Author: WorkCompAcademy

The Department of Health and Human Services Office of the Inspector General (“OIG”) and the Department of Justice (“DOJ”) released the FY 2015 Health Care Fraud and Abuse Control Program Annual Report. The Annual Report details the enforcement actions and the monetary gains from efforts by the OIG and DOJ to fight fraud and abuse throughout the prior fiscal year..

The Annual Report estimated that settlements and judgments resulted in approximately $2.4 billion returned to both the government and private parties in 2015. The Annual Report estimated that from 2013 to 2015, the return on investment for the Program has been $6.10 for every $1.00 expended (down from the previous calculation of $7.70 for every $1.00). Further, the DOJ convicted 613 defendants, and the OIG brought 800 criminal actions against individuals and entities involved in health care fraud and abuse-related crimes. The OIG also excluded 4,112 individuals from participation in federal health care programs in 2015. In Medicare, medical professionals may be banned from seeking money to see patients if they’ve been convicted of defrauding a health care program or fraud-related offenses.

But those banned providers have no problem starting a second career in California’s workers’ compensation system. Recent criticism argues that no such facility vetting occurs on a regular basis for workers’ compensation medical treatment. For example, Medicare banned Dr. Thomas Heric in 2006 after he pleaded guilty to charges related to writing reports based on diagnostic tests that turned out to be fraudulent. Heric then found a new line of work in the workers’ compensation medical system. His job was to review data on injured workers’ sleep patterns and issue reports needed to bill insurers. Five years later, prosecutors accused Heric of fraud again. That case is pending in Orange County Superior Court. Heric’s attorney, Robert Moest, said Heric stands by the reports and is fighting the charges.

There have been numerous successful criminal and civil health care fraud investigations in 2015 by the OIG and DOJ. These included: an $800 million settlement in which a company allegedly paid kickbacks to physicians through selling interests in exchange for referrals; a $54 million settlement by drug companies for knowingly underpaying rebates owed under the Medicaid Drug Rebate Program; a 156-month imprisonment and $1.2 million restitution payment for an individual medical supply company owner for submitting false claims to Medicare for hundreds of medical devices; a $47 million settlement by a laboratory for paying physicians kickbacks for patient referrals and billing for medically unnecessary testing; and the largest national health care fraud takedown in history charging 243 individuals, including 46 medical professionals, for alleged participation in Medicare fraud schemes for approximately $712 million in false billings.

The OIG’s audit and evaluation process found some key emerging issues in the Annual Report, including: Medicaid Home Health services; terminated Medicaid providers; access to Medicaid managed care services; payments to delinquent providers; non-emergency medical transportation services; issues in Medicare Part D; and the skilled nursing facility payment system. CMS reported that the national Medicaid improper payment rate for 2015 was 9.8 percent or $29.1 billion (an increase from the 2014 rate of 6.7 percent or $17.5 billion). Also in 2015, CMS awarded a contract for a pilot program to estimate the possible fraud in the Medicare program, specifically in the Home Health benefit. This pilot program includes a review team of health care clinicians, analysts, policy experts and fraud investigators that will review possible fraud and determine whether law enforcement should be involved.

Health care payers should be aware of the concentrations of the Annual Report, as many of these areas will likely remain a focus in 2016. In 2015, the DOJ Civil Division Fraud Section focused on hospitals and physicians. This trend is one that payers should watch for in the future. The DOJ stated in the Annual Report it was concerned with hospitals and physicians treating patients on an inpatient basis when they could have been treated as outpatients. The DOJ also stated that a key area of concern was in violations of the Stark Law for physicians with ownership interest in health care entities. Further, the DOJ civil division recently has been litigating more cases that would have normally been settled in the past. This trend may continue in upcoming years.

Many of the recent settlements from providers have been in regards to excessive physician compensation. Several large settlements have resulted from findings of physician compensation that was in excess of fair market value, not commercially reasonable and based on the volume or value of referrals. Further, the DOJ has emphasized a recent focus on individual accountability and corporate responsibility. It is likely these trends will continue as well.

