COVID-19 Fraud is Now a Government Top Priority: Are You Ready?


COVID-19 Fraud is Now a Government Top Priority: Are You Ready?


The U.S. Department of Justice (DOJ) and the U.S. Department of Health & Human Services Office of the Inspector General (HHS-OIG) are rapidly stepping up nationwide efforts to identify and combat civil and criminal fraud related to COVID-19 funding, and stakeholders are on notice. 

Now is the time to refocus internal compliance efforts, employee training and record-keeping hygiene as the government enters the next phase of its accountability efforts.


DOJ Personnel + Strategy Shift: COVID-19 Enforcement a Top Priority

Attorney General Merrick B. Garland recently highlighted DOJ’s commitment “to using every available federal tool — including criminal, civil, and administrative actions — to combat and prevent COVID-19 related fraud,” highlighting thousands of ongoing investigations. 

DOJ has put in place new strike teams to enhance the agency’s existing efforts, which will include additional analysts and data scientists to review data, agents to investigate the cases and prosecutors to bring them to court. The message is clear: It’s preparing for the “next phase in the Justice Department’s efforts to fight pandemic fraud.”  

Indeed, in early March, DOJ announced the appointment of a director for COVID-19 fraud enforcement “to lead the agency’s criminal and civil enforcement efforts to combat COVID-19 related fraud, along with the latest results of criminal and civil enforcement actions that include alleged fraud related to over $8 billion in pandemic relief.” They expect to hire more than 100 new prosecutors and hundreds of FBI agents to focus entirely on pandemic-related fraud enforcement.

DOJ is putting the industry on notice that COVID-19 enforcement remains central to its mission. At the Federal Bar Association Qui Tam Conference, Acting Assistant Attorney General Brian M. Boynton highlighted DOJ’s enforcement priorities, which include fraud related to the pandemic, electronic health records. and cybersecurity. In his remarks, Boynton touted the DOJ Civil Division’s “sophisticated data analytics” that “identify patterns across different types of healthcare providers giving [DOJ] a way to identify trends and extreme outliers.” 

The Justice Department, along with HHS-OIG, increasingly rely on sophisticated data-mining programs to identify cases that qui tam relators might not otherwise recognize. Recent success with data programs related to Medicare Advantage plans and opioids, and other lessons learned identifying fraud over the last decade in the Troubled Asset Relief Program, translate well to the government’s current COVID-19 efforts.

HHS Watchdog Audit Will Bring Additional Attention to Hospitals

Meanwhile, in a recent HHS-OIG Work Plan update, the agency announced the Office of Audit Services (OAS) will audit a specific feature of the Provider Relief Fund (PRF) program administered by the Health Resources and Services Administration (HRSA): hospital compliance with the PRF balance billing requirement for out-of-network patients.  

Under the PRF terms and conditions, hospitals are eligible for PRF distribution payments if they attest to specific requirements. This includes a requirement that providers, such as hospitals, must not pursue the collection of out-of-pocket payments from presumptive or actual COVID-19 patients in excess of what the patients otherwise would have been required to pay if the care had been provided by in-network providers. This restriction includes deductibles, copayments and balance billing.

HRSA has clarified a presumptive case of COVID-19 is a case where a patient’s medical record documentation supports a diagnosis of COVID-19, even if the patient doesn’t have a positive in vitro diagnostic test result in his or her medical record. This injects significant room for disagreement where the medical record is not conclusive, or where documentation errors exist.

In this nationwide audit, OIG will determine whether hospitals that received PRF payments and attested to the associated terms and conditions fully complied with the balance-billing requirement for COVID-19 patients.

OIG plans to (1) assess how hospitals calculated bills for out-of-network patients admitted for COVID-19 treatment, and (2) review supporting documentation for compliance. They’ll also evaluate procedural controls and monitoring efforts to ensure compliance with the balance-billing requirement.

OIG estimates issuing an audit report in 2023, though the agency has considerable leeway as to the final issuance date. PRF compliance remains a top priority across multiple agencies, and hospitals should expect continued pressure to provide materials to OAS. Now is the time to proactively review records and policies, in anticipation of OIG’s pressure on HRSA.

HRSA Reporting

Separately, the new provider relief bureau at HRSA is just beginning to unpack the volumes of mandatory PRF Period 1 spending reports due last November, with Period 2 reports due March 31, 2022.  Providers who failed to meet these deadlines are out of compliance with the PRF terms and conditions and must return payments to HRSA

Letters to delinquent parties demanding repayment are already underway, and appeal rights appear non-existent. Additionally, non-compliant providers can’t receive or retain future PRF payments, including any applicable Phase 4 payments. Providers must take care to avoid retaining such funds if they failed to satisfy the reporting deadlines for either period.  

With pressure from OIG targeting HRSA’s expanded role during the pandemic, we don’t expect much leniency from HRSA’s provider relief bureau where statutory, regulatory or sub-regulatory guidance wasn’t followed. But the bureau is new and faces uncharted territory ahead.   

What to Expect Over the Coming Months

We anticipate DOJ and OIG affirmative caseloads, along with qui tam actions, to increase substantially. While DOJ has achieved early success with blatant pandemic fraud cases, we expect more sophisticated challenges to emerge, bolstered by data analytics and an eager whistleblower’s bar. In particular, documentation errors and omissions related to pandemic funding — that at the time may have been overlooked due to staffing shortages and other health-related priorities — may not be forgiven as the world moves beyond the pandemic.

What You Can Do Now
  • Now is the time to redouble internal compliance mechanisms, including data monitoring or internal analytics tools to identify potential non-compliance before DOJ or OIG issues a subpoena or civil investigative demand.
  • Emphasizing internal hotline procedures and investigating complaints in earnest will find favor with regulators and may avoid costly qui tam litigation.
  • Expect HRSA to work with OIG and DOJ where entities failed to meet the first two reporting deadlines and refused to return PRF funds, or actively retained additional funds.
  • While the reporting portals are closed and no appeal or reopening rights exist, delinquent providers and counsel should attempt to engage with the provider relief bureau early, as that agency is still learning from the PRF experience. It remains unclear whether HRSA will offer additional guidance for situations involving legitimate mistakes.

Hospitals should prepare for potential document requests related to OIG’s PRF balance-billing audit, and if they identify potential non-compliance early, they should work with counsel to determine next steps. While OIG audits don’t require the subject agency to take action, often these public-facing reports alert DOJ and whistleblowers alike to new theories and targets. HRSA doesn’t appear to operate a self-disclosure program, but counsel can evaluate other interactions with the agency before court proceedings begin.  

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These materials are for general informational purposes only. These materials do not, and are not intended to, constitute legal or compliance advice, and you should not act or refrain from acting based on any information provided in these materials.Neither Ensemble Health Partners, nor any of its employees, are your lawyers.Please consult with your own legal counsel or compliance professional regarding specific legal or compliance questions you have.