Kusserow on Compliance: Huge fraud schemes involving telemedicine and DME

– Charges against two dozen people involving over $1.2 billion

 – Administrative Action against 130 DMEs submitting $1.7 Billion in claims

The DOJ announced charges against 24 defendants—including the CEOs, COOs, and others associated with five telemedicine companies, the owners of dozens of durable medical equipment (DME) companies, and three licensed medical professionals—associated with health care fraud schemes involving more than $1.2 billion. CMS and the Center for Program Integrity (CPI) have taken adverse administrative action against 130 DME companies that had submitted over $1.7 billion in claims and were paid over $900 million. The scheme involved payment of illegal kickbacks and bribes by DME companies in exchange for the referral of Medicare beneficiaries by medical professionals working with fraudulent telemedicine companies for back, shoulder, wrist, and knee braces that were medically unnecessary.

The DOJ alleges those charged with paying doctors to prescribe DME either without any patient interaction or with only a brief telephonic conversation with patients they had never met or seen. The proceeds of the fraudulent scheme were allegedly laundered through international shell corporations and used to purchase exotic automobiles, yachts, and luxury real estate in the United States and abroad. Some of the defendants obtained patients for the scheme by using an international call center that advertised to Medicare beneficiaries and “up-sold” the beneficiaries to get them to accept numerous “free or low-cost” DME braces, regardless of medical necessity. The international call center allegedly paid illegal kickbacks and bribes to telemedicine companies to obtain DME orders for these Medicare beneficiaries. The telemedicine companies then allegedly paid physicians to write medically unnecessary DME orders. Finally, the international call center sold the DME orders that it obtained from the telemedicine companies to DME companies, which fraudulently billed Medicare. Collectively, the CEOs, COOs, executives, business owners and medical professionals involved in the conspiracy are accused of causing over $1 billion in loss.

 

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.

Connect with Richard Kusserow on Google+ or LinkedIn.

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Copyright © 2019 Strategic Management Services, LLC. Published with permission.

Kusserow on Compliance: 2018 FCA enforcement and 10 tips for channeling whistleblowers internally

 New health care qui tam cases average 9 per week

$2.5 billion in recoveries from health care sector

75 percent of cases predicated by “Whistleblowers”

Whistleblowers are entitled to up to 25 percent of recoveries

The vast majority of False Claims Act cases are brought to the DOJ by “whistleblowers” (qui tam relators), under the qui tam provisions of the False Claims Act (FCA). In 2018, this continued to be the case. The DOJ’s Civil Division reported having 645 new qui tam actions initiated last year, at an average of 14 new cases per month. Of that total, 446 were health care cases—about nine a week average. Federal recoveries, including settlements and judgments, amounted to over $2.8 billion. Most of this, over $2.5 billion, related to health care and life sciences. FCA violations occur when someone knowingly submits a false or fraudulent claim for payment to the government.  The penalty for doing this is up to three times the amount of each claim, plus penalties as high as $21,563 per claim. Whistleblowers file cases with the DOJ on behalf of the United States as well as themselves and must provide all the evidence they have supporting the complaint. The DOJ decides to intervene (take over prosecution) or not. If the DOJ decides to intervene, the government takes the lead in prosecuting the case; and if not, the relator may proceed with the prosecution on their own in federal court.  The relator is entitled to 15 to 25 percent of the government’s recovery, plus attorneys’ fees and expenses.

The recovery results in 2108 marked the ninth consecutive years where recoveries have exceeded $2 billion. Of the health care recoveries, more than three quarters of that sum were as result of qui tam cases. Health care and life sciences settlements involved drug and device manufacturers, hospitals, Medicare Advantage plans, pharmacies, and laboratories. The largest settlement, for $625 million, was with AmerisourceBergen Corp. and its subsidiaries, and it involved resolution of allegations that it repackaged and resold cancer drugs to profit from “overfill” in the original packaging. The other major settlements also involve pharmaceutical manufacturers. In those cases, the FCA was violated as result of payment of kickbacks to induce the flow of business.  The largest case among providers involved an independent physician association that entered into a $270 million settlement with another case resulting in a $216 million settlement with the former hospital chain, Health Management Associates.

10 Tips: Channeling Whistleblowers Internally 

  1. Review/update hotline-related polices/procedures (confidentiality, anonymity, non-retaliation, duty to report, etc.)
  2. Promote the reporting of wrongdoing (newsletter, intranet, training programs, etc.)
  3. Find ways to provide feedback so that employees know reporting is taken seriously
  4. Consider engaging experts to evaluate compliance communication channels effectiveness
  5. Allegations of potential violations of law or regulations must be promptly investigated.
  6. Ensure that individuals are trained and competent to conduct prompt investigations.
  7. All cases where investigation indicates potential violations, disclose promptly
  8. Take appropriate disciplinary action against identified wrongdoers
  9. Understand CMS and OIG self-disclosure protocols that may avoid FCA investigation
  10. Ensue investigations finding of potential violations of law are promptly disclosed to the DOJ

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.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2019 Strategic Management Services, LLC. Published with permission.

