Supreme Court Takes Action About Knowledge Required to Prove False Claims
CMSby Elizabeth Hogue, Esq.
For providers to be liable under the federal False Claims Act, enforcers must prove that they knowingly submitted false claims. The U.S. Supreme Court recently issued an opinion in United States ex rel. Schutte v. SuperValu, Inc. [No. 21-1326 (U.S. June 1, 2023)], which defines what “knowingly” means. The Court decided that providers act knowingly depending on their “culpable state of mind” when they submitted alleged false claims; not what providers may have thought after submitting them. The requirement to prove knowledge, or “scienter,” said the Court, refers to providers’ knowledge and subjective beliefs; not to what objectively reasonable persons may have known or believed.
On June 30, 2023, the U.S. Supreme Court issued orders that revive two whistleblower lawsuits based on the opinion described above. Specifically citing the above decision, the Court granted whistleblower Troy Olbausen’s request to hear his case. The Court then vacated an Eleventh Circuit decision that dismissed Olhausen’s whistleblower lawsuit.
The Eleventh Circuit previously dismissed Olhausen’s suit against Arriva Medical because he could not prove that the defendants had knowledge of their submission of false claims in view of their objectively reasonable interpretation of the Medicare rules in question. The Supreme Court sent the case back to the Eleventh Circuit for further consideration based on its decision in Schuttte v. SuperValu, above [Olhausen v. Arriva Med., LLC, No. 22-374 (U.D. June 30, 2023)].
Likewise, on June 30, 2023, the Supreme Court sent a case back to the Fourth Circuit for further consideration in light of the Schutte case.
These actions make it clear that the new standard set by the Supreme Court in the Schutte case will make a difference in cases based on the federal False Claims Act. The Court said in the Schutte case:
“Both the text and the common law also point to what the defendant thought when submitting the false claim – not what the defendant may have thought after submitting it…As such, the focus is not, as respondents would have it, on post hoc interpretations that might have rendered their claims accurate. It is instead on what the defendant knew when presenting the claims…Culpability is generally measured against the knowledge of the actor at the time of the challenged conduct.”
The Court also said:
“Under the FCA, petitioners may establish scienter by showing that respondents:
- actually knew that their reported prices were not their ‘usual and customary’ prices when they reported those prices;
- were aware of a substantial risk that their higher, retail prices were not their ‘usual and customary’ prices and intentionally avoided learning whether their reports were accurate, or
- were aware of such a substantial and unjustifiable risk but submitted the claims anyway…
If petitioners can make that showing, then it does not matter whether some other, objectively reasonable interpretation of ‘usual and customary’ would point to respondents’ higher prices. For scienter, it is enough if respondents believed that their claims were not accurate.”
Proving that providers submitted false claims just got tougher for enforcers.
See Ms. Hogue’s earlier report on this SCOTUS case in our June 7 edition: homecaretechreport.com/article/3587
©2023 Elizabeth E. Hogue, Esq. All rights reserved. No portion of this material may be reproduced in any form without the advance written permission of the author.
©2023 by Rowan Consulting Associates, Inc., Colorado Springs, CO. All rights reserved. This article originally appeared in Home Care Technology: The Rowan Report. homecaretechreport.com One copy may be printed for personal use; further reproduction by permission only. editor@homecaretechreport.com
Medicare Dollars Flow Freely to MA Plans
Editorialanalysis by Tim Rowan, Editor
It is good to occasionally remind ourselves that 2023 is the year enrollment in Medicare Advantage reached a full half of Medicare beneficiaries. Originally conceived as a plan to control spending, MA does seem to be achieving that goal.
At what cost, however?
The Medicare trust fund pays insurance companies participating in the MA program a per-patient-per-month fee based on the company’s own declaration of each customer’s health and likely future needs. With those monthly payments, MA companies provide care as needed. Or at least they are supposed to.
