One more CMS "demonstration project."
Posted by: Robert Markette
August 22, 2007

On Monday, the Department of Health and Human Services and the Department of Justice announced another test project designed to prevent fraudulent providers from operating in the Medicare system.  This time the government is targeting fraudulent infusion therapy providers operating in South Florida.

As described by the press release, the new demonstration project will operate in a manner similar to the home health fraud enforcement project announced for Houston and L.A.  Infusion providers in designated south Florida counties will be required immediately resubmit applications for enrollment.  Failure to reapply within thirty days of receiving a notice to reapply will result in having your billing privileges revoked.

If an infusion therapy provider is discovered to have owners, partners, directors, or managing employees who have a felony conviction, the provider will have its privileges revoked.  If the provider failed to report a change of ownership, it will have its billing privileges revoked.  If a provider no longer meets each and every provider enrollment requirement, they will have their privileges revoked.

The providers that successfully reapply may find themselves subject to greater review, including site visits, depending upon the government?s determination of the potential risk for more fraud.  For many providers, this is a potentially onerous outcome.  The announcement does not make it clear what factors will become part of the ?risk assessment.?  More audits and site visits will translate into more work for providers.

The press release went on to detail the successes of the South Florida Medicare fraud ?strike force?.  This effort uses real time access to Medicare billing records to assist the government?s efforts to identify and prosecute Medicare fraud.  It has resulted in a large number of indictments and convictions over the last eighteen months.

As with all other ?demonstration? projects, I would expect this project to spread and to become a standard operating practice for the government.  Given the success of the strike force in south Florida, I would not be surprised to discover similar efforts initiated in other parts of the country as well.

Over the last few months, the government has announced a number of efforts to combat fraud in the home health and related industries.  Providers should be aware of these efforts, because they could very quickly become standard enforcement techniques.   Although many of these efforts are aimed at over fraud, it is still drawing enforcement attention back to home health.

The government has not taken a hard look at fraud in the home health and hospice industries in a number of years.  This has led many providers to become lax in their fraud and abuse compliance efforts.  It seems that they are beginning to look again.  Providers need to be aware that this is coming and prepare for it.    Those providers who are engaged in questionable activities simply because others are doing the same, may be very surprised to find they are being prosecuted when the government starts to pursue fraud and abuse prosecutions in the home health and hospice industries more vigorously.

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Another opinion of free services to beneficiaries
Posted by: Robert Markette
August 03, 2007

The OIG issued another opinion letter this week on providing free stuff to beneficiaries before the beneficiary has a need for your services.  (In other words, free services as a way to get your foot into the door.)  Once again, OIG?s opinion was that providing free stuff to beneficiaries is a potential violation of the fraud and abuse laws.  (They say potential, because they will not offer an opinion on intent, but remember, intent is governed by the overly broad one-purpose test.)

The opinion was sought by another DME provider.  The requestor provided home medical equipment, including home oxygen and sought an opinion regarding its practice of providing certain items to patients diagnosed with congestive heart failure.  As you may know, Medicare requires an oximetry test to confirm a patients need or in home oxygen.  This test cannot be performed by the provider who will supply the in home oxygen.  

The provider in this letter was providing patients diagnosed with congestive heart failure with a ?clinical assessment? and an oximetry test.  (For those of you who think this sounds familiar, OIG issued an opinion on a very similar arrangement last year.)  The clinical assessment consisted of ? a subjective functional assessment; heart rate, respiratory rate, and blood pressure measurements; assessment of breath sounds and level of dyspnea; a check for peripheral edema, abdominal pain or swelling; and a medication profile and mobility analysis.?  

The requestor also provided the patient with education regarding his/her condition and tips in the recognition and self-management of symptoms. Finally, as part of the assessment, the requestor would perform pulse oximetry tests on the patient while the patient was at rest, while active, and overnight.

The requestor argued that such testing was appropriate, because it provided useful data about the patient?s breathing.  They also noted that it could be days or weeks before and independent company was able to perform the patient?s oximetry test.

The provider was not providing free home oxygen. These clinical assessment were potentially reimbursable by Medicaid or if performed by an IDTF, but the DME provider would not bill anyone for them.  The DME provider would only perform these assessments on patients after they received a doctor?s order (for the assessment, but not a referral for home oxygen).  The requestor would not advertise or market that it provided these free assessments and the patients would be advised that they were free to choose any provider for the supplies, equipment, or services they would ultimately need.  

In determining whether the free CHF assessment and oximetry testing was a valuable service, OIG again applied the reasonable beneficiary test.  OIG opined that a reasonable beneficiary would believe that the CHF assessment and oximetry test was a valuable medical service that would speed access to home oxygen and lead to improved clinical outcomes.  Thus, even though the assessment had a reimbursable value of $22.00, the beneficiary?s perception made it a valuable service.

In addressing whether the free service would be likely to influence the beneficiary?s decision, the OIG recited the same factors it used in the last two free services opinions.  OIG noted that the physician order for the assessment would be perceived as an endorsement of the provider; providing the free services gave the provider a chance to establish a relationship with the patient; once the relationship was established, the patient would likely choose the provider in the future; offering the services for free ?maximized? the opportunity to initiate the relationship.  For these reasons, the arrangement was likely to influence the beneficiary?s decision.

The final question was whether the provider should know the arrangement would influence the beneficiary?s decision. The OIG noted that CHF patients are likely to need other services in the future; the requestor offered them free services; the requestor provided them in the home.  These factors led OIG to conclude not only that the provider should know the arrangement would influence beneficiaries, but that the arrangement was calculated to generate business for the requestors. They did not mention it, but the free oximetry test provided the requestor with advance notice whether the patient would be eligible for home oxygen.  Which helped the provider to further identify patients with a need for future services.

Once again, we see OIG finding on offer of free services to beneficiaries to be a potential violation of the CMP and anti-kickback statutes.  Because of the focus on the beneficiaries perception of value, it will be very difficult for any arrangement that ?gets your foot in the door? before an actual referral for services, like free safety or other assessments, to pass OIG?s scrutiny.  Before you begin providing pre-referral in home services or assessments, you should seek the advice of counsel.  The penalties for violating the CMP statute are quite steep.

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