California surgeon gets prison time for role in $580M billing fraud scheme

https://www.beckershospitalreview.com/legal-regulatory-issues/california-surgeon-gets-prison-time-for-role-in-580m-billing-fraud-scheme.html?origin=cfoe&utm_source=cfoe

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An orthopedic surgeon was sentenced to 30 months in federal prison Nov. 22 for his role in a healthcare fraud scheme that resulted in the submission of more than $580 million in fraudulent claims, mostly to California’s worker compensation system, according to the Department of Justice.

Daniel Capen, MD, was sentenced more than a year after pleading guilty to conspiracy to commit honest services fraud and soliciting and receiving kickbacks for healthcare referrals. He was one of 17 defendants charged in relation to the government’s investigation into kickbacks physicians received for patient referrals for spinal surgeries performed at Pacific Hospital in Long Beach, Calif.

Dr. Capen received at least $5 million in kickbacks for referring surgeries to Pacific Hospital and for referring services to organizations affiliated with the hospital. He allegedly accounted for $142 million of Pacific Hospital’s claims to insurers between 1998 and 2013, according to the Justice Department.

In addition to the prison term, Dr. Capen was ordered to forfeit $5 million to the federal government and pay a $500,000 fine.

 

 

 

 

Former UMMS board member indicted in fraud scheme

https://www.beckershospitalreview.com/legal-regulatory-issues/former-umms-board-member-indicted-on-11-counts-of-fraud-tax-evasion.html

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Former Baltimore Mayor Catherine Pugh, who served on the board of University of Maryland Medical System for 18 years, was indicted on charges of wire fraud and tax evasion related to a children’s book scandal that involved the Baltimore-based health system and Oakland, Calif.-based Kaiser Permanente, a local CBS affiliate reports.

The indictment was unsealed Nov. 20, ahead of Ms. Pugh’s scheduled hearing on Nov. 21. If convicted, Ms. Pugh could face up to 100 years in prison and be required to forfeit her home and repay more than $769,000 allegedly obtained through the scheme.

The indictment alleges Ms. Pugh conspired with city employees to defraud buyers of her Healthy Holly children’s books, according to CBS, which published the indictment in full. It alleges Ms. Pugh arranged five $100,000 deals with UMMS to donate a total of 100,000 books to Baltimore public schools. The books were allegedly never delivered, and instead rerouted to alternate storage facilities around the city, distributed at campaign events and double-sold to other customers.

The indictment also alleges Ms. Pugh used Healthy Holly profits to fund straw donations to her mayoral campaign and to buy a house in Baltimore. She also faces allegations of tax evasion related to Healthy Holly sales, according to the report.

CBS notes Kaiser Permanente also disclosed buying $114,000 of the books at a time that overlaps with winning a $48 million contract from the city, according to the report.

The two city officials connected to the scheme pleaded guilty to conspiracy and tax evasion, according to the report.

Read the full story and access the full indictment here.

 

Health care’s fraud and abuse laws are getting overhauled

https://www.axios.com/health-care-fraud-abuse-stark-law-antikickback-changes-fd354212-9583-44c7-85e4-86e4690cc56e.html

Doctors dressed in blue operate on a patient in a surgical suite.

The Trump administration is proposing to loosen regulations that prohibit doctors from steering patients insured by federal programs to facilities where they have a financial interest and that outlaw health care companies from offering bribes and kickbacks in exchange for patient referrals.

Why it matters: The industry has long clamored for an overhaul to these laws, which companies say obstruct their goals of providing “value-based care.” But critics worry the broad and vague changes could engender more fraud and abuse than there already is.

Driving the news: The Department of Health and Human Services would create new exemptions for the physician self-referral law and the federal anti-kickback statute — decades-old, complex laws that forbid payments that encourage unnecessary care and increase taxpayer costs.

  • Hospitals, doctors, nursing homes and other entities would be able to create “value-based arrangements,” and those deals could include exchanging bonuses or other types of “remuneration” without running afoul of referral laws.
  • For example, under these exemptions, a hospital could provide a nursing home with a behavioral health nurse for certain discharged patients, or a hospital could donate cybersecurity technology to a physician’s office.
  • Many exemptions already exist, including for organizations called “accountable care organizations” that try to keep a patient’s care within a narrow set of hospitals and doctors, but these changes would go much further.

Between the lines: The overarching concern is everyone’s definition of “value” is different. How will regulators know whether providers are acting in good faith to coordinate care, or if they are using “value-based care” as a cover to control patient referrals and enrich themselves?

A major exclusion: Pharmaceutical companies, medical device firms, labs and medical equipment makers are cut out from the changes because the federal government is afraid those companies would “misuse the proposed safe harbors.”

