What is Causing the Spike in Partial Hospitalization Overpayment Actions?

June 29, 2010 by  
Filed under Featured, Medicare Audits

(June 29, 2010): Are Partial Hospitalization Programs (PHPs) and Community Mental Health Centers (CMHCs) being unfairly targeted in the Administration’s push to identify and recover allegedly improper Medicare payments?

May 2010, the Office of the Inspector General of the HHS (HHS-OIG) published an assessment of the Program Safeguard Contractors (PSCs) overpayment collections that identified only 2 overpayment referrals for partial hospitalization claims in 2007.  These referrals accounted for only $403,935 of approximately $835 million in overpayment referrals — less than 0.1% of the total.  Yet, we are aware of far more overpayment cases involving CMHCs (many of which are in the Southern region) making their way through the administrative appeals process right now. 

After carefully reviewing the data, it is our belief that CMS has taken action to address HHS-OIG’s unimplemented recommendations regarding the agency’s concerns about partial hospitalization claims.   Dating as far back as 1998, HHS-OIG has pushed for stronger oversight of these programs.  For at least the last three years (2007, 2008, and 2009), HHS-OIG’s compendium of unimplemented recommendations has included dramatic findings as to the scope of supposed partial hospitalization program billings and the potential savings that could be derived from focusing on this area.  For instance, in 2007 and 2008, the agency reported:

“’Partial hospitalization’ services, which may be provided by both hospitals and community mental health centers, have been particularly troublesome…. We estimated that payment error rates for partial hospitalization in community mental health centers were as high as 92 percent.”  (Emphasis added).

HHS-OIG estimated that ensuring the appropriateness of Medicare payments for mental health services would yield $725 million in savings in 2007.  This figure increased to $1.44 billion in 2008 and 2009.

Again in 2009, HHS reiterated its findings, saying,

We believe that CMS still needs to monitor partial hospitalization services provided by community mental health centers, which we consider particularly vulnerable.  We will continue to monitor CMS’s efforts to ensure that mental health services are medically necessary and reasonable and are accurately billed.”  (Emphasis added).

While neither CMS nor HHS-OIG have commented on the “spike” in cases brought against CMHCs, it appears clear that partial hospitalization claims are currently being reviewed by contractors around the country for possible overpayments. 

To be clear, we take exception with these findings.  After representing many CMHCs around the country, it has become apparent that many of the reviewers conducting reviews of partial hospitalization claims have little or no experience assessing these specialized services.  As a result, we are quite concerned that CMHCs are now being targeted.  We strongly recommend that CMHCs conduct periodic reviews of both applicable LCD provisions and their billing practices to ensure that partial hospitalization services are being appropriately ordered, documented and billed.

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.

Counsel for HHS-OIG Discusses the Impact of Health Care Reform on Enforcement with Congress

(June 22, 2010):  In his testimony last week before the Health and Oversight Subcommittees of the House Committee on Ways and Means, Lewis Morris, Chief Counsel to the Inspector General (HHS-OIG) of Health and Human Services (HHS), emphasized the increasing speed and intensity of HHS-OIG’s multi-pronged health care fraud enforcement efforts.  Morris’ testimony reinforces the need for Community Mental Health Centers (CMHCs) and Partial Hospitalization Programs (PHPs) to aggressively prepare for a knock on the door from HHS-OIG or one of its many enforcement partners.

Morris highlighted numerous new enforcement tools available under the Patient Protection and Affordable Care Act (PPACA), paying particular attention to innovations in data access and use.  These measures include consolidating and sharing data across agencies, as well as deploying new technology that allows “investigators to complete in a matter of days analysis that used to take months with traditional investigative tools.” 

He further praised the enhanced accountability measures contained in PPACA, such as HHS-OIG’s ability to impose civil monetary penalties for “failing to grant [upon reasonable request] timely access to HHS-OIG for investigations, audits, or evaluations.”  Notably, PPACA Section 6408 provides for a penalty of $15,000 per day for failure to grant access. 

Morris’ testimony also reminded the health care community that:

  • PPACA allows the HHS Secretary to suspend payments to providers or suppliers based on credible evidence of fraud.  At the same time, it expands the types of conduct constituting Federal health care fraud offenses under Title 18.
  • HHS-OIG has improved access to information from entities directly or indirectly involved in providing medical items or services payable by any Federal program.

