MEDICARE FRAUD: DOJ To ‘Ease Up’ On Hospital Probes
The Justice Department "has agreed to take a less aggressive approach in pursuing suspected Medicare fraud by hospitals," the Wall Street Journal reports. While the department, which is under "heavy criticism from the hospital industry and some members of Congress," did not agree to honor the industry's request for an enforcement moratorium until August 1, it did agree to soften its approach to its ongoing, three-prong fraud investigation. However, the DOJ's refusal to temporarily suspend the investigations "virtually ensures a congressional battle over the future" of the False Claims Act, "which has become one of the government's most important tools in fighting health care fraud." In fact, Rep. Bill McCollum (R-FL) is currently sponsoring a bill that would weaken the act; it has the backing of the hospital industry and 70 co-sponsors.
The Battle Rages On
According to the Journal, the Health and Human Services Inspector General "is expected to report to Congress soon" that because of fraudulent claims, Medicare spent 11% ($20.3 billion) on improper payments last year. Last week, however, when the hospital industry asked for the moratorium, industry officials told the department that it "is improperly using the False Claims Act to browbeat" hospitals that make honest billing mistakes "into paying stiff penalties." Thomas Nickels, vice president for government affairs for the American Hospital Association, said, "We want the Justice Department to come forward with a new way of doing business on this." But the department's special counsel for health care fraud John Bentivoglio said granting the enforcement moratorium "would be inconsistent with our obligations to treat each case on its merits and would violate our obligations to enforce federal law." The Journal reports that Bentivoglio did say the department is in a "refinement" stage of its enforcement process and is making changes to "improve enforcement."
One of the biggest changes the department is enacting is changing its practice of sending out "demand letters." These letters "inform hospital officials that federal prosecutors believe they are" in violation of the False Claims Act and could be subject to "triple damages and a fine of $5,000 to $10,000 for each claim." The letters "urge the administrators to pay the triple damages to settle the cases quickly and avoid the fines." Regarded by hospitals as "intimidating," the department will now send out "contact letters," inviting hospital officials "to meet with government investigators to explain the questionable billing." The Journal reports that even "strong defenders" of the law "agreed that the Justice Department letters have been overly harsh." Sen. Charles Grassley (R-IA), who amended the law so it could be used by the federal government to reclaim funds, said the demand letters "were meant to scare people and that's the wrong way to enforce the law." According to Grassley, Attorney General Janet Reno recently assured him that "nobody is going to be prosecuted if they make an honest mistake." The "department's switch to contact letters reflects that spirit," the Journal reports.
The Justice Department is currently investigating hospitals in three major areas they suspect abuse. In the first, called the "three-day window project," the department is looking to see if hospitals are separating billing for procedures performed within the first three days of a stay, which are supposed to be covered under a lump-sum reimbursement. In the second project, the department is looking to see if hospitals "unbundled" claims for laboratory tests supposed to be submitted as a single claim. The third investigation area involves "the way teaching hospitals bill Medicare for physician services provided by residents" (McGingley, 4/9).