Number of False Claims Act Investigations Being Pursued is Currently at an All Time High . . . and is Likely to Go Even Higher Due to Changes to the False Claims Act Under Health Care Reform

(November 26, 2010):  As set out in a U.S. Department of Justice (DOJ) Press Release issued earlier this week, during Fiscal Year 2010 (ending September 30, 2010), DOJ secured $3 billion in civil settlements and judgments in connection with cases involving fraud against the government.  Notably, $2.5 billion (approximately 83%) of the recoveries were related to health care fraud cases.  According to DOJ, since January 2009, $5.4 billion has been collected under the False Claims Act and returned to Federal programs (such as the Medicare Trust Fund) and / or the Treasury.   As Assistant Attorney General of the Civil Division Tony West reported:

“Under Attorney General Eric Holder’s leadership, our aggressive pursuit of fraud under the False Claims Act has resulted in the largest two-year recovery of taxpayer dollars in the history of the Justice Department. . . Nowhere is this more apparent than in our success in fighting health care fraud. Since January 2009, the Civil Division, together with the U.S. Attorneys’ offices, commenced more health care fraud investigations, secured larger fines and judgments, and recovered more taxpayer dollars lost to health care fraud than in any other two-year period.” (emphasis added).

While the number of False Claim Act cases commenced during the last two years is at an all time high, this number is likely to further grown due to recent changes to the False Claims Act under Health Care Reform.

Pursuant to Section 6402 of the Patient Protection and Affordable Care Act (generally referred to as the “Health Care Reform Act”), Medicare participating providers, including Physicians, Group Practices, Chiropractors, Home Health Agencies, Hospices, Community Mental Health Clinics, and others who bill the identify an “overpayment” must report and return the overpayment, explaining (in writing) how the overpayment occurred within 60 days. As the statute provides:

‘The PPACA states that “[a]ny overpayment retained by a person after the deadline for reporting and returning the overpayment. . . is an obligation [as defined in the False Claims Act.”

Failure to meet this obligation may subject a provider to to monetary penalties of up to $11,000 per claim (in the case, in the form of an “overpayment,” plus treble damages.

As many providers can readily confirm, confirming that an overpayment exists isn’t also that easy, especially in complex cases where a patient has secondary insurance and / or the number of claims processed (as charges, credits and corrections) may be quite large. Additionally, due to the complexity of Medicare coverage and payment rules, two reasonable individuals may disagree as to whether an overpayment is present. In any event, the number of potential whistleblowers (individuals with knowledge of arguable overpayments under Section 6402), will undoubtedly increase.

Health care providers should review their current Compliance Plan to better ensure that internal audit and review mechanisms are in place so that any overpayments can be readily identified and repaid to the government within the 60-day deadline. The decision of where to disclose and return an overpayment, whether to a Medicare Administrative Contractor (MAC), the Department of Health and Human Services – Office of inspector General (HHS-OIG), or to DOJ, may differ depending on the facts.  Depending on the size or complexity of an overpayment, a provider may need to contact legal counsel for advise on how to best handle the alleged overpayment. Due to the 60-day deadline, if legal counsel is to be involved, they must should be contacted as soon as possible.

An effective Compliance Plan case assist in the identification and proper handling of overpayments. If your practice has not already implemented an effective Compliance Plan, it should do so immediately.

Robert W. Liles has worked with a wide variety of heath care providers around the country in connection with False Claims Act and / or False Claims Case.  Should your practice need assistance with compliance or overpayment issues.  For a complimentary consultation, please call: 1 (800) 475-1906. 

Providers Should Exercise Caution When Handling Overpayments, More Than Likely You Can’t Keep It, Even if the Payor Doesn’t Want it Back!

(July 15, 2010):  Since the May 2009 passage of the Fraud Enforcement and Recovery Act (FERA) and subsequent enactment of the PPACA, we’ve heard a lot about how the government looks at Medicare overpayments and how providers should handle them.  Two major misconceptions seem to underlie the public response to provisions clarifying that failure to timely refund Medicare overpayments can result in False Claims Act (FCA) liability.

I.          Historical Overview of the “Overpayment” Issue

Prior to the clarification and statutory reinforcement of the “overpayment” issue provided by PPACA, a number of providers have mistakenly believed that in the absence of a direct demand for repayment, an identified overpayment would belong to the provider.  Notably, this issue is not new.  In fact, the recent enacted provisions have merely reinforced the government’s long-standing position that a provider has a responsibility to voluntarily refund Medicare overpayments without an overpayment determination being made by the government.

As you will recall, the agreement to return any overpayments is fundamental to a provider’s eligibility to participate in the Medicare program.  Section 1866(a)(1)(C) of the Social Security Act (42 U.S.C. § 1395cc) requires participating providers to furnish information about payments made to them and to refund any monies incorrectly paid.  Implemented in 2006, the Medicare Credit Balance Report (CMS-838) is designed to ensure timely compliance with this obligation.

