The United States has settled a civil fraud lawsuit against a large durable medical equipment (DME) supplier with approximately 700 locations throughout the United States. The settlement resolves claims that the supplier violated the False Claims Act by fraudulently continuing to bill federal healthcare programs for the rental of costly non-invasive ventilators (NIVs) when patients no longer needed or used the devices. The settlement also resolves claims that the supplier violated the Anti-Kickback Statute by waiving coinsurance payments to induce certain Medicare and TRICARE beneficiaries to rent NIVs.
Under the settlement, which was approved February 14, 2024, the supplier agreed to pay a total sum of $25.5 million, of which $24,228,517.96 will be paid to the United States and the remainder will be paid to various states. As part of the settlement, the supplier also made factual admissions regarding its conduct. The supplier admitted that it received reimbursement from federal healthcare programs for some NIV rental claims that did not comply with all of those programs’ billing rules and guidance. It also admitted that in some instances, it continued to seek monthly payments when it was aware that patients were not using the devices.
According to the complaint filed in Manhattan federal court, during the period from January 1, 2013, through February 29, 2020, both Medicare and other federal healthcare programs reimbursed the supplier as much as $1,400 per month for providing NIV rentals to patients. When DME suppliers rent NIVs to beneficiaries of federal healthcare programs and seek reimbursement for these rentals, they are obligated to ensure that the NIVs continue to be used and remain medically reasonable and necessary throughout the rental period. They must also maintain documentation to support that the device continues to be used and is medically reasonable and necessary. Additionally, DME suppliers are required to promptly discontinue billing federal healthcare programs if the NIV is no longer being used or is deemed medically unnecessary.
Despite these requirements, the supplier persistently submitted monthly claims for payments to federal healthcare programs even when the NIVs were no longer medically necessary or when the patient had ceased using the device. In many cases, the supplier lacked adequate documentation to verify continued usage or medical necessity, yet it continued seeking payments from federal healthcare programs for these NIV rentals.
Also, in violation of the Anti-Kickback Statute, the supplier’s regional vice presidents waived, either partially or in full, the coinsurance payment due from certain Medicare and TRICARE beneficiaries in an effort to persuade them to rent NIVs from the company instead of another DME supplier. These coinsurance payment waivers were not based on an individualized assessment of the beneficiaries’ financial needs.
Compliance Perspective
Issue
Ordering and billing for medications, tests, procedures, and DME that are not medically necessary can be seen as fraudulent billing or submission of false claims. It is illegal to submit claims for payment to Medicare, Medicaid, and private insurance that you know or should know are false or fraudulent. The Anti‑Kickback Statute prohibits offering or paying remuneration to induce the referral of items or services covered by Medicare, Medicaid, and other federally funded healthcare programs. Under federal and state anti-kickback statutes, you may not knowingly and willfully offer, pay, solicit, or receive anything of value to induce or reward for referrals of federal or state healthcare program business. The prohibition against kickbacks applies to those who pay for referrals and to those who receive them. Failure to promptly report a kickback can result in lawsuits, fines, and other sanctions. Facility staff should be knowledgeable in how to report suspicious billing practices. A nonretaliatory environment for reporting suspicious billing practices is mandatory for all facilities.
Discussion Points
- Review your policies and procedures on determining if services for residents are necessary. Also review policies and procedures for preventing and reporting false claims and kickbacks.
- Train appropriate staff on how to determine each resident’s level of care and if services provided are reasonable and necessary. Include information on how to report concerns and suspected violations, and make sure staff know that prompt reporting is mandatory. Document that the training occurred and place in each employee’s education file.
- Periodically audit to ensure that medical tests, procedures, and prescriptions meet the criteria for medical necessity and that they have been approved by the resident’s primary physician. Survey professional staff on their knowledge of what can be considered medical necessity. Also periodically audit to ensure that documentation supports resident use of DME and that devices are being used correctly.
*This news alert has been prepared by Med-Net Concepts, LLC for informational purposes only and is not intended to provide legal advice.*