Perhaps most significantly: 

  • Medicare and Medicaid program integrity contractors (i.e., ZPICs and PSCs) are required to provide performance statistics, “including the number and amount of overpayments recovered, number of fraud referrals, and the return on investment of such activities.” (emphasis added).

While not surprising, it is nonetheless disconcerting that ZPICs and PSCs are essentially being “graded” based on the amount of overpayments recovered,” along with the number of enforcement actions handled and referred to law enforcement.  Based on these performance measures, is there any real difference between ZPICs and RACs?  While RACs may be compensated directly based on the amount of overpayments collected (and ZPICs are not), it is crystal clear that the government’s expectations of ZPICs are quite similar.  Now, more than ever before, it is essential that CMHCs and PHPs implement effective compliance measures.

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.

President Obama Publicizes Measures to Fight Health Care Fraud. . . Again. . .

June 14, 2010 by  
Filed under Featured, Medicare Audits

(June 8, 2010):  For those of you who missed the first two dozen pronouncements (okay, perhaps a little exaggerated, but still . . . we the message when Congress made it a False Claims Act violation to hold onto a mere overpayment for more than 60 days), President Barack Obama has again expressed his concern about health care fraud in a national Town Hall video teleconference with Senior Citizens across the country.  He took this opportunity to further publicize his “national campaign to combat fraud and misinformation” regarding the Medicare program and the Affordable Care Act.

As President Obama reiterated, the current Administration is committed to fighting health care fraud.  To that end, the following steps have been taken:

The President has directed HHS to cut the improper payment rate, which tracks fraud, waste and abuse in the Medicare Fee for Services program, in half by 2012.

 The Administration has helped support a renewed partnership between the Federal government and state Attorneys General. Secretary Kathleen Sebelius and Attorney General Eric Holder today sent a letter to state Attorneys General urging them to vigorously prosecute criminals who seek to steal from seniors and taxpayers and pledged the support of federal officials for state efforts.

 A nationwide series of anti-fraud summits hosted by the Departments of Justice and Health and Human Services will bring federal, state and local officials together with representatives from the private sector to discuss tactics to fight fraud. The first summit will be held in Miami with additional summits in Los Angeles, Las Vegas, Detroit, Boston, New York, and Philadelphia.

 A redoubling of efforts by U.S. Attorneys nationwide to coordinate with state and local law enforcement to prevent and prosecute fraud. Today, Attorney General Holder called on U.S. Attorneys to hold regular forums with local officials to discuss how to better crack down on criminals who commit fraud.

 Notably, the current administration’s focus on health care fraud enforcement is reminiscent of the major initiatives rolled out during the President Clinton’s terms in office.  As you may recall, Attorney General Reno named “Health Care Fraud” as the Department of Justice’s “#1” white collar priority.  While many voters tend to associate Republicans with “pro-law enforcement” and “anti-fraud” measures, the Democrats have clearly led in the area of health care fraud enforcement.  While the government’s review of Medicare billings have been broad-based, CMHCs in Florida, Louisana, Texas and Tennessee appear to be expecially hard hit.  Partial hospitalization claims have been (and are continuing to be) audited by  ZPICs and PSCs througout the South.  Regrettably, in many cases we have found that the contractors’ audit findings have been severely flawed, failing to properly the LCD’s provisions, missing key information in the medical records submitted by the CMHC for review and asserting conclusions that are unsupported by any evidence in the case.    As a result, CMHCs have been forced to appeal the ZPIC / PSC denial decisions through the administrative appeals system, a time-consuming and expensive process.

In any event, the message is quite clear – the current administration has been, and will continue to be, extremely aggressive in its efforts to identify and pursue both alleged overpayments and instances of health care fraud.  Unfortunately, with recent changes to the False Claims Act and the Federal Anti-Kickback Statute, incidents that might have otherwise qualified as a mere overpayment may be viewed quite differently today by Federal prosecutors. CMHCs and other health care providers should diligently work to ensure that their operations, coding and billing activities fully comply with 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.





