[Federal Register Volume 66, Number 134 (Thursday, July 12, 2001)]
[Notices]
[Pages 36583-36585]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-17484]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of Inspector General


Publication of OIG Special Advisory Bulletin on Practices of 
Business Consultants

AGENCY: Office of Inspector General (OIG), HHS.

ACTION: Notice.

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SUMMARY: This Federal Register notice sets forth a recently issued OIG 
Special Advisory Bulletin addressing certain questionable marketing and 
other practices by independent business consultants. These practices 
may put the Medicare and Medicaid programs at increased risk of fraud 
and abuse. The purpose in issuing this bulletin is to alert providers, 
suppliers and others to those practices.

FOR FURTHER INFORMATION CONTACT: Vicki Robinson, Office of Counsel to 
the Inspector General, (202) 619-0335.

SUPPLEMENTARY INFORMATION: In an effort to identify and eliminate 
fraud, waste and abuse, the Office of Inspector General (OIG) 
periodically develops and issues Special Advisory Bulletins to alert 
health care providers about industry practices and arrangements that 
potentially pose a risk to the Federal health care programs. The 
purpose of this Special Advisory Bulletin is to identify certain 
questionable practices that are engaged in by a small number of 
consultants and to emphasize the need for health care providers to 
exercise good business judgment when selecting and relying on a 
consultant. A reprint of the recently issued Special Advisory Bulletin 
follows.

Special Advisory Bulletin on Practices of Business Consultants (June 
2001)

Introduction

    The Office of Inspector General (OIG) was established at the 
Department of Health and Human Services (HHS) by Congress in 1976 to 
identify and eliminate fraud, abuse, and waste in the Department's 
programs, including the Medicare and Medicaid programs, and to 
promote efficiency, economy, and effectiveness in departmental 
operations. Historically, the OIG has

[[Page 36584]]

primarily carried out this mission through a nationwide program of 
audits, investigations, and inspections. More recently, the OIG has 
augmented its efforts to detect fraud, abuse, and waste with 
increased efforts to promote prevention through the issuance of 
guidance to the health care industry.
    Providers, suppliers, and others \1\ involved in the health care 
industry not only serve the health care needs of Federal program 
beneficiaries, but they also play an essential role in safeguarding 
the integrity of the Federal programs. As part of our commitment to 
working with industry, we want to alert providers to certain 
marketing and other practices used by some independent consultants 
that should concern providers and that may put the Medicare and 
Medicaid programs at increased risk of abuse. While some of the 
practices described in this bulletin may not themselves rise to the 
level of fraud and may not be illegal in all cases, all of the 
practices increase the risk of abuse of the Medicare and Medicaid 
programs. We encourage providers to recognize and protect themselves 
and the Federal programs against these questionable practices. 
Providers use the legitimate services of consultants, such as 
accountants, attorneys, business advisors, and reimbursement 
specialists, for many bona fide reasons, including, for example, 
improving the efficiency and effectiveness of the provider's 
operations (including its coding and billing systems), enhancing the 
accuracy of the provider's claims, conserving resources through 
outsourcing, and ensuring compliance with applicable laws, 
regulations, and rules. Responsible consultants play an integral 
role in developing and maintaining practices that enhance a client's 
business objectives, as well as improving the overall integrity of 
the health care system.
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    \1\ For purposes of simplicity, the term ``providers'' as used 
in this bulletin refers to providers, suppliers, and practitioners 
that provide items or services payable in whole or in part by a 
Federal health care program.
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    We believe that most consultants, like most providers, are 
honest and that the vast majority of relationships between providers 
and consultants are legitimate business activities. Unfortunately, a 
small minority of unscrupulous consultants engage in improper 
practices or encourage abuse of the Medicare and Medicaid programs. 
Depending on the circumstances, these practices may expose both the 
consultants and their clients to potential legal liability.\2\ 
Hiring a consultant does not relieve a provider of responsibility 
for ensuring the integrity of its dealings with the Federal health 
care programs.
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    \2\ The practices described in this bulletin are illustrative, 
and this bulletin does not purport to identify every potentially 
improper practice arising from the relationship between a provider 
and a consultant, nor does it purport to identify every potential 
violation of the criminal or civil statutes. In particular, this 
bulletin is not intended to identify every potential violation of 
the False Claim Act or the anti-kickback statute, although some of 
the practices described may contribute to, or increase the risk of, 
violations of these provisions. This bulletin does not address the 
many fraud and abuse concerns that arise from sham consulting 
arrangements.
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Questionable Practices