Secondly, PPACA Section 6402 echoes the requirements of CMS’ 2002 proposed rule that providers “must, within 60 days of identifying or learning of the excess payment, return the overpayment to the appropriate intermediary and carrier, at the correct address, and notify the intermediary and carrier, in writing, of the reason for the overpayment.”  (67 Fed. Reg. 3662 (January 25, 2002)).  A conservative reading of that proposed rule arguably suggested that HHS-OIG’s voluntary disclosure protocol may not be “voluntary” after all but a mandatory repayment may be required.  Thus, the government has long sought to clarify when, not if, overpayment refunds would be required.

Despite the publicity resulting from PPACA and its FCA implications, it is important to remember that this issue was addressed over a decade ago.  As set out in the 1998 holding in United States v. Yale University School of Medicine, Civil Action No. 3:97CV02023 (D.Conn.), the government intervened in a qui tam and obtained $1.2 million settlement based on alleged FCA  violations for failing to return credit balances.  In summary, providers who fail to promptly (within 60 days of identification) return an overpayment to the government do so at their own peril.

II.         Handling Non-Federal Overpayments

As an aside, even if the overpayment at issue is not owed to a Federal payor (such as Medicare or Medicaid), it is imperative to remember that virtually no overpayments belong to a provider.  In the case of non-Federal payors (such as a private insurance company), we are aware of numerous instances where the non-Federal payor has notified the provider that due to the administrative burden of applying an overpayment to a beneficiary’s account (typically due to the complexity of the payment history), the non-Federal payor has chosen to either “waive” collection of an overpayment or not to cash a check sent by the provider.  This also regularly occurs when the identified overpayment is under a certain amount (such as $25.00).  When faced with such a situation, a provider must review applicable State law to ascertain how an overpayment must be handled.  For instance, in Texas, Title 6 of the Property Code requires businesses and other entities holding unclaimed property to turn the property over to the Texas Comptroller’s Office after the appropriate abandonment period has expired.  As in most States, violation of these escheat laws can subject a provider to various penalties.

III.        Conclusion

The lesson to be learned here is quite clear – regardless of who the payor is, an overpayment can rarely, if ever, properly be retained by a provider, regardless of the amount in controversy.  A provider must carefully examine both Federal and State statutes when faced with this issue.  The best practice is to return an overpayment to the payor (Federal, State, or private patient), regardless of the amount, upon identification.  Should a provider be unable to identify who is owed an overpayment or cannot locate a valid address to return the overpayment (due to a variety of factors), your State’s escheat law must be considered.

This can be a complicated issue, especially when a large overpayment has been identified and it is owed to a Federal payor.  While time is of the essence, it is strongly recommended that you contact your legal counsel as soon as it appears that a potential large or complicated Federal overpayment has been found.  Your attorney can help guide you through this complex process.

Should you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

PPACA Creates a Minefield for Medicare Providers Who Fail to Promptly Return Medicare Overpayments

(July 9, 2010):  Does the failure to promptly return a Medicare overpayment warrant liability under the False Claims Act (FCA)?  Congress thinks so.  The Patient Protection and Affordable Care Act (PPACA) creates new obligations under the FCA whereby a Medicare provider who fails to timely report and refund an overpayment may be subject to substantial damages and penalties.

Section 6402 of the PPACA requires Medicare providers, including physicians and partial hospitalization providers, among others, to a) return and report any overpayment, and b) explain, in writing, the reason for the overpayment.

This law creates a minefield for physicians and other Medicare providers.  First, providers have only 60 days to comply with the reporting and refund requirement from the date on which the overpayment was identified or, if applicable, the date any corresponding cost report is due, whichever is later.  Of course, the PPACA does not actually explain what it means to “identify” an overpayment.

Nonetheless, the PPACA makes this reporting and repayment requirement an “obligation” under the FCA.  Pursuant to the Fraud Enforcement and Recovery Act of 2009 (FERA) amendments to the FCA, an individual or entity may be liable if he or it “knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government.”  Thus, providers who fail to meet their 60 day “obligation” may be subject to monetary penalties of up to $11,000 per claim, and treble damages.

Should you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

President Obama Publicizes Measures to Fight Health Care Fraud. . . Again. . .

(June 8, 2010):  For those of you who missed the first two dozen pronouncements (okay, perhaps a little exaggerated, but still . . . we the message when Congress made it a False Claims Act violation to hold onto a mere overpayment for more than 60 days), President Barack Obama has again expressed his concern about health care fraud in a national Town Hall video teleconference with Senior Citizens across the country.  He took this opportunity to further publicize his “national campaign to combat fraud and misinformation” regarding the Medicare program and the Affordable Care Act.

As President Obama reiterated, the current Administration is committed to fighting health care fraud.  To that end, the following steps have been taken:

The President has directed HHS to cut the improper payment rate, which tracks fraud, waste and abuse in the Medicare Fee for Services program, in half by 2012.

 The Administration has helped support a renewed partnership between the Federal government and state Attorneys General. Secretary Kathleen Sebelius and Attorney General Eric Holder today sent a letter to state Attorneys General urging them to vigorously prosecute criminals who seek to steal from seniors and taxpayers and pledged the support of federal officials for state efforts.

