Ex-CFO, 3 surgeons charged in $950M kickback scheme in California

https://www.beckershospitalreview.com/legal-regulatory-issues/ex-cfo-3-surgeons-charged-in-950m-kickback-scheme-in-california.html

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Federal prosecutors unsealed charges this week against nine new defendants for their alleged roles in a kickback scheme that resulted in the submission of more than $950 million in fraudulent claims, mostly to California’s worker compensation system, according to the Department of Justice.

The nine defendants were 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. They are among the dozens of physicians and other medical professionals allegedly involved in the scheme.

Of the nine defendants recently charged, three are orthopedic surgeons. Daniel Capen, MD, agreed to plead guilty to conspiracy and illegal kickback charges. He allegedly accounted for about $142 million of Pacific Hospital’s claims to insurers. Timothy Hunt, MD, who allegedly referred spinal surgery patients to Dr. Capen and other physicians, agreed to plead guilty to a conspiracy charge involving his receipt of illegal kickbacks. Tiffany Rogers, MD, allegedly received illegal kickbacks to refer patients for spinal surgeries to Pacific Hospital.

The other defendants recently charged in the scheme include the former CFO of Pacific Hospital’s physician management arm, George Hammer. He agreed to plead guilty to tax charges based on the fraudulent classification of illegal kickbacks in hospital-related corporate tax filings. Two chiropractors as well as two companies and an individual associated with one of the chiropractors were also charged for their alleged involvement in the scheme, according to the DOJ.

Michael Drobot, former owner and CEO of Pacific Hospital, ran the 15-year-long kickback scheme. He was sentenced to more than five years in prison in January.

 

 

DOJ charges more than 600 in historic fraud takedown involving $2B in false claims

https://www.fiercehealthcare.com/payer/doj-jeff-sessions-medicare-strike-force-fraud-takedown-opioids-oig?mkt_tok=eyJpIjoiTXpRelpESTBaVE5tTVRBNSIsInQiOiJmTnBaRmJoVDJaOVZYRkhCd05cL2JXOVNoYU50NlVYN3pIb3ZlRFg1a3RqRWhXbjVMYm5SeEY3Y1ZNdENBb3NQSkZBTXRSR0tDSjZ4R2pJd0RjUFZ2bmRGbnhqXC9pQ2oxaTVCdHN3TUx0b25Ib09rblVuYlJVMW51NlVDcUdzRGNnIn0%3D&mrkid=959610

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Another year, another record-setting healthcare fraud takedown.

This year, the Department of Justice charged 601 individuals involved in fraud schemes totaling $2 billion in losses to the federal government. That’s nearly 200 more people and an additional $700 million than the previous year’s takedown.

There was a clear emphasis on opioid distribution, with 162 individuals charged with illegally prescribing or distributing narcotics. Of those charged for opioid fraud, 76 were physicians.

“Healthcare fraud is a betrayal of vulnerable patients, and often it is theft from the taxpayer,” Attorney General Sessions said in a statement. “In many cases, doctors, nurses, and pharmacists take advantage of people suffering from drug addiction in order to line their pockets. These are despicable crimes.”

Federal enforcement agencies have zeroed in on medical providers as a source of opioid diversion. Last year the DOJ created a new Opioid Fraud and Abuse Detection Unit with 12 dedicated U.S. attorneys and a focus on data analytics. In January, Sessions said the Drug Enforcement Agency (DEA) would direct agents to focus on prescribers and pharmacies and that dispense an unusual amount of drugs.

“This year’s operations, focusing on opioid-related schemes, spotlight the far-reaching impact of health care fraud,” said HHS Deputy Inspector General Gary Cantrell.

In this year’s takedown announcement, the DOJ said “virtually every health care fraud scheme requires a corrupt medical professional to be involved” and “aggressively pursuing” providers has a deterrent effect and ensures they cannot use their license to perpetuate schemes.

The agency highlighted one particular scheme in which a pain management specialist in New York and New Jersey was accused of taking cash from patients in exchanges for oxycodone and Subsys. He was also charged with second-degree murder after a patient died from an overdose.

