Partners in Health Care Fraud and Abuse Solutions Session Description This Presentation provides a...

www.etico.comPartners in Health Care Fraud and Abuse Solutions

Session Description

This Presentation provides a firsthand-source look at the 'what, how and where' of the most damaging and widespread types of fraud schemes that continue to target public programs and private health plans in the United States.

Case examples will illustrate the 'what, how and where' of those schemes, including common denominators that facilitate the fraud, how schemes have been detected and lessons learned

“Fraudster”

US Health Care System


Over 26 years of public & private sector Health Care Insurance experience, focused mainly on detection and prevention of health care fraud

Experience includes more than 12-years working for US CMS – Managed the CMS LA and Miami Field Offices (SIU Services)

– Responsible for identifying inappropriate payments exceeding $177 million, projected savings exceeding $462 million, and the revocation of billing privileges for 272 providers suspected of fraud

SIU Director & Internal Audit Manager for Commercial Insurer

Two-time recipient of the HHS Secretary’s Award, 2-time recipient of CMS Administrator’s Citation, 2-time recipient of HHS Inspector General’s Cooperative Achievement Award, and recipient of Commendation for Distinguished Public Service from the District Attorney, LA County, California

On “Bureau of National Affairs Health Care Fraud Report” Advisory Board

Participated in 1st National Health Care Fraud Summit hosted by HHS/DOJ

Requested speaker at Health Care Anti-Fraud Conferences/Meetings

Ted DoyleDirector of Client Solutions

What is Health Care Fraud?What is the Scope of the

Problem?

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Health Care Fraud in the United StatesI

Health care related fraud has become a significant drain on the resources of the American health system, impacting federal and state health plans as well as commercial health insurance products

PUBLIC PERCEPTION

20% of Americans say it’s acceptable to defraud insurers

40% say it’s okay to exaggerate claims to beat the deductible

One-third of doctors say it’s necessary to “game the health care system”

Over one-third of doctors say their patients ask them to help them obtain fraudulent coverage for services

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Health Care Fraud“The Motive”

2010: $2.6 trillion national health care expenditure

– 52 % private-sector $$$– 48 % public-sector $$$

SOURCE: Centers for Medicare & Medicaid Services, National Health Expenditure Projections

7www.etico.com Partners in Health Care Fraud and Abuse Solutions

Health Care Fraud“The Damage”

3% To 10% of annual U.S. Expenditure*

Translation: $78 billion to $260 billion in 2010 alone

SOURCES:

U.S. Government Accountability Office; National Health Care Anti-Fraud Association


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PRE Patient Protection and Affordable Care Act (PPACA) Projected Medicare

& Medicaid Spending & Estimated Fraud 2005-2015 ($Bs)

$649$722

$774$839

$903$974

$1,134

$1,424

$336$408

$438 $477 $513 $553$641

$799

$65 $72 $77 $84 $90 $97 $113$142

$19 $22 $23 $25 $27 $29 $34 $43

$0

$250

$500

$750

$0

$250

$500

$750

$1,000

$1,250

$1,500

2005 2006 2007 2008 2009 2010 2012 2015

Medicare & Medicaid

Medicare (Part D:+20%in'06)

GAO Frd=10%M&M

NHCAA Frd=3%M&M

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System’s Inherent Vulnerabilities

Necessary assumption of honesty

Thousands of payers

1,000,000 providers

4 billion+ transactions annually

Evolving system– Plan/product design

– Less paper, human scrutiny; more auto-adjudication

– ICD-10 conversion October, 2013

Fraud perceived as low-risk/high-reward crimeFraud perceived as low-risk/high-reward crime


Contributing Factors

The Need to Pay Large Volumes of Claims Promptly and Electronically Complex Coding and Payment SystemSpeed at Which Fraudulent National Schemes Can PayoffRegulatory and Compliance Considerations


The Collateral Damage

Corruption of patients’ medical histories

Medical identity theft

Theft of patients’ finite health benefits

Physical risk/harm to patients

Financial Damage for Health Care PayorsFinancial Damage for Health Care Payors

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The Perpetrators

Dishonest patients

Dishonest providers (individuals or institutions)

Professional criminals/bogus providers

Other parties to the system– Dishonest billing services

– Dishonest payer employees


Most Common Forms of Provider Fraud

Billing for services not rendered

Misrepresentation of services provided

Provision of medically unnecessary services


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Insurers (Payers & Plans) need to be aware of heightened risk in these locationsTrends morph from one high risk area and appear in another high risk area VERY easily

Healthcare Fraud Environment

HHS/DOJ Defined Fraud High Risk Areas

Traditional Fee For Service Healthcare

Managed Care or “Capitated Payment”

Miami, FL

Los Angeles, CA

New York, NY

Detroit, MI & Chicago, IL

Houston/Dallas, TX

www.etico.com Partners in Health Care Fraud and Abuse Solutions

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Trends in Provider/ Member Based Healthcare Fraud