Owner of Texas Behavioral Health Counseling Clinic Pleads Guilty to Medicare Fraud

June 5, 2010 by  
Filed under Featured, HEAT Enforcement

(June 5, 2010):  Early last week, the U.S. Attorney’s Office in Houston, Texas announced that a plea agreement had been reached with the owner of a behavioral counseling center in Houston.  The owner pled guilty to (1) conspiracy to commit health care fraud, (2) health care fraud and (3) aggravated identity theft, all arising out of the defendant’s alleged role in a health care fraud scheme in which Medicare and Medicaid were fraudulently billed for psychiatric counseling services.

According to the government, the owner of the behavioral counseling company misrepresented himself as a doctor in psychology (Ph.D.) when, in fact, he had merely purchased a doctoral degree online and then supposedly awarded himself several bogus professional certifications in counseling.

The government further alleged that the defendant unlawfully acquired Medicaid beneficiaries’ information, including names, addresses and Medicaid numbers which were then used to file false claims for reimbursement by Medicare and / or Medicaid for group therapy sessions and psychiatric counseling sessions that were not provided to the beneficiaries.  

The defendant also allegedly billed for services that were supposedly provided by qualified, licensed professionals, when in fact the provider of the services was not licensed or qualified to bill for the mental illness services provided.

While the defendant pled guilty to the charges, he has not yet been sentenced.  The case was investigated by agents working for HHS-OIG and the Texas MFCU.

What should CMHCs learn from this case?

First and foremost, both Federal and State investigative agencies are actively reviewing clinics and other organizations involved in the provision of behavioral health and counseling services. CMHCs must be vigilant in their efforts to ensure that services billed fully comply with applicable statutory and regulatory services governing the coverage, coding and billing of partial hospitalization program claims and other services provided to Medicare and Medicaid beneficiaries.

Second, as part of your compliance efforts, it is important that you regularly review and verify the credentials and licensure status of your physicians, counselors and therapists. While none of you may intend to engage in the type of conduct described above, you may nevertheless find that your clinic has improperly billed for services due to the actions of one or more of you treating personnel.  Professional licenses may have lapsed, been placed on suspension or even revoked without your knowledge.  It isn’t enough to merely check a physician’s or professional therapist’s licensure status when they are hired.  Licensure checks should be routinely conducted as a part of your compliance efforts.   

Responding to a Search Warrant of Your CMHC.

June 1, 2010 by  
Filed under Featured, HEAT Enforcement

(June 1, 2010)  I.   Introduction:   Like most honest health care providers, the CMHCs that we work with believe that “search warrants” are only executed by the government in connection with the investigation of nefarious characters and criminals.  Unfortunately, that just isn’t the case.  The Federal government has increasingly utilized search warrants as a first-strike investigative tool.  In fact, the execution of a search warrant may very well be the first notice a CMHC has that their practice or clinic is under investigation.

Allegations of wrongdoing may arise from a wide variety of sources. CMHCs may have been reported by disgruntled current or former employees, dissatisfied patients, or others familiar with the practice’s operations.  Notably, recent criticism aimed at RACs for their failure to identify and refer possible criminal wrongdoing to the government for further investigation may have generated a new period of significant enforcement.  It appears that Zone Protection Integrity Contractors (ZPICs) around the country have recently intensified their activities, going well beyond the typical overpayment audits normally seen.  We have seen a marked increase in the number of unannounced site visits, Medicare suspension actions and Medicare number revocation cases.  We fully anticipate the number of criminal referrals to DOJ to increase as well.

In assessing this issue, it is important to remember that prior to obtaining a search warrant, an Assistant U.S. Attorney has gone before a Federal Magistrate and has shown “probable cause” that a crime has been committed or is being committed.  Once issued, the search warrant may greatly help DOJ build its case.  Search warrants are preferable to subpoenas and other investigative tools because:

CMHCs will likely be caught completely off-guard, thereby reducing the possibility that documents may be lost, destroyed or otherwise be missing before it can be secured as part of the investigation.  In executing a search warrant, the government can preserve the documentation and electronic evidence to the greatest extent possible.

The government may use the execution of a search warrant as an opportunity to segregate possible witnesses and see if they can interview the employees and obtain statements before the clinic and its employees have an opportunity to obtain counsel.