  • Pharma lobbyists, in particular, have pushed hard to change the law so drug companies could directly subsidize drug copays for Medicare and Medicaid patients, even though federal officials have said that practice “masks the high prices those companies charge for their drugs.”
  • HHS Secretary Alex Azar told reporters the government may consider separate regulations for value-based drug contracts, even though the evidence of those deals’ effectiveness is limited at best.

The bottom line: These changes come at the same time that hospitals, physicians, pharmaceutical companies and others are paying out billions of dollars every year in fraud settlements.

  • Public comments are due Dec. 31, and if this comment process is anything like the initial requests that asked for guidance, the industry will be heavily involved.

 

 

 

DOJ breaks up alleged genetic testing fraud scheme estimated at $2.1 billion

https://www.healthcarefinancenews.com/news/doj-breaks-alleged-genetic-testing-fraud-scheme-estimated-21-billion?mkt_tok=eyJpIjoiWkdNMU56WmxabVl3TWpRMSIsInQiOiI0dlhaYUJpT2xBU0FqeDNmWkRlZHVZYnRsZ2xBK3pxMmN6RG5kS3Q1UWgrWFYyNllIK2lLZEYzclRDWUYyTFwvOGdhUzRVSnlscG5MQjBtY0NwT2d1TjZHdXJYRUlYRGszVEhrQmY5b0xhRDlFTWNTNUEwWnVvWGUwZXE3ME9kdGgifQ%3D%3D

The defendants ordered unnecessary tests that were reimbursed by Medicare, with laboratories sharing the profit, DOJ says.

The U.S. Department of Justice has charged 35 people with unlawfully charging Medicare $2.1 billion in what it said is one of the largest healthcare fraud schemes in history.

The 35 alleged offenders were charged in five separate federal districts, and were linked to dozens of telemedicine firms and laboratories focused on genetic testing for cancer. The people charged, including nine doctors and one other medical professional, cumulatively billed Medicare billions for cancer genetic tests, the DOJ said in a press release.

The charges were a culmination of coordinated law enforcement activities over the past month that were led by the Criminal Division’s Health Care Fraud Unit, resulting in charges against more than 380 individuals who allegedly billed federal healthcare programs for more than $3 billion, and allegedly prescribed and dispensed approximately 50 million controlled substance pills in Houston, across Texas, the West Coast, the Gulf Coast, the Northeast, Florida and Georgia, and the Midwest.

These include charges against 105 defendants for opioid-related offenses, and charges against 178 medical professionals.

The investigation targeted an alleged scheme involving the payment of illegal kickbacks and bribes by CGx laboratories in exchange for the referral of Medicare beneficiaries by medical professionals working with fraudulent telemedicine companies for expensive, and medically unnecessary, cancer genetic tests.

According to the DOJ, the targets of the scheme were primarily seniors, who were approached at health fairs, at their homes during door-to-door visits, or through telemarketing calls. The “recruiters,” as they were called, would approach seniors about supposedly free cancer screenings or generic cheek swab tests, and the recruiters would then obtain the seniors’ Medicare information for the purposes of fraudulent billing or identify theft.

The recruiter would then get a doctor to sign off on a genetic so a lab would process it, and then pay a kickback in exchange for ordering the test. The lab would process the test and bill Medicare, and once it was reimbursed, would share the proceeds with the recruiter, according to the charges.

Often, the test results were not provided to the beneficiaries, or were worthless to their actual doctors. Some of the defendants allegedly controlled a telemarketing network that lured hundreds of thousands of elderly and/or disabled patients into a criminal scheme that affected victims across the U.S.

The defendants allegedly paid doctors to prescribe CGx testing, either without any patient interaction or with only a brief phone conversation with patients they had never met or seen.

WHAT’S THE IMPACT

In addition to the DOJ charges, the Centers for Medicare and Medicaid Services, Center for Program Integrity said it took adverse administrative action against cancer genetic testing companies and medical professionals who submitted more than $1.7 billion in claims to the Medicare program.

The DOJ Criminal Division, along with the U.S. Department of Health and Human Services Office of Inspector General and the FBI, spearheaded the investigation.

The DOJ calls the scheme one of the largest it has ever handled.

THE LARGER TREND

Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 15 strike forces operating in 24 districts, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $16 billion.

In addition, CMS, working in conjunction with the Health and Human Services Office of the Inspector General, are taking steps to increase accountability and decrease the presence of fraudulent providers.

The newest Medicare fraud scheme is the second to be uncovered in the last month. Earlier in September, a telemedicine CEO pleaded guilty to one count of conspiracy to defraud the United States and pay and receive healthcare kickbacks and one count of conspiracy to commit money laundering in a scheme estimated at $424 million.

