The Centers for Medicare & Medicaid Services finalized a new provider designation for rural hospitals, “Rural Emergency Hospitals,” in its Outpatient Prospective Payment System rule on Tuesday, November 1. Effective January 1, 2023, this new designation will allow certain eligible rural hospitals and Critical Access Hospital to receive a 5% payment increase for their services. This new designation is meant to increase payments to rural hospitals to avoid potential closures and provide essential services to their communities. However, under this new designation, the hospitals cannot provide acute inpatient care.
The No Surprises Act “NSA” went into effect January 1, 2022, and protects most consumers enrolled in individual and group health insurance plans from surprise medical bills in certain circumstances. Enforcement of the NSA generally involves both state and federal governments. The NSA originally allows the states to enforce the provisions of the NSA unless the state is unable to do so. In that scenario, the federal government will enforce the provisions of the NSA in that state.
Based on survey responses and CMS communications between the Centers for Medicare & Medicaid Services and the Louisiana Department of Insurance, “CMS understands that Louisiana lacks authority to enforce the [NSA] provisions.” Therefore, CMS “will assume direct enforcement of these new protections.” Louisiana is one of a handful of states that has deferred enforcement of all provisions of the NSA to the federal government.
We will continue to monitor enforcement of the NSA on a federal level as it relates to enforcement in Louisiana.
The Medicaid Fiscal Accountability Rule has become the zombie of federal reimbursement regulation. After it was withdrawn, CMS has nevertheless attempted to gradually implement it through a variety of “this has always been the law” positions. Hopefully, the litigation described in this article will bring some clarity, or at least provide some tools that will help us find clarity on this issue.
A New York pediatric dentist, his management company, and thirteen affiliated pediatric dental practices agreed to settle Medicaid false claims allegations for total payments of $753,457. Defendants were accused of performing medically unnecessary therapeutic pulpotomies on pediatric patients and including inaccurate provider information on claims submitted to Medicaid Managed Care Organizations (MCOs). The complaint was filed in April 2017 by a former office manager hired by the individual defendant, Dr. Barry Jacobson, to manage the dental office. In this case, this whistleblower, who is legally called a “relator,” alleged that the defendant, his clinic, and other related entities engaged in a pattern and practice of over-utilizing services by: (1) basing the salary of staff based on “production” goals, which were met by providing medically unnecessary services; (2) routinely billing for filling a virtual mouth full of cavities, where the children did not have many, or any, cavities; (3) paying cash bribes to staff members to increase the number of patients the providers saw; (4) engaging in “thumb print dentistry,” which involved filling a decayed tooth without using a drill to clean out the area; (5) performing procedures without the parents’ consent, and (6) generating impossible daily procedure numbers for the number of patients being seen.
The settlement involved two states—New York and New Jersey—as well as the United States of America, who was part of the suit due to the federal share paid to the Medicaid program. The total settlement was $753,457. Interestingly, of the settlement:
Approximately $342,000, or 45% of the settlement amount, was for repayment of the claims. Of this amount, it is unknown the total amount that was allegedly fraudulently billed by the providers.
Over $410,000 of the settlement involved penalties imposed under the False Claims Act, 31 U.S.C. § 3729 et seq. Under the False Claims Act, penalties ranging from $12,537 to $25,076 can be imposed for each allegedly fraudulent claim submitted to the government. Because Medicaid payments are generally low dollar amounts, the exposure for penalties can often by millions and millions more than the actual amount of loss to the government plus double or treble damages.
The whistleblower received $135,000 from the settlement amount, or approximately 18% of the amount of the settlement. The whistleblower, by statute, would also have received reasonable attorney’s fees for the prosecution of the case.
What lessons are there to be learned from this case by the typical, law-abiding dentist? Here are some thoughts:
Be careful of policies that encourage putting productivity over patient care. Because profit is usually only possible in Medicaid for high volume billing, providers will do what they can to maximize the number of claims that come in the door. Setting bonuses for quotas met or using coercive and/or punitive measures to increase productivity is a red flag for government investigators and can lead to finding of a violation of the Anti-Kickback Statute and the False Claims Act.
Make sure that the patient file truthfully reflects what happened with the patient. In the pediatric Medicaid context, the temptation is to over-utilize services with the idea that the patient may not return for years. Even if a provider believes this to be true, this rationale cannot be used to bill for services that are not medically necessary at the time of the service.
Make an effort to address employee complaints regarding billing and compensation, as those who are disgruntled will likely become whistleblowers.
Louisiana Medicaid is implementing directed payments for acute, psychiatric, LTAC, and rehabilitation hospitals through its five Medicaid managed care plans. The program covers services on and after July 1, 2022. Although no new hospital-MCO contracts are required, each plan has specific informational requirements. As a service to our clients and other Louisiana hospitals, Breazeale, Sachse & Wilson has compiled all of those forms and instructions on a single website.