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Telemedicine Related Medicare Revocation Actions for Failure to Provide Access to Documentation are on the Rise!

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Medicare Revocations of a Provider's Billing Privileges(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.  The potential consequences of having your Medicare enrollment revoked include, but are not limited to the following:
  • 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 instances, 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 4th 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 defends health care providers in Medicare auditsRobert W. Liles serves as Managing Partner at the health law firm, Liles Parker, Attorneys and Counselors at Law.  Liles Parker attorneys represent individuals and entities around the country in connection with 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).

A Disruptive Conduct Conviction Can Result in a Medicare Exclusion.

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A Disruptive Conduct Conviction Can Have Serious Adverse Consequences(September 22, 2020):  Since 1981, the Department of Health and Human Services (HHS), Office of Inspector General (OIG) has been delegated responsibility for pursuing exclusion actions against individuals and entities that have been convicted of one or more enumerated crimes, engaged in certain improper conduct or have been subjected to an adverse licensure action. Depending on the nature of the specific adverse action taken against an individual or entity, the OIG may or may not be required by law to exercise its exclusion authority.  Exclusion is the most severe administrative sanction that may be taken against an individual or entity.  If you are excluded from participation in the Medicare, Medicaid and other federal health benefit programs you are effectively prohibited from being paid by for any items or services that you furnish, order or prescribe.  Equally important, you may not be employed or contract with an individual or entity that participates in one or more federal health benefits programs.  This article examines a recent state based, non-felony disruptive conduct conviction that resulted in an individual’s exclusion from federal health benefit programs.

I.  Factual Basis for the Disruptive Conduct Conviction:

In a recent case out of New York, a licensed Registered Nurse was employed by a long-term care facility providing rehabilitation and nursing home services.  It was alleged that in September 2015, a resident of the facility had received the wrong medications and that the Registered Nurse had failed to advise a transporting ambulance service of medication error.  Ultimately, the patient’s ingestion of the wrong medications contributed to her death.  After an investigation of the conduct by New York’s Medicaid Fraud Control Unit, a New York state grand jury indicted the Registered Nurse for:

  • Two Counts — Endangering the Welfare of an Incompetent or Physically Disabled Person in the First Degree, a Class E Felony, in violation of Penal Law § 260.25; and

  • Two Counts — Willful Violation of Health Laws, in violation of Public Health Law § 12?b(2), an unclassified misdemeanor.

In December 2018, the Registered Nurse pleaded guilty to a single amended count of Disorderly Conduct (in violation of section 240.20(7) of the N.Y. Penal Law, an unclassified misdemeanor).  As set out under the state statute, under N.Y. Penal Law § 240.20(7):

“[a] person is guilty of disorderly conduct when, with intent to cause public inconvenience, annoyance or alarm, or recklessly creating a risk thereof . . . [sh]e creates a hazardous or physically offensive condition by any act which serves no legitimate purpose.”[1] 

As part of her plea agreement, the Registered Nurse stated that she recklessly created a risk of a hazardous condition by not providing adequate care to [the nursing home resident].” Based on the Registered Nurse’s guilty plea, a New York state court sentenced her to a one-year conditional discharge and assessed fees of $95.00.

II.  Can a Disruptive Conduct Conviction be a Basis for a Medicare Exclusion Action?

In October 2019, the OIG notified the Registered Nurse that based on her New York disruptive conduct conviction, she was being excluded from participation in Medicare, Medicaid, and other federal health programs under section 1128(a)(2) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(2)) for the minimum statutory period of five years. As 42 U.S.C. § 1320a-7(a)(2)[2] provides:

“(2) Conviction relating to patient abuse.  Any individual or entity that has been convicted, under Federal or State law, of a criminal offense relating to neglect or abuse of patients in connection with the delivery of a health care item or service.”  (emphasis added).

In response to the proposed exclusion action, the Registered Nurse filed a timely appeal and sought review of the action by an Administrative Law Judge (ALJ).  In her arguments, she reasonably argued that a disruptive conduct conviction was considered to be a violation NOT a crimeunder New York state law.  In support of her position, she submitted written statements from several lawyers that concluded that her violation[3] was not considered to be a criminal offense under New York state law.

Moreover, in its pleadings, the OIG acknowledged that “the disorderly conduct statute under which Petitioner pled guilty does not, on its face, specifically encompass neglect of a patient. . .”  Nevertheless, the OIG argued that the “allegations forming the basis of [Registered Nurse’s] guilty plea establish that her conduct clearly relates to neglect.”

In deciding this case, the ALJ examined both the “criminal offense” and “patient neglect” issues discussed above to determine whether OIG was mandatorily obligated to exclude the Registered Nurse from participation in federal health care programs pursuant to 42 U.S.C. § 1320a-7(a)(2)).  As the ALJ decision found:

Pursuant to section 1128(i) of the Act (42 U.S.C. § 1320a-7(i)), an individual is convicted of a criminal offense when:  (1) a judgment of conviction has been entered against him or her in a federal, state, or local court, regardless of whether an appeal is pending or whether the record of the conviction is expunged; (2) there is a finding of guilt by a court; (3) a plea of guilty or no contest is accepted by a court; or (4) the individual has entered into any arrangement or program where judgment of conviction is withheld.” (emphasis added).

Based on 42 U.S.C. § 1320a-7(i)(3), the ALJ ruled that the action against the Registered Nurse did, in fact, meet the federal definition of a “conviction” of a criminal offense, even though the ultimate plea (to an “Information”) would not be considered a criminal offense under New York state law.  Furthermore, since the Registered Nurse’s disruptive conduct conviction resulted from her failure to report a medication error (which contributed to the death of a resident), the conviction took place in connection with the delivery of a health care item or service.  As such, the action required that the Registered Nurse be mandatorily excluded from federal health benefits programs for a minimum statutory period of five years under 42 U.S.C. § 1320a-7(a)(2).  For additional information on the impact of “exclusion” on a health care provider’s ability to seek payment for services provided to individuals covered by a federal health benefit program, we recommend that you review the following linked article.

III.  Recommendations:

As this case reflects, for the purposes of making an exclusion action determination, the definition of what constitutes a criminal offense under federal law is broadly defined and is not subject contradictory definitions under state law.  As a result, a New York state conviction that constitutes a mere violation and is not considered to qualify as a criminal offense still triggered the imposition of a mandatory exclusion from federal health benefit programs.

This case illustrates one of the many unexpected adverse consequences that a health care provider or supplier may face when accepting a plea deal in a criminal case.  Although the imposition of a mere violation by the state of New York was a likely viewed as a significant victory by both the defendant and her legal counsel, it ultimately resulted in the Registered Nurse’s exclusion from participation in federal health care programs for a period of five years.  From a practical standpoint, being excluded from the Medicare and Medicaid programs will make it extremely difficult for the Registered Nurse to find employment.

How should you respond in a case like this?  First and foremost, you need to fully be advised of the various implications you may face if you accept a plea deal from the state that results in a misdemeanor or felony conviction.  Although on its face a plea deal may appear to be a significant “win” for a defendant, the implications of accepting such a plea may effectively derail a health care provider’s career for many years.

Are you a health care provider or supplier currently considering a plea agreement? We recommend that you seek the advice of experienced legal counsel before taking a plea.  You need to fully understand the administrative consequences that are likely to be triggered as a result of your plea.  For a free initial consultation, please contact Robert Liles at 1 (800) 475-1906.  

Robert W. LilesRobert W. Liles serves as Managing Partner at the health law firm, Liles Parker, Attorneys and Counselors at Law.  Liles Parker attorneys represent health care providers and suppliers around the country in connection with audits, investigations and prosecutions.  Are you considering a possible plea agreement?  Have you fully considered the possible administrative consequences of entering into a plea agreement?  Give us a call.  For a free initial consultation regarding your situation, call Robert at: 1 (800) 475-1906.

[1] https://www.nysenate.gov/legislation/laws/PEN/240.20

[2] https://www.law.cornell.edu/uscode/text/42/1320a-7

[3] A similar case where the OIG addressed the impact of a conviction to an “Information,”  please see the article titled “A State Conviction for “Patient Neglect” Will Result in Mandatory Exclusion from Participation in Federal Health Benefit Programs.” 

 

United Concordia Dental and its SIU are Actively Auditing Dentists Around the Country.

