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A wound care audit can shake even the most diligent healthcare providers. One letter from CMS, OIG, or Qlarant puts your entire practice under scrutiny - especially if you bill for high-cost products like NuShield, Grafix, or other placenta-derived allografts. What starts as a “routine” request for documentation can explode into massive overpayment demands or even fraud allegations. Unfortunately, many clinicians rush to comply or assume good intentions will protect them. That’s a mistake: auditors are trained to find errors, and a single oversight can threaten your business and reputation.
Don’t face this alone. At Health Law Alliance, our former federal prosecutors know exactly how government teams build their cases. We intervene quickly to:
Even honest mistakes in documentation, especially with skin substitutes and advanced wound care products, can trigger hefty fines or Medicare exclusion. Act now to prevent a bad situation from getting worse. We handle all communications with CMS and its contractors, ensuring you’re defended by seasoned wound care audit attorneys who’ve been on the other side of the table.
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Wound care audits are often triggered by unusual billing patterns or high utilization of costly treatment products. Medicare contractors use data analytics to flag providers who bill large volumes of skin substitutes or allograft materials (like placenta-based grafts) or who reapply products more frequently than peers. If your clinic’s billing stands out – for example, using NuShield or Grafix in many cases, or not following standard wound care protocols – it may prompt an audit. Sometimes audits stem from a whistleblower complaint or as part of a broader industry crackdown (the OIG Work Plan has recently spotlighted skin substitute costs). In short, any provider using advanced wound care products at scale can be subject to review, even if you believe your practices are compliant.
The risks from a wound care audit are very serious. If auditors decide your claims were not medically necessary or properly documented, they will issue an overpayment demand – essentially a bill requiring you to pay back what Medicare reimbursed, often with interest. These demands can easily reach hundreds of thousands or even millions of dollars for a busy wound care practice. Beyond recoupment, auditors might refer your case to the Office of Inspector General (OIG) if they suspect intentional misconduct. That opens the door to fraud allegations under the False Claims Act, which carries heavy civil penalties (up to three times the damages) and potential exclusion from Medicare. Even honest providers can find themselves accused of fraud over documentation mistakes. Failure to respond properly to an audit significantly increases the chance of escalation. This is why having legal counsel is essential – to rebut unfounded findings and demonstrate your good-faith compliance before things spiral.
Yes. You have the right to appeal wound care audit results, and you absolutely should if you disagree with them. Medicare provides a five-level appeals process for providers to challenge claim denials and overpayment determinations. The steps include a redetermination by your MAC (Medicare Administrative Contractor), a reconsideration by a Qualified Independent Contractor, a hearing before an Administrative Law Judge (ALJ), a review by the Medicare Appeals Council, and finally, the option of federal court. Successfully appealing can result in reinstated payments or reduced liability. However, the appeals process is complex and strictly timed – for example, you typically have 30 days to file an appeal if you want to halt recoupment while the case is reviewed. Missing a deadline or submitting a weak appeal can forfeit your chance at relief. An experienced healthcare attorney can navigate these appeals, meet all deadlines, and craft persuasive arguments to overturn unwarranted denials. Do not ignore an adverse audit result; you can fight it, and we can help.
Wound care audits tend to hone in on documentation weaknesses. Common issues include:
Being aware of these common pitfalls can help providers improve their records. But if you’re already in an audit, a lawyer will scrutinize the cited documentation issues and counter any unfair or incorrect conclusions the auditors draw.
One of our healthcare attorneys experienced in wound care audits can be your advocate and shield throughout the audit process. Here’s how we help:
Audit response strategy: The moment you receive an audit notice or records request, we guide you on exactly how to respond. We ensure that submitted documentation is complete and presented in a way that supports your case, preventing missteps that auditors could exploit.
Interfacing with auditors: We take over communications with the auditing entity (be it Qlarant, another UPIC, or Medicare). By dealing directly with the auditors or investigators, your attorney can control the flow of information, answer questions carefully, and push back against overreaching requests. This protects you from inadvertently saying or providing something that could be used against you.
Challenging findings: If the auditor identifies alleged overpayments or compliance issues, we rigorously challenge those findings. This can involve pointing out errors in the audit’s analysis, supplying additional evidence of medical necessity, and citing regulations or coverage rules that support your treatments. Our goal is to get unwarranted denials overturned before they become final.
Appeals and negotiations: Should the audit proceed to a formal overpayment demand or payment denial, we handle the appeals process from start to finish. We’ll file timely appeals at each level, compile compelling legal arguments, and represent you in hearings. Often, we can also negotiate settlements or repayment plans if needed, aiming to substantially reduce any financial payback.
