With Enforcement Actions on the Rise, Behavioral Providers Must Improve Compliance Plans for Protection

The nation is finally starting to realize the importance of behavioral health care. As a result, providers have more reimbursement options than ever.

Commercial payers have become a bigger part of the picture thanks to parity requirements, and Medicaid and Medicare reimbursement opportunities continue to grow. But with more money comes more problems, especially on the compliance front.

“Anytime there’s a greater spend, there’s a greater focus from a compliance standpoint and an enforcement standpoint,” Polsinelli shareholder Bragg Hemme told Behavioral Health Business.


Polsinelli is a national law firm with more than 900 attorneys across 21 cities. Behavioral health is one area of focus for the firm, as well as for Hemme. She often represents behavioral health providers navigating relatively new relationships with government payers.

“We are working with a lot of our behavioral health care providers that are getting into Medicare and Medicaid for the first time, or they’re seeing an expansion of it,” Bragge Hemme said. “But over the last couple of years, we’ve also seen a huge increase in activity around both government … [and] private plan enforcement.”

As such, compliance has become more important than ever for behavioral health providers, especially those working with federal health care programs for the first time.


Rules vary between private and public payers, with Medicare and Medicaid imposing strict, unique rules for program participants. Two of those include the False Claims Act and the Anti-Kickback Statute.

The False Claims Act imposes liability on any person or company that defrauds governmental programs. Meanwhile, the Anti-Kickback Statute says that physicians can’t self-refer from one business to another business that they have a financial relationship with, unless certain exceptions apply.

But those rules are more complicated than they sound — and often difficult to follow correctly. Plus, punishments for breaking those rules are often harsher than what providers would see on the commercial side.

“The hammer is much more significant,” Hemme said. “The penalties are higher, and you’re at-risk for losing your enrollment in a Medicaid program or Medicare.”

CleanSlate example

In recent years, Polsinelli has dealt with “a number of cases” in which behavioral health organizations were hit with subpoenas or civil investigative demands as a result of government enforcement, according to Jennifer Evans, who is also a shareholder at the law firm.

While not a client of Polsinelli’s, CleanSlate Centers is one of the most recent providers to fall victim to such enforcement.

With dozens of locations in 11 states, CleanSlate is a medication-assisted treatment (MAT) provider that also owns and operates an independent clinical laboratory in Holyoke, Massachusetts.

In October, Massachusetts Attorney General Maura Healey sued the provider for allegedly defrauding the state Medicaid program.

The lawsuit claims that CleanSlate submitted millions of dollars worth of false claims for unnecessary drug tests and that it violated state and federal self-referral laws by sending those tests to its sister lab.

Meanwhile, CleanSlate has denied the any wrongdoing.

“We are disappointed with the Attorney General’s decision to intervene in this matter,” a company spokesperson told BHB in October. “We strongly believe this claim is without merit, and we look forward to the opportunity to demonstrate in court that the care provided to our patients was outstanding and the lab tests that were ordered were medically necessary. Maintaining a culture of integrity is of the utmost importance to our company and we remain confident that our business practices and policies fully comply with both federal and state law.”

Providers should heed the lawsuit as a warning to be very careful and take preventative compliance measures when working with federal payers, Evans told BHB.

“It looks like from the complaint that … Clean Slate was cognizant of these laws, and they were trying to get it right,” she said. “But the government has put forward some novel theories that they didn’t get it right, and that there were significant violations of that federal law.”

For example, the lawsuit uses a somewhat uncommon application of Stark law rules, faulting CleanSlate for sending drug tests to its sister lab, Evans said. 

“In a traditional business environment, if one company owns another company that furnishes a service that they need, of course they’re going to work with their sister company,” she said.

She used the example of a car manufacturer that owns a tire company. It makes sense for the car company to buy tires from its sister organization. But in health care, when the federal government is the payer, you’re not allowed to do that “without a lot of bells and whistles and regulatory compliance,” Evans said.

The lawsuit alleges that CleanSlate did not comply with those rules properly.

Compliance keys

As the CleanSlate case illustrates, providers can believe they’re doing everything right and still find themselves under investigation from the government. For organizations to protect themselves, compliance is key.

As such, they should commit time, money and people toward preparing and implementing a compliance plan, Evans said. The use of outside counsel is also important, given the complex nature of many of these laws.

Successful compliance programs should include the seven elements furnished by the Office of Inspector General (OIG) for Health and Human Services, Evans and Hemme said.

That includes policies and procedures; a compliance infrastructure; effective education and training; effective communication; effective auditing and monitoring; effective investigation into violations; and a consistent disciplinary process.

Hemme advised providers to start with a risk assessment. When it comes to issues to focus on, those should include ordering labs, referral relationships, gift policies and marketing strategies, in addition to state and federal laws.

Plus, it’s important to take employee complaints seriously. Workers must feel like they have a voice — or else they could become whistleblowers down the line.

“The incentives given to private whistleblowers or relators to the False Claims Act are absolutely staggering,” Polsinelli shareholder Asher Funk told BHB. “The fact that … someone within an organization can observe what they perceived to be fraud against the government and bring an action in the name of the government … and ultimately receive a substantial portion of any recovery — you just can’t underestimate the power of that.”

Additionally, it’s important to be mindful of company goals and how they’re communicated internally, Funk said. If not conveyed correctly, company objectives such as growth could easily be harmfully twisted by whistleblowers in a lawsuit.

Finally, these considerations are also important for providers that don’t work with federal payers.

“A lot of this stuff bleeds over into the commercial space,” Polsinelli shareholder Dmitry Shifrin told BHB. “If the private payers smell blood in the water — and oftentimes they will when the government’s already coming out there — they’ll start lining up to pursue their pound of flesh, so to speak, to claw back a lot of money they perceive they probably overpaid.”

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