North Carolina Cracks Down on Behavioral Health Providers with New IBM Software

North Carolina’s Department of Health and Human Services (“DHHS”) announced that “computer software designed to root out potentially fraudulent Medicaid claims has uncovered 206 outpatient behavioral health providers across the state with unusual Medicaid billing worth up to $191 million.” The software, developed by IBM, tracks both billing behavior and relationships between healthcare providers.  Ten investigations of outpatient behavioral health providers have already been conducted, resulting in a total of $6.2 million in potentially fraudulent payments. 

The IBM software revealed some of the following billing issues in its three-year claim review:

• For a single date, providers billed for more hours of service than there are hours in a day (i.e., 44 hours of service all provided on one date);
• Group therapy sessions have been “unbundled” (i.e., providers billed for the group rate and then billed each individual group member separately, essentially, double billing for one procedure); and
• Individual providers collected hundreds of thousands, even millions, of dollars in Medicaid payments in a single year where typical yearly payments should be no more than roughly $140,000 for a single person.

North Carolina is the first state to use software to track potentially-fraudulent activity and, according to DHHS, this is the first phase in analyzing Medicaid claims for “questionable activity.”  The next phases include placing providers on pre-payment review wherein claims will not be paid until they are reviewed and approved by Medicaid officials (versus the “pay-and-chase” model currently utilized); prosecuting cases by the state attorney general; and recovering overpayments as quickly as possible.

While this effort focused on North Carolina’s Medicaid behavioral health providers, the desire to ramp up efforts to combat fraud are not unique to North Carolina.  All behavioral health providers should be cognizant of the renewed focus on behavioral health compliance and the new efforts being employed by payors to enforce the laws and their policies.

107 Charged with Defrauding Medicare, Community Mental Health Center Administrators Included

On May 2, the Department of Justice and the Department of Health and Human Services (HHS) issued a joint press release regarding a nationwide takedown in 7 cities across the country resulting in charges against 107 individuals accused of bilking Medicare for $452 million. “The charges are based on a variety of alleged fraud schemes involving various medical treatments and services such as home health care, mental health services, psychotherapy, physical and occupational therapy, durable medical equipment (DME) and ambulance services.”  

Included were individuals in Miami and Louisiana involved in community mental health centers (CMHCs) who allegedly submitted hundreds of millions of dollars in fraudulent claims.  According to the press release, the Louisiana case is the largest CMHC-related scheme ever prosecuted by the Medicare Fraud Strike Force (Strike Force).  

A copy of the court documents filed in this takedown is available here: http://www.justice.gov/opa/medicare-fraud-docs-2012.html.

In addition to its increased authority to arrest alleged wrongdoers, the Patient Protection and Affordable Care Act (“PPACA”) has armed HHS with more authority to suspend Medicare or Medicaid payments during a pending investigation.  In fact, according to Section 6402(h)(1) “[t]he Secretary may suspend payments to a provider of services or supplier under this title pending an investigation of a credible allegation of fraud against the provider of services or supplier, unless the Secretary determines there is good cause not to suspend such payments.”  42 CFR 405.370 defines credible allegation of fraud as the following:

A credible allegation of fraud is an allegation from any source, including but not limited to the following:

(1)    Fraud hotline complaints.
(2)    Claims data mining.
(3)    Patterns identified through provider audits, civil false claims cases, and law enforcement investigations. Allegations are considered to be credible when they have indicia of reliability.

As is evident from the language of the regulation, the standard that has to be met for HHS to suspend payments to alleged wrongdoers is extremely low.

Since March 2007, the Strike Force and the Health Care Fraud Prevention and Enforcement Action Team (HEAT) have operations in 9 locations and have charged more than 1,330 defendants who collectively have falsely billed the Medicare program for more than $4 billion.

CMS Continues its Provider Enrollment Rulemaking, Final Rule Issued

The Centers for Medicare and Medicaid Services (“CMS”) published in the Federal Register today its final rule implementing certain changes to provider and supplier enrollment (“Final Rule”) and finalizing provisions of the Patient Protection and Affordable Care Act (“PPACA”) that were implemented in the May 5, 2010 interim final rule (“IFR”).  Most notably, effective June 26, 2012, the Final Rule requires providers and suppliers eligible for a national provider identifier (“NPI”) to:

• ·         Report their NPIs on their Medicare enrollment application;
• ·         Update their enrollment record if the provider or supplier was in the Medicare program prior to obtaining an NPI or if the NPI is not in the provider or supplier’s enrollment record; and
• ·         Include on all claims submitted to Medicare for payment their NPIs, as well as the NPIs of any other provider or supplier identified on the claim.

The anticipated effects of implementing this new provision add up to $1.59 billion in savings over the next ten years.  This rule is one of many born out of PPACA that allows CMS to take an aggressive approach to provider enrollment by strengthening CMS’ ability to ensure quality and integrity on the front end.

Arizona Entity Among Initial Medicare Shared Savings Program Participants, More Applications Accepted for 2013 Start Date

Section 3022 of the Patient Protection and Affordable Care Act (“PPACA”) established the Medicare Shared Savings Program (“MSSP”) wherein providers and suppliers participate through accountable care organizations (“ACOs”) that meet certain efficiency and quality of care requirements.  The November 2, 2011 MSSP final rule, issued by Centers for Medicare and Medicaid Services (“CMS”), provided that it would provide for multiple start dates in 2012—April 1 and July 1 (42 CFR 425.200).  On April 10, 2012, CMS announced the first twenty-seven (27) ACOs that have entered into agreements with CMS to participate in the MSSP, including Arizona Connected Care, LLC (“ACC”) and Jackson Purchase Medical Associates, serving Kentucky and Illinois.

ACC, an ACO formed of independent providers and suppliers in Tucson and Southern Arizona, includes physicians, federally qualified health care centers and Tucson Medical Center.  ACC seeks to “engag[e] patients directly in their own care” in a “supportive and education-based health care environment.”  ACC expects to serve roughly 7,500 beneficiaries.

While applications for the July 1, 2012 start date were due by March 30, the due dates for the January 1, 2013 start date are approaching.  Those ACOs seeking to participate in the MSSP beginning in 2013 must submit to CMS a notice of intent to apply by June 15 and must submit applications between August 1 and August 30.  To access the application and other significant dates, please click here: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/Application.html.

New Michigan Health Insurance Claims Tax – Applies to PIHPs

The Michigan Governor signed into law a one percent (1%) tax on health insurance claims which will be levied upon and collected from specialty prepaid health plans, among other types of commercial and government third party payors. As a result, prepaid inpatient health plans that pay for services rendered to behavior health consumers will be subject to the new tax.

Under the new law, the tax will be applied to services beginning on or after January 1, 2012 and the tax will be levied upon a “carrier’s” or “third party administrator’s”¹ paid claims.

The new law was signed in anticipation of action by the Centers for Medicare and Medicaid offices to disallow the current Use Tax on Medicaid contracted health plans and specialty prepaid health plan as a means to generate State revenue for purposes of obtaining federal matching funds for the Medicaid program. Thus, the new tax replaces the current six percent (6%) Use Tax levied upon Medicaid contracted health plans and specialty prepaid health plans.

A copy of the new law is available online through the Michigan Legislature website at: http://www.legislature.mi.gov/(S(d2epzp45p2r4odfaqtuhrjff))/mileg.aspx?page=getObject&objectName=2011-SB-0348

¹Please see definitions set forth under the new law at: http://www.legislature.mi.gov/(S(d2epzp45p2r4odfaqtuhrjff))/mileg.aspx?page=getObject&objectName=2011-SB-0348

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