DOJ is Aggressively Investigating Allegations of Wrongdoing Related to COVID-19 Fraud and the Current National Emergency

(March 27, 2019):  We live in trying times.  As the coronavirus disease (COVID-19) has spread both globally and throughout the United States, the government has taken a number of steps to address the current pandemic.  On March 13, 2020, President Donald Trump officially declared that the COVID-19 outbreak constitutes a national emergency.[1]  Within 72 hours of the issuance of President Trump’s declaration,  William Barr, the Attorney General of the United States, determined it was necessary to issue a memorandum to the 94 U.S. Attorney’s Offices around the country stressing the fact that Department of Justice (DOJ) prosecutors must remain diligent in their efforts to detect, investigate and prosecute wrongdoing related to the COVID-19 crisis.  This article examines the various COVID-19 fraud concerns that DOJ has already raised and sets out steps you can take to reduce your level of regulatory risk.

I.   Overview of DOJ Guidance of COVID-19 Fraud and Related Wrongdoing:

As mentioned above, on March 16, 2020, the Attorney General issued guidance[2] to the 94 U.S. Attorney’s Office around the country noting that it is essential that the justice system remain functioning throughout the national emergency.  It is also worth noting that U.S. Attorney’s Offices has been “directed to prioritize the detection, investigation, and prosecution of all criminal conduct related to the current pandemic.”

Less than a week after issuing this initial guidance, the DOJ announced on Sunday, March 22, 2020, that it had filed its first enforcement action in the Western District of Texas related to COVID-19 fraud.  As set out in the Civil Complaint filed by the government, the defendants have been alleged to have engaged in a “wire fraud scheme seeking to profit from the confusion and widespread fear surrounding COVID-19” through the company’s sale of World Health Organization (WHO) vaccine kits.  As the government notes, at this time, there are no legitimate COVID-19 vaccines and the WHO is not distributing such a vaccine.  As Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division stated at the time:

“The Department of Justice will not tolerate criminal exploitation of this national emergency for personal gain . . . We will use every resource at the government’s disposal to act quickly to shut down these most despicable of scammers, whether they are defrauding consumers, committing identity theft, or delivering malware.”[3]

Even more recently, on March 25, 2020, the U.S. Attorney’s Office for the Central District of California announced that it had filed a criminal complaint against an individual who allegedly solicited investments in a company that was marketing pills that would prevent coronavirus infections.  The defendant’s company was also supposedly marketing an injectable cure for individuals battling COVID-19. The complaint charges the individual with a single count of attempted wire fraud. [9]

II.   Specific Guidance Issued by Deputy Attorney Rosen on COVID-19 Fraud:

Shortly thereafter, on March 25, 2020, Deputy Attorney General, Jeffrey A. Rosen issued guidance titled “Department of Justice Enforcement Actions Related to COVID-19.” [4]  As the guidance notes, there are a number of specific statutory authorities that Federal prosecutors may find applies to assert if COVID-19 fraud or wrongdoing is identified.  These statutory authorities include, but are not limited to:

Specific examples of possible COVID-19 fraud schemes that might be perpetrated were set out in Deputy Attorney General Rosen’s memorandum.  These examples included:

• Robocalls making fraudulent offers to sell respirator masks with no intent of delivery. 18 U.S.C. § 1343 (Wire Fraud). The crime of “wire fraud” occurs when someone voluntarily and intentionally uses makes an interstate telephone call or another electronic communication (such as e-mail) in furtherance of a fraud scheme. Notably, the elements of wire fraud are very similar to those of mail fraud statute except that it speaks of communications transmitted by wire.

• Fake COVID-19-related apps and websites that install malware or ransomware. 18 U.S.C. § 1343 (Wire Fraud) or 18 U.S.C. § 1030 (Computer Fraud). The crime of wire fraud is described above.  The crime of computer fraud occurs when someone knowingly causes the transmission of a “program, information, code or command” and intentionally damages (without authorization) a protected computer.   

• Phishing emails asking for money or presenting malware. 18 U.S.C. § 1030 (Computer Fraud). One of the forms of computer fraud is set out above. Additional examples are also discussed under 18 U.S.C. § 1030.[5]  

• Social media scams fraudulently seeking donations or claiming to provide stimulus funds if the recipient enters his or her bank account number. 18 U.S.C. §§ 1028-1028A (Identity Theft) or 18 U.S.C. § 1343 (Wire Fraud).  Notably, the government has extensive experience prosecuting individuals and entities who are alleged to have set up fake charities and have effectively taken advantage of a national disaster or tragedy.  The perpetrators of this type of fraud are almost always caught and the courts have levied heavy jail sentences and fines on bad actors found guilty of engaging in this type of wrongdoing.

• Sales of fake testing kits, cures, “immunity” pills, and protective equipment. 21 U.S.C. 333 (Introduction of Misbranded or Adulterated Drug or Device Into Interstate Commerce) or 15 U.S.C. § 2068 (Violation of the Consumer Product Safety Act). Federal prosecutors and regulators for the Food and Drug Administration (FDA) handle these types of cases on an ongoing basis and are experienced in shutting down fraudsters hawking fake cures and treatments.

• Fraudulent offers for free COVID-19 testing in order to obtain Medicare beneficiary information that is used to submit false medical claims for unrelated, unnecessary, or fictitious testing or services. 18 U.S.C. §§ 1028-1028A (Identification Fraud and Aggravated Identity Theft).  This type of fraud has been occurring law before the inception of the COVID-19 fraud cases we are now seeing.  Most recently, Medicare beneficiary information has been misused by a number of telemarketing companies and durable medical equipment companies.  Federal prosecutors are currently in the middle of several prosecutions involving this type of conduct. 

• Prescription drug schemes involving the submission of medical claims for unnecessary antiretroviral treatments or other drugs that are marketed as purported cures for COVID19. 18 U.S.C. § 1347 (Healthcare Fraud) or 15 U.S.C. § 2068 (Violation of the Consumer Product Safety Act). These common schemes are now being seen in connection with COVID-19 fraud cases around the country.  Health care providers should exercise caution before entering into business relationships with laboratories, pharmacies  and other ancillary service providers who are marketing purported cures or treatment regimens for COVID-19.

• Robberies of patients departing from hospitals or doctor offices. 18 U.S.C. § 2118 (Robberies and Burglaries Involving Controlled Substances). Although not discussed in Deputy Attorney General Rosen’s memorandum, it is a Federal crime to take, or attempt to take, by force or violence or by intimidation, any quantity of a controlled substance from any person (including a patient) on the business premises or property of a person registered with the Drug Enforcement Administration.  In addition, to this Federal statute, there are a host of robbery statutes that would implicated under State law. 

• Threats of violence against mayors and other public officials. 18 U.S.C. § 875 (Interstate Communications) or 18 U.S.C. § 876 (Mailing Threatening Communications). Using the internet to convey an interstate threat of violence or injury to any person would be a crime under 18 U.S.C. § 875.  Similarly, using the mails to threaten someone with violence or injury would be a crime under 18 U.S.C. § 876.  

• Threats to intentionally infect other people. 18 U.S.C. § 2332a (Use of Weapons of Mass Destruction). Of the examples discussed in Deputy Attorney General Rosen’s guidance, this is perhaps the most interesting.  As the memorandum reflects, Federal prosecutors may view “Threats or attempts to use COVID-19 as a weapon against Americans”  as a violation of 18 U.S.C. § 2332a since COVID-19 arguably meets the statutory definition of a “biological agent” [6]and therefore could implicate our country’s terrorism-related statutes.

III.   Reducing Your Level of Regulatory Risk During the Current National Emergency:

Although the health, societal and business impact of the current COVID-19 emergency is unprecedented (at least in our lifetime), the fact that bad actors will readily take advantage of this situation is to be expected.  In fact, with the exception of the terroristic threat conduct discussed above, the types of wrongdoing encountered in COVID-19 fraud cases is pretty run-of-the-mill.  In addition to the concerns raised in Deputy Attorney General Rosen’s memorandum, several additional areas of risk to be considered by health care providers and suppliers include the following:

• Exercise Due Diligence Before Accepting the Assertions of Medicare Coverage by a Vendor’s Sales Representative. There are a wide variety of medical devices and pharmaceutical products that have not been properly vetted through the FDA approval process in order to qualify for coverage and payment by Medicare.  Don’t assume that sales pitches asserting that a medical device or pharmaceutical product is correct.   In recent years, we have represented multiple providers who were talked into buying expensive equipment and other products based on a sales representatives promises that the item or service to be billed qualifies for Medicare coverage and payment.  In once case we handled, when our client was audited, the company that sold the medical device at issue had long since gone out of business and had been sued by other providers for misrepresenting that the services performed with the medical device could be properly billed to Medicare.
• Take Care if You Seek a Bank or Small Business Administration (SBA) Loan as a Result of the COVID-19 Crisis. In an effort to help businesses deal with the current national emergency, the government has streamlined the SBA loan process for small businesses. Two recent articles[7]covering these developments have been placed on our website.  Should you decide to seek a bank or SBA backed business loan, you must exercise care when completing these applications.  While the documentation and approval timeframes may have been simplified, should you make a misstatement on the application or fail to disclose relevant information, your actions may constitute a crime.
• Government Waivers of Certain Requirements (Such as those Associated with Telehealth / Telemedicine Services) are Always Limited. To its credit, the Centers for Medicare and Medicare Services (CMS) have been quick to address many of the patient access, diagnostic and treatment concerns expressed by health care providers and patients alike that have arisen because of the current COVID-19 outbreak.  For example, CMS maintains a list of services that are normally furnished in-person that it will now permit providers to furnish by Medicare telehealth.  As CMS wrote in recent guidance[8] it issued on March 17, 2020:  “Under the emergency declaration and waivers, these services may be provided to patients by professionals regardless of patient location.”  Don’t assume that the relaxation of Medicare’s telehealth / telemedicine rules are an indication that this area is no longer under extreme scrutiny by law enforcement and by CMS program integrity contractors such as Unified Program Integrity Contractors (UPICs).  Once our country has effectively dealt with the current national emergency, government investigators and CMS contractors will undoubtedly resume their review and audit of these historically-problematic claims.  For a more detailed discussion of the government’s enforcement efforts in this regard, please see our article from February 17, 2020, titled “Telemedicine Audits of Evaluations by Referring Physicians are Increasing.”

While CMS is continuing to identify additional ways that it can better facilitate the provision of patient care, health care providers need to remember that specific waivers recently approved by CMS are likely to be short-term in nature.  More importantly, all other coverage and payment requirements remain in effect.  First and foremost, were the services medically necessary?  Were the services properly documented (in accordance with CMS, State Medical Board and Industry Standards)?  Were the services properly coded and billed?  And finally, was the reimbursement you received accurate?

Once the current national emergency is over, health care providers and suppliers should expect to see significant upswings in program integrity audits by Unified Program Integrity Contractors (UPICs), Supplemental Medical Review Contractors (SMRCs) and Comprehensive Error Rate Testing (CERT) contractors.  As this health crisis continues, it is also important to keep in mind that State and Federal law enforcement agencies are actively soliciting reports of COVID-19 fraud and other related wrongdoing.  Attorney General Barr has urged the public to report any and all COVID-19 fraud schemes that are identified to the National Center for Disaster Fraud (NCDF) hotline.  As a result, it is imperative that you continue to ensure that your regulatory compliance efforts are both ongoing and up-to-date (in terms of your obligations under the law).

Have you received a document request from the OIG, a UPIC, a SMRC or another CMS contractor?  Are you currently facing a government audit or investigation of your claims billed to Medicare, Medicaid or another Federal health benefit program?  Call us for a free consultation.  We can be reached at: (202) 298-8750 or toll-free 1 (800) 475-1906.

Robert W. Liles serves as Managing Partner at the health law firm, Liles Parker, Attorneys and Counselors at Law.  Liles Parker attorneys represent health care providers and suppliers around the country in connection with claims audits and investigation.  Is your health care practice, home health agency or hospice being audited? Give us a call.  For a free initial consultation regarding your situation, call Robert at: 1 (800) 475-1906.

[1] “Proclamation on Declaring a National Emergency Concerning the Novel Coronavirus Disease (COVID-19) Outbreak,”dated March 13, 2020.  A copy of the declaration can be found the following link.

[2] DOJ’s Memorandum, “COVID-19 – Department of Justice Priorities,” March 16, 2020.  A copy can be found at the following link.

[3] A copy of DOJ’s Press Release is available at this link.

[4] DOJ’s Memorandum, “Department of Justice Enforcement Actions Related to COVIF-19,” March 24, 2020. A copy can be found at the following link.

[5] 18 U.S.C. § 1030 (Fraud and Related Activity in Connection with Computers). A link to the statute can be found here.

[6] See 18 U.S.C. § 175.

[7] Our article titled “Small Business Administration Releases Express Bridge Loan Pilot Program for COVID-19,” dated March 26, 2020, can be found here.   An earlier article titled “COVID-19 SBA Loan Support May be Available for Qualified Health Care Providers,” dated March 25, 2020, can be found here.

[8] CMS guidance titled “Medicare Telehealth Frequently Asked Questions (FAQs),” dated March 17, 2020, can be found here.

[9]  A copy of the Press Release can be found here.

42 CFR Sec. 424.535(a) Medicare Revocation Actions — Your Medicare Billing Privileges Can be Revoked For a Host of New Reasons. Are You Facing a Medicare Revocation Action? If so, You Must Act Fast to Preserve Your Appeal Rights.

(March 9, 2020):   Last September, the Centers for Medicare and Medicaid Services (CMS) published a Final Rule titled “Medicare, Medicaid, and Children’s Health Insurance Programs; Program Integrity Enhancements to the Provider Enrollment Process.”  The Final Rule under 42 CFR Sec. 424.535(a), was published in order to implement sections 1866(j)(5) and 1902(kk)(3) of the Social Security Act (as amended by the Affordable Care Act).

As we discussed in earlier articles[1], the Final Rule is quite expansive. It implements a wide range of new enrollment, affiliation, revocation and denial authorities.  As a reminder, here’s an overview of the timeline we are concerned with:

• November 4, 2019: Purported effective date of the expanded revocation bases outlined in the Final Rule. 

• September 10, 2019: CMS published the Final Rule titled “Medicare, Medicaid, and Children’s Health Insurance Programs; Program Integrity Enhancements to the Provider Enrollment Process.” in the Federal Register. [2]  The Final Rule sets out the expanded reasons for revocation or denial of a provider’s or supplier’s billing authority.  

• March 1, 2016: CMS published a Proposed Rule titled “Medicare, Medicaid, and Children’s Health Insurance Programs; Program Integrity Enhancements to the Provider Enrollment Process.”[3] This Proposed Rule set out the enrollment revocation and denial changes CMS planned to implement in an effort to address long-standing program integrity risks that have previously been exploited in the past.

Within hours of the purported[4] effective date of the Final Rule, CMS Medicare Administrative Contractors (MACs) began issuing revocation letters to participating Medicare providers and suppliers who had been identified as slated to have their Medicare billing privileges revoked (based on one or more of the expanded revocation letters set out in the Final Rule).  This updated article focuses on one aspect of the Final Rule – the expanded Medicare billing privilege revocation authorities now exercised by CMS.

I.   Implementation of Medicare’s Expanded Billing Privilege Revocation Authorities Under 42 CFR Sec. 424.535(a):

Prior to the issuance of the Final Rule, under 42 CFR Sec. 424.535(a), CMS exercised the authority to revoke the Medicare billing privileges of a currently-enrolled provider or supplier (along with any related provider or supplier agreement) based on fourteen reasons.  Under the Final Rule, the number of reasons upon which revocation could be based grew to 22.[5]  Moreover, the scope of several of the original fourteen reasons for revocation was expanded under the Final Rule, primarily due to implementation of new requirements with respect to “Affiliations,” “Disclosable Events,” and “Uncollected Debts.”  Over the last few months, since the expanded bases for revocation have been implemented, we have seen a significant increase in the number of revocation actions being pursued by Medicare MACs around the country. Moreover, as discussed in Section III below, CMS is now typically imposing a 10-year reenrollment bar (rather than the previous 3-year reenrollment bar) when pursuing a revocation action. An overview of the expanded list of reasons upon which a provider’s Medicare billing privileges can be revoked is provided below:

1. Noncompliance. Under 42 CFR Sec. 424.535(a) (1), CMS can revoke Medicare billing privileges if it has determined that a provider or supplier isnot in compliance with its enrollment requirements(as set out in the appropriate enrollment application) AND has not submitted an appropriate plan of correction, CMS may revoke the Medicare billing privileges.

2. Provider or supplier conduct. Under 42 CFR Sec. 424.535(a) (2), CMS can revoke Medicare billing privileges if a provider, supplier or any owner, managing employee, delegated official, medical director, supervising physician or other health care personnel of the provider or supplier has been excluded from participation in a Federal health care program OR has been disbarred, suspended, otherwise excluded from participating in any other Federal procurement program. 

3. Felonies.  Under 42 CFR Sec. 424.535(a) (3), CMS can revoke Medicare billing privileges if a provider, supplier or any owner or managing employee was convicted of a Federal or State felony (within the preceding 10 years) that CMS determines is detrimental to the best interests of the Medicare program and its beneficiaries. 

4. False or misleading information. Under 42 CFR Sec. 424.535(a) (4), CMS can revoke Medicare billing privileges if a provider or supplier certified as “true” information on the enrollment application that is misleading or false. As the regulation is quick to point out, the false certification action can also lead to fines and imprisonment. 

5. On-site review. Under 42 CFR Sec. 424.535(a) (5), CMS can revoke Medicare billing privileges if when conducting an “on-site review” at the purported address of the provider or supplier, it finds that the site is no longer operational OR the on-site review shows that the provider has moved and did not update their address appropriately. In recent years, this revocation reason is typically cited when a Unified Program Integrity Contractor (UPIC) conducts an unannounced, on-site visit of a practice, home health agency, hospice or other provider, based on the location listed in PECOS.  If a provider has moved offices and has failed to update CMS Form 855B and the Provider Enrollment, Chain, and Ownership System (PECOS), the CMS contractor will recommend that a provider’s billing privileges be revoked. 

6. Grounds related to provider or supplier screening requirements. Under 42 CFR Sec. 424.535(a) (6),  CMS can revoke the Medicare billing privileges of an institutional provider[6] that fails to submit an application fee or hardship exception request with their Medicare revalidation application.

7. Misuse of billing number.  Under 42 CFR Sec. 424.535(a) (7), CMS can revoke Medicare billing privileges if a provider or supplier knowingly sells to or allows another individual or entity to use its billing number (other than in the case of a valid reassignment of benefits). 

8. Abuse of billing privileges. Under 42 CFR Sec. 424.535(a) (8), CMS can revoke the Medicare billing privileges of a provider or supplier: 

• • Submits a claim for services that have not been furnished to a specific individual on the date of service. Examples provided under 42 CFR scc. 424.535(a) (8) include situations where beneficiary is deceased, situations where the directly physician or beneficiary is not in the state or country when the serves were allegedly furnished, OR when the equipment necessary for testing is not present when the testing is said to have taken place.
  • Has a pattern or practice of submitting claims that fail to meet Medicare requirements.[7]

9. Failure to report[8]. Under 42 CFR Sec. 424.535(a) (9), can revoke the Medicare billing privileges if a provider or supplier: 

• • Failed to comply with its reporting requirements under 42 CFR Se. 516(d), such as changes in ownership or control, any other changes in enrollment within 90 days, any revocation or suspension of a Federal or State license within 30 days; OR
  • Failed to comply with its reporting requirements under 42 CFR Sec. 33(g)(2), such as changes in ownership, changes of location, changes in general supervision, and adverse legal actions must be reported to the Medicare fee-for-service contractor on the Medicare enrollment application within 30 calendar days of the change. All other changes to the enrollment application must be reported within 90 days. As a recent letter to a provider from CMS contractor Novitas Solutions stated:

 “An undeliverable records request sent to the provider’s Medicare 855 correspondence address constitutes a failure to provide CMS access to documentation in violation of 42 U.S. Code Sec. 424.516(1).”  

