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Dramatic Increase in VA Fraud Investigations Puts Doctors at Risk for Substantial Penalties

Lynette Byrd
Attorney Lynette S. Byrd
Healthcare Team Lead
Former Federal Prosecutor

Treating wounded soldiers can be a highly rewarding experience. It can also be highly lucrative, as the U.S. Department of Veterans Affairs (VA) reimburses healthcare providers at rates up to four times higher than Medicare. Unfortunately, while many wounded soldiers are in need of immediate and long-term care, and while doctors who treat wounded soldiers must often make quick decisions in order to save their patients digits and limbs – and in many cases their lives – doctors’ VA billing practices are heavily scrutinized. Billing errors and other mistakes (including simply failing to document a procedure’s medical necessity) can trigger invasive audits and investigations, and allegations of VA fraud can lead to both civil and criminal penalties.

Recently, we have seen a dramatic increase in VA fraud investigations targeting doctors and other healthcare providers that treat wounded soldiers. These investigations, which often involve agencies such as the U.S. Department of Justice (DOJ) and the U.S. Department of Health and Human Services’ Office of Inspector General (OIG) in addition to the VA, can be triggered by a variety of different events and allegations. For example, while many investigations are triggered by automated analysis of VA billing data (which simply look for “outliers” in general billing trends), misguided allegations of VA fraud from patients, patients’ family members, and former employees are common as well.

5 Common Issues in VA Fraud Investigations

So, what are the VA and other federal authorities looking for when targeting healthcare providers for recoupments, fines, program exclusion, and other penalties? While it is critical to identify the specific allegations involved in each individual investigation in order to execute an appropriate defense strategy, some of the more-common allegations in VA fraud investigations include:

1. Providing Duplicate (and Unnecessary) Forms of Treatment

Many VA patients seek treatment for severe traumatic injuries which may potentially require grafts, amputation, and other highly-invasive forms of treatment. Prior to taking such extreme measures, doctors will often attempt to treat their patients’ injuries using medications, dressings, and other methods which, if successful, will allow the patient to heal without permanent disfigurement and other potential complications. Sometimes these less-invasive treatment methods are successful, and sometimes they are not—doctors often have no way of knowing unless they try and see how the patient’s body responds.

In these types of scenarios, doctors may face allegations of billing the VA for duplicate (and unnecessary) forms of treatment. In essence, the doctor is being accused of abusing the VA system and wasting taxpayer funds. This can be the case even if there is medical justification for the chosen approach and the decision is based upon a desire to provide the patient with the most-desirable outcome possible.

2. Patient Monitoring and Repeat Scans

With grafts, amputations, orthopedic surgeries, and other invasive procedures, ensuring that the patient’s body heals property can require consistent monitoring over an extended period of time. For example, after a skin graft procedure, x-rays may need to be taken every two to four weeks, if not even more frequently. Any time a doctor orders a high volume of scans for a particular patient (and especially if a doctor orders a high volume of scans for multiple patients), the volume alone is going to raise red flags, and federal authorities may seek information about the existence of any financial relationship between the doctor and the testing laboratory as well.

3. Lack of Medical Necessity

Similar to Medicare, Medicaid, and Tricare fraud investigations, VA investigations often focus on an alleged lack of medical necessity. Each of the federal healthcare benefit programs has its own standards for medical necessity, and services that fall short of meeting these standards are not eligible for reimbursement. Of course, federal investigators are necessarily evaluating doctors’ medical-necessity determinations after the fact, and treatment decisions based upon the exercise of sound medical judgment will frequently be second-guessed in light of the outcomes they produce.

In order to prove that their services meet the VA’s “medical necessity” requirements, doctors must maintain comprehensive records of patients’ symptoms and their own decision-making processes. Even if a treatment or procedure qualifies as medically-necessary under the VA billing guidelines, if there is no documentation to prove it, an investigation can still result in prosecution for VA fraud.

4. Prescription Drug Fraud (Including Opioid Diversion)

The risk of opioid dependence among wounded soldiers with painful and debilitating injuries as been well-documented, and the VA has undertaken an Opioid Safety Initiative (OSI) for managing opioid therapy for veterans with chronic pain. With combatting opioid abuse – and particularly opioid abuse among veterans – being a top federal law enforcement and public safety initiative, doctors who bill the VA for prescription medications are currently on the front lines.