September 15, 2020 by  
Filed under Dental Audits & Compliance

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DOJ is aggressively prosecuting instances of COVID-19 fraud and related wrongdoing.(September 15, 2020):  There are approximately 1.4 million active duty service members in our country.  These active duty service members have approximately 1.9 million dependents.  Our military also consists of almost a million reserve and national guard participants.  Depending on an individual’s status, these active duty service members, their dependents, and reservists are likely eligible to participate in a dental plan administered by United Concordia Dental.  Despite the fact that many dental practices have been decimated due to COVID-19, United Concordia and its Special Investigations Unit (SIU) have continued to move forward with ongoing dental claims audits AND initiate new investigations of suspected instances of improper billing and fraud.   United Concordia’s SIU is responsible for detecting fraud and improper coding or billing practices in the government’s Active Duty Dental Program[1] and in the TRICARE Dental Program.[2]  This article examines recent investigations and prosecutions of dentists and their practices for the submission of improper dental claims to United Concordia for coverage and payment.  We will also discuss a number of the steps you can take to reduce your level of risk if your dental claims are audited by United Concordia Dental and its SIU.

I.  How are United Concordia Dental Claims Audits and Investigations Generated?

The SIU at United Concordia Dental is responsible for coordinating dental fraud investigations with both state and federal law enforcement agencies. Notably, United Concordia Dental’s Utilization Review Department has also taken an active role in the identification and audit of aberrant billing patterns.  Collectively, these units have capitalized on their ability to ferret out fraudulent billing and coding conduct using data mining.  Several of the primary referral sources relied on by United Concordia’s SIU and its Utilization Review Department are set out below:

Data mining. United Concordia Dental auditors and investigators rely heavily on their ability to compile and analyze historical utilization, coding and billing data to identify potential improper conduct.  While data mining and analytics may not be able to definitively prove that a dentist is defrauding a payor, it can be used an effective audit targeting tool by the payor.  Once an outlying dentist is identified, the payor can focus its audit and investigative resources on specific issues and claims.

Patient complaints. When a patient is treated by a dentist, an Explanation of Benefits (EOB) is ultimately generated and sent to the attention of the subscriber (the individual responsible for coverage by the health plan).  An EOB is intended to describe the dental services provided and indicate whether or not the service qualifies for coverage and payment.  Unfortunately, EOB’s are often cryptic and can cause significant confusion when reviewed by a subscriber. This can result in complaints filed with a payor’s SIU or a state / federal law enforcement agency.

Anonymous complaints. United Concordia Dental has established an effective SIU Fraud Hotline that can be used by a complainant to file a complaint.  A person registering a complaint with the SIU can choose to identify himself / herself OR may remain anonymous.  Complaints may be submitted through the SIU Fraud Hotline[3] by e-mail, fax or phone.  Individuals filing anonymous complaints have included patients, current or past employees, competitors and others who believe that he or she has knowledge of wrongdoing.

Overpayment data. This may be based on a specific dentist’s “error rate” or the overall error rate calculated for a dental practice. After considering a dentist’s history of repeated overpayments, United Concordia may decide to initiate an audit or investigation.

State dental licensing boards. State Dental Boards taking an adverse action against a licensed dental professional mat be required by law to report the adverse action to the National Practitioner Databank (NPDB).  When this occurs, notice of the adverse action will be accessible United Concordia Dental and other payors.  Depending on the nature of the allegations, this may spur the initiation of an audit or investigation by the payor.

Industry reports and findings of improper conduct.Dental payor SIUs and utilization staff are constantly on the lookout for evidence of improper dental billing and coding conduct and possibly fraudulent business practices. To the extent that trends are identified, this information is often shared among and between both private sector SIU personnel and their state and federal law enforcement counterparts.

II.  Types of Actions that May be Taken in the Event that Improper Dental Conduct is Identified:

Regardless of the source, if a fraud referral against your dental practice is made, United Concordia’s SIU and / or its Utilization Review Department will conduct an assessment of the allegations and determining whether further review and investigation is warranted.

Administrative RemediesIf wrongful conduct has been alleged, there are a number of administrative actions that United Concordia may choose to take against your dental practice.  These include:

  • Initiation of a postpayment audit of a dentist’s claims.
  • Placement of a dental provider’s claims on prepayment review.
  • A dentist’s billing privileges may be suspended by a payor.
  • Termination of dental provider’s participation in United Concordia’s program.

Civil Remedies To the extent that United Concordia Dental has been improperly billed, the payor may be able to pursue the following civil remedies:

  • Breach of contract (under state law).
  • Civil fraud (under state law).
  • Unjust enrichment (under state law).
  • Payment under mistake of fact (under state law).
  • Violations of the federal Civil False Claims Act (31 U.S.C. 3729).

Criminal Remedies.   While United Concordia Dental may not independently initiate a criminal action, it may make a referral to state and federal law enforcement authorities for possible prosecution.  Focusing on federal criminal prosecutions, the following statutory violations have commonly been alleged in prosecutions of dental fraud:

  • Prohibition Against Kickbacks (Anti-Kickback Statute)(42 U.S.C. § 1320a–7b(b)).
  • False or Fraudulent Claims (18 U.S.C. § 287). 
  • Conspiracy (18 U.S.C. § 371). 
  • Fraudulent Identification of Documents (18 U.S.C. § 1028). 
  • Mail, Wire, Radio and Television Fraud (18 U.S.C. § 1341, 1343). 
  • Health Care Fraud (18 U.S.C. § 1347). 
  • Obstruction of a Criminal Investigation into Health Care Offenses (18 U.S.C. § 1518). 

III.  Examples of Cases Prosecuted Against Dentists in Connection with Fraudulent United Concordia Dental Claims:

As a review of the payor’s efforts will show, the fraud identification and deterrence activities of United Concordia’s SIU and Utilization Review Department have been quite effective in a number of states.  Case examples of audits and investigations handled in Pennsylvania and California are set out below:

Pennsylvania.  Misrepresentation of a non-covered service.  In this case, the payor’s SIU received a referral from United Concordia Dental’s Utilization Review Department after a Beaver County dentist was identified as having a history of performing many more anterior restorations than the payor would normally expect to see when compared to his peers.  As a result, an audit of 30 patient dental records was conducted.  Upon review, the payor’s Dental Director found that the dentist had billed for multiple anterior restorations that were not documented in the patient dental records.  When asked about this inconsistency, the dentist admitted that when a patient needed a bridge, he knew that the payor wasn’t likely to cover the work so he would list the dental service provided as an anterior restoration.  Based on the dentist’s admission, a referral to the Federal Bureau of Investigation (FBI) was made and the dentist was prosecuted for fraud.  The dentist ultimately plead guilty to one count of health care fraud and agreed to repay $94,098.89 to United Concordia.

Pennsylvania.  (1) Misrepresentation of a non-covered service, (2) Billing for dental services not rendered.  In this Pennsylvania case, a fraud investigator for United Concordia Dental made a referral to the Delaware County District Attorney’s Office after identifying aberrant claims that appeared to be being billed to the payor.  When conducting an investigation into the dentist’s billing practices, the dentist allegedly admitted to improperly billing the payor, stating:

“Some of the patients asked me not to charge their copays, because their previous dentists didn’t charge it. . . I couldn’t say no. Instead of charging copays, I did false claims to cover their copays. I knew it was wrong, but I couldn’t ask for the copays.”

A detective interviewing the dentist further report that the defendant admitted that he charged United Concordia for root canal procedures (that were not performed) in order to cover the costs of other dental services that did not qualify for coverage.

Pennsylvania.  Billing for medically unnecessary dental services.  In yet another Pennsylvania case, a dentist was alleged to have submitted fraudulent dental claims to the Active Duty Family Member Dental Plan, a dental plan administered by United Concordia, under a contract with TRICARE.   Notably, the government also alleged that the defendant dentist had improperly waived beneficiaries’ co-payments.  Ultimately, the dentist plead guilty and was sentenced to one year in prison.  As part of a separate civil settlement, the dentist agreed to pay restitution of more than $527,000 to the dental payor.  Finally, the dentist also agreed to be permanently debarred from serving as a Department of Defense health care provider.

Pennsylvania.  Billing for dental services without a valid license.  In this case, an Alleghany County dentist was arrested after it was alleged that he had continued to practice dentistry with a suspension license. While his license was suspended, the dentist alleged to have continued to see patients and had billed United Concordia for dental services rendered. The state Attorney General’s Office charged with the dentist with two counts of insurance fraud.

