Sanford Health, Sanford Clinic and Sanford Medical Center in South Dakota have agreed to pay $25,842 in a settlement about telemedicine services with the HHS Office of Inspector General (OIG). The settlement stemmed from a reportable event under Sanford’s corporate integrity agreement (CIA), which was part of its $20.25 million false claims settlement in 2019.[1]
The lone physician at the heart of the telemedicine settlement with OIG was terminated as soon as Sanford learned about the physician’s “questionable billing practices,” said Paul Hanson, president and CEO of Sanford Sioux Falls, in a statement.
While the settlement amount is small, it highlights some emerging areas, including the potential of the COVID-19 uninsured program to become a wellspring of audits and enforcement actions.
According to the CMP settlement, which was obtained through the Freedom of Information Act, OIG alleged that Sanford Health, Sanford Clinic and Sanford Medical Center, referred to as the respondents, submitted fraudulent claims to Medicare, Medicaid, TRICARE and the Health Resources and Services Administration (HRSA) COVID-19 uninsured program. Between March 1, 2020, and Feb. 24, 2022, OIG alleged respondents billed for a physician’s telemedicine services that didn’t meet billing requirements because:
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The services were scheduled for times when the physician was out of the country and lacked access to Sanford’s “approved telemedicine platform,” the settlement said.
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The services weren’t delivered with interactive two-way video and audio.
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The services “purported to be for multiple family members” when the physician “had only spoken to one family member.”
The physician is a Sioux Falls family medicine provider, Hanson said in the statement. “After an internal investigation, the provider was promptly terminated from employment, and we reported the findings to the [OIG]. The provider’s termination was strictly because of the billing issue and not due to any concerns involving care. All payers have been reimbursed for any improper charges. We hold ourselves to the highest standards and do not tolerate this behavior.”
The allegations touch on a basic prohibition in Medicare, said attorney Holley Thames Lutz, with Dentons US LLP in Washington, D.C. As CMS stated in its telehealth answers to frequently asked questions (FAQs), “Medicare cannot pay for services that are furnished by a physician or practitioner located outside of the United States (see 42 CFR 411.9).”[2]
It's noteworthy the settlement includes claims submitted to HRSA, said attorney Judy Waltz, with Foley & Lardner LLP. The COVID-19 uninsured program isn’t traditionally thought of in terms of a federal health care program, but it satisfies the statutory definition of direct funding from the U.S. government, she explained. “Given the huge amounts of money paid out by HRSA during COVID, this may become the big new area for OIG recoveries,” Waltz said. “Also, the fact that this involved HRSA COVID money rebuts a popular theory that the government will be more forgiving because some lapse in compliance was a COVID issue.” If more HRSA audits are forthcoming based on its status as a government program, she thinks standard audit and appeal rights would kick in.
The settlement also highlighted “easy” ways telehealth can go wrong, including the use of the wrong modality, Waltz said.
For now, providers have tremendous flexibility to deliver services via telehealth because of the COVID-19 public health emergency (PHE). For example, CMS allows auxiliary personnel, such as nonphysician practitioners (NPPs), to provide services incident to a physician even if the physician, the NPP and the patient are in different locations. Normally, incident-to rules require, in part, the physician’s direct supervision, which means the physician must be in the office suite and immediately available, Lutz said. During the PHE, CMS said the “in the office suite” requirement didn’t really work “because people were not coming into physician offices,” she noted. “With a waiver, the physician is able to provide direct supervision via real-time audiovisual equipment.” For example, the patient, NPP and physician can be on Zoom. As CMS described in the telehealth FAQs, “Importantly, Medicare will also pay physicians for care furnished in the patient’s home by auxiliary personnel as long as those services are furnished incident to a physician’s service and as long as the practitioner is providing appropriate supervision through audio/video communication when needed.”
But incident-to billing by telehealth delivery may soon come to an end. CMS in the proposed 2023 Medicare Physician Fee Schedule (MPFS) rule would end virtual presence for direct supervision of incident-to services.[3]
CIA Generally Describes Reportable Events
Sanford’s CMP settlement, which was signed by Lisa Re, assistant inspector general for legal affairs, on July 26, mentions that it relates to its CIA.[4] “On March 21, 2022, Respondents disclosed a Reportable Event under the Corporate Integrity Agreement between Respondents and the OIG,” the settlement said.
Sanford’s CIA has general requirements around reportable events. They include a substantial overpayment and a matter that “a reasonable person would consider a probable violation of criminal, civil, or administrative laws applicable to any Federal health care program for which penalties or exclusion may be authorized.” Employee exclusions also are a reportable event.
“The settlement underscores that monitoring and self-disclosure obligations continue when an entity is under a CIA,” Waltz said. “This one was reported as a reportable event (not the self-disclosure protocol) but still resulted in a penalty.” Sanford repaid the actual damages before entering into the settlement.
The CIA is attached to Sanford’s False Claims Act (FCA) settlement, which focused on allegations that then-employed neurosurgeon Wilson Asfora, M.D., was performing medically unnecessary spinal surgery using devices from his physician-owned distributorship (POD). Sanford didn’t admit liability in either settlement. Asfora and his two PODs settled a FCA case of their own for $4.4 million last year and were excluded from Medicare for six years.[5] Sanford terminated Asfora in 2019.
About six weeks before the Sanford settlement was signed, another health system settled a CMP case in connection with a CIA reportable event but for a lot more money. William Beaumont Hospital in Michigan agreed to pay $1.732 million in a settlement with OIG that centered on the hospital’s physician compensation and leases under certain circumstances.[6]
Contact Lutz at holley.lutz@dentons.com.