Protect your dental practice from government scrutiny—watch for Medicare and Medicaid overpayments

Here’s a stern warning for dentists. Do NOT keep overpayments from Medicare or Medicaid. This could lead to False Claims Act liability and lawsuits, and no one wants to face the wrath of the US government. Lea Courington is an attorney who specializes in these matters. She explains how you can protect your practice.

Under the Affordable Care Act, health-care providers must report and return Medicare or Medicaid overpayments within 60 days after an overpayment is identified, or the date a corresponding cost report is due, whichever is later. But it can be challenging to figure out what constitutes an “identified” overpayment. Does the 60-day clock start when a health-care provider actually knows there is an overpayment, or is suspicion about a possible overpayment enough to start the 60-day clock?

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It’s an important question. If a health-care provider misses the 60-day deadline, particularly if the government can demonstrate that the provider did not investigate a suspicion or concern about possible overpayment, the government can assert that an identified overpayment has been “knowingly concealed” or “knowingly and improperly avoided.” Looking the other way to avoid knowing of the overpayment never protects the provider from having to repay an overpayment, but it could lead to False Claims Act liability, potentially triggering treble damages, civil monetary penalties, and, even worse, exclusion from federal health-care programs.

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Keep in mind that the fact that neither you, your staff, nor your billing company caused the error will not, in the government’s eyes, excuse the failure to investigate a suspicion or concern about a potential overpayment, or the failure to repay an identified overpayment.

The August 2015 decision by a federal trial court in New York, Kane v. Healthfirst, illustrates these points. The overpayment in Healthfirst arose from an insurance company computer error that mistakenly informed certain hospital providers that they could seek secondary payment from other payers following payment by New York’s Medicaid managed care program. This error caused the hospitals’ electronic billing systems to bill secondary payers, including New York’s Medicaid program, which mistakenly paid the claims.

The error was initially noticed by the Comptroller for the State of New York, who told the hospital network operator, Continuum, in September 2010. Continuum asked one of its employees to identify claims subject to the computer error. In February 2011, the employee sent an email and spreadsheet to Continuum’s management that contained 900 specific hospital claims that the employee said needed further analysis, with a total potential liability of over $1 million.

The government sued Continuum, alleging that the overpaid claims had been identified when the employee sent the email and spreadsheet to Continuum’s management in February 2011, and that the defendants had violated the False Claims Act by not reporting and returning the overpayments within 60 days after that. The defendants argued that the February 2011 email and spreadsheet were just a preliminary report that only identified potential overpayments as opposed to actual overpayments, and asked the court to dismiss the case.

The government’s allegation that it took two years and an official government demand to Continuum for the company to produce key documents for the government to complete its investigation of the 900 claims and then return the overpayments was key to the court’s conclusion that the case should not be thrown out.

Here are some things you can do to protect yourself from being caught in a similar situation. First, conducting regular self audits and compliance checks will help you catch errors early, when they’re small and easier to correct. If you discover you were erroneously reimbursed for incorrectly coded services, promptly repay the amounts. This not only avoids False Claims Act liability, but will demonstrate to the government that your compliance efforts are serious.

Next, if you’re surprised by something—such as learning that a patient death occurred prior to the service date on a claim, or finding that services were provided on your behalf by someone who was excluded from health care programs but didn’t tell you, or by a provider that may not have had the certifications they claimed to have—promptly investigate the matter. For example, if someone didn’t have the proper certifications, were the services billed as though they did? If the services were billed as though someone did, which patients’ claims were billed? Were the claims paid?

Next, watch for sudden spikes in reimbursement without any obvious explanation for the spike, such as bringing a new partner into the practice, which you would expect to increase reimbursements. When you investigate the situation, you may find another explanation that justifies the spike, or you may find overpayments that need to be repaid.

The standard imposed by the False Claims Act for reporting and returning overpayments is an exacting standard with dire consequences for missteps. The government is likely to continue its strong enforcement. Each year the federal government and states recover larger amounts of allegedly fraudulent payments, and as health care costs increase, so does the incentive to recover these fraudulent payments.

At the same time, health-care providers are often inundated with claim and billing information, some of which could be characterized as identified overpayments. Providers should take a critical and comprehensive look at their billing and compliance processes and create a streamlined process to review claim and billing information, investigate reports of possible noncompliance, and report and return overpayments within 60 days.

Lea Courington is senior counsel at Dykema Cox Smith Law Firm. She’s based in the firm’s Dallas office, and is a member of the firm’s Health Care and Government/Corporate Compliance Groups. She focuses her practice on health care, government investigations and white collar criminal defense, antitrust, and pharmaceutical matters. Lea defends dentists, physicians, hospitals, health care systems, other health-care providers, and officers and directors in False Claims Act and qui tam cases. She also represents them in parallel criminal and civil governmental investigations and program integrity inquiries and audits arising from whistleblower complaints and allegations of Medicare and Medicaid fraud. A former trial attorney with the U.S. Department of Justice Antitrust Division, Lea’s experience includes both civil cases and the prosecution and defense of white collar federal criminal matters.