            OR

• •  Failed to comply with its reporting requirements under 42 CFR Sec. 424.57(c)(2), such as changes in information on a provider’s application for billing privileges within 30 days of the change. 

10. Failure to document or provide CMS access to documentation. Under 42 CFR Sec. 424.535(a) (10), CMS can revoke the Medicare billing privileges if a provider or supplier has failed to comply with the documentation or CMS access requirements. Under 42 CFR Sec. 516(f), a provider or supplier is required to maintain documentation for 7 years from the date of services, AND upon the request of CMS or Medicare contractors, provide access to that documentation. 

11. Initial reserve operating funds. Under 42 CFR Sec. 424.535(a) (11), CMS can revoke the Medicare billing privileges of a home health agency if within 30 days of CMS or a Medicare contractor request, the home health agency cannot furnish supporting documentation verifying that the home health agency  meets the initial reserve operating funds requirement found in 42 CFR Sec. 489.28(a). 

12. Other program termination. Under 42 CFR Sec. 424.535(a) (12), CMS can revoke Medicare billing privileges if a provider or supplier is terminated, revoked or otherwise barred from participation in a State Medicaid program or any other Federal health care program. This represents a significant change.

13. Prescribing authority. Under 42 CFR Sec. 424.535(a) (13), CMS can revoke Medicare billing privileges if a physician or other eligible professional’s Drug Enforcement Administration (DEA) Certificate of Registration is revoked or suspended; OR a State licensing body suspends or revokes the ability of a physician or other eligible professional to prescribe drugs.

14. Improper prescribing practices. Under 42 CFR Sec. 424.535(a) (14), CMS can revoke Medicare billing privileges of a physician or other eligible professional if it determines that there has been a pattern or practice of prescribing Part B or Part D drugs that is:

• • Abusive or represents a threat to the health and safety of Medicare beneficiaries or both; OR
  • Fails to meet Medicare requirements.

15. Reserved.

16. Reserved.

17. NEW — Debt referred to the United States Department of Treasury. Under 42 CFR Sec. 424.535(a) (17), CMS can revoke Medicare billing privileges if a provider or supplier has an existing debt that CMS appropriately refers to the United States Department of Treasury.[9]

18. NEW — Revoked under different name, numerical identifier or business identity. Under 42 CFR Sec. 424.535(a) (18) CMS can revoke the Medicare billing privileges if a provider or supplier is currently revoked under a different name, numerical identifier, or business identity, and the applicable reenrollment bar period has not expired. [10]

19. NEW — Affiliation that poses an undue risk. Under 42 CFR Sec. 424.535(a) (19), CMS may revoke the Medicare billing privileges if it determines that the provider or supplier has or has had an affiliation under 42 CFR Sec. 424.519 that poses an undue risk of fraud, waste, or abuse to the Medicare program.

20. NEW — Billing from a non-compliant location. Under 42 CFR Sec. 424.535(a) (20), CMS may revoke the Medicare billing privileges of a provider or supplier, even if all of the practice locations associated with a particular enrollment comply with Medicare enrollment requirements, if the provider or supplier billed for services performed at or items furnished from a location that it knew or should have known did not comply with Medicare enrollment requirements.[11]

21. NEW Abusive ordering, certifying, referring, or prescribing of Part A or B services, items or drugs. Under 42 CFR Sec. 424.535(a) (21), CMS may revoke the Medicare billing privileges if it determines that a physician or eligible professional has a pattern or practice of ordering, certifying, referring, or prescribing Medicare Part A or B services, items, or drugs that are abusive, represents a threat to the health and safety of Medicare beneficiaries, or otherwise fails to meet Medicare requirements.[12]

22. NEW — Patient Harm. Under 42 CFR Sec. 424.535(a) (22), CMS may revoke the Medicare billing privileges if it determines that a physician or eligible professional has been subject to prior action from a State oversight board, Federal or State health care program, Independent Review Organization (IRO) determination(s), or any other equivalent governmental body or program that oversees, regulates, or administers the provision of health care with underlying facts reflecting improper physician or other eligible professional conduct that led to patient harm.[13]

As the above expanded list of revocation authorities reflects, CMS now has the express ability to revoke the Medicare billing privileges of a health care provider or supplier for serious violations of law (such as conviction of a felony or patient abuse).  However, it also has the authority to revoke Medicare billing privileges for conduct that may only amounts to an administrative error or mistake by a provider or supplier.  Perhaps even more troubling is the fact that the past or current “affiliations” of a provider or supplier may lead to a revocation action if CMS determines that the affiliation represents an undue risk to the Medicare program or its beneficiaries.

A hundred years ago, the U.S. Supreme Court stated in the case Rock Island Arkansas & Louisiana R. Co v. United States[14]:

“Men must turn square corners when they deal with the government“

That statement still rings true in today’s world.  Health care providers and suppliers are permitted to apply to participate in the Medicare and Medicaid programs.  Participation isn’t a “right.”  It is a privilege.  When you complete your enrollment paperwork, you expressly agree to comply with the terms of the Form 855 Enrollment Application.  Should you fail to comply with each of the obligations set out in that agreement, CMS reserves the right to revoke your Medicare billing privileges. Now, more than ever, it is essential that you have an effective Compliance Program in place and that you periodically review your practices to ensure that you and your staff are fully complying with applicable Medicare regulatory, statutory and legal requirements.

II.   Length of Time a Provider’s Medicare Billing Privileges May be Revoked Under 42 CFR Sec. 424.535(c):

The Final Rule significantly modified 42 CFR Sec. 424.535(c). This regulatory provision sets out the potential reenrollment bar time limits that may imposed by CMS when initiating a Medicare revocation action.  If this is the first time that a provider’s Medicare billing privileges are being revoked, the minimum reenrollment bar is 1 year, and the maximum reenrollment bar is 10 years.[15]  If CMS determines that a provider attempted to “circumvent its existing reenrollment bar by enrolling in Medicare under a different name, numerical identifier or business identity,” the agency can further tack on up to 3 additional years onto the reenrollment bar it has imposed.[16] As a final point in this regard, Moreover, under if a provider or supplier is being revoked from Medicare a second time, CMS may choose to impose a reenrollment bar of up to 20 years.[17]

III.   Responding to a Medicare Revocation Action:

If you receive notice that CMS is intending to revoke your Medicare billing privileges, it is essential that you engage experienced health law counsel to represent you in the appeal process.  This is especially critical given the fact that recent revocation actions initiated by CMS have all sought to impose of reenrollment bar of 10 years, rather than the 3-year bar that was typically imposed prior to November 4, 2019.  Unfortunately, a Medicare revocation action can trigger a number of other secondary adverse actions by law enforcement, private payors and a provider’s State Medical Board. If your Medicare billing privileges are being revoked, please feel free to give us a call for a free consultation.  Liles Parker attorneys have extensive experience representing health care providers around the country in Medicare revocation actions.  We can be reached at:  1 (800) 475-1906.

Robert W. Liles is a former Federal prosecutor and has more than 25 years of health law experience.  Mr. Liles and the other attorneys at Liles Parker have extensive experience representing providers and suppliers in the appeal of proposed Medicare revocation actions. Questions?  Give Robert Liles a call.  For a free consultation, he can be reached at:  1 (800) 475-1906.

[1] September 2019 article titled “Medicare, Medicaid and CHIP Enrollment Revocation and Denial Authorities Have Expanded.  What Steps are You Taking to Reduce Your Level of Risk?”

and our December 2017 article titled “Revocation of Your Medicare Billing Privileges.”

[2] 84 FT 47794 (September 10, 2019). https://www.govinfo.gov/content/pkg/FR-2019-09-10/pdf/2019-19208.pdf

[3] 81 FR 10720.

[4] We are in currently in the process of challenging the purported effective date of November 4, 2019.  CMS failed to provide the proper notice requirements mandated under the Congressional Review Act.  This failure thereby delays the effective date of the expanded revocation authorities.

[5] Slots have been placed in reserve for revocation reasons number 15 and 16 which would likely be assigned by CMS in the future and would presumably go through the rulemaking process.

[6] Under 42 CFR Sec. 424.502, the term “Institutional Provider” means any provider or supplier that submits a paper Medicare enrollment application using the CMS-855A, CMS-855B (not including physician and nonphysician practitioner organizations), CMS-855S, CMS-20134, or an associated Internet-based PECOS enrollment application.

[7] Under 42 CFR Sec. 424.535(a) (8), when making this determination, CMS considers:

• The percentage of submitted claims that were denied;
• The reasons for the denials; whether the provider has a history of final adverse actions (and the nature of these actions;
• The length of time over which the pattern has continued; how long the provider has been enrolled in Medicare; and
• Any other information that CMS deems relevant to its determination of whether the provider or supplier has or has not engaged in the pattern or practice identified.

[8] Under 42 CFR Sec. 424.535(a)) (9), when determining whether a revocation under this paragraph is appropriate, CMS considers the following factors:

(i) Whether the data in question was reported.

(ii) If the data was reported, how belatedly.

(iii) The materiality of the data in question.

(iv) Any other information that CMS deems relevant to its determination.

[9] Under 42 CFR Sec. 424.535(a) (17), when determining whether a revocation under this paragraph is appropriate, CMS is supposed to consider:

• The reason(s) for the failure to fully repay the debt (to the extent this can be determined).
• Whether the provider or supplier has attempted to repay the debt (to the extent this can be determined).
• Whether the provider or supplier has responded to CMS’ requests for payment (to the extent this can be determined).
• Whether the provider or supplier has any history of final adverse actions or Medicare or Medicaid payment suspensions.
• The amount of the debt. (vi) Any other evidence that CMS deems relevant to its determination.

[10] Under 42 CFR Sec. 424.535(a) (18), when determining whether a provider or supplier is a currently revoked provider or supplier under a different name, numerical identifier, or business identity, CMS investigates the degree of commonality by considering the following factors:

• Owning and managing employees and organizations (regardless of whether they have been disclosed on the Form CMS–855 application).
• Geographic location.
• Provider or supplier type.
• Business structure.
• Any evidence indicating that the two parties are similar or that the provider or supplier was created to circumvent the revocation or reenrollment bar.

[11]  Under 42 CFR Sec. 424.535(a) (20), when determining whether and how many of the provider’s or supplier’s enrollments, involving the non-compliant location or other locations, should be revoked, CMS considers the following factors:

• The reason(s) for and the specific facts behind the location’s noncompliance.
• The number of additional locations involved.
• Whether the provider or supplier has any history of final adverse actions or Medicare or Medicaid payment suspensions.
• The degree of risk that the location’s continuance poses to the Medicare Trust Funds.
• The length of time that the noncompliant location was non-compliant.
• The amount that was billed for services performed at or items furnished from the non-compliant location.
• Any other evidence that CMS deems relevant to its determination.

[12] Under 42 CFR Sec. 424.535(a) (21), when making its determination as to whether such a pattern or practice exists, CMS considers the following factors:

(i) Whether the physician’s or eligible professional’s diagnoses support the orders, certifications, referrals or prescriptions in question.

(ii) Whether there are instances where the necessary evaluation of the patient for whom the service, item or drug was ordered, certified, referred, or prescribed could not have occurred (for example, the patient  was deceased or out of state at the time of the alleged office visit).

(iii) The number and type(s) of disciplinary actions taken against the physician or eligible professional by the licensing body or medical board for the state or states in which he or she practices, and the reason(s) for the action(s).

(iv) Whether the physician or eligible professional has any history of final adverse action (as that term is defined in Sec. 424.502).

(v) The length of time over which the pattern or practice has continued.

(vi) How long the physician or eligible professional has been enrolled in Medicare.

(vii) The number and type(s) of malpractice suits that have been filed against the physician or eligible professional related to ordering, certifying, referring or prescribing that have resulted in a final judgment against the physician or eligible professional or in which the physician or eligible professional has paid a settlement to the plaintiff(s) (to the extent this can be determined).

(viii) Whether any State Medicaid program or any other public or private health insurance program has restricted, suspended, revoked, or terminated the physician’s or eligible professional’s ability to practice medicine, and the reason(s) for any such restriction, suspension, revocation, or termination.

[13] Under 42 CFR Sec. 424.535(a) (21), when determining whether a revocation is appropriate, CMS considers the following factors:

(A) The nature of the patient harm.

(B) The nature of the physician’s or other eligible professional’s conduct.

(C) The number and type(s) of sanctions or disciplinary actions that have been imposed against the physician or other eligible professional by the State oversight board, IRO, Federal or State health care program, or any other equivalent governmental body or program that oversees, regulates, or administers the provision of health care. Such actions include, but are not limited to in scope or degree:

(1) License restriction(s) pertaining to certain procedures or practices.

(2) Required compliance appearances before State medical board members.

(3) License restriction(s) regarding the ability to treat certain types of patients (for example, cannot be alone with members of a different gender after a sexual offense charge).

(4) Administrative or monetary penalties.

(5) Formal reprimand(s).

(D) If applicable, the nature of the IRO determination(s).

(E) The number of patients impacted by the physician’s or other eligible professional’s conduct and the degree of harm thereto or impact upon.

[14] 254 U.S. 141, 143 (1920).

[15] 42 CFR Sec. 424.535(c)(1)(i).

[16] 42 CFR Sec. 424.535(c)(2)(i).

[17] 42 CFR Sec. 424.535(c)(3),

Overview of Dental Claims Audits and Investigations by Medicaid and Private Payors in 2019

(March 4, 2020):  Many dentists and dental practices around the country are glad that 2019 is behind us.  Last year was a banner year for law enforcement investigators and administrative auditors of dental claims.  Federal and State prosecutors around the country actively pursued both civil and criminal cases against individual dentists for a variety of offenses.  Notably, a number of the defendants prosecuted by the government were first identified as engaged in wrongdoing by Unified Program Integrity Contractors (UPICs) conducting Medicaid dental claims audits and private payor Special Investigative Units (SIUs) reviewing dental claims submitted by a practice for payment.  In this article, we examine the administrative, civil and criminal cases that were brought against dentists in 2019 in order to identify the conduct that led to the imposition of overpayments, the imposition of civil penalties by the government, and in some instances, the criminal prosecution of dentists for various violations of law.

I.   Administrative Dental Claims Audits Expanded in 2019:

• Medicaid Claims Audits.

Almost a decade ago, the enactment of the Affordable Care Act[1] made it possible for state Medicaid programs to greatly increased their eligibility criteria and the scope of services offered to program beneficiaries. While eligible child enrollees were already receiving dental benefits, in many states, the number of adults qualifying for Medicaid dental benefits doubled. Not surprisingly, as Medicaid dental services have grown, the costs associated with these benefits also greatly expanded.  In response, Federal and State authorities have steadily devoted ever increasing resources to the audit and investigation of improper dental business, coding and billing practices.

The Centers for Medicare and Medicaid Services (CMS) has engaged a number of third-party, UPIC contractors (such as Qlarent, AdvanceMed, the CoventBridge Group, and SafeGuard Services LLC) to perform program integrity audits of Medicaid dental claims around the country.  It is important to keep in mind that UPICs are expressly required to refer suspected cases of fraud and abuse to law enforcement for further investigation and possible prosecution.  UPICs are also required to recommend the revocation of participating providers and suppliers that are non-compliant with Medicare regulations and policies.

Notably, several large private dental management companies, such as DentaQuest and Delta Dental also currently serve as dental plan administrators for various state Medicaid Advantage dental plans around the country.[2]  SIUs at DentaQuest, Delta Dental and other dental plan administrators have implemented a number of measures to identify and investigate instances of suspected fraud or improper dental billing practices.

• DentaQuest, Delta Dental and Other Private Payor Dental Audits.

DentaQuest, Delta Dental and a number of other payors serve as administrators for private dental plans and various employer-sponsored dental insurance policies around the country.  In 2019,  private dental payors greatly expanded the scope and frequency of audits conducted by their SIUs.  Additionally, these private dental payors greatly increased their use of “prepayment review” and “payment hold” actions, both of which can adversely impact a dental practice’s cash flow and possibly cripple a practice’s ability to operate.

II.   Common Reasons for Denial Cited in Administrative Dental Audits by UPICs, DentaQuest and Delta Dental:

In 2019, the following reasons for denial were commonly cited by UPICs, DentaQuest and Delta Dental in audits we handled:

• • Failure to sign progress notes (either electronically or by hand). At first glance, you may feel that the failure to electronically-sign a dental progress note is a mere technical deficiency. Unfortunately, that isn’t necessarily the case, CMS contractors (such as UPICs) are actively denying dental claims if the associated progress note has not been signed by the rendering dentist. As set out in the Medicaid Program Integrity Manual[3] reflects, “unsigned entries” (referring to electronic and handwritten), “shall be excluded from consideration when performing [a] medical review.”  Similarly, in several of the private dental payors cases that we handled, the payors denied claims that were not supported by signed progress notes and / or orders.  As a final point in this regard, please keep in mind that most State Dental Practice Acts include specific requirements mandating that progress notes, orders and treatment records be signed by the licensed dental professional who performed the service.

• • Billing for dental services not rendered. Unfortunately, this reason for denial has been a recurring theme cited by UPICs and SIUs alike when auditing dental records and claims for many years.  For example, recent private payor audits conducted have alleged that multiple instances were found where dentists billed for periodontal services (CDT Code D4331 – periodontal scaling and root planing) that were not performed based on the auditor’s review of the patient dental treatment records and radiographs in the file.  Similarly, insufficient documentation has been cited when denying these services based on failure to establish medical necessity. In these instances, the auditors noted that in order to diagnose and treat periodontal disease, dated pre-operative diagnostic quality radiographs and pre-operative periodontal charting is needed. Without these, periodontal disease cannot be properly diagnosed and periodontal scaling and root planing should not be conducted.

• • Misrepresentation of a non-covered service. In some respects, this improper practice is nothing more than another form of “billing for services not rendered. ”Simply put, in the recent cases we have seen where this has occurred, a dentist or dental practice has either purposely or erroneously characterized a non-covered dental service as a covered service. Keep in mind, the definition of a non-covered service varies from policy to policy. Additionally, the list of non-covered services under a specific policy may change from year-to-year. In any event, it is important that dental providers regularly check to ensure that the services being provided qualify for coverage and payment.

• • Misrepresentation of the provider of the dental service. This type of billing error is still commonly found in both dental and medical practices around the country. In the cases we have seen, “fraud” wasn’t the reason for the underlying misrepresentation on the ADA Claims form. In most instances, it was merely a matter of a credentialing delay. In other cases, dental practices appeared to believe that they were permitted to bill for the services under a concept similar to Medicare’s “Incident-To” rule. Although we have not seen a dental misrepresentation case of this type referred for criminal prosecution, it is important to remember that the ADA Dental Claims form is being electronically submitted to the health plan for payment.  Depending on the facts, an aggressive prosecutor could argue that such conduct constitutes were fraud. 18 U.S.C. §1343.

• • Unlicensed individuals found to have performed dental procedures. Generally speaking, we have seen two categories of cases where this has occurred. In the first example, a licensed professional failed to renew his Because of this administrative error, the dentist inadvertently performed dental procedures while his license had lapsed.  In the second example, a dental assistant or dental hygienist was found to have performed one or more dental procedures that were outside of their scope of practice. Both of these examples typically lead to claims denials.  They may also result in complaints to the State Dental Board.

• • Routine failure to collect the patient’s full payment or share of cost without notifying the carrier. Is your dental practice consistently collecting co-payments and deductibles that may be owed by a covered beneficiary?  In the case of non-government administered plan, the unsupported waiver of these amounts may constitute a breach of contract. However, if the dental plan is Federally funded, such a failure may constitute a violation of the Anti-Kickback Statute.

