(August 27, 2010): Yesterday, Attorney General Eric Holder and U. S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius conducted the second of a planned series of “Regional Health Care Fraud Prevention Summits.”
In addition to these agency heads, participants learned of current and additional planned initiatives from a number of Federal and State law enforcement officials. The first summit was recently conducted in Miami, Florida. This summit was held in Los Angeles, California.
Describing the progress made in the last fiscal year, Attorney General Holder noted that:
“In just the last fiscal year, we’ve won or negotiated more than $1.6 billion in judgments and settlements, returned more than $2.5 billion to the Medicare Trust Fund, opened thousands of new criminal and civil health care fraud investigations, reached an all-time high in the number of health care fraud defendants charged, and stopped numerous large-scale fraud schemes in their tracks.”
Notably, Attorney General Holder also made it clear that the government’s joint Health Care Fraud Prevention and Enforcement Action Team (HEAT) program is slated for further expansion over the next year. As he noted:
“HEAT’s impact has been recognized by President Obama, whose FY 2011 budget request includes an additional $60 million to expand our network of Strike Forces to additional cities. With these new resources, and our continued commitment to collaboration, I have no doubt we’ll be able to extend HEAT’s record of achievement. And this record is extraordinary. (emphasis added).
These funds will be to supplement, not supplant, existing health care fraud enforcement efforts currently underway. While the additional cities slated for HEAT expansion were not announced at this event, all health care providers, regardless of location, should be especially vigilant in their efforts to ensure that Medicare coding and billing practices regulating the items and services they are providing must comply with applicable statutory and agency requirements.
Should you have questions regarding a health care fraud issue, you may call Robert W. Liles or another of our attorneys. Call 1 (800) 475-1906 for a free consultation.
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.
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.
(July 9, 2010): Does the failure to promptly return a Medicare overpayment really warrant liability under the False Claims Act (FCA)? Congress thinks so. The Patient Protection and Affordable Care Act (also known as the “Affordable Care Act” or “ACA”) creates an obligation under the FCA whereby a Medicare provider who fails to timely report and refund an overpayment may be subject to substantial penalties and damages.
Section 6402 of the ACA 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 ACA does not actually explain what it means to “identify” an overpayment.
Nonetheless, the ACA 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.
Several Liles Parker attorneys have worked former Federal and / or State prosecutors. Our attorneys have extensive experience working on False Claims Act cases. Should you have any questions, 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.