What is a Referral Under the Anti-Kickback Statute?

(January 26,  2021Under the Anti-Kickback Statute (Anti-Kickback Statute), what constitutes a referral? Notably, neither the term referral nor the term referring (as it is referred to in the law) are defined in the statute. While you may be tempted to argue that a referral only occurs when one party refers a beneficiary to another party for services or supplies that may be covered by a Federal health care provider, a Seventh Circuit case shows how broad this term is likely to be interpreted by the courts.

I.  The Federal Anti-Kickback Statute:

At the outset, it is important to keep in mind that the Anti-Kickback Statute is a criminal statute. The statute makes it a crime to exchange (or offer to exchange), anything of value, in an effort to induce (or reward) the referral of Federal health care program business. See 42 U.S.C. § 1320a-7b. Violations of the Anti-Kickback Statute can result in fines of up to $100,000 and imprisonment for up to ten years. Under the Anti-Kickback Statute, a health care provider may be liable if he or she is found to be:

(b) Illegal remunerations

 (1) Whoever knowingly and willfully solicits or receives any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind—

(A) in return for referring an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program, or

(B) in return for purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under a Federal health care program,[1] shall be guilty of a felony and upon conviction thereof, shall be fined not more than $100,000 or imprisoned for not more than 10 years, or both.[2]

 (2) Whoever knowingly and willfully offers or pays any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind to any person to induce such person –(A) to refer an individual to a person  for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program, or

(B) to purchase, lease, order, or arrange for or recommend purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under a Federal health care program, shall be guilty of a felony and upon conviction thereof, shall be fined not more than $100,000 or imprisoned for not more than 10 years, or both.

           . . .

 (h) Actual knowledge or specific intent not required

 With respect to violations of this section, a person need not have actual knowledge of this section or specific intent to commit a violation of this section.   (emphasis added).

A recent decision issued by the Seventh Circuit Court of Appeals has provided a comprehensive analysis as to what it believes may constitutes a referral under the Anti-Kickback Statute. In the case, United States vs. Kamal Patel, a Chicago area doctor was found to be in violation of the Anti-Kickback Statute because he allegedly referred one of his patients to a home health care provider in return for a monetary payment. The Patel case has important implications for physicians and other health care providers who wish to avoid liability under the Anti-Kickback Statute and, possibly in turn, under the False Claims Act.

II.  What is a Referral Under the Anti-Kickback Statute?

Dr. Patel practiced internal medicine and provided services for elderly patients. He prescribed home health care services to about ten patients per month. 95% of Dr. Patel’s patients were Medicare beneficiaries. The home health care provider, Grand Home Health Care (Grand), was among several providers available to Dr. Patel’s patients. After experiencing a decline in its patients, the owners of Grand met with Dr. Patel and offered to pay Dr. Patel for referrals on a per-patient basis. Grand started to provide services for 2 to 4 of Dr. Patel’s patients per month. After the patients selected Grand as the home health care provider, Grand was required to obtain Dr. Patel’s certification and recertification on the Medicare Form 485 for payment under Medicare. Grand would pay Dr. Patel $400 for each certification and $300 for each re-certification.

Importantly, Dr. Patel was not involved in the selection of Grand by his patients. The patients chose Grand among a number of choices given to them by Dr. Patel’s assistant. Moreover, Dr. Patel did not discuss the selection with the patients or their family members. Grand, however, could not be paid and reimbursed under Medicare without Dr. Patel signing the Form 785 certification form which stated that the home health care was medically necessary. Dr. Patel would also sign the re-certification form if home health care and treatment lasted longer than 60 days. Grand paid Dr. Patel $300 for each certification form, and $400 for each re-certification form signed. The certification form also stated that Dr. Patel “authorized” the services.

Dr. Patel was subsequently investigated and prosecuted under the Anti-Kickback Statute for referring patients to Grand in return for monetary payments. Dr. Patel argued that he had not referred his patients because the patients selected Grand without input or recommendation from him. The Court disagreed. The Court found that a broader definition of referring is mandated in order to promote the central purpose of the Anti-Kickback Statute to prevent Medicare and Medicaid fraud and to “protect doctors whose medical judgments might be clouded by improper financial considerations.”

The Court therefore concluded that the term referring under the Anti-Kickback Statute not only addresses an action by a physician in recommending home care services but also in authorizing such services. The Court found that the danger of fraud in the certification process is quite clear because a physician could refuse to certify the provider thereby increasing the cost of care and impeding the selection process of the patient. Also, the Court found that the doctor would have an improper incentive to certify or re-certify a provider when the care is not necessary or the services of the provider are not competent. Ultimately, the Court found that Dr. Patel acted as a financial gatekeeper to the patient selecting the provider of choice, making the patient’s independent choices at the outset meaningless if Dr. Patel did not provide certifications.

III.  “Certifications” and “Recertifications” Can Result in Liability:

In the Patel case, the physician there did not directly refer his patients to the home health care provider at issue. Yet, the Court found treated certifications and recertifications completed by Dr. Patel to be the same conduct as a referral because without the doctor’s authorization the provider could not be paid under Medicare. Accordingly, doctors must take extra care to monitor staff and the providers with whom they work with in treating payments. Both monetary payments and other forms of remuneration received from a home health agency must be carefully evaluated to ensure that the relationship does not run afoul of the Federal Anti-Kickback Statute. Depending on the state, it may also be necessary for you to analyze any applicable state statutes that may criminalize such conduct. As this case reflects, referrals, certifications and recertifications can result in a violation of the statute.

The Patel case suggests that what is a “referral” may be broadly construed by a court to include any type of approval or authorization by the physician, including, but not necessarily limited to, the signing of a Medicare certification or recertification form.

IV.  Final Remarks:

It is important to keep in mind that the Anti-Kickback Statute is a criminal statute. Moreover, a violation of the Anti-Kickback Statute may give rise to parties involved in the “referral” – both a referring (certifying or recertifying) physician, and the home health agency to whom the referral is being made. It is imperative that any and all home health Medical Director (and similar) relationships must be carefully vetted to ensure that the business relationship does not run afoul of the Anti-Kickback Statute.

Although not raised in the Patel case, it is important to also keep in mind that the Affordable Care Act, Public Law 111-148, can lead to civil False Claims Act liability under similar facts. As you will recall, the Affordable Care Act was passed by Congress and subsequently signed into law by President Obama on March 23, 2010. While the overall purpose of the legislation was to make health care more accessible and affordable for millions of uninsured Americans, the statute also introduced a number of important revisions to the Federal Anti-Kickback Statute, one of which expanded a health care provider’s potential liability for a Medicare or Medicaid-related kickback violation. While both the government and private relators had successfully argued (under an implied certification theory) that a violation of the Anti-Kickback Statute may give rise to a violation of the False Claims Act, the Affordable Care Act effectively codified this theory. As 42 U.S.C. § 1320(a)-7b(g) now provides:

“(f) HEALTH CARE FRAUD.—

(1) KICKBACKS.—Section 1128B of the Social Security Act

(42 U.S.C. 1320a–7b) is amended by adding at the end the following new subsection:

‘‘(g) In addition to the penalties provided for in this section or section 1128A, a claim that includes items or services resulting from a violation of this section constitutes a false or fraudulent claim for purposes of subchapter III of chapter 37 of title 31, United States Code.’’

As a result of this legislation, Federal prosecutors (and possibly whistleblowers) could have also pursued this case under the civil False Claims Act. Both physicians and home health care providers must be mindful that the damages and penalties under the False Claims Act can be quite severe. For false claims or statements made on or after June 19, 2020, the penalties that may be assessed vary from a minimum of $11,665 to a maximum penalty of $23,331, per false claim, plus treble damages.

What’s the answer for your organization? First and foremost, it is imperative that you develop, implement and adhere to the provisions and guidelines of an effective Compliance Plan. While no Compliance Plan can completely shield a health care provider from liability, your earnest efforts to fully comply with the law can go a long ways towards dispelling the argument that you knowingly (as defined under the False Claims Act) submitted a false claim to the government for payment.

Robert W. Liles, JD, MS, MBA serves as Managing Partner at Liles Parker, Attorneys and Counselors at Law. Robert represents home health agencies of all sizes around the country in connection with a full range of MAC and UPIC prepayment reviews, UPIC postpayment audits, suspension actions, and the revocation of a provider’s Medicare billing privileges. He also handles home health False Claims Act cases. For a complimentary consultation, please call Robert at: 1 (800) 475-1906.

[1] A “Federal health care program” is defined as (1) any plan or program that provides health benefits, whether directly, through insurance, or otherwise, which is funded directly, in whole or in part, by the United States Government [not including health insurance provided to federal government employees] or (2) any state health care program, as defined in Section 1128(h) [42 U.S.C. §1320a-7(h)]. 42 U.S.C. §1320a-7b(f). Federal health care programs include Medicare and Medicaid.

[2] Among its many provisions, the Bipartisan Budget Act of 2018 (enacted February 9, 2018) increased the criminal penalties under the Anti-Kickback Statute from a maximum of $25,000 to a maximum of $100,000, per violation.  The Bipartisan Budget Act of 2018 also increased the potential period of incarceration from five years to ten years.

Prepayment Reviews and Audits of Medicare Claims are Ongoing. Are Your Claims Being Audited?

(January 19, 2021):  As you will recall, on March 30, 2020, the Centers for Medicare and Medicaid Services (CMS) suspended most Medicare audits and reviews due to the COVID-19 national emergency.  In early August, CMS instructed its contractors to resume their prepayment and postpayment audit activities. Over the last six months, we have seen a significant increase in the number of prepayment reviews initiated by Medicare Administrative Contractors (MACs) and other CMS contractors. It is therefore essential that home health agencies, physician practices and other health care providers and suppliers understand the prepayment review process and are prepared to appropriately respond to an document request if a MAC, a RAC or another CMS contractor initiates a prepayment audit of their claims.  This article provides an overview of the process and discusses ways of reducing your level of risk.

I. Legislative Background:

With the passage of the Medicare and Medicaid programs in 1965, the Centers for Medicare and Medicaid Services (CMS)[1] became authorized to perform a myriad of Medicare program functions, either directly or by contract. Moreover, on August 21, 1996, the Congress enacted the Health Insurance Portability and Accountability Act of 1996 (HIPAA).   Section 202 of HIPAA added section 1893 to the Social Security Act, thereby establishing the Medicare Integrity Program (MIP Program).  This legislation also permitted CMS to contract with eligible contractors to perform program integrity activities.

On December 8, 2003, Congress subsequently enacted the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA).  The MMA included a new subsection  regarding both random prepayment audits and non-random prepayment complex medical reviews.  Today, prepayment audits of Medicare claims are now conducted by MACs and other CMS contractors around the country.

II.  Reasons Providers are Targeted for Prepayment Review / Prepayment Audit:

Contrary to popular belief, CMS and its contractors do not conduct “random” a prepayment audit of health care providers.  As CMS expressly set out in the Federal Register:

“Although section 934 of the MMA sets forth requirements for random prepayment review, our contractors currently do not perform random prepayment review. However, our contractors do perform non-random prepayment complex medical review. We are cognizant of the need for additional rulemaking should we wish our contractors to perform random review.” [2]

As a result, if your practice or home health agency has been subjected to non-random prepayment complex medical review by a MAC, it is because of one or more reasons.  In most instances, prepayment reviews / prepayment audits are the result of data mining efforts used by CMS contractors to identify potentially inappropriately billed claims. The data mining runs may have been initiated by:

• National or local claims data comparisons.
• An analysis of utilization practices.
• Beneficiary complaints.
• Competitor complaints.
• Department of Health and Human Services, Office of Inspector General (OIG)
• Government Accountability Office (GAO) reports.
• Department of Justice (DOJ) investigations.   

Regardless of the reason for review, once a CMS contractor conducts a data mining run and identifies a likelihood of sustained or high level of payment error, the contractor will typically place a health care provider on prepayment audit and immediately request supporting medical documentation in support of any claims submitted by the provider for payment.

III.  Types of Non-Random Prepayment Review:

There are a number of reasons that a MAC may place your practice or agency on prepayment review.  These reasons are outlined below.  Regardless of the reason for placing a Medicare provider or supplier on prepayment review, from an operational standpoint, the MAC installs an edit in the Fiscal Intermediary Standard System (FISS) which suspends a claim for medical review before the claim is paid by the contractor.  One the edit is put in place, the only way for it to be removed is for the provider or supplier to effectively show (through their submission of a claim’s supporting documentation), that the medical services or DME supplies at issue are medically necessary and qualify for coverage and payment.  An overview of the reasons for being placed on prepayment review / prepayment audit (along with a description of their associated edits) are outlined below:

Automated Edits.  Automated edits have been implemented to address systemic concerns regarding certain billing or claims practices and are not provider specific.  Once an improper practice is identified, MACs will go into their claims processing systems and install automated edits in the FISS so that certain claims are either automatically denied or are flagged for further review. [3]

New Provider/New Benefit Edits.  The billing practices of newly enrolled Medicare providers and suppliers are carefully monitored by MACs to help ensure that the claims being submitted qualify for coverage and payment.  To accomplish this monitoring function, MACs install a “new provider” edit in the FISS system that will then flag claims for prepayment review.  This same approach is used when Medicare is introducing a new benefit and CMS wants to better ensure that providers are meeting medical necessity, documentation, coding and billing requirements. [4].