Preventing escalation: A crucial role of your attorney is to keep a civil audit from escalating into a fraud case. By proactively addressing audit issues and demonstrating compliance, we reduce the chance of a referral to the OIG or DOJ. If a referral has already happened, we manage interactions with federal investigators and mount a strong defense to protect you from fraud allegations.
In short, we bring peace of mind and a fighting chance. With attorneys who understand both the clinical side of wound care and the legal intricacies of Medicare rules, you get comprehensive defense. Our involvement shows the auditors you mean business – and it lets you focus on caring for patients while we handle the battle.
Wound care audits have been surging in recent years, and it’s not by accident. A few key factors are driving this rise:
Skyrocketing costs and usage: Advanced wound care products – especially human tissue allografts and bioengineered skin substitutes – can be very expensive. Medicare Part B spending on these items has ballooned as more clinics adopt them for chronic wounds. For example, a single application of a placental membrane product can cost thousands of dollars. As usage grows, Medicare’s outlays grow, and that draws scrutiny. Auditors are under pressure to rein in costs by ensuring each use is justified.
OIG and CMS initiatives: The Office of Inspector General has explicitly put skin substitute therapies on its radar. In its Work Plan, OIG signaled intent to examine Medicare payments for skin substitutes, noting concerns about rising expenditures and lack of clear coverage policies. When the OIG highlights an issue, it often leads to a wave of audits and investigations in that area. CMS contractors like UPICs then get directives to focus on those claims.
Previous findings of improper billing: There have been cases and audits revealing some providers overusing these products or not following guidelines. Each time an auditor uncovers a clinic billing, say, weekly applications of a graft far beyond what most patients need, it reinforces the belief that this area is prone to fraud, waste, or abuse. That history prompts even more audits industry-wide.
Industry growth and marketing: The wound care industry itself has grown, with companies aggressively marketing products like NuShield, Grafix, and others to practitioners as revolutionary solutions. Increased promotion can lead to wider use, including off-label applications, which in turn results in heightened oversight by regulators. Essentially, as more money flows into advanced wound care, more eyes are watching how that money is spent.
The bottom line: Audits are up because wound care is in the spotlight – financially and clinically. Providers must be prepared to justify their treatment decisions under this microscope.
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When Medicare or a UPIC auditor combs through your wound care claims, they are looking for any reason to deny coverage. Some common denial reasons that wound care providers encounter include:
Excessive reapplication frequency: Auditors may claim you applied a skin substitute too many times or for too long a duration. For instance, if the typical healing time is 4-6 applications and you billed 12 applications, they might say continued treatment wasn’t medically necessary because the wound wasn’t improving sufficiently. Closely tracking wound improvement and having a clear rationale for each additional application is critical to counter this.
Lack of prior conservative therapy: Medicare generally expects that standard wound care (e.g. dressings, offloading, antibiotics if infection, etc.) was attempted before using costly grafts. One frequent denial reason is “conservative treatment not documented.” If your notes don’t show that you tried and failed more conservative measures prior to using a product like STRAVIX, auditors argue the advanced therapy was not justified.
Improper documentation or missing details: As noted, incomplete documentation sinks many claims. Common examples: not documenting why one product was chosen over alternatives, failure to note the patient’s improvement (or lack thereof) after each treatment, or missing documentation of how much product was used vs. discarded. Auditors interpret these gaps as the service being not reasonable or necessary. Thorough, specific charting for each wound care service is the best defense, but even then auditors often nitpick.
Product deemed investigational or non-covered: Some wound care products are considered “investigational” or off-label for certain uses by Medicare. If you used a newer placenta-derived product that isn’t explicitly covered, an auditor can deny all those claims outright. Similarly, if a product was used in a manner not approved (non-homologous use, such as using a graft to actively treat a wound rather than as a simple cover when it’s only approved as a cover), they will deny it. We’ve seen this with certain amniotic membrane injections and applications being labeled as not meeting coverage criteria.
Lack of patient-specific justification: Denials also happen when auditors feel the care was not individualized. They might say your documentation looks copied and pasted, or that you didn’t explain why the patient needed, for example, Grafix vs. a cheaper alternative. Every wound is different; your records must show you tailored the treatment to that patient’s unique condition. Without that, auditors claim the service wasn’t medically necessary for that beneficiary specifically.
Understanding these common denial reasons can help you prepare stronger documentation in the future. If you’re already facing these denial reasons in an audit, an attorney can formulate counterarguments – for example, showing medical literature that supports reapplications, or highlighting parts of the record that the auditor overlooked. Many denials can be overturned on appeal when you address the auditor’s reasoning head-on with facts and expert support.
