With ZPICs, PSCs, and RACs Fighting Most, If Not All, Extrapolation Challenges, Experienced Counsel Is Imperative if You Hope to Have the Extrapolation Invalidated

July 20, 2010 by  
Filed under Featured, Medicare Audits

(July 20, 2010): In recent years, we have seen agents for the Centers for Medicare & Medicaid Services (CMS) increasingly rely on statistical extrapolation estimates when assessing claims overpayments. In early cases, we successfully invalidated countless extrapolations by identifying relatively basic reasons for why the calculations were inconsistent with accepted statistical principles and practices.  Now, however, providers should expect for ZPICs and PSCs (and soon, RACs) to send a team of statisticians and attorneys to vigorously oppose most (if not all) hearings challenging the validity of the extrapolation calculation.

Regardless of whether you are providing Partial Hospitalization, Evaluation and Management (E/M), Home Health, Physical Therapy, Surgical, or other services, should your practice or clinic find that it is facing an extrapolated Medicare audit, it is strongly recommended that you engage qualified, experienced counsel to represent you as early in the process as possible.  Your legal counsel can then engage an expert statistician to assess the contractor’s actions and assist with the attorney’s efforts to have the extrapolation thrown out by either the Qualified Independent Contractor (QIC) or the Administrative Law Judge hearing your case. 

Before you engage counsel, you should consider asking the following questions:

  • Has the attorney ever handled large, complex contractor audits before? Some firms will happily take your case, despite the fact that they have little or no experience in this area of health law. Don’t pay for your attorneys to learn how to handle a case. While every case is different, an experienced firm will have developed a number of arguments and defenses that may be readily used in your case without having to conduct costly, extensive legal research.
  • Can the firm provide client references who are willing to speak with you about the quality of work performed on their Medicare statistical extrapolation case?
  • Who will be working on your case? Will it be an inexperienced Associate attorney or one of the partners who has actually fought and won a multitude of Medicare overpayment claims and cases where the damages have been extrapolated by the contractors?
  • What are the credentials of the attorneys and paralegals who will be working on your case? Have they ever worked on the side of the government? One of our attorneys served as an Assistant U.S. Attorney for many years, ultimately being selected to serve as the First National Health Care Fraud Coordinator for the Department of Justice, Executive Office for U. S. Attorneys. In addition to a law degree, he also holds a Master’s in Health Care Administration. To fully appreciate the challenges faced by health care providers, you need an attorney who understands both the legal constraints and the practical business risks faced by health care providers.

In several of the cases we have handled, the alleged error rate has exceeded 90%.  With the resulting alleged damages often in the millions of dollars, few providers are in a position to merely pay such an overpayment.  Instead, they need experienced counsel to aggressively fight to have this overpayment overturned.  When defending these cases, it is essential that you challenge both the denial of claims and the extrapolation itself.

Should you have any questions regarding these issues, 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.

 

Medicare Fraud Strike Force Operation Leads to Charges against 94 Defendants, including 4 in South Texas

July 19, 2010 by  
Filed under Featured, HEAT Enforcement

 (July 17, 2010): Yesterday, the Department of Justice (DOJ) announced charges against 94 physicians, medical assistants, and health care company owners and executives in connection with alleged false Medicare claims amounting to more than $251 million.  24 defendants from Miami account for approximately $103 million of that amount.  Four defendants were charged in Houston for their alleged roles in a $3 million scheme to submit fraudulent claims for durable medical equipment (DME).  Other arrests were made in Baton Rouge, Brooklyn, and Detroit.   The offenses charged include conspiracy to defraud the Medicare program, criminal false claims, violations of the anti-kickback statutes, and money laundering.  The charges are based on a variety of fraud schemes, including physical therapy and occupational therapy schemes, home health care schemes, HIV infusion fraud schemes and durable medical equipment (DME) schemes.

Announcing the arrests, Attorney General Eric Holder said, “With today’s arrests, we’re putting would-be criminals on notice: Health care fraud is no longer a safe bet.  It’s no longer easy money.  If you choose to engage in health care fraud, you will be found; you will be stopped; and you will be brought to justice.”

