Check Out OIG’s Newly Updated List of Corporate Integrity Agreements to Understand Recent Compliance Issues

In keeping up on the latest compliance issues, reporting issues, and the government's view on health care law issues, one of a health care lawyer's regular tasks is to review the latest compliance agreements reached by Office of Inspector General (OIG) for Health and Human Services. 

OIG negotiates corporate integrity agreements (CIA) with health care providers and other entities as part of the settlement of Federal health care program investigations arising under a variety of civil false claims statutes. Providers or entities agree to the obligations, and in exchange, OIG agrees not to seek their exclusion from participation in Medicare, Medicaid, or other Federal health care programs. This is also usually part of an agreement not to pursue or file criminal charges.

We also have clients review them in order for them to understand the government's view on various business practices in health care. If your business is interested, here is the OIG's posted list of corporate integrity agreements.  They are in PDF and can be downloaded and reviewed. 

CIAs have many common elements, but each one addresses the specific facts at issue and often attempts to accommodate and recognize many of the elements of preexisting voluntary compliance programs.

A comprehensive CIA typically lasts 5 years and includes requirements to:

 1. hire a compliance officer/appoint a compliance committee;

 2. develop written standards and policies; 

 3.  implement a comprehensive employee training program; 

 4.  retain an independent review organization to conduct annual reviews; 

 5.  establish a confidential disclosure program; 

 6.  restrict employment of ineligible persons; 

 7.  report overpayments, reportable events, and ongoing investigations/legal proceedings;      and 

 8.  provide an implementation report and annual reports to OIG on the status of the entity's compliance activities.

Keep compliant and make sure that your health care entity does not end up on this list.

Posted by Tracy Green, Esq. 

How Do You Appeal A Medi-Cal Temporary Suspension?

The Department of Health Care Services (DHCS) has the authority under the Welfare and Institutions Code to impose administrative sanctions on Medi-Cal providers. Some of the most common sanctions are withhold and temporary suspension.

The primary basis for "Temporary Suspension" is Welfare and Institutions Code, Section 14043.36 which provides as follows:

“If it is discovered that a provider is under investigation by the Department or any state, local, or federal government law enforcement agency for fraud and abuse, that provider shall be subject to temporary suspension from the Medi-Cal program, which shall include temporary deactivation of all provider numbers used by the provider to obtain reimbursement from the Medi-Cal program.”

The Medi-Cal application has providers agree to temporary suspension if they are under investigation for fraud or abuse; fail to disclose all information in their application or provide false information; or fail to remediate discrepancies found after an unannounced visit; submit claims for payment for any provider who is excluded on on the Ineligible list; or “when necessary to protect the interests of the Medi-Cal program.”

How can I appeal from a Medi-Cal temporary suspension? You do not have the rights to a full appeal with a hearing and the right to bring witnesses. Instead, you only have the right to what is known as an “administrative” or paper appeal under Welfare and Institutions Code, Section 14043.65. 

For this reason, the most important thing to do from the beginning is to begin the meet and confer process with DHCS to seek to resolve the issues. The appeal can be filed at the same time. We have had many cases where we were able to satisfy DHCS that there was no viable fraud or violation of program rules or where we reached agreements that allowed the provider to maintain their Medi-Cal provider number under certain written settlement agreements.

Before these meetings, it is critical to meet with an attorney and evaluate the evidence and to determine whether there is any exposure for fraud. If there are concerns, it may be important not to have meetings where the provider’s Fifth Amendment rights are waived since anything that is said at a meeting in Sacramento is evidence.

While the meet and confer process is ongoing, the appeal is filed and it must be supported by substantial evidence under oath in order to have any chance of winning this “paper” appeal. A judge does not rule on the appeal. It is a “hearing officer” from DHCS and there is no hearing or opportunity to cross-examine witnesses. Thus, any appeal submissions must be thorough.

Seeking input from DHCS in Sacramento is critical since “temporary” can last as long as 3 years while the Department claims that an investigation is ongoing. The meet and confer process with an in-person meeting in Sacramento is very helpful in helping prove to the Department the issues in the claimed “fraud” are non-existent (we have seen cases where the evidence was flawed and the statements were false) or that the errors were minimal and not grounds for a true temporary suspension.

One of the recurring issues is that often DCHS will refer the case to the State Attorney General’s Office – Bureau of Medi-Cal Fraud – and it is often required that the case be closed by their office in order to reinstate the provider number and lift the temporary suspension. 

Every one of these cases is different and it is critical to evaluate them at the earliest time possible. Usually these cases commence when there are on-site inspections and it may be necessary to obtain an attorney’s input at that time to ensure that all is handled professionally and that a referral for fraud and abuse will not be made. Often, providers do not take the on-site inspections as seriously as they should and do not sufficiently address the auditor or investigator’s concerns at the earliest level. If you need assistance with your audit, on-site inspection or temporary suspension, feel free to contact our office for a complimenary 15 minute consultation.  

Posted by Tracy Green, Esq.

Green and Associates, Attorneys at Law

Phone: 213-233-2260

Email: tgreen@greenassoc.com

California Department of Health Care Services (DHCS) Issues Temporary Suspensions Against 16 Alcohol And Drug Treatment Centers - More Suspensions To Come

On July 18, 2013, the California Department of Health Care Services (DHCS) announced temporary suspensions against 16 alcohol and drug treatment centers that are suspected of operating in violation of state and federal Drug Medi-Cal (DMC) laws. The disciplinary measures resulted from preliminary investigations of alcohol and drug treatment programs by DHCS’ Audits and Investigations Division. The investigations included reviews and onsite visits last week of 22 treatment centers.

It is believed that a total of 66 companies have been audited and that additional treatment centers have been suspended since July 18 based on reports by the Los Angeles Times. According to the Times, 29 companies that operate a total of 83 clinics have been temporarily suspended.

As DMC-certified clinics, they are reimbursed by the state for substance use disorder services provided to eligible Medi-Cal members. As a result of the investigations, the 16 centers received temporary suspensions of their Medi-Cal provider numbers, preventing them from submitting claims for reimbursement of services until investigations are complete.

"Temporary" suspensions can take over one year while the criminal investigation is pending. Temporary suspensions can result in the facility closing given that most of these programs are fully reliant on Medi-Cal payments. All 16 cases have been referred to the California Department of Justice for further investigation, which may lead to permanent sanctions (such as termination of provider number) or the filing of a criminal action.  However, the temporary suspension can be lifted early if the treatment centers can show that there is not reliable evidence of fraud or abuse. This action is the first phase of DHCS’ ongoing review of DMC, which came fully under its purview earlier this month.

 Allegations received by DHCS regarding DMC include claims that providers have hired individuals who are on the federal list of excluded providers. These individuals have been convicted of a felony or misdemeanor involving fraud or abuse in any government program, or they have been convicted of neglect or abuse of a patient while providing a health care item or service. Some centers are suspected of violating state and federal laws by providing services that are not deemed medically necessary and of fraudulently billing DMC for services that were not rendered. DHCS is working with counties, which contract directly with these clinics to provide services, to resolve any discrepancies between the actions of the centers and their billing of Medi-Cal.

