Fresenius slapped with record FCA settlement worth $486B

By MATTHEW HAY

HHBR Washington Correspondent

Fresenius Medical Care, the world’s largest provider of kidney dialysis products and services, entered into the largest healthcare fraud settlement ever Jan. 19, when it agreed to pay the U.S. government $486 million to settle an investigation of National Medical Care (NMC), its kidney dialysis subsidiary. The agreement was announced at the U.S. Courthouse in Boston.

In all, three NMC subsidiaries agreed to plead guilty to three separate conspiracies and hand over a record $101 million in criminal fines. Fresenius also agreed to pay a record $385 million to resolve related, civil False Claims Act accusations. The whistle blowers in the case will pocket $65.8 million.

The settlement may signal healthcare providers that the government is now pursuing some fraud investigations, said healthcare attorney Eugene Tillman with Reed Smith Shaw & McClay (Washington).

Medicare, the principal source of NMC’s reimbursement, covered intradialythic parenteral nutrition (IDPN) under the prosthetic device benefit only if the patient suffered from a severe pathology of the alimentary tract, which did not allow absorption of sufficient nutrients. It was not covered as a supplemental nutrition even if it was prescribed by a physician to treat malnutrition.

According to Tillman, the first set of issues surround false documentation to support medical necessity. "What is interesting here is that you had a longstanding issue about whether the IDPN coverage criteria are too restrictive or whether the durable medical equipment regional carriers are interpreting them too narrowly" said Tillman.

He said there have been numerous denials and appeals, but that this case extends well beyond those cases.

"What is alleged here," he explained, " is manufacturing medical necessity documentation, including information that was false and known to be false."

The second area Tillman highlights involves IDPN administration kits. He said disputes frequently surface over whether a carrier is properly interpreting the law and guidance or is being unduly restrictive.

"At the root of the allegation is basically not a statute and not a regulation, but a directive from a carrier," asserted Tillman. He said that suggests that even when providers are dealing with directives, they must be cautious. "The fact that it involves a carrier guideline is not going to immunize you from potential liability, including criminal liability," he warned.

Tillman also pointed to the government’s interpretation of IDPN bag-hanging fees. He said it has been debated for years whether bag-hanging fees are appropriate, but he added that in this case, the government is focusing on what they consider a manipulation of numbers. "The underlying issue here that is raised in the context of a conspiracy charge is whether the payment of a bag-hanging fee to a dialysis provider is a kickback in order to induce the dialysis provider to use the IDPN company that is offering the bag-hanging fee," he explained.

"What is interesting is the government comes very close to acknowledging that a payment to an IDPN supplier to a dialysis facility would be proper, so long as it is based on the actual cost that the dialysis facility incurred in supporting the delivery of the IDPN," he added.