The operation was conducted by the joint DOJ-HHS Medicare Fraud Strike Force, multi-agency teams of federal, state, and local investigators designed to combat Medicare fraud through the use of Medicare data analysis techniques and an increased focus on community policing.  Strike Force teams are operating in seven cities in the United States: the five aforementioned cities, Los Angeles, and Tampa.  AG Holder noted that the ongoing Strike Force initiative in South Florida has resulted in the indictments of 810 organizations and individuals since March 2007 and uncovered $1.85 billion in improperly billed claims.

The Strike Forces are a part of Health Care Fraud Prevention and Enforcement Action Team (HEAT), which is made up of top level law enforcement and professional staff from the DOJ and HHS and their operating divisions.  HEAT is dedicated to joint efforts across government to both prevent fraud and enforce current anti-fraud laws around the country.

Should you have any questions regarding these issues, 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.

“Finders Keepers” Doesn’t Apply to Medicare Overpayments for Partial Hospitalization Services

July 15, 2010 by  
Filed under False Claims Act, Featured

(July 15, 2010):  Since the May 2009 passage of the Fraud Enforcement and Recovery Act (FERA) and subsequent enactment of the PPACA, we’ve heard a lot about how the government looks at Medicare overpayments for partial hospitalization services and how Community Mental Health Clinics (CMHCs) should handle them.  Two major misconceptions seem to underlie the public response to provisions clarifying that failure to timely refund Medicare overpayments can result in False Claims Act (FCA) liability.

I.          Historical Overview of the “Overpayment” Issue

Prior to the clarification and statutory reinforcement of the “overpayment” issue provided by PPACA, a number of CMHCs have mistakenly believed that in the absence of a direct demand for repayment, an identified overpayment for partial hospitalization services would belong to the CMHC.  Notably, this issue is not new.  In fact, the recent enacted provisions have merely reinforced the government’s long-standing position that a CMHC has a responsibility to voluntarily refund Medicare overpayments for partial hospitalization services without an overpayment determination being made by the government.

As you will recall, the agreement to return any overpayments for partial hospitalization services is fundamental to a CMHC’s eligibility to participate in the Medicare program.  Section 1866(a)(1)(C) of the Social Security Act (42 U.S.C. § 1395cc) requires participating CMHCs to furnish information about payments made to them and to refund any monies incorrectly paid.  Implemented in 2006, the Medicare Credit Balance Report (CMS-838) is designed to ensure timely compliance with this obligation.

Secondly, PPACA Section 6402 echoes the requirements of CMS’ 2002 proposed rule that CMHCs “must, within 60 days of identifying or learning of the excess payment, return the overpayment to the appropriate intermediary and carrier, at the correct address, and notify the intermediary and carrier, in writing, of the reason for the overpayment.”  (67 Fed. Reg. 3662 (January 25, 2002)).  A conservative reading of that proposed rule arguably suggested that HHS-OIG’s voluntary disclosure protocol may not be “voluntary” after all but a mandatory repayment may be required.  Thus, the government has long sought to clarify when, not if, refunds for overpayment of partial hospitalization services would be required.

Despite the publicity resulting from PPACA and its FCA implications, it is important to remember that this issue was addressed over a decade ago.  As set out in the 1998 holding in United States v. Yale University School of Medicine, Civil Action No. 3:97CV02023 (D.Conn.), the government intervened in a qui tam and obtained $1.2 million settlement based on alleged FCA  violations for failing to return credit balances.  In summary, CMHCs who fail to promptly (within 60 days of identification) return an overpayment for partial hospitalization services to the government do so at their own peril.

