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I think this is, this is something that's not going away, and it's something it's important for healthcare providers to take note and take action so that they can be vigilant on the front end and be prepared for any sort of action that takes place. Going, welcome to off the

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chart of business and medicine podcast featuring lively and informative conversations with health care experts, opinion leaders and practicing physicians about the challenges facing doctors and medical practices. My name is Austin Luttrell. I'm the associate editor of medical economics. I'd like to thank you for joining us today. In today's episode, I sat down with Pat Naples, the senior associate at Aaron Fox Schiff, whose practice focuses on health care litigation, government investigations and managed care disputes. We talked about the legal basis behind CMS latest wave of anti fraud actions, including the withholding of Medicaid funds for Minnesota and nationwide enrollment moratorium for certain durable medical equipment suppliers and the new crush initiative. We also talked about what the shift pay and chase to real time fraud detection means for physician practices, what rights physicians have when payments are flagged or withheld, and what small practices without a dedicated compliance staff can do right now to reduce their risk. Pat Naples, thank you for joining us, and now let's get into the episode.

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The Pat Naples, thank you so much for joining me today. Thank you, Austin. Appreciate the opportunity to speak with you. So before we dive in, could you briefly introduce yourself and Aaron Fox shift, sure happy to so. I'm an attorney with Aaron Fox Schiff, a law firm with offices in DC, Chicago, Austin, San Francisco and Los Angeles. We do a range of different work, but my practice in particular, and a large part of our practice as a firm, is in the healthcare space, and that includes regulatory work, but also a significant amount of fraud and compliance and enforcement work, and then also some managed care litigation involving providers and insurance companies. And the latter two areas are where I spend most of my time working in fraud enforcement on the one hand, and then managed care claims on the other

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CMS fraud crackdown that was announced covers three pretty different actions that's withholding Minnesota's Medicaid funding, freezing enrollment for durable medical equipment, prosthetics, orthotics and supplies, enrollment, as well as launching the crush initiative. Could you kind of walk through the legal basis for each of those. I mean, I feel like they're they stem from three different places. They do, so, starting with the Minnesota action that's based on the Social Security Act. And the Social Security Act does allow the withholding of funds where a program hasn't met the federal government's integrity requirements, which include things like preventing fraud and taking sufficient steps to prevent fraud. And so now whether, in the case of Minnesota, there's actually a program integrity issue, separate question that's currently the subject of federal litigation that's ongoing, but that's the basis for the deferral of funds to the state of Minnesota. Is based on that Social Security Act. As far as the action for the moratorium is concerned, that's based on the Affordable Care Act. The Affordable Care Act allows for temporary moratoria to be placed where there is a significant potential for fraud to occur, and we have seen a number of settlements, judgments, enforcement actions involving durable medical equipment suppliers in the past year, the past two years, so that's been a hotbed of activity, and the Affordable Care Act's the basis for that action. The final

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initiative, the crush initiative, as you called it, right, is really just a request for information, and that's the government has broad authority and does this, not just in healthcare, but in a variety of different industries, where they're essentially asking the public for comment on ways that they can stop fraud. And if you look at this particular request for information while it's focused on for the.

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It also has a component of it that is particularly targeted at durable medical equipment. And so I think in some ways, the second and third prongs of this action are really working, working together, in some ways, in that the moratorium sort places a temporary hold on new enrollment. And then you have the RFI, which is really seeking longer term what the administration and what the agency can do with respect to durable medical equipment. So as part of the crackdown, HHS Secretary Kennedy, CMS administrator Oz, they talked about replacing the the pay and chase models. They called it with a real time detect and deploy strategy, saying they're going to use advanced AI tools to identify fraud and instantly stop improper payments before they go out the door.

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I guess just before we like, dive into the intricacies of that, what are the legal guardrails on that approach?

