Stark, Health Care Fraud & Abuse Update: June 2019

The health care industry is constantly evolving, and the laws to which providers are subject are continually refined and revamped.

As regulators continue their mission to stamp out fraud, waste, and abuse within federal health care programs, medical practices, businesses, and providers need to stay apprised of the latest news and stay tuned to what the future may bring.

Below, are a few of the most recent updates concerning federal health care fraud and enforcement, regulatory revisions, and potential change-ups.

Fraud and Abuse Enforcement: Civil, Criminal & Administrative Actions

In November 2018, we provided an update on regulatory health care fraud enforcement actions, and in particular, the 2018 National Health Care Fraud Takedown. As discussed, the largest multi-agency health care enforcement operation to date netted numerous investigations and indictments nationwide. The OIG expects close to $3 billion ($2.91B) in investigative recoveries from FY 2018 alone.

As an OIG report shows, FY 2018 was an active year for health care fraud enforcement:

  • Over 1,100 new criminal health care investigations opened by the DOJ;
  • Federal indictments in nearly 600 cases involving over 870 defendants, nearly 500 of whom were convicted for fraud and abuse-related crimes during the fiscal year.
  • Over 915 civil health care fraud investigations opened by the Justice Department, with more than 1,200 civil health care fraud and abuse matters pending at the end of the fiscal year.
  • Nearly 680 criminal actions over Medicare and Medicaid fraud, and nearly 800 civil actions, including administrative penalties over self-disclosures, unjust-enrichment suits filed in federal court, CMP (civil monetary penalty) settlements, and False Claims Act cases.
  • More than 2,700 individuals and entities were excluded from Medicare and Medicaid, and other federal government health care programs.
  • Numerous audits and evaluations issued by HHS-OIG in connection to Medicare and Medicaid funds.

In 2019, the DOJ, HHS/OIG, Health Care Fraud and Abuse Control Program (HCFAC), and other enforcement agencies have already made it clear they intend to build upon these numbers. In May alone, the OIG averaged nearly 1.5 new criminal and civil health care fraud cases per day, many of which dealt with Stark law and AKS violations, other areas of focus include:

  • Health care fraud schemes
  • Medicare and Medicaid kickbacks
  • Opioids and illegal prescribing / fraud schemes
  • Greater individual accountability

The OIG publishes nearly daily updates on its biggest busts and takedowns. Some of the most recent criminal and civil enforcement actions from June 2019 include indictments for a Houston medical clinic, criminal charges for 3 physicians and 5 marketers implicated in a kickback scheme, the Appalachian Region Opioid Takedown, insurance billing settlements, and many more.

It also includes the takedown of a nationwide brace scam, which in April resulted in 24 indictments in 17 federal districts. A DOJ press release notes that medical professionals who worked with fraudulent telemedicine companies received illegal bribes and kickbacks from medical equipment companies in exchanges for medically unnecessary orthotic braces. Participants allegedly submitted more than $1.7 billion in Medicare claims and were paid over $900M.

Health Care Regulations & The Future

There are a number of initiatives and efforts related to federal health care fraud and abuse laws currently underway that may re-shape the industry and how practices, business professionals, and providers conduct their work.

Stark Law Overhaul

CMS Administrator Seema Verma announced in March 2019 that her first action item on a list of major overhauls focuses squarely on the Stark law, or the physician self-referral law. As part of the updates, CMS wants to clarify areas of non-compliance, update decades-old rules, and support the push to value-based care.

Since then, however, the transition is slow in coming, and many health care executives are saying major and immediate changes to Stark are needed in order to adopt new payment models without incurring risks for significant penalties (even when there’s no intent to violate the law). They want to be sure updates address critical areas such as:

  • New forms of reimbursement and bonus sharing
  • Incentives for practitioners
  • Exceptions for value-based care (bundled models, capitated payments, and Medicare shared savings)
  • Telemedicine reimbursement
  • Repeal of the 3-day acute-care stay requirements

Anti-Kickback Reform

Reform advocates also have their eyes set on refurbishing the Anti-Kickback Statute. Earlier this year, the CMS and OIG issued requests for information to expedite sprint toward creating new AKS safe harbors. The resulting responses from a range of hospitals, physician associations, and trade group shows that potential changes may address some of the biggest purported issues, including:

  • Coordinated care
  • Eliminating over-utilization of federally payable health care services (through criminalization, civil monetary penalties, or sanctions like Medicare exclusion)
  • Safe harbors for cybersecurity
  • Broad exceptions for alternative payment models
  • Patient access / social health determinants
  • Merging AKS / Stark exceptions
  • Formalizing and expanding existing fraud and abuse waivers

Criminal Liability Under the Travel Act

In May, a federal jury found 7 defendants guilty in connection to a bribery and kickback scheme at a physician-owned surgical hospital in Texas. Ten others implicated in the scheme had previously pled guilty. The case, U.S. v. Beauchamp, is gaining attention because of the federal government’s new approach to prosecuting health care fraud.

Because the parties in this matter were not recipients of federal health care program money, prosecutors would have not been able to bring charges under federal health care fraud laws such as the AKS and Stark Law. Instead, they creatively used the Travel Act (which prohibits unlawful activity involving interstate commerce) to target fraud and abuse conduct which did not harm programs like Medicare or Medicaid.

While not the first case to take such an approach, prosecutions of health care fraud matters under the Travel Act are rare. However, it did prove successful and could become a more common tactic used by prosecutors to crack down on fraud involving private payors / privately insured beneficiaries.

Whatever the future may bring for health care fraud and abuse laws and enforcement, Hendershot Cowart P.C. will be prepared to provide the immediate counsel and representation clients need. Call (713) 909-7323 or contact us online to learn more about our health and medical law practice.

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