DOJ is Criminally Prosecuting Virginia Physician Who Improperly Disclosed Patient Health Information

June 24, 2011 by  
Filed under Compliance, Featured, Medicare Audits

(June 24, 2011): Physicians and other health care providers should take care — improprerly  disclosing a patient’s protected individual health information could land you in Federal prison. Earlier this week, Virginia osteopath was indicted in the Eastern District of Virginia on charges that he illegally disclosed a former patient’s health information to the patient’s employer.

The Virginia physician was indicted by a Federal Grand Jury for the wrongful disclosure of individually identifiable health information under the Health Insurance Portability and Accountability Act (HIPAA).  The physician reportedly faces a maximum of up to five years imprisonment if convicted.

According to the indictment, the physician practiced osteopathic medicine and served as Medical Director at a Virginia psychiatric care facility. The physician is alleged to have provided inpatient mental health treatment to a patient in 2007.  As set out in a discharge summary from 2008, the physician indicated that the patient was not considered a danger to others. Nevertheless, on three separate occasions in February 2008, the physician allegedly disclosed, without any authorization, the patient’s individually identifiable health information to an agent of the patient’s employer. In these unauthorized disclosures, the physician  falsely indicated that the patient was a serious and imminent threat to the safety of the public, when he allegedly knew that the patient was not such a threat.

CommentaryAs this case shows, the Federal government is quite serious about health information privacy.  It is essential that health care providers take affirmative steps to ensure that all of their staff – including physicians – are cognizant of both applicable statutory and regulatory requirements and their associated obligations with respect to protected health information.  Effective training on HIPAA, HITECH and the restrictions governing disclosure should represent an important component of each provider’s Compliance Plan. 

Liles Parker attorneys have extensive experience representing physicians and other health care professionals in government investigations and disciplinary actions.  Our attorneys are also knowledgeable regarding HIPAA, HITECH and provider obligations under these statutes.  Need assistance?  Call us for a complimentary initial consultation.  We can be reached at:  1 (800) 475-1006. 

CMHC Compliance Officers Should Review Their Compliance Plans to Ensure that “I-9s” are Being Properly Handled and Completed by Staff. The Failure to do so Can Result in Civil and / or Criminal Penalties.

November 28, 2010 by  
Filed under Compliance, Featured, Medicare Audits

(November 28, 2010): In 2003, the Immigration and Naturalization Service (INS) was became part of the U.S. Department of Homeland Security. Despite this change, certain functions, such as responsibility for enforcing citizenship discrimination actions remained with the U.S. Department of Justice’s Office of Special Counsel for Immigration-Related Unfair Employment Practices (DOJ-OSC).  As one large not-for–profit hospital group recently found, DOJ-OSC takes this responsibility quite seriously and is aggressively investigating allegations of “citizenship status discrimination” committed by employers (including health care providers). Most recently, DOJ-OSC has pursued violations allegedly occurring when prospective applicants were asked to show that they are eligible to work in the United States.

I.  Background

With the passage and implementation of the Immigration Reform and Control Act of 1986, employers (including health care providers) have been required to verify that applicants for jobs show that they are authorized to work in the United States.  For over 25 years, employers have been requiring that prospective applicants complete Section 1 of an “I-9 Form” (officially titled “Form I-9, Employment Eligibility Verification”).  Section 1 of the form provides various options for an applicant to show that they are eligible to work in the United States.  Employers are then required to complete Section 2 of the form within three days of the applicant starting to work.  As the government’s Employer Handbook covering the completion of the Form I-9 reflects:

“To comply with the law, you must verify the identity and employment authorization of each person you hire, complete and retain a Form I-9 for each em­ployee, and refrain from discriminating against individu­als on the basis of national origin or citizenship.”

For most prospective applicants and employers, this process has been relatively painless.  While the failure of a company to complete I-9s for its employees could subject the employer to civil and / or criminal penalties, the relative ease of completion of this form has typically been included in the pre-employment paperwork given to an applicant. 

In a recent case pursued by DOJ-OSC, the government alleged that a health care provider required that “non-U.S. citizen and naturalized U.S. citizen new hires . . . present more work authorization documents than required by Federal law, but permitted native born U.S. citizens to provide documents of their own choosing.”  Based on the fact that non-U.S. citizens and naturalized citizens were treated differently, the government investigated a complaint filed by a “charging party” against this health care provider. Ultimately, the government and the health care provider reached a settlement to the discriminatory allegations presented. 