On July 1, 2013, all substance use disorder programs from the Department of Alcohol and Drug Programs completed their transfer to DHCS. This allows for better coordination of the licensing, certification and program management of substance use disorder services to the benefit of individuals with substance use disorders.

Attorney Commentary Having represented Medi-Cal providers, including alcohol and drug treatment centers, who received temporary suspensions, it is critical to act quickly in assessing the merit of the allegations.  There are opportunities to seek a settlement conference and resolution with the Department especially where the allegations are weak or with little merit.

Posted by Tracy Green, Attorney
Green and Associates

Court of Appeal Upholds Utilzation Controls On Psychology Services Provided By Community Mental Health Clinic

In a setback to community health and the State of California's attempts to handle its budget issues by cutting back services to those most in need, a recent Court of Appeal decision, Mendocino Community Health Clinic v. State Department of Health Care Services, upheld utilization controls imposed by the Department of Health Care Services on psychology services at the rate of two visits per month an outpatient to a community mental health clinic. The Third District Court of Appeal ruled that this regulation does not violate the federal Medicaid Act.

The statute at issue is Welfare and Institution Code Section 14132(a) which provides that Medi-Cal, which implements the federal act, will cover outpatient psychological services rendered at a federally-qualified health center (FQHC) “subject to utilization controls.” The Department then adopted a regulation limiting Medi-Cal coverage of psychology services to a maximum of two per month.

After the two-visit-per-month regulation was adopted, Medi-Cal told the Mendocino clinics it would not reimburse them for more visits than that for fiscal years 2003-2004 and 2004-2005. The clinics sought administrative review in the Sacramento County Superior Court and won at that level by ruling that that as a “federally-qualified health center” under the act, it was entitled to payment for all necessary treatment rendered to its Medi-Cal patients.

The clinics argued that the regulation limiting payment was intended to address overbilling by individual practitioners, not by federally-qualified health centers, or FQHCs, which have a special status under the Medicaid Act. They also argued that they provide “core services” that must be paid for by Medi-Cal under federal law.

The Department appealed. The Court of Appeal overturned the Superior Court and ruled in favor of the Department. The Opinion reasoned that although federal law  requires full reimbursement for core services provided by FQHCs, it does not preclude states from enacting utilization controls in limiting the number of such visits.  

In sum, the Department cannot pay less than 100 percent of reimbursement but it can impose utilization controls. The fact that the federal legislation did not address utilization controls one way or the other was a significant factor in the Court of Appeal's opinion. 

For the mentally ill, limiting services to two per month regardless of the severity or need for treatment is contrary to the intent of federal law. 

Posted by Tracy Green, Esq., a Medi-Cal attorney in Los Angeles, California. 

How Can I Learn How To Bill Medi-Cal Properly And Get My Billing Staff Trained?

For Medi-Cal providers, one of the most important things is for your biller, billing staff and office manager to understand the program, the rules and the upcoming changes. 

If you are a Medi-Cal provider, even one that only does occasional billing to the program, it is important to have your staff and biller as well. As a provider, you will be held responsible for what they do in billing.  So, what can you do that is cost effective?

First, even if your biller (third party or in-house) tells you what experts they are - remember that the rules and the way they apply them change constantly.  Anyone who says they know it all is to be regarded with caution. Change is the name of the game in healthcare billing.

Second, have your staff and even you sign up for the Medi-Cal Learning Portal. Anyone can sign up (even students or lawyers like me) and have access to recorded webinars, eLearning tutorials, quick links to provider manuals, information on upcoming seminars, contact information for regional representatives, and so on. You can even ask for a custom workshop through Medi-Cal. 

Third, have your billing staff attend Medi-Cal training seminars. For example, next month, on April 16 and 17, 2013, the Department of Health Care Services (DHCS) and Xerox State Healthcare, LLC [the DHCS fiscal intermediary] will conduct Medi-Cal training seminars.  This is also available for sign-up on the Medi-Cal Learning Portal linked above. On April 16, the training will for Allied Health, Long Term Care and CCS/GHPP providers only.  On April 17, the training will be for Medical, Inpatient/Outpatient, HAP, and  CCS/GHPP providers.

In order to be compliant and not have audits or accusations of fraudulent billing, keep records of the training and be vigilant about having your staff and outside billers staying on top of these issues. All too often, people are relying on old rules and the way things used to be and are not staying on top of or ahead of the issues.


  

What Should Health Care Providers Do To Prepare For Or Help Avoid An Audit By Medi-Cal, Medicare Or Private Insurance Companies?

If you are a health care provider with a Medicare or Medi-Cal provider number -- especially in Southern California --chances are you WILL be audited or have an on-site visit at some point over the years. The audits and on-site visits (sometimes unannounced) have increased dramatically over the past years and will continue to increase as the state and federal governments face budget problems. In addition, the private insurers who administer Medicare are required by their contracts with the government to audit whether they suspect improprieties or not.

Your practice may also be subject to audits from insurance companies and health maintenance organizations (HMOs). The audit must be taken seriously since it can result in an overpayment being assessed and/or adverse administrative history. However, do not panic. Although it can seem like an intimidating event, you can increase your chances of prevailing and not having an unfair overpayment amount assessed if you prepare for any potential audit in advance and handle it properly once the request is made.

Here are some strategies and tips for helping you not only survive your audit but being prepared and prevailing to the greatest extent possible:

1. Prepare Your Staff In Advance For Understanding That Audits Are Part Of The Healthcare Business. Providers and the staff often erroneously assume that if they are being paid for claims that everything is correct and they are doing everything right. Not so. Medicare and Medi-Cal pay the provider on a "good faith" basis and reserve the right to audit. Private insurers, on the other hand, often require pre-approval before payment. Thus, it is critical that your entire staff understand that the best defense against audits is good charting, documentation, proper coding, and avoiding any upcoding, billing for services not provided or documented or anything else that may be characterized as fraud or abuse.

Once everyone understands that audits are part of the process it also helps them take control of the audit process and not let fear prevent them from handling it professionally. Most Medicare and Medi-Cal audits fall into one of three broad categories:
(1) an audit during the application or updating of application process where there is an on-site visit and review of business records and typically only a limited number of claims;
(2) prepayment audits (most common in Medicare), in which a review of claims is conducted before Medicare pays the physician, where carriers typically want to look at only one or two claims from each physician; and
(3) post-payment audits.

In a comprehensive post-payment audit or review, the carrier reviews a small statistical sample of claims and uses the results to calculate a projected overpayment for a period of months or years.

