President Obama enacts the “Improper Payments Elimination and Recovery Act”

(July 22, 2010): Earlier today, President Obams enacted the “Improper Payments Elimination and Recovery Act,” thereby further increasing the likelihood that health care providers and others may be subjected to private sector audits of payments made by the government.

While the full impact of this legislation is not yet known, its passage is yet another indication that the government will be expanding its use of “private sector auditors” to “find and recapture government overpayments.”

As President Obama stated:

Today, the House took another critical step toward increased fiscal responsibility by passing the Improper Payments Elimination and Recovery Act.  This bipartisan legislation will help save taxpayer dollars by reining in wasteful overpayments from the federal government to individuals, organizations and contractors – the kind of unacceptable accounting mistakes that cost taxpayers $98 billion in 2009.  This bill also puts in place more rigorous thresholds for when programs must be scrutinized for payment errors and expands the authority of Federal agencies to use private sector auditors to find and recapture government overpayments.  And it dramatically increases transparency and accountability in government spending – in short, it changes business-as-usual in Washington.

I believe that we have a special responsibility to be wise stewards of Americans’ hard-earned tax dollars.  That’s why last November I issued an Executive Order to curb improper payments by boosting transparency, holding agencies accountable, and creating strong incentives for compliance.  And it’s why this March I signed an order calling on all federal agencies to launch tough audits to recover some of the money lost to improper payments last year.  I applaud the House for passing legislation today that supports these goals and I hope that the Senate will take swift action to send a bill to my desk as soon as possible.”

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.

Liles Parker Supports Arlington Pediatric Center

(July 22, 2010): Over the years, the individual attorneys at Liles Parker have actively supported the efforts of Arlington Pediatric Center (APC), which provides free or extremely reduced cost medical care to children in Arlington, Virginia.  This year is no different.  Liles Parker is proud to be a corporate supporter of APC’s work and encourages other law firms in the DC metropolitan area to contribute so that APC can continue to care for underprivileged children.

APC has made a difference in lives of thousands of Arlington children who lack private medical insurance and might otherwise have no access to consistent, high-quality care.  Because of APC’s comprehensive, family-centered approach, many special-needs and other children have been able to overcome their medical, psycho-social, learning, and physical challenges.

Liles Parker shares APC’s vision that every child deserves quality medical care and is pleased to do its part.   Please visit APC’s website to learn more about the important work it does: http://www.arlpedcen.org/

 

With ZPICs, PSCs, and RACs Fighting Most Challenges to Their Extrapolation, Experience Counts

(July 20, 2010): In recent years, we have seen agents for the Centers for Medicare & Medicaid Services (CMS) increasingly rely on statistical extrapolation estimates when assessing claims overpayments. In early cases, attorneys successfully invalidated countless extrapolations by identifying relatively basic reasons for why the calculations were inconsistent with accepted statistical principles and practices.  Now, however, providers should expect for ZPICs and PSCs (and soon, RACs) to send a team of statisticians and attorneys to vigorously oppose most (if not all) hearings challenging the validity of the extrapolation calculation.

Regardless of whether you are providing Partial Hospitalization, Evaluation and Management (E/M), Home Health, Physical Therapy, Surgical, or other services, should your practice or clinic find that it is facing an extrapolated Medicare audit, it is strongly recommended that you engage qualified, experienced counsel to represent you as early in the process as possible.  Your legal counsel can then engage an expert statistician to assess the contractor’s actions and assist with the attorney’s efforts to have the extrapolation thrown out by either the Qualified Independent Contractor (QIC) or the Administrative Law Judge hearing your case.

Before you engage counsel, you should consider asking the following questions:

• Has the attorney ever handled large, complex contractor audits before? Some firms will happily take your case, despite the fact that they have little or no experience in this area of health law. Don’t pay for your attorneys to learn how to handle a case. While every case is different, an experienced firm will have developed a number of arguments and defenses that may be readily used in your case without having to conduct costly, extensive legal research.
• Can the firm provide client references who are willing to speak with you about the quality of work performed on their Medicare statistical extrapolation case?
• Who will be working on your case? Will it be an inexperienced Associate attorney or one of the partners who has actually fought and won a multitude of Medicare overpayment claims and cases where the damages have been extrapolated by the contractors?
• What are the credentials of the attorneys and paralegals who will be working on your case? Have they ever worked on the side of the government? One of our attorneys served as an Assistant U.S. Attorney for many years, ultimately being selected to serve as the First National Health Care Fraud Coordinator for the Department of Justice, Executive Office for U. S. Attorneys. In addition to a law degree, he also holds a Master’s in Health Care Administration. To fully appreciate the challenges faced by health care providers, you need an attorney who understands both the legal constraints and the practical business risks faced by health care providers.

In several of the cases we have handled, the alleged error rate has exceeded 90%.  With the resulting alleged damages often in the millions of dollars, few providers are in a position to merely pay such an overpayment.  Instead, they need experienced counsel to aggressively fight to have this overpayment overturned.  When defending these cases, it is essential that you challenge both the denial of claims and the extrapolation itself.

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.