Wound care audits involve a web of governmental players and contractors. It helps to know who you’re up against:
Centers for Medicare & Medicaid Services (CMS): CMS administers the Medicare program. While CMS itself doesn’t directly audit every provider, it sets the policies and delegates audit work. When it comes to wound care, CMS might issue coverage guidelines (like Local Coverage Determinations via MACs) and task its contractors to ensure compliance.
Medicare Administrative Contractors (MACs): MACs, like Novitas or Palmetto GBA, process Medicare claims and make initial payments. They can also conduct targeted probes or reviews of claims. If your MAC notices something off (like unusual billing for wound care), they might initiate an audit or refer it to a specialized contractor.
Unified Program Integrity Contractors (UPICs): UPICs are the Medicare fraud-fighting auditors. Qlarant is a prime example of a UPIC that covers certain regions. UPICs are hired specifically to detect fraud, waste, and abuse in Medicare claims. For wound care, a UPIC like Qlarant or CoventBridge might send the letter initiating an audit. These contractors are known for aggressive tactics – they often assume the worst (fraud) and make you prove otherwise. They will comb through your records with a fine-tooth comb and are quick to cite any deviation from policy as an overpayment.
Office of Inspector General (OIG): The OIG for HHS (Health & Human Services) is the federal watchdog. While OIG might not directly audit your clinic’s records out of the blue (they rely on UPICs for that), they become involved if fraud is suspected or as part of broader enforcement. For instance, if a UPIC finds what it thinks is intentional wrongdoing, it can refer the case to the OIG. The OIG also conducts research (like studies on skin substitute payments) and issues subpoenas or works with the Department of Justice on civil and criminal healthcare fraud cases. An OIG subpoena could land in your mail if your wound care billing is part of a larger investigation.
Department of Justice (DOJ): If things escalate severely, the DOJ may get involved, especially for fraud allegations under the False Claims Act. While this is beyond a standard audit, it’s the next level if an audit uncovers evidence (or suspicion) of systematic overbilling or false documentation. The DOJ, often via local U.S. Attorney’s Offices, can pursue civil or criminal actions. This is why even an audit needs to be handled carefully – to avoid painting a target on your back for DOJ.
State Agencies and Medicaid Contractors: If you treat Medicaid patients, state Medicaid agencies or Medicaid Integrity Contractors might audit wound care claims too. Also, commercial insurance may have their own auditors. But the biggest challenges usually come from Medicare-focused entities like those above, since Medicare sets the tone for audit enforcement.
Knowing the players is important because each has different powers and processes. Health Law Alliance has dealt with all of them. Our team includes former government attorneys and investigators who have worked inside these agencies – we know how they operate and how to respond effectively on your behalf.
Not all wound care treatments draw equal attention. Auditors are especially focused on certain products that are commonly misused or very costly. If you use any of these in your practice, be extra cautious:
NuShield®: A dehydrated placental membrane allograft used to cover wounds and support healing. NuShield and products like it are flagged because they’re placenta-derived (raising questions of FDA regulation and proper usage) and high-cost. Auditors will check if NuShield was used only for approved indications and whether your documentation justifies its use over simpler dressings.
Grafix®: A cryopreserved placental membrane product (originally from Osiris Therapeutics) applied to chronic wounds, such as diabetic foot ulcers. Grafix has been marketed for its regenerative properties. Its use is scrutinized to ensure medical necessity – e.g., the wound was not healing with standard care – and that each application is documented. Because Grafix is expensive, repeated use on the same patient draws audit interest to see if it was truly needed that often.
STRAVIX®: A unique placental tissue matrix that includes umbilical components (Wharton’s jelly). STRAVIX is used in surgery and wound care for its healing properties. Auditors target STRAVIX due to its off-label complexities – it may be viewed as not covered if used beyond a wound covering. They will review if you followed any coverage guidelines and if the product was billed under the correct codes and amounts.
Other skin substitutes: In addition to the above, Medicare auditors have been looking at a range of skin substitute grafts and biologics. These include amnion/chorion membrane products (like EpiFix®, AmnioBand®), bioengineered skin like Dermagraft® or Apligraf®, and even human tissue grafts used in wounds or burns (AlloPatch, etc.). Essentially, any advanced graft or cellular tissue product used for wound healing can be a target. Each may have specific Medicare billing rules, FDA considerations, and frequency limits.
The common thread is that these products are innovative but costly. They often lack long histories of clinical use, so Medicare treats them cautiously. If you’re using them, you must ensure rock-solid documentation:
Our firm stays up-to-date on the latest audit focus list. We know which products are in the crosshairs and how to defend their appropriate use. If your use of any specific product is questioned, we’ll bring in the necessary medical justifications and expert support to defend you.
