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The bedrock rule of government healthcare reimbursements is that providers will only receive payment for medical care that is both “reasonable” and “necessary.” It is then up to the sound judgment of providers to define what is truly medically necessary. However, as healthcare spending has skyrocketed in recent years, academics, patient safety groups, and government agencies have increasingly scrutinized the medical necessity of various medical treatments. In fact, a recent paper in JAMA sounded alarms about the mounting costs for medically unnecessary treatments, when it estimated “waste” in the United States healthcare system at more than $900 billion a year, of which $300 billion flowed from Medicare and Medicaid.
Undoubtedly, at some point, medically unnecessary treatments leap across the Rubicon from being simply healthcare “waste” to being outright fraud. In most medical specialties, this demarcation between waste and fraud is blurry, at best. However, this line might be coming into focus, in part, because of the efforts of Choosing Wisely, an initiative of the ABIM foundation that “aims to promote conversations between physicians and patients by helping patients choose care that is: supported by evidence, not duplicative of other tests or procedures already received, free from harm, and truly necessary.”
About a year ago, Choosing Wisely made news when they had nine specialty societies release lists of five things physicians and patients should question. Basically, they came up with lists of things that healthcare providers shouldn’t do when practicing medicine. While they identified such “over-treatments” as “waste,” many of these identified treatments have been outright rejected by the relevant medical communities. In other words, the chorus of medical specialists viewed these particular treatments as “medically unnecessary.”
Undoubtedly, there are health systems and physicians who continue billing government healthcare programs for such unnecessary treatments. Oftentimes, they choose poorly because their desire for monetary gains outweighs their medical judgment. For such healthcare providers, a False Claims Act qui tam lawsuit might be the only effective prescription for fraud.
More information for whistleblowers is located at the Nolan Auerbach website.
Under Medicare’s Inpatient Prospective Payment System (IPPS), there has always been a recognized problem that hospitals drive up health care costs when they readmit patients who were prematurely discharged. Initially, Medicare regulations monetarily addressed this concern by paying hospitals only one DRG payment for patients admitted twice on the same day with the same symptoms. Even then, double-billed same-day readmissions flooded the Medicare system. In response, CMS subsequently implemented an edit in 2004 to attempt to reject subsequent claims on behalf of beneficiaries who were readmitted to the hospital on the same day. Nonetheless, Medicare claims for same-day readmissions continued seeping through the payment system, and more hospitals increasingly billed for inappropriate observation stays.
Recently, Congress decided to attack this potential inpatient Medicare fraud readmission problem more broadly, when the Affordable Care Act established the Hospital Readmissions Reduction Program. This program effectively reduced Medicare payments to IPPS hospitals with excessive readmissions. Unlike the same-day readmission regulations, this law penalized hospitals based on high readmission rates over a 30-day period. In other words, Medicare reimbursement rates are now negatively impacted when a hospital has a high rate of Medicare readmissions during a 30-day period.
If past is prologue, the effective expansion of the Medicare readmission penalty will drive dishonest hospitals to deflate their readmission rates by diverting the claims to In turn, this scheme will allow hospitals to receive payments from Medicare, while at the same time dodging the Medicare readmission penalty. Such payment schemes are evidenced by hospitals with disproportionately high rates of observation stays over 24 hours.
More information for whistleblowers is located at the Nolan Auerbach website.
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It is common knowledge in the Durable Medical Equipment (DME) industry that a DME provider must not bill Medicare Part B for DME provided to patients in Medicare-certified Skilled Nursing Facilities (SNFs). Indeed, for over twenty years, HHS-OIG has raised concerns that DME providers regularly submit false Medicare Part B claims that misrepresent that their equipment was provided to patients in their home or in a facility used as a home when, in fact, they were in Medicare-certified SNFs.
