Category Archives: Obamacare

Medicaid Reimbursement Rates: What Goes Down Never Goes Up!

It is a timeless joke. What goes down, but never goes up? Medicaid rates!

Having a Medicaid card is as useful as holding a lottery ticket. Sure, maybe you’ll hit the jackpot and find a quality health care provider with whom you share some common connection, but, most likely, you will receive nothing but false hope. 10% of nothing is nothing.

For health care providers that do accept Medicaid – how many of you are accepting new patients? Or maybe the better question is – how many of you are profitable from your Medicaid patients?

The fact of the matter is that Medicaid pays crap. See blog. And blog.

Because we live in a society in which we need money to live, if Medicaid pays less than the cost, health care providers will not accept Medicaid. And you cannot blame them. It’s happening all over the country. In Utah, dentists are un-enrolling in Medicaid, i.e., refusing their Medicaid patients. See article. Pennsylvania has a shortage of psychiatrists..even more so who accept Medicaid. See article. “Some 55% of doctors in major metropolitan areas refuse to take new Medicaid patients, according to a 2014 report by Merritt Hawkins. The Department of Health and Human Services reported that same year that 56% of Medicaid primary-care doctors and 43% of specialists weren’t available to new patients.” See article.

Medicaid is failing our most vulnerable and many more. Medicaid, as it exists now, fails every taxpayer, every health care provider who accepts it, and every family member of a developmentally disabled person who is dependent on Medicaid.

The cost of the Medicaid program is expected to rise from $500 billion to $890 billion by 2024, according to the Center for Medicare and Medicaid Services (CMS). Yet – throwing more money at a dysfunctional program does not equate to Medicaid recipients gaining access to quality care. The increased money is not going to the services for Medicaid recipients. The ballooned Medicaid budget is not earmarked to elevate the current, inadequate Medicaid reimbursements, which would induce more health care providers to accept Medicaid. The higher the cost of Medicaid, the more the government slashes the reimbursement rates. Yet our government is willing to throw Medicaid dollars at managed care organizations (MCOs) to release the burden of managing such shortfalls and turn a blind eye when our taxpayers’ money is not used to provide Medicaid medically necessary services to recipients, but to compensate CEOs $400,000 or allow alleged extortion.

For example, in obstetrics, if the national Medicaid reimbursement rate for ob/gyn visits is $1.00, here, in NC, Medicaid reimburses ob/gyns 88¢. Which is why only 34% of North Carolina ob/gyns accept Medicaid.

If it is imperative for the Medicaid reimbursements to increase (to, at the very least, cost, if not a slight profit), then how do we accomplish such an insurmountable task?

There are two options: (1) lobbying (which, obviously, has not been successful thus far); and (2) litigation.

Section 30(A) of the Medicaid Act requires that a state provide Medicaid reimbursement rates at a level to “assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population…”

In an article entitled “Nurse Staffing Levels and Medicaid Reimbursement Rates in Nursing Facilities,” written by Charlene Harrington, James H. Swan, and Helen Carrillo, the authors found that the Medicaid nursing home reimbursement rates were linked to quality of care, as to both RN hours and total nursing hours.

“Resident case mix was a positive predictor of RN hours and a negative predictor of total nursing hours. Higher state minimum RN staffing standards was a positive predictor of RN and total nursing hours while for-profit facilities and the percent of Medicaid residents were negative predictors.” Id.

Numerous other articles have been published in the last few years that cite the direct correlation between reimbursement rates and quality of care.

How do we stop Medicaid reimbursement rates from dropping and the executives of those companies charged with managing Medicaid funds from lining their own pockets?

According to the Supreme Court, suing under the Supremacy Clause is not the answer.

In Armstrong v. Exceptional Child Services, providers of habilitative Medicaid services sued the State of Idaho for Medicaid reimbursements rates being too low as to violate Section 30(A) of the Medicaid Act.

In the Armstrong decision from last year, the Supreme Court, Scalia found that, in enacting §1902(a)(30)(A) Congress had empowered the HHS Secretary to withhold all Federal funds from states that violate federal law. According to Armstrong, this “express provision of an administrative remedy” shows that Congress intended that the Secretary be the enforcer – not the courts. In other words, the Supreme Court held that

“The sole remedy Congress provided for a State’s failure to comply with Medicaid’s requirements—for the State’s “breach” of the Spending Clause contract—is the withholding of Medicaid funds by the Secretary of Health and Human Services.” Armstrong.

