There is a federal regulation that is putting health care providers out of business. It is my legal opinion that the regulation violates the U.S. Constitution. Yet, the regulation still exists and continues to put health care providers out of business.
Because so far, no one has litigated the validity of the regulation, and I believe it could be legally wiped from existence with the right legal arguments.
How is this important?
Currently, the state and federal government are legally authorized to immediately suspend your Medicare or Medicaid reimbursements upon a credible allegation of fraud. This immense authority has put many a provider out of business. Could you survive without any Medicare or Medicaid reimbursements?
The federal regulation to which I allude is 42 CFR 455.23. It is a federal regulation, and it applies to every single health care provider, despite the service type allowed by Medicare or Medicaid. Home care agencies are just as susceptible to an accusation of health care fraud as a hospital. Durable medical equipment agencies are as susceptible as dentists. Yet the standard for a “credible allegation of fraud” is low. The standard for which the government can implement an immediate withhold of Medicaid/care reimbursements is lower than for an accused murderer to be arrested. At least when you are accused of murder, you have the right to an attorney. When you are accused to health care fraud on the civil level, you do not receive the right to an attorney. You must pay 100% out of pocket, unless your insurance happens to cover the expense for attorneys. But, even if your insurance does cover legal fees, you can believe that you will be appointed a general litigator with little to no knowledge of Medicare or Medicaid regulatory compliance litigation.
42 USC 455.23 states that:
“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.
(2) The State Medicaid agency may suspend payments without first notifying the provider of its intention to suspend such payments.
(3) A provider may request, and must be granted, administrative review where State law so requires.”
In the very first sentence, which I highlighted in red, is the word “must.” Prior to the Affordable Care Act, this text read “may.” From my years of experience, every single state in America has used this revision from “may” to “must” for governmental advantage over providers. When asked for good cause, the state and or federal government protest that they have no authority to make a decision that good cause exists to suspend any reimbursement freeze during an investigation. But this protest is a pile of hooey.
In reality, if anyone could afford to litigate the constitutionality of the regulation, I believe that the regulation would be stricken an unconstitutional.
Here is one reason why: Due Process
The Fifth and Fourteenth Amendments to the Bill of Rights provide us our due process rights. Here is the 5th Amendment:
“No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.”
There have been a long and rich history of interpretation of the due process clause. The Supreme Court has interpreted the due process clauses to provide four protections: (1) procedural due process (in civil and criminal proceedings), (2) substantive due process, (3) a prohibition against vague laws, and (4) as the vehicle for the incorporation of the Bill of Rights.
42 CFR 455.23 violates procedural due process.
Procedural due process requires that a person be allowed notice and an opportunity to be heard before a government official takes a person’s life, liberty, or property.
Yet, 42 CFR 455.23 allows the government to immediately withhold reimbursements for services rendered based on an allegation without due process and taking a provider’s property; i.e., money owed for services rendered. Isn’t this exactly what procedural due process was created to prevent???? Where is the fundamental fairness?
42 CFR 455.23 violates substantive due process.
The Court usually looks first to see if there is a fundamental right, by examining if the right can be found deeply rooted in American history and traditions.
Fundamental rights include the right to vote, right for protection from pirates on the high seas (seriously – you have that right), and the right to constitutional remedies. Courts have held that our right to property is a fundamental right, but to my knowledge, not in the context of Medicare/caid reimbursements owed; however, I see a strong argument.
If the court establishes that the right being violated is a fundamental right, it applies strict scrutiny. This test inquires into whether there is a compelling state interest being furthered by the violation of the right, and whether the law in question is narrowly tailored to address the state interest.
Where the right is not a fundamental right, the court applies a rational basis test: if the violation of the right can be rationally related to a legitimate government purpose, then the law is held valid.
Taking away property of a Medicare/caid provider without due process violates substantive due process. The great thing about writing your own blog is that no one can argue with you. Playing Devil’s advocate, I would anticipate that the government would argue that a suspension or withhold of reimbursements is not a “taking” because the withhold or suspension is temporary and the government has a compelling reason to deter health care fraud. To which, I would say, yes, catching health care fraud is important – I am in no way advocating for fraud. But important also is the right to be innocent until proven guilty, and in civil cases, our deeply-rooted belief in the presumption of innocence is upheld by the action at issue not taking place until a hearing is held.
For example, if I sue my neighbor and declare that he is encroaching on my property, the property line is not moved until a decision is in my favor.