• • Misreporting dates to circumvent calendar year maximums or time limitations. The misreporting of dates in an effort to evade calendar year maximums and / or time limitations may constitute a violation of one or more State and Federal fraud statutes.

• • Failure to properly document support for medical necessity. Properly documenting medical necessity continues to be a problem. Over the last year, our reviews have found that there was often little detail provided to support medical necessity of pediatric dental treatments provided. For example, prophylaxis was typically provided because it was medically required. Although dental notes often indicated that plaque was visible, the notes often failed to  specify any areas of build-up. Also, the level of decay was typically not included to support services such as fillings and crowns.

• • Missing dental treatment plans / consent forms. Completed dental treatment plans and consent forms have frequently been found to be missing from patient dental records. The dental treatment plans that were included were typically signed by the pediatric dental patient’s parent, but the signatures were often not dated. Signatures should be dated and these dates should correspond with the date listed as the date of authorization noted on the claim form. Many of the dates of authorization for the “signatures on file” on the claim form were after the date of service, which is an error cited in recent audits.  

 Have you received a request for dental records from a government or private payor?  Take care.  You don’t want to inadvertently turn an administrative or civil audit into a criminal case.  Dental records, progress notes, x-rays and other documents must be signed and dated by the health care provider at the time the services are rendered or conducted.  In conducting your review, did you find that the claims documentation is legible and complete?  If not, change your practices now.  Wholesale efforts to go back and supplement incomplete documentation may constitute obstruction of justice if incorrectly handled.  Never make changes to a patient’s documentation or dental records without first discussing the issues presented with legal counsel so that you can ensure that a third party reviewing the updated records will not be misled as to the nature of the changes or revisions AND when the changes or revisions were made. 

In other words, your records must accurately show when changes, corrections or additions were made to the patient’s dental records.  Late entries to a record must be dated as such.  More than likely, government and private payor auditors will give very little (if any) credit to late entries or supplemental records unless the service being supplemental was recently performed.   The falsification of information in a patient’s dental record (or in other records presented to the government, its agents or private payor auditors) can constitute a criminal violation and could lead to much bigger troubles for you and your dental practice than a mere overpayment.

III.   Civil Investigations / False Claims Act Dental Cases Brought in 2019:

Last fiscal year, the Federal government won or negotiated over $3 billion in judgments and settlements under the civil False Claims Act. Of the $3 billion in settlements and judgments recovered by the Department of Justice this past fiscal year, $2.6 billion involved the health care industry. It is worth noting that these recoveries only reflect Federal funds, millions of dollars more were also recovered for State Medicaid programs.   Despite the fact that literally billions of dollars were recovered from health care providers and suppliers using the False Claims Act, very few of the settlements and judgments were related to dentists, dental practices and / or dental management companies.  Examples of False Claims Act dental recoveries made in 2019 include:

• • December 2019. In this case, the government alleged that from 2014 through 2015, the defendant dentist presented claims to the State Medicaid program for dental services that were never provided.  Connecticut’s Superior Court ordered the defendant to pay treble damages, along with a civil penalty of $1.5 million.

• • March 2019. In this case dental fraud case, after reviewing a sample of patient dental records, the State Attorney General’s Office found that a dental practice has defrauded the State Medicaid program.  To resolve the allegations, the defendant dentists agreed to pay $1 million under the State False Claims Act and agreed to be voluntarily excluded from participating in the Medicare and Medicaid programs.

 IV.   Criminal Prosecutions of Illegal Dental Business Practices in 2019:

As the case overviews below reflect, both Federal and State prosecutors aggressively prosecuted dentists for their illegal conduct in 2019.  Examples of the criminal prosecutions pursued in dental cases last year include:

• • October 2019.  Virginia.  In this case, a Virginia-licensed dentist was sentenced to nearly eight and a half years in prison for conspiracy to distribute prescription opioids and muscle relaxant pills without a legitimate medical purpose.  The government alleged that the defendant was involved in an elaborate scheme to prescribe opioids such as hydrocodone and oxycodone pills for his personal use and the use of his co-conspirators. 

• • October 2019. Missouri. Federal prosecutors allege that two dentists at a Missouri dental practice participated in two different schemes to defraud Medicaid.  In the first scheme, patients were allegedly provided a $50 Ortho-Tain mouth pieces designed to straighten teeth but the Medicaid program was then billed $700 for a “speech aid prosthesis.” In the second scheme, federal prosecutors say the dentists provided dentures and other dental services to patients who did not qualify for Medicaid reimbursement and then submitted claims to Medicaid anyway.  Federal prosecutors say these two schemes netted $885,748.

• • September 2019. Maryland. The dental practice owner (and former dentist) at a Maryland practice agreed to pay over $5.4 million in restitution and nearly $4 million in a forfeiture money judgment after pleading guilty to health care fraud for involvement in a $5 million-plus Medicaid fraud scheme. Authorities said the former dentist (who is currently serving a 16-year sentence for sexual assault of patients), used his dental practices to submit fraudulent claims to D.C. Medicaid for thousands of unprovided provisional crowns, which resulted in around $5.4 million worth of improper payments from the program between August 2012 and February 2016.
  • August 2019. Illinois. An Illinois dentist was indicted on 13 counts of health care and wire fraud after prosecutors say he billed Illinois Medicaid hundreds of thousands of dollars for dental procedures he never performed. The U.S. Attorney’s Office for the Southern District of Illinois stated. In all, it is alleged that Kim collected more than $700,000, which prosecutors want paid back to the state.
  • July 2019. Arkansas.  In the case, an Arkansas dentist received a five-year suspended prison term and was ordered to pay $33,383.05 in restitution, $100,149.15 in damages and $2,500 in fines after pleading guilty to defrauding Medicaid. Authorities said the dentist submitted more than 3,100 fraudulent claims to Medicaid for X-rays and various dental services between September 2015 and December 2017, which resulted in $186,461 worth of improper payments from the program.
  • June 2019. Tennessee.  A Tennessee dentist and practice owner was sentenced to two years and nine months in prison and was ordered to pay $965,448 in restitution after pleading guilty to conspiracy to commit health care fraud for orchestrating a scheme to defraud TennCare and other health care benefit programs. Authorities said the dentist caused the submission of fraudulent claims to TennCare and other health benefit programs for unprovided or incomplete dental work from November 2013 to January 2018.
  • June 2019. California.  A California dentist based out of Los Angeles was sentenced to more than three years in prison for health insurance fraud and was ordered to pay restitution of more than $1.4 million after pleading guilty to submitting fraudulent claims to multiple private insurers for unprovided dental care services.
  • April 2019.  New Jersey.  An unlicensed dentist from New Jersey was convicted in a $2 million fraud case in New York.  The unlicensed dentist was sentenced to two years in prison and ordered to pay restitution of almost $1 million after being convicted for his role in the $2 million health insurance fraud scheme.  Prosecutors allege that the unlicensed dentist worked as a dentist in Manhattan and conspired with others to pay kickbacks to patients and submit fraudulent claims to health insurers for unprovided dental services or services. 

V.   Steps a Dental Practice Can Take to Reduce Regulatory / Statutory Risk:

• Don’t Ignore a Request for Dental Records from a Medicaid or Private Payor Auditor? 

It has been our experience that a significant portion of all requests for dental records and claims information are either overlooked or ignored by a dental practice.  This error can result in a payor terminating your agreement.   Legal counsel can often intervene on your behalf and obtain an extension of time in which to submit the requested documents. We have seen several cases where a dental practice’s failure to response to the payor’s records request in a timely fashion resulted in the automatic denial of the claims being audited.

• Implement an Effective Dental Compliance Program.

First and foremost, it is recommended (and if you take Medicaid it is required by law) that you develop and implement an effective Compliance Program.  This would include an aggressive plan to conduct periodic internal audits of your dental claims to ensure that the services have been provided, fully documented, were medically necessary and were coded / billed properly. When was the last time you conducted an internal dental claims audit and examined whether the services you are providing fully reflect medical necessity requirements, are documented to meet the requirements of the payor, and are properly coded and billed? What did you find?  Who conducted the audit, someone from your dental practice, or an outside dental consultant?  Be sure and engage any outside dental consultant through legal counsel.

• Screen Your Employees, Contractors and Agents Against Available Screening Databases.

Dental providers should screen their applicants, clinical staff, administrative staff, contractors, vendors and agents on a monthly basis.  At this time, there are more than 40 different databases that need to be checked.  These databases include:

(1) List of Excluded Individuals and Entities (LEIE). Maintained by HHS-OIG.
(2) System for Award Management (SAM). Maintained by the General Services Administration.
(3) 40 State Medicaid Exclusion Registries. Maintained by either the State Attorney General’s Office or the State Medicaid Fraud Control Unit (MFCU).

Questions regarding your screening obligations?  Call the helpful folks at Exclusion Screening, PLLC with any screening questions.  They can be reached at: 1 (800) 294-0952

• Call a Qualified Health Law Attorney for Help in Responding to a Dental Audit.

 Hopefully, you won’t face a Medicaid or private payor dental audit in the near future.  If you do, it is essential that you engage qualified legal counsel to guide you through the process.  A knowledgeable, experienced lawyer can interact directly with the payor and work towards a reasonable resolution of the case.  Legal counsel can also provide guidance with respect to payor documentation, coding and billing requirements. Importantly, the Liles Parker attorneys who would represent you and your practice in a dental audit are both experienced health lawyers AND have achieved certification as Certified Medical Reimbursement Specialists (CMRSs) by the American Medical Billing Association (AMBA) and / or Certified Professional Coders (CPCs) by the American Academy of Professional Coders.

Are you facing a dental claims audit or investigation? We can help.  For a free consultation, please call Robert at:  1 (800) 475-1906.

Robert W. Liles serves as Managing Partner at the health law firm, Liles Parker, Attorneys and Counselors at Law.  Liles Parker attorneys represent health care providers and suppliers around the country in connection with dental claims audits and investigation.  Is your dental practice being audited? Give us a call.  For a free initial consultation regarding your situation, call Robert at: 1 (800) 475-1906.

[1] Signed into law by President Obama on March 23, 2010.

[2] As Medicaid dental rolls have increased, many states have chosen to engage a third-party to administer their Medicaid dental programs, such as Delta Dental or DentaQuest.  At last count, Delta Dental administers dental programs serving more than 80 million Americans, many of whom are participants in a government-sponsored program.  Similarly, DentaQuest administers dental programs serving over 25 million beneficiaries, most of whom are covered by a government-sponsored program.

[3] Medicaid Program Integrity Manual, 1.7.5 “Medical Review for Program Integrity Purposes.”

Have You Received a Civil Investigative Demand (CID)? How Should a Health Care Provider or Supplier Respond When Receiving a Civil Investigative Demand?

(March 3, 2020):  In recent years, Federal prosecutors around the country have increasingly relied on Civil Investigative Demands when investigating civil False Claims Act matters and cases.[1]  It’s easy to see why the government has continued to focus its civil enforcement efforts on alleged violations of the False Claims Act. Let’s look at the numbers — it’s been another banner year for the civil False Claims Act.  According to the Department of Justice (DOJ), the government secured more than $3 billion in settlements and judgments in False Claims Act cases for Fiscal Year ending September 30, 2019.  More than $2.6 billion of this $3 billion is related to health care matters and cases.  As DOJ notes, this is the tenth consecutive year that health care False Claims Act settlements and judgments have exceeded $2 billion.  As these statistics show, health care providers and suppliers are the primary targets of both whistleblower and government-initiated actions under the False Claims Act.[2] To investigate alleged violations of the False Claims Act, Federal prosecutors have been increasingly relying on Civil Investigative Demands as a pre-litigation discovery tool.  This article examines the government’s current use of Civil Investigative Demands in health care False Claims Act matters and cases and discusses the steps you should take if you are the recipient of one of these administrative subpoenas.

I.  What is a Civil Investigative Demand?

A Civil Investigative Demand is a formal administrative subpoena that is issued by an Assistant U.S. Attorney (or a DOJ Civil Division Trial Attorney) in connection with the government’s investigation of a False Claims Act matter or case.  In the context of a government-initiated False Claims Act investigation, this discovery tool by prosecutors to assist them in deciding whether or not to file suit under the statute.[3]  Alternatively, if a False Claims Act case has already been filed by a whistleblower, DOJ prosecutors may choose to issue one or more Civil Investigative Demands to gather additional information that may be necessary to decide whether or not to intervene in the qui tam[4] case that has been filed.  Under 31 U.S.C. § 3729-3733(1)(A)-(D), the government can use a Civil Investigative Demand to require a person:

(A) to produce such documentary material inspection and copying,

(B) to answer in writing written interrogatories with respect to such documentary material or information,

(C) to give oral testimony concerning such documentary material  or information, or

(D) to furnish any combination of such material, answers, or testimony.

 II.  The Evolution of Civil Investigative Demands:

• False Claims Amendments of 1986.

With the passage of the “False Claims Amendments of 1986,” [5] the Attorney General of the United States was given the authority to issue Civil Investigative Demands in connection with the investigation of civil False Claims Act matters. Unfortunately, this discovery tool was only infrequently utilized by DOJ due to the fact that the Attorney General had to personally authorize a Civil Investigative Demand before it could be issued.  From a practical standpoint, this restriction made it very difficult for line prosecutors to utilize this discovery tool.  In order to do so, an Assistant U.S. Attorney would have to traverse multiple levels of DOJ management in order to even present a Civil Investigative Demand request for the consideration of the Attorney General.  Not surprisingly, only significant, large-dollar loss False Claims Act matters typically made it to this level and resulted in the issuance of a Civil Investigative Demand.

• Fraud Enforcement and Recovery Act of 2009, P.L.111-21 (FERA).

On May 20, 2009, the “Fraud Enforcement and Recovery Act of 2009”[6] was signed into law by President Obama. Among its provisions, FERA greatly modified the rules under which Civil Investigative Demands could be issued.  Under FERA:

Delegation of Civil Investigative Demand Issuance Authority – Under FERA, the Attorney General can delegate his / her authority to Issue Civil Investigative Demands in False Claims Act matters and cases. In practice, the authority to issue a Civil Investigative Demand has now been delegated to Assistant U.S. Attorneys investigating alleged violations of the False Claims Act.

Sharing of Information Obtained Using a Civil Investigative Demand with a Qui Tam Relator – FERA permitted the Attorney General (or Designee) to share information obtained using a Civil Investigative Demand with a qui tam relator if the Attorney General (or Designee) determines it is necessary to do so as part of any False Claims Act investigation.[7]

The redelegation of authority to issue Civil Investigative Demands from the Attorney General to a designee was immediately met with opposition from a variety of industry groups.  By letter dated July 13, 2009, several dozen national associations and large corporate entities (ranging from the American Hospital Association to Exxon Mobile Corporation), wrote to Attorney General Eric Holder to express their concerns that the redelegation of issuance authority may lead to problems with:

“consistency, coordination, institutional memory, and a variety of other issues that overbroad delegation would raise.”[8]

Ultimately, the Attorney General did, in fact, choose to delegate the authority to issue Civil Investigative Demands to U.S. Attorneys around the country.[9] U.S. Attorneys have further redelegated this authority to Assistant U.S. Attorneys in their offices.

III.  Can Information Obtained Through a Civil Investigative Demand be Shared with Criminal Prosecutors?

The short answer is “Yes,” documentary materials, answers to interrogatories and transcripts of oral testimony obtained under a Civil Investigative Demand can be shared with criminal prosecutors.   In fact, all of the information gathered through a Civil Investigative Demand can be used for “official use” in “furtherance of a Department of Justice investigation or prosecution of a case.”[10]

A common concern expressed by defendants in a case is that perhaps the government is using the civil investigative process (such as the issuance of a Civil Investigative Demand) as a “stalking horse” to obtain information, answers to interrogatories and civil testimony in a case that would be unavailable (or not easily obtainable) if the case were pursued criminally.  Unless a defendant is able to show that a civil action has been brought solely to obtain evidence for a criminal prosecution, courts have not been sympathetic to the stalking horse argument.[11]

For additional guidance on the risks presented when dealing with parallel civil and criminal investigations, you may wish to review our article titled “A Civil Investigative Demand Issued to You or Your Medical Practice is Serious Business. Understand Your Level of Risk Before Responding to the Government’s Investigation.”

IV.  How Should a Health Care Provider or Supplier Respond When Receiving a Civil Investigative Demand?

Upon receipt of a Civil Investigative Demand, you should immediately contact experienced legal counsel to guide you in your response.  When selecting legal counsel, it is essential that that ensure that the attorney representing you is both experienced and knowledgeable with respect to the use of the Civil Investigative Demands and the government’s use of the False Claims Act.  For example, is the attorney a former Assistant U.S. Attorney?  Is the attorney an experienced False Claims Act lawyer?  Has the attorney recently represented physicians and other health care providers in responding to a Civil Investigative Demand? Does the attorney have experience managing large, complex document productions in a cost-effective fashion? Has the attorney provided a thorough explanation of the subpoena response process?  Once you have selected a qualified, experienced attorney to represent your interests, legal counsel will likely take the following actions:

• Instruct you to refrain from engaging in any document destruction activities until the full scope of the government’s inquiry can be determined. You want to avoid taking any action that could be misconstrued as obstruction of justice.
• Carefully review the specifications of the Civil Investigative Demand and work with you to determine where responsive documents, electronic records and other materials may be located.
• Contact the issuing Assistant U.S. Attorney and obtain an extension (if necessary) so that you can comply with the government’s requests. Your legal counsel may also be successful in getting the government to narrow the scope of documents being sought and may be able to learn how the government views your role (and potential exposure) in the current False Claims Act case. For instance, does the government view you as a target,   a subject or a witness of their investigation. 
• Conduct a privileged, internal review of your business arrangements, medical records, coding and billing practices (the nature of the internal review will depend in large part on the focus of the government’s investigation as reflected by the specification of the Civil Investigative Demand). To the extent that you do, in fact, have a problem, your attorney will likely want to obtain a clear picture of the nature and scope of any overpayment or improper conduct so that remedial action can be taken.
• Depending on the internal review findings, is there potential criminal exposure in this case?

Liles Parker attorneys have extensive experience representing health care providers and suppliers in government audits and investigations. Several of our attorneys are former prosecutors and are highly experienced handling False Claims Act matters and cases.  If you are the recipient of a Civil Investigative demand it is imperative that you immediately contact qualified, experienced counsel to represent you when responding to this administrative subpoena.  For a free consultation, please give us a call at:  1 (800) 475-1906.

Robert W. Liles serves as Managing Partner at the health law firm, Liles Parker, Attorneys and Counselors at Law.  Liles Parker attorneys represent health care providers and suppliers around the country in connection with False Claims Act issues and investigations.  Are you the recipient of a Civil Investigative Demand?  If so, we can help.  For a free initial consultation regarding your situation, call Robert at: 1 (800) 475-1906.

[1] 31 U.S.C. § 3729-3733.

[2] Notably, most of these False Claims Act recoveries were generated by whistleblower actions.  A total of 633 new whistleblower cases were filed in FY 2019.  In contrast, the government filed 146 new False Claims Act cases in FY 2019 (where no whistleblower was involved).

[3] A Civil Investigative Demand can only be issued by a Federal prosecutor prior to the government filing of a False Claims Act case or making a decision whether to intervene or not intervene in a case.  After a case is filed or an election is made, the government may only utilize traditional civil litigation discovery tools.

[4] In a “Qui Tam” action, a private party, referred to as a “Relator” (or more commonly as a “Whistleblower”) files a case under the civil False Claims Act on behalf of the government.  If a qui tam action is successful, the Relator can receive up to 25% of the recovery (in an intervened case) or up to 30% of the recovery (in a non-intervened case).