The State Compensation Insurance Fund is seeking to cut its workers’ compensation rates, per a recent filing with the California Department of Insurance.

The rate filing also includes an overall 9.5 percent rate reduction due to improvements in State Fund’s claims costs and goes into effect next year.

“An important part of State Fund’s purpose is to provide fair pricing. We have filed a new pricing structure with the California Department of Insurance (CDI) that will further enhance our pricing accuracy and rate stability for our policyholders,” said Gina Simons, communications director for State Fund.

State Fund said in a communication sent out to insurance brokers that it is evolving its pricing structure by introducing additional pricing ranges and risk characteristics “that will further enhance pricing accuracy and make our rates more stable year over year.”

Although the rate action will have an overall effect of a decrease, individual policyholders may see their rates increase or decrease depending on their individual loss experience, Simons said.

“Once the filing is accepted by CDI, we anticipate it to be effective Sept. 1, 2016,” Simons added.

Last week the SCIF also released its 2015 Annual Report which is now available online. The report profiles financial performance in 2015 highlighted by an increase of $271 million in net income, which is 14 percent more than in 2014. Other important highlights include – 138,000 policies were written in 2015 – net premiums earned were $1.6 billion – policyholders’ surplus grew by $164 million since Dec. 31, 2014, and net investment income was $731 million.

“2015 was a pivotal year for State Fund’s transformation into the agile and efficient workers’ compensation carrier we will become,” stated Vernon Steiner, State Fund President and CEO. “Under the oversight of our Board of Directors, we began this transformation with the goals of strengthening our culture and improving our business processes and technology.”

Despite this favorable financial achievement, State Fund’s Board of Directors did not declare a dividend on new or renewal policies that incepted during the 2015 calendar year. Instead, during 2015, State Fund designated an additional $750 million dollars as restricted surplus to cover future expenses for pension and other healthcare benefits. It also continues to carry reserves for losses, anticipated future claims, and expenses that are prudent and adequate for our operations.

This proposed rate reduction is atypical good news for the California workers’ compensation marketplace. California employers generally tolerate unrelenting premium increases. At least for now, other states are facing the bad news.

For example, Florida businesses could soon be paying almost 20 percent more for workers’ compensation coverage. In response to a recent decision from the Florida Supreme Court, the National Council on Compensation Insurance (NCCI) filed a 17.1 percent rate increase with the Florida Office of Insurance Regulation (OIR) for all new, renewal and additional policies in effect on a “pro-rata” basis. It’s the first rate filing from NCCI, which files on behalf of 260 Florida workers’ comp insurers, since the Florida Supreme Court struck a devastating blow to the state’s workers’ compensation system.

The U.S. Supreme Court on Thursday imposed some limits on the kind of fraud claims that can be brought against federal contractors in a case involving a suit against one of America’s largest hospital operators over a woman’s death at one of its facilities. More than a dozen major healthcare organizations and associations have jumped into the Supreme Court case over the validity of a legal theory now used to bring many fraud lawsuits against them.

But the 8-0 ruling was not the broad victory for business sought by the company, Universal Health Services, and other healthcare providers are fearful of suits under the U.S. False Claims Act, which lets individuals make claims that the federal government has been defrauded.

The case focuses on situations in which whistle-blowers allege providers have submitted false claims to government programs by failing to follow certain regulations. That legal theory is known as “implied certification” and has been accepted by some federal appeals courts and rejected by others. The justices threw out a 2015 appeals court ruling that had allowed the parents of Yarushka Rivera to sue Universal Health Services under the False Claims Act, but sent the case back to a lower court, meaning the suit could potentially still proceed.