Facing an adverse audit result – like a stack of denied claims or a demand letter – is daunting. Fortunately, you are not without recourse. The legal process for appealing wound care audit findings is well-established, though it requires diligence:
1. Rebuttal (optional, fast response): Before diving into formal appeals, providers have a brief window to submit a rebuttal letter to the Medicare contractor after receiving an overpayment demand. This isn’t a full appeal on the merits, but rather a chance to argue why recoupment (taking back the money) should be delayed or not initiated. For example, if the auditor made a procedural error or you have new info coming, a rebuttal can buy time. This must be filed within 15 days of the demand letter. We often help clients craft effective rebuttals when appropriate.
2. Redetermination (1st level appeal): The official appeals start here. You have 120 days from the determination (or 30 days if you want to stop recoupment) to request a redetermination by your MAC. Another Medicare reviewer will look at the claims anew. At this stage, it’s crucial to submit a thorough argument and any supporting documentation you didn’t send before. We prepare a persuasive case file showing why the services were medically necessary and compliant.
3. Reconsideration (2nd level appeal): If the redetermination upholds the denial, the next step is reconsideration by a Qualified Independent Contractor (QIC). You have 180 days to file for reconsideration (again, sooner if recoupment is ongoing). The QIC’s reviewers are separate from the MAC and will evaluate all evidence. We often bolster the record here with expert opinions or medical literature to support the wound care services. This is usually the last chance to submit evidence, so we make it count.
4. Administrative Law Judge hearing (3rd level): If the QIC denies your reconsideration, you can appeal to the Office of Medicare Hearings and Appeals for an ALJ hearing (must file within 60 days of the QIC decision). This is a big opportunity – an independent judge (administrative law judge) will review the case and you can present arguments, and sometimes even testimony. Our attorneys will represent you in a hearing (often via video or phone), making the case that the auditor’s decision was wrong. ALJs have the power to overturn a lot of denials and frequently do, especially when the documentation is there and equities are on your side. The wait for a hearing can be long (months, even over a year), but statistically, providers’ chances improve at this stage with strong representation.
5. Medicare Appeals Council (4th level): If you lose at the ALJ, you can appeal to the Medicare Appeals Council within 60 days. This is basically a higher-level review of the ALJ’s decision. No new evidence can be introduced typically. It’s more of a legal argument stage. We write detailed legal briefs pointing out any errors in the ALJ decision or misinterpretation of law/policy.
6. Federal Court (5th level): Finally, if all else fails, you have the right to file a lawsuit in federal court against HHS (within 60 days of the Council decision). This is relatively rare in audit cases but is an option for significant matters. Here it becomes a true judicial process. Our team includes seasoned litigators who can take the fight to court if needed, arguing that Medicare’s decision was arbitrary or not supported by substantial evidence.
Throughout this appeals journey, timing and strategy are critical. You must adhere to strict deadlines at each level or you lose your rights. Also, the recoupment of funds usually starts after day 30 of the first demand, which means Medicare might begin offsetting the alleged overpayment from your current claims. Properly filing an appeal can pause recoupment at certain stages, preserving your cash flow while the dispute is ongoing. We help manage these nuances.
Most importantly, we shift the narrative from “guilty until proven innocent” (the auditor’s stance) to a fair consideration of the facts. We present your story: that you provided necessary, beneficial wound care to patients in need, and you did so in good faith compliance with Medicare rules. Our goal in the appeal process is total vindication – getting claims paid and clearing your name. Even if we don’t win at the first stages, we keep fighting, often negotiating along the way, until we secure a reasonable resolution.
When a wound care provider is hit with an audit, the experience can be harrowing. The process often starts with a letter or records request from CMS, the OIG, or a Medicare contractor like Qlarant (a UPIC). From there, the stakes quickly become evident: if auditors find perceived billing errors or missing documentation, they may slap the provider with a hefty overpayment demand, insisting on recoupment of Medicare funds already paid out. The provider may suddenly owe tens or even hundreds of thousands of dollars back to the government. But it doesn’t stop there—an adverse audit can lead to punishing outcomes like steep civil fines for alleged healthcare fraud, or even a referral for criminal prosecution. In extreme situations, a wound care practitioner could be excluded from Medicare and Medicaid—a career-threatening penalty that cuts off a major source of patients and revenue.
