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National respiratory and home medical equipment provider Apria Healthcare recently agreed to a $40.5 million settlement. A whistleblower alerted authorities to fraudulent billing practices. The U.S. Attorney’s Office, Southern District of New York, made the announcement.

The lawsuit claimed that Apria submitted claims to federal health programs, like Medicare and Medicaid. The claims sought reimbursement of the rental of non-invasive ventilators (NIVs). The lawsuit stated that the company did not know if the beneficiaries were continuing to use them or if the NIVs were medically necessary.

A non-invasive ventilators is a kind of complex respiratory equipment that can dynamically modify the pressure level of air delivery.

Whistleblower Settlement Terms

The settlement stems from a whistleblower case filed by three former Apria employees. The filed under the qui tam provisions of the False Claims Act. This law permits private persons – known as “relators” – to file civil cases on behalf of the United States and share in the recovery.

U.S. District Judge Edgardo Ramos approved the settlement on December 18th. It provides that Apria will pay $37.6 million of the total $40.5 to the United States. Apria will pay the remaining money to various states. In addition, the settlement states that Apria made extensive factual admissions regarding its conduct, including that the company relied on the respiratory therapists in its branches to monitor patients’ usage of their NIV devices.

However, Apria’s respiratory therapists were thought to regularly visiting these patients to assess whether they used their NIV devices in accordance with their physicians’ instructions. The whistleblower said the company’s respiratory therapists frequently failed to conduct those regular visits to NIV patients. For instance, an internal analysis found that in December 2016, Apria’s respiratory therapists failed to complete more than 50% of the visits they were supposed to conduct. Apria continued to request monthly reimbursement from federal health programs for the NIV rentals. It made these requests despite respiratory therapists frequently failing to conduct the in-home verification of use visits.

Further, when Apria respiratory therapists recorded that the visits showed patients had ceased the use of their NIVs, the company often didn’t stop seeking reimbursement or work to determine if the NIV rentals were still medically necessary.

U.S. Attorney’s Statement

“It is critical to the financial integrity of federal health programs like Medicare and Medicaid that reimbursements are made only for medically necessary items and services. DME providers like Apria have an obligation to ensure that the equipment and devices they rent to patients are medically necessary,” acting U.S. Attorney Audrey Strauss said. “When companies knowingly disregard that obligation to maximize their profits, this Office will hold them accountable for their fraudulent conduct.” Strauss also thanked the whistleblower for assistance in the case.

“Apria’s conduct compromised the integrity of the Medicare and Medicaid programs, and needlessly increased the financial burden on taxpayers,” HHS-OIG Special Agent in Charge Scott J. Lampert added. “Along with our law enforcement partners, HHS-OIG will continue to ensure that those individuals and entities that bill federal health care programs improperly are held accountable for their actions.”

Also, the Office of Personnel Management (OPM) Office of Inspector General Deputy Inspector General Norbert E. Vint said: “The OPM OIG is committed to fighting all forms of health care fraud. As demonstrated by this settlement, providers that exploit federal health care programs by submitting false claims will be held accountable.”

The Complaint’s Allegations

In 2014, Apria made the decision to prioritize the expansion of its NIV rental business. Health care programs like Medicare paid up to $1,400/month to cover NIVs.

But this move jeopardized Apria’s compliance with the basic medical necessity requirement of federal health programs. In fact, although Apria was aware that it was responsible for monitoring patients’ utilization of their NIVs and to stop billing when NIVs were no longer being used, it did not have enough staff, or “respiratory therapists,” to conduct this monitoring. Thus, the company regularly invoiced Medicare and other aid programs when it could not verify that patients were still using NIVs. Moreover, the company frequently kept billing the federal health programs. The company did this even though it had information indicating that patients were no longer using their NIVs.

Whistleblower Identified Additional Illicit Practices

Apria also engaged in two other types of improper practices to illicit added NIV orders and higher profits. Apria improperly billed federal health programs for certain NIV rentals that were being used in a setting called “PAC mode.” This provides bi-level pressure support therapy, which was available from a less expensive device and didn’t qualify for reimbursement at the NIV rate. In addition, the company also improperly waived co-pays for a number of Medicare and TRICARE beneficiaries to induce them to rent NIVs.

Managers at several Apria’s branches ordered their salespeople to routinely discuss the availability of co-pay waivers with NIV patients. Some orders came before the patients raised concerns about their ability to make these payments. In many instances, these managers also authorized salespeople to offer co-pay waivers to persuade patients to rent NIVs from Apria instead of other suppliers.

In addition, during the Covered Period, Apria gave full co-pay waivers to hundreds of NIV patients. They gave them without any assessment as to whether those patients could afford some portion of their co-pay responsibilities.

Apria also Enters into Corporate Integrity Agreement

In connection with the settlement, Apria also entered into a Corporate Integrity Agreement with HHS-OIG. This requires the company to implement board oversight, a claims review process by an independent review organization, and other compliance steps with the objective of bolstering its compliance with federal health care program requirements and thereby protecting the programs.