Federal Government Fraud and Abuse Series – Annual Report of the Departments of Health and Human Services and Justice Health Care Fraud and Abuse Control Program FY 2021 (FY 2021 HCFAC Report)

HHS-OIG Focuses Civil Monetary Penalties on Affirmative Litigation and Exclusion, Patient Dumping and Self-Disclosure

The Federal Government Fraud and Abuse Series explores key issues and takeaways from the Departments of Health and Human Services’ and Justice’s FY 2021 Annual Report. 

The Annual Report of the Attorney General and the Secretary of the Department of Health and Human Services details the expenditures and revenues under the Health Care Fraud and Abuse Program as required under Section 1817(k)(5) of the Social Security Act. The Health Care Fraud and Abuse Program was created as a far-reaching program to combat fraud and abuse in health care – both in public and private health plans. The Program is led under the joint direction of the Attorney General and Secretary and aims to  “(1) coordinate federal, state, and local law enforcement efforts relating to health care fraud and abuse with respect to health plans; (2) conduct investigations, audits, inspections, and evaluations relating to the delivery of and payment for health care in the United States; (3) facilitate enforcement of all applicable remedies for such fraud; and (4) provide education and guidance regarding complying with current health care law.” 

As is required under the Act, the Attorney General and Secretary must submit a joint annual report to Congress identifying the amounts appropriated to the Medicare Trust Funds for the previous fiscal year under specific categories and the source of such amounts, and the amounts appropriated from the Medicare Trust Funds for such year for use by the Attorney General and Secretary, including the justification for such expenditure amounts. 

Per the FY 2021 HCFAC Report, the federal government won or negotiated more than $5 billion USD in health care fraud judgments and settlements. Additionally, the Department of Justice opened 831 new criminal health care fraud investigations, filed criminal charges in 462 cases (involving 741 defendants), and convicted 312 defendants; and opened 805 civil health care fraud investigations and reported 1,432 civil health care matters pending at the end of the fiscal year. Similarly, the Office of Inspector General investigations led to 504 criminal actions and 669 civil actions during the fiscal year and excluded 1,689 individuals from participation in the federal health care programs.  

Introduction

According to the FY 2021 HCFAC Report, the various CMP authorities are utilized by the federal government in three common ways: (1) false claims and kickback affirmative enforcement; (2) Emergency Medical Treatment and Labor Act (EMTALA) enforcement; and (3) the Self-Disclosure Protocol. The FY 2021 HCFAC Report further states that HHS-OIG concluded cases involving more than $79.9 million USD in CMPs and assessments.

Background

HHS-OIG has the authority to seek civil monetary penalties (CMPs), assessments, and exclusion against an individual or entity based on a wide variety of prohibited conduct under the Civil Monetary Penalties Law (CMPL). CMP cases are brought by HHS-OIG to emphasize guidance, enhance other HHS-OIG work such as audits and evaluations, fill enforcement gaps, and “level the playing field for compliant providers.” The penalty amount for violations varies according to the underlying misconduct. The CMPL also provides for mandatory and permissive authority to exclude persons from participation in the Federal health care programs. In each case resolved through a settlement agreement, the settling party has contested OIG’s allegations and denied any liability. No CMP judgment or finding of liability has been made against the settling party in those instances.

Though the 2021 FY HCFAC Report focuses on 3 specific areas in which HHS-OIG utilizes its CMP authorities, the agency additionally frequently seeks CMPs against individuals and entities in other areas as well:

Drug Price Reporting

The Medicaid Drug Rebate Program requires drug manufacturers to submit pricing information to HHS and to pay a rebate to the state Medicaid programs for each unit of the covered drug that the state Medicaid programs reimburse. Those drug manufacturers who have entered Medicaid Drug Rebate agreements are also required to report price information utilized to set Average Sales Price – the reimbursement metric for drugs covered by the Medicare Part B program. HHS-OIG may seek a CMP against a drug manufacturer that fails to timely report the requisite information.

False and Fraudulent Claims

HHS-OIG may seek a CMP or exclusion against individuals or entities that present claims to the Federal government that the individual or entity knows or should know are false.