In other words, according to Armstrong, the sole remedy for health care providers who demand higher Medicaid reimbursement rates, will be for the Secretary of HHS to withhold Medicaid funds from the state. Such a drastic measure would undoubtedly cause the state such a budgetary shortfall that the state would soon be in a position in which it could not reimburse health care providers at all. Therefore, the providers go from receiving woefully low reimbursement rates to receiving none at all. That seems hardly the situation that the Supreme Court would want.

There are still litigation options for health care providers to sue in order to increase the Medicaid reimbursement rate. Just not through the Supremacy Clause.

I have a joke: What goes down, but never goes up?

The New White Collar Exemptions: The Final Rule, (an exception), and the Possible Consequences

On May 18, 2016, the US Department of Labor (DOL) announced the Final Rule amending the “white collar” overtime exemptions to increase the number of employees eligible for overtime, effective December 1, 2016. Got overtime? There is no phase-in; it is immediately effective on December 1st.

We all know that the Affordable Care Act (ACA) placed heavier burdens on employers with the employer mandate for employee health insurance. But, the burdens didn’t stop with the ACA!! Oh, no!  In 2014, President Obama signed an Executive Order directing the Department of Labor to update the regulations defining which white collar workers are protected by the Fair Labor Standards Act (FLSA) minimum wage and overtime standards. How else could we financially burden employers? We could mandate employers pay overtime to salaried workers!!! Oh, we already do? Let’s raise the overtime salary threshold exemptions so more employees receive overtime!!

aca-white-collar-highres

You ask, “How is the DOL Final Rule on white collar exemptions germane to my health care agency/practice?” Answer: Do you have employees? If yes, the Final Rule is applicable to you. If no, there is no need to read this blog (unless you are a salaried employee and want to receive more overtime).

The new, increased salary threshold for executives, administration, and professionals exemptions swells from $455/week to $913/week or $23,660/year to $47,476/year. The number for the ceiling is actually less than what was proposed by $800/week. These numbers are based on 40th percentile of full-time employees (salaried) in the lowest wage region, which happens to be the South. Don’t get your knickers in a knot.

Furthermore, the exemption for the highly compensated employee will jump from $100,000 to $134,004 (odd number). This number is $12,000 more than the proposed amount. Well, that just dills my pickle!

The Final Rule also requires that the salary threshold for executives, administration, and professionals be reviewed every three years in order to maintain the salary exemption comparable to the 40th percentile of full-time employees (salaried) in the lowest wage census region – the South.

Finally, the salary basis test will be amended to allow employers to use non-discretionary bonuses and incentive payments, such as commissions, to satisfy the requirements up to 10% of the salary threshold.

The allowance of non-discretionary bonuses and incentive payments was meant to soften the blow of the increased salary thresholds. That’s about as useless as a screen door on a submarine/a trapdoor on a canoe.

VERY IMPORTANT EXCEPTION

The Secretary of DOL issued a time-limited non-enforcement policy for providers of Medicaid-funded services for individuals with intellectual or developmental disabilities in residential homes and facilities with 15 or fewer beds. From December 1, 2016 to March 17, 2019, the Department will not enforce the updated salary thresholds.

BUT THE REST OF US BEWARE!!

Do your math!! If the 10% maximum allowance is exceeded, you could find yourself in a world of hurt! We are talking misclassification claims! Also, ensure you know the proper distinctions between discretionary and non-discretionary bonuses!

What likely consequences will arise from this Final Rule? There are a number of possibilities:

  1. Employers will raise employees’ salaries to the new levels;
  2. Employers will pay more overtime;
  3. Employers will convert the salaried employees to hourly;
  4. Employers will change benefits or other operation costs to compensate for the increased burden.

Well, that’s just lower than a snake’s belly in a wagon rut!

Turning Medicare Into a Premium Support System: Frequently Asked Questions — The Henry J. Kaiser Family Foundation

Premium support is a general term used to describe an approach to reform Medicare that aims to reduce the growth in Medicare spending. These FAQs raise and discuss basic questions about the possible effects of a premium support system for Medicare beneficiaries, the federal budget, health care providers, and private health plans.

via Turning Medicare Into a Premium Support System: Frequently Asked Questions — The Henry J. Kaiser Family Foundation

The Effects of Medicaid Expansion under the ACA: Findings from a Literature Review — The Henry J. Kaiser Family Foundation

Research on the effects of Medicaid expansions under the Affordable Care Act (ACA) can help increase understanding of how the ACA has impacted coverage; access to care, utilization, and health outcomes; and various economic outcomes, including state budgets, the payer mix for hospitals and clinics, and the employment and labor market. These findings also may…

via The Effects of Medicaid Expansion under the ACA: Findings from a Literature Review — The Henry J. Kaiser Family Foundation

“A Modest Proposal for the ACA Employer Mandate”

We all know about the ACA employer mandate. It placed a tremendous burden on employers, many of whom will only feel this burden weighing them down as we ring in the new year because, starting in 2016, companies with over 50 employees must offer health insurance to full time employees (those who work over 30 hours per week).