California.  Billing for dental services not rendered.  In this case, a Los Angeles dentist plead guilty to one count of health care fraud in connection with his fraudulent billing of crowns and fillings that were not provided to patients.  Overall, the government alleged that the defendant improperly billing approximately $3.8 million in false and fraudulent claims to United Concordia, Denti-Cal (California’s Medicaid program), MetLife, Anthem, Cigna, Delta Dental, United Healthcare and other dental payors.  The government claimed that the defendant received more than $1.4 million in connection with these wrongful dental claims.  In addition to paying restitution to the affected dental payors, the defendant dentist was sentenced to more than three years in prison.

IV.  Responding to an Audit and Investigation of Your United Concordia Dental Claims:

Unfortunately, there is a significant chance that if your dental claims are audited, a reviewer will allege that your dental records are incomplete or incorrect.  Therefore, if you or your practice is subject to an audit or investigation, it is important that you engage legal representation as soon as possible.

Retain experienced health law counselDon’t wait until an overpayment has been assessed, it is in your best interests to bring in experienced legal counsel when you first receive notice of an audit or investigation.  Remember, everything you say is evidence!

Determine the focus of a government investigation of your dental claims and business practices. Is the focus of the current enforcement action administrative, civil or criminal?  criminal, civil or administrative?  If the focus is criminal, is the dentist considered a target, subject or witness?

Conduct a privileged internal investigation of your dental claims and business practices. You need to try and get ahead of the government’s investigation.  Determine the likely extent of any liability.  Be careful to ensure that the internal review is privileged?

Robert W. LilesRobert W. Liles serves as Managing Partner at the health law firm, Liles Parker, Attorneys and Counselors at Law.  Liles Parker attorneys represent dentists and dental practices around the country in connection SIU private payor and state Medicaid audits and investigations.  Are your dental claims 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] Generally speaking, the Active Duty Dental Program covers active duty service members and members of the national guard.

[2] The TRICARE Dental Program is a voluntary dental plan that is available to family members of an active duty service member and family members of a member of the national guard.

[3] A copy of United Concordia’s “SIU Fraud Hotline” form can be found at the following link: https://www.unitedconcordia.com/docs/fraudcomplaintform.pdf

Sober Home and Recovery Residence Fraud Enforcement Efforts are on the Increase – Are Your Sober Home Business Practices Legal?

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(September 12, 2020):  This has been a rough year for sober home and recovery residence owners, operators and their health care business partners. Literally everyone has been adversely impacted by the public health crisis generated by the rapid spread of COVID-19. While most health care and providers obtained a temporary reprieve from, Medicare, Medicaid and private payor administrative audits[1], many state and federal law enforcement agencies (such as the Federal Bureau of Investigation (FBI), the Department of Health and Human Services, Office of Inspector General (OIG), state Medicaid Fraud Control Units (MFCUs) have continued to investigate allegations of wrongdoing against sober home and recovery residence owners, operators, managers and their health care business partners.  Moreover, these investigative agencies have continued to make referrals to federal and state prosecutors for possible civil and / or criminal enforcement.  This article provides a review of the government’s sober home and recovery residence prosecution efforts and examines the current enforcement landscape.

I.  Alcohol and Drug Addiction Treatment Industry Overview:

The care and treatment of individuals with alcohol and drug abuse issues is estimated to cost $42 billion in 2020.  More than 14,000 treatment and aftercare facilities current treat more than 3.7 million individuals in the United States.[2]  With the expansion of insurance eligibility under the Affordable Care Act,[3] the number of individuals who covered by health insurance has continued to grow over the last decade.

A broad continuum of care is available to individuals seeking treatment for alcohol and drug addiction and dependency issues.  The most intensive level of care is typically provided in an inpatient setting.  Patients residing in inpatient treatment centers are often still dependent on alcohol or drugs and need the intensive level of care to complete a supervised detoxification (detox) program.[4]  After successfully completing a supervised detox program, these individuals are typically discharged from an inpatient treatment facility to a lower level of care such as afforded in a Partial Hospitalization Program (PHP), Intensive Outpatient Program (IOP),[5] or Outpatient Program (OP).  Individuals being treated on an outpatient basis (whether PHP, IOP or OP) often elect to live in a drug and alcohol-free group home or similar facility with other individuals going through recovery.  These supportive, drug and alcohol-free facilities are often referred to as a:

  • Sober Home.
  • Halfway House.
  • Recovery Residence.

In this article, we will collectively refer to the three recovery facilities listed above as a sober home or recovery residence. These facilities are primarily group homes and residential facilities comprised of individuals with a shared history of alcohol or drug abuse who are now in recovery.  Individuals who reside in a sober homes or a recovery residence typically pay rent to live in this supportive, group setting.

II.  Sober Home and Recovery Residence Business Relationships Can Lead to Violations of the Anti-Kickback Statute or the Eliminating Kickbacks in Recovery Act:

Living in a sober home or recovery residence has traditionally served as an essential step in the drug and alcohol recovery process.  While most sober homes do not directly provide and bill insurance for clinical services, the residents of a sober home or recovery residence have a number of ongoing primary care and drug screening needs that must be met.  For instance, recurrent laboratory testing may be needed to verify that a resident is, in fact, remaining alcohol and drug free.  A number of sober homes have therefore engaged a licensed physician to serve as the facility’s Medical Director to oversee and order periodic drug screening tests to verify an individual’s compliance with the rules.[6]  Drug screening tests (such as a urinalysis) conducted on insured patients are then billed by the testing In addition to engaging a Medical Director, a sober home may also establish a business relationship with a testing laboratory and with other types of medical providers (such therapists, counselors, DME suppliers).  When a sober home’s Medical Director orders drug screening for residents, it isn’t unusual for a favored testing laboratory to collect blood and urine samples from residents at their sober home.   Physicians, testing laboratories and other health care providers and suppliers would then bill a sober home resident’s insurance company (such as Medicare, Medicaid, TriCare, FEHBP, Railroad Retirement or a private payor).[7]   Unfortunately, this is where the sober home business model typically runs afoul of state and federal regulatory and statutory requirements. Depending on the facts, the conduct could represent a violation of the federal Anti-Kickback Statute.

Kickbacks arrangements between referring sober homes / recovery residences and testing laboratories are problematic even if only private payors are affected by the improper conduct.  Under the Eliminating Kickbacks in Recovery Act (EKRA)(covered in section 8122 of “The Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act” (SUPPORT Act)), it is unlawful to solicit, receive or pay any remuneration (including any kickback, bribe or rebate) directly or indirectly, in return for referring a patient or patronage to a recovery home, clinical treatment facility or laboratory. This is intended to address a number of opioid related issues and it extends these prohibitions to services covered by a private payers as Medicare, Medicaid and other government programs. In addition, since the language of the act is very broad and the term laboratory is not limited to just those laboratories associated with substance abuse services, enforcement actions under EKRA could potentially reach laboratories outside the scope of substance abuse treatment. It could also implicate sales and marketing procedures that have been standard components of many laboratory business models and criminal sanctions under EKRA include fines up to $200,000 and up to 10 years imprisonment for kickbacks with respect to services covered by any type of health care benefit program in or affecting interstate or foreign commerce.

III. Sober Home / Recovery Home Risk Areas:

In recent years, federal auditors have dedicated considerable resources to their assessment of sober homes and recovery residence.  As the Government Accountability Office (GAO) found, the national prevalence of sober homes (referred to as “recovery residences” in GAO’s report) is unknown because there is not comprehensive data that can be relied on to arrive at this figure.[8] The GAO found that four of the five states it reviewed had conducted (or were in the process of conducting) law enforcement investigation of:

“unscrupulous behavior and potential insurance fraud related to recovery homes and outcomes of some of these investigations included criminal charges and changes to health insurance policies.”[9]

While not exhaustive, there are a number of common regulatory fraud risk areas that have been identified by state and federal investigators and prosecutors when investigating treatment centers, sober homes and recovery residences.  For example:

Fraudulent Coding. (Massachusetts Medicaid False Claims Act — M.G.L.c. 118E, § 21A ET SEQ.).  In this Massachusetts case, a physician and his addiction treatment clinic have been indicted for allegedly committing health care fraud against MassHealth, the state’s Medicaid program.  One of the allegations is that the physician billed for the administration of Vivitrol and was able to circumvent the limits on Vivitrol reimbursement by coding some of the Vivitrol treatments as chemotherapy treatments rather than as a treatment to prevent a relapse associated with alcohol or drug abuse.   The government has not detailed how the defendants were able to get past the Medicaid payment restrictions.