Rivera suffered a fatal seizure in 2009 at age 19 a mental health facility owned by the company in Lawrence, Massachusetts. The lawsuit said the facility provided “gravely inadequate treatment” and used “unsupervised and unqualified personnel.” Rivera’s parents, Julio Escobar and Carmen Correa, accused the company of defrauding the government because it was getting federal Medicaid funding to provide treatment to low-income people and did not comply with personnel regulations at the Lawrence facility.

The ruling represented a partial victory for the business community because it rejected the lower court’s expansive view of a company’s liability under the False Claims Act. Roy Englert, King of Prussia, Pennsylvania-based Universal Health Services’ lawyer, said he was pleased the justices threw out the appeals court ruling and set a “new rigorous standard” for determining if the claims can move forward.

The ruling “accepts the basic notion that fraudsters can’t provide shoddy services to the government and expect payment without incurring significant liability,” said David Frederick, the lawyer for Rivera’s family.

Businesses had hoped the justices would put more limits, or disallow completely, lawsuits based on a federal contractor’s failure to meet certain legal or regulatory requirements not specifically outlined in a government contract. The court instead said such lawsuits can be filed as long as they are relevant to the government’s decision to make the payment to the company.

Justice Clarence Thomas, writing for the court, said the parents “may well have adequately pleaded a violation” of the fraud law, but added that the False Claims Act “is not a means of imposing treble damages and other penalties for insignificant regulatory or contractual violations.”

The Obama administration had backed the parents.

The DWC will enforce lien claimants’ use of a Uniform Assigned Name (UAN) beginning June 25, 2016. This is a uniform naming convention which ensures that parties are properly associated to cases in EAMS . The UAN is currently used by attorneys, claims administrators and lien claimants.

Effective June 25, 2016, lien claimants must use their UAN when filing a Notice and Request for Allowance of Lien and Application for Adjudication or their attempt to do so will result in failure. This requirement applies to all filing methods (OCR, EForm, and JET). It is advised that all lien claimants check the UAN Lien Claimants search page to verify their exact UAN name that must be used when filing documents.

Lien claimants who do not have a UAN should email the Central Registration Unit at CRU@dir.ca.gov. Please include an attachment with your business letterhead in the email request . The new assigned name or information will be posted within 10 business days of receipt of the request.

This new mandate is likely to become an additional tool in the claim administrator’s health care fraud prevention process. The true identity of fraudulent medical providers is often hidden behind fictitious business names, medical management companies who file liens in their name, as well as collection companies who do the same. In many instances the true identity of the perpetrator at the top of the pyramid scheme is not clearly visible. Forcing liens to be identified by a single unique number is a step forward since this would at least provide an investigatory thread that can be followed to the culprit’s doorstep.

The Center for Investigative Reporting current investigatory effort exposes fraud in California’s workers’ compensation system. An analysis of more than a million court cases details how workers have been swept into medical billing mills, prescribed unregulated medications and advised to undergo sometimes unneeded or high-risk surgery by doctors who were raking in bribes. The CIR report has now birthed follow up articles in many California leading publications.

The Sacramento Bee in a series of related articles points out that a review of thousands of criminal court records by The Center for Investigative Reporting shows a system in which pay-to-play schemes trump patient care, particularly in unregulated treatments rejected by insurers and “disputed in obscure courts throughout the state.” Prosecutors are pursuing charges against more than 80 medical professionals who have handled more than 100,000 injured-worker cases, most of them originating in Southern California. They allege that the cases account for $1 billion in fraud.

And the Sacramento Bee story suggests that “nobody cares about policing health care for injured workers.” Thousands of unregulated medical providers can spurn legislated checks and balances on medical care in the only-in-California network of 24 workers’ compensation courts. Anyone can demand money – a process known as filing a medical lien – for unregulated medical treatments that include the use of questionable devices, pain creams, shockwave therapies and DNA tests. And in an overburdened system that favors settlements over trials, they often succeed”.

