicare. Consequently, Medicare paid approximately $2.1 million in excess capitation fees to Humana, approximately 80% of which went to Dr. Thompson.
In this case, it is reasonable to expect that Humana had knowledge that Dr. Thompson reported abnormally high HCCs for his patients. For comparison, ankylosing spondylitis has an HCC score of 0.364, which is more than an aortic aneurysm and three times as high as diabetes. Plus, look at the amount of money that the MCO paid Dr. Thompson. Surely, it appeared irregular.
What, if anything, is the MCO’s duty to report physicians with an abnormally high number of high HCC codes? If you have knowledge of someone committing a crime and you do nothing, isn’t that called aiding and abetting?
With the publication of the Yates memo, I expect to see CMS holding MCOs and other state agencies accountable for the actions of its providers. Not to say that the MCOs should actively, independently investigate Medicare/caid fraud, but to notify the Human Services Department (HSD) if abnormalities exist, especially if as blatant as one doctor with 387 patients suffering from ankylosing spondylitis.
Monday, February 22, 2016, The Centers for Medicare and Medicaid Services (CMS) announced that it plans to increase onsite visits and monitoring of health care providers. One of the top priorities for CMS is to verify that provider enrollment and address are correct…
Because, as you know, providers with correct addresses on file are less likely to commit Medicare fraud. Medicare Fraud 101 – Give CMS the wrong address. Really? (While I applaud their valiant effort, the fraud that I have witnessed has not been a health care provider using a fake address to provide fake services…that is too Ponzi, too shallow in thought…too easily detected. Oh no, the fraud I have encountered were providers with actual practices with correct addresses, but embellishing on the amount of services provided to an actual Medicare enrollee to cushion their pockets. This is much more difficult to detect.
But CMS has its reasons for sniffing out fake addresses. CMS’ address hunt-down comes on the heels of a report from June 2015 out of the Government Accountability Office (GAO), which determined that approximately 22% of Medicare provider addresses are “potentially ineligible.” Additionally, last March (2015) CMS decreased the amount of audits conducted by Medicare Administrative Contractors (MACs), which are one of the entities that investigate Medicare provider eligibility.
Whenever the GAO finds potential errors, CMS usually puts on the whole dog and pony show…or, maybe, for a change, a pig and pony show…
With all these political talks about donkeys and elephants, I would like to take a moment and blog about a pig. Some of you know that I own a pet pig. She is 4 1/2 years old and about 30 pounds. See below.
Isn’t she cute?! Some of you will remember my last blog about Oink was “Our Medicaid Budget: Are We Just Putting Lipstick on a Pig?”
The reason I bring up Oink is that she is the smartest, most animated animal I have ever encountered. She is also the best “sniffer-outer” I have ever encountered. Her keen sense of smell is well beyond any human’s sense of smell. If you liken Oink to CMS and Medicare fraud to a Skittle, the Skittle would have no chance.
These upcoming and increased number of audits is CMS’ way of sniffing out fraud. However, CMS’ sense of smell is not up to snuff like Oink’s sense of smell.
Searching for erroneous addresses in order to detect fraud, waste, and abuse (FWA) will, inevitably, be over-inclusive. Meaning, many of the erroneous addresses will not be committing Medicare fraud. Some erroneous addresses exist because providers simply moved to another location and either failed to inform CMS or CMS’ database was not updated with the new address. Other erroneous addresses exist because health care providers went out of business and never informed CMS. A new company leases the property and it appears to CMS that fraudulent billing was occurring a couple years ago out of, for example, what is now a Jimmy John’s.
Searching for erroneous addresses in order to detect FWA will, inevitably, be under-inclusive. Meaning, that many providers committing Medicare fraud do so with accurate office addresses.
My contention is that if you want to find FWA, you need to dig deeper than an incorrect address. Sniffing out Medicare fraud is a bit more in depth than finding improper addresses. That would be like tossing handfuls of Skittles on the ground and expecting Oink to only find the green ones.
In fiscal year 2014, Medicare paid $554 billion for health care and related services. CMS estimates that $60 billion (about 10 percent) of that total was paid improperly (not only because of incorrect addresses).