[5] Public Law 99-562, 100 Stat. 3153 (October 27, 1986), reprinted in, 10A USCCAN (December 1986). A copy of the False Claims Act Amendments of 1986 can be found at: https://www.govinfo.gov/content/pkg/STATUTE-100/pdf/STATUTE-100-Pg3153.pdf

[6] Public Law 111-21, 123 Stat. 1616 (May 20, 2009).  A copy of the Fraud Enforcement and Recovery Act of 2009 can be found at: https://www.congress.gov/bill/111th-congress/senate-bill/386/text

[7] Prior to the passage of FERA, the Attorney General was only able to share information obtained using a Civil Investigation Demand after obtaining authorization to do so from a U.S. District Court, after showing “substantial need” that the sharing of the information was in “furtherance of its statutory duties.”

[8] Letter from associations and industry representatives to Attorney Eric Holder, dated July 13, 2009.  https://www.nacdl.org/getattachment/746c7dca-6386-4e47-a980-717132ee21e0/cidscoalitionletter.pdf

[9] 28 C.F.R. Part 0, Subpart Y and Appendix.  https://www.law.cornell.edu/cfr/text/28/appendix-to_subpart_Y_of_part_0

[10] 31 U.S.C. § 3733(l)(8).

[11] See United States v. Kordel, 397 U.S. 1, 11 (1970).  Also see United States v. Stringer, No. 06-30100 (9th Cir. Apr. 4, 2008). In the Stringer case, the 9^th Circuit reversed a lower court decision to dismiss a criminal indictment based on the government’s alleged violation of the defendant’s due process rights resulting from improper behavior when conducting a parallel civil / criminal investigation.

Telemedicine Audits of Evaluations by Referring Physicians are Increasing

(February 17, 2020):  Over the last few months, we have seen a significant increase in the number of telemedicine audits and investigations by law enforcement and program integrity contractors.  Unfortunately, most of the calls we have received have been from physicians who have inadvertently become associated with a number of improper telemedicine schemes.  The purpose of this article is to discuss several of the problematic Durable Medical Equipment (DME) telemedicine business arrangements that we have seen.  This article also reviews the possible adverse ramifications that can result if a physician, nurse practitioner or physician assistant becomes involved in one of these improper billing arrangements.

I.  Historical Overview of DME Telemedicine Audits and Enforcement Efforts:

Although telehealth services have been around in one form or another for more than a century,[1] it wasn’t until 1997 that legislation was passed that would cover certain Medicare telemedicine consultations to patients living in specific rural areas.[2] These services were later implemented as part of the 2001 Physician Fee Schedule.[3]  Since that time, the scope of Medicare telehealth services covered by the government has expanded considerably.[4]  Nevertheless, a significant number of restrictions greatly limit the care that can be provided[5] via a telecommunications system, who qualifies to provide telemedicine services,[6] and where a Medicare beneficiary must be located in order for the location to qualify as an “originating site.”[7]  A more in-depth discussion of these Medicare telemedicine restrictions can be found at this linked article.[8]

Despite the fact that coding and fee schedule guidance regarding Medicare covered telemedicine services wasn’t even published until November 2001, by March 2003 the Department of Health and Human Services (HHS), Office of Inspector General (OIG) had already found it necessary to issue a Special Fraud Alert entitled “Telemarketing By Durable Medical Equipment Suppliers.”[9]  At that time, the OIG had identified a number of DME suppliers that had utilized third-party marketing companies to make unsolicited telephone calls to Medicare beneficiaries in an effort to generate referrals.  The Social Security Act, § 1834(a)(17)(A), prohibits DME suppliers from making unsolicited calls to Medicare beneficiaries regarding the furnishing of a covered item (unless one of three narrow exceptions apply[10]).  Moreover, § 1834(a)(17)(B) bars payments to a DME supplier that knowingly submits a claim that was generated as a result of a prohibited telephone solicitation.  The OIG further noted that DME suppliers cannot use third-party marketing companies as a subterfuge to get around these unsolicited telemarketing restrictions. As the Special Fraud Alert expressly notes:

“. . . a DME supplier is responsible for verifying that marketing activities performed by third parties with whom the supplier contracts or otherwise does business do not involve prohibited activity and that information purchased from such third parties was neither obtained, nor derived, from prohibited activity. If a claim for payment is submitted for items or services generated by a prohibited solicitation, both the DME supplier and the telemarketer are potentially liable for criminal, civil, and administrative penalties for causing the filing of a false claim.” (emphasis added).

Over the next seven years, further instances of improper, and often illegal conduct by third-party marketing companies continued to be identified by the government.  In January 2010, the OIG reissued its originally March 2003 Special Fraud Alert, updating the guidance to reflect additional concerns that had been noted by law enforcement.  As the OIG’s 2010 Updated Special Fraud Alert[11] states:

“OIG has also been made aware of instances when DME suppliers, notwithstanding the clear statutory prohibition, contact Medicare beneficiaries by telephone based solely on treating physicians’ preliminary written or verbal orders prescribing DME for the beneficiaries. A physician’s preliminary written or verbal order is not a substitute for the requisite written consent of a Medicare beneficiary.”

Once again, the OIG stressed that DME suppliers may only engage in telemarketing activities to Medicare beneficiaries if one of the three exceptions under Social Security Act § 1834(a)(17)(B) have been met. Moreover, the DME suppliers cannot try to go around these restrictions by using third-party marketing companies to make unsolicited telephone contacts.

II.  Current DME Telehealth / Telemedicine Fraud Enforcement Efforts:

Telemedicine audits of physician orders for DME supplies and law enforcement investigations of the business arrangements between referring physicians, telemedicine marketing companies and DME suppliers have steadily increased.  This is due in large part to the fact that there are often multiple major risk areas at play in the provision of this type of care.  Over the last year, the government has announced the investigation and indictment of multiple large DME telemedicine cases, many of which are still ongoing.  For example:

February 2020.  District of New Jersey.  In this case, the government has alleged that the owners of two telemedicine companies agreed to solicit and receive illegal kickbacks and bribes from patient recruiters, pharmacies, brace suppliers and others in exchange for the arranging for doctors to order medically unnecessary braces for Medicare beneficiaries.  To accomplish the fraud, the government alleges that the telemedicine company owners recruited and hired health care providers to order braces for Medicare beneficiaries. Federal prosecutors also allege that the telemedicine company owners paid illegal kickbacks to health care providers to order DME supplies for Medicare beneficiaries that were medically unnecessary and / or were ineligible for Medicare reimbursement.  Once the physician orders for DME supplies were obtained, the government alleges that the telemedicine company owners transferred the orders to co-conspirator DME suppliers who then submitted in excess of $56 million in false claims to the Medicare program.

September 2019.  District of New Jersey.  In this case, a New Jersey physician pleaded guilty to his role in a $13 million telemedicine health care fraud scheme.  Notably, this was one of the 24 defendants indicted in the national take-down discussed below.  In this particular case, the New Jersey physician admitted that while working for two telemedicine companies, he wrote medically unnecessary orders for orthotic braces for Medicare beneficiaries. He further admitted that he wrote the brace orders for the telemedicine companies without speaking to the patients and that he “concealed” the fraud by stating in his documentation that he had “discussions” or “conversations” with the patients.

April 2019.  Nationwide DME Telemedicine Take-Down.  Last April, the Department of Justice announced that it had brought criminal charges against 24 individuals and 130 DME companies for their alleged participation in fraud schemes involving more than $1.2 billion in losses to insurance payors.  The fraud was widespread, and more than 80 search warrants were executed in 17 Federal judicial districts.  The 24 individual defendants include CEOs and COOs of telemedicine companies, owners of DME companies and a number of licensed medical professionals.  As the Press Release noted:

“The defendants allegedly paid doctors to prescribe DME either without any patient interaction or with only a brief telephonic conversation with patients they had never met or seen.  The proceeds of the fraudulent scheme were allegedly laundered through international shell corporations and used to purchase exotic automobiles, yachts and luxury real estate in the United States and abroad.” (emphasis added).

As a review of recent cases will show, every DME telemedicine fraud case is different. Nevertheless, there are a number of common fraud tactics that are repeatedly alleged in the cases prosecuted by the government, many of which are discussed below.

III.  The Role of Physicians, Nurse Practitioners and Physician Assistants in the DME Telehealth Fraud Cycle:

Many of the physicians, nurse practitioners and physician assistants currently undergoing a telemedicine audit or a law enforcement investigation of their telehealth evaluations first decided to dabble in the world of telemedicine as a way to supplement their income.  In the cases we have handled, these individuals have typically worked full-time as a hospitalist or in another staff capacity and have then taken a side job with a telemedicine marketing company to conduct telemedicine DME evaluations of patients.  In most instances, the evaluating physician would work as an Independent Contractor and would be paid anywhere from $30 to $50 for each telemedicine patient evaluation performed.

As a quick review of the internet will confirm, even today there are multiple employment websites listing part-time opportunities for physician telemedicine work.  At first glance, it may look like a fast and easy way to make some money. When it comes to telemedicine business arrangements, the old maxim “You are Judged by the Company You Keep,” certainly holds true.  We recommend that you exercise caution and conduct an appropriate level of due diligence before you take on this type of work.  As the case summaries above reflect, if you are drawn into an improper telemedicine business arrangement, you may face administrative, civil or even criminal sanctions.  Questions to be asked include, but are not limited to:

• How is the telemedicine marketing company generating potential beneficiary referrals?
• How is the telemedicine marketing company paid for its services and by whom? Is the company paid by a DME supplier?
• Is the telemedicine marketing company also involved with the promotion of laboratory services?
• How will you be paid for the telemedicine evaluations you will be performing?
• Will you be billing Medicare or another responsible payor directly for your services?
• If you won’t be billing Medicare for the telemedicine evaluation, will you be assigning your rights to bill for evaluations to the telemedicine marketing company?
• Will you be paid by a telemedicine marketing company for each evaluation that you conduct OR only for the evaluations in which you order DME supplies?
• What safeguards are in place to prevent third-parties from using your provider number to submit claims for services that you did not render or for supplies that you did not order?
• Have you asked qualified health care legal counsel to review the proposed Independent Contractor agreement between you and the telemedicine marketing company?
• If you were to decide to work with the telemedicine marketing company, how would you receive patient referrals? Will a patient desiring a telemedicine consultation contact you directly or will you be given a list of patients that need to be evaluated?
• Have you checked with your medical malpractice carrier to verify whether they will cover your telemedicine services?
• Where are the patients you will be evaluating located?
• Will you be personally interacting with each patient by telephone or interactive video conferencing OR is the telemedicine marketing company asking you to conduct your evaluation based on a patient recording and / or an intake sheet completed by the marketing company?
• Has the telemedicine marketing company asked that you complete a prepopulated “script” when issuing an order?
• If you decide to issue an order for DME supplies after conducting a telemedicine evaluation, who decides which DME supplier will be chosen to fill the prescription?
• Are you meeting state requirements with respect to the establishment of physician-patient relationship?
• Where will patient records of your evaluations be stored, and will you have ready access to those records for at least seven (7) years, or if longer, the length of time required by your state’s law?
• Will you maintain a copy of the patient records yourself?

Each of these questions should be carefully considered before deciding whether to work with a telemedicine marketing company.  To the extent that potential concerns are identified, we recommend that you work with a qualified health law attorney to determine whether an issue represents a significant professional licensure, statutory or regulatory compliance risk.  If a significant risk is identified, we recommend you discuss what steps, if any, can be taken to address the risk and to better ensure that your efforts do not violate the law.

IV.  Specific Risks Faced by Referring Physicians in Telemedicine Audits:

• Failure to Comply with Medicare’s Mandatory Claim Filing Requirements.

When representing physicians in telehealth audits and investigations, one of the first areas we discuss with our clients is how they were compensated for their efforts.  After conducting a telemedicine evaluation, did the physician bill the Medicare program directly for the Evaluation & Management (E/M) service conducted?  Although not necessarily determinative of fraud or improper conduct, this is one of the factors that Unified Program Integrity Contractors (UPICs), such as Qlarent, AdvanceMed, the CoventBridge Group, and SafeGuard Services LLC, will be examining.  It is important to keep in mind that you are listed as the referring provider on each of the orders for DME supplies that are issued as a result of the telemedicine evaluations that you have conducted.  It is relatively easy for a UPIC to pull a list of the referring providers who are listed on the claim forms submitted by DME suppliers and determine which providers did not bill for the E/M telemedicine service he or she allegedly conducted. Why does this matter?

In the absence of a bona-fide reassignment agreement, it is mandatory that you bill Medicare for the telemedicine evaluations that you are conducting. In fact, under the Social Security Act, § 1848(g)(4),[12] physicians and suppliers are required to submit claims to Medicare carriers for services furnished to Medicare beneficiaries on or after September 1, 1990.  Compliance with Medicare’s mandatory claim filing requirements are carefully monitored by Medicare Administrative Contractors (MACs).  Violations of this requirement can result in both Civil Monetary Penalties and / or exclusion from participating in the Medicare program.

The bottom line is simple.  Your failure to comply with Medicare’s mandatory claims submission requirements may very well lead to the initiation of a UPIC audit.

• Failure to Comply with Federal and State Documentation Maintenance and Access Requirements.

One of the problems sometimes faced by physicians who have entered into an Independent Contractor business arrangement with a telemedicine marketing company is the fact that patient records are typically maintained by the telemedicine marketing company, not by the evaluating / referring physician.  When a DME claims audit is conducted by a UPIC, the program integrity contractor will also issue a request to the referring physician for a complete copy of the Medicare beneficiary’s medical records. Sample language that a UPIC may include in its letter to the referring physician may look like the following:

“The UPIC is reviewing claims associated with the beneficiaries referenced in the attached list, submitted by the DME supplier as noted, for supplies billed where you were identified as the referring physician.  We are therefore requesting the following medical documentation. . . “

Importantly, as a referring provider, you are required by regulation to maintain a copy of the medical documentation upon which your order and / or referral was based.  As required by 42 CFR § 424.516(f)(2)(i)(A):

(f) Maintaining and providing access to documentation. 

(2)(i) A physician or, when permitted, an eligible professional who orders, certifies, refers, or prescribes Part A or B services, items or drugs is required to –

(A) Maintain documentation (as described in paragraph (f)(2)(ii) of this section) for 7 years from the date of the service.

As a licensed medical professional, you should also keep in mind that your state’s Medical Practice Act invariably requires that you maintain a copy of the medical records for each of your patient.  For example, under Texas Medical Board Rule § 165.1(b)(1)[13]:

“(1) A licensed physician shall maintain adequate medical records of a patient for a minimum of seven years from the anniversary date of the date of last treatment by the physician.”

The failure to maintain copies of patients’ records has led to severe administrative sanctions.  In several recent cases we have seen, since the referring physician did not have a copy of the telemedicine evaluation notes conducted, the physician failed to submit them in response to a proper request for records from a UPIC.  When the physician failed to submit the records requested, CMS revoked the physician’s billing privileges for a period of 10 years.  The revocation action taken was based on the following:

“42 CFR § 424.535 – Revocation of enrollment in the Medicare program.

(a) Reasons for revocation. CMS may revoke a currently enrolled provider or supplier’s Medicare enrollment and any corresponding provider agreement or supplier agreement for the following reasons:

. . .

(10) Failure to document or provide CMS access to documentation.

(i) The provider or supplier did not comply with the documentation or CMS access requirements specified in §424.516(f) of this subpart.

(ii) A provider or supplier that meets the revocation criteria specified in paragraph (a)(10)(i) of this section, is subject to revocation for a period of not more than 1 year for each act of noncompliance.”

To be clear, the government’s revocation of a physician’s Medicare billing privileges isn’t necessarily the end of this saga.  The failure to maintain adequate documentation and / or provide ready access to patient records when requested can lead to both a referral to a physician’s State Medical Board and, in some cases, a referral to the OIG for possible permissive exclusion action.

V.  Responding to a Telemedicine Audit or Investigation:

Every telemedicine audit by a UPIC and investigation by law enforcement is different.  If your telemedicine evaluations are being audited, it is essential that you consult with qualified health law counsel to better ensure that your case is properly handled.  Liles Parker attorneys have represented physicians, marketing companies and DME suppliers in a wide variety of telemedicine-related matters.  Give us a call for a free consultation.

Have you received a request for telemedicine-related records?  Our experienced health law attorneys can advise you on how to best respond to a telemedicine audit and represent you throughout the complex appeal process that has been established. For a free initial consultation regarding your situation, call us at: 1 (800) 475-1906.

[1] A number of writers have argued that telehealth / telemedicine services were likely first provided by telegraph in the mid-1800’s and then in a more traditional format after the invention of the telephone in the latter part of the 19^th century.

 [2] Medicare coverage of telehealth services was first passed as part of the Balanced Budget Act of 1997, Pub. L. No. 105-33, 111 Stat. 251. 199.

 [3] CMS. 2001 Physician Fee Schedule List of Telehealth Codes. Available at: https://www.govinfo.gov/content/pkg/FR-2001-11-01/html/01-27275.ht

[4] As an industry, practically everyone involved in the delivery of health care has long promoted the expansion of telehealth / telemedicine services, often pointing to improved patient access, long-term cost savings and better overall health outcomes as merely a few of the many advantages that will undoubtedly result as the use of telemedicine expands.

[5] A list of covered telehealth services payable under the Medicare Physician Fee Schedule when furnished via telehealth during Calendar Year 2020 can be found at:  https://www.cms.gov/Medicare/Medicare-General-Information/Telehealth/Telehealth-Codes

[6] 42 C.F.R. § 410.78(b)(2).

[7] 42 C.F.R. § 410.78(b)(3).

[8] While somewhat dated, this December 2018 article entitled “Audits of Telehealth Services are Increasing. Do Your Telehealth Services Meet Applicable Requirements?” provides a concise overview of the Medicare telehealth coverage limitations that were in place at that time.  Since Medicare’s coverage requirements in this area are quite dynamic, we recommend that you review the current rules.

[9] A copy of the March 2003 Special Fraud Alert is available at:  https://oig.hhs.gov/fraud/docs/alertsandbulletins/Telemarketingdme.pdf

[10] Under § 1834(a)(17)(A)(i) – (iii) of the Social Security Act:

(i) The individual has given written permission to the supplier to make contact by telephone regarding the furnishing of a covered item.

(ii) The supplier has furnished a covered item to the individual and the supplier is contacting the individual only regarding the furnishing of such covered item.

(iii) If the contact is regarding the furnishing of a covered item other than a covered item already furnished to the individual, the supplier has furnished at least 1 covered item to the individual during the 15-month period preceding the date on which the supplier makes such contact.

[11] A copy of the November 2010 Special Fraud Alert is available at:

https://oig.hhs.gov/fraud/docs/alertsandbulletins/fraudalert_telemarketing.pdf

[12] https://www.ssa.gov/OP_Home/ssact/title18/1848.htm

[13] Texas Medical Board Rule § 165.1(b)(1).

SIU Dental Audit Reviews by DentaQuest, Delta Dental and Cigna Can Ultimately Lead to Criminal Prosecution and Imprisonment.  Are Your Dental Office’s Medical Necessity, Documentation, Coding and Billing Practices Compliant?

(October 16, 2019):  A Federal District Court Judge recently sentenced a Murfreesboro, TN dentist to prison and ordered that he pay restitution to TennCare (Tennessee’s Medicaid program).  Regrettably, the types of improper billing practices cited by the government in the criminal Information filed against the defendant dentist aren’t that uncommon.  This recent prosecution serves as an excellent case study of why it is essential that dentists and dental practices take steps to ensure that their medical necessity, documentation, coding and billing practices fully comply with applicable regulatory requirements and contractual obligations.  In addition to reviewing the types of improper conduct that led to the government’s criminal pursuit of the defendants in this case, this article examines how a Special Investigations Unit dental audit (SIU dental audit) by auditors and investigators at DentQuest, Delta Dental and Cigna can ultimately lead to a referral to State or Federal law enforcement officials.  Once a referral is made, you and your dental practice may be subject to criminal investigation and prosecution.

