Department of Health and Human Services

Following on the Department of Health and Human Services Office of Inspector General’s (OIG) June announcement that it would begin updating its public-facing Work Plan on a monthly basis, OIG released its first update to add 14 new topics to the Work Plan on July 17. As the health care industry knows, OIG Work Plan sets forth various projects that the OIG’s Office of Audit Services (OAS) and Office of Evaluation and Inspections (OEI) are currently undertaking or planning to undertake in the future. Previously, OIG updated its Work Plan to reflect adjustments once or twice each year. In a stated effort to increase transparency in its audit and inspection work, OIG changed its practices to begin issuing monthly updates.

The 14 topics all describe new OAS audit work, much of which is focused on Medicare and Medicaid issues. Several areas appear to lend themselves to data-mining, such cross-checking claims between Medicare Parts A and B or providers of concurrent services. For example, the OIG aims to:

  1. Evaluate whether certain Medicare Part B payments for ambulance services are subject to Medicare Part A skilled nursing facility (SNF) consolidated billing requirements (i.e. the SNF received payment for the ambulance transport as part of the Part A payment, and thus was responsible for paying the ambulance provider);
  2. Compare Medicare Part B and Part A claims to check for overlapping claims between home health agencies and/or hospices and outside providers;
  3. Investigate the validity of Medicare payments for telehealth services provided at distant sites that do not have corresponding originating site claims; and
  4. Examine Medicare payments to hospital outpatient providers for non-physician outpatient services provided under the inpatient prospective payment system.

OIG also proposed two more wide-ranging programmatic reviews. First, OIG plans to conduct a study to identify “common characteristics” of “at risk” home health agency providers in an effort to target pre-and post-payment claim reviews. This OAS study appears to be a follow-up to an OEI study issued in June 2016 of “selected characteristics commonly found in OIG-investigated cases of home health fraud.” Second, OIG plans to review hospital electronic medical record incentive payments for compliance with Medicare’s meaningful use requirements. OIG’s continued examination of EMR incentive payments follows on OAS’ June 2017 report estimating that between May 2011 and June 2014, over $729 million was paid to hospitals and physicians who did not comply with the incentive program requirements.

For a full list of the 14 additional inquiries, visit the OIG’s Work Plan website.

According to a report released last week, the Health Care Fraud and Abuse Control Program (HCFAC) returned over $3.3 billion to the federal government or private individuals as a result of its health care enforcement efforts in fiscal year (FY) 2016, its 20th year in operation. Established by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) under the authority of the Department of Justice (DOJ) and the Department of Health and Human Services (HHS), HCFAC was designed to combat fraud and abuse in health care. The total FY 2016 return represents an increase over the $2.4 billion amount reported by the agencies for FY 2015.

The report serves as a useful resource to understand the federal health care fraud enforcement environment. It highlights costs and returns of federal health care fraud enforcement, providing not only amounts recovered from settlements and awards related to civil and criminal investigations but also outlining funds allocated for each departmental function covered by the HCFAC appropriation. Total HCFAC allocations to HHS for 2016 totaled $836 million (approximately $255 million of which was allocated to the HHS Office of Inspector General (OIG)) and allocations to DOJ totaled $119 million. The report touts a return on investment of $5 for every dollar expended over the last three years.

The report also includes summaries of high-profile criminal and civil cases involving claims of violations of the False Claims Act (FCA), among other claims. The cases include OIG and HHS enforcement actions as well as some of those pursued by the Medicare Fraud Strike Force, which is an interagency task force composed of OIG and DOJ analysts, investigators, and prosecutors. Successful criminal and civil investigations touch virtually all areas of the health care industry from various health care providers to pharmaceutical companies, device manufacturers and health maintenance organizations, among others.

The report follows an announcement by the DOJ last December declaring FY 2016’s recovery of more than $4.7 billion in settlements and judgments from civil cases involving fraud and false claims in all industry sectors to be its third highest annual recovery, the bulk of which, $2.5 billion, resulted from enforcement in the health care industry.

Barely a week after the U.S. Department of Health & Human Services Office of Inspector General (OIG) issued a new fraud alert about Anti-Kickback Statute compliance risks with medical director arrangements, the U.S. Department of Justice (DOJ) announced a $17 million False Claims Act settlement with a nursing home for alleged kickback violations concerning medical director arrangements.

Hebrew Homes Health Network, Inc., a Miami-Dade County nursing home network, and its former president and executive director, William Zubkoff, agreed on June 16, 2015, to settle the qui tam suit brought by Hebrew Homes’ former CFO. According to DOJ, this is the largest False Claims Act settlement for a nursing home allegedly violating the Anti-Kickback Statute.

In the settlement agreement, the government alleged that Zubkoff and Hebrew Homes devised a scheme that, from 2006 to 2013, involved hiring numerous physicians as “sham” medical directors who performed few or no actual services as a way to compensate the physicians for their Medicare referrals.

The government contended in the settlement that the following alleged facts served as “evidence proving” the alleged violations:

  • Hebrew Homes drafted and provided the medical directors with uniform contracts that detailed numerous job duties for the medical director position.
  • As corroborated by statements made by certain of the medical directors to the United States, the medical directors performed none, or almost none, of the job duties listed in their contracts, but nonetheless were paid the salaries provided in their contracts.
  • The medical directors’ patient referrals, without exception, increased exponentially once the medical director contract and payments began.
  • Hebrew Home employees recommended via e-mail increasing the salary of various medical directors because of their high number of patient referrals, and recommended decreasing the salary of, or terminating, medical directors for their lack of patient referrals.

The relator makes other allegations in the complaint to support his case, such as facilities having multiple medical directors simultaneously, the failure to require or request time records of performing services, and examples of internal communications to support the theory that directorships were used as a way to increase referrals.

As part of the settlement, Zubkoff agreed to resign as an employee of Hebrew Homes on March 23, 2015. OIG expressly reserved its exclusion rights against Zubkoff, which is an indication that OIG is considering pursuing an exclusion case against him. Hebrew Homes also agreed to enter into a five-year Corporate Integrity Agreement (CIA) with OIG, which involves OIG monitoring Hebrew Homes’ arrangements with referral sources. The CIA also requires the board of directors to hire a compliance expert to review and report on the compliance program.

The physicians who had the medical directorships were not a party to the settlement, and their potential liability was not released by the settlement. In light of OIG’s fraud alert, it remains to be seen whether OIG will pursue spin-off investigations of some physicians.

Health care general counsel should review and brief their internal clients on the new Practical Guidance for Health Care Governing Boards on Compliance Oversight (Guidance), released on April 20, 2015.  A joint effort by the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services (HHS), the Association of Healthcare Internal Auditors, the American Health Lawyers Association (AHLA) and the Health Care Compliance Association, the Guidance is a useful and timely resource for both the general counsel and the board.

While the Guidance does not break new ground, it updates and condenses prior publications, addressing such important compliance program considerations as:

(1) The definition of the interrelationship between, and the roles of, the organization’s audit, compliance and legal functions;

(2) Mechanisms for effective and appropriate reporting of compliance issues within an organization;

(3) Methods for identifying regulatory risks; and

(4) Means of encouraging accountability for achievement of compliance goals and objectives throughout the organization.

For a detailed analysis of the Guidance, please read “New Board Compliance Guidance Prompts General Counsel Focus.”

By McDermott’s Health Regulatory Compliance Developments Team: Michael Peregrine, Bernadette Broccolo, Joshua T. Buchman, Tony Maida, Kelsey Leingang and Laura McLane