COVID-19: Healthcare Enforcement & Program Integrity – Compassion or Business as Usual?

March 24, 2020

The coronavirus (COVID-19) has created the most dire public health and economic crisis in generations, and the US government is under intense pressure to provide the necessary relief to US citizens, healthcare providers, and employers. Clearly, now is not the time to impose additional and unnecessary burdens on healthcare providers. At the same time, government enforcers and auditors remain working, albeit remotely, with a continued eye on health provider recoveries. This LawFlash covers the regulatory relief that has been granted thus far, and where government enforcement and program integrity fits against that backdrop.

Healthcare-related regulatory relief has taken many forms, including expanding telehealth access and payment to reduce in-person contact, reducing certain paperwork obligations on providers to facilitate availability of healthcare professionals and space to care for patients, and suspending Medicare surveys of providers.

Many healthcare providers and their staff are stretched to the breaking point, adopting new and necessary COVID-19 protocols and protections, deploying staff to take on new responsibilities, and suspending non-essential services. And the burden is not only on direct caregivers and clinicians, but also on healthcare managers, billers learning how to operate remotely with new COVID-19 billing directives, information technology staff who must support remote workers—often while short staffed—and finance teams trying to keep the organization operational and solvent so employees can be paid and medical supplies purchased.

Amidst Industry Calls for Regulatory Relief, Subpoena Activity & Civil Investigative Demands Continue

It has been especially difficult to hear that healthcare providers continue to receive subpoenas and civil investigative demands from the US Department of Justice (DOJ) and the Office of the Inspector General of the US Department of Health and Human Services (HHS-OIG), as well as audit requests from Medicare/Centers for Medicare & Medicaid Services (CMS) contractors, with no suspension of investigation and audit activities. While it is obvious that the government cannot relieve providers of compliance with all applicable laws—even during the COVID-19 emergency—the government can be judicious in exercising its enforcement and program integrity discretion.

CMS has been asked by many provider groups to suspend audit activity and the associated burdens therefrom. On March 3, CMS posted a notice suspending most non-emergent inspections and surveys, asking surveyors not to sanction providers for having insufficient medical supplies, such as personal protective equipment, and directing statutorily required inspections to focus on infection control and immediate jeopardy. On March 23, CMS posted a notice announcing a new targeted plan for healthcare facility inspections. The plan temporarily postpones standard inspections for nursing homes, hospitals, home health agencies, intermediate care facilities, and hospices, as well as revisits inspections not associated with immediate jeopardy. The notice states that only complaint inspections triaged at the immediate jeopardy level and targeted infection control inspections will be undertaken over the next few weeks.

No doubt, the industry will continue to call on DOJ and HHS leadership to take appropriate steps to suspend non-criminal enforcement and audits during this crisis. Diverting scarce healthcare resources from combatting COVID-19 to instead respond to non-urgent government inquiries has left many healthcare providers vociferously questioning the wisdom of the government’s exercise of its enforcement discretion. In addition to DOJ and HHS-OIG, CMS’s Center for Program Integrity (CPI) has been largely silent in the face of COVID-19, with one exception. On March 20, CPI did issue a memorandum to all Medicare Part D Sponsors underscoring that they should allow flexibility with respect to minimizing face-to-face contact associated with medication dispensing and delivery, to include flexibility on beneficiary signature requirements and subsequent audits on signatures. This memorandum is not yet posted on CPI’s website.

Will State-Level Regulatory Relief Show the Way?

While CMS CPI may be slow to react publicly to the requests for audit relief, states may lead the way in exercising reasonable enforcement discretion. On March 20, the Texas Health and Human Services Inspector General issued a notice stating the following:

[Texas OIG] understands that during the COVID-19 pandemic providers may experience increased demand for services and staffing shortages. The rapidly evolving situation may make it difficult to meet deadlines and place a strain on providers as they care for Texans. In order to assist health care professionals as they care for patients, the OIG is extending a variety of deadlines for providers involved in an audit, investigation, inspection or medical review. These ongoing efforts are part of the OIG’s mission to ensure taxpayer funds for health and human services are spent properly while giving health care providers the flexibility to help those who need it.

The Texas OIG has published the extended deadlines on its website and specifies in the notice that requests for additional extensions based on special circumstances may be made in writing.

Having surveyed other states’ Medicaid program websites, they have not yet issued similar notices, though calls for compassion and understanding abound. California’s Medi-Cal agency Department of Health Care Services (DHCS) issued a notice on March 20 inviting providers with COVID-19 economic hardship that have an overpayment debt due to an audit finding to contact DHCS Third Party Liability and Recovery Division, Overpayments Unit, to discuss alternative repayment options. Wisconsin Medicaid, operated under the name ForwardHealth, has noted that “ForwardHealth is actively reviewing program policies and flexibilities to best support care in response to the COVID-19 outbreak.” In Washington State, the first coronavirus outbreak state, Medicaid has not issued a statement that it has suspended Medicaid audits, but its website does note the following:

In this time of the COVID-19 crisis, Apple Health (Medicaid) is aware that usual and customary ways of providing and billing for services may not be feasible. In the interest of public health, Apple Health is trying to be as flexible as possible and is creating new policies that will allow you to provide medically necessary services and bill with the most appropriate code you determine applicable using the guidance below. We will update this FAQ as necessary.

What Can Healthcare Providers Do Now?

Morgan Lewis will monitor federal and state government statements related to enforcement and program integrity relief during the COVID-19 crisis. In the meantime, healthcare providers are well served to document where COVID-19 served as the basis for any technical non-compliance or billing or coding uncertainty. Two years from now, when auditors or enforcement agencies are conducting retrospective reviews, the absence of record documentation citing COVID-19 may put providers at a disadvantage.

Coronavirus COVID-19 Task Force

For our clients, we have formed a multidisciplinary Coronavirus COVID-19 Task Force to help guide you through the broad scope of legal issues brought on by this public health challenge. We also have launched a resource page to help keep you on top of developments as they unfold. If you would like to receive a daily digest of all new updates to the page, please subscribe now to receive our COVID-19 alerts.


If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Washington, DC
Michele Buenafe
Kathleen McDermott
Scott Memmott
Albert Shay
Howard Young
Jacob Harper
Ariel Landa-Seiersen

Greg Etzel
Scott McBride
Banee Pachuca
Sydney Reed 

San Francisco
Reece Hirsch 

Mark Stein