Medicare Fraud News, Breaking Headlines and Insight from the Qui Tam Perspective

From patient enrollment to equipment delivery, every single stage of the DME supply process has fallen under the False Claims Act microscope. Increasingly, the government has zeroed in on what we call “set it and forget it” Medicare billing schemes. Here, the DME supplier appropriately approves a Medicare beneficiary to receive a particular DME. However, once the Medicare dollars start flowing, the supplier regularly delivers equipment and supplies whether or not the patient’s need for it continues.

The most recent example of the “set it and forget it” billing scheme was revealed in a $41.8 million False Claims Act settlement involving Hill-Rom Company, Inc., one of the nation’s largest DME suppliers. In this intervened qui tam action, the government alleged that the company had a practice of automatically billing for patients over long periods of time without making any reasonable effort to determine if the patients for whom it submitted the claims continued to meet Medicare conditions for payment. This “set it and forget it” approach to Medicare billing caused the company to submit false claims for patients for whom the equipment was not medically necessary, including claims for patients who had died or were no longer using the equipment.

With DME suppliers regularly relying on automated billing systems, other companies are likely engaged in this same “set it and forget it” billing practice. The whistleblowers in the qui tam action against Hill-Rom Company received $8 million, or nearly 20% of the total recovery.

For more information about qui tam law and Medicare fraud, contact Nolan and Auerbach, P.A.

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The current political debate in Washington centers on whether to cut government spending. However, with over $110 billion in improper or erroneous payments flowing out of the government’s coffers in 2010, the real focus should be on cutting improper government spending.

Most importantly, increased scrutiny should be directed at improper government health care spending, which accounts for a whopping 64% of the improper government payments in 2010. By focusing efforts on this sizeable $70.4 billion improper price tag, the government would see its largest return per investigative dollar.

This week, the government took steps to turn off the spigot of improper government health care dollars. Specifically, the U.S. Department of Health and Human Services rolled out its final regulations for a new Medicaid Recovery Audit Contractor (RAC) Program, mandated by the Obama Health Reform legislation of 2010. Modeled after the Medicare RAC program, this new initiative pays contractors 9 percent to 12.5 percent of any improper Medicaid payments they recover.

Undoubtedly, the Medicaid RAC program will up the number of auditors watching the stream of government spending. However, to efficiently and effectively fish out improper payments, the government still needs the inside knowledge and expertise of courageous whistleblowers. Indeed, without the help of whistleblowers to spot these seemingly innocuous claims, improper payments will easily flow by auditors.

Moreover, with a growing river of health care spending and its attendant Medicare fraud, there can be no shortage of individuals willing to suit up under the qui tam provisions of the False Claims Act. For those who successfully recover government funds via a qui tam action, their courageous actions could be worth up to 30% of the funds recovered by the government.

For more information about qui tam law and Medicare fraud, contact Nolan and Auerbach, P.A.

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In 2009, Congress made an important improvement to the False Claims Act, expanding the “Reverse False Claims” provision to reach those who consciously retain an overpayment of government funds. The impact of this amendment will not be realized for years, but the potential size of the overpayment iceberg is truly remarkable.

For example, an FY 1996 Medicare audit found that Medicare overpayments amounted to $23.2 billion (or 14% of the total program costs), due to fraud, waste and abuse.  Certainly a significant portion of those overpayments were due to fraud (or at least the wrongful retention of overpayments). Recent smaller-scale audits have returned similar percentages.

Another telling sign was revealed in a recent CMS report, which announced that the Medicare Recovery Audit Contractor (RAC) program has collect $575 million in overpayments from October 2009, when the RAC program was expanded nationally, through June 2011. Notably, RAC overpayment collections have grown steadily in fiscal year 2011, from $81 million for the first quarter to $233 million for the third quarter.

Sometimes referred to as “armchair investigations,” Medicare RAC investigations rarely unravel complex overpayment schemes. Corporate insiders are much better positioned to fully expose overpayment schemes. The federal False Claims Act pays substantial whistleblower rewards to do so.

For more information about qui tam law and Medicare fraud, contact Nolan and Auerbach, P.A.