Patient Brokering. (Massachusetts “All-Payor” State Anti-Kickback Statute — G.L.c. 175H, §3)(Federal Anti-Kickback Violations — 42 U.S.C. § 1320a-7b(b)(1)(A): When investigating allegations of “patient brokering,” a representative of the Massachusetts Attorney General’s Office testified before Congress that the AG’s Office had been receiving reports that state residents have been lured to out-of-state addiction treatment providers by paid recruiters who promised them free travel to an addiction treatment center in a warm-weather state. When the patients discovered that the treatment they were to receive was low quality or nonexistent, they were often left thousands of miles from home with no health insurance, no access to the medical care they needed, and no resources to return home. In the most tragic cases, these young people suffered fatal overdoses following their continued opioid use without treatment.”[10]  As a result, the Massachusetts AG’s Office opened criminal investigations into addiction treatment fraud and issued a Consumer Advisory, alerting patients and their families that they should be wary of unsolicited offers for free out-of-state addiction treatment.

Illegal Business Relationships (Involving Claims Submitted to Federal / State Payors). (Federal Anti-Kickback Violations — 42 U.S.C. § 1320a-7b(b)(1)(A)).[11]: Generally, sober home and recovery residences do not qualify as health care providers or suppliers and are unable to be credentialed and participate in health benefits programs.  As a result, they cannot bill insurance payors. Some sober home and recovery residence owners and operators have entered into unscrupulous, often illegal referral business relationships with physicians, nurse practitioners, physician assistants, testing laboratories, and others. In exchange for the referral of their residents for medical and clinical services (often in the form of drug screen testing), sober home and recovery home owners, operators (and affiliated Medical Directors) have received a “referral fee” or kickback from the servicing health care provider or supplier who then bills the resident’s insurance company for payment.

Illegal Business Relationships (Involving Submitted to Private Payors).  (Illegal remunerations for referrals to recovery homes, clinical treatment facilities, and laboratories — 18 U.S.C. § 220): Despite the fact that EKRA has now been in place for almost two years,  only a handful of cases have been prosecuted under EKRA.  While illegal sober home conduct was not cited, a recent EKRA case out of the District of New Jersey did allege that a drug treatment center illegally paid a marketing company for patient referrals. To identify patients, the marketing company used a nationwide network of recruiters who were instructed to identify individuals addicted to alcohol or drugs AND were covered under a health care benefit program.  The drug treatment center allegedly paid the marketing company approximately $5,000 for each referral.  The marketing company then supposedly paid a percentage of the referral funds received to its recruiters.  Notably, the government alleged that the drug treatment facility tried to disguise the kickbacks as a “monthly fee” paid to the marketing company.  

Business Relationships Resulting in the Violation of the Health Care Fraud and Anti-Kickback Statutes. (Conspiracy to Commit Health Care Fraud — 18 U.S.C. §1349).[12] In this recent case a multi-agency task force[13] investigated the business practices of a Florida osteopathic physician in his role as “Medical Director” for more than 50 addiction treatment facilities and sober homes.  Unlike most relationships where a physician has been engaged to serve as Medical Director, the physician in this case was paid only a nominal salary.  Instead, federal prosecutors have alleged that the physician benefited from the relationship by getting access to a “stable” of insured addiction treatment patients residing in sober homes and addiction treatment centers.   As Medical Director, the physician in this case is alleged to have signed more than 136 standing orders for medically unnecessary urinalysis tests.  These urinalysis tests were processed by testing laboratories that sometimes paid kickbacks to referring sober homes and addiction treatment centers.  As the Criminal Complaint states:  “In addition, the entire referral network made possible by [Medical Director] authorizing such false and fraudulent testing for these addiction treatment centers, sober homes, and testing laboratories by his signing of standing orders often facilitated kickback relationships between these parties and individual recruiters or brokers for these entities, as the sober home and treatment center owners (through these brokers) received kickbacks from the owners and operators of the laboratories in return for sending specimens their way for testing.”  Ultimately, the government has further alleged the standing orders signed by the government resulted in the improper billing of hundreds of millions of dollars of medically unnecessary urinalysis tests and other fraudulent treatments.  Finally, prosecutors have claimed that the defendant Medical Director did not meaningfully review the results of the tests he ordered.  The government has estimated that the fraudulent conduct resulted in approximately $681 million for urinalysis laboratory tests and other medical services billed to the Medicare program and to private payors.  Of this total, approximately $121 million was paid to government and private payors.  The defendant physician (serving as Medical Director) is currently charged with Conspiracy to Commit Health Care Fraud and Wire Fraud (18 U.S.C. §1349).  The government has also filed a Criminal Forfeiture (18 U.S.C. §982(a)(7) count against the physician in an effort to recover to losses incurred by federal health care benefit programs due to the fraud.

Ordering of Medically Unnecessary Controlled Substances.Distributing Controlled Substances Without a Legitimate Medical Purpose. (21 U.S.C. § 841(a)(1).[14]  In a recent Florida case, an internal medicine physician and a licensed mental health counselor were indicted for their roles[15] in the distribution of controlled substances that were not medically necessary and had no legitimate medical purpose.  As the indictment statement, the defendant physician knowingly and intentionally distribute and dispense outside the scope of professional practice and not for a legitimate medical purpose, a controlled substance.”

Aiding or Abetting in the Performance of Illegal Conduct(Principals — 18 U.S.C. § 2).  In the same Florida case discussed above, a licensed mental health counselor was implicated in the illegal dispensing conduct of the principal offender, the ordering physician.

Wrongfully Prescribing Controlled Substances After a Medical License or Controlled Substance Registration has been Suspended(Conspiracy to Unlawfully Distribute a Schedule III Controlled Substance — 21 U.S.C. 846).[16]   In one case, a physician employed as the Medical Director at a substance abuse treatment center was charged by indictment with one count of conspiracy to distribute controlled substances in relation to his employment at the center. While serving as Medical Director, his medical license was suspended.  Nevertheless, the physician continued to prescribe controlled substances for individuals at the treatment center over a five-month period.

IV.  Conclusion:

The business practices of sober homes and recovery residences are under microscope.  It is therefore essential that you carefully review your business relationships and practices to ensure that you are complying with state and federal regulations and statutes.  Steps you can take include, but are not limited to:

Develop and implement an effective Compliance Program for your sober home / recovery residence.

Properly train your staff on their duties and obligations under the law.

Exercise caution before entering into any business relationships with drug treatment centers, physicians, DME companies, and other entities to whom your sober home / recovery residence may make referrals.  Additionally, watch our for marketing companies who may want to send you possible patient referrals.  Contact your attorney before entering into these relationships! 

Conduct a GAP analysis of your business practices.

DOJ is holding owners, operators and management officials to a level of responsibility consistent with their position in the organization.

Educate your owners, operators and managers regarding the “Yates Memo” and DOJ’s interest in individual accountability.

Have your contracts and agreements reviewed by health law counsel before executing the documents.

Finally, if you or your sober home / recovery residence is ever investigated, it is critical that you engage qualified health law counsel to represent your interests. Need assistanceGive us a call for a free consultation:  1 (800) 475-1906.

Robert W. LilesRobert W. Liles serves as Managing Partner at the health law firm, Liles Parker, Attorneys and Counselors at Law.  Liles Parker attorneys represent individuals and entities around the country in connection with 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] On March 30, 2020, the Centers for Medicare and Medicaid Services (CMS) suspended most Medicare Fee-For-Service (FFS) medical reviews because of the COVID-19 pandemic. Many private payors also curtailed their audit activities for several months.

[2] The U.S. Addiction Rehab Industry (January 2020).  A summary of this report can be found at: https://www.marketresearch.com/Marketdata-Enterprises-Inc-v416/Addiction-Rehab-12943155/?progid=91619

[3] The Affordable Care Act was enacted on March 23, 2010. Pub. L. 111- 148.

[4] When an individual stops using drugs or taking alcohol, detoxification (commonly referred to a “detox”) occurs.  Detox is essentially the process of allowing drugs and alcohol to be removed or flushed out of an individual’s body.  Inpatient detox programs are designed to medical and mental support to an individual while he / she goes through the withdrawal process.

