The theory of “worthless services” has yet again been tried by whistleblowers in the federal False Claims Act context, this time resulting in a large settlement with the federal government. We saw this argument made previously in Ashber v. Momence, which we discussed in a prior article here. Now, Extendicare Health Services Inc., and its subsidiary Progressive Step Corporation (collectively “the Defendants”), have agreed to settle two federal False Claim Act (whistleblower or qui tam) actions for $38 million. Continue reading
Tag Archives: OIG
The Rise of the Worthless Services Theory in Federal False Claims Act (Whistleblower) Cases – A Look to the Future
Office of the Inspector General of the federal Department of Health and Human Services (“OIG”) has issued a report that suggests that most states that offer Medicaid through Managed Care Organizations (“MCOs”) have widely-variable and possibly inadequate oversight of the organizations providing care to Medicaid beneficiaries. Given OIG’s findings, beneficiaries, providers, and Medicaid MCOs should not be surprised if federal guidelines or regulations emerge that move toward standardizing access requirements and compliance assessments in Medicaid managed care. Continue reading
Attention OMH Continuing Day Treatment Providers: OIG Releases Audit of CDT Programs, Seeks Repayment of over $18 Million to Federal Medicaid Program
The United States Department of Health and Human Services Office of the Inspector General (“OIG”) conducted an audit of New York State’s nonhospital-based Continuing Day Treatment (“CDT”) program.
CDT services are clinic services administered by the New York State Office of Mental Health (“OMH”). OMH’s CDT program provides Medicaid recipients with treatment designed to maintain and/or enhance current levels of functioning and skills, to maintain community living, and to develop self-awareness and self-esteem through the exploration and development of strengths and interests. CDT services include, but are not limited to, assessment and treatment planning, discharge planning, medication therapy, case management, psychiatric rehabilitation, and activity therapy.
To be eligible for the CDT program, a recipient must have a diagnosis of a designated mental illness as well as a dysfunction due to a mental illness. The recipient’s treatment plan must be completed in a timely manner; be signed and approved by both the recipient and the physician involved in the treatment; include a diagnosis of a designated mental illness, treatment goals, objectives, and related services, a plan for the provision of additional services, and criteria for discharge planning; and be reviewed every 3 months. Additionally, progress notes must be recorded at least every 2 weeks by the clinical staff members who provided CDT services to the recipient. The progress notes must identify the particular services provided and the changes in goals, objectives, and services, as appropriate. In addition, CDT services must be adequately documented, including type, duration, and need for continuing services.
The OIG audit report alleges that New York State claimed federal Medicaid reimbursement for nonhospital CDT services that did not comply with federal and State requirements. Of the 100 claims in the OIG’s random sample, 66 claims complied with federal and State requirements, while 34 claims allegedly did not. The audit period was from April 1, 2009 to August 17, 2011.
According to the OIG audit report, the alleged deficiencies occurred because (1) certain nonhospital CDT providers did not comply with federal and State regulations and (2) the State did not ensure that OMH adequately monitored the CDT program for compliance with certain federal and State requirements. On the basis of the sample results, the OIG estimated that the State improperly claimed at least $18,093,953 in federal Medicaid reimbursement for nonhospital CDT services that did not meet federal and State requirements.
The OIG recommended that the State refund $18,093,953 to the Federal Government; work with OMH to issue guidance to the provider community regarding federal and State requirements for claiming Medicaid reimbursement for nonhospital CDT services; and work with OMH to improve OMH’s monitoring of the CDT program to ensure compliance with federal and State requirements.
According to the OIG audit report, New York State responded as follows
. “In written comments on our draft report, the State agency disagreed with our first recommendation (financial disallowance) and did not indicate concurrence or nonconcurrence with our remaining recommendations. Specifically, State agency officials stated that we based our findings entirely on State regulations and, if OMH found claims to have violated the State regulations we cited, those violations “would not have rendered the services non-reimbursable.” The State agency also disagreed with our determination that, for one sampled claim, progress notes were not prepared by a staff member who provided a service. Specifically, State agency officials stated that, for the sampled claim (#73), a progress note clearly demonstrated that “the treatment provider was actively engaged” with the beneficiary during the 2-week period that included the sampled service date. In addition, the State agency disagreed with our determination that certain sampled claims did not meet reimbursement standards. State agency officials indicated that their preliminary analysis of our workpapers revealed that providers supplied us with schedules of group services that beneficiaries were scheduled to attend each day they visited the CDT provider. State agency officials stated that these schedules document the frequency and types of services planned for each beneficiary.”
As a result of the OIG audit, it is likely that the New York State Office of the Medicaid Inspector General (“OMIG”) will be conducting additional audits of CDT providers.
