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.

Look into My Crystal Ball: Who Is Going to Be Audited by the Government in 2017?

Happy New Year, readers!!! A whole new year means a whole new investigation plan for the government…

The Department of Health and Human Services (HHS) Office of Inspector General (OIG) publishes what is called a “Work Plan” every year, usually around November of each year. 2017 was no different. These Work Plans offer rare insight into the upcoming plans of Medicare investigations, which is important to all health care providers who accept Medicare and Medicaid.

For those of you who do not know, OIG is an agency of the federal government that is charged with protecting the integrity of HHS, basically, investigating Medicare and Medicaid fraud, waste, and abuse.

So let me look into my crystal ball and let you know which health care professionals may be audited by the federal government…

crystal-ball

The 2017 Work Plan contains a multitude of new and revised topics related to durable medical equipment (DME), hospitals, nursing homes, hospice, laboratories.

For providers who accept Medicare Parts A and B, the following are areas of interest for 2017:

  • Hyperbaric oxygen therapy services: provider reimbursement
  • Inpatient psychiatric facilities: outlier payments
  • Skilled nursing facilities: reimbursements
  • Inpatient rehabilitation hospital patients not suited for intensive therapy
  • Skilled nursing facilities: adverse event planning
  • Skilled nursing facilities: unreported incidents of abuse and neglect
  • Hospice: Medicare compliance
  • DME at nursing facilities
  • Hospice home care: frequency of on-site nurse visits to assess quality of care and services
  • Clinical Diagnostic Laboratories: Medicare payments
  • Chronic pain management: Medicare payments
  • Ambulance services: Compliance with Medicare

For providers who accept Medicare Parts C and D, the following are areas of interest for 2017:

  • Medicare Part C payments for individuals after the date of death
  • Denied care in Medicare Advantage
  • Compounded topical drugs: questionable billing
  • Rebates related to drugs dispensed by 340B pharmacies

For providers who accept Medicaid, the following are areas of interest for 2017:

  • States’ MCO Medicaid drug claims
  • Personal Care Services: compliance with Medicaid
  • Medicaid managed care organizations (MCO): compliance with hold harmless requirement
  • Hospice: compliance with Medicaid
  • Medicaid overpayment reporting and collections: all providers
  • Medicaid-only provider types: states’ risk assignments
  • Accountable care

Caveat: The above-referenced areas of interest represent the published list. Do not think that if your service type is not included on the list that you are safe from government audits. If we have learned nothing else over the past years, we do know that the government can audit anyone anytime.

If you are audited, contact an attorney as soon as you receive notice of the audit. Because regardless the outcome of an audit – you have appeal rights!!! And remember, government auditors are more wrong than right (in my experience).

Health Care Integration: A Glimpse Into My Crystal Ball

Throughout the history of health care, payors and payees of Medicare/caid have existed in separate silos. In fact, the two have combated – the relationship has not always been stellar.

Looking into my crystal ball; however, all will not be as it is now [that’s clear as mud!].

Now, and in the upcoming years, there will be a massive shift to integrate payors and payees under the same roof. Competition drives this movement. So does the uncertainty in the health care market. This means that under one umbrella may be the providers and the paying entities.

Why is this a concern? First – Any healthcare entity that submits claims to the federal government, whether it be a provider or payor, must comply with the fraud and abuse statutes. As such, there is a potential to run afoul of federal and state regulations regulating the business of health care. Payors know their rules; providers know their rules…And those rules are dissimilar; and, at times, conflicting. The opportunity to screw up is endemic.

Second – With the new responsibilities mandated by the Yates Memo, these new relationships could create awkward situations in which the head of the payor department could have knowledge (or should have knowledge) of an [alleged] overpayment, but because of the politics at the company or self-interest in the preservation of his or her career, the head may not want to disclose such overpayment. With the 60-day rule, the head’s hesitation could cost the company.

Let’s investigate:

The Affordable Care Act (ACA) reinvented health care in so many ways. Remember, the ACA is supposed to be self-funding. Taxes were not to increase due to its inception. Instead, health care providers fund the ACA through post payment and prepayment audits, ZPIC audits, CERTs, MFCU, MICs, RACs, and PERMs.

