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Florida Medical Device Company Settles $16 Million Case

November 10th, 2021 by

Enforcement against medical device companies is not new and yet, these companies continue to engage in schemes that land them in hot water.  Frequently the same schemes are repeated over and over- some form of payment by the device company to a physician who selects/recommends the device to patients.  In some cases, the payment is in the form of an honorarium for speaking engagements.  In others, the payment is an all-expense paid travel to attend device company-sponsored “CME” in exotic locations or consulting fees for assisting in the evaluation and design of the device.

Announced yesterday by the U.S. Department of Justice (DOJ), is the settlement of allegations against Florida-based Arthrex Inc., a medical device company that specializes in orthopedic products.  Under the settlement agreement, Arthrex will pay $16 million for allegedly paying kickbacks to an orthopedic surgeon (Dr. Peter Millett) in Colorado.  The “payment” in this case was structured as royalty payments purportedly to compensate the orthopedic surgeon for his “contributions” to the development of two of Arthrex’s products when in fact the “payment” was intended to induce the surgeon’s recommendation/selection of the Arthrex products.  By offering the payments to the surgeon with the intent to induce purchase of Arthrex’ products which were then billed to Medicare, Arthrex violated the Anti-Kickback Statute (AKS) as well as the False Claims Act. read more

Compounding Pharmacies Remain at the Tip of the Enforcement Spear

November 8th, 2021 by

Compounding pharmacies are subjected to special licensing and permitting rules because of the heightened risk of the very nature of what they do- customizing a prescription by combining, mixing or altering ingredients to create a sterile or non-sterile medication for a given patient.  Pharmacies may only compound drugs where a commercially available drug/dose/formulation is not available.  Because of the heightened risk coupled with the high cost of compounded drugs and the increased prescribing of these expensive drugs, compounding pharmacies continue to be at the tip of the enforcement spear and a target for investigations.   This and the fact that the number of compounding pharmacies is only a fraction of the number of licensed pharmacies in the U.S., contributes to the increasing visibility when the U.S. Department of Justice prosecutes violators.

Growth of Compounding

From 2006 to 2015, the U.S. experienced a sevenfold increase in the prescribing of compounded drugs.  Recently, the compounding pharmacies market was valued at more than $9 billion and is projected to grow by another $5 billion over the next 30 years. read more

Routine Waiver of Patient Financial Responsibility – A Wolf in Sheep’s Clothing

May 19th, 2021 by

By: Michael Silverman

While not a ‘classic’ kickback – such as the scenario of a practitioner receiving remuneration in exchange for a prescription or referral of healthcare business – the routine waiver of patient financial responsibly by a healthcare provider ALSO constitutes healthcare fraud, even for commercially insured patients!

Unfortunately, such a serious violation does not readily come to mind for many of those operating in the healthcare space, but its relatively straightforward once you think about it. In essence, a financial incentive is being provided to the patient to utilize the services of a certain healthcare provider by virtue of that individual not being subjected to out-of-pocket expense they normally would be subjected to if they were to utilize another similarly situated provider. read more

Provider Self-Disclosures of Overpayments for Medicare Part C – Managed Care

March 6th, 2019 by

medicare part c overpaymentBy: Karina Gonzalez

When providers or suppliers self-report overpayments to Medicare Part C Managed Care organization, there is some uncertainty on what lookback period applies and whether there actually is an overpayment obligation. Is it Medicare’s 60-day overpayment rule that applies or do the Managed Care Part C organizations impose a different lookback period for overpayments?

CMS (The Centers for Medicare & Medicaid Services) published its Final Rule clarifying the procedures applicable to the statutory requirement under the Affordable Care Act (“ACA”) for providers and suppliers to self-report and return overpayments. (The Final Rule was published on February 12, 2016). The Final Rule applies to Medicare Parts A and B and addresses the procedures that a provider or supplier need to follow to investigate, identify, quantify to self-report and return an overpayment. The Final Rule clarifies the obligations of Medicare providers and suppliers to report and return overpayments for claims originating only under Medicare Parts A and B. The final rule does not address, or reference, the obligations of providers to return overpayments to Medicare Advantage organizations for Part C claims. read more

A New Perspective from CMS? Medicare, Stark Law and Whistleblower Changes on Deck

October 2nd, 2018 by

medicare stark lawBy: Dave Davidson

Over the past several months, the Centers for Medicare & Medicaid Services (CMS) has taken a number of steps that show an awareness of the regulatory burden placed upon participants in the government’s health care programs, and even some willingness to consider reducing those burdens.  While it remains to be seen whether the recent proposals will have measurable results, the following actions can still be viewed with guarded optimism.

Proposed Changes to Medicare

In July, 2018, CMS proposed significant changes to Medicare, to be included in rules that take effect in 2019.  These changes cover physician fee schedules, streamlining Evaluation & Management (E&M) billing, advancing “virtual care,” decreasing drug costs, revising the MIPS program and establishing the MAQI demonstration project.  The agency also asked for comments on price transparency issues. read more

Anti-Kickback Statute and Healthcare Marketing: 3 Legal Considerations

September 6th, 2018 by

healthcare marketingBy: Matt Fischer

Healthcare marketing arrangements that violate the Anti-Kickback Statute (AKS) can lead to serious financial and criminal consequences.  Understanding the types of marketing arrangements that courts have found to be in violation of the statute and the potential implications are critical for marketers to know in order to operate in the healthcare industry.

