Medicare Update

Medicare Fraud Strike Force Efforts Trigger Arrests in 3 States

Today, the Department of Health and Human Services (HHS) and Department of Justice (DOJ) announced that 30 individuals in 3 states have been charged for their alleged roles in Medicare fraud schemes to submit more than $61 million in false Medicare claims.

The charges announced today arise from Medicare Fraud Strike Force (Strike Force) operations in Miami, Detroit and Brooklyn. According to a DOJ Press Release, the defendants allegedly participated in various criminal schemes, including conspiracy to defraud the Medicare program, conspiracy to launder money, money laundering, criminal false claims, making false statements and receiving kickbacks.

As part of today's announcement, the HHS and DOJ also announced that the Strike Force is expanding its operations to include Brooklyn, Tampa and Baton Rouge. The Strike Force is already operating in Miami, Los Angeles, Houston and Detroit.

The Strike Force is a multi-agency team of federal, state and local investigators designed to combat Medicare fraud through the use of Medicare data analysis techniques.

The Strike Force efforts are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), which is a joint HHS and DOJ effort to reduce and prevent Medicare fraud. 

Since the inception of Strike Force operations (in March 2007), the Strike Force has obtained indictments of more than 400 individuals and organizations (involving more than $1 billion in Medicare claims).

For more information, see the DOJ Press Release.

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OIG Reports on Medicare Home Health Outlier Payments in Miami-Dade County

On December 7, 2009, the Department of Health of Human Services' Office of Inspector General (OIG) released a reported titled Aberrant Medicare Home Health Outlier Payment Patterns in Miami-Dade County and Other Geographic Areas in 2008 (Report).

According to the Report, the OIG analyzed all home health claims that were submitted and paid in 2008 to identify geographic areas that exhibited aberrant Medicare home health outlier payment patterns. The OIG defines aberrant to be at least twice the national average for 3 or more of the 5 payment characteristics reviewed.

In brief, the OIG found that:

• Miami-Dade County accounted for more outlier payments in 2008 than the rest of the nation combined. In fact, Miami-Dade County accounted for 52 percent of the approximately $1 billion Medicare paid in home health outlier payments in 2008, while only 2 percent of all Medicare beneficiaries receiving home health services resided there. 
• In Miami-Dade County, Medicare outlier payments for home health claims with a primary diagnosis related to diabetes were 8 times the national average.  
• 23 counties nationwide exhibited aberrant home health outlier payment patterns similar to that of Miami-Dade County (but to a lesser extent). 

In the Report, the OIG recommends that home health services in Miami-Dade County and the 23 additional counties warrant additional review as part of ongoing antifraud activities (such as the Health Care Fraud Prevention and Enforcement Action Team (HEAT)). However, the OIG does not identify the 23 additional counties in the Report because they may be subject to future OIG and HEAT reviews.

The OIG also recommends that the Centers for Medicare & Medicaid Services (CMS):

• Continue with efforts to institute a cap on the total outlier payments an individual home health provider may receive annually.
• Review home health providers that exhibit aberrant outlier payment patterns and respond appropriately based on the findings.
• Continue with efforts to strengthen enrollment standards for home health providers to prevent illegitimate home health agencies from obtaining billing privileges. 

CMS concurred with the 3 recommendations (above).

As part of the Final Rule updating the Medicare home health prospective payment system (HH-PPS) for calendar year 2010, CMS also adopted a 10 percent cap on outlier payments at the agency level and lowered the targeted total aggregate outlier payments to 2.5 percent of HH-PPS payments.

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OIG Releases Semi-Annual Report to Congress

On December 3, 2009, the Department of Health and Human Services' Office of Inspector General (OIG) released its Semi-Annual Report to Congress (Report) for the 6 month period ending September 30, 2009.

In the Report, the OIG reports savings and expected recoveries of $20.97 billion for fiscal year (FY) 2009.  According to the OIG, the $20.97 billion includes:

• $16.48 billion in implemented recommendations to put funds to better use;
• $492 million in audit receivables; and
• $4 billion in investigative receivables. 

For FY 2009, the OIG also reports:

• Exclusions of 2,556 individuals and entities from Federal health care programs;
• 671 criminal actions against individuals or entities that engaged in crimes against departmental programs; and
• 394 civil actions, which include False Claims Act and unjust enrichment suits, civil monetary penalty settlements, and administrative recoveries related to provider self-disclosures. 

The Report also highlights OIG initiatives and accomplishments pertaining to Medicare Parts A, B, C and D. One of the initiatives highlighted is the Health Care Fraud Prevention and Enforcement Action Team (HEAT) and the Medicare Strike Forces operating in South Florida, Los Angeles, Detroit and Houston. For the reporting period, Medicare Strike Force efforts resulted in charges being filed against 138 individuals or entities, 44 convictions, and $40.7 million in investigative receivables.