Another example, if I sue my business partner for breach of contract because she embezzled $1 million from me, I do not get the $1 million from her until it is decided that she actually took $1 million from me.
So to should be – if a provider is accused of fraud, property legally owned by said provider cannot just be taken away. That is a violation of substantive due process.
42 CFR 455.23 violates the prohibition against vague laws
A law is void for vagueness if an average citizen cannot understand it. The vagueness doctrine is my favorite. According to census data, there are 209.3 million people in the US who are over 24-years. Of those over 24-years-old, 66.9 million have a college degree. 68% do not.
Although here is a quick anecdote: Not so sure that a college degree is indicative of intelligence. A recent poll of law students at Columbia University showed that over 60% of the students, who were polled, could not name what rights are protected by the 1st Amendment. Once they responded “speech,” many forgot the others. In case you need a refresher for the off-chance that you are asked this question in an impromptu interview, see here.
My point is – who is to determine what the average person may or may not understand?
Back to why 42 CFR 455.23 violates the vagueness doctrine…
Remember the language of the regulations: “The State Medicaid agency must suspend all Medicaid payments to a provider after the agency determines there is a credible allegation of fraud…”
“Credible allegation of fraud” is defined as an allegation, which has been verified by the State, from any source, including but not limited to the following:
- Fraud hotline complaints.
- Claims data mining.
- Patterns identified through provider audits, civil false claims cases, and law enforcement investigations. Allegations are considered to be credible when they have indicia of reliability and the State Medicaid agency has reviewed all allegations, facts, and evidence carefully and acts judiciously on a case-by-case basis.”
With a bit of research, I was able to find a written podcast published by CMS. It appears to be a Q and A between two workers at CMS discussing whether they should suspend a home health care agency’s reimbursements, similar to a playbook. I assume that it was an internal workshop to educate the CMS employees considering that the beginning of the screenplay begins with a “canned narrator” saying “This is a Medicaid program integrity podcast.”
The weird thing is that when you pull up the website – here – you get a glimpse of the podcast, but, at least on my computer, the image disappears in seconds and does not allow you to read it. I encourage you to determine whether this happens you as well.
While the podcast shimmered for a few seconds, I hit print and was able to read the disappearing podcast. As you can see, it is a staged conversation between “Patrick” and “Jim” regarding suspicion of a home health agency falsifying certificates of medical necessity.
On page 3, “Jim” says, “Remember the provider has the right to know why we are taking such serious action.”
But if your Medicare/caid reimbursements were suddenly suspended and you were told the suspension was based upon “credible allegations of fraud,” wouldn’t you find that reasoning vague?
42 CFR 455.23 violates the right to apply the Bill of Rights to me, as a citizen
This esoteric doctrine only means that the Bill of Rights apply to State governments. [Why do lawyers make everything so hard to understand?]
When you get accused of Medicare or Medicaid fraud or of an alleged overpayment, the federal and state governments have the authority to suspend your reimbursements. If you rely heavily on Medicaid or Medicare, this suspension can be financially devastating. If your Medicare or Medicaid reimbursements are suspended, you have to hire an attorney. And, somehow, you have to be able to afford such legal representation without reimbursements. Sadly, this is why many providers simply go out of business when their reimbursements are suspended.
But, legally, how long can the state or federal government suspend your Medicare or Medicaid payments without due process?
According to 42 C.F.R. 405.371, the federal government may suspend your Medicare reimbursements upon ” reliable information that an overpayment exists or that the payments to be made may not be correct, although additional information may be needed for a determination.” However, for Medicare, there is a general rule that the suspension may not last more than 180 days. MedPro Health Providers, LLC v. Hargan, 2017 U.S. Dist. LEXIS 173441 *2.
There are also procedural safeguards. A Medicare provider must be provided notice prior to a suspension and given the opportunity to submit a rebuttal statement explaining why the suspension should not be implemented. Medicare must, within 15 days, consider the rebuttal, including any material submitted. The Medicare Integrity Manual states that the material provided by the provider must be reviewed carefully.
42 CFR 455.23 states that “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.”
Notice the differences…
Number one: In the Medicare regulation, the word used is “may” suspend. In the Medicaid regulation, the word used is “must” suspend. This difference between may and must may not resonate as a huge difference, but, in the legal world, it is. You see, “must” denotes that there is no discretion (even though there is discretion in the good cause exception). On the other hand, “may” suggests more discretionary power in the decision.
