Centers for Medicare & Medicaid Services
Subscribe to Centers for Medicare & Medicaid Services's Posts

First Circuit Deems Request for Leave to File Fourth Amended Complaint Futile

On December 23, 2016, the US Court of Appeals for the First Circuit issued an opinion in United States ex rel. D’Agostino v. ev3, Inc. (Case No. 16-1126), affirming the US District Court for the District of Massachusetts’s denial of a relator’s motion for leave to file a fourth amended complaint under the False Claims Act (FCA).

The relator, a former sales representative at ev3, a medical device developer and manufacturer, alleged that his former employer and its subsidiary, Micro Therapeutics, Inc., violated provisions of the FCA by selling two products, the Onyx Liquid Embolic System (Onyx) and the Axium Detachable Coil System (Axium), to hospitals seeking reimbursements by the government through the Centers for Medicare & Medicaid Services (CMS).

(more…)




New OIG Reports Peg Billing Trends and Prescribing Hotspots as Harbingers of Part D Fraud

On Tuesday, June 23, the U.S. Department of Health & Human Services Office of Inspector General (OIG) released two reports that hone in on data patterns showing potential fraud and abuse in the Medicare Part D program.  These reports were released less than a week after a coordinated national Medicare fraud takedown that included a significant number of Part D-related targets.

Medicare Part D is the optional prescription drug benefit for Medicare beneficiaries that went into effect in 2006.  In 2013, over 39 million beneficiaries were enrolled in the program.  The Centers for Medicare & Medicaid Services (CMS) relies on Part D plan sponsors and the Medicare Drug Integrity Contractor (MEDIC) to help CMS detect and prevent fraud, waste and abuse in the Part D program.

The OIG utilized Part D data analytics to identify three main trends that it sees as potential indicators of Part D fraud: increased spending for commonly abused opioids, over 1,400 pharmacies with questionable Part D billing patterns and specific geographic “hotspots” for specific non-controlled drugs.  The OIG provided five examples of hotspots around the country and compared per-beneficiary payment rates in the hotspots to the national averages.

The OIG issued this report in tandem with another document summarizing the work that  has been done thus far by OIG and CMS in identifying and addressing Part D program integrity weaknesses.  It also touched on MEDIC’s increased authority to access claims data from Medicare Parts A and B in its efforts to combat fraud.  This document emphasized that CMS, MEDIC, and Part D sponsors need to increase their efforts to address Part D fraud and abuse.  OIG also pushed for increased data collection, including expanded reporting requirements and drug utilization review programs, and for the implementation of even more robust oversight efforts, including mechanisms to recover payments from Part D sponsors.

Part D sponsors, pharmacies and providers should be keenly aware of the OIG’s continuous efforts to identify and combat against potential areas of fraud in the Part D program.  Active prescribers located in the OIG’s current hotspots should also prepare for increased scrutiny and continue their efforts to maintain compliance programs that can resolve any statistical issues the OIG may identify.

Read the full reports at https://oig.hhs.gov/oei/reports/oei-02-15-00190.pdf and https://oig.hhs.gov/oei/reports/oei-03-15-00180.pdf.




Recent OIG Report Spotlights Millions in Overpayments Caused by Physician Place-of-Service Coding Errors

On May 6, 2015, the Office of Inspector General (OIG) for the U.S. Department of Health & Human Services (HHS) released a report on overpayments attributed to incorrect physician place-of-service coding. The report determined that Medicare potentially overpaid physicians approximately $33.4 million for incorrectly coded services that were provided from January 2010 through September 2012.

As part of their claims submissions, physicians and other Medicare suppliers are required to report the setting in which they furnish services. This setting designation (either “facility” or “non-facility”) is a decisive reimbursement factor as Medicare only reimburses physicians for overhead expenses if their services are provided in a non-facility setting (e.g., physician offices and independent clinics). The OIG report compared same-day physician and facility claims to determine how often physicians performed services in facility locations but incorrectly coded the services as performed in non-facility locations. Of $33.4 million in estimated overpayments, approximately 75 percent were made for services provided in a hospital outpatient setting but coded as a non-facility claim. The other roughly 25 percent of the overpayments were made for miscoded services provided in ambulatory surgery centers.

The OIG attributed the overpayments to physician-level internal control weaknesses as well as insufficient Medicare contractor post-payment reviews. The OIG recommended that the Centers for Medicare & Medicaid Services (CMS) direct its Medicare contractors to initiate and monitor recoveries of the overpayments identified by the report (as of December 2014, $1.75 million of the 2010 overpayments had already been recovered). Other recommendations included more comprehensive education efforts and directives for Medicare contractors to perform similar place-of-service audits on high-risk physician services and recover any resulting overpayments.

Given the report’s recommendations, physician practices and employers should ensure they are proactively managing compliance to include periodic internal audits of place-of-service coding. By doing so, providers can better protect themselves from potential overpayment liability and can make more timely decisions about corrective actions and government disclosures.