The health care provider was required to pay $257,000 in civil penalties plus an additional $1,000 which was given to the charging party to make up for back pay that was owed due to the delay in hiring the individual.  This delay was allegedly caused by the provider’s requirement that this non-U.S. citizen (or naturalized U.S. citizen) was required to provide more extensive paperwork to prove his / her authorization to work in the United States than was required from U.S. born citizens. 

II. Compliance Plan Considerations:

Importantly, I-9 compliance considerations are not limited to only non-discrimination practices.  Both Compliance Officers and Human Resources staff should review the government’s “Handbook for Employers’ and ensure that your facility is complying with each facet of the law in this regard.  As the Handbook states, each provider must:

“Ensure that the employee fully completes Section 1 of Form I-9 at the time of hire — when the employee be­gins work. Review the employee’s document(s) and fully complete Section 2 of Form I-9 within 3 business days of the first day of work.

If you hire a person for less than 3 business days, Sections 1 and 2 of Form I-9 must be fully completed when the employee begins work.”

Importantly, I-9s do not have to be completed for some individuals.  As the government’s Handbook further states:

“You DO NOT need to complete a Form I-9 for persons who are:

1. Hired before November 7, 1986, who are continu­ing in their employment and have a reasonable expectation of employment at all times;

2. Employed for casual domestic work in a private home on a sporadic, irregular, or intermittent basis;

3. Independent contractors; or

4. Providing labor to you who are employed by a con­tractor providing contract services (e.g., employee leasing or temporary agencies).

5. Not physically working on U.S. soil.”

III. Lessons Learned:

While the Compliance Plan covering your Community Mental Health Centers (CMHCs) likely already covers a wide variety of employment-related issues, Compliance Officers should check to ensure that I-9 requirements are made a part of your overall Compliance Program if these mandates are not already covered.

As this case reflects, health care Compliance Officers should periodically conduct a comprehensive risk assessment of a provider’s operations and business relationships.  While traditional compliance reviews have focused on traditional health care statutory and regulatory responsibilities, Compliance Officers cannot ignore other risk areas (such as I-9 related responsibilities).  A good place to start would be to meet with both clinical and non-clinical supervisory and managerial employees to discuss regulated aspects of their work. 

Liles Parker attorneys have extensive experience working with health care providers, including CMHCs,  to develop and implement effective Compliance Plans and Programs.  Should you have questions, call us for a complementary consultation.  We may be reached at 1-800-475-1906.


The Zone 7 ZPIC Has Recommended Revocation of 82% of CORFS and 79% of CMHCs in South Florida – Is Your ZPIC Next?

October 9, 2010 by  
Filed under Featured, Medicare Audits

(October 9, 2010):  In late 2008, SafeGuard Services LLC (SafeGuard) was awarded one of the first two contracts to serve as a Zone Program Integrity Contractor (ZPIC) for Zone 7, an area which includes Florida, Puerto Rico and the U.S. Virgin Islands.  The contract covered a base year plus four additional years.  SafeGuard’s appointment was one of the first actions taken to consolidate the work previously performed by Program SafeGuard Contractors (PSCs) and Medicare Drug Integrity Contractors (MEDICs). Among its consolidated duties, SafeGuard is responsible for handling medical reviews and benefit integrity functions for Medicare claims under both Part A and Part B (hospital, CMHCs, skilled nursing, home health, provider and durable medical equipment).  These claims are the focus of this article.  SafeGuard became fully operational in Zone 7 on February 1, 2009.

Working together to promote the integrity of the Medicare and Medicaid programs, in recent years Safeguard has developed close working relationships with CMS, HHS-OIG, U.S. Attorney’s Offices, the FBI and other Medicare contractors.  .

As with other ZPICs, SafeGuard employs a number of techniques, both proactive and reactive, to address fraud.  In recent years, SafeGuard appears to have been one of the leading ZPICs in terms of “data-mining.”  The primary source for Medicare claims data is CMS’ National Claims History system.  Many of the audit and investigative processes developed by SafeGuard appear to now be employed by other ZPICs

CMS’ Proposed Rule issued September 23, 2010, provides an overview of how CMS and HHS-OIG intend to implement a number of new enforcement tools authorized under the Health Care Reform bill passed last March.  In reviewing the Proposed Rule, we unexpectedly learned about several audit initiatives that the “Zone 7 ZPIC” has been pursuing.  As the Proposed Rule states:

