Archives for September 22, 2016

Kusserow on Compliance: GAO reported continued fraud vulnerability under the Affordable Care Act

The Government Accountability Office (GAO) issued a report that the Affordable Care Act (ACA) marketplaces remain “vulnerable to fraud,” after the agency successfully applied for coverage for multiple fake people, who hadn’t filed tax returns for 2014 but were still able to get tax credits to help pay their monthly premiums for 2016 coverage. The GAO engaged in testing by using undercover attempts to obtain health-plan coverage from the federal marketplace and selected state marketplaces for 2015. The tests found the federal marketplace and selected state marketplaces approved each of 10 fictitious application for subsidized health plans. All 10 were approved, even though eight of these 10 fictitious applications failed the initial online identity-checking process.

Four applications used Social Security numbers that were never been issued. Other applicants obtained duplicate enrollment or obtained coverage by claiming that their employer did not provide insurance that met minimum essential coverage. Three of GAO’s applications were approved for Medicaid, although GAO provided identity information that would not have matched Social Security. For two applications, the marketplace or state Medicaid agency directed the fictitious applicants to submit supporting documents, and GAO provided fake information that resulted in the applications were approved. A third marketplace did not seek supporting documentation, and the application was approved by phone. CMS, California, Kentucky, and North Dakota, advised the GAO that they are only inspecting for supporting documentation that has obviously been altered; otherwise documentation submitted would not be questioned for authenticity.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2016 Strategic Management Services, LLC. Published with permission.

HHS uses CIAs to teach fraudulent providers a lesson

The United States reached a $28.5 million settlement with a private for-profit corporation that operates 35 skilled nursing facilities (SNF), most located in California following allegations that the corporation engaged in a scheme to submit false claims to Medicare and TRICARE for medically unnecessary rehabilitation therapy services. Under the settlement, the corporation entered into a corporate integrity agreement (CIA) with the HHS Office of Inspector General (OIG). In an unrelated case, the OIG imposed a $3 million penalty—the largest penalty for CIA violations to date—on another provider that failed to correct improper billing practices during the term of its CIA.

Settlement and CIA for false claims scheme

North American Health Care Inc. (NAHC), its chairman of the board, and its senior vice president of reimbursement analysis will pay $30 million to resolve allegations that they violated the False Claims Act (31 U.S.C. §§3729–3733) by causing the submission of false claims to Medicare and TRICARE for medically unnecessary rehabilitation therapy services provided to skilled nursing facility (SNF) residents. The government alleges that the senior vice president of reimbursement analysis contributed to the conduct by creating the improper billing scheme and that the chairman reinforced the scheme at NAHC facilities. As part of the settlement, NAHC entered into a five-year CIA with the OIG requiring an independent review organization to annually review therapy services billed to Medicare.

Violation of CIA

Kindred Health Care, Inc., paid a penalty of more than $3 million to the federal government for failing to comply with a CIA, marking the largest penalty for CIA violations to date. Kindred entered into a CIA with the OIG after it was discovered that Kindred billed Medicare for hospice care provided to patients who were not eligible for the services. In audits mandated by the CIA, internal auditors found that Kindred failed to correct improper billing practices in the fourth year of its five-year agreement. The OIG caught wind of the noncompliance during several unannounced visits.

“This penalty should send a signal to providers that failure to implement these requirements will have serious consequences,” said Inspector General Daniel R. Levinson. “We will continue to closely monitor Kindred’s compliance with the CIA.”