Healthcare Fraud Lawyer Blog

Medicare and Medicaid fraud are a thriving business. Medicare and Medicaid fraud are also illegal and, in many ways, immoral enterprises that take advantage of programs intended to help the elderly and impoverished. Health care fraud takes many forms. Today, we focuses on one subset – recruiting schemes. In these cases, scammers recruit “patients,” obtain their beneficiary numbers, and file false and/or exaggerated claims with Medicare or Medicaid. As with other forms of health care fraud, our Medicare and Medicaid fraud law firm believes that whistleblowers are key to fighting health care recruitment fraud.

Scammers Trade Shoes for Beneficiary Numbers Last week, The New York Times reported on a disturbing case of health care fraud. Nine New York doctors are among the 23 individuals named as defendants in a Medicaid fraud scam that netted nearly $7 million dollars. The indictment includes charges of health care fraud, money laundering, and enterprise corruption.

Allegedly, defendants recruited homeless people from soup kitchens and shelters, specifically targeting those with valid Medicaid cards, by promising them free sneakers or other footwear. Recruits would be taken to medical clinics (typically places owned by one of the scammers) where they underwent unnecessary tests and were labeled with fake diagnoses. Scammers would then bill Medicaid to the tune of hundreds or even thousands of dollars per “patient.” Often, bills included claims for medical equipment and testing that were either inappropriate or wholly fictitious and for unnecessary follow-up visits. Before leaving, the homeless men and women were allowed to pick a pair of shoes from stacks of footwear in the clinics’ basement. In some cases, the recruiters were paid a referral fee per recruit; in other cases, Medicaid payments were split between the recruiter and the doctor.

Sometimes it seems like the terms “health care fraud” and “Medicare fraud” are interchangeable. Medicare related fraud is a topic of great concern, but it is important to remember that Medicare is not the only government health care agency targeted by scammers. Medicaid fraud is also a growing problem and our Medicaid fraud law firm is proud to partner with whistleblowers who step forward to bring the perpetrators to justice and return funds to this important program.

Medicaid Fraud Generally

The National Association of Medicaid Fraud Control Units (“NAMFCU”) brings together professionals from across the country to fight Medicaid provider fraud, an epidemic that costs the nation’s taxpayers hundreds of millions of dollars each year. As the NAMFCU’s website explains, the perpetrators of Medicaid fraud range in size from sole practitioners to large medical institutions and include all segments of the health care industry from hospitals and home health providers to pharmacies and medical equipment companies. Examples of Medicaid fraud include: Billing for services that were not rendered and/or patients not actually seen; Billing both Medicaid and a private insurer for the same treatment; Misrepresenting provider credentials; Charging for unnecessary treatment, and; Kickback schemes involving the exchange of improper payments in exchange for referrals.

An article released by the Wall Street Journal late last week caught the attention of health care fraud lawyer Greg Brod. As discussed below, the article reviews some promising numbers from 2014 that show the fight against health care fraud is gaining ground and, at the same time, show how far we have to go. The article also discusses what it calls a shift in focus from “chasing fraud” to preventing it. We believe this is a false dichotomy and that belief, the belief that prosecuting fraud prevents fraud, is part of what motivates our firm’s commitment to partnering with private whistleblowers to fight health care fraud.

Government Reports $3.3 Billion Recovered in 2014 from Perpetrators of Health Care Fraud

Last Thursday, The Wall Street Journal reported that the U.S. government recovered $3.3 billion in the course of fiscal year 2014 from the perpetrators of health care fraud schemes that targeted federal health programs. The article cites a report from the federal Health and Human Services Administration (“HHS”) that was released to the public later the same day. Over the past three years, the administration recovered $7.70 for each dollar it spent investigating fraud in the health care arena. This is the third-highest level of return on investment since the government launched the Health Care Fraud and Abuse Control Program in 1996. Since that time, investigations have resulted in the return of over $27.8 billion to the Medicare and Medicaid systems. Nonetheless, the recoveries represent only a small fraction of the amount scammers are believed to be draining from the federal program coffers. Fraud is believed to account for a startling 10% of all Medicare spending, a figure that works out to $58 million a year.

Readers of this blog know that scammers are routinely bilking the federal Medicare system out of large sums of money, crimes that add up to billions (yes, with a “b”) in losses every year. Health care fraud is not, however, only a federal matter. From small lies to big ones, criminals are also targeting the California Medi-Cal program. Medi-Cal fraud scams cost the state and every taxpayer money and pose a very real threat to the health and welfare of millions of Californians. Fighting these schemes requires the commitment of honest Californians willing to step up to the plate. The Brod Law Firm is proud to be their partner in this fight, representing the interests of the state and the interests of the individual whistleblower as a Medi-Cal fraud whistleblowers’ law firm.

The Medi-Cal System and Medi-Cal Fraud Medi-Cal is California’s Medicaid program, a form of government provided health insurance that covers low-income individuals. Enrollment appears to be growing as coverage expands. While most readers probably know both of those facts, the vastness of the program may still come as a surprise. In November 2014, news site California Healthline reported that approximately 30% of Californians were enrolled in the program, a figure that reflects the addition of more than 2.7 million enrollees in the prior year alone (Note: the site does suggest the figure might fall in the months following the report).

A section of the website for The Office of the Attorney General (“OAG”) for the State of California defines Medi-Cal fraud as “the billing of the Medi-Cal program for services, drugs, or supplies that are unnecessary, not performed, [or] more costly than those actually performed [and] also refers to paying and/or receiving kickbacks for Medi-Cal billing referrals” (formatting changed). The OAG explains that such scams create a financial burden that all Californians feel in the form of increased taxes and rising health insurance premiums while those in need of care may be forced to go without because funds have been stolen from already strained coffers. Per the Office, Medi-Cal fraud also poses a direct threat to public health with scams that involve things like reused syringes, “treatments” carried out by unqualified staff, and unwarranted medical procedures.

