Moving the HME Industry Forward


OIG Self-Dislosure Protocol – Part 3

May 4, 2015

AMARILLO, TX – Today’s DME supplier is highly regulated. It must abide by a plethora of federal anti-fraud laws, including (but not limited to) the Medicare anti-kickback statute and the federal False Claims Act. Because the day-to-day operations of a DME supplier are complicated, because the documentation requirements the DME supplier must meet are complex, and because federal anti-fraud laws are broadly written, it is not uncommon for the supplier to unwittingly cross into fraud territory.

If a DME supplier discovers that it is engaging in activities that violate one or more federal anti-fraud laws, the question becomes:  What should the supplier do? One course of action is for the supplier to utilize the OIG’s Self-Disclosure Protocol (“SDP”).

Part 1 gave an overview of the SDP. Part 2 discussed the information that should be contained in the narrative that is submitted to the OIG. This Part 3 will discuss the SDP requirements for conduct involving false billings.

Requirements for Conduct Involving False Billing
When a disclosure involves the submission of improper claims to federal health care programs, the disclosing party must conduct a review to estimate the improper amount paid by the federal health care programs (referred to as “damages”) and prepare a report of its findings that follows the requirements in this section. OIG will verify a disclosing party’s calculation of damages.   

The disclosing party’s estimation of damages must consist of a review of either: (1) all the claims affected by the disclosed matter or (2) a statistically valid random sample of the claims that can be projected to the population of claims affected by the matter. A disclosing party may not extend the time to resubmit claims to federal health care programs through the SDP; therefore, the damages estimation must not include a reduction, or “netting” for any underpayments discovered in the review.

When using a sample to estimate damages, the disclosing party must use a sample of at least 100 items and use the mean point estimate to calculate damages. If a probe sample is used, those claims may be included in the 100-item sample if statistically appropriate. To avoid unreasonably large sample sizes, the SDP does not require a minimum precision level for the review of claims. As a result, the disclosing party may select an appropriate sample size to estimate damages as long as the sample size is at least 100 items. As a general rule, smaller sample sizes (closer to 100) will suffice where the population has a high level of homogeneity, and larger sample sizes will be necessary where the population contains a more diverse mixture of claim types. The disclosing party should keep in mind that a careful and complete definition of the population will assist in making accurate findings.

The disclosing party’s report must include, at a minimum, the following information:
• Review Objective: A statement clearly articulating the objective of the review.
• Population: A description of the group of claims about which information is needed, an explanation of the methodology used to develop the population, and the basis for this determination.
• Sources of Data: A full description of the source of the data reviewed and the information upon which the review was based, including the sources of payment data, and the documents that were relied upon.
• Personnel Qualifications: The names and titles of the individuals who conducted the review. The review should be conducted by qualified individuals, e.g., statisticians, accountants, auditors, consultants, and medical reviewers, and the review report should describe their qualifications.
• Characteristics Measured: The review report should identify the characteristics used for testing each item. For example, in a review designed to estimate the value of overpayments due to duplicate payments, the characteristics used are those that must exist for an item to be a duplicate. The amount of the duplicate payment is the measurement of the overpayment. The report must also explain the method for determining whether an item entirely or partially meets the criterion for having the characteristics measured.

If the financial review was based upon a sample, the review report must also include the Sampling Plan that was followed. At a minimum, this includes:
• Sampling Unit: Any of the designated elements that constitute the population of interest.
• Sampling Frame: The totality of the sampling units from which the sample was selected and the way in which the audit population differs from the sampling frame (and the effect this difference has on conclusions reached as a result of the audit).
• Sample Size: The size of the sample reviewed to reach the estimate of the damages. The sample size must be at least 100 claims.
• Source of Random Numbers: The sample must be selected through random numbers. The source of the random numbers used must be shown in the report. OIG strongly recommends the use of OIG’s Statistical Sampling Software, also known as ‘‘RAT-STATS,’’ which is currently available free of charge at
• Method of Selecting Sampling Units: The method for selecting the sample units.
• Sample Design: Unless the disclosing party demonstrates the need to use a different sample design, the review should use simple random sampling.  If necessary, the disclosing party may use stratified or multistage sampling. Details about the strata, stages, and clusters should be included in the review report.
• Missing Sample Items and Other Evidence: If the review was based on a sample, missing sample items should be treated as errors, pursuant to federal health care program rules requiring the retention of supporting information for submitted claims. Missing sample items should be noted in the report. The report must also describe any evidence, other than the sample results, that was considered in arriving at the review results.
• Estimation Methodology: If the review was based on a sample, because the general purpose of the review is to estimate the monetary losses to the federal health care programs, the methodology to be used must be variables sampling (treating each individual item in the population as a sampling unit) using the difference estimator (estimates of the total errors in the population are made from the sample differences by multiplying the average audited difference by the number of units in the population).