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So there are two primarily. One is that under the regulations that would permit the withholding of federal funds, the deferral of federal funds, there has to be a credible allegation of fraud, and so that is a showing that the department has to make now it's largely to their discretion as to whether there's been that credible allegation or not. So I think the extent to which that's a guardrail in theory versus a guardrail in practice is a fair question. And then as to another guardrail, there are procedural requirements on CMS in terms of notice that have to occur with respect to any withholding of federal funds. So those are the two kind of primary guardrails that are in place with respect to withholding of federal funds. So does AI flagging a claim as suspicious legally justify withholding payment from from a physician or from a practice. I mean, is there a threshold there? And how much transparency does a physician get? Like, can CMS just essentially say the system flagged you and that's it? Or do they have to find out kind of why they were flagged?

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So I'm going to give the classic Law School answer. It depends there's

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and it's hard to say, because it's typically a determination that's made by the administration, and it is something that the administration has, that this administration and past administrations have been looking at, I think given the focus on AI in the past couple of years, it may seem like something new, and certainly the activity we've seen with things like data mining has increased in recent years, but actually it was back in 2011

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that data mining claims, or claims data mining was added to federal health care regulations as a potential basis for a credible allegation of fraud. So this is something DOJ has been having in the works for quite some time. Is building out their own system for detecting anomalies in claims data, and look, practically speaking, is DOJ going to take action or is HHS going to take action because of one anomalous claim? Probably not, but depends on the claim. It depends on the circumstances. It depends, to a certain extent, on the provider. But what we've seen more typically is that there are looking for large outliers in the data set to flag and say, Hold on. What's happening here? And is there a fraud issue? Is there a fraud concern?

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If there is that, that kind of one claim that AI is flagging is suspicious,

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and then, you know, a physician's payments are withheld. You know, ahead of that, is there an appeals path there? I mean, what can a physician do in that case? So the physician can submit a written rebuttal statement in response to the withholding

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and argue essentially that there's not a credible allegation of fraud, and certainly that's something that physicians can and should do to the extent they think there's been a mistake here. Now, unfortunately, if you are a physician in that situation, that's largely within the agency's discretion to either consider or reject the written rebuttal statement that gets submitted. Then if they reject that process, it does have to go through the whole ordinary Administrative Review process and administrative agency appeal. Only after that point can there be a process for judicial review. So there is Review.

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And it can take place, but it can be time consuming. Are there limits on using AI to make those calls before a human has reviewed anything there and does if the AI does make a mistake and those funds are withheld? Could that create any liability for CMS?

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So

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in terms of liability for CMS, I think that's highly unlikely CMS generally, and all government agencies generally, have sovereign immunity from any sort of suit, and that would almost certainly govern in this case. So I think the likelihood of that is relatively low

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in terms of what what there is in place with respect to these claims and what may be done. I think this is why it's important for providers to be monitoring their own claim submissions, particularly if you are a large practice, large hospital system, a medical research center, you can use AI tools on your own to spot anomalies, to understand them and to try to guard against this. And if those anomalies exist and there is some indicia of fraud, the department's new policies are encouraging providers to come forward with things like reduced penalties and deferrals and

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fewer criminal penalties in the event that there is a voluntary self disclosure that happens and it meets the requirements set forth in the policy. And so I think the lesson, the takeaway, for providers, if you will, in this space, is check your own data and be on top of it and be monitoring it so that you can be prepared and you can take advantage of self disclosure if that's something that's needed,

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ahead of time and ahead of when DOJ comes knocking it at the door.

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Hey there. Keith Reynolds here, and welcome to the p2 management minute in just 60 seconds, we deliver proven, real world tactics you can plug into your practice today, whether that means speeding up check in, lifting staff morale or nudging patient satisfaction north, no theory, no fluff, just the kind of guidance that fits between appointments and moves the needle before lunch. But the best ideas don't all come from our newsroom. They come from you got a clever workflow, hack an employee engagement win, or a lesson learned the hard way. I want to feature it. Shoot me an email at K Reynolds at mjh life sciences.com with your topic, quick outline or even a smartphone clip. We'll handle the rest and get your insights in front of your peers nationwide. Let's make every minute count together. Thanks for watching, and I'll see you in the next p2 management minute.

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You going back to, like the first part of the announcement here, Minnesota is the first state to have funds withheld.