Provider Specific Probe Edits  These edits select claims from a specific provider who has been identified as having a potential problem identified through their billing patterns, Medicare’s knowledge of service area abuses, and/or complaints received by Medicare. The provider is notified in writing that a probe review (sample of 20-40 claims) is being conducted. When the provider specific probe edits are complete, and it is found that there is a high incidence of inappropriate billing, a provider may be placed on targeted review.  Examples of provider specific billing patterns that may be targeted include:  (1) Through data analysis, a MAC has identified questionable billing practices by a specific provider (such as non-covered, incorrectly coded or incorrectly billed services); (2) A MAC receives alerts from other MACs, Quality Improvement Organizations (QIOs), Comprehensive Error Rate Testing (CERT) auditors, Recovery Audit Contractors (RACs), the OIG, the General Accounting Office (GAO), or other CMS program integrity contractor findings that support the need for further review; (3) A MAC receives complaints about a specific provider’s billing practices; or (4) A MAC validates that a specific provider is billing for services that have been associated with a high risk of payment error. [5].

Provider Specific Targeted Review (TR).  Once a provider is placed on targeted review status, a TR edit is installed in the FISS so that a certain percentage of claims will be pulled for prepayment review.  Once a provider is placed on targeted review, the period of review typically lasts for three months.  At the end of the three month period, if a MAC has determined that the provider’s claims meet medical necessity requirements, are properly documented, have been coded and billed correctly, the MAC may agree to remove the edit.  If a provider’s billing practices remain problematic, the edit will generally remain in place for another three months. It is important to keep in mind that if a provider is unable to to show its MAC that its claims practices are compliant for six months or more, the MAC may make a referral to a Unified Program Integrity Contractor (UPIC) for postpayment audit. [6][7].

Referral Edits. Referral edits are based on a referral from other entities, for example the state surveyor after identifying potential unusual billing patterns or practices. Providers are notified by letter when they have been placed on a referral edit. The source of the referral is not disclosed. 

Widespread Edits.  MACs regularly review claims with the greatest risk of inappropriate program payment, this includes areas that have been identified through data analysis. The following list provides examples of widespread edits but is not all inclusive:  (1) Length of stay or number of visits; (2) Revenue and/or HCPCS; (3) Diagnosis and may include ICD-9/ICD-10 codes in relation to revenue codes.

IV.  Considerations if Your Practice or Home Health Agency is Placed on Non-Random Prepayment Review:

Importantly, once a provider is placed is targeted for prepayment audit, it is highly unlikely that the claims edit will be lifted any time soon without significant work on your part.  Please keep in mind:

• There is no “silver bullet” approach having a prepayment audit discontinued.
• There is no administrative appeals process in which to contest the placement of your organization on prepayment audit.
• Be wary of consultants who claim to “know someone” that can have you removed from prepayment status.

Once you have been placed on prepayment review, your first task is to figure out the reason why your claims were identified for audit.  Were you placed on prepayment review because of your utilization practices, documentation deficiencies or another reason? Ultimately, getting off of prepayment review is just plain hard work.

Over the years, our firm has been contacted by numerous providers whose approach consisted of “holding” their claims in the mistaken belief that the review would eventually be lifted, at which time they would submit their claims for payment.  You need to understand – health care providers are placed on prepayment review because a MAC or another CMS contractor has reason to believe (rightly or wrongly) that their claims are not in full compliance with applicable coverage, documentation, medical necessity, coding or billing rules. The best approach to having a prepayment review lifted is to carefully analyze each aspect of your claims, compare your practices with those set out in the applicable rules and correct any deficiencies.  Sounds simple doesn’t it?  Unfortunately, it can be quite difficult, depending on the types of claims involved.  Our firm has worked with a number of health care providers over the years, assisting them in getting removed from prepayment review and incorporating remedial steps into their Compliance Plan.

Robert W. Liles, JD, is Managing Partner at the health law firm, Liles Parker, PLLC.  With offices in Washington, DC, Houston, TX, and Baton Rouge, LA, our attorneys represent home health agencies, physicians and other health care providers around the country in connection with Medicare / Medicaid prepayment reviews, UPIC postpayment audits, Compliance Plan reviews and State licensing board actions.  Should you have any questions, please call us for a free consultation.  Robert can be reached at: 1 (800) 475-1906.   

Chiropractor Owned Multidisciplinary Practices are at a Higher Risk of Audit

(January 13, 2021):  Over the last few years, we have noted a significant increase in the number of audits initiated against Chiropractor owned multidisciplinary practices.  Typically, these integrated medical practices and clinics employ at least one Chiropractor (typically in an ownership or managerial capacity), along with multiple Doctors of Medicine (MDs), Doctors of Osteopathy (DOs). Physician-extenders such as Nurse Practitioners (NPs) and Physician Assistants (PAs) are also commonly employed in these multidisciplinary practices and clinics.

The purpose of this article is to examine Chiropractor owned multidisciplinary practices which employ MDs, DOs and physician extenders in order to provide a wide range of care and treatment services.  While there are a number of benefits to such a model, both State regulatory entities and Federally-contracted Unified Program Integrity Contractors (UPICs) working for the Centers for Medicare and Medicaid services (CMS) have shown their concern regarding these organizations.  Depending on the jurisdiction, a number of State regulatory entities have questioned the appropriateness of the model itself.  UPICs and other CMS Medicare contractors have initiated (or, in some cases, are in the process of initiating) a review or audit of various claims submitted to Medicare for coverage and payment.

I. Why have Chiropractors Worked to Integrate Other Medical Services Into Their Practice?

While you may disagree, it has been our observation that many Chiropractors have an entrepreneurial spirit.  This has manifested itself in a growing number of Chiropractor owned multidisciplinary practices which provide health care services other than merely those associated with chiropractic care.  Depending on the State, integrating other medical services into a chiropractic practice isn’t always easy – there are often a number of statutory and / or regulatory barriers to be overcome. Examples of the Chiropractor owned multidisciplinary practices we have recently seen have included:

• Pain management clinics.
• Multidisciplinary clinics which also offer complimentary and alternative medicine therapy options.
• Industrial medicine clinics (often focusing on Workman’s Compensation cases).
• Orthopedic clinics focusing on back injuries, spinal compression problems and victims of automobile accidents.

Chiropractic practices choosing to transition over to a multidisciplinary model have often found that they are better equipped to address the health problems of their patients.  This is often due to the fact that an integrated DC / MD practice typically greatly expands the scope of care and treatment services available to patients. This multidisciplinary approach provides patients with a convenient one-stop care and treatment option.

From a financial standpoint, Chiropractor owned multidisciplinary practices have also found that this business model opens up a number of previously-unavailable opportunities.  As you are aware, only a few chiropractic services qualify for coverage and payment under Medicare.  While private payor plans typically cover a somewhat wider scope of services, many Chiropractors have essentially built their business on cash-pay patients.  The addition of MDs, DOs and physician extenders has permitted integrated practices to expand their scope of medically-reimbursable services, many of which now qualify for coverage and payment by Medicare and  private payor programs.  While there are both patient-care and financial benefits to the integrated, multi-disciplinary model, there are also a number of challenges you should consider prior to setting up this type of practice or clinic.

II.  Challenges to be Considered:

A.     State Regulatory Considerations.

Depending on the State, it may be illegal for anyone other than a medical physician to own a medical practice.  For example, many jurisdictions still prohibit the “Corporate Practice of Medicine.” In such States, it is illegal for a corporation to practice medicine.  Moreover, a corporation cannot employ a physician to provide medical care and treatment services.

Although every State is different, if your State prohibits the Corporate Practice of Medicine, it may be against the law for a corporation or for a non-physician individual (including a Chiropractor) to own or control a physician practice or clinic which provides professional physician services.  Therefore, we strongly recommend that prior to setting up a Chiropractor-owned, multidisciplinary practice or clinic, you should contact a qualified health lawyer to assist you maneuvering through the myriad statutory and regulatory requirements governing this complex area of law.  As a final point in this regard, should you choose to set up an integrated practice or clinic, it is essential that you have a full understanding of both your State’s Chiropractic Practice Act and the Medical Practice Act governing the physicians you intend to employ.

B.    Current Audit Challenges.

Over the last few years, many providers, including Chiropractor owned multidisciplinary practices, have been advised that their claims are being placed on prepayment review or that their prior-paid claims are being be subjected to a postpayment audit by a UPIC, such as Qlarant, Safeguard Services or CoventBridge. [1]  Most of these CMS program integrity contractor audit actions have been generated as a result of data-mining.  Other reasons for audit and / or review have included: patient complaints, competitor complaints and referrals from State Medical Boards.  Regardless of the reason for audit, if your integrated practice or clinic is audited, it is essential that you engage qualified health law counsel to advise you on your options for responding to an inquiry by a UPIC.  For a detailed discussion of the current UPIC audit environment, please see our article titled “A UPIC Audit is Serious Business — Is Your Office Prepared?”  [2]

Prepayment Reviews: Unlike postpayment overpayment assessments, there is not an effective administrative overpayment process for health care providers placed on prepayment review.  We recommend that you consult with legal counsel if your practice is placed on prepayment review.  There are three points to keep in mind in such cases:

• It is often in your best interest to continue to submit claims for review and not hold them.  Even if they are denied, at least you can initiate the postpayment appeals process as soon as possible and hopefully begin to restore cash flow;
• It is often helpful to engage qualified health law counsel to review your claims and generate a report that can be sent to the UPIC, pointing out that the claims do, in fact, qualify for coverage and payment.
• Think outside of the box—no provider can survive on prepayment review over a long period if a significant portion of their payor mix is Medicare.  Contact your health law counsel to discuss possible options for seeking remedial action to have the prepayment review lifted.

Postpayment Audits: Over the last decade, program integrity contractors (such as UPICs) have aggressively pursued alleged Medicare overpayments from Chiropractors, Physicians and other health care providers around the country.  Specific actions taken have included:

• Using statistical sampling and extrapolation.While the Medicare Program Integrity Manual sets out the basic requirements for a UPIC to conduct a statistical sampling, these contractors have been known to have deviated from the sampling methodologies proscribed by CMS.
• UPIC reviews have often alleged significant claims coverage concerns.Identified error rates of 100% by UPICs are not uncommon.  They then seek a full refund of all claims submitted by an individual provide.
• Multiple errors often identified. Due to the massive amount of minute technical requirements imposed on providers, UPICs are often able to identify and allege multiple technical and substantive errors in many of the claims which they review.

Medicare Revocation Actions:Over the last year, we have seen a sharp increase in the number of Medicare revocation actions taken.  The reasons for revocation have varied but have typically been associated with alleged violations of a health care provider’s participation agreement.  In some cases, the UPIC contractors found that the provider had moved addresses and had not properly notified Medicare.  In other cases, a health care provider was alleged to have not been cooperative or refused to participate in a site visit.  As a participating provider in the Medicare program, your organization must fully meet each of its obligations under the agreement in order to remain in the program.

UPIC Referrals for Civil and Criminal Enforcement: UPICs are actively referring health care providers to law enforcement agencies such as the Office of Inspector General (OIG) and the  Department of Justice (DOJ) for possible civil and / or criminal enforcement) when a case appears to entail more than a mere overpayment.  However, just because a referral is made doesn’t mean that it will be prosecuted.  In many instances, OIG and / or DOJ will decline to open a case for a variety of reasons (such as lack of evidence, insufficient damages, etc.).

What Sources of Coding / Billing Data are used by UPICs? UPICs are required to use a variety of proactive and reactive techniques to identify and confront any potentially improper or fraudulent practices.  As set out in Chapter 2 of the Medicare Integrity Policy Manual (MIPM), UPICs utilize a wide variety of data sources. Primary sources relied on by UPICs include:

• Claims Summary Information (CSI) reports.  CSI reports describe the various provider types and break down each provider’s utilization practices by units of service performed, charges billed, etc.
• Part B Analytics System Report (PBASR). The PBASR compares utilization ratios by code, further broken down by MAC, and each provider’s specialty.
• Short Term Alternatives for Therapy Services (STATS) reports.  UPICs use STATS reports to analyze the outpatient therapy professional and provider claims data.
• IDR Analysis Reports.  UPICs use IDR analysis reports and Focused Medical Review (FMR) to analyze shows Part B claims utilization and enrollment data.

III.  Final Thoughts:

Chiropractor-owned multidisciplinary practices and clinics currently appear to be under the proverbial microscope.  While there is little, if any, action that can reduce your likelihood of being targeted for an audit due to data-mining, there are a number of effective steps that you can reduce your risk of liability if an audit or investigation is initiated.  The design, implementation and adherence to provisions set out in an effective compliance plan can greatly improve your efforts to fully meet your statutory and regulatory requirements under the law.

Robert W. Liles, JD, MBA, MS, CPC, serves as Managing Partner at the health law firm of Liles Parker, Attorneys and Counselors at Law.  Robert represents Chiropractors and other health care providers around the country in connection with UPIC audits, DOJ investigations, State Medical Board disciplinary, and other health law related issues.  Please give Robert a call for free consultation.  He can be reached at:  1 (800) 475-1906.

[1] Qlarant, Safeguard Services and CoventBridge are the current program integrity contractors that have been awarded contracts as Unified Program Integrity Contractors (UPICs) by the Centers for Medicare and Medicaid Services (CMS).

[2]  A copy of this article can be found at the following link.

Pierce the Corporate Veil — Are You Personally Liable for a UPIC Overpayment?