Number two: In the Medicare regulation, notice is required. It reads, “Except as provided in paragraphs (d) and (e) of this section, CMS or the Medicare contractor suspends payments only after it has complied with the procedural requirements set forth at § 405.372.” 405.372 reads the Medicare contractor must notify the provider or supplier of the intention to suspend payments, in whole or in part, and the reasons for making the suspension. In the Medicaid regulation, no notice is required. 455.23 reads “The State Medicaid agency may suspend payments without first notifying the provider of its intention to suspend such payments.”
Number three: In the Medicare regulation, a general limit of the reimbursement suspension is imposed, which is 180 days. In the Medicaid regulation, the regulations states that the suspension is “temporary” and must be lifted after either of the following (1) there is a determination of no credible allegations of fraud or (2) the legal proceedings regarding the alleged fraud are complete.
Yet I have seen States blatantly violate the “temporary” requirement. Consider the New Mexico situation. All the behavioral health care providers who were accused of Medicaid fraud have been cleared by the Attorney General. The regulation states that the suspension must be lifted upon either of the following – meaning, if one situation is met, the suspension must be lifted. Well, the Attorney General has cleared all the New Mexico behavioral health care providers of fraud. Criterion is met. But the suspension has not been lifted. The Health Services Department (HSD) has not lifted the suspension. This suspension has continued for 4 1/2 years. It began June 24, 2013. See blog, blog, and blog. Here is a timeline of events.
Why is there such a disparity in treatment with Medicare providers versus Medicaid providers?
The first thing that comes to mind is that Medicare is a fully federal program, while Medicaid is state-run. Although a portion of the funds for Medicaid comes from the federal government.
Secondly, Medicare patients pay part of costs through deductibles for hospital and other costs. Small monthly premiums are required for non-hospital coverage. Whereas, Medicaid patients pay nothing.
Thirdly, Medicare is for the elderly, and Medicaid is for the impoverished.
But should these differences between the two programs create such a disparity in due process and the length of reimbursement suspensions for health care providers? Why is a Medicare provider generally only susceptible to a 180 day suspension, while a Medicaid provider can be a victim of a 4 1/2 year suspension?
Parity, as it relates to mental health and substance abuse, prohibits insurers or health care service plans from discriminating between coverage offered for mental illness, serious mental illness, substance abuse, and other physical disorders and diseases. In short, parity requires insurers to provide the same level of benefits for mental illness, serious mental illness or substance abuse as for other physical disorders and diseases.
Does parity apply to Medicare and Medicaid providers?
Most of Medicare and Medicaid law is interpreted by administrative law judges. Most of the time, a health care provider, who is not receiving reimbursements cannot fund an appeal to Superior Court, the Court of Appeals, and, finally the Supreme Court. Going to the Supreme Court costs so much that most normal people will never present before the Supreme Court…it takes hundreds and hundreds upon thousands of dollars.
In January 1962, a man held in a Florida prison cell wrote a note to the United States Supreme Court. He’d been charged with breaking into a pool hall, stealing some Cokes, beer, and change, and was handed a five-year sentence after he represented himself because he couldn’t pay for a lawyer. Clarence Earl Gideon’s penciled message eventually led to the Supreme Court’s historic 1963 Gideon v. Wainwright ruling, reaffirming the right to a criminal defense and requiring states to provide a defense attorney to those who can’t afford one. But it does not apply to civil cases.
Furthermore, pro bono attorneys and legal aid attorneys, although much-needed for recipients, will not represent a provider.
So, until a health care provider, who is a gaga-zillionaire, pushes a lawsuit to the Supreme Court, our Medicare and Medicaid law will continue to be interpreted by administrative law judges and, perhaps, occasionally, by Superior Court. Do not take this message and interpret that I think that administrative law judges and Superior Court judges are incapable of interpreting the laws and fairly applying them to certain cases. That is the opposite of what I think. The point is that if the case law never gets to the Supreme Court, we will never have consistency in Medicare and Medicaid law. A District Court in New Mexico could define “temporary” in suspensions of Medicare and/or Medicaid reimbursements as 1 year. Another District Court in New York could define “temporary” as 1 month. Consistency in interpreting laws only happens once the Supreme Court weighs in.
Until then, stay thirsty, my friend.