So how much does it cost you, as an employer, to hire an employee? Are there exceptions? Are there loopholes?

We will get to the first question in a second. The answer to the last two questions is a “yes,” which will be discussed further in this blog.

Cost of an employee

Employers have to pay Social Security tax, Medicare tax, state unemployment insurance, and, now in 2016, health care insurance benefits (if the company has 50+ employees).

Social Security tax is 6.2%. Medicare tax is 1.45%. State unemployment tax differs from state to state, but it can range from 0% to 12.27% (Massachusetts). For the sake of clarity, we will use 5%.

Health insurance benefits also can vary greatly depending on the plan. According to the Kaiser Family Foundation/Health Research & Education Trust 2015 Employer Health Benefits Survey, annual premiums for employer-sponsored family health coverage reached $17,545 this year, up 4 percent from last year, with workers on average paying $4,955 towards the cost of their coverage.

This means that the employer, on average, is paying $12,490 per year per employee for health care benefits.

Assuming a base salary of $70,000, an employer would spend:

Social Security tax: $4,340

Medicare tax: $1,015

State unemployment tax: $350

Health care insurance benefits: $12,490

For a whopping total of $18,195 per year.

Think about this…if you offer your employee a salary of $70,000/year, he/she has to produce revenue for that company of, at least, $88,195 per year in order for you to break even. As you well know, successful companies are not in the business of breaking even, so you will expect your employee to create, at least, over $90,000 of profit in order to be paid a salary of $70,000.

None of the above contemplate a 401K plan. If you’re in a position to offer your employees a 401K plan, they will need to be that much more profitable.

So how can you, as the employer of a home health company, a long term care facility, a dentist practice, or other health care provider decrease the amount of money spent on health care benefits?

“A Modest Proposal for the ACA Employer Mandate”

Before we begin our journey of “A Modest Proposal for the ACA Employer Mandate,” I would like to give a bit of an English lesson on satire, lest one of you miss it. Satire is defined as, “the use of humor, irony, exaggeration, or ridicule to expose and criticize people’s stupidity or vices, particularly in the context of contemporary politics and other topical issues.” It is burlesque. And so I write this blog in the vein of Jonathon Swift’s “A Modest Proposal” (for those of you who have not heard of it, I suggest you click on the link above). For the faint of heart, those easily offended, or those too lazy to click on the link, I suggest not reading further.

Below is my “A Modest Proposal for the ACA Employer Mandate.”

  1. Hire childless singles.

Childless singles are cheaper to insure. So screen your potential employees. Ask whether they intend to have children and warn them that you operate a non-child company. Explain that if you discover that any employee has a dependent child it will result in immediate termination. Bonuses for those who undergo voluntary hysterectomies or vasectomies.

2. Hire old people.

People over 65 are eligible for Medicare. They’re loyal; they don’t talk back. The only things they complain about are their ailments. Many expect little pay because they, or their parents, went through the Great Depression. You can be sure that they will not spend their time on Facebook, Twitter, Instagram, or other social media because they don’t know how. If the position involves driving, you can sure they will get no speeding tickets. Best of all, you know that you are not undertaking a long-term commitment.

3. Hire poor people.

People below the poverty line are eligible for Medicaid. They rarely talk on the phone to friends. Many even only talk to themselves, which is fantastic (and not creepy at all) in the workplace. They are never late with excuses of bad traffic; and their homes are, most likely, going to be very near by (and maybe right out front). They never try to “one-up” the Joneses’. You will never see them bragging about their new Iphones, Louis Vuitton bag, or Mercedes Benz.

5. Hire lazy people.

People who work under 30 hours per week do not get offered health care coverage. Hire employees who enjoy video games too excess. All the better if they own Assassin’s Creed: Victory, Battlefield: Hardline, and Dying Light. It’s an office party every day – no need to worry about them working over 30 hours per week – they like vodka, bourbon, and gin. It’s even better if they enjoy the occasional (daily) marijuana. Embrace a drug-friendly environment.

If you follow the above hiring tips, you too can avoid paying the ACA employer mandate. Remember, the key to success is to only hire childless singles, and old, poor, and lazy people.

