More dollars to battle healthcare fraud on the horizon

fraudHas your practice adopted a corporate compliance program? If not, now is the time to call your healthcare lawyer. That’s because if a proposed federal rule goes into effect a lot more money could be made available to catch those involved in fraud and abuse.

Health and Human Services Secretary Kathleen Sebelius just announced a proposal that would increase rewards for reporting fraud to $9.9 million. While that may sound like a lot, during the last three years the Obama administration has recovered nearly $15 billion in fraud, a big chunk of which came from individual whistleblowers.

Under the proposed changes, a person who provides specific information that leads to the recovery of money may be eligible to receive a reward of 15 percent of the amount recovered, up to nearly $10 million. HHS currently offers a reward of 10 percent up to $1,000 under the current reward program.

With that kind of money on the line, it could become more worthwhile and draw more potential whistleblowers from the woodwork.

Because of that Medicare providers and suppliers should adopt a strict corporate compliance program establishing a culture of compliance or risk the possibility of becoming the target of someone seeking a reward.

Current, future, and former employees, competitors, customers/patients, and vendors not only are potential but the most likely whistleblowers. And it’s not hard. It does not require that a whistleblower case be filed in federal court. They only need to provide useful information and then apply for the reward.

In addition to increasing reward compensation, the proposed rule would also strengthen certain provider enrollment provisions including allowing HHS to deny enrollment of providers who are affiliated with an entity that has unpaid Medicare debt, deny or revoke billing privileges for individuals with felony convictions, and revoke privileges for providers and suppliers who are abusing their billing privileges.

Providers and suppliers who receive reimbursement from Medicare should contact their legal counsel to review their current or proposed business arrangements and discuss the creation and implementation of a formal compliance plan. It could help them avoid becoming a target.

HHS issued a fact sheet on the proposed rule that further outlines the reward program proposals.

HHS OIG issues unusual fraud alert on physician-owned distributorships

Surgeons performing a surgery

The HHS Office of Inspector General issued a Special Fraud Alert on March 26 focusing on specific attributes of physician-owned distributorships (PODs) that  it believes “produce substantial fraud and abuse risk and pose dangers to patient safety.”

PODs, as defined by the OIG, are “physician-owned entities that derive revenue from selling, or arranging for the sale of, implantable medical devices ordered by their physician owners in procedures the physician owners perform on their own patients at hospitals or ambulatory surgery centers.”

Because the OIG views PODs as “inherently suspect under the anti-kickback statute,” one should not be lulled into thinking that just because the Fraud Alert focused principally on implantable medical devices that the OIG is only interested in those types of arrangements. Nothing could be further from the truth because the OIG stated that the principle set forth in the Fraud Alert “would apply when evaluating arrangements involving other types of physician-owned entities.

The OIG listed eight characteristics of suspect POD’s that are likely to attract more scrutiny:

  1. The size of the investment offered to each investment varies with the expected or actual volume or value of devices used by the physician.
  2. Distributions are not made in proportion to ownership interest, or physician-owners pay different prices for their ownership interests, because of the expected or actual volume or value of devices used by the physicians.
  3. Physician-owners condition their referrals to hospitals or ASCs on their purchase of the POD’s devices through coercion or promises, for example, by stating or implying they will perform surgeries or refer patients elsewhere if a hospital or an ASC does not purchase devices from the POD, by promising or implying they will move surgeries to the hospital or ASC if it purchases devices from the POD, or by requiring a hospital or an ASC to enter into an exclusive purchase arrangement with the POD.
  4. Physician-owners are required, pressured, or actively encouraged to refer, recommend, or arrange for the purchase of the devices sold by the POD or, conversely, are threatened with, or experience, negative repercussions (e.g., decreased distributions, required divestiture) for failing to use the POD’s devices for their patients.
  5. The POD retains the right to repurchase a physician-owner’s interest for the physician’s failure or inability (through relocation, retirement, or otherwise) to refer, recommend, or arrange for the purchase of the POD’s devices.
  6. The POD is a shell entity that does not conduct appropriate product evaluations, maintain or manage sufficient inventory in its own facility, or employ or otherwise contract with personnel necessary for operations.
  7. The POD does not maintain continuous oversight of all distribution functions.
  8. When a hospital or an ASC requires physicians to disclose conflicts of interest, the POD’s physician-owners either fail to inform the hospital or ASC of, or actively conceal through misrepresentations, their ownership interest in the POD.

Physicians who are invested in PODs or other joint ventures should have those arrangements reviewed by legal counsel to ensure that they continue to remain compliant with state and federal laws.

For the complete fraud alert, click here.

GAO finds Medicare Advantage plans overpaid $5.1 billion

A photo of dollar bills falling from skyJust last month, I wrote about how the government was falling short in its job to collect hundreds of millions of dollars in Medicaid overpayments. That news came from a report released by the Department of Health and Human Services’ Office of the Inspector General.

The saga continues with another report from the Government Accountability Office which finds that insurers that offer Medicare Advantage plans received up to $5.1 billion in overpayments between 2010 and 2012. These plans are offered by private companies that contract with Medicare to provide both Part A and Part B benefits.

The GAO audit is critical of how the Centers for Medicare and Medicaid Services (CMS) calculated payment rates for Medicare Advantage plans.  It notes that the plans are incentivized to adjust the risk scores for private Medicare beneficiaries versus public fee-for-service patients.

The report found the following:

GAO estimated that cumulative Medicare Advantage (MA) risk scores in 2010 were 4.2 percent higher than they likely would have been if the same beneficiaries had been enrolled continuously in Medicare fee-for-service (FFS). For 2011, GAO estimated that differences in diagnostic coding resulted in risk scores that were 4.6 to 5.3 percent higher than they likely would have been if the same beneficiaries had been continuously enrolled in FFS. This upward trend continued for 2012, with estimated risk scores 4.9 to 6.4 percent higher.

While CMS did not change its risk score adjustment methodology for 2013, agency officials said they may revisit their methodology for future years.

Click here to read the full report.


Government fails to collect $226 million in Medicaid overpayments

A surgical clamp holding money.The government is falling short in its job to collect hundreds of millions of dollars in Medicaid overpayments, according to a report released this month by the Department of Health and Human Services’ Office of the Inspector General.

The job of collections falls to the Centers for Medicare and Medicaid Services and according to the report there’s about $226 million in Medicaid overpayments that have gone to 11 states.

As of December 2012, CMS reported collecting $987,481,600 of the $1,213,085,167 in overpayments issued between fiscal years 2000 and 2009, according to the report. “However, CMS had not collected the remaining $225,603,567 because it had not always proceeded with the collection process in a timely manner,” the report notes.

OIG made the following recommendations:

  • Collect the remaining $225,603,567 that is due the federal government.
  • Review and address delays in resolving OIG audit recommendations and promptly pursue corrective actions.
  • Maintain adequate documentation to support the collection of overpayments in accordance with OMB Circular A-50 and CMS standard operating procedures.
  • Educate the states about their responsibility to report overpayments on the correct line of the CMS-64 to improve oversight of the reporting process.

In its response, CMS said it failed to collect some overpayments because additional review of the claims was needed, according to the report.

States affected are: Indiana, Illinois, Kansas, Louisiana, Missouri, New Jersey, Oregon and Pennsylvania. CMS is working to collect overpayments to Medicaid providers in Florida, New York and Massachusetts.

Click here to read the entire report.


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