Fired Mercyhealth exec sentenced for wire fraud, tax evasion

A former vice president of Janesville, Wis.-based Mercyhealth was sentenced to 3 ½ years in prison May 4 for wire fraud and tax evasion in relation to a $3.1 million kickback scheme, according to the U.S Justice Department.

Barbara Bortner, 57, Mercyhealth’s former vice president of marketing and public relations, pleaded guilty to the scheme in October 2021. 

Ms. Bortner was charged in September 2021. She admitted getting kickbacks from Ryan Weckerly, owner of a marketing agency hired by the health system, from 2015 to 2020.

Prosecutors said Ms. Bortner and Mr. Weckerly created a scheme in which Mr. Weckerly’s marketing agency, Morningstar Media Group, inflated invoices sent to Ms. Bortner for marketing work he did for Mercyhealth. In exchange, Ms. Bortner receive kickbacks from the funds received.

Prosecutors also said Ms. Bortner agreed to maintain Morningstar Media as its primary marketing group in exchange for the kickbacks.

Mr. Weckerly pleaded guilty in November 2021 and will be sentenced May 17.

Mercyhealth fired Ms. Bortner in August 2021, weeks before the charges were filed against her. Mercyhealth said the fraud didn’t affect patient care.

Feds poised to fight to preserve mask mandate for travel

The Department of Justice (DOJ) is appealing a Florida judge’s Monday decision to strike down the mask requirement for public transportation. Federal judge Kathryn Mizelle ruled the Centers for Disease Control and Prevention (CDC) exceeded its authority under the Public Health Service Act of 1944. Meanwhile, giddy passengers and flight crew have been discarding their face coverings as airlines, the Transportation Safety Administration, several local transit authorities, Uber and Lyft, all removed their mask requirements.  

The Gist: Despite DOJ’s appeal, which appears to be aimed at preserving its own authority to act during health crises, rather than reinstating the current mask requirement (which was set to expire in two weeks anyway), the tone of the Biden administration is clearly shifting. Earlier this week President Biden told reporters that the decision to wear a mask is “up to them,” meaning individual Americans. 

In the bumpy transition out of the emergency phase of the pandemic, we now have a patchwork of rules for masking. This is even true within healthcare facilities: some, including Houston Methodist and Iowa-based UnityPoint Health, are no longer requiring masks for visitors or employees who are not involved in patient care. 

With COVID cases now rising in 41 states as mask mandates fall, the next month will prove critical in determining whether “endemic” COVID remains manageable, or once again stresses the healthcare system and other critical infrastructure.  

Justice Department adds CEO to $120M Medicare fraud case

The Justice Department has intervened in a whistleblower lawsuit accusing former executives of San Antonio-based Merida Health Care Group of violating the False Claims Act, according to Law360

The Justice Department is intervening in the action, which dates back to 2015, alleging the former executives submitted more than $120 million in false claims to Medicare for medically unnecessary home health services and hospice care. The Justice Department is also adding Merida Health Group’s former CEO Henry McInnis to the complaint, according to the report. 

The Justice Department alleges Mr. McInnis and Rodney Mesquias, the former owner of Merida Health Care Group, violated the False Claims Act, and the government is also seeking damages under the common law and equitable theories of fraud and payment by mistake, according to court documents filed April 7 in the U.S. District Court for the Southern District of Texas. 

Mr. McInnis was sentenced to 15 years in prison in February 2021 for his role in a healthcare fraud and money laundering scheme. Mr. Mesquias was sentenced to 20 years in prison in late 2020. 

Private equity-backed buyouts have physicians concerned

The Federal Trade Commission and the Justice Department are seeking comments on ways merger guidelines should be updated, and physicians are raising concerns about private equity-backed buyouts of provider practices. 

The FTC and the Justice Department announced in January that they’re seeking to revamp merger guidelines for businesses. Comments on how to “modernize the merger guidelines to better detect and prevent anticompetitive deals,” can be submitted to the agencies through April 21. 

Comments are pouring in from physicians. Many of the comments are anonymous, but the commenters self-identify as physicians. 

The physicians’ top concern are private equity-backed buyouts, according to an analysis by Law360. They’re also concerned by the profit-first attitude of healthcare and consolidation in the industry, according to the report. 

The commenters raised many concerns with private equity groups, saying theyput profits over patients” and “stifle the voices of physicians.”

The comments are coming in as private equity firms continue to buy up physician practices. 

Private equity firms acquired 59 physician practices in 2013, and that number increased to 136 practices by 2016, according to a research letter published in JAMA

10 physicians, healthcare CEO to pay $1.68M to settle kickback claims

Ten Texas physicians and a healthcare executive who operates a group of medical practices in Florida agreed to pay a total of $1.68 million to settle kickback allegations, according to a March 22 Justice Department news release.

