Industry Voices—Law enforcement scrutiny of the CARES Act Provider Relief Fund Uninsured Program is here

The Department of Health and Human Services appears to have begun conducting an outlier analysis on its reimbursement to healthcare providers for treating uninsured COVID-19 patients. Providers have who have received payments from the COVID-19 Uninsured Program should take steps to ensure that they are in full compliance with the terms and conditions for payment, including the balance billing restriction.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (CARES) Act appropriated $100 billion to HHS to issue pandemic relief payments to healthcare providers. Using this funding, supplemented with additional appropriations, HHS created a program to reimburse providers for treatment of uninsured COVID-19 patients and COVID-19 testing and vaccination for uninsured individuals. 

According to a public database last updated on March 25, 2021, the COVID-19 Uninsured Program, which is implemented by the Health Resources & Services Administration, has distributed over $2.2 billion in reimbursement to healthcare providers for COVID-19 treatment, on top of payments for testing and administering vaccines.  

Each payment from the COVID-19 Uninsured Program is governed by a set of terms and conditions. By applying for, receiving, and retaining payments, HRSA expects each recipient to be in “ongoing compliance with these terms and conditions.” Furthermore, the terms and conditions state that each recipient’s “full compliance with all Terms and Conditions is material to the Secretary’s decision to disburse funds to the Recipient.”

The term “material” mirrors an element of many False Claims Act theories of liability and strengthens the government’s position that even discrete violations of the Terms and Conditions can serve as the predicate for a False Claims Act case. This is also consistent with public remarks from senior Department of Justice officials that “going forward the False Claims Act will play a central role in the Department’s pursuit of COVID-19 related fraud.”

So far, there has been little publicly announced scrutiny by either HHS or law enforcement of the COVID-19 Uninsured Program, despite DOJ making clear through repeated announcements—including an update on March 26 “on criminal and civil enforcement efforts to combat COVID-19 related fraud”—that it is prioritizing fraud on pandemic relief programs. And while HRSA has announced reporting requirements for General and Targeted Distributions from the CARES Act Provider Relief Fund, the Uninsured Program is not included in these reporting requirements, seemingly creating a lack of auditing visibility for the government. 

But HHS officials recently announced that they had referred to the HHS Office of Inspector General a provider that is an outlier on reimbursement for treatment claims from the COVID-19 Uninsured Program. This dovetails with a recent DOJ commitment that the “Civil Division is working closely with various Inspector Generals and other agency stakeholders to identify, monitor, and investigate the misuse of critical pandemic relief monies, and we expect this collaborative effort to translate into significant cases and recoveries.”

HHS’ announcement underscores the importance for providers that have received significant aggregate reimbursement from the COVID-19 Uninsured Program—whether for testing, treatment, or vaccination—to assess their data for outliers. 

Proactive internal data analytics are particularly important because both DOJ Civil and Criminal Division leadership have recently acknowledged a new reliance on data analytics to identify targets for investigation, explaining that they have “increasingly been undertaking sophisticated analyses of Medicare data to uncover potential fraud schemes that have not been identified by whistleblower suits, as well as to help analyze and support the allegations that we do receive from such suits.” HRSA’s payment database appears ripe for DOJ and whistleblower scrutiny, and a year into the COVID-19 Uninsured Program, DOJ may finally be turning its new analytical skills on this reimbursement information.   

Providers can assess outlier status on an array of metrics, which can vary based on provider type and structure.  Of course, situational factors such as the percentage of the population that is uninsured in the region must be taken into account while assessing outlier status. After identifying outliers, providers can perform targeted medical record reviews to assess whether documentation supports compliance with HRSA’s billing requirements.

Depending on the results, self-disclosure and administrative repayment to HRSA may be appropriate.

Providers should also ensure they have policies and procedures in place to drive compliance with ancillary provisions of the Terms and Conditions. For example, the Terms and Conditions impose a commitment that providers “not engage in ‘balance billing’ or charge any type of cost-sharing for any items or services” provided to uninsured individuals for whom the provider received reimbursement for administering a COVID-19 vaccine or treatment.

The same requirement applies to reimbursement for testing and permissible related services. Many providers may be in the process of updating their billing procedures to come into compliance with the new balance billing prohibitions imposed by the No Surprises Act, signed into law as part of the Consolidated Appropriations Act of 2021. However, particularly during the early chaos of the pandemic, providers may not have had billing safeguards in place to avoid balance billing where required by the Terms and Conditions.

HHS’ announcement serves as a signal that as the COVID-19 Uninsured Program has matured, HRSA may now be in a position to more actively work with HHS-OIG and DOJ to scrutinize provider compliance with the Terms and Conditions. Providers should ensure their compliance programs have a line of sight into reimbursement from the COVID-19 Uninsured Program.

Brenna Jenny is a partner in the Healthcare practice at Sidley Austin LLP. This article has been prepared for informational purposes only and does not constitute legal advice. This information is not intended to create, and the receipt of it, does not constitute a lawyer-client relationship. Readers should not act upon this without seeking advice from professional advisers. The content therein does not reflect the views of the firm.

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