(Updated January 9, 2021): Owners of healthcare companies often wonder whether the government can pierce the corporate veil and try to hold the owners personally liable for overpayment claims when facing a program integrity audit by a Unified Program Integrity Contractor (UPIC). [1] This rarely happens, but assuming that a provider does not prevail in the administrative appeal process, one way for the government to try and collect monies owed by a bankrupt health care entity would be to try and pierce the corporate veil.  A health care entity is usually owned by one or more individual owners. These owners often organize the company into an entity such as a corporation or Limited Liability Company (LLC). This is specifically done to limit each individual owner’s personal liability. Owners of incorporated health care providers can only be found personally liable for their companies’ debts to the Centers for Medicare & Medicaid Services (CMS) in certain very narrow circumstances, one of which is piercing the corporate veil.

I.  Will the Government Seek to Pierce the Corporate Veil?

The legal doctrine of piercing the corporate veil allows creditors to reach through the corporate structure and collect their debts from shareholders or similar owners. This doctrine is not unique to healthcare. In fact it is a potential way for all creditors to collect debts from individual entity owners.

CMS and its contractors rarely seek to pierce the corporate veil, and courts also tend to disfavor the practice. Veil piercing depends on facts that by their nature are difficult to prove in court. The burden of proving the facts is always on the creditor. Even though it may be difficult for a creditor to prove these facts exist, it is still important to know how a creditor could pierce a healthcare corporation’s “veil” to prevent individual owner liability. Creditors must prove specific factors to justify imposing liability on owners for a provider’s debts to CMS, including the following:

1. Defective Incorporation: If the legal statutory requirements for organizing the corporation or LLC are not met, no corporation exists to shield owners from liability.

2. Ignoring the Separateness of the Corporation: Entering into contracts and otherwise transacting business variously in a corporate name and an individual name can justify piercing the corporate veil. Commingling corporate and individual assets, transferring assets between the provider and an owner without formalities, or transferring assets between the provider and a sister company, can also suggest the owners did not respect the separate nature of the entity, potentially allowing CMS to pierce the corporate veil.

3. Significant Undercapitalization: A corporation must have a reasonably sufficient amount of capital to pay its expected debts. Undercapitalization is grounds to impose liability on the owners.

4. Excessive Dividends or Other Payments to Owners: When owners are actually working for a corporation, they can usually pay themselves fair compensation, as long as it is clearly characterized as salary or wages. However, additional dividends and other non-compensation distributions can only be safely taken out by an owner to the extent the distributions reflect profits. If an owner takes non-compensation distributions exceeding profits, these distributions constitute a return of capital and can give rise to an undercapitalization claim by a corporate creditor. If such distributions are made when the corporation is insolvent, the creditors’ claims against the owner will be almost impossible to defend.

5. Misrepresentation and other Unfair Dealings with Creditors: Deceptive practices such as dishonesty, false statements to corporate creditors, and asset concealment can make owners liable for corporate debts.

6. Absence or Inaccuracy of Records: If corporate records are missing or inaccurate, this can form a basis to pierce the corporate veil, especially if they hinder a creditor’s collection efforts against the provider.

7. Failure to Maintain Ongoing Legal Requirements: Each state’s statutes impose annual franchise fees and report-filing requirements on corporations and similar entities. These usually have grace periods and cure provisions, but if they are neglected long enough the corporation or LLC will legally cease to exist, resulting in owner liability.

II.  Case Example Where the Government Sought to Pierce the Corporate Veil of a Home Health Agency:

In United States v. Bridle Path Enterprises, Inc., a Massachusetts Federal district court held the owners of a home health agency personally liable for the provider’s Medicare overpayment debt. The provider, Bridle Path, made payments toward the overpayment until they sold all of their assets to another provider. At the time of the sale, $64,807.84 was outstanding on the overpayment liability. The United States sought to hold Bridle Path’s owners personally liable for the Medicare overpayment, using the piercing the corporate veil doctrine. Due to the number of checks Bridle Path wrote to its owners, their home health agency, and their real-estate holding company, the court found that the owners did not treat Bridle Path as a separate corporate entity and pierced the corporate veil to hold the owners liable for the Medicare debt.

 III.  Final Remarks:

If any of the factors above exist, CMS and its Medicare contractors can seek to pierce the corporate veil of a healthcare provider’s company and collect debts from the provider’s owners. These circumstances are not typical for health care providers and are easily avoided by maintaining personal owner dealings separate from all entity business.  Do your practice’s day-to-day operations expose you to unnecessary liability?  If your business was assessed a huge fine and forced into bankruptcy, are you 100% confident that you, as the owner, will be free of individual liability? If you have any questions about this or any other health law issue, call 1 (800) 475-1906 for a complimentary consultation.

The attorneys at Liles Parker, Attorneys & Counselors at Law represent health care suppliers and providers around the country. We specialize in regulatory compliance reviews, UPIC audits of Medicare and Medicaid claims, and the defense of proposed State Medical Board disciplinary actions. Need help?  Call Robert Liles for a free consultation:  1 (800) 475-1906.

[1] For a detailed discussion of the Unified Program Integrity Contractor (UPIC) audits and investigations currently being conducted, please see our page titled: “A UPIC Audit is Serious Business — Is Your Office Prepared?” 

Preparing for a UPIC Audit? Examine These Eight Claim Elements

(Updated January 9, 2021):  Each year, our attorneys and paralegals review and assess literally thousands of Medicare claims which have been audited (and denied) by Unified Program Integrity Contractors (UPICs) and other contractors working for the Centers for Medicare and Medicaid Services (CMS).  Are you preparing for a UPIC audit?  If your Medicare or Medicaid claims haven’t already been audited by a UPIC, chances are that it will eventually happen. As UPIC audits increase during 2021, it is essential that health care providers and suppliers review their processes to better ensure that services and supplies billed to Medicare and Medicare fully comply with applicable coverage, coding and billing requirements.  While defending physicians and other health care providers in UPIC audits and government reviews, we have identified a relatively straight-forward approach for determining whether a particular claim qualifies for coverage and payment.  Generally, we refer to this approach as an examination of the “Eight Elements of a Payable Claim.” Notably, this has proven to be extremely helpful tool when developing an effective Compliance Plan for a client.  As set out below, physicians and other non-hospital health care providers can often use this approach to determine whether specific services billed to the Medicare and Medicaid programs.

I.  Assessing Your Claims — Preparing for a UPIC Audit:

A discussion of the eight elements which must be carefully assessed for each and every claim is provided below.  This is especially when you are preparing for a UPIC audit of the medical services or supplies you have billed to the Medicare and Medicaid programs.

Element #1: Medical Necessity — In addressing this element, a treating health care provider should ask the following question: “Were the services administered medically necessary?”

Just because a certain treatment regime is medically necessary does not mean that it will be covered by Medicare or Medicaid.  We believe that this element constitutes the most important question to be answered by a provider.  Government payors only cover medically necessary services and supplies.

Element #2: Services Were Provided – The second issue addressed is whether the services at issue were actually provided.

As you can imagine, regardless of the fact that services ordered were medically necessary, the services must actually be provided in order for those services to be billed and paid.  When you are preparing for a UPIC audit, as part of your internal auditing and monitoring, should you find instances where you cannot show that a medical service or piece of durable medical equipment was provided, you must return any funds that have been received.  Equally important, medical services must actually be provided at a level of quality consistent with Medicare’s expectations or the expectations of the covering payor.

Element #3:  No Statutory Violations – Are the services “tainted” by any statutory or regulatory violation, such as the Stark Law, Federal Anti-Kickback or a False Claims Act violation?

Remember, a UPIC is specifically instructed to detect and refer instances of fraud, waste and abuse. [1]  When you are preparing for a UPIC audit, your review of claims should not be limited to merely a review of the documentation.  You need to also examine your organization’s business relationship and business practices.  For example, is there any evidence that the service or supplies are linked in any way to a breach of the Federal Anti-Kickback Statute or Stark’s prohibition against improper self-referrals?  Similarly, is the service or claim associated with a possible violation of the civil False Claims Act? In recent years, we have see an increasing number of cases where otherwise payable claims were tainted due to the fact that the referring or servicing provider was excluded from participation in the Medicare or Medicaid programs. [2]  The bottom line is fairly straight-forward: it is insufficient to merely show that a claim appears to meet the government payor’s basic medical necessity, billing and coding rules. You need to also verify that the way the business was generated or referred was proper and not due to a statutory violation.

Element #4:  Meets all Coverage Rules – Do the services meet Medicare’s coverage requirements?

The next point to be addressed when auditing a claim is to determine whether or not it is covered by Medicare or Medicaid.  It is important to keep in mind that a medical service or supplies can be medically necessary yet still not qualify for coverage and payment.   Ultimately, every service or claim, regardless of whether the beneficiary is a Medicare or a Medicaid plan participant, must be examined to see if it qualifies for coverage.

Element #5:  Full and Complete Documentation – Have the services rendered been properly and fully documented?

It is essential that you pull each and every regulatory issuance, along with any guidance issued by the state which sets out the documentation requirements associated with a particular service or claim.  After auditing literally thousands of claims, we have found that over a majority of the health care providers we have audited have never fully researched and reviewed applicable  documentation requirements.  As UPIC clinical reviewers of both Medicare and Medicaid claims are quick to state in hearings before an Administrative Law Judge (ALJ), “If it isn’t documented, it didn’t happen.”   When made during an ALJ hearing by a UPIC, this point is quite effective—it is extremely difficult for a provider to prove that a service was provided if there is insufficient documentation of the work conducted in the patient’s medical records.  Therefore, research, review, and confirm the precise documentation requirements to be met, then ensure that you take the time to fully and accurately document the work you have performed.

UPIC auditors are excellent at identifying one or more ways in which your claims do not meet applicable coverage requirements.  While you may very well disagree with their assessments, especially in “medical necessity” determinations (when you file a request for redetermination appeal and later, a request for reconsideration appeal), you will find that your Medicare Administrative Contractor (MAC) and your Qualified Independent Contractor (QIC) agree with the UPIC’s denial decision.  Rather than endure significant costs and stress when defending against an overpayment assessment, you need to take steps to avoid a denial in the first place.  To that end, health care providers should ensure that clinical staff members are fully trained and educated regarding Medicare’s documentation, coding, and billing processes.  It is very important that you show your clinicians that UPICs  enforce a strict application of Medicare’s documentation and coverage requirements.

Element #6: Proper Coding – Were the services rendered correctly coded?

Unfortunately, even if the foregoing rules have been met, it is quite simple to make a coding mistake, therefore invalidating the claim.  The coding rules are both complicated and dynamic, potentially changing from year to year.  We recommend that you either engage a qualified third-party billing company to assist you with coding and billing or ensure that your in-house staff members handling these duties are experienced and provided regular opportunities for updated training.

Element #7: Proper Billing Practices – Were the services rendered correctly billed to Medicare?

As a final requirement, health care providers must ensure that the services or claims performed fully meet Medicare or Medicaid;s billing rules.  Once again, you need to ensure that your staff is properly trained to handle the organization’s billing responsibilities. As you review your billing practices, you should abide by the following:  First, “If it doesn’t belong to you, give it back.” [3] Conversely, if you don’t owe the money, don’t automatically throw in the towel.  Discuss these claims with our attorneys to determine if there may be other arguments in support of payment that may be asserted.  

II.  Final Considerations — UPIC Audits:

The likelihood that your practice or organization will be subjected to a Medicare or Medicaid audit is increasing every day.  As a participating provider in one or more Federal health care programs, you have an affirmative obligation to ensure that your claims are properly provided, documented, coded, and billed.  Unfortunately, many health care providers have never researched and reviewed the proper rules covering the care and treatment services they provide.  When conducting a “GAP Analysis” [4] of your organization, a sample of your claims is an important proactive step you can take to help ensure that your current practices are fully compliant with applicable laws and regulations; such analyses do not have to be statistically significant.  Should you identify deficiencies, remedial steps should be taken (immediately) so that future claims for care and treatment will meet all applicable requirements.  Keep in mind—any identified overpayments must be repaid promptly to the government in order to avoid possible False Claims Act liability.

Audits of Respiratory (CPT Code 87633) / Gastro (CPT Code 87507) Panels are Ongoing.