[5] Under the guidelines issued by U.S. Department of Health and Human Services, Substance Abuse and Mental Health Services Administration, Center for Substance Abuse Treatment (SAMHSA) and the American Society of Addiction Medicine (ASAM), Intensive Outpatient Programs (IOPs) are formal abuse treatment programs that are required to be overseen by a qualified medical professional, and to have a formal treatment plan to be used in the patient’s care.

[6] A sober home’s Medical Director may also offer primary care services to residents.

[7] Both governmental and private payor health plans qualify as “health care benefit programs” under 18 U.S.C. §24(b).

[8] Government Accountability Office (GAO) report entitled “SUBSTANCE USE DISORDER – Information on Recovery Housing Prevalence, Selected States’ Oversight, and Funding.” (GAO-18-315) (March 2018, Page 6).  https://www.gao.gov/assets/700/690831.pdfA representative of GAO was subsequently asked to testify before the Committee on Finance, United States Senate on October 24, 2019 (GAO-20-214T). GAO’s report on this testimony is available at:  https://www.gao.gov/assets/710/702271.pdf

[9] GAO-18-315, page 7.

[10] Hearing Before the Subcommittee on Oversight and Investigations of the Committee on Energy and Commerce, House of Representatives, Testimony of Eric M. Gold. Serial No. 115-87, (December, 12, 2017).

[11] Federal Anti-Kickback Violations, 42 U.S.C. § 1320a-7b(b)(1)(A.

[12] Attempt and Conspiracy, 18 U,S,C, §1349.

[13] Comprised of the FBI, the Drug Enforcement Administration (DEA), and the Internal Revenue Service – Investigative and Forensic Service (IRS).

[14] See 21 U.S.C. § 841(a)(1).

[15] In this case, the licensed mental health counselor was implicated in the illegal dispensing conduct through the operation of 18 U.S.C. §2.  As the statutory provision provides:

“(a) Whoever commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable as a principal. 

(b) Whoever willfully causes an act to be done which if directly performed by him or another would be an offense against the United States, is punishable as a principal.”

Aider and abettor liability is distinct from accessory after the fact under 18 U.S.C. § 3. An aider and abettor, unlike an accessory after the fact, is punishable as a principal.

[16] See 21 U.S.C. 846

Medicaid After-Hours Claims Audits (CPT 99050 & CPT 99051) by State Medicaid Regulators are Continuing.  Are Your Medicaid After-Hours Claims Compliant?

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Medicaid After-Hours Claims Audits(June 3, 2020):  By 2027, national health spending is expected to exceed $6 trillion.  Notably, health spending will rise from a share of approximately 17.9% of the Gross National Product (GNP) to 19.4% during this time period.[1]  Understandably, Medicare and Medicaid program officials have ramped up their efforts to reign-in the costs of these government payor programs.  One of the continuing areas of concern that has contributed to the high cost of Medicaid services is the use of hospital emergency room services by Medicaid recipients for the care of non-urgent medical issues.  In response, many State Medicaid plans (especially Medicaid Advantage plans) have taken steps to make it easier for plan beneficiaries to obtain care by their primary care provider after normal business hours rather than be forced have to seek significantly more expensive hospital emergency room assistance during evenings, weekends and holidays, when their primary caregiver’s offices would normally be closed. This article reviews the billing of Medicaid after-hours claims (CPT 99050, CPT 99051) in more detail and discusses the types of deficiencies that have been noted by regulators when auditing these services.

I.  Background of the Medicaid After-Hours Claims Issue:

The non-emergency use of hospital emergency room services by Medicaid participants has been a long-standing problem of almost four decades.  As early as 1983, the Department of Health and Human Services (HHS), Office of Inspector General (OIG) noted that there was a high rate of hospital emergency room misuse by Medicaid recipients who would utilize high-cost emergency rooms for the care and treatment of non-emergency medical issues. At that time, it was estimated that over one-half to two-thirds of Medicaid emergency room visits” were non-emergent.[2] As the OIG’s 1983 report further noted, Medicaid recipients were found to be visiting hospital emergency rooms for non-urgent care largely because other sources of care [were] either unavailable or inaccessible to the them.”  The OIG concluded that at least half of Medicaid beneficiary emergency room visits could have been more appropriately treated in community care settings. Notably, the root cause of the problem was clearly understood by the government long ago:

The use of emergency rooms for non-urgent care results primarily from the recipient’s lack of access to primary care during or after office hours.  Often the Medicaid recipient does not have a doctor that they see on a regular basis.  Recipients may not live near a participating physician or may lack transportation to get to the physician’s office.  A recipient may not be able to go to the physician’s office during normal office hours, and may have difficulty reaching the physician after hours.[3] (emphasis added).

II. State Medicaid Coverage Issues of CPT Code 99050 and CPT Code 99051:

If a participating provider treats a Medicaid recipient after normal business hours, a number of State Medicaid plans now permit a participating provider to bill an appropriate Evaluation and Management (E/M) code AND bill CPT 99050 or CPT 99051 as an additional charge to reflect the fact that after-hours care was provided.  As the 2019 American Medical Association Current Procedural Terminology manual reflects, CPT 99050 and CPT 99051 are defined as follows:

  • CPT 99050Service(s) provided in the office at times other than regularly scheduled office hours, or days when the office is normally closed (i.e., holidays, Saturday or Sunday), in addition to basic service.
  • CPT 99051Service(s) provided in the office during regularly scheduled evening, weekend, or holiday office hours, in addition to basic service.

The Office of Inspector General provided the following example to demonstrate proper billing of CPT 99050:

“[A] physician’s office may be open from 9 a.m. to 5 p.m., Monday through Friday. A physician treating a beneficiary in that office at 7 p.m. on a Thursday may bill for CPT code 99050 in addition to the evaluation and management code for the visit.[4]  

With the incorporation of these codes into their payment schemes, State Medicaid plans have effectively encouraged primary care providers to make themselves, and / or members of their staff, available beyond regularly scheduled office hours, and weekends, to care for Medicaid patients.  The expanded availability of these Medicaid providers has therefore made it less likely that Medicaid patients would seek care for non-emergent medical conditions from hospital emergency rooms.  Unfortunately, the coding and billing requirements applied by State Medicaid regulators often unwritten and / or in direct contradiction of what a Medicaid provider has been told by one or more Medicaid Advantage payor plans.  As a result, the billing of CPT 99050 and CPT 99051 has led to a number of State investigations and audits of these codes.

III.  Overview of CPT 99050 and CPT 99051 Medicaid After Hours Claims Audit Enforcement Efforts:

A number of State Medicaid regulatory authorities have been actively auditing the claims practices of physicians and other providers who have been billing for after-hours services using CPT 99050 and CPT 99051.  While the audit findings have varied from one state to another, the government has generally argued that providers have incorrectly billed for after-hours services when such services did not qualify for coverage and payment.  Examples of state Medicaid after-hours claims audit initiatives include the following:

Texas

  • Despite the fact that Texas physicians and practices have seen dramatic drops in revenues since March 2020 due to the COVID-19 crisis, the Texas Health and Human Services Commission, Office of Inspector General (HHSC-OIG) have continued to aggressively audit CPT 99050 claims billed by Medicaid providers. Notably, many of these audits have focused on physician practices in the Rio Grande Valley.  As of May 2020, Medicaid after-hours claims audits remain ongoing throughout Texas.
  • Last year, HHSC-OIG reached a settlement with a physician in Pharr, Texas for $297,549 for the alleged improperly billing of Medicaid after-hours claims. Government investigators claimed that the provider was improperly reimbursed for Medicaid after-hours services, in contravention to the billing requirements set out in the provider’s Medicaid managed care contract and HHSC program policy.[5]
  • That same month, the government regulators reached a similar settlement with a physician practice in Mission, Texas in the amount of $61,310. [6]
  • Notably, Texas has recently upped-the-ante, so to speak, by issuing a “Clarification Statement” meant to further explain its coverage of Medicaid after-hours claims. Effective February 1, 2020, Texas Medicaid & Healthcare Partnership (TMHP)[7] now takes the position that:“After-hours procedures are limited to one per day, same provider.” [8]

What is meant by this “Clarification Statement”?  Great question.  At this time, TMHP has not issued any additional guidance setting out the parameters of this new rule.

