1,250 medical statements contained plethora of identity information.

Medical theft identity is on the rise. Is your organization prepared for a possible mishap?

ICD-9 Codes

Take note of the latest possible casualty: After Rochester, NY-based Strong Memorial Hospital mailed about 1,250 medical bills to the wrong patients in April 2010, the hospital issued a warning of possible misuse of information.

Strong discovered its blunder through patients calling in to report that they’ve received the wrong bills, according to a report in local paper Democrat and Chronicle. An automatic folding machine that also stuffed bills into windowed envelopes broke down, hospital spokeswoman Teri D’Agostino reportedly said, adding that the machine picked up multiple statements, so that patients got their own hospital bills