Medicaid

Published on: July 8, 2024

Major Indictment of Telemedicine Company

The US Department of Justice (DOJ) recently filed its first criminal drug distribution prosecutions related to telemedicine prescribing through a digital health company. The indictments accused Done Global, Inc., its founder and CEO, its clinical president, and several other persons associated with the company of participating in a scheme to distribute Adderall over the internet, conspire to commit health care fraud in connection with the submission of false and fraudulent claims for reimbursement for Adderall and other stimulants, and obstruct justice. This case is highly instructive for those seeking to structure both telemedicine arrangements and payment arrangements with healthcare providers.

Specifically, DOJ alleged that Done operated a business model wherein it charged monthly subscription fees to patients and facilitated telemedicine visits with prescribers for the treatment of ADHD, including prescribing Adderall. DOJ alleged that the business model limited the information available to prescribers, instructed Done prescribers to prescribe Adderall and other stimulants even if the patient did not qualify, mandated that initial encounters would be under 30 minutes, included an auto-refill function that allowed patients to automatically request a refill each month, did not compensate prescribers for follow-up visits or consults after the initial consults, and compensated prescribers solely based on the number of patients who received prescriptions. DOJ alleged that these practices led to false and fraudulent claims for medically unnecessary services being submitted to Medicare, Medicaid, and commercial insurers.

In addition to allegations regarding the business model, DOJ also alleged that the company had been made aware that material was posted on online social networks about how to use Done to obtain easy access to Adderall and other stimulants, but that Done allegedly sought to conceal this information and made fraudulent statements to the media regarding it. The indictments of the individual officers of the corporation are also consistent with federal law enforcement’s emphasis on holding individuals, rather than just the corporation, responsible for alleged healthcare fraud.

Published on: July 2, 2024

Congress Seeks to Extend Telehealth Flexibilities and Expand Reimbursement

by Wachler & Associates, P.C.

In May 2024, the House of Representatives Energy and Commerce Subcommittee on Health advanced the Telehealth Modernization Act of 2024 (H.R. 7623) with the goal of extending several Medicare telehealth flexibilities through 2026. This most recent bill comes after nearly two dozen other bills proposed by the Subcommittee to strengthen access to healthcare. The bill primarily seeks to maintain Medicare’s hospital-at-home program through 2029 in order to provide continued resources for at-home care for patients requiring acute-level care. The bill also aims to remove the geographic originating site restrictions on telehealth visits through 2026. Unless this bill or similar legislation is passed, the programs will expire at the end of 2024.

Notably, the bill would also provide broader discretion to the Department of Health and Human Services (HHS) to expand the types of practitioners who may furnish reimbursable telehealth services. This would create the potential for any healthcare provider who bills the Medicare program to be eligible to provide telehealth services. Further, the bill would enable HHS to maintain an expanded list of reimbursable telehealth services, including after the existing telehealth flexibilities expire.

Additionally, the bill would specifically benefit patients located in rural areas by allowing greater resources to be allocated toward rural health clinics providing telehealth services. As the current bill reads, Federally Qualified Health Centers and Rural Health Clinics would permanently be able to provide telehealth services and receive reimbursements in those settings. Federally Qualified Health Centers and Rural Health Clinics create a critical safety-net of primary care providers for underserved populations. Permitting these types of providers to furnish telehealth services as distant sites would play a major role in expanding and maintain access to care in underserved and rural communities, and would further promote continuity of care in those communities.

Published on: May 14, 2024

OIG to Scrutinize Peripheral Vascular Procedures

by Wachler & Associates, P.C.

The Department of Health and Human Services (HHS) Office of Inspector General (OIG) recently announced that it intends to increase scrutiny of fee-for-service peripheral vascular procedures billed to the Medicare program. Although OIG did not describe the specific actions in intends to take, it appears likely that OIG will conduct data analysis of Medicare claims for vascular services, especially atherectomies and angioplasties; conduct audits of specific providers, likely those with high utilization of vascular services or those with prior audit denials or accusations of improper billing; and also review the program integrity measures that CMS and its contractors have taken to address fraud, waste, and abuse in these procedures.