I.  SIU Dental Audit Reviews by DentaQuest, Delta Dental and Cigna Can Result in a Referral to State or Federal Law Enforcement Officials:

In this case, a Tennessee licensed dentist reportedly owned a dental practice with three locations in Murfreesboro, TN and a single location in Lebanon, TN.   The dental practice treated patients that were covered by private-payor dental plans and Medicaid.  Payors billed by the dental practice included, but were not necessarily limited to:  DentaQuest (DentaQuest served as the administrator to the TennCare program – Tennessee’s Medicaid program), Delta Dental and Cigna.[1]  Starting in late 2014, a number of payors initiated an SIU dental audit of the defendant’s multi-location dental practice.  These included:

December 2014. DentaQuest SIU Dental Audit.   In late 2014, DentaQuest conducted an audit of select 2013 and 2014 claims submitted to the Medicaid payor plan by the practice.  After reviewing the claims, DentiQuest alleged that the practice claiming was:

• • Billing for crowns at an unusually high rate; and
  • Impermissibly billing DentaQuest for services provided by non-credentialed dentists.

Importantly, the defendant was allegedly advised of these allegations both during and after the DentaQuest audit.

December 2016.  Delta SIU Dental Audit.  Delta Dental conducted an audit of 2015 and 2016 claims submitted to the payor for coverage and payment. At the conclusion of the dental claims audit, Delta Dental alleged that the dental practice:

• • Billed for dental services during the period January 2015 through May 2016 that were allegedly not provided.

Both during and after the Delta Dental audit, the defendant dentist and his office manager were allegedly advised of the allegation that the practice had billed the payor for services that were not provided.

August 2016.  Tennessee Bureau of Investigation Probe.  In August 2016, the defendant dentist and his office manager reportedly learned that the Tennessee Board of Investigation had initiated an investigation of the dental practice’s billing conduct.  Despite the fact that the defendants supposedly learned of the State’s ongoing investigation, they allegedly:

• • Directed employees to continue to bill for work that had not been performed.

As the summary findings of these dental claims audits reflect, the defendant dentist and the practice administrator were repeatedly advised by dental plan sponsors that a number of medical necessity, coding and documentation deficiencies had been identified.  Despite the fact that the defendants were allegedly put on actual notice of these improper coding and billing practices, the practice appears not to have taken remedial steps to correct the conduct.

II.  Overview of the Fraudulent Dental Billing Conduct Alleged by the Government:

The criminal Information filed against the defendant dentist outlines a number of documentation and billing practices that allegedly resulted in the submission of false and fraudulent dental claims to the DentaQuest (TennCare Medicaid), Delta Dental and Cigna payor plans. Not surprisingly, the types of improper conduct that the government chose to criminally prosecute are far from uncommon.  In fact, many of the dental audits we have defended on behalf of dental practices around the country have involved at least one of the documentation, coding and / or billing problems that ultimately led to the criminal referral in this case.  As both government and private payor SIU dental audit representatives will readily attest, when it comes to dental claims fraud, the old adage “. . . there is nothing new under the sun” certainly applies.[2] The types of improper conduct alleged by the government are outlined below:

 III.  Criminal Charges Brought Against the Defendant Dentist and Disposition of the Case:

The defendant dentist in this case entered into a plea bargain with the Federal government and agreed to waive his right to an Indictment.  As the pleadings in this case reflect, in November 2018, the defendant dentist was charged in a criminal Information with one count of criminal conspiracy under 18 USC § 1349.[4]   In June 2019, the defendant dentist was sentenced to almost three years in prison and ordered to pay almost one million dollars in restitution to the TennCare Medicaid program.[5]

How can you and your dental practice avoid engaging in the types of improper conduct identified by the government in this case? As a first step, your practice needs to develop, implement and adhere to the both the letter and the spirit of an effective compliance program.  An overview of the compliance program process is set out below.

IV.  Every Dental Practice Must Develop and Implement an Effective Compliance Program:

As you will recall, the Department of Health & Human Services (HHS), Office of Inspector General (OIG), issued voluntary Compliance Guidance for Individual and Small Group Physician Practices” almost 20 years ago, in 2000.[6]  As the seven element compliance guidance reflects, the term “physician” is defined to include “a doctor of dental surgery or dental medicine.” [7] With the passage of the Affordable Care Act[8]  in 2010, dental practices and other health care providers participating in Federal health benefits programs were now required to establish a compliance program as a condition of their enrollment in the Medicare, Medicaid, and Children’s Health Insurance Program (CHIP) payor plans.  Under § 6401(b)(5) of the statute:

“Subtitle E—Medicare, Medicaid, and CHIP Program Integrity Provisions

SEC. 6401. PROVIDER SCREENING AND OTHER ENROLLMENT REQUIREMENTS UNDER MEDICARE, MEDICAID, AND CHIP.

Sec. 6401(a)(7):  COMPLIANCE PROGRAMS.—On or after the date of implementation determined by the Secretary under subparagraph (C), a provider of medical or other items or services or supplier within a particular industry sector or category shall, as a condition of enrollment in the program under this title [Medicare], title XIX [Medicaid], or title XXI [CHIP], establish a compliance program that contains the core elements established under subparagraph (B) with respect to that provider or supplier and industry or category.

. . . .

Sec. 6401(b)(5):  COMPLIANCE PROGRAMS.—The State requires providers and suppliers under the State plan or under a waiver of the plan to establish, in accordance with the requirements of section 1866(j)(7), a compliance program that contains the core elements established under subparagraph (B) of that section 1866(j)(7) for providers or suppliers within a particular industry or category.”  (emphasis added).

From a practical standpoint, dental practices have been slow to make the transition from a “voluntary” to a “mandatory” approach towards compliance. In January 2017, the OIG and compliance professionals of the Health Care Compliance Association (HCCA) met and made modifications to the original seven elements identified in the 2000 compliance program guidance.  The seven elements were modified to include the following:

1. Standards, Policies, and Procedures.
2. Compliance Program Administration.
3. Screening and Evaluation of Employees, Physicians, Vendors and other Agents. 
4. Communication, Education, and Training on Compliance Issues. 
5. Monitoring, Auditing, and Internal Reporting Systems. 
6. Discipline for Non?Compliance.
7. Investigations and Remedial Measures.[9]

 If the defendants had properly developed, implemented and diligently worked to follow an effective dental practice compliance program, it is highly unlikely that the deficiencies identified by the government would have occurred (assuming, of course, that the defendants would have worked to comply with applicable statutory and regulatory requirements).

V.  The Possible Impact of an SIU Dental Audit on Your Dental Practice:

Assuming that your dental practice does not participate in the Medicare program[10] (but does participate in the Medicaid program), a wide variety of audit entities may show up at your door to perform an “unannounced audit” or send you a written notice of audit.  Audit entities that may initiate a review of your dental claims include:

It is important to keep in mind that many of these audit entities have overlapping areas of responsibility.  As a result, it is entirely possible that one audit entity (for instance, a Unified Program Integrity Contractor (UPIC)) may decide to look at your 2015 Medicaid dental claims, while a completely different entity (such as Medicaid Recovery Audit Contractor (Medicaid RAC)) could audit your 2016 Medicaid dental claims.  For instance:

• UPIC / Medicaid RAC Audits. On the government side, your dental practice’s Medicaid claims may be audited by a UPIC or a Medicaid RAC working for the Centers for Medicare and Medicaid Services (CMS).

 

• State MFCU Audits. Since the Medicaid program is jointly funded by the Federal and State governments, your Medicaid claims may also be audited by your State’s Medicaid Fraud Control Unit (MFCU).

 

• Audits by a Private Company Administrator of the Medicaid Program. If a private payor plan (such as DentaQuest) is serving as the administrator of the State Medicaid program, the private payor Special Investigations Unit (SIU) may initiate an audit of your Medicaid claims

 

• Private Payor Audits. To the extent that your dental practice is a participating provider in one or more private dental payor plans, each of these private payor plans has an in-house SIU that is tasked with identifying and taking appropriate administrative action against providers and suppliers engaged in improper conduct. If a SIU identifies conduct that it believes may constitute fraud, it may choose to make a referral to law enforcement for further investigation and possible criminal prosecution.

In the case discussed above, the Special Investigation Units (SIU) of DentQuest, Delta Dental and Cigna initiated audits of the dental practice’s claims.   A private payor’s SIU is typically comprised of health care auditors and investigators, many of whom previously worked for Federal or State law enforcement agencies.  If evidence of wrongdoing is found by the SIU, the private payor may decide to take an administrative action, such as place a dental provider on prepayment review or terminate a dental provider from their payor program.  To the extent that an alleged overpayment is identified by the SIU, it may send a demand letter to a dental provider.  This ultimately could lead to the initiation of a collection action in civil court by the private payor.  In a worst case scenario, if an SIU agent identifies evidence of actual fraud (as opposed to conduct that is indicative of a mistake, error or an accident), the unit may choose to make a referral to the government for further investigation and possible criminal prosecution.

As set out in the background discussion (Section I), the dental practice in the instant case underwent several audits over a fairly short period of time.  The audits conducted included reviews by DentaQuest (as the administrator for TennCare’s Medicaid dental program), Delta Dental and Cigna.  The Tennessee Bureau of Investigation subsequently initiated its own investigation of the dental office’s billing practices.  After concluding their reviews, a criminal referral was made to the U.S. Attorney’s Office.  Federal prosecutors then initiated criminal proceedings against the dentist practice owner and the practice administrator.

VI.  Responding to a DentaQuest Audit, Delta Dental Audit or Cigna Audit of Your Dental Claims:

The government does not expect you to be perfect with respect to your documentation, coding and billing practices.  Nevertheless, the government does expect you to take reasonable steps to prevent the occurrence of improper billing practices. The development and implementation of an effective compliance program is an integral part of your dental practice’s program integrity efforts.  Unfortunately, even if you diligently work to stay within the four corners of the law, mistakes will still be made and your dental claims will still be subject to audit by a State Medicaid program, DentaQuest, Delta Dental, Cigna and other dental payors.  How should you respond if you are audited by a government or private payor?

• Call an Experienced Health Lawyer for Assistance. Effectively responding to a government or private payor audit of your dental claims is essential if you hope to reduce the possible adverse effects of an audit.  An experienced health lawyer can walk you through the process and interact directly with the payor to seek an extension of the deadline to submit dental records and advise you on the documentation, coding and billing requirements that are required by a given payor.  Notably, the Liles Parker attorneys who would represent you and your practice in a dental audit are both experienced health lawyers AND have achieved certification as Certified Medical Reimbursement Specialists (CMRSs) by the American Medical Billing Association (AMBA) and / or Certified Professional Coders (CPCs) by the American Academy of Professional Coders.

 

• Don’t ignore a SIU dental audit of your claims. It has been our experience that approximately 20% of all dental audit requests are either ignored by a dental practice or were set aside for later review and then got lost in the ever-growing pile of administrative correspondence received by a dental practice.  Don’t allow this to happen.  Most payors will give a dental practice a deadline to submit any responsive, supporting dental records.  This submission deadline can be as little as a few days to as much as 30 days.  If the payor does not receive the requested records by the deadline, it will automatically deny the dental claims.

 

• Are there indications that the government or private payor intends to try and extrapolate damages? If a payor describes the group of dental medical records requested as a “statistically relevant sample” or uses similar descriptive terminology, call your legal counsel.  While not typically seen in private payor audits, we have seen numerous instances where a private payor has attempted to extrapolate any damages identified in connection with their audit.  Depending on applicable law and the terms of your contract with the payor, your legal counsel may be able to get the extrapolation dismissed.  If the payor does, in fact, have the authority to extrapolate damages, Liles Parker attorneys will often work with a statistical expert to conduct a preliminary assessment of whether or not the sample selected is, in fact, a sample that is representative of the universe of dental claims at issue.

 

• Assemble the dental records requested. Take the time to assess the specific claims at issue and the supporting documentation in each file.  Are there additional places (e.g., files in storage) where additional supporting documentation may be kept?  If the documentation appears to be incomplete, you may be able to supplement the records with an affidavit. Are there any referring or ancillary providers that might have supporting documentation (e.g., referrals or orders from another dental professional, laboratory or X-ray test result)?

 

• Retain duplicates of any information that you submit to the SIU dental auditor. Should you choose to go it alone and not be represented by legal counsel, you need to make sure that you secure a complete copy of the documentation sent to the payor.  It should be kept separate from your working files.  Should an appeal prove necessary, you will need to know the information on which the payor based its denial decision.

 

• Don’t turn an administrative or civil audit into a criminal case. Dental records, progress notes, x-rays and other documents must be signed and dated by the health care provider at the time the services are rendered or conducted.  In conducting your review, did you find that the claims documentation is legible and complete?  If not, change your practices now.  Wholesale efforts to go back and supplement incomplete documentation may constitute obstruction of justice if incorrectly handled.  Never make changes to a patient’s documentation or dental records without first discussing the issues presented with legal counsel so that you can ensure that a third party reviewing the updated records will not be misled as to the nature of the changes or revisions AND when the changes or revisions were made.  In other words, your records must accurately show when changes, corrections or additions were made to the patient’s dental records.  Late entries to a record must be dated as such.  More than likely, government and private payor auditors will give very little (if any) credit to late entries or supplemental records unless the service being supplemental was recently performed.   The falsification of information in a patient’s dental record (or in other records presented to the government, its agents or private payor auditors) can constitute a criminal violation and could lead to much bigger troubles for you and your dental practice than a mere overpayment.

Private payor SIUs are an important source of referrals for State and Federal prosecutors. Your compliance with a payor’s medical necessity, documentation, coding and billing requirements will be carefully reviewed by a SIU if your dental claims are subjected to an audit by the payor’s anti-fraud unit.  If evidence of criminal fraud is identified, there is real possibility that your conduct will be referred to the government for further investigation and possible prosecution.  Your adoption and implementation of an effective compliance program will greatly reduce your level of risk.  Liles Parker attorneys have extensive experience working with dental practices around the country to develop and implement an effective compliance program.  Part of this process includes the performance of a “GAP Analysis” to determine whether the practices current practices are consistent with applicable regulatory and contractual requirements.  If deficiencies are identified, remedial steps can then be taken to bring the practice back into compliance.

Is your dental practice being audited by DentaQuest, Delta Dental or Cigna?  If so, give us a call.  We can help.  A number of Liles Parker attorneys are experienced defending dental practices in Medicaid and private payor audits.  Moreover, these attorneys are both experienced health lawyers AND Certified Professional Coders (CPCs).  For a free consultation, please give us a call:  1 (800) 475-1906.

[1] Each of these plans qualify as “health care benefit programs” as defined by 18 USC § 24(b).

[2] Ecclesiastes 1:9 reads, in part “What has been is what will be, and what has been done will be done again. There is nothing new under the sun.”

[3] Are Your Providers Properly Credentialed with Each Payor?  How long does it take for the payor to credential a new dentist?  Once a new dentist is approved, will the payor cover dental claims back to the submission date of credentialing package?   We are seeing a huge rise in the number of overpayments based on failure to credential.  A detailed discussion of this credentialing issue is discussed in an article entitled: “The Dangers of Billing Payors for the Services of a Non-Credentialed Dentist / Non-Participating Dentist.”

[4] Under the Fifth Amendment of the Constitution, a criminal defendant in a Federal case has a constitutional right to be indicted by a Grand Jury.  An Information is typically used by the government when a defendant voluntarily pleads guilty (typically after entering into plea bargain negotiations with the government).

[5] Notably, the defendant practice administrator has not entered a guilty plea and is scheduled to be tried in December 2019.

[6] 65 Fed. Reg. 59434. (October 5, 2000).

[7] 65 Fed. Reg. 59434, 59435.

[8] A copy of the Affordable Care Act can be found at the following link:  https://www.govinfo.gov/content/pkg/PLAW-111publ148/pdf/PLAW-111publ148.pdf

[9]See “Measuring Compliance Program Effectiveness – A Resource Guide.” 

[10] Generally speaking, traditional Medicare does not cover most routine dental care procedures, such as cleanings, fillings, tooth extractions, dentures, or other common dental procedures. Under certain circumstances, Medicare Part A may cover dental services that are needed in connection with the provision of a covered Part A service (e.g. an operation your jaw).  Additionally, some Medicare Advantage are now starting to cover a limited scope of routine dental procedures.

What is the CMS Preclusion List? What is the Difference Between an Exclusion and a Preclusion Action? How Can You Appeal a CMS Preclusion Action?

(October 8, 2019):  On April 16th, 2018, the Department of Health & Human Services (HHS), Centers for Medicare and Medicaid Services (CMS), issued a Final Rule entitled, “Medicare Program; Contract Year 2019 Policy and Technical Changes to the Medicare Advantage, Medicare Cost Plan, Medicare Fee-for-Service, the Medicare Prescription Drug Benefit Programs, and the PACE Program.” [1] This 300+ page issuance revised the Medicare Advantage program (Part C) regulations, along with the Prescription Drug Benefit program (Part D) regulations, in order to implement portions of the Comprehensive Addiction and Recovery Act (CARA).  Among its various provisions, the Final Rule also served to rescind existing regulations that required prescribers of Part D drugs and providers of Medicare Advantage services and items to enroll in Medicare Fee-for-Service in order for the Part D drug or Medicare Advantage service or item to qualify for coverage and payment.[2]  In lieu of the enrollment requirements, CMS now requires that a Part D plan sponsor reject a pharmacy claim for a Part D drug if the provider prescribing the drug is included on a “Preclusion List.” Similarly, if a health care provider or supplier is listed on the preclusion list, no services furnished (or items supplied) by that individual or entity will be covered by Medicare Advantage.  At the time, CMS estimated that these changes would reduce program costs by $34.4 million in 2019.

A year to the day after publishing the Final Rule covering the Preclusion List, CMS published a Final Rule revising the Medicare Advantage (Part C) and Prescription Drug Benefit Program (Part D) regulations[3] on April 16, 2019.  The April 2019 Final Rule made a number of revisions to the Preclusion List provisions set out in the April 2018 Final Rule.  This article examines the CMS Preclusion List in more detail and examines the impact of a provider, supplier and / or prescriber being placed on the list.

I.  What is the CMS Preclusion List?

Simply stated, the CMS preclusion list is a register of all health care providers, suppliers, and prescribers who are precluded from receiving reimbursement for Medicare Advantage items and services or Part D drugs that are provided or prescribed to Medicare beneficiaries. CMS has established the preclusion list in an effort to better ensure patient safety and to protect the integrity of the Medicare Trust Funds from the actions of providers and prescribers that have been identified as “bad actors.”

CMS is responsible for maintaining the Preclusion List. The list is made available to Medicare Advantage and Part D payor plans.  If a Medicare Advantage receives a claim for a health care item or service that was furnished by a precluded party, the claim will be denied. Similarly, if a Part D payor plan receives a claim for reimbursement from a pharmacy or Medicare beneficiary that is related to a drug that was prescribed by a precluded individual, the claim will be denied.

II.  What is the Difference Between an “OIG Exclusion” and a “CMS Preclusion” Action?

While based on completely different statutes, both the exclusion and preclusion regulations are intended to protect that safety of Medicare, Medicare and Federal health care beneficiaries AND help safeguard the financial integrity of Federal and State health care programs.  What is the difference between the two programs?