Other areas of the country included equally egregious schemes:

  • In Texas a pharmacy owner and pharmacists were charged with using fraudulent prescriptions to fill more than 1 million hydrocodone and oxycodone pills and distributed them to drug dealers.
  • In California, an attorney was accused of offering prostitutes and expensive meals to two podiatrists in exchange for preprinted prescription pads.
  • In Michigan and Illinois, individuals were charged with home health fraud schemes totaling $44 million.
  • In Southern Florida, a hotbed for healthcare fraud, the owner and director of a sober home were charged for a scheme involving widespread fraudulent urine testing and $106 million in claims for substance abuse treatment.

Fraud takedowns of this size and scale have become an annual event, dating back nearly a decade. Both the number of individuals and the amount of money involved in the schemes have gradually increased over the years as the DOJ and the Office of Inspector General (OIG) have emphasized the use of analytics as an investigative tool.

Federal enforcers have also relied on a collaborative approach to enforcement. Like last year, this week’s takedown involved multiple federal agencies, including the Department of Health and Human Services, the OIG, the Centers for Medicare & Medicaid Services (CMS) and the Medicare Fraud Strike Force.

Since 2016, federal agencies have charged more than 1,300 individuals tied to $4.2 billion in fraudulent billing schemes.

 

Preexisting Conditions Can Define Your Future

http://www.philly.com/philly/health/health-costs/pre-existing-condition-protections-aca-lawsuit-20180628.html

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Labor Unions Will Be Smaller After Supreme Court Decision, but Maybe Not Weaker

 

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With the Supreme Court striking down laws that require government workers to pay union fees, one thing is clear: Most public-sector unions in more than 20 states with such laws are going to get smaller and poorer in the coming years.

Though it is difficult to predict with precision, experts and union officials say they could lose 10 percent to one-third of their members, or more, in the states affected, as conservative groups seek to persuade workers to drop out.

The court’s decision is the latest evidence that moves to weaken unions are exacting a major toll. Beyond the dropout campaigns aimed at members, conservatives are bringing lawsuits to retroactively recover fees collected by unions from nonmembers.

In May, President Trump signed three executive orders making it easier to fire government workers and reining in the role of unions representing federal workers.

Dropping out of a union is a more attractive proposition now that workers no longer have to pay a so-called agency fee, typically about 80 percent of union dues, if they choose not to belong to a union. (Those doing so generally account for a small fraction of the workers whom public-sector unions represent.)

In the five years after Michigan passed a law ending mandatory union fees in 2012, the number of active members of the Michigan Education Association dropped by about 25 percent, according to government filings, a much faster attrition rate than before. Its annual receipts fell by more than 10 percent, adjusting for inflation.

Still, the more interesting question is whether the unions, whatever the blow to their ranks and finances, will be substantially weaker.

Union leaders insist that they won’t — that the crisis posed by the case, Janus v. American Federation of State, County and Municipal Employees, has brought more cohesion and energy to their ranks.

“No one wanted this case,” said Randi Weingarten, president of the American Federation of Teachers. “But the gestalt around the country has been to turn an existential threat into an opportunity to engage with our members like never before.”

There are reasons to believe that the claim is not merely desperate bravado.

One parallel to the current development is a 2014 Supreme Court ruling known as Harris v. Quinn, which struck down mandatory union fees for home-based workers who serve private individuals but are paid through government programs like Medicaid.

As of late 2013, the Service Employees International Union represented about 60,000 public-sector home care and child-care workers in Illinois, about 40 percent of whom were union members. (The rest paid agency fees.)

Receipts for the service employees union local representing home-based workers in Illinois dropped significantly in the four years after the decision. But an aggressive membership campaign largely offset the loss of members.

It also built and reinforced personal relationships with members, who could be summoned to make demands of politicians in nearly every legislative district.

“Our members go and meet Sam McCann,” said Keith Kelleher, who until last year was president of the local representing these home-based workers, referring to a Republican state senator. “He says yes most of time because he’s got hundreds of members in his district.”

