Everyone is well familiar with the old adage that the three most important things in real estate are location, location, location. A noticeable trend in government enforcement makes clear the axiom is equally relevant to the practice of medicine. Government enforcement agencies continue to take a hard look at physician whereabouts when services are billed under their provider numbers. A recent Administrative Law Judge (ALJ) decision upholding a Centers for Medicare & Medicaid Services (CMS) revocation of a South Florida clinic exemplifies just how serious the government is about location, location, location.

CMS Revocation Action

On October 5, 2017, an ALJ for the United States Department of Health and Human Services (HHS) affirmed CMS' decision to revoke Kendall Medical Center, Inc.'s (KMC) enrollment and billing privileges. Kendall Med. Ctr., Inc v. CMS, DAB CR4948 (2017).The revocation was based on the clinic's submission of 23 claims to Medicare that were not personally rendered by the physician identified on the claim. Id. at 1-2. The revocation prohibited KMC from submitting claims, terminated its Medicare provider agreement, and barred re-enrollment for term of 1-3 years.

Between June 2015 and September 2015, KMC submitted 23 claims to Medicare for services purportedly rendered by the clinic's medical director. Id. CMS determined, through its own data analytics, the physician was not in the State of Florida on the dates the services were rendered. Id. Instead, the services were performed by other licensed physicians employed by the clinic. Id. at 4.

In September 2016, CMS initiated the revocation action against KMC on the grounds the clinic abused its billing privileges by failing to accurately identify the rendering physician. Id. at 2. Under the governing regulations, an abuse of billing privileges includes instances where a provider submits a claim for services on a date when he or she is not in state or country. 42 C.F.R. § 424.535(a)(8)(i)(B). At no time did CMS allege, or present evidence, that the 23 services at issue were fraudulent.

KMC appealed the revocation determination to the HHS Departmental Appeals Board. KMC, while admitting the medical director was not in the state when the services were provided, challenged the revocation on the grounds that: (1) CMS failed to show that the claims were fraudulent; and (2) revocation was unduly harsh based on the alleged regulatory violation. Id. at 4-6. KMC's arguments were both premised on the fact the services were medically necessary and performed by licensed physicians employed by the clinic.

The court rejected KMC's arguments. The ALJ noted CMS was not required to establish the falsity of a claim to demonstrate that an abuse of billing privileges occurred. Id. at 4. An abuse of billing privileges is established when: (1) a claim for a service is submitted; and (2) the service could not have been performed by the physician because he or she was out of the state or country. Id. Where both elements are satisfied, CMS has the authority to revoke because the service "'could not have been furnished' within the meaning of the [regulation]." Id. at 4-5. The fact the services were performed by other licensed physicians employed by the clinic was irrelevant to the analysis.

The ALJ also rejected KMC's position that revocation was inequitable because the underlying allegations only involved the submission of 23 improper claims. Id. at 4-5. CMS' decision "to revoke a provider or supplier is not subject to review based on equity or mitigating circumstances" and the ALJ cannot substitute his or her judgement in determining whether the agency action was appropriate. Id. Once a basis for revocation is established, an ALJ cannot "second-guess" CMS' decision to revoke. Id. at 6.

What can providers and suppliers learn from this case?

The government's message is clear: Individuals and entities will be held accountable for the accuracy of the claims they submit to Medicare. "A proper claim… is one that identifies both the specific beneficiary who received a service and the specific named physician who furnished the service to the beneficiary." Id. at 4. Accountability, in certain situations, can result in revocation even in the absence of a specific allegation of fraud.

The difficulty for providers and suppliers is trying to determine what facts CMS will consider in identifying an abuse of billing privileges. Can an error or mistake give rise to a finding of an abuse of billing privileges? While CMS' guidance on the topic makes clear that revocation is not intended to target isolated occurrences or accidental billing errors, the threshold of what constitutes a pattern of abusive billing is extremely low. "[CMS] will not revoke billing privileges under § 424.535(a)(8) unless there are multiple instances, at least three, where abusive billing practices have taken place." 73 Fed. Reg. 36,448, 36,455 (June 27, 2008) (emphasis supplied). Here, CMS drew the line at the submission of 23 inaccurate claims. The lesson of this holding is that when it comes to physician location, providers and suppliers must know there is virtually no room for error.