CMS is responsible for developing provider and supplier enrollment procedures to help safeguard the program from FWA. CMS contracts with Medicare Administrative Contractors (MACs) and the National Supplier Clearinghouse (NSCs) to manage the enrollment process. MACs are responsible for verifying provider and supplier application information in Provider Enrollment, Chain and Ownership System (PECOS) before the providers and suppliers are permitted to enroll into Medicare. CMS currently contracts with 12 MACs, each of which is responsible for its own geographic region, known as a “jurisdiction.
As you can see, we live in Jurisdiction 11. These MACs act as the “sniffer-outers” for CMS.
According to the GAO June 2015 report, about 23,400 (22 percent) of the 105,234 addresses that GAO initially identified as a Commercial Mail Receiving Agency (CMRA), vacant, or invalid address are potentially ineligible for Medicare providers and suppliers. “About 300 of the addresses were CMRAs, 3,200 were vacant properties, and 19,900 were invalid. Of the 23,400 potentially ineligible addresses, [GAO] estimates that, from 2005 to 2013, about 17,900 had no claims associated with the address, 2,900 were associated with providers that had claims that were less than $500,000, and 2,600 were associated with providers that had claims that were $500,000 or more per address.”
In other words, out of 105,234 addresses, only 2,600 actively billed Medicare for over $500,000 from 2005 through 2013 (8 years). Had CMS narrowed the scope and looked at practices that billed over $500,000 since 2010, I fancy the the number would have been much lower, because, as discussed above, many of these providers either moved or went out-of-business.
Now, 2,600 is not a nominal number. I am in no way undermining CMS’ efforts to determine the accuracy of providers’ addresses; I am not insinuating that these efforts are unnecessary or a complete waste of time. I think verification of health care providers’ addresses is an important aspect of detecting FWA. Instead, I believe that, as discussed above, verifying providers’ addresses is a poor, under and over-inclusive attempt at searching for FWA. Because, as I stated at the beginning of this blog, the people who are intentionally trying to defraud the system, are not going to intentionally give an erroneous address. It is just too easy for the government to discover the error. No, the people who are intentionally defrauding the state will have a legitimate office.
For example, in my opinion, it is unlikely that anyone intentionally trying to defraud the system will inform the government that they provide health care services from the following places:
Again, if I liken CMS’ search for FWA by detecting inaccurate addresses to Oink, it would be like tossing a handful of Skittles on the ground and expecting Oink to only find the green ones.
If CMS audits are to Oink as fraud is to Skittles, then I think there is a less intrusive, less inclusive way to detect FWA rather than throwing out packets of Skittles for Oink. All that does is make Oink eat too much.
By: Ed Roche, founder of Barraclough NY LLC, a litigation support firm that helps healthcare providers fight against statistical extrapolations
It was published in RACMonitor.
Healthcare providers sometimes can get caught up in a political storm. When this happens, audits can be used as a weapon to help preferred providers muscle into a market. This appears to have happened recently in New Mexico.
Let’s go back in time.
On Sept. 14, 2010, Susana Martinez was in Washington, D.C. She was looking for campaign contributions to run for the governorship of New Mexico. She visited the office of the government lobbying division of UnitedHealth Group and picked up a check for $25,000.
The next day, Martinez published an editorial claiming that Bill Richardson’s administration in New Mexico was tolerating much “waste, fraud and abuse” in its Medicaid program. Eventually, she was elected as the 31st governor of New Mexico and took office Jan. 1, 2011.
According to an email trail, by the fall of 2012, Martinez’s administration was busy exchanging emails with members of the boards of directors of several healthcare companies in Arizona. During this same period, the Arizonans made a number of contributions to a political action committee (PAC) set up to support Martinez. At the same time, officers from New Mexico’s Human Services Department (HSD) made a number of unannounced visits to Arizona.
The lobbying continued in earnest. Hosted in part by UnitedHealth money, the head of HSD visited Utah’s premier ski resort, and the bill was paid for by an organization financed in part by UnitedHealth. The governor’s chief of staff was treated to dinner at an expensive steakhouse in Las Vegas. There is suspicion of other contacts, but these have not been identified. All of these meetings were confidential.
