Written by Elizabeth E. Hogue, Esq. and presented here with the authors permission.

There seems to be a myth among providers of private duty or homecare services that the federal anti-kickback statute applies to Medicare certified providers only. On the contrary, the anti-kickback statute applies to providers who receive funds from any state or federal healthcare program; including the Medicaid Program, VA, TRICARE, etc. Private duty providers: This means many of you!

Four companies in Pennsylvania, for example, contracted with the Medicaid Program to provide services to qualified recipients, including personal assistance services (PAS), coordination of services and non-medical transportation, among others. Between January, 2011, and April, 2017, the companies received more than $87M in payments from the Medicaid Program. PAS payments accounted for more than $80M of this amount.  Sixteen defendants in this case admitted to participation in a wide-ranging conspiracy to defraud the Medicaid Program to obtain millions of dollars in illegal payments through submission of claims for services that were never provided or for which there was insufficient or fabricated documentation to support claims submitted.

The defendants engaged in a number of fraudulent activities, including fabrication of time sheets to reflect the provision of care that was never provided to recipients. Participants in the conspiracy also paid kickbacks to recipients in exchange for their participation in fraudulent activities, including to the son-in-law of an owner. Claims were also submitted for services allegedly provided by “ghost” employees of the companies. Some of the defendants also admitted that they submitted claims for so-called “unused” hours, i.e., excess hours of care that recipients had not needed.

Finally, defendants admitted during the course of audits of the companies that they directed the fabrication of various documents for submission to state authorities in an effort to conceal fraudulent conduct. Fabricated documents included time sheets required by the PAS program, criminal history checks, child abuse clearance forms and required consumer affidavits.

Defendants were required to pay approximately $54 million in restitution.

Fraud and abuse enforcers have repeatedly urged and, in some cases required, private duty providers to develop internal compliance programs. How do compliance programs help providers avoid enforcement action?

First, as a practical matter, when providers establish and maintain Compliance Programs, they discourage regulators from pursuing allegations of fraud and abuse violations. Technically speaking, the Federal Sentencing Guidelines make it clear that establishment and implementation of Compliance Programs is considered to be a mitigating factor. That is, if accusations of criminal conduct are made, the consequences may be substantially less severe as a result of a properly implemented Compliance Plans.

Providers with Compliance Plans are more likely to avoid fraud and abuse. This is because Plans routinely establish an obligation on the part of employees to prevent fraud and abuse. Compliance Plans also make it clear that employees have an obligation to bring any potential fraud and abuse issues to the attention of their employers first.

Compliance Plans may also help to prevent qui tam, or so-called “whistleblower” lawsuits by private individuals who believe that they have identified instances of fraud and abuse. There are significant incentives to bring these legal actions since “whistleblowers” receive a share of monies recovered as a result of their efforts. Some whistleblowers have received millions of dollars.

Finally, the Deficit Reduction Act (DRA) requires providers who receive more than $5 million from Medicaid Programs per year to implement policies and procedures, provide education to employees, and put information in their employee handbooks about fraud and abuse compliance. These requirements can be met through implementation of a Fraud and Abuse Compliance Program.

In view of the above, providers of private duty services should implement and maintain effective compliance plans.

©2022 Elizabeth E. Hogue, Esq. All rights reserved.

No portion of this material may be reproduced in any form without the advance written permission of the author.