Ep. 61 – Three Compliance Lessons from a False Claims Act Verdict

In a recent False Claims Act case, a long-term care pharmacy and consulting services provider was found liable for submitting false claims to the government, resulting in a jury verdict of over $135 million in damages. The verdict drew attention for its size and the fact that it actually went to trial. Although the defendants are likely to appeal, the allegations in this case demonstrate three important compliance lessons for healthcare providers. We discuss these lessons and important takeaways from the allegations in this case on our podcast this week.

Lesson #1: Understand and comply with the conditions of payment

Conditions of payment are non-negotiable requirements—like a valid prescription meeting state law requirements—that must be met to bill a government health care program for a service. If these aren’t satisfied, any claim submitted is likely to be considered false. It’s essential for compliance officers to:

• Know the conditions tied to each reimbursable service.
• Incorporate these into internal policies.
• Routinely audit to ensure compliance.

Lesson #2: Follow through on compliance issues

Compliance officers must ensure that:

• Identified risks are addressed promptly, especially if the risk is resulting in claims being submitted for services not meeting a condition of payment.
• Systems or processes creating non-compliant billing are fixed.
• Overpayments are calculated and returned.

If internal stakeholders resist addressing compliance concerns, consider escalating the issue, involving outside counsel, or including it in the organization’s formal risk assessment.

Lesson #3: Scrutinize automation and IT systems

Automation can streamline healthcare operations—but also introduce compliance risks. Healthcare organizations should:

• Involve compliance in the design and implementation of IT systems impacting billing or patient care.
• Audit automated tools to ensure they support—not undermine—compliance with billing rules.
• Be proactive in identifying how technology could create problems meeting a condition of payment before systems go live.

Final Thoughts
This recent False Claims Act case is a high-stakes reminder of the importance of ensuring conditions of payment are met before submitting claims to government payers. By understanding conditions of payment, acting swiftly to fix any failure to meet the conditions of payment, and carefully managing automation tools, healthcare organizations can protect themselves from costly legal consequences.

For more practical guidance on auditing for compliance with conditions of payment, check out Episode #32 of The Healthcare Compliance Pod.