On July 13, 2017, Attorney General Jeff Sessions and Department of Health and Human Services (HHS) Secretary Tom Price, M.D., announced the Department of Justice’s (DOJ) biggest-ever health care fraud takedown. 412 health care providers were charged with health care fraud. In total, allegedly, the 412 providers schemed and received $1.3 billion in false billings to Medicare, Medicaid, and TRICARE. Of the 412 defendants, 115 are physicians, nurses, and other licensed medical professionals. Additionally, HHS has begun the suspension process against 295 health care providers’ licenses.
The charges include allegations of billing for medically unnecessary treatments or services that were not really provided. The DOJ has evidence that many of the defendants had illegal kickback schemes set up. More than 120 of the defendants were charged with unlawfully or inappropriately prescribing and distributing opioids and other narcotics.
While this particular sting operation resulted from government investigations, not all health care fraud is discovered through government investigation. A great deal of fraud is uncovered through private citizens coming forward with incriminating information. These private citizens can file suit against the fraudulent parties on behalf of the government; these are known as qui tam suits.
Being a whistleblower goes against what most of us are taught as children. We are taught not to be a tattletail. I have vivid memories from elementary school of other kids acting out, but I would remain silent and not inform the teacher. But in the health care world, tattletails are becoming much more common – and they make money for blowing that metaphoric whistle.
What is a qui tam lawsuit?
Qui tam is Latin for “who as well.” Qui tam lawsuits are a type of civil lawsuit whistleblowers (tattletails) bring under the False Claims Act, a law that rewards whistleblowers if their qui tam cases recover funds for the government. Qui tam cases are a powerful weapon against Medicare and Medicaid fraud. In other words, if an employee at a health care facility witnesses any type of health care fraud, even if the alleged fraud is unknown to the provider, that employee can hire an attorney to file a qui tam lawsuit to recover money on behalf of the government. The government investigates the allegations of fraud and decides whether it will join the lawsuit. Health care entities found guilty in a qui tam lawsuit will be liable to government for three times the government’s losses, plus penalties.
The whistleblower is rewarded for bringing these lawsuits. If the government intervenes in the case and recovers funds through a settlement or a trial, the whistleblower is entitled to 15% – 25% of the recovery. If the government doesn’t intervene in the case and it is pursued by the whistleblower team, the whistleblower reward is between 25% – 30% of the recovery.
These recoveries are not low numbers. On June 22, 2017, a physician and rehabilitative specialist agreed to pay $1.4 million to resolve allegations they violated the False Claims Act by billing federal health care programs for medically unreasonable and unnecessary ultrasound guidance used with routine lab blood draws, and with Botox and trigger point injections. If a whistleblower had brought this lawsuit, he/she would have been awarded $210,000 – 420,000.
On June 16, 2017, a Pennsylvania-based skilled nursing facility operator agreed to pay roughly $53.6 million to settle charges that it and its subsidiaries violated the False Claims Act by causing the submission of false claims to government health care programs for medically unnecessary therapy and hospice services. The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by 7 former employees of the company. The whistleblower award – $8,040,000 – 16,080,000.
There are currently two, large qui tam cases against United Health Group (UHG) pending in the Central District of California. The cases are: U.S. ex rel. Benjamin Poehling v. UnitedHealth Group, Inc. and U.S. ex rel. Swoben v. Secure Horizons, et al. Both cases were brought by James Swoben, who was an employee and Benjamin Poehling, who was the former finance director of a UHG group that managed the insurer’s Medicare Advantage Plans. On May 2, 2027, the U.S. government joined the Poehling lawsuit.
The charges include allegations that UHG:
- Submitted invalid codes to the Center for Medicare and Medicaid Services (CMS) that it knew of or should have known that the codes were invalid – some of the dates of services at issue in the case are older than 2008.
- Intentionally avoided learning that some diagnoses codes or categories of codes submitted to their plans by providers were invalid, despite acknowledging in 2010 that it should evaluate the results of its blind chart reviews to find codes that need to be deleted.
- Failed to follow up on and prevent the submissions of invalid codes or submit deletion for invalid codes.
- Attested to CMS each year that the data they submitted was true and accurate while knowing it was not.
UHG would not be in this expensive, litigious pickle had it conducted a self audit and followed the mandatory disclosure requirements.