II.         Handling Non-Federal Overpayments for Partial Hospitalization Services

As an aside, even if the overpayment at issue is not owed to a Federal payor (such as Medicare or Medicaid), it is imperative to remember that virtually no overpayments for partial hospitalization services belong to a CMHC.  In the case of non-Federal payors (such as a private insurance company), we are aware of numerous instances where the non-Federal payor has notified the CMHC that due to the administrative burden of applying an overpayment for partial hospitalization services to a beneficiary’s account (typically due to the complexity of the payment history), the non-Federal payor has chosen to either “waive” collection of an overpayment or not to cash a check sent by the CMHC.  This also regularly occurs when the identified overpayment is under a certain amount (such as $25.00).  When faced with such a situation, a CMHC must review applicable State law to ascertain how an overpayment for partial hospitalization services must be handled.  For instance, in Texas, Title 6 of the Property Code requires businesses and other entities holding unclaimed property to turn the property over to the Texas Comptroller’s Office after the appropriate abandonment period has expired.  As in most States, violation of these escheat laws can subject a CMHC to various penalties.

III.        Conclusion

The lesson to be learned here is quite clear – regardless of who the payor is, an overpayment for partial hospitalization services can rarely, if ever, properly be retained by a CMHC, regardless of the amount in controversy.  A CMHC must carefully examine both Federal and State statutes when faced with this issue.  The best practice is to return an overpayment to the payor (Federal, State, or private patient), regardless of the amount, upon identification.  Should a CMHC be unable to identify who is owed an overpayment or cannot locate a valid address to return the overpayment (due to a variety of factors), your State’s escheat law must be considered.

This can be a complicated issue, especially when a large overpayment for partial hospitalization services has been identified and it is owed to a Federal payor.  While time is of the essence, it is strongly recommended that you contact your legal counsel as soon as it appears that a potential large or complicated Federal overpayment has been found.  Your attorney can help guide you through this complex process.

Should you have any questions regarding these issues, 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.

Don’t Take ZPICs’ Extrapolation Calculations at Face Value! Can Their Results Be Readily Reproduced? When Defending These Cases, We Address These and Other Deficiencies in the Contractor’s Actions

July 14, 2010 by  
Filed under Featured, Medicare Audits

(July 14, 2010): Imagine a ZPIC, PSC, or RAC hands you a claims analysis rife with alleged errors, an indecipherable list of statistical formulas, and an extrapolated recovery demand that will cripple your practice or clinic.  What steps should you take to analyze their work?  Based on our experience, providers can and should carefully assess the contractor’s actions, use of formulas and application of the RAT-STAT program when selecting a statistical sample and extrapolating the alleged damages based on the sample pulled.  Over the years, we have challenged the extrapolation of damages conducted by Medicare contractors around the country, covering tens of thousands of claims.  Regardless of whether you are providing Partial Hospitalization, Evaluation and Management, Home Health, Physical Therapy, Surgical or other services, it is imperative that you work with experienced legal counsel and statistical experts to analyze the statistical sampling and extrapolation steps taken by the contractor. Should you succeed in invalidating the extrapolation, the whole games changes.  The question is – “How can you go about fighting an extrapolation calculation?”

One method is to show that the contractor’s auditor failed to identify a Statistically Valid Random Sample (SVRT).  Among the first steps is you should take is to retain experienced legal counsel to review the Medicare contractor’s actions.  Notably, there are a multitude of legal arguments which may be asserted (depending on the specific facts in your case).  Our firm has worked with several outstanding statistical experts over the years, each of which has a proven track record of analyzing the contractor’s actions and identifying any flaws made by the ZPIC or PSC when extrapolating damages.    

Notably, Section 3.10.4.2 of CMS’ Medicare Program Integrity Manual establishes that the contractor is obligated to fully document the statistical methods an auditor employs:

“The PSC or ZPIC BI [Benefit Integrity] unit or the contractor MR [Medical Review] unit shall identify the source of the random numbers used to select the individual sampling units. The PSC or ZPIC BI unit or the contractor MR unit shall also document the program and its algorithm or table that is used; this documentation becomes part of the record of the sampling and must be available for review.  (emphasis added)

The PSC or ZPIC BI units or the contractor MR units shall document all steps taken in the random selection process exactly as done to ensure that the necessary information is available for anyone attempting to replicate the sample selection.  (emphasis added)