Yet many of these severe outcomes stem from simple documentation errors or billing misunderstandings rather than intentional wrongdoing. Even honest wound care providers focusing on patient care can get caught up in an audit due to technical paperwork issues. Auditors, however, often treat these mistakes as harshly as deliberate fraud. That’s why early legal intervention is critical. The moment a wound care audit begins, providers should seek experienced healthcare defense counsel to help set the record straight. Early involvement can clarify misunderstandings, ensure the proper documentation is provided, and negotiate to resolve overpayment claims before they escalate. Acting fast can mean the difference between a manageable repayment plan and a career-ending outcome like Medicare exclusion or fraud charges.
At Health Law Alliance (HLA), we understand that a wound care audit is not just a paperwork exercise – it’s an existential threat to your practice. Our mission is to defend healthcare providers aggressively against such threats. Here’s what sets our wound care audit defense apart:
Former Government Insiders: Our team features former federal prosecutors and ex-government health care investigators. We’ve been on the other side of the table and know how the government builds cases. This insider knowledge allows us to anticipate the auditors’ moves and counter them effectively. We use the government’s own playbook to protect you.
Healthcare Law Focus: HLA isn’t a general law firm dabbling in health cases – healthcare defense is all we do. We have deep knowledge of Medicare regulations, coverage policies for wound care treatments, and the nuanced distinctions of products like placental allografts. This means we can quickly identify where auditors overstepped or misapplied a rule in your case.
Rapid Response & Intervention: Time is of the essence in an audit. We pride ourselves on acting immediately. The moment you engage us, we mobilize to halt any destructive actions by auditors. Whether it’s stopping a premature repayment demand or heading off a potential fraud referral, we know which levers to pull fast. Swift action can prevent a bad situation from getting worse.
Tailored Defense Strategy: No two wound care providers are exactly alike, and neither are their audits. We craft a custom defense strategy for each client. After thoroughly reviewing your situation – the audit scope, the specific treatments under review, your documentation – we assemble the strongest possible defense plan. That might include enlisting wound care experts to support medical necessity, performing our own audit of your records to preemptively address issues, or negotiating directly with CMS officials to resolve misunderstandings. Our approach is not one-size-fits-all; it’s built around what will work best for you.
Full-Service Support: An audit can affect all aspects of your practice. We don’t just handle the paperwork; we provide end-to-end legal support. This includes advising your staff on how to handle auditor visits or interviews, guiding you on any necessary compliance corrections, and being ready to defend you in any forum – from audit conferences to administrative hearings to court, if needed. You get a legal partner by your side every step of the way, so you never have to face the auditors alone.
Proven Results: Our aggressive and strategic defense has saved clients millions in potential repayments and prevented countless penalties. We have a strong track record of getting audit findings significantly reduced or thrown out entirely. And in situations where the evidence was on the government’s side, we’ve successfully negotiated settlements that kept our clients in business and avoided crippling consequences. The bottom line: we fight for the best possible outcome, and we know how to win.
When you choose Health Law Alliance, you’re getting a dedicated ally who treats your battle as our own. We know your professional reputation and financial survival are on the line. Our attorneys will work tirelessly to safeguard what you’ve built. Don’t let a wound care audit derail your practice – let us defend you with the skill, tenacity, and experience that this fight demands.
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CVS Caremark one of the three major PBMs that control nearly 90% of the market for prescription claims processing.
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Optum is one of three major PBMs that control nearly 90% of the market for prescription claims processing.
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ESI is one of the three major PBMs that control nearly 90% of the market for prescription claims processing.
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Prime has a relationship with ESI that provides for joint provider networks and oversight by both companies.
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Medicare and Medicaid use agencies like OIG or OMIG and outside contractors to audit prescription drug claims.
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Humana is a payor that uses PBMs and other contractors to audit government and commercial drug claims.
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Qlarant is contracted with Medicare to perform fraud, waste, and abuse audits and investigations.
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Safeguard is contracted with Medicare to perform fraud, waste, and abuse audits and investigations.
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To design an effective PBM audit response strategy, providers must understand the chain of events both prior to the initiation of a PBM audit and afterwards. For example, Special Investigative Units (SIUs) are often the genesis of a pharmacy audit, and the presence or absence of "audit risk factors" is informative on potentially broader exposure beyond the claims under audit. Any decision to resolve an audit should be informed and result in a full and final settlement of all liability, but PBM audit settlements need to be structured carefully to achieve this goal.
CVS Caremark, OptumRx, and Express Scripts, control at least 80% of the market, making them the three biggest PBMs. Humana also ranks among the largest. In addition, these PBMs regulate access to networks for smaller competitors, such as ESI's partnership with Prime. Plan sponsors, such as United Health, Cigna and Aetna, are vertically integrated with these PBMs, increasing audit risk for pharmacies because network sanctions are more likely to affect a significant aspect of a pharmacy's business across both government and commercial claims.
