Feds target healthcare fraud by looking for outliers

Last week, the U.S. Department of Justice announced the largest healthcare fraud takedown in its history. Approximately 300 defendants in 36 federal districts, including South Florida, were charged with engaging in fraudulent billings to the tune of more than $900 million.

Charges included: conspiracy to commit healthcare fraud, violations of the anti-kickback statutes, money laundering and aggravated identity theft involving various medical treatments and services, including home healthcare, psychotherapy, physical and occupational therapy, durable medical equipment (DME) and prescription drugs.

In the Southern District of Florida alone, 100 defendants were charged with taking part in various schemes related to approximately $220 million in false billings in the areas of home healthcare, mental health services and pharmacy fraud. Of them, nine were charged with operating six different home healthcare companies in the Miami area that were allegedly engaged in filing false and fraudulent claims to Medicare for services that were not medically necessary and were based on bribes and kickbacks. Those six companies received more than $24 million from Medicare in the scheme, according to investigators.

Last week’s arrests came on the same day that the U.S. Department of Health and Human Services Office of Inspector General issued a report citing home healthcare as a program area that has long been vulnerable to fraud, waste, and abuse and one that it will be focusing on. The report notes that between 2011 and 2015, OIG home health investigations have resulted in more than 350 criminal and civil actions and $975 million in receivables. The OIG conducted an analysis identifying more than 500 home health agencies and more than 4,500 physicians as outliers in comparison to their peers nationally with respect to multiple characteristics commonly found in OIG-investigated cases of home health fraud.

The OIG noted that although these providers are considered outliers because of their claims data, it does not mean they are perpetrating fraud. However, because of what the OIG found in its data gathering, the agency said it will be conducting investigations and audits of these providers and/or refer them for followup by the Centers for Medicare & Medicaid Services (CMS). The analysis also identified 27 geographic “hotspots” in 12 states (including Florida) where characteristics commonly found in OIG home healthcare fraud cases are prevalent. Many of these hotspots are areas already recognized as having high rates of Medicare fraud.

Those characteristics include:

  • High percentage of episodes for which the beneficiary had no recent visits with the supervising physician
  • High percentage of episodes that were not preceded by a hospital or nursing home stay
  • High percentage of episodes with a primary diagnosis of diabetes or hypertension
  • High percentage of beneficiaries with claims from multiple HHAs
  • High percentage of beneficiaries with multiple home health readmissions in a short period of time

While cases of home healthcare fraud investigated by OIG vary in nature, they generally involve HHAs that bill for services that are not medically necessary and/or not provided.

Because physicians play a key role in the delivery of home healthcare and act as “gatekeepers” by certifying beneficiaries’ eligibility and managing their care plans, investigators have often found them to be principal conspirators in home health fraud schemes.

As evidenced by last week’s history making arrests and reports such as the one issued by the OIG, it is clear that the federal government is stepping up its enforcement, particularly in the area of home healthcare fraud.

Just last week, the Centers for Medicare & Medicaid Services announced that Florida and four other states were targets of a three-year Medicare pre-claim review demonstration for home healthcare services designed to screen out potential fraudulent activity.

Home healthcare agencies and physicians that wish to enter into compensation arrangements for services provided must ensure that those arrangements and the payments under them are fair market value and commercially reasonable in the absence of federal healthcare program referrals.

An alert issued last week by the OIG detailed improper arrangements and guidance recommending that home healthcare agencies and physicians carefully evaluate the terms of any compensation arrangements they have with each other and to ensure that the services provided are reasonable and medically necessary.

The Health Law Offices of Anthony C. Vitale can assist with the structuring of these compensation arrangements to ensure they comply with the law. In addition, our highly skilled team of healthcare law professionals have extensive experience representing those who are charged with fraudulent billing, kickbacks, Medicare and Medicaid fraud and false claims, among others. For more information contact our office at 305-358-4500 or email us at info@vitalehealthlaw.com.

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The Health Law Offices of Anthony C. Vitale