6 Misconceptions About Fraud
Investigations: Who's at risk?
by Neil Caesar

There is a danger of complacency if you ignore these six common misconceptions about fraud and abuse in the HME industry. If you are alert, you should be better prepared to both create and enforce your company’s compliance policies, and avoid a fraud investigation.

1. Only greedy con men get in trouble.

Even companies with honorable goals are at risk of default. Most of the laws tied to false claims focus on reimbursement errors that become fraudulent because they are allowed to continue without attention to monitoring and correcting the problem. Similarly, most anti-kickback investigations focus on instances of value gain in exchange for referrals. While the purpose of such relationships may be improved clinical care, that does not prevent regulatory scrutiny. Even if the value received is simply an opportunity to perform a legitimate service for a legitimate fee, this still may be viewed as a kickback.

2. Everybody does it this way, so I won’t get in trouble.

It is irrelevant whether an activity is common practice—if it violates regulations, it is unlawful.

Of course, the rules can become muddy, partially because of confusing or conflicting instructions from Medicare carriers. In the late 1990s, The University of Pennsylvania received a $30 million fine because its teaching physicians violated Medicare rules for reimbursement for services rendered by residents under the supervision of teaching physicians. This fine was imposed even though the question of when such reimbursement is permitted had been subject to varying interpretations by carriers during the past several years.

Note also that activities that appear to be “done by everyone else,” often vary significantly in their details. Often, these details make the difference between a relationship that passes scrutiny and one that does not.

3. Joint ventures are dangerous—but everything else is safe.

Among other agreements requiring caution are those concerning managed care; rentals and space; management and professional service arrangements; discount arrangements; or almost any relationship where a financial agreement involves the provision of care services. Even though homecare supply companies do not intend that such services be tied together, each such relationship raises the possibility of scrutiny under the law.

4. Only the mastermind behind an arrangement is at risk; suppliers are not at risk if they simply sign on to someone else’s plan.

Anti-kickback laws make equally culpable all who offer or receive anything of value in exchange for a referral or recommendation. Arguably, suppliers are obligated to report those who make such an offer. Fortunately, I rarely see any evidence of enforcement of this obligation.

If you are financially involved in arrangements with others who allegedly submit false claims, you may be in for a rough ride, even if you were not involved with billing procedures. As mentioned, all parties to a venture may come within the scope of any scrutiny attached to that venture. Also, if a supplier’s payment as a subcontractor involves receipt of improper funds, they may be subject to eventual repayment, with or without fines and penalties.

5. If those offering the relationship went to the trouble of putting it together, they must have looked into all the issues, and a supplier does not need to check out the details.

This is a difficult and shifting area of the law. Many homecare companies are ignorant of the issues, rely on old legal advice or mimic a business model they heard about. In addition, some homecare companies are willing to take more risks than others. The mastermind behind the plan may be willing to take on far more risk than would a supplier fully informed about it.

6. If a company’s staff submit false claims or otherwise violate the law without the owners’ personal knowledge, the owners are safe.

In most contexts, the people responsible for the business are also responsible for staff supervision and must be informed about staff members’ activities. They are responsible for all that goes out under their signature or stamp.

With the closer watch over fraud and abuse in the homecare marketplace, in addition to the increased incentives for whistleblowing by former employees, colleagues and patients, HME suppliers are advised to make sure their businesses are compliant.

A business owner cannot afford to give in to the common misconceptions of the past. Watching your business practices and those of your partners will help to ensure investigators never visit your business.