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While the pharmaceutical industry is gradually changing its wayward ways, certain durable medical equipment (DME) counterparts are still cemented in a culture of deceit. This message was, once again, echoed in a scathing HHS-OIG report, Most Power Wheelchairs in the Medicare Program Did Not Meet Medical Necessity Guidelines (OEI-04-09-00260). According to an HHS-OIG investigation of FY2007 power wheelchair claims, 52% of the claims lacked sufficient documentation and at least 9% of the claims were medically unnecessary.

“Of the $189 million that Medicare allowed for power wheelchairs provided in the first half of 2007, $95 million was for power wheelchairs that were medically unnecessary or had claims that were insufficiently documented,” OIG said.

OIG conducted medical record reviews on 375 claims for standard and complex rehabilitation power wheelchairs supplied to beneficiaries in the first half of 2007.

This report comes on the heels of two previews OIG reports that looked at the same sample of claims. “Across all three reports, 80 percent of claims for power wheelchairs supplied to beneficiaries in the first half of 2007 did not meet Medicare requirements,” the report said.

The only way to fully ferret out fraud in the DME industry is to review the medical records from sources, such as the prescribing physician, in addition to the supplier, to determine whether power wheelchairs are medically necessary. It will also take more insiders to expose the ever-prevalent kickback payments which continue to exist within the industry. With inadequate government oversight and thousands of new suppliers entering the market every single year, the DME industry is a breeding ground for fraudsters.

Nolan & Auerbach, P.A. handled a successful whistleblower case regarding unnecessary power wheelchairs over a decade ago. Despite its courageous whistleblower and star Assistant United States Attorney in that case, subsequent cases of the same fraud continue to pop up all over the country.  The federal government needs the assistance of whistleblowers to expose dishonest providers and DME suppliers, and once and for all put an end to these dishonest practices.

For more information about qui tam law and Medicare fraud, contact Nolan and Auerbach, P.A.

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Recently, HHS-OIG was asked to examine a proposed business plan, in which post-acute care providers would pay money to a for-profit online referral service. Under this business arrangement, healthcare providers, such as nursing homes and home health facilities, would pay a fee to electronically receive and respond to referral requests from hospitals. This fee would consist of an initial “implementation fee” and a fixed monthly subscription fee that was not based on the number of referrals. HHS-OIG was asked to opine on whether this arrangement potentially violated the federal Anti-kickback statute.

The federal anti-kickback statute makes it a criminal offense to knowingly and willfully offer to pay, solicit, or receive any remuneration to induce or reward referrals of items or services reimbursable by a federal health care program. Thus, where remuneration is paid purposefully to induce or reward referrals of items or services payable by a federal health care program, the anti-kickback statute is violated.

In a recently released advisory opinion, HHS-OIG determined that the proposed arrangement would implicate the Anti-kickback statute, because the online company would be soliciting and accepting, and providers would be paying, remuneration in return for the company arranging for the post-acute care services for Medicare and Medicaid patients.

This advisory opinion is noteworthy, for it seems to rest on the monopolistic impact of the online service. Specifically, HHS-OIG stressed that non-paying providers would be faced with significant competitive disadvantage, for hospitals tend to discharge patients to post-acute care providers on a first-come, first served basis. In other words, the online system would unfairly move its paying customers to the front of the line, leapfrogging those providers who were unwilling or unable to pay for the online referral service. The end result is that providers would be pressured to pay for the service, regardless of whether they could afford the charge, thus creating incentives to, among other things, “prolong patient stays, provide separately billable, unnecessary services, or upcode resident Resource Utilization Group assignments.”

As evident in this proposed arrangement, emerging technologies are adding a little extra spice to modern-day kickback schemes. However, at their very essence, these illegal practices still consist of the same basic ingredients of bribing others to steer Medicare and Medicaid patients.

For more information about qui tam law and Medicare fraud, contact Nolan and Auerbach, P.A.

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Rex Healthcare, of North Carolina, has agreed to pay $1.9 million to settle allegations that it fraudulently charged Medicare by improperly classifying patients for inpatient services.

By classifying patients as inpatients the hospital would receive a larger reimbursement from Medicare than if they had been classified as outpatient. Hospitals that make false claims for larger Medicare reimbursements can end up driving the costs of healthcare.

