RACs, PSCs, ZPICs, HIPAA Auditors, State MFCUs, MICs, Medicaid RACs, HHS-OIG, DOJ, FBI, and Now. . . Patients?

(January 20, 2012):

I.   Background

Richard Pecore, Esq. Joins the Firm as Senior Counsel

(February 7, 2011): Liles Parker is pleased to announce that Richard Pecore has joined the Firm’s Health Law practice as Senior Counsel.  Mr. Pecore is a licensed Texas attorney and has worked on a variety of health care related matters and cases over the years.  Mr. Pecore has extensive civil litigation experience and will be representing Firm clients in “big-box” overpayment cases brought by Recovery Audit Contractors (RACs), Zone Program Integrity Contractors (ZPICs) and Program Safeguard Contractors (PSCs).  In recent years, Mr. Pecore has represented virtually hundreds of clients in health care related cases, conducting legal research, handling depositions and representing clients in contentious hearings.  As Managing Partner Robert W. Liles stated:

“We are thrilled to have Richard join our Health Law practice.  His litigation skills and experience will allow the Firm to further expand its representation of health care providers around the country, with an emphasis on cases in South Texas.”

At this time, Mr. Pecore will be working out of the Firm’s Washington and San Antonio offices.  Should you have any questions or would like to speak with Mr. Pecore about his legal services, please call our Washington office at (202) 298-8750.  Alternatively, you may e-mail Richard at rpecore@lilesparker.com. 

Welcome to the team, Richard!

Health Care Fraud Enforcement Takes an International Turn

(October 17, 2010):  The FBI has announced the arrest of 73 defendants, a number of which are allegedly members of an international organized crime organization, as part of one of the largest criminal health care fraud cases ever brought.  It is estimated that these individuals are responsible for the illegal submission of over $163 million in fraudulent Medicare claims.  As  the FBI’s Press Release reflects:

 “. . .the defendants allegedly stole the identities of doctors and thousands of Medicare beneficiaries and operated at least 118 different phony clinics in 25 states for the purposes of submitting Medicare reimbursements.

 As the FBI noted, the schemes employed by this group included the submission of fraudulent claims for medically unnecessary treatments and services to the Medicare program for payment by these “phantom clinics.”  Indictments covering these defendants were issued in five states, California, Georgia, New Mexico, New York, and Ohio. Commenting on the multi-agency cooperation involved, the Press Release notes that:

“Today’s arrests are an example of the FBI’s ability to conduct cross-program, multi-divisional investigations targeting a national level threat. In recent years, the department has undertaken a series of steps to modernize its organized crime program and enable federal law enforcement to take a unified approach to combating international organized crime. The Attorney General’s Organized Crime Council brings together the leadership of the FBI and eight other federal law enforcement agencies or offices with the department’s prosecutors, focusing high-level attention on these issues. The IOC-2 provides support in the form of information and intelligence to the member agencies that enhance efforts to identify, penetrate and dismantle the most dangerous organized crime groups through investigations and prosecutions. The creation of the International Organized Crime Targeting Committee and the Top International Criminal Organizations Target (TICOT) List, directs investigators and prosecutors to concentrate their limited resources on those international organized crime groups that pose the greatest threat to the United States. The department’s Criminal Division, through the Health Care Fraud Unit, Organized Crime and Racketeering Section, and the Asset Forfeiture and Money Laundering Section, has created new training programs to educate investigators and prosecutors on the intricacies of international organized crime and financial investigations.” (emphasis added).

Commentary: As this case reflects, the ease and extraordinary profits which can be generated from health care fraud is more than enough incentive for international organized crime syndicates to move into this area.  With the uncovering of this scheme, we should fully expect that DOJ, HHS-OIG and other law enforcement agencies will continue to investigate these relationships.

 Liles Parker attorneys represent health care providers around the country in administrative, civil and criminal health law related matters and cases.  Please call us at 1 (800) 475-1906 for a free consultation.

Existing Home Health Agencies are Considered a “Moderate” Risk According to CMS for Screening Purposes Under its Recent Proposed Rule

(October 5, 2010): late last month, the Centers for Medicare & Medicaid Services (CMS) published a Proposed Rule entitled “Medicare, Medicaid, and Children’s Health Insurance Programs; Additional Screening Requirements, Application Fees, Temporary Enrollment Moratoria, Payment Suspensions and Compliance.” 