Public home-based workers in Illinois, a state with a notably anti-union Republican governor, continue to notch victories as a result. Last summer, home care workers won a 48-cent-an-hour wage increase from the state, up from an average wage of $13, in a budget that the legislature passed by overriding the governor’s veto. This spring, home child-care workers won more than a 4 percent raise.

In anticipation of the Janus ruling, major public-sector unions have invested heavily in recent years in reaching out to current members — an effort known as internal organizing — and to prospective members to keep their numbers from dropping precipitously and to create a more activist culture. They plan to continue funding these initiatives even if it requires cutting spending elsewhere.

Mary Kay Henry, the international president of the service employees union, said the union used projections derived from its experience after the Harris decision to cut its budget by 30 percent shortly after Mr. Trump was elected. She said the union, which represents about two million workers, roughly half of them in the public sector, was focusing its spending on recruiting members and mobilizing workers to face down employers and elect pro-labor politicians.

“We intend to prioritize the political and organizing work,” she said.

Government filings show that the union has cut contributions to organizations that it had traditionally supported, including the Children’s Defense Fund, People for the American Way, and the National Immigration Law Center. (The union says it provides nonmonetary support to some of these groups.)

At the same time, the union is investing tens of millions of dollars in a door-to-door canvassing initiative for the midterm elections, intended to turn out people who don’t normally vote.

Lee Saunders, president of the American Federation of State, County and Municipal Employees, said that his union’s two highest priorities going forward would be its internal outreach and helping to organize nonunionized workplaces, and that the union would probably “have to make adjustments” to fund these programs. The union spent more than $15 million during the 2016 campaign cycle supporting political candidates, parties and committees.

Mr. Saunders said the union, which represents over 1.2 million workers, had held one-on-one conversations with nearly 900,000 members since 2013. Among the goals of these conversations, he said, is to inoculate members against campaigns by conservative groups to urge them to quit.

“If someone knocks on their door talking about how you can get out of the union — ‘it would be so easy, you don’t have to pay union dues’ — our folks are prepared to tell them to get the hell off their doorstep,” he said.

Alexander Hertel-Fernandez, a political scientist at Columbia University who studies corporate and conservative efforts to weaken labor, said organized interest groups had traditionally had the greatest impact on elections by educating members about candidates and through on-the-ground canvassing rather than large campaign contributions. “It’s doubly so for unions,” he said, adding that the focus “seems like a wise decision, but the effectiveness has to be weighed against what happens to membership and overall revenues.”

The unions enjoy certain advantages. States like California and New Jersey have tried to ease the blow from Janus pre-emptively by passing legislation that, for example, guarantees public-sector unions access to new hires and their personal contact information to help in recruiting.

There is also a substantial wind at their back: a rising energy on the left during the Trump era. Workers in particular appear more willing to take to the streets and state capitols, including tens of thousands of teachers who walked off their jobs this year in conservative states to protest the underfunding of public education.

When the Supreme Court ruled last month that employment contracts could prohibit workers from bringing class-action lawsuits, activists in states like New York, Vermont and Oregon escalated their efforts to pass so-called private attorneys general legislation, allowing workers to bring cases on the state’s behalf that could benefit all affected workers, the same way litigation by an attorney general would.

“We’ve had many, many folks calling: ‘I heard about this legislation you helped design. How do we make this happen?’” said Deborah Axt, co-executive director of Make the Road New York, an advocacy group pushing the measure. Ms. Axt said the group planned to campaign for the legislation’s enactment this summer.

That kind of energy appears to be benefiting unions. A Gallup poll last summer showed labor’s approval at its highest level since 2003, and unions in West Virginia and several other states where teachers walked off the job this year report gains in members.

“We’ve seen a 13 percent jump in membership because of the walkout,” said Ed Allen, president of the Oklahoma City American Federation of Teachers. “We have over 300 people signed up to work in political campaigns. We’ve never seen those kinds of numbers before.”

