In my last couple of articles, I’ve focused on the controls necessary to safely operate a pharmacy and dispense appropriate prescribed medications, including controlled substances. And those of you who heed that kind of advice are likely to avoid the unwanted attention of law enforcement. However, for those who continue to think they can operate with impunity, heads’ up: the war against opioids in the U.S. is ongoing and enforcement activities are not slowing down. Below is an article about this recent case out of Texas and some lessons we can all take away from what was reported.
In this most recent case, a federal jury in Texas convicted a Texas pharmacy owner (Carr) on March 7 of one count of conspiracy to unlawfully distribute and dispense controlled substances, four counts of unlawfully distributing and dispensing controlled substances, one count of conspiracy to launder money, and two counts of engaging in transactions in property obtained from the illicit activity. Carr now faces up to 140 years in prison, among other consequences.
The U.S. Attorney arrested 13 people in a $100 Million healthcare fraud scheme in NY and NJ involving automobile insurance claims. Some of the facts alleged include—
Bribed 911 operators and hospital employees for confidential information of insured drivers
Unnecessary and painful medical procedures
A non-physician owning medical clinics
Paying hundreds of thousand of dollars to “runners” who used the money to bribe people
Healthcare businesses that largely serve people injured in motor vehicle accidents remain a top tier focus for law enforcement and special investigative units (SIUs) of insurers. But so do many other providers in the healthcare sector, such as pharmacies, durable medical equipment (DME) providers, addiction treatment providers and labs. Payer and governmental presumption is often that financial motives are driving clinical behavior, NOT documented medical necessity. Hence the need for active compliance plans and policies and procedures that don’t sit on a shelf, but rather are woven into daily business and clinical operations. Nothing less than the right contracts, the right compliance plan and the right business culture will establish and maintain a sustainable healthcare business!
There’s certainly a lot of enforcement activity against compounding pharmacies these days. The ramp-up began around 2012 after a fungal meningitis outbreak that caused 64 deaths and many more infections related to the compounding activities at New England Compounding Centers. That heightened scrutiny continues to rock the compounding pharmacy world, not just from the drug quality, safety, and security standpoint, but also from the standpoint of the potential fraud and abuse inherent in the pricing of ingredients and the final compounded product as well as relationships between compounding pharmacies and the physicians who refer to them.
LATEST ENFORCEMENT ACTION
Announced yesterday by the U.S. Department of Justice (DOJ), the latest enforcement action is against Professional Compounding Centers of America Inc. (PCCA), a Houston-based supplier of wholesale compounding ingredients to other pharmacies. In many prior enforcement actions, compounding pharmacies have been charged in various schemes to defraud the federal government by filing false claims for prescriptions that were not medically necessary or not requested by patients and paying kickbacks to prescribing physicians. While similar in some ways to prior enforcement actions, this one differs because in this case, the DOJ reached back to the wholesaler of the compounding ingredients that were sold to the pharmacies that then submitted inflated claims to TRICARE. Here, the DOJ nabbed PPCA in a complaint alleging False Claims Act violations, specifically that PCCA reported fraudulent and inflated Average Wholesale Prices (AWPs) for the compounding ingredients that it sold to pharmacies. Those inflated AWPs resulted in pharmacies submitting inflated claims to TRICARE, the federal payer for military personnel and their dependents.
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.
Yet again, the fraud enforcement arm of the DOJ strikes out against fraud in the pharmacy industry. Two new cases shed continuing light on the ongoing fraud.
Announced last week by the DOJ, the owner/operator of five pharmacies in New York pled guilty to charges stemming from a scheme to defraud Medicare and Medicaid by billing for prescription drugs that were not dispensed, not prescribed, not medically necessary or dispensed when the pharmacy had no authority to dispense the prescription drugs. This blatant disregard for the law was magnified when the owner/operator used the ill-gotten gains of her scheme to purchase luxury items like cars and jewelry. Nothing screams “come and get me” like openly flaunting the money taken from the government.
Healthcare fraud continues to be a significant priority for the U.S. Department of Justice. On February 24, 2021, the DOJ’s Criminal Division Fraud Section published its annual “Fraud Section Year in Review 2020.” While the Fraud Section has three separate enforcement units, the Health Care Fraud (HCF) Unit is responsible for all enforcement activities in the health care industry. The Unit’s focus is to protect against fraud and abuse in federal health care programs and recoup illicit gains.