The governor continued to publicly criticize health services in New Mexico. She focused on 15 mental health providers who had been in business for 40 years. They were serving 87 percent of the mental health population in New Mexico and had developed an extensive delivery system that reached all corners of the state.
Martinez honed in on one mental health provider because the CEO used a private aircraft. He was accused of using Medicaid funds to finance a lavish lifestyle. None of this was true. It turned out that the owner had operations all over the state and used the plane for commuting, but it made for good sound bites to feed the press.
The state decided to raise the pressure against the providers. Public Consulting Group (PCG), a Boston-based contractor, was called in to perform an audit of mental health services. In addition to taking samples and performing analyses of claims, PCG was asked to look for “credible allegations of fraud.”
In legal terms, the phrase “credible allegations of fraud” carries much weight. Under the Patient Protection and Affordable Care Act, it can be used to justify punitive actions against a provider. It is surprising that only “allegations” are necessary, not demonstrated proof. The reality is that in practical terms, a provider can be shut down based on allegations alone.
In a letter regarding its work, PCG stated that “there are no credible allegations of fraud.” Evidently, that was the wrong answer. PCG was kicked out of New Mexico and not allowed to complete its audit. HSD took over.
The PCG letter had been supplied to HSD in a Microsoft Word format. In a stunning act, HSD removed the statement concluding that there were “no credible allegations of fraud.” HSD continued to use the PCG letter, but only in this altered form.
HSD continued to insist publicly that there were credible allegations of fraud. Since PCG had been kicked out before completing the audit, a HSD staff attorney took the liberty of performing several statistical extrapolations that generated a repayment demand of more than $36 million. During testimony, the attorney admitted that the extent of his experience with statistics was an introductory course he had taken years earlier in college.
Two years later, statistical experts from Barraclough NY LLC who are elected fellows of the American Statistical Association examined HSD’s work and concluded that it was faulty and unreliable. They concluded there was zero credibility in the extrapolations.
But for the time being, the extrapolations and audits were powerful tools. On June 24, 2013, all of the aforementioned 15 nonprofits were called into a meeting with HSD. All were accused of massive fraud. They were informed that their Medicaid payments were to be impounded. The money needed to service 87 percent of New Mexico’s mental health population was being cut off.
The next day, UnitedHealth announced a $22 million investment in Santa Fe. We have not been able to track down the direct beneficiaries of these investments. However, we do know that the governor’s office immediately issued a press release on their behalf.
The 15 New Mexico providers were being driven out of business. This had been planned well in advance. Shortly thereafter, the government of New Mexico, through HSD, [approved] issued $18 million in no-bid contracts to five Arizona-based providers affiliated with UnitedHealth. These are the same companies that had been contributing to the governor’s PAC.
These five Arizona companies then took over all mental health services for New Mexico. Their first step was to begin cutting back services. To give one example: patients with two hours therapy per week were cut back to 10 fifteen-minute sessions per year.It was the beginning of a mental health crisis in New Mexico.
As of today, two of the Arizona providers have abandoned their work in New Mexico. A third is in the process of leaving. What is the result? Thousands of New Mexico mental health patients have been left with no services. Entire communities have been completely shut [cut] off. The most vulnerable communities have been hit the hardest.
Through litigation, the 15 original providers forced the New Mexico Attorney General to examine the situation. It took a long time. All of the providers now are out of business. The Attorney General reported a few weeks ago that there were never any credible allegations of fraud.
This should mean that the impounded money would be returned to the 15 providers. After all, the legal reason why it was impounded in the first place has been shown to be false. One would think that the situation could return to normal.
The original 15 should be able to continue their business, and hire back the more than 1,500 persons they had been forced to lay off. Once the impounded monies are returned to the providers, they will be able to pay their legal bills, which now add up to hundreds of thousands of dollars.
Unfortunately, that is not happening. HSD still is claiming that the $36 million extrapolation is due, and that actually, the providers owe the state money. The New Mexico government is not budging from its position. The litigation continues.
Meanwhile, New Mexico now is tied with Montana in having the highest suicide rate in the continental United States.
People screw up. We are human; hence the term, “human error.”
But how to handle said mistakes in health care records after the fact, which could be the target in a Medicare/caid audit?
