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TRICARE Audits & Fraud Investigations

The federal government has a marked interest in identifying waste, fraud, and abuse in the health care industry, particularly when it comes to federal programs that reimburse claims from health care practices. This includes TRICARE, the federal government payor for military health insurance that paid over $1.75 billion in FY 2015. Following an investigation by the Justice Department and other state and federal agencies, authorities suspect a majority of that was expenditure was the result of fraudulent billing. They also suspect the primary offenders are compounding pharmacies with special licenses to mix and alter medications, including specialty creams.

Today, the federal government has dramatically increased investigations into compounding pharmacies and other TRICARE health care providers, with a particular focus on identifying fraudulent schemes involving:

  • Marketing representatives, compounding pharmacies, and physicians
  • False Claims Act & Anti-Kickback Statute violations
  • Lack of medical necessity
  • Failures to establish proper doctor-patient relationships
  • Overbilling, auto-refill programs, services not rendered

While federal authorities continue investigations to identify and prosecute fraudulent billing practices and kickback arrangements, compounding pharmacies and other health care practitioners should be aware they are more likely to face increasingly aggressive TRICARE audits. As such, these providers should take proactive steps to ensure they are prepared for any audit or investigation, and to take immediate steps when they are notified of an audit or potential fraud investigation.

TRICARE Claim Audits

Express Sprits, which administers the TRICARE Pharmacy Program, is actively conducting audits of compounding pharmacies, pharmacies, physicians, toxicology groups, marketing agents and other TRICARE providers. Although identifying overpayments for recoupment is still one of their job descriptions, the recent crackdown has placed greater emphasis on identifying potential fraud, Anti-Kickback Statute violations, and violations of the Stark Law, which governs physician referrals.

With an increased focus on fraud, health care providers need to address and respond to audits appropriately in order to provide relevant records and documentation and limit their exposure to more invasive, time-consuming, and costly investigations that pose a potential for violations and penalties.

Our Houston health and medical law attorneys at Hendershot, Cannon & Hisey, P.C. have experience helping TRICARE providers take the proactive steps to ensure clear and compliant billing practices By establishing sound policies and an infrastructure of compliance, practitioners can reduce their exposure to recoupment and further investigations. We also provide immediate counsel to clients facing TRICARE audits, and representation during appeals.

TRICARE Fraud Investigations

In addition to counseling TRICARE providers on a pro-active basis and providing representation during audits, our firm also has extensive experience representing clients who have received Civil Investigation Demand (CID) letters or subpoenas in connection to alleged fraud, or who have been made aware of TRICARE fraud investigations. Because the federal government is prioritizing these investigations, and because they create substantial risks for prosecution and penalties, including civil and criminal liability, early intervention by an attorney is of the utmost importance.

Our legal team responds immediately to TRICARE fraud investigations to communicate with authorities, interpret and respond appropriately to CIDs and other government demands, and explore options for resolutions, including various defense strategies against allegations that focus on:

  • Lack of medical necessity / doctor-patient relationships – Federal authorities have cited a lack of medical necessity and lack of proper physician-patient relationships as a basis for many of their investigations and violations of the False Claims Act, especially in relationship to compounding pharmacies. Refuting these allegations may involve demonstrating that a proper doctor-patient relationship was established, that telemedicine protocol was followed, and / or medical services and products were necessary.
  • Intent – The Anti-Kickback Statute is an intent-bases law, meaning that any remunerations received by physicians or other providers do not constitute a violation if their sole purpose was not to induce volume or value of referrals. Although the False Claims Act does not require proof of specific intent to constitute a violation, arguments of intent, though limited, may be raised to ensure those who made honest efforts to comply with the law are not held liable for claims with material inaccuracies due to accident or negligence.
  • Safe Harbors – Certain types of arrangements, such as personal services and management contracts, may fall under “safe harbors” that protect businesses from civil and criminal liability, provided that appropriate terms are met. For example, physicians who are paid by compounding pharmacies may argue that their relationship was a personal services and management safe harbor when there is evidence of an established agreement in writing of at least one year that covers all services provided, and which sets compensation consistent with fair market value in advance, without taking referrals into account.

Mitigating the impact of government demands, responding to authorities, and determining the most appropriate options for resolution and defense are matters that must be addressed on a case-by-case basis – and they should be addressed sooner, rather than later. Our attorneys at Hendershot, Cannon & Hisey, P.C know the federal government has raised the stakes when it comes to TRICARE audits and fraud investigations, which is why we make ourselves immediately available to help providers across the step when they need it most. To speak with a member of our team, contact us.

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