HHS-OIG Reports that Four Types of Errors Accounted For 95% of the Net Improper Medicaid Overpayments

(April 20, 2010): The Department of Health and Human Services, Office of Inspector General (HHS-OIG) recently released its report “HHS-Analysis of Improper Payments Identified During the Payment Error Rate Measurement Program Reviews in 2006 and 2007 (A-06-09-00079).” As set out in the report, four types of medical review errors accounted for 95% of the net improper Medicaid overpayments during 2006 and 2007.  A breakdown of the findings set out in the report is detailed below:

HHS-OIG examined a total of 1,356 medical review errors and 202 data processing errors. 

 Medical Review Errors:

 Of the medical review errors analyzed by HHS-OIG, the agency found that four types accounted for 78% of the errors and 95% of the net improper Medicaid overpayments. The four error types included:

                         Top Four Types of Medical Review Errors

  • Insufficient documentation (37.4%),
  • No documentation (25%),
  • Services that violated State policies  (12.9%), and
  • Medically unnecessary services (2.4%).

 The 1,356 medical review errors included 23 service categories, six of which accounted for 67 percent of the errors and 95 percent of the net improper Medicaid overpayments. The six service categories included:

                         Top Six Types of Service Categories Involved

  • Nursing facilities,
  • Inpatient hospitals,
  • Home and Community-Based Services waivers,
  • Intermediate care facilities for the mentally retarded,
  • Prescribed drugs, and
  • Physician.

 Data Processing Errors:

 Of the 202 data processing errors HHS-OIG analyzed, four types accounted for 78 percent of the errors and 64 percent of the net improper Medicaid overpayments. The four error types included:

  •  Pricing errors,
  • Non-covered services errors,
  • Rate cell errors for managed care claims, and
  • Errors in the logic edits of claim processing systems.

 The 202 data processing errors represented 18 service categories, six of which accounted for nearly 73 percent of the errors and 79 percent of the net improper Medicaid overpayments. The six service categories included:

  •  Inpatient hospitals
  • Nursing facilities,
  • Capitated care,
  • Prescribed drugs,
  • Physicians, and
  • Outpatient hospital.

 Estimated Financial Impact (Federal Only):

 For 2006, CMS estimated that the Federal share of the improper payments paid was $6.6 billion.  This increased considerably, to $18.6 billion in 2007 (Federal share only).  HHS-OIG has recommended that CMS provide States with similar analytical data to help them address these improper payments.

Liles Parker Commentary:

 With the passage of the recent Health Care Reform Bill, CMS has been authorized to expand the RAC program to Medicaid.  Now, more than ever before, it is essential that providers carefully analyze their operations, coding and billing practices in order to ensure that Medicaid billings meet applicable regulatory and statutory requirements.

Should you have any questions regarding these changes, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

HEAT Enforcement Update — Health Care Fraud Investigations and Prosecutions in Texas Increased in March 2010

April 3, 2010 by  
Filed under Featured, HEAT Enforcement

(April 3, 2010): Notably, the number of publicly-disclosed investigations and prosecutions in Texas significantly increased last month.  Two of the cases disclosed involved mental health professionals.    

  • A Psychologist was convicted of health care fraud and money laundering, in connection with various claims fraudulently billed to Medicare.  Instances of improper conduct included billing for more than twenty-four hours of services in a single day; billing for services in a single day which amounted to more than double the normal business hours of the Psychologist’s practice; billing for services allegedly rendered during weekends, holidays, and times that the Psychologist was known to be out of town and away from the practice; and, submitting claims for services and evaluations not actually performed by the Psychologist, as required by law.  
  • An unlicensed Behavioral Health Counselor was charged with Medicaid fraud for allegedly engaging in aggravated identity theft.  The defendant allegedly improperly acquired Medicaid beneficiaries’ information, including names, addresses and Medicaid numbers, then used the information to file false claims through a behavioral counseling service the defendant owned.  These behavioral counseling services were billed to Medicaid but allegedly not provided to the beneficiaries for which they were billed.

