Home Health & Hospice Week

Suppliers pay millions in two recent cases.

Batten down the compliance hatches or your business could get blown away by allegations of payment fraud and abuse.

Two distinct settlements announced May 15 should send that message loud and clear to firms billing Medicare or Medicaid for durable medical equipment, prosthetics orthotics and supplies, experts say.

Lincare Holdings Inc. is settling several on-going investigations by the HHS Office of Inspector General and the Department of Justice by paying a total of just over $12 million to the government, the company announced May 15. Lincare, based in Clearwater, FL, said that it admitted to no wrongdoing in settling the cases.

On the same day, Group II Medical Supports LLC, a DME supplier based in Beckley, W. Va., announced that it had agreed to pay the feds almost $1.6 million to partially resolve civil suit allegations that it submitted false claims to Medicare and Medicaid. The company's principals are also banned from participating in either program for five years.

Feds Get Tough On Self-Referrals

The Lincare case should be a loud wake-up call for DME suppliers in particular, stresses Mac Thornton, partner with Sonnenschein Nath & Rosenthal in Washington, DC and a former chief counsel to the OIG.

The Lincare settlement is the largest administrative recovery by the OIG, notes Thornton. That could mean higher stakes for other firms that find themselves caught in compliance snafus similar to Lincare's situation.

The charges: Federal officials accused Lin-care of paying physicians to refer patients to the company from 1993 through 2000. Gifts to doctors--including sports tickets, gift certificates, trips and golf outings--also raised federal officials' suspicions of violations of federal anti-kickback law.

"This significant settlement is an important example of OIG's continuing effort to eliminate illegal kickback practices and violations of self-referral law," Inspector General Daniel Levinson says in a release.

Kickback Inquiries Get Aggressive

The OIG and other federal agencies have made no secret of the fact that they intend to aggressively pursue cases related to illegal kickbacks and self-referrals. In an April 25 "Open Letter to Health Care Providers," for example, the OIG offered guidance on how providers could self-disclose Stark physician self-referral law violations to limit financial liability for compliance breaches (see Eli's HCW, Vol. XV, No. 18).

Providers who resolve Stark or kickback liability through the OIG General Self-Disclosure Protocol will receive good settlement terms, paying "near the lower end" of the civil monetary penalty fines and other penalties they might face in a regular enforcement action, Levinson said in the letter.

Forecast: Watch for relationships with referral sources to be hot enforcement targets.

Tread Carefully In Medicaid Territory

Group II Medical Supports' settlement raises a red flag about the enforcement actions on the Medicaid side, warns Jeff Baird, an attorney with Brown & Fortunato in Amarillo, TX.

Group II Medical Supports' settlement stems from the filing of false Medicare and Medicaid claims for inflatable mattresses to treat pressure ulcers. According to federal officials, the DME supplier misrepresented patient conditions to support the claims.
 
Group II Medical Supports faces still more charges from the federal government--and the May 15 pronouncement against the firm comes on the heels of an $8.4 million criminal lawsuit settlement against supplier. On March 30, District Judge David A. Faber ordered Group II to pay that amount as restitution to Medicare and Medicaid (United States v. Group II Medical Supports LLC, S.D.W.V., No. 5:05-cr-00127--1, 3/30/06).

Lesson learned: Be conscientious and complete when documenting medical necessity, experts advise.