This settlement is in response to procedures done from 2001 to 2007. This case was brought forward under the qui tam provisions of the False Claims Act that allow private citizens to bring forward cases of fraud on behalf of the Federal Government. Theses citizens, called relators, are entitled to a percentage of the settlement amount.

The difference between outpatient and inpatient reimbursement being so great, this case represents what we believe to be a trend in qui tam lawsuits based upon inpatient admissions.

For more information about qui tam law and Medicare fraud, contact Nolan and Auerbach, P.A.

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Currently, state Medicaid Fraud Control Units (MFCUs) have limited resources and capabilities to use statistical models and data mining technologies to identify patterns of health care fraud. These limitations have appeared even when whistleblowers have successfully uncovered possible widespread fraudulent business practices. However, this all might soon change under a recently proposed federal rule.

The US Department of Health and Human Services Office of Inspector (HHS-OIG) has proposed to allow MFCUs to use federal funds to conduct data mining on Medicaid claims. Under the proposed HHS-OIG rule, MFCUs would have to clear specific hurdles before receiving the federal funds, including delineating the duration of the data mining.

This would be a huge step forward for our country’s fraud-fighting efforts. Whistleblowers regularly birddog substantial evidence of massive health care fraud schemes. This proposed rule would supply the MFCUs with the necessary tools to fully unearth the identified fraud.

Once federal funding for data mining has been granted, MFCUs will be required to provide information on an annual basis regarding the costs associated with data mining, the total number of fraud cases resulting from data mining, the outcome of the cases, and the amount of recoveries obtained. If the MFCUs effectively utilize these funds to actively investigate qui tam actions, the reported outcomes could be quite substantial.

For more information about qui tam law and Medicare fraud, contact Nolan and Auerbach, P.A.

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Our Medicare system relies on contractors to identify fraudulent claims from the Durable Medicare Equipment (DME) industry. However, time and time again, Medicare contractors have dropped the ball when it comes to identifying even the most egregious instances of fraud. To fully protect our Medicare dollars, the Medicare system has regularly turned to whistleblowers and their counsel to supplement the limited capabilities and resources of DME Medicare contractors.

The most recent enforcement blind spot was revealed in an HHS Office of Inspector General audit of Medicare claims for home blood-glucose test strips and lancets. Reviewing a sample of 100 claims paid in 2007, the Inspector General discovered that 83% of the claims were lacking requisite documentation. In other words, only 17% of the claims should have been paid by the Medicare contractor.

Investigating the problem further, the Inspector General learned that the contractor’s claims processing system was unable to detect whether the claims had the necessary supporting documentation. In short, the contractor was simply not capable of detecting fraudulent claims.

Unfortunately, the results of this audit are not an outlier. By and large, our Medicare contractors are only capable of “processing claims,” and the role of fraud recovery falls on law enforcement, who must engage in a game of “pay and chase.”

The incentives and protections afforded whistleblowers under the False Claims Act have never been stronger. Whistleblowers are often handsomely rewarded, and when it comes to the fraud-prone DME industry, there is plenty of opportunity!

For more information about qui tam law and Medicare fraud, contact Nolan and Auerbach, P.A.

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Inpatient rehabilitation facilities receive higher Medicare reimbursement payments when patients are discharged, than when the patients are transferred to other facilities. However, according to a recent HHS-OIG report, some facilities have a “difficult time” distinguishing between discharged and transferred patients.

In this audit, HHS-OIG reviewed the records of 41 inpatient rehabilitation facility patients who were supposedly discharged from the hospital. Remarkably, 26 of the 41 patients were actually transferred to another facility. In turn, the Medicare system overpaid an astounding 63% of the time. With an additional price tag of $6,200/patient, these overpayments drained well over $100,000 from the Medicare Trust Fund. If the facilities knowingly submitted these upcoded claims, they could be held liable under the federal False Claims Act.

These results provide a glimpse into a pervasive world of Medicare fraud. Inpatient rehab facilities regularly miscode transferred patients, with the hopes of inflating their bottomlines.

For more information about qui tam law and Medicare fraud, contact Nolan and Auerbach, P.A.

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