2. Identify In Advance Who Is Authorized To Speak To Auditors And Any Other Person Or Investigator Who Visits The Office In An Announced Or Unannounced Visit. First impressions count and this applies to audits and other visits by regulators or investigators. You will be better prepared if you determine in advance who is permitted to speak to government auditors or regulators. For example, you do not want the receptionist interviewed about your office's policies and procedures since anything he or she says may be used in your audit.

Establish a procedure that only an office manager, the provider or the health care lawyer are allowed to meet and discuss anything with the auditor or regulator. The other staff should be limited to contacts about establishing times and dates available for meeting unless and until they are instructed to do so by the designated persons in charge of the audit. There are many horror stories about staff meeting with auditors or regulators while the provider is out of the office and giving misinformation which was later used against the provider.

3. In Order To Anticipate An Audit Or Prevent An Adverse Audit, Understand Fully How The Medicare Or Medi-Cal Program Operates. Providers often assume that billers and office staff know how the Medicare and Medi-Cal programs operate when this is often not the case. Billers are used to working from superbills and entering codes without analyzing whether all the program rules are being followed. It should be understood by all that these programs will only reimburse "reasonable and necessary" services where there is the required documentation -- even if the services were provided. If the documentation is not present in the file -- it will be presumed that the service was not provided or that it was not medically reasonable and necessary.

We suggest that the providers have the billers and office managers create a thorough notebook regarding each of the procedure codes billed that contains the printed portions of any relevant manuals about what constitutes 'reasonable and necessary services' as defined by Medicare or Medi-Cal and what documentation is required for these services. It is then necessary to have the providers and anyone who sees patients or provides services read and understand these requirements. In addition, the provider needs to be aware of what your local carrier wants claims forms and patient records to contain because the requirements vary.

The provider may have worked in a hospital or private setting where the documentation requirements are different from private Medicare or Medi-Cal and not realize they are failing to properly document the file. For example, state law and private insurers may allow a physical therapist assistant or physical therapy aide to perform certain tasks in physical therapy while Medicare's billing and reimbursement policies and procedures may not pay for the same treatment by these assistants or aides for Medicare treated patients. Such information typically is contained in the Medicare manual and the local carrier's local medical review policy which are all available online.

Above all else, maintain complete documentation in patient records to substantiate the services billed. Record symptoms and diagnoses, details of the services and level of care provided, and complete progress notes. Medicare considers lack of corresponding documentation as evidence that billed services were not reasonable and necessary. The auditor will consider any related reimbursement as an overpayment and require the provider to refund the applicable amount.

There should be periodic internal reviews of files and education to ensure that the documentation is being done properly. Even if this billing and procedure code notebook and research was not done before the audit, prepare it at the beginning of the audit so everyone at the provider's office is prepared and knows the billing and reimbursement policies. Often during the audit, auditors will be mistaken about documentation or medical necessity requirements.

4. Have A Health Care Attorney To Whom You Can Send Any Audit Letters Or Whom You Can Contact Anytime There Is A Visit And Request For An Interview. If you receive a letter or visit from your Medicare or Medi-Cal carrier requesting a number of charts or records, contact your attorney immediately and fax him or her the letter or business cards of the visitors. Even if the attorney only needs to be minimally involved in most of the audit and file preparation, you need an objective person to ensure that the audit is handled in the best manner possible.

It is often easier for the health care attorney to speak with the auditors and set up a timetable for any interviews or to ensure that there is sufficient time to respond to the request for documentation. In most cases, thirty or sixty minutes of a qualified health care attorney's time at the beginning of the audit is well worth it since it will reduce the risk of overpayment, help reduce the provider's time and help ensure that the audit goes smoothly and that a good impression is made.

Resist the temptation to think that if a health care attorney is involved that an auditor or regulator will think that something is "wrong." In fact, the opposite impression is given: the provider is sophisticated, professional and has an established method for responding to audits. This is especially important in "unannounced" visits where it is easier for a health care attorney to be objective and take control of the situation where an auditor simply shows up and demands records and interviews at that moment. The health care attorney can also address regulatory issues that may be beyond the provider's expertise.

5. Read Any Letters Or Lists Carefully And Make Sure You Understand What Is Requested And See If There Are Any Patterns. This is another reason to send an audit or similar letter to your health care attorney so you understand what is requested. For example, assume that records for specific dates of service are requested as to a certain number of patients. Make sure that you also send in any other documentation that would support the services rendered on that day. This could include laboratory results, X-ray reports, photographs, consultations from other physicians, etc.

When reviewing the audit letter, especially if the letter requests multiple charts, see if there seems to be some type of underlying pattern or theme in the chart notes. Were the requested patient charts all billed for one particular code, all referred by a certain physician, or is there some other pattern? This will assist you in better addressing the concerns of the audit -- which may not be told to you directly by the auditors.

6. Determine With Your Health Care Attorney Whether You Need An Expert Witness Or Coding Expert During The Audit Process. Your attorney and you should consider hiring a coding expert to review the charts, preferably before you submit them to the auditor or carrier. If the expert cannot complete the review before the deadline for producing the records, the attorney will ask for an extension or simply have the expert conduct his review at the same time that the carrier does. Your attorney should have the review done under the attorney work product privilege so that the results will be confidential. One excellent preventative measure is to have a coding expert review charts periodically so that you know that your practice is in compliance with billing and record requirements. This can also be part of a compliance plan.

7. Take Control Of The Audit. Make Sure Records Are Complete. Review Charts And Records Carefully Before Copying Them Or Providing Them To Auditors. The auditors or regulators do their best to put the burden on the provider to prove that the services were properly documented and coded. Remember that the auditors are often not medical personnel even if they have some medical training. The auditors will often ask for the charts right away in unannounced visits.

Take your time and ensure that all reports, notes and other information are in the chart before you produce or copy it. Look for other records such as sign in sheets that will also be relevant to the audit. One of the most important things to do in preparing to respond to an audit is to ensure that the records are complete. One of the best ways to do this is to meticulously compare each medical record with its corresponding billing record. Remember, the billings are where the government’s investigation began. You can ensure that there are records for each of the dates billed, identify coding issues and have a better idea how to proceed in the audit.

Another important step is to make sure you produce the complete records. It is not enough to have them but you need to produce them and have records of the production. If you fail to produce records requested, you can be penalized financially or with adverse action against your provider number. If the auditor or regulator agrees you do not need to produce certain records or documentation, you or your health care attorney should document this agreement. It is important to document what is produced since you will be creating an administrative record. All records and documentation produced should be accompanied by a memorandum or letter itemizing the records produced and either delivered in person or with a return receipt or overnight service as proof of delivery.

8. Do NOT Alter The Records. If you need to supplement the records, make sure you do not back date or alter the records. Altering records can cause problems much worse than overpayments -- Medical Board complaints and discipline. Seek the advice of counsel when it comes to supplementing records or there is any issue about missing records.

9. Understand What Circumstances Might Can Trigger An Audit. Audits can provide an education. They can be stressful, especially if the outcome is unfavorable. However, they can offer tremendous amounts of information and educational opportunities for your office. Try to remain positive while you go through this process. What are some common triggers of audits?