In addition to GAO and HHS OIG studies and reports, a number of Zone Program Integrity Contractors (ZPIC) and Program Safeguard Contractors (PSC), organizations used by CMS in helping to fight fraud in Medicare, have taken a number of administrative actions including payment suspensions and increased medical review, for the provider and supplier types shown above. For example, the Zone 7 ZPIC contractor in South Florida has conducted onsite reviews at 62 CORFs since January 2010 and recommended revocation for 51 CORFs, or 82 percent of the CORFS in the area. The same contractor has conducted an onsite reviews at 38 CMHCs located in Dade, Broward and Palm Beach County since January 2010, and recommended that 30 CMHCs be revoked for noncompliance (79 percent of the CMHCs in the area). In each instance where the ZPIC requested a revocation, the CMHC was also placed on prepay review. We have also conducted an analysis of IDTF licensure requirements and have found several circumstances that indicate irregularity and potential risk of fraud.” (emphasis added).

 Notably, there was no discussion of how the ZPIC expects patients with rehabilitative needs or acute psychiatric treatment needs will be cared for if SafeGuard succeeds in shutting down a vast majority of the CORFs or CMHCs in South Florida.   Is your ZPIC next to go down this path?

 Liles Parker attorneys represent providers in ZPIC related actions.  For a free consultation, please call 1 (800) 475-1906.

HHS-OIG has Identified “Partial Hospitalization Program Services” as a New Audit Area of Interest in its 2011 Work Plan

October 1, 2010 by  
Filed under Medicare Audits

(October 1, 2010):  This afternoon, HHS-OIG issued its 2011 Work Plan setting out new and continuing areas of interest where the investigative agency plans to initiate new audit reviews or continue their assessment of other areas of interest.  Depending on the ultimate findings made by HHS-OIG’s Office of Audit Services, there may very well be increased scrutiny in the future by ZPICs and RACs of partial hospitalization billings to the Medicare program.  Specific areas of interest for HHS-OIG’s Office of Audit Services include:

(1) Patient plans of Care, (2) Physician supervision and (3) Certification requirements.

 As the 2011 Work Plan sets out:

“We will review the appropriateness of Medicare payments for partial hospitalization program (PHP) psychiatric services. The Social Security Act, § 1832(a)(2)(J), provides for coverage of PHP services, and conditions for payment are in CMS’s Medicare Claims Processing Manual, Pub. No. 10004, ch. 4, § 260, and at 42 CFR §§ 410.43 and 424.24(e). A PHP is an intensive outpatient program of psychiatric services that hospitals may provide to individuals in lieu of inpatient psychiatric care. The program is to provide individuals who have mental health conditions with an individualized, coordinated, comprehensive, and multidisciplinary treatment involving nurses, psychiatrists, psychologists, and social workers. Medicare spending for PHP services has increased over the years. We will determine whether Medicare payments for PHP psychiatric services in hospital outpatient departments and freestanding community mental health centers met Medicare requirements based on documentation supporting psychiatric services, including patient plans of care, and physician supervision and certification requirements. (OAS; W001135453; various reviews; expected issue date: FY 2011; new start).”

 Once again, it is highly recommended that CMHCs review their documentation and billing practices to better ensure full compliance with applicable regulations. 

Liles Parker attorneys have extensive experience representing Medicare providers in administrative appeals.   Should you have any questions regarding these issues, contact Liles Parker for a free consultation at: 1 (800) 475-1906.

“Medical Records Retention” Issues Continue to be Important for CMHCs

August 17, 2010 by  
Filed under Compliance, Featured, Medicare Audits

(August 17, 2010): The Centers for Medicare and Medicaid Services (CMS) recently issued MLM Matters SE1022, titled Medical Record Retention and Media Formats for Medical Records” which serves as a helpful reminder regarding a number of medical records retention issues faced by Community Mental Health Centers (CMHCs) around the country.  As reflected in the guidance, MLM Matters SE1022 directly applies to health care providers (such as CMHCs) submitting claims to Medicare contractors for services provided to Medicare beneficiaries.

 While medical record retention requirements are generally governed by State law and can vary from State to State, it is important to remember that under HIPAA’s administrative simplification rules,  “covered entities” such as CMHCs,  must retain required medical records for a period of “six years from the date of its creation or the date when it last was in effect, whichever is later.”  As CMHC providers can readily attest, this requirement can be quite difficult to apply when the care as issue involve partial hospitalization program services.  For example, the supporting documentation covering partial hospitalization services provided during a specific period may relate back, and be supported by, a Psychiatric Evaluation, Physician Orders, Hospital Discharge Orders and other documents that were have been created many months prior to the specific dates at issue.  As a result, strict adherance to the six year requirement (assuming that the State retention requirements are six years are less since  HIPAA requirements preempt State laws if the State laws require a shorter medical records retention period) could make it difficult to fully support partial hospitalization claims if an audit is conducted.    Having said that, there are opposing compliance reasons to properly cull outdated medical records when possible.  Finding an acceptable balance between these goals is often difficult and should involve the advise of your legal counsel.