What are the mandatory disclosure requirements? Glad you asked…
Section 6402(a) of the Affordable Care Act (ACA) creates an express obligation for health care providers to report and return overpayments of Medicare and Medicaid. The disclosure must be made by 60 days days after the date that the overpayment was identified or the date any corresponding cost report is due, if applicable. Identification is defined as the point in which the provider has determined or should have determined through the exercise of due diligence that an overpayment exists. CMS expects the provider to proactively investigate any credible information of a potential overpayment. The consequences of failing to proactively investigate can be seen by the UHG lawsuits above-mentioned. Apparently, UHG had some documents dated in 2010 that indicated it should review codes and delete the invalid codes, but, allegedly, failed to do so.
How do you self disclose?
According to CMS:
“Beginning June 1, 2017, providers of services and suppliers must use the forms included in the OMB-approved collection instrument entitled CMS Voluntary Self-Referral Disclosure Protocol (SRDP) in order to utilize the SRDP. For disclosures of noncompliant financial relationships with more than one physician, the disclosing entity must submit a separate Physician Information Form for each physician. The CMS Voluntary Self-Referral Disclosure Protocol document contains one Physician Information Form.”
“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.
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.
You are a provider, and you accept Medicare and Medicaid. You find out that the person with whom you contracted to provide extraction services for your dental patients has been upcoding for the last few months. -or- You discover that the supervisory visits over the past year have been less than…well, nonexistent. -or- Or your licensed therapist forgot to mention that her license was revoked. What do you do?
What do you do when you unearth a potential, past overpayment to you from Medicare or Medicaid?
Number One: You do NOT hide your head!
Do not be an ostrich. First, being an ostrich will have a direct correlation with harsher penalties. Second, you may miss mandatory disclosure deadlines, which will lead to a more in-depth, concentrated, and targeted audits by the government, which will lead to harsher penalties.
As for the first (harsher penalties), not only will your potential, monetary penalties leap skyward, but knowledge (actual or should have had) could put you at risk for criminal liability or false claims liability. As for increased, monetary penalties, recent Office of Inspector General (OIG) information regarding the self disclosure protocol indicates that self disclosure could reduce the minimum multiplier to only 1.5 times the single damages versus 2-10 times the damages without self disclosure.
As for the second (missing deadlines), your penalties will be exorbitantly higher if you had or should have had actual knowledge of the overpayments and failed to act timely. Should the government, despite your lack of self disclosure, decide to audit your billings, you can count on increased scrutiny and a much more concentrated, in-depth audit. Much of the target of the audit will be what you knew (or should have) and when you knew (or should have). Do not ever think: “I will not ever get audited. I am a small fish. There are so many other providers, who are really de-frauding the system. They won’t come after me.” If you do, you will not be prepared when the audit comes a’knocking on your door – and that is just foolish. In addition, never underestimate the breadth and scope of government audits. Remember, our tax dollars provide almost unlimited resources to fund thousands of audits at a time. Being audited is not like winning the lottery, Your chances are not one in two hundred million. If you accept Medicare and/or Medicaid, your chances of an audit are almost 100%. Some providers undergo audits multiple times a year.
Knowing that the definition of “knowing” may not be Merriam Webster’s definition is also key. The legal definition of “knowing” is more broad that you would think. Section 1128J(d)(4)(A) of the Act defines “knowing” and “knowingly” as those terms are defined in 31 U.S.C. 3729(b). In that statute the terms “knowing” and “knowingly” mean that a person with respect to information—(i) has actual knowledge of the information; (ii) acts in deliberate ignorance of the truth or falsity of the information; or (iii) acts in reckless disregard of the truth or falsity of the information. 31 U.S.C. 3729(b) also states that knowing and knowingly do not require proof of specific intent to defraud.
Number Two: Contact your attorney.
It is essential that you have legal counsel throughout the self disclosure process. There are simply too many ways to botch a well-intended, self disclosure into a casus belli for the government. For example, OIG allows three options for self disclosure; however, one option requires prior approval from OIG. Your counsel needs to maintain your self disclosure between the allowable, navigational beacons.
Number Three: Act timely.
You have 60-days to report and pay. Section 1128J(d)(2) of the Social Security Act requires that a Medicare or Medicaid overpayment be reported and returned by the later of (1) the date that is 60 days after the date on which the overpayment was identified or (2) the date any corresponding cost report is due, if applicable. See blog.
If you have a Medicare issue, please continue to Number Four. If your issue is Medicaid only, please skip Number Four and go to Number Five. If your issue concerns both Medicare and Medicaid, continue with Number Four and Five (skip nothing).