ON THE RECORD

“Unfortunately, audacious schemes such as those alleged in the indictments are pervasive and exploit the promise of new medical technologies such as genetic testing and telemedicine for financial gain, not patient care,” said Deputy Inspector General for Investigations Gary L. Cantrell of HHS-OIG. “Instead of receiving quality care, Medicare beneficiaries may be victimized in the form of scare tactics, identity theft, and in some cases, left to pay out of pocket.  We will continue working with our law enforcement partners to investigate those who steal from federal healthcare programs and protect the millions of Americans who rely on them.”

“Healthcare fraud and related illegal kickbacks and bribes impact the entire nation,” said Assistant Director Terry Wade of the FBI’s Criminal Investigative Division. “Fraudulently using genetic testing laboratories for unnecessary tests erodes the confidence of patients and costs taxpayers millions of dollars. These investigations revealed some medical professionals placing their greed before the needs of the patients and communities they serve. Today’s law enforcement actions reinforce that the FBI, along with its partners, will continue to pursue and stop this type of illegal activity.”

 

Texas docs, pharmacists charged in alleged opioid pill mill scheme

https://www.healthcaredive.com/news/texas-docs-pharmacists-charged-in-alleged-opioid-pill-mill-scheme/563270/

Dive Brief:

  • The U.S. Department of Justice said Wednesday it charged 58 people in Texas in connection with their alleged roles in various schemes to defraud government health programs, including distributing and dispensing medically unnecessary opioids, billing Medicaid for non-emergency ambulance services that were never actually provided and paying kickbacks and laundering money through durable medical equipment companies.
  • The allegations involved multiple programs including Medicare, Medicaid, TRICARE, the Department of Labor-Office of Worker’s Compensation programs as well as private insurance companies.
  • Separately, DOJ brought charges against a total of 34 people for their alleged participation in Medicare and Medicaid fraud schemes in other states, including California, Arizona and Oregon. Seventeen of the people charged in those schemes were doctors or licensed medical professionals.

Dive Insight:

Created in 2007, the Medicare Fraud Strike Force​ has units operating in 23 districts, and has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 billion. It’s a joint effort between DOJ and HHS to deter healthcare fraud.

According to the most recent statistics, from January, the strike force has brought 2,117 criminal actions, secured 2,754 indictments and recovered $3.3 billion in connection with its investigations.

HHS declared the opioid crisis a national emergency in 2017. And the DOJ is increasingly focusing on fraud related to opioids, including going after medical professionals allegedly involved in the unlawful distribution of opioids and other prescription narcotics.

“Sadly, opioid proliferation is nothing new to Americans,” U.S. Attorney Ryan K. Patrick of the Southern District of Texas said in a statement announcing the charges. “What is new is the reinforced fight being taken to dirty doctors and shady pharmacists,” he said.

The coordinated healthcare fraud enforcement operation across Texas resulted in charges involving networks of “pill mill” clinics that led to $66 million in losses and the distribution of 6.2 million pills, the government said. Sixteen doctors and pharmacists were among those charged.

And that’s on top of last month, when the Health Care Fraud Unit’s Houston Strike Force charged dozens of people in a trafficking network that diverted more than 23 million oxycodone, hydrocodone and carisoprodol pills.

The Texas actions also involved healthcare fraud other than opioid diversion, including fraudulent physician orders for durable medical equipment, fraudulent claims for ambulance services and stealing protected healthcare information.

The separate actions in California, Arizona and Oregon involved schemes that ran the gamut from billing for medically unnecessary compounded drugs, unnecessary cardiac treatments and testing, billing for chiropractic services never provided and a hospice kickback scheme.

 

 

 

Insurers often shrug off fraud

https://www.axios.com/health-insurance-fraud-costs-enrollees-employers-74ad83f1-39d7-461e-9485-726676fd327f.html

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Fighting fraud “is not a top priority” for major insurers, ProPublica reports, because they can just pass along the cost of wasteful spending to enrollees and employers.

Why it matters: Experts say fraud likely accounts for 10% of U.S. health costs. However, “private health insurers, who preside over some $1.2 trillion in spending each year, exhibit a puzzling lack of ambition when it comes to bringing fraudsters to justice,” ProPublica’s Marshall Allen writes.

Case in point: In California’s 14 largest counties, which cover 80% of the state’s population, prosecutors filed charges in only 22 fraud cases referred by a commercial insurer in 2017 and 2018 combined.

  • Investigating fraud can be costly for insurers — both financially and in terms of their relationships with providers.

Go deeper, via ProPublica: How to Make Health Insurers Take Fraud Seriously