Medicare

The Medicare and Medicaid programs were established to ensure the health and medical needs of our nation’s aging and disabled populations. Unfortunately, a small number of doctors,hospitals,nursing homes,drug companies, and other health care providers have taken advantage of our tax dollars by making false claims to Medicare and Medicaid.Common fraudulent schemes include billing for unperformed services, upcoding,excessive service levels,questionable medical necessity,or referral kick backs.

Over the past decade,the federal government, led primarily by the Department of Justice (DOJ) and Department of Health and Human Services (DHHS) has heightened its scrutiny of billing by skilled nursing facilities (SNFs).  Some of their efforts have been aided by employee as well as private citizens acting as whistleblowers.  Under the False Claims Act (FCA), 31 U.S.C. §§ 3729–3733, private citizens who disclose to the government the exact elements of the purported fraud receive a percentage of the funds recovered by the government. The FCA was enacted in 1863 as the result of widespread fraud by Civil War suppliers. Nat’l Whistleblower Ctr., False Claims Act/Qui Tam Awards.

The Medicare fee-for-service reimbursement structure and the private, for-profit provider healthcare system has created two problems:  (1) an unintended incentive for over utilization of services,and; (2) an unintended incentive for the over utilization of services, which the government has been unable to audit, primarily as the result of the growing numbers of Medicare beneficiaries and senior health care providers.

Moreover, the Office of Inspector General (OIG) has been hampered by the impact of the sequestration of funds on its ability to root out fraud and ensure quality of care.  A total of $30.6 million was sequestered from the Health Care Fraud and Abuse Control Program (HCFAC) program in FY 2013, despite the fact that audits have been shown to be effective.  See, Dept’ of Health and Human Servs. and Dep’t of Justice Health Care Fraud and Abuse Control Program Annual Report for Fiscal Year 2013.  In 2009, the OIG’s review of skilled nursing facilities billing practices revealed that 37% of all billings that were paid did not meet Medicare quality-of-care requirements.  In 2012 Medicare spent over$32 billion on SNF services alone, of which $1.5 billion should not have been paid.

What additional amount of fraud or inappropriate billings could remain unidentified due to lack of compliance officers or whistleblowers afraid to come forward?  With billions of dollars in payments made every year and limited enforcement due to sequestration of funds and federal hiring freezes, skilled nursing facilities are staying one step ahead.

In particular, the Federal government has been interested in the over utilization of therapy services provided within the skilled nursing facility (SNF) setting.  Like all astute business people, SNF owners have taken measures to increase the valuations of their facilities by enhancing profitability. “Buyers who have been in the business for a few decades are aghast at the $150K to $300K per bed prices (valuation matrix for buying and selling SNFs) being paid for essentially a building with a skilled nursing license.”  The Senior Care Investor,Vol. 27:10, at 2 (Oct. 2015).

As early as 2012, the government was aware that the Medicare and Medicaid funds paid to SNFs were an attractive opportunity to increase profitability. In a 2012 interview, Jodi Nudelman, inspector general of Department of Health and Human Services Region II, noted that Medicare pays SNFs for the services they provide, but at “different rates for each group . . . that varies between $200 and $800 a day per patient.” One of the reasons that nursing homes were targeted for attention was that “facilities were increasing billing for the highest level of therapy even though the types of patients and their medical conditions had not really changed.” The result? According to Nudelman, SNFs were billing more than 25% of their claims in error, resulting in $1.5 billion that should not have been paid.  See, Interview with JodiNudelman,Region II Inspectorby RobertaBaskin,OIG Directorof MediaCommunications (Nov. 13, 2012).  In other cases, facilities were providing unnecessary services that offered no patient benefits and could actually result in harm. “We have seen this with therapy services,” continued Nudelman, “because facilities have a financial incentive to provide more therapy than a patient needs.  The more therapy a facility provides, the more they are paid.”

In an interview with the New York Times, Andrew Slavitt, the acting administrator of the Centers for Medicare and Medicaid Services,acknowledged that the payment system created an incentive for nursing homes to “provide as much therapy to a resident as that resident can tolerate.” And in March, an influential federal panel, the Medicare Payment Advisory Commission,called on Congress to “thoroughly revamp payments to nursing homes,” noting that Medicare payments to SNFs have been “at least 10 percent higher than the cost of care for fourteen years in a row. . . . Therapy payments are not proportional to costs, but instead rise faster than providers ’therapy costs.” This means, according to the commission, that Medicare “essentially requires tax payers to continue to finance the high margins of this industry.”  Robert Pear, Nursing Homes Bill for More Therapy Than Patients Need, U.S. Says, N.Y. Times (Sept. 30, 2015).

A Wall Street Journal article published the previous month reported that the highest level of skilled nursing therapy—at least 720 minutes a week—generated some of Medicare’s largest payments. In 2013, the Journal found, Medicare’s “ultra-high” rate (720 minutes or more per day) averaged roughly $560 a day. “The average was $445 a day for ‘very high’ therapy (500 to 719 minutes) and $325 for the ‘low’ category (45 to 149 minutes).”  Christopher Weaver, et al., How Medicare rewards copious nursing home therapy,Wall St. J. (Aug. 16, 2015, 10:40 P.M.).