The combination of force and surprise will have an enormous psychological effect on your employees.  There will be absolutely no question about the seriousness and gravity of the government’s investigation.  This is often very intimidating, often resulting in significant damage to the practice, ranging from employee resignations to adverse publicity and media attention.

Finally, the scope of the search warrant will likely be sufficiently broad that the CMHC will have a difficult time determining the focus of the government’s investigation.

Once a search warrant is executed, the issue becomes how to best respond.  The purpose of this advisory is to provide an overview of the Federal search warrant process so that your interests can be protected.

II.   Responding to a Federal Search Warrant:

   A.         Before the search.

If the government were to execute a search warrant on your practice today, would you be ready?  Have your employees been briefed on how to respond if Federal agents show up at your clinic?  If your answer to either of these questions is “no,” you should take immediate steps to better ensure that you are ready if this event were to occur.  Understandably, no CMHC likes to think that they would learn of an investigation in such a fashion.  Nevertheless, it occurs practically every day.  You should work with your attorney to draft procedures for responding to a search warrant that are tailored for your clinic. 

   B.         At the time of a search.

Please remember that these steps are not all inclusive.  Upon the execution of a Federal search warrant, you should immediately contact your attorney so that the specific facts and circumstances of your situation can be fully assessed and taken into consideration.  In responding to a search warrant, you should:

Avoid taking any actions that could be misconstrued by the government as an obstruction to their search.  That does not mean that you cannot ask questions – merely that you should not obstruct their search.

 Try and ensure that patient care activities are not jeopardized. Typically, law enforcement will be sensitive to these issues and will try to avoid direct patient care areas.  Nevertheless, you may need to bring this issue to their attention.  You may find that legal counsel can often work with law enforcement to resolve an unreasonable intrusion in this regard.

 Ask for a copy of the search warrant and give it to your lawyer.  Your lawyer will try and prevent them from seizing any documents or items that appear to be outside of the scope of their warrant.  Importantly, search warrants are supposed to provide a specific description of the information or items to be search.  If a search warrant is ambiguous overly broad, your counsel may choose to seek to quash to the search.

 Regarding the search warrant itself, your lawyer will try and note the issuance date of the warrant and the date it was executed. Additionally, counsel will ask to check the identification of the leading agent handling the search, along with the identification of any other participating agencies (e.g. IRS, HHS-OIG).

 While your lawyer may request to see the affidavit upon which the search warrant is based, you should not be surprised if it was sealed by the Court and cannot be obtained. If counsel has not yet arrived, call your lawyer to discuss whether there may be any grounds to object to the search.  Should you object, inform the lead agent of your objection. Should the search continue, record the date and time of their arrival and departure.

 If they will allow it, try and accompany agents on the search.  Try to note which areas were searched and which documents or items were seized.  

 You may have documents that qualify as attorney-client privileged materials.  Should agents try to take documents that may be considered privileged, you should immediately object and notify the agents that the documents they are seizing are privileged.

 Try and obtain a receipt from the agents for any items or documents that are seized. When possible, get copies of original documents before they are removed.

C.  Handling employee issues.

The execution of a search warrant is an extremely stressful situation and can create confusion and stress on a practice’s employees. You should quickly move to restore order and re-assure employees that the situation is under control.

While a search warrant can be used to seize documents or other items, it cannot be used to force employees to participate in an interrogation.  Due to the many sensitivities in this area, it is strongly recommended that you have counsel advise employees of the situation.  While the government cannot force employees to answer questions, you must take care when you are briefing employees on the situation. While you must not tell employees that they are not allowed to talk with an agent, it is appropriate to tell employees that they have no obligation to answer any questions.  While individuals have a Fifth Amendment privilege against self-incrimination, your practice or clinic does not enjoy such a privilege.

When possible, send employees home for the day or have them work in another part of the facility.  Finally, you should notify employees that any questions regarding the location of certain records should be directed to a specific management official so that any inquiries can be properly and consistently handled.

  D.  After the search.

Document retention issues should be carefully handled. It is our view that all document destruction should immediately stop, even if the activity would be consistent with pre-search document retention policies used by the CMHC.  Once an investigation is initiated, you should diligently work to avoid even an appearance that obstruction of justice may be occurring. 

Questions?  Call Robert W. Liles, Esq. at (202) 298-8750 for additional information.

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.