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What is a Medicare Deactivation of Your Billing Privileges?

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What is a Referral Under the Anti-Kickback Statute?

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


I.  The Federal Anti-Kickback Statute:

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

(b) Illegal remunerations

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

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

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

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

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

           . . .

 (h) Actual knowledge or specific intent not required

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

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

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

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

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

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

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

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

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

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

IV.  Final Remarks:

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

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


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

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

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

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

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

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

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

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

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

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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.

Chiropractor Owned Multidisciplinary Practices are at a Higher Risk of Audit

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

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

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

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

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

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

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

II.  Challenges to be Considered:

A.     State Regulatory Considerations.

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

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

B.    Current Audit Challenges.

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

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

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

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

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

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

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

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

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

III.  Final Thoughts:

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

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

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

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

[3] CMS, Medicare Program Integrity Manual, § 2, available at this link.

Preparing for a UPIC Audit? Examine These Eight Claim Elements

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

II.  Final Considerations — UPIC Audits:

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

Healthcare LawyerRobert W. Liles represents health care providers in UPIC Medicare and Medicaid audits. In addition, Robert counsels clients on regulatory compliance issues, performs GAP analyses, conducts internal reviews, and trains healthcare professionals on various legal and compliance issues Do you need help preparing for a UPIC audit? Call Robert for a free consultation: 1 (800) 475-1906.

[1] A detailed discussion of the UPIC audit process can be found at the following link.

[2]  For an overview of the impact of an “exclusion” action, please see Paul Wiedenfeld’s article titled “A Provider’s Guide to OIG Exclusions.”

[3] A detailed discussion of a provider’s repayment obligations when an overpayment has been identified can be found at this link.

[4]  For a detailed discussion on how to conduct a “GAP Analysis” of your health care claims, please see our page titled: “How to Conduct a GAP Analysis of Your Health Care Practice.”

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)

Medicare Revocation Actions Related to Telemedicine Rising!

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

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

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

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

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

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

Ҥ 424.535 РRevocation of enrollment in the Medicare program.

(10) Failure to document or provide CMS access to documentation. (i) The provider or supplier did not comply with the documentation or CMS access requirements specified in § 424.516(f). . .”

As 42 C.F.R. § 424.516(f) provides:

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

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

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

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

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

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

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

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

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

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

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

  • What is the impact of a Medicare revocation action?  The imposition of a 10-year re-enrollment bar can effectively destroy a health care provider’s practice.  Moreover, it will likely limit a provider’s employment options.  Additional potential consequences of having your Medicare enrollment revoked are discussed below.
  • Depending on the facts, the role you played in a telemedicine fraud case may result in a referral to the U.S. Department of Justice (DOJ) for investigation and possible prosecution. Since 1994, CMS has participated in an interagency agreement with the DOJ which allows CMS program integrity contractors (in this case, UPICs) to send health care fraud referrals directly to the DOJ without having to first route the referral through the Office of Inspector General (OIG).  Your involvement in a telemedicine related fraud case will be carefully evaluated.  For instance, did you actually conduct evaluations by phone, video or asynchronously OR did you perform an evaluation based solely on the medical information and intake documents provided to you by an intermediary marketing company?
  • You will be likely be barred from enrolling in the Medicare program for a period of 10 years. In light of the cases we have handled since the issuance of the November 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 physicians, NPs and PAs in connection with Medicare revocation actions, administrative audits (UPIC audits / private payor audits), civil False Claims Act cases, and criminal violations of the Federal Anti-Kickback Statute and EKRA.  Are you currently being audited or under investigation?  We can help.  For a free initial consultation regarding your situation, call Robert at: 1 (800) 475-1906.

[1]  Often the companies identify themselves as “locum tenens” agencies, or “telemedicine providers.” Most have a contract the physician signs that (1) doesn’t permit the physician to retain any patient records, and (2) requires the physician to agree not to file any claims or bill the patient.

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

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

[4] For an overview of the various reasons that a provider’s Medicare enrollment and billing privileges may be revoked, please see our article titled 42 CFR Sec. 424.535(a) Medicare Revocation Actions — Your Medicare Billing Privileges Can be Revoked For a Host of New Reasons. Are You Facing a Medicare Revocation Action? If so, You Must Act Fast to Preserve Your Appeal Rights.(March 9, 2020).

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

[6] See 42 C.F.R. § 424.535(a)(10).

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

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

Are Your Sober Home / Recovery Residence Business Practices Legal?

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Are your Sober Home and Recovery Residence Business Practices Legal? Call Liles Parker for help. 1 (800) 475-1906.(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 your Sober Home or Recovery Residence business practices 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 & 99051) by Regulators are Ongoing. 