The ACA also made a whole new commercially-insured population subject to the False Claims Act. False statements are now being investigated in connection with Medical Loss Ratios, justifications for rate increases, risk corridor calculations, or risk adjustment submissions.

CMS imposes a duty to detect fraud, waste, and abuse (FWA). But what if you’re looking at your own partners?

medicare paying

 

The chart above depicts “old school” Medicare payment options for physicians and other health care providers. In our Brave New World, the arrows will be criss-crossed (applesauce), because when the payors and the payees merge, the reimbursements, the billing, and the regulatory supervision will be underneath the same roof. It’ll be the game of “chicken” taken to a whole new level…with prison and financial penalties for the loser.

Since 2011, kickback issues have exponentially grown. The Anti-Kickback Statute makes it a criminal offense for a provider to give “remuneration” to a physician in order to compensate the physician for past referrals or to induce future referrals of patients to the provider for items or services that are reimbursed, in whole or in part, by Medicare or Medicaid.

Imagine when payors and payees are owned by the same entity! Plus, the ACA amended the kickback statutes to eliminate the prong requiring actual knowledge or intent. Now you can be convicted of anti kickback issues without any actual knowledge it was ever occurring!!

Now we have the “one purpose test,” which holds that a payment or offer of remuneration violates the Anti-Kickback Statute so long as part of the purpose of a payment to a physician or other referral source by a provider or supplier is an inducement for past or future referrals. United States v. Borrasi,  2011 WL 1663373 (7th Cir. May 4, 2011).

There are statutory exceptions. But these exceptions differ depending on whether you are a payor or payee – see the potential criss-cross applesauce?

And, BTW, which types of health care services are bound by the anti kickback statutes?

  1. Clinical laboratory services;
  2. Physical therapy services;
  3. Occupation therapy services;
  4. Radiology services (including MRIs, Ultrasounds, and CAT scans);
  5. Radiation therapy and supplies;
  6. Durable medical equipment and supplies;
  7. Parenteral and enteral nutrients, equipment, and supplies;
  8. Prosthetics, orthotics, and prosthetic devices and supplies;
  9. Home health services;
  10. Outpatient prescription drugs; and
  11. Inpatient and outpatient hospital services.

 

Imagine a building. Inside is a primary care physician (PCP), a pediatrician, a home health agency, and a psychiatrist. Can the PCP refer to the home health agency? Can a hospital refer to a home care agency? What if one of the Board of Directors sit on both entities?

The keys to avoiding the anti kickback pitfalls is threefold: (1) fair market value (FMV); (2) arm’s length transactions; and (3) money cannot be germane to referrals.

However, there is no one acceptable way to determine FMV. Hire an objective appraiser. While hiring an objective appraiser does not establish accuracy, it can demonstrate a good faith attempt.

Number One Rule for Merging/Acquiring/Creating New Partnerships in our new Brave New World of health care?

Your attorney should be your new BFF!! (Unless she already is).

CMS Clarifying Medicare Overpayment Rules: The Bar Is Raised (Yet Again) for Health Care Providers

Have you ever watched athletes compete in the high jump? Each time an athlete is successful in pole vaulting over the bar, the bar gets raised…again…and again…until the athlete can no longer vault over the bar. Similarly, the Center for Medicare and Medicaid Services (CMS) continue to raise the bar on health care providers who accept Medicare and Medicaid.

In February, CMS finalized the rule requiring providers to proactively investigate themselves and report any overpayments to CMS for Medicare Part A and B. (The Rule for Medicare Parts C and D were finalized in 2014, and the Rule for Medicaid has not yet been promulgated). The Rule makes it very clear that CMS expects providers and suppliers to enact robust self auditing policies.

We all know that the Affordable Care Act (ACA) was intended to be self-funding. Who is funding it? Doctors, psychiatrists, home care agencies, hospitals, long term care facilities, dentists…anyone who accepts Medicare and Medicaid. The self-funding portion of the ACA is strict; it is infallible, and its fraud, waste, and abuse (FWA) detection tools…oh, how wide that net is cast!