 

States Are Taking Aim at Home Health Providers

(July 19, 2010): Home health care providers are in the crosshairs again.  On July 15, HHS granted Florida a waiver of the anti-data mining provisions of federal Medicaid program regulations that will allow its Medicaid Fraud Control Unit (MFCU) to begin seeking out reasons to investigate home health and other providers for fraud.  While Florida is the first and currently the only state to obtain a waiver of this type, if Florida’s pilot program “succeeds”, the other 49 MFCUs could soon be doing the same thing.

MFCU “strike forces” are designed to investigate referred cases of fraud.  They are prohibited by 42 CFR §1007.19(e)(2) from receiving federal funding for conducting analysis to independently identify Medicaid fraud.  In their formal July 7^th request, the Florida Attorney General and Florida Agency for Health Care Administration Secretary requested an expedited waiver of those protections.

The pilot program, intended to be effective January 1, 2011, will allow the state MFCU to use data mining to “identify situations in which a question of fraud may exist, including the screening of claims, analyses of patterns of practice, or routine verification with recipients of whether services billed by providers were actually received.”  The Florida officials’ request makes a point of calling out home health providers in justifying this expansion of the MFCU’s powers, declaring that:

“[S]ome services such as durable medical equipment and home health are frequent targets of fraudulent activity…” and

“areas of particular concern that the demonstration would address include …home and community based waivers, payments to assisted living facilities, and home health services.” (Emphasis added).

We are greatly concerned by the continued targeting of home health providers by state and Federal officials.  Given the explicit program goals of increasing the number of leads and cases, the number of arrests and convictions, the number of overpayment and abuse referrals, and the recovery of funds and then serving as a model for other states, this program warrants close monitoring.

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.

 

Medicare Fraud Strike Force Operation Leads to Charges against 94 Defendants, including 4 in South Texas

(July 17, 2010): Yesterday, the Department of Justice (DOJ) announced charges against 94 physicians, medical assistants, and health care company owners and executives in connection with alleged false Medicare claims amounting to more than $251 million.  24 defendants from Miami account for approximately $103 million of that amount.  Four defendants were charged in Houston for their alleged roles in a $3 million scheme to submit fraudulent claims for durable medical equipment (DME).  Other arrests were made in Baton Rouge, Brooklyn, and Detroit.

The offenses charged include conspiracy to defraud the Medicare program, criminal false claims, violations of the anti-kickback statutes, and money laundering.  The charges are based on a variety of fraud schemes, including physical therapy and occupational therapy schemes, home health care schemes, HIV infusion fraud schemes and durable medical equipment (DME) schemes.

Announcing the arrests, Attorney General Eric Holder said, “With today’s arrests, we’re putting would-be criminals on notice: Health care fraud is no longer a safe bet.  It’s no longer easy money.  If you choose to engage in health care fraud, you will be found; you will be stopped; and you will be brought to justice.”

The operation was conducted by the joint DOJ-HHS Medicare Fraud Strike Force, multi-agency teams of federal, state, and local investigators designed to combat Medicare fraud through the use of Medicare data analysis techniques and an increased focus on community policing.  Strike Force teams are operating in seven cities in the United States: the five aforementioned cities, Los Angeles, and Tampa.  AG Holder noted that the ongoing Strike Force initiative in South Florida has resulted in the indictments of 810 organizations and individuals since March 2007 and uncovered $1.85 billion in improperly billed claims.

The Strike Forces are a part of Health Care Fraud Prevention and Enforcement Action Team (HEAT), which is made up of top level law enforcement and professional staff from the DOJ and HHS and their operating divisions.  HEAT is dedicated to joint efforts across government to both prevent fraud and enforce current anti-fraud laws around the country.

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.

South Texas Medicare Providers are Under the ZPIC Microscope

(July 16, 2010):  If there were ever any doubts that ZPICs are going to make their presence known in South Texas now that they have replaced PSCs,those doubts can be put to rest.  Health Integrity LLC, the Zone 4 contractor, is proving to be an active and aggressive auditor of physician practices, physical therapy services, home health care, and other types of Medicare covered treatment in the region.

Even in a nationwide environment of intensifying oversight, Medicare providers in South Texas are under particularly close scrutiny.  According to a study by the Dartmouth Institute for Health Policy & Clinical Practice, updated as recently as May 12, 2010, “even after price adjustment, Miami and McAllen Texas are the highest cost regions in the country.” (Emphasis added).  And don’t forget that ZPICs are essentially being “graded” based on the amount of overpayments recovered, along with the number of enforcement actions handled and referred to law enforcement.

As many Medicare providers in South Texas can attest, the folks at Health Integrity (Zone 4 – ZPIC) are becoming a familiar sight in their offices and clinics — reportedly conducting extensive on-site audits with little if any notice.  To their credit, most providers have reported that Health Integrity’s representatives have been reasonable in their requests when conducting an on-site review, typically taking a sample of certain records and asking that the remaining records be sent within a reasonable amount of time after the visit.  Nevertheless, providers should take care when responding to the ZPIC’s requests for information.  While a provider may have an obligation to cooperate with the ZPIC, you should contact your counsel to ensure that your rights are protected while still fully meeting your obligations as a Medicare participant.