Frequently, since the program began, whistleblowers have told the government that employees are rewarded for increasing a patient’s risk-adjustment, the clinical assessment that is supposed to be scored by a physician but is often instead scored through data mining. That practice involves employees searching through patient records, looking for signs of health conditions that would raise their assessment, and thus their value to the insurer. In other words, a class of crime that would earn an HHA a hefty fine if they did it with their OASIS assessments.
Evidence has been mounting lately that these insurance companies not only fudge the numbers to gather more than they should from Medicare, but they also provide as little care as they can get away with. Our industry is familiar with the penny-pinching MA companies practice when authorizing in-home care. The problem is larger than that.
String of Recent Accusations
- The HHS Office of Inspector General issued a report revealing how Elevance, the company formerly known as Anthem, made $5.5 billion in profits in the first six months of this year, a 14.4% jump from the $4.8 billion in profits it made during the same period of 2022. The profits, OIG said, came mostly from denying care to Medicaid beneficiaries, care that their physicians had recommended.
- The largest insurer, with 27 percent of the market, UnitedHealth’s investors were distraught in June when it appeared the company was spending too much on patient care. Their fears were calmed, however, when United reported revenue of $56.3 billion for 2Q 2023, compared to $45.1 billion in the same quarter of 2022.
- Cigna is the target of a class action suit in California, in which it is accused of using an algorithm to deny care, overriding and sometimes ignoring physician recommendations.1
Last October, the New York Times summarized the problem with a list of recent government findings and accusations:
“Kaiser Permanente called doctors in during lunch and after work and urged them to add additional illnesses to the medical records of patients they hadn’t seen in weeks. Doctors who found enough new diagnoses could earn bottles of champagne, or a bonus in their paycheck.
“Elevance Health paid more to doctors who said their patients were sicker. And executives at UnitedHealth Group, the country’s largest insurer, told their workers to mine old medical records for more illnesses — and when they couldn’t find enough, sent them back to try again.
“Each of the strategies — which were described by the Justice Department in lawsuits against the companies — led to diagnoses of serious diseases that might have never existed. But the diagnoses had a lucrative side effect: They let the insurers collect more money from the federal government’s Medicare Advantage program.”
Comparison to Home Health and Hospice
Naturally, these examples reach into the hundreds of billions because MA covers hospital and physician claims, but the comparison to our sector is nevertheless valid.
Since payments to HHAs were first attached to patient assessments a quarter century ago, clinicians have gotten better and better at the task. OASIS assessments are more accurate and thorough than they used to be. Professional coders are more adept at identifying and sequencing appropriate diagnosis codes. AI-assisted tools entering the fray promise an enhanced level of accuracy. (See our product review of the most promising of these tools.)
From the beginning, more accurate assessments have always meant a 10 to 15 percent increase in an agency’s episodic payment over less accurate OASIS scores. Wary of being accused of upcoding, nurses have always been unnecessarily cautious with their intake assessments.
Upcoding Accusations
CMS has always responded to increasing accuracy with accusations of upcoding, even though the Medicare trust fund more often benefits from the above described undercoding habit. Regulatory adaptations have enshrined the fear of upcoding into an assumption that it will happen, with payments slashed in advance just in case it does.
When errors in assessments and claims are discovered by CMS contractors through sampling, the overpayment amount found in the sample is extrapolated to an agency’s entire patient census. The result has at times crossed the line into seven figures, with a payback demand that occasionally cripples the HHA.
Compare this practice to the gift given to MA companies that we revealed in these pages last February: “Government Lets Health Plans That Ripped Off Medicare Keep the Money” In researching that story, we found that CMS typically postpones its duty to audit the risk adjustment figures that MA plans submit annually. After getting more than a decade behind, they decided to write off overpayments to MA plans prior to 2018 and start auditing from that year forward.
As an additional gift they said they would demand repayments only on the amounts turned up in their sample dataset, without extrapolating to each MA’s total patient population as they do with HHAs.
What can one conclude from this comparison? Possibly that CMS is very good at policing millions of dollars but gets overwhelmed and gives up with amounts in the billions.