This scheme was most recently uncovered in an intervened False Claims Act action against DME provider Dynasplint Systems, Inc. In this case, the government alleges that since 2006, the company specifically focused its sales force on SNFs, and then falsely billed Medicare Part B for DME sold to these facilities. According to the government, in 2009, data showed that approximately one-half of Dynasplint’s Medicare billings to DME Medicare Administrative Contracts were for patients Dynasplint represented were in “custodial care” facilities, as opposed to SNFs. This number raised a red flag, because during the same time period, looking at other DME suppliers, less that 0.1% had billed Medicare Part B for patients in custodial care.
In effect, dishonest DME providers cause Medicare to be double-billed when they bill Medicare Part B for DME provided to patients in SNFs. The SNFs charge Medicare Part A or Medicaid a daily rate per patient, and this rate includes the cost of DME used by its patients. Any separate additional DME claim for SNF patients under Medicare Part B is duplicative, and when done knowingly, is health care fraud.
More information for whistleblowers is located at the Nolan Auerbach website.
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Recently, 60 Minutes ran a segment looking into the questionable inpatient admission practices of hospitals owned by Health Management Associates (HMA). According to 60 Minutes, HMA is under federal investigation for pressuring its associated physicians into admitting patients, regardless of medical necessity. For added pressure, HMA supposedly set lofty patient admission goals for each hospital. Moreover, when some providers and senior-level employees raised health care fraud concerns, they were allegedly alienated, isolated and terminated by the company.
Hospital systems potentially commit Medicare fraud when they set high patient admission goals for their hospitals. Indeed, when hospitals admit Medicare beneficiaries based on monetary greed, as opposed to medical need, the admissions run afoul of the law, triggering liability under the federal False Claims Act.
More information for whistleblowers is located at the Nolan Auerbach website.
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A recent report from HHS-OIG reveals that Medicare paid $1.5 billion in improper claims for skilled nursing care in 2009. This astounding sum represented nearly 6% of the $26.9 billion paid overall to skilled-nursing facilities in 2009. Notably, 25% of all Medicare claims submitted by skilled nursing facilities had “errors,” and the vast majority of the “errors” were improperly upcoded for ultra-high therapy that was not medically necessary.
Needless to say, with “errors” skewing toward higher Medicare reimbursements, outright fraud was and is pervasive in the skilled nursing care industry. This disturbing trend might partially explain the recent rise in Medicare payouts for such services, which have increased to over $32 billion in fiscal year 2012.
As the baby boomer generation ages into Medicare, the country will face rising entitlement spending and mounting federal debt. Ridding the Medicare program of fraud would certainly lessen some of these financial concerns. According to HHS-OIG, the government should focus some of its enforcement efforts on skilled nursing care providers.
More information for whistleblowers is located at the Nolan Auerbach website.
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According to a recent Government Accountability Office (GAO) report, dishonest hospitals and medical facilities are the leading concerns of health care fraud investigations. In civil cases, hospitals were the most frequently investigated subjects, making up 20 percent of the 2,399 subjects, slightly more than medical facilities—defined as medical centers, clinics and practices—at 18 percent. For all health care civil fraud cases, about 61 percent of the subjects investigated were organizations and not individuals affiliated with those entities. According to the report, physicians represented only 12 percent of the civil health care fraud suspects.
Clearly, civil health care fraud investigations tend to focus on large health care providers, as opposed to individual providers. This investigatory focus likely reflects the recent success and proliferation of False Claims Act qui tam actions, which tend to spotlight systematic, business-plan healthcare fraud schemes.
More information for whistleblowers is located at the Nolan Auerbach website.
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The federal Stimulus Bill of 2009 launched a Medicare and Medicaid incentive program that encouraged physicians and hospitals to adopt and use certified electronic health record (EHR) systems to improve care and save costs. However, according to a letter the Department of Health and Human Services and the Department of Justice sent to five hospital associations, they are concerned that dishonest hospitals are using the EHR technologies to game the system.
Many EHR systems permit hospitals to simply copy and paste patient narratives and histories, ostensibly saving administrative time. However, dishonest hospitals are engaged in healthcare fraud by using this basic word processing function to facilitate upcoding of the level of care.