As MLM Matters SE1022 further notes:

 The Centers for Medicare & Medicaid Services (CMS) requires records of providers submitting cost reports to be retained in their original or legally reproduced form for a period of at least 5 years after the closure of the cost report. This requirement is available at 42 CFR 482.24[b][1].

 CMS requires Medicare managed care program providers to retain records for 10 years. This requirement is available at 42 CFR 422.504 [d][2][iii].

 Finally, the guidance points out that the Medicare program:

“. . . does not have requirements for the media formats for medical records. However, the medical record needs to be in its original form or in a legally reproduced form, which may be electronic, so that medical records may be reviewed and audited by authorized entities. Providers must have a medical record system that ensures that the record may be accessed and retrieved promptly.”

 The issue of “records retention” can be quite complex, especially when dealing with partial hospitalization claims.  This issue is further complicated if the CMHC is being audited or under investigation by the government or a Medicare contractor.  In such a situation, we typically advise clients to curtail all document (paper and electronic) destruction activities are until the external review is resolved.  In light of these considerations, it is strongly recommended that you work with your legal counsel to better ensure that your CMHC is meeting its document retention obligations. 

 Should you have questions regarding these issues, you may call your current counsel or you may call Liles Parker for a complimentary consultation at 1 (800) 475-1906.

CMS is Requiring that ZPICs and PSCs Strictly Adhere to “Signature Requirements” When the Contractors are Conducting Medical Reviews

August 5, 2010 by  
Filed under Featured, Medicare Audits

  • (August 4, 2010): The Centers for Medicare and Medicaid Services (CMS) has recently updated its “signature requirement” instructions to Medicare contractors, Change Request (CR) 6698, (including affiliated contractors such as CERT reviewers, ZPICs and PSCs) to be applied as they conduct Medicare claims audits and reviews.  

 As the guidance reflects, this issuance is intended to “clarify and update” Medicare’s Program Integrity Manual.  Importantly, this guidance is not intended to replace any existing specific requirements that may be contained in LCDs or other CMS manuals which may set out specific signature requirements (such as signature and timeliness requirements which must be made in connection with Treatment Plans or Plans of Care prepared by CMHCs when providing partial hospitalization program care).

 Several examples of the strict approach that CR 6698 requires include:

  • For medical review purposes, Medicare requires that services provided / ordered be authenticated by the author.  The method used shall be a hand written or an electronic signature.  Stamp signatures are not acceptable.

Our comments:  Despite the fact that “stamp signatures” have been problematic for years, we are still seeing cases where a provider has continued to use a stamp of his signature on orders and at the end of record entries. Get rid of signature stamps in your office or clinic!  Contractors that may be looking for an excuse to deny your claims will readily do so if your have used a stamp instead of documenting your signature by hand. 

  • If there are other reasons for denial, unrelated to signature requirements, the reviewer shall not proceed to signature authorization.  If the criteria in the relevant Medicare policy cannot be met but for a key piece of medical documentation which contains a missing or illegible assessment, the reviewer shall proceed to the signature assessment.   

 Our comments:  This requirement reinforces the fact that Medicare reviewers are required to assess the adequacy of medical documentation (and presumably of medical necessity), separate and apart from their review of the signature itself.  Once they determine that the medical documentation is otherwise acceptable for coverage purposes, then they will assess whether the signature meets applicable requirement

  • If the signature is missing from an order, ACs, MACs, PSCs, ZPICs and CERT shall disregard the order during the review of the claim.

Our comments:  This requirement can be extremely harsh, especially when considering the fact that many claims depend on an initial order by a referring or ordering physician.  If in the absence of such an order, the claim will be denied, it becomes readily apparent that providers must be especially diligent in their review of orders to ensure that each one is properly signed.

 These examples represent only a few of the many examples and changes highlighted in CR 6698.  We strongly recommend that you review these changes with each of the providers in your practice or clinic to ensure that everyone is aware of how CMS expects its contractors to proceed when conducting medical reviews. 

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.


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.


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 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.

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.

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