According to prosecutors, the Texas physicians received thousands of dollars in pay from eight different management service organizations in exchange for ordering laboratory tests from Little River Healthcare, True Health Diagnostics and/or Boston Heart Diagnostics Corp. 

Here are the physicians who reached monetary settlements: 

  • Tamar Brionez, MD, agreed to pay $85,006
  • Gary Goff, MD, and his affiliated practices agreed to pay $454,088
  • John Hierholzer, MD, agreed to pay $24,850
  • Bruce Maniet, DO, agreed to pay $175,43
  • Huy Chi Nguyen, MD, agreed to pay $211,821
  • Dung Chi Nguyen, MD, agreed to pay $211,721
  • Rakesh Patel, DO, agreed to pay $174,539
  • Cuong Trinh, MD, agreed to pay $45,056
  • Randall Walker, MD, agreed to pay $60,898
  • Michael Whiteley, DO, agreed to pay $52,015 

As part of the settlements, the 10 physicians agreed to cooperate in the investigations against other parties involved in the alleged scheme.  

In addition to the physicians, Brett Markowitz, the founder and CEO of Florida Rejuvenation Holdings, which operates medical practices in Tampa, paid $185,000 to resolve allegations of accepting kickbacks from True Health. Prosecutors said True Health paid for each patient that physicians at the medical practices referred for clinical laboratory services. 

What is an insurance company in 2022?

https://mailchi.mp/7788648545f0/the-weekly-gist-february-25-2022?e=d1e747d2d8

The largest health insurers are quickly becoming vertically integrated healthcare organizations that span the care and coverage continuum. While 2021 was a mixed year for these companies as healthcare volumes bounced back, their diversified portfolios helped cushion losses from higher claims.

The graphic above analyzes revenue growth by segment for the five largest insurers across the last two years. On average the insurance and pharmacy benefit management components of the companies grew at nine percent, while care delivery and integrated health services grew at much higher rates. UnitedHealth Group (UHG) and Anthem boasted the highest year-over-year revenue growth, driven by UHG’s Optum subsidiary and Anthem’s integrated health services.

Cigna and CVS Health each earned less than a quarter of their total revenue from their insurance arms last year. While Humana lags the others in topline revenue, it has assembled a robust portfolio of care delivery investments and partnerships, surpassed only by UHG. 

As antitrust scrutiny on vertical integration increases (case in point: the DOJ is now challenging UHG’s acquisition of Change Healthcare), insurers will face the hard task of integrating their portfolio of service—and demonstrating that they deliver value to consumers and patients.

Department of Justice (DOJ) files suit to block UnitedHealth Group (UHG)’s $13B acquisition of Change Healthcare

https://mailchi.mp/7788648545f0/the-weekly-gist-february-25-2022?e=d1e747d2d8

DOJ alleges that allowing UHG’s Optum subsidiary to acquire Change, a direct competitor used by most large commercial insurers for healthcare claims solutions, would give UHG 75 percent of the healthcare claims processing and management market. This would significantly reduce competition, the DOJ claims, while simultaneously giving UHG access to its competitors’ sensitive plan design and pricing information. UHG called the DOJ’s position ‘deeply flawed’ and promised to fight the case. 

The Gist: This is the second big move by antitrust regulators in a week to put the brakes on consolidation in healthcare: shortly after the DOJ sued to block Rhode Island’s two largest health systems, Care New England and Lifespan, from merging, those systems abandoned plans to combine. 

We are seeing the first real signs that the Biden administration is following through on plans to more closely scrutinize healthcare deals, including payer-led vertical integration. For both payers and providers, increased scrutiny will place a premium on the consumer value proposition of any combination—and force merging companies to deliver on the benefits of scale. 

FTC sues to block Rhode Island’s largest health systems from merging

Dive Brief:

  • The Federal Trade Commission is suing to block Rhode Island’s two largest health systems from merging, alleging the tie-up between Lifespan and Care New England would increase prices and diminish the quality of care.
  • In the state’s own review, Rhode Island’s attorney general said the union would result in “extraordinary market power” and denied the merger application under state law that requires a review of such tie-ups. Rhode Island’s attorney general will join FTC’s federal lawsuit seeking to block the deal.
  • The FTC alleges that, together, Lifespan and Care New England would control at least 70% of Rhode Island’s market for inpatient hospital services and also reduce competition in several nearby Massachusetts communities.

Dive Insight:

The union between Lifespan, the state’s largest health system, and Care New England, the second largest, quickly raised alarms in Rhode Island.

A 25-page report from the state’s insurance department found that the merger would “significantly alter” the state’s healthcare market, which currently enjoys a “relatively competitive” market. State regulators were also concerned about the control the new system would have over physician services. Given these risks, the state insurance commissioner proposed a set of conditions on the deal including price caps. Health system executives were open to working under certain conditions.