■ High or excessive use of specific CPT codes. Sometimes excessive use of certain ICD-9 codes may also trigger audits. Generally, doctors who are outside the bell curve with regard to billing practices may get flagged on internal carrier audit screens.

If your practice tends to be more specialized (perhaps you specialize more in geriatric patients), you will, by the nature of your practice, be billing certain codes more frequently than the other doctors in the community who have a more broader-based practice pattern. You will want to explain these issues to the auditors. Do not be afraid to bill for specialized services or think that you will avoid an audit by underbilling or billing at the lower code. Just be extra careful in the documentation. Do not alter proper billing protocols just to try to stay under the radar. Bill for what you did and let the chart defend you.

Importantly, don't stress to the auditors how you provide services for "free" and underbill. That does not help your audit in most circumstances. Are you billing for codes where you are using new technology? Did you change your practice patterns to become more specialized so that your billing patterns changed? Did you add new diagnostic or therapeutic machines to the practice? Did you purchase a practice? If so, you may flag out on a statistical basis. Explain your billing and practice changes to the auditors and the best defense is a well-documented file. Use the research notebook described above to ensure you are complying with all the documentation and medical necessity requirements.

■ Do you have an unhappy patient or patient's family? If you have an unhappy patient, review the bill if the patient had a bad outcome or received an unexpectedly large bill. Sometimes collection practices or a bad outcome can prompt a patient to launch a complaint that generated the audit. To avoid such problems in the future, make sure the patient knows upfront about the costs. Speak with the biller or collection service to alter methods of collections. Consider formulating a payment plan with the patient or allow patients to pay with a credit card. If one of the patients was unhappy, raise this with the auditors.

■ Do you have disgruntled current or former employees? All it takes is a complaint from a current or former employee to trigger a fraud audit or other review. The employee may try to get revenge and the best way to prevent this from occurring is to do the following:

--have a compliance plan that requires the employee to report suspected fraud and abuse during employment;

--conduct exit interviews where employees are asked about any suspected fraud or abuse;

--have written employee policies and maintain personnel files;

--have regular office meetings to review policies;

--address small issues before they escalate to large ones;

--make everyone in the office feel like part of the team; and

--educate the employees regarding billing and documentation requirements so that they do not mistakenly think that something is being done improperly.

If you suspect that a current or former employee triggered the audit, bring the disgruntled employee up in the audit and explain why he or she is not credible if he or she is the source. The auditor may not identify the complainant but this may help defuse the employee's allegations.

■ Are You Overusing Pre-Printed Forms Or Template Shortcuts? Be careful with the use of templates especially in electronic records. Although templates are acceptable charting methods, they can look very repetitive, especially when it comes to routine care and services. Each chart note should clearly reflect the chief complaint, history, examination and treatment you rendered on that date for that patient.

Cutting and pasting templates/macros from previous dates of service and simply using that language again in subsequent chart notes does not necessarily indicate what happened on that specific date of service. It makes for a bigger charts but once it looks repetitive or like filler, it can cause an issue with the audit where your office might be characterized as a "mill" or you are questioned about the amount of time spent with the patient.

Look for these triggers and others as they will help you defend the audit. Do not be afraid of negative facts or problems that you have found. If there are weaknesses or mistakes, discuss with your health care attorney whether you should concede certain issues at the audit level for credibility reasons. Do not assume that if you admit certain problems that the auditors will be fair to you or not seek overpayment. You need to have a strategy and having an outside objective person such as a health care attorney can be useful so you do not make a tactical mistake that could cause later problems or result in an overpayment.

10. Be Professional. Treat the auditors with respect even when you disagree with them or their position. This is another reason to have an objective health care attorney for you to rely upon. It is easy to get emotional and defensive when your medical services seem like they are under attack and you already feel underpaid by the carriers.

11. Maintain A Notebook Of Administrative And Professional Records. In advance of the audit, have a notebook or file with all the key documents you need for an audit. You will be prepared and then update these on an annual basis at the beginning of the year. These records include but are not limited to the following:

--All Medicare and Medi-Cal applications and supplemental applications (see if there is an issue with failure to update these applications);

--Malpractice insurance, workers' compensation insurance; liability insurance and any other insurance required by the programs; --Copies of all licenses held by providers and staff;

--Other business documentation required by the programs such as office leases, contracts with laboratories, contracts with suppliers, etc. (this will depend upon the type of provider);

--Equipment lists where the equipment is diagnostic or used for billing; and

--Any other documentation required by the program and its manuals.

12. Request An Exit Conference Or Meeting Upon The Conclusion Of The Audit. Depending on the type of audit or visit, you want to have an exit conference or meeting where you can address any outstanding issues in the audit. You also may want to or submit a letter that is reviewed or drafted by your health care attorney showing that you have fully complied with all record requests and documenting any positions regarding coding, billing, medical necessity or other issues that have arisen. Having an excellent record of your submissions will be important to obtaining a favorable result and creating a good record if there is a subsequent hearing.

13. Conclusion. Audits happen to all providers. It does not necessarily mean you are a bad provider or that you should immediately leave the Medicare or Medi-Cal programs. With increasing financial pressures on health programs and practices, it is important to be forward thinking and create compliance plans and self-audit so your practice does not get assessed an overpayment.

During the audit, do your best to turn a potentially negative situation into a positive learning experience to correct any legitimate problems that the audit may uncover as well as to minimize the chance of future audits. Being stubborn and continuing to bill improperly will not help your practice. The carrier may still monitor your subsequent claims to see if your billing practices have actually changed and comply with the program's rules and regulations. Be proactive, anticipate audits in advance and handle audits intelligently and you will prevail to the greatest extent possible.

Posted by Tracy Green, Esq. Please email Ms. Green at tgreen@greenassoc.com or call her at 213-233-2260 to schedule a complimentary 30-minute consultation.  

Any questions or comments  should be directed to Tracy Green, a very experienced California administrative law attorney, Los Angeles Medicare audit attorney, and Los Angeles Med-Cal attorney.The firm focuses its practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed providers and in audits, administrative board and discipline matters in California and throughout the country. Our website is: http://www.greenassoc.com/

Medi-Cal Update: June Fee-for-Service Provider Payment Delay

The California Department of Health Care Services (DHCS) recently announced it will delay payments for one week at the end of June and pay those claims out of the 2010-2011 fiscal year budget. This means that the last checkwrite in June 2010 will be delayed until the start of the next fiscal year that begins July 1, 2010. Providers should make cash flow plans and plan for potential budget problems in California.

