Lessons Learned from 2017 OIG Semiannual Report to Congress

Each year, the Department of Health and Human Services and OIG is tasked with updating Congress on its performance, trends, and actions taken to combat healthcare fraud and abuse.  The mid-term report was issued for the period of October 2016 to March 2017 and describes OIG’s work on identifying significant problems, abuses, deficiencies, remedies, and investigative outcomes relating to the administration of HHS programs and operations that were disclosed during the reporting period.

In the Semiannual Report highlights section below, we present OIG’s expected recoveries, criminal and civil actions, and other statistics as a result of their work for the second half of the year. The OIG also highlighted some of their work completed during this semiannual reporting period.

OIG Numbers At-A-Glance

During the first half of FY 2017, OIG reported expected investigative recoveries of over $2 billion. OIG also reported 468 criminal actions against individuals or entities that engaged in crimes against HHS programs, 461 civil actions, and 1,422 exclusions of individuals and entities from participation in Federal healthcare programs.

During the reporting period, Strike Force efforts resulted in the filing of charges against 49 individuals or entities. These teams use data analytics to detect and investigate healthcare fraud through a coordinated and data-driven approach. The efforts led to multiple investigations, including a case in which four defendants involved in a home healthcare and hospice Medicare fraud scheme were sentenced to a combined 35 years and 2 months in prison and ordered to pay $33 million in restitution, joint and several.

Public and Private Partnerships are Beneficial for OIG

OIG has formed strong public and private partnerships to amplify enforcement success. During this reporting period, OIG special agents partnered with Medicaid Fraud Control Units (MFCUs) on 714 criminal investigations. Results from those investigations included a 33-year prison sentence for a former staff physician for the City of Houston who was convicted on 14 counts of healthcare fraud. OIG continues to participate in the Health Care Fraud Prevention Partnership, a national public–private partnership aimed at fighting and preventing healthcare fraud through information sharing.

Future Insight on Where OIG Will Focus

Looking to the future, the OIG is tracking its performance in priority areas, such as:

(1) Protecting beneficiaries from prescription drug abuse

(2) Reducing improper payments for home health services in fraud “hot spots”

3) Improving program integrity for the Child Care and Development Fund grant programs

(4) Maximizing the effectiveness of State Medicaid Fraud Control Units

OIG’s Responsibility to Reduce Fraudulent Payments

Improper payments, as reported in the department’s financial statements, have demonstrated a steady increase over the last several years. In FY 2016, the department reported estimated improper payments of more than $96 billion.

During this semiannual period, OIG issued several audits that identified improper payments as a result of issues related to eligibility determinations:

• Express Lane Eligibility. Under the express lane eligibility option, which allows States to expedite and simplify enrollment in Medicaid and the Children’s Health Insurance Program (CHIP) by relying on findings from other agencies’ eligibility determinations, OIG estimated that improper Medicaid payments on behalf of potentially ineligible beneficiaries totaled $284.1 million.

• CHIP payments for potentially ineligible beneficiaries totaled $10.6 million.
• Payments after death. Medicare and Medicaid continue to make improper payments on behalf of beneficiaries who are deceased. During this reporting period, OIG found that Florida did not always stop making capitation payments to Medicaid managed care organizations (MCOs) after a beneficiary’s death, resulting in more than $26 million in overpayments.
• Incarcerated beneficiaries. The OIG continued work reviewing inappropriate payments for incarcerated beneficiaries, recently reporting that CMS has not taken steps to recoup $34 million in potentially improper payments made on behalf of incarcerated beneficiaries.
• Improper payments for chiropractic services. Based on sample results, OIG estimated that $358.8 million (82%) of $438.1 million paid by Medicare for chiropractic services was unallowable.

OIG Areas of Improvement 2017

OIG also pointed to some very significant gaps and areas they continue to focus on. These are consistent with the OIG Work Plan for 2017.

During the semiannual period, OIG conducted a wide array of enforcement activities. Key areas for enforcement included:

• Prescription drugs: OIG is committed to combating drug diversion and pursues numerous cases against providers who knowingly engage in drug diversion. In one recent example, an OIG investigation led to a physician being sentenced to 30 years for operating a “pill mill” with Pagan’s Motorcycle Club.
• Care in non-institutional settings: OIG continues to focus on fraud in non-institutional settings, including in Medicare home health services and HCBS, including personal care services (PCS). For example, during this reporting period, an OIG investigation led to guilty pleas of nine defendants in a $33 million Detroit home health and hospice fraud scheme Further, the OIG issued an Investigative Advisory on Medicaid fraud and patient harm involving PCS.
• Grant fraud: A significant and growing portion of OIG’s enforcement efforts target grant fraud. In one grant fraud case during this reporting period, an executive of a health care center received an 18-year prison sentence and was ordered to pay $13.5 million in restitution for embezzling $17 million in HHS grant funds.

