Reprinted from REPORT ON MEDICARE COMPLIANCE, the nation's
leading source of news and strategic information on Medicare compliance, Stark
and other big-dollar issues of concern to health care compliance officers.
By Nina
Youngstrom, Managing Editor
June 9, 2014 Volume
23 Issue 20
Providers should brace for more
Medicare and Medicaid payment suspensions based on a credible allegation of
fraud. CMS and state Medicaid agencies may block payments to large swaths of providers
in one fell swoop, which happened in the nation’s capital this spring, and
impose suspensions on a variety of services and care providers.
“If someone learns they are under
investigation, they need to be prepared for the possibility — moving up to the
probability — for payment suspension, especially on the Medicaid side,” says
San Francisco attorney Judy Waltz, with Foley & Lardner LLP.
Sec. 6402(h) of the Affordable Care Act
requires the suspension of Medicare and/or Medicaid payments to a provider when
there is a credible allegation of fraud unless there is “good cause not to
suspend payments.” Suspension of payments means shutting down some or all of a
provider’s Medicare cash flow while the allegation is investigated. The money
is put in a suspense account — akin to escrow — and released to the provider
only if a case is not pursued and there’s no determination of an overpayment,
Waltz says. Although Medicare payment suspensions max out at 18 months and
can’t last longer than six unless there are special circumstances (i.e., OIG or
DOJ requests it), states decide for themselves how long Medicaid payment
suspensions will last, Waltz says.
As defined in 2011 CMS interim final
regulations, a “credible allegation of fraud” includes an allegation from patterns
identified by audits, civil false claims cases, law enforcement investigations,
hotlines and claims data mining, Waltz says. “Allegations are considered to be
credible when they have indicia of reliability,” the regulations state (42 CFR
Sec. 405.370 for Medicare and 42 CFR Sec. 455.2 for Medicaid). CMS and states
can skip payment suspensions for credible allegations of fraud if there is good
cause (e.g., it would hinder beneficiary access or alert the target of an
investigation). “A credible allegation is a much lower standard than what used
to be required for payment suspensions,” she notes.
There’s more discretion on the Medicare
side in terms of whether to suspend a provider’s payments, Waltz says. But
states must wield this axe unless they can meet a good-cause exception. If CMS
thinks the state had grounds to suspend a provider’s payments but failed to
act, the state loses the federal share of Medicaid for the services that are in
the vortex of a credible allegation of fraud, Waltz says.
Atlanta attorney Sara Kay Wheeler also
sees more payment suspensions based on credible allegations of fraud, which can
stem from a Medicare administrative contractor, zone program integrity
contractor or other audit or investigation. “We have seen an increase in cases
where payment suspensions are at issue,” says Wheeler, who is with King &
Spalding.
There’s nothing stopping Medicare or
Medicaid from suspending payments for a type of service — joint replacements or
cardiac surgery, for example — rather than all payments to a provider based on
a credible allegation of fraud, Waltz says, although she doesn’t know of any
cases like this yet.
Mass Payment Suspensions Are a New
Tactic
But she noted that one new enforcement
technique is mass payment suspensions of unrelated providers based on credible
allegations of fraud. In Washington, D.C., for example, the Medicaid agency
recently suspended payments to 52% of the city’s home health agencies (HHAs)
for personal care aid services. Although Judge Rosemary Collyer of the U.S.
District Court for the District of Columbia on April 9 granted a temporary
restraining order to stop the payment suspension, she later refused to grant
permanent injunctive relief after considering the case in more depth. That left
the payment suspensions in place, although two HHAs got their payment
suspensions lifted and are back in Medicaid while six HHAs face Medicaid
termination.
A sweeping payment suspension is
eye-opening. “This is such a huge number of providers,” Waltz says. “It is not
clear how much differentiation the government can make between providers when
these credible fraud allegations are evaluated. Some may be decent providers,
some may not.”
The D.C. Medicaid agency, the
Department of Health Care Finance, suspended payments without notice to Premier
Health Services, ABA Inc., Health Management Inc., Immaculate Health Care
Services and other agencies based on credible allegations of fraud. The
Medicaid agency alleges the HHAs “repeatedly billed and [were] reimbursed for
PCA services that were not supported by the documentation,” the court decision
states. While plans were made to transfer patients to other providers, the HHAs
were required to continue providing services to Medicaid enrollees. After four
weeks, the HHAs sued to force the city to pay them before they went broke, and
for breach of contract, violation of their due process rights and other alleged
wrongdoing. At an April 9 hearing, the HHAs persuaded the judge there was a
good chance they would win their case, so she ordered the Medicaid agency to
pay them retroactively and keep the money flowing. For their part, the HHAs had
to keep providing personal care aide services because “there was an
insufficient number of home health care providers in the District of Columbia
to which to transfer Plaintiffs’ patients.”
But after the judge reviewed more court
filings, she concluded the HHAs probably wouldn’t prevail. For one thing, the
judge wrote that “in contrast to a provider’s right to participate in the
Medicaid program, there is no constitutional right to receive Medicaid
payments.” Also, the Medicaid agency apparently acquired enough capacity to
transfer the plaintiffs’ patients to other providers so the HHAs don’t have to
keep treating them for free. And the judge wasn’t persuaded the payment
suspension would force the HHAs out of business because Medicaid pays them for
other services, the May 9 decision states.
Finally, the HHAs should exhaust
administrative remedies before seeking relief from the federal courts, the
judge said. “Plaintiffs’ failure to exhaust administrative remedies is yet
another reason why they have not shown a likelihood of success here.”
A Mixed Outcome for HHAs
Ultimately, the outcome for the HHAs
was mixed. Washington, D.C., attorney Brad Johnson, who represents Premier,
said for his client, “the District of Columbia has not disclosed any evidence
of fraud and the suspension has been withdrawn.” After failing to get
injunctive relief, Premier appealed the payment suspension to the Medicaid
Office of Administrative Hearings (OAH). But the two sides worked it out, and
everything is back to normal for Premier, which withdrew its appeal, Johnson
says. Meanwhile, the Medicaid agency is terminating some of the HHAs, including
ABA and Nursing Unlimited Services, from Medicaid. Their attorney, Reggie
Richter, says he is appealing the terminations to OAH and once he files the
paperwork, the terminations will be stayed pending a hearing. Richter is
concerned that providers face payment suspension based on credible allegations
of fraud they are not privy to. “I have reviewed what has happened in other
states, and I think a problematic aspect of the law is you don’t have the
opportunity to basic due process,” Richter says. “The government should not be
able to make these claims without putting up the evidence against them.”
Meanwhile, he notes that KBC also got its payment suspension reversed and
Immaculate and Health Management are allowed to provide Medicaid personal care
aide services but their payment suspensions stand.
CMS has also suspended payments en
masse. In cooperation with an HHS-DOJ Health Care Fraud Prevention and
Enforcement Action Team (HEAT), CMS suspended the payments of 78 Dallas area
HHAs, Waltz says. Last year’s Health Care Fraud and Abuse Control program
report says 297 providers are under “active suspension” from Medicare in fiscal
year 2013 and 105 more suspensions were approved that year.
“Payment suspension is a powerful
weapon,” Wheeler says. “By the time the time period runs out, you could be out
of money,” especially if Medicare or Medicaid is one of your main payers.
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