A knock on the door: What do government regulators want from providers?

By Paul Cirel

Not many days go by that I don’t hear from a health care provider who has just been contacted – or worse yet, visited – by government agents, demanding the production of medical charts, billing and payment ledgers, appointment books and/or every other sort of record that providers regularly maintain.

With any luck, the question the provider asks is, “What should I do?” Often, it’s “What should I have done?” Either way, the unfortunate truth is that too few heath care providers recognize that they are engaged in the most heavily regulated business in America. Fewer still know who the regulators are, or what to do when contacted by them.

This primer offers a little guidance, but not much solace, on both of those issues.

Whenever there is a knock at the door, two questions immediately come to mind: “Who’s there?” and “What do you want?” When it’s someone from the government who has come knocking, those two questions are even more important.

There is a veritable alphabet soup of health care regulators and weaponry: CMS (the Centers for Medicare and Medicaid Services); DMA (Division of Medical Assistance); OIG (Office of the Inspector General); MFCU (the Medical Fraud Control Unit); the Attorney General’s Office (AGO); the DOJ (Department of Justice) and, well, you get the picture.

The common thread is that any regulator will surely want records, and they will probably want to talk. Before even thinking about answering the door, we need to step back and focus on why the regulators are knocking in the first place.

Fraud and abuse

The main watchwords for the government’s oversight of the health care industry are “fraud and abuse.”

In theory, fraud and abuse are distinguishable concepts.

Under federal regulations, “fraud” is defined as an intentional deception or misrepresentation, made with the knowledge that it could result in an unauthorized health care benefit or payment. “Abuse” is defined as practices that are inconsistent with sound fiscal, business or medical practice, which result in unnecessary costs or reimbursement for services that are either not medically necessary, or were rendered below recognized professional standards.

In practice, however, there are few, if any “abusive” practices, that would not be considered fraudulent if you added the very subjective element of intent. As a result, there are no easy distinctions to be made.

Consider, for example, billing for services that were never rendered versus billing for unnecessary levels of medical evaluation and management services. Depending on the government’s assessment of intent, each of those situations can be – and has been – the basis of anything from simple recoupment of overpayment to the foundation of a criminal prosecution.

In short, like Sam and Eric – the twins in “Lord of the Flies” who melded into the single being, Samneric – “fraud and abuse” has become “fraudnabuse,” a single but amorphous concept describing any practice which exposes a health care provider to liability under any health care reimbursement law or regulation.

Indeed, providers should recognize that the fact that such specialized laws have been enacted – at both the state and federal level – is itself sobering proof of the depths to which the government thinks it necessary to monitor the health care industry.

Long before the current focus on health care took root, there were laws on the books that seemed adequate enough for the criminal and civil enforcement of any matter involving larceny or fraud, false claims or misrepresentations or obstruction of justice.

Now, those general laws have been augmented – if not supplanted – by specifically designed statutes aimed at prosecuting fraud and abuse in virtually every government sponsored and private health care program.

Panoply of statutes

The key aspects of all of these statutes are quite similar.

Generally, each requires some element of intent (i.e. that the conduct was engaged in “knowingly” or “willfully”) and that a reimbursement claim (or statement or representation) was false in some material way.

In the context of a health care claim, materiality usually relates to an aspect of the provider’s claim that impacts how much should be paid or whether or not it should be covered at all. Such factors might include the CPT code description of the service billed, the date, the location of the service or the skill/training of the provider.

These statutes also apply to non-providers who “cause false statements to be made.” Thus, support staff that make erroneous entries on charts, superbills or travel cards that are then routed to the billing department to generate a claim also fall within the statutes’ reach.

Bills don’t even have to be false to prompt an investigation and prosecution.

In at least one case brought under the Medicare and Medicaid False Claims statute, the literal accuracy of the claim was not a defense. In that case, a physician was convicted because the government believed that a less expensive procedure code would have been more accurate, even though the CPT code used was technically accurate in describing the service provided.

Anti-kickback

No discussion of specialized health care enforcement statutes would be complete without reference to the anti-kickback law.

The anti-kickback law was intended to ensure that all referrals be based on factors of medical necessity, skill and suitability, and not because of an economic or other business relationship between providers.