PBMs and payors use artificial intelligence and data mining across medical and pharmacy claims to identify areas of potential inquiry. Among other areas, these inquiries typically involve high-reimbursing medicines, brand/generic substitution, inventory discrepancies, co-payment collection, prior authorization, and telehealth relations. Separately, DEA conducts audits and inspections for compliance to controlled substance regulations.
Common types of PBM audits include desk audits; on-site audits; invoice audits; and prescription audits. Irrespective of the type of PBM audit, all interactions with PBMs should be taken extremely seriously and can lead to severe consequences if not handled appropriately. For example, there has been a sharp increase in the federal prosecution of pharmacists for audit-related conduct, including answering PBM questions incorrectly. Accordingly, pharmacies should consider using outside audit counsel to avoid these pitfalls.
Pharmacies can take various steps to prepare to meet PBM audits, including routine self-audits. In fact, the government publishes comprehensive guidance and a checklist to assist pharmacies in their audit planning, including self-audits around prescribing practices, controlled substance management, invoice management, and billing practices. If you need assistance designing or implementing an audit protection plan, please do not hesitate to contact us.
Defending against a PBM audit requires comprehensive knowledge of the rights, responsibilities, and intricacies of pharmacies and their laws and regulations. If your pharmacy has been identified for a PBM audit, there are a number of potential defenses available to you. The first defense against a PBM audit is to be proactive, and audit planning can lessen the chance of unfavorable findings. That said, it is often necessary to involve an attorney to hold PBMs to their obligations under law and provider agreements. For this reason, national audit services and pharmacy audit consultants are often ineffective.
Audit discrepancies and findings can be appealed based on the specific procedures outlined in the provider manuals. It is important to follow these requirements exactly, within the timeframes established, or your appeal rights could be lost and further review denied. In an appeal, it is critically important to make a complete record of why the audit findings or sanctions should be reversed, including through documentation, legal arguments, and corrective actions, if any. Depending on the outcome of the appeal, you may have further legal recourse against the PBM.
PBM audits can have severe repercussions depending on the results of the pharmacy audit, including recoupments, network sanctions, and criminal, civil and administrative investigations involving jail time, significant fines, and license revocation or exclusion. We publish a 10-part PBM Audit Guide that discusses the overlap between PBM audits and government investigations and how to successfully manage audit risk. This resource is complimentary to subscribers HERE.
Government investigations may come in many forms, but criminal matters involving potential jail time, mandatory exclusion, loss of licensure, and reputational harm are the most severe and scary scenarios that anyone can face. Unfortunately, it often is not clear, particularly at the outset, whether an investigation involves criminal violations or what your status might be in the investigation. For example, our clients might be informed that the FBI is interviewing patients, or that their partners have received subpoenas. The uncertainty that results from these types of events is particularly difficult for our clients to manage, and typically involves sleepless nights, loss of appetite, anxiety and potential depression.
Our experienced healthcare defense attorneys understand what clients are going through, and focus on providing them with insight into the government’s investigation and how best to defend it. There are a variety of potential outcomes, many of them involving far less severe ramifications than might be contemplated. Indeed, in healthcare, parallel criminal, civil, and administrative laws provide an opportunity for potential resolution of government investigations under terms that do not involve loss of liberty or livelihood. The range of outcomes that might be available depends on the evidence available to the government, but cases involving patient harm typically receive more focus from a criminal perspective than run-of-the-mill billing irregularities, particularly when the federal government is involved.
That said, there are several notable exceptions. At Health Law Alliance, our healthcare defense attorneys have decades of federal and state prosecutorial experience, and we rely on that background to highlight areas of increased risk. In particular, the below agencies focus on the prosecution of criminal healthcare fraud.
