OIG, GAO talk healthcare fraud as Health Alliance settles--again--with DOJ

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The backdrop: Less than a month after agreeing to a $108 million settlement with the U.S. Department of Justice (DOJ) in a case involving ex-member The Christ Hospital, the Health Alliance of Greater Cincinnati has struck yet another deal to resolve allegations that its network hospitals violated the Anti-Kickback Statute and the False Claims Act. This time the Health Alliance, two member hospitals (Fort Hamilton Hospital and University Hospital) and a physician group will pay $2.6 million to settle claims that the hospitals were involved in a kickback-for-referral scheme related to interventional cardiology procedures, reports the Business Courier of Cincinnati.

The action: It's testimony season on Capitol Hill, and officials from both the Office of Inspector General (OIG) at the U.S. Department of Health and Human Services and the U.S. General Accountability Office (GAO) talked about healthcare fraud and abuse with some renewed urgency during a June 15 Joint Hearing on Reducing Fraud, Waste and Abuse in Medicare held by the Subcommittees on Health and Oversight and the House Committee on Ways and Means.

The OIG, which recently announced that its expected recoveries for October 2009 through March 2010 include $667 million in audit receivables and $2.5 billion in investigative receivables, is seeking new power to exclude fraud-minded corporate executives from the Medicare program, reports The Hill. Currently, those executives have a convenient out. Owners and employees who knew or should have known about fraudulent activity that resulted in a company's conviction can be excluded from Medicare--but only as long as they still work for that company. So post-conviction, executives can resign and owners can sell out to escape exclusion. The OIG wants to close that loophole by obtaining the authority to exclude any past or present worker who was responsible for Medicare fraud.

In addition, new care delivery and payment models promoted by the Patient Protection and Affordable Care Act, such as accountable care organizations, medical homes, gain-sharing, and bundled payment systems, "will require a fresh examination of fraud-and-abuse risks," said OIG Chief Counsel Lewis Morris at the hearing. The risks, which could differ based on the models' design and operation, "could include, for example, stinting on care, discrimination against sicker patients, misreporting quality and performance data, and gaming of payment windows to ‘double bill' for otherwise bundled services," he said.

These risks might require changes to the fraud-and-abuse laws, said Morris. "Existing fraud-and-abuse laws designed to restrain the influence of money on medical decision-making may complicate or impede certain reforms because the fraud-and-abuse laws generally restrict economic ties between parties in a position to generate federal healthcare program business for each other."

Meanwhile, the GAO took direct aim at the Centers for Medicare and Medicaid Services (CMS) during the hearing. Kathleen King, the GAO's director of Health Care, identified five recommendations for reducing improper Medicare payments. Those five challenges include the following:

1. Strengthening the provider enrollment process and standards, particularly conducting background checks at the time of enrollment on home health agencies and suppliers of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS).

2. Improving pre-payment review of claims. King commended CMS for adding "edits to flag claims for services that were unlikely to be provided in the normal course of medical care." However, "additional pre-payment controls, such as using thresholds for unexplained increases in billing, could further enhance CMS' ability to identify improper claims before they are paid," she noted.

3. Focusing post-payment claims review on the most vulnerable areas. Paying the recovery audit contractors (RACs) on a contingency fee basis has resulted in the RACs focusing on high-dollar inpatient hospital stays. "Therefore, other contractors' post-payment review activities could be more valuable if CMS directed these contractors to focus on items and services where RACs are not expected to focus their reviews, and where improper payments are known to be high, specifically home health and durable medical equipment," said King.

4. Improving oversight of contractors, particularly drug plan sponsors.

5. Developing a robust process for addressing identified vulnerabilities that lead to improper payment. CMS hasn't set such controls fully in place, for example, with the national RAC program, said King.

To learn more:
- read the DOJ press release
- read this Business Courier of Cincinnati article
- take a look at this piece in The Hill
- read Morris' prepared remarks
- read the GAO's recommendations and King's statement here
- visit the Ways and Means hearing webpage
- read this Federal News Radio report
- read this RacMonitor article

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