OIG Issues Updated Provider Self-Disclosure Protocol

An enlarged photo of a word "fraud"The Department of Health and Human Services Office of Inspector General this week issued an updated provider self-disclosure protocol (SDP) that gives healthcare providers guidance on how to disclose potential fraud, avoid prosecution, and mitigate potential penalties under its civil money penalty authority.

OIG first published the protocol in 1998 as a way for healthcare providers to disclose potential fraud involving federal healthcare programs. Since then, the OIG has resolved more than 800 disclosures resulting in more than $280 million in recoveries to federal healthcare programs.

Some of the most common issues providers disclose include:

  • Billing for items or services furnished by excluded individuals
  • Evaluation and management services and DRG upcoding
  • Duplicate billing
  • Alteration or falsification of records
  • Kickbacks and Stark Law violations

The SDP is organized to provide guidance on what submissions should include for specific types of conduct—improper claims, employment of, or contracting with, excluded individuals and violations of the anti-kickback statute.

Some new features include:

  • Minimum settlement amounts of at least $50,000 for self-disclosures involving kickback-related submissions and $10,000 for all other disclosures to reflect minimum civil monetary penalty (CMP) amounts for such violations.
  • Suspension of the obligation to report overpayments under section 1128J of the Social Security Act Waiver of statute of limitations defenses by disclosing parties.
  • Calculation of damages within 90 days of initial self-disclosure (formerly within 90 days of OIG’s acceptance of submission).
  • Minimum sample size of 100 units and the use of a mean point estimate for billing-related disclosures.
  • Express clarification that manufacturers may use the SDP if at least one of OIG’s CMP authorities is implicated by the conduct.
  • Express recognition of the various damage calculation methodologies that OIG has often used in resolving different types of disclosures (e.g., different damage calculation methodologies for excluded individual disclosures versus kickback-related disclosures)

OIG said it will issue further guidance after CMS issues the 60-day overpayment final rule.

Click here to read the full document.

Healthcare Fraud – A $60 Million Business

According to a recent Associated Press article published in the New York Times, healthcare fraud is estimated to cost the federal government at least $60 billion a year. These losses are mainly to Medicare and Medicaid and are said to involve “everything from sophisticated marketing schemes by major pharmaceuticals encouraging doctors to prescribe drugs for unauthorized uses to selling motorized wheelchairs to people who don’t need them.”

Despite intensive and increasing regulatory oversight, there seems to be no end to it, with health care fraud increasing and more and more economic pressure placed on providers through decreased reimbursements to save costs. But, the government is working hard and utilizing new high-tech data analysis technologies which have enabled it to track Medicare fraud more efficiently by identifying billing spikes.

The federal government unsealed its indictment on Tuesday, February 28, 2012, of a Texas physician, Dr. Jacques Roy, and his office manager, who were arrested on charges of running a $375 million fraud scheme, the largest in history by an individual physician. The indictment charged that, over a five-year period, Dr. Roy certified 11,000 Medicare beneficiaries for home health services from more than 500 agencies for services that were not medically necessary or were not performed.

The patients were recruited by runners, including home health agency owners, who went door-to-door to recruit Medicare and Medicaid beneficiaries for home health services. He had people sign forms that contained the physician’s electronic signature and a representation that the physician had seen the beneficiaries in their homes.  Some recruiters were paid $50 for every signed form. Dr. Roy faces a maximum prison sentence of 100 years and over $18 million in fines and forfeitures. Millions in reimbursements to the home health agencies have been suspended and the agencies themselves who were knowingly involved in the scheme face exclusion from the Medicare program.

Healthcare providers who believe that they can skate under the radar undetected should be aware of the new tools being implemented by law enforcement to detect fraud. While they may find it easy to run around the statutes in the short run, they will be caught eventually and suffer draconian penalties which stiffen with each round of health care reform. On the other hand, because the various anti-fraud laws and safe harbors are complex and often counterintuitive, many providers unintentionally run afoul of the law without even knowing it, creating for themselves enormous overpayment obligations, fines, and possible prison time.

While most providers would never think of engaging in the fraudulent activities described in Dr. Roy’s indictment, many would be surprised to learn that transactions that are common within the business community, such as the payment of commissions for sales referrals, exchanging in-kind services for referrals of business, and similar transactions, may violate federal and state law.

We have found that most independent contractor arrangements among health care providers incorporate illegal or improper compensation terms, even though the parties intended to comply with the law. They, too, may find themselves ensnared in a legal tangle with government regulators which will be costly at the very least. That is why we encourage anyone engaged in the healthcare industry, either as a direct provider of healthcare services, or a vendor, to seek the counsel of a qualified health lawyer to review their transactions before they are formalized.


The Latest OIG Advisory Opinions

A medical supply/DME company thought it was on to something when it submitted two proposals to the OIG for review that involved the supplier bidding for an exclusive supplier deal with a county operated skilled nursing facility (“SNF”). Both arrangements were substantially similar, but would give the SNF below cost pricing on non-covered items and services in exchange for the exclusive contract and lucrative Medicare contract with the SNF.

Typically, medical supply companies that provide Medicare covered goods and services would bill Medicare directly. Non-covered goods and services will be charged directly to the SNF at a price that would cover the company’s costs and provide a profit. In this case, the SNF published an RFP soliciting bids to be its exclusive supplier of Medicare covered items and services. Each bid was also to include pricing for non-covered items. The supply company in question wanted to know if it could offer below-cost pricing to the SNF for the non-covered items and services.

The OIG, stated that “in evaluating whether an improper nexus exists between the rates offered for items and services and referrals of Federal business in a particular arrangement, we look for indicia that the rate is not commercially reasonable in the absence of other, non-discounted business.” It went on to observe that the proposed arrangement gave rise to an inference that the supplier and the SNF may be “swapping the below-cost rates on business for which the skilled nursing facility bears the business risk (i.e., the Non-Covered Items) in exchange for other profitable non-discounted Federal business (i.e., the Covered Items), from which the supplier can recoup losses incurred on the below-cost business, potentially through overutilization or abusive billing practices.” On that basis, the OIG declared that this type of “swapping” of improper discounts for the exclusive contract for the lucrative Medicare business poses a substantial risk of violating the anti-kickback statute.

The also OIG seemed to issue a not so veiled warning to the SNG that it bears some responsibility here as well by noting the “the SNF may be soliciting improper discounts on business for which it bears risk in exchange for referrals of business for which it bears no risk.” It should go without saying that the anti-kickback laws cut both ways. It is improper to both solicit a kickback and to offer one.


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