Minimum Settlement Amounts
OIG’s general practice is to require a minimum multiplier of 1.5 times the single damages, although in each case, OIG will determine whether a higher multiplier is appropriate. As a general practice, for purposes of settlement in the SDP, OIG applies this multiplier to the amount paid by federal health care programs, not the amount claimed. For False Claims Act submissions, OIG will require a minimum $10,000 settlement amount to resolve the matter. If OIG determines that no potential fraud liability exists for conduct disclosed under the SDP, OIG will refer the matter to the appropriate payor for acceptance of the overpayment and no CMP release will be provided.

Overpayment Reconciliation
If, prior to resolving an SDP matter, a disclosing party refunds an overpayment related to the same conduct disclosed under the SDP, OIG will credit the amount paid toward the ultimate settlement amount. However, OIG is not bound by any amount that is repaid outside the SDP process. OIG may question the methodology of the overpayment calculation, particularly if the disclosing party estimated the overpayment amount by some method other than as described in the SDP. If OIG disputes the methodology used to calculate the overpayment, OIG may require the disclosing party to redo the review or conduct an independent damages review, which may result in a damage or overpayment amount that is higher than the disclosing party’s estimate. Moreover, even if OIG agrees with the methodology used to calculate the overpayment, the disclosing party should expect to pay a multiplier on the damages under the SDP.

Jeff Baird will be presenting the following webinars in the month of May:
AAHomecare’s Educational Webinar
Value-Added Services vs. Prohibited Beneficiary Inducement: When is the Line Crossed?
Presented by:  Jeffrey S. Baird, Esq., Brown & Fortunato, P.C.
Tuesday, May 5, 2015
2:30-4:00 p.m. EASTERN TIME
It is perfectly acceptable for the HME supplier to provide services to its patients that the supplier’s competitors do not provide. This is good business. These are classified as “value-added services.” On the other hand, when a supplier offers “something of value” to induce a prospective customer (a Medicare beneficiary) to buy something from the supplier (as opposed to buying something from the supplier’s competitor), then this may result in a prohibited inducement in violation of the beneficiary inducement statute and the Medicare anti-kickback statute. The line between a value-added service and a prohibited inducement can be unclear. This program will discuss the difference between “value-added services” and “prohibited inducements” and how the supplier can be aggressive in providing great services without “crossing the line.”

Registration: Click here to register for “Value-Added Services vs. Prohibited Beneficiary Inducement: When is the Line Crossed?” on Tuesday, May 5, 2015, 2:30-4:00 pm ET, with Jeffrey S. Baird, of Brown & Fortunato, PC.
Please contact Ika Sukh at if you experience any difficulties registering.
Member: $99.00    Non-Member: $129.00

AAHomecare’s Educational Webinar
How the Losing Bidder Can Enter the Competitive Bid Arena
Presented by:  Jeffrey S. Baird, Esq., Brown & Fortunato, P.C.
Thursday, May 28, 2015
2:30-4:00 p.m. EASTERN TIME
Sadly, there are way too many quality DME suppliers that have not been awarded contracts.  There are ways, however, for the non-contract supplier to enter the competitive bidding arena “after the fact.” This program will discuss those ways. Examples include purchasing 100% of a contract supplier’s assets; engaging in a partial asset purchase in which the non-contract supplier purchases only those assets associated with the contract supplier’s competitive bid contract; 100% stock acquisition; and establishing a 5% or more common ownership that will entitle the non-contract supplier to be added to the contract supplier’s competitive bid contract. In addition, the webinar will discuss whether, as a result of one of these transactions, any liability of one company will be imposed on the other company.

Contact Ika Sukh to register at

Member: $99.00
Non-Member: $129.00

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato PC, a law firm based in Amarillo, Tex. Jill S. Vogel, JD, is an attorney with the Health Care Group at Brown & Fortunato PC. They represent pharmacies, HME companies, and other health care providers throughout the United States. Baird and Vogel are Board Certified in Health Law by the Texas Board of Legal Specialization. Baird can be reached at (806) 345-6320 or Vogel can be reached at (806) 345-6343 or