DME Scheme of Greed Knows No Bounds

Durable Medical EquipmentBy: Susan St. John

In yet another take-down of an illicit scheme to defraud the Medicare Program and ChampVA, as well as other insurers, Patsy Truglia has been sentenced to 15 years in federal prison. He has also had assets forfeited since these assets were acquired with money from his ill-gotten fraud scheme. In total, Mr. Truglia and his co-conspirators collected approximately $18.5 million from Medicare, ChampVA, and insurance using a scheme of telemarketing, telemedicine, and multiple DME providers or “store fronts.”

The scheme used telemarketers to collect beneficiaries personal and medical information to create orders for DME products such as knee, back, and wrist braces. These orders were then provided to telemedicine practitioners for signature – often without a valid telehealth communication. In essence, there was no attempt at having a practitioner exercise independent judgment as to the medical necessity of these DME products. Instead, these practitioners were paid for their signatures on the pre-filled order forms as part of the “scheme of greed.” From January 2018 to 2019, this scheme of greed resulted in approximately $12 million in payment to Truglia and his co-conspirators.Continue reading

Compounding Pharmacies Remain at the Tip of the Enforcement Spear

Compounding pharmacies are subjected to special licensing and permitting rules because of the heightened risk of the very nature of what they do- customizing a prescription by combining, mixing or altering ingredients to create a sterile or non-sterile medication for a given patient.  Pharmacies may only compound drugs where a commercially available drug/dose/formulation is not available.  Because of the heightened risk coupled with the high cost of compounded drugs and the increased prescribing of these expensive drugs, compounding pharmacies continue to be at the tip of the enforcement spear and a target for investigations.   This and the fact that the number of compounding pharmacies is only a fraction of the number of licensed pharmacies in the U.S., contributes to the increasing visibility when the U.S. Department of Justice prosecutes violators.

Growth of Compounding

From 2006 to 2015, the U.S. experienced a sevenfold increase in the prescribing of compounded drugs.  Recently, the compounding pharmacies market was valued at more than $9 billion and is projected to grow by another $5 billion over the next 30 years.Continue reading

SNF Reimbursement Model Leads to False Claims

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Medical necessity is foundational to payment by government payers (Medicare, Medicaid, Tricare, FEHBP) for health care services.  If services are not medically necessary, any claims filed constitute false claims. In a recent DOJ False Claims Act (FCA) case, a civil settlement of a whistleblower action was reached in resolution of allegations that over a more than six-year period, a rehabilitation therapy contractor violated the FCA by causing the submission by 12 skilled nursing facilities (SNFs) of false claims for “medically unnecessary, unreasonable, and/or unskilled rehabilitation therapy services.”  Under the Settlement Agreement, the rehabilitation therapy provider agreed to pay $8.4 million to resolve the matter.

BACKGROUND ON SNF REIMBURSEMENT

In order to understand the case, it is important to understand (at least at a basic level) SNF reimbursement.  This case arises during the time period 2010-2016 when SNFs were paid by Medicare under the Resource Utilization Groups (RUGs).  By way of background, RUGs are a prospective payment model which includes a system of grouping a SNF’s residents according to their clinical and functional statuses which information derives from the minimum data set (MDS) assessment for the resident.  Soon after adoption, many SNFs and rehabilitation therapy providers adjusted their model of care delivery to increase the level of reimbursement.  The methodology created an incentive to deliver more therapy than skilled nursing services since those RUGs were reimbursed at a higher rate.Continue reading

Routine Waiver of Patient Financial Responsibility – A Wolf in Sheep’s Clothing

By: Michael Silverman

While not a ‘classic’ kickback – such as the scenario of a practitioner receiving remuneration in exchange for a prescription or referral of healthcare business – the routine waiver of patient financial responsibly by a healthcare provider ALSO constitutes healthcare fraud, even for commercially insured patients!

Unfortunately, such a serious violation does not readily come to mind for many of those operating in the healthcare space, but its relatively straightforward once you think about it. In essence, a financial incentive is being provided to the patient to utilize the services of a certain healthcare provider by virtue of that individual not being subjected to out-of-pocket expense they normally would be subjected to if they were to utilize another similarly situated provider.Continue reading

Provider Self-Disclosures of Overpayments for Medicare Part C – Managed Care

medicare part c overpayment

medicare part c overpaymentBy: Karina Gonzalez

When providers or suppliers self-report overpayments to Medicare Part C Managed Care organization, there is some uncertainty on what lookback period applies and whether there actually is an overpayment obligation. Is it Medicare’s 60-day overpayment rule that applies or do the Managed Care Part C organizations impose a different lookback period for overpayments?