In explaining the motivation for its review, OIG noted that the use of peripheral vascular procedures in the Medicare population has increased over the past decade. In 2022, Medicare paid more than $600 million for atherectomies and angioplasties with and without a stent in peripheral arteries. These minimally invasive surgeries aim to improve blood flow when arteries narrow or become blocked because of peripheral arterial disease but are recommended only after patients have tried medical and exercise therapy, and have lifestyle-limiting symptoms. OIG also asserted that CMS and whistleblower fraud investigations have identified these surgeries as vulnerable to improper payments.

Our firm has significant experience in representing physician groups and other providers in the defense of Medicare audits of vascular procedures. We have seen many instances in which Medicare contractors have misunderstood clinical terminology or other documentation elements relating to vascular procedures and have inappropriately denied claims or even alleged that the provider has committed fraud based only on the contractor’s own mistaken interpretation of the provider’s medical records. Providers who are audited by the Unified Program Integrity Contractors (UPICs), such as CoventBridge Group, should be particularly vigilant in reviewing any findings or claim denials issued by the UPICs. Such denials are generally appealable through the Medicare claims appeal process and may be partially or fully overturned on appeal. Even where a provider prevails on appeal, a contractor’s spurious fraud allegations can have significant detrimental impacts, including delays in payment, Medicare payment suspensions, and further audits from both Medicare and other payors.

Published on: April 15, 2024

MDHHS Awards New Medicaid Health Plan Contracts

by Wachler & Associates, P.C.

Earlier this month, the Michigan Department of Health and Human Services (MDHHS) awarded Comprehensive Health Care Program contracts for Michigan’s Medicaid health plans. Health plans administered under Michigan Medicaid provide access to healthcare services to nearly 2 million Michigan residents. In this recent award of health plan contracts, nine health plans submitted proposals. The awarded Medicaid contracts are expected to go into effect in October 2024 and carry terms of five years, with three, one-year optional extensions.

The Medicaid health plan contracts were awarded based on Michigan’s 10 Prosperity Regions as follows:

Region 1 – Upper Peninsula Prosperity Alliance: Upper Peninsula Health Plan, LLC.

Published on: April 11, 2024

Senators Request Audit of CMS Internal Oversight Processes

by Wachler & Associates, P.C.

On March 12, 2024, several senators wrote a letter to the Government Accountability Office (GAO) Comptroller General, requesting an investigation into the policies and procedures CMS has in place to prevent Medicare fraud, waste, and abuse. The senators noted that in 2022, GAO estimated there were $47 billion in improper Medicare payments with $1.7 billion being reclaimed, representing a 2.8% recovery rate.

The senators’ letter was likely prompted by a recent investigation from the National Association of Accountable Care Organizations (NAACOS), which uncovered an alleged fraudulent urinary catheter scheme. NAACOS discovered that ten medical device companies went from billing 15 patients for catheters to over 500,000 patients for catheters within a period of two years. This alleged scheme has been estimated to cost CMS over $2 billion and has garnered significant media attention. Of particular concern to the senators is the fact that NAACOS publicly commented on this issue prior to any announcements from CMS.

The senators noted that this alleged scheme highlights “critical vulnerabilities” within CMS’ fraud, waste, and abuse policies. To this point, they requested that the fraud prevention measures of the Medicare Fraud Strike Force, a team with representatives from the Department of Health and Human Services (HHS), Office of Inspector General (OIG), and Federal Bureau of Investigation (FBI), should be investigated by GAO in order to identify weaknesses and areas for improvement.

Published on: March 26, 2024

OIG Continues to Audit PRF Recipients

by Wachler & Associates, P.C.

A recent report by the Department of Health and Human Services (HHS) Office of Inspector General (OIG) may signal even more scrutiny of healthcare providers who received funds from the Provider Relief Fund (PRF). As we have long predicted, while the PRF was intended as a financial lifeline for the country’s healthcare providers during the height of the COVID-19 pandemic, as the pandemic has cooled, it has become a minefield of compliance issues for healthcare providers and fertile ground for government auditors to demand repayments.

