Be Ready: Reddy’s Healthcare Fraud Enforcement Predictions for 2022
As the Biden Administration is increasing resources on enforcement of fraud and abuse matters, below are my top 5 enforcement predictions in healthcare.
1. COVID-19 Related Matters
Since the government has spent trillions of dollars on COVID-19 relief funds, we can naturally expect the U.S. Department of Justice (DOJ) to prioritize enforcement of false or fraudulent claims related to those funds. Indeed, the DOJ announced its intention to aggressively investigate misconduct in connection with the Coronavirus Aid, Relief, and Economic Security (CARES) Act and COVID-19. The Attorney General has established the COVID-19 Fraud Enforcement Task Force and hotlines for reporting COVID-19 related fraud, and various agencies and states also have similar initiatives. We can expect prosecutions in this area to include misusing funds received from the Paycheck Protection Program (PPP), monies distributed for personal protective equipment (PPE), small business association loan fraud, misrepresenting or misstating information on applications or forms used to obtain PPP funds or the Health and Human Services (HHS) Provider Relief Funds (PRF), schemes involving COVID-19 testing sites and laboratories, and false billings related to COVID-19 testing and vaccinations. As COVID-19 related supply chain shortages persist, we can also expect enforcement of fraud in connection with these shortages.
2. Telehealth
Telehealth services drastically increased and expanded due to COVID-19, and we can expect the government to increase its scrutiny on practices and arrangements related to telemedicine or telehealth services. Enforcement actions relating to telehealth will likely include fraudulently billing for services that were not provided, billing for unnecessary services, overbilling for services, and upcoding time and complexity of services that were provided.
3. Opioid Epidemic
The opioid epidemic has been exacerbated by the COVID-19 pandemic and we should expect the DOJ to not only focus on large pharmaceutical companies’ involvement in the manufacturing and distribution of opioids, but also on smaller and less publicized schemes such as illegal prescriptions and/or distribution of opioids, medically unnecessary drug testing, kickbacks between substance abuse treatment facilities and medical laboratories, and sober homes. Additionally, the Eliminating Kickbacks in Recovery Act (EKRA) was passed in 2018 to prohibit patient brokering and kickbacks in the substance abuse provider industry. Due to its extremely far-reaching scope to providers outside of the substance abuse area and to non-government payors as well as the passage of time during which the government has test-run this statute for several prosecutions, we are likely to see EKRA being used in more prosecutions.
4. Pharmacy Benefit Managers (PBMs)
The media often claims that inflated drug prices are caused by pharmacy benefits managers and drug manufacturers, and as a result, the government has made it an enforcement priority as these costs are passed on to federal health care programs. In November 2020, the Office of Inspector General (OIG) released a final rule to amend the Anti-Kickback regulations related to pharmaceutical discounts, rebates, and PBM fees. Although the validity of the regulation is currently being challenged, this regulation represents the government’s increased concern with drug prices. Additionally, states such as New York are passing regulations to regulate PBMs, which includes creating departments to receive complaints. This increase in scrutiny, coupled with PBMs being the recent target of numerous False Claims Act cases, means an increase in prosecutions for illegal drug and rebate discount agreements with pharmaceutical manufacturers, kickbacks to insurance companies, and violating contractual responsibilities relating to disbursement of prescription medications.
5. Long Term, Nursing Home, and Home Healthcare Fraud
The momentum for prosecutions involving long term care, nursing home care, and home health care will likely continue into 2022 as the government has been investing resources in the area of elder care abuse. For example, in March 2020, the DOJ launched the National Nursing Home Initiative to pursue nursing homes that provide substandard care such as inadequate staffing, hygiene and infection control protocols, adequate nourishment of residents, failure to provide medications, and use of physical or chemical restraints. The DOJ has also been committed to prosecuting nursing home and elderly health care providers who are billing for medically unnecessary tests and procedures, paying kickbacks to doctors for referring patients to nursing homes, receiving kickbacks, rebates, or other benefits for prescribing drugs or using medical devices. Further, the DOJ has initiated the Elder Justice Initiative, a task force focused on prosecuting elder abuse, financial fraud, scams, and neglect, which not only allows for cases to be brought under the False Claims Act by the DOJ but also by state and local prosecutors. There were numerous prosecutions in this area in 2021 and we can expect more of the same in 2022.
Thus, to ensure an investigation-free 2022, providers should proactively, instead of reactively, assess their compliance programs and practices, and seek guidance if necessary.
Please contact Kirti Reddy at kirti.reddy@quarles.com or (202) 372-9606 if you would like to discuss her 2022 healthcare fraud enforcement predictions.