Grants, Contracts, and Other Agreements

Individuals and entities that engage in fraud and other improper conduct related to HHS grants, contracts, and other agreements may face CMPs, assessments, and exclusion. Additionally, HHS-OIG may impose sanctions for knowingly presenting a specified claim under a grant, contract, or other agreement that is false or fraudulent, or knowingly making or using any false statement, omission, or misrepresentation of a material fact in any application, proposal, bid, progress report, or other document submitted to HHS to receive funds from an HHS grant, contract, or other agreement.

Kickbacks

The federal Anti-Kickback Statute is a criminal statute that prohibits the giving, accepting, soliciting, or arranging items of value in any form, either directly or indirectly, for inducing or rewarding another party for referrals of services paid for or by a state and/or U.S. federal healthcare program. Such inducements are considered kickbacks and are illegal. Improper incentives include those paid directly or indirectly, and might be cash, gifts/items of value, or in-kind items. HHS-OIG seeks CMPs or exclusion against entities or individuals who knowingly and willfully: (1) offer or pay remuneration, directly or indirectly to induce referrals of Federal health care program business; or (2) solicit or receive remuneration, directly or indirectly, in return for referrals of Federal health care program business.

Misuse of Departmental Words and Emblems

The Social Security Act prohibits an individual or entity’s unauthorized use of words or emblems belonging to HHS. HHS-OIG may impose CMPs against individuals or entities who without authorization use words or emblems belonging to HHS, its programs, operating divisions, or agencies, in connection with any communication that the individual or entity knows or should know would convey, or could be interpreted or construed as conveying, the false impression that the item is approved, endorsed, or authorized by HHS or that the individual or entity has a connection with HHS.

Patient Dumping

The EMTALA – sometimes referred to as the “patient dumping statute” – requires anyone coming to an emergency department with an emergency medical condition to be stabilized and treated regardless of the individual’s insurance status or ability to pay. In circumstances where the hospital does not have the capabilities required to stabilize the patient, the hospital must arrange for an appropriate transfer. HHS-OIG may seek a CMP against any hospital that has negligently violated its obligations under the EMTALA.

Physician Self-Referral

The Physical Self-Referral Statute – the “Stark law” – prohibits individuals or entities from referring Medicare or Medicaid patients for designated health services to entities with which the individual or entity has a direct or indirect financial relationship (unless an exception applies). HHS-OIG may seek a CMP or exclusion against individuals or entities that present or cause to be presented a claim that the individual or entity knows or should know is for a service for which payment may not be made under the Stark law.

Select Agents and Toxins

The Public Health Security and Bioterrorism Preparedness and Response Act of 2002 requires that entities and individuals who possess, use, or transfer select agents follow specific regulatory requirements. HHS-OIG may seek a CMP against those who do not follow those regulatory requirements.

FY 2021 HCFAC Report – CMPs

The FY 2021 HCFAC Report examines each of the 3 focus areas in which HHS-OIG utilizes its CMP authorities, including the total recovery awards under each and notable real-world case examples for the same.

Affirmative Litigation and Exclusion

According to FY 2021 HCFAC Report, in FY 2021 HHS-OIG recovered more than $9.2 million USD in false claims and kickback affirmative enforcement actions. Additionally, HHS-OIG excluded 39 individuals and entities from participation in the Federal health care programs based on allegations of false claims and kickbacks. HHS-OIG highlighted the following examples of such affirmative litigation in the FY 2021 HCFAC Report:

• In April 2021, HHS-OIG entered a settlement with a physician and its physicians in Florida for $1,082,182.50 USD. The settlement resolved allegations that such physicians submitted claims for comprehensive clinical pathology consultations that were for services provided: (1) by pharmacists in a hospital setting that did not meet the requirements to be billed “incident to” a physician’s professional services; and (2) to hospital inpatients on consecutive days of the patient’s stay where no consultation request had been made, no written narrative report by a consultant pathologist was produced, and no exercise of medical judgement by a consultant pathologist was required.