And you’ve struck gold if you hire a childless, old, lazy, poor, single person….Goldmine!

Accusations of Medicaid/care Fraud Run Rampant in SC: There Are Legal Remedies!

As if South Carolina didn’t have enough issues with the recent flooding, let’s throw in some allegations of Medicaid fraud against the health care providers. I’m imagining a provider under water, trying to defend themselves against fraud allegations, while treading water. It’s not a pretty picture.

Flash floods happen fast, as those in SC can attest.

So, too, do the consequences of allegations.

Shakespeare is no stranger to false accusations. In Othello, Othello is convinced that his wife is unfaithful, yet she was virtuous. In Much Ado About Nothing, Claudio believes Hero to be unfaithful and slanders her until her death. Interestingly, neither Othello and Claudio came to their respective opinions on their own. Both had a persuader. Both had a tempter. Both had someone else whisper the allegations of unfaithfulness in their ears and both chose to believe the accusation with no independent investigation. So too are accusations of Medicaid/care fraud so easily accepted without independent investigation.

With the inception of the Affordable Care Act (ACA), We have seen a sharp uptick on accusations of credible allegations of fraud.  See blog for the definition of credible allegation of fraud.

The threshold for credible allegation of fraud incredibly low. A mere accusation from a disgruntled employee, a mere indicia of credibility, and/or even a computer data mining program can incite an allegation of fraud. Hero was, most likely, committing Medicare/acid fraud too.

The consequences of being accused of fraud is catastrophic for a  health care provider regardless whether the accusation is accurate. You are guilty before proving your innocence! Your reimbursements are immediately suspended! Your entire livelihood is immediately crumbled! You are forced to terminate staff! Assets can be seized, preventing you even the ability to hire an attorney to defend yourself!

I have seen providers be accused of credible allegations of fraud and the devastation that follows. In New Mexico. In North Carolina. See documentary. Many NC providers serve SC’s population as well. The Medicaid reimbursement rates are higher in SC.

Obviously, The ACA is nationwide, federal law. Hence, the increase in allegations/accusations of health care fraud is nationwide.

Recently, South Carolina health care providers have been on the chopping block. Othello and Claudio are in the house of Gamecocks!

South Carolina’s single state agency, DHHS, required Medicaid recipients to get a 2nd prior approval before receiving health care services for “rehabilitative behavioral health” services, such as behavioral health care services for substance abuse and mental illness (could you imagine the burden if this were required here in NC?).

Then, last year, SC DHHS eliminated such 2nd prior approval requirement.

With fewer regulations and red tape in which to maneuver, SC saw a drastic uptick of behavioral health care services. Othello and Claudio said, “Fraud! More services with only one prior approval must be prima fracie fraud!”

Hence, behavioral health care providers in SC are getting investigated. But, mind you, during investigations reimbursements are suspended. You say, “Well, Knicole, how will these health care provider agencies afford to defend themselves without getting paid?” “Good question,” I say. “They cannot unless they have a stack of cash on hand for this exact reason.”

“What should these providers do?” You ask.

Hire an attorney and seek an injunction lifting the suspension of payments during the investigation.

Turn a Shakespearean tragedy into a comedy! Toss in a dingy!

Judges have lifted the suspensions. Read the case excerpt below:

order

As you can read in the above-referenced case, despite 42 455.23(a) mandating a suspension of payments upon credible allegations of fraud, this Judge found that the state failed to carefully weigh the evidence before suspending all payments.

There are legal remedies!!

Have an Inkling of a Possible Overpayment, You Must Repay Within 60 Days, Says U.S. District Court!

You are a health care provider.  You own an agency.  An employee has a “hunch” that…

maybe…

perhaps….

your agency was overpaid for Medicare/caid reimbursements over the past two years to the tune of $1 million!

This employee has been your billing manager for years and you trust her…but…she’s not an attorney and doesn’t have knowledge of pertinent legal defenses. You are concerned about the possibility of overpayments, BUT….$1 million? What if she is wrong?  That’s a lot of money!

According to a recent U.S. District Court in New York, you have 60 days to notify and refund the government of this alleged $1 million overpayment, despite not having a concrete number or understanding whether, in fact, you actually owe the money.

Seem a bit harsh? It is.

With the passage of the Affordable Care Act (ACA) on March 23, 2010, many new regulations were implemented with burdensome requirements to which health care providers are required to adhere.  At first, the true magnitude of the ACA was unknown, as very few people actually read the voluminous Act and, even fewer, sat to contemplate the unintentional consequences the Act would present to providers. For example, I daresay that few, if any, legislators foresaw the Draconian effect from changing the word “may” in 42 CFR 455.23 to “must.” See blog and blog and blog.