• Medicare OIG Exclusion. The OIG is responsible for administering the various mandatory and permissive exclusion authorities that have been enacted.  If a health care provider, supplier or other entity is “excluded” from participation in the Medicare or Medicaid programs, the excluded party cannot provide care or services to Medicare and / or Medicaid beneficiaries. Moreover, an excluded party cannot work for a participating provider. Nor can an excluded party serve as an agent, contractor, or vendor for a participating provider or supplier. In my opinion, the definitive analysis of the OIG’s exclusion regulations is covered in Paul Weidenfeld’s article entitled, “Federal Exclusion Regulations and Enforcement Authorities, and How Providers Can Avoid Risk with Proper Exclusion Screening.” [4]

Broadly speaking, an individual or entity is typically excluded from participation in the Medicare or Medicaid programs due to a criminal conviction, the abuse of a patient, and / or an adverse licensure sanction. In contrast with the preclusion regulations set out the updated Final Rule dated April 16, 2019,[5] the exclusion regulations were first mandated by Congress in 1977 as part of the “Medicare-Medicaid Anti-Fraud and Abuse Amendments, Public Law 95-142.”

If an individual or entity (typically a health care provider, supplier) is excluded from Medicare or Medicare, the identity of the excluded party is posted online and is publicly available on the on OIG’s “List of Excluded Individuals/Entities” (LEIE) and / or one the 41 State Medicaid exclusion databases that are currently maintained around the country. Finally, the effect of an exclusion action applies across the board. It applies to services and items covered by traditional Medicare program, Medicare Advantage (Part C), and Part D drug plans.

• Medicare CMS Preclusion. In contrast to the Medicare exclusion authorities which are administered by the OIG, the Medicare preclusion authorities are managed by CMS.  As described in Section III below, Medicare preclusion actions are typically revocation-based or conduct / behavior-based actions that effectively bar Medicare Part C and Part D plans from making payments to any individuals or entities that have been placed on the CMS preclusion list. Unlike the 43 Federal and State exclusion databases which are publicly accessible, the CMS preclusion database is only available Medicare Advantage (Part C) and Part D payor plans have with a valid Health Plan ID been granted access to the preclusion database by CMS.

III.  How are Individuals and Entities Added to the CMS Preclusion List?

Individuals and entities added to the Preclusion List fall within two broad categories. These categories are examined in more detail below:

Category #1: Preclusion List – Revocation Based:  Under this category, health care providers, suppliers, and prescribers can be placed on the Preclusion List if:

• • The Medicare billing privileges of an individual or entity are currently revoked under 42 CFR §424.535; and
  • There is an active reenrollment bar in effect under 42 CFR §424.535(c); and
  • CMS has determined that the underlying conduct that led to the revocation is detrimental to the best interests of the Medicare program. In making this determination, CMS is to consider the following factors:
    • The seriousness of the conduct underlying the individual’s or entity’s revocation.
    • The degree to which the individual’s or entity’s conduct could affect the integrity of the Part D or MA program.
    • Any other evidence that CMS deems relevant to its determination;

If these three revocation-related requirements have been met, CMS may place a health care provider, supplier, or prescriber on the agency’s Preclusion List.

 OR

Category #2: Preclusion List – Conduct / Behavior Based:  Under this category, health care providers, suppliers, and prescribers can be placed on the Preclusion List if:

• • The individual or entity has engaged in behavior for which CMS could have revoked the individual or entity to the extent applicable, if they had been enrolled in Medicare; and
  • CMS determines that the underlying conduct that would have led to the revocation is detrimental to the best interests of the Medicare program. In making this determination under this paragraph, CMS considers the following factors:
    • The seriousness of the conduct underlying the individual’s or entity’s revocation.
    • The degree to which the individual’s or entity’s conduct could affect the integrity of the Part D or MA program.
    • Any other evidence that CMS deems relevant to its determination.

It is also important to keep in mind that CMS significantly expanded the bases for revoking a provider’s, supplier’s. or prescriber’s Medicare billing privileges under 42 CFR § 424.535(a)   As discussed in a recent article examining the Final Rule entitled, “Medicare, Medicaid, and Children’s Health Insurance Programs; Program Integrity Enhancements to the Provider Enrollment Process,” the revised reasons for revocation that may be asserted by the government will be effective November 4, 2019.[6]

As a final point in this regard, please note that OIG Exclusions and felony convictions will also result in an individual or entity being placed on the CMS Preclusion List.

IV.  How Will an Individual or Entity Learn of Their Inclusion on the CMS Preclusion List?

When placing an individual or entity on the Preclusion List, CMS (through one of its Medicare Administrative Contractors (MAC)) is supposed to send written notice to the party.  The MAC will send the letter to the address listed in the Provider Enrollment Chain and Ownership System (PECOS) system.  The effective date of the preclusion action, along with reason(s) an individual or entity has been added to the list is required to be included in the letter. Additionally, the notice letter is supposed to provide information advising the individual or entity of their right to appeal their inclusion on the list.[7]

V.  How Long Can a Provider, Supplier, or Prescriber Stay on the CMS Preclusion List?

If a provider, supplier, or prescriber exhausts their first level of administrative appeal (either due to the fact that no appeal was filed in a timely fashion[8] OR CMS denied the appellant’s request for reconsideration), CMS will add the individual or entity’s name to the Preclusion List.  Please note, if the preclusion action has been taken due to the fact that the provider, supplier, or prescriber has been excluded from participation in Federal and State programs, the individual or entity will be placed on the CMS Preclusion List effective the date of the party’s exclusion. The length of time that an individual or entity will remain actively precluded will depend on the following:

• Length of Preclusion if Based on an Exclusion Action. If a provider, supplier, or prescriber is placed on the CMS Preclusion List due to the fact the individual or entity has been excluded from participation in Federal and State health care programs, the party will remain actively precluded for at least until the excluded party has been reinstated by the OIG.

• Length of Preclusion if Based on a Revocation Action. If a provider, supplier, or prescriber is placed on the CMS preclusion list due to the fact that the individual or entity is currently revoked (or would have been revoked had they enrolled in the Medicare program), the individual or entity will remain actively precluded for the length of their re-enrollment bar. The length of a re-enrollment bar ranges from 1 to 3 years, depending the seriousness of the reason for revocation.

• Length of Preclusion if Based on a Felony Conviction. If a provider, supplier, or prescriber is placed in the CMS preclusion list due to a felony conviction, the length of the preclusion will remain in effect for a 10-year period, beginning on the date of the felony conviction, unless CMS determines that a shorter time period is warranted (effective January 1, 2020).

Importantly, at the expiration of a preclusion action, a precluded party’s name is NOT totally removed from the CMS Preclusion List.  As set out in April 2019 Final Rule, once a precluded party is reinstated, the party’s name will remain on the preclusion database list, but will be annotated to reflect the fact that the provider, supplier or prescriber has been reinstated.  Once reinstated, the individual or entity may again submit claims for services and items to Medicare Advantage (Part C)) plans, and / or issue prescriptions for Part D drugs.

VI.  Can an Individual or Entity Participating in the Medicare Program “Screen” to Ensure that Precluded Parties Aren’t Hired?

Unfortunately, Medicare providers and suppliers do not have access to the CMS Preclusion List.  Only CMS approved Medicare Advantage (Part C) and Part D payor plans have with a valid Health Plan ID been granted access to the preclusion database.  As CMS notes:

“CMS makes the Preclusion List available to the Medicare Advantage (MA) plans and Part D plans. MA [Medicare Advantage] plans will deny payment for a health care item or service furnished by an individual or entity on the Preclusion List. Part D plans will reject a pharmacy claim (or deny a beneficiary request for reimbursement) for a Part D drug that is prescribed by an individual on the Preclusion List.”[9]

Under 42 CFR § 422.204(b),  a Medicare Advantage organization is required to establish and comply with a comprehensive set of written credentialing and recredentialing requirements.  The credentialing process is intended to serve as the initial set of program integrity safeguards used by Part C and Part D payor plans to prevent bad actors from enrolling in the programs.  Unfortunately, this system is imperfect at best.  More often than not, the credentialing of a newly-hired provider, supplier or prescriber is not requested by a participating health care organization prior to the organization’s employment of the newly-hired party.  Notably, it is entirely possible that an individual may have been placed on the CMS Preclusion List due to his or her improper conduct or behavior (as described in Category #2 above), yet may not have been excluded from participation in Federal health care programs by the OIG.  Therefore, even assuming that your organization properly screens its applicants against all available Federal and State exclusion lists prior to extending an offer of employment, it is still possible that you may unknowingly employ or enter a contract with a precluded individual or entity.  We strongly recommend that your organization conduct proper due diligence before employing or contracting with a provider, supplier or prescriber.  Should you inadvertently hire, or continue to employ, an individual who is precluded from providing services or items that will be billed to Medicare Advantage (Part C) plans, or issue prescriptions that will be billed to a Medicare Part D plan, those claims will be denied.

VII.  How Do You Appeal a CMS Preclusion Action?

To establish the administrative framework to appeal a CMS preclusion action, CMS revised 42 CFR § 498.3(b), adding a new provision, Section (20), which made the decision to place an individual or entity on the Preclusion List an “Initial Determination” for appeal purposes.  CMS further modified 42 CFR § 498.5, adding paragraph (n)(1).  Under 42 CFR § 498.5(n)(1):

“Any individual or entity that is dissatisfied with an initial determination or revised initial determination that they are to be included on the preclusion list (as defined in § 422.2 or § 423.100 of this chapter) may request a reconsideration in accordance with § 498.22(a).”  (emphasis added).

If an individual or entity files a Request for Reconsideration and is dissatisfied with the decision, the individual or entity can seek a hearing before an Administration Law Judge (ALJ).[10]  After an ALJ renders a hearing decision, either party (CMS or the individual / entity on the Preclusion List) may request Departmental Appeals Board review.  Additionally, the individual or entity may also seek judicial review of the Department Appeals Board’s decision.[11]  For additional background information on the preclusion list, you may wish to review a recorded webinar presentation we made for the Texas Association for Home Care and Hospice.

Have you been placed on the CMS Preclusion List? Although the CMS Preclusion List has only been in place a short time, a number of Liles Parker attorneys have already handled (or, are in the process of handling) preclusion appeal cases. Our experienced health law attorneys can advise you on how to best respond to this challenge and represent you throughout the complex appeal process that has been established. For a free initial consultation regarding your situation, call us at: 1 (800) 475-1906.

[1] 83 FR 16440 (April 16, 2018).

[2] Institutional providers and suppliers must still be enrolled in Medicare Fee-for-Services.  Additionally, as part of their credentialing requirements, some Medicare Advantage plans may require that a provider or supplier be enrolled in the Medicare Fee-for-Service program.

[3] “Medicare and Medicaid Programs; Policy and Technical Changes to the Medicare Advantage, Medicare Prescription Drug Benefit, Programs of All-Inclusive Care for the Elderly (PACE), Medicaid Fee-For-Service, and Medicaid Managed Care Programs for Years 2020 and 2021.”  84 FR 15680.  (April 16, 2019).

[4] Part I of the article “Federal Exclusion Regulations and Enforcement Authorities, and How Provider’s Can Avoid Risk with Proper Exclusion Screening,” is in the process of being published in a series part series by the folks at Exclusion Screening.

[5] 84 FR 15680.

[6] See article entitled “Medicare, Medicaid and CHIP Enrollment Revocation and Denial Authorities Have Expanded.  What Steps are You Taking to Reduce Your Level of Risk? (September 18, 2019).

[7] An example of the letter sent to a revocation-based precluded party can be found at:

https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/MedicareProviderSupEnroll/Downloads/Preclusion_List_Model_Letter-Revoked_With_Active_Enrollment_Bar.pdf

An example of the letter sent to a conduct / behavior-based precluded party can be found at:

https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/MedicareProviderSupEnroll/Downloads/Preclusion_List_Model_Letter-Could_Have_Been_Revoked.pdf

[8] This would occur upon the expiration of the 60-day period in which a provider, supplier or prescriber has to file a reconsideration appeal to the proposed preclusion action. See 84 FR 15680, 15781.

[9] See CMS “Preclusion List Frequently Asked Questions.”  Updated 08/07/2019.

[10] 42 CFR § 498.5(n)(2).   Notably, CMS may also seek a hearing before an ALJ if it is dissatisfied with the reconsideration decision.

[11] 42 CFR § 498.5(n)(3).

OIG Has Identified Common Errors by High-Risk Home Health Agencies.  Does Your Home Health Agency Have These Documentation Problems?

(September 30, 2019):  On September 5, 2019, the Department of Health & Human Services (HHS), Office of Inspector General (OIG) published an HHS-OIG Data Brief entitled “The Centers for Medicare & Medicaid Services Could Use Comprehensive Error Rate Testing Data To Identify High-Risk Home Health Agencies.”[1]  The purpose of OIG’s review was two-fold:  First, OIG examined the results of “high-risk” home health claims reviews conducted by Comprehensive Error Rate Testing (CERT) contractors during the Fiscal Years (FY) 2014 through 2017 and identified the most common types of errors that resulted in claims denials.  Second, OIG wanted to identify factors that can be used to more readily identify high-risk home health agencies, reduce improper payments and ultimately reduce the home health CERT error rate. The purpose of this article is to examine the common types of home health claims errors identified by CERT contractors and discuss steps that your agency should take when responding to a CERT audit request.

I.  Overview of the CERT Audit Program:

In 1996, the OIG first measured the improper payment rate for traditional Medicare, Fee-for-Service (FFS) claims on a nationwide basis.  The OIG continued to estimate the Medicare FFS improper error rate until 2002.  In 2003, the Centers for Medicare & Medicaid Services (CMS) took over responsibility for handling these measurements.  To do so, CMS implemented the Comprehensive Error Rate Testing (CERT) program.

The CERT program was designed to measure improper payments made under the Medicare FFS program and comply with the Improper Payments Information Act (IPIA).^[2] What is considered to be an improper claim?  CERT contractors are specifically tasked with the review of a sample of Part A and Part B claims that have been paid by a Medicare Administrative Contractor (MAC) or a Durable Medical Equipment (DME) MAC.

After pulling a sample of paid Medicare FFS claims, the CERT contractor will then contact the responsible health care provider or supplier and request a copy of the medical documentation associated with the claim at issue.  Upon receipt, the CERT contractor will then audit the claim to determine whether it was correctly paid by the responsible MAC or DME MAC. If the MAC or DME MAC should have denied a claim or paid the claim at a different amount, the claim is considered to be an improper payment.  Each year, CERT contractors review approximately 50,000 Medicare FFS claims.  Based on their findings, a national improper payment rate is calculated.

II.  CERT Audits of Home Health Medicare Claims:

During the period FY 2014 through FY 2017, CERT auditors found that improper payment rates of Medicare FFS claims paid to home health agencies has significantly decreased, from 51% error rate in FY 2014 to 32% error rate in FY 2017.

Estimates of Improper Home Health Agency Payments as Reported by Comprehensive Error Rate Testing

III.  The OIG Analysis of CERT Home Health Error Data:

Despite the fact that significant progress by home health agencies has been made, CERT auditors calculated that as of FY 2017, approximately 32% of the Medicare FFS payments made to home health agencies were improper. This error rate is more than three times higher than the overall national improper payment rate of 9.51%.[3]

With the CERT contractor’s findings in mind, the OIG conducted an analysis of the CERT audit results in an effort to identify “high-risk HHAs with high rates of improper payments as well as the common types of errors that caused improperly paid claims.” [4]

As the OIG report notes, there is no definitive list of high-risk HHAs. Therefore, the OIG assembled a list of home health agencies that have had three or more improperly paid claims (as identified by CERT auditors) during the period FY 2014 through FY 2017.

IV.  What Were the OIG’s Findings with Respect to High-Risk Home Health Agencies?

Upon review of the CERT audit findings, the OIG estimated that from FY 2014 through FY 2017, more than $4 billion was paid to high-risk home health agencies.  More significantly, OIG estimates that during this same period, 78% of the CERT-reviewed payments made to high-risk home health agencies were improper.  As the chart below reflects, from FY 2014 to FY 2017, the improper error rate of high-risk home health agencies declined from a high of 81.2% to a low of 72.0%.  Nevertheless, it is important to remember that the error rate for high-risk home health agencies remains more than twice the overall error rate for all home health agencies.

The 87 High-Risk Home Health Agencies’ Error Rate Compared With the Home Health Agency National Error Rate

V.  Primary Claims Errors of High-Risk Home Health Agencies:

Overall, OIG found that more than 90% of the CERT audit denials of high-risk home health agencies were based on “insufficient documentation.”  The primary documentation errors noted included the following:

• • 49% of Face-to-Face Evaluations Did Not Meet Medicare Documentation Guidelines. As Palmetto GBA (the MAC for Texas-based home health agencies) has noted, the most common face-to-face documentation deficiencies identified by CERT auditors included the fact that (1) the documentation was insufficient to show that the physician-patient encounter was related to the primary reason for home care, (2) the documentation was insufficient to show how the patient’s condition supports the patient’s homebound status, and / or (3) the documentation was insufficient to show how a patient’s condition supports the need for skilled services.

• • 16% of Physician Certification and Recertification Requirements Have Not be Properly Documented. Under 42 CFR 424.22(a)(1), a physician must certify that a patient is eligible for Medicare home health services.  The contents of a proper certification must reflect that (1) the individual needs or needed intermittent skilled nursing care or physical therapy or speech-language pathology services, (2) the individual is confined to the home except when receiving outpatient services, (3) a plan for furnishing services has been established and will be or was periodically reviewed by an eligible physician, (4) a face-to-face patient encounter, related to the primary reason the patient requires home health services, occurred no more than 90 days prior to the home health start of care or within 30 days of the start of care.  Additionally, the face-to-face encounter must be conducted by a physician, nurse practitioner, certified nurse specialist, certified nurse midwife or a physician assistant (as described in 42 CFR 424.22(a)(1)(v)(A) through (B)).

Additional documentation errors included:

• 9% of Orders were improperly documented or were missing.
• 9% of Outcome and Assessment Information was not in the OASIS repository or the patient’s medical records.
• 5% of Plans of Care were not properly documented or were missing.
• 4% of Progress Notes were not fully documented to support a billed date of service by specific specialists or were missing.
• 8% Other documentation deficiencies.

VI.  Comments from CMS:

Although CMS acknowledged that home health claims remain problematic, the agency took issue with the OIG’s findings. As the agency wrote:

“CMS does not believe this methodology for identifying error-prone HHAs is valid. The CERT program calculates the improper payment rate for the entire Medicare Fee-for-Service program by evaluating a statistically valid stratified random sample of claims to determine if they were paid properly under Medicare coverage, coding, and billing rules. . . However, the service-type improper payment rates do not have similar precision requirements and therefore CERT data is not precise at the provider level.”  (emphasis added).

Regardless of whether you side with the OIG or with CMS, there is no dispute that overall, home health agency documentation remains incomplete and / or missing 32.2% of the time.  Unfortunately, home health agencies in Ohio, Illinois, Texas, North Carolina and Florida (Review Choice Demonstration Project states), are especially vulnerable as the project ramps up in these states.

VII.  Recommendations for Home Health Agencies:

Home health agencies around the country remain under the microscope.  Agency claims are being subjected to Target, Probe & Educate (TPE) audits, Additional Documentation Requests (ADRs), Prepayment Review and Postpayment Audit.  Implementation of the Review Choice Demonstration Project in the five states above further adds to the significant audit risks already faced by home health agencies in these states.

Now, more than ever before, it is imperative that home health agencies conduct periodic internal reviews of their documentation practices to ensure that they are meeting the myriad requirements that have been established by CMS in order for home health claims to qualify for coverage and payment.   Moreover, it is important to keep in mind that there are multiple government contractors that may audit your home health agency at any time.  The following chart provides an overview of the current home health audit landscape.

As a participating provider in the Medicare program, a home health agency is required to have an effective Compliance Program in place.  One of the seven elements of your Compliance Program includes “Monitoring, Auditing and Internal Reporting Systems.”  If you have not already done so, your home health agency needs to periodically conduct internal audits and reviews to better ensure that physicians, nurse practitioners, therapists and staff are properly documenting their services in a compliant fashion.

