Beneficiaries recently informed the government how they were contacted by equipment companies and persuaded to accept unnecessary equipment or services.

Some patients received items they never requested. Providers then sent certificates of need to the patients’ physicians, who often signed the forms without verifying medical necessity with the patients. Then, suppliers often inflated equipment costs by more than 1,000 percent when billing Medicare.

However, for every example of abuses such as these, there are dozens of inadvertent billing errors and well-intentioned financial relationships that violate antifraud and abuse rules. What distinguishes these situations from the above instances of intentional fraud is that they often result from inattention to billing procedures or a poor understanding of reimbursement and antifraud regulations. The government clearly takes the position that a repeated pattern of inattention to these rules constitutes fraud, subjecting the provider to large penalties under various antifraud statues.

Biller Beware

Even before the penalties apply, the investigation process itself often creates havoc with a company’s ability to function.

Two identically suited men arrived at one of my HME clients’ offices, presented the receptionist with a search warrant, and proceeded to remove computers and patient records. My client was the target of a Medicare fraud investigation.

Another client, a pharmacy, discovered that its operation was under scrutiny because federal agents showed up at the homes of several of the company’s staff members at
7:30 a.m. to ask them about billing activities at their company.

Investigations can affect more than just company staffers. One investigation of an HME supplier resulted in the questioning of referring physicians, investors in a joint venture and the sleep center where tests were conducted.

If you are lucky, federal investigation will merely result in dozens of hours of lost time, thousands of dollars spent in legal and accounting fees and a degree of harm to your company’s reputation that can be salvaged over time. Often, severe fines and monetary penalties that easily run into five to six figures will be part of this unpleasant package. Exclusion from federal program participation and even imprisonment are possible.

These examples are not designed to scare you. They occur throughout the country with increasing frequency. The government believes that more than 10 percent or so of all health care costs nationally are attributed to fraud or abuse. For every dollar spent on antifraud enforcement, the government claims it receives hundreds of dollars in collections and fines. Clearly, investigating health care fraud is a lucrative investment of government funds, and will continue to accelerate.

Government scrutiny need not come as directly or forcefully as it did with my three clients. State governments, including state Medicaid agencies, are conducting their own fraud and abuse investigations and turning over damaging information to the Office of the Inspector General (OIG) or the Justice Department. Perhaps most sobering, a supplier may become the target of an investigation that began with another provider. For example, if a hospital is under investigation because of an irregularity in its outpatient department cost report, and that facility has a joint venture with an HME supplier, the supplier may come under investigation, which may lead then to an investigation of all the supplier’s contract relationships.

Employee Scrutiny

In addition, the federal false claims statutes give a private qui tam right to employees and private citizens to sue on behalf of the government for violations of these statues. A disgruntled former employee has an incentive to sue a supplier or agency because of billing problems that allegedly constitute false claims.

Since the qui tam individual’s entitlement is a significant fraction of the total fine imposed on the health care organization (often, 15 to 25 percent or more), and since penalties often equal five to 10 times the amount of alleged overpayments, it is easy to see why these qui tam provisions create a veritable legion of potential watchdogs looking over your shoulder, watching for your mistakes.

Supplier Misunderstanding

In my experience, suppliers and other homecare companies generally believe that their business operations are correct, proper and legal. However, very often they or their employees have done something that may be unlawful or, at least, could trigger an investigation.

Most homecare companies are unaware of the extent of potential exposure and may be ignorant of unlawful activity. Often, suppliers believe they can engage in conduct that can be questioned and challenged, even though it is common within the industry.

I believe that one reason for this widespread problem is that the anti-fraud and abuse laws and other laws regulating self-referral are frequently misunderstood by home health providers. The application of these laws is widespread and variable.

Every time a homecare company gives or receives anything of value from a physician, hospital, managed care organization, network or other alliance, anti-kickback and/or self-referral issues are created. These laws apply to virtually every relationship among health care providers including service arrangements, leases, activitieswithin networks and company acquisitions.