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

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Prepayment Review / Prepayment Audit

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

I. Legislative Background:

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

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

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

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

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

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

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

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

III.  Types of Non-Random Prepayment Review:

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

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

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

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

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

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

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

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

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

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

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

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

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

[1] At the time of passage, the Health Care Financing Administration (HCFA) was responsible for the management of the Medicare and Medicaid programs.  In September 2001, the Secretary, Health and Human Services, Tommie Thompson, changed HCFA’s name to the Centers for Medicare and Medicaid Services
[2] Federal Register /Vol. 73, No. 188 / Friday, September 26, 2008 /Rules and Regulations, 55753.
[3] CMS Pub. 100-08, Ch. 3, §
[4] CMS Pub. 100-08, Ch. 3, §3.1B.
[5] CMS Pub. 100-08, Ch. 3, §3.2.2A.
[6] CMS Pub. 100-08, Ch. 3, §3.2.1.
[7] For an overview of the UPIC program, see our discussion at this link.

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

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

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

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

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

Specific outpatient gastrointestinal tests currently being audited include:  

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

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

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

I.  Clinical Laboratory Testing for Viral Respiratory Infections:

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

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

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

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

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

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

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

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

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

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

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

III.  Problems with Multiplex PCR Respiratory Viral Panels:

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

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

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

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

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

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

(a) Reduced antibiotic use.[5]

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

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

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

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

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

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

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

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

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

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

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

Robert W. Liles represents providers in audits of CPT Code 87633 and CPT Code 87507 claims

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

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

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

[4] CGinocch@NSHS.edu

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

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

[7] Id.

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

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

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

December 28, 2020 by  
Filed under Featured, Home Health & Hospice

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Hospice audits and investigations are ongoing. Call for a free consultation: 1 (800) 475-1906(December 28, 2020):  Let’s face it, we are all glad to have 2020 behind us.  From an enforcement standpoint, COVID-19 greatly impeded the Federal government’s ability to investigate and prosecute civil and criminal violations of law.  The numbers speak for themselves.  Between February 2020 and April 2020, new criminal prosecutions had dropped by 80%.[1] Although the final numbers from May to December 2020 are still pending, it is anticipated that the number of prosecutions will still fall far short of where they were in 2019.  Why did this occur?  The answer is fairly straightforward – the number of civil and criminal referrals sent to Federal prosecutors at U.S. Attorney’s Offices around the country dropped precipitously when much of our country effectively shut down, and took other steps to stop the spread of COVID-19. Although prosecutions as a whole were way down in 2020.  The government hasn’t put investigations on hold.  With respect to administrative reviews, private sector program integrity contractors working for the Center for Medicare and Medicaid Services (CMS) have moved forward with audits of hospice claims around the country.  On the civil side, both Federal and State prosecutors have continued to investigate alleged hospice agency violations of the False Claims Act.  Finally, as we recently saw in the Southern District of Texas, criminal hospice-related prosecutions have continued to be held.  This article examines the various hospice audits, investigations and prosecutions that have taken place in 2020.

I.  Criminal Prosecutions of Hospice Related Violations:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

IV.  Responding to a UPIC Audit of Your Hospice:

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

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

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

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

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

V.  Hospice Risk Areas:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

NATIONWIDE Representation:  1 (800) 475-1906

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

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

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

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

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

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

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

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

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

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