• In August 2021, HHS-OIG entered a settlement with an ambulance service entity in Massachusetts for $704,706.62 USD to resolve allegations that the entity presented claims to Medicare Part B for ambulance transportation to and from “SNFs” when such transportation was already covered by the “SNF consolidated billing payment under Medicare Part A.”

Patient Dumping

In FY 2021, HHS-OIG recovered $125,000 USD in cases under the EMTALA statute. Per the HCFAC Report, notable patient dumping examples include:

• In December 2020, HHS-OIG entered a $100,000 USD settlement with a regional medical center (RMC). The settlement resolved allegations based upon its failure to perform an adequate screening of a patient presenting chest pain, nausea, vomiting, and diarrhea. The patient waited 3 hours and 44 minutes at the RMC before visiting another hospital. The patient was diagnosed and received immediate treatment before being sent back to the original RMC for urgent surgery. The FY 2021 HCFAC Report stressed that the $100,000 reflected the maximum penalty to resolve those allegations.

Self-Disclosure Protocol

HHS-OIG maintains the Provider Self-Disclosure Protocol (“SDP”) whereby providers may voluntarily identify, disclose, and resolve instances of potential fraud involving the Federal health care programs for resolution under the CPML. According to HHS-OIG the SDP “incentivizes persons to detect and prevent fraud internally and to bring potential fraud to HHS-OIG’s attention.” The SDP provides certain benefits to participating individuals and entities, including more timely resolutions and reduced CMPs compared to those individuals and entities subject to affirmative cases brought by HHS-OIG or the Department of Justice (“DOJ”). According to the FY 2021 HCFAC Report, HHS-OIG collected $70.5 million USD under the SDP. Additionally, HHS-OIG identified 3 examples of SDP cases as noteworthy in FY 2021 for purposes of the HCFAC Report:

• In October 2020, a Massachusetts hospital self-disclosed conduct to HHS-OIG and paid $6,4952,847 USD for allegedly violating the CPML. HHS-OIG had alleged that the hospital had failed to maintain physician certifications, recertifications, and treatment plans for inpatient psychiatry services in violation of Medicare billing requirements. Further, the hospital had instead retained a third-party contractor who was responsible for such functions as well as maintaining patient records in the unit.

• In February 2021, a Virginia hospital self-disclosed conduct to OIG and paid $6,050,628 for allegedly violating certain provisions under the CPML related to physician self-referrals and kickbacks. HHS-OIG had alleged that the hospital paid remuneration to two medical groups in the form of office space, office staff, and services rendered under call coverage arrangements.

• In April 2021, a Colorado radiation therapy entity self-disclosed conduct to HHS-OIG and paid $3,569,645.76 USD for allegedly violating the CMPL by submitting false claims for certain radiation and oncology services involving 25 different CPT codes and evaluation and management services provided to patients undergoing radiation therapy.

HHS-OIG Updates Self-Disclosure Protocol Following FY 2021

In November 2021, HHS-OIG announced that it had updated and amended the Provider Self-Disclosure Protocol (now retitled the “Health Care Fraud Self-Disclosure Protocol” to clarify that the SDP is applicable to all entities subject to CMPs and not limited to health care providers). The SDP provides guidance on how to investigate potentially fraudulent conduct, quantify damages, and report the conduct to OIG to resolve the person’s – an individual, trust or estate, partnership, corporation, professional association or corporation, or other entity, public or private – liability under the CMP authorities. According to HHS-OIG, the 2021 update was issued to amend and rename the SDP, increase the minimum settlement amounts, and make other clarifying changes.

As before, the updated SDP underscores the importance of cooperation for persons looking to disclose under the SDP.  Self-disclosure benefits, including a swifter resolution, lower penalties, and an exclusion release without integrity agreement obligations are dependent upon the disclosing person’s “willingness to work cooperatively with OIG throughout the process” (emphasis added).  HHS-OIG specifies that cooperation includes, by way of example, conducting thorough investigations, submitting all necessary information, communicating through a consistent point of contact, being responsive to requests, and being willing to pay a penalty or multiplier of damages for self-disclosed conduct.

