The False Claims Act, originally passed in 1863 and amended many times including in 2010 under the Patient Protection and Affordable Care Act, is one of the primary tools the federal government uses to combat fraud, waste, and abuse costs in the healthcare industry, specifically relating to Medicare and Medicaid. The law includes a qui tam provision that allows whistleblowers to sue on behalf of the government and potentially receive a percentage of any recovered funds.
The U.S. Department of Justice recovered $2.5 billion in settlements and judgments under the False Claims Act in 2018 alone, and healthcare recoveries were over 85% of total recovered funds under the FCA. Of course, the COVID-19 public health emergency that began in 2020 caused a massive increase in healthcare spending and disruptions in many of the normal protections against fraud costs, and many in the healthcare industry believe the COVID crisis has exacerbated the situation. The fiscal year 2021 included the second-largest amount of False Claims Act settlements and judgments ever, and no one believes that’s a coincidence given the pandemic.
The Healthcare Industry, the CARES Act, and the False Claims Act
In 2020 as a response to the COVID-19 crisis, Congress passed the CARES ACT to stabilize the healthcare industry and give it additional tools to combat the pandemic. The legislation aimed to incentivize innovation in COVID-19 treatment, prevention, and diagnosis. It also provided federal funds to healthcare entities affected by the pandemic, to help stabilize the healthcare sector as they pivoted to combat the pandemic.
Of course, by taking that federal funding, those providers became subject to federal laws regarding public funds. Laws such as the False Claims Act.
Healthcare providers have typically found themselves to be targets of FCA enforcement activity because of Medicare and Medicaid participation. Reimbursement for Medicare and Medicaid requires documentation of the services provided, time involved, and proper billing codes. The provider must also certify that the treatment provided was medically necessary. This also includes, periodic audits help ensure that most transactions are aligned with federal requirements. Any unnecessary treatment is demonstrably a false claim.
$175 billion in funds were disbursed under the auspices of the CARES Act to providers. Unlike Medicare and Medicaid funds, these funds were disbursed under emergency conditions with limited oversight. In addition, several sectors of the healthcare industry face FCA risks due to other aspects of the pandemic.
Healthcare Industry Faces Increased FCA Oversight
Several sectors and types of patient care in the healthcare industry face notably increased risk of FCA claims.
Telehealth came into its own during the pandemic, with visits increasing sharply after the US Centers for Medicare & Medicaid Services (CMS) authorized an expansion in eligibility due to the pandemic. A new type of provider/patient interaction, combined with relaxed restrictions, provides not only ample opportunity for fraud, waste, and abuse costs, but for even well-intentioned providers to fall afoul of the rules if not careful with their documentation.
Telehealth providers should ensure they are compliant with all rules and regulations even during a period of relaxed enforcement. For providers who have been providing telehealth services during the public health crisis, a priority should be ensuring all documentation is brought up to date and kept accessible in case of future FCA enforcement activity.
It’s also advisable that telehealth providers ensure they’re following cybersecurity best practices so that cybercriminals can’t leverage telehealth systems to obtain private medical information and create additional liability.
Medicare Advantage Plans
Medicare Advantage allows private insurance companies to offer insurance plans and benefits to Medicare patients. They contract with providers to provide Medicare services, receiving compensation from the government that varies by the individual based on several factors.
The theory of implied false certification is frequently used in FCA actions against Medicare providers. Essentially, many stakeholders in the healthcare industry consider submitting a claim to Medicare as an implicit certification of compliance with applicable regulations. If the provider is out of compliance with regulations at the time of claim submission, they are vulnerable to FCA lawsuits.
The CARES act carries two major new requirements for Medicare Advantage Plans. First, MA plans must cover any COVID-19 vaccine without cost-sharing. Second, they must allow pandemics to obtain a 90-day supply of covered medications without restriction. Violation of either requirement can form the basis of an implied false certification claim.
Provider Relief Fund
Oversight authorities and politicians, including congressional representatives in key committee seats, have expressed concern about the lack of transparency surrounding the CARES Provider Relief Fund. As we emerge from the public health emergency, oversight agencies and the plaintiff’s bar are applying close scrutiny to funds distributed to providers.
Recipients of Provider Relief Fund funding agreed to specific terms and conditions and signed an electronic affidavit to that effect. This included several certifications, such as that the provider would provide diagnosis, treatment, or testing for individuals with possible or actual cases of COVID-19, and that funds would not be used to pay salaries of individuals above $197,300.
It’s to be noted that many large hospital chains that received funds from the PRF have executives with salaries well in excess of the stated salary cap. Also, there is much ambiguity regarding what constitutes a possible case of COVID-19 for the purposes of the law. These and other factors mean that PRF recipients are at substantial potential risk for False Claims Act lawsuits.
Fraud, Waste and Abuse in Healthcare Industry Claims
The False Claims Act only applies to government spending, but fraud, waste, and abuse costs are a problem for private healthcare payers as well. While private payers can’t rely on the False Claims Act to recover FW&A costs, they can partner with Alaffia Health to review medical claims and prevent overpayments.
Alaffia Health utilizes an advanced AI platform to review high-cost medical claims for errors or improper charges, allowing our expert team of payment integrity analysts to focus their efforts on claims identified as most likely to contain errors. We then negotiate directly with the provider to establish the proper charge, before the healthcare payer pays out on an improperly billed claim.
Healthcare payers spend up to $300 billion each and every year on F,W&A charges. Alaffia Health is the payment integrity partner payers need to keep their margins under control. Our solution is effective, easy to implement, and comes with no upfront cost. It’s a win-win. Get started today.