Under the AKS, it is a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce referrals of items or services reimbursable by the Federal health care programs.  Where remuneration is paid purposefully to induce referrals of items or services paid for by a Federal health care program, the AKS is violated.  By its terms, the AKS ascribes criminal liability to parties on both sides of an impermissible transaction.  An example of a highly scrutinized arrangement involves percentage compensation.  For regulators, percentage compensation arrangements provide financial incentives that may encourage overutilization and increase program costs.

Here are 3 important things to know: read more

Medicare Audit and Appeal Process from A to Z: Challenging Extrapolated Overpayments

February 1st, 2018 by

ZPIC auditBy: Matt Fischer

Medicare claims are processed by organizations (i.e. Medicare Administrative Contractors (“MACs”)) that contract with the Centers for Medicare & Medicaid Services (“CMS”) to act as liaisons between the Medicare program and providers and suppliers.  As CMS continues to evolve its enforcement strategies to reduce fraud and abuse in the system, post payment reviews utilizing statistical sampling still remain as one of its key methods.  These reviews are conducted not just by MACs but also by Zone Program Integrity Contractors (“ZPICs”).  When a review is completed, providers and suppliers often face large extrapolated overpayment amounts based on the analysis of a small sample of claims.  Therefore, providers and suppliers need to understand the process and most importantly, how to effectively navigate the system.

ZPICs are a part of Medicare’s integrity program and took the place of Program Safeguard Contractors (“PSCs”) that operated with the same goal in the past.  ZPIC reviews initiate in various ways such as from whistleblower complaints, through ZPIC investigations (e.g. using data mining), and from referral from the Office of Inspector General (“OIG”).       read more

Civil Investigative Demand: What to Expect in a Heightened Regulatory Environment

November 6th, 2017 by

DOJ InvestigationBy: Matt Fischer

The United States Department of Justice (DOJ) has the power to issue civil investigative demand (CIDs) when the DOJ has reason to believe that a person may be in possession of information relevant to a false claims investigation.  The DOJ is empowered to serve CIDs by the False Claims Act (FCA).  A CID is similar to a grand jury subpoena; however, it provides greater versatility in the use of the information obtained.  In addition to requiring the production of documents similar to a grand jury subpoena, CIDs demand other types of discovery responses and the information gathered may be shared between the civil and criminal sides of an investigation.  Given this flexibility and with the passage of the Fraud Enforcement and Recovery Act of 2009 (which changed the law to allow issuance of a CID without the personal signature of the Attorney General), the DOJ has substantially increased its use of CIDs in the realm of healthcare law enforcement.     read more

Beware The Hypnosis of Crisis

April 27th, 2017 by

By: Jeff Cohen

One of the biggest challenges faced by addiction treatment providers today, especially in Palm Beach County, Florida, arises in the context of unprecedented pressure by law enforcement via the Sober Home Task Force, newspapers and insurers.  The threat of being targeted by law enforcement is an enormous thing in itself.  Add to that the mainstream media’s insatiable desire for readers, the industry’s drop into insurer red flagging and recoupment, the political football nature of addiction and addiction treatment, and treatment providers can lapse into a state of paralyzed tunnel vision, a sort of mass hypnosis.  Here’s the problem:  providers dealing with the current compliance crisis environment have a lot to lose if they take their eye off the bigger picture.  The more absorbed they become in “crisis mode,” the more likely they will miss important addiction treatment compliance details in an increasingly regulated and changing industry.  Losing the ability to see the entire picture (and trends) and quickly adapting to it can have costly (and even deadly) consequences.

The addiction treatment industry is like any other healthcare provider—enormously and increasingly regulated, highly scrutinized and always dynamic.  The moment it took on features of traditional healthcare (e.g. lab and physician services), it left the relatively warm and fuzzy comfort of behavioral health providers, sorta.  “Sorta” because medical behavioral health (e.g. psychology and counseling) has not had it easy in the past 10 years, as it came under crushing price compression with managed care driven networks and other price cutting middlemen that have often been owned or controlled by insurance companies.  Addiction treatment providers in the pure behavioral health space were “saved” from all this till about three years ago because they were out of network and not the focus of insurer driven price cuts.  As payors (and their price cut incentivized middle men) looked for more ways to drive up profits, the competitive and disorganized addiction treatment sector became a natural (and unprepared) sector to hit.  And they hit it hard!  Clearly, the Perfect Storm.  Addiction treatment providers now have no option but to learn to swim hard and fast in the ever changing river of the healthcare business industry. read more

Cigna Lawsuit Loses Texas Case Against Humble Surgical Hospital, Hit with $16 Mil Judgment

July 13th, 2016 by

anti kickbackBy: Karina Gonzalez

Cigna recently sued a Texas hospital, Humble Surgical for overpayments.  Humble Surgical is an out-of-network (OON) provider.  Cigna alleged fraudulent billing practices and that the hospital engaged  in a scheme to defraud payors by waiving members’ financial responsibility.

While the suit involved many other  allegations  our article focuses on the arguments Cigna made on failure to collect co-payments, deductibles, and co-insurance and fee-forgiving practices by the hospital.   There were several other issues raised that are important to various practices that Cigna has engaged in with out-of-network providers.  Cigna has consistently audited South Florida providers alleging failure to collect patient financial responsibility or fee-forgiveness, then informing the provider that it was not entitled to any reimbursement because these practices fell within the exclusionary language of the member’s plan.

The suit brought under federal law, ERISA and also Texas common law seeking reimbursement for all overpayments. Cigna was seeking equitable relief including imposing a lien or constructive trust on  fees paid to the hospital.

Humble Surgical counter sued against Cigna for  nonpayment of patients’ claims, underpayment of certain claims and delayed payment of all claims in violation of ERISA, including other causes of action. Here’s what happened:  read more