Tax Scam Includes State Returns

*This article is an original work of the ISMA and was released as an ISMA Special Alert on April 8, 2014.

Here are the details and what you need to do

Based on reports from physicians and accountants, the ISMA has previously issued several alerts about physician identity theft and tax fraud at the federal level. The ISMA has now learned the Indiana Department of Revenue (DOR) has been investigating identity theft and tax return scams at the state level as well. The DOR confirmed the scam impacts various health professionals, including physicians, nurses, dentists and oral surgeons, and noted a proliferation of such cases since March.

“The Department has been catching and stopping hundreds of the fraudulent claims and saving millions of dollars,” said Bob Dittmer, DOR spokesman.

Dittmer said the department hired eight new tax investigators whose only job is to uncover fraudulent claims.

While some fraudulent claims have been successfully identified by DOR before they were actually filed, others have not been identified as fraudulent until after they were filed. “They are viewing this as a large problem and are very concerned. While their investigation has not yet identified the source of the presumed breach, they are tracking all the cases, looking for patterns, and actively investigating and pursing leads,” said Julie Reed, ISMA general counsel, who spoke with the DOR investigation unit.

Reed also confirmed through the DOR that physicians from outside of Indiana have been affected by this. More specifically, the DOR has identified cases in which the identities of physicians located outside Indiana have been used to file fraudulent Indiana tax returns.

Physicians who have been defrauded at the state level will need to file a paper return—and are advised to do so as quickly as possible. Also, physicians who have determined that they are victims of tax fraud should notify DOR by calling (317) 232-2240. There is no complaint form to fill out, but your call will be routed properly to the investigation unit. Your state tax refund may be delayed, but only by a few weeks, according to the DOR.

If you have been victimized by this, contact your accountant immediately. They may be able to execute an IRS and State Department of Revenue Power of Attorney form, which allows them to discuss your situation with the taxing authorities on your behalf.

“We are maintaining contact with state and federal authorities. We have received assurances from the Indiana authorities that they are investigating this matter and intend to pursue it to its fullest.” Reed said.

Chuck Taylor, of the Indiana Attorney General's Identify Theft Unit, said, "Our office is actively investigating the complaints we have received to identify a common source of compromise. We urge victims to monitor their credit reports to detect any additional fraudulent use of their personal information. Anyone who believes they have been affected should file an identity theft complaint.”

You can learn more about identity theft or file a complaint by visiting here.

The ISMA has offered to assist the DOR and the Office of the Indiana Attorney General in any way possible

Telehealth and Restraint/Seclusion in Schools

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On March 26, 2014, the Office of Medicaid Policy and Planning (“OMPP”) published a notice of proposed reimbursement methodology for telehealth monitoring services for Home Health Agencies (“HHA”).  In this notice, OMPP proposes to add telehealth monitoring services as a covered service for HHA and to reimburse HHA for such services.  OMPP also proposes to eliminate the current limitation for requiring the hub site, which is the location of the physician or practitioner providing the consultation services, to be greater than 20 miles from the spoke site, which is the location of the patient when the service is provided. This limitation is only being removed for telemedicine services provided by Federally Qualified Health Centers (FQHCs), Rural Health Clinics (RHCs), Community Mental Health Centers (CMHCs), and Critical Access Hospitals (CAHs).  These changes are made in accordance with Indiana Code 12-15-5-11, which was added by the General Assembly in 2013, PL 204-2013.  A proposed rule for the new reimbursable service will be published at a later date, but the proposed effective date for the new reimbursable service is October 1, 2014. The Notice of Proposed Reimbursement Methodology is available here.