(January 3, 2021):  In recent months, we have seen a significant rise in the number of Medicare and Medicaid audits focusing on the medical necessity of certain outpatient Respiratory Viral Panels (CPT Code 87633) and Gastrointestinal Pathogen Panels (CPT Code 87507).  Unfortunately, many of these audits seem to be merely the latest example where payors have conflated the issues of “Medical Necessity” and “Coverage.”  In this article, we examine a number of the laboratory tests currently being audited by Medicare and Medicaid payors and we discuss why the government’s crack-down on respiratory and gastrointestinal testing may be ill-advised.  Specific outpatient respiratory tests currently being scrutinized include:

CPT Code 87631 (Respiratory Virus Panel.  3-5 Targets)

CPT Code 87632 (Respiratory Virus Panel. 6-12 Targets)

CPT Code 87633 (Respiratory Virus Panel.  12-20 Targets)

Specific outpatient gastrointestinal tests currently being audited include:  

CPT Code 87505 (Infectious agent detection by nucleic acid (DNA or RNA) Gastrointestinal Pathogen Panel (PCR).  3-5 Targets)

CPT Code 87506 (Infectious agent detection by nucleic acid (DNA or RNA) Gastrointestinal Pathogen Panel (PCR).  6-11 Targets)

CPT Code 87507 (Infectious agent detection by nucleic acid (DNA or RNA) Gastrointestinal Pathogen Panel (PCR).  12-25 Targets)

I.  Clinical Laboratory Testing for Viral Respiratory Infections:

Prior to the development of low-cost, outpatient multiplex laboratory testing technologies, clinicians diagnosed viral respiratory track infections with the assistance of direct fluorescent-antibody assay (DFA) and culture testing.  With this approach, clinicians were able to detect only a little more than a handful of commonly seen respiratory viruses.  DFA testing was labor intensive, required qualified laboratory staff and specific monoclonal antibodies. As technology has advanced, the ability to detect new respiratory viruses also increased.  From 2000 to 2007, five new human respiratory viruses were discovered. The emergence of five new respiratory viruses since 2000, including metapneumovirus (MPV), severe acute respiratory syndrome coronavirus (SARS-CoV), avian influenza virus H5N1, CoVs NL63 and HKU1, and human bocavirus really amplified the limitations of relying on DFA and culture testing. It became more important than ever that clinicians have the ability to readily detect both traditional and emerging respiratory viruses. [1]

Since 2000, a number of laboratory polymerase chain reaction (PCR) testing technologies were developed that enabled the rapid processing of 20 or more respiratory tests simultaneously, using a single sample.  As this technology has developed, the use of these multiplex testing systems has grown.  Today, a number of physician practices and clinics have integrated multiplex PCR testing systems into their outpatient practices.  The benefits of using multiplex PCR respiratory viral panel tests are well established and are discussed below.

II.  Benefits of Outpatient Multiplex PCR Respiratory Viral Panels — CPT Code 87631, CPT Code 87632 and CPT Code 87633:

The specific respiratory lab tests being audited include: CPT Code 87631, CPT Code 87632 and CPT Code 87633.  As you would expect, payors are quite concerned with the proliferation of CPT Code 87633, which involves the testing and billing for 12-20 targets. Despite these concerns, proponents of broad respiratory testing can point to a wide variety of benefits that have been realized through the use of multiplex PCR respiratory viral panel systems.  These benefits include, but are not limited to:

PCR testing platforms cover a broader scope of viral agents. PCR respiratory viral panel testing platforms can automatically process 22 (or more) viral tests at one time. DFA testing systems were typically limited to conducting 6 or 7 concurrent tests.

PCR test results are faster. PCR respiratory viral panel test results are typically available within an hour.  In contrast, old-school DFA and culture testing is both labor intensive and more time consuming.

PCR respiratory viral panels have been shown to significantly reduce ICU days.[2]

PCR respiratory viral panels have been shown to reduce the duration of a patient’s antibiotic use. [3]

Perhaps most importantly, PCR respiratory viral panels just work better.

PCR respiratory viral panels identified significantly more pathogens than traditional testing platforms. Christine Ginocchio, Ph.D.[4] presented a poster at the recent Seasonal and Pandemic Influenza meeting in Washington, DC, that emphasized the assay’s reproducibility and its ability to detect mixed infections.  “Overall, we detected a variety of respiratory viruses in 29 percent of specimens tested by direct immunofluorescence [DFA], in 49.9 percent of the specimens by rapid viral culture using R-Mix cells [Diagnostic Hybrids, Athens, Ohio], and in 64 percent of the specimens by the RVP [respiratory viral panel] assay,” she says. “The increase in identifying specimens positive for a respiratory virus was due to the fact that we are detecting viruses we normally do not culture for or grow routinely in the laboratory—the rhinoviruses, parainfluenza, and coronaviruses.”

Despite the fact that the benefits to using multiplex testing are numerous, a number of payors have taken a hard line when it comes to covering these tests.  Several of the payors concerns are discussed below.

III.  Problems with Multiplex PCR Respiratory Viral Panels:

Testing platform manufacturers have programmed their machines to test for organisms that are not common. One the one hand, manufacturers have covered their bases when it comes to commonly identified viral infections.  However, as the number of emerging respiratory viral organisms has grown, the manufacturers have expanded the scope of testing to include these organisms, despite the fact that they infrequently seen.

Testing platforms have a “fixed” testing protocol. For example, one of the more common PCR respiratory viral panel testing platforms is set up to test for 22 different organisms using a single sample, regardless of whether the ordering physician believes that a patient should be tested for all 22 of these viral organisms.

Medicare takes the position that multiplex PCR respiratory platforms do not meet the payor’s “reasonable and necessary” requirements. Essentially, Medicare takes the position that fixed testing platforms, where a sample is automatically tested for 22 organisms, regardless of whether or not they are needed, does not meet the payor’s reasonable and necessary requirements.  As such, checking for organisms where there is no identified need for testing would be medically unnecessary.  As Palmetto has argued “The multiplex PCR respiratory viral panels are effectively a ‘one size fits all’ diagnostic approach, and do not meet Medicare’s ‘reasonable and necessary’ criteria. Non-coverage of these multiplex PCR respiratory viral panels does not deny patient access because appropriate clinician directed testing is available.”

The Emergence of COVID-19 has Heightened the Government’s Concerns Regarding Multiplex Testing.   Earlier this year, the OIG added “COVID-19 Add-on Testing” to its list Work Plan projects.  As the OIG noted at the time, the OIG has program integrity concerns related to add-on tests in conjunction with COVID-19 testing, particularly related to potentially fraudulent billing for associated respiratory pathogen panel (RPP) tests, allergy tests, or genetic tests.

IV.  Coverage Concerns with Respect to Outpatient Gastrointestinal Multiplex Testing — CPT Code 87505, CPT Code 87506 and CPT Code 87507:

The specific gastrointestinal lab tests being audited include: CPT Code 87505, CPT Code 87506 and CPT Code 87507.  As you would expect, payors are quite concerned with the proliferation of CPT Code 87507, which involves the testing and billing for 12-25 targets.  Proponents of broad, multiplex testing can point to a number of benefits that have been identified in connection with this approach.  Several of these benefits include:

(a) Reduced antibiotic use.[5]

(b) Reduced time to antimicrobial therapy.[6]

(c) Led to more targeted therapy.[7]

(d) Reduced downstream procedures such as endoscopies and abdominal imaging.[8]

Medicare, Medicaid and private payors have approached both respiratory and gastrointestinal multiplex testing in a similar fashion.  For example, Noridian has issued Local Coverage Determination guidance providing that it would only cover multiplex gastrointestinal pathogen molecular assays in limited circumstances:

“In immune competent beneficiaries, coverage is limited to no more than 5 bacterial targets (when not testing for Clostridium difficile). Testing for 6-11 pathogens is covered when there is a clinical concern for Clostridium Difficile colitis, and Clostridium difficile is one of the pathogens being tested.

Testing for 12 or more organisms will only be covered in critically ill or immunosuppressed patients.”[9]

V.  Responding to an Audit of Outpatient Respiratory and Gastrointestinal Multiplex Laboratory Tests:

Arguably, there has been a disconnect between the technology being developed by industry and payor policies. A number of the multiplex lab testing technologies currently being sold are not set up to test for only a limited number of specified pathogens.  When conducting outpatient respiratory and gastrointestinal multiplex tests, these machines may automatically test the maximum number of targets.  In other words, a provider can’t use some of these machines to only test for 3-5 targets even if that is all the provider wanted to test.  While payors like to base their denials of higher level multiplex testing on lack of medical necessity grounds, there have been a number of studies which suggest that in the long run, it is both better for the patient and more economical to conduct broad-based multiplex testing.  In any event, you cannot bill a payor for respiratory viral or gastrointestinal pathogen tests that were not medically necessary.  Should you identify that you have received an overpayment, you have an affirmative obligation to return it to the appropriate payment.  For more information on your duty to return overpayments, please see our page on the subject.

If your respiratory and / or gastrointestinal laboratory testing practices are audited (especially CPT Code 87633 and CPT Code 87507), you will need to be able to show that the level of testing billed was medical necessary and appropriate given the clinical profile of each patient.

NATIONWIDE REPRESENTATION:  Call for Free Consultation. 1 (800) 475-1906

Robert W. Liles, JD, MS, CPC, serves as Managing Partner at Liles Parker.  Liles Parker health law attorneys [10] are experienced in defending claims audits of this type.  In addition to being experienced health lawyers, many of our attorneys have also achieved recognition as Certified Professional Coders (CPCs).  Are your laboratory claims for CPT Code 87633 and CPT Code 87507 being audited?  Give us a call for a free consultation:  1 (800) 475-1906.

[1] Journal of Clinical Microbiology, Development of a Respiratory Virus Panel Test for Detection of Twenty Human Respiratory Viruses by Use of Multiplex PCR and a Fluid Microbead-Based Assay Sept. 2007, p. 2965–2970.

[2] Martinez R, et al. Clinical Virology Symposium, Poster #C-368, May 2016.

[3] Rogers B, et al. Arch. Path. & Lab. Med. 2015;139(5): 636-41.

[4] CGinocch@NSHS.edu

[5] Axelrad JE, Freedberg DE, Whittier S, Greendyke W, Lebwohl B, Green DA. Impact of Gastrointestinal Panel Implementation on Healthcare Utilization and Outcomes. J of Clin. Microbiology. 2019; 27;57(3). e01775-18.

[6] Cybulski R, Bateman A, Bourassa L, Bryan A, Beail B, Matsumoto J, Cookson B, Fang FC; Clinical impact of a Multiplex Gastrointestinal PCR Panel in Patients with Acute Gastroenteritis. 2018. Clinical Infectious Diseases, ciy357, https://doi.org/10.1093/cid/ciy357.

[7] Id.

[8] Axelrad JE, Freedberg DE, Whittier S, Greendyke W, Lebwohl B, Green DA. Impact of Gastrointestinal Panel Implementation on Healthcare Utilization and Outcomes. J of Clin. Microbiology. 2019; 27;57(3). e01775-18.

[9] Noridian Local Coverage Article: Billing and Coding: Foodborne Gastrointestinal Panels Identified by Multiplex Nucleic Acid Amplification (NAATs) (A56711)

A Look Back at Hospice Audits and Prosecutions in 2020 — Are You Ready for 2021?

(December 28, 2020):  Let’s face it, we are all glad to have 2020 behind us.  From an enforcement standpoint, COVID-19 greatly impeded the Federal government’s ability to investigate and prosecute civil and criminal violations of law.  The numbers speak for themselves.  Between February 2020 and April 2020, new criminal prosecutions had dropped by 80%.[1] Although the final numbers from May to December 2020 are still pending, it is anticipated that the number of prosecutions will still fall far short of where they were in 2019.  Why did this occur?  The answer is fairly straightforward – the number of civil and criminal referrals sent to Federal prosecutors at U.S. Attorney’s Offices around the country dropped precipitously when much of our country effectively shut down, and took other steps to stop the spread of COVID-19. Although prosecutions as a whole were way down in 2020.  The government hasn’t put investigations on hold.  With respect to administrative reviews, private sector program integrity contractors working for the Center for Medicare and Medicaid Services (CMS) have moved forward with audits of hospice claims around the country.  On the civil side, both Federal and State prosecutors have continued to investigate alleged hospice agency violations of the False Claims Act.  Finally, as we recently saw in the Southern District of Texas, criminal hospice-related prosecutions have continued to be held.  This article examines the various hospice audits, investigations and prosecutions that have taken place in 2020.

I.  Criminal Prosecutions of Hospice Related Violations:

In mid-December 2020, after a month-long Federal criminal trial,  the owner of a chain of hospices and a business partner of conspiracy to commit health care fraud, conspiracy to commit money laundering and conspiracy to obstruct justice as well as six counts of health care fraud.  The hospice owner was also convicted of one count of conspiracy to pay and receive kickbacks.  The hospice owner was subsequently ordered to serve 20 years in prison and pay $120 million in restitution.  This case is noteworthy in several respects.

First, this is one of the first Federal criminal prosecutions of hospice-related crimes that has been tried before a jury.  As a review of the Indictment reflects, the defendants in this case were charged with multiple violations of criminal law.  Charges included, but were not limited to, the following:

Conspiracy to Commit Health Care Fraud (18 U.S.C. §1349):  In this case, the government alleged that the hospice owner and several other individuals provided hospice and home health services through a number of affiliated entities to Medicare beneficiaries, knowing that the services were medically unnecessary and did not comply with Medicare’s reimbursement requirements.  The defendants were also alleged to have falsified or caused the falsification of patient records and other documentation in connection with these claims.

Health Care Fraud (18 U.S.C. § 1349):  The government alleged that the “in connection with the delivery of and payment for health care benefits, items and services, did knowingly and willfully execute, and attempt to execute, a scheme and artifice to defraud a health care benefit program affecting interstate commerce. . . and to obtain by means of materially false and fraudulent pretenses, representations, and promises, money and property owned by and under the custody and control of Medicare,” all in violation of 18 U.S.C. §1347.

Obstruction of Criminal Investigations of Health Care Offenses (18 U.S.C. §1518):  The government alleged that FBI agents met with one of the defendants and advised him that they were conducting an investigation into the individual’s involvement in referring patients in exchange for illegal kickbacks.  The FBI agents also advised the defendant that making a false statement to a Federal agent was a Federal crime.  During the subsequent interview, the defendant denied ever receiving kickbacks and payments in exchange for patient referrals. The defendant subsequently had a telephone call with an individual who was a confidential informant working for the government.  During that call, the defendant is alleged to have told the informant “that they would have to take steps to conceal the kickbacks that the informant had paid to the defendant in exchange for patient referrals.  The defendant later instructed the confidential informant to provide a false and misleading statement to the FBI in the event that the informant was interviewed in order to conceal the kickback payments made to the defendant.