Another boiling frog in the muck of the ACA is the 60-Day Refund Rule (informally the 60-day rule).

What is the 60-Day Refund Rule?

In 2012, CMS proposed the “60-day Refund Rule,” requiring Medicare providers and suppliers to repay Medicare overpayments within 60 days of the provider or supplier identifying the overpayment.  Meaning, if you perform a self audit and determine that you think that you were overpaid, then you must repay the amount within 60 days or face penalties.

If I had a nickel for each time a clients calls me and says, “Well, I THINK I may have been overpaid, but I’m not really sure,” and, subsequently, I explained how they did not owe the money, I’d be Kardashian rich.

It is easy to get confused. Some overpayment issues are esoteric, involving complex eligibility issues, questionable duplicity issues, and issues involving “grey areas” of “non”-covered services.  Sometimes a provider may think he/she owes an overpayment until he/she speaks to me and realizes that, by another interpretation of the same Clinical Coverage Policy that, in fact, no overpayment is owed. To know you owe an overpayment, generally, means that you hired someone like me to perform the self audit.  From my experience, billing folks are all too quick to believe an overpayment is owed without thinking of the legal defenses that could prevent repayment, and this “quick to find an overpayment without thinking of legal defenses” is represented in Kane ex rel. United States et al. v. Healthfirst et al., the lawsuit that I will be discussing in this blog.  And to the billings folks’ credit, you cannot blame them.  They don’t want to be accused of fraud. They would rather “do the right thing” and repay an overpayment, rather than try to argue that it is not due.  This “quick to find an overpayment without thinking of legal defenses” is merely the billing folks trying to conduct all work “above-board,” but can hurt the provider agency financially.

Nonetheless, the 60-day Refund Rule is apathetic as to whether you know what you owe or whether you hire someone like me.  The 60-Day Refund Rule demands repayment to the federal government upon 60-days after your “identification” of said alleged overpayment.

Section 1128(d)(2) of the Social Security Act states that:

“An overpayment must be reported and returned under paragraph (1) by the later of— (A) the date which is 60 days after the date on which the overpayment was identified; or (B) the date any corresponding cost report is due, if applicable.”

A recent case in the U.S. District Court of New York has forged new ground by denying a health care providers’ Motion to Dismiss the U.S. government’s and New York State’s complaints in intervention under the False Claims Act (FCA).  The providers argued that the 60-day rule cannot start without a precise understanding as to the actual amount of the overpayment. Surely, the 60-day rule does not begin to run on the day someone accuses the provider of a possible overpayment!

My colleague, Jennifer Forsyth, recently blogged about this very issue.  See Jennifer’s blog.

Basically, in Kane ex rel. United States et al. v. Healthfirst et al., three hospitals provided care to Medicaid patients. Due to a software glitch [cough, cough, NCTracks] and due to no fault of the hospitals, the hospitals received possible overpayments.  The single state entity for Medicaid in New York questioned the hospitals in 2010, and the hospitals took the proactive step of tasking an employee, Kane, who eventually became the whistleblower, to determine whether, if, in fact, the hospital did receive overpayments.

At this point, arguably, the hospitals were on notice of the possibility of overpayments, but had not “identified” such overpayments per the 60-day rule.  It was not until Kane made preliminary conclusions that the hospitals were held to have “identified” the alleged overpayments.  But very important is the fact that the Court held the hospitals liable for having “identified” the alleged overpayments prior to actually knowing the veracity of the preliminary findings.

Five months after being tasked with the job of determining any overpayment, Kane emails the hospital staff her findings that, in her opinion, the hospitals had received overpayments totaling over $1 million for over 900 claims.  In reality, Kane’s findings were largely inaccurate, as approximately one-half of her alleged findings of overpayments were actually paid accurately.  Despite the inaccurate findings, the Complaint that Kane filed as the whistleblower (she had been previously fired, which may or may not have contributed to her willingness to bring a whistleblower suit), alleged that the hospitals had a duty under the 60-day rule to report and refund the overpayments, even though there was no certainty as to whether the findings were accurate. And the Court agreed with Kane!

Even more astounding, Kane’s email to the hospitals’ management that contained the inaccurate findings contained phrases that would lead one to believe that the findings were only preliminary:

  • “further analysis would be needed to confirm his findings;” and
  • the spreadsheet provided “some insight to the magnitude of the problem” (emphasis added).