Is this case part of a broader government trend?

An examination of recent enforcement actions demonstrate that the government is focusing on physician location to identify potential aberrant billing practices. Evidence of a provider's absence at a time a service is provided supports an inference that a supervision requirement may not have been satisfied, or worse, no service was provided at all. Once that inference is present, the government has a compelling reason to investigate both the individual and entity involved in the claim submission. Recent examples of this can be found in the following resolutions:

  • In December 2017, a North Carolina physician entered into a $60,000 Civil Monetary Penalty Law (CMPL) settlement with the Office of Inspector General (OIG) to resolve allegations that she failed to supervise "incident to" services provided by her employees. The OIG contended the physician was not present in the clinic at the time the services were rendered. https://oig.hhs.gov/fraud/enforcement/cmp/cmp-ae.asp
  • In November 2017, a New York physical therapy practice and its owner agreed to resolve their CMPL liability with the OIG for $500,000 and the imposition of a three-year integrity agreement for submitting claims to Medicare for services that were not adequately supervised. The OIG alleged the claims were false and fraudulent because the physical therapist was not present in the clinic at the time the services were rendered. https://oig.hhs.gov/fraud/enforcement/cmp/cmp-ae.asp
  • In May 2017, a New York doctor agreed to a seven-year period of exclusion with the OIG, pursuant to section 1128(b)(7) of the Social Security Act, to resolve allegations he submitted claims to Medicare and Medicaid while he was out of the state and/or country. https://oig.hhs.gov/fraud/enforcement/cmp/cmp-ae.asp

This exclusion followed the physician's settlement with the Department of Justice (DOJ) resolving his criminal and civil liability for the same conduct. The DOJ settlement required the doctor to enter into a deferred prosecution agreement and an $8 million dollar False Claims Act (FCA) settlement. https://www.justice.gov/usao-edny/pr/board-certified-obstetrician-and-gynecologist-agrees-civil-fraud-settlement-conjunction

What can providers and suppliers do about this enforcement trend?

The actions above show that DOJ, OIG, and CMS are targeting providers of all types for failing to be present during the rendering of a service that is billed to a federal health care program. This failure can lead to criminal convictions, significant FCA and CMP settlements, program exclusion, and provider revocation. Further, no one is immune as hospitals, clinics, and individuals find themselves the targets of the government enforcement efforts.

So why are these enforcement actions so common? The answer is twofold. First, enforcement is consistent with the government's stated goals of holding individuals accountable, curbing "incident to" abuse, and excluding or revoking untrustworthy or abusive providers and suppliers. Second (and possibly the more likely reason), is the conduct is easy to identify and easier to prove. A fact the government and relator's bar is acutely aware of. Once a provider or suppliers is identified as an aberrant biller under this theory, there is very little that can be done to evade liability.

Government use of data analysis to identify this specific conduct is becoming more prevalent by the day. In Kendall Medical Center, CMS acknowledged that the 23 improper claims were identified through data analytics. CMS did not explain the methodology used to identify the claims, but it should be inferred that the Agency cross-referenced the doctor's travel records against the rendering provider identifier on the claim form.

Providers and suppliers must operate knowing that the government is developing enforcement cases by cross-referencing billing information against travel records. Providers and suppliers should also assume that this investigative tool is now part of every fraud investigation, regardless of the underlying allegation.

So what can health care providers do to prevent themselves from becoming the next statistic in this trend? Thankfully, the problem is also easy to prevent. Health care entities should consider the following:

  • Know that this is a government-wide enforcement priority and non-compliance carries significant sanctions.
  • Assume the government has access to all of your providers' domestic and international travel records both prospectively and retrospectively.
  • Develop compliance controls specifically aimed at tracking the dates and times providers are not present in the hospital, clinic, or office. Ensure that all relevant departments and individuals have real time access to this information to ensure compliance with applicable regulations. Further, entities should periodically evaluate whether the compliance controls are effective in identifying and deterring the problem.
  • Conduct a review of previously submitted and paid claims to identify any potential non-compliance. Don't assume that because the problem is in the past there is nothing to worry about. The government is analyzing this information and so should you.
  • Always be mindful of location, location, location.