Key Takeaways:

• The Medicare over-the-counter (OTC) COVID-19 test demonstration program has ended, which means Medicare will no longer reimburse providers for furnishing home tests to Medicare beneficiaries.
• Although the program is over, the Centers for Medicare & Medicaid Services (CMS) and the U.S. Department of Justice (DOJ) have taken an interest in reviewing whether providers complied with the requirements for the program.
• The government has multiple options to either audit or investigate providers that received reimbursement under the program. Such review could come from (1) administrative audits conducted by a CMS contractor, (2) a civil investigation under the False Claims Act (FCA) or (3) a criminal investigation. The DOJ has already indicted at least one provider for claims submitted under this program, and more enforcement activity is expected.

In April 2022, CMS announced an initiative to pay for Medicare beneficiaries to receive free OTC COVID-19 test kits. Specifically, Medicare established a demonstration project to pay various eligible healthcare providers to furnish eight OTC tests per month per individual Medicare beneficiary for the duration of the limited program. The list of provider types eligible to furnish and bill for OTC COVID-19 tests was broad and included physicians, nonphysician practitioners, clinics, hospital outpatient departments, independent laboratories and certain pharmacies, among many others. Simply put, this program enabled numerous providers to receive Medicare reimbursement for shipping the OTC test kits directly to the homes of Medicare patients without needing an order from a physician.

On May 11, CMS ended this program, and Medicare stopped paying providers for these OTC tests. Although the program has ended, the federal government is still very interested in reviewing providers that submitted claims to Medicare as part of this program. Recently, the DOJ indicted a physician in Florida for allegedly conspiring to defraud Medicare by submitting claims for “over-the-counter COVID-19 tests that were medically unnecessary and ineligible for reimbursement.” The indictment alleges that the provider shipped the OTC tests to Medicare beneficiaries regardless of whether they requested them, and Medicare purportedly paid a total of $2.6 million for these claims.

Criminal prosecution is not the only tool the government has to review claims submitted under this program. Another option is using CMS program integrity contractors who have the authority to request records and perform administrative audits related to claims submitted to Medicare. Through such audits, CMS can claw back payments if providers are unable to produce adequate documentation to demonstrate that patients requested the tests furnished by the provider. Additionally, under the FCA, the Civil Division of the DOJ has the ability to review providers’ participation in this program by issuing civil investigative demands (CIDs) for records and testimony. The penalties under the FCA are severe, such that a provider found liable for furnishing unnecessary OTC tests under this program could be forced to pay back three times the Medicare payments, along with other civil fines.

Thus the government has powerful tools to investigate and pursue enforcement actions against all types of healthcare providers, and the recent indictment is likely just the beginning of the government’s interest in pursuing investigations and enforcement actions related to this program. Any provider that received Medicare reimbursement through this program should be on the alert and be ready to provide adequate records to demonstrate their full compliance with the program’s requirements if they receive an audit request, a subpoena or a CID.

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