The delay of the checkwrite payment normally scheduled for June 24, 2010, will impact providers that render services to the following programs:

• Medi-Cal
• Healthy Families
• Child Health and Disability Prevention
• California Children’s Services
• Expanded Access to Primary Care
• Genetically Handicapped Persons Program
• Abortion Services

Because this year’s budget is so contentious, it is possible that physicians will be subject to additional payment delays if the Legislature’s budget talks go well beyond the constitutional June 15 deadline. According to the State Controller’s office, a budget impasse would not immediately affect Medi-Cal providers. Medi-Cal payments would continue until the state’s cash reserves are completely exhausted. Claims for services provided under the other programs listed above may, however, be further delayed if a new budget is not in place by July 1.

The last checkwrite in June 2010 will be delayed until the start of the next fiscal year that begins July 1, 2010. The delay of the checkwrite payment normally scheduled for June 24, 2010, will impact providers that render services to the following programs:


The electronic funds transfer (EFT) settlement date for those affected by the checkwrite delay will be July 2, 2010. Providers that render services for Cancer Detection Programs: Every Woman Counts will not be affected by the checkwrite delay and will receive payments as normally scheduled.

 Posted by Tracy Green, Esq.  Any questions should be directed to Tracy Green, a very experienced Los Angeles physician attorney, Los Angeles Medi-Cal attorney and Los Angeles health care attorney. You can email her at tgreen@greenassoc.com or call her at 213-233-2261.

The firm focuses its practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing health care providers   in California and throughout the country. Their website is: http://www.greenassoc.com/

California Attorney General Files Medi-Cal Fraud Charges Against Former Manager Of Mt. Shasta Clinic

Medi-Cal prosecutions are beginning to show up even in rural areas such as beautiful Mt. Shasta. On October 9, 2009, the California Attorney General's Office filed criminal charges against Denise Fairhurst, the former manager of a Mount Shasta-based medical clinic, in Siskiyou County Superior Court. Ms. Fairhurst was charged with five criminal counts of grand theft, insurance fraud and submitting false claims to the government. Bail was initially set at $1 million dollar. Bail is often initially set at the amount of the alleged loss.

The criminal complaint contends that between January 2004 and December 2007, Ms. Fairhurst, acting as the manager of Alpine Healthcare Clinic, billed Medi-Cal $2.2 million for services not rendered to beneficiaries to help pay Alpine's operations and management. It was further alleged that Ms. Fairhurst used $33,492 of the funds to pay personal credit card bills.

According to the complaint, Alpine Clinic had financial problems which stemmed from Ms. Fairhurst's inability to set appropriate compensation rates for employees and physicians. The complaint alleges that a member of the maintenance staff was paid $1000 a month to work one hour a week. Other medical clinics in town allegedly lost employees to Alpine because they could not compete with its pay structure. The clinic also allegedly lost income because of an agreement Ms. Fairhurst made with doctors to provide care to patients when they were admitted to a hospital.

The fraud allegedly began to occur when, with costs rising, Mr. Fairhurst submitted false claims to Medi-Cal. She allegedly forged Medi-Cal forms, claiming that patients had received care at the clinic, even though some patients had not been to it in years. It is alleged that approximately two-thirds of the claims Ms. Fairhurst submitted were fraudulent.

A member of Alpine Clinic's board of directors allegedly discovered that payment claims had been submitted for patients who had not been seen at the clinic. The board of directors hired an accounting firm to conduct an audit of the clinic's finances. Ms. Fairhurst allegedly refused to provide any information to the firm and resigned in June 2008. The audit uncovered further evidence of Fairhurst's activities, including the use of a personal credit card that was linked to the clinic's bank account. Alpine Clinic's board of directors referred its findings to the Attorney General's Bureau of Medi-Cal Fraud and Elder Abuse for prosecution earlier this year. If convicted, Fairhurst faces up to five years in prison.

Attorney Comments: We have had number of cases where managers have made billing decisions or taken actions that put the medical office at risk for allegations of Medi-Cal fraud billing. In cases where the office manager was working for an individual provider or group it is often difficult to prove that the manager acted on his or her own without the owners being involved. We have had cases where the medical office has decreased business and the manager has billed inappropriately in order to keep the office financially solvent.

We have also had cases where billers have made mistakes that have later resulted in referrals for criminal investigations. Physicians and health care providers often rely on managers and billers to bill correctly and place too much trust in their skill and ability to navigate the health care billing rules.

Compliance plans and periodic audits need to be instituted at all offices that bill Medi-Cal, Medicare or insurance companies. Even if it is at a small scale (review of random charts and billing every quarter) it needs to be done. So much of billing is invisible to the medical providers. Many clinic managers and billers at small offices and clinics are not MBAs and do not have college degrees. Instead, they often learned their skills on the job.

Small providers should look to the way in which hospitals and larger clinics operate to find methods through internal controls for ensuring that billers and managers have an independent set of eyes reviewing their work on a periodic basis. Through early detection and reporting, providers can reduce their exposure to false billing claims, overpayments from audits, civil damages and penalties, administrative remedies, and even criminal sanctions.

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal  at Green and Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in health care fraud cases. Their website is: http://www.greenassoc.com/

What Should I Do To Prepare For Or Help Avoid An Audit By Medi-Cal, Medicare Or Private Insurance Companies?

If you are a health care provider with a Medicare or Medi-Cal provider number -- especially in Southern California --chances are you WILL be audited or have an on-site visit at some point over the years. The audits and on-site visits (sometimes unannounced) have increased dramatically over the past years and will continue to increase as the state and federal governments face budget problems. In addition, the private insurers who administer Medicare are required by their contracts with the government to audit whether they suspect improprieties or not.

Your practice may also be subject to audits from insurance companies and health maintenance organizations (HMOs). The audit must be taken seriously since it can result in an overpayment being assessed and/or adverse administrative history. However, do not panic. Although it can seem like an intimidating event, you can increase your chances of prevailing and not having an unfair overpayment amount assessed if you prepare for any potential audit in advance and handle it properly once the request is made.

Here are some strategies and tips for helping you not only survive your audit but being prepared and prevailing to the greatest extent possible:

1. Prepare Your Staff In Advance For Understanding That Audits Are Part Of The Healthcare Business. Providers and the staff often erroneously assume that if they are being paid for claims that everything is correct and they are doing everything right. Not so. Medicare and Medi-Cal pay the provider on a "good faith" basis and reserve the right to audit. Private insurers, on the other hand, often require pre-approval before payment. Thus, it is critical that your entire staff understand that the best defense against audits is good charting, documentation, proper coding, and avoiding any upcoding, billing for services not provided or documented or anything else that may be characterized as fraud or abuse.

Once everyone understands that audits are part of the process it also helps them take control of the audit process and not let fear prevent them from handling it professionally. Most Medicare and Medi-Cal audits fall into one of three broad categories:
(1) an audit during the application or updating of application process where there is an on-site visit and review of business records and typically only a limited number of claims;
(2) prepayment audits (most common in Medicare), in which a review of claims is conducted before Medicare pays the physician, where carriers typically want to look at only one or two claims from each physician; and
(3) post-payment audits.

