The American Hospital Association has issued a special legal alert to all state and local hospital associations, warning them and their teaching and tertiary-care hospital members about the new false-billing investigation launched by the government.
The legal alert, issued June 16, follows the disclosure that HHS' inspector general's office is examining whether hospitals have billed Medicare and Medicaid for medical procedures in which non-FDA-approved medical devices were used (June 20, p. 4). The investigation focuses on medical devices used in certain cardiac procedures.
Medicare and Medicaid generally don't pay providers for the use of medical devices that haven't been cleared by the FDA for marketing.
According to the AHA, the government has served at least 100 hospitals across the country with subpoenas, demanding documents related to the investigation. Hospitals must comply with the subpoenas by July 1 unless they negotiate an extension with HHS.
Many hospitals likely will seek extensions because the subpoenas seek a decade's worth of documents dating back to April 5, 1984, involving perhaps thousands of medical procedures.
The AHA alert suggested a possible connection between the investigation, which is being coordinated by the inspector general's Seattle office, and last fall's plea agreement with C.R. Bard, the Murray Hill, N.J.-based medical device manufacturer.
C.R. Bard paid the government a $61 million fine and admitted to altering cardiac angioplasty products on the market and conducting clinical trials without FDA approval (Jan. 17, p. 21).
"Such a connection is possible, and the AHA speculates that customer lists that may have been discovered in the FDA and Justice Department case were used by the (inspector general) to identify hospitals that have received the (subpoenas)," the AHA said in its alert.
The AHA also speculated that, in addition to any false-billing violations, the government may be looking at possible violations of the anti-kickback provisions of the Medicare and Medicaid fraud-and-abuse statutes. The provisions bar any form of remuneration to induce patient referrals and the use of services or devices.
The subpoenas, a copy of which was obtained by MODERN HEALTHCARE, ask the hospitals to supply the government with a list "of all payments, gifts, stock and stock options, discounts or reductions in price, services, or any other remuneration received from the manufacturers of the devices (listed above)."
In addition to seeking legal counsel, the AHA recommended that targeted hospitals negotiate an extension to comply with the subpoena as well as attempt to limit the scope of the documents being sought.
Regardless, the inspector general's office will be wading in documents, said Paul DeMuro, a healthcare attorney with Latham & Watkins in San Francisco. He represents several hospitals that have received subpoenas.
"It will be awhile before we know the results of the investigation," Mr. DeMuro predicted.