The above-mentioned comments would further the argument that the hospitals were not required to notify the Department and return the money 60 days from Kanes’ email because Kane’s own language within the email was so wishy-washy. Her language in her email certainly does not instill confidence that her findings are accurate and conclusive.

But…

The 60-day rule requires notification and return of the overpayments within 60 days of identification.  The definition of “identification” is the crux of Kane ex rel. United States et al. v. Healthfirst et al. [it depends on what the definition of “is” is].

The Complaint reads, that the hospitals “fraudulently delay[ed] its repayments for up to two years after the Health System knew” the extent of the overpayments” (emphasis added). According to the Complaint, the date that the hospitals “knew” of the overpayment was the date Kane emailed the inaccurate findings.

The hospitals filed a Motion to Dismiss based on the fact that Kane’s email and findings did not conclusively identify overpayments, instead, only provided a preliminary finding to which the hospitals would have needed to verify.

The issue in Kane ex rel. United States et al. v. Healthfirst et al. is the definition of “identify” under the 60-day rule. Does “identify” mean “possibly, maybe?” Or “I know I owe it?” Or somewhere in between?

The hospitals filed a Motion to Dismiss, claiming that the 60-day rule did not begin to run on the date that Kane sent his “preliminary findings.”  The U.S. District Court in New York denied the hospitals’ Motion to Dismiss and stated in the Order, “there is an established duty to pay money to the government, even if the precise amount due is yet to be determined.” (emphasis added).

Yet another heavy burden tossed upon health care providers in the ever-deepening, regulatory muck involved in the ACA.  As health care providers carry heavier burdens, they begin to sink into the muck.

Important take aways:

  • Caveat: Take precautions to avoid creating disgruntled, former employees.
  • Have an experienced attorney on speed dial.
  • Self audit, but self audit with someone highly experienced and knowledgeable.
  • Understand the ACA. If you do not, read it. Or hire someone to teach you.

False Claims Act: The Medicare Horror Story

What the heck is the False Claims Act and why is it important to you?

When it comes to Medicaid and Medicare, the ghoulish phrase “False Claims Act” is frequently thrown around. If you google False Claims Act (FCA) under the “news” option, you will see some chilling news article titles.

  • Pediatric Services of America, units to pay $6.88 in False Claims
  • NuVasive, Inc. Agrees to Pay $13.5 Million to Resolve False Claims
  • California Oncologist Pays $736k to Settle False Claims Allegations

False claims cases tend to be high dollar cases for health care providers; many times the amounts are at issue that could potentially put the provider out of business. FCA is spine-chilling, and many health care providers would rather play the hiding child rather than the curious investigator in a horror story.  Come on, let’s face it, the curious characters usually get killed.  But, this is not a horror story, and it is imperative that providers are informed of the FCA and potential penalties.

I have blogged about post payment reviews that use extrapolation, which result in astronomical alleged overpayments. See blog and blog.  Interestingly, these alleged overpayments could also be false claims.  It is just a matter of which governmental agency is pursuing it (or person in the case of qui tem cases).

But the ramifications of false claims allegations are even more bloodcurdling than the astronomical alleged overpayments. It is important for you to understand what false claims are and how to prevent yourself from ever participating in a false claim, knowingly or unknowingly.

First, what is a false claim?

A false claims occurs when you knowingly present, or cause to be presented, to the US Government a false or fraudulent claim for payment or approval. (abridged version).

Let’s analyze.

The false claim does not have to be billed with actual knowledge that it is false or fraudulent. The false claim does not even have to be fraudulent; it can be merely false. The distinction lies in that a fraudulent claim is one that you intentionally alter. A false claim could merely be incorrect information.  Saying it another way, the false claim can be a false or incorrect claim that you had no actual knowledge was false. That is hair-raising.

What is the penalty? It is:

A civil penalty of not less than $5,500 and not more than $11,000 per claim, plus 3 times the amount of the claim. You can see why these are high dollar cases.

The federal government recovered a jaw-dropping $5.7 billion in 2014 under the False Claims Act (FCA). In 2013, the feds recovered $5 billion under the FCA. Expect 2015 to be even higher.  Since the inception of the Affordable Care Act (ACA), FCA investigations have increased.

Overwhelmingly, the recoveries are from the health care industry.

Everyone knows that the Medicare Claims Processing Manual is esoteric, verbose, and vague. Let’s face it: just Chapter 1 “General Billing Requirements” alone is 313 pages! Besides me, who reads the Medicare Claims Processing Manual cover to cover? Who, besides me, needs to know that Medicare does not cover deported beneficiaries or the exceptions to the Anti-markup Payment Limitation?

