Why Are Federally Qualified Health Centers Targeted in Healthcare Fraud Investigations??

The FQHC Program

Federally Qualified Health Centers enjoy a special, and specially valuable, corner of Medicare and Medicaid. The benefits FQHCs enjoy aren’t available to most providers. So the scrutiny of FQHCs is pretty extreme. The risk of being audited or investigated is pretty high.

FQHCs have a near-mythic place in American health care. The Health Resources and Services Administration within HHS governs the FQHC program. HRSA defines a health center this way:

Federally Qualified Health Centers are health centers funded by the HRSA Health Center Program. FQHCs serve medically underserved communities and medically vulnerable populations. In exchange for special benefits FQHCs must provide medical care regardless of a patient’s ability to pay. Fees are reduced, or “sliding fees,” and based on a patient’s ability to pay. FQHC patients have representation on the health center board.

Beyond HRSA grants, FQHCs are also paid by Medicare and Medicaid under a prospective payment system (PPS). There are several types of qualified health centers. They include:

• Community Health Centers (CHC)
• Migrant Health Centers (MHC) focus on migrant farmworkers and their families.
• Health Care for the Homeless (HCH) programs serve the homeless.
• Public Housing Primary Care (PHPC) works with people who live in public housing.

Many Americans do not know what FQHCs are. That’s a shame. Their very real accomplishments with vulnerable populations also mean FQHCs find themselves in the crosshairs of regulators a lot. A recent fact sheet from the HRSA gives a sense of scale:

• A significant number of Americans receive care at health centers.
• Many kids get their care there.
• Rural and poor folks, who have few other places to go.
• Quite a few veterans.
• Their patient load grew fast over the last two decades.

The FQHC model relies on a standard set of core services. FQHCs offer yearly checkups, screens for illness and disease, illness and injury care, mental health and nutrition counseling and referrals to specialists when necessary. Additionally, the federal government sometimes allocates funds to the model to care for specific groups. Initiatives of this kind include opioid abuse programs, HHS grants for HIV and AIDS care and other national health programs.

The Kinds of Risk FQHCs Face

What could possibly go wrong? FQHCs are dealing with Medicare and Medicaid dollars. There are many ways to violate the law, and get in hot water. Generally, the kinds of risk FQHCs face in terms of investigation come down to a few categories.

Medicare pays FQHCs a national adjusted rate. For new patients, as well as for Initial Preventive Physical Exam or Annual Wellness Visit services, the rate is 34.16 percent more than the standard payment rate for other patients. There’s a big incentive to see new patients at FQHCs. Investigators look closely for miscoding and misclassifying old patients as new ones. Investigators see high volumes of FQHC patients with IPPE or AWV visits as a red flag. FQHCs tend to take on many new patients, but volumes that are very high raise questions.

FQHC billing rules are tight, with a lot of precision and detail. Strict adherence to those rules is not optional. Otherwise, billing errors can mean the federal government will claw payments back. In the worst case, they may lead to penalties in a criminal or civil fraud investigation. Some common billing errors include:

• Billing for services by practitioners who are not FQHC practitioners.
• Patients were not seen by a practitioner one-on-one.
• Billing for homebound patients when those rules are not met.
• The reason for the visit is not medically necessary or a qualifying mental health or preventive visit.
• The G0466 visit code for new patients is billed when it should be G0467 for established patients.
• The G0469 mental health new patient code is billed when it should be G0470 for established patients.

Every FQHC is eligible for discounts for drugs in the 340B program. Every FQHC has to register before it can use the program. The FQHC must follow all rules to qualify for the 340B program continually. Improperly obtaining, dispensing or diverting discounted drugs can bring invasive inquiries and severe penalties.

FQHC compliance doesn’t stop at the points of service. The way the health center is organized, and its everyday operations, must meet strict federal standards. There’s the Health Center Program Compliance Manual, but there are other government compliance requirements. Among them, an FQHC must:

• Offer culturally competent comprehensive high quality primary care, plus support services for health education, translation and transportation, if needed.
• Serve all patients, regardless of their ability to pay, with a sliding fee scale adjusted for income.
• Build integrated patient-centered care systems specifically tailored to the needs of diverse underserved communities and populations.
• Run operations and own procedures by every Health Center Program requirement. Follow all federal, state and local law.

Based on all the specific ways there are to do things wrong, it’s not surprising that FQHCs get audited and investigated a lot. HRSA deploys its own surveyors for what it calls ”Operational Site Visits” (OSVs). Every FQHC gets an OSV, because they are critical to HRSA oversight of FQHCs. These are standardized, methodical and transparent. A poor OSV can bring penalties and payment conditions, and in some cases it triggers civil and criminal fraud investigations.

In a business where relationships are so crucial, it’s easy to run afoul of federal regulations. The federal Anti-Kickback Statute and Stark Law ban offering, paying or receiving referral fees and other remuneration. Both statutes are written in broad terms, so even very common, routine arrangements can create massive federal liability for FQHCs, physicians and other providers.

Can Be Punished in Many Ways

With broad responsibilities and a lot of rules, it follows that an FQHC can be punished in many ways. The Compliance Manual sets out the menu:

• The HRSA can change advance payments into reimbursement payments.
• Extra financial reports or monitoring of finances can be put in place.
• There may be required technical or management assistance.
• Some things may require prior approvals.
• Payments can be withheld while waiting to take more action.
• The costs of noncompliant services can be disallowed.
• There can be a full or partial suspension.
• There could be a start to a debarment process.
• Future federal awards can be withheld.
• There may be any other remedies allowed by law.

Beyond HRSA sanctions, FQHCs under investigation for fraud can face civil and criminal statutory penalties. Prosecutors can enforce a very wide range of federal laws. The three major fraud statutes are the Anti-Kickback Statute, the Stark Law and the False Claims Act. Penalties can get very serious very fast:

• Paying back Medicare and Medicaid money.
• Prepayment review of future claims, which can hold up payments for months. A business with cash flow dependent on reimbursements can find the financial disruption brutal.
• Civil monetary penalties (CMP) or criminal fines.
• Treble damages, which means triple the government’s actual losses.
• Paying the government’s legal fees.
• Losing eligibility for Medicare, Medicaid and other federal programs.
• Time in federal prison.