Obstruction of Justice (18 U.S.C. §1512):  The government alleged that in response to a Grand Jury investigation, the Custodian of Records for one of the entities investigated produced patient records that contained various false and fictitious records that the defendants’ co-conspirators manufactured and created at the direction of two of the defendants. 

False Statement (18 U.S.C. §1001):  The government alleged that when questioned about kickbacks, one of the defendants made a materially false, fictitious and fraudulent statement to FBI agents when he stated that he did not receive kickbacks and payments in exchange for patient referrals.

Commenting on the subsequent conviction of the defendant, a DOJ official noted stated that the owner of the chain of hospice agencies had “funded his lavish lifestyle by exploiting patients with long-term, incurable diseases by enrolling them in expensive but unnecessary hospice services.”

It is also worth noting that the OIG’s Special Agent in Charge for the Dallas Region stated that the defendant’s conduct in this case had effectively prevented patients from accessing curative care.

II.  Civil False Claims Act Cases Brought Against Hospice Agencies:

Overall, settlements and judgments under the Federal civil False Claims Act [2] are anticipated to be at historic lows when comparing Fiscal Year (FY) 2020 to previous years.  While the DOJ has not released the final numbers, we anticipate that the total will fall far short of the $3 billion achieved during FY 2019.  That doesn’t mean however, that False Claims Act cases haven’t continued to be filed, investigated and, in some cases, settled by the government.  For example during 2020, hospice False Claims Act settlements included, but were not limited to the following:

Middle District of Florida:  In a case originally brought by a whistleblower under the False Claims Ac’s qui tam provisions, a Florida hospice agreed to pay $3.2 million to resolve allegations that is knowingly submitted false claims to the Medicare, Medicaid and TRICARE programs for hospice care that did not qualify for reimbursement.  More specifically, Federal prosecutors in this case alleged that the Florida hospice billed for services provided to patients that were not terminally ill.  The government also alleged that the hospice fraudulently billed for higher levels of care than were medically necessary.

State of Georgia:  In a case brought under Georgia’s False Medicaid Claims Act provisions, a whistleblower alleged that an Atlanta-based hospice had submitted false claims to both Medicare and the Georgia Medicaid programs for patients that were not terminally ill and therefore did not qualify for coverage and payment. After investigating the case, the defendant hospice company agreed to pay $1.75 million to resolve the allegations.

III.  Audits of Hospice Claims Remain Ongoing by UPIC Contractors Around the Country:

Unified Program Integrity Contractor audits (also known as UPIC audits) of your hospice are serious business and can result in civil and criminal referrals to law enforcement. [3]  Unlike their predecessors,[4] UPIC program integrity contractors are authorized to audit both Medicare and Medicaid claims.  Perhaps most importantly, the goal of the UPIC program is to identify and report evidence of fraud to law enforcement authorities.  As the Centers for Medicare and Medicaid Services (CMS) expressly states in its Medicare Program Integrity Manual, Section 4.2:

“The primary goal of the UPIC is to identify cases of suspected fraud, waste and abuse, develop them thoroughly and in a timely manner, and take immediate action to ensure that Medicare Trust Fund monies are not inappropriately paid. Payment suspension and denial of payments and the recoupment of overpayments are examples of the actions that may be taken in cases of suspected fraud. Once such actions are taken, cases where there is potential fraud are referred to LE [Law Enforcement] for consideration and initiation of criminal or civil prosecution, civil monetary penalties (CMP), or administrative sanction actions.” [5]

On or about March 30, 2020, CMS instructed Recovery Audit Contractors (RACs) and other program integrity contractors to place most fee-for-service claims audits on hold.  During this period, most administrative enforcement activities were suspended. During this period, UPICs continued to conduct data mining and other targeting activities, it just held off sending out requests for records to health care providers and suppliers. In August 2020, CMS rescinded its administrative audit hold order.  Since that time, a number of hospice agencies around the country have received requests for records and billing information. In light of the preliminary targeting work already conducted by UPICs, we anticipate that the number of audits initiated against hospices will continue to rise throughout 2021.

IV.  Responding to a UPIC Audit of Your Hospice:

UPIC audit and administrative enforcement activity has steadily increased since August 2020, despite the fact that the spread of COVID has continued unabated throughout the country.  Possible administrative actions that a UPIC might take with respect to your hospice agency include:

• Unannounced site visits.
• Prepayment review.
• Postpayment audit.
• Revocation of an agency’s billing privileges.
• Suspension of payments.
• Referral to law enforcement for criminal investigation and prosecution.

If your hospice agency is audited by a UPIC, we strongly recommend that you contact an experienced health care attorney before you turn over the medical records and claims materials requested.  ?Your attorney can usually contact the UPIC and obtain an extension of time for you to assemble the records at issue and review them for completeness.  ?

If documents are missing, try and locate a copy of the information that is needed in your records.  For instance, is a complete copy of the referring physician’s notes in the files?  Are supporting hospital records in the file?? If any information appears to be incorrect, take care when making a correction.  NEVER backdate a document.

To the extent that amendments, corrections or delayed entries must be made in a hospice record, it is essential that you comply with the requirements set out in Chapter 3, Section 3.3.2.5 of the CMS Medicare Program Integrity Manual.[6]  A third party reviewing your records cannot be misled as to when information was corrected, revised or added.

V.  Hospice Risk Areas:

As reflected above, hospice agencies (and the individuals associated with them) are under law enforcement’s microscope.  To reduce your hospice agency’s level of regulatory risk, it is essential that you ensure that medical necessity, documentation, coding and billing practices fully comply with applicable statutory and regulatory requirements. It is equally important for you to carefully examine your marketing and business practices.^[7]  In the event of an investigation, one of the first assessments conducted by the Federal agents will be to determine how referrals to the hospice are generated.  Common hospice risk areas examined by law enforcement have included the following:

(1) Falsely diagnosing a patient as terminally ill and admitting the patient into hospice.

(2) Falsification of physician certification documents and other medical records in order to make it appear that a patient qualifies for hospice, when in fact he or she is not eligible for hospice care.

(3) Failure to document that a bona fide face-to-face examination of the patient took place.

(4) Billing for higher levels of hospice care, such as “Continuous” or “Crisis Care,” when such services were either not provided or were not medically necessary.

(5) Providing an inadequate level of care than is needed to care for terminally ill patients.

(6) Failure to properly advise patients that they were effectively waiving certain Medicare covered services if they elect to enter hospice.

(7) Failure to order needed medications in order to keep costs at a minimum.

(8) Engaging in illegal marketing practices in order to generate referrals.

(9) Paying physicians and others kickbacks and other illegal payments for referrals.

(10) Other improper hospice billing practices identified by UPICs and law enforcement investigators have included:

(a) Pressuring a patient to refuse or relinquish the Medicare Hospice Benefit when the patient is   still eligible for and desires care but has become too expensive;

(b) Billing for hospice care provided by unqualified or unlicensed clinical personnel;

(c) Knowingly misusing provider certification numbers, resulting in improper billing; and

(d) Failure to adhere to hospice licensing requirements and Medicare conditions of participation.

(11) Knowingly failing to return overpayments made by Federal health care programs.

(12) Falsifying diagnosis and / or procedure codes. Diagnosis and procedure codes for hospice services reported on the reimbursement claim must accurate, and should be based on the patient’s clinical condition as reflected in the medical record.

(13) Employing individuals who have been excluded from participation in Federal health care programs to provide administrative or clinical hospice services.

If a UPIC shows up unannounced at your hospice tomorrow, would you be ready?  Have you reviewed your business and clinical practices to ensure that your admissions meet applicable medical necessary requirements?  Now is the time to conduct an honest assessment of your documentation, coding and billing and marketing practices. Don’t wait until the government is already auditing your claims.

NATIONWIDE Representation:  1 (800) 475-1906

Need help?  Give us a call.  A number of our health lawyers are also Certified Professional Coders (CPCs) and / or Certified Medical Reimbursement Specialists (CMRSs).  Our attorneys have extensive experience representing hospice agencies in connection with UPIC and other program integrity audits.  Additionally, several of our attorneys have held significant positions as Federal prosecutors with the U.S. Department of Justice.  To the extent that a civil or criminal investigation has been initiated by the government, our attorneys will diligently work to obtain a favorable outcome in your case.  For a free consultation, please give us a call:  1 (800) 475-1906.

[1] TRAC Report (May 20, 2020).

[2] 31 U.S.C. §§ 3729 – 3733.  For a more detailed discussion of the False Claims Act, we recommend you see our overview of the statute.

[3] A detailed discussion of the Unified Program Integrity Contractor audit process can be seen on our website at the following link.

[4] For instance, Zone Program Integrity Contractors (ZPICs) were only authorized to audit Medicare claims while Medicaid Integrity Contractors (MICs) were only authorized to audit Medicaid claims.

[5] CMS Medicare Program Integrity Manual, Section 4.2.

[6] Chapter 3, Section 3.3.2.5 of the CMS Medicare Program Integrity Manual.

[7] In examining the compliance needs of hospice agencies, the OIG has written:

“Every compliance program should require the development and distribution of written compliance policies, standards, and practices that identify specific areas of risk and vulnerability to the hospice.  These policies, standards and practices should be developed under the direction and supervision of, or subject to review by, the compliance officer and compliance committee and, at a minimum should be provided to all individuals who are affected by the particular policy at issue.”  

 See 65 Fed. Reg. 59434, 59438 (Oct. 5, 2000) (emphasis added). 

AbilityOne OIG Audits are Ramping-Up! Is Your Nonprofit Agency Ready for an Audit?

(November 11, 2020):  If you run a nonprofit company that contracts with the federal government through the AbilityOne Program, then you should be aware that inadequate compliance policies could put your nonprofit in danger of facing allegations of waste, fraud, abuse, and mismanagement, onerous audits and investigations, and even civil liability.   Under the AbilityOne Program, the federal government assigns contracts for the procurement of goods and services to qualified nonprofit agencies that meet designated requirements for direct labor performed by blind and other severely disabled individuals. The AbilityOne Program is intended to advantage the disabled by giving them the opportunity of a living wage while also reducing expenditures otherwise devoted to transfer payments for unemployed disabled persons. The AbilityOne Program is in fact designed to generate additional tax revenue by increasing the taxable income of the disabled through wages paid out under program contracts.

I.  Background of the AbilityOne Program:

The AbilityOne Program traces its origins to the New Deal era when Congress passed the Wagner-O’Day Act in 1938, which established the Committee on Blind-Made Products for overseeing the procurement of goods made in part using the labor of blind persons. The Javitz-Wagner-O’Day Act of 1971 (JWOD) expanded upon the original legislation by extending its coverage not only to the blind but other severely disabled individuals as well. The legislation also authorized the federal government to utilize AbilityOne program contracts for the procurement of services in addition to goods.

AbilityOne works with a group of special nonprofit organizations that assist in the distribution of AbilityOne contracts. In its formative years, the AbilityOne Committee relied on the National Industries for the Blind (NIB) to help administer the program. Today the NIB has been joined by SourceAmerica and the American Federation for the Blind (AFB) in a collaborative oversight role with AbilityOne. These organizations are designated as central nonprofit agencies (CNAs) that help monitor qualified nonprofits receiving contracts from the procurement list and otherwise facilitate AbilityOne’s distribution of product and service orders at a fair market price. [1]

The AbilityOne program, which has since been reconstituted as a Commission with independent agency oversight, now serves as the nation’s largest indirect employer of disabled individuals through its contracts with hundreds of qualified nonprofit agencies. Its contracts are in the aggregate worth up to $3 billion, and they provide employment and training opportunities to some 45,000 disabled individuals. [2]

II.  Rise of the AbilityOne Commission OIG:

On December 18, 2015, the Consolidated Appropriations Act of 2016 (P.L. 114-113) was passed.  Among its various provisions, Title IV, Section 401 of the legislation amended the the 1978 Inspector General Act and established a new Office of Inspector General (OIG) at AbilityOne as a designated federal entity.  As an independent agency, the AbilityOne Commission has been vested with investigatory and audit authority for the purpose of detecting waste, fraud, abuse, and mismanagement involving agency programs. The statute mandates that the Inspector General have access to all records, reports, audits, documents, and other materials relating to the inspector general’s responsibilities while further empowering the inspector general to issue subpoenas and administer oaths, affirmations, and affidavits. [3]

To safeguard against audits, investigations, and even potential lawsuits, nonprofit agencies must adhere to the full range of compliance mechanisms available to AbilityOne. These mechanisms serve two ends, that AbilityOne programs both help the federal government fulfill its procurement orders and encourage employment and training of blind and severely disabled individuals. The AbilityOne oversight framework centers upon rules regarding direct labor hours performed by disabled individuals. The JWOD implementing regulation requires that nonprofits maintain direct labor hour records for each employee, whether disabled or not, as well as separate files on the visual acuity and normal competitive employment viability of blind workers. [4] Maintaining records of direct labor hours for each employee helps to fulfill one of the most important provisions in the AbilityOne oversight framework, which is the ratio of overall direct labor hours (ODLH) of disabled to non-disabled employees. Nonprofit agencies must ensure that blind or other severely disabled individuals perform at least 75% of all ODLH per fiscal year. A NPA with disabled employees working fewer than 75% of direct labor hours contravenes the purpose of the AbilityOne program and may face probation or even exclusion from the program. [5]  The AbilityOne OIG is equipped with a number of tools at its disposal to ensure compliance in addition to those powers granted under the IG Statute.  Recent enforcement efforts taken by the AbilityOne OIG have included:

• Issuing policy guidance highlighting the importance of regulatory compliance.
• Conducting site inspections of nonprofit agencies funded, in part, by AbilityOne programs.
• Reviewing annual certifications submitted by nonprofit agencies.
• Providing training to nonprofit agencies on their obligations as a federal contractor / agency receiving federal funding.

