Four Settlements for Justice Dept as Health Care Companies Seek to Avoid Coal for Christmas

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It must be the last weekend before Christmas because health care companies are looking to resolve government investigations into their wrongdoing before we leap into the new year! In the last two days, we’ve now seen four multi-million dollar settlement announcements in False Claims Act cases.

Doctor to Receive $18.1 Million for Reporting Illegal Contract Offer by Hospital

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Another hospital has settled allegations of violations of the Stark Law that were brought by a whistleblower lawsuit under the False Claims Act. This time, it was Tuomey Healthcare System, which had previously lost at trial, resulting in an order to pay $277 million for violations of the law, and in its Fourth Circuit appeal. It ultimately settled the case for $72.5 million from the South Carolina hospital system, which will be sold to Palmetto Health.

In this case, the hospital entered into contractual relationships with area specialty physicians after becoming concerned that it would lose referrals of surgical procedures from them. The part-time employment agreements required them to send their cases to Tuomey and paid bonuses based in part on their referrals. The Stark Law prohibits the payment of anything of value to physicians based on their referrals of business paid for by the federal healthcare programs. One of the individuals that Tuomey offered a contract to reported them to the Department of Justice.

Many people have the mistaken impression that only an individual who works for a company can bring a whistleblower lawsuit. This is not true. Any individual that has nonpublic information sufficient to demonstrate fraud can file a lawsuit. However, insiders are typically the most likely individuals to have such information so they have gotten. Job seekers, industry experts, consultants, competitors and other individuals can also report health care fraud to the U.S. Government.

The resolution to this case came after a long legal battle, with two trials in a U.S. District Court and two appeals. The first verdict led to an order of payment of $45 million for Stark Law violations but was overturned on appeal. The second jury found Tuomey liable for additional misconduct under the False Claims Act. Tuomey began exploring a sale of the company while facing the largest potential penalty levied against a community hospital. The board and management determined a sale was its best option due to financial difficulties. Based on the discounted recovery, it seems likely that the Justice Department took these into account when reducing the fine against the community hospital.

In September, there were two other hospital settlements of cases under the False Claims Act for kickbacks in violation of the Stark Law. These two settlements totaled almost $200 million in recoveries for the United States Government.

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OIG Report: Ambulance Fraud of $50 Million in Six Months of 2012

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An investigation by the Inspector General’s office detected Medicare payments for potentially fraudulent ambulance rides of $54 million in the first half of 2012. During the year, Medicare Part B paid $5.8 billion for ambulance transportation, double what it paid ten years earlier.

The investigators found approximately $24 million in payments by Medicare were not for rides valid under the program requirements. Additionally, Medicare paid $30 million for transportation where there is no evidence that services were provided for the patient at either the pick-up or drop-off location. If the amounts are extrapolated out to a full year, that would be more than $100 million lost to Medicare fraud in this area alone.

The problem was not limited to one company or geography. Approximately one in five suppliers had questionable billing and four metropolitan areas accounted for half of the questionable transports. One of the areas was Philadelphia, with Los Angeles, New York and Houston also causing problems.

The report details a number of the various fraudulent schemes uncovered as background. These include unnecessarily transported patients, upcoding claims from basic to advanced life support transportation, and transporting patients to and from home when that level of service is limited to emergencies. Other claims involved the falsification of transport documents, transporting patients together but submitting claims for reimbursement of individual transports, and the illegal payment of kickbacks to patients.

There were also a number of unusual scenarios, such as urban ambulance services requesting reimbursement for rides with an average distance of more than 100 miles per ride when the national average is just 10 miles. Additionally, 46 ambulance companies were paid for transportation where there is no evidence of medical services provided in 9 out of the 10 rides.

The results of the OIG were shared with Medicare last year and they have already started taking action upon them. One way that individuals can assist Medicare is by bringing cases of ambulance fraud to the attention of the Justice Department through a False Claims Act lawsuit. This law provides whistleblowers (known as relators under the law) with rewards of between 15 and 30 percent of money recovered by the federal government due to fraudulent claims for Medicare and Medicaid payments.