New Jersey

  • In this case, the New Jersey Office of the Comptroller, Medicaid Fraud Division, (New Jersey Comptroller) alleged that one of its Medicaid providers had improperly billed 99050 for services which it provided during “regular office hours.”[9] In its decision, the New Jersey Comptroller argued that because CPT 99050 was an add-on code, it should not be utilized and billed frequently, and that the provider’s frequent use of the code indicated improper usage.
  • To determine the practice’s regular business hours, the New Jersey Comptroller reviewed the hours of operation that were listed in the credentialing documents which the provider submitted to enroll in the payor’s managed care network, and the hours of operation listed on the payor’s online provider portal. The New Jersey Comptroller then compared these times against the times and dates of service which were listed in the claims submitted by the provider to determine whether the provider regularly treated patients on weekends and federal holidays (July 4th, Labor Day, Thanksgiving, Christmas, New Year’s Day, Easter, and Memorial Day).  After completing this analysis, the New Jersey Comptroller argued that dates and times which were submitted with the Medicaid provider’s claims showed that the Medicaid provider regularly operated during weekends and federal holidays, and that these times were considered regular office hours for purposes of the after-hours code.
  • The New Jersey Comptroller concluded that the Medicaid provider had improperly used CPT 99050 despite the fact that the Medicaid payor had reassured the provider that it was properly billing the code, and had awarded the Medicaid provider a $100,000 bonus for saving the payor over $600,000 in emergency room visits. Although the New Jersey Comptroller acknowledged the provider’s receipt of this award, it concluded that the practice’s receipt of this award did not overcome the practice’s allegedly improper use of CPT 99050.

Alabama

  • Although not as recent as the cases currently being pursued in Texas and New Jersey, it is worth noting that a Federal case out of the Northern District of Alabama held that a healthcare provider had improperly used the after-hours billing code for weekend visits when the clinic’s normal business hours, as advertised on the clinic’s website and written to all insurance companies, were 7 days a week from 8:00 am to 6:00 pm.[10]

South Carolina

  • The South Carolina Department of Health & Human Services advised that providers with regular scheduled evening and weekend office hours should not use CPT 99050 for services provided during those times or for treating patients whose visits lasted longer than the facility’s posted hours.[11]

Connecticut

  • A Connecticut Medicaid pediatric practice, agreed to pay $65,378 to settle allegations that it violated the False Claims Act by improperly billing after-hours billing code CPT 99050.[12] The U.S. Attorney’s Office for the District of Connecticut alleged that the practice had improperly billed the after-hours code when the practice was open for business and regularly scheduling patients for same-day sick visits.

IV.  Responding to an Audit of Your Medicaid After-Hours Claims:

While the basic rules for the billing of after-hours codes are well established, the way that coverage and payment requirements are being interpreted by State Medicaid regulators widely vary from one jurisdiction to another.  Some of the problems we are seeing include, but are not limited to the following:

  • State Regulators Don’t Always Go By Your Agreements with the Medicaid Advantage Plans. Medicaid providers typically negotiate what constitutes after-hours with each Medicaid Advantage payor plan. The negotiated understanding of what constitutes after-hours is often expressly defined in the provider’s contract.  It is not uncommon for the definition of after-hours to differ from one Medicaid Advantage plan to another.  Despite the fact that a provider may have reached an agreement with a provider, State Medicaid regulators conducting audits of CPT 99050 and CPT 99051 have often disregarded the definition set out in the contract and denied payment of these claims, citing a number of reasons why the claims don’t qualify for coverage and payment.
  • Incomplete Documentation. A number of the cases we have reviewed have involved health care practices who have failed to keep and / or maintain records of when a patient arrived and left their offices.  The failure to keep proper records will inevitably lead to denials of CPT 99050 and CPT 99051.
  • Failure to Maintain a Patient Signature Sheet. Even if your practice electronically checks in a patient when they arrive at your office, it is important to also obtain a patient signature which reflects when the patient arrived.
  • Inconsistent Posting of Office Hours. Regardless of what your Medicaid Advantage provider contract may state with respect to what constitutes after-hours, you may find that signage, online posts, and / or a practice’s “Google Your Business” listing indicates that a practice is supposedly open at a time that is consider after-hours by a Medicaid Advantage plan.   In the event of Medicaid claims audit, the government may try to argue that since an online listing indicated that a time was within your regular business hours, the practice cannot be paid for CPT 99050 and CPT 99051.

Ultimately, the way these cases are being handled appears to vary from state to state.  How should you respond if your Medicaid after-hours claims are audited?  We recommend you immediately contact experienced health law counsel to assist with the defense of these claims. For a free consultation, call:  1 (800) 475-1906.

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

 

 

 

 

[1] CMS Office of the Actuary Releases 2018-2027 Projections of National Health Expenditures, February 20, 2019.  https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/ForecastSummary.pdf

[2] Testimony of Michael Mangano, Deputy Inspector General, before the Subcommittee on Oversight and Investigations of the Committee on Energy and Commerce, House of Representatives, on February 28 and March 26, 1992. (See page 422).  During his testimony, Mr. Mangano cited OIG’s September 1983 report entitled “Non-Emergency Use of Hospital Emergency Departments by Medicaid and Medicare Beneficiaries.”  https://archive.org/stream/medicaidprogrami00unit/medicaidprogrami00unit_djvu.txt

[3] Ibid, page 424.

[4] Id.

[5] See OIG Medicaid Program Integrity recovers $14 million in third quarter, OIG HHSC (July 12, 2019), https://oig.hhsc.texas.gov/latest-news/oig-medicaid-program-integrity-recovers-14-million-third-quarter

[6]    Id.

[7] The Texas Medicaid & Healthcare Partnership (TMHP) is the claims administrator for Texas Medicaid under contract with the Texas Health and Human Services Commission.

[8] TMHP is still in the process of adding this language to Texas Medicaid Provider Procedures Manual, Medical and Nursing Specialists, Physicians, and Physician Assistants Handbook, and the Children with Special Health Care Needs (CSHCN) Services Program Provider Manual.

[9] Final Audit Report – Ocean County Internal Med. Assoc., P.C.’s Use of AMA’s CPT Code 99050, N.J. Office of Comptroller (July 11. 2018), at 11-12, https://www.nj.gov/comptroller/news/docs/ocima_far.pdf.

[10] No. CV 5:10-cv-2843-IPJ, 2014 U.S. Dist. LEXIS 195885, at *6 (N.D. Ala. July 29, 2014), aff’d, United States ex rel. Salters v. Family Care, Inc., No. 5:10-cv-2843-LSC, 2016 U.S. Dist. LEXIS 173433 (N.D. Ala. Dec. 15, 2016).

[11] See Provider Perspective, 1 S.C. Dep’t of Health and Hum. Serv., at 1 (2008), at https://www.scdhhs.gov/internet/pdf/provider%20newsletterfinal.pdf.

[12] See Pediatric Practice Pays $65,378 to Settle Allegations Under the False Claims Act, FBI (May 27, 2010), https://archives.fbi.gov/archives/newhaven/press-releases/2010/nh052710.htm.

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

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

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

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

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

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

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

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

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

Federal Statutory Authority 
15 U.S.C. § 1 — Trusts, etc. in Restraint of Trade Illegal; Penalty
15 U.S.C. § 2 – Monopolizing Trade a Felony; Penalty
15 U.S.C. § 14 – Sale etc., on Agreement not to Use Goods of Competitor
15 U.S.C. § 1263 Prohibited Acts (Introduction of Misbranded or Banned Hazardous Substances into Interstate Commerce)
15 U.S.C. § 2068 – Prohibited Acts (Sale, Manufacture, Distribution or Import of a Consumer Product or other Product that is not in Conformity with Consumer-Product-Safety Regulations)
18 U.S.C. § 175Prohibitions with Respect to Biological Weapons
18 U.S.C. § 875 — Interstate Communications
18 U.S.C. § 876 – Mailing Threatening Communications
18 U.S.C. § 1030Fraud and Related Activity in Connection with Computers
18 U.S.C. § 1038 — False Information and Hoaxes
18 U.S.C. § 1040 — Fraud in Connection with Major Disasters and Emergencies
18 U.S.C. § 1341 – Frauds and Swindles (Mail Fraud)
18 U.S.C. § 1343 – Fraud by Wire, Radio or Television (Wire Fraud)
18 U.S.C. § 1347 — Healthcare Fraud
18 U.S.C. § 1349 — Conspiracy to Commit Fraud
18 U.S.C. §§ 1028-1028A — Fraud and Related Activity in Connection with Identification Documents, Authentication Features, and Information (Identification Fraud and Aggravated Identity Theft)
18 U.S.C. § 2320 –Trafficking in Counterfeit Goods
18 U.S.C. § 2332a — Use of Weapons of Mass Destruction
21 U.S.C. § 333 — Violation of the Food, Drug, and Cosmetic Act