As discussed in its Fiscal Year 2019 report on the top management and performance challenges facing AbilityOne, the OIG stated that it would need additional resources to carry out these oversight functions, an indication that in the future the OIG could, with enough funding, even more aggressively utilize these tools to target uniform compliance across the Commission’s entire contracting network. [6]  What does this mean?  In the short run, it means that this relatively new enforcement branch is working through its outstanding audit and investigative duties.  In the long run, it means that nonprofit agencies participating in the AbilityOne program should expect to be audited and may be facing significant penalties if they are not in compliance with their program obligations.

III.  The AbilityOne OIG is Actively Making False Claims Act Referrals to the U.S. Department of Justice (DOJ):

As we have recently seen the AbilityOne OIG is actively making referrals to Department of Justice (DOJ) prosecutors around the country.  Importantly, a number of the referrals being made are for alleged violations of the civil False Claims Act.[7] The civil False Claims Act is the primary civil fraud enforcement tool utilized by the federal government.  It is an extraordinarily useful statute for government prosecutors, both in terms of ease of use and in terms of the damages that may be recovered by the government.   Under Section 3729 of the civil False Claims Act, a person or entity may be in violation of the statute if the individual or entity:

“(1) Knowingly presents or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval;

 (2) Knowingly makes, uses or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government;

 (3) Conspires to defraud the Government by getting a false or fraudulent claim allowed or paid;

 (4) Has possession, custody or control of property or money used or to be used, by the Government and, intending to defraud the Government or willfully to conceal the property, delivers or causes to be delivered, less property than the amount for which the person receives a certificate or receipt;

 (5) Authorized to make or deliver a document certifying receipt of property used or to be used, by the Government and, intending to defraud the Government, makes or delivers the receipt without completely knowing that the information on the receipt is true;

 (6) Knowingly buys or receives as a pledge of an obligation or debt, public property from an officer or employee of the Government or a member of the Armed Forces, who lawfully may not sell or pledge the property; or

 (7) Knowingly makes, uses or causes to be made or used, a false record or statement to conceal, avoid or decrease an obligation to pay or transmit money or property to the Government, is liable to the United States Government . . .”

False Claims Act cases are prosecuted by the DOJ Civil Division in Washington, D.C. and by “Affirmative Civil Enforcement” (ACE) Coordinators appointed in each of the 94 U.S. Attorney’s Offices around the country. It is essential to keep in mind that the civil False Claims Act does not cover mistakes, accidents or mere negligence.  

Unfortunately, the line separating a “mistake” from a non-intentional wrongful claim that could give rise to an action under the False Claims Act is not always easy to discern.  A person or entity found to have violated this statute may be liable for both civil penalties and treble damages. The amount of civil penalties that may be imposed for each false claim depends on when each was made:

• For claims or statements made on or after August 1, 2016, but before January 1, 2017, the minimum penalty which may be assessed under 31 U.S.C. 3729 is $10,781 and the maximum penalty is $21,563.

• For claims or statement made on or after January 15, 2017, but before June 19, 2020, the new minimum was raised to $11,181 to the maximum penalty is raised to $22,363.

• For claims or statement made on or after June 19, 2020, the new minimum was raised to $11,665 and the maximum penalty was raised to $23,331

IV.  Is Your Nonprofit Agency Facing an AbilityOne-Related  False Claims Act Investigation?

Federal prosecutors are actively employing the False Claims Act to target nonprofit agencies that purportedly misrepresent their overall direct labor hours (ODLH) associated with AbilityOne-related set-aside contracts for the employment of blind workers. These lawsuits can result in settlements costing nonprofits hundreds of thousands or even millions of dollars.  Notably, False Claims Act liability isn’t limited only to alleged misrepresentations in annual ODLH certifications.  In one recent case, the Justice Department recovered almost $2 million in a settlement with a nonprofit agency over allegations that it misrepresented its ratio of disabled to non-disabled employees in order to attract AbilityOne contracts. [8]

Nonprofit agencies that contract with AbilityOne must be aware of their potential liability under the False Claims Act if their actual direct labor hours or other specified employee allocation ratios fail to match up with annual certifications or prior agreements and communications made with AbilityOne. The agencies most vulnerable to lawsuit are therefore not always what the legislative nomenclature characterizes as “at risk agencies.” An “at risk” agency is classified as one with ODLH below 75%, while a high risk agency has ODLH below 60%. [9] At risk or high risk agencies do not necessarily misrepresent underlying deficiencies in their ODLH compliance. Agencies alleged to have engaged in fraud or other misconduct, by contrast, do tend to have known, deliberately ignored or been recklessly ignorant of their failure to comply with ODLH requirements.  This failure may be reflected in the nonprofit agencies periodic ODLH compliance certification sheets. Nonprofit agencies not engaged in fraud but still prone to deficient compliance, such as those with below required ODLH, can still be subject to probation or even debarment from the government’s procurement list

V.  Conclusion — Moving Forward with Your AbilityOne Compliance Obligations:

Management at nonprofit agencies should be mindful of their AbilityOne-related contractual obligations with respect to the reporting of work hours and the employment of blind workers.  An organization’s failure to meet these contractual obligation actions could conceivably result in the loss of funding, the assessment of penalties and damages, and the organization being debarred from doing business with the federal government. Additionally, nonprofit agency executives signing false certification statements may face personal liability for their role in any false statements and / or misrepresentations made to the government that resulted in wrongful claims being submitted to the government for payment.  Nonprofit agency management officials should also be mindful that additional expressions of commitment made to AbilityOne for purposes of securing contracts, such as direct labor hours or employee ratios even higher than the statutory mandates, might also expose the nonprofit to fraud claims if the nonprofit fails to meet those commitments and then additionally fails to fully disclose this to AbilityOne.  Finally, nonprofit management team members must ensure that their policies and procedures will facilitate an agency’s compliance with its contractual obligations, duties and responsibilities as a participating agency in AbilityOne-related funding and blind worker employment programs.  One of the first signs that your nonprofit agency is being investigated for possible violations of the False Claims Act is the receipt of Civil Investigative Demand (CID) from the government.  As discussed in one of our other articles, a CID, it is important that you retain experienced legal counsel if your agencies is ever targeted by the government under the False Claims Act.  Our attorneys have extensive experience handling False Claims Act matters and cases.  For a free consultation, give us a call:  (202) 298-8750.  We represent individuals and entities nationwide in these types of cases and others brought under the False Claims Act.

Is your nonprofit agency being audited by AbilityOne OIG?  If so, give us a call.  We can help.  For a free consultation, call:  1 (800) 475-1906.   

[1] 41 U.S.C. § 8503. The statute further mandates that the Committee maintain a procurement list for both products and services from which it assigns orders to qualified nonprofits. These nonprofits are in turn grouped into two categories, those that employ the blind and those that employ the other severely disabled. As with other agencies, the Committee is charged with issuing regulations in furtherance of its responsibilities under the statute.

[2] AbilityOne Commission. “Ability One – Milestones.”

[3] 5 U.S.C. § 6. The IG Statute enumerates additional powers, including the requesting of assistance or information from other government agencies and entering contracts with outside parties to carry out its audit and investigatory functions. These powers uniformly apply to all agency IGs, including that for AbilityOne OIG.

[4] 41 C.F.R. § 51-4.3. The direct labor hours reporting rules and additional review requirements for blind individuals represent only a few of the compliance standards imposed on nonprofit agencies. The regulation includes additional requirements, such as those concerning the compensation, employment, and occupational health and safety standards prescribed by the Secretary of Labor, as well as placement programs in coordination with community services.

[5] Some exceptions for below 75% ODLH do apply, depending on the circumstances and at the discretion of the Commission. The Commission is more tolerant of relaxing the requirement if doing so still encourages the employment of disabled persons for specialized projects while also permitting the federal government to meet its procurement orders.

[6] AbilityOne OIG.  Top Management and Performance Challenges Report. December 2, 2019.

[7] 31 U.S.C. § 3729.

[8] See Department of Justice. U.S. Attorney’s Office for the Eastern District of Wisconsin Press Release titled: “Wisconsin-Based Nonprofit to Pay $1.9 Million To Settle Allegations of False Claims and Kickbacks On Federal Contracts for Blind Workers.” September 30, 2020.  In an earlier 2019 case out of the Western District of Tennessee, the government settled another False Claims Act against a different defendant for $150,000. The Press Release announcing this settlement is titled: “Memphis Goodwill Industries, Inc. will pay $150,000 to the United States for claims that were in violation of the False Claims Act.” June 19, 2019.

[9] U.S. AbilityOne Commission. “Nonprofit Agencies Out of Compliance with Commission Regulations.” Policy 51.403. March 22, 2013.

Home Health Revocation Actions by Medicare are Expanding Around the Country

(September 28, 2020):  Last September, CMS published a Final Rule titled “Medicare, Medicaid, and Children’s Health Insurance Programs; Program Integrity Enhancements to the Provider Enrollment Process.” [1] Among its many changes, the Final Rule significantly expanded the reasons that may be asserted by the Centers for Medicare and Medicaid Services (CMS) when revoking a health care provider’s enrollment and Medicare billing privileges.  The Final Rule also extended the period that a health care provider can be barred from reenrolling in the Medicare program.  Since the issuance of the Final Rule, the enrollment and Medicare billing privileges of an increasing number of home health agencies nationwide have been revoked.   This article examines several of the primary regulatory bases that have been cited by CMS when pursuing a home health revocation action.  It also examines a number of the issues that a home health agency should consider when faced with a potential revocation action.

I.  Summary Listing of the Reasons a Home Health Agency’s Medicare Enrollment May be Revoked:

With the implementation of the Final Rule, the number of reasons upon which CMS may seek to revoke the enrollment and Medicare billing privileges of a participating provider or supplier grew from 14 to 22. [2]  A summary listing of the expanded list of reasons for revocation is set out below.

Revocation Reason #1. Noncompliance. 42 C.F.R. §424.535(a)(1).

Revocation Reason #2. Provider or supplier conduct. 42 C.F.R. §424.535(a)(2).

Revocation Reason #3. Felonies. 42 C.F.R. §424.535(a)(3).

Revocation Reason #4. False or misleading information. 42 C.F.R. §424.535(a)(4).

Revocation Reason #5. On-site review. 42 C.F.R. §424.535(a)(5).

Revocation Reason #6. Grounds related to provider or supplier screening requirements. 42 C.F.R. §424.535(a)(6).

Revocation Reason #7. Misuse of billing number. 42 C.F.R. §424.535(a)(7).

Revocation Reason #8. Abuse of billing privileges. 42 C.F.R. §424.535(a)(8).

Revocation Reason #9. Failure to report. 42 C.F.R. §424.535(a)(9).

Revocation Reason #10. Failure to document or provide CMS access to documentation. 42 C.F.R. §424.535(a)(10).

Revocation Reason #11. Initial reserve operating funds. 42 C.F.R. §424.535(a)(11).

Revocation Reason #12. Other program termination. 42 C.F.R. §424.535(a)(12).

Revocation Reason #13. Prescribing authority. 42 C.F.R. §424.535(a)(13).

Revocation Reason #14. Improper prescribing practices. 42 C.F.R. §424.535(a)(14).

Revocation Reason #15. Reserved. 42 C.F.R. §424.535(a)(15).

Revocation Reason #16. Reserved. 42 C.F.R. §424.535(a)(16).

Revocation Reason #17. NEW — Debt referred to the United States Department of Treasury. 42 C.F.R. §424.535(a)(17).

Revocation Reason #18. NEW — Revoked under different name, numerical identifier or business identity. Under 42 C.F.R. §424.535(a)(18).

Revocation Reason #19. NEW — Affiliation that poses an undue risk. 42 C.F.R. §424.535(a)(19).

Revocation Reason #20. NEW — Billing from a non-compliant location. 42 C.F.R. §424.535(a)(20),

Revocation Reason #21. NEW — Abusive ordering, certifying, referring, or prescribing of Part A or B services, items or drugs. 42 C.F.R. §424.535(a)(21).

Revocation Reason #22. NEW — Patient harm. 42 C.F.R. §424.535(a)(22).

For a detailed discussion of the 22 revocation reasons summarized above, you may wish to review our article titled “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.”

II.  Primary Reasons Cited in Home Health Revocation Actions:

In reviewing the 22 reasons that CMS may revoke a home health agency’s enrollment and Medicare billing privileges, it is worth noting that only Revocation Reason #11. Initial reserve operating funds. 42 C.F.R. §424.535(a)(11), specifically targets home health agencies.  Under this provision, CMS can revoke the Medicare billing privileges of a home health agency if the agency fails to provide documentation that CMS can use to verify that the home health agency meets the initial reserve operating funds requirement described in 42 C.F.R. §489.28(a).  Although this particular basis for Medicare revocation is explicitly aimed at home health agencies, to date, it is rarely been cited by CMS as the primary reason for revoking an agency’s enrollment and Medicare billing privileges.

