Device manufacturer’s misrepresentations result in $12.5M FCA settlement

Medical device manufacturer AngioDynamics, Inc., settled with the United States for $12.5 million following allegations that the company caused health care providers to submit false claims related to the use of the LC Bead® and the Perforator Vein Ablation Kit® (PVAK) to Medicare, Medicaid, and other federal health care programs. The government alleged that the manufacturer both provided instructions to use inaccurate billing codes and misrepresented Medicare billing policy related to the devices. The settlement came as a result of a suit filed under the whistleblower provision of the False Claims Act (FCA) (31 U.S.C. § 3729).

LC Bead allegations

The medical device manufacturer will pay $11.5 million—$10.9 million paid to the federal government and $600,000 paid to state Medicaid programs—to resolve allegations that the company caused the submission of false claims for procedures involving an unapproved drug delivery device marketed with false and misleading promotional claims. The government alleged that between 2006 and 2011, AngioDynamics served as the distributor for the manufacturer of the LC Bead and marketed the product for use as a drug delivery device in combination with chemotherapy drugs. Employees of the manufacturer routinely claimed that this use of the LC Bead was “better,” “superior,” “safer,” and “less toxic” than alternative treatment, despite lack of clinical evidence to support the statements and despite the FDA’s repeated declination to approve the product. Knowing that many insurers did not provide coverage for certain LC Bead procedures, the company instructed health care providers to use inaccurate billing codes for claims related to these uses.

PVAK allegations

AngioDynamics will also pay $1 million to resolve allegations that the company caused the submission of false claims in connection with the use of PVAK, used to close or collapse malfunctioning veins and which was approved by the FDA only for use in treating superficial veins and not for perforator veins. The manufacturer voluntarily recalled the PVAK and reissued the product under the name “the 400 micron kit.” Despite the recall and rebranding, certain AngioDynamics employees took part in a continued campaign to market the device to treat perforator veins, falsely representing to providers that Medicare would cover this use

Report shows management of CMS payment program shows vulnerabilities

While CMS has made some progress towards addressing problems with the Quality Payment Program (QPP), a new report shows vulnerabilities remain regarding technical assistance for clinicians and the potential for fraud and improper payments. The HHS Office of the Inspector General (OIG) report noted that if CMS fails to sufficiently address these issues, clinicians may struggle to success under the QPP or choose not to participate. The report also found that CMS needs to put systems in place to effectively prevent, detect, and address fraud and improper payments.

CMS is implementing core provisions of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (P.L. 114-10) as the QPP, a set of clinician payment reforms designed to put increased focus on the quality and value of care. The QPP is a significant shift in how Medicare calculates payment for clinicians and requires CMS to develop a complex system for measuring, reporting, and scoring the value and quality of care.

Technical assistance

The report shows that if clinicians do not receive sufficient technical assistance, they may struggle to succeed under the QPP or choose not to participate. Clinician feedback collected by CMS demonstrates widespread basic awareness of the QPP, but also indicates uncertainty regarding details of participation such as who must report and how to submit data. CMS contractors have focused largely on general education initiatives, with fewer resources devoted to more customized, practice-specific technical assistance. CMS has established a Service Center to answer questions about the QPP by phone or email. Service Center data indicate that clinicians continue to have questions about both eligibility and scoring criteria, and that small practices, in particular, need information and assistance. Small practices and clinicians in rural or medically underserved areas, who may have fewer administrative resources and less experience with prior CMS quality programs, should be prioritized for assistance. The report stated, “Clinician feedback collected by CMS demonstrates widespread awareness of the QPP, but also uncertainty about eligibility, data submission, and other key elements of the program.”

Fraud

The report also found that if CMS does not develop and implement a comprehensive QPP program integrity plan, the program will be at greater risk of fraud and improper payments. To ensure that the QPP succeeds, CMS must effectively prevent, detect, and address fraud and improper payments. QPP payment adjustments are intended to reward high-value, high-quality care. Safeguarding the validity of Merit-based Incentive Payment System (MIPS) data and the accuracy of QPP payment adjustments is critical to ensure that these payments are based on clinicians’ actual performance. Appropriate oversight is critical to prevent fraud and improper payment adjustments. CMS needs to clearly designate leadership responsibility for QPP program integrity. CMS also needs to develop a comprehensive program-integrity plan for the GPP to ensure the accuracy of MIPS data submitted by clinicians. CMS said that it “is currently in the early stages of developing an oversight plan to QPP data.”

Personal service care fraud; a growing problem for Medicaid

Medicaid personal care service (PCS) fraud cases made up a “substantial and growing” portion of cases investigated by the Medicaid Fraud Control Units (MCFUs) and greater oversight is recommended by the HHS Office of the Inspector General (OIG). In a report covering the PCS work of MFCUs over fiscal years 2012-2015, the OIG found that these cases comprised over 12 percent of the total investigations and accounted for 34 percent of the convictions (OIG Report, OEI-12-16-00500, December 6, 2017).

