Although the COVID-19 pandemic is behind us, the regulatory and legal fallout from the pandemic is far from over.  Since the COVID public health emergency (PHE) expired in May 2023, various federal agencies, including HHS-OIG and the DOJ, have been investigating whether healthcare providers and suppliers followed the rules governing a number of COVID-era programs.  There’s just one problem:  there often weren’t very many, if any, rules when these programs were initially rolled out and, where there were some rules, those rules were often not effectively communicated to the provider community, which was doing everything it could to stay afloat and keep patients alive.

One such example is Medicare’s Over-the-Counter COVID-19 Test Demonstration.  Under that program –which was initiated on April 4, 2022 and ended with the end of the PHE on May 11, 2023 – Medicare covered and paid for up to 8 OTC Covid tests per month (at $12 per test) for anyone with Medicare Part B or a Medicare Advantage plan.  During the pendency of the program, the rules were sparce, and limited to the following:

  • Eligible providers (including but not limited to physicians and other non-physician practitioners, physician practices, hospital outpatient departments, skilled nursing facilities, laboratories, and pharmacies) could provide up to 8 OTC Covid tests per month to Medicare beneficiaries and bill Medicare for those tests using the HCPCS code K1034. This applied to “all OTC, FDA-approved, authorized, or cleared COVID-19 tests that are self-administrated with a specimen that’s self-collected.”
  • Patients did not need a physician’s order or supervision for OTC tests provided under the program.
  • Eligible providers were instructed not to submit more than 1 claim or claim line per patient per day for the same service.
  • Eligible providers were instructed not to use roster bills.
  • DMEPOS suppliers were not eligible to participate in this program.
  • OTC Covid tests administered during an inpatient stay were not covered.
  • Eligible providers were instructed not to collect any additional payment from patients for the tests billed to Medicare under the program.
  • Eligible providers were instructed to “keep good documentation” to show that a patient requested the tests.

CMS hailed this program as one of many flexibilities it rolled out to help contain the COVID pandemic. Now that the program is long over, however, CMS appears to be having a bit of “buyer’s remorse” and is actively investigating various providers that participated in the program.

For example, Qlarant, which is the Unified Program Integrity Contractor (UPIC) for the Western and Southwestern Jurisdictions (which includes 20 states including California and Texas) has been sending out record requests related to claims submitted under the OTC Covid test program and has issued overpayment demands to those who cannot prove compliance with the program’s rules.  But, as stated above, the program did not have many rules.  To make matters worse, Qlarant’s overpayment demands often lack detail regarding the reason for the overpayment, other than to say that the rules were not followed, and that documentation was not sufficient. 

Medicare overpayment demands are just the beginning.  In April 2023, before the PHE even expired, the DOJ indicted two individuals in the Middle District of Florida, alleging that they engaged in a healthcare fraud conspiracy related to the OTC Covid test program.  Specifically, the DOJ alleged that a physician and one of her employees committed criminal healthcare fraud by enrolling the physician as a Medicare provider, paying $85,000 to a marketing company in exchange for Medicare beneficiary information, shipping OTC Covid tests to those beneficiaries, and then billing Medicare for those tests.  It is important to note that, as alleged, these defendants violated one of the few rules that CMS did, in fact, issue—they billed for tests that were not requested by the beneficiary.  

Providers who submitted claims to Medicare under the OTC Covid test program should prepare for an audit and/or investigation by ensuring that all relevant documentation – particularly documentation demonstrating that the beneficiary initiated the request for the tests – is maintained.  Should you receive an audit, subpoena, or any other request related to your participation in the program, you should work with your legal counsel to ensure that your response is fulsome in order to prevent the need for a costly overpayment appeal or investigation.

The attorneys at Chilivis Grubman represent healthcare providers of all types and sizes in connection with government investigations, audits and audit appeals, and various other litigation and regulatory matters. If you need assistance with such a matter, please contact us today.