Opioid prescriptions are increasingly facing routine scrutiny, and doctors are being forced to justify their prescriptions with increasing frequency. Once again, thorough documentation is key, and doctors who have referral relationships and other agreements with pharmacies must be able to affirmatively show that their financial relationships do not run afoul of the Anti-Kickback Statute’s prohibitions on compensation for program beneficiary referrals. Doctors must also be extremely careful to ensure that their prescription practices comply with the Controlled Substances Act (CSA) and the U.S. Drug Enforcement Administration (DEA) registration requirements, and insufficient DEA compliance is a common trigger for civil and criminal prosecutions as well.

5. Coding Errors and Billing Violations

Coding errors and billing violations are also common allegations in VA fraud investigations. Even for doctors that rely on third-party billing companies, billing and coding compliance must remain top-of-mind, as delegating responsibility does not relieve providers of their compliance obligations under any circumstances. Along with mistakes such as submitting incorrect billing codes, “unbundling” related medical services, “upcoding” medical services, and double-billing the VA and other benefit programs (or private insurers), doctors may face allegations of misusing or fraudulently overusing CPT codes such as:

  • 15002 (surgical preparation or creation of recipient site by excision of open wounds, burn eschar, or scar (including subcutaneous tissues), or incisional release of scar contracture, trunk, arms, legs)
  • 15004 (surgical preparation or creation of recipient site by excision of open wounds, burn eschar, or scar (including subcutaneous tissues), or incisional release of scar contracture, face, scalp, eyelids, mouth, neck, ears, orbits, genitalia, hands, feet and/or multiple digits)
  • 15721 (application of skin substitute graft to trunk, arms, legs, total wound surface area up to 100 square centimeters, first 25 square centimeters or less of wound surface) and 15272 (each additional 25 square centimeters of wound surface area or part thereof)
  • 15275 (application of skin substitute graft to face, scalp, eyelids, mouth, neck, ears, orbits, hands, feet and/or multiple digits, total wound surface area up to 100 square centimeters, first 25 square centimeters or less of wound surface area) and 15726 (each additional 25 square centimeters of wound surface area or part thereof)

What to Do if Your Practice is Being Targeted for Alleged VA Fraud

If your medical practice is under investigation by the VA, DOJ, OIG, DEA, or any other federal agency, you must defend yourself effectively in order to avoid the risk of financial penalties, loss of VA eligibility, and even federal imprisonment. You must promptly determine why your practice is being targeted (is it one of the issues discussed above, or something else?), and you must tailor your defense strategy accordingly. At this stage, you cannot afford to let the investigation proceed unchecked. If you are going to avoid charges and prosecution, it is going to be the result of your decision to aggressively intervene in the government’s investigation – not the government’s unilateral decision to terminate the investigation without seeing it through to the end.

With this in mind, some of the key steps doctors need to take after learning that they are under investigation for VA fraud include:

  • Seek Legal Representation Immediately – In order to effectively intervene in the investigation and execute a strategic defense, you need to begin work with a team of highly-experienced federal healthcare fraud defense lawyers as soon as possible.
  • Avoid Speaking with Federal Agents – Unless and until otherwise advised by your attorneys, at this stage all communications with federal agents should be conducted through your legal counsel. Mistakes can have drastic consequences, and allowing your attorneys to speak on your behalf will ensure that you do not unnecessarily (and unknowingly) jeopardize your defense.
  • Instruct Your Personnel Appropriately – During the government’s investigation, only certain individuals should be authorized to speak with federal agents, and these individuals should have a clear understanding of what they should (and shouldn’t) say.
  • Conduct an Internal Assessment – If your practice could be at risk due to past coding errors or other billing violations, you need to know about these issues before they are discovered by federal agents.
  • Preserve Relevant Documentation – All relevant documentation must be preserved (in hardcopy and electronic format) in order to comply with your legal obligations and to ensure that you have the evidence you need to challenge the government’s allegations of billing fraud.

Speak with a VA Fraud Defense Lawyer at Oberheiden, P.C.

Is your medical practice being targeted in a VA fraud investigation? If so, we encourage you to contact us immediately for a free case assessment. To speak with one of our VA fraud defense lawyers in confidence, call 888-680-1745 or inquire online now.

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