News & Insights


July 27, 2020

Health Headlines – July 27, 2020

HHS and DOJ Release Annual Fraud and Abuse Report –  Last week, HHS and DOJ issued the Health Care Fraud and Abuse Control (HCFAC) Program FY 2019 Annual Report detailing federal enforcement activities and results during the federal fiscal year (FY) 2019, which ran from October 1, 2018 through September 30, 2019. The HCFAC Program is a national initiative, under the joint direction of the U.S. Attorney General and the Secretary of HHS, to coordinate federal, state, and local law enforcement activities with respect to healthcare fraud and abuse. The report indicates that total judgments, settlements and amounts recovered increased in FY 2019 compared to FY 2018. DOJ investigations and enforcement actions decreased slightly but were generally consistent with the prior year. The overall number of OIG investigations and enforcement actions was also consistent, but the overall proportion of criminal cases compared to civil cases increased in FY 2019. This article summarizes the key metrics detailed in the report.

Monetary Results for DOJ and HHS in FY 2019

  • $2.6 billion in total judgments and settlements for healthcare fraud, which represents an increase of $300 million compared to FY 2018.
  • $3.6 billion in total amounts recovered, which represents an increase of $1 billion compared to FY 2018. This amount includes recoveries corresponding to prior years and also includes approximately $254 million in payments to private qui tam relators.
  • $1.06 billion in HCFAC budget expenditures by DOJ and HHS, which represents an increase of $28 million compared to FY 2018.
  • Calculated three-year return on investment (ROI) of $4.20 returned for every $1.00 spent, which represents an increase from the calculated three-year ROI of $4.00 per $1.00 reported for FY 2018.

DOJ Enforcement Actions in FY 2019

  • 1,060 new criminal healthcare fraud investigations and 1,112 new civil healthcare fraud investigations, which represents a slight decrease from the 1,139 criminal and 1,203 civil investigations in FY 2018.
  • 814 defendants charged in 485 criminal cases, which represents a slight decrease from the 872 defendants charged in 572 cases in FY 2018.

OIG Enforcement Actions in FY 2019

  • 747 new criminal actions, which represents an increase from the 679 criminal actions initiated in FY 2018.
  • 684 new civil actions, which represents a decrease from the 795 civil actions initiated in FY 2018.
  • 2,640 individuals and entities excluded from participating in federal healthcare programs, which represents a slight decrease from the 2,712 exclusions in FY 2018. Of these, 45% were based on criminal convictions relating to Medicare and Medicaid, 12% were based on criminal convictions relating to other healthcare programs, 9% were based on patient abuse or neglect and 22% were based on state licensure revocations.

Please click here for a copy of the FY 2019 Annual Report. A copy of the FY 2018 Annual Report is available here.

Reporter, J. Gardner Armsby, Atlanta, +1 404 572 2760,

CMS Announces New Funding, Training, and Staff Testing Requirements for Nursing Homes On July 22, 2020, CMS announced four new policies pertaining to nursing homes during the COVID-19 public health emergency.  First, CMS allocated to nursing homes an additional $5 billion from the Provider Relief Fund established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act.   Second, CMS will require nursing homes in states with a COVID-19 test positivity rate of 5 percent or greater to test all nursing home staff each week.  CMS’s distribution of rapid point-of-care testing devices to nursing homes will support this mandate.  Third, CMS, in partnership with the CDC, will implement an online, self-paced, on-demand training for nursing homes on COVID-19, which will be required to receive funding from the Provider Relief Fund Program.  Finally, CMS will send to the states, as part of the weekly Governor’s report, a list of nursing homes with an increase in cases.

The new funds will be available “to build nursing home skills and enhance nursing homes’ response to COVID-19, including infection control.”  The funds can be used, among other things, for hiring additional staff, implementing infection control “mentorship” programs with subject matter experts, increasing testing, and providing additional services, such as technology for remote family visits.  The new funding supplements the $4.9 billion distribution to nursing homes announced by CMS in May (as previously reported in Health Headlines on May 26, 2020).

The training that will be made available by CMS and CDC is based on the experience of the Task Force Strike Teams deployed by the White House since July 18, 2020 to provide onsite technical assistance and education to nursing homes experiencing outbreaks.  The Task Force Strike Teams comprise clinicians and public health service officials from CMS, CDC and the Office of the Assistant Secretary for Health.  The focus of the Task Force Strike Teams has been on keeping COVID-19 out of facilities, detecting cases quickly, preventing transmission and managing staff.  The training will be available to all nursing homes.  Specialized technical assistance will be provided to nursing homes that have been found to have infection prevention deficiencies during the most recent CMS inspection and had recent COVID-19 cases. 

CMS’s announcement is available here.

Reporter, Igor Gorlach, Houston, +1 713 276 7326,

OIG Issues Advisory Opinion on Arrangement for Charitable Organization to Buy and Forgive Patient Debt from Providers – On July 24, 2020, OIG issued an Advisory Opinion (AO), AO 20-04, regarding whether an arrangement where a charitable organization purchases or receives donations of unpaid medical debt from health care providers, and then forgives that debt, implicates federal fraud and abuse laws.  OIG determined that while the arrangement could potentially generate prohibited remuneration under the Anti-kickback Statute (AKS), OIG would not impose administrative sanctions based on the particulars of the arrangement, detailed herein.

