Fraud & Abuse

In a recent advisory opinion, the OIG stated that it would not seek sanctions against a hospital-based hospice agency for providing certain volunteer services to terminally ill patients who did not qualify for the hospice benefit. The OIG recognized that the volunteer services may ultimately influence the recipients to select the hospice, which was a…

The Office of Inspector General (OIG) of the Department of Health and Human Services has concluded that a per diem payment structure between a not-for-profit hospital and specialist physicians would not result in administrative sanctions under OIG’s civil monetary penalties law that relates to prohibited remuneration by the anti-kickback statute. According to an OIG Advisory Opinion that was posted this week:

Each year, [the hospital] allocates an aggregate annual payment amount per specialty for on-call coverage payments to participating physicians based on: (1) the likely number of days per month the specialty would be called; (2) the likely number of patients a participating physician would see per call day; and (3) the likely number of patients requiring inpatient care and post-discharge follow-up care in a participating physician’s office (OIG Advisory Opinion 12-15)

Once the aggregate amount per specialty is determined, the hospital divides this amount by 365 days to create the on-call coverage per diem fee to be paid to the specialty physicians. Notably, these physicians receive the per diem fee for each day of coverage under the arrangement even if they are not contacted by the emergency department to treat a patient.

Numerous elements of the particular arrangement at issue were highlighted by OIG as minimizing the risk of fraud and abuse. First, the per diem payment was certified by an independent consultant as commercially reasonable and within the range of fair market value for actual and necessary services. It was also calculated without regard to referrals or other business generated by the participating physicians. The OIG highlighted that the per diem amount was calculated annually in advance and was uniformly administered without regard to the individual physician’s referrals.

The Sixth Circuit recently made some interesting findings related to the knowledge standard in the False Claims Act (“FCA”) and whether maximizing profits is evidence of fraud.

The knowledge standard in the FCA may create a disincentive for defendants to litigate cases brought by the government, especially considering the standard for liability can be met by the government demonstrating that the defendant acted with reckless disregard or in deliberate ignorance of the truth or falsity of the claim.   See 31 U.S.C. § 3729.  In light of this fairly low standard, it is no secret that some defendants decide it is less costly to settle a case, rather than engaging in protracted litigation with the government.  However, in one recent case the defendant, Renal Care Group, Inc. and its wholly-owned subsidiary, decided to fight back against allegations it defrauded the government of millions of dollars while providing dialysis treatments to Medicare beneficiaries suffering from end-stage renal disease.  Renal Care lost the first battle when the district court granted summary judgment in favor of the United States and awarded the government $82.6 million in damages and penalties.  On appeal, however, Renal Care secured a major victory when the court of appeals reversed the district court’s judgments on grounds that Renal Care did not act in reckless disregard under the FCA.

Without going into the specific facts alleged by the government, there are two important findings from this Sixth Circuit decision worth noting.  First, the Sixth Circuit determined that Renal Care did not act recklessly.  Per the Sixth Circuit, a defendant can be held liable under the FCA by showing that it acted with actual knowledge or constructive knowledge.  United States v. Renal Care Group, et al., No. 11-5779, slip op. at 17 (6th Cir. Oct. 5, 2012).  Constructive knowledge can be proven by demonstrating that the defendant acted in deliberate ignorance of, or with reckless disregard to, the truth or falsity.  One of the facts relied on by the court in reaching its decision on the knowledge requirement is that Renal Care sought legal counsel, who in turn sought clarification from CMS on what appears to be fairly ambiguous regulations.  The court focused on this fact, in addition to some others, in reaching its conclusion that Renal Care did not act recklessly. 

The Government Accountability Office (GAO) issued an interesting report in September that analyzed civil and criminal healthcare fraud cases.  The report is based on 2010 data from the various agencies in the federal government charged with investigating and pursuing healthcare fraud.  For purposes of this blog entry, I’m going to focus on some key numbers on the civil side. 

In 2010, the government investigated a total of 10,187 “subjects.”  Subjects included entities such as hospitals, medical clinics, and pharmacies, as well as individuals that provide services at these entities.

  • Of the 10,187 subjects investigated, 2,339 of the subjects were related to civil investigations, rather than criminal investigations.
  • Of the 2,339 civil investigations, nearly 20% of these were hospitals.  Medical centers or clinics made up another almost 18% of the total 2,339 civil investigations.
  • Of the total 2,339 civil investigations, the government actually pursued cases against 1,087.
  • Of the 1,087 civil cases the government pursued, the government either settled with, or won a judgment against, 55% of these subjects.
  • Of the 55% civil cases that either settled or resulted in a judgment for the government, 44% of these subjects were hospitals or medical facilities (medical practices or clinics).

These numbers are interesting because it shows that hospital or medical facilities make up over one third of all civil investigations and almost half of all settlements.  It is also interesting to look at the number of investigations that were based on qui tam filings.  A qui tam is a civil False Claims Act case brought by a private citizen, “relator” or “whistleblower,” on behalf of the government.  Once a case is filed, the Department of Justice and the Office of Inspector General are charged with investigating and making a determination about whether the government should pursue the case by becoming a party to the litigation.  In many cases, if the government believes the allegations have merit, the government will attempt to settle before actually litigating.

On September 25, 2012, two members of the Husch Blackwell Healthcare team, Brian Bewley and David Pursell, presented a webinar discussing:

  • An overview of Stark
  • Stark overpayment reporting requirements
  • Steps to take after discovering a potential Stark violation

As former Senior Counsel in the Office of Inspector General for Health and Human Services and…

The heads of both the Department of Justice (DOJ) and Department of Health and Human Services (HHS) sent a joint letter on Monday, September 24, to five hospital industry groups, including the American Hospital Association, threatening to prosecute providers that use electronic health records (EHR) to “game” the system and improperly obtain federal monies for…

In August, the Office of Inspector General (OIG) of the U. S. Department of Health and Human Services released a report describing inappropriate and questionable billing by home health agencies.  The OIG conducted the study because recent investigations and studies showed that home health agencies are vulnerable to fraud, abuse, and waste.  The OIG identified inappropriate claims by examining claims data from home health, inpatient hospital, and skilled nursing facilities.  The OIG also looked at HHAs that billed unusually high amounts according to at least one of its six measures of questionable billing.  The report determined that Medicare inappropriately paid $5M for home health claims with three specific errors in 2010.  To read the report, click here.

Attorney Elizabeth Hogue prepared a concise, helpful summary of the report as follows:

The OIG issued Report OEI-04-11-00240 in August, 2012, entitled “Inappropriate and Questionable Billing by Medicare Home Health Agencies.” Unlike some other guidance published the OIG, this Report provides detailed information about inappropriate and questionable billing practices by home health agencies (HHA’s). Specifically, the OIG concluded that HHA billing is questionable or unusually high on the six measures below, if greater than the 75th percentile plus 1.5 times the interquartile range. The six measures are as follows:

 1. High average outlier payment amounts per beneficiary

According to the OIG, HHA’s with outlier payments above $403 per beneficiary have unusually high outlier payments and are likely engaging in questionable billing practices.

Earlier this month, the US Dept. of Health and Human Services Office of inspector General (OIG) issued a report regarding suspicious billing practices by community mental health clinics (CMHCS).  OIG scrutiny of CMHCs, particularly with respect to partial hospitalization programs (PHPs), is probably not a surprise to those in the Texas mental health provider community…