Recent Fraud Enforcement Action: Lessons for Providers

The following article describes lessons that providers can learn from a recent enforcement action.

Please do not hesitate to contact us with comments, questions, or requests for additional information.

(877) 871-4062 
According to a July 23, 2020, press release, Progenity, Inc., fraudulently overbilled Medicaid and the VA by using a billing code that misrepresented the tests performed. Fraud enforcers also claim that Progenity provided illegal kickbacks in the form of excessive fees to physicians, meals and happy hours for physicians and their staff members, and improper reductions or waivers of patients' coinsurance and deductible payments. The "price tag" for Progenity: $49 million! Enforcement action was taken against Progenity by multiple state and federal health care programs; including the VA, various state Medicaid Programs, TRICARE, and the Federal Employees Health Benefits Program.
FIRST LESSON: FRAUD AND ABUSE PROHIBITIONS APPLY TO ALL FEDERAL AND STATE HEALTH CARE PROGRAMS, NOT JUST THE MEDICARE PROGRAM. This means, for example, that companies that provide private duty services that may be paid for, at least in part, by any federal or state healthcare program must comply with the federal False Claims Act and the Anti-Kickback Statute, and applicable state requirements. Many private insurers have followed the federal government's lead in terms of fraud and abuse enforcement.
The government also alleges that Progenity induced physicians to order lab tests by providing kickbacks. This claim was based on the fact that the "draw fees" that Progenity paid to physicians to draw blood for lab tests exceeded the fair market value of the services performed.
SECOND LESSON: PROVIDERS MUST PAY PHYSICIANS AT FAIR MARKET VALUE FOR SERVICES ACTUALLY RENDERED. Providers must address the issue of payments at fair market value to physicians who both make referrals and provide services to them. The most effective way for many providers to meet this requirement is to pay physicians at an hourly rate at fair market value for services actually rendered. In other words, flat monthly amounts are likely inappropriate because providers run the risk of payment for services that were not rendered or payments for services at rates above fair market value.
Progenity also provided kickbacks in the form of food and alcohol to physicians and their staff at "gatherings," including happy hours and holiday parties. There was rarely any educational content provided during these events. One sales representative for Progenity, for example, spent $65,658 on meals and alcohol for physicians during a single year.
THIRD LESSON: PROVIDERS' GIFTS OF NOMINAL VALUE TO PHYSICIANS CANNOT EXCEED THE CURRENT FEDERAL LIIMIT OF $423.00 PER YEAR AND ANY STATE LIMITATIONS. Providers may give referring physicians non-cash, non-monetary equivalent items of nominal value worth no more than $423.00 per calendar year. Monetary equivalents include gift cards and gift certificates. Providers must track what they give physicians to help ensure that they do not exceed this limit. Enforcers have repeatedly said that providers are responsible to show how much they spent.
Progenity provided kickbacks to patients in the form of waivers of coinsurance and deductible payments and had agreements with physicians to do so on a regular basis.
FOURTH LESSON: PROVIDERS CANNOT ROUTINELY WAIVE CO-PAYMENTS AND DEDUCTIBLES UNLESS THEY MAKE INDIVIDUALIZED DETERMINATIONS OF FINANCIAL NEED AND/OR MAKE REASONABLE COLLECTION EFFORTS. This means that providers must have policies and procedures that govern the waiver of co-payments and deductibles, including criteria that are used to determine financial need. These policies and procedures must be consistently applied.
The information above isn't new. Enforcement actions on the bases described above are "low hanging fruit." Make it tougher for enforcers to take action by taking the steps described above!
©2020 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.


There have been no comments made on this article. Why not be the first and add your own comment using the form below.

Leave a comment

Commenting is restricted to members only. Please login now to submit a comment.

Career Directory

VALA Members are welcomed to post basic job announcements FREE as part of the membership benefits.
Not a VALA member? Join today!

Upcoming VALA Events

VALA is proud to offer upcoming events, webinars, and meetings for assisted living administrators, regional staff members, caregivers, nurses, and other staff members. Several of the events will offer a variety of continuing education credits dependent upon the topics (i.e. NAB, Nursing, Social Work). Check the VALA Events Calendar for upcoming opportunities.