The DWC had this response. “We know there’s a problem,” said Christine Baker, director of the state Department of Industrial Relations, which administers workers’ compensation. Baker’s agency worked with lawmakers on a 2012 law that was meant to limit the filing of medical liens. It established a $150 fee required to demand payment in workers’ compensation courts. It also gave insurers new powers to deny money to providers that aren’t approved to treat injured workers.

Yet claims for unapproved care still are cropping up, Baker said. And the number of liens filed last year is even higher than it was when one of Baker’s advisers initially concluded that the system “rewards bad behavior.” Baker said her department has begun reviewing the medical providers who currently file the largest number of liens. The result: “We do note that many are (criminally) indicted.”

Perhaps the DWC mandate that lien claimants must soon use a UAN is the aftermath of these stunning developments. It would seem at least that the DWC and claim administrators will soon be able to better track the identity of who it is that is asking to get paid.

Four U.S. senators – two Democrats and two Republicans – introduced a bill on Tuesday aimed at preventing big pharmaceutical companies from using safety rules to prevent generic drugs from coming to market.

Top leaders on the Senate Judiciary Committee led by Ranking Member Patrick Leahy (D-Vt.) introduced the new legislation to combat anticompetitive practices by brand-name drug companies that delay entry of lower-priced generic drugs. The issue will also be the subject of a Senate committee hearing next week.

The Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act would deter pharmaceutical companies from blocking cheaper generic alternatives from entering the marketplace. The bill is cosponsored by Chairman Chuck Grassley (R-Iowa), and Senators Amy Klobuchar (D-Minn.) and Mike Lee (R-Utah), leaders of the Subcommittee on Antitrust, Competition Policy and Consumer Rights.

Leahy said: “the high cost of prescription drugs is preventing access to necessary medical care, and I share their concern that many pharmaceutical products are simply too expensive for consumers. Pharmaceutical companies should be compensated for their important work developing life-saving treatments, but predatory practices at the expense of consumers are unacceptable. Drug affordability is a bipartisan issue that affects each and every one of us.”

The CREATES Act targets abusive delay tactics that are being used to block entry of affordable generic drugs. The first delay tactic addressed by the CREATES Act occurs when brand- name drug companies prevent potential generic competitors from obtaining samples of the branded product, so the generic company cannot perform the testing necessary to show that its product is equivalent to the brand-name product, a prerequisite for FDA approval.

The second delay tactic addressed by the CREATES Act occurs when brand-name manufacturers whose products require a distribution safety protocol (known as a Risk Evaluation Mitigation Strategy with Elements to Assure Safe Use, or “REMS with ETASU” ) refuse to allow generic competitors to participate in that safety protocol, again undermining the generic’s ability to gain FDA approval.

The CREATES Act allows a generic drug manufacturer facing one of these delay tactics to bring an action in federal court for injunctive relief (i.e. to obtain the sample it needs, or to enter court- supervised negotiations for a shared safety protocol). The bill also authorizes a judge to award damages to deter future delaying conduct.

The CREATES Act is intended to provide an efficient, tailored path for generic drug manufacturers to obtain relief so they can continue working to bring their lower-cost product to market. The Congressional Budget Office has estimated that similar legislation would save the government over $2 billion in direct savings over 10 years. The savings to consumers and private insurance companies would likely be far greater.

There is a similar bill in the House of Representatives which addresses the same issue but uses a different strategy. For example, it requires the generic company seeking a REMS drug to get FDA authorization to obtain the sample.

As an example of one of the REMS disputes which is public, Mylan Pharmaceuticals filed a lawsuit in 2014 against Celgene Corp, accusing it of using REMS to prevent generic copies of Thalomid and Revlimid to market.

The Senate Judiciary Committee’s antitrust panel will hold a hearing on its bill on June 21.The Pharmaceutical Research and Manufacturers of America, or PhRMA, which counts major drugmakers among its members, said it had no immediate comment. The Generic Pharmaceutical Association was pleased to see the bill introduced.