In Appendix D of the Report, the OIG provides Congress with its responses to the 2008 annual solicitation for proposals to develop or modify existing safe harbors to the Federal anti-kickback statute. The proposals and OIG responses can be found on pages 85-86 of the Report.

For more information, see the OIG's Semi-Annual Report to Congress.

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Top Ten Medicare Update Blog Posts in November 2009

Below are the top ten Medicare Update posts during November 2009 (based on the number of views):

1)   CMS Releases Final Medicare Physician Fee Schedule Changes for 2010

2)   CMS Releases Final Medicare Home Health Payment Changes for 2010

3)   CMS Releases 2010 Final Rule for Hospital Outpatient Departments and Ambulatory Surgical Centers

4)   CBO Releases Cost Estimate for Medicare Physician Payment Reform Act

5)   Senate Health Care Reform Bill Provides for Recovery Audit Contractor Expansion

6)   Senate Health Reform Bill Includes Significant Medicare Payment Reductions

7)   CMS to Instruct Medicare Contractors on Home Health Outliers in December 2009

8)   Senator Kaufman Introduces Health Care Fraud Enforcement Act

9)   House Passes Affordable Health Care for America Act

10) Senator Grassley Introduces Fighting Medicare Payment Fraud Act of 2009

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DOJ Reports on Health Care False Claim Case Recoveries in 2009

In a recent Press Release, the Department of Justice (DOJ) reported that the Federal government secured $2.4 billion in settlements and judgments from fraud cases during the fiscal year ending September 30, 2009 (FY 2009).

Of the $2.4 billion recovered in FY 2009, the DOJ reports that nearly $2 billion was recovered in lawsuits filed under the False Claims Act's qui tam provisions. The Press Release also reveals that in FY 2009 health care fraud recoveries reached $1.6 billion, which is about two-thirds of the $2.4 billion in settlements and judgments for FY 2009.

The DOJ reports that the Department of Health and Human Services reaped the largest recoveries, largely attributable to the Medicare and Medicaid programs. In fact, the largest health care recoveries came from the pharmaceutical and medical device industries, which accounted for $866.7 million in settlements.

On May 20, 2009, President Obama signed the Fraud Enforcement and Recovery Act of 2009 into law, which amends the False Claims Act and may increase the false claim risks for health care providers and suppliers. So, Medicare providers and suppliers should remain pro-active in establishing/maintaining comprehensive and effective compliance policies and procedures.

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Homecare Association Raises Concern about Impact of CMS Verification Process

On November 20, 2009, the American Association for Homecare (AAHomecare) sent a letter to the Centers for Medicare & Medicaid Services (CMS) requesting that CMS delay the implementation of rules/instructions providing for the rejection of claims for DMEPOS based on ordering/referring physician enrollment in the Provider Enrollment, Chain and Ownership System (PECOS).

According to the AAHomecare letter, the Association is concerned about the slow pace of physician enrollment in PECOS and how claim rejections may affect patient access to care and provider payments. For information about the facts and circumstances surrounding AAHomecare's concerns, see the letter. 

On April 24, 2009, CMS issued Transmittal 480 (Change Request 6421). Transmittal 480 is intended to address concerns about DMEPOS ordered/referred by physician and non-physician practitioners (ordering/referring provider) that may not be permitted by the Medicare program to do so.

As a first step, CMS is verifying that the ordering/referring provider on a DMEPOS claim:

• Has a current enrollment record in Medicare (i.e., the ordering/referring provider enrolled or updated his/her enrollment record within the past 5 years and the NPI is in the record); and
• Is of a specialty that is eligible to order and refer.

CMS intends to implement this verification in 2 phases:

• Phase 1 (October 5, 2009 - January 3, 2010) - DMEPOS suppliers that report ordering/referring providers who do not pass both edits will receive an informational message on their remittance. CMS reports that paper billers will not receive an informational message.
• Phase 2 (January 4, 2010 and thereafter) - DMEPOS suppliers that report ordering/referring providers who do not pass both edits will have their claims rejected.

For more information on this verification process, see:

• Transmittal 480/Change Request 6421
• MLN Matters Article Number MM6421
• Provider Inquiry Assistance Article - JA6421
• Message for Providers/Suppliers Concerning CR 6421

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UPDATE: OMB Reports Medicare Improper Payment Rates for FY 2009

On November 17, 2009, the Office of Management and Budget (OMB) released data on improper payments made by the Federal government during fiscal year (FY) 2009.

The data reveals that the Federal government made $98 billion in improper payments in FY 2009 with over half (i.e., $54 billion) of the improper payments coming from the Medicare and Medicaid programs. 

The data also reveals that the Medicare fee-for-service (FFS) program had $24 billion in improper payments during FY 2009 and an improper payment rate of 7.8 percent.  The Medicare FFS improper payment rate for FY 2009 is more than double the rate reported for FY 2008 (i.e., 3.6 percent).  The OMB reports that the rate increase is attributed to stricter standards on identifying improper payments.