This is a very important, yet extremely “fine-lined” topic. Imagine a tightrope walker. If you fall off one way, you fall to the abyss of accusations of fraud. You fall off the other way and you fall into the ocean of the False Claims Act. Fixing document errors post date of service (DOS) is a fine line with catastrophic consequences on both sides.
In NC, our administrative code provides guidance.
“SECTION .1400 – SERVICE RECORDS
10A NCAC 13J .1401 REQUIREMENT
(a) The agency shall develop and implement written policies governing content and handling of client records.
(b) The agency shall maintain a client record for each client. Each page of the client record shall have the client’s name. All entries in the record shall reflect the actual date of entry. When agency staff make additional, late, or out of sequence entries into the client record, the documentation shall include the following applicable notations: addendum, late entry, or entry out of sequence, and the date of the entry. A system for maintaining originals and copies shall be described in the agency policies and procedures.
(c) The agency shall assure that originals of client records are kept confidential and secure on the licensed premises unless in accordance with Rule .0905 of this Subchapter, or subpoenaed by a court of legal jurisdiction, or to conduct an evaluation as required in Rule .1004 of this Subchapter.
(d) If a record is removed to conduct an evaluation, the record shall be returned to the agency premises within five working days. The agency shall maintain a sign out log that includes to whom the record was released, client’s name and date removed. Only authorized staff or other persons authorized by law may remove the record for these purposes.
(e) A copy of the client record for each client must be readily available to the appropriate health professional(s) providing services or managing the delivery of such services.
(f) Client records shall be retained for a period of not less than five years from the date of the most recent discharge of the client, unless the client is a minor in which case the record must be retained until three years after the client’s 18th birthday. When an agency ceases operation, the Department shall be notified in writing where the records will be stored for the required retention period.”
What NOT to do:
- Erase notations and write the revision
- Add a check mark that was not previously there
- Forge a staff’s initials
- Back date the revision
When it comes to alteration of medical records for Medicare/caid patients after the DOS, you are walking on a tightrope. Catastrophe is below, not a net. So tiptoe carefully.
Call an attorney with specific questions.
Another Win for Gordon & Rees! Judge Finds NM HSD Arbitrary, Capricious, and Not Otherwise in Accordance of Law! And JUSTICE PREVAILS!
For those of you who have followed my blog for a while, you understand the injustices that occurred in New Mexico against 15 behavioral health care providers in 2013. For those of you who do not recall, for background, see blog, and blog and blog. These 15 agencies comprised 87% of NM behavioral health care services. And they were all shut down by immediate suspensions of reimbursements on June 23, 2013, collectively.
My team (Robert Shaw, Special Counsel, and Todd Yoho, Master Paralegal) and I worked our “behinds off” in these two New Mexico administrative hearings that have so far been held. The first was for The Counseling Center (TCC) headed up by Jim Kerlin (seen below). And our decision was finally rendered this past Friday!
BTW: It is officially Jim Kerlin day in Otero county, NM, on June 11th.
The second hearing, which appeal is still pending, was for Easter Seals El Mirador, headed up by Mark Johnson and Patsy Romero. Both companies are outstanding entities and we have been blessed to work with both. Over the last 20-30 years, both companies have served the New Mexican Medicaid population by providing mental health, developmentally disabled, and substance abuse services to those most in need.
After both companies were accused of committing Medicaid fraud, and, while, subsequently, the Attorney General’s office in NM found no indications of fraud, both companies were told that they owed overpayments to HSD. We filed Petitions for Contested Cases. We disagreed.
NM HSD based its decision that all 15 behavioral health care companies were guilty of credible allegations of fraud based on an audit conducted by Public Consultant Group (PCG). While I have seen the imperfections of PCG’s auditing skills, in this case, PCG found no credible allegations of fraud. HSD, nonetheless, took it upon itself to discard PCG’s audit and find credible allegations of fraud.
These cases were brought in administrative court. For those who do not know, administrative court is a quasi-judicial court, which is specially carved out from our state and federal civil courts. In NC, our Office of Administrative Hearings (OAH) is the administrative court in which health care providers and Medicaid recipients seek relief from adverse agency actions. Similarly, NM also has an administrative court system. The administrative court system is actually a part of the executive branch; the Governor of the State appoints the administrative law judges (ALJs).
