DOJ is Using Medicare Billing Data to Target Health Care Providers

DOJ and HHS are Using Medicare Billing Data to Target Providers

(August 31, 2010): Last week, department heads of the U.S. Department of Justice (DOJ) and the Department of Health and Human Services (HHS), met in Los Angeles, CA and conducted the second of a planned series of “Regional Health Care Fraud Prevention Summits.” Following-up on a similar conference held in Miami, DOJ Attorney General Eric Holder and HHS Secretary Kathleen Sebelius discussed a number of ongoing concerns and remedial steps (such as data mining) that are being taken to identify, investigate and prosecute instances of Medicare fraud. In addition to these agency heads, participants learned of current and additional planned fraud enforcement initiatives from Federal and State law enforcement officials. A recurring theme duting the summits has been the fact that Medicare Billing Data is being used as an essential targeting tool by program integrity contractors and civil / criminal prosecutors. As outlinrd below, it is essential that Medicare providers performing Evaluation and Management services take the time to review their billing practices. If your utilization ratios are significant different from those of your peers, you need to determine why that is the case. Ultimately, regardless of whether you appear to be an outlier, you need to regularly review your documentation, medical necessity, coverage, coding and billing practices and ensure that your services qualify for coverage and payment.

I. Medicare Billing Data Issues Discussed at the Summit:

As Attorney General Holder discussed, the administration’s current enforcement actions were having a significant impact on health care fraud. In fact, additional funding has been allocated to expand the HEAT program to additional cities:

“. . . Last year brought a historic step forward in this fight. In May 2009, the Departments of Justice and Health and Human Services launched the Health Care Fraud Prevention and Enforcement Action Team, or “HEAT.” Through HEAT, we’ve fostered unprecedented collaboration between our agencies and our law enforcement partners. We’ve ensured that the fight against criminal and civil health care fraud is a Cabinet-level priority. And we’ve strengthened our capacity to fight health care fraud through the enhanced use of our joint Medicare Strike Forces.

This approach is working. 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.

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.

We can all be encouraged, in particular, by what’s been accomplished in L.A. Criminals we’ve brought to justice here – in the last year alone – include the owners of the City of Angels Hospital, who pleaded guilty to paying illegal kickbacks to homeless shelters as part of a scheme to defraud Medicare and Medi-Cal; a physician in Torrance who defrauded insurance companies by misrepresenting cosmetic procedures as “medically necessary”; an Orange County oncologist who pleaded guilty to fraudulently billing Medicare and other health insurance companies up to $1 million for cancer medications that weren’t provided; a Santa Ana doctor who pleaded guilty to health care fraud for giving AIDS and HIV patients diluted medications; and a ring of criminals who defrauded Medi-Cal out of more than $4.5 million by using unlicensed individuals to provide in-home care to scores of disabled patients, many of them children.“ (emphasis added).

As HHS Secretary Sebelius further noted:

“In March, we gave him some help when Congress passed and the president signed the Affordable Care Act -- one of the strongest health care anti-fraud bills in American history. Under the new law we’ve begun to strengthen the screenings for health care providers who want to participate in Medicaid or Medicare. And I am proud to announce that CMS is issuing a final rule strengthening enrollment standards for suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS).

This rule and others coming soon mean that only appropriately qualified suppliers will be enrolled in the program. The days when you could just hang a shingle over a desk and start submitting claims are over. No more power-driven wheelchairs for marathon runners. Under the new law, we’re also making it easier for law enforcement officials to see health care claims data from around the country in one place, combining all Medicare-paid claims into a single, searchable database. And we’re getting smarter about analyzing those claims in real time to flag potential scams. It is what credit card companies have been doing for decades: If 10 flat screen TV’s are suddenly charged to my card in one day, they know something’s not quite right. So they put a hold on payment and call me right away.

We should be able to take the same approach when one provider submits ten times as many claims for oxygen equipment as a similar operation just down the road. It’s about spotting fraud early before it escalates and the cost grows. As we step up our efforts to stamp out fraud, we’re holding ourselves accountable. The President has made a commitment to cut improper Medicare payments in half by 2012.”(emphasis added).

II. DOJ's Use of Medicare Billing Data to Target Providers:

While DOJ Attorney General Holder’s and HHS Secretary Sebelius’ presentations provided an overview of law enforcement’s current and future efforts, the comments of DOJ Assistant Attorney General for the Criminal Division, Lanny A. Breuer, were especially enlightening in terms of how providers are being identified and targeted for investigation. As Mr. Breuer discussed:

“In 2007, the Criminal Division of the Justice Department refocused our approach to investigating and prosecuting health care fraud cases. Our investigative approach is now data driven: put simply, our analysts and agents review Medicare billing data from across the country; identify patterns of unusual billing conduct; and then deploy our "Strike Force" teams of investigators and prosecutors to those hotspots to investigate, make arrests, and prosecute. And as criminals become more creative and sophisticated, we intend to use our most aggressive investigative techniques to be right at their heels. Whenever possible, we actively use undercover operations, court-authorized wiretaps and room bugs, and confidential informants to stop these schemes in their tracks.” (emphasis added).

As Mr. Breuer’s comments further confirm, health care providers are being identified based on their billing patterns. Through the use of data-mining, providers who coding and billing practices identify them as outliers, are finding themselves subjected to administrative, civil and even criminal investigation.

III. Problems with Using Data Mining for Targeting:

As counsel for a wide variety of health care providers around the country, we are especially concerned that honest, hard-working health care providers are finding themselves and their practices / clinics under investigation merely because: (1) their productivity is higher than that of their peers, or (2) their focus is specialized and often treats a higher percentage of seriously sick patients which ultimately requires a more detailed or comprehensive examination than one might normally find. Ultimately, through our representation of health care providers who have been targeted through data-mining, we believe that it is fundamentally unfair to investigate a provider merely on the basis of statistical data which can be manipulated in a thousand different ways in order to justify going after a specific provider or a type of practice.

On the administrative side, when data-mining is used as a targeting tool, providers are being audited and pursued by ZPICs, PSCs and RACs – each of is incentivized (either because they receive a percentage of any overpayment OR they are under contract with CMS to find overpayments and wrongful billings) to find fault with the provider.

IV. Continuing Concerns:

Under the current system, providers targeted through data-mining are likely to be saddled with extrapolated damages which can easily run into the millions of dollars, regardless of the fact that a large percentage of these providers are eventually exonerated (either fully or partially) when the case is heard by an Administrative Law Judge.

Health care providers subjected to an administrative audit (by a ZPIC, PSC or RAC), civil investigation (such as a review by the DOJ for possible False Claims Act liability), or criminal investigation (by DOJ or a State Medicaid Fraud Control Unit) should immediately contact your counsel. Extreme care should be taken when making statements to Federal or State investigators. Should the provider make a statement that is false or misleading, such comments could be used as the basis for bringing a separate cause of action. Your legal counsel may choose to handle all contacts with the government.

Robert W. Liles HealthCare Attorney

Robert W. Liles, J.D., M.B.A., M.S., represents health care providers and suppliers around the country in connection with Medicare, Medicaid and private payor audits. Robert serves as Managing Partner at the health law firm, Liles Parker, Attorneys & Counselors at Law. Should you have questions regarding these issues, give Robert a call. You may call 1 (800) 475-1906 for a free consultation.