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Already the fastest growing part of the Medicaid-funded health care system, state and federal outlays in the home health industry have ballooned in the last five years. While the MFCUs have only just begun to scratch the surface of potential criminal activity, already a number of “megalarceny” Medicaid frauds have been uncovered totaling more than $8 million. Not only are these defendants charged with grossly inflating the number of hours their employees worked, but more importantly, in some cases, with recklessly sending untrained, unqualified and unlicensed aides into the private homes of thousands of critically ill and care-dependent patients.
Home health care is an industry that contains all the components for disaster—it is unregulated in the traditional medical sense; multiple agencies are involved with large amounts of government money; and it is attractive to the consumer.
o In California, an elderly man who starved to death while lying in his own filth was locked in a room by his sons and daughter while they enjoyed Thanksgiving dinner in another room. They were his government-paid home health care givers.
o Five individuals in Massachusetts were charged on a variety of Medicaid fraud charges as a result of the MFCUs investigation into Medicaid’s personal care attendant program which allows disabled individuals to remain in a community setting with the aid of personal care attendants. Each of the defendants charged the State for services which were not provided and/or inflated billings made to the agencies.
o Five people in California were paid for up to a year for caring for relatives who had died. These caretakers were also recipients of other government programs. Both they and the program paying them failed to report the offsetting income.
o Similarly, in Washington State, two home health care providers continued to bill the Medicaid program after the patients had died. In one of these cases, the defendant continued to bill the state while living with the deceased patient’s widow.
o A certified nurse’s aide in Maine was sentenced to three years in jail and to four years probation for adding her name to a number of credit cards that belonged to the patients and making purchases on those cards totaling $7,196.13.
o The owner and billing clerk of a New York home health care agency were convicted of stealing more than $1.1 million, during a three-year period, by fraudulently billing the state for professional nursing services rendered to thousands of homebound Medicaid patients by unqualified workers—including illegal aliens from Jamaica and Ireland—who were not licensed and often had no training whatsoever.
o A statewide audit of New York’s Care At Home Program (also known as the Katie Beckett Waiver Program) identified more than $2.4 million in Medicaid overpayments. The audit revealed that during a four-year period, Medicaid was charged not only for services more properly payable to patients’ private insurance policies, but also for services billed via special codes that bypassed the routine prior approval process and resulted in substantial overpayments.
o In one county in California, there are no less than 74 home health service agencies, many of which line up, literally, at board and care homes offering competitive incentives for home health care business within the facility. These agencies are potentially turning board and care homes into health facilities that are virtually unlicensed, uncertified, unregulated and practically invisible.
HOME INFUSION TREATMENTS
One of the most rapidly growing segments within the home health care industry is that of home infusion treatments, currently estimated to cost about $4 billion. Originally intended to replace the hospital setting, these home medical therapies treat many serious illnesses, including but not limited to victims of cancer, HIV, Alzheimer’s disease, blood ailments and strokes.
Home infusion treatments include more than the actual medication. In addition to drugs and nutritional formulas, supplies such as tubing, syringes, alcohol swabs, bottles, gloves and needles, and expensive equipment such as pumps, nebulizers, glucose monitors and blood pressure kits are regularly utilized by the victims of these serious illnesses. All are billed on a regular basis. A large portion of the funds is spent in the area of home care services. Regular visits, frequently more than once a day, by an R.N., a nurse practitioner, a home health aide, a physician’s assistant or even a physician are required and reimbursed. Further, regular visits are fragmented: drugs are billed by the pharmacies, and the supplies used to assist in administering the drugs are billed by the DME provider.
The potential for fraud in this rapidly expanding and highly expensive industry is clear. Kickbacks to doctors to authorize medically unnecessary treatment, services or supplies, whether provided or not, is cause for MFCU concern.
THE GROWTH OF “COTTAGE” INDUSTRIES
The capability of MFCUs to detect and prosecute health care fraud has greatly increased as the tools have become more sophisticated and attempts at sharing information with sister MFCUs and with other law enforcement offices have proved successful. Unfortunately, the opportunity for unjust enrichment has increased equally as fast. The MFCUs have witnessed sophisticated cottage industries springing to life in response to recent legislation increasing federal requirements for certain treatment modalities. For example:
1. The increase in nursing home-based contract speech and rehabilitative therapy services sometimes rendered to patients who are medically incapable of benefiting from them, and
2. The proliferation of multilayered billings for pseudo-rehabilitative therapy services, rendered by nonprofessionals in community rehabilitation programs for mentally disabled.
Although legislative changes in the above areas were enacted so recently that the MFCUs have not yet prosecuted a provider for fraud under the new laws, it is already apparent that millions of dollars are being expended on high-profit services that have little or no value to the patients. To the frustration of both civil auditors and criminal prosecutors who are charged with policing fraud and abuse, there are too few controls over providers’ imaginations when it comes to billing ridiculously simple services at outrageous sums.