On March 26, 2013, the Commission on Seclusion and Restraint in Schools published various documents regarding new rules for the use of restraint and seclusion in schools.  These published documents include an: (1) Economic Impact Statement; (2) Notice of Public Hearing, set for April 21, 2014 (Indianapolis), April 23, 2014 (Evansville) and April 24, 2014 (Chesterton); and (3) Proposed Rule.  This Proposed Rule is published in accordance with Indiana Code 20-20-40, which was added by the 2013 General Assembly, PL 122-2013.   The Proposed Rule provides rules regarding the use of restraint and seclusion in public school corporations, charter schools, and accredited nonpublic schools.  Specifically, the rules apply to: (1) all public school corporations, charter schools, or accredited nonpublic schools; (2) all public school corporations, charter schools, or accredited nonpublic schools students regardless of whether student has been identified as eligible for special education services; and (3) all programs and services subject to the supervision of the state educational agency, including those programs conducted by or through the following: (A) public school corporations, (B) charter schools, (C) special education planning districts,
(D) state agencies, or (E) other public agencies. (proposed 513 IAC 1-2-1) The Proposed Rule emphasizes the elimination or minimization of the use of restraint and seclusion and  provides: (i) guidelines regarding the use of restraint and seclusion; (ii) guidelines for the prevention of the use of potentially harmful restraints/seclusions; (iii) training requirements for the use of restraints/seclusions; (iv) guidelines for adopting and distributing the school’s seclusion/restraint policy; and (v) requirements for reporting of incidents of restraint/seclusion.   The full text of the Proposed Rule regarding the use of restraints and seclusions in schools is available here

If you have any questions, please feel free to contact Leah Mannweiler at or Meghan McNab at

A Perfect Storm: Medicare’s Release of Practitioner Billing Records

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This week, Medicare released the payment amounts received by over 800,000 medical professionals. This unprecedented move has created a lot of controversy, both regarding potential salaries of health care providers and the fact that such data does not tell the full story. In reality, the release of this data creates increased risk to patients, hospitals, and practitioners.
Patients across the country now having access to payment amounts is not itself a bad thing. Transparency is certainly an admirable objective for everyone. As CMS Administrator Marilyn Tavenner notes, "[d]ata transparency is a key aspect of transformation of the health care delivery system." I believe most would agree; however transparency lacking context can be a dangerous combination. For example, the data does not actually give insight into personal income, the fact that a group's practitioners may bill Medicare under a single National Provider Identifier number, or that the data is not indicative of quality.
From a hospital and practitioner view, these issues should certainly be concerning. However, the real risk of transparency lacking context rests upon the False Claims Act (FCA). The FCA originally was enacted during the Civil War to deter government contractors from taking advantage of the United States need for supplies and commodities during war time. A century and a half later, the FCA is consistently used as a method to deter health care fraud. For example, the Justice Department has recovered $17 billion since 2009 under the FCA.
A FCA risk can arise for hospitals and practitioners in two different scenarios. First, if a person knowingly submits a false claim or causes another to submit a false claim or knowingly makes a false statement to get a false claim paid by the government. Second, if a person acts improperly to avoid having to pay money to the government. In a nut shell, FCA liability can arise for services billed to the government but not provided, retention of overpayments, and possibly for common billing errors.  The government also includes as false claims the failure to submit documentation supporting the claim billed even if the service was provided and was medically necessary.
The real risk is that under the FCA, individual whistleblowers can file lawsuits alleging false claims on behalf of the government. In fact, in 2013 alone whistleblower lawsuits under the FCA recovered nearly $3 billion, with the whistleblowers recovering $345 million. Since the data has been released, numerous attorneys and other whistleblower organizations have begun to mine the data for clues to fraud.
Hospitals and practitioners should take a proactive approach to limiting these risks.  First, ensure internal reporting is occurring within your organization. Employees often become whistleblowers due to the fear of retaliation by the employer for reporting compliance issues.  Second, review the current data provided by CMS to ensure it is correct.  If it is not, audit your own records and make a note regarding any outliers.  Third, ensure timely and accurate submission of data to support the claim billed.  By highlighting potentially problematic areas, your organization can investigate and fix any issues moving forward.  Finally, ensure education is occurring in your organization.  This includes educating board members, executives, managers, and practitioners on these risks.
Although the jury is still out on the impact this release of data will have, it is certain to increase liability for health care organizations and practitioners.  If you have any questions about the False Claims Act, or Compliance, please feel free to contact Robert A. Wade at (574) 485-2002 or Alex T. Krouse at (574) 485-2003.