Interestingly, the Medicare Advantage improper payment rate jumped to 15.4 percent.  In a November 2008 Press Release, the Centers for Medicare & Medicaid Services (CMS) reported a Medicare Advantage improper payment rate of 10.6 percent for calendar year 2006.  CMS also stated that it expected for the Medicare Advantage rate to decline through program maturation and CMS's use of tools, such as statistical sampling, medical reviews, and error rate reduction plans.

A number of news organizations (including the Associated Press) report that President Obama is expected to sign an Executive Order within the next week to address waste and fraud in Federal government programs. The OMB also has a new blog post titled "Reducing Improper Payments" addressing the Executive Order, which can be found here.  The OMB data on improper payments can be found here.

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UPDATE: CMS has issued a Press Release and Fact Sheet addressing the higher Medicare improper payment rates.

Related Post: CMS Reports Projected 2008 Medicare Improper Payment Rate

Senator Grassley Introduces Fighting Medicare Payment Fraud Act of 2009

On November 16, 2009, Senator Charles Grassley issued a Press Release and introduced the Fighting Medicare Payment Fraud Act of 2009 (S.2774). 

As introduced, S.2774 would provide the Secretary of the Department of Health and Human Services (Secretary) with the authority to extend the time period that Part A and B claims must be paid up to 1 year for a category of providers or suppliers, categories of providers or suppliers in a particular geographic area, or individual providers when the Secretary determines that there is a likelihood of fraud, waste or abuse. For individual providers or suppliers, S.2774 also suggests that the Secretary must take whatever time is necessary to ensure that claims are clean claims.

During the extended time period, S.2774 instructs the Secretary to engage in heightened scrutiny of claims (such as prepayment review and other methods that the Secretary determines to be appropriate).

It does not appear that the Secretary's decision to extend the time period for Part A or Part B claims would be subject to administrative or judicial review.

Finally, S.2774 would require the Office of Inspector General (OIG) to recommend to the Secretary, on an annual basis, categories of providers or suppliers in which additional scrutiny is needed before claims are paid.  The Secretary would be required to provide a response to the OIG recommendations. 

S.2774 has been referred to the Senate Finance Committee.

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Senator Kaufman Introduces Health Care Fraud Enforcement Act

On October 28, 2009, Senator Ted Kaufman (along with co-sponsoring Senators Patrick Leahy, Arlen Specter, Herb Kohl, Chuck Schumer, and Amy Klobuchar) introduced the Health Care Fraud Enforcement Act of 2009 (S.1959).

As drafted, S.1959 aims to strengthen the U.S. government's capacity to investigate and prosecute waste, fraud and abuse in government health care programs and private health insurance.  In brief, S.1959 would (among other things):

• Amend the Federal Sentencing Guidelines to provide a two-level increase in the offense for a defendant convicted of a federal health care offense relating to a government health care program that involves a loss of $1 million or more, a three-level increase if the loss is $7 million or more, and a four-level increase if the loss is $20 million on more.
• Specify that, for purposes of the Federal Anti-Kickback Statute and health care fraud statute (18 U.S.C. 1347), "willful conduct" does not require proof that a defendant had actual knowledge of the law in question or specific intent to violate the law.
• Amend the Federal Anti-Kickback Statute to ensure that all claims resulting from illegal kickbacks are false, even if the claims are not submitted directly by the wrongdoers themselves.
• Expand the definition of a "health care fraud offense."
• Authorize the Department of Justice to issue subpoenas for access to any institution that is the subject of an investigation related to a violation of the Civil Rights for Institutionalized Persons Act (and for any documents, records, materials, files, reports, memoranda, policies, procedures, investigations, video or audio recordings, and quality assurance reports).
• Authorize the appropriation of $20 million per year from 2011 through 2016 for investigations, prosecutions and civil or other proceedings related to fraud and abuse.

According to Senator Kaufman's Press Release, "[f]raud perpetuated against both public and private health plans costs between $72 and $220 billion annually, increasing the cost of medical care and health insurance and undermining public trust in our health care system."

S.1959 has been referred to the Judiciary Committee.

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Top Ten Medicare Update Blog Posts in October 2009

Below are the top ten Medicare Update posts during October 2009 (based on the number of views):

1)   CMS Announces 2010 Medicare Premiums and Deductibles

2)   OIG Work Plan Reveals Possible Risk Areas for Medicare Providers and Suppliers

3)   Senator Stabenow Introduces Medicare Physician Fairness Act of 2009

4)   OIG Work Plan Identifies Possible Areas of Concern for Home Health Agencies and DMEPOS Suppliers

5)   CMS Directs Medicare Contractors to Take Action on OIG Reports

6)   CMS Posts FAQ on Code 432 and Medicare Recovery Audit Contractors

7)   The Changing Dynamics of Medicare Fraud Schemes?

8)   Medicare Fraud and Recovery Audit Contractor Program

9)   CMS to Shelve Medicare Medical Home Demonstration

10) Region D Recovery Audit Contractor Updates CMS Approved Audit Issues

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