The Medicare Fraud Strike Force, operated by the U.S. Department of Justice (DOJ) in regions across the country, is particularly adept at prosecuting healthcare fraud criminal matters. Medicare Fraud Strike Force Teams harness data analytics and the combined resources of federal, state, and local law enforcement entities to prevent and combat healthcare fraud, waste, and abuse. More specifically, the Strike Force uses advanced data analysis techniques to identify aberrant billing levels in healthcare fraud “hot spots” – cities with high levels of billing fraud – combined with traditional investigative techniques to target suspicious billing patterns in addition to emerging schemes and fraudulent practices that move from one location to another.First established in March 2007, prosecutors operate in 16 Strike Forces, including the National Rapid Response Strike Force based in Washington, DC. The Strike Force Model centers on a cross-agency collaborative approach, bringing together the investigative and analytical resources of DOJ’s Fraud Section, the Federal Bureau of Investigation (FBI), the U.S. Department of Health and Human Services Office of the Inspector General (HHS-OIG), the Centers for Medicare & Medicaid Services (CMS), Drug Enforcement Administration (DEA), Defense Criminal Investigative Service (DCIS), Federal Deposit Insurance Corporation Office of the Inspector General (FDIC-OIG), Internal Revenue Service (IRS), Department of Labor-OIG, United States Postal Service – Office of the Inspector General (USPS-OIG), Veterans Administration – Office of the Inspector General (VA-OIG), and other agencies. Strike Force Health Care Fraud and Prescription Opioid teams are located across the country, as depicted by the chart below:
The Medicare Strike Force has filed thousands of criminal actions and indictments and recovered billions of dollars in assets resulting from healthcare fraud. The Strike Force teams bring together the Office of Inspector General (OIG), the Department of Justice (DOJ), Offices of the United States Attorneys (USAOs), the Federal Bureau of Investigation (FBI), local law enforcement, and others. These attorneys and investigators have a proven record of success in analyzing data and investigative intelligence to quickly identify fraud and bring prosecutions. The interagency collaboration also enhances the effectiveness of the Strike Force model. For example, OIG refers credible allegations of fraud to the Centers for Medicare & Medicaid Services (CMS) so that it can suspend payments to the alleged healthcare fraud perpetrators, thereby preventing losses to federal programs. Finally, the Medicare Strike Force does not focus exclusively on healthcare fraud but also prosecutes wire fraud, mail fraud, bank fraud, money laundering offenses, violations of the Anti-Kickback Statute (AKS), false statements offenses, Title 42 offenses, Title 26 offenses, and Title 21 offenses, in the highest intensity regions.
The Medicare Strike Force is a specialized department within the DOJ’s Health Care Fraud Unit, based in Washington, D.C., with operations across the country. DOJ’s Health Care Fraud Unit is led by over 80 experienced white-collar prosecutors who focus solely on prosecuting the nation’s most complicated healthcare fraud matters and the illegal prescription, distribution, and diversion of opioids and other controlled substances. The Health Care Fraud Unit’s mission is to protect the public treasury from wide-scale healthcare fraud, protect patients from significant fraudulent schemes that result in patient harm, and to detect, limit, and deter fraud and illegal prescription, distribution, and diversion of controlled substance offenses. The Health Care Fraud Unit endeavors to prosecute defendants who orchestrate schemes that result in the loss of hundreds of millions or billions of dollars, the distribution of tens of millions of opioids or controlled substances, and complex money laundering, tax, and other financial crime offenses.
The Health Care Fraud Unit prides itself on conducting the most trials of any DOJ component, including the U.S. Attorney's Offices. DOJ prosecutors, referred to as “Trial Attorneys,” have participated in the largest and most complex healthcare fraud and opioid distribution trials in the country. Notably, the Health Care Fraud Unit is a leader in using advanced data analytics and algorithmic methods to identify newly emerging healthcare fraud schemes and to target the most egregious fraudsters. The Health Care Fraud Unit’s team of dedicated data analysts works with prosecutors to identify, investigate, and prosecute cases using data analytics. At the Health Law Alliance, our healthcare defense attorneys have extensive experience in the use of data analytics to identify potential fraud, waste, and abuse, having served as the Chief Compliance Officer and Executive Leadership Team member for UnitedHealth Group, with oversight of Optum and UnitedHealthcare, including Special Investigative Units (SIUs) within those platforms.
The Health Care Fraud Unit’s cases are complex and wide-reaching. In particular, the National Rapid Response Strike Force was created in 2020 to investigate and prosecute fraud cases involving major healthcare providers that operate in multiple jurisdictions. The National Rapid Response Strike Force coordinates with the Civil Division’s Fraud Section and Consumer Protection Branch, U.S. Attorneys’ Offices across the country, state Medicaid Fraud Control Units (MFCUs), the FBI, HHS-OIG, and other agency partners to investigate and prosecute multi-jurisdictional and corporate healthcare fraud. The National Rapid Response Strike Force’s recent successes include the conviction of owners of a multi-state network of rural hospitals in a $1 billion billing fraud matter; the $500 million global resolution with Tenet Healthcare Corporation and related individual prosecutions for a hospital kickback scheme; the prosecution of billions of dollars in telemedicine fraud; prosecution of over $1 billion in fraudulent addiction rehabilitation facility fraud as part of the Sober Homes Initiative; and leadership of the Unit’s efforts to prosecute those seeking to criminally exploit the COVID-19 pandemic, including the conviction at trial of the President of a Silicon Valley technology company for healthcare fraud, illegal kickback, and securities fraud related to the announcement of purportedly revolutionary testing for COVID-19 using only a few drops of blood, i.e., Elizabeth Holmes and associates.