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False Claims Act 60 Day Clock on Retained Overpayments Begins on Initial Notice

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The Southern District of New York has put healthcare providers under the gun to act quickly when confronted with information that they may have received overpayments from Medicare and Medicaid or else have liability and treble damages imposed on them by the False Claims Act. In a decision in early August, the Court rejected Defendants theory that the 60 day clock set forth by the Patient Protection and Affordable Care Act of 2010 for a reverse false claim started when the Defendants were certain that an overpayment occurred.

The SDNY decision is the first in a case involving the question of retained overpayments. The complaint was filed in April 2011 and both the United States and the State of New York intervened in the litigation.

The United States’ Complaint-in-Intervention sets forth the operative facts. A software glitch beginning in 2009 and patched at the end of 2010 led the Defendant hospitals to mistakenly bill secondary payers for services covered by other insurance. After New York questioned its bills in September 2010, one of the Defendants tasked the Relator with creating a compressive list of potential claims for payment made in error. In early 2011, the Relator identified more than 900 claims totaling over $1 million. Approximately half of the claims listed did not actually involve overpayments by the government, but the vast majority of those listed did involve erroneous billing. Ultimately, the payments for those false claims identified did not conclude until March 2013.

The question on the motion to dismiss was whether the Relator identified the overpayments when including them on the 2011 list of possible errors or did the 60 day clock in the law start running when they were conclusively ascertained. The Court held that the U.S. had sufficiently alleged a viable complaint under the law that the claims were identified in 2011 and that the Defendants had the requisite scienter to warrant proceeding with the case.

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Medicare Payment Guidelines Driving Therapy Decisions

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There was an article in the Wall Street Journal today about the increasing percentage of patients on ultra high therapy in nursing homes. Over the past twelve years, the percentage of patients receiving the highest level of federal payments for nursing care has skyrocketed from under 10% in 2002 to more than 50% in 2013.

Although not conclusive, this sort of increase seems characteristic of a system fraught with Medicare fraud. With numbers like these, we expect to see more whistleblowers filing False Claims Act lawsuits (or presently filed cases becoming unsealed). There have already been at least three filed against HCR ManorCare. In April, the Justice Department announced it would intervene in the lawsuits and pursue an enforcement action against the skilled nursing facility operator.

The complaints that we have seen in cases like this one are generally pretty horrific. They recount stories of nursing homes providing lengthy therapy sessions to deteriorating patients incentivized by the Medicare billing guidelines. Nursing homes which provide more than 720 minutes of therapy per week could bill the U.S. Government’s Medicare program for an average of $559 per day.

The article also draws attention to the number of patients getting the highest level of therapy in nursing homes and then going into hospice care. Hospice payments have been made for those patients who are dying and seems a bit contradictory for the facilities to be using high levels of rehab on patients who are about to be declared beyond hope for treatment.

This is not the only area where newspapers have noted problems among health care providers. This article follows one published in the Wall Street Journal at the beginning of June noting the large percentage of long term care patients discharged by hospitals around the time of maximum earnings. The study of ventilator patients published by Health Affairs concluded that decisions are not being driven by patient need.

Instead, the even distribution of discharges before the prospective payment system was implemented soon led to a large and noticeable grouping of patients discharged on or immediately after the highest level of Medicare payments kicked in. This suggests either that patients were kept longer than medically necessary in order to fraudulently obtain additional government payments or they were released earlier than warranted to put their health at risk.

In April, President Obama signed a bill passed by Congress that would stop Medicare payment reductions to doctors and focus more on the quality of care they provide. This legislation followed up on an earlier initiative under the Affordable Care Act to reward doctors with more pay when they provide high quality care at lower cost. Until initiatives like these begin solving the problems identified in these two areas, we will have to depend on whistleblowers to inform the government about fraudulent billing practices.

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At 50, Medicare Needs to Rein in Costs

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Fifty years after the establishment of Medicare and Medicaid, more than 100 million Americans now rely on them for health insurance. Despite flaws, the legislation that made health care affordable for the elderly and the poor in our country have been a shining success. However, it is crucial that Congress and the Centers for Medicare and Medicaid Services (CMS) halt rising drug prices and fraud if they expect to celebrate this success fifty years from now.