As set out in the Proposed Rule, the Health Care Reform Act passed last March:

 “. . . makes a number of changes to the Medicare and Medicaid programs and CHIP that enhance the provider and supplier enrollment process to improve the integrity of the programs to reduce fraud, waste, and abuse in the programs.” 

 Among these various changes mandated by the legislation, the Secretary, HHS, is required to determine the level of screening applicable to providers and suppliers according to the risk of fraud, waste, and abuse the Secretary determines is posed by particular categories of providers and suppliers.  As set out in the Proposed Rule, CMS intends to categorize health care providers and suppliers by the “Level of Risk” generally associated with that type of provider or supplier.  Three levels of risk have been identified, “Limited,” “Moderate,” and “High.”  The types of screening tools to which a provider will be subjected vary depending on the level of risk assigned to a specific type of provider or supplier by CMS. The types of screening tools to be used at each level of risk include the following: 

Category of Risk and Required Screening for Medicare Physicians, Non-Physician Practitioners, Providers, and Suppliers 

Type of Screening Required	Limited	Moderate	High
Verification of any provider/supplier-specific requirements established by Medicare	X	X	X
Conduct license verifications, (may include licensure checks across States)	X	X	X
Database Checks (to verify Social Security Number (SSN), the National Provider Identifier (NPI), the National Practitioner Data Bank (NPDB) licensure, an OIG exclusion, taxpayer identification number, tax delinquency, death of individual practitioner, owner, authorized official, delegated official, or supervising physician)	X	X	X
Unscheduled or Unannounced Site Visits		X	X
Criminal Background Check			X
Fingerprinting			X

 Notably, CMS considers currently enrolled “Home Health Agencies” to represent a “Moderate” risk.  In comparison, CMS considers prospective (newly enrolling) home health agencies to be a “High Risk.” Commenting on the screening steps that CMS will be taking when dealing with providers and suppliers with a “Moderate” level of risk:

 “We propose that Medicare contractors will conduct unannounced pre- and/or post-enrollment site visits in addition to those screening tools applicable to the “limited” level of risk. Based on the success of pre-and/or post enrollment site visits conducted by the NSC during the enrollment process for suppliers of DMEPOS and a similar process established by carriers and A/B MACs during the enrollment of IDTFs, we believe that unscheduled and unannounced pre-and post-enrollment site visits help ensure that suppliers are operational and meet applicable supplier standards or performance standards. In addition, we believe that unscheduled and unannounced pre-and post-enrollment site visits are an essential tool in determining whether a provider or supplier is in compliance with its reporting responsibilities, including the requirement in §424.516 to notify the Medicare contractor of any change of practice location. Moreover, §424.530(a)(5) and §424.535(a)(5) give CMS and its Medicare contractors the authority to deny or revoke Medicare billing privileges for providers and suppliers respectively if the provider or supplier is not operational or the provider does not maintain the established provider or supplier performance standards.” (emphasis added).

 In addition to the screening steps to be taken, the Proposed Rule also covers the implementation of payment suspension authorities and a variety of other provisions set out in the Health Care Reform Act.

 Should you have any questions regarding these issues, please give us a call at 1 (800) 475-1906 for a free consultation.

Health Data Insights Begins Medical Necessity Reviews

(August 30, 2010): Introduction:

Health Data Insights (HDI), the Centers for Medicare & Medicaid Services (CMS) Recovery Audit Contractor (RAC) responsible for auditing health care providers in Region D, has announced it will immediately begin reviews on previously approved projects which involve the medical necessity of selected inpatient DRG payments.  A complete list of the medical necessity “issues” currently being examined by HDI can be found on its Website. 