Greg Crist, a spokesman for the American Health Care Association (lobbying group for the skilled nursing industry), said that while Medicare may pay nursing homes more than their costs, Medicaid, the program for low-income people, generally pays SNFs much less.“  And on any day,”Mr. Cristsaid, “two-thirds of our residents are on Medicaid.”  Put another way, Medicaid does not facilitate profitability so we drive profitability through the Medicare program.

This has created a ripe environment for whistle blowers and, not surprisingly, the number of cases filed continues to increase. The federal government is now placing greater emphasis on putting wrongdoers in jail as well recouping fraudulently billed services. In September, U.S. Deputy Attorney General Sally Quillian Yates noted that “civil attorneys investigating corporate wrongdoing should maintain a focus on the responsible individuals.” “Absent extraordinary circumstances or approved departmental policy,” she added, “the department will not release culpable individuals from civil or criminal liability when resolving a matter with a corporation.” In other words, no plea deals.

The elderly and disabled sector of our society continues to grow. So too will the government’s responsibility to enforce and perhaps change a federal program that is now leaking billions of dollars. At the moment, a few unscrupulous players are winning the race.

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Medicare

The Seventh Circuit upheld the dismissal of a suit filed in 2011 under the False Claims Act on January 4, 2016, finding the Relator was merely adding details to a prior kickback suit remarkably similar to his own.  Bogina v. Medline Industries, Inc., No. 15-1867 (7th Cir. 2016).  Thus, Relator Bogina failed the “original source” requirement as he was not “an individual who has direct and independent knowledge of the information on which the allegation [in his complaint] are based.”  31 USC § 3730(e)(4)(B).  Defendant Medline Industries, Inc. had previously settled a 2007 suit brought by Sean Mason, an employee of Medline, where it had been charged with giving bribes and kickbacks to purchasers of its medical equipment who provided services reimbursed by Medicare and Medicaid.  Without admitting liability Medline settled with the government for $85 in compensation.  Judge Posner found the two suits remarkably similar and that the government was on notice of the possibility of a broader bribe kickback scheme before Bogina sued.  Had the government chosen to broaden the case against Medline beyond the settlement with Mason it could have gone after other Medline customers such as those named in Bogina’s claims that allegedly received kickbacks.  As Posner noted, the settlement with Medline released it from some of the very claims alleged in Bogina’s complaint.  Despite Bogina’s claim that the fraud continues to the present day and that other nursing facilities were involved, these allegations were “on information and belief.”  And as Rule 9(b) of the Federal Rules of Civil Procedure require “in alleging fraud  .  .  . a party must state with particularity the circumstances constituting fraud.’’ Allegations based on “information and belief” won’t do in a fraud case for it can means as little as “rumor has it that . . .”

Full decision available for review: http://media.ca7.uscourts.gov/cgi-bin/rssExec.pl?Submit=Display&Path=Y2016/D01-04/C:15-1867:J:Posner:aut:T:fnOp:N:1680761:S:0.

The content provided here is for informational purposes only and should not be construed as legal advice on any subject.

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Medicare

Whenever other benefits are involved in a WC claim, questions arise.

If a client gets Vet benefits, is there a reduction?  If Service Connected, no. If Non-Service Connected, yes.

If client is getting UC & WC, will Social Security deny benefits?  Not necessarily. 820 ILS 405 Section 601(b)(1).

If client has another WC claim pending in Ohio as well as Illinois, what then?  Confusing since Ohio is a reverse offset State.

If client is going thru a divorce, does the spouse have an interest in the WC claim proceeds?  You betcha.

Does CMS require that a Medicare set-aside arrangement be  established in situations that involve both a WC claim and a third party  liability claim?  Answer: Third party liability insurance proceeds are also  primary to Medicare. To the extent that a liability settlement is made that  relieves a WC carrier from any future medical expenses, a CMS approved Medicare  set-aside arrangement is appropriate. This set-aside would need sufficient funds  to cover future medical expenses incurred once the total third party liability  settlement is exhausted. The only exception to establishing a Medicare set-aside arrangement would be if it can be documented that the beneficiary does not  require any further WC claim related medical services. A Medicare set-aside arrangement is also unnecessary if the medical portion of the WC claim  remains open, and WC continues to be responsible for related services once the  liability settlement is exhausted.

The content provided here is for informational purposes only and should not be construed as legal advice on any subject.

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Medicare

Coordination of Benefits & Recovery: http://go.cms.gov/cobro

Attorney Services:  http://go.cms.gov/attorney

Beneficiary Services:   http://go.cms.gov/bene

Insurer Services:  http://go.cms.gov/insurer

The content provided here is for informational purposes only and should not be construed as legal advice on any subject.

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Medicare

Annual enrollment for Part D prescription drug plans and Part C Medicare Advantage plans is from October 15, 2014 through December 7, 2014.  This means that Medicare beneficiaries have to analyze their options and make choices by December 7, 2014.

During open enrollment, Medicare beneficiaries who do not have a Part D plan can enroll in one, and those who do have Part D coverage can change plans.  Beneficiaries can also return to traditional Medicare from a Medicare Advantage (MA) plan, enroll in an MA plan, or change MA plans.

Plan information for 2015 is available on the Medicare Plan Finder at www.medicare.gov.

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Medicare

David R. Bryant and Jennifer Danish will be presenting “UPDATE IN SOCIAL SECURITY AND MEDICARE SET ASIDES” at the CBA Worker’s Compensation Committee Meeting scheduled for November 7, 2014, 12:15 p.m. to 1:30 p.m.  For more information visit www.chicagobar.org.

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