 A nationwide series of anti-fraud summits hosted by the Departments of Justice and Health and Human Services will bring federal, state and local officials together with representatives from the private sector to discuss tactics to fight fraud. The first summit will be held in Miami with additional summits in Los Angeles, Las Vegas, Detroit, Boston, New York, and Philadelphia.

 A redoubling of efforts by U.S. Attorneys nationwide to coordinate with state and local law enforcement to prevent and prosecute fraud. Today, Attorney General Holder called on U.S. Attorneys to hold regular forums with local officials to discuss how to better crack down on criminals who commit fraud.

 Notably, the current administration’s focus on health care fraud enforcement is reminiscent of the major initiatives rolled out during the President Clinton’s terms in office.  As you may recall, Attorney General Reno named “Health Care Fraud” as the Department of Justice’s “#1” white collar priority.  While many voters tend to associate Republicans with “pro-law enforcement” and “anti-fraud” measures, the Democrats have clearly led in the area of health care fraud enforcement.  While the government’s review of Medicare billings have been broad-based, health care providers in Florida, Louisana, Texas and Tennessee appear to be expecially hard hit.  Medicare claims have been (and are continuing to be) audited by  ZPICs and PSCs througout the South.  Regrettably, in many cases we have found that the contractors’ audit findings have been severely flawed, failing to properly the LCD’s provisions, missing key information in the medical records submitted by the health care provider for review and asserting conclusions that are unsupported by any evidence in the case.    As a result, providers have been forced to appeal the ZPIC / PSC denial decisions through the administrative appeals system, a time-consuming and expensive process.

In any event, the message is quite clear – the current administration has been, and will continue to be, extremely aggressive in its efforts to identify and pursue both alleged overpayments and instances of health care fraud.  Unfortunately, with recent changes to the False Claims Act and the Federal Anti-Kickback Statute, incidents that might have otherwise qualified as a mere overpayment may be viewed quite differently today by Federal prosecutors. Health care providers should diligently work to ensure that their operations, coding and billing activities fully comply with statutory and regulatory requirements.

Should you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

 

 

 

 

Hold on Tight – 2010 Could be Rough for Providers. . .

(February 27, 2010): The number of auditors, reviewers, investigators and prosecutors going after health care providers is increasing and signals an alarming, unprecedented effort by the government to uncover and recover alleged Medicare overpayments to health care providers.

Health care providers now face not only simple repayment demands, but also civil False Claims Act cases and criminal Medicare / Medicaid fraud claims identified by various new government contractors. Regrettably, we have seen unintentional mistakes, incomplete documentation and technical errors cited as the basis for seeking the repayment of millions of dollars, representing Medicare services rendered long ago, in some cases as many seven years before the demand letter was sent.  Perhaps most troubling is the fact that no one, including the ZPIC and / or PSC conducting the medical review, doubts that the medical services were rendered and in most cases, the Medicare beneficiary benefited from the care and treatment provided.  Today, every health care provider must beware of:

• “RACs” — Recovery Audit Contractors.
• “ZPICs” — Zone Program Integrity Contractors.
• “MICs” — Medicaid Integrity Contractors.
• “MCFU” — Medicaid Fraud Control Unit.
• “HHS-OIG” — Department of Health and Human Services, Office of Inspector General.
• “DOJ” — U.S. Department of Justice, and
• “HEAT” — Healthcare Fraud Prevention & Enforcement Task Force (in a number of U.S. Attorney’s Offices around the country).

RACs and the havoc they are expected to wreak is old news, quite frankly. The newest players in town, ZPICs, MICs and HEAT Teams should be at the top of your current list of concerns. As you will recall,   CMS consolidated functions of all Program Safeguard Contractors (PSCs) and Medicare Prescription Drug Integrity Control (MEDIC) contracts into ZPIC contracts.  ZPICs are designed to combine claims data (FIs, Regional Home Health Intermediary, Carrier, DMERC) and other data to create a platform for documenting complex data analysis.  While RACs (until recently) have focused solely on recovering money, ZIPCs also look for fraud.

MICs are just now revving up around the country.  Unburdened by many of the restrictions placed on RACs, providers with a heavy Medicaid beneficiary base should diligently review their Medicaid coding and billing efforts to better ensure compliance with applicable statutory and regulatory requirements.

HEAT Teams are made up of top level law enforcement and professional staff from DOJ and HHS.  HEAT was implemented to prevent fraud and enforce current anti-fraud laws and prevent waste that focuses on improving data and information sharing between the Center for Medicare & Medicaid Services and law enforcement agencies.  HEAT is working to strengthen program integrity activities to monitor and ensure compliance and enforcement.  HEAT’s tools to identify fraud include hotlines and web sites for healthcare workers and ordinary citizens.  Furthermore, HEAT officials are helping state Medicaid officials conduct better audits and provide better monitoring to detect fraudulent activities.

Should you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.