 

Scope of Responsibility:

RACs, such as HDI, contract with the CMS to perform post-payment reviews of Medicare claims to find overpayments (and theoretically, underpayments in return for a percentage (from 9 percent to 12.5 percent) of the amounts recovered. Put simply, they “eat what they kill.” HDI was awarded responsibility for handling Region D audits.  Region D consists of 17 States and 3 U.S. territories (Alaska, Arizona, California, Hawaii, Iowa, Idaho, Kansas, Missouri, Montana, North Dakota, Nebraska, Nevada, Oregon, South Dakota, Utah, Washington, Wyoming, Guam, American Samoa and Northern Marianas).  HDI’s contingency fee contract award dollar amount is 9.49% according to CMS.  The 29 DRGs where HDI will be examining “medical necessity” requirements, include certain procedures related to:

• Nervous System Disorders
• Respiratory
• Cardiac Procedures
• Cardiovascular Diseases
• Cardiovascular, Other
• Gastrointestinal Disorders
• Musculoskeletal Disorders
• Endocine, Nutritional & Metabolism Disorders
• Kidney & Urinary Tract Disorders, and
• Blood & Immunological Disorders

Provider Concerns:

A continuing concern of health care providers is that the RAC determinations of medical necessity will be performed by personnel with little, if any, specific knowledge of the specific claims at issue. Given the RAC business model, providers remain worried that audits will not reflect a fair and reasonable application of applicable coverage requirements. This is especially worrisome in light of the fact that approximately 41 percent of overpayments in the demonstration project were due to medical necessity determinations.

Audit and Appeal Considerations:

As set out CMS’ June 2010 reported entitled “The Medicare Recovery Audit Contractor (RAC) Program — Update to the Evaluation of the 3-Year Demonstration,” as of 03/09/10, the cumulative number of claims with overpayment determinations identified by RACs has grown to 598,238.  Notably, only 76,073 of these overpayments were appealed by health care providers.  Of the claims appealed, over half were decided in favor of the health care provider.  Interestingly, HDI had one of the highest number of claims denials overturned on appeal, in favor of the appealing provider. Four basic steps to be taken when preparing for a RAC audit include:

(1)               Monitor issues of interest to the government and its contractors.  Are the services you provide currently under scrutiny by RACs and other Medicare contractors?  You should keep abreast of current enforcement initiatives and mistakes made by other providers.  Learn from their mistakes. 

(2)               Know where your current weaknesses are and fix them.  This typically requires that you conduct an internal audit of your coding, billing and operational practices.  Take care when engaging an outside “consultant.”  We have seen numerous cases where the consultant conducts an internal assessment and identifies multiple problems with the provider’s prior and current practices. Unfortunately, few consultants consider the fact that their adverse report to the provider will likely not be privileged.  As a result, if the provider is ever investigated, the report could easily serve as a roadmap for the government. Prior to conducting an internal audit – call your attorney!   

(3)               Know your rights. If your practice is audited, know your rights both during the audit and once the audit results are issued by the contractor.  There is a fine line between exercising your rights as a provider and being perceived by a contractor as refusing to cooperate in their review.  You should immediately call your attorney to clarify which actions must be taken if your practice is subjected to a site visit by a Medicare contractor.  The best practice would be for you to call your attorney today and discuss how you should respond in the event of a site visit.  CMS takes allegations of non-cooperation very seriously.  Should the contractor argue that you refused to cooperate in their efforts, you could find the action taken by the contractor is to seek a revocation of your Medicare number.  This is an especially sensitive issue.

(4)               Have a firm understanding of how the Medicare appeals process works.  Depending on the amount in controversy, you may choose to handle Medicare claims denials internally.  As the use of data-mining increases, Medicare contractor reliance on provider profiling will continue to increase.  While mere errors or mistakes should be returned to the government (or not appealed is properly denied by the contractor), should you find that claims were improperly denied, we recommend that you appeal such denials. RACs and other Medicare contractors will likely focus on providers with high error rates. 

While every case is different, health care providers should consider the following when faced with a RAC audit:

The scope of RAC audits is expanding.  In the past, hospitals and other “low-hanging fruit” were the focus of HDI and other RACs around the country.  As a result, some physicians, small practice groups, clinics and other smaller providers have grown complacent in their compliance efforts.  This is a mistake, as more issues are identified and approved, the RACs will be expanded the scope of their reviews.  Now is the time to get your practice in order.

ZPICs and PSCs continue to represent a greater danger to small physician practices and health care provider groups. Zone Program Integrity Contractors (ZPICs) and Program SafeGuard Contractors (PSCs) are not subject to the time, audit and service scope limitations imposed on RACs.  The implementation of effective compliance efforts will help reduce the likelihood of liability should the practice be audited by a ZPIC, PSC or RAC.

Beware of “canned” consultant solutions.  As a search on Google will readily attest, consulting firms around the country are touting the latest RAC audit “tool” or audit response “template.”   We recommend that you exercise caution when retaining any organization that “guarantees” results or seeks to dissuade you from engaging legal counsel support.  