Tim Rowan is a 30-year home care technology consultant who co-founded and served as Editor and principal writer of this publication for 25 years. He continues to occasionally contribute news and analysis articles under The Rowan Report’s new ownership. He also continues to work part-time as a Home Care recruiting and retention consultant. More information: RowanResources.com
Tim@RowanResources.com
©2024 by The Rowan Report, Peoria, AZ. All rights reserved. This article originally appeared in Healthcare at Home: The Rowan Report.homecaretechreport.com One copy may be printed for personal use: further reproduction by permission only. editor@homecaretechreport.com
CMS News
CMSNOW AVAILABLE IN iQIES – Preview Reports and Star Rating Preview Reports for the January 2024 Refresh
CMS just published updated measure for Home Health Outcome Information Set (Oasis) and all HH QRP claims-based measures. These updated measures are no based on the standard number of quarter.
For additional information, please see the HH Quality Reporting Training webpage and the Home Health Data Submission Deadlines webpage.
©2023 by Rowan Consulting Associates, Inc., Colorado Springs, CO. This article originally appeared in Home Care Technology: The Rowan Report. Click here to subscribe. It may be freely reproduced provided this copyright statement remains intact. editor@homecaretechreport.com
Most Americans Cannot Afford Long-Term Care
Admin by Kristin Rowan, Editor with Bob Roth, Managing Partner at Cypress HomeCare Solutions Saving for Long-term Care Starts in High School What is the primary focus for an 18-year-old? Graduating high school, getting into the college or career training program of their...Call to Action: Advocacy Is Everyone’s Responsibility
CMS by Tim Rowan, Editor Emeritus T he battle for stable Home Health reimbursement rates continues full speed ahead on Capitol Hill, but the advocacy organizations engaged on the front lines of that battle are losing ground. The Partnership for Quality Home Healthcare and...Triad of Innovation
Clinical by Kristin Rowan, Editor The Arizona Healthcare Cost Containment System (AHCCCS American Rescue Plan (ARP) Program has awarded a grant to a collaborative group of care providers, solutions providers, and educators. On January 18th, Arizona home care agency Cypress...All of our “Meet the CEO” Interviews
Admin by Tim Rowan, Editor Emeritus, Advertising in The Rowan Report comes with a few perks! Our CEO interview with Tim is one of them. Advertisers with a full-year contract receive one annual CEO interview with Tim. If you’re not an advertiser, CEO interviews can be...Pay Attention to Fraud Reports
Adminby Elizabeth E. Hogue, Esq.
Two former Amedisys employees claim that they were fired in retaliation for alerting management to possible violations of the federal False Claims Act. They then filed a whistleblower, or qui tam, lawsuit [Pilat v. Amedisys, Inc., No. 23-566 (2d Cir. Jan. 17, 2024)]. In their whistleblower suit, the employees claim that they complained internally to supervisors about suspected fraudulent practices and refused to engage in such practices.
The employees, for example, recommended against recertifying patients, but supervisors overruled the recommendations and recertified patients again. One of the employees then refused instructions from his supervisors to recertify the patient yet again. The employee said that the patient was completely independent and it would be “unethical” to do so.
The employees also expressed concern to supervisors about the inability of nurses and therapists to keep up with a large volume of patients. One employee said he had to schedule visits for three times as many patients as was safe. The employees explained that many patients were seen for only a few minutes rather than an appropriate amount of time. The employees said that one nurse was assigned to make eighty-six visits during one week and another was assigned to make seventy-eight visits. Amedisys billed for the visits anyway.
In addition, former employees identified multiple specific instances in which clinicians were instructed to document false information about patients. The false documentation was then used to support treatments for which patients did not qualify or to recommend unnecessary treatments. Supervisors, for example, instructed employees to fraudulently document that a fifty-year-old man whom an employee was treating was not independent and needed assistance to climb stairs. The patient did not need such assistance.
The employees further claimed that a female patient in her late fifties with early onset Parkinson’s disease received services during an episode of care. The severity of her condition was overstated in order to continue treatment.