Subsection 1128J(d) was added to Section 6402 of the ACA, which requires that providers report overpayments to CMS “by the later of – (A) the date which is 60 days after the date on which the overpayment was identified; or (B) the date any corresponding cost report is due, if applicable.”

Identification of an overpayment is when the person has, or reasonably should have through the exercise of reasonable diligence, determined that the person received an overpayment. Overpayment includes referrals or those referrals that violate the Anti-Kickback statute.

CMS allows providers to extrapolate their findings, but what provider in their right mind would do so?

There is a six-year look back period, so you don’t have to report overpayments for claims older than six years.

You can get an extension of the 60-day deadline if:

• Office of Inspector General (OIG) acknowledges receipt of a submission to the OIG Self-Disclosure Protocol
• OIG acknowledges receipt of a submission to the OIG Voluntary Self-Referral Protocol
• Provider requests an extension under 42 CFR §401.603

My recommendation? Strap on your pole vaulting shoes and get to jumping!

The Yates Memo: It May Be the Second Coming for Individual Executives

The Yates memo? Sadly, we aren’t talking about William Butler Yates, who is one of my favorite poets:

TURNING and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.
Surely some revelation is at hand;
Surely the Second Coming is at hand…Part of The Second Coming

Ok, so maybe it is a little melodramatic to compare the Yates memo from the Office of the Deputy Attorney General to the end of the world, the drowning of innocence, and The Second Coming, but I made analogies in past blogs that had stretched and, dare I say, hyberbolized the situation.

What is the Yates memo?

The Yates memo is a memorandum written by Sally Quillian Yates, 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.

By far the most scary and daunting item discussed within the Yates memo is the DOJ’s interest in indicting individuals within corporations as well as the corporate entities itself, i.e., the executives…the management. Individual accountability.

No more Lehman Brothers fallout with former CEO Dick Fuld leaving the catastrophe with a mansion in Greenwich, Conn., a 40+ acre ranch in Sun Valley, Idaho, as well as a five-bedroom home in Jupiter Island, Fla.  Fuld may have or may not have been a player in the downfall of Lehman Brothers. But the Yates Memo was not published back in 2008.

The Yates Memo outlines 6 steps to strengthen audits for corporate compliance:

  1. To be eligible for any cooperation credit, corporations must provide to the DOJ all relevant facts about individuals involved in corporate misconduct.
  2. Both criminal and civil corporate investigations should focus on individuals from the inception of the investigation.
  3. Criminal and civil attorneys handling corporate investigations should be in routine communication with one another.
  4. Absent extraordinary circumstances, no corporate resolution will provide protection from criminal or civil liability for any individuals.
  5. Corporate cases should not be resolved without a clear plan to resolve related individual cases before the statute of limitations expires and declinations as to individuals in such cases must be memorialized.
  6. Civil attorneys should consistently focus on individuals as well as the company and evaluate whether to bring suit against an individual based on considerations beyond that individual’s ability to pay.

So why write about now – over 6 months after it was disseminated?

First, since its dissemination, a few points have been clarified that were otherwise in question.

About a month after its publication, U.S. Assistant Attorney General Leslie Caldwell emphasized the Yates memo’s requirement that corporations must disclose all relevant facts regarding misconduct to receive cooperation credit. Caldwell went so far to say that companies must affirmatively seek relevant facts regarding misconduct.

For example, Hospital X is accused of Medicare fraud, waste, and abuse (FWA) in the amount of $15 million. The Yates memo dictates that management at the hospital proactively investigate the allegations and report its findings to the federal government. The memo mandates that the hospital “show all its cards” and turn itself in prior to making any defense.

The problem here is that FWA is such a subjective determination.

What if a hospital bills Medicare for inplantable cardioverter defibrillator, or ICD, for patients that had coronary bypass surgery or angioplasty within 90 days or a heart attack within 40 days? What if the heart attack was never documented? What if the heart attack was so minor that it lasted under 100 milliseconds?

The Medicare National Coverage Determinations are so esoteric that your average Medicare auditor could very well cite a hospital for billing for an ICD even when the patient’s heart attack lasted under 100 milliseconds.

