Blog Archives
Health Care Fraud Liability: With Yates Fired – What Happens to the Memo?
“You’re fired!” President Trump has quite a bit of practice saying this line from The Apprentice. Recently, former AG Sally Yates was on the receiving end of the line. “It’s not personal. It’s just business.”
The Yates Memo created quite a ruckus when it was first disseminated. All of a sudden, executives of health care agencies were warned that they could be held individually accountable for actions of the agency.
What is the Yates Memo?
The Yates Memo is a memorandum written by Sally Quillian Yates, former Deputy Attorney General for the U.S. Dept. of Justice, dated September 9, 2015.
It basically outlines how federal investigations for corporate fraud or misconduct should be conducted and what will be expected from the corporation getting investigated. It was not written specifically about health care providers; it is a general memo outlining the investigations of corporate wrongdoing across the board. But it is germane to health care providers.
See blog.
January 31, 2017, Sally Yates was fired by Trump. So what happens to her memo?
With Yates terminated, will the memo that has shaken corporate America that bears her name go as well? Newly appointed Attorney General Jeff Sessions wrote his own memo on March 8, 2017, entitled “Memorandum for all Federal Prosecutors.” it directs prosecutors to focus not on corporate crime, but on violent crime. However, investigations into potential fraud cases and scrutiny on providers appear to remain a top priority under the new administration, as President Donald Trump’s proposed budget plan for fiscal year 2018 included a $70 million boost in funding for the Health Care Fraud and Abuse Control program.
Despite Sessions vow to focus on violent crimes, he has been clear that health care fraud remains a high priority. At his confirmation, Sessions said: “Sometimes, it seems to me, Sen. Hirono, that the corporate officers who caused the problem should be subjected to more severe punishment than the stockholders of the company who didn’t know anything about it.” – a quote which definitely demonstrates Sessions aligns with the Yates Memo.
By law, companies, like individuals, are not required to cooperate with the Justice Department during an investigation. The Yates Memo incentivizes executives to cooperate. However, the concept was not novel. Section 9-28.700 of the U.S. Attorneys’ Manual, states: “Cooperation is a potential mitigating factor, by which a corporation – just like any other subject of a criminal investigation – can gain credit in a case that otherwise is appropriate for indictment and prosecution.”
Even though Trump’s proposed budget decreases the Department of Justice’s budget, generally, the increase in the budget for the Health Care Fraud and Abuse Control program is indicative of this administration’s focus on fraud, waste, and abuse.
Providers accused of fraud, waste, or abuse suffer extreme consequences. 42 CFR 455.23 requires states to suspend Medicaid reimbursements upon credible allegations of fraud. The suspension, in many instances, lead to the death of the agency – prior to any allegations being substantiated. Just look at what happened in New Mexico. See blog. And the timeline created by The Santa Fe New Mexican.
When providers are accused of Medicare/caid fraud, they need serious legal representation, but with the suspension in place, many cannot afford to defend themselves.
I am “all for” increasing scrutiny on Medicare/caid fraud, waste, and abuse, but, I believe that due process protection should also be equally ramped up. Even criminals get due process.
The upshot regarding the Yates Memo? Firing Yates did not erase the Yates Memo. Expect Sessions and Trump to continue supporting the Yates Memo and holding executives personally accountable for health care fraud – no more hiding behind the Inc. or LLC. Because firing former AG Yates, did nothing to the Yates Memo…at least not yet.
New Federal Legislation Proposed to Increase Due Process for Health Care Providers!
Every once in a blue moon, I am actually happy with the actions of our government. One of these rare occasions occurred on March 17, 2016. Happy St. Patty’s Day!
On March 17, 2016, Senior Senator John Thune from South Dakota introduced S.2736: A bill to require consideration of the impact on beneficiary access to care and to enhance due process protections in procedures for suspending payments to Medicaid providers.
How many times have I blogged about the nonexistence of due process for Medicaid providers??? I cannot even count. (Well,I probably could count, but it take quite some time). My readers know that I have been complaining for years that the federal regulations consider Medicaid provider guilty until proven innocent. See blog. And blog.