Not to mention, the Manual is not law. The Manual does not get approved by Congress. The Manual is guidance or policy.

However, in FCA cases, you can be held liable for items in the Medicare Claims Processing Manual of which you were not aware. In other words, in FCA cases, you can be found liable for what you should have known.

Real life hypotheticals:

Hospital submits claims to Medicare and received payment for services rendered in a clinical trial involving devices to improve organ transplants. Unbeknownst to the hospital, the Manual prohibits Medicare reimbursements for non-FDA approved services.

Physician A has reciprocal arrangement with Physician B. A undergoes personal surgery and B serves A’s Medicare Part B patients while A is recovering. A returns and bills Medicare and is paid for services rendered by B 61 days+ after A left the office.

A physician accepts assignment of a bill of $300 for covered Medicare services and collects $80 from the enrollee. Physician neglects to depict on the claim form that he/she collected anything from the patient. Medicare’s allowable amount is $250, and since the deductible had previously been met, makes payment of $200 to the physician.

These are just a few examples of situations which could result in a FCA allegation.

But do not fret! There are legal defenses written into the Social Security Act that provides protection for health care providers!

Important take-aways:

1. Check whether you have insurance coverage for FCA.
2. Have an attorney on hand with FCA experience.
3. Read portions of the Medicare Claims Billing Manual which are pertinent to you.

Most importantly, if you are accused of billing false claims, get your advocate sooner rather than later! Do not engage in any conversations or interviews without counsel!

Appeal all findings!

Supreme Court Upholds Obamacare! Three Judges Dissent, Calling the Decision Absurd!

Mark this day, June 25,2015 (also my daughter’s 10th birthday) as also the birth of a new state.  Our country, according to the Supreme Court’s decision in King v. Burwell, now consists of 51 states.  The Health and Human Services (HHS) is now our 51st state.

Today the Supreme Court decided the King v. Burwell case.

If you recall, this case was to determine whether the plain language of the Affordable Care Act (ACA) should be upheld.  According to the ACA, people were to receive tax subsidies or “premium tax credits” to subsidize certain purchases of health insurance made on Exchanges, but only those enrolled in through an Exchange established by the State under [§18031]. §36B(c)(2)(A).

See blog.

“Specifically, the question presented is whether the Act’s tax credits are available in States that have a Federal Exchange.”

“At this point, 16 States and the District of Columbia have established their own Exchanges; the other 34 States have elected to have HHS do so.”

In Justice Scalia’s words, “This case requires us to decide whether someone who buys insurance on an Exchange established by the Secretary gets tax credits. You would think the answer would be obvious—so obvious there would hardly be a need for the Supreme Court to hear a case about it. In order to receive any money under §36B, an individual must enroll in an insurance plan through an “Exchange established by the State.” The Secretary of Health and Human Services is not a State. So an Exchange established by the Secretary is not an Exchange established by the State—which means people who buy health insurance through such an Exchange get no money under §36B.”

However, the majority disagrees.

Apparently, HHS is now our 51st state.

The upshot of the Decision is that the majority found that, despite our country’s deep-rooted, case law precedent that when a statute is unambiguous that the plain meaning of the statute prevails.  Despite hundreds of years of the Supreme Court upholding statutes’ clear meanings, the Supreme Court, in this case, decided that “[i]n extraordinary cases, however, there may be reason to hesitate before concluding that Congress has intended such an implicit delegation.”

Therefore, when the ACA became law, and the word “state” was used, surely, Congress meant “state and/or federal government.”  Or, on the other hand, let’s just call HHS a state for the purpose of the ACA.

In Justices Scalia, Thomas, and Alito’s opinions, the decision is absurd.  In the dissent they write, “The Court holds that when the Patient Protection and Affordable Care Act says “Exchange established by the State” it means “Exchange established by the State or the Federal Government.” That is of course quite absurd, and the Court’s 21 pages of explanation make it no less so.”

Is Health Care Fraud on the Rise? Or Just the Accusations??

Recent stories in the news seem to suggest that health care fraud is running rampant.  We’ve got stories about Eric Leak‘s Medicaid agency, Nature’s Reflections, funneling money to pay athletes, a seizure of property in Greensboro for alleged Medicaid fraud, and, in Charlotte, a man was charged with Medicaid fraud and sentenced to three years under court supervision and ordered to pay $3,153,074. And these examples are local.

Health care fraud with even larger amounts of money at stake has been prosecuted in other states.  A nonprofit up in NY is accused of defrauding the Medicaid system for over $27 million.  Overall, the federal government opened 924 criminal health care fraud investigations last year.

