Notice of Suspension – Credible Allegation of Fraud Notice
Healthcare providers who accept Medicaid or Medicare and who rely heavily on these sources of funding for their business do so at considerable risk. Federal regulations give state agencies the ability to freeze you out of Medicaid or Medicare payments if there is even a credible allegation of fraud against your company. This is an extremely low bar and there is no hearing before payments are suspended, so strict compliance is absolutely essential and a vigorous defense is necessary if such an allegation of Medicaid fraud or Medicare fraud has been filed against your company.
A Credible Allegation of Fraud Will Suspend Medicare and Medicaid Payments
The federal government is extremely concerned about healthcare fraud. So much so that statutes in the Social Security Act and the Affordable Care Act (ACA) and their attendant regulations require state agencies to suspend all Medicare and Medicaid payments to a provider if that state agency has learned of credible allegations of healthcare fraud (see, e.g., 42 C.F.R. § 455.23 (Medicaid) and 42 C.F.R. § 405.371 (Medicare)).
These payment suspensions can be the lifeblood of healthcare providers, particularly those that provide services for the elderly, through Medicare, or for low-income communities, through Medicaid or the ACA. Unless these providers have a diverse clientele that pay with a variety of types of insurance, a Medicare or Medicaid suspension can be crippling.
A “Credible Allegation” is an Exceptionally Low Bar
42 C.F.R. §§ 405.370 and 455.2 both define a “credible allegation of fraud” in nearly the same ways for Medicare and Medicaid, respectively. Both state that an allegation from “any source” suffices, including but not limited to:
- A tip through a fraud hotline, if it is verified by other evidence
- Data mining in claims data
- Claims patterns identified through healthcare audits, civil allegations of false claims, and law enforcement investigations, so long as they have indicia of reliability
All three of these sources are problematic.
Anyone can call a healthcare fraud hotline, including angry former employees or disgruntled patients. They can also call the hotline for a variety of reasons, including to make a legitimate report or to exact revenge on a healthcare provider or former employer. Because these tips can be verified by any “other evidence,” they can go a long way towards raising to the level of a “credible allegation” that can imperil your company’s reimbursements.
Data mining has long been known to be a problematic source of evidence regarding healthcare fraud. Many of the algorithms that state and federal agencies use will compare a healthcare provider’s billing practices to the regional average. If your company provides unique or specialized services, it can trigger red flags that can lead to a credible allegation of fraud.
Similarly, patterns of reimbursement claims can lead to credible allegations of fraud if they appear to be abnormal. If your practice is outside the regular or expected range of services, your normal course of business can attract scrutiny.
State Agencies Are Responsible for Due Diligence and Issuing a Notice of Suspension
Once an allegation is received, it is up to state agencies to decide what due diligence is necessary to determine whether the allegation is “credible” or has an “indicia of reliability.” All that the federal regulations require is that the evidence be reviewed on a case-by-case basis.
If this low and vague standard is satisfied, the state agency suspends Medicare and Medicaid payments, unless there is good cause not to suspend the payments under 42 C.F.R. § 455.23(a). The state agency will also notify the Medicaid or Medicare Fraud Control Units or another law enforcement agency of their actions, and issue the healthcare provider a Notice of Suspension:
- Within 5 days of implementing the suspension on payments, or
- Within 30 days if a law enforcement agency requests a delay on the notification, which can be extended twice, up to 90 days.
There is No Due Process Before Receiving a Notice of Suspension
Crucially, the Notice of Suspension that puts a halt on your Medicaid and Medicare reimbursements – including for services already provided – is the next step that the state agency will take after an allegation is deemed credible. You do not have an opportunity to challenge the finding, and do not have any chance to defend yourself and your company before it goes into effect. Instead, your Medicaid and Medicare funding is pulled out from underneath your company and you have to fight to get it back.
Suspensions Typically Last a Year or Until Resolution
While the suspension of funding is not indefinite, it does generally last for an entire year. For many healthcare providers, this is long enough to make it impossible to recover from.
Additionally, the U.S. Department of Justice (DOJ) can request that the Centers for Medicare and Medicaid Services (CMS) extend the suspension if the DOJ anticipates filing a criminal or a civil action for healthcare fraud against you and your company.
Healthcare providers can only shorten the suspension by terminating the legal action. This can be done by:
- Settling the case
- Securing a court judgment, like an injunction, or a dismissal
- Convincing CMS to close or drop the case due to lack of evidence
Therefore, it is essential for healthcare providers to take immediate action to terminate the suspension. Depending on the circumstances, this may involve filing a case in court to get an injunction or pursuing administrative remedies with the state agency behind the suspension.
Healthcare Fraud Defense Lawyers at Oberheiden P.C. Represent Providers Across the Country
Medicare and Medicaid suspensions based on credible allegations of fraud combine three of the most unfair aspects of administrative law into a single situation:
- Extremely low evidentiary standards that could be satisfied by bad actors with ulterior motives,
- High financial penalties, and
- No due process or hearings before those penalties go into effect.
The healthcare fraud defense attorneys at Oberheiden P.C. know what is at stake. Call them at (888) 680-1745 or contact them online immediately to get your defense started.
Dr. Nick Oberheiden, founder of Oberheiden P.C., focuses his litigation practice on white-collar criminal defense, government investigations, SEC & FCPA enforcement, and commercial litigation.