However, 42 CFR 431.10 mandates that each state designate a single state entity to manage Medicaid. In NM, that single state agency is Human Services Department (HSD); in NC, it is the Department of Health and Human Services (DHHS) (for now).
42 CFR 431.10 states that if the single state agency delegates authority to another entity, that other entity cannot “have the authority to change or disapprove any administrative decision of that agency, or otherwise substitute their judgment for that of the Medicaid agency with respect to the application of policies, rules, and regulations issued by the Medicaid agency.”
If an ALJ is deciding an issue with Medicaid, then her or she would be substituting his or her judgment for that of the Medicaid agency with respect to the application of policies, rules, and regulations issued by the Medicaid agency.
This is why, in NC, prior to 2013, our ALJs could only make a Recommendation, not an Order or Decision. See blog. In 2013, NC was granted a Waiver to the single state agency mandate allowing ALJs to render decisions on behalf of Medicaid.
In New Mexico, however, there has been no such Waiver. Thus, the ALJ only recommends a decision. In NC, our ALJs are appointed and are independent of DHHS. Juxtapose, in NM, the ALJ answers to the single state entity AND only issues a recommendation, which the agency may accept or reject.
Needless to say, in TCC v. HSD, the ALJ ruled against us. And HSD accepted the recommended decision. We appealed to Superior Court with a Petition for Judicial Review.
Judges in Superior Courts are not employed by their single state agencies. I have found, generally, that Superior Court judges truly try to follow the law. (In my opinion, so do ALJs who do not have to answer to the single state agency, like in NC).
This past Friday, October 23, 2015, Judge Francis Matthew, issued a Decision REVERSING HSD’s decision that TCC owed any money and ordered all funds being withheld to be released. Here are a couple quotes:
Special Counsel, Robert Shaw, our paralegal, Todd Yoho, our local counsel Bryan Davis, and I are beyond ecstatic with the result. Robert and I worked weeks upon weeks of 12-16 hour days for this case.
I remember the night before the 1st day of trial, local counsel encountered an unexpected printing problem. I had just flown into New Mexico and Robert Shaw was on his way, but his flight was delayed. Robert got to the hotel in Santa Fe at approximately 7 pm New Mexico time, which was 10 pm eastern time.
It’s 7:00 pm the evening before the trial…and we have no exhibits.
Robert went to the nearby Kinko’s and printed off all the exhibits and organized the binders until 2:00 am, 5:00 am eastern time. During which time I was preparing opening statement, direct examinations, and cross examinations (although I went to bed way before 2:00 am).
Regardless, Robert was dressed, clean-shaven, and ready to go the next day at 9:00 am with the exhibits (of which there were approximately 10 bankers’ boxes filled).
The trial lasted all week. Every day we would attend trial 9:00-5:00. After each day concluded, our evenings of preparation for the next day began.
I am not telling you all this for admiration, consternation, or any other reason except to shed some light as to our absolutely unbridled joy when, on Friday, October 23, 2015, Bryan Davis emailed us the Order that says that HSD’s decision “is REVERSED in its entirety…”
See the article in The Santa Fe New Mexican.
We hope this sets good precedent for Easter Seals El Mirador and the other 13 behavioral health care agencies harmed by HSD’s allegations of fraud in 2013.
42 CFR 455.23 mandates a state to suspend reimbursements for a provider upon “credible allegations of fraud.” Obviously, this is an extreme measure that will undoubtedly put that accused provider out of business without due process. BTW: the “credible” allegation can be non-credible. It does not matter. See blog. 42 CFR 455.23 is the modern day guillotine for health care providers.
Which leads me to say…It is my sincere hope, that, going forward, state agencies realize the magnitude of implementing measures mandated by 42 CFR 455.23. Instead of wielding the power willy-nilly, it is imperative to conduct a good faith investigation prior to the accusation.
And, certainly, do not conduct an investigation, discard the results, and accuse 87% of your behavioral health care providers in your state. Think of the recipients!! The employees!! And all the families affected!!