Some hospital systems have commented that the current EHR systems actually encourage upcoding by “prompting” providers to download lab test results and patient histories to qualify for higher reimbursement codes. Others have stated that the systems merely ensure that providers are accurately and adequately compensated for their time.
The federal government has vowed to identify hospitals who misuse and abuse EHR technologies to game the Medicare and Medicaid systems. Seemingly innocuous claims rarely reveal upcoding schemes, but with the assistance of whistleblowers, HER upcoding can and will be exposed.
More information for whistleblowers is located at the Nolan Auerbach website.
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In 2007, Thomas Bingham’s company was contacted by HCA to do a market rent study of a medical office suite in Chattanooga, Tennessee. Based on his thorough analysis, Mr. Bingham determined that an equivalent net rental rate of approximately $8.10 to $10.10 per square foot represented fair market value.
Much to his surprise, HCA hospital Parkridge Medical Center then rented the space from a group of physicians at nearly $13 per square foot. In order to justify the reasonableness of paying more for the office suite, HCA had obtained a second fair market value study, from an unlicensed and uncertified appraiser and “split (some of) the difference” with Bingham’s fair market value study.. The medical practice regularly referred patients to the hospital.
In 2008, Mr. Bingham filed a False Claims Act qui tam action, alleging that the hospital provided, and caused others to provide, unlawful remuneration to the medical practice in order to obtain patient referrals; disguised this illegal remuneration as legitimate payments under real estate leasing arrangements and as an assignment of an existing real estate lease; knowingly solicited and relied on an erroneous real estate market rent/FMV appraisal; and submitted, and caused others to submit, to the federally sponsored health care programs, including Medicare and Medicaid, false claims in violation of the Stark Statute and the Anti-kickback statute.
Recently, the federal government intervened and settled Mr. Bingham’s qui tam action for $16.5 million.
More information for whistleblowers is located at the Nolan Auerbach website.
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Medicare reimbursement includes payments for certain evaluation and management (E&M) services that are necessary prior to the performance of a procedure. CMS does not normally allow additional payments for separate E&M services performed by a provider on the same day as a procedure. However, if a provider performs an E&M service on the same day as a procedure that is significant, separately identifiable, and above and beyond the usual preoperative and postoperative care associated with the procedure, a so-called “modifier-25” may be attached to the claim to allow additional payment for the separate E&M service.
For over a decade, HHS-OIG has been concerned that health care providers were regularly and falsely tagging a modifier-25 on millions of Medicare claims. In fact, after a thorough 2002 audit, HHS-OIG determined that over 35% of all modifier-25 claims were false. In response, HHS-OIG has increasingly scrutinized providers who reach for modifier-25.
For example, noting an exceptionally high use of the modifier-25, the federal government recently investigated the Medicare billing practices of Georgia Cancer Specialists, one of the country’s largest private oncology practices. The end result was a $4.1 million False Claims Act settlement, in which the government alleged that the medical group applied modifier-25 to claims that did not qualify for its use, leading to overpayments by Medicare.
More information for whistleblowers is located at the Nolan Auerbach website.
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New York Downtown Hospital has agreed to pay $13.1 million to resolve qui tam allegations that it paid illegal kickbacks for patient referrals from a for-profit detoxification services management company. According to the government’s complaint-in-intervention, the hospital paid fees to SpecialCare Hospital Management Corp., under purported administrative services agreements. However, the agreements cloaked arrangements for the company to illegally refer Medicaid patients, in violation of federal and state anti-kickback laws.
The government also alleged that the hospital made false Medicare and Medicaid claims for inpatient drug and alcohol detoxification treatment, when its detox programs lacked the required state license. The allegations concerned the hospital’s operation of a detox program, called New Vision, from July 1998 to February 2006.
Two qui tam relators originally brought the schemes to the governments’ attention in 2002, when they filed a multi-defendant action against several hospitals. The federal government and New York state intervened in the case in 2009. Claims against the other defendants remain pending.
More information for whistleblowers is located at the Nolan Auerbach website.
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