Perhaps the most vivid example provided by the employees involved a female patient who was approximately seventy years old who had a neurological disorder that limited her mobility. The patient’s condition did not prevent her from leaving home or from driving. Supervisors repeatedly overruled employees’ recommendations to reduce visits even though she was completely independent and it would be “unethical” to provide more intensive treatment. The employees were also told not to document a leg injury that the patient suffered in a car accident because documentation of the accident would make it clear that she was not actually homebound and that she did not meet eligibility requirements of the Medicare Program.
Providers must take seriously employees’ concerns regarding possible fraudulent and abusive practices. Most whistleblowers take their concerns to their employers first. It is only when employers ignore their concerns or, even worse, retaliate against employees for raising issues in the first place, that employees turn to outside enforcers for assistance in pursuing their concerns. Whether or not the allegations of employees are valid, providers must take them seriously. Thorough investigations are required in order to demonstrate to employees that there is no problem or that the problem has been corrected.
Although this case involves home health services, the message applies to all types of providers. The message from this case and numerous other lawsuits is clear: Don’t shoot the proverbial messenger who brings information about possible fraud and abuse violations. There is a very heavy price to be paid.
©2024 Elizabeth E. Hogue, Esq. All rights reserved.
No portion of this material may be reproduced in any form without the advance written permission of the author.
Enforcers Target Discharge Planners/Case Managers Yet Again
AdminBy Elizabeth E. Hogue, Esq.
Case managers/discharge planners continue to come under fire from fraud enforcers for violations of the federal anti-kickback statute. This statute generally prohibits anyone from either offering to give or actually giving anything to anyone in order to induce referrals. Case managers/discharge planners who violate the anti-kickback statute may be subject to criminal prosecution that could result in prison sentences, among other consequences.
A U.S. District Judge in California sentenced an owner of a post-acute provider to eighteen months in prison for one count of conspiracy to commit health care fraud and one count of conspiracy to pay and receive health care kickbacks. From July of 2015 through April of 2019 the provider paid and directed others to pay kickbacks to multiple case managers/discharge planners for referrals of Medicare patients, including employees of health care facilities and employees’ spouses. Recipients of the kickbacks included a discharge planner/case manager at a hospital, and discharge planners at skilled nursing and assisted living facilities.
Payments of kickbacks resulted in over eight thousand claims to Medicare for patients referred to the provider. Medicare paid the provider at least two million dollars for services provided to patients referred in exchange for kickbacks. Because the provider obtained patient referrals by paying kickbacks, the provider should have not received any Medicare reimbursement. The discharge planners/case managers who received kickbacks from the provider also pled guilty and will be sentenced soon.
The Office of Inspector General (OIG) of the U.S. Department of Health and Human Services (HHS), the primary enforcer of fraud and abuse prohibitions, says that discharge planners/case managers and social workers cannot accept the following from providers who want referrals:
- Cash
- Cash equivalents, such as gift cards or gift certificates
- Non-cash items of more than nominal value
- Free discharge planning services that case managers/discharge planners and social workers are obligated to provide
Discharge planners/case managers and social workers provide extremely important services that are valued by many patients and their families, but their credibility and trustworthiness is destroyed when they make referrals based on kickbacks received.
A word to managers and all the way up the chain of command to CEOs: whether or not you know when case managers/discharge planners accept kickbacks, the OIG may also hold you responsible.
You may be responsible if you knew or should have known. The OIG has made it clear that your job is to monitor and to be vigilant. A good starting point is to put in place a policy and procedure requiring discharge planners/case managers to report in writing anything received from post-acute providers. Even better, how about a policy and procedure that prohibits all gifts?
Now a word to post-acute marketers: do not give kickbacks to discharge planners/case managers and social workers. It is simply untrue that you must give kickbacks in order to get referrals. The proverbial bottom line is: Do you like the color orange? Is an orange prison uniform your preferred fashion statement? Please stop now!
Reprinted with permission from ©2024 Elizabeth E. Hogue, Esq. All rights reserved.
No portion of this material may be reproduced in any form without the advance written permission of the author.