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

  • Robocalls making fraudulent offers to sell respirator masks with no intent of delivery. 18 U.S.C. § 1343 (Wire Fraud). The crime of “wire fraud” occurs when someone voluntarily and intentionally uses makes an interstate telephone call or another electronic communication (such as e-mail) in furtherance of a fraud scheme. Notably, the elements of wire fraud are very similar to those of mail fraud statute except that it speaks of communications transmitted by wire.
  • Fake COVID-19-related apps and websites that install malware or ransomware. 18 U.S.C. § 1343 (Wire Fraud) or 18 U.S.C. § 1030 (Computer Fraud). The crime of wire fraud is described above.  The crime of computer fraud occurs when someone knowingly causes the transmission of a “program, information, code or command” and intentionally damages (without authorization) a protected computer.   
  • Phishing emails asking for money or presenting malware. 18 U.S.C. § 1030 (Computer Fraud). One of the forms of computer fraud is set out above. Additional examples are also discussed under 18 U.S.C. § 1030.[5]  
  • Social media scams fraudulently seeking donations or claiming to provide stimulus funds if the recipient enters his or her bank account number. 18 U.S.C. §§ 1028-1028A (Identity Theft) or 18 U.S.C. § 1343 (Wire Fraud).  Notably, the government has extensive experience prosecuting individuals and entities who are alleged to have set up fake charities and have effectively taken advantage of a national disaster or tragedy.  The perpetrators of this type of fraud are almost always caught and the courts have levied heavy jail sentences and fines on bad actors found guilty of engaging in this type of wrongdoing.
  • Sales of fake testing kits, cures, “immunity” pills, and protective equipment. 21 U.S.C. 333 (Introduction of Misbranded or Adulterated Drug or Device Into Interstate Commerce) or 15 U.S.C. § 2068 (Violation of the Consumer Product Safety Act). Federal prosecutors and regulators for the Food and Drug Administration (FDA) handle these types of cases on an ongoing basis and are experienced in shutting down fraudsters hawking fake cures and treatments.
  • Fraudulent offers for free COVID-19 testing in order to obtain Medicare beneficiary information that is used to submit false medical claims for unrelated, unnecessary, or fictitious testing or services. 18 U.S.C. §§ 1028-1028A (Identification Fraud and Aggravated Identity Theft)This type of fraud has been occurring law before the inception of the COVID-19 fraud cases we are now seeing.  Most recently, Medicare beneficiary information has been misused by a number of telemarketing companies and durable medical equipment companies.  Federal prosecutors are currently in the middle of several prosecutions involving this type of conduct. 
  • Prescription drug schemes involving the submission of medical claims for unnecessary antiretroviral treatments or other drugs that are marketed as purported cures for COVID19. 18 U.S.C. § 1347 (Healthcare Fraud) or 15 U.S.C. § 2068 (Violation of the Consumer Product Safety Act). These common schemes are now being seen in connection with COVID-19 fraud cases around the country.  Health care providers should exercise caution before entering into business relationships with laboratories, pharmacies  and other ancillary service providers who are marketing purported cures or treatment regimens for COVID-19.
  • Robberies of patients departing from hospitals or doctor offices. 18 U.S.C. § 2118 (Robberies and Burglaries Involving Controlled Substances). Although not discussed in Deputy Attorney General Rosen’s memorandum, it is a Federal crime to take, or attempt to take, by force or violence or by intimidation, any quantity of a controlled substance from any person (including a patient) on the business premises or property of a person registered with the Drug Enforcement Administration.  In addition, to this Federal statute, there are a host of robbery statutes that would implicated under State law. 
  • Threats of violence against mayors and other public officials. 18 U.S.C. § 875 (Interstate Communications) or 18 U.S.C. § 876 (Mailing Threatening Communications). Using the internet to convey an interstate threat of violence or injury to any person would be a crime under 18 U.S.C. § 875.  Similarly, using the mails to threaten someone with violence or injury would be a crime under 18 U.S.C. § 876.  
  • Threats to intentionally infect other people. 18 U.S.C. § 2332a (Use of Weapons of Mass Destruction). Of the examples discussed in Deputy Attorney General Rosen’s guidance, this is perhaps the most interesting.  As the memorandum reflects, Federal prosecutors may view “Threats or attempts to use COVID-19 as a weapon against Americans”  as a violation of 18 U.S.C. § 2332a since COVID-19 arguably meets the statutory definition of a “biological agent” [6]and therefore could implicate our country’s terrorism-related statutes.

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

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

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

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

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

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

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

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

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

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

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

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

[6] See 18 U.S.C. § 175.

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

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

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

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

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Have Your Medicare Billing Privileges Been Revoked Under 42 CFR Sec. 424.535(a)?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

            OR

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

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

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

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

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

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

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

15. Reserved.

16. Reserved.

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

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

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

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

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

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

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

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

Men must turn square corners when they deal with the government

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

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

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

III.   Responding to a Medicare Revocation Action:

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

42 CFR scc. 424.535(a)Robert W. Liles is a former Federal prosecutor and has more than 25 years of health law experience.  Mr. Liles and the other attorneys at Liles Parker have extensive experience representing providers and suppliers in the appeal of proposed Medicare revocation actions. Questions?  Give Robert Liles a call.  For a free consultation, he can be reached at:  1 (800) 475-1906.

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

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

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

[3] 81 FR 10720.

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

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

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

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

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

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

(i) Whether the data in question was reported.

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

(iii) The materiality of the data in question.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(A) The nature of the patient harm.

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

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

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

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

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

(4) Administrative or monetary penalties.

(5) Formal reprimand(s).

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

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

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

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

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

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

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

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

I.   Administrative Dental Claims Audits Expanded in 2019:

  • Medicaid Claims Audits.

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

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

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

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

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

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

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

    • Failure to sign progress notes (either electronically or by hand). At first glance, you may feel that the failure to electronically-sign a dental progress note is a mere technical deficiency. Unfortunately, that isn’t necessarily the case, CMS contractors (such as UPICs) are actively denying dental claims if the associated progress note has not been signed by the rendering dentist. As set out in the Medicaid Program Integrity Manual[3] reflects, unsigned entries (referring to electronic and handwritten), shall be excluded from consideration when performing [a] medical review.”  Similarly, in several of the private dental payors cases that we handled, the payors denied claims that were not supported by signed progress notes and / or orders.  As a final point in this regard, please keep in mind that most State Dental Practice Acts include specific requirements mandating that progress notes, orders and treatment records be signed by the licensed dental professional who performed the service.
    • Billing for dental services not rendered. Unfortunately, this reason for denial has been a recurring theme cited by UPICs and SIUs alike when auditing dental records and claims for many years.  For example, recent private payor audits conducted have alleged that multiple instances were found where dentists billed for periodontal services (CDT Code D4331 – periodontal scaling and root planing) that were not performed based on the auditor’s review of the patient dental treatment records and radiographs in the fileSimilarly, insufficient documentation has been cited when denying these services based on failure to establish medical necessity. In these instances, the auditors noted that in order to diagnose and treat periodontal disease, dated pre-operative diagnostic quality radiographs and pre-operative periodontal charting is needed. Without these, periodontal disease cannot be properly diagnosed and periodontal scaling and root planing should not be conducted.
    • Misrepresentation of a non-covered service. In some respects, this improper practice is nothing more than another form of “billing for services not rendered. Simply put, in the recent cases we have seen where this has occurred, a dentist or dental practice has either purposely or erroneously characterized a non-covered dental service as a covered service. Keep in mind, the definition of a non-covered service varies from policy to policy. Additionally, the list of non-covered services under a specific policy may change from year-to-year. In any event, it is important that dental providers regularly check to ensure that the services being provided qualify for coverage and payment.
    • Misrepresentation of the provider of the dental service. This type of billing error is still commonly found in both dental and medical practices around the country. In the cases we have seen, “fraud” wasn’t the reason for the underlying misrepresentation on the ADA Claims form. In most instances, it was merely a matter of a credentialing delay. In other cases, dental practices appeared to believe that they were permitted to bill for the services under a concept similar to Medicare’s “Incident-To” ruleAlthough we have not seen a dental misrepresentation case of this type referred for criminal prosecution, it is important to remember that the ADA Dental Claims form is being electronically submitted to the health plan for payment.  Depending on the facts, an aggressive prosecutor could argue that such conduct constitutes were fraud. 18 U.S.C. §1343.
    • Unlicensed individuals found to have performed dental procedures. Generally speaking, we have seen two categories of cases where this has occurred. In the first example, a licensed professional failed to renew his Because of this administrative error, the dentist inadvertently performed dental procedures while his license had lapsed.  In the second example, a dental assistant or dental hygienist was found to have performed one or more dental procedures that were outside of their scope of practice. Both of these examples typically lead to claims denials.  They may also result in complaints to the State Dental Board.
    • Routine failure to collect the patient’s full payment or share of cost without notifying the carrier. Is your dental practice consistently collecting co-payments and deductibles that may be owed by a covered beneficiary?  In the case of non-government administered plan, the unsupported waiver of these amounts may constitute a breach of contract. However, if the dental plan is Federally funded, such a failure may constitute a violation of the Anti-Kickback Statute.
    • Misreporting dates to circumvent calendar year maximums or time limitations. The misreporting of dates in an effort to evade calendar year maximums and / or time limitations may constitute a violation of one or more State and Federal fraud statutes.
    • Failure to properly document support for medical necessity. Properly documenting medical necessity continues to be a problem. Over the last year, our reviews have found that there was often little detail provided to support medical necessity of pediatric dental treatments provided. For example, prophylaxis was typically provided because it was medically required. Although dental notes often indicated that plaque was visible, the notes often failed to  specify any areas of build-up. Also, the level of decay was typically not included to support services such as fillings and crowns.
    • Missing dental treatment plans / consent forms. Completed dental treatment plans and consent forms have frequently been found to be missing from patient dental records. The dental treatment plans that were included were typically signed by the pediatric dental patient’s parent, but the signatures were often not dated. Signatures should be dated and these dates should correspond with the date listed as the date of authorization noted on the claim form. Many of the dates of authorization for the “signatures on file” on the claim form were after the date of service, which is an error cited in recent audits.  