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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 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:


  • 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.


  • 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]


  • 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.

The Coronavirus Aid, Relief and Economic Security (CARES) Act: Provisions Relevant to Healthcare Providers

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By Michael Cook, Jennifer Papapanagiotou & Andy Lynch –  Partners at Liles Parker, PLLC.

(March 31, 2020):  On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (CARES) Act[1] passed the House of Representatives by a voice vote. The President then signed the bill into law. The bill is the third round of federal government support in the wake of the coronavirus public health crisis and associated economic fallout, succeeding the $8.3 billion in public health support passed two weeks ago and the Families First Coronavirus Response Act.  Liles Parker has published a series of articles highlighting the waivers and other actions taken by the Centers for Medicare & Medicaid Services and other Federal and State agencies to ease the burden on healthcare providers during the COVID-19 public health emergency.[2]  This article is the first in a two-part series that will highlight some of the more significant provisions of the Cares Act.

I.   Support for Healthcare Providers

  • Section 3211, Supplemental Awards for Health Centers: The CARES Act provides for supplemental awards for FY 2020 for federally qualified health centers, including an additional $1,320,000,000 for the prevention, diagnosis, and treatment of COVID-19 or the detection of SARS-CoV-2.
  • Sections 3212 – 3213, Reauthorizations of HRSA Rural Development and Telehealth Network Grant Programs: The Act reauthorizes HRSA’s Rural Health Care Services Outreach, Rural Health Network Development and Small Health Care Provider Quality Improvement grant programs, as well as the Telehealth Network and Telehealth Resource Center grant programs.
  • Section 3214, Modernization of the Public Health Service: The legislation creates a Ready Reserve Corps to ensure that there are enough doctors and nurses ready to respond to public health emergencies like COVID-19.
  • Section 3215, Limitation of Liability for Volunteer Health Professionals During COVID-19 Emergency Response: This section holds harmless from liability under federal or state law, health care professionals who volunteer their service during the public health emergency for the COVID-19 pandemic declared by the Secretary of HHS.  There are a number of conditions that must be satisfied for this limitation of liability to be effective.

Among these, the limitation of liability covers only professionals who are truly volunteers and who do not receive compensation in the course of providing health care services in the diagnosis or treatment of COVID-19.  The professional must be acting within the scope of her/his license, registration, or certification under the State of licensure/certification, and may not exceed the scope of the license/certification of similar professionals in the State in which the action or omission occurs.  The limitation of liability does not cover willful or criminal misconduct, gross negligence and other similar types of flagrant misconduct.

The provision applies only to conduct that occurs on or after the date of enactment of the CARES Act and is only in effect during the period of the public health emergency declared by the Secretary during the pandemic.

  • Section 3216, Flexibility for Members of the National Health Service Corps During the Emergency Period: During the period of the emergency declaration, this provision allows the Secretary to temporarily re-assign members of the National Health Services Corps to provide service outside of the areas to which they have been assigned to respond to the COVID-19 pandemic. The assignment would need the member’s voluntary agreement and would need to be “within a reasonable distance” of the original assignment, and the member would need to maintain the number of hours originally required of her/him.    