Well-intentioned as it may be, the law paints with a very broad brush. It prohibits soliciting or receiving remuneration to induce – or in exchange for – the ordering, referring or purchasing of any item or service that is reimbursable by Medicare or Medicaid. Remuneration generally means an economic benefit, and any remuneration will do. So, for example, real estate or equipment leases that are deemed to be below market value, a reduced rate for administrative or billing services and low interest loans have all been found to be prohibited forms of remuneration. So, too, have vacations, video equipment and sports tickets.

For purposes of the anti-kickback statute, the inducement of referrals need not be the only, or even the primary purpose of remuneration for it to be a kickback. Even where there are other, justifiable reasons for something of value to have been exchanged (like wanting to do business with a known and trusted colleague), if one purpose was to induce business, it violates the law.

False claims

In civil fraud and abuse cases, which are generally brought under the False Claims Act, the government’s burden of proving intent is greatly reduced for two reasons.

First, as you probably know, civil cases only require proof by a preponderance of the evidence (legalese for “something is more likely than not”), as opposed to the much more exacting “beyond a reasonable doubt” standard required in criminal cases. What you probably don’t know is that the civil false claims statute stacks the deck in the government’s favor. The statute defines “knowingly” to include not just actual knowledge, but also what it calls “deliberate ignorance” or “reckless disregard” for the truth.

What does that mean? Well, you know those provider bulletins, newsletters and carrier manual updates that come rather endlessly in the mail? Study them carefully, because not keeping up with them is considered to be either deliberate ignorance or reckless disregard for what they say.

“But I am too busy to keep up with all that paperwork and besides, I am a good person who certainly didn’t mean to defraud the government” you say? Sorry, because the civil false claims statute says: “[N]o proof of specific intent to defraud is required.”

Believe it or not, there are even worse provisions of the Act. It permits private persons who claim unique knowledge of a past or present fraud (read: disgruntled employees, former business partners or competitors) to bring a civil action in the name of the government. Such whistleblower – or qui tam – suits are quickly becoming the most commonly used weapon in health care enforcement. (For a more detailed story on these cases, see Massachusetts Medical Law Report, Winter 2006, “Health care whistleblower claims on the rise.”)

Why have they flourished? Successful qui tam plaintiffs are entitled to 15-30 percent of any monetary recovery by the government, including not just the recoupment amount, but also penalties of up to $10,000 for each individual false statement and triple the entire amount of damages.

Here’s how it works: The whistleblower – called a “relator” – files the complaint in federal court, under seal. That means that it is not a public document and not even the defendant is served a copy of the complaint. Instead, the relator provides the complaint – along with a disclosure statement of the allegations and evidence he or she is aware of – to the government.

The complaint remains under seal while the United States Attorney’s Office (often aided by OIG) investigates the allegations. Technically, the government has 60 days to review the complaint, but that time limit can be – and routinely is – extended by the court.

The purpose of the review is to allow the government to evaluate whether the allegations have merit. If the government determines there is merit, it will intervene and take over the prosecution from the relator who then sits back and waits to collect. These suits frequently remain under seal for several months – even years – while the government investigates.

The government ‘knocks’

Whether it’s a qui tam complaint, allegations brought to the government’s attention from another source or suspect billing patterns, the methods of investigating presumed fraud and abuse do not vary much, and sooner or later they include making contact with the provider.

That contact may come in the seemingly innocuous form of a notice of audit or it may be an unsettling surprise visit from OIG/DMA/MFCU investigators.

More concerning are subpoenas for records and testimony to be given to a grand jury or federal agent. Downright terrifying is the execution of a search warrant at the provider’s office.

All occur more often than many providers imagine and, regardless of how or when that first contact comes, the investigation started well before the government arrives.

By the time that first contact comes, questionable billing patterns and claims have already been targeted and analyzed. If the investigation was instigated by an outside person, that individual will have been interviewed, along with others the investigators reasonably believe will maintain secrecy until they are ready to contact the provider.

Paul Cirel is a partner at Dwyer & Collora in Boston and focuses his practice on the representation of health care professionals including individual physicians, corporate providers and group practices.

Questions or comments should be directed to the editor at: reni.gertner@mamedicallaw.com