Of the remaining revocation reasons cited above, the reasons CMS has repeatedly relied on a home health revocation action are Revocation Reason #5. On-site review. 42 C.F.R. §424.535(a)(5) and Revocation Reason #8. Abuse of billing privileges. 42 C.F.R. §424.535(a)(8).  Both of these reasons for revocation are discussed in more detail below, along with recent home health Medicare revocation case decisions examining these regulatory violations.

III. “On-Site Review” as a Basis for a Home Health Revocation Action:

In recent years, our attorneys have represented numerous home health agencies whose enrollment and Medicare billing privileges have been revoked due to the fact that an unannounced, on-site visit by a CMS-contracted inspector found that the provider was no longer operational to furnish Medicare covered home health services. As 42 C.F.R. §424.535(a)(5) provides:

“(5) On-site review. Upon on-site review or other reliable evidence, CMS determines that the provider or supplier is either of the following:

(i) No longer operational to furnish Medicare-covered items or services.

(ii) Otherwise fails to satisfy any Medicare enrollment requirement.” (emphasis added).

What does this mean?  Simply put, if a CMS-contracted inspector conducts an unannounced site visit of a home health agency’s existing certified location and finds that the agency is no longer “operational” at that location, the home health agency’s enrollment and Medicare billing privileges are subject to revocation.  A home health agency is considered to be operational [3] if it:

“. . . has a qualified physical practice location, is open to the public for the purpose of providing health care related services, is prepared to submit valid Medicare claims, and is properly staffed, equipped, and stocked (as applicable, based on the type of facility or organization, provider or supplier specialty, or the services or items being rendered), to furnish these items or services.”

Many of these revocation cases are the result of a home health agency’s failure to properly notify the appropriate MAC that it intends to move from its surveyed and certified location to a new site (within its current approved geographic area). [4]  Home health agencies must also submit an amended Form CMS-855A, along with any other required documentation within 90 days. [5]  A recent DAB decision affirmed the revocation of a home health agency by CMS on the basis that an on-site review of the provider’s surveyed location found that the agency was not operational.

March 2020.  Texas Home Health Agency. Reason for Revocation – On-Site Review.  In a recent case decided by an Administrative Law Judge (ALJ) of the HHS, Departmental Appeals Board (DAB), the ALJ reviewed a revocation case involving a Texas home health agency that allegedly failed to meet its regulatory requirements under 42 C.F.R. §424.535(a)(5).

The facts in the case are fairly straightforward. In July 2017, a CMS-contractor inspector attempted to conduct an unannounced site visit of a home health agency in Tyler, Texas.  When the inspector arrived at the agency address on file with CMS and the MAC, she found that the building at that location was “[v]acant and locked.”  The inspector also found that no employees were present and there were no signs of customer activity.”

At appeal, the home health agency argued that the regulations require that a provider NOT the provider’s physical practice location was required to be “open to the public” for the purpose of providing health care related services.  The home health agency argued that since its staff delivered home health services in the homes of patients and not in a single practice location, it was, in fact, “open to the public.”  Based on the facts presented, the DAB ruled that since the home health agency was not operational at the address on file with CMS, it was in violation of the requirements under 42 C.F.R. §424.535(a)(5)(i).  The DAB therefore affirmed the revocation action and the two-year enrollment bar that had been imposed.

III. “Abuse of Billing Privileges” as a Basis for a Home Health Revocation Action:

As a review of 2019 and 2020 DAB decisions will confirm, CMS is increasingly citing a home health provider’s abuse of billing privileges when exercising its Medicare revocation authority.  Most of the revocation actions taken during this period alleged that the home health agency “has a pattern or practice of submitting claims that fail to meet requirements.” [6] As 42 C.F.R. §424.535(a)(8) provides:

“(8) Abuse of billing privileges. Abuse of billing privileges includes either of the following:

(i) The provider or supplier submits a claim or claims for services that could not have been furnished to a specific individual on the date of service. These instances include but are not limited to the following situations:

(A) Where the beneficiary is deceased.

(B) The directing physician or beneficiary is not in the state or country when services were furnished.

(C) When the equipment necessary for testing is not present where the testing is said to have occurred.

(ii) CMS determines that the provider or supplier has a pattern or practice of submitting claims that fail to meet Medicare requirements. In making this determination, CMS considers, as appropriate or applicable, the following:

(A) The percentage of submitted claims that were denied.

(B) The reason(s) for the claim denials.

(C) Whether the provider or supplier has any history of final adverse actions (as that term is defined under § 424.502) and the nature of any such actions.

(D) The length of time over which the pattern has continued.

(E) How long the provider or supplier has been enrolled in Medicare.

(F) Any other information regarding the provider or supplier’s specific circumstances that CMS deems relevant to its determination as to whether the provider or supplier has or has not engaged in the pattern or practice described in this paragraph.”  (emphasis added).

What does this mean?  When analyzing this revocation reason, it is worth noting that it is comprised of two parts, paragraphs (i) and (ii).  Under 42 C.F.R. §424.535(a)(8)(i), several straightforward criteria are outlined in sections (i)(A)-(C) that can serve as the basis for revoking a provider’s enrollment and Medicare billing privileges.  In contrast, paragraph (ii) permits CMS to revoke a provider’s enrollment if it determines that the provider “has a pattern or practice of submitting claims that fail to meet Medicare requirements.”   Although sections (ii)(A)-(F) are intended to provide a framework that can be used by CMS to determine if a “pattern or practice” of improper billing conduct is present, in our opinion this reason for revocation is still remarkably broad and subject to the vagaries of the discretion of CMS and its contractors.  An overview of one of the more interesting Medicare revocation cases brought under 42 C.F.R. §424.535(a)(8) is set out below.

May 2020.  Texas Home Health Agency. Reason for Revocation — Abuse of billing privileges:  In this case, an ALJ was faced with a case where a Texas home health agency was alleged to have submitted 38 claims (associated with 13 beneficiaries) to Medicare for services that were allegedly provided without a valid certification of eligibility.

In this case, the 13 home health Medicare beneficiaries at issue listed a Houston physician as the ordering / certifying physician.  Qlarant, the Unified Program Integrity Contractor (UPIC) for Texas, conducted a review of these claims and discussed them with the physician who allegedly ordered the home health services.  The physician attested that he did not order home health services for any of the 13 beneficiaries under review.  Based on Qlarant’s findings, Palmetto (the assigned Medicare Administrative Contractor) revoked the home health agency’s enrollment and Medicare billing privileges, citing violations of 42 C.F.R. § 424.535(a)(8)(ii). In support of its decision, Palmetto noted that the physician denied ordering the home health services.  Palmetto further stated that the physician did not have a prior Part B relationship with the 13 beneficiaries at issue. [7] Therefore, Palmetto took the position that the Physician was not involved in the care, treatment, or monitoring of the 13 beneficiaries whose medical records he reviewed.

On appeal, it was argued that a licensed nurse practitioner working under a valid collaboration agreement with a Houston-based physician properly certified the need for home health services in connection with these 13 beneficiaries.  As the home health agency noted, the supervising physician had signed a letter which stated:

“To whom it may concern: This is [to] certify that I [Physician] authorized [Nurse Practitioner] NP of [Pasadena Medical Clinic] to sign all Home Health orders on my behalf as her supervising physician.”

In its arguments, the home health agency conceded that “all related orders were signed and submitted by [Physician] and/or [Nurse Practitioner] of [Pasadena Medical Clinic].”  On appeal, the home health agency acknowledged that the claims were “noncompliant because there was an impermissible delegation of his authority to sign home health certification documents” by the nurse practitioner.  Therefore, the DAB found that the claims did not qualify for coverage and payment.  The DAB also ruled that it was appropriate to revoke the home health agency’s enrollment and Medicare billing privileges for violating 42 C.F.R. § 424.535(a)(8), “Abuse of Billing Privileges.”  The ALJ also upheld the three-year enrollment bar that had been imposed by CMS.

As a final point, it is worth noting that during the period at issue (August 2016 through November 2017), Medicare paid for home health services only if a physician certifies the beneficiary’s eligibility for the home health benefit – not a nurse practitioner.[8]

IV.  Length of a Medicare Enrollment or Re-enrollment Bar:

As the case examples above reflect, until recently a health care provider could only be barred from being enrolled in the Medicare program for a period of one to three years.  Under the Final Rule effective November 4, 2019, [9] this period was extended to ten years [10] (under certain circumstances, a provider may be barred from enrolling or re-enrolling in the Medicare program for up to 20 years). [11]

V.  Anticipated Impact of New Medicare Revocation Authorities:

Six of the reasons that may be relied on by CMS when revoking a home health agency’s enrollment and Medicare billing privileges are new and became effective November 4, 2019.  Of the six new reasons, we believe that Revocation Reason #17: Debt referred to the United States Department of Treasury.  42 C.F.R. §424.535(a)(17) may represent the most significant risk to your home health agency.  As 42 C.F.R. §424.535(a)(17) provides:

“(17) Debt referred to the United States Department of Treasury. The provider or supplier has an existing debt that CMS appropriately refers to the United States Department of Treasury. In determining whether a revocation under this paragraph (a)(17) is appropriate, CMS considers the following factors:

(i) The reason(s) for the failure to fully repay the debt (to the extent this can be determined).

(ii) Whether the provider or supplier has attempted to repay the debt (to the extent this can be determined).

(iii) Whether the provider or supplier has responded to CMS’s requests for payment (to the extent this can be determined).

(iv) Whether the provider or supplier has any history of final adverse actions or Medicare or Medicaid payment suspensions.

(v) The amount of the debt.

(vi) Any other evidence that CMS deems relevant to its determination.”

What does this mean?  Many home health agencies around the country have been subjected to postpayment audits by UPICs (or their predecessor contractors, ZPICs).  Alleged overpayments in these cases have been as high as $10 million.  As you are likely aware, the Medicare administrative appeals process used to appeal these alleged debts has been hopelessly overwhelmed by the appeal of alleged debts identified in audits by UPICs, ZPICs and RACs.  From a practical standpoint, if your home health agency files for a hearing before an ALJ, it will be an average of 3.9 years before your case gets adjudicated.

Assuming that you haven’t paid-off the alleged debt, while your administrative appeal is pending, CMS and its contractors will be required under the Debt Collection Improvement Act of 1996 (DCIA) to refer eligible delinquent debt to the Department of Treasury (Treasury) for collection or offset through the Treasury Offset Program (TOP).  Upon receipt of the referral, Treasury or one of its contracted collection agencies will initiate proceedings to satisfy the alleged debt.

We can typically get Treasury to place its collection efforts on hold while an alleged Medicare overpayment is actively being appealed,  Unfortunately, with the implementation of 42 C.F.R. §424.535(a)(17), CMS is now also able to revoke a home health agency’s enrollment and Medicare billing procedures after referring an alleged debt to Treasury for collection.

VI.  Responding to a Proposed Home Health Revocation Action:

We cannot overstate the seriousness of a home health revocation action.  For most home health agencies, traditional Medicare is the largest payor, with Medicaid typically constituting the second-largest payor.  From a practical standpoint, if your home health agency’s Medicare enrollment and billing privileges are revoked, it will be difficult, if not impossible, for your company to remain solvent.

It is therefore crucial that you contact experienced health law counsel to represent you when you first receive notice of a revocation action.  The appeals procedures followed in a revocation case is quite different from that employed in the appeal of a claim denial or an alleged overpayment.  Liles Parker attorneys have extensive experience representing health care providers and suppliers in challenging the imposition of a Medicare revocation action.  Is your home health agency facing revocation?  Give us a call for a free consultation.  1 (800) 475-1906.

Robert W. Liles and the health lawyers at Liles Parker, Attorneys & Counselors at Law have extensive experience representing health care providers and suppliers nationwide in Medicare revocation actions.  Has CMS proposed that your enrollment and Medicare billing privileges be revoked?  Give us a call for a free consultation.  We can be reached at:  1 (800) 475-1906.

[1] The Final Rule under 42 C.F.R. §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).

[2] Two of the new reasons for revocation have not yet been announced.  Placeholder slots remain open at 42 C.F.R. §424.535(a)(15) and (16).

[3] The definition of “operational” is set out at 42 C.F.R. §424.502.

[4] For additional information, please see CMS guidance titled “Home Health Agencies (HHAs): Change of Address Notification of the Medicare Administrative Contractor (MAC).”

[5] See 42 C.F.R. §424.516(e)(2).

[6] The revocation reason “Abuse of Billing Privileges” was added to the existing list of revocation reasons that may be asserted by CMS effective February 3, 2015.  79 Fed. Reg. at 72,513 (adding paragraph (ii) to 42 C.F.R. § 424.535(a)(8)).

[7] While not explicitly stated, we suspect that this means that the so-called ordering physician had not billed Medicare for an Evaluation and Management (E/M) service in the course of caring for these 13 patients.

[8] Prior to the emergence of COVID-19, CMS had identified limited exceptions to this rule.  For example, under Maryland law, a nurse practitioner can provide primary care services.  Effective January 1, 2020, CMS allowed Medicare-enrolled nurse practitioners to certify home health services for Medicare beneficiaries as part of the Maryland Total Cost of Care (TCOC) Model. See MLM Matters Number MM 11330.  Additionally, as provided Section 3708 of the CARES Act, CMS is temporarily allowing a Medicare-eligible home health patient to be under the care of a nurse practitioner, clinical nurse specialist, or a physician assistant who is working in accordance with State law (for Medicare claims with a “claim through date” on or after March 1, 2020).  For additional information on the temporary regulatory waivers that CMS has implemented in response to COVID-19, see the agency’s guidance entitled “Home Health Agencies: CMS Flexibilities to Fight COVID-19,” issued September 8, 2020.

