The federal government is targeting healthcare providers suspected of improperly billing for wound care under federal healthcare programs (i.e., Medicare and Medicaid). From improperly billing for skin substitutes to accepting benefits in violation of the federal Anti-Kickback Statute, the government is pursuing a broad range of allegations in these investigations.

Wound care fraud enforcement has recently become a top federal law enforcement priority. The US Department of Justice (DOJ) and US Department of Health and Human Services Office of Inspector General (HHS OIG) are targeting all forms of wound care fraud under Medicare, Medicaid, and other federal healthcare programs—and they are pursuing criminal charges when warranted.

Facing a federal wound care fraud investigation poses substantial risks. Wound care providers accused of federal healthcare fraud can face recoupments, fines, and loss of billing eligibility. They can also face federal prison time in some cases. As a result, a strategic defense is essential, and targeted medical professionals and other healthcare providers must be prepared to do what it takes to withstand high-stakes federal scrutiny.

“The DOJ and HHSOIG are actively targeting wound care providers suspected of fraudulently billing Medicare and Medicaid. They are conducting investigations focused on improper skin substitute billing and other alleged healthcare fraud schemes, particularly in cases involving vulnerable patients (i.e., skilled nursing facility patients and other elderly patients). For providers targeted in wound care fraud cases, a prompt and effective response is critical for avoiding unnecessary consequences.” ” – Lynette S. Byrd, Managing Partner at Oberheiden P.C.

While various red flags related to a wound care provider’s billing practices can trigger federal scrutiny, federal investigations can result from other triggers as well. Federal agents are pursuing cases based on tips from employees, hospice patients’ family members, and other individuals, and federal prosecutors are pursuing charges in a wide range of scenarios.

Defending Against a Wound Care Fraud Investigation Under the False Claims Act

With this in mind, defending against a wound care fraud investigation starts with gaining a clear understanding of the circumstances at hand. Once targeted healthcare organizations have a clear understanding of their risk, then they can build and execute a targeted defense strategy.

Investigations targeting providers’ wound care practices generally fall under the False Claims Act. The False Claims Act prohibits healthcare professionals and organizations from submitting “false or fraudulent claims” for reimbursement. While alleged false claims will create civil liability exposure in most cases, the DOJ and HHSOIG also pursue criminal enforcement when warranted. We have already seen multiple criminal cases involving allegations of wound care fraud.

For wound care providers targeted with False Claims Act allegations, fighting to avoid unnecessary consequences involves:

1. Understanding the Scope and Nature of the Alleged Fraud

As mentioned above, a critical first step is to understand what triggered the government’s health care fraud investigation. This will provide key insight into the scope and nature of the alleged fraud, which in turn will allow for the development of a focused defense strategy.

Healthcare fraud enforcement investigations targeting providers’ billings for wound care services can involve a wide range of allegations. These include (but are by no means limited to):

• Billing for wound care services or skin substitute products that lack medical necessity
• Billing for wound care services provided to terminally ill patients
• Billing for unnecessary or excessive wound evaluation and management services
• Upcoding in order to obtain increased skin substitute pricing
• Unbundling, phantom billing, and other fraudulent practices involving skin substitute claims

Late last year, the HHSOIG issued a report that deemed skin substitutes to be, “particularly vulnerable to questionable billing and fraud schemes”—and, ultimately, any allegations of improperly billing the Centers for Medicare and Medicaid Services (CMS) or another federal payor can lead to a high-stakes wound care fraud investigation. While all allegations present risks for civil enforcement, allegations of intentional fraud can lead to criminal prosecution.

2. Identifying Any False and Fraudulent Claims Under Federal Programs (i.e., Medicare and Medicaid)

When facing scrutiny from federal authorities, targeted providers should work with their legal counsel to promptly identify any false or fraudulent claims that create exposure to civil or criminal enforcement. Targeted providers need to have a clear and comprehensive understanding of their risk—and this involves identifying all fraudulent billings under all federal healthcare programs.

While this can be a time-intensive and resource-intensive process, facing a wound care enforcement investigation can be an extremely high-risk matter. As a result, targeted providers need to prioritize their defense, and they need to know what (if anything) federal agents may uncover.