What is going on? Are more people getting into the health care fraud business? Has the government become better at detecting possible health care fraud?

I believe that the answer is that the federal and state governments have determined that it “pays” high dividends to invest in health care fraud investigations.  More and more money is being allocated to the fraud investigative divisions.  More money, in turn, yields more health care fraud allegations…which yields more convictions….and more money to the government.

Believe me, I understand the importance of detecting fraud.  It sickens me that those who actually defraud our Medicaid and Medicare systems are taking medically necessary services away from those who need the services.  However, sometimes the net is cast so wide…so far…that innocent providers get caught in the net.  And being accused of health care fraud when you innocent is a gruesome, harrowing experience that (1) you hope never happens; and (2) you have to be prepared in case it does.  I have seen it happen.

As previously stated, in fiscal year (FY) 2014, the federal government opened 924 new criminal health care fraud  investigations.  That’s 77 new fraud investigations a month!!  This number does not include civil investigations.

In FY 2012, the Department of Justice (DOJ) opened 2,016 new health care fraud investigations (1,131 criminal, 885 civil).

The Justice Department launched 903 new health-care fraud prosecutions in the first eight months of FY 2011, more than all of FY 2010.

These numbers show:

  • an 85% increase over FY 2010,
  • a 157% increase over FY 2006
  • and 822% over FY 1991.

And the 924  investigations opened in fiscal 2014 only represent federal investigations.  Concurrently, all 50 states are conducting similar investigations.

What is being recovered? Are the increased efforts to detect health care fraud worth the effort and expenditures?

Heck, yes, it is worth it to both the state and federal governments!

Government teams recovered $4.3 billion in FY 2013 and $19.2 billion over the last five years.  While still astronomically high, the numbers dropped slightly for FY 2014.  In FY 2014, according to the Annual Report of the Departments of Health and Human Services and Justice, the federal government won or negotiated over $2.3 billion in health care fraud judgments and settlements.  Due to these efforts, as well as efforts from preceding years, the federal government retrieved $3.3 billion from health care fraud investigations.

So the federal and state governments are putting more money into investigating health care fraud.  Why?

The Affordable Care Act.

Obviously, the federal and state governments conducted health care fraud investigations prior to the ACA.  But the implementation of the ACA set new mandates to increase fraud investigations. (Mandates, which were suggestions prior to the ACA).

In 2009, Barack Obama signed Executive Order 13520, which was targeted to reduce improper payments and to eliminate waste in federal programs.

On March 23, 2010, President Obama signed the ACA into law.  A major part of the ACA is focused on cost containment methods. Theoretically, the ACA is supposed to be self-funding.  Detecting fraud, waste and abuse in the Medicare/Medicaid system helps to fund the ACA.

Unlike many of the other ACA provisions, most of the fraud and abuse provisions went into effect in 2010 or 2011. The ACA increases funding to the Healthcare Fraud and Abuse Control Program by $350 million over the next decade. These funds can be used for fraud and abuse control and for the Medicare Integrity Program.

The ACA mandates states to conduct post payment and prepayment reviews, screen and audit providers, terminate certain providers, and create provider categories of risk.

While recent articles and media seem to indicate that health care fraud is running rampant, the substantial increase in accusations of health care fraud really may be caused by factors other than more fraud is occurring.

The ACA mandates have an impact.

And, quite frankly, the investigation units may be a bit overzealous to recover funds.

What will happen if you are a target of a criminal health care fraud investigation?

It depends whether the federal or state government is conducting the investigation.

If the federal government is investigating you, most likely, you will be unaware of the investigation.  Then, one day, agents of the federal government will come to your office and seize all property deemed related to the alleged fraud.  Your accounts will be frozen.  Whether you are guilty or not will not matter.  What will matter is you will need an experienced, knowledgeable health fraud attorney and the funds with which to compensate said attorney with frozen accounts.

If the state government is conducting the investigation, it is a little less hostile and CSI-ish.  Your reimbursements will be suspended with or without your notice (obviously, you would notice the suspension once the suspension occurred).  But the whole “raid on your office thing” is less likely.

There are legal remedies available, and the “defense” should begin immediately.

Most importantly, if you are a health care provider and you are not committing fraud, you are not safe from accusations of fraud.

Your insurance, most likely, will not cover attorneys’ fees for alleged intention fraud.

The attorney of your choice will not be able to accept funds that are “tainted” by alleged fraud, even if no fraud occurred.

Be aware that if, for whatever reason, you are accused, you will need to be prepared…for what you hope never happens.

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