CMS (The Centers for Medicare & Medicaid Services) published its Final Rule clarifying the procedures applicable to the statutory requirement under the Affordable Care Act (“ACA”) for providers and suppliers to self-report and return overpayments. (The Final Rule was published on February 12, 2016). The Final Rule applies to Medicare Parts A and B and addresses the procedures that a provider or supplier need to follow to investigate, identify, quantify to self-report and return an overpayment. The Final Rule clarifies the obligations of Medicare providers and suppliers to report and return overpayments for claims originating only under Medicare Parts A and B. The final rule does not address, or reference, the obligations of providers to return overpayments to Medicare Advantage organizations for Part C claims.Continue reading

DME Regulation: The Government’s CID Powers are not Unlimited

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dme regulationBy: Matt Fischer

The Department of Justice (DOJ) has recently aimed its investigatory efforts under the False Claims Act (FCA) to the durable medical equipment (DME) industry.  One area of DME regulation focus has been on diabetic shoe and insert manufacturers.  In its arsenal of investigative tools, the DOJ has the ability to issue Civil Investigative Demands (CIDs).  However, there are limits to the DOJ’s investigatory powers.  If a CID is received, DME suppliers need to be aware of the limitations placed on the government and what initial steps need to be taken. Continue reading

A New Perspective from CMS? Medicare, Stark Law and Whistleblower Changes on Deck

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medicare stark lawBy: Dave Davidson

Over the past several months, the Centers for Medicare & Medicaid Services (CMS) has taken a number of steps that show an awareness of the regulatory burden placed upon participants in the government’s health care programs, and even some willingness to consider reducing those burdens.  While it remains to be seen whether the recent proposals will have measurable results, the following actions can still be viewed with guarded optimism.

Proposed Changes to Medicare

In July, 2018, CMS proposed significant changes to Medicare, to be included in rules that take effect in 2019.  These changes cover physician fee schedules, streamlining Evaluation & Management (E&M) billing, advancing “virtual care,” decreasing drug costs, revising the MIPS program and establishing the MAQI demonstration project.  The agency also asked for comments on price transparency issues.Continue reading

Anti-Kickback Statute and Healthcare Marketing: 3 Legal Considerations

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healthcare marketingBy: Matt Fischer

Healthcare marketing arrangements that violate the Anti-Kickback Statute (AKS) can lead to serious financial and criminal consequences.  Understanding the types of marketing arrangements that courts have found to be in violation of the statute and the potential implications are critical for marketers to know in order to operate in the healthcare industry.

Under the AKS, it is a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce referrals of items or services reimbursable by the Federal health care programs.  Where remuneration is paid purposefully to induce referrals of items or services paid for by a Federal health care program, the AKS is violated.  By its terms, the AKS ascribes criminal liability to parties on both sides of an impermissible transaction.  An example of a highly scrutinized arrangement involves percentage compensation.  For regulators, percentage compensation arrangements provide financial incentives that may encourage overutilization and increase program costs.

Here are 3 important things to know:Continue reading

False Claims Act Case Beaten by Bona Fide Employee Arrangement

false claims actBy: Jeff Cohen     

One healthcare employer’s compensation arrangement with its employees just got much needed support from the 11th Circuit Court of Appeals.  The employer there, which provided AIDS patients certain healthcare related services, paid its employees a bonus of $100 per patient.  The case was brought on the argument that the compensation arrangement constituted an illegal kickback under the federal Anti- Kickback Statute.  The court, however, disagreed because the employees who received the bonuses were “bona fide employees.”

The court’s focus on the plain language of the safe harbor for bona fide employees was refreshingly clear, notably that “any amount paid by an employer to an employee (who has a bona fide employment relationship with such an employer) for employment in the furnishing or any item or service.”  Essentially, any amount paid by an employer to a bona fide employee is not considered to be “remuneration” under the Anti-Kickback Statute.Continue reading

Healthcare Compliance: Providers MUST Have Corporate Compliance Programs

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healthcare complianceBy: Jacqueline Bain

How serious is the federal government that corporate compliance is necessary for healthcare providers?

In late 2015, the Department of Justice (DOJ) hired the agency’s first Compliance Counsel. Then, in early 2017, the DOJ published “common questions” that US Attorneys should ask as part of a criminal investigation when the DOJ evaluates a company’s compliance program. The “common questions” published by the DOJ describe specific factors that prosecutors should consider in conducting an investigation of a corporate entity, determining whether to bring charges, and negotiating plea or other agreements. These factors include “the existence and effectiveness of the corporation’s pre-existing compliance program” and the corporation’s remedial efforts “to implement an effective corporate compliance program or to improve an existing one.”Continue reading