Since being established approximately a year, Texas HEAT team investigations and prosecutions have significantly increased throughout the State.  Both enforcement efforts and the frequency of Medicare audits are anticipated to increase throughout 2010.  In addition to the increasing number of civil and criminal cases brought by the Texas HEAT Strike Forces, the number of administrative overpayment cases is anticipated to grow as well.  It is essential that CMHCs continue in their efforts to ensure that both business operations and billing practices fully comply with applicable statutory and regulatory requirements. 

Should you have any questions regarding these changes, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

The “Fraud and Abuse” Enforcement Impact of the Health Care Reform Bill on Community Mental Health Clinics and the Partial Hospitalization Program Services They Provide

April 1, 2010 by  
Filed under False Claims Act, Featured

(April 1, 2010): On March 21, 2010, the House voted to approve legislation previously passed by the Senate – the “Patient Protection and Affordability Care Act” (PPACA).  President Obama signed the PPACA on March 23, 2010.  On March 25, 2010, both the Senate and House passed a “Reconciliation Act,” approving reconciliation changes to the PPACA. On March 30, 2010, President Obama signed the “Reconciliation Act” passed by Congress.  These two pieces of legislation, collectively referred to as the “Health Care Reform Bill,” constitute the most sweeping changes to our health care system in decades.  While the overall impact of these changes on health care providers is still being evaluated, it is readily apparent that Community Mental Health Centers (CMHCs) are among a select group of providers that have been specifically targeted by the legislation.

(April 1, 2010):  As most CMHCs owners and operators are now aware, the recent health care legislation includes a number of cryptic provisions regarding the requirement that CMHCs provide a significant share of their services (later defined during reconciliation as 40%) to non-Medicare beneficiaries.  Hopefully, these requirements will be repealed prior to their anticipated effective date.  We encourage all CMHC owners to join NABH in its efforts to have these requirements repealed or appropriately modified.

The purpose of this article is to examine several of the legislation’s other provisions which directly impact CMHCs around the country – focusing on the “fraud and abuse” provisions outlined in the Bill.  Please note, these are not the only “fraud and abuse” provisions covered by the PPACA, merely several of the more prominent features of the legislation.

Enrollment Issues:

 The PPACA’s provisions included a renewed emphasis on provider screening efforts. The legislation gave the Secretary, HHS, the authority to require fingerprinting, criminal background checks, random site visits and other provider screening mechanisms.  Moreover, the Secretary, HHS, is now authorized to issue a temporary freeze on the enrollment of new provider applications, including entire categories of providers.  Perhaps most importantly, the Secretary’s decisions in this regard are not subject to judicial review. CMHC owners desiring to expand could be delayed in doing so if the Secretary, HHS decides to limit the number of new CMHCs in the future.

Overpayments and the False Claims Act:

As you will recall, changes to the False Claims Act were passed last year under the Fraud Enforcement and Recovery Act (FERA) which made it clear that any person (including CMHCs) who knowingly concealed or knowingly and improperly avoided an “obligation to pay” would be liable under the False Claims Act’s reverse false claims provisions.  Importantly, the PPACA defined “overpayments” as “any funds that a person receives or retains” under Medicare or Medicaid, to which they are not entitled.  The PPACA further provides that all overpayments must be reported and refunded within 60 days of being identified or the any corresponding cost report is due.  Moreover, the legislation made it clear that a “repayment retained by a person after the deadline for reporting and returning the overpayment” is an “obligation” for purposes of the False Claims Act.   The bottom line is clear – should you identify an overpayment, it must be repaid within 60 days or your CHMC may be liable under the False Claims Act.  Penalties under the False Claims Act include treble damages and penalties of between $5,500 and $11,000 per false claim.

Kickbacks and the False Claims Act:

CMHCs that we work with have diligently worked to ensure that their operational and business practices fully comply with applicable provision of the Federal Anti-Kickback Statute.  Now, more than ever, CMHCs will need to ensure that these efforts to remain compliant with these provisions.  Under the PPACA, it is now crystal clear that violations of the Anti-Kickback Statute (a criminal violation) also constitute a violation of the civil False Claims Act.

As these examples reflect, it is essential that CMHCs have effective Compliance Plans in place – designed to prevent and / or detect CHMC-specific risks.

Should you have any questions regarding these changes, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.