The PRF is a $178 billion fund created by Congress through the CARES Act to provide financial relief to healthcare providers during the COVID-19 pandemic. HHS subdivided the PRF into various general and targeted distributions and assigned the Health Resources and Services Administration (HRSA) to administer the PRF. These distributions were paid to providers in several waves between April 2020 and the present. While this infusion of cash was likely a welcome relief at the time, it came with strings attached. Some of these strings included restrictions on which providers were eligible to receive funds, restrictions on how providers could use the funds, and requirements to report on the use of the funds.

The recent OIG investigation looked at PRF payments made to 150 providers during the PRF Phase 2 General Distributions. The Phase 2 General Distributions required providers to apply for payments and submit documentation. HRSA reviewed these applications and calculated the payment amount to make to provider, mostly based on the provider’s patient care revenue as documented in the application. OIG asserted that, for 17 of the 150 providers it reviewed, HRSA had miscalculated amounts due and had overpaid the providers. OIG recommended that HRSA demand these providers return these funds and that HRSA review all other Phase 2 General Distributions for similar errors HRSA may have made.

Published on: March 21, 2024

CMS Expands 36-Month Rule to Hospices

by Wachler & Associates, P.C.

Hospice care has become an area of program integrity focus for the Centers for Medicare & Medicaid Services (CMS). Pursuant to that focus, CMS recently expanded the rules and scrutiny that it applies to hospices, including expanding the 36-month rule to apply to hospices.

The 36-month rule is a rule regarding changes of ownership in certain types of Medicare-enrolled entities. If an entity undergoes a change of majority ownership within three years of its initial enrollment in Medicare or within three years of its most recent change of majority ownership, the Medicare provider agreement generally cannot be transferred to the new owner. The new owner is generally required to enroll in Medicare as a new entity, including undergoing all site surveys, accreditations, and other requirements. In the absence of a new enrollment, the new owner will not be permitted to bill under the entity that it just bought. Purchases outside the 36-month window are generally not subject to this rule. Historically, the 36-month rule applied to home health agencies (HHAs). CMS has now expanded it to apply to hospices as well.

Further, CMS has redesignated some hospices as high-risk providers, subject to additional enrollment requirements. CMS classifies provider types based on the perceived risk that the provider type poses to the Medicare program. Hospices are generally in the “moderate risk” category, requiring a site visit on top of the standard enrollment screenings. However, in the recent rule, CMS designated newly-enrolling hospices and those reporting a new owner (5% or more) as part of the “high risk” category. All owners of newly-enrolled hospices and new owners of existing hospices will be required to submit fingerprints for a criminal background check. Note that a new hospice owner may be subject to “high risk” screening without implicating the 36-month rule depending on the nature of the purchase and how much of the ownership interest is transferred. Sales and purchases of Medicare-enrolled entities may also be subject to “change of ownership” or “change of information” requirements, again depending on the nature and amount of the transfer.

Published on: March 19, 2024

Michigan Medicaid Releases New Telemedicine Policy

by Wachler & Associates, P.C.

The use of telemedicine for patient care exploded during the COVID-19 pandemic. While telemedicine services were generally a limited and niche practice prior to the pandemic, social distancing measures, lock-downs, and fear of spreading the disease combined with a desire for widespread testing for the disease created a tremendous need for the use of telemedicine for the delivery of many kinds of healthcare services.

Government programs, like Medicare and Medicaid, and commercial insurance carriers, which had all long restricted the use of telemedicine, scrambled to change their rules to allow telemedicine services in the face of this need. Many of these changes were made in a temporary manner, to expire at the end of the pandemic, with permanent changes to be determined later. Throughout the pandemic, telemedicine services proved to be safe, effective, and convenient. Therefore, healthcare providers and patients generally concurred that permanent changes to telemedicine policies should allow more widespread use.