However, executives seemed surprise by Thursday’s announcement that the deal to create an integrated academic medical system with Brown University at the forefront would be blocked.

“On four separate occasions in prior years, the FTC reviewed the same proposed merger and allowed it to proceed,” a joint statement released Thursday said. The management teams said they offered up 30 conditions to regulators to satisfy antitrust concerns about the merger, “but neither the FTC or the AG ever discussed these conditions or others with the two systems prior to today’s decisions,” according to the statement.

After flirting with the idea of combining the systems for years, Lifespan and Care New England inked a deal to merge last February after the coronavirus pandemic revived talks.

The two touted the deal as a way to create an integrated academic health system with Brown University’s medical school in a central role. Brown University committed $125 million to the creation of the new system.

However, FTC commissioners voted unanimously to block the union over concerns it would extinguish competition between the two.

And although regulators have long leaned on the argument that hospital mergers lead to higher prices, a joint letter from FTC Chair Lina Khan and Commissioner Rebecca Kelly Slaughter points to the harmful effects consolidation has on labor markets, an argument growing in importance within the agency

“Just as we want firms to compete with each other to sell goods and services to their customers, we want employers to compete with each other to attract and retain workers,” the letter states. “Indeed, there is a growing body of empirical research about the potential for competitive harm to labor markets from consolidation and concentration.”

The news follows reports that the Department of Justice is preparing to sue to stop UnitedHealth Group’s blockbuster acquisition of Change Healthcare, a healthcare technology firm. Concerned about the “massive consolidation” of healthcare data, the American Hospital Association urged antitrust regulators to thoroughly examine the proposed transaction in a letter sent to DOJ last spring.

After taking office, President Joe Biden has signaled his administration would take an aggressive antitrust stance, including getting tough on hospital mergers. Last summer, the president issued an executive order that called on antitrust regulators to “review and revise” merger guidelines to ensure patients are not harmed by proposed deals.

Biden specifically called out the healthcare industry, rife with consolidation and accompanying research that shows hospital unions lead to higher prices.

“Thanks to unchecked mergers, the ten largest healthcare systems now control a quarter of the market,” the release from the White House said.

Still, the FTC has become overwhelmed by the sheer number of proposed transactions. In August, the agency said it was hit by a “tidal wave” of merger filings and warned applicants it may not vet all submissions before the applicable deadlines. But in letters sent to merging companies, the FTC warned the delay should not be interpreted as a green light for any deal.

“Companies that choose to proceed with transactions that have not been fully investigated are doing so at their own risk,” the regulator said in a statement.

Florida physician convicted of $110M fraud

Report from the Department of Justice Fraud & Abuse Control for 2017 sheds  light upon the importance of compliance - The Coding Network

A Florida physician was convicted Feb. 10 for his role in a healthcare fraud scheme that involved billing health insurance companies for $110 million in medically unnecessary services, according to the Justice Department

Mark Agresti, MD, of Palm Beach, Fla., unlawfully billed insurers for $110 million of drug testing services that were medically unnecessary. The patients who received the unnecessary drug tests were residents of Good Decisions Sober Living in West Palm Beach. Dr. Agresti was the medical director of the facility, according to the Justice Department. 

“Patients at GDSL were required to submit to excessive, medically unnecessary urine drug tests as a condition of residency approximately three or four times per week,” the Justice Department said. “These [urinalysis] drug tests cost as much as $6,000 to $9,000 per test.”

According to evidence presented at trial, Dr. Agresti also had Good Decisions Sober Living patients sent to his own medical practice to fraudulently bill for services. 

Dr. Agresti was convicted of 11 counts of healthcare fraud and one count each of conspiracy to commit healthcare fraud and wire fraud. He is scheduled to be sentenced April 21. 

Oak Street faces DOJ inquiry into third-party marketing, transportation relationships

Dive Brief:

  • Oak Street Health, a value-based primary care network for adults on Medicare, is facing a Department of Justice inquiry into its relationships with third-party marketing agents and its provision of free transportation for members.
  • The DOJ is investigating whether Oak Street violated the False Claims Act, per a regulatory filing published Monday. On a call with investors Tuesday, management declined to provide additional information into the government’s request, saying it was too early to know for sure what exactly the agency is investigating but that they’re working to comply.
  • Otherwise, the provider had a generally solid third quarter with better-than-expected revenue and well-controlled medical costs, analysts said. Oak Street increased its full-year 2021 guidance following the results, which beat Wall Street expectations with topline revenue of $389 million, up 78% year over year and a quarterly record for the company.