II.   Provisions Affecting Coverage and Payment Under the Medicare & Medicaid Programs

  • Section 3701, Health Savings Accounts for Telehealth Services: This section allows a high-deductible health plan (HDHP) with a health savings account (HSA) to cover telehealth services prior to a patient reaching the deductible, increasing access for patients who may have the COVID-19 virus and protecting other patients from potential exposure.
  • Section 3702, Over-the-Counter Medical Products without Prescription: This section allows patients to use funds in HSAs and Flexible Spending Accounts for the purchase of over-the-counter drugs and menstrual care products without a prescription from a physician. This section appears to reverse the ACA and makes permanent the over-the-counter drug changes during the 2020 plan year and after.
  • Section 3703, Expanding Medicare Telehealth Flexibilities: This section eliminates the requirement included in the Coronavirus Preparedness and Response Supplemental Appropriations Act of 2020 (Public Law 116-123) that limits the Medicare telehealth expansion authority during the COVID-19 emergency period to situations where the physician or other professional has treated the patient in the past three years. This enables beneficiaries to access telehealth, including in their home, from a broader range of providers, reducing COVID-19 exposure for the duration of the public health emergency.
  • Section 3704, Allowing Federally Qualified Health Centers and Rural Health Clinics to Furnish Telehealth in Medicare: This section allows, during the COVID-19 emergency period, Federally Qualified Health Centers and Rural Health Clinics to serve as a distant site for telehealth consultations. A distant site is where the practitioner is located during the time of the telehealth service. This section will allow FQHCs and RHCs to furnish telehealth services to beneficiaries in their home. Medicare will reimburse for these telehealth services based on payment rates similar to the national average payment rates for comparable telehealth services under the Medicare Physician Fee Schedule. It will also exclude the costs associated with these services from both the FQHC prospective payment system and the RHC all-inclusive rate calculation.
  • Section 3705, Expanding Medicare Telehealth for Home Dialysis Patients: This section eliminates a requirement during the COVID-19 emergency period that a nephrologist conduct some of the required periodic evaluations of a patient on home dialysis face-to-face, allowing these vulnerable beneficiaries to get more care in the safety of their home.
  • Section 3706, Allowing for the Use of Telehealth during the Hospice Care Recertification Process in Medicare: Under current law, hospice physicians and nurse practitioners cannot conduct recertification encounters using telehealth. This section allows, during the COVID-19 emergency period, qualified providers to use telehealth technologies in order to fulfill the hospice face-to-face recertification requirement.
  • Section 3707, Encouraging the Use of Telecommunications Systems for Home Health Services in Medicare: This section requires the Department of Health and Human Services (HHS) to issue clarifying guidance encouraging the use of telecommunications systems, including remote patient monitoring, to furnish home health services consistent with the beneficiary care plan during the COVID-19 emergency period.
  • Section 3708, Improving Care Planning for Medicare Home Health Services: This provision enables nurse practitioners, clinical nurse specialists, and physician assistants to order home health services, and certify and recertify patients for home health care. These changes also apply to Medicaid and become effective when HHS publishes implementing regulations, which must be within six months of the enactment of the CARES Act.  Unlike many of the provision of the Act, this provision is permanent and survives the end of the emergency.
  • Section 3709, Adjustment of Sequestration:  The CARES Act suspends the mandatory 2% global reductions under the sequestration order for the period May 1 through the remainder of calendar year 2020.
  • Section 3710, Medicare Hospital IPPS Add-On Payment for COVID-19 Patients During Emergency Period: The Act increases DRG weights by 20% for patients diagnosed with COVID-19 during the emergency period.
  • Section 3711, Increasing Access to Post-Acute Care During the Emergency Period: The Act waives certain requirements for inpatient rehabilitation facilities (IRFs) and long-term acute care hospitals (LTCHs).  For IRFs, the provision waives the requirement that a patient receive at least 15 hours of therapy per week.  For LTCHs, the provision waives the requirement of a payment adjustment where an LTCH does not have a discharge percentage of 50% of patients who would meet the eligibility requirements during the emergency period.  The provision also waives the site-neutral payment rate for discharges occurring during the emergency period that are in response to the public health emergency.
  • Section 3712, Revising Payment Rates for DME Under Medicare During the Emergency Period: This Section prohibits scheduled payment reductions in Medicare DME during 2020 and the emergency period.
  • Section 3715, Providing Home and Community-Based Services in Acute Care Hospitals:  A number of waivers under sections 1915 and 1115 of the Social Security Act provide for home and community-based services for individuals who otherwise would require care in a hospital, nursing facility, or ICF/MR.  This provision allows states to cover these services to individuals under certain of these waivers while they are in an acute care hospital if they meet certain conditions, including that they are identified in the individual’s care plan, not provided through the hospital, not a substitute for services that the hospital is otherwise required to provide, and are designed to ensure a smooth transition to the community and preserve the individual’s functional abilities.
  • Section 3719, Expansion of Medicare Hospital Accelerated Payment Program During COVID-19 Public Health Emergency: During the period of the emergency, this provision expands the accelerated hospital payment program by allowing acute care hospitals, cancer hospitals, children’s hospitals, and critical access hospitals (CAHs) to apply for up to 6-months’ advance payment of up to 100%, and for CAH’s 125%, of anticipated payments.  The provision also provides for 120 days before claims are offset to recoup these payments and not less than 12 months after the date of the first accelerated payment before the outstanding balance must be paid in full.

