October 30, 2015

Breaking: DOJ Reaches $250 Million Settlement with Hospitals

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EDITOR’S NOTE: This story was first reported by David Glaser on Monitor Mondays, Oct. 26, 2015. 

The U.S. Department of Justice (DOJ) has reached 70 settlements involving 457 hospitals in 43 states for more than $250 million, with the agreements related to cardiac devices implanted in Medicare patients in violation of Medicare coverage requirements, officials announced today.

“While recognizing and respecting physician judgment, the department will hold accountable hospitals and health systems for procedures performed by physicians at their facilities that fail to comply with Medicare billing rules,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, in a news release posted on the DOJ website. “We are confident that the settlements announced today will lead to increased compliance and result in significant savings to the Medicare program while protecting patient health.”   

An implantable cardiac defibrillator, or ICD, is an electronic device that is implanted near and connected to the heart. Only patients with certain clinical characteristics and risk factors qualify for an ICD covered by Medicare. 

The investigation began several years ago and was based on the government’s assertion that Medicare didn’t cover ICDs if the patient received it within 40 days of a MI or 90 days of bypass, or if other criteria outlined in National Coverage Determination 20.4 were not met. 

There are many things that really bother me about the fact that this investigation occurred under the False Claims Act. There is the fact that according to the NCD manual, unless an NCD specifically says it limits coverage, it doesn’t limit it. In other words, NCD 20.4 establishes situations in which ICDs are always covered and situations in which they may not be covered, but it doesn’t establish situations in which they are never covered. If a physician believes that a patient needs the device, there is an argument for coverage. If a physician or hospital believes that a service is necessary, there is no mechanism to present that argument short of submitting a bill to Medicare. The act of submitting a claim when you believe a service is covered should not be grounds for false claims liability. 

There is also the fact that if every hospital in the country is doing a certain something, it’s a strong indication the problem is the policy, or confusion about the policy, and not the conduct of the hospitals. But the thing that bothers me the most is that former Vice President Cheney received an ICD in circumstances that this settlement would characterize as “fraudulent” (his particular issue was that his ejection fraction was higher than described in the NCD). In other words, there is going to be a big newspaper story noting that hospitals have provided medically unnecessary care to senior citizens across the country when the same care, if provided to a vice president, is considered appropriate. Care that was proper for the vice president is thus being called fraud, requiring repayment and imposition of penalties when provided to the average citizen. 

This is very, very, very wrong. And I didn’t include enough “verys.” The investigation is nearing its conclusion. So why am I still talking about it? It’s because this is a very important opportunity for education. Because of the dollars involved, this settlement will inspire conversation, and much of that conversation will suggest that there is rampant fraud in the healthcare industry. Personally, I highly doubt that, but whether there is or not, the ICD situation shouldn’t be characterized as fraud.  

The False Claims Act is a powerful stick. The fact that the government can impose penalties of three times the damages and $5,500 to $11,000 per claim is scary. But I don’t think that hospitals should be quick to surrender to pressure from the government. And I know that we all will be better off if we speak out when the government tries to characterize reasonable care as fraud. I think that the government uses the label “fraud” to avoid discussions about rationing. Reasonable people might differ about the use of ICDs. There are some, and maybe many, cases involved in the settlement for which experts would assert that the implantation of the ICD was not necessary. In fact, based on the way the government handled its investigation, it would not recover unless at least one expert felt the care was improper. But as soon as we are talking about reasonable people differing, that is, by definition, not fraud. If these cases were treated as overpayments, to be recovered under the typical overpayment process, I wouldn’t object (though I would argue that many of them still merit coverage). If the treating physician had any legitimate basis for believing the implant was necessary, Medicare should cover it.

Labels can matter. When this case hits the news, tell anyone who will listen that if Dick Cheney were a Medicare recipient, his ICD would have been labelled as “fraudulently implanted.” Let them start to understand that investigations like this don’t demonstrate fraud and abuse; they are abuse of the word “fraud.”

About the Author

David M. Glaser, Esq., is a shareholder in Fredrikson & Byron’s Health Law Group. David helps clinics, hospitals, and other healthcare entities negotiate the maze of healthcare regulations, providing advice about risk management, reimbursement, and business planning issues. He has considerable experience in healthcare regulation and litigation, including compliance, criminal and civil fraud investigations, and reimbursement disputes. David’s goal is to explain the government’s enforcement position and to analyze whether the law supports this position. David is a popular panelist on Monitor Mondays and is a member of the RACmonitor editorial board. 

Contact the Author 

dglaser@fredlaw.com

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editor@racmonitor.com 

David M. Glaser, Esq.

David M. Glaser, Esq., is a shareholder in Fredrikson & Byron’s Health Law Group. David helps clinics, hospitals, and other healthcare entities negotiate the maze of healthcare regulations, providing advice about risk management, reimbursement, and business planning issues. He has considerable experience in healthcare regulation and litigation, including compliance, criminal and civil fraud investigations, and reimbursement disputes. David’s goal is to explain the government’s enforcement position and to analyze whether the law supports this position. David is a popular panelist on Monitor Mondays and is a member of the RACmonitor editorial board.

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