Liles Parker attorneys have extensive experience representing home health agencies around the country in connection with claims audits by OIG, UPICs, MACs and other CMS contractors.  Notably, many of our health lawyers are also Certified Professional Coders (CPCs) and / or Certified Medical Reimbursement Specialists (CMRSs).  Give us a call if your home health agency is audited, WE CAN HELP. Questions?  Give us a call.  For a free consultation, we can be reached at:  1 (800) 475-1906.

[1] Department of Health & Human Services, Office of the Inspector General, HHS OIG Data Brief, A-05-17-00035, entitled “The Centers for Medicare & Medicaid Services Could Use Comprehensive Error Rate Testing Data to Identify High-Risk Home Health Agencies.”  (August 2019).

[2] The IPIA was later amended by the Improper Payments Elimination and Recovery Act (IPERA) of 2010 and the Improper Payments Elimination and Recovery Improvement Act (IPERIA) of 2012.

[3] See https://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/CERT/

[4] Data Brief:  Analysis of Home Health CERT Data (A-05-17-00035).  Page 3.

A Civil Investigative Demand Issued to You or Your Medical Practice is Serious Business. Understand Your Level of Risk Before Responding to the Government’s Investigation

(September 17, 2019): The False Claims Act (31 U.S.C. §§ 3729-3733) is the primary civil enforcement tool relied on by the Federal government. It has a long and storied history, going back all the way to the Civil War.[1]  Prior to 1986, the statute was only infrequently utilized by law enforcement. That changed with the enactment of the “False Claims Amendments Act of 1986.”[2]  Among its many changes, the 1986 Amendments Act authorized the Attorney General to issue Civil Investigative Demands in connection with the investigation of False Claims Act cases.  Over the years, Civil Investigative Demands have greatly bolstered the effectiveness of the government’s ability to examine alleged violations of the False Claims Act.[3]

In 2009, Congress further expanded the use of Civil Investigative Demands when it passed the “Fraud Enforcement and Recovery Act of 2009”[4] (FERA).  Among its various provisions, FERA authorized the Attorney General to delegate his authority to issue Civil Investigative Demands to other Department of Justice (DOJ) officials. The Attorney General subsequently issued a directive in 2010 which delegated his authority to issue Civil Investigative Demands to the Assistant Attorney General for the Civil Division.  This directive also permitted the Assistant Attorney General for the Civil Division to redelegate the authority to issue Civil Investigative Demands to other DOJ Officials, including United States Attorneys.[5]

From a practical standpoint, the redelegation of authority to issue Civil Investigative Demands from the Office of the Attorney General to the 94 United States Attorneys Offices has greatly expanded the issuance of Civil Investigative Demands around the country.  This article examines the government’s use of Civil Investigative Demands as an investigative tool and discusses the steps you should take if the government issues one to you or your health care organization.

[For additional guidance on the risks presented when dealing with parallel civil and criminal investigations, you may wish to review our article titled “Have You Received a Civil Investigative Demand (CID)? How Should a Health Care Provider or Supplier Respond When Receiving a Civil Investigative Demand?]

I.  What is a Civil Investigative Demand?

A Civil Investigative Demand is essentially a judicially enforceable administrative subpoena[6] that can be issued by a Federal prosecutor to obtain documentary materials and other information that may be in your possession, custody or control that the government believes may be relevant to an investigation of possible violations of the False Claims Act.  A Civil Investigative Demand is only issued in connection with an ongoing False Claims Act investigation.

When issued to you or your medical practice, this investigative tool can be used to require that the subject (recipient individual or entity) of a Civil Investigative Demand:

• Produce such documentary material for inspection and copying,
• Answer in writing written interrogatories with respect to such documentary material or information,
• Give oral testimony concerning such documentary material or information,[7] or
• Furnish any combination of such material, answers, or testimony.

II.  Are You or Your Medical Practice the Target of False Claims Act Investigation?

If you are sent a Civil Investigative Demand, it doesn’t necessarily mean that you are believed to have violated the False Claims Act. It’s possible that a Federal prosecutor believes that you are a mere witness or a custodian of the records or other information that is relevant to the government’s False Claims Act investigation.  If you are the subject or target of a False Claims Act investigation, it is quite common for the Assistant U.S. Attorney handing the matter to clearly identify you or your medical practice as such when issuing a Civil Investigative Demand. While the language utilized by the government may vary from case to case, letters sent to physicians and other health care providers / suppliers will typically state something along the lines of:

“This False Claims Act investigation concerns allegations that you, your medical practice, your employees, contractors, and agents, as well as other individuals or entities violated or conspired to violate the False Claims Act by submitting claims to Federal health benefit program for which you were not entitled to receive payment.”

After investigating suspected violations of the False Claims Act, the Attorney General (through his or her designee) may either bring a civil suit for violations of the False Claims Act OR elect to intervene in a qui tam case that has been brought by a private party.   Importantly, once the government either files a False Claims Act complaint or intervenes in a qui tam that has been filed, it loses its authority to issue a Civil Investigative Demand.[8]

III.  Do I have to Comply with the Requirements Set Out in a Civil Investigative Demand?

The evidence sought by a Civil Investigative Demand may be quite extensive and will likely include demands for documentary materials, electronic records and written responses to interrogatories.  Unfortunately, it may be quite costly and time-consuming for you to assemble the information requested and fully comply with the specifications set out in a Civil Investigative Demand.  Should you fail to comply with a Civil Investigative Demand, the government will likely file a petition in Federal District Court seeking judicial enforcement of the request.[9] As the government’s utilization of Civil Investigative Demands has increased, we have seen a number of challenges raised by recipients.

In one recent case, Federal prosecutors issued a Civil Investigative Demand in connection with their investigation of whether a physician had violated the Anti-Kickback Statute and Stark (which, depending on the facts, may also constitute a violation of the civil False Claims Act).[10]  The respondent recipient of the Civil Investigative Demand, a California-based orthopaedic surgeon, refused to comply with the government’s request, arguing that the DOJ lacked the authority to enforce the Civil Investigative Demand due to the fact that the government’s had allegedly entered into settlement communications with a related party.  Essentially, the respondent argued that the government’s settlement discussions with a related party constituted a determination that a basis for the physician respondent’s liability was present.  Therefore, the respondent physician took the position that the government had an obligation to move forward with litigation rather than continue to investigate.  In this case, since the government had not yet initiated a civil action and had not made an election related to actual qui tam litigation, the District Court that the Civil Investigative Demand should be enforced.

IV.  Risks Presented in Parallel Civil and Criminal Investigations of Your Conduct:

Although the issuance of a Civil Investigative Demand is reflective of the fact that a civil False Claims Act investigation is underway, it is important to keep in mind that the government may also have an open, ongoing criminal investigation related to the conduct that is under review. In recent years, this has become quite common, due in large part to more effective coordination efforts between civil litigators and criminal prosecutors in U.S. Attorneys Offices around the country.

It is the policy of the DOJ that its components (including U.S. Attorney’s Offices) employ a coordinated approach to litigating affirmative matters from the initial intake, throughout the investigation and to resolution.[11] DOJ requires “early, effective and regular communication” between all of its litigating components in order that it considers all potential remedies. Consultation between the Department’s civil and criminal attorneys, together with agency attorneys, are promoted to permit consideration of the fullest range of the government’s potential remedies and promotes the most thorough and appropriate resolution in each case. (criminal, civil, regulatory or administrative).

In some instances, concurrent criminal and civil investigations of individual misconduct are pursued. When this occurs, it is DOJ policy for the litigating components to coordinate the investigation and potential resolutions among themselves and with other stakeholders to the extent that the law permits. For example, criminal Assistant U.S. Attorneys are encouraged to use Administrative Investigative Demand (AID) subpoenas instead of Grand Jury subpoenas so that information obtained can be freely shared with their civil counterparts.  Similarly, civil Assistant U.S. Attorneys are required to share the information they obtain in response to Civil Investigative Demands and / or qui tam investigation with their criminal colleagues. Coordination is extended to all aspects of the investigation including consideration as to the apportionment of fines, penalties and/or forfeitures and the avoidance of the duplicative fines, penalties and/or forfeiture in its resolution. Parallel actions are also intended to facilitate the Department’s efforts to hold individuals as well as corporations accountable for malfeasance.

As earlier discussed, the fact that you are the recipient of a Civil Investigative Demand does not necessarily mean that you are the target of a government False Claims Act investigation. Instead, you may be considered a subject of the government’s False Claims Act investigation. Finally, you may be a mere witness.  Ultimately, a Federal prosecutor may choose to issue a Civil Investigative Demand if he or she believes that you have documentation or other materials that are relevant to the government’s investigation of possible violations of the False Claims Act.

A Civil Investigative Demand cannot be issued to investigation allegations that are solely criminal in nature (for example, the fraudulent billing of health care services to a private payor).  However, if a bona fide investigation of possible civil false claims is present, this tool can be used to investigation potential False Claims Act violations and other conduct that may constitute a violation of criminal law. In light of the nature of parallel proceedings, there are a number of risks that you should take into account when responding to a Civil Investigative Demand.  Several of these risks include:

• Federal Anti-Kickback Statute (42 U.S.C. 1320a-7b(b)).  The Federal Anti-Kickback Statute[12] makes it a crime to knowingly and willfully offer, pay, solicit, or receive remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to purposefully induce or reward referrals of items or services payable by a federal health care program. Simply put, it is against the law to pay or provide anything of value in an effort to induce referrals or business related to a federal health care program.  While for many years the Federal Anti-Kickback Statute and the civil False Claims Act were long viewed as separate and distinct enforcement tools, over the past 20 years, the enforcement landscape has slowly changed. Starting in the early 1990’s, whistleblowers began asserting violations of the False Claims Act in cases that would typically be pursued as a criminal anti-kickback violation.  These cases often involved fact patterns where a party was alleged to have violated the Anti-Kickback Statute and, in the process, billed for services that were allegedly medically unnecessary (or, in some instances, worthless) and made a false express and / or implied certification to the Medicare or Medicaid program.  The 2010 passage of the Affordable Care Act (ACA) obviated the need to bootstrap a violation of the Anti-Kickback Statute into a violation of the civil False Claims Act.  Under the ACA, a claim submitted in violation of the Federal Anti-Kickback Statute now automatically constitutes a false claim for purposes of the civil False Claims Act.   Providers need to keep in mind that even though a kickback violation may also be pursued under the False Claims Act, that does not preclude the government from prosecuting individuals and entities for violations of the Anti-Kickback Statute.

• False Statements Involving Health Care Programs (18 U.S.C. § 1035). Several examples we have seen have involved the (a) the misrepresentation of the provider of a medical service, (b) the misrepresentation of a non-covered service, and / or (c) the billing of services performed by unlicensed staff. Each of these examples may give rise to criminal and / or may also be pursued under the civil False Claims Act:

• Misrepresentation of the Provider of a Service. This improper billing practice is still commonly found in both medical and dental practices around the country. In the cases we have seen, “fraud” wasn’t the reason for the underlying misrepresentation on the CMS 1500 Claims form. In most instances, it was merely a matter of a credentialing delay.  Although we have not seen a misrepresentation case of this type referred for criminal prosecution, it is important to remember that both CMS 1500s and ADA Dental Claim Forms Claims forms are typically electronically submitted to the health plan for payment.  Depending on the facts, an aggressive prosecutor could argue that such conduct constitutes a criminal false statement under 18 U.S.C. § 1035 or even wire fraud under 18 U.S.C. §1343.

• Misrepresentation of a Non-Coverage Service. This type of improper billing practices occurs when a medical or dental practice has mischaracterizes a non-covered service as a covered service. Keep in mind, the definition of a non-covered service varies from payor to payor. Additionally, the list of non-covered services under a specific payor’s policy may change from year-to-year.  In any event, it is important that health care providers regularly check to ensure that the services being provided qualify for coverage and payment.

• Billing for Medical or Dental Services Performed by Unlicensed Staff. Perhaps the quickest way to get into trouble with both law enforcement and your State Medical Board or State Dental Board is to allow non-licensed individuals to provide care that may only be administered by qualified, licensed personnel. Earlier this year, the New York Attorney General’s Office announced the indictment, arrest and arraignment of a health care provider and four unlicensed individuals that the provider was permitting to perform medical related procedures on more than 100 Medicaid patients. From a false claims perspective, the billing of Medicare and / or Medicaid services by unlicensed staff would constitute the misrepresentation of the credentials of the staff member at issue and would not qualify for reimbursement.

These are only a few of the risks that you face when a government investigation of your business arrangements, and billing / coding practices is initiated. When responding to a Civil Investigative Demand, it isn’t merely sufficient to produce the information requested. A careful analysis of your practices needs to be conducted on the front end so that any problematic conduct can be identified and assessed. Experienced health care legal counsel can then more effectively represent you and your practice.

V.  How Should You Respond to a Civil Investigative Demand?

For the reasons set out above, we strongly recommend that you engage counsel as soon as you receive a Civil Investigative Demand.  Your attorney can then take the lead and contact the Assistant U.S. Attorney[13] handling the False Claims Act investigation. Additional steps you should take include, but are not limited to:

• Determine the nature of your involvement in the government’s investigation. Does the government consider you or your practice to be a target, a subject or a witness?  Are both civil and criminal allegations present?  If the possibility of criminal culpability has been identified, it is essential that your legal counsel advise you on any steps needed to properly safeguard your interests.

• Don’t turn what may be a civil problem into a criminal case. Steps should immediately be taken to ensure that no documentation (either paper or electronic) is destroyed, deleted or over-written. Your attorney can guide you in this document preservation process. The last thing you want to do is take an action in a civil False Claims Act investigation that might constitute a separate criminal violation (such as obstruction of justice).  Once the proverbial fog lifts, your attorney will likely be able advise you whether it is permissible to resume getting rid of documents that have no bearing on the government’s case.
• Have experienced health law counsel handle scope and timing negotiations with the government. Civil Investigative Demands are often excessively broad in scope and typically request large numbers of medical or dental records and claims information.  Moreover, under the statute you have very little time to produce the materials being sought by a Civil Investigative Demand. Your attorney will likely try and work with the government attorney handling the investigation to obtain an extension of time in which to submit the requested documents.[14]  Your attorney will also try and work with the government attorney to see if the scope can be narrowed (at least at first).  Finally, your attorney will want to try negotiate for the documents and information to be produced to be submitted on a “rolling” basis.
• Diligently work to identify and address the government’s concerns. It has been our experience that most Assistant U.S. Attorneys are willing to engage (at least in a limited fashion) in a discussion regarding the nature of the government’s concerns. This information can be crucial in assessing the conduct, responding to the government’s concerns, and, if necessary, preparing your defense(s) in the case. Keep in mind, at this point, the government hasn’t filed a False Claims Act complaint and hasn’t intervened in the whistleblower’s case (to the extent that one exists).  Now is the time to do your very best to analyze the facts and respond to the allegations presented.

• Take care before “Certifying” your responses under the Civil Investigative Demand. As required under 31 U.S.C. § 3733(f)(1), when you produce documentary materials in response to a Civil Investigative Demand, it must be made under a “Sworn Certificate.”  31 U.S.C. § 3733(f)(1), The Sworn Certificate is required to state that:

“. . . all of the documentary material required by the demand and in the possession, custody, or control of the person to whom the demand is directed has been produced and made available to the false claims law investigator identified in the demand.”[15]

As with any certification made to the government, you must exercise caution when making the representations required under 31 U.S.C. § 3733(f)(1).  Should your responses to the Civil Investigative Demand be false or misleading, the government may assert that you have made a false statement (assuming that the requisite level of intent can be shown).

As reflected by the risks discussed above, if you or your practice are the recipient of a Civil Investigative Demand, you should immediately contact a qualified health lawyer.  The issuance of a Civil Investigative Demand raises a number of complex regulatory questions that must be fully vetted.  Have you received a Civil Investigative Demand?  Give us a call for a free consultation.  1 (800) 475-1906.

Robert W. Liles serves as Managing Partner at the health law firm, Liles Parker, Attorneys and Counselors at Law.  Liles Parker attorneys represent health care providers and suppliers in connection with False Claims Act issues and investigations.  Have you received a Civil Investigative Demand?  If so, we can help.  For a free initial consultation regarding your situation, call Robert at: 1 (800) 475-1906.

[1] For additional background information on the False Claims Act, see “False Claims Act Matters and Cases — An Overview.”  

^[2] Public Law 99-562.  October 27, 1986.  Senator Charles Grassley (R-Iowa) and Representative Howard Berman (C-California) led the drive to have these amendments passed. Several of the significant changes to the statute included, but were not limited to the following:

• Permitted the government to seek treble damages.
• Revised the statute’s qui tam provisions by increasing the incentives to whistleblowers disclosing allegations of fraud under the False Claims Act.
• Conferred authority upon the Attorney General to issue Civil Investigative Demands (CIDs) in connection with the investigation of False Claims Act investigations.

[3] Last Fiscal Year (FY 2018), the Federal government won or negotiated more than $2.8 billion in judgments and settlements under the False Claims Act. Of the $2.8 billion in settlements and judgments recovered by the Department of Justice this past fiscal year, $2.5 billion involved the health care industry.  Although the gross recoveries were almost $600 less than what was collected in FY 2017, it is worth noting that an additional $329 million was collected in health care related cases than last year.  During FY 2018, 645 qui tam (whistleblower) cases were filed. About 87% of all new FCA matters pursued against entities involved in the healthcare industry were brought by relators.

[4] P.L.111-21 (FERA).  FERA also permitted Federal prosecutors to share information obtained under a Civil Investigative Demand with “any person” (most typically a qui tam relator)(See 31 U.S.C. § 3733(a)(1) and with Federal prosecutors conducting criminal investigations if the Attorney General or designee has reason to believe that such person may be in possession, custody, or control of any documentary material or information relevant to a False Claims law investigation.

[5] In 2010, the Attorney General signed Order No. 3134-2010 (January 15, 2010).

[6] See United States v. Markwood, 48 F.3d 969, 975-76 (6th Cir. 1995) (finding FCA CIDs are administrative subpoenas); FTC v. Invention Submission Corp., 965 F.2d 1086, 1087 (D.C. Cir. 1992) (treating FTC CID as administrative subpoena), cert. denied, 507 U.S. 910 (1993); United States v. ASG Solutions Corp., No. 17-cv-1224, 2018 WL 1418023, 2018 U.S. District LEXIS 47716 (S.D. Cal., March 22, 2018) (Report and Recommendation of Magistrate Judge) (enforcement of FCA CID governed by standards for administrative subpoenas), adopted in full, 2018 WL 3471405, 2018 U.S. Dist. LEXIS 121013 (S.D. Cal., July 18, 2018).

[7] Under a Civil Investigative Demand, the government may seek oral testimony concerning the documents and / or information that you are producing. The oral testimony is handled like a deposition, the deponent is placed under oath and a stenographic record of the proceeding is kept.

[8] For example, in the case United States v. Kernan Hospital, No. RDB-11-2961, 2012 WL 5879133, 2012 U.S. Dist. LEXIS 165688 (D. Md., Nov. 20, 2012), the district court denied the government’s Petition for Summary Enforcement based on the fact that the United States had already filed an FCA complaint in the case.  The District Court took this position even though the case had been dismissed (for failure to plead the alleged fraud with particularity) at the time the Civil Investigative Demand was issued.

[9] The scope of judicial review that is conducted by a District Court Judge when the government seeks to enforce a Civil Investigative Demand is very narrow.  As the Ninth Circuit has stated:

 “[t]he scope of the judicial inquiry in . . . any . . . agency subpoena enforcement proceeding is quite narrow. The critical questions are: (1) whether Congress has granted the authority to investigate; (2) whether procedural requirements have been followed; and (3) whether the evidence is relevant and material to the investigation.” EEOC v. Fed. Express Corp., 558 F.3d 842, 848 (9th Cir. 2009) (quoting EEOC v. Karuk Tribe Hous. Auth., 260 F.3d 1071, 1076 (9th Cir. 2001)).

