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Potential Medical Fraud: Self-disclosing and How it Helps

The Office of the Inspector General (OIG), a division of the Department of Health and Human Services (HHS) is a Federal investigation unit responsible for investigating suspected fraud against Federal healthcare programs including Medicare, Medicaid, and Tricare. Offenses within their jurisdiction include violations of the Anti-Kickback statute and the independent provider agreement the Medicaid program forms with each provider enrolled in Medicaid.

The laws defining the boundary between acceptable billing practices and relationships between providers are complex and all too easy to run afoul of (even negligently or accidentally) in the course of the day-to-day operations of a health care provider as it seeks to compete, make ends meet and provide the best care to its patients. It is a distressing, yet common occurrence for the administrator of a health care facility to give their business practices or the actions of their staff a closer look and realize they may be in violation of the law, or very close.

Even under the best circumstances, the last thing such a provider typically wants is the OIG knocking on their door. In the event that a provider suspects their actions, or actions done by their employees, may be illegal, it may be better than the OIG hearing it from them instead. The HHS-OIG Self Disclosure Protocol, (SDP for short), defines the benefits that a provider may enjoy for having self-disclosed a potential violation, as well as the scope of such potential violations which qualify for such leniency as shall be allowed.

What Should be Disclosed?

Potential violations appropriate for disclosure through the SDP include:

  • Rewards or Incentives Provided for Referral of Medicaid or Medicare Patients.

These can be very indirect, and less than obvious. Things like forgiving amounts owed from one provider to another for services, or providing free services or supplies to providers who have referred business. These actions do not circumvent the Anti-Kickback Statute and do constitute violations.

  • Failure to Timely Refund Overbilling

This can include overbilling patients, insurance companies, other providers, or Medicaid itself, and any payments made for services not ultimately rendered. The law requires that refunds be made in a timely manner in such cases.

  • False Billing
  1. Billing for services other than those performed (even very slight differences, like the brand of medication dispensed).
  2. Billing for services the Provider is not actually authorized to provide or bill for (such as by a non-Medicaid provider).

What Shouldn’t be Disclosed through the OIG SDP?

Violations of the Stark Law are not, by themselves, considered fraud for this purpose, and should not be reported to the OIG, but rather to the Centers for Medicare and Medicaid Services. The Stark Law forbids providers of certain Designated Health Services from receiving referrals from physicians with whom they have a financial relationship (whether direct or indirect). It also forbids the billing of such services to Medicaid when so referred, and the making of these referrals by the physician with the financial relationship with the provider. Read More: Learn the Florida Regulatory Laws (Including the Stark Law) Health Care Investors Should Know

Accidental overbilling itself does not constitute potential fraud and in most cases can be fixed simply by prompt repayment of the overpaid or improperly paid amounts. When caught early, they need not be reported as potential fraud.

Benefits of Self-Reporting

Of course, it is nearly always better not to be under investigation than to be. However, if an investigation is imminent, or it is too late to prevent or cure the problem it may give rise to one, it is better to be under an investigation triggered by self-disclosure than by the OIG for the following reasons:

  • Create in the OIG a presumption of good faith and cooperation on your part, which can prompt them to advocate to the Department of Justice for lighter penalties.
  • Presumption against requiring a corporate integrity agreement as part of a settlement.
  • Paying a lower multiplier on single damages than would normally be required.
  • Tolling/suspension of a 60-day rule requiring the reporting and repayment of overpayments until
    a settlement is reached. Note: although promptly cured overpayments are not, as stated before, fraudulent by themselves, the tolling of the 60-day period comes into play when overpayments result from other problems that constitute potential fraud.
  • You are not required to admit liability in order to form a settlement agreement when the potential violation was self-reported.
  • Last but not least; self-reporting can reduce your damages!
    • The OIG will consider your ability to pay in negotiating a settlement; when the state initiates an investigation, this consideration is ignored.
    • Self Reporting reduces the multiplier applied to damages by law.
    • A different and much more favorable method of calculating Anti Kickback Statute damages is used.

Drawbacks of Self-Reporting

Now that you know what self-disclosure can do for you, it is equally important to understand what it can not. Above all, it is important to know that self-disclosure generally will not singlehandedly save the day. Self-reporting is a method of damage mitigation that prevents a bad situation from becoming a worse one.

Specifically, the SDP will not prevent the following:

  • It does not protect you from other liabilities, such as criminal liability, or claims by the Department of Justice under the False Claims Act (FCA), which can impose liability for over double the government’s damages for the knowing submission of false claims. As such, it can be an essential consideration before Self-disclosure is made whether the person making the disclosure has implicated themselves in any crime and whether the potentially fraudulent claims to be reported fall within the scope of the FCA.
  • Nor does it protect the reporter from tax liability, in the event that the disclosures expose errors in taxation and prompt an audit by the IRS, so consider whether the matter to be disclosed suggests that an underpayment of taxes occurred or an underreporting of incomes, whether intentionally or otherwise.
  • The release that does occur from any settlement is limited to the entity making the report, and to the conduct actually reported.
  • Furthermore, any misstatements or lack of candor in the disclosure can be investigated by the Inspector General and/or the Department of Justice. As such, it is imperative to make a complete and good faith disclosure, if one is to be made; taking care not to omit any relevant information and avoid any statements that could be construed as misleading.
  • Finally, settlements are not confidential and are even subject to the Freedom of Information Act, or Sunshine Law. This means that a member of the public who knows what they are looking for can access the stipulations and terms of your settlement agreement with an ordinary Public Records Act request.

Legal Representation Matters

If you have discovered potential fraud and are evaluating how to protect yourself best, self-disclosure may be your best option in order to maintain some control over the coming investigation and preserve your best shot at a favorable outcome. Potentially serious legal administrative and legal consequences can arise from an investigation by the Office of the Inspector General and you need to go into that situation as well-informed as you can be.

We can help. The attorneys at Howell Buchan and Strong possess a wealth of experience in the field of health care regulation in Florida. Call 850-877-7776 today to schedule your free, no-obligation consultation.

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