The Michigan Medicaid program recently released an important update clarifying its permanent, post-pandemic policies regarding which providers are authorized to render services via telemedicine under the Michigan Medicaid program. First, as a general rule, a healthcare provider must be licensed or otherwise authorized to practice in the state where the patient is located. Usually, this will include a Medicaid patient in Michigan and a provider located outside of Michigan. In this situation, the provider must be licensed in Michigan in order for the services to be reimbursed under Michigan Medicaid. Although not a condition of Michigan Medicaid, the provider should also be mindful of the licensing requirements of the state in which they are located, which may require that the provider be licensed there as well. Under limited circumstances, Michigan Medicaid may also cover telemedicine services provided by providers who are licensed in another state to Michigan Medicaid patients if the patient is in the state where the provider is licensed. In either case, the provider must be enrolled in Michigan Medicaid and also have the ability to refer the patient to another provider of the same type or specialty who can see the patient in-person when necessary.

Published on: March 12, 2024

Providers Receiving Repayment Demands for Provider Relief Fund Payments

by Wachler & Associates, P.C.

In response to the unprecedented challenges created by the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security (CARES) Act established the Provider Relief Fund (PRF) as an effort to financially support the nation’s healthcare providers as they grappled with COVID-19. To achieve this goal, the Health Resources & Services Administration (HRSA) was tasked with administering the PRF program, and distributed hundreds of thousands of payments from the program’s $178 billion fund to healthcare providers of all types. However, even though providers may have used the PRF funds for permitted COVID-related purposes, many providers are increasingly being demanded to return the money, and being given little to no notice or information as to why.

In the early days of the COVID-19 pandemic, the first batch of disbursements under the PRF program were unsolicited and were deposited directly into providers’ bank accounts without prior application or notice. Providers had to quickly decide whether to return the funds, or to keep the money and agree to abide by the terms and conditions of the PRF program, despite not knowing at the time precisely what those terms were. Many providers that are being subjected to the current rash of repayment demands received PRF funds during the earliest distribution phases.

The repayment demands themselves and the processes available to dispute such demands present an entirely new set of complications and may often give the impression that a provider is being unfairly targeted for performing valuable healthcare services during a public health emergency. As the administrator of the PRF program, HRSA is supposed to initially notify providers of any alleged non-compliance with the PRF program terms and conditions. Usually, this is due to HRSA’s claim that a provider has not submitted the required reporting before the appropriate deadline or within the late reporting timeframe. Notably, providers are increasingly commenting that they are not receiving any notices regarding compliance with the PRF program or reporting requirements, or further, that they are later discovering such notices were sent to the wrong address.

Published on: February 27, 2024

RAC to the Future: AI in Healthcare Audits

by Wachler & Associates, P.C.

Healthcare providers are starting to see the first claims audits based on analysis and determinations made by artificial intelligence (AI). Although the technology is new, many of the issues remain the same. Especially where the companies that develop AI-based audit tools sell these tools and services to commercial insurance companies, AI-driven audits increasingly resemble audits of Medicare providers and suppliers performed by the Recovery Audit Contractors, or RACs.

RACs are Medicare contractors charged by the Centers for Medicare & Medicaid Services (CMS) to identify overpayments and underpayments made to providers and to facilitate return of overpayments to the Medicare Trust Fund. Primarily, RACs accomplish this by conducting audits and issuing repayment demands. RACs are different from other types of Medicare contractors that conduct audits because RACs are paid on a contingency fee. That is, RACs received a percentage of any funds they extract from providers, making them significantly incentivized to deny claims and demand repayment even where there is no clinical or legal basis to do so.

Similarly, because few insurance carriers have developed sophisticated AI tools in house, they often contract outside technology companies to provide the AI audit tools, and often to conduct the audits themselves. These outside contractors are motivated to deny claims and identify alleged overpayments in order to retain the business of the insurance carrier. This motivation is further enhanced where the outside contractor is paid a percentage of the alleged overpayments that their AI tool identifies. Therefore, any provider should carefully scrutinize any such audit findings, much as they would scrutinize the findings of a similarly motivated RAC.