Kathleen Sebelius, Secretary of the Department of Human Services, recently announced during a press conference that HHS will as of July 1, 2011 be rolling out a $77 million computer program designed to prospectively identify potentially fraudulent Medicare claims by collecting and analyzing patterns in large numbers of submitted claims. According to a recent article in the Philadelphia Inquirer, the technology to be used by HHS is known as “predictive-modeling” software and is similar to technology used by banking and telecommunications companies in the private sector to identify fraud. The price tag for the new system will be paid through funding under The Patient Protection and Affordable Care Act of 2010. In the same press conference, Attorney General Eric Holder announced that in the last two years alone, the Federal Government has collected nearly $8 billion in judgments, settlements, fines, restitution and forfeitures related to healthcare fraud and improper Medicare payments.

It is apparent that the federal government is in fact putting its money where its mouth is when it comes to fraud and abuse enforcement. Physicians and other healthcare providers who have put their internal compliance efforts on the backburner in the last several years are well advised to redouble their compliance efforts – particularly with regard to periodic coding, documentation and claims review – to identify patterns and deficiencies which may raise red flags for the government and other third party payer programs. Auditing should be targeted, focusing on problem or high risk areas specific to practice specialty or service area. In addition, to be effective, auditing should be conducted at least annually and should be done under the supervision of legal counsel to preserve attorney client privilege of audit results. An experienced health care attorney can also help providers design audits and counsel on how to rectify identified deficiencies. Of course, deficiencies should be corrected (which may include refunding monies to Medicare or the third party payer programs) and providers and billing personnel should be appropriately educated based on audit findings. For more information on designing an effective compliance program, providers can visit the OIG’s website.

A recent whistleblower case out of the federal 3rd Circuit in Pennsylvania highlights some of the dangers in not properly documenting financial relationships between physicians and hospitals. Specifically, in US ex. rel. Kosenske v. Carlisle HMA, Inc., a Qui Tam lawsuit brought by the former member of an anesthesia group, the 3rd Circuit Court of Appeals reversed a US District Court’s summary judgment in favor of the defendant hospital and anesthesia group.

The anesthesia group in question had a written exclusive contract with the hospital for anesthesia services but, subsequent to entering into the exclusive agreement, began providing pain management services at the hospital’s freestanding pain center. The hospital did not charge the anesthesia group rent for use of the space in the pain center and the qui tam relator claimed that the arrangements failed to meet the Stark exception for personal service arrangements (and therefore that claims for services referred by the anesthesia group’s physicians to the hospital were in violation of the federal False Claim Act).


Continue Reading Pennsylvania Qui Tam Case Highlights Dangers in Physician/Hospital Arrangements