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.


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.


“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.

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.


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.

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.

The Latest Threat to CMHCs – Medicaid Integrity Contractor Audits and Investigations

May 11, 2010 by  
Filed under Featured, Medicare Audits

(May 11, 2010):  Over the years, our Firm has represented a significant number of Community Mental Health Clinics (CMHCs) around the country.    While the patient, services offered and payor mix varies from client to client, almost all our clients provide services of some sort which are reimbursable by Medicaid.  As CMHCs and other health care providers are now finding, the level of scrutiny now being placed on Medicaid billings has significantly increased within the last year.

 The purpose of this series of articles is to provide an overview of the Medicaid Integrity Contractor (MIC) program.  Over the next week, we will be providing an overview of this latest enforcement effort by Federal and State authorities.

 I.  Background:  The Deficit Reduction Act of 2005 was signed into law in February 2006.  Among tis provisions, this legislation created the Medicaid Integrity Program (MIP) in Section 1936 of the Social Security Act (Act).   Section 1936 of the Act required that the Centers for Medicare and Medicaid Services (CMS) set up contracts with private, outside contractors, Medicaid Integrity Contractors (MICs), for the purpose of performing four key program integrity functions:

 Review provider actions.

  • Audit Medicaid claims submitted by providers.
  • Identify overpayments.
  • Provide education on program integrity issues.

 Section 1936 of the Act also required that CMS: 

  • Provide support and assistance to States in their efforts to combat Medicaid fraud.
  • Periodically publish a Comprehensive Medicaid Integrity Plan (CMIP).

 Importantly, the MIP represents the first major, coordinated effort by the Federal government to address Medicaid fraud and abuse.  CMS received an initial $5 million in Fiscal Year 2006 and $75 million in Fiscal Year 2009 (and thereafter) to fund these enforcement activities.  Notably, these enforcement efforts were meant to supplement, not supplant, existing efforts by both Federal and State to combat Medicaid fraud. 

 Operationally, the MIP is centrally managed by the Medicaid Integrity Group (MIG).  The MIG reports directly to the “Director of the Center for Medicaid and State Operations.”  The MIG includes:

 Office of the Group Director (serves as primary point of contact in CMS for Medicaid fraud and abuse issues).

Division of Medicaid Integrity Contracting (responsible for the procurement, oversight and evaluation of Medicaid contractors who are conducting audits and identifying overpayments).

Division of Field Operations (works directly with the provider audit contractors).

Division of Fraud Research and Detection (provides research, statistical and data support for both the MIP and the states.  Identifies current and emerging fraud trends).

In 2008, the MIG began work on a “MIG Data Engine,” the first national database of Medicaid claims.  This has enabled the Federal government to conduct complex data mining reviews and has facilitated the identification of health care providers who are “outliers.”   Working with State Medicaid Fraud Control Units (MFCUs), HHS-OIG and DOJ have ramped up the intensity of Medicaid audits and investigations to never before seen levels.  

Over the next week, we will examine the types of MIC contractors established under the MIP.  We will also discuss steps you should take NOW to prepare for an audit.  Finally, we will discuss a number of points you should how you should consider if your clinic or practice is subjected to a Medicaid audit.

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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