As if South Carolina didn’t have enough issues with the recent flooding, let’s throw in some allegations of Medicaid fraud against the health care providers. I’m imagining a provider under water, trying to defend themselves against fraud allegations, while treading water. It’s not a pretty picture.
Flash floods happen fast, as those in SC can attest.
So, too, do the consequences of allegations.
Shakespeare is no stranger to false accusations. In Othello, Othello is convinced that his wife is unfaithful, yet she was virtuous. In Much Ado About Nothing, Claudio believes Hero to be unfaithful and slanders her until her death. Interestingly, neither Othello and Claudio came to their respective opinions on their own. Both had a persuader. Both had a tempter. Both had someone else whisper the allegations of unfaithfulness in their ears and both chose to believe the accusation with no independent investigation. So too are accusations of Medicaid/care fraud so easily accepted without independent investigation.
With the inception of the Affordable Care Act (ACA), We have seen a sharp uptick on accusations of credible allegations of fraud. See blog for the definition of credible allegation of fraud.
The threshold for credible allegation of fraud incredibly low. A mere accusation from a disgruntled employee, a mere indicia of credibility, and/or even a computer data mining program can incite an allegation of fraud. Hero was, most likely, committing Medicare/acid fraud too.
The consequences of being accused of fraud is catastrophic for a health care provider regardless whether the accusation is accurate. You are guilty before proving your innocence! Your reimbursements are immediately suspended! Your entire livelihood is immediately crumbled! You are forced to terminate staff! Assets can be seized, preventing you even the ability to hire an attorney to defend yourself!
I have seen providers be accused of credible allegations of fraud and the devastation that follows. In New Mexico. In North Carolina. See documentary. Many NC providers serve SC’s population as well. The Medicaid reimbursement rates are higher in SC.
Obviously, The ACA is nationwide, federal law. Hence, the increase in allegations/accusations of health care fraud is nationwide.
Recently, South Carolina health care providers have been on the chopping block. Othello and Claudio are in the house of Gamecocks!
South Carolina’s single state agency, DHHS, required Medicaid recipients to get a 2nd prior approval before receiving health care services for “rehabilitative behavioral health” services, such as behavioral health care services for substance abuse and mental illness (could you imagine the burden if this were required here in NC?).
Then, last year, SC DHHS eliminated such 2nd prior approval requirement.
With fewer regulations and red tape in which to maneuver, SC saw a drastic uptick of behavioral health care services. Othello and Claudio said, “Fraud! More services with only one prior approval must be prima fracie fraud!”
Hence, behavioral health care providers in SC are getting investigated. But, mind you, during investigations reimbursements are suspended. You say, “Well, Knicole, how will these health care provider agencies afford to defend themselves without getting paid?” “Good question,” I say. “They cannot unless they have a stack of cash on hand for this exact reason.”
“What should these providers do?” You ask.
Hire an attorney and seek an injunction lifting the suspension of payments during the investigation.
Turn a Shakespearean tragedy into a comedy! Toss in a dingy!
Judges have lifted the suspensions. Read the case excerpt below:
As you can read in the above-referenced case, despite 42 455.23(a) mandating a suspension of payments upon credible allegations of fraud, this Judge found that the state failed to carefully weigh the evidence before suspending all payments.
There are legal remedies!!
Recent stories in the news seem to suggest that health care fraud is running rampant. We’ve got stories about Eric Leak‘s Medicaid agency, Nature’s Reflections, funneling money to pay athletes, a seizure of property in Greensboro for alleged Medicaid fraud, and, in Charlotte, a man was charged with Medicaid fraud and sentenced to three years under court supervision and ordered to pay $3,153,074. And these examples are local.
Health care fraud with even larger amounts of money at stake has been prosecuted in other states. A nonprofit up in NY is accused of defrauding the Medicaid system for over $27 million. Overall, the federal government opened 924 criminal health care fraud investigations last year.
What is going on? Are more people getting into the health care fraud business? Has the government become better at detecting possible health care fraud?
I believe that the answer is that the federal and state governments have determined that it “pays” high dividends to invest in health care fraud investigations. More and more money is being allocated to the fraud investigative divisions. More money, in turn, yields more health care fraud allegations…which yields more convictions….and more money to the government.