Kusserow on Compliance: Understanding and addressing whistleblowers

The vast majority of the cases resolved by the Civil Division of the Department of Justice (DOJ) were cases brought by “whistleblowers” under the qui tam provision of the False Claims Act (FCA). Whistleblowers are responsible for an even higher percentage of cases resulting in OIG Corporate Integrity Agreements (CIAs). Although most compliance officers are well aware of this program, many remain unclear as to how the process works. Tom Herrmann, J.D., who served over 20 years in the Office of Counsel to the OIG and as an Appellate Judge for the Medicare Appeals Board, explained that Congress permitted a whisltleblower called the “Relator” to file a case with the DOJ under the FCA.  Since this provision of law went into effect in 1986, there have been over 10,000 qui tam cases filed with a current average of one such case being filed every day of the year. The intent was to create incentives for private parties to detect and pursue fraud under the FCA. In return for reporting this information, Relators receive a portion (usually about 15 to 25 percent) of any recovered damages.  Once the lawsuit is filed, it is placed “under seal”, meaning that it is kept secret from everyone but the government, in order to give the DOJ enough time to investigate the allegations in deciding whether to join (“intervene”) in the case. Intervention by the DOJ occurs only in about one in five qui tam lawsuits, leaving whistleblowers the option to pursue cases on their own, however the chances of success are much lower than in cases when the government joins. Most successful qui tam cases are resolved through settlement negotiations rather than a court trial, although trials may occur.

Kash Chopra, J.D., noted that the overwhelming number of cases that result in a CIA, arise from whistleblowers and these, in turn, are based upon violations of the federal Anti-Kickback Statute (AKS). It is the government’s position that all claims arising from a corrupt arrangement violating the AKS or in some cases, the Stark Law, are considered fraudulent. This is even when the services rendered were needed and provided appropriately.  She advises here clients that the best ways to manage the whistleblower risk is to ensure that they are channeled through internal communication channels and their complaints are promptly evaluated, investigated, and resolved.  It is worth considering the following:

  1. Using outside experts to independently audit arrangements with physicians and evaluate compliance communication channel effectiveness.
  2. Ensuring a 24/7 hotline operated externally by experts in recognizing health care compliance issues.
  3. Reviewing/updating hotline-related polices/procedures (confidentiality, anonymity, non-retaliation, duty to report, etc.).
  4. Making sure that the duty to report suspected wrongdoing is explained in the Code, policies and training.
  5. Having trained and competent people on hand to conduct prompt and competent investigations of matters raised through the hotline.
  6. Moving quickly to use CMS and OIG self disclosure protocols when there is credible evidence of violations; and not wait until the DOJ gets involved.

For more information on this subject, Kashish Parikh-Chopra can be reached at kchopra@strategicm.com or via telephone at (703) 535-1413.

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.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2018 Strategic Management Services, LLC. Published with permission.

Kusserow on Compliance: Congressional hearing on Medicare fraud

The HHS Deputy Inspector General for Audit Services provided Congressional testimony related to Medicare fraud and began by noting that Medicare spending $700 billion annually on behalf of 59 million beneficiaries has grown to the point where it is more than 15 percent of all federal spending. With increasing number of beneficiaries and rising health care costs, it is estimated that Part A Trust Fund will be depleted by 2026; and spending for Medicare Part B will grow by more than 8 percent over the next 5 years, outpacing the U.S. economy. Medicare and Medicaid improper payments reported by HHS was $90 billion a year with two thirds involving Medicare fee-for-service payments due to errors associated with insufficient or no documentation. Although improper payments may occur in all types of health care, home health, skilled nursing facility (SNF), and inpatient rehabilitation facility (IRF) are areas of particular concern, representing 33 percent of the overall estimated improper payment rate for Medicare fee-for-service.

Responding to this high level of improper payments, the OIG is using advanced data analytics help the agency more effectively assess risk and pinpoint oversight efforts. The OIG uses data analytics to analyze millions of claims and billions of data points. At the macro level, the OIG analyzes data patterns to assess fraud and other types of risk across Medicare services, provider types, and geographic locations to prioritize our work and more effectively deploy our resources. At the micro level, the OIG uses data analytics, including near- real-time data, to identify potential fraud suspects for more in-depth analysis and to efficiently target investigations. OIG enforcement efforts involve a three-pronged approach that focuses on prevention, detection, and enforcement. The CMS’s Fraud Prevention System (FPS) was cited as serving an important tool with data analytics and predictive analytics for fraud-detection.  Once suspected fraud is identified, the OIG investigate the facts and pursue enforcement to hold perpetrators accountable and recover misspent taxpayer dollars.

 

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.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2018 Strategic Management Services, LLC. Published with permission.