Dive Insight:

The federal government is increasingly cracking down on alleged fraud, especially in the Medicare Advantage program. In privately run MA plans, CMS pays companies on a per-member basis, then adjusts payments based on the acuity or severity of their member’s health status, as supported by provider data like diagnostic codes. Generally, the sicker the member, the higher the plan’s reimbursement.

That’s led to allegations of plans hiking risk scores to overinflate members’ health needs, resulting in higher payments from CMS. Watchdogs have been finding higher incidence of fraud and abuse as the MA program becomes more popular, growing to cover more than 40% of all Medicare beneficiaries.

Oak Street isn’t a traditional plan itself, but enters into full-risk contracts with Medicare Advantage plans, and via CMS’ direct contracting program, in which it assumes full responsibility for patients’ medical expenses in exchange for a fixed per-member, per-month payment. The Chicago-based company is the latest target of a federal inquiry into whether it violated the False Claims Act.

According to the primary care company, the DOJ sent a civil investigative demand on Nov. 1 asking for information about Oak Street’s relationships with third-party marketers and transportation partners.

Oak Street does provide patients transportation to appointments when they need it and has various ways for finding new patients, including community partnerships, but it’s unclear what the DOJ is specifically investigating, CEO Mike Pykosz told investors.

“We have had no meaningful conversations with the government,” Pykosz said. “I’m not really sure what the link is.”

The CEO noted it’s not unusual for such inquiries to take months to resolve, particularly in the hyper-regulated healthcare industry, but said he wouldn’t speculate further.

A civil investigative demand is a form of administrative subpoena, and doesn’t denote any regulatory or legal action itself. However, it is used by the government to kick off investigating potential False Claims violations, and determine whether there’s sufficient evidence to warrant filing an action, according to the National Law Review.

Penalties for violating the act could range from $11,655 to $23,331 per violation, plus triple damages. Total penalties have resulted recently in some significant payouts from MA participants. Notably, in late August, integrated health system Sutter Health agreed to pay $90 million to settle whistleblower allegations of risk adjustment fraud, in the largest False Claims Act settlement against a hospital system in the MA program.

Analysts noted the inquiry, while in early stages, is a point of concern for Oak Street’s future stock performance.

“This creates a new potential risk factor that we are unlikely to get clarity on for some time,” SVB Leerink analyst Whit Mayo wrote in a note.

Oak Street, which also provides services to patients with a range of insurance options, had an otherwise solid quarter, eclipsing $1 billion of year-to-date revenue for the first time in the company’s history.

The highly infectious delta variant did contribute to higher expenses, as it has with other providers.

Oak Street reported $15 million in costs from COVID-19 admissions in the first half of the year, and another $10 million in the third quarter. COVID-19-related expenses surged in the latter half of August and continued into September, but tailed off early into the fourth quarter, CFO Tim Cook said.

The majority of Oak Street’s patients are in northern U.S. markets, however, which experienced coronavirus surges last year during the winter as more people stayed indoors.

“We will see what happens in November and December,” Cook said. “While COVID costs are going to be lower in Q4, unfortunately we’re not in a world where they’re going to be zero.”

In the quarter, the primary care provider’s medical claims expense doubled year over year to almost $310 million. Oak Street’s medical loss ratio of 82.2% was lower than analysts expected, though management said they expected it to be higher in the fourth quarter.

Pykosz and Cook called out medical costs from new patients brought in during 2021 as a system-wide stressor.

Because diagnoses from 2020 claims are used to determine 2021 risk scores, fewer claims last year could mean lower risk scores and lower payments for plans this year. Oak Street’s patients, especially older adults in low-income communities, used fewer services last year during COVID-19, which resulted in lower revenues this year even as costs expanded.

Management said they expected to get back on track in 2022 as patients new to Oak Street this year will contribute to higher reimbursement next year, closing the current medical-cost gap between tenured and new patients.

“This is certainly an outlier year from every other year we’ve had results,” Pykosz said.

Oak Street, which was founded in 2012 and went public in August 2020 at a $9 billion valuation, reported a net loss of almost $110 million in the quarter, compared to a loss of $59 million at the same time last year.

Oak Street continued expanding its membership and network in the quarter, reporting 69% at-risk patient growth and opening 15 new centers in seven new markets.

Oak Street’s competition in the value-based primary care space has ramped up this year, as peers One Medical acquired a rival value-based medical chain and VillageMD got a hefty new investment from drugstore partner Walgreens.

But Pykosz pointed to Oak Street’s exclusive relationship with senior group AARP and its acquisition of specialty telehealth provider RubiconMD as differentiators, while noting there’s room for a number of players in the space.

“At this point we don’t feel there’s a lot of pressure or competitive dynamics pressuring our performance,” Pykosz said.

In the third quarter, Oak Street served 100,500 risk-based patients, representing 76% of its total patient base. The company expects at-risk patient volume to grow to between 111,500 and 113,500 patients this year.