Summary

A hospital executive was recently indicted for allegedly submitting a false attestation regarding a hospital’s “meaningful use” of electronic health records (“EHR”) technology through the Medicare EHR incentive program. This marks the first criminal indictment in connection with attestations of “meaningful use.” The indictment has far-reaching implications for health care providers.

The Health Information Technology for Economic and Clinical Health Act (“HITECH”) was enacted as part of the American Recovery and Reinvestment Act of 2009 (“ARRA”) to support the development of a nationwide health information technology infrastructure that allows for the electronic use and exchange of information. A key goal of HITECH is to achieve widespread adoption and use of EHR systems.

To encourage adoption and meaningful use of EHRs, ARRA also established the Medicare and Medicaid EHR incentive programs, which provide payments to eligible professionals and hospitals that demonstrate “meaningful use” of certified EHR technology. To qualify for such incentive payments, eligible providers must attest to using certified EHR technology and meeting certain “meaningful use” objectives established by the Centers for Medicare and Medicaid Services (“CMS”).

Until very recently, CMS compliance efforts in policing the payments of these “meaningful use” dollars have been focused on causing providers to simply repay these monies, i.e., without any additional fines or penalties, or related prosecutions.

Recently, however, a hospital executive, Joe White, former chief financial officer of the now shuttered Shelby Regional Medical Center (“Shelby”) in Texas, was indicted for allegedly lying about meaningful use of EHR to secure government payments. Specifically, White is charged with making false statements and aggravated identity theft for making the attestations through a user name associated with the name and social security number of the Shelby director of nursing/assistant administrator. According to the indictment, Shelby used the EHR system only sparingly, and White directed individuals to manually input information from paper records in order to satisfy the meaningful use requirements. The alleged false statements resulted in a Medicare incentive payment of $785,000 for Shelby.  

This is the first indictment in the U.S. for falsifying attestations as to satisfying “meaningful use” goals. To date, it is estimated that hospitals and physicians have claimed more than $20 billion under the “meaningful use” EHR incentive programs. The risks to the Medicare program of fraudulent attestations was highlighted in a December 2013 report issued by the U.S. Department of Health and Human Services – Office of the Inspector General (“OIG”).¹ OIG found that CMS had not developed and implemented adequate prepayment safeguards. Specifically, OIG expressed concerns regarding the ability to verify the accuracy of hospitals’ self-reported information, because the data necessary for such verifications are not readily available.

Over the past year, CMS has been using private contractors to conduct prepayment and post-payment audits of providers who receive or have received EHR incentive payments. It is unclear whether the Shelby case came to light as a result of these audits or some other means, such as a whistleblower. This case should cause providers to pay closer attention to their attestations regarding achievement of their EHR goals in these types of investigations.

The ramifications of such investigations are far reaching. It is expected that the number of these investigations will increase significantly, as the government becomes more proficient at weeding out providers who have wrongfully attested to satisfying “meaningful use” standards. It is clear, from the criminal charges pursued in the Shelby matter, that the government is becoming much more aggressive in this area of enforcement.

It is also expected that the review of “meaningful use” attestations and moneys received through the program will become a more important part of due diligence efforts in health care buy/sell transactions, which are on the increase as providers respond to health reform under the Affordable Care Act. A prime example of the import of “meaningful use” attestations in buy/sell transactions is the self-disclosure of “meaningful use” shortcomings by Health Management Associates, prior to its acquisition by Community Health Systems, Inc., resulting in approximately $31 million being returned to the government.

1    Department of Health and Human Services – Office of Inspector General, “Not All Recommended Fraud Safeguards Have Been Implemented in Hospital EHR Technology,” December 2013, OEI-01-11-00570_.