Number Four: Review the OIG Self Disclosure Protocol (for Medicare).
OIG publishes a Self Disclosure Protocol. Read it. Print it. Frame it. Wear it. Memorize it.
Since 2008, OIG has resolved 235 self disclosure provider cases through settlements. In all but one of these cases, OIG released the disclosing parties from permissive exclusion without requiring any integrity measures. What that means is that, even if you self disclose, OIG has the authority to exclude you from the Medicare system. However, if you self disclose, may the odds be ever in your favor!
Number Five: Review your state’s self disclosure protocol.
While every state differs slightly in self disclosure protocol, it is surprising how similar the protocol is state-to-state. In order to find your state’s self disclosure protocol, simply Google: “[insert your state] Medicaid provider self disclosure protocol.” In most cases, you will find that your state’s protocol is less burdensome than OIG’s.
On the state-side, you will also find that the benefits of self disclosure, generally, are even better than the benefits from the federal government. In most states, self disclosure results in no penalties (as long as you follow the correct protocol and do not hide anything).
Number Six: Draft your self disclosure report.
Your self disclosure report must contain certain criteria. Review the Federal Registrar for everything that needs to be included.
It is important to remember that you are only responsible for self disclosures going back six years (on the federal side).
Mail the report to:
330 Independence Avenue, Room 5527
Washington, DC 20201
Or you can self disclose online at this link.
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?
How many times have you heard, “Third time’s a charm?”If that is true, then what is the fifth time? The sixth time?
In an October 3, 2016, advisory report, the Office of Inspector General (OIG) recommends that the Center for Medicare and Medicaid Services (CMS) heighten its scrutiny on personal care services (PCS) in states across the country. The OIG claims “that home health has long been recognized as a program area vulnerable to fraud, waste, and abuse.” Past OIG reports have focused on Medicare. This new one focuses on Medicaid.
OIG is a division of the U.S. Department of Health and Human Services (HHS) and is charged with identifying and combating waste, fraud, and abuse in the HHS’s more than 300 programs. But, evidently, OIG is not happy, happy, happy, when HHS disregards its findings, which appears to be what has happened for a number of years.
PCS are nonmedical services for people who need assistance with activities of daily living (ADLs), such as bathing, eating, and toileting. Most of the time, PCS are allowing the person to remain in his or her home, instead of being institutionalized. However, according to OIG, PCS is fraught with fraud.
PCS is an optional service for Medicaid, i.e., states can choose to cover the cost of PCS with government funds. But, on the federal level, PCS is provided, if medically necessary, in all states.
The OIG report summarizes Medicaid fraud schemes from November 2012 through August 2016. OIG goes on to say that the fraud in this report is merely replicate of Medicare fraud found in a prior reports. In other words,OIG is basically saying that it has found Medicare fraud in home health in multiple, past reports and that CMS has not followed through appropriately. In fact, this report makes over five times, in recent years, that OIG has instructed CMS to increase its regulatory oversight of Medicare/caid personal care services. How many times does it take for your spouse to ask you to take out the trash until you take out the trash? Third time’s a charm??
Mark my words…in the near future, there will be heightened investigations and increased audits on home health.
Here are some scenarios that can trigger an audit of home health:
- High percentage of episodes for which the beneficiary had no recent visits with the supervising physician;
- High percentage of episodes that were not preceded by a hospital or nursing home stay;
- High percentage of episodes with a primary diagnosis of diabetes or hypertension;
- High percentage of beneficiaries with claims from multiple home health agencies; and
- High percentage of beneficiaries with multiple home health readmissions in a short period of time.
While the above-mentioned scenarios do not prove the existence of Medicare/caid fraud, they are red flags that will wave their presence before health care investigators’ faces.
Here are the states (and cities) which will be targets:
Notice that North Carolina is not highlighted. Notice that Florida is highlighted and contained numerous “hotspots.” Certainly that has nothing to do with the abnormal number of people on Medicare…
Regardless, North Carolina will get its share of Medicare PCS audits. Especially, considering that we have the 7th most number of Medicare beneficiaries in the country – that should have gotten us highlighted per se.
Since the OIG Portfolio report issued in 2012, OIG has opened more than 200 investigations involving fraud and patient harm and neglect in the PCS program across the country. “Given the significant vulnerabilities in the PCS program, including a lack of internal controls, and that PCS fraud continues to be a persistent problem, OIG anticipates that its enforcement efforts will continue to involve PCS cases.”Report.