    To safeguard themselves, providers engaging the services of 
consultants should be alert to the following questionable practices:
    Illegal or Misleading Representations. Consultants may make 
illegal or misleading statements or representations about their 
relationship with the Medicare program, the Centers for Medicare and 
Medicaid Services (CMS),\3\ or the OIG. For example, consultants may 
misrepresent that they have ``inside'' or ``special'' access to the 
OIG or to OIG materials. In other cases, consultants may 
misrepresent that their services or products are approved, 
certified, or recommended by Medicare, CMS, HHS, or the OIG. Such 
claims are misleading and potentially harmful to well-meaning 
providers. Illegal or misleading statements or representations 
include, for example:
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    \3\ The Health Care Financing Administration (HCFA) renamed the 
Centers for Medicare and Medicaid Services; misuse of the new or 
former name would be equally deceptive.
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     An educational consultant misrepresenting that its 
Medicare reimbursement seminars are mandatory for obtaining or 
maintaining a Medicare provider number. Although such training may 
be valuable, the Medicare program does not require a provider to 
attend training courses in order to participate in the Medicare 
program.
     A consultant misrepresenting that a provider that fails 
to attend its ``Medicare-sanctioned'' seminars will be subject to 
Government penalties. In truth, the Government does not penalize 
providers for such conduct.
     A consultant improperly using Federal program logos or 
symbols on its marketing materials.\4\
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    \4\ Section 1140 of the Social Security Act prohibits the 
improper use of the words ``Medicare'', ``Medicaid'', ``Health Care 
Financing Administrator'', ``HCFA'', ``Department of Health and 
Human Services'', ``DHHS'', ``Health and Human Services'', ``HHS'', 
``Social Security'', ``Social Security Account'', ``Social Security 
System'', ``Social Security Administration'', ``Supplemental 
Security Income Program'', ``SSI'', and ``SSA'', and any variation 
on these words, as well as the symbols or emblems for the SSA, HCFA 
and HHS. Violations are punishable by civil money penalties of 
$5,000 per violation (in the case of mail solicitation or 
advertisement, each piece of mail constitutes a separate violation) 
or $25,000 in the case of a broadcast or telecast. The OIG enforces 
this authority.
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     A consultant claiming that it is recommended by the 
OIG. The OIG does not recommend or endorse particular consultants or 
particular consultants' services.
     A compliance consultant falsely asserting or implying 
that it offers recognized accreditation or certification for 
compliance programs or compliance officers.
    Promises and Guarantees. Consultants may explicitly or 
implicitly promise or guarantee specific results that are 
unreasonable or improbable. In some cases, consultants may resort to 
improper means to effectuate these promises or guarantees, such as 
submitting false claims or preparing false cost reports on behalf of 
a client. This misconduct potentially subjects both the consultant 
and the provider to liability under the False Claims Act.\5\ 
Problematic promises would include, for example:
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    \5\ The False Claims Act ascribes liability only where the party 
knows or acts with reckless disregard or deliberate ignorance of the 
falsity of the claim.
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     A valuation consultant promising or assuring a client 
that its appraisal of a physician's practice will yield a ``fair 
market value'' that satisfies the client's need for a particular 
valuation, regardless of the actual value of the practice.
     A billing consultant promising a prospective client 
that its advice or services will produce a specific dollar or 
percentage increase in the client's Medicare reimbursements. The 
consultant's fee is often based on a percentage of this increased 
reimbursement.
    Encouraging Abusive Practices. Some consultants may knowingly 
encourage abuse of the Medicare or Medicaid programs. In some cases, 
reimbursement specialists or other consultants advocate that their 
clients engage in aggressive billing schemes or unreasonable 
practices that are fraudulent or abusive of the Medicare or Medicaid 
programs. This conduct potentially subjects both the consultant and 
the client to liability under the False Claims Act. For example:
     A reimbursement specialist may suggest that a client 
use inappropriate billing codes in order to elevate reimbursement 
and may describe methods to avoid detection.
     A consultant may encourage a client to modify or 
customize a routine medical supply in an insignificant manner to 
justify billing the supply as a device that generates higher 
reimbursement.
     A reimbursement specialist may advise a client to bill 
for an expensive item or service with a high reimbursement rate when 
a less expensive item or service with a lower reimbursement rate was 
actually provided to the patient.
     A consultant may advise a client to adopt a patently 
unreasonable interpretation of a reimbursement law, regulation, or 
rule to justify substantially greater reimbursement.
     A consultant may promise to increase Medicare revenues 
for laboratory services by showing its clients how to disguise 
double billings and claims for medically unnecessary services.
     A consultant may suggest the creation of deceptive 
documentation in order to mislead potential reviewers.
    Discouraging Compliance Efforts. Some consultants may make 
absolute or blanket statements that a client should not undertake 
certain compliance efforts (such as retrospective billing reviews) 
or cooperate with payor audits, regardless of the client's 
circumstances. As reflected in the OIG's compliance guidances,\6\ 
the OIG believes that voluntary compliance efforts, such as internal 
auditing and self-review, are important tools for doing business 
with the Federal health care programs. Left undetected and, 
therefore, unchecked and

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uncorrected, improper billing or other conduct may exacerbate fraud 
and abuse problems for a provider in the future.
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    \6\ The OIG's compliance guidances are available on our webpage 
at http://www.hhs.gov/oig.
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Conclusion

    Consultants who abuse their position of trust pose a risk to 
their provider clients, to the Federal health care programs, and to 
themselves. While most consultants are honest and provide valuable 
services to their clients, a small minority engage in questionable 
practices or promote abuse of the Federal health care programs. In 
general, if a consultant's advice seems too good to be true, it 
probably is. We urge providers to be vigilant and to exercise 
judgment when selecting and relying on consultants.

    Dated: July 3, 2001.
Michael F. Mangano,
Acting Inspector General.
[FR Doc. 01-17484 Filed 7-11-01; 8:45 am]
BILLING CODE 4152-01-P