 

How Policy, Business Decisions in Iowa Led to Higher Premiums

https://www.commonwealthfund.org/blog/2018/policy-decisions-iowa?omnicid=EALERT%%jobid%%&mid=%%emailaddr%%

Map of Iowa where premiums are higher due to policy decisions

This year, Iowa’s legislature took the extraordinary step of abdicating the state’s authority to regulate health insurance products. The bill, enacted in April, exempts health plans offered by the state’s Farm Bureau from state and federal insurance regulation, including Affordable Care Act (ACA) provisions designed to protect people with preexisting conditions and provide a minimum standard of benefits.

Proponents argue that such a law is needed to provide individual market consumers with cheaper health plan options than available under the ACA. Critics point out that younger, healthier consumers are most likely to benefit from these plans. And while details haven’t been provided yet, the Farm Bureau plans are expected to be medically underwritten, and not cover the ACA’s minimum set of benefits. As a result, older Iowans, those with preexisting conditions, and those who need comprehensive coverage are unlikely to find these plans affordable or attractive. And many could be denied enrollment outright. As enrollment in the ACA-compliant individual market becomes older and sicker, marketplace consumers who do not qualify for the ACA’s income-related premium subsidies will face increasingly higher premiums.

Iowa’s Farm Bureau statute is making a bad situation worse for the state’s individual market. Thanks to a number of decisions by state policymakers and the dominant insurance company – Wellmark Blue Cross Blue Shield – premiums in the state’s individual market are already among the highest in the country, with an average annual marketplace plan premium in excess of $10,000 in 2018.

A Study of Market Failure: Iowa’s Individual Health Insurance Market

The current dismal state of the ACA individual market in Iowa was not a foregone conclusion. In 2014, when the marketplaces launched, Iowa had four insurers competing in the ACA’s marketplace. In 2018, only one insurer is selling ACA-compliant health plans; it agreed to do so only after implementing an average 50 percent increase to unsubsidized premiums.

Iowa’s marketplace enrollment has also lagged that of other states. As of 2016, only 20 percent of eligible Iowans had enrolled (by comparison, that number was 40 percent in Illinois, 43 percent in Missouri, and 57 percent in Maine). Iowa is an outlier for a critical reason. Wellmark BlueCross BlueShield declined to participate in the marketplace for the first three years, entered only briefly in 2017 and then declined to participate in 2018, but is returning to the market in 2019. The insurer also maintained a large block of pre-ACA grandfathered and transitional, or “grandmothered,” health plans (see table).

Because the enrollees in these plans must pass a health screen before being allowed to enroll, they are relatively healthy. Because Wellmark was able to hang on to these healthy enrollees, the pool of people available for the ACA-compliant market was much smaller and sicker than it otherwise would have been.

Affordable Care Act Grandfathered and Grandmothered Health Plans
Grandfathered health plans Policies in effect before the March 2010  enactment of the ACA;  not subject to ACA standards and protections. Although these policies can be renewed indefinitely as long as they do not undergo substantial changes, they can’t be newly issued.
Grandmothered (transitional) health plans Policies issued after the ACA’s 2010 enactment but before 2014. Policies are not required to meet critical ACA protections.

Grandfathered and Grandmothered Policies: Policy and Business Choices with Long-Term Consequences

Due to the transitional nature of the individual market and the high administrative costs of maintaining grandfathered health plans, many insurers — other than Wellmark — discontinued these products over time. And unlike several states that prohibited these policies in order to ensure a healthier, more stable individual market, Iowa’s leadership embraced the Obama administration’s decision to allow the renewal of grandmothered health plans. Iowa stands out even among states that did not ban such plans:  an estimated 38,000 people remained in grandmothered policies as late as 2018. Indeed, approximately 60 percent of Iowans buying insurance on their own stayed with pre-ACA grandfathered or grandmothered health plans.

Left with a smaller and sicker pool of enrollees than they had projected, it is therefore not surprising that the insurers remaining in the market needed significant premium increases. The premium hike implemented in 2018 likely drove as many as 26,000 Iowans to drop their coverage this year.