Yet, according to the Yates memo, the hospital is required to present all relevant facts before any defense. What if the hospital’s billing person is over zealous in detecting mis-billings? The hospital could very well have a legal defense as to why the alleged mis-billing is actually compliant. What about a company’s right to seek counsel and defend itself? The Yates memo may require the company to turn over attorney-client privilege.

The second point that has been clarified since the Yates’ memo’s publication came from Yates herself.

Yates remarks that there will be a presumption that the company has access to identify culpable individuals  unless they can make an affirmative showing that the company does not have access to it or are legally prohibited from producing it.

Why should this matter? It’s only a memo, right?

Since its publication, the DOJ codified it into the revised U.S. Attorneys’ Manual, including the two clarifying remarks. Since its inception, the heads of companies have been targeted.

A case was brought against David Bostwick, the founder, owner and chief executive officer of Bostwick Laboratories for  allegedly provided incentives to treating physicians in exchange for referrals of patients who would then be subjected to these tests.

When the pharmaceutical company Warner Chilcott was investigated for health care fraud prosecutors also went after W. Carl Reichel, the former president, for his alleged involvement in the company’s kickback scheme.

Prior to the Yates’ memo, it was uncommon for health care fraud investigations to  involve criminal charges or civil resolutions against individual executives.

The Second Coming?

It may feel that way to executives of health care companies accused of fraud, waste, and abuse.

CMS Ramps Up Medicare Audits: A Pig and Pony Show?

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.

oink

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:

UPS2demolished2

fast food2

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.

If you are one of the Medicare providers that get caught into CMS’ widely  thrown net, be sure to know your rights! Know the appeal steps!

Audits “Breaking Bad” in New Mexico

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.

Alphabet Soup: RACs, MICs, MFCUs, CERTs, ZPICs, PERMs and Their Respective Look Back Periods

I have a dental client, who was subject to a post payment review by Public Consulting Group (PCG). During the audit, PCG reviewed claims that were 5 years old.  In communication with the state, I pointed out that PCG surpassed its allowable look back period of 3 years.  To which the Assistant Attorney General (AG) said, “This was not a RAC audit.”  I said, “Huh. Then what type of audit is it? MIC? ZPIC? CERT?” Because the audit has to be one of the known acronyms, otherwise, where is PCG’s authority to conduct the audit?

There has to be a federal and state regulation applicable to every audit.  If there is not, the audit is not allowable.

So, with the state claiming that this post payment review is not a RAC audit, I looked into what it could be.

In order to address health care fraud, waste, and abuse (FWA), Congress and CMS developed a variety of approaches over the past several years to audit Medicare and Medicaid claims. For all the different approaches, the feds created rules and different acronyms.  For example, a ZPIC audit varies from a CERT audit, which differs from a RAC audit, etc. The rules regulating the audit differ vastly and impact the provider’s audit results greatly. It can be as varied as hockey and football; both have the same purpose of scoring points, but the equipment, method of scoring, and ways to defend against an opponent scoring are as polar opposite as oil and water. It can be confusing and overwhelming to figure out which entity has which rule and which entity has exceeded its scope in an audit.

It can seem that we are caught swimming in a bowl of alphabet soup. We have RACs, ZPICs, MICs, CERTs, and PERMs!!

alphabet soup

What are these acronyms??

This blog will shed some light on the different types of agencies auditing your Medicare and Medicaid claims and what restrictions are imposed on such agencies, as well as provide you with useful tips while undergoing an audit and defending the results.

First, what do the acronyms stand for?

  • Medicare Recovery Audit Contractors (RACs)
  • Medicaid RACs
  • Medicaid Integrity Contractors (MICs)
  • Zone Program Integrity Contractors (ZPICs)
  • State Medicaid Fraud Control Units (MFCUs)
  • Comprehensive Error Rate Testing (CERT)
  • Payment Error Rate Measurement (PERM)

Second, what are the allowable scope, players, and look back periods for each type of audit? I have comprised the following chart for a quick “cheat sheet” when it comes to the various types of audits. When an auditor knocks on your door, ask them, “What type of audit is this?” This can be invaluable information when it comes to defending the alleged overpayment.