This week, the nation celebrates the 50th Anniversary of President Lyndon B. Johnson signing the amendment to the Social Security Act creating Medicare and Medicaid on July 30, 1965. The push for government sponsored health insurance took more than 20 years, with President Franklin Delano Roosevelt leaving it out of his proposal for Social Security in the 1930s and President Harry S. Truman proposing national health insurance in both 1945 and 1949.

Despite its early controversy, Medicare remains one of the most popular government programs in the country. However, the affordability of government health insurance will be tested in the next ten years due to rapidly escalating drug costs and continued fraud in the system. By 2024, the cost of Medicare is expected to increase to $1.1 trillion annually.

A significant reason for the increase is the price of drugs. It should come as no surprise that drug prices have increased since the 1960s, as even the cost of a McDonald’s hamburger has risen from its original price of just 15 cents. Yet, increases in prescription drug spending have far outpaced inflation during that time period. In 2015 alone, spending on prescription drugs is expected to increase 7.6 percent. As prices for some courses of treatment begin to approach or exceed $100,000, it is necessary to take measures to halt this price growth.

One measure that can and should be adopted is to allow Medicare to negotiate drug prices. President Obama has already called for the authority to negotiate prices with pharmaceutical companies under Medicare Part D, the program that provides prescription drug coverage. Congress did not initially provide CMS with this authority when it created Part D in 2003. It must do so now.

Fraud is another massive problem in the system contributing to the high cost to taxpayers. Out of the projected $600 billion in Medicare spending to provide health care in 2014, the U.S. Government Accountability Office estimates that the agency made improper payments totaling approximately $60 billion. The government must do more in the fight to rein in this spending.

Recognizing the contributions that whistleblowers play here would be an easy first step. Since 1987, health care whistleblowers have helped the United States recover more than $20 billion in taxpayer dollars spent due to fraud.

In tandem with the 50th anniversary of Medicare, the U.S. will also celebrate the passage of the first whistleblower law this week. On July 30th, 1778, the Continental Congress passed the first law protecting whistleblowers of the United States. For the past few years, Senator Grassley has proposed and the Senate has declared this day National Whistleblower Appreciation Day. It is expected to happen again this year.

There is now a call by the National Whistleblower Center to make it a permanent day of appreciation for those who have served our country by exposing fraud, waste, misconduct and other violations of the laws of our nation. This is warranted and a simple way to encourage more people to come forward to report unnecessary spending. The False Claims Act has been the government’s most effective law against fraud in the history of the United States. When Congress amended the law in 1986 to strengthen the public-private partnership to protect taxpayer dollars from fraud, it recognized the important role of whistleblowers. If we hope to cut down Medicare spending due to fraud, we should do so on an annual basis.

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Another $60 Billion in Improper Payments by Medicare in 2014

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A Government Accountability Office (GAO) report found that nearly $60 billion in payments from Medicare in 2014 went to doctors with bad addresses or disciplinary actions. Thousands of medical providers were identified in the government probe.

The GAO reportedly used USPS records, site visits and Google Maps to check the payment addresses in the Medicare system. It found 23,400 improper locations out of the 105,234 in the database. A deputy administrator for CMS indicated that much of the problem data was simply poor documentation rather than fraudulent payments.

Medicare has already kicked out 34,000 providers since February 2011. The 2010 Affordable Care Act (ObamaCare) partly required the overhaul of Medicare’s enrollment system and provider verification which Centers for Medicare and Medicaid Services (CMS) has been performing for the past five years.

The GAO also found more than 100 cases through March 2013 where the provider was licensed in one state but had a disciplinary action against them in another and yet continued to receive government payments.

If any payments were made improperly in violation of the False Claims Act, the government should be able to clawback the payouts under the treble damages provisions of the whistleblower law.

In related news, a group of oncologists at cancer hospitals criticized soaring drug prices. As their patients are fighting a deadly illness, they are being bankrupted by the out-of-pocket costs. They are calling for regulations to limit this problem. Prescription drug prices increased more than 12% last year. New cancer drug prices are particularly on a tear, with prices increasing more than five fold over 15 years. Medicare also said that new medications will increase drug spending 9.7% between 2015 and 2024.

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Is Telemedicine Fraud in our Future?