Significant Settlement in Long Term Care Industry

Nursing Homes:  Tennessee – Life Care Centers of America (LCCA) and LCCA’s owner and sole shareholder, Forrest Preston, entered into a settlement agreement to resolve allegations from January 2006 to February 2013. LCCA caused the submission of false claims to Medicare and TRICARE for medically unnecessary rehabilitation therapy services provided to patients at LCCA’s SNFs. LCCA is the nation’s fourth largest chain of Skilled Nursing Facilities. The defendants agreed to pay $145 million plus interest to resolve their liability under the False Claims Act, along with a 5-year comprehensive CIA requiring management certifications from numerous employees at the corporate, divisional, regional, and facility level.

OIG Most Wanted List

One of OIG’s Most Wanted Fugitives, Ariel Martinez Ruiz, was captured during this reporting period. Martinez was indicted on charges of healthcare fraud in June 2016 and fled the United States. Martinez was the owner operator of Magnifique Home Health in Miami, Florida. According to the indictment, from July 2014 through February 2015, Martinez conspired to defraud Medicare by submitting false claims. Specifically, Martinez and others obtained the names and Medicare identification numbers of Medicare beneficiaries, along with the names and provider numbers of physicians, to submit false claims to Medicare. Investigators believe that Martinez, through Magnifique, was paid over $4.7 million for services Magnifique did not render. Martinez was detained while trying to enter the United States from an inbound flight originating in Cuba. He is currently in custody and will face charges stemming from his indictment.

Because of the success of OIG’s Most Wanted Fugitives website, OIG launched its Most Wanted Deadbeat Parents website. The site identifies parents who fail to pay court-ordered child support for their children; as a result, an unnecessary strain is placed on the custodial parents and the children as well as on agencies that enforce these matters. The Human Services Reviews section of this Semiannual Report provides examples.

OIG Hotline Activity (10/1/16–3/31/17)

Contacts to 1-800-HHS-TIPS phone line, including callers seeking information: 66,891

Total Tips Evaluated : 14,562

Tips Referred for Action: 9,970

Closed, no basis provided for further action: 4,222

Closed, no HHS violation: 370

State Medicaid Fraud Control Unit Activity Increases

Collectively, in FY 2016, MFCUs reported 18,730 investigations, of which 15,509 were related to Medicaid fraud and 3,221 were related to patient abuse and neglect, including misappropriation of patients’ private funds. The cases resulted in criminal charges or indictments involving 1,721 individuals, including 1,249 for fraud and 472 for patient abuse and neglect. In total, 1,564 convictions were reported in FY 2016, of which 1,160 were related to Medicaid fraud and 404 were related to patient abuse and neglect. Civil judgments and settlements for FY 2016 totaled 998, and monetary recoveries in civil cases totaled over $1.5 billion. (See Medicaid Fraud Control Units 2016 Expenditures and Statistics contained in an Interactive Map and Chart).

The Ultimate OIG Penalty: Exclusion

During this semiannual reporting period, OIG excluded 1,422 individuals and entities from Medicare, Medicaid, and other Federal healthcare programs. Most of the exclusions resulted from convictions for crimes relating to Medicare or Medicaid, for patient abuse or neglect, or as a result of license revocation.

Civil Monetary Penalties Issued

During this semiannual reporting period, OIG concluded cases involving more than $26.3 million in CMPs and assessments.

Summary:

All in all, OIG continues to have significant success in pursuing and punishing those who commit fraud and abuse in healthcare. However, serious gaps exist in enrolling providers and distinguishing who owns a company. These allow bad actors to continue to enter the healthcare field and submit false claims and increase the risk to your organization. To enhance your compliance program, exclusion monitoring for employees and vendors is essential. Also, a process must be set in place for license verification to ensure that no outstanding disciplinary actions are associated with a healthcare professional’s license to practice.

Written by Michael Rosen, ESQ