Enrollment and Premiums Had Iowa Taken a Different Path

What if Iowa had taken a different path? If Wellmark had, like many other insurers, discontinued its grandfathered policies, and if the state had prohibited grandmothered plans, the individual market would be a lot healthier than it is today. In fact, doing so would have added up to 85,000 people to Iowa’s ACA-compliant market, according to a new estimate by Wakely Consulting Group. Those added enrollees, because they are relatively healthy, would have reduced average premiums for ACA-compliant plans by up to 18 percent (see table).1

Enrollment and Premiums in ACA-Compliant Market Due to Improved Risk Pool
  Without Grandfathered Plans Without Grandmothered Plans Without Grandfathered or Grandmothered Plans
Total change in ACA-compliant enrollment +25,000 to 40,000 +30,000 to 45,000 +55,000 to 85,000
Change in premiums -5% to -12% -5% to -12% -8% to -18%

Analysis by Wakely Consulting Group. Numbers have been rounded.

Looking Ahead

Iowa’s experience offers important lessons. The more the individual market is segmented between healthy and the less-healthy consumers, the more likely unsubsidized enrollees are to face unaffordable premiums. Federal proposals such as those to expand the availability of short-term and association health plans, to the extent they are not limited by state policies, could result in more state individual markets resembling Iowa’s. The primary losers in such a scenario are the working middle-class consumers: entrepreneurs who run their own businesses, freelancers and consultants, farmers and ranchers, and early retirees who earn too much to qualify for the ACA’s premium subsidies.

State leaders can protect these families by adopting policies that will expand the risk pool and maintain a balance between healthy and less-healthy enrollees. A number of states have already done so, through state-level reinsurance programs, expanded annual enrollment opportunities, and limits on short-term and association health plans. It’s not too late for other states to follow their lead.

 

 

Microsoft Healthcare is a new effort to push doctors to the cloud

https://www.theverge.com/2018/6/27/17509096/microsoft-healthcare-cloud-systems

Microsoft has been working on health-related initiatives for years, but the company is now bringing its efforts together into a new Microsoft Healthcare team. This doesn’t mean you’ll be visiting a Microsoft Store anytime soon for human virus scans, instead it’s a bigger effort to create cloud-based patient profiles, push doctors to the cloud, and eventually have artificial intelligence analyzing data.

The software maker has hired two industry veterans to help out: Jim Weinstein and Joshua Mandel. Weinstein is the former CEO of the Dartmouth-Hitchcock Health system and joins Microsoft as the VP of Microsoft Healthcare, and will work with healthcare organizations to move systems to the cloud. Mandel joins as Microsoft Healthcare chief architect, after completing a nearly two-year stint at Google as an executive for the company’s Verily venture (formerly Google Life Sciences). Mandel will be working closely with the open standards community to create an open cloud architecture for all healthcare providers.

Microsoft’s new Healthcare team appears to be a more formalized approach to the company’s Healthcare NExT (New Experiences and Technologies) company-wide initiative that kicked off last year. NExT was designed to foster health industry partnerships and bring together Microsoft’s research, AI, and cloud teams to focus on healthcare.

Microsoft is trying to find ways to move healthcare data to the cloud securely and in a way that doesn’t break strict compliance requirements for confidentiality. The new Microsoft Healthcare team will be part of Microsoft’s broader AI and Research division. “At Microsoft, we’re confident that many aspects of the IT foundations for healthcare will move from on-premise doctors’ offices and clinics to live in the cloud,” explains Peter Lee, head of Microsoft Healthcare. “We are taking concrete steps with an initial ‘blueprint’ intended to standardize the process for the compliant, privacy-preserving movement of a patient’s personal health information to the cloud and the automated tracking of its exposure to machine learning and data science.”

Lee admits the company has its “work cut out for us,” and this certainly won’t be an easy task for Microsoft. There’s an ongoing race to bring more technology to healthcare and, in particular, artificial intelligence. IBM, Baidu Google, and Alibaba are all working on similar healthcare initiatives, but IBM has struggled with its own efforts. Some analysts predict that AI use in healthcare will grow over the next decade and potentially generate huge savings for the US healthcare economy. Microsoft is clearly part of the broader race to introduce cloud technology, IoT devices, and AI into healthcare, and this new team will be responsible for that. Microsoft now plans to share more about Microsoft Healthcare later this year.