The OIG audit report is available at http://oig.hhs.gov/oas/reports/region2/21201011.pdf.
For more information, please contact the author, David R. Ross, who served as Acting New York State Medicaid Inspector General under governors Pataki and Spitzer, as well as General Counsel, Deputy Medicaid Inspector General, and Director of Audits and Investigations for the Office of the Medicaid Inspector General (OMIG). He can be reached at (518) 462-5601 or via e-mail at firstname.lastname@example.org.
The United States Department of Health and Human Services Office of the Inspector General (“OIG”) has completed its audit of 2010 Medicare payments for Evaluation and Management (“E/M”) services. The audit report, available at https://oig.hhs.gov/oei/reports/oei-04-10-00181.asp, states that the Medicare program overpaid providers $6.7 billion for E/M services that were incorrectly coded or lacked documentation in 2010. The claims error rate was 55% and the dollar value of the overpayments represented 21% of Medicare payments for E/M services that year. The OIG audit found that 42% of claims for E/M services were incorrectly coded (upcoded, billed at a higher level than appropriate, and downcoded, billed at a lower level than appropriate) and 19% were lacking documentation. This equates to 61% of E/M services being incorrectly billed and/or documented in 2010. Continue reading
Through their Health Care Fraud Abuse Control program (“HCFAC”), the United States Departments of Justice (“DOJ”) and the United States Department of Health and Human Services (“HHS”) have recovered more than $19 billion from health care providers over the last five years. A report released on February 26 shows that the program’s three-year return on investment in fraud and abuse investigations is $8.10 for every dollar spent—this is a record high for the 17-year-old program. These numbers suggest that the federal government’s interest in investigating and prosecuting health care fraud and abuse is as strong as ever.
For perspective, the current five-year recovery amount—$19.2 billion—is more than double the $9.4 billion recovery for the previous five-year period. All of this is despite the loss of $30.6 million as a result of the budget-related sequestration in 2013.
HCFAC is a creation of the 1996 HIPAA statute, and is a joint project of DOJ and HHS. Moreover, the high reported return on investment illustrates that HCFAC is a money-maker for Medicare—HCFAC’s appropriations come from the Medicare Hospital Insurance Trust Fund, also known as the Medicare Part A Trust Fund.
In the last year alone, DOJ filed 137 cases in this area, and charged 345 individuals with crimes. It secured 234 guilty pleas and 46 convictions. Defendants sentenced in the 2013 fiscal year served an average of 52 months in prison.
Not to be outdone, the Centers for Medicare and Medicaid Services (“CMS”) have banned over 225,000 individuals and entities from billing Medicare between March 2011 and September 2013.
The OIG Report may be accessed here: http://oig.hhs.gov/publications/docs/hcfac/FY2013-hcfac.pdf
The HHS Press Release may be accessed here: http://www.hhs.gov/news/press/2014pres/02/20140226a.html
Medicare Payments for Zombies: OIG reveals that Medicare Advantage payments sometimes outlive beneficiaries
Just in time for Halloween, in a Medicare audit, the Office of the Inspector General of the Department of Health and Human Services has found that $23 million in Medicare expenditures in 2011 were paid inappropriately after the beneficiary had died. The vast majority of these overpayments, 86 percent, flowed from Medicare Part C, also known as Medicare Advantage, a program that allows private insurers to offer managed care plans for Medicare beneficiaries. The average payment for a deceased Part C beneficiary was $1,682.
In the scheme of total Medicare expenditures, these overpayments accounted for only a tiny fraction—less than one-tenth of one percent, according to OIG. Nonetheless, OIG recommended that CMS take actions that would more closely monitor claims made on behalf of beneficiaries after their dates of death, and to ensure that dates of death are properly documented.
The OIG’s press release in this matter may be viewed here: http://oig.hhs.gov/oei/reports/oei-04-12-00130.pdf
Caitlin Monjeau contributed this post.
The United States Department of Health and Human Services Office of the Inspector General (OIG) has issued a Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs (“the Bulletin”). The Bulletin replaces the previous OIG bulletin on this topic issued in 1999. Exclusions from federal health care programs (including but not limited to Medicaid, Medicare, TRICARE, and veterans’ programs) often result from criminal and civil actions taken by governmental entities against providers.
The Bulletin details the consequences of exclusion from federal health care programs. Guidance is also provided regarding civil monetary penalty liability for a provider who employs an excluded individual. The Bulletin provides guidance to the health care industry on the scope and frequency of screening employees and contractors against the OIG’s List of Excluded Individuals and Entities (LEIE) to determine whether they are excluded persons. The Bulletin also recommends using the OIG’s recently revised self-disclosure protocol to disclose any employees who are excluded individuals.