[10] United States v. Picetti, No. 2:19-cv-00049 KJM AC (E.D. California)(April 29, 2019).

[11] Justice Manual Chapter 1-12.000; updated in November 2018, See also, Memorandum entitled “Coordination of Parallel Criminal, Civil, Regulatory and Administrative Proceedings,” from the Attorney General to all Litigating Divisions and All Trial Attorneys, dated January 30, 2012, found as Civil Resource Manual 228 and Criminal Resource Manual 2464.

[12] Under the Bipartisan Budget Act of 2018 (effective February 9, 2018), Criminal penalties for acts involving Federal health care programs under 42 U.S.C. § 1320a–7b, including but not limited to the Anti-Kickback Statute, were increased from $25,000 to $100,000. Additionally, the maximum sentences for felonies involving Federal health care program fraud and abuse under 42 U.S.C. § 1320a–7b, including but not limited to the Anti-Kickback Statute, were increased from five to ten years.

[13] Infrequently, we have seen prosecutors from the State Attorney General’s Office issue a CID.

[14] Pursuant to 31 U.S.C. §3733, you will only have twenty days in which to respond to a Civil Instigative Demand, unless an extension is granted by the government.  Additionally, if a request for oral testimony is being sought, you may have as little as seven days within which to respond.

[15]31 U.S.C. § 3733(f)(1)(B).

The Dangers of Billing Payors for the Services of a Non-Credentialed Dentist / Non-Participating Dentist

(August 17, 2019):  Over the last year, we have seen a significant increase in the number of Medicaid and private insurance audits of dental claims. A common trigger for these audits included instances in which a practice improperly billed for the services of a non-credentialed dentist while using the identification number of a credentialed provider.  When we discussed this billing audit issue with our dental clients, many were surprised to learn that this practice was improper. Unfortunately, billing for services performed by another dentist using your National Provider Identifier (NPI) can result in a wide range of adverse actions against you and your practice.  This article examines this issue and discusses the potential fallout of engaging in this type of conduct.

I.  What is “Credentialing” and Why is it Important?

The credentialing processes utilized by insurance companies serve as a payor’s first line of defense and are intended to protect patients, help ensure the quality of care being provided, and safeguard the financial integrity of the insurance plan. The Joint Commission describes “Credentialing” as:

“[t]he process of obtaining, verifying, and assessing the qualifications of a practitioner to provide care or services in or for a health care organization. Credentials are documented evidence of licensure, education, training, experience, or other qualifications.”[1]

It is important to keep in mind that the specific credentialing requirements and procedures used vary from one payor to another. For example, dentists who wish to enroll in their State Medicaid Program are typically required to complete multiple credentialing applications.

• State Medicaid Programs require that each dental practice obtain a provider number; and
• Each dentist who will be performing dental services on Medicaid patients must be individually credentialed and admitted as a participating provider; and
• After being admitted as a participating provider in a State Medicaid Program, a dentist must still complete separate credentialing applications in order to become a participating provider in the various Medicaid Managed Care programs that may be available in your state.

II.  What’s the Worst that Can Happen if You Improperly Bill the Services Of a Non-Credentialed Dentist / Non-Participating Dentist Under the Billing Number of a Credentialed Dentist / Participating Dentist?

Let’s consider the following common hypothetical situation: suppose you own a growing dental practice that provides dental care and treatment services to both adults and children.  You are a participating provider in the State Medicaid Program and also participate in a number of Medicaid Managed Care and private payor plans.  You recently hired a new dentist to help with your ever-growing patient caseload.  Although you are fully credentialed by each of the government and private payor insurance plans, your new dentist is still in the process of completing her credentialing applications, and you have been told that it may take 90 days (or even longer) for Medicaid, Medicaid Managed Care and private payors to review and approve the new dentist’s credentialing application.  How are you expected to bill for the dental services provided by your newly hired dentist? Can you bill for the services of a non-credentialed dentist using your provider number?  As we will discuss below, the improper billing of dental services performed by a non-credentialed provider under the provider number of a credentialed dentist can lead to administrative, civil and even criminal liability.

Administrative Sanctions:  At a minimum, if you improperly bill the dental services of a non-credentialed dentist under the name and provider number of a credentialed dentist, you should expect the payor to take the position that each of the improperly billed claims constitute an overpayment that must be repaid to the insurance company.  Unfortunately, in many of the cases we have seen and / or defended, the government and private payors have imposed additional sanctions.  In some instances, where the claims at issue have been covered by Medicaid or Medicaid Managed Care, the Department of Health and Services, Office of Inspector General (OIG) pursued Civil Monetary Penalties against the provider.  We have also defended clients in cases where the payor had terminated the provider’s participation in the payor plan and / or filed a complaint against the dentist with the State Board of Dental Examiners.   Examples of cases where administrative sanctions have been imposed are set out below:

• Indiana. $125,446 in Civil Monetary Penalties Assessed.  An Indiana dental practice was assessed significant penalties by the Department of Health and Services, Office of Inspector General (OIG) as a result of alleged improper billing practices.   The government alleged that the dental practice submitted claims to the state Medicaid program for dental services that were performed by non-credentialed dentists under the names of dentists who were credentialed with Indiana Medicaid.

• Massachusetts. $841,120 in Civil Monetary Penalties Assessed. In this case, a Massachusetts-based dental school was alleged to have submitted claims to Medicare[2] for dental services that were provided by non-credentialed dentists.  Additionally, the OIG claimed that the level of dental service billed was not supported by the associated dental records and documentation.

• Multiple States. Disciplinary Licensure Actions are Pending – Multiple State Boards of Dental Examiners.    We have been (and are currently) involved in multiple matters where Medicaid Managed Care and / or private payor insurance plans have filed complaints with State Dental Boards against dentists for allegedly submitting false or fraudulent claims to the insurance company.  Notably, the improper conduct alleged has consistently included allegations that the dental practice submitted the claims of dental services performed by non-credentialed dentists under the names and NPIs of dentists who were properly credentialed in a particular plan.

Civil Sanctions — False Claims Act Liability.  Most of the cases brought under the False Claims Act[3] against Medicare and Medicaid participating providers in connection with the improper billing of services by a non-credentialed provider involved medical, rather than dental services.  Nevertheless, this remains a significant risk for dental practices that bill Medicaid and Medicaid Managed Care plans.  Two examples of False Claims Act cases that were brought against Medicare providers for the wrongful billing of services performed by non-credentialed physicians are set out below:[4]

• $500,000 Settlement Under the False Claims Act.  In a case in  the Western District of Oklahoma, a licensed physician allowed an uncredentialed practitioner to use his NPI to bill Medicare for Evaluation & Management (E/M) physical therapy services that the licensed physician did not personally perform or supervise. The government brought an action against the physician under the civil False Claims Act. The defendant had to pay $500,000 to settle the case.

•  $859,500 Settlement Under the False Claims Act. In this case, a well-respected state university health science center filed a self-disclosure with the OIG for submitting claims to Medicare using the NPIs of multiple physicians who did not render or supervise the services at issue.  The university health science center was forced to pay $859,500 to the government to settle alleged violations of the False Claims Act.

Criminal Sanctions:  In a worst-case scenario, Federal prosecutors may take the position that the wrongful billing of dental services by a non-credentialed provider under the name and provider number of a credentialed provider constitutes health care fraud.  In the case discussed below, a licensed dentist was prosecuted for engaging in various health care fraud schemes.  One of the counts in the prosecution included the dentist’s alleged “fraudulent” submission of services performed by a non-credentialed dentist.  To be clear, we have not seen any Federal prosecutions which were based solely on this specific type of illegal conduct.  Nevertheless, it is clear that if a dentist is alleged to have engaged in a broader scope of fraudulent conduct, prosecutors will not hesitate to include these types of false claims in an Information or Indictment against the physician.

• Defendant Ordered to Pay $956,448 in Restitution and Sentenced to 33 Months in Jail.  In a recent criminal prosecution (June 2019) in the Middle District of Tennessee, a licensed dentist and his former practice administrator were charged with Conspiracy to Commit Health Care Fraud.  The government further alleged that the defendant dentist “took steps to conceal the fraud by discouraging employees from questioning billing practices” and “instructing employees to lie if questioned by insurance companies.”Ultimately, the defendant dentist pled guilty to the charges and was sentenced to 33 months in Federal prison.  He was also ordered to pay $956,448.00 in restitution.According to the Information filed against the defendant dentist, the defendant engaged in various acts of fraud against the Delta Dental, Cigna, TennCare and DentaQuest programs, including:  (1)  Billing for dental services that were not completed or performed at all;  (2)  Falsifying dates of service to appear to comply with benefit programs’ timeframe and preauthorization requirements;  (3)  Falsifying claims to appear that services had been rendered by a benefits program credentialed dentist; 

III.  When Can Non-Credentialed / Non-Participating Dentists Properly Bill Under the Name and Number of a Participating Dentist?

Not surprisingly, Medicare, Medicaid and private payors have all established their own rules governing when, and if, a non-credentialed dentist can properly bill under a credentialed physician’s name and billing number.  In this section, we examine three of the most common scenarios in which a provider can bill for the dental services performed by a non-credentialed dentist:

Locum Tenens / Substitute Dentist.  The term “locum tenens” is a Latin phrase that means “one holding a place.”[5]  It is used to describe an independent contractor dentist or medical doctor who has been hired to temporarily take the place of a staff dentist or medical doctor who is absent due to illness, pregnancy, vacation or continuing dental education courses. It is also sometimes used to fill vacancies when a dental practice is short-staffed.  The rules governing the proper billing of dental services performed by a locum tenens dentist often vary from payor to payor. For instance:

• Medicare Locum Tenens / Substitute Dentist Rules.[6] As set out under Section 1842(b)(6)(D) of the Social Security Act, a physician may receive Medicare payment for physician[7] services (and for services performed incident to such physician services) that are performed by another physician on behalf of the billing physician if the billing physician is unavailable to provide the services, and the services are furnished pursuant to an arrangement that is either:  (1) Informal and reciprocal, or (2) Involves per diem or other fee-for-time compensation for such services.

In addition, the services must not be provided by the substitute physician over a continuous period of more than 60 days unless the billing physician is called or ordered to active duty as a member of a reserve component of the Armed Forces.  Since the definition of “physician” includes both a Doctor of Dental Medicine and a Doctor of Dental Surgery (see Footnote 7), it can be argued that a Medicare-participating dentist would also qualify for the coverage of this rule

• Medicaid Locum Tenens / Substitute Dentist Rules. In Texas, “a locum tenens arrangement is not allowed for dentists”[8] under the Texas Medicaid dental program.[9] However, under Texas Administrative Code (TAC) rules §354.1121 and §354.1221, it is permissible to bill for Medicaid dental services performed by substitute dentists as long as certain requirements are met.[10] The approach taken by a state’s Medicaid program with respect to the billing of locum tenens dentists and / or substitute dentists can vary from state to state.

• Private Payor Locum Tenens / Substitute Dentist Rules. The requirements to bill a private payor plan for the services of a locum tenens or substitute dentist may vary widely depending on the individual plan.  It is therefore important to research the billing rules that apply under each private payor contract.

“Incident to” Billing of Dentist Services.  At the outset, it is important to recognize that there is virtually no Medicare, Medicaid or private insurer guidance discussing whether the “incident to” billing of dental services that are performed by a non-credentialed dentist is permitted (assuming, of course, that the requirements of incident to billing have been fully met).  Despite the absence of written guidance in this regard, based on the way the incident to rule has been applied to physicians, an argument can be made that the concept also applies to dentists.

For example, Medicare has no rules which prohibit a non-participating physician who serves as auxiliary personnel to a participating physician from providing incident to services to the patient. In addition, Medicare does not preclude the supervising, participating physician from billing for incident to services performed by a non-participating physician as long as: (a) the services are reasonable, necessary and otherwise meet all of Medicare’s incident to requirements;[11] (b) the non-enrolled physician is properly licensed by the state; and (c) the incident to services comply with any applicable state law requirements.

Given that the definition of “physician” pertains to both a Doctor of Dental Medicine and a Doctor of Dental Surgery, one could argue that the incident to rules apply to dental services as well as general medical services.  Unfortunately, such an exception would only apply to dental services that qualify for coverage and payment by Medicare.

Medicaid, Medicaid Managed Care and private payor insurance plans have consistently opposed the applicability of incident to billing to dental services, even though nothing in their participation agreements mentions such billing practices.

IV.  Reducing Your Level of Risk:

There are several steps that your dental practice can take to better comply with the credentialing and billing requirements that have been established by the Medicare, Medicaid, Medicaid Managed Care and private payor insurance programs.  These include:

• Plan ahead by starting the credentialing process as soon as possible when a new dentist joins the practice.
• Restrict non-credentialed dentists from performing dental services on patients covered under a payor plan that requires credentialing.
• Until new hires are credentialed, have them limit their services to self-pay patients or other services that do not require credentialing.
• Read your enrollment applications and their associated payor contracts. What are the credentialing requirements that must be met?
• Does the insurance payor recognize incident to billing of dental services? Some private payor plans expressly prohibit the use of incident to billing.  If that is the case, and a provider knowingly billing for services performed by a non-credentialed provider under the name and NPI of a credentialed provider, the insurance company may argue that the provider has committed health care fraud.  

[An updated article examining a number of the current audits and enforcement initiatives aimed at dentists and dental practices is covered in our article dated October 16, 2019, titled “SIU Dental Audit Reviews by DentaQuest, Delta Dental and Cigna Can Ultimately Lead to Criminal Prosecution and Imprisonment. Are Your Dental Office’s Medical Necessity, Documentation, Coding and Billing Practices Compliant?”]

Robert W. Liles serves as Managing Partner at the health law firm, Liles Parker, Attorneys and Counselors at Law.  Liles Parker attorneys represent dentists, dental practices and other health care providers around the country in connection with Medicare, Medicaid and private payor dental claims audits.  We also represent dentists in connection with State Dental Board complaints and investigations.  Are your dental claims or services currently being audited or under investigation?  We can help.  For a free initial consultation regarding your situation, call Robert at: 1 (800) 475-1906.

 [1] See https://www.jointcommission.org/assets/1/6/AHC_who_what_when_and_where_credentialing_booklet.pdf

[2] Although traditional Medicare Part A does not cover most dental care treatment services, it may cover certain dental procedures that are necessary for an otherwise covered service to be completed.  For instance, a Medicare patient may obtain coverage for certain dental work in connection with jaw surgery.  Additionally, several Medicare Advantage plans now cover routine vision and dental procedures.

[3] 31 U.S.C. § 3729-3733. The Federal civil False Claims Act is the primary civil enforcement tool used to combat fraud against the United States.  The False Claims Act imposes civil monetary penalties and treble damages on any person who knowingly submits, or causes to be submitted, a false claim to the government for payment.

[4] It is important to note that the two cited False Claims Act cases involved the submission of claims to the Medicare program. In these cases, the government noted that the improperly billed services were not performed or supervised by the credentialed provider under whom the service was billed.  This language reflects the exemption that if Medicare’s “Incident To” requirements are otherwise met, the services of non-credentialed physician can, in fact, be billed under the name of the supervising, credentialed physician.

[5] The Concise Oxford English Dictionary (Eleventh Edition).

[6] Please note, Medicare no longer uses the term “locum tenens” when referring solely fee-for-time compensation arrangements.  Under Section 16006 of the 21^st Century Cures Act, the term “locum tenens arrangements” is now used to refer to both fee-for-compensation arrangements and reciprocal billing arrangements.

[7] As set out on CMS’s website, the definition of “Physician” includes the following:

“For the purposes of Open Payments, a “physician” is any of the following types of professionals that are legally authorized by the state to practice, regardless of whether they are Medicare, Medicaid, or Children’s health Insurance Program (CHIP) providers:

• Doctors of Medicine or Osteopathic Medicine
• Doctors of Dental Medicine or Dental Surgery
• Doctors of Podiatric Medicine
• Doctors of Optometry
• Chiropractors

Note: Medical residents are excluded from the definition of physicians for the purpose of this program.”

https://www.cms.gov/OpenPayments/About/Glossary-and-Acronyms.html.

[8] https://hhs.texas.gov/about-hhs/communications-events/news/2017/11/services-rendered-a-substitute-dentist-may-be-billed-tmhp-utilizing-modifier-u5-effective-january-1.

[9] Notably, that is not the case when it comes to medical doctors.  Texas Medicaid does permit locum tenens arrangements for physicians.  As set out under Section 9.2.2 of the Texas Medicaid Provider Procedures Manual, “Physicians may bill for the service of a substitute physician who sees clients in the billing physician’s practice under either a reciprocal or locum tenens arrangement.”  A complete rendition of Section 9.2.2 can be found at:

http://www.tmhp.com/Manuals_HTML1/TMPPM/Archive/2016/Vol2_Medical_Specialists_and_Physicians_Services_Handbook.24.083.html.

^[10] These requirements include, but are not limited to:

“Dentists who take a leave of absence for no more than 90 days may bill for the services of a substitute dentist who renders services on an occasional basis when the primary dentist is unavailable to provide services. Services must be rendered at the practice location of the dentist who has taken the leave of absence. A locum tenens arrangement is not allowed for dentists.

This arrangement will be limited to no more than 90 consecutive days. Under this temporary basis, the primary dentist (who is the billing agent dentist) may not submit a claim for services furnished by a substitute dentist to address long-term vacancies in a dental practice. The billing agent dentist may submit claims for the services of a substitute dentist for longer than 90 consecutive days if the dentist has been called or ordered to active duty as a member of a reserve component of the Armed Forces. Medicaid and CSHCN accepts claims from the billing agent dentist for services provided by the substitute dentist for the duration of the billing agent dentist’s active duty as a member of a reserve component of the Armed Forces.

Providers billing for services provided by a substitute dentist must bill with modifier U5 in Block 19 of the American Dental Association (ADA) claim form.

The billing agent dentist may recover no more than the actual administrative cost of submitting the claim on behalf of the substitute dentist. This cost is not reimbursable by Medicaid or CSHCN.

The billing agent dentist must bill substitute dentist services on a different claim form from his or her own services. The billing agent dentist services cannot be billed on the same claim form as substitute dentist services.

The substitute dentist must be licensed to practice in the state of Texas, must be enrolled in Texas Medicaid, and must not be on the Texas Medicaid provider exclusion list.

The dentist who is temporarily absent from the practice must be indicated on the claim as the billing agent dentist, and his or her name, address, and National Provider Identifier (NPI) must appear in Blocks 53, 54, and 56 of the ADA claim form.

The substitute dentist’s NPI number must be documented in Block 35 of the ADA claim form. Electronic submissions do not require a provider signature.”

https://hhs.texas.gov/about-hhs/communications-events/news/2017/11/services-rendered-a-substitute-dentist-may-be-billed-tmhp-utilizing-modifier-u5-effective-january-1.

 [11] As discussed in MLM Matters Number: SE0441:

“To qualify as “incident to,” services must be part of your patient’s normal course of treatment, during which a physician personally performed an initial service and remains actively involved in the course of treatment. You do not have to be physically present in the patient’s treatment room while these services are provided, but you must provide direct supervision, that is, you must be present in the office suite to render assistance, if necessary. The patient record should document the essential requirements for incident to service. More specifically, these services must be all of the following:

• An integral part of the patient’s treatment course;
• Commonly rendered without charge (included in your physician’s bills);
• Of a type commonly furnished in a physician’s office or clinic (not in an institutional setting); and
• An expense to you.”

Additionally, in an office setting:

“In your office, qualifying “incident to” services must be provided by a caregiver whom you directly supervise, and who represents a direct financial expense to you (such as a “W-2” or leased employee, or an independent contractor).

You do not have to be physically present in the treatment room while the service is being provided, but you must be present in the immediate office suite to render assistance if needed. If you are a solo practitioner, you must directly supervise the care. If you are in a group, any physician member of the group may be present in the office to supervise.”

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