Well, finally, someone in Congress has taken notice.What is really cool is that my team at my law firm Gordon & Rees was asked to provide some input for this bill…pretty cool! Although I have to say, everything that we proposed is not included in the proposed bill. Apparently, some of our suggestions were too “pro provider” and “didn’t stand a chance to be passed.” Who would have thought? Baby steps, I was informed.
The bill, if enacted, would require the Secretary of Health and Human Services (HHS) to revise the Code of Federal Regulations, specifically the Title 42 of the CFR.
Currently, 42 CFR 455.23 reads: “the State Medicaid agency must suspend all Medicaid payments to a provider after the agency determines there is a credible allegation of fraud for which an investigation is pending under the Medicaid program against an individual or entity unless the agency has good cause to not suspend payments or to suspend payment only in part.” (emphasis added). Rarely has a state agency found “good cause” to not suspend payments. In fact, quite the opposite. I have seen state agencies use this regulation harshly and with intent to put providers out of business.
S.2736 would revise the above-mentioned language and require that a state agency take certain steps to ensure due process for the provider prior to implementing a suspension in payments.
Prior to implementing a payment suspension, this proposed bill would require the state agency to:
- Consult with the Medicaid fraud unit for the state and receive written confirmation of such a consultation; and
- Certify that the agency considered whether beneficiary access would be jeopardized or whether good cause exists, in whole or in part (according to the new, proposed manner of determining good cause)
We all know that the above bullet points supply more protection than we have now.
Furthermore, there are protections on the back end.
After a suspension is implemented, at the beginning of each fiscal quarter, the state Medicaid agency must:
- certify to the Secretary that it has considered whether the suspension of payments should be terminated or modified due to good cause (as modified by S.2736); and
- if no good cause is found, furnish to the provider the reasons for such determination.
S.2736 allow requires the agency to disclose the specific allegations of fraud that is being investigated (after a reasonable amount of time) and to evaluate every 180 days whether good cause exists to lift the suspension. Regardless, good cause not to continue the suspension will be deemed to exist after 18 months (with some other qualifying details).
According to a government track website, this bill has a 8% chance of getting past committee. And a 3% chance of being enacted.
The stats on all bills’ “pass-ability,” is that only 15% of bills made it past committee and only about 3% were enacted in 2013–2015.
So call your Congressman or woman! Support S.2736! It’s not perfect, but it’s better!!!
Accusations of Medicaid/care Fraud Run Rampant in SC: There Are Legal Remedies!
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!!
Williams Mullen Hosts Its First Annual Healthcare Panel Discussion: Summary Below
I am currently sitting in a hotel in New Mexico. I testified this morning before the New Mexico Behavioral Health Care Subcommittee regarding due process for health care providers upon “credible allegations of fraud.”
This past Sunday I ran and finished my very first half marathon. And, yes, I am sore. I signed up for the Bull City 1/2 marathon in Durham because it was being held in October and I thought the temperature would be cool. But I failed to contemplate Durham’s hills…ouch!
Despite my jet lag and sore muscles, I wanted to blog about the health care panel discussion this past Thursday night hosted by Williams Mullen. Representative Nelson Dollar, Barbara Morales Burke, Blue Cross Blue Shield of NC, Stephen Keene, General Counsel for the NC Medical Society, and I presented as the healthcare panel. As you can see below, we sat in the above-referenced order.
Below, I have outlined the questions presented and my personal recollection of each answer. These answers were not recorded, so, if, by chance, I misquote someone, it is my own personal recollection’s fault, and I apologize.
Our Williams Mullen associate Robert Shaw, acted as the moderator and asked the following questions:
To Rep. Dollar:
Most of us have heard about the discussion in the General Assembly about moving North Carolina’s Medicaid program towards a more fully implemented managed care model or to one using accountable care organizations. Where do the House and Senate currently stand with respect to these models, and what are the prospects for passing Medicaid reform in next year’s long session of the General Assembly?
Summary: The House and the Senate are not in agreement. The House put forth a Bill 1181 last session that encompasses the House’s ideas for Medicaid reform. It was a bipartisan bill. It was passed unanimously. Medicaid reform should not be a bipartisan matter. Our Bill did not fare well in the Senate, but the House believes Bill 1181 is the best we have so far.