Retain experienced health care counsel. Under the current appeal structure, there is a significant likelihood that your case will eventually be heard by an Administrative Law Judge (ALJ).  Importantly, ALJs are lawyers — not typically clinicians.  In defending your case, it is strongly recommended that you retain legal counsel, regardless of whether you ultimately decide to work with a consultant or employ a clinician as an expert witness.  Legal counsel will be best situated to understand and argue the various legal arguments which may prove essential in winning your case.

While RACs have not represented much of a threat to individual physicians and small practice groups in the past, the future is likely to be quite different.  Physicians must already contend with audits by ZPICs, PSCs, Medicaid Integrity Contractors (MICs), Medicaid Fraud Control Unit (MFCU) investigators and Comprehensive Error Rate Testing (CERT) contractors.  The expansion of the RAC program will further increase the need for statutory and regulatory compliance.  Physicians and small practice groups and organizations should avoid the misconception that their limited size and / or relative billings will keep them “off the radar,” thereby limiting their chances of being audited.

ZPICs and PSCs are continuing to rely statistical sampling in an effort to extrapolate damages:

In our practice, we have seen a marked increase in the number of solo physicians and small providers groups who have been subjected to pre-payment and post-payment audits of their Medicare billings. 

In the case of post-payment reviews, the vast majority of Medicare audits we have worked on have included the statistical extrapolation of damages by ZPICs and PSCs.  We expect RACs to follw suit as the number of their audits increase.  In defending a post-payment audit, it is essential that you examine the statistical methodology utilized and identify any flaws in the contractor’s approach.  We have successfully convinced both Qualified Independent Contractors (QICs) and ALJs to invalidate statistical extrapolations based on mistakes in the process committed by the ZPIC or PSC.  Arguments can be legal and / or methodology-based.  In many cases, it is necessary to engage the assistance of a qualified statistical expert.  Should you succeed – be ready to defend this decision before the Medicare Appeals Counsel (MAC).  Over the past year, practically every invalidation of the statistical extrapolation of damages was appealed to the MAC by the Administrative QIC (AdQIC). 

Summary:

Health care providers must be proactive in their efforts to better comply with applicable Medicare coding and billing practices.  Should your practice be placed on pre-payment audit or have its post-payment Medicare claims reviewed, we recommend that you immediately contact your health care attorney for assistance.

Should you have questions regarding RAC, ZPIC or PSC audit processes, you may contact us for a complimentary consultation.  We can be reached at 1 (800) 475-1906.

 

Additional Cities will have HEAT Teams in 2011

(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.

 

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.

Texas Physician Indicted and Arrested

(July 9, 2010):  On June 14, 2010 the U.S. Attorney’s Office for the Western District of Texas announced that a Federal Grand Jury had returned a 99-count indictment against a pain management physician who operated clinics in San Antonio and El Paso.  The physician was charged with 21 counts of health care fraud, 20 counts of false statements relating to health care fraud matters, 21 counts of mail fraud, 16 counts of wire fraud, 4 counts of unlawful distribution of a controlled substances and 16 counts of money laundering.  The indictment alleges that the physician “caused to be submitted claims for reimbursement of peripheral nerve injections, facet injection procedures and Level Four office visits–typically involving 25 minutes of face-to-face time between patient and physician–which never were performed.”  Instead, the U.S. Attorney’s Office alleges that the physician performed “prolotherapy” on his patients — a procedure that Federal health care benefit programs do not reimburse.

Notably, an indictment is merely a charge and is not considered to be evidence of guilt.  In issuing this indictment, the Texas HEAT task force, comprised of Federal prosecutors and investigative agencies,  have continued to ramp up efforts to investigate and prosecute allegations of health care fraud.  Notably, the use of “prolotherapy,” a relatively new therapeutic approach, has been supported by some of the best known clinics and physicians in the country.

While this case has yet to fully develop, it again points out that health care providers must take care when utilizing new approaches, despite the fact the therapeutic technique may be considered to be state-of-the-art.  Unfortunately, Medicare may take years to recognize and cover some techniques.  In the mean time, it is essential that providers take care when coding and billing for procedures that may not clearly qualify for coverage under applicable Medicare and / or contractor guidance.

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.

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

(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.

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