Among other changes, the updated SDP notably includes the following revisions. Given the prominence of self-disclosure as a key area of HHS-OIG’s utilization of its CMP authorities in the FY 2021 HCFAC Report, it remains to be seen what broader impact(s) the updated SDP has on HHS-OIG’s approach to such matters.

Minimum Settlement Amounts

As stressed in the SDP, persons participating in the SDP should expect to pay the above single damages for disclosed conduct. Specifically, HHS-OIG requires minimum settlement amounts for self-disclosed matters under the SDP. The revised SDP increases the minimum settlement amounts for kickback-related claims from $50,000 USD to $100,000 USD and from $10,000 USD to $20,000 USD for all other false claims-related conduct. According to the SDP, these minimum amounts account for Federal health care program damages and any relevant multiplier, which the federal government generally requires, at a minimum, a multiplier of 1.5 times the single damages of any underlying violative conduct.

Online Disclosures Only

The updated SDP makes clear that all self-disclosures must be submitted through the self-disclosure portal on HHS-OIG’s website. Disclosures submitted via other mechanisms (e.g., paper mail) are no longer accepted.

Disclosure of Corporate Integrity Agreement (CIA) Violations

In a clarification, HHS-OIG specifies in the updated SDP that disclosing persons under a CIA may utilize the SDP to report violations of such terms. In such instances, the disclosure must reference the fact that the disclosing person is subject to a CIA and a copy of the disclosure must also be sent to the disclosing person’s HHS-OIG monitor. Further, disclosures that constitute “reportable events” under a particular CIA must also be reported accordingly to the HHS-OIG, as is required by the applicable CIA.

Role of DOJ in Resolution

HHS-OIG releases claims that it may have under the CMPL against the disclosing person when settling matters disclosed under the SDP. However, HHS-OIG does not have the authority to settle claims under the False Claims Act – the DOJ retains sole authority to settle such claims on behalf of the Federal government. As a result, SDP settlement agreements do not typically include an explicit release of False Claims Act claims. The SDP updates state that HHS-OIG coordinates with the DOJ in resolving SDP matters and provides further guidance and clarification on the roles and interactions between the two agencies in carrying out self-disclosure resolution.

If HHS-OIG is the sole agency representing the Federal government, then the matter will be settled under HHS-OIG’s applicable CMP authorities.

The updated SDP clarifies that there are typically two scenarios in which HHS-OIG will coordinate with the DOJ in resolving SDP matters: (1) the DOJ elects to participate in the settlement (and provide a False Claims Act release); and (2) the disclosing person requests release under the False Claims Act (necessitating DOJ association). In either scenario, if the DOJ elects to participate in the settlement, then the matter is resolved as the agency deems appropriate, consistent with its resolution of False Claims Act cases. The SDP further states that in such cases, this may include a calculation of damages resulting from violations of the Anti-Kickback Statute based upon paid claims. From a practical sense, such cases may be resolved in a different manner than if OIG were the sole agency involved in the settlement. In those instances, HHS-OIG will “advocate” that the disclosing person receive a “benefit from self-disclosure” and that resolution is consistent with HHS-OIG’s approach in similar cases. That said, the updated SDP makes clear that the DOJ ultimately determines the approach for all cases in which it is involved, including those stemming from self-disclosure under the SDP.

Additionally, the updated SDP highlights that in cases involving disclosures of potential criminal conduct, HHS-OIG will also coordinate with the DOJ. There, HHS-OIG’s Office of Investigations will investigate criminal matters and any disclosure under the SDP pertaining to criminal conduct will be referred to DOJ for resolution. Notably absent from the discussion on criminal matters is a similar commitment from HHS-OIG that it will advocate that the disclosing person receive a self-disclosure benefit, as was included in the prior SDP. HHS-OIG does not indicate its rationale for removing this language and the significance of this change, if any, remains to be seen.

Calculation of Damages

The updated SDP also explained that disclosing persons must calculate and include damages to each affected Federal health care program in addition to the sum of all damages.

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