Read the full report: “Incorrect Place-of-Service Claims Resulted in Potential Medicare Overpayments Costing Millions”




CMS Appears Receptive to Senators’ Requests to Change Focus of RAC Program to Providers with High Claims Denials

Last Thursday, in a hearing before the Senate Special Committee on Aging exploring the relationship between Recovery Audit Contractor (RAC) audits and an increase in claims for hospital observation stays, a bipartisan duo of senators urged the Centers for Medicare & Medicaid Services (CMS) to shift the focus of RAC audits to providers that have high levels of claims denial. CMS officials seemed to agree with the senators’ concerns, suggesting that RAC audits will increasingly target providers with higher claims denial rates.

The RAC program was created under the Medicare Modernization Act of 2003 to detect and correct improper Medicare payments. In her opening remarks, Sen. Claire McCaskill (D-MO) criticized the program for focusing its energy on “auditing the appropriateness of short-term [hospital] stays.” As a result, Sen. McCaskill stated, CMS spends more resources in the inpatient setting at the expense of others. Instead, RAC should target providers with higher denial rates, she stressed. “I’m concerned that more than half the RAC audits are for inpatient hospital admissions, when that appears to be out of sync with both the proportion of inpatient claims to total Part A and B claims, as well as out of sync with where CMS’s own contractors say there are higher improper payment rates,” she said.

Committee Chairwoman Susan Collins (R-ME) similarly urged CMS to refocus RAC audits on so-called “outliers” – providers with high rates of denied Medicare claims – “rather than applying the compliance efforts across the board.” In response, Sean Cavanaugh, deputy administrator and director of CMS, said that the agency has in fact already started to change the RAC process. “We’ve already begun with the current RAC contracts to require them to focus on providers where they find a high denial rate and to move on from providers who are consistently billing in accordance with our rules,” he said. Cavanaugh added that CMS is also considering provider feedback regarding its “two-midnight” policy – which clarifies when a patient acquires “inpatient” status under Medicare – and will respond in a proposed rule later this summer.

If implemented, the senators’ suggestions to shift the focus of the RAC process could ease a massive audit appeals backlog in CMS, which has come under fire from lawmakers and providers. At the same time, providers that have higher rates of claims denials should be aware that RAC auditors may soon come knocking.




Recent Appellate Decisions Underscore Importance of Public Disclosure Bar, But Outcomes Are Highly Dependent on the Facts

Two Circuit Courts of Appeals recently came out on opposite ends of the False Claim Act’s (FCA’s) public disclosure bar.  On February 19, 2015, the United States Court of Appeals for the Third Circuit affirmed the district court’s dismissal of claims related to allegations of fraudulently inflated pharmaceutical prices, holding that the information underlying the suit had been publicly disclosed in the media and elsewhere and that the relator failed to qualify as an original source.  U.S. ex rel. Morgan v. Express Scripts, Inc., No. 14-1029, 2015 WL 728029 (3rd Cir. Feb. 19, 2015) (unpublished).  On February 25, 2015, the United States Court of Appeals for the Sixth Circuit reinstated a claim against a hospital related to allegedly fraudulent Medicaid and Medicare charges, holding that the allegations, though previously known to government auditors, had not been publicly disclosed.  U.S. ex rel. Whipple v. Chattanooga-Hamilton County Hospital Authority, No. 13-6645, 2015 WL 774887 (6th Cir. Feb. 25, 2015).  These different outcomes demonstrate the fact-intensive nature of the inquiry under the public disclosure bar.

In Express Scripts, the pharmacist-relator alleged that certain pharmaceutical industry defendants profited from artificially inflated Average Wholesale Prices (AWPs).  In affirming dismissal, the Third Circuit agreed with the district court’s finding that the allegations underlying the case had been widely disclosed, including by the news media and in previously-filed lawsuits (including one in which the relator served as an expert).  Thus, the relator needed to be an “original source” of the information for his suit to proceed.  The Third Circuit held that the relator could not meet this standard.  The relator, who was never an employee of any of the defendants, purportedly identified the alleged fraud by performing an “eyeball” comparison of two publicly available price lists.  Moreover:

The mere fact that Morgan quantified the AWP differential does not remove his allegations from the public disclosure realm.  Morgan’s 4.16 percent differential simply indicates an AWP based on a 25 percent markup over wholesale acquisition cost, a markup disclosed in a Congressional report predating Morgan’s complaint.  The report’s disclosure of a specific, industry-wide markup shift provided Morgan with all the “essential elements” needed to arrive at a 4.16 percent price differential.

In Whipple, the Sixth Circuit confronted a different and more thorny public disclosure issue.  The court, applying the pre-Patient Protection and Affordable Care Act version of the public disclosure bar, determined that the information underlying the complaint’s allegations had not been publicly disclosed, even though the allegations of improper billing had already been the subject of an audit and investigation conducted by the United States Department of Health and Human Services Office of Inspector General (OIG) and Centers for Medicare & Medicaid Services’ contractor charged with investigating fraud and waste.  The defendant hospital had also conducted an internal investigation through its own outside counsel and auditors.  The hospital had submitted a voluntary refund check as a result of these audits, and the OIG had administratively closed its investigation before the relator brought suit.

Nonetheless, distinguishing between [...]

Continue Reading




BLOG EDITORS

STAY CONNECTED

TOPICS

ARCHIVES