Medicare billing is a complex and specialized field. Translating patient care into billing codes takes knowledge and skill. While most providers and coders work hard to make sure billing codes accurately reflect the care provided, others use the system to divert money from government coffers into their own pockets. Fraudulent Medicare coding takes a number of forms. Catching those involved in these scams often takes inside knowledge. Attorney Greg Brod partners with honest insiders who’ve observed modifier fraud and, as a skilled Medicare fraud attorney, he partners with these individuals, protecting their interests while fighting back and working to return taxpayer money to already strained health care programs.

Recent Medicare Coding Settlements In January, a physician in Georgia agreed to pay more than $305,000 to settle coding-related allegations under the federal False Claims Act. As reported by the Department of Health and Human Services, Dr. Dennis Conrad Harper was accused of using an inappropriate billing code in order to bypass Medicare limitations and receive payment for certain urine drug tests. The Government alleged that he submitted payment claims for high-complexity tests while actually performing less-complex tests. Similar allegations regarding improper coding on urine drugs tests formed the basis of a September 2014 settlement between the federal government and Clinical Lab Partners, a Connecticut firm as well as a May 2014 settlement totaling $4.65 million involving Calloway Laboratories, the federal Medicare program, and the West Virginia Medicaid program. The U.S. Attorney involved in the latter explained “Drug treatment programs are a vital component of our ongoing battle against prescription drug abuse….The cost for [related] testing often falls upon federal health care programs like Medicare and Medicaid. The additional expense of unnecessary review, like that routinely performed by Calloway Labs, increases the burden on an already stressed system.”

The Most Common Forms of Coding and Billing Fraud Beckers ASC, an information source for the healthcare industry with a focus on outpatient surgery, provides a useful page titled “5 Common Fraudulent Coding, Billing Schemes.” The report discusses the following types of fraudulent billing/coding scams: 1) Upcoding – billing for a more complex procedure than was actually preformed (listed as the most common coding fraud); 2) Unbundling – separately billing for items that should be included in a bundled package; 3) Kitchen sink coding – including codes beyond those tied to confirmed diagnoses (notably can hurt patients by making their records include preexisting conditions they don’t actually have); 4) Inconsistent coding – changing a listed diagnosis without actual symptom changes, often done just prior to surgery; 5) Inflated charges – inflating charges, particularly when bills are not first sent to an insurance provider, often in personal injury/accident-related care.

It seems like you can barely turn on the television these days without seeing an advertisement for medications and medical equipment. Equipment ads in particular often target seniors and inevitably include a promise that the company will deal directly with Medicare to get the product supplied with little or no cost to the consumer. While medical equipment helps countless people live fuller and more productive lives, the industry is a prime target for scammers. Power wheelchair scams and other equipment fraud operations allow scammers to profit at the expense of taxpayers and Medicare beneficiaries. Stopping these scams often requires beneficiaries and/or company insiders coming forward and sharing their knowledge. Medicare fraud lawyer Attorney Greg Brod protects the interests of these brave whistleblowers while working to stop equipment fraud and return money to the government.

Wheelchair Scams: “The Poor Man’s Way In” to Medical Fraud A 2014 Washington Post report, carried online by The Fiscal Times, paints a picture of one power wheelchair scam based on testimony offered before a California court last summer. According to witness testimony, patient recruiters would call seniors and ask whether they had ever received a power wheelchair through Medicare. If the answer was “no,” the recruiter would attempt to get the person to agree to come to a medical office and get a prescription for a power wheelchair. Whether the patient truly needed the expensive equipment was all but irrelevant. One Medicare beneficiary testified that he told them he did not need a power wheelchair but that the company insisted they were giving away the chairs or free.

Wheelchair schemes date back to at least the mid-’90s. The Post calls the operations “the poor man’s way in, an entry-level fraud that didn’t require a medical degree or a hospital.” Equipment fraud scammers bill Medicare for chairs and other equipment that is not medically indicated and pocket the large price markup. In the scheme underlying the above-mentioned court inquiry, recruiters were paid $800 for each time a (usually bogus) prescription was written and a chair ordered. The California-based scam billed Medicare for some 1,000 power chairs, a medium-sized operation in the world of Medicare equipment fraud. Per The Post, Medicare has spent $8.2 billion on power wheelchairs and motor scooters since 1999. It is impossible to know how many of the 2.7 million people who received chairs paid for by the government had true medical need.

Medicare Advantage (“MA”) plans allow Medicare beneficiaries to have a private company manage their health care benefits. When a beneficiary opts for coverage via an MA plan, Medicare pays the plan a set amount depending on the patient’s health status. As detailed below, this capitated payment system relies upon providers and plans to honestly report information about a beneficiary’s health. Sadly, Medicare Advantage fraud is rampant, including capitated payment fraud. Our Medicare Advantage fraud law firm partners with honest people who come forward to report these scams and protect the Medicare system, ensuring money is available for those who truly need it.

A Brief Introduction to the Capitated Payment System

The Medicare News Group, a website designed for journalists and others looking for Medicare-related information, provides a set of Frequently Asked Questions that helps readers understand a complex health care system. The FAQ explains that capitated payments are per patient rates paid to a physician or other medical provider. Capitated payments are based on a patient’s general health and are paid regardless of whether or not services are actually provided and regardless of how many services are delivered.