The AKS makes it a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce or reward referrals of items or services reimbursable by a Federal health care program.  The statute has been interpreted to cover any arrangement where one purpose of the remuneration was to engage in conduct prohibited by the statute.  Section 1128A(a)(5) of the Social Security Act (the Beneficiary Inducements CMP) provides for the imposition of civil monetary penalties against any person who offers or transfers remuneration to a Medicare or state health care program (including Medicaid) beneficiary that the person knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of any item or service for which payment may be made, in whole or in part, by Medicare or a State health care program (including Medicaid).  The issue presented in the AO is whether the arrangement for a hospital to sell or donate its patient debt to a charitable organization that then forgives the debt could violate the AKS or the Beneficiary Inducements CMP. 

As a general matter, hospitals collect far less than the amounts billed to patients each year, even after accounting for hospitals’ financial assistance policies.  According to the AO, most hospitals that are unable to collect after completing their own collection efforts proceed to write off uncollectible accounts as bad debt, while others sell portfolios of uncollectible accounts to debt purchasing companies.  Debt purchasing companies continue to try to collect the debt from patients.  In some instances, a charitable organization works with debt purchasing companies to screen for medical debt that meets the charitable organization’s criteria for forgiveness and then negotiates the purchase of that debt at arm’s length from the debt purchasing company.  After the charitable organization acquires the medical debt, the organization forgives it completely, ensuring that the debt is reported as “paid in full” and any derogatory mark from the patient’s credit report is removed.

Under the proposed arrangement, the charitable organization would bypass dealing with the debt purchasing company altogether and, instead, purchase or receive a donation of inpatient and outpatient debt directly from hospitals and certain other providers.  This medical debt could include debt related to services furnished under federal health care programs.  Any medical debt that the charitable organization would consider purchasing or receiving through donation would be debt that the providers already attempted and failed to collect either through their own billing and collection process or by using one or more collection agencies.  If debt is related to Medicare services, the debt would be “uncollectible” under Medicare bad debt rules.  The charitable organization and providers would work with a HIPAA-compliant third-party vendor of data and analytical services to identify debt that meets the objective criteria for forgiveness.  Finally, providers would agree not to publicize the sale or donation of debt to the charitable organization, and the charitable organization would not identify providers by name in promotional or marketing materials that are available to the public.

Given these facts, the AO acknowledged that the charitable organization’s forgiveness of a patient’s debt that was donated or sold to it by a provider, if known to the patient, could induce the patient to seek items or services from that provider or could influence the patient’s future selection of the provider.  Therefore, according to OIG, the arrangement implicates both the Beneficiary Inducements CMP and the AKS.  However, OIG noted that for the following reasons below, it would not impose sanctions under these authorities and found the proposed arrangement to be a low fraud risk.

  • The charitable organization would forgive debt only after the provider attempted and failed to collect the debt and was based on an individualized determination of financial need.  Therefore, there would be no blanket debt forgiveness or cost-sharing waiver concerns.
  • Providers would have to agree not to publicize the sale or donation of debt to the charitable organization.
  • The proposed arrangement should not lead to increased costs to federal health care programs because the debt forgiveness would take place only after the provider rendered the services with the expectation of collecting payment and attempted to collect payment. 
  • The proposed arrangement does not materially affect the status quo as providers already have a financial interest to try to collect the medical debt.  If the provider is unable to collect the debt, it may write off the debt or sell it to a debt purchasing company, even in the absence of an arrangement with a charitable organization.
  • Donors to the charitable organization would have only limited control over how their donations could be used to forgive medical debt, removing concern that individual donors would target particular patients, treatment types, or patients covered by a particular type of insurance.

As with all OIG Advisory Opinions, this AO applies only to the requestor, should not be relied upon by other parties and is not binding on any agency other than HHS.  The AO does, however, give providers insight as to how a similar arrangement may be enforced.

Advisory Opinion 20-04 is available here

Reporter, Michael L. LaBattaglia, Washington, D.C., +1 202 626 5579,


Stark Law, Anti-Kickback Statute, and CMP Law Final Rules Under Review by the Office of Management and Budget – On July 21, 2020, the White House Office of Management and Budget (OMB) began reviewing two sets of final rules that would amend the regulations implementing the federal Stark Law, the Anti-kickback Statute, and the beneficiary inducements prohibition under the civil monetary penalties (CMP) law. In October 2019, CMS and OIG released highly anticipated proposed rules that addressed value-based arrangements, proposed major changes to key Stark Law concepts and definitions, addressed the donation of cybersecurity technology and services and created flexibility to provide patient incentives in value-based arrangements and with respect to telehealth.  The period for OMB’s review is limited to 90 days but may be extended indefinitely by the head of the rulemaking agency.  OMB may also extend the review period on a one-time basis for no more than 30 days. King & Spalding’s summary of the 2019 proposed rules can be viewed here.   

HHS Publishes Notice Informing Provider Relief Fund Recipients of the Timing of Future Reporting Requirements – Under the Provider Relief Fund terms and conditions, each recipient is required to submit reports to HHS. On July 20, 2020, HHS published a notice informing recipients of payments exceeding $10,000 in the aggregate of the timing of future reporting requirements.  The relevant dates are provided below:

  • HHS will release detailed reporting instructions by August 17, 2020. 
  • The reporting system will become available on October 1, 2020.
  • All recipients must report on their expenditures through the period ending December 31, 2020 within 45 days of the end of calendar year 2020.
  • Recipients who have expended funds in full prior to December 31, 2020 may submit a single final report at any time during the window that begins October 1, 2020, but no later than February 15, 2021.
  • Recipients with funds unexpended after December 31, 2020 must submit a second and final report no later than July 31, 2021.