In a comprehensive post-payment audit or review, the carrier reviews a small statistical sample of claims and uses the results to calculate a projected overpayment for a period of months or years.

2. Identify In Advance Who Is Authorized To Speak To Auditors And Any Other Person Or Investigator Who Visits The Office In An Announced Or Unannounced Visit. First impressions count and this applies to audits and other visits by regulators or investigators. You will be better prepared if you determine in advance who is permitted to speak to government auditors or regulators. For example, you do not want the receptionist interviewed about your office's policies and procedures since anything he or she says may be used in your audit.

Establish a procedure that only an office manager, the provider or the health care lawyer are allowed to meet and discuss anything with the auditor or regulator. The other staff should be limited to contacts about establishing times and dates available for meeting unless and until they are instructed to do so by the designated persons in charge of the audit. There are many horror stories about staff meeting with auditors or regulators while the provider is out of the office and giving misinformation which was later used against the provider.

3. In Order To Anticipate An Audit Or Prevent An Adverse Audit, Understand Fully How The Medicare Or Medi-Cal Program Operates. Providers often assume that billers and office staff know how the Medicare and Medi-Cal programs operate when this is often not the case. Billers are used to working from superbills and entering codes without analyzing whether all the program rules are being followed. It should be understood by all that these programs will only reimburse "reasonable and necessary" services where there is the required documentation -- even if the services were provided. If the documentation is not present in the file -- it will be presumed that the service was not provided or that it was not medically reasonable and necessary.

We suggest that the providers have the billers and office managers create a thorough notebook regarding each of the procedure codes billed that contains the printed portions of any relevant manuals about what constitutes 'reasonable and necessary services' as defined by Medicare or Medi-Cal and what documentation is required for these services. It is then necessary to have the providers and anyone who sees patients or provides services read and understand these requirements. In addition, the provider needs to be aware of what your local carrier wants claims forms and patient records to contain because the requirements vary.

The provider may have worked in a hospital or private setting where the documentation requirements are different from private Medicare or Medi-Cal and not realize they are failing to properly document the file. For example, state law and private insurers may allow a physical therapist assistant or physical therapy aide to perform certain tasks in physical therapy while Medicare's billing and reimbursement policies and procedures may not pay for the same treatment by these assistants or aides for Medicare treated patients. Such information typically is contained in the Medicare manual and the local carrier's local medical review policy which are all available online.

Above all else, maintain complete documentation in patient records to substantiate the services billed. Record symptoms and diagnoses, details of the services and level of care provided, and complete progress notes. Medicare considers lack of corresponding documentation as evidence that billed services were not reasonable and necessary. The auditor will consider any related reimbursement as an overpayment and require the provider to refund the applicable amount.

There should be periodic internal reviews of files and education to ensure that the documentation is being done properly. Even if this billing and procedure code notebook and research was not done before the audit, prepare it at the beginning of the audit so everyone at the provider's office is prepared and knows the billing and reimbursement policies. Often during the audit, auditors will be mistaken about documentation or medical necessity requirements.

4. Have A Health Care Attorney To Whom You Can Send Any Audit Letters Or Whom You Can Contact Anytime There Is A Visit And Request For An Interview. If you receive a letter or visit from your Medicare or Medi-Cal carrier requesting a number of charts or records, contact your attorney immediately and fax him or her the letter or business cards of the visitors. Even if the attorney only needs to be minimally involved in most of the audit and file preparation, you need an objective person to ensure that the audit is handled in the best manner possible.

It is often easier for the health care attorney to speak with the auditors and set up a timetable for any interviews or to ensure that there is sufficient time to respond to the request for documentation. In most cases, thirty or sixty minutes of a qualified health care attorney's time at the beginning of the audit is well worth it since it will reduce the risk of overpayment, help reduce the provider's time and help ensure that the audit goes smoothly and that a good impression is made.

Resist the temptation to think that if a health care attorney is involved that an auditor or regulator will think that something is "wrong." In fact, the opposite impression is given: the provider is sophisticated, professional and has an established method for responding to audits. This is especially important in "unannounced" visits where it is easier for a health care attorney to be objective and take control of the situation where an auditor simply shows up and demands records and interviews at that moment. The health care attorney can also address regulatory issues that may be beyond the provider's expertise.

5. Read Any Letters Or Lists Carefully And Make Sure You Understand What Is Requested And See If There Are Any Patterns. This is another reason to send an audit or similar letter to your health care attorney so you understand what is requested. For example, assume that records for specific dates of service are requested as to a certain number of patients. Make sure that you also send in any other documentation that would support the services rendered on that day. This could include laboratory results, X-ray reports, photographs, consultations from other physicians, etc.

When reviewing the audit letter, especially if the letter requests multiple charts, see if there seems to be some type of underlying pattern or theme in the chart notes. Were the requested patient charts all billed for one particular code, all referred by a certain physician, or is there some other pattern? This will assist you in better addressing the concerns of the audit -- which may not be told to you directly by the auditors.

6. Determine With Your Health Care Attorney Whether You Need An Expert Witness Or Coding Expert During The Audit Process. Your attorney and you should consider hiring a coding expert to review the charts, preferably before you submit them to the auditor or carrier. If the expert cannot complete the review before the deadline for producing the records, the attorney will ask for an extension or simply have the expert conduct his review at the same time that the carrier does. Your attorney should have the review done under the attorney work product privilege so that the results will be confidential. One excellent preventative measure is to have a coding expert review charts periodically so that you know that your practice is in compliance with billing and record requirements. This can also be part of a compliance plan.

7. Take Control Of The Audit. Make Sure Records Are Complete. Review Charts And Records Carefully Before Copying Them Or Providing Them To Auditors. The auditors or regulators do their best to put the burden on the provider to prove that the services were properly documented and coded. Remember that the auditors are often not medical personnel even if they have some medical training. The auditors will often ask for the charts right away in unannounced visits.

Take your time and ensure that all reports, notes and other information are in the chart before you produce or copy it. Look for other records such as sign in sheets that will also be relevant to the audit. One of the most important things to do in preparing to respond to an audit is to ensure that the records are complete. One of the best ways to do this is to meticulously compare each medical record with its corresponding billing record. Remember, the billings are where the government’s investigation began. You can ensure that there are records for each of the dates billed, identify coding issues and have a better idea how to proceed in the audit.

Another important step is to make sure you produce the complete records. It is not enough to have them but you need to produce them and have records of the production. If you fail to produce records requested, you can be penalized financially or with adverse action against your provider number. If the auditor or regulator agrees you do not need to produce certain records or documentation, you or your health care attorney should document this agreement. It is important to document what is produced since you will be creating an administrative record. All records and documentation produced should be accompanied by a memorandum or letter itemizing the records produced and either delivered in person or with a return receipt or overnight service as proof of delivery.

8. Do Not Alter The Records. If you need to supplement the records, make sure you do not back date or alter the records. Altering records can cause problems much worse than overpayments -- Medical Board complaints and discipline. Seek the advice of counsel when it comes to supplementing records or there is any issue about missing records.

