Providers Beware: Behavioral Health Fraud Investigations, Recoveries on the Rise

Most behavioral health providers agree it’s a good thing: The federal government continues to funnel more money into behavioral health initiatives, such as fighting the opioid epidemic and funding certified community behavioral health clinics (CCBHC).

But as providers find themselves with more federal dollars, they’re also more likely to face increased scrutiny over their practices, experts say.

In fiscal year 2019, the U.S. Department of Justice (DOJ) collected $2.6 billion in civil fraud recoveries from health care companies, up slightly from $2.5 billion a year earlier. While behavioral health settlements made up a relatively small portion of those, enforcement is activity in the space is on the rise, a trend Bass, Berry & Sims attorney Matthew Curley doesn’t expect to let up anytime soon.


“It’s [an area] we’re keeping an eye on,” Curley told Behavioral Health Business. “It’s fair to say that enforcement actions and recoveries regarding behavioral health providers are becoming increasingly significant components of the government’s overall enforcement efforts.”

Curley regularly represents health care organizations facing civil investigation requests or subpoenas related to the False Claims Act. His firm, which specializes in health care litigation, recently released its annual review of fraud and abuse, which highlighted several notable 2019 behavioral health settlements with the DOJ.

Among the most expensive came from publicly traded behavioral health giant Acadia Healthcare (Nasdaq: ACHC). The Franklin, Tennessee-based company agreed to pay $17 million to resolve allegations its subsidiary CRC Health in West Virginia defrauded Medicaid of $8.5 million through false claims for opioid-related lab tests.

The second two biggest settlements outlined in the report were also related to allegations of false claims for drug testing. In one instance, now-closed Milwaukee-based Acacia Mental Health Clinic and its owner agreed to pay more than $4 million. In another, Connecticut Behavioral Health Associates and its owner settled for more than $3.3 million.

The uptick in settlements like these is relatively recent.

“It wasn’t until last year in our review that we actually started to break out behavioral health providers … as a separate standalone section of settlements,” Curley explained. “We had begun to see an increasing level of enforcement activity in that part of the healthcare sector.”

Given the federal funding flowing into the industry and the media attention some unscrupulous substance abuse providers have gotten in recent years, that’s not exactly a surprise, Curley said.

Still, a number of well-intentioned providers may find themselves on the other end of government enforcement unintentionally. Even if it’s a mistake or misunderstanding, providers are often forced to settle with the DOJ in order to remain financially viable.

“Oftentimes we see behavioral health providers — or any health care providers — trying to reach some kind of resolution with the government as opposed to litigating either civilly or criminally because of the extraordinary expense that can be associated with with protracted litigation,” Curley explained.

As such, behavioral health providers should be cautious going into 2020, especially as it relates to questions surrounding medical necessity, lab testing and the referral aspect of the Anti-Kickback Statute. On top of that, the Eliminating Kickback in Recovery Act (EKRA) of 2018 should remain top of mind.

“Under the Anti-Kickback Statute, there has to be a tie to federal health care programs, but under EKRA, there’s an all-payer kickback provision, and the statute itself is not as narrowly tailored as I think it was intended to be at the outset,” Curley said.

To protect themselves, providers should implement data-rich compliance programs that can identify and reduce risk factors, as well as mediate issues when they arise. Additionally, it’s important to swiftly respond to those who raise compliance concerns, he said, as employees often become whistleblowers when they feel their concerns are not being acknowledged or addressed.

“We certainly expect that the government’s enforcement efforts will remain robust and that whistleblowing activity will continue,” he said. “Having a robust compliance program is a critical first step for behavioral health providers to make sure that they’re well positioned if and when they face a government investigation or a whistleblower lawsuit.”

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