Fifth time is a ______?? (Sure thing).
Don’t we have due process in America? Isn’t due process something that our founding fathers thought important, essential even? Due process is in our Constitution.
The Fourteenth (governing state governments) and the Fifth Amendment (governing federal government) state that no person shall be “deprived of life, liberty, or property without due process of law.”
Yet, apparently, if you accept Medicaid or Medicare, due process is thrown out the window. Bye, Felicia!
How is it possible that criminals (burglars, murderers, rapists) are afforded due process but a health care provider who accepts Medicaid/care does not?
Surely, that is not true! Let’s look at some examples.
In Tulsa, a 61-year-old man was arrested for killing his Lebanese neighbor. He pled not guilty. In news articles, the word “allegedly” is rampant. He allegedly killed his neighbor. Authorities believe that he may have killed his neighbor.
And prior to getting his liberty usurped and getting thrown in jail, a trial ensues. Because before we take a person’s liberty away, we want a fair trial. Doesn’t the same go for life and property?
Example A: I recently received a phone call from a health care provider in New Jersey. She ran a pediatric medical daycare. In 2012, it closed its doors when the State of New Jersey accused it of an overpayment of over $12 million and suspended its funds. With its funds suspended, it could no longer pay staff or render services to its clients.
Now, in 2016, MORE THAN FOUR YEARS LATER, she calls to ask advice on a closing statement for an administrative hearing. This tells me (from my amazing Murdoch Mysteries (my daughter’s favorite show) sense of intuition): (1) she was not provided a trial for FOUR YEARS; (2) the state has withheld her money, kept it, and gained interest on it for over FOUR YEARS; (3) in the beginning, she did have an attorney to file an injunction and a declaratory judgment; and (4) in the end, she could not afford such representation (she was filing her closing argument pro se).
Examples B-P: 15 New Mexico behavioral health care agencies. On June 23, 2013, the State of New Mexico accuses 15 behavioral health care agencies of Medicaid fraud, which comprised 87.5% of the behavioral health care in New Mexico. The state immediately suspends all reimbursements and puts most of the companies out of business. Now, MORE THAN THREE YEARS LATER, 11 of the agencies still have not undergone a “Fair Hearing.” Could you imagine the outrage if an alleged criminal were held in jail for THREE YEARS before a trial?
Example Q: Child psychiatrist in rural area is accused of Medicaid fraud. In reality, he is not guilty. The person he hired as his biller is guilty. But the state immediately suspends all reimbursements. This Example has a happy ending. Child psychiatrist hired us and we obtained an injunction, which lifted the suspension. He did not go out of business.
Example R: A man runs a company that provides non-emergency medical transportation (NEMT). One day, the government comes and seizes all his property and freezes all his bank accounts with no notice. They even seize his fiance’s wedding ring. More than TWO YEARS LATER – He has not stood trial. He has not been able to defend himself. He still has no assets. He cannot pay for a legal defense, much less groceries.
Apparently the right to speedy trial and due process only applies to alleged burglars, rapists, and murderers, not physicians and health care providers who render medically necessary services to our most fragile and vulnerable population. Due process??? Bye, Felicia!
What can you, as a health care provider, do if you are accused of fraud and your reimbursements are immediately suspended?
- Prepare. If you accept Medicare/caid, open an account and contribute to it generously. This is your CYA account. It is for your legal defense. And do not be stupid. If you accept Medicaid/care, it is not a matter of if; it is a matter of when.
- Have your attorney on speed dial. And I am not talking about your brother’s best friend from college who practices general trial law and defends DUIs. I am talking about a Medicaid/care litigation expert.
- File an injunction. Suspension of your reimbursements is a death sentence. The two prongs for an injunction are (a) likelihood of success on the merits; and (b) irreparable harm. Losing your company is irreparable harm. Likelihood of success on the merits is on you. If your documents are good – you are good.
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.
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.
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?
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?
- Clinical laboratory services;
- Physical therapy services;
- Occupation therapy services;
- Radiology services (including MRIs, Ultrasounds, and CAT scans);
- Radiation therapy and supplies;
- Durable medical equipment and supplies;
- Parenteral and enteral nutrients, equipment, and supplies;
- Prosthetics, orthotics, and prosthetic devices and supplies;
- Home health services;
- Outpatient prescription drugs; and
- 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?