9. Understand What Circumstances Might Can Trigger An Audit. Audits can provide an education. They can be stressful, especially if the outcome is unfavorable. However, they can offer tremendous amounts of information and educational opportunities for your office. Try to remain positive while you go through this process. What are some common triggers of audits?

■ High or excessive use of specific CPT codes. Sometimes excessive use of certain ICD-9 codes may also trigger audits. Generally, doctors who are outside the bell curve with regard to billing practices may get flagged on internal carrier audit screens.

If your practice tends to be more specialized (perhaps you specialize more in geriatric patients), you will, by the nature of your practice, be billing certain codes more frequently than the other doctors in the community who have a more broader-based practice pattern. You will want to explain these issues to the auditors. Do not be afraid to bill for specialized services or think that you will avoid an audit by underbilling or billing at the lower code. Just be extra careful in the documentation. Do not alter proper billing protocols just to try to stay under the radar. Bill for what you did and let the chart defend you.

Importantly, don't stress to the auditors how you provide services for "free" and underbill. That does not help your audit in most circumstances. Are you billing for codes where you are using new technology? Did you change your practice patterns to become more specialized so that your billing patterns changed? Did you add new diagnostic or therapeutic machines to the practice? Did you purchase a practice? If so, you may flag out on a statistical basis. Explain your billing and practice changes to the auditors and the best defense is a well-documented file. Use the research notebook described above to ensure you are complying with all the documentation and medical necessity requirements.

■ Do you have an unhappy patient or patient's family? If you have an unhappy patient, review the bill if the patient had a bad outcome or received an unexpectedly large bill. Sometimes collection practices or a bad outcome can prompt a patient to launch a complaint that generated the audit. To avoid such problems in the future, make sure the patient knows upfront about the costs. Speak with the biller or collection service to alter methods of collections. Consider formulating a payment plan with the patient or allow patients to pay with a credit card. If one of the patients was unhappy, raise this with the auditors.

■ Do you have disgruntled current or former employees? All it takes is a complaint from a current or former employee to trigger a fraud audit or other review. The employee may try to get revenge and the best way to prevent this from occurring is to do the following:

--have a compliance plan that requires the employee to report suspected fraud and abuse during employment;

--conduct exit interviews where employees are asked about any suspected fraud or abuse;

--have written employee policies and maintain personnel files;

--have regular office meetings to review policies;

--address small issues before they escalate to large ones;

--make everyone in the office feel like part of the team; and

--educate the employees regarding billing and documentation requirements so that they do not mistakenly think that something is being done improperly.

If you suspect that a current or former employee triggered the audit, bring the disgruntled employee up in the audit and explain why he or she is not credible if he or she is the source. The auditor may not identify the complainant but this may help defuse the employee's allegations.

■ Are You Overusing Pre-Printed Forms Or Template Shortcuts? Be careful with the use of templates especially in electronic records. Although templates are acceptable charting methods, they can look very repetitive, especially when it comes to routine care and services. Each chart note should clearly reflect the chief complaint, history, examination and treatment you rendered on that date for that patient.

Cutting and pasting templates/macros from previous dates of service and simply using that language again in subsequent chart notes does not necessarily indicate what happened on that specific date of service. It makes for a bigger charts but once it looks repetitive or like filler, it can cause an issue with the audit where your office might be characterized as a "mill" or you are questioned about the amount of time spent with the patient.

Look for these triggers and others as they will help you defend the audit. Do not be afraid of negative facts or problems that you have found. If there are weaknesses or mistakes, discuss with your health care attorney whether you should concede certain issues at the audit level for credibility reasons. Do not assume that if you admit certain problems that the auditors will be fair to you or not seek overpayment. You need to have a strategy and having an outside objective person such as a health care attorney can be useful so you do not make a tactical mistake that could cause later problems or result in an overpayment.

10. Be Professional. Treat the auditors with respect even when you disagree with them or their position. This is another reason to have an objective health care attorney for you to rely upon. It is easy to get emotional and defensive when your medical services seem like they are under attack and you already feel underpaid by the carriers.

11. Maintain A Notebook Of Administrative And Professional Records. In advance of the audit, have a notebook or file with all the key documents you need for an audit. You will be prepared and then update these on an annual basis at the beginning of the year. These records include but are not limited to the following:

--All Medicare and Medi-Cal applications and supplemental applications (see if there is an issue with failure to update these applications);

--Malpractice insurance, workers' compensation insurance; liability insurance and any other insurance required by the programs; --Copies of all licenses held by providers and staff;

--Other business documentation required by the programs such as office leases, contracts with laboratories, contracts with suppliers, etc. (this will depend upon the type of provider);

--Equipment lists where the equipment is diagnostic or used for billing; and

--Any other documentation required by the program and its manuals.

12. Request An Exit Conference Or Meeting Upon The Conclusion Of The Audit. Depending on the type of audit or visit, you want to have an exit conference or meeting where you can address any outstanding issues in the audit. You also may want to or submit a letter that is reviewed or drafted by your health care attorney showing that you have fully complied with all record requests and documenting any positions regarding coding, billing, medical necessity or other issues that have arisen. Having an excellent record of your submissions will be important to obaining a favorable result and creating a good record if there is a subsequent hearing.

13. Conclusion. Audits happen to all providers. It does not necessarily mean you are a bad provider or that you should immediately leave the Medicare or Medi-Cal programs. With increasing financial pressures on health programs and practices, it is important to be forward thinking and create compliance plans and self-audit so your practice does not get assessed an overpayment.

During the audit, do your best to turn a potentially negative situation into a positive learning experience to correct any legitimate problems that the audit may uncover as well as to minimize the chance of future audits. Being stubborn and continuing to bill improperly will not help your practice. The carrier may still monitor your subsequent claims to see if your billing practices have actually changed and comply with the program's rules and regulations. Be proactive, anticipate audits in advance and handle audits intelligently and you will prevail to the greatest extent possible.

Any questions or comments should be directed to: tgreen@greenassoc.com.  Tracy Green is a principal at Green and Associates. They focus their practice on the representation of individuals, businesses and licensed professionals, particularly health care professionals including individual physicians, corporate providers and group practices. Their website is: http://www.greenassoc.com/

Medi-Cal Fraud Indictment Names 42 Persons Who Worked At Two Related Companies Using Unlicensed Nurses For Home Health Care

On June 25, 2009, a 41-count indictment was returned in the Central District of California and charged 42 defendants with conspiracy to commit health care fraud relating to allegedly using unlicensed individuals to provide in-home health care to disabled patients, many of them children with cerebral palsy or developmental disabilities.

It is alleged that these services were billed to Medi-Cal as if licensed nurses performed the services. The total billings at issue amount to $4.6 million. On July 9, 2009, approximately 20 of the defendants were arrested.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.