To which Keene interjected: It is important that Bill 1181 was unanimous. The Medical Society endorses the bill.
To Barbara Morales Burke:
As we head into open enrollment season under the Affordable Care Act, what are the biggest challenges you see from the insurer’s perspective in complying with Affordable Care Act requirements and meeting the needs of the marketplace?
Summary: BCBS, as all other insurance companies, faced unique times last year during the open enrollment and this year will be even more important because we will find out who will re-new the policies. While BCBS was not perfect during last year’s open enrollment, we have learned from the mistakes and are ready for the upcoming enrollment.
To Steve Keene:
What concerns are you seeing from members of the North Carolina Medical Society regarding patients’ access to providers of their choice and your members’ participation in the major health insurance networks?
Summary: This has always an issue since he came to NC. He actually wrote a memo regarding the access to provider issue back in the 1990s. The insurance need to come up with a known a published standard. BCBS actually has better relationships with providers than, say, for example, a United Healthcare. If the insurance company decides to only use X number of ob/gyns, then it should be clear why the insurance company is only contracting with x number ob/gyns.
To Knicole Emanuel:
Under the Affordable Care Act, the standard for withholding payments in the event of a credible allegation of fraud has changed. What is the standard for a credible allegation of fraud and how does such an allegation affect Medicaid reimbursements?
Summary: The ACA was intended to be self-funding. In drafting the ACA, 42 CFR 455.23 was amended from allowing states to choose whether to suspend Medicaid reimbursements upon credible allegations of fraud to mandating the states to suspend payments. The basis for a suspension is credible allegations of fraud and only requires an indicia of reliability. This indicia of reliability is an extremely low standard and, thus, adversely impacts health care providers who are accused of fraud without a basis, such as a disgruntled employee or anonymous and unfounded complaint.
For more information on suspension of Medicaid payments, please see my blogs: “How the ACA Has Redefined the Threshold for “Credible Allegations of Fraud” and Does It Violate Due Process?” or “NC Medicaid Providers: “Credible Allegations of Fraud?” YOU ARE GUILTY UNTIL PROVEN INNOCENT!”
To Keene and Burke: (ACA topic)
One of the concerns, or perhaps benefits depending on one’s perspective, about the implementation of the Affordable Care Act is the possible transition from our country’s employer-based health insurance model. Are you seeing any trends away from the employer-based health insurance model, or do you expect such a trend in the future?
Summary: (From Keene) He sees the employer-based health insurance model as a tax issue. Employer-based health insurance is not going anywhere unless the related tax break is eliminated. Keene does not have an opinion as to whether the employer-based health insurance model is good or bad; he just believes that it is not going anywhere. On a side note, Keene mentioned that, with employer-based health insurance, the employee has a much smaller voice when it comes to negotiating any terms of the health insurance. The employee is basically at the whim of the employer and health insurance company.
Dollar and Emanuel: (Medicaid reform)
Who are the major contributors to the legislative discussion on Medicaid funding and reimbursement rates? What stakeholders do legislators want or need to hear from more to make sound policy decisions about funding decisions?
Summary: (From Dollar) It is without question that the legislators are surrounded by lobbyists regarding the discussion as to Medicaid funding and reimbursement rates. I stated that the reimbursement rates are too low and are a direct correlation as to quality of care. Rep. Dollar stated that he is open to hearing from all. Furthermore, Rep. Dollar believes that the Senate Bill on Medicaid reform is a good start for Medicaid reform. The Bill implements the Accountable Care Organizations (ACOs), and is supported by the NC Medical Society.
Summary: (From me) I support Medicaid reform that eliminates the MCOs in behavioral health care. These MCOs are prepaid and have all the financial incentive to deny services and terminate providers.
Burke: (ACO)
How is Blue Cross Blue Shield of North Carolina working with providers to take advantage of the new Medicare Shared Savings Program? (E.g., partnership signed with WakeMed Key Community Care (an accountable care organization) in July.)
Summary: BCBS works very hard to maintain solid relationships with providers. To which Keene agreed and stated that other private insurance does not.
The health care panel was great. We hope to host a State of the State on Health Care panel discussion annually.