In addition, in 2022, the DOJ Criminal Division announced the formation of the New England Prescription Opioid (NEPO) Strike Force, a joint law enforcement effort to investigate and prosecute healthcare fraud schemes in the New England region, and to prosecute individuals involved in the illegal distribution of prescription opioids and other controlled substances. NEPO leverages the success of the October 2018 formation of the Appalachian Regional Prescription Opioid (ARPO) Strike Force, a joint effort between DOJ, FBI, HHS-OIG, DEA, and state and local law enforcement to combat healthcare fraud and the opioid epidemic in locations that have been harmed significantly by addiction. ARPO has partnered with federal and state law enforcement and U.S. Attorneys’ Offices throughout Alabama, Kentucky, Ohio, Virginia, Tennessee, and West Virginia to prosecute medical professionals involved in the illegal prescription and distribution of opioids.
In addition to DOJ’s Strike Forces and Health Care Fraud Units, all of the U.S. Attorneys’ Offices are staffed by federal prosecutors, referred to as Assistant United States Attorneys (AUSAs), who investigate and prosecute healthcare fraud crimes in their respective jurisdictions. There are 93 U.S. Attorneys’ Offices in the country, and the U.S. Attorney in each district is the chief federal law enforcement officer, reporting to the Attorney General of the United States. The U.S. Attorneys’ Offices are coordinated by the Executive Office for U.S. Attorneys, which oversees the DOJ’s Health Care Fraud and Abuse Act Program, established as part of the Health Insurance Portability and Accountability Act of 1996 (HIPAA). To most, HIPAA is better known for privacy and nondiscrimination rules, but the statute also created a number of healthcare offenses and enforcement tools, including the “HIPAA subpoena,” and mandated that the DOJ and HHS-OIG coordinate to support efforts to investigate and prosecute healthcare fraud.
To this end, HIPAA provided a funding source, specifically requiring that amounts equaling recoveries from healthcare fraud investigations be deposited in or transferred to the Federal Hospital Insurance Trust Fund. Recoveries are then appropriated from the Trust Fund to the Health Care Fraud and Abuse Control Account in an amount the Attorney General and HHS Secretary certify annually are necessary to finance healthcare fraud enforcement activities. Appropriations from the Control Account fund attorneys, investigators, and litigation support to combat healthcare fraud. Since 1997, over $57 billion has been collected by the DOJ and HHS. Of that, nearly $40 billion has been returned to the Medicare Trust Funds, an average of approximately $1.5 billion per year, and Medicaid, Tricare, the Veteran’s Administration, among others. In the same period, 13,628 defendants have been convicted of healthcare fraud offenses, an average of 545 every year. These numbers are startling, to be sure.
All states also operate Medicaid Fraud Control Units (MFCUs), typically within the State Attorney General’s Office, to investigate and prosecute Medicaid-related fraud. The Social Security Act (SSA) requires each state to effectively operate an MFCU unless the Secretary of Health and Human Services (HHS) determines that (1) the operation of a Unit would not be cost-effective because minimal Medicaid fraud exists in a particular state; and (2) the state has other adequate safeguards to protect enrollees from abuse or neglect. MFCUs are funded jointly by the federal and state governments. Each Unit receives a federal grant award equivalent to 90 percent of total expenditures for new Units and 75 percent for all other Units.
MFCU cases often begin as referrals from external sources or are generated from data mining. MFCU staff review referrals of possible fraud to determine the potential for criminal prosecution or civil action. If the Unit accepts a referral, the case may result in various outcomes. Criminal prosecutions may result in convictions; civil actions may result in civil settlements. Both criminal prosecutions and civil actions routinely include the assessment of monetary recoveries. The approach of the MFCUs varies state-by-state, with some offices, such as Pennsylvania’s MFCU, that pursue criminal cases exclusively. In other words, the Pennsylvania MFCU will either bring a criminal case or decline the matter completely; that office does not interpret its enabling statutes to permit the resolution of investigations on civil terms. Other state MFCUs, however, investigate and prosecute both criminal and civil cases. The OIG has the authority to exclude convicted individuals and entities from any federally funded healthcare program, such as Medicaid, on the basis of convictions referred from MFCUs. In addition to achieving these outcomes, MFCUs may also make recommendations to their state governments to strengthen program integrity.
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