ZPIC and PSC statisticians must be able show their work to the extent that a reviewer can attempt to “replicate” their actions and determine whether or not the steps taken were consistent with accepted principles and practices of statistical sampling.  The failure of a ZPIC or PSC statistician to fully and properly document his actions may serve as the basis for seeking to invalidate the extrapolation. The calculation of a valid statistical sample and the extrapolation of damages by ZPIC and PSC statistician is a highly complex process. After handling many extrapolated damages cases, we have found that few ZPIC or PSC statisticians fully meet their obligations to document the steps taken and / or conduct the process in a proper fashion, consistent with accepted statistical sampling procedures.  Should your practice or clinic find that it is facing an extrapolated Medicare audit, it is strongly recommended that you engage qualified, experienced counsel to represent you in the process.  Your legal counsel can then engage a qualified statistician to assess the contractor’s actions.

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.

Texas Psychiatrist Indicted and Arrested

July 9, 2010 by  
Filed under Featured, HEAT Enforcement

(July 9, 2010):  On June 14, 2010 the U.S. Attorney’s Office for the Western District of Texas announced that a Federal Grand Jury had returned a 99-count indictment against a pain management physician who operated clinics in San Antonio and El Paso.  The physician was charged with 21 counts of health care fraud, 20 counts of false statements relating to health care fraud matters, 21 counts of mail fraud, 16 counts of wire fraud, 4 counts of unlawful distribution of a controlled substances and 16 counts of money laundering.  The indictment alleges that the physician “caused to be submitted claims for reimbursement of peripheral nerve injections, facet injection procedures and Level Four office visits–typically involving 25 minutes of face-to-face time between patient and physician–which never were performed.”  Instead, the U.S. Attorney’s Office alleges that the physician performed “prolotherapy” on his patients — a procedure that Federal health care benefit programs do not reimburse. 

Notably, an indictment is merely a charge and is not considered to be evidence of guilt. In issuing this indictment, the Texas HEAT task force, comprised of Federal prosecutors and investigative agencies,  have continued to ramp up efforts to investigate and prosecute allegations of health care fraud.  Notably, the use of “prolotherapy,” a relatively new therapeutic approach, has been supported by some of the best known clinics and physicians in the country. 

While this case has yet to fully develop, it again points out that health care providers must take care when utilizing new approaches, despite the fact the therapeutic technique may be considered to be state-of-the-art.  Unfortunately, Medicare may take years to recognize and cover some techniques.  In the mean time, it is essential that providers take care when coding and billing for procedures that may not clearly qualify for coverage under applicable Medicare and / or contractor guidance.

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.

PPACA Creates a Minefield for CMHCs Who Fail to Promptly Return an Overpayment

July 9, 2010 by  
Filed under False Claims Act, Featured

(July 9, 2010):  Does the failure of a CMHC to promptly return a Medicare overpayment warrant liability under the False Claims Act (FCA)?  Congress thinks so.  The Patient Protection and Affordable Care Act (PPACA) creates new obligations under the FCA whereby a Medicare provider (such as a CMHC) who fails to timely report and refund an overpayment may be subject to substantial damages and penalties.

Section 6402 of the PPACA requires Medicare providers, including physicians and partial hospitalization providers, among others, to a) return and report any overpayment, and b) explain, in writing, the reason for the overpayment.

This law creates a minefield for CMHCs.  First, CMHCs and other Medicare providers have only 60 days to comply with the reporting and refund requirement from the date on which the overpayment was identified or, if applicable, the date any corresponding cost report is due, whichever is later.  Of course, the PPACA does not actually explain what it means to “identify” an overpayment. 

Nonetheless, the PPACA makes this reporting and repayment requirement an “obligation” under the FCA.  Pursuant to the Fraud Enforcement and Recovery Act of 2009 (FERA) amendments to the FCA, an individual or entity may be liable if he or it “knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government.”  Thus, CMHCs who fail to meet their 60 day “obligation” may be subject to monetary penalities of up to $11,000 per claim, and treble damages.

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.