[9] “Medicare, Medicaid, and Children’s Health Insurance Programs; Program Integrity Enhancements to the Provider Enrollment Process”

[10] See 42 C.F.R. §424.535(c)(1)(i).

[11] See 42 C.F.R. §424.535(c)(1)(ii).

Medicare Revocation Actions Related to Telemedicine Rising!

(September 25, 2020):  In recent years, many individuals (especially younger members of our work force) have embraced the chance to supplement their income through short-term engagements in the “gig economy.”  Notably, both professionals and non-professionals alike have found flexible, part-time opportunities online, allowing them to work remotely as independent contractors.  A number of physicians, nurse practitioners and physician assistants have taken advantage of the chance to participate in the gig economy, working virtually and providing telemedicine services for patients.  Unfortunately, many of these licensed professionals have conducted little or no due diligence into the companies engaging them to conduct evaluations by phone, video or asynchronously.  In some cases, the company engaging these licensed professionals to provide telemedicine evaluations has been alleged to have illegally funneled prescriptions issued by these professionals to third-party durable medical equipment (DME) suppliers.  Associated physicians, nurse practitioners and physician assistants (collectively referred to as “Telemedicine Providers”) have then found themselves subject to administrative sanctions, civil liability, and, in some case, criminal prosecution.  This article examines the Medicare revocation actions that have resulted from a Telemedicine Provider’s failure to provide access to documentation related to telemedicine services that are currently being pursued by Medicare Administrative Contractors (MACs) around the country.

I.  Overview of Statutory and Regulatory Concerns When Providing Telemedicine Evaluations:

With the advent of COVID, both governmental and private payors alike have supported the expansion of telehealth / telemedicine services.  Coverage and payment rules have been expanded by most payors and patients have welcomed the opportunity to be evaluated remotely by their caregiver.  Generally, the current wave of telemedicine related enforcement actions has been unrelated to the coverage expansions resulting from the spread of COVID.  The vast majority of Medicare revocation actions associated with improper telemedicine business practices have been related to pre-COVID conduct.   An overview of these improper telemedicine cases is provided below:

• Intermediary marketing companies.  Over the last few years, licensed providers with prescribing authority have been actively recruited by an intermediary company[1] OR have responded to an online advertisement seeking to hire physicians, nurse practitioners or physician assistants to perform remote telemedicine evaluations. These companies essentially serve as middlemen – they are not typically participating providers or suppliers in the Medicare program.
• Lists of beneficiaries to be evaluated remotely are assembled by the intermediary marketing companies. Using a variety of patient recruiting and screening methods, representatives of the intermediary marketing company will work to assemble a list of prospective beneficiaries who have expressed an interest in being evaluated for DME.  The intermediary marketing company then provides these beneficiary lists to Telemedicine Providers who have been engaged to conduct remote assessments and evaluations[2] of these individuals. After completing an evaluation, the Telemedicine Provider then decides whether it is medically necessary and appropriate to order DME for the beneficiary. Typically, the licensed providers have been paid a fixed amount of $25 — $30 for each telemedicine evaluation conducted.
• Beneficiaries have no control of where an order or prescription is referred.  In the cases we have handled, orders for DME have NOT been issued to a supplier, pharmacy or testing laboratory selected by the patient.  Instead, the order has been directed by the intermediary marketing company to a particular supplier, pharmacy or testing laboratory with whom the company has a business relationship.[3]
• Unified Program Integrity Contractors (UPICs) are using data mining to identify potentially fraudulent telemedicine business relationships.  Through an analysis of billing data, UPICs have noted that some DME suppliers have billed Medicare for items based on orders issued by a physician, nurse practitioner or physician assistant who did NOT bill Medicare for an associated Evaluation and Management (E/M) service, either directly or through an appropriate reassignment relationship.
• UPIC requests for medical records have often gone unanswered or unfulfilled.  Both UPICs and a variety of state and federal law enforcement agencies around the country have been investigating questionable telemedicine related business relationships.  One of the essential steps in investigating the propriety of these claims has included an assessment of the beneficiary’s medical records, along with the telemedicine evaluation conducted.  These medical records and intake documents are often maintained by the intermediary marketing company and have not been downloaded or maintained by the ordering physician, nurse practitioner or physician assistant. Moreover, the contracts between the parties often prohibit the physician from retaining copies of documents. In several cases we have handled, the licensed provider’s relationship with the intermediary marketing company was terminated long ago and the provider no longer has access to the beneficiary records now being requested.
• Telemedicine providers are often unaware that a marketing company is engaging in illegal kickback activities.  Licensed providers are not usually privy to the terms of any business relationship between an intermediary marketing company and an associated DME supplier.  Both UPICs and law enforcement agencies around the country are investigating these telemedicine related business relationships.

II. Medicare Revocation Actions Based on a Provider’s Failure to Provide Access to Documents are Being Pursued by CMS Around the Country:

The failure to respond or comply with a UPIC request for records is one of the many bases[4] that CMS may assert to revoke a provider’s enrollment in the Medicare program, along with any corresponding provider agreement. As provided by 42 C.F.R. § 424.535(a)(10):

Ҥ 424.535 РRevocation of enrollment in the Medicare program.

(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). . .”

As 42 C.F.R. § 424.516(f) provides:

• 424.516 – Additional provider and supplier requirements for enrolling and maintaining active enrollment status in the Medicare program.

“(f) Maintaining and providing access to documentation. (1)(i) A provider or a supplier that furnishes covered ordered, certified, referred, or prescribed Part A or B services, items or drugs is required to –

(A) Maintain documentation (as described in paragraph (f)(1)(ii) of this section) for 7 years from the date of service; and

(B) Upon the request of CMS or a Medicare contractor, to provide access to that documentation (as described in paragraph (f)(1)(ii) of this section).

(ii) The documentation includes written and electronic documents (including the NPI of the physician or, when permitted, other eligible professional who ordered, certified, referred, or prescribed the Part A or B service, item, or drug) relating to written orders, certifications, referrals, prescriptions, and requests for payments for Part A or B services, items or drugs.

(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; and

(B) Upon request of CMS or a Medicare contractor, to provide access to that documentation (as described in paragraph (f)(2)(ii) of this section).

(ii) The documentation includes written and electronic documents (including the NPI of the physician or, when permitted, other eligible professional who ordered, certified, referred, or prescribed the Part A or B service, item, or drug) relating to written orders, certifications, referrals, prescriptions or requests for payments for Part A or B services, items, or drugs.” (emphasis added).

III.  Medicare Revocation Actions for the Failure to Provide Medical Records Have Typically Sought a 10-Year Re-Enrollment Bar.

CMS extended the maximum re-enrollment bar that can be applied after a revocation from three years to ten years through a Final Rule, which was published on September 10, 2019 and became effective November 4, 2019.[5]  Although a 10-year re-enrollment bar is supposed to be reserved for cases involving serious misconduct, CMS has been actively seeking a 10-year re-enrollment bar in cases where the basis for exclusion is the failure to provide access to documentation.[6]

• What is the impact of a Medicare revocation action?  The imposition of a 10-year re-enrollment bar can effectively destroy a health care provider’s practice.  Moreover, it will likely limit a provider’s employment options.  Additional potential consequences of having your Medicare enrollment revoked are discussed below.
• Depending on the facts, the role you played in a telemedicine fraud case may result in a referral to the U.S. Department of Justice (DOJ) for investigation and possible prosecution. Since 1994, CMS has participated in an interagency agreement with the DOJ which allows CMS program integrity contractors (in this case, UPICs) to send health care fraud referrals directly to the DOJ without having to first route the referral through the Office of Inspector General (OIG).  Your involvement in a telemedicine related fraud case will be carefully evaluated.  For instance, did you actually conduct evaluations by phone, video or asynchronously OR did you perform an evaluation based solely on the medical information and intake documents provided to you by an intermediary marketing company?
• You will be likely be barred from enrolling in the Medicare program for a period of 10 years. In light of the cases we have handled since the issuance of the November 4^th Final Rule, it appears to be CMS’s policy to seek to impose a 10-year enrollment bar in revocation cases based on a violation of 42 C.F.R. § 424.535(a)(10).
• You will likely be placed on Medicare’s “Preclusion List.” Individuals and entities that have been revoked from Medicare, are under an active reenrollment bar, AND CMS has determined that the underlying conduct that led to the revocation is detrimental to the best interests of the Medicare program may qualify to be placed on the Medicare Preclusion List.  The Preclusion list is made available to Medicare Advantage and Part D plans.   If placed on the Preclusion List, an individual or entity will not be permitted to enroll in the Medicare Part C or Part D programs.
• A Medicare revocation action may result in the revocation of your enrollment as a provider in your state’s Medicaid program. Using Texas as an example, Rule § 371.1703(a) of the Texas Administrative Code provides that:

“(a) The OIG may terminate the enrollment or cancel the contract of a person by debarment, suspension, revocation, or other deactivation of participation, as appropriate. The OIG may terminate or cancel a person’s enrollment or contract if it determines that the person committed an act for which a person is subject to administrative actions or sanctions. . . .

(b)(7) a provider that is terminated or revoked for cause, excluded, or debarred under Title XVIII of the Social Security Act or under the Medicaid program or CHIP program of any other state;”[7]

• A Medicare revocation action will result in a report being sent to the National Practitioner Databank (NPDB). As the NPDB Guidebook[8] notes, “formal or official actions such as revocation of suspension of a license, certification agreement, or contract for participation in government health care programs; reprimand; censure; or probation,” is considered to be a final adverse action and must be reported by a Federal agency.
• A report to the NPDB may result in an investigation by your State Medical Board. A revocation action based on your failure to provide records to a UPIC may generate a collateral investigation by your state licensing board since you are likely required to maintain adequate patient records.  For instance, under Rule § 165.1(a) of the Texas Administrative Code, a licensed physician is required to maintain an “adequate medical record” for each patient that is complete, contemporaneous and legible.  Your failure to maintain a copy of the records you reviewed when making a telemedicine evaluation may constitute a violation of your obligations under the Texas Medical Practice Act. As such, you may be subject to disciplinary action.
• A Medicare revocation of your billing privileges may result in the termination of your hospital credentialing. Many hospitals require that a physician, nurse practitioner or physician assistant be enrolled in the Medicare program (or at the very least, be eligible to enroll in the Medicare program), in order to be credentialed and granted privileges.  If you have been barred from enrollment in Medicare, you may not be eligible to obtain privileges at a hospital.
• Termination from commercial payor agreements. Unfortunately, Medicare revocation actions are often used by commercial payors as a basis for terminating a provider from their plan.
• Loss of employment. The collateral consequences of a Medicare revocation action can greatly limit your ability to work for a practice or entity that treats Medicare and Medicaid patients.   As a result, you may be terminated from employment.

IV.  Responding to a UPIC Request for Records:

We cannot overemphasize the seriousness of a UPIC request for records, especially when those records are related to your telemedicine evaluation of a patient’s DME needs.  Remember – UPICs are tasked with identifying suspected cases of fraud and abuse being committed against the Medicare and Medicaid programs.   Should you fail to provide records requested by a UPIC, the proposed revocation of your Medicare billing privileges may be the least of your problems.  Therefore, it is essential that you engage qualified health law counsel to represent you and guide you through this administrative process.  Liles Parker attorneys have extensive knowledge of the Medicare revocation process and have successfully represented multiple physicians and nurse practitioners in the appeal of a proposed revocation action, including those involving failure to respond to a records request.  For a free consultation, give us a call.  We can be reached at: (202) 298-8750.

Robert W. Liles serves as Managing Partner at the health law firm, Liles Parker, Attorneys and Counselors at Law.  Liles Parker attorneys represent physicians, NPs and PAs in connection with Medicare revocation actions, administrative audits (UPIC audits / private payor audits), civil False Claims Act cases, and criminal violations of the Federal Anti-Kickback Statute and EKRA.  Are you 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]  Often the companies identify themselves as “locum tenens” agencies, or “telemedicine providers.” Most have a contract the physician signs that (1) doesn’t permit the physician to retain any patient records, and (2) requires the physician to agree not to file any claims or bill the patient.

[2] A variety of telemedicine compliance issues arise at this stage of the agreement.  Many times, the physician does not directly speak with the patient.  The physician’s agreement with the intermediary may say that the physician is supposed to conduct their telemedicine services “in compliance with their state licensing law” but most physicians have no idea what their state law requires.

[3] Licensed providers are not usually privy to the terms of any business relationship between a telemedicine marketing company and an associated DME supplier, compound pharmacy or testing laboratory.

[4] For an overview of the various reasons that a provider’s Medicare enrollment and billing privileges may be revoked, please see our article titled “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).

[5] See Medicare, Medicaid, and Children’s Health Insurance Programs; Program Integrity Enhancements to the Provider Enrollment Process, 84 Fed. Reg. 47794 (Sep. 10, 2019).

[6] See 42 C.F.R. § 424.535(a)(10).

[7] Title 1, Part 15, Rule § 371.1703(a) of the Texas Administrative Code, “Termination of Enrollment or Cancellation of Contract.”

[8] NPDB Guidebook (October 2018), (Page E-81).

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