Background

Personal care services are those services that support consist daily living activities, including bathing and dressing, meal preparation, and transportation. PCS providers assist the elderly, people with disabilities, and individuals with chronic or temporary health conditions, allowing these persons to remain living in their homes and communities. PCS are typically delivered through either an agency-directed PCS or a self-directed PCS, through which beneficiaries hire and supervise their own provider. PCS are offered either as an optional benefit through a Medicaid State plan or through demonstration projects and waiver programs. States are required to develop their requirement and qualification standards for PCS providers, resulting in widely varying requirements across the country.

Growing percentage

The OIG found that during the three-year review period, PCS fraud cases made up a substantial and increasing number of MFCU cases and outcomes. In FY 2015, such cases made up 12 percent of total investigations and over the review period, they made up 38 percent of indictments, and 34 percent of convictions. Furthermore, during the review period, indictments increased 56 percent and convictions increased 33 percent. Payments to PCS providers represented $13 billion out of $524 billion total Medicaid expenditures during FY 2015.

Recommendations and challenges

MCFUs have recommended that State Medicaid either enroll PCS attendants as Medicaid providers, or include PCS attendants in a provider registry. This would allow for the assignment of unique provider identification number to PCS attendants to include on claims for reimbursement. Some form of enrollment or registration is needed, as the inability to identify individual PCS attendants restricts the ability to identify fraudulent providers. MCFUs have suggested that enrolling PCS attendants in Medicaid would better inform them about Medicaid procedures and requirements.

MCFUs have also recommended the use of background checks for attendants. They found that the current, minimal, background check requirements could put vulnerable beneficiaries at risk. For example, a PCS attendant in Arizona pleaded guilty to theft and financial exploitation of a vulnerable adult, after having stolen checkbooks, cash, credit cards, and personal items belonging to the beneficiaries. The PCS agency checked for felony arrests and found none; the attendant had, however, numerous misdemeanor convictions and had previously lost her nursing assistant license.

The MCFUs have also recommended using additional documentation requirements, such as requiring require PCS attendants to provide detailed or standardized timesheets and to show the start and stop times for the services. The currently minimal PCS documentation means that PCS claims data may not contain the identity of the PCS attendant, the number of hours worked, or the time of day during which the services were provided.

Lastly, the MCFUs recommended that State Medicaid agencies implement a variety of controls regarding oversight of PCS providers and their services. These controls include more frequent in-home supervisory visits, training for PCS attendants and cross-reference attendant and beneficiary location. For a variety of reasons, beneficiaries may be reluctant to report abuses and more frequent in-home visits could curtail fraud.

Funding issues

The units reported that their efforts to protect beneficiaries are hamstrung by their ineligibility to receive Federal funding to investigate and prosecute complaints in nonfacility settings. Such complaints are often referred to other agencies. Those agencies often do not receive the same level of training on patient abuse and neglect that MCFU staff receives and may have severely strained resources.

Conclusions

The report found that the volume and increase of MFCU investigations and prosecutions indicates that PCS remain vulnerable to fraud. The report noted that the recommendations are similar to those made in previous reports and states that it is crucial that federal funding authority be expanded to allow MFCUs to investigate and prosecute cases of patient abuse and neglect in nonfacility settings.

Doctor, nurse indicted for fraudulent schemes involving unnecessary compounded medications

Separate indictments brought against a nurse practitioner and doctor by the Department of Justice (DOJ) alleged that the two individuals participated in separate but similar schemes to defraud TRICARE. Under the schemes, the nurse practitioner and doctor prescribed medically unnecessary compounded medications to individuals they had not examined, had a compounding pharmacy dispense the medications, and seek reimbursement from TRICARE.

The indictment against the nurse practitioner

According to the indictment, TRICARE reimbursed the compounding pharmacy more than $3.3 million for compounded medications prescribed by the nurse practitioner between February 2013 and October 2016, In addition, the nurse practitioner allegedly received more than $50,000 in kickback payments from a marketer for the compounding pharmacy in return for prescribing the compounded medications and making false statements to the FBI. The nurse practitioner was charged with conspiracy to commit health care fraud and wire fraud; wire fraud; conspiracy to distribute and dispense a controlled substance; distributing and dispensing of a controlled substance; conspiracy to solicit and receive health care kickbacks; soliciting and receiving health care kickbacks; and making false statements.

The indictment against the doctor

The indictment against the doctor stated that TRICARE reimbursed the compounding pharmacy more than $2.3 million for compounded medications prescribed by the doctor between October 2014 and December 2015. In response to an audit conducted by TRICARE, the doctor allegedly submitted falsified patient records to make it appear as though he had examined patients before prescribing the compounding medications. He was charged with conspiracy to commit health care fraud and wire fraud, wire fraud, conspiracy to distribute and dispense a controlled substance, distributing and dispensing a controlled substance, conspiracy to falsify records in a federal investigation and falsification of records in a federal investigation.