SCOPE, AUDITOR, AND LOOK-BACK PERIOD
Name Scope Auditor Look-back period
Medicare RACs

Focus:

Medicare zaqoverpayments and underpayments

Medicare RACs are nationwide. The companies bid for federal contracts. They use post payment reviews to seek over and under payments and are paid on a contingency basis. Region A:  Performant Recovery

Region B:  CGI Federal, Inc.

Region C:  Connolly, Inc.

Region D:  HealthDataInsights, Inc.

Three years after the date the claim was filed.
Medicaid RACs

Focus:

Medicaid overpayments and underpayments

Medicaid RACs operate nationwide on a state-by-state basis. States choose the companies to perform RAC functions, determine the areas to target without informing the public, and pay on a contingency fee basis. Each state contracts with a private company that operates as a Medicaid RAC.

In NC, we use PCG and HMS.

Three years after the date the claim was filed, unless the Medicaid RAC has approval from the state.
MICs

Focus:

Medicaid overpayments and education

MICs review all Medicaid providers to identify high-risk areas, overpayments, and areas for improvement. CMS divided the U.S. into five MIC jurisdictions.

New York (CMS Regions I & II) – Thomson Reuters (R) and IPRO (A) • Atlanta (CMS Regions III & IV) – Thomson Reuters (R) and Health Integrity (A) • Chicago (CMS Regions V & VII) – AdvanceMed (R) and Health Integrity (A) • Dallas (CMS Regions VI & VIII) – AdvanceMed (R) and HMS (A) • San Francisco (CMS Regions IX & X) – AdvanceMed (R) and HMS (A)

MICs are not paid on a contingency fee basis.

MICs  may review a claim as far back as permitted under the laws of the respective states (generally a five-year look-back period).
ZPICs

Focus:

Medicare fraud, waste, and abuse

ZPICs investigate potential Medicare FWA and refer these cases to other entities.

Not random.

CMS, which has divided the U.S. into seven ZPICs jurisdictions.

Only investigate potential fraud.

ZPICs are not paid on a contingency fee basis.

ZPICs have no specified look-back period.
MFCUs

Focus:

Medicaid fraud, waste, and abuse

MFCUs investigate and prosecute (or refer for prosecution) criminal and civil Medicaid fraud cases. Each state, except North Dakota, has an MFCU.

Contact info for NC’s:

Medicaid Fraud Control Unit of North Carolina
Office of the Attorney General
5505 Creedmoor Rd
Suite 300
Raleigh, NC   27612

Phone: (919) 881-2320

website

MFCUs have no stated look-back period.
CERT

Focus:

Medicare improper payment rate

CERT companies indicate the rate of improper payments in the Medicare program in an annual report. CMS runs the CERT program using two private contractors (which I am yet to track down, but I will). The look back period is the current fiscal year (October 1 to September 30).
PERM

Focus:

Medicaid improper payment rate

PERM companies research improper payments in Medicaid and the Children’s Health Insurance Program. They extrapolate a national error rate. CMS runs the PERM program using two private contractors(which I am yet to track down, but I will). The look back period is the current fiscal year (the complete measurement cycle is 22 to 28 months).

 As you can see, the soup is flooded with letters of the alphabet. But which letters are attached to which audit company determines which rules are followed.

It is imperative to know, when audited, exactly which acronym those auditors are

Which brings me back to my original story of my dental provider, who was audited by a “non-RAC” entity for claims 5 years old.

What entity could be performing this audit, since PCG was not acting as its capacity as a RAC auditor? Let’s review:

  • RAC: AG claims no.
  • MIC: This is a state audit, not federal. No.
  • MFCU: No prosecutor involved. No.
  • ZPIC: This is a state audit, not federal. No allegation of fraud. No.
  • CERT:This is a state audit, not federal. No.
  • PERM: This is a state audit, not federal. No.

Hmmmm….

If it walks like a duck, talks like a duck, and acts like a duck, it must be a duck, right?

Or, in this case, a RAC.