Administrative Implementation to Encompass All Providers:  On March 28, 2020, CMS published a press release and a Fact Sheet that expanded the availability of the accelerated advance payment program to all Medicare participating health care providers and suppliers.  These advance payments will be based on historical payments.  The Press Release states that “… [t]he payments can be requested by hospitals, doctors, durable medical equipment suppliers and other Medicare Part A and Part B providers and suppliers.”  The applicants must: have billed Medicare for claims within 180 days of the request; not be in bankruptcy; not be under active medical review or program integrity investigations; and not have delinquent Medicare overpayments.  Applications are made to the MACs, and CMS anticipates that payments will be issued within seven days of a request.  Providers described in the legislation, above, can request payments for an amount for up to a six-month period, while other types of providers can request up to a three-month period.  The Fact Sheet provides further instructions on the process.[3]

  • Section 3720, Delaying Requirements for Enhanced FMAP to Enable State Legislation Necessary for Compliance: The The Families First Coronavirus Relief Act increases State Federal assistance matching percentages (FMAP) percentages by 6.2% during the calendar quarters that encompass the emergency period if the State meets certain conditions, one of which was that it did not increase premiums in excess of what they were on January 1, or impose new premiums, during this period.  This provision gives any state that has raised or imposed such premiums since January 1, a thirty-day delay in the enforcement of that requirement – presumably to provide the State an opportunity to come into compliance without losing the increased matching rate.

III.   Health and Human Services Extenders

  • Section 3811, Extension of Money Follows the Person Rebalancing Demonstration: The CARES Act extends and provides funds for the demonstration through November 30, 2020.
  • Section 3812, Extension of Spousal Impoverishment Protections: This section of the Act extends certain protections from spousal impoverishment through November 30, 2020 to help a spouse of an individual who qualifies for nursing home care to live at home in the community.
  • Section 3813, Delay of DSH Reductions: The CARES Act delays Medicaid DSH reductions that were to begin on May 23, 2020, to begin, instead, on December 1, 2010.

IV.   Economic Stabilization and Assistance to Severely Distressed Sectors of the United States Economy

Title IV of the Act provides $500 billion in funding for loans and financial assistance to mid-size and large businesses, states and municipalities and non-profits.  $46 billion of these funds are specially allocated to the airline industry and industries critical to national security.  Assistance to airlines and national security industries will be via direct U.S. Department of Treasury loans and investments.

The remaining $454 billion is available to assist other businesses, states and municipalities and non-profits. The financial assistance will be made available via a Federal Reserve Act Section 13(3) program to provide financing through banks and other lenders.  This assistance targets businesses employing between 500 and 10,000 employees.  The assistance is contemplated primarily as low interest loans (interest rate not exceeding 2% per annum) with payments of principal and interest deferred for the first six months or longer.

The Act provides conditions on eligibility and terms and conditions of loans, including:  (i) economic conditions make the loan necessary to support ongoing operations, (ii) funds will be utilized to retain or restore at least 90% of workforce, (iii) prohibitions on dividends and stock buybacks while the loan is outstanding, and (iv) restrictions on offshoring jobs and a requirement that a majority of employees are based in the U.S. Other requirements, terms and conditions for loans and assistance will be determined and set forth in the Department of Treasury and Federal Reserve guidelines.  Title IV assistance does not provide for future loan forgiveness.

Application procedures and guidelines for the Title IV program are to be published shortly by the Department of Treasury and the Federal Reserve.

V.   HHS – Public Health and Social Services Emergency Fund

The CARES Act establishes a $100 billion “Public Health and Social Services Emergency Fund” to reimburse eligible providers for health care related expenses or lost revenues that are attributable to the coronavirus.  The Act further defines eligible health care providers to be public entities, Medicare or Medicaid enrolled suppliers and providers, and other entities that the Secretary includes that provide diagnosis, testing, or care for individuals with possible or actual cases of COVID-19.  These funds are available for building or construction of temporary structures, leasing of properties, medical supplies and equipment including personal protective equipment and testing supplies, increased workforce and trainings, emergency operation centers, retrofitting facilities, and surge capacity.  To be eligible, providers are required to apply to HHS.

VI.   Conclusion:

Liles Parker attorneys and staff are closely monitoring HHS, CMS and CDC guidance and will update as new information becomes available. Please contact us with questions or for assistance with your response to this unprecedented National Emergency.







Michael Cook, Jennifer Papapanagiotou and Andy Lynch are Partners at Liles Parker, PLLC.  They each have decades of experience representing health care providers and suppliers and other businesses around the country in connection with a wide range of matters.  Questions regarding the impact of recent coronavirus guidance on your organization?  Call Liles Parker for a free consultation.  We can be reached at:  1 (800) 475-1906.

[1] See this link for a full copy of the CARES Act.

[2] For a collection of all articles written by Liles Parker attorneys related to the COVID-19 public health emergency, please visit our webpage at this link.

[3] The CMS Press Release on the Accelerated and Advanced Payment process can be accessed here and the Fact Sheet can be accessed here.

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