Type of Fraud Traditional Fee For Service Healthcare

Managed Care or Capitated Payment

Billing for Services Not Rendered

Billing for dead members and/or by Dead providers

Medically Unbelievable

Physically Impossible Services

Sham services/providers

Upcoding

Kickbacks/Bribes

ID Theft of member and/or provider information


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Benefit/Program TrendsProvider and/or Member Based

Health Care Fraud

Type of Fraud Traditional Fee For Service Healthcare

Managed Care

Infusion Therapy

Durable Medical Equipment

Diagnostic Centers

Out of Network Schemes

Outpatient Schemes, i.e., PT

Prescription Drug Diversion

Cosmetic Procedures

Pain Management

Inpatient Schemes

Home Health and Hospice

Organized Crime


Fraud Schemes That Continue to Target

Public Programs and Private Health Plans


Notable Hot Spots

Outpatient surgery center schemes (“rent-a-patient”)

Cosmetic surgery schemes

Imaging/other diagnostic testing

Pain management & related narcotic Rx schemes (“pill mills”)

Partial Hospitalizations, Inpatient One-Day Stays

Common denominators: – Little or no medical necessity

– Little or no validation of “Ordering Relationship”

– Little or no validation of provider’s legitimacy

– Risk/harm to patients


Other “Top” RisksAmbulance Transports

Alternative Medicine

Weight Loss Clinics

Hospital Fraud

Podiatric Fraud

DME Fraud

Sleep Studies

Dialysis Fraud

Clinical Laboratory

Wound Repair Upcoding

Unlicensed Ambulatory Surgical Centers

Free Standing Emergency Rooms


Less-Prominent Frauds - “Chronic Cases”

Evaluation & Management upcoding – “time bandits”– Office visits & ALL patients billed for same level of service

– Consultations (in- and outpatient)

– Emergency evals, with non emergency diagnosis

Prescription drug diversion – “doctor-shopping”– Abuse and/or resale of controlled substances – “A perfect storm”:

• Narcotics (vicodin, oxycontin, fentanyl, methadone)

• Sedatives/anxiety drugs (valium, xanax)

• Stimulants (ritalin, adderall/amphetamine)

– Medical-claim cost far exceeds Rx cost

– Significant potential liability for Rx payers

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Anorectal ManometryMonday, March 8, 2010: California Medical Clinic Owner Convicted in $3.4 Million Medicare Fraud Scheme.

Manuk Karapetyan, 46, an Armenian national, found guilty of 22 counts of health care fraud and six counts of money laundering for a scheme that billed more than $3.2 million in only one month for medical services that were not provided

Charges against Karapetyan are in connection with approximately 6,000 health insurance claims for more than 800 patients supposedly treated at Karapetyan’s clinic, USA Independent Medical Corp

No patients received medical services, and no doctors provided any medical services

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Anorectal ManometryUSA Independent billed for services such as echocardiography, office evaluations, ultrasounds, electromyography studies of the anal or urethral sphincter, and Anorectal Manometry.

Karapetyan sentenced to five years in state prison

In total, Medicare paid over $30M for suspected fraud related to ARM (CPT: 90911, 91010, 91122, 43236)

Source - http://7thspace.com/headlines/337394/california_medical_clinic_owner_convicted_in_34_million_medicare_fraud_scheme.html

http://articles.glendalenewspress.com/2010-07-28/news/tn-gnp-sentenced-20100728_1_manuk-karapetyan-medicare-patients-health-care

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Anorectal ManometryLessons Learned

How does fraud or “over-utilization” like the ARM Occur?

How can it be prevented?

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CA Doctor Glen R. Justice Charged in $1MFraud Scam

Charged with fraudulently billing up to $1 million for injectable cancer medications that never were provided

Billed for injectable cancer medications when patients never received those medications

“Upcoded” claims by claiming that more expensive injectable medications were provided

Scheme involved medications: Neulasta, Neupogen, Procrit/Epogen/Aranesp, and Neumega

Scheme ran from 2004 thru October 2009

Physician’s plea agreement acknowledged that the public and private health insurance companies suffered losses of between $400,000 and $1 millionSource: http://7thspace.com/headlines/341747/california_cancer_doctor_glen_r_justice_of_corona_del_mar_charged_in_1_million_health_care_fraud_scam.html

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Fraud and Organized Crime

Armenian-American Crime Ring

Mirzoyan-Terdjanian Organization

http://www.fbi.gov/news/stories/2010/october/medicare-fraud-organized-crime-bust/

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Armenian-American Crime Ring

Largest Medicare fraud scheme ever committed by a single enterprise

73 defendants—including members and associates of an Armenian-American organized crime enterprise

federal indictments announced in five states

more than $163 million in fraudulent billings

55 arrested in a nationwide takedown carefully planned and carried out by the FBI

More than two dozen search warrants were also executed at the same time.