Believe me, I understand the importance of detecting fraud. It sickens me that those who actually defraud our Medicaid and Medicare systems are taking medically necessary services away from those who need the services. However, sometimes the net is cast so wide…so far…that innocent providers get caught in the net. And being accused of health care fraud when you innocent is a gruesome, harrowing experience that (1) you hope never happens; and (2) you have to be prepared in case it does. I have seen it happen.
As previously stated, in fiscal year (FY) 2014, the federal government opened 924 new criminal health care fraud investigations. That’s 77 new fraud investigations a month!! This number does not include civil investigations.
In FY 2012, the Department of Justice (DOJ) opened 2,016 new health care fraud investigations (1,131 criminal, 885 civil).
The Justice Department launched 903 new health-care fraud prosecutions in the first eight months of FY 2011, more than all of FY 2010.
These numbers show:
- an 85% increase over FY 2010,
- a 157% increase over FY 2006
- and 822% over FY 1991.
And the 924 investigations opened in fiscal 2014 only represent federal investigations. Concurrently, all 50 states are conducting similar investigations.
What is being recovered? Are the increased efforts to detect health care fraud worth the effort and expenditures?
Heck, yes, it is worth it to both the state and federal governments!
Government teams recovered $4.3 billion in FY 2013 and $19.2 billion over the last five years. While still astronomically high, the numbers dropped slightly for FY 2014. In FY 2014, according to the Annual Report of the Departments of Health and Human Services and Justice, the federal government won or negotiated over $2.3 billion in health care fraud judgments and settlements. Due to these efforts, as well as efforts from preceding years, the federal government retrieved $3.3 billion from health care fraud investigations.
So the federal and state governments are putting more money into investigating health care fraud. Why?
The Affordable Care Act.
Obviously, the federal and state governments conducted health care fraud investigations prior to the ACA. But the implementation of the ACA set new mandates to increase fraud investigations. (Mandates, which were suggestions prior to the ACA).
In 2009, Barack Obama signed Executive Order 13520, which was targeted to reduce improper payments and to eliminate waste in federal programs.
On March 23, 2010, President Obama signed the ACA into law. A major part of the ACA is focused on cost containment methods. Theoretically, the ACA is supposed to be self-funding. Detecting fraud, waste and abuse in the Medicare/Medicaid system helps to fund the ACA.
Unlike many of the other ACA provisions, most of the fraud and abuse provisions went into effect in 2010 or 2011. The ACA increases funding to the Healthcare Fraud and Abuse Control Program by $350 million over the next decade. These funds can be used for fraud and abuse control and for the Medicare Integrity Program.
The ACA mandates states to conduct post payment and prepayment reviews, screen and audit providers, terminate certain providers, and create provider categories of risk.
While recent articles and media seem to indicate that health care fraud is running rampant, the substantial increase in accusations of health care fraud really may be caused by factors other than more fraud is occurring.
The ACA mandates have an impact.
And, quite frankly, the investigation units may be a bit overzealous to recover funds.
What will happen if you are a target of a criminal health care fraud investigation?
It depends whether the federal or state government is conducting the investigation.
If the federal government is investigating you, most likely, you will be unaware of the investigation. Then, one day, agents of the federal government will come to your office and seize all property deemed related to the alleged fraud. Your accounts will be frozen. Whether you are guilty or not will not matter. What will matter is you will need an experienced, knowledgeable health fraud attorney and the funds with which to compensate said attorney with frozen accounts.
If the state government is conducting the investigation, it is a little less hostile and CSI-ish. Your reimbursements will be suspended with or without your notice (obviously, you would notice the suspension once the suspension occurred). But the whole “raid on your office thing” is less likely.
There are legal remedies available, and the “defense” should begin immediately.
Most importantly, if you are a health care provider and you are not committing fraud, you are not safe from accusations of fraud.
Your insurance, most likely, will not cover attorneys’ fees for alleged intention fraud.
The attorney of your choice will not be able to accept funds that are “tainted” by alleged fraud, even if no fraud occurred.
Be aware that if, for whatever reason, you are accused, you will need to be prepared…for what you hope never happens.