During 2020, the HCF Unit operated 15 strike forces in 24 federal judicial districts throughout the U.S. The efforts of these strike forces led to charges against 167 individuals alleging $3.77 billion in fraudulent charges for health care paid for by federal and state programs. This should cause any health care provider to stand up and take notice. And enforcement in the health care industry is not likely to go away soon with so many schemes ripe for the government’s picking and generating recoupment on behalf of the federal health care programs.
Here are couple of the latest schemes that have landed pharmacies, pharmacists and other health care professionals squarely in the crosshairs of federal enforcement:
A 2018 Department of Justice civil settlement involving a Florida interventional pain physician was a cliff hanger when it surfaced, especially vis a vis the issue of the so-called Company Model, where anesthesiologists and referring physicians jointly owned an anesthesia provider. The Daitch settlement involved interventional pain specialists who settled the case for $2.8 Million. There, the government claimed that a mass of urine drug tests weren’t reasonable or medically necessary. But the issue buried in the settlement call the issue of intertwined medical businesses and the Company Model into question.
The so-called Company Model involves the formation of a company that provides anesthesia services. It’s jointly owned by anesthesiologists and referring physicians. Theoretically, on a Monday, the anesthesiologists own the anesthesia practice and bill for all anesthesia services performed at a GI lab or ASC. On a Tuesday, however, the new company (jointly owned by the same anesthesiologists and the referring physicians) steps in and starts billing for the anesthesia services, thus indirectly sharing a part of the profits with the physicians who are generating the anesthesia referrals.
The Secretary of Health and Human Services issued blanket waiver of the Stark Law on March 30th in order to facilitate COVID related medical services. The waivers apply only to financial relationships and referrals related to COVID. The circumstances and conditions under which the waivers apply are strictly and narrowly described. Moreover, the waivers have no impact in the presence of fraud or abuse. With respect to physicians wanting to provide designated health services (e.g. clinical lab services) related to COVID detection and treatment, for instance–
the federal requirement that the DHS be provided in the same building as the physician office is waived; and
the financial relationship limitations between the physician (or family member) and the DHS provider is waived.
The waiver also contains specific examples of waived interactions between providers and hospitals, including—
On February 4, 2020, the Department of Justice announced a $1.5 million settlement with Southeastern Retina Associates, a 17 physician practice, with offices in Tennessee, Georgia and Virginia. The sole basis of the claim was the alleged misuse of the Modifier 25 billing code and charging for exams at higher levels than warranted. The claim was initiated by a whistleblower, who will receive $270,000 from the settlement.
Use and potential abuse of Modifier 25 is obviously not unique to retina surgeons. In fact, the modifier can be very beneficial to providers, since it allows for payment for those patient visits when the care provided exceeds the scope of the scheduled appointment. However, given the potential for abuse and the many watchful eyes of the government (the Southeastern Retina case was investigated by the U.S. Attorney’s Office, the HHS Office of Inspector General, the U.S. Office of Personnel Management, the FBI, and the Tennessee Attorney General’s Office) and wannabe whistleblowers, a periodic review of a provider’s billing practices is always a good idea.
Attorney Richard A. Merlino will present this live webinar for attendees interested in learning about strategies for proactively investigating a healthcare business. He will share information on predictive analytics and implementing compliance programs, as well as the top exposure areas where fraud is most likely to occur so that you can find the fraud before a whistleblower does.
Compliance programs should establish a culture that promotes prevention, detects and resolves healthcare fraud, per the OIG. Pursuant to the Whistleblower Protection Enhancement Act of 2012, the Department of Health and Human Services, Office of Inspector General, has established a Whistleblower Ombudsman to educate Department employees about prohibitions on retaliation for whistleblowing, as well as employees’ rights and remedies if anyone retaliates against them for making a protected disclosure.
Health law is the federal, state, and local law, rules, regulations and other jurisprudence among providers, payers and vendors to the healthcare industry and its patient and delivery of health care services; all with an emphasis on operations, regulatory and transactional legal issues.