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What does that signal to other states? And separately, what does that mean for physicians who are practicing in Minnesota right now? I mean, what are they gonna what are they looking at here? The

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government's message, the federal government's message is to be vigilant at the state level in guarding against fraud. And if the government, federal government, doesn't feel as though a state government is being sufficiently vigilant, then they may step in and take action, as they did in Minnesota. And what I think that means for providers is, and this is in some respects, a continuation of a trend we've already been seeing, which is increasing enforcement activity at the state level. Historically, this has been an area of largely federal enforcement, although certainly state AGs have been involved to varying degrees, depending on the state, but the message that we're seeing from the federal government, I think, will cause an uptick in state level activities. You've seen some of that already. Some of the more high profile ones have been in Texas, and those haven't involved medical providers as much, but they have involved lifestyle life sciences companies, AG, Paxton has been pretty aggressive in pursuing pharmaceutical companies that they believe are engaged in fraudulent activities. And so I would expect there to be, though, a continued uptick in activity at the state level that the providers should be aware of. So we talked about it briefly earlier, the nationwide moratorium on Medicare enrollment for certain DME suppliers,

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for maybe a practice or a primary care physician who refers patients to DME suppliers but doesn't bill them directly, doesn't deal with them directly. What does this mean for them? Is there anything they should be doing differently in how they're documenting or.

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Handling those referrals? Yes, so I think that those dealing with referrals to durable medical equipment suppliers should be scrutinizing those relationships, scrutinizing those referral if to the extent there are referral agreements, referral contracts, making sure that those fall within CMS safe harbors and are appropriate. I also think that

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you're going to have increased activity in the Durable Medical Equipment space. So even though the moratorium is really just a moratorium on new suppliers that are involved in Medicare enrollment and trying to get approved by Medicare. The signal that's being sent, both by that and the crush initiative, is that this is an area of focus for the administration, and even if, as a provider, you are doing everything by the book and doing everything correctly, and

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you're not a target of an investigation, you can still be a witness to an investigation that involves a durable medical equipment supplier, and that, in and of itself, can requires devotion of resources, whether you're responding to a subpoena, producing documents, making employees available for interviews, those sorts of things can be disruptive and are a reason to scrutinize supplier relationships, and again, ensure that those relationships are grounded in the law and are ones that you know you have a supplier that takes that takes compliance seriously out of this administration, we hear a lot of the language about stopping fraud, waste and abuse, beyond just this announcement, are there any rumblings of other enforcement actions or other announcements that physicians and practices should maybe be watching for? So there have been a couple, one I mentioned earlier, which is DOJ is new corporate enforcement policy, which in some ways is a continuation of the policy that they released last year, but in one significant way, is different in that it is uniform across the country. And so you do see an increasing focus on uniformity across jurisdictions. And so that's something, no matter where providers are located, that they should pay attention to. Another one is cross departmental collaboration. There was a joint task force involving HHS, OIG

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and DOJ that was announced recently. And I think that's something that is also going to generate increased activity. And then the final one, which has been somewhat well covered in mainstream media, has been the creation of a National Fraud Division. Now, of course, there's been a fraud branch of the Civil Division for years, and so I think it remains to be seen how this National Fraud Division will differ from the fraud branch, but at a minimum, it's signaling increased focus, increased attention and an increased devotion of resources to combating fraud, waste and abuse. So insofar as fraud is concerned, those are the, those are the primary areas to pay attention to. So switch gears, I guess, a little bit and just kind of, you know, looking at small practices, what compliance problems do you typically see come up again and again that might put them at risk under this stricter enforcement?

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It's the first one, probably the most common, is just sort of your classic referral relationship, anti Kickback Statute issues.

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If you've got consulting relationships with hospitals or with manufacturers or with suppliers, those referral relationships are classic source of enforcement activity and of compliance activity. So even for small practices, to the extent you have those referral relationships, those are things that you want to take a look at. Another thing that I would focus on now in this environment in particular is documentation around claims and billing medical necessity determinations are something that the administration is increasingly scrutinizing and is ensuring are a focus and are something of Attention. And I think that's another area of importance. The final thing, I think small practices need to be aware of, but large practices too, is cyber security and ensuring adequate devotion of resources to those spaces. There's been a lot of activity and announcements.