New Mexico AG clears third agency of Medicaid billing fraud!!!

BREAKING NEWS

Here is the article (my opinions will be forthcoming):

SANTA FE – The Attorney General’s Office has cleared a third behavioral health agency of Medicaid fraud, and it’s reaching out to audit firms for help in investigating the remaining dozen referred by the Human Services Department two years ago.

Attorney General Hector Balderas said Wednesday that he has issued requests for proposals from audit firms to help with the investigations, to speed up the process.

A spokesman for Balderas, meanwhile, said the AG’s Office has completed its investigation into Raton-based Service Organization for Youth and found no Medicaid fraud on the part of the agency, although there was overbilling.

The AG’s Office referred the case back to the Human Services Department to pursue the overbilling, according to spokesman James Hallinan. The alleged amount was not immediately available.

As an outgrowth of the SOY investigation, a former therapist for the agency was charged six weeks ago by the AG’s Office with Medicaid fraud. She allegedly provided false billing information to SOY.

The Human Services Department in 2013 referred to the attorney general 15 nonprofits that provided services to the mentally ill and addicted, saying an audit it commissioned had found $36 million in overbilling, mismanagement and possible fraud.

Two of the providers – The Counseling Center of Alamogordo and Santa Fe-based Easter Seals El Mirador – had previously been cleared of fraud by the AG’s Office and are in disputes with HSD about what, if anything, they owe for alleged overbilling.

Former Attorney General Gary King, who left office at the end of December, had said it could take up to six years to complete the probes. Balderas said that was too long and got approval from the Legislature during the regular session to shift $1.8 million out of a consumer protection fund to hire extra help.

The request for proposals “is a critical infusion of resources to expedite the behavioral health Medicaid fraud investigations,” Balderas said Wednesday in a statement. He said expanding the pool of experts to work with his staff “will allow our investigation to proceed even more quickly and efficiently, which has always been my priority.”

The request for proposals, issued last week, requires that bidders respond by June 30.

After the Human Services Department cut off Medicaid funding to the providers and referred them to the AG’s Office, it brought in five Arizona companies to take over a dozen of them. SOY, however, had its Medicaid funding restored by HSD and continued to operate, with technical assistance from one of the Arizona firms.

The report on the SOY investigation was not immediately available from Balderas’ office. Hallinan said it was being reviewed before release to ensure that it didn’t affect the criminal proceedings against the former SOY therapist.

NC State Auditor Finds Eastpointe Guilty of Accepting Kickbacks!

Last week I traveled to Houston, Dallas, and Denver to meet with other health care attorneys of Gordon & Rees.  It was a great trip and I met some wonderful colleagues.  But I was happy to get home to my family, including our new addition of 9 peacock eggs.

Yes, 9 peacock eggs!!

Here is a pic:

peacock eggs

(I know that there are 10 eggs in the picture, but we will not talk about the 10th.  Just know that we have high hopes that the other 9 are viable and survive!!  As of today, at 1:00 pm, all 9 eggs are chirping, but no cracks yet!!)

Oh, and, before I forget…Watch ABC news tonight.  I was interviewed for a story about one of my clients.

Anyway, while I was gone, I was unable to post a blog regarding the State Auditor’s most recent audit report regarding Eastpointe.  So here it is…

As the managed care organizations (MCOs) continue to accuse health care providers of fraud, waste, and abuse (FWA), it seems from a recent State Auditor report that, at least, one of the MCOs itself is guilty of the very accusation that they are alleging against providers.  See blog. And blog.

There is an old story:

A wolf, passing by, saw some shepherds in a hut eating for their dinner a haunch of mutton. Approaching them, he said: What a clamor you would raise, if I were to do as you are doing!

Moral:
Men are too apt to condemn in others the very things they practice themselves

The audit findings beg the questions…Is it only Eastpointe? Or all 9 MCOs? How much Medicaid money is lining the pockets of MCO executives, instead of paying for medically necessary services for Medicaid recipients?  Beth Wood  only audited Eastpointe. Is this only the tip of the iceberg?