Moreover, we have found that ZPICs are increasingly placing home health providers (and others) on pre-payment review.  This can effectively delay a provider’s cash flow up to six months (and in some cases even longer).  Given the GAO’s recommendation last month that CMS put more emphasis on automated pre-payment review, we expect to see this trend continuing precipitously upward.

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.

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 our other attorneys at 1 (800) 475-1906.

Michael Cook Joins Firm as Of Counsel

(July 14, 2010): Liles Parker is pleased to announce that Michael Cook has joined the firm as Of Counsel.  With more than 35 years of experience in a wide variety of health matters, Mr. Cook is an outstanding asset to our team.

The depth and breadth of Mr. Cook’s experience is extraordinary.  Having begun his career as an attorney with the Office of the General Counsel of the Department of Health and Human Services, he has since managed the health care practices of the Washington, DC offices of several large national law firms.  Mr. Cook has represented clients on matters ranging from reimbursement counseling to regulatory, operational, litigation, and transactional matters.  In addition, he has served on the Long Term Care Work Group of the Health Reform Commission for a former Governor of Virginia and as a co-chair of a subgroup of his Transition Team.

“Michael Cook is a highly respected attorney who is a great fit for our fast-growing practice,” said managing member Robert W. Liles.  “We are thrilled to be able to call on his knowledge and experience in complicated health care matters.”

Mr. Cook will practice in our Washington, D.C. office and holds a law degree from Villanova University School of Law, as well as a Bachelor of Arts, cum laude, from Temple University.

Should you have any questions or would like to speak with Mr. Cook about his legal services, please call our Washington office at (202) 298-8750, or an email to mcook@lilesparker.com.

Welcome to the team, Mike!

What Can Cities Do About Dangerous Buildings?

(June 25, 2010): Cities have the authority, usually provided by State statute, to regulate dangerous and substandard buildings and structures.   In Texas, a City has to pass an ordinance to activate its ability to regulate dangerous buildings and structures.  See TEX. LOC. GVT CODE § 214 Subchapter A.

Before taking action against a dangerous building, City officials should check their code of ordinances to make sure they have the ability and authority to regulate dangerous structures.   This authority will include the ability to require the repair, removal, or demolition of the building and to require occupants of a dangerous building to either vacate the premises or relocate.  Common criteria to cause the vacating of a premise include whether or not the building is “dilapidated, substandard, or unfit for human habitation”.

Unoccupied buildings that may pose a danger to the public or be an attractive nuisance to children and/or vagrants are also subject to the regulatory authority of a City.  It does not matter if the building or structure is secured or unsecured.  This broad regulatory authority is given to a City under the umbrella of providing for the “health, safety and welfare” of its citizens.

The City must follow due process and give proper notification to a property owner before taking action against a building. Consequently, property owners, landlords, or investors who purchase property within a city limit should contact the City and determine what city ordinances are applicable to the property.  The same applies to a person who may inherit a building or home, or the business that purchases a property.  This also allows the owner to determine if the City is following proper procedure in giving notice and in its determination that a building is unsafe or dangerous.

Cities should always consult legal counsel to ensure proper procedure is being followed when adverse action taken against a building.  Concurrently, owners of a building within city limits should consult their attorney if they get a notice that their building is considered a nuisance.

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.

Contracts and Cities 101

(May 10, 2010): Inevitably a service provider, such as an IT professional or a vendor supplying coffee or coke machines, will sign a yea- to-year or a 3-5 year contract with a City.

And the contract may be signed by a City Officer such as the City Manager, City Administrator, or even a Mayor.  The service provider believes all is well and is happy to have a contract with a client who always pays.  The City personnel are happy to have the service.

It is all fine if the person who signed on behalf of the City had been given authority by the City Council to enter into the contract.  If that person had not been given authority by City Council, then the contract may be voidable.

How can that be?  Surely a service provider can rely upon the authority of a Mayor or City Manager as an agent of the City to enter into a contract.  That is not always the case.

For example, pursuant to Texas law, a City cannot be bound by a contract that the City Council did not authorize an officer or city employee to enter into.  See Stirman v City of Tyler, 443 S.W.2d 354, 358 (Tex.Civ.App.-Tyler 1969, writ ref’d n.r.e.); Alamo Carriage v. City of San Antonio, 768 S.W.2d 937, 941-942 (Tex.App.—San Antonio, no writ).  While the City in all likelihood will have to pay for service rendered up till the time of any termination of the contract, the City will also have the ability to adopt a position there is no contract or the contract is voidable because the City officer or City employee was not given authority to sign the contract.

The City officer or employee should always check to make sure he or she has been given authority to sign a contract, either by City Council vote or by City Council approved budgetary guidelines.  And the service provider should always request that the City officer or employee verify their authority to sign the contract.  For example, you can imagine the stakes are considerably higher for city construction contracts.

This due diligence should be done for all contracts by both City and the service provider and always each party should consult their attorney.

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.

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