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2017 FCA Non-Compliance Trends Emerging at Hospitals

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The Office of Inspector General (OIG), as part of the Department of Health and Human Services, plays a critical role in maintaining the integrity of the Medicare and Medicaid programs. Each year, the OIG releases a Work Plan that highlights its priorities and emerging issues in detecting and preventing fraud, waste, and abuse in the Medicare and Medicaid programs.

The recently released 2017 Work Plan highlights the areas OIG will be carefully reviewing and investigating in 2017, and identifies various segments of the healthcare industry susceptible to fraud and abuse, including hospitals, nursing homes, hospices, home health, medical devices, pharmaceuticals and others.  Within those segments, the OIG highlights the specific issues most deserving of scrutiny. 

Sometimes these issues involve simple errors, but often times they are the result of fraud.  Whistleblowers can play a significant role in exposing healthcare fraud, and can be assured that the OIG will be particularly receptive to information related to the areas the OIG has identified.

Set forth below is a sampling of some of the specific risks the OIG identified with respect to hospitals. 

Hyperbaric Oxygen Therapy

Hyperbaric oxygen (HBO) therapy involves giving a beneficiary a high concentration of oxygen inside a pressurized chamber. To qualify for reimbursement for this therapy, a beneficiary must have at least one of fifteen covered conditions. However, recent OIG reviews show that the medical documentation submitted by providers to justify Medicare reimbursement for the treatment often is often inadequate. 

Providers who submit bills to federal healthcare program for services ineligible for reimbursement may be violating the False Claims Act.

Inpatient Psychiatric Facility Outlier Payments

Individuals suffering from an acute mental health crisis involving mental illness or substance abuse related problems, are sometimes admitted to Inpatient Psychiatric Facilities. Between the fiscal years of 2014 to 2015, there has been a 28% increase in claims with outlier payments made to Inpatient Psychiatric Facilities. Outlier payments are supplemental Medicare payments designed to recover funds that would not normally be available from the patient. The 28% increase resulted in an increase of $80 million in public spending from the Medicare program, while drug usage data has not significantly changed in a way that clearly correlates with this increase. 

The increase in outlier payments may be an innocent phenomenon, but the significance of the increase suggests that some providers may be improperly billing Medicare, in violation of the False Claims Act.

Payments for Patients Diagnosed with Kwashiorkor

Often associated with famine-stricken tropical and sub-tropical areas of the world, Kwashiorkor is a severe form of malnutrition, which manifests in the form of a swollen abdomen on an individual who is otherwise extremely frail and thin. Though incidents of Kwashiorkor are not typically found in the United States, the OIG has identified many Kwashiorkor diagnoses on claims for Medicare reimbursement. In past reviews, the OIG has identified improper payments for the diagnosis of Kwashiorkor, and is continuing to look into medical records to make sure the diagnosis is legitimate and not made solely for the purpose of increasing reimbursement.

A sudden increase in reimbursement requests for rare diseases, especially if for disproportionately expensive conditions or treatments, can signal an intentional effort to defraud the government.  A whistleblower reporting such an effort can be eligible to receive an award under the False Claims Act.

Hospital Wage Data Misrepresentation

Hospitals report wage data annually, which is used to calculate wage index rates to account for the different costs of care in different geographical regions. In the past, the OIG has used this data to identify hundreds of millions of dollars in incorrectly reported wage data. By adjusting the cost of labor upwards, hospitals are able to increase the amount of money that Medicaid will reimburse. Again this year, the OIG Work Plan lists this as a continuing problem.

Fraud and misrepresentation is not limited to patient records and medical diagnoses, but can also occur in non-medical hospital departments such as Human Resources or Accounting.

Teaching Hospital Payments

Indirect Medical Education (IME) Adjustments are adjustments to Medicare reimbursement amounts to hospitals that qualify as teaching hospitals. These teaching hospitals receive additional payments for Medicare patients to reflect the higher indirect patient care costs of teaching hospitals, compared to non-teaching hospitals. Prior OIG reviews have shown that excess reimbursement has been awarded in conjunction with these IME adjustments. The OIG will continue to assess whether payments for IME claims amounts were made in accordance with Federal requirements, and were calculated correctly.

Payments for the somewhat intangible increased costs associated with teaching hospitals can be difficult to track and verify. The OIG is aware of this blind spot, and is working to limit wasteful spending due to improper IME adjustments.  Whistleblowers can play a key role in helping the OIG identify problems.

Goldberg Kohn's False Claims Act practice supports whistleblowers who identify fraudulent business practices within the healthcare industry. Employees in the healthcare industry are uniquely positioned to notice and report wrongdoing, and by coming forward, can play an important role in protecting patient health and the wasteful expenditure of taxpayer dollars. Contact Goldberg Kohn today for a free, confidential consultation.

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