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A bipartisan group of members of the U.S. House of Representatives introduced a bill to expand Medicare coverage of telehealth services this month. Telemedicine is expected to be the wave of the future, with the growth in home health technologies ramping up globally from 14.3 million in 2014 to 78.5 million in 2020 according to Tractica, a digital health advisory service. However, if there aren’t adequate checks and balances in the system to prevent fraud, the costs to the system could easily overwhelm any cost savings and efficiency benefits to the new method of treating patients.

Medicare currently pays for telehealth services provided by certain practitioners to individuals in certain rural areas or counties outside of a Metropolitan Statistical Area. The Medicare Telehealth Parity Act of 2015 would expand the list of eligible providers and removes geographic barriers. The bill would move the system to parity between telehealth and in-person services in three phases.

If Medicare isn’t careful, this could make committing health care fraud easier for doctors that want to game the system. How much easier would it be for doctors to claims reimbursement for services rendered if they don’t even have to have patients come into the office?

The U.S. loses billions every year to Medicare fraud already. In 2012, an FBI report estimated the amount lost at between 3 and 10 percent of all health care expenditures. Every year, the U.S. recovers a couple billion in fraudulent payments thanks to whistleblowers, their attorneys, the Department of Justice and the False Claims Act. But that’s still a drop in the bucket compared to the amount lost.

On the other hand, the recording of the telecommunication sessions could permit better review of the bills provided by health care providers. The problem is simply one of scale. There may not be a way for the government to review the sessions from every provider for fraud. Ultimately, the question is whether more providers will try to take advantage of the new system and how many will slip through the cracks.

Telemedicine is coming. There are a lot of initiatives that advance the ball on it. The 21st Century Cures Act just passed the House last week. But the version of the bill that passed only calls for Medicare to study whether care may be improved by expanding telehealth services and does not call for the expanded reimbursement of services rendered through telemedicine. Another potential bill introduced in previous sessions, the Telehealth Advancement Act, would extend Medicare coverage in remote areas and strengthen the broadband communication infrastructure there to allow the services to take place.

We should figure out how to prevent the fraud that plagues the current system from expanding to include it as well. Otherwise, we will need more whistleblowers.

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New Rules for Nursing Homes Proposed

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The U.S. Government has promised to update Medicare and Medicaid rules in order to increase the quality of care provided by nursing homes and long term care facilities to the 1.5 million people living in them. The guidelines that determine when a nursing facility qualifies for a government payment were last updated in 1991.

Drug and Medical Device Companies Pay Doctors $6.49 Billion in 2014

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1,444 companies paid 1,100 teaching hospitals and 607,000 physicians nearly $6.5 billion in 2014. It is the first full year of data concerning the financial ties between doctors and the pharmaceutical companies and medical device manufacturers that are paying them. The data counts the value of meals as well as payments for speeches, consulting and research.

Pfizer is believed to have made the most payments with $234 million in research payments and general outlays of $53.3 million.  Some companies like Johnson & Johnson and Merck reported payments from several different entities.

The data comes from the release of the second annual Open Payments report by the Centers for Medicare and Medicaid Services today. Last year, CMS released information for payments from August 1 until December 31, 2013. Physicians and teaching hospitals received $3.43 billion in payments during the last 5 months in 2013.

The release of this information was authorized by the Affordable Care Act in 2010. The provision, called the Sunshine Act, requires manufactures to disclose their payments to physicians and teaching hospitals. The effort is to bring transparency, or sunshine, to the ties that might impact a doctor’s prescribing decisions and inform their patients of them.

As we represent several health care whistleblowers in False Claims Act litigation that has been unsealed, and have seen several other settled and currently pending cases, we know that drug and device companies do cross the bounds when marketing their products. The allegations we have seen allege that payments for speaker programs were in effect kickbacks in violation of the Anti-Kickback Statute and the Stark Law. Many of these payments were for “sham” speak programs that had few or no attendees as well as little, if any, educational value. Companies were also expressly tying the participation of physicians in their speaking programs, for which they receive compensation, to the amount of product that they prescribed.

Patients should be aware of these tactics of marketing medical products, check the data and speak to their physician about their medications.

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