Headquartered in New York City and Los Angeles but operated throughout the U.S. and around the world

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Armenian-American Crime RingSubjects allegedly stole identities of thousands of Medicare beneficiaries and doctors licensed in more than one state

Other subjects leased office space and opened phony clinics

Others simply rented a PO box

Other subjects opened bank accounts to receive Medicare funds

Subjects billed Medicare for services never provided

Funds directly deposited into designated bank accounts and immediately withdrawn and laundered

Opened were at least 118 phony clinics in 25 states

Significant lead came from Income Tax Investigation 28

Fraudulent Billing & “Ordered Services”

Independent Diagnostic Testing Facilities (Labs)

Clinical Testing Laboratories

Durable Medical Equipment

Home Health Services

Hospice Services for “Terminally Ill”

EQUALSEQUALSTests & Equipment Not Really Ordered and Likely NOT Performed

Tests For Which A Clinical Relationship Does NOT Exist 29

Deceased But Not “Dead & Gone”

Deceased Members

Deceased Performing Providers

Deceased Ordering Providers

Identity TheftIdentity Theft

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“Identity Compromise”

Compromised IDs – Medicare Program– More than 200,000 Member IDs have been compromised

– More than 4,900 “False Front” Providers identified• Source: CMS PSC, Western Integrity Center, May 2010

Deceased Doctors– Dead Doctors Used to Scam Government Out of Medicare

Money:http://hsgac.senate.gov/public/_files/OPENINGSTMTCarlLevin7908.pdf

– Senate Hearing Viewable at: http://hsgac.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_id=eb856347-01f1-4b55-826e-a9bf5247072c

– Fraudulent providers submitted claims based on “orders” from some doctors who were dead for 10 years or more

– From 2000 to 2007, Medicare paid between $60M & $93M for claims where the “ordering” or prescribing doctor had been dead for at least 12-months 31

Fraud Interdiction ProgramFormer Deputy DA Albert

Mackenzie50 Crook Project

Program’s core project wherein numerous medical doctors suspected of being involved in healthcare fraud have been identified as viable tax fraud casesOriginally the list consisted of 50 medical doctors we identified who had failed to report over 122 million in income paid by MedicareAs the suspects have been arrested, leads have been developed leading to additional suspects involved in these multi-million dollar healthcare fraud casesLed to recent Armenian-American Arrests in LA and other US cities

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People vs. Parviz Berjis

$23 million in automobile insurance, workers’ compensation, and tax fraud

Sentenced to 8 years in prison

Ordered to pay $2.2 million in restitution to L.A. County and $2.8 million in back state taxes

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People vs. Saud Salim Rayyis

Convicted of tax fraud for failing to report $4 million

Sentenced to 3 years in prison

Surrendered medical license

Will be deported upon release

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Joint HHS/DOJ HEAT Initiative

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HEAT: HEATH CARE FRAUD PREVENTION AND

ENFORCEMENT ACTION TEAMCabinet-level Attention and Coordination

Prevention -- Detection -- Enforcement

Increased Use of Technology to Prevent and Detect Fraud

Expansion of Medicare Fraud Strike Forces (“MFSF”) and Investigative Techniques

Recommendations to Remedy Vulnerabilities

National Summit on Health Care Fraud– Public-Private Collaboration

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HEAT Initiativewww.stopmedicarefraud.gov


HEAT Initiative

FY2009: DOJ+HHS-OIG+CMS – Charges filed for criminal health care fraud against more

than 800 defendants

– Secured 583 criminal convictions

– Opened 886 new civil health care fraud investigations

– Obtained 337 civil administrative actions against individuals and organizations committing health care Fraud

– Recovered more than $2.5 billion in criminal, civil and administrative actions related to health care fraud enforcement activities


The Good News!

Private health insurance - 2009 Stats

Every $2M invested in fighting health-care fraud returns $19.5M in recoveries, court-ordered judgments and prevented losses

SIUs on average:– Produce an ROI of 9 to 1

– Bring in recoveries of nearly $4.3 million

– Generate savings of more than $11.1 million

– Establish $8.8 million in prevented losses

– Had 453 total open cases

– Handled 940 total cases

– Handled 31 cases per Investigator

Source: NHCAA (www.nhcaa.org) - Anti-Fraud Management Survey CY 2009


The Good News!Health Care Fraud & Abuse Control Program Annual

Report for Fiscal Year 2009 - Enforcement Actions

U.S. Attorneys' Offices opened 1,014 new criminal health care fraud investigations involving 1,786 potential defendants

Federal prosecutors had 1,621 health care fraud criminal investigations pending, involving 2,706 potential defendants, and filed criminal charges in 481 cases involving 803 defendants

583 defendants were convicted for health care fraud-related crimes

DOJ opened 886 new civil health care fraud investigations and had 1,155 civil health care fraud matters pendingSource: http://www.justice.gov/dag/pubdoc/hcfacreport2009.pdf



Contact information

Ted DoyleDirector of Client Solutions (414) [email protected]

www.etico.com

Questions

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