The indictment is part of a joint state and federal investigation called “Operation License Integrity” that related to the operation of two related Santa Fe Springs-based companies: Medcare Plus Home Health Providers and one of its subsidiaries Medcare Excel Plus Home Health Services.

There have already been two prior federal criminal cases that involved the owner of these entities and a key assistant. Last year, Priscilla Villabroza, a registered nurse who ran Medcare Plus Home Health Providers, pleaded guilty in federal court last year to five counts of health care fraud. Ms. Villabroza has yet to be sentenced and is most likely cooperating in the new case.

In a separate federal health care fraud case, Susan Bendigo, who was a registered nurse and allegedly a key assistant to Ms. Villabroza, was indicted and fled the country. Government officials believe that she has fled to the Philippines. Both Ms. Villabroza and Ms. Bendigo are originally from the Philippines.

According to court documents, Villabroza and others hired unlicensed individuals to provide care to disabled Medi-Cal patients at home and in school, many of whom were children and young adults served under a program called Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) Supplemental Services. None of the children are alleged to have suffered any injuries from these services.

The indictment alleges that from August 2004 through the end of 2007, Villabroza and others hired unlicensed individuals at the rate of $8 to $12 per hour to provide services to the disabled Medi-Cal patients and billed Medi-Cal as if they were licensed vocational nurses (LVNs). Some of the unlicensed individuals allegedly had foreign training, but never passed a nursing exam here. Some of them allegedly had no medical training at all.

It is alleged that the identities of actual licensed nurses were unlawfully appropriated by using the license of former workers of the registry or by placing ads in Craigslist and seeking resumes at job fairs. The home health agency then indicated in the health care records and billing that the work was perform by licensed individuals using the misappropriated license numbers.

The unlicensed nurse defendants visited the patients at home and at school and provided nursing services that included administering medications, adjusting ventilators, and feeding through gastronomy tubes. Some parents and patients reported to authorities that the “nurses” lacked basic skills.

Villabroza, Bendigo and supervisors involved in the scheme allegedly directed the unlicensed nurse defendants to lie about their licensing and qualifications by telling the parents or guardians of the disabled Medi-Cal beneficiaries that they were LVNs, according to the indictment. The unlicensed nurse defendants falsely presented themselves as professionals, concealed their unlicensed status from the parents or guardians of the disabled Medi-Cal beneficiaries, and in some cases affirmatively misrepresented themselves as LVNs.

Attorney Commentary: This new indictment has been claimed by the U.S. Attorney’s Office to be "the largest Medi-Cal fraud case ever filed in the State of California." Health care fraud cases are starting to sound like drug cases where each new indictment is the largest ever.

This claim appears to contain some hyperbole since the defendants are supervisors and workers from the same two entities. There are 42 defendants but many of them are low-level individuals who were probably earning only $8 to $12 an hour and were used by the company and were probably desperate for a job. All these defendants appear to be Filipina women. In years past, these lower-level individuals would probably not have been charged but would have been treated as victims who were being used. However, in this case it appears that the owner/operator plead first and now the case against all the others proceeds.

There is some logic to tagging these defendants with felonies so that none of these people can work in the health care field again where it is proven that they knew they were required to be licensed and were misrepresenting themselves to patients and to Medi-Cal. However, a federal felony can adversely affect their lives for many years and for almost off of them it is certainly their first contact with the criminal justice system. Unlike a state charge which can be expunged, these federal felony charges can have a devastating impact on the individuals' ability to obtain any future employment.

We urge the prosecutors to use their discretion to ensure that only those who are knowingly engaging in fraud are charged. We further would like the government to educate licensed personnel (especially those in the ethnic communities) about the rules and consequences of engaging in any fraudulent conduct or working for those who may be engaging in fraudulent conduct.

For law abiding providers, does this case hold any lessons? It is still important to remember that it is important to be careful about which services can be billed as "incident to" physician services and what services require a licensed physician professional. We have handled many audits where there were issues of unlicensed personnel providing the services. For example, we have handled cases where physical therapy was billed but unlicensed medical assistants provided the services. Or we have seen cases where the medical assistant has started an IV, given a shot or written in the chart and the physician has later co-signed the chart. There are many more examples and it especially occurs where the medical assistant was a physician or a nurse in a foreign country before moving to the U.S.

In prior years, these types of cases may have simply gone administrative with an audit and a demand for overpayment where the services were provided. However, providers need to be vigilant that there is no pattern of having unlicensed personnel provide services that can only be provided by licensed personnel.

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers. Their website is: http://www.greenassoc.com/

9th Circuit Court of Appeal Blocks Medi-Cal Cuts

Medi-Cal providers won an important ruling on Thursday, July 8, 2009. A federal appeals court in San Francisco today upheld a lower court ruling blocking a 10 percent cut ordered by the state Legislature in 2008 in Medi-Cal payments to doctors, dentists, pharmacies and other providers. The decision is Independent Living Center of Southern California, Inc., et al. v. David Maxwell-Jolly, Director of the Department of Health Care Services, State of California (9th Cir. Case No 08-56422).

A copy of the decision can be found at:
http://www.ca9.uscourts.gov/datastore/opinions/2009/07/09/0856422.pdf

The 9th U.S. Circuit Court of Appeals said the California Department of Health Services violated federal law by failing to consider the impact of the cut on quality and access to health care.
A three-judge panel upheld a preliminary injunction issued by U.S. District Judge Christina Snyder in Los Angeles last year. The reductions would have amounted to several hundred million dollars.

Medi-Cal is the California version of the federal Medicaid program, which is jointly funded by the state and federal governments and pays for health services for uninsured low-income parents, children and people with disabilities. The program currently serves 7.1 million Californians.

The appeals court said a state budget crisis could not be used as a justification for illegal cuts in the program. Ninth Circuit Judge Milan Smith wrote, "We do not doubt the severity of the fiscal challenges facing the state of California," but said, "A budget crisis does not excuse ongoing violations of federal law." Smith further wrote: "There is a robust public interest in safeguarding access to health care for those eligible for Medicaid, whom Congress has recognized as the most needy in the country."

The cuts were due to go into effect on July 1, 2008. Later last year, the Legislature replaced those cuts with a 5 percent reduction for pharmacies and hospitals effective in March 2009, but those cuts were also blocked by court orders. The state is challenging the orders halting the second round of planned cuts in a separate appeal.

The decision held that the injunction against the 10 percent cuts should apply retroactively for the period between July 1, 2008, when the reduction went into effect, and Aug. 18, 2008, when the injunction was issued.

Attorney Commentary: The budget crisis will continue to impact California and Medi-Cal providers to a significant degree. Whether in enrollment, audits or the elimination of ancillary services -- the budget will continue to drive the agency. Med-Cal providers need to realize that for the next few years the budget will impact their practice and their ability to be paid.

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green and Associates, Attorneys at Law, Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers who are Medicare and Medi-Cal providers.