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They’re Watching: Federal Enforcement Actions Against Providers

May 13, 2024

Sometimes, you just get that nagging feeling. Somebody’s watching you. You look over your shoulder, but nobody’s there. That doesn’t mean, however, that you’re not, in fact, under some form of surreptitious surveillance.

Medical providers would do well to proceed under the assumption that they are always under the microscope. If it’s not an auditor doing a post-payment review, it might be a whistleblower in your own facility who’s paying close attention to what you’re doing and how you’re documenting. If wrongdoing can be alleged, you may find yourself on the wrong side of a federal enforcement action. This article will act to review a sampling of some recent actions taken against anesthesia, chronic pain and other providers who found themselves coloring outside the lines and pushing the envelope from a compliance perspective.

Enforcement Actions Against Anesthesia

Late last year, the U.S. Department of Health and Human Services (HHS) released its “Annual Report for the Health Care Fraud & Abuse Control Program,” which detailed the department’s latest recoupment and criminal prosecution efforts. Below, we have listed some of the highlights of the report that pertain to anesthesia.

Kickbacks. One of the laws that significantly impacts medical practices is the federal antikickback statute (AKS). This legislation essentially outlaws an attempt by providers of federal healthcare (e.g., Medicare, Medicaid) services to induce others to refer patient cases in exchange for some type of remuneration, i.e., kickback. The Office of Inspector General (OIG) puts it this way:

The AKS is a criminal law that prohibits the knowing and willful payment of “remuneration” to induce or reward patient referrals or the generation of business involving any item or service payable by the Federal health care programs (e.g., drugs, supplies, or health care services for Medicare or Medicaid patients). Remuneration includes anything of value and can take many forms besides cash, such as free rent, expensive hotel stays and meals, and excessive compensation for medical directorships or consultancies.

HHS reported that it had collected $28 million from two Georgia-based anesthesia groups found to have engaged in a kickback scheme. The groups paid ambulatory surgical centers (ASCs) for the ASCs’ drugs, supplies, equipment and labor—as well as providing free staffing—in order to induce the ASCs to throw cases their way. The government contended these actions violated the AKS. It should be noted that Medicare already reimburses ASCs for their drugs, supplies, equipment and labor as part of the ASC’s facility fee payments.

Wrong Provider. The department reported that it collected over $1 million from an anesthesia group that billed its noncredentialled CRNAs under the names of CRNAs who were credentialed. According to one anesthesia compliance attorney and auditor, “This happens far too frequently where providers who are waiting to be credentialed are billed in the name of providers who are already credentialed.” This is obviously a no-no as it violates straightforward CMS guidelines that indicate only the person performing the services should be sending out a claim for such services, teaching and incident-to situations being notable exceptions.

Enforcement Actions Involving Chronic Pain

The HHS report referenced above also detailed several enforcement actions against chronic pain practitioners. These generally fell into two primary buckets: UDT billing and opioid prescriptions. Below, we present a brief synopsis of each category.

UDT Billing. HHS collected $24.5 million from one chronic pain group, $16 million from another group, and $11 million from a third group for performing both presumptive and definitive urine drug testing (UDT) services at the same time and providing the results to its physicians at the same time. The department stated that the physicians would not review the presumptive screen results if they already had the definitive confirmation results; thus, the screens were not medically necessary. If the screens were not medically necessary, then there was no legitimate screen to confirm. Accordingly, the confirmation tests were also not eligible for payment.

In addition, one of the groups violated the Stark law by paying 40 percent of the UDT profits to the ordering physicians. That same group billed for medically unnecessary psychological testing by having the testing done before the patient was seen by a physician to determine the medical necessity of the testing.

Overprescribing Narcotics. There were numerous cases reported by HHS wherein physicians were sentenced to prison terms approaching 20 years for overprescribing opioids. Most of these cases involved physicians who sold drugs for cash, distributed over 1 million pills and had knowledge that the drugs were being sold on the street. One of the physicians prescribed oxycodone to his close friends to sell so he could buy cocaine for himself and send his child to an expensive private school!

We all know that the illegal usage of opioids is, and has been for some time, at epidemic levels. Consequently, it’s only natural that chronic pain practices are going to come under the scrutiny of federal officials since (a) they have ready access to such pharmaceuticals, and (b) dispensing these drugs is a major part of their practice parameters. It is imperative, therefore, for pain physicians to have strict protocols in place for the prescribing and dispensing of these drugs. After all, you don’t want to find yourself on the government’s radar or looking down the barrel of a 20-year prison sentence. The best policy is to proceed with caution and consistently adhere to a conservative approach when it comes to dosages, knowing the feds are watching.


Stark on the Rise

Earlier this year, a report in Becker’s Physician Leadership revealed a noticeable increase in enforcement actions surrounding the Physician Self-Referral Law, commonly referred to as the Stark law. The statute prohibits doctors from referring federal healthcare beneficiaries to entities in which they have a financial stake, such as labs, hospitals, or pharmacies, unless the referral falls within an expressly authorized exception, known as a “safe harbor.”

Most of the enforcement actions listed in the report involved allegations that physician compensation structures had taken into account the volume or value of referrals, such as an entity transferring a portion of its operating margin or prescription-drug profits to physicians, or providing compensation that was above fair market value (FMV). Cases also included alleged higher than FMV space rental and equipment rental payments. Here are two sample Stark allegations from 2023, according to the report:

  • A dermatology management company self-disclosed and paid $8.9 million to resolve claims that senior managers agreed to raise the price of 11 dermatology practices. The deal was a part of an arrangement in which providers agreed to refer services to company-affiliated entities following the acquisition.
  • A cardiac imaging company and its owner, founder and CEO agreed to pay over $85 million to resolve allegations it paid referring cardiologists above fair market value to supervise PET scans in violation of Stark.

According to the report, several organizations entered into such settlements with the government. These settlements ranged from a few million dollars to $345 million, which is the largest-ever Stark-related settlement to date.

With all this government scrutiny on the healthcare industry, providers would do well to keep abreast of the laws and compliance regulations that could directly impact their practice.

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