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In that space, by DOJ, but also by CMS, HIPAA compliance is in some ways more complicated than it has been because there's so much activity in the cybersecurity space, and so you want to be sure that even as a small practice, you are devoting sufficient resources to the security of your patient records. Many practices, especially smaller ones, aren't exactly flush with compliance staff.

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How do you counsel clients who are trying to get this right without a dedicated compliance team?

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There are a couple of steps that I think even small practices can take to try to address compliance efficiently. One is issue spotting, risk management. Start there, look at your high risk areas and determine what those are. Do you deal a lot in durable medical equipment, and if you deal a lot in durable medical equipment, then, of course, under this administration, that's something that you should be scrutinizing, and that's a risk area for you. If you have a lot of consulting relationships, that's a referral area where you're going to want to scrutinize and you're going to want to be careful about. And so I think that's the first area, is figure out where your risk is, and then figure out what you need to do with that level of risk, one of which, and this, I think, is the second step, is implementing proper training. So I think oftentimes we can overlook the onboarding that happens as soon as a new employee joins an organization, or the annual PowerPoint on compliance and fraud that employees have to click through. But those things matter, they do, and when you know, if you get a subpoena from DOJ or a civil investigative demand, a CID being able to say, look, we've got a robust training program that every employee has to go through when they begin, and that has to happen on an annual basis, right? That's sort of the can be a relatively straightforward thing to set up, but can be an important signal that even as a small practice, you're taking compliance seriously.

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Third step, basic monitoring doesn't have to be,

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you know, doesn't have to be a substantial devotion of resources scrutinizing every contract. But if you've got referral relationships, audit those relationships and make sure they're actually complying with your contracts. If you have billing and coding, you can devote some resources to looking in that billing and coding and making sure that your documentation is as it should be in that particular area. So I think some basic level of monitoring is another, is another area of importance. And the final, the final area that that I think small practices can take is, if you don't have a compliance person on staff, build a relationship with compliance consultants, with outside counsel who can advise you, at least on you know, a periodic basis, about what the developments are in this space, what are the things you could be concerned about, what gaps might you have in your compliance program that you can pay attention to that, that small devotion of resources at one time can really pay off, so that you don't wind up in a situation where you're having to devote substantial resources to that because there's some enforcement action that you didn't see coming. Is there anything else that you think they might have glossed over, either regarding the announcement or otherwise that you want to share?

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The only other thing I would point out where we're seeing significant uptick in activity is with respect to telehealth and telemedicine, there are increasing levels of scrutiny arising out of the pandemic on telehealth and telemedicine as it has proliferated. So if you're involved in telehealth, involved in telemedicine, know that that is an area of focus from this administration, and so that's something that that that I would focus on. Look I, I think to some extent,

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this, this feels like this can feel like something new, and it can feel like something different. But I wouldn't say this is really the continuation of a trend that it's been in place for a number of years, and we've seen it across administrations. This is, in a lot of ways, a continuation of what the Biden administration was doing and the first Trump administration before that, it's been a consistent uptick in healthcare compliance and fraud enforcement for years now, and so I wouldn't expect, for example, a change of administration. To me.

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Seen a change in the way that health care fraud and health care compliance are policed, and so I think this is, this is something that's not going away, and it's something it's important for health care providers to take note and take action so that they can be vigilant on the front end and be prepared for any sort of action that takes place going Pat Naples, thank you again for taking The time today. Thanks so much, Austin. Really appreciate it.

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Hi once

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again. That was Pat Naples, senior associate at Aaron Fox shift. On behalf of the whole medical economics and physicians practice teams, I'd like to thank you for listening to the show and ask that you please subscribe so you don't miss the next episode. As always, be sure to check back on Monday and Thursday mornings for the latest conversations with experts, sharing strategies, stories and solutions for your practice. You can find us by searching off the chart, wherever you get your podcasts, and if you'd like the best stories that medical economics and physicians practice published delivered straight to your email six days of the week, subscribe to our newsletters at medical economics.com and physicianspractice.com

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off the chart, a business of medicine podcast is executive produced by Chris mazzolini and Keith Reynolds and produced by Austin Latrell, medical economics and physicians practice are both members of the mjh Life Sciences family. Thank you.

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You.