Additionally, the Bulletin describes the scope and effect of the legal prohibition on payment by Federal health care programs for items or services furnished by an excluded person, or at the medical direction, or on the prescription of, an excluded person. For purposes of OIG exclusion, payment by a Federal health care program includes amounts based on a cost report, fee schedule, prospective payment system, capitated rate, or other payment methodology. The Bulletin also describes how exclusions can be violated and the administrative sanctions OIG can pursue against those who have violated an exclusion.
The new US HHS OIG Special Advisory Bulletin can be found at http://oig.hhs.gov/exclusions/advisories.asp.
The 1999 version can be found at http://oig.hhs.gov/exclusions/effects_of_exclusion.asp.
For more information, please contact the author, David R. Ross, who served as Acting Medicaid Inspector General under governors Pataki and Spitzer, as well as General Counsel, Deputy Medicaid Inspector General, and Director of Audits and Investigations for the Office of the Medicaid Inspector General (OMIG).
On Tuesday, the federal Office of the Inspector General (“OIG”) issued a Special Fraud Alert (“Fraud Alert”) detailing the OIG’s concerns with Physician-Owned Entities. Specifically, the alert dealt with physician-owned distributorships, or PODs. PODs are typically entities that make money by selling or arranging for the sale of implantable medical devices.
The United States Senate Finance Committee produced a report on PODs (“Senate Report”) in June of 2011. According to the Senate Report, PODs are structured to give physicians who choose the medical devices that they implant in patients some payment derived from the profits that the sale of the devices generate. Senate Report at 2. For example, a surgeon who chooses a certain kind of stent may receive a payment from the stent manufacturer based upon the sale of the stent. The Senate Report indicated that PODs have proliferated among surgeons and surgical practices as reimbursements have declined. Senate Report at 3.
As the Senate Report points out, PODs seem to create financial incentives for the doctors involved to choose medical devices that will generate payments for themselves. Senate Report at 5. The Committee that authored the report was troubled by anecdotal evidence that surgeons, who happened to be members of PODs, performed multiple expensive and risky procedures using implants for which the POD was compensated. Senate Report at 5. The Report concluded that PODs stood on uncertain legal ground in the quick-moving health care arena; the Committee specifically charged the OIG with addressing this issue. Senate Report at 8.
The OIG’s recent Fraud Alert responds to this charge and indicates that PODs pose major problems, including the corruption of medical judgment, the overutilization of medical procedures, increased costs to Federal health care programs, and unfair competition. Fraud Alert at 2. Although intent is the determining factor in assessing whether a given POD is lawful under the federal anti-kickback statute, OIG concluded that PODs are “inherently suspect under the anti-kickback statute.” Fraud Alert at 3.
OIG sets out a list of eight characteristics that it considers “suspect” in a POD, most of which indicate that referrals or the volume of referrals are the primary reason a physician involved with the POD might use a given device. Fraud Alert at 3. OIG does also make clear that this is not an exhaustive list. Fraud Alert at 3-4.
The Special Fraud alert is available here.
The Senate Report is available here.
Caitlin Monjeau contributed this post.
New York State Allegedly Overbilled $15 Billion for State-Operated Facilities for Developmentally Disabled
On May 17, 2012, the U.S. Department of Health and Human Services, Office of Inspector General (OIG) released a report that found Medicaid overpayments to New York State-operated developmental centers. The OIG concluded that, in 2009, State-operated facilities for the developmentally disabled received $1.7 billion in Medicaid payments in excess of the reported costs of these facilities. The Medicaid rates paid to these New York State-operated facilities were ten times higher than the rates paid to private Intermediate Care Facilities in New York, which the OIG found comparable. The OIG determined that these overpayments had occurred for two decades and that they are still occurring in 2012. In fact, in fiscal year 2011, the daily payment rate to New York’s developmental centers was $5,118, which represented a 24 percent increase since 2009 and means that State-run developmental facilities are being paid approximately $1.9 million per year for each individual patient. This surprising increase was triggered by the formula for Medicaid payment rates for patients in developmental centers, which allows State-operated facilities to collect roughly two-thirds of the total Medicaid payment after an individual who has left the facility. Continue reading
In a recent audit of the New York State Department of Health (DOH), the Office of the Inspector General of the United States Department of Health and Human Services (OIG) found that several New York City area providers billed Medicaid for services that did not meet state and federal requirements. OIG recommended that DOH refund nearly $7.8 million to the federal government and that the both DOH and the New York State Office for People with Developmental Disabilities (OPWDD) alter its policies and procedures. Continue reading