According to our State Auditor, Eastpointe former executive has lined his pockets with $547,595+…

Here are the key findings from the NC State Auditor’s report regarding Eastpointe:

KEY FINDINGS

  • Former CFO facilitated apparent kickbacks totaling $547,595 from two Eastpointe contractors
  • Former CFO purchased three vehicles totaling $143,041 without a documented business purpose
  • Former CFO purchased $18,600 of equipment for personal use
  • Former CFO, Chief Executive Officer (CEO), and other employees used Eastpointe credit cards to make $157,565 of questionable purchases
  • Inadequate CEO and area board oversight contributed to operational failures

Eastpointe is one of 9 MCOs in NC charged with managing and supervising Medicaid behavioral health care services. So what do we do when the entity IN CHARGE of managing Medicaid money is mismanaging tax dollars???

Where is the supervision??

Over the last few years, since the MCOs went live across the state, I have seen the MCOs terminate Medicaid providers for no cause, claim providers owed money, penalties, plans of corrections (POC), and/or refuse to contract with providers for reasons as silly as:

  • Failing to put shoes on a paraplegic (no feet), because the assessment included that the patient required help dressing;
  • Using green ink (a personal favorite) on a service note;
  • Having signatures on service notes that are difficult to read (so the auditors assume that the person doesn’t have the correct licenses).

Here, we have the State Auditor finding that Eastpointe’s former CFO unilaterally hired two contractors to improve Eastpointe’s building (paid for with Eastpointe’s funding), but the former CFO accepting over half a million dollars.  This is no green ink! This is no insignificant finding!!

What is Eastpointe’s funding?

eastpointe funding

As you can see, 72.7% of Eastpointe’s funding is pure Medicaid money. When Eastpointe’s former CFO received $547,595 in kickbacks, 72%, or $394,268.40, should have been used to provide Medicaid behavioral health care services.

These are our tax dollars, people!!  These are our tax dollars budgeted to aid our most needy population with behavioral health care services!!  These are our tax dollars budgeted to provide psychiatric services, substance abuse services, and services for those with developmental disabilities!!!!

Our State Auditor states in her report, “The former CFO may have violated several state laws including fraud, misrepresentation, and obtaining property by false pretenses.”

Let’s look at a couple of those statutes that may have been violated:

42 U.S. Code § 1320a–7b imposes criminal penalties for acts involving Federal health care programs, and federal dollars pay a portion of our Medicaid program.

North Carolina General Statute § 14-234 states: “No public officer or employee who is involved in making or administering a contract on behalf of a public agency may derive a direct benefit from the contract except as provided in this section, or as otherwise allowed by law.”

The question becomes was the former CFO of Eastpointe, at the time of the receipt of kickbacks a “public officer” or “employee who is involved in making or administrating a contract on behalf of a public agency?” I believe the answer is yes, at least as to the latter.

Here is the point in this blog that my personal views will be aired. I find the former CFO’s behavior significantly opprobrious and reprehensible.

Here we have an MCO which is in charge of behavioral health care for our most vulnerable and needy populations…not just those in poverty, but those in poverty suffering from mental illness, substance abuse, and/or developmental disabilities (MH/SA/DD). Obviously, those Medicaid recipients suffering from MH/SA/DD will not have the means to hire a private attorney to defend their interests. When they receive denials for authorizations or reductions in services, they are defenseless. Sure, some children have strong advocate parents, but, on the whole, those suffering from MH/SA/DD have little to no advocates.

Juxtapose someone sitting in the role of a CFO…a chief financial officer of a company. Think he or she can hire a private attorney?? Think he or she has advocates or means to hire advocates??
How can someone in power abuse that power to the detriment of the under-privileged and sleep at night? I find the State Auditor’s audit findings repugnant beyond comprehension.

We are left with a former CFO who may or may not have committed criminal activity, but, who, at least according to the State Auditor, has received kickbacks. We are left with questions.

Is it only Eastpointe? Or all 9 MCOs? How much Medicaid money is lining the pockets of MCO executives, instead of paying for medically necessary services for Medicaid recipients?  Will there be justice?

We can only hope that this audit is a catalyst to consequences.