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

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

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

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

    • December 2019. In this case, the government alleged that from 2014 through 2015, the defendant dentist presented claims to the State Medicaid program for dental services that were never provided.  Connecticut’s Superior Court ordered the defendant to pay treble damages, along with a civil penalty of $1.5 million.
    • March 2019. In this case dental fraud case, after reviewing a sample of patient dental records, the State Attorney General’s Office found that a dental practice has defrauded the State Medicaid program.  To resolve the allegations, the defendant dentists agreed to pay $1 million under the State False Claims Act and agreed to be voluntarily excluded from participating in the Medicare and Medicaid programs.

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

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

    • October 2019.  Virginia.  In this case, a Virginia-licensed dentist was sentenced to nearly eight and a half years in prison for conspiracy to distribute prescription opioids and muscle relaxant pills without a legitimate medical purpose.  The government alleged that the defendant was involved in an elaborate scheme to prescribe opioids such as hydrocodone and oxycodone pills for his personal use and the use of his co-conspirators
    • October 2019. Missouri. Federal prosecutors allege that two dentists at a Missouri dental practice participated in two different schemes to defraud Medicaid.  In the first scheme, patients were allegedly provided a $50 Ortho-Tain mouth pieces designed to straighten teeth but the Medicaid program was then billed $700 for a “speech aid prosthesis.” In the second scheme, federal prosecutors say the dentists provided dentures and other dental services to patients who did not qualify for Medicaid reimbursement and then submitted claims to Medicaid anyway Federal prosecutors say these two schemes netted $885,748.
    • September 2019. Maryland. The dental practice owner (and former dentist) at a Maryland practice agreed to pay over $5.4 million in restitution and nearly $4 million in a forfeiture money judgment after pleading guilty to health care fraud for involvement in a $5 million-plus Medicaid fraud scheme. Authorities said the former dentist (who is currently serving a 16-year sentence for sexual assault of patients), used his dental practices to submit fraudulent claims to D.C. Medicaid for thousands of unprovided provisional crowns, which resulted in around $5.4 million worth of improper payments from the program between August 2012 and February 2016.
    • August 2019. Illinois. An Illinois dentist was indicted on 13 counts of health care and wire fraud after prosecutors say he billed Illinois Medicaid hundreds of thousands of dollars for dental procedures he never performed. The U.S. Attorney’s Office for the Southern District of Illinois stated. In all, it is alleged that Kim collected more than $700,000, which prosecutors want paid back to the state.
    • July 2019. Arkansas.  In the case, an Arkansas dentist received a five-year suspended prison term and was ordered to pay $33,383.05 in restitution, $100,149.15 in damages and $2,500 in fines after pleading guilty to defrauding Medicaid. Authorities said the dentist submitted more than 3,100 fraudulent claims to Medicaid for X-rays and various dental services between September 2015 and December 2017, which resulted in $186,461 worth of improper payments from the program.
    • June 2019. Tennessee.  A Tennessee dentist and practice owner was sentenced to two years and nine months in prison and was ordered to pay $965,448 in restitution after pleading guilty to conspiracy to commit health care fraud for orchestrating a scheme to defraud TennCare and other health care benefit programs. Authorities said the dentist caused the submission of fraudulent claims to TennCare and other health benefit programs for unprovided or incomplete dental work from November 2013 to January 2018.
    • June 2019. California.  A California dentist based out of Los Angeles was sentenced to more than three years in prison for health insurance fraud and was ordered to pay restitution of more than $1.4 million after pleading guilty to submitting fraudulent claims to multiple private insurers for unprovided dental care services.
    • April 2019.  New Jersey.  An unlicensed dentist from New Jersey was convicted in a $2 million fraud case in New York.  The unlicensed dentist was sentenced to two years in prison and ordered to pay restitution of almost $1 million after being convicted for his role in the $2 million health insurance fraud scheme.  Prosecutors allege that the unlicensed dentist worked as a dentist in Manhattan and conspired with others to pay kickbacks to patients and submit fraudulent claims to health insurers for unprovided dental services or services. 

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

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

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

  • Implement an Effective Dental Compliance Program.

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

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

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

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

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

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

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

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

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

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

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

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

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

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Have you received a Civil Investigative Demand? Call Liles Parker for assistance. 1 (800) 475-1906.(March 3, 2020):  In recent years, Federal prosecutors around the country have increasingly relied on Civil Investigative Demands when investigating civil False Claims Act matters and cases.[1]  It’s easy to see why the government has continued to focus its civil enforcement efforts on alleged violations of the False Claims Act. Let’s look at the numbers — it’s been another banner year for the civil False Claims Act.  According to the Department of Justice (DOJ), the government secured more than $3 billion in settlements and judgments in False Claims Act cases for Fiscal Year ending September 30, 2019.  More than $2.6 billion of this $3 billion is related to health care matters and cases.  As DOJ notes, this is the tenth consecutive year that health care False Claims Act settlements and judgments have exceeded $2 billion.  As these statistics show, health care providers and suppliers are the primary targets of both whistleblower and government-initiated actions under the False Claims Act.[2] To investigate alleged violations of the False Claims Act, Federal prosecutors have been increasingly relying on Civil Investigative Demands as a pre-litigation discovery tool.  This article examines the government’s current use of Civil Investigative Demands in health care False Claims Act matters and cases and discusses the steps you should take if you are the recipient of one of these administrative subpoenas.

I.  What is a Civil Investigative Demand?

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

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

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

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

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

 II.  The Evolution of Civil Investigative Demands:

  • False Claims Amendments of 1986.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[1] 31 U.S.C. § 3729-3733.

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

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

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

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

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

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

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

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

[10] 31 U.S.C. § 3733(l)(8).

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

Telemedicine Audits of Evaluations by Referring Physicians are Increasing

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

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

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

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

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

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

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

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

II.  Current DME Telehealth / Telemedicine Fraud Enforcement Efforts:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(f) Maintaining and providing access to documentation. 

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

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

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

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

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

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

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

. . .

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

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

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

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

V.  Responding to a Telemedicine Audit or Investigation:

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

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

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

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

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

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

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

[6] 42 C.F.R. § 410.78(b)(2).

[7] 42 C.F.R. § 410.78(b)(3).

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

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

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

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

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

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

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

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

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

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

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