The rapidity with which a small, unethical segment of the health care industry adapts its infrastructure to new federal legislation is amazing—if not frightening—to those who attempt to prosecute, contain or stop provider abuse. Unscrupulous providers are increasingly likely to identify and exploit “gray areas” in laws and regulations. Aggressive marketing techniques, not traditionally associated with the health care industry, have increased costs by adding marginally necessary or totally unnecessary procedures to health care bills.
FRAUD IN MANAGED CARE
In an attempt to control exploding Medicaid costs and to provide better access to care, more and more states are turning to managed care programs. Recently, states are requiring greater numbers of the Medicaid population—currently at about eight million people, or almost 25 percent of all Medicaid recipients — to participate in their managed care programs. Certain problems have already been reported. These include poor quality of services, weak oversight of providers’ financial reporting, disclosure of ownership and solvency.
While many proponents of managed care believe that the very nature of the system prevents fraud, the experience of the fraud control units proves otherwise. At the request of the President’s Task Force on National Health Care Reform, the National Association of Medicaid Fraud Control Units prepared a paper which described the MFCUs experience with health care fraud in both the traditional health care delivery system and a system of managed care. Though the MFCUs recognize that it is impossible to critique any new health care delivery system and how it might be vulnerable to fraud, NAMFCU attempted to supply the President’s Task Force with common experiences, as well as possible remedies for program vulnerabilities.
The report concluded that no health care plan is immune to fraud; fraud will simply take different forms in response to the way the program is structured. The potential for quality of care problems is troublesome. While fee-for-service payments give providers the incentive to provide too many or unnecessary services, capitated payments offer the reverse incentive, to provide too few services. The panoply of health care-related crimes is likely to continue regardless of any permutations undertaken by a new delivery system.
MFCUs have documented certain types of criminal activity in managed care plans: fraudulent subcontracts, fraudulent related party transactions, excessive salaries and fees to the entrepreneurs involved, bribery, tax evasion, kickbacks, rebates and other illegal economic arrangements and fraud in the administration of the program. Quality of care issues, such as the underutilization of necessary services, falsification or misrepresentation of professional credentials, and the use of unlicensed providers, may occur more frequently in managed care programs than in the traditional fee-for-service payment program. Further, instead of billing numerous unnecessary procedures for a few existing clients, physicians may legally increase their income by agreeing to provide care for hundreds or even thousands of clients for monthly capitation fees. The patients become a captive audience, and the physician has less incentive to find sufficient time to provide good care for his patients.
A Maryland case illustrates one kind of fraud and patient neglect that will be a problem faced by managed health care programs in future years. Ha Yong Jung, M.D., maintained a largely Medicaid practice in a poor neighborhood in downtown Baltimore. He had a reputation among drug addicts as a physician who would “write disability.” The Maryland MFCU received information that Jung was double-dipping by billing both Medicaid and the Department of Social Services (DSS) for a physical examination of a disability applicant.
For reasons that appear to have been largely financial, Jung’s practice underwent a series of changes in the 1990s. In 1990, undercover MFCU investigators found a relatively normal physician’s practice and received a courteous, although somewhat brief, examination. By 1992, however, Jung’s billings to the Medicaid program had more than quadrupled. That year, MFCU undercover investigators found an office overflowing with as many as 34 addicts with disability papers in hand, who were shunted in and out of the physician’s examining room at two- or three-minute intervals. The investigators’ allegedly “comprehensive” examinations included a brief touch of a stethoscope and a blood pressure reading taken through rolled up shirt cuffs. No medical history was taken, and the visits lasted less than four minutes each. Records subpoenaed by the Maryland MFCU from Jung confirmed that he sometimes saw 100 patients per day, although he spent only six hours per day at his practice. The recorded blood pressure readings were “made up” and disability forms were filled in before the patients met with Jung. By courting addicts, Jung built—almost overnight—a practice which was billing Medicaid at the rate of $340,000 per year, and DSS at the rate of $99,000 for medical services that were often so perfunctory as to be useless.
These costs to the welfare program, however, are minor when compared to the overall societal cost of keeping hundreds of able-bodied individuals on disability. Nor was the only cost to society a monetary one. During the period of Jung’s burgeoning so-called practice, Maryland’s Medicaid program instituted a managed care or “gatekeeper” program. Recipients were assigned to a single primary physician of their choice who was responsible for coordinating their care. Those recipients who chose Jung as their physician so they could get disability payments with ease found themselves without real medical care. Sadly, these addicts and alcoholics were the ones who most needed someone coordinating their care.
This article was reprinted with permission from Medicaid Fraud and Patient Abuse, a publication of the National Association of Medicaid Fraud Control Units. Individuals wishing a free copy of the full publication may request same from Barbara Zelner, National Association of Medicaid Fraud Control Units, 750 First Street NE #1100, Washington, DC 20002.
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