Medicare Compliance & Reimbursement

Understand CMS’ rules on CAAP usage, reporting, and recoupment.

As the COVID-19 public health emergency (PHE) winds down, pandemic-related fraud enforcement is ramping up — and you shouldn’t expect that scrutiny to end any time soon.

Context: On Feb. 9, Department of Health and Human Services (HHS) Secretary Xavier Becerra renewed the COVID PHE for a 13th and final time, effective Feb. 11 (see Medicare Compliance & Reimbursement, Vol. 49, No. 4). The declaration followed a previous White House announcement, marking May 11 as the PHE end date.

Aligning with HHS updates, the Centers for Medicare & Medicaid Services (CMS) continues to tweak its guidance on PHE-related waivers, flexibilities, and policies, offering 17 provider-specific fact sheets as well as a “What Do I Need to Know” sheet on the transition to a post-PHE landscape (see Medicare Compliance & Reimbursement, Vol. 49, No. 5).

But: Even though the COVID PHE is coming to a close, that doesn’t mean compliance with the rules on relief funds and loans or Medicare claims submitted during the pandemic aren’t still on the feds’ radar. In fact, both state and federal enforcement agencies remain steadfast in their pursuit of COVID fraudsters with many investigations, audits, and inspections still in the works.

Consider This Recent Example

Over the last few years, the Department of Justice (DOJ) has brought charges against a plethora of individuals for the fraudulent use of CARES Act Provider Relief Fund payments and Paycheck Protection Program (PPP) loans. And, on Jan. 17, Highland Ranch, Colorado-based physician Francis F. Joseph was convicted of COVID-19 Accelerated and Advanced Payment (CAAP) fraud, in addition to PPP fraud.

Reminder: In March of 2020, under the direction of the CARES Act, CMS began taking CAAP requests and making related payments to Medicare providers to assist with COVID-related hardships. Providers could request up to 100 percent of their Medicare payment amount for a three-month period, explains the HHS Office of Inspector General (OIG) in a report on CAAP payment compliance. As of September 2020, the Medicare Administrative Contractors (MACs) disbursed more than $100 billion in CAAP program payments to more than 46,000 providers, the OIG notes in the report.

As required by the CARES Act, CMS began recouping CAAP payments after 12 months, with the earliest repayments coming due in March 2021. Beginning at that year mark, the repayment schedule was 25 percent of the CAAP total for 11 months, 50 percent for six months, and then 100 percent of the balance due at “29 months from the initial issuance of the CAAP,” CMS notes in a CAAP Frequently Asked Question set last updated in August.

That 29-month mark hit in September 2022 for the earliest CAAP recipients, notes CMS in a repayment and CAAP disbursement brief. But the exact date of the balance coming due varies, depending on when providers received their payments. CMS hasn’t updated its statistics since last year, but as of Nov. 30, 2022, the agency still had more than $1.4 billion yet to recoup from providers.

Details of the case: This is the first conviction DOJ has brought for misappropriating funds from the CAAP program and “marks another example of the government’s enforcement efforts to address COVID-19-related fraud,” say attorneys Sophie Mourous and Timothy Fry with law firm McGuireWoods LLP in the firm’s FCA Insider blog.

“Joseph received approximately $250,000 from these funds and fraudulently used the money to pay for his own personal expenses, and not in accordance with the terms of the relief programs,” explains a DOJ release on the case. Joseph was convicted in a D.C. court for theft of the funds and wire fraud; he was acquitted of a theft charge for a separate COVID-relief payment. The court hasn’t set a sentencing date yet, but he could face upwards of 20 years in prison for the wire fraud, the DOJ says.

Of the total amount, the court homed in on $87,000 in CAAP funds Joseph illegally transferred to a family member, explain Mourous and Fry. “DOJ argued to the jury that a program CMS developed to ensure healthcare providers could remain solvent with access to low-interest loans was used by Dr. Joseph illegally for personal gain," they note.

Important: That’s why thorough recordkeeping and reporting are critical. “While a particularly egregious example, other smaller providers should ensure they have kept records on how they used these funds to further the provider’s ability to provide care at the start of the pandemic, rather than take advantage of government funding in a manner that could be challenged in the future,” Mourous and Fry say.

DOJ has already prosecuted more than 200 individuals in 130 cases for CARES Act fraud from payments received through the PPP, PRF, and Economic Injury Disaster Loan program, the release notes. “The Fraud Section has also seized more than $80 million in cash proceeds derived from CARES Act-related fraud schemes, as well as numerous real estate properties and luxury items purchased with such proceeds,” the DOJ says.

Resources: Review the case specifics at www.justice. gov/opa/pr/physician-convicted-misappropriating-approximately-250000-covid-19-relief-programs. Read the OIG report on CAAP compliance at https://oig.hhs.gov/ oas/reports/region5/52000053.pdf, peruse CMS’ CAAP webpage with links to the FAQs and other insight at www. cms.gov/medicare/covid-19-accelerated-and-advance-payments, and find CMS data on CAAP recoupment at www.cms.gov/files/document/medicare-caap-repayments-publication-11-30-2022.pdf.