3. Identifying Any Concerns Related to Fraudulent Billing for Durable Medical Equipment (DME)

The DOJ and HHSOIG have placed particular emphasis on identifying wound care schemes involving durable medical equipment (DME). As a result, targeted providers need to emphasize this area of compliance when assessing their risk as well. All DME billings should be supported by patients’ electronic health records (EHR) or other clinical documentation, and they should all be directly related to medically necessary patient care.

4. Identifying Any Concerns Under the Anti-Kickback Statute and Stark Law

Violations of the federal Anti-Kickback Statute and Stark Law also constitute violations of the False Claims Act. Federal authorities are probing providers’ financial relationships to determine if they involve improper use of Medicare spending or improper use of funds obtained from other federal health care programs.

Rebates, refunds, patient referral fees, and other improper financial incentives can all constitute illegal kickbacks in the healthcare industry—and they can all potentially create exposure to civil or criminal enforcement. Physicians, physicians’ practices, nurse practitioners, sales representatives, wholesale graft distributors, and various other individuals and entities can face scrutiny for alleged Anti-Kickback Statute violations, and they must all be prepared to defend themselves when necessary.

5. Gathering Documentation that Supports the Business’s Billing Practices

In parallel with assessing their risk, targeted providers should also gather documentation that supports their billing practices. While targets of federal investigations need to be extremely careful about voluntarily providing records to the government, being prepared to affirmatively demonstrate Medicare and Medicaid billing compliance (to the extent possible) can help set the stage for a favorable resolution.

Importantly, healthcare providers targeted in federal fraud investigations have an obligation to preserve potentially relevant documents—and inadequate preservation can itself lead to federal consequences.

Another area of particular focus for the DOJ and HHSOIG in wound care fraud investigations has been the improper use of EHR systems. When providers face accusations of programming their EHR systems to inflate billing codes, this can lead to serious consequences. EHR system manipulation can also restrict providers’ options for using clinical documentation to substantiate compliance, and using EHR system manipulation to drive inappropriate Medicare or Medicaid utilization can lead to criminal prosecution by the DOJ. We have seen DOJ investigators analyze EHR metadata for signs of documentation manipulation, with allegations of manipulation leading to exposure to charges for wire fraud and other federal crimes.

6. Building a Defense Strategy Focused on the Alleged Healthcare Fraud

After assessing their risk and gathering relevant documentation, targeted providers can then work with their legal counsel to build a defense strategy focused on the specific allegations at hand. From demonstrating that a provider’s billing practices adhere to Local Coverage Determination guidelines to challenging accusations that a provider billed for services provided by unlicensed personnel without physician oversight, it may be necessary to assert a wide range of defenses to avoid liability.

In nearly all cases, demonstrating that healthcare providers have developed and adhered to custom-tailored compliance programs can help facilitate a favorable resolution. This includes demonstrating that providers have adequately trained their personnel on compliance and risk mitigation.

With that said, billing significantly above regional averages or having an unusually high reimbursement rate for wound care services can still trigger scrutiny from the DOJ and other federal enforcement agencies—and, even if criminal prosecution isn’t a concern, civil enforcement could still lead to recoupments, treble damages, fines, and other serious penalties.

7. Targeting a Resolution that Avoids Prosecution for Federal Fraud

With an informed and documented defense strategy in place, wound care providers that are under investigation can proactively target a resolution that avoids prosecution for federal fraud. Whether this involves fighting to avoid liability entirely or targeting a civil settlement that avoids a federal indictment will depend on the circumstances involved.

Immediate Next Steps When Facing a Wound Care Fraud Investigation

Medicare and Medicaid lose tens of millions of dollars annually to wound care fraud. As a result, combating wound care fraud is a top federal priority, and investigations targeting providers suspected of fraud can move quickly. With this being the case, targeted providers need to take steps to protect themselves immediately.

When facing a federal wound care fraud investigation, a targeted provider’s immediate next steps should include engaging legal counsel and working with their counsel to preserve potentially relevant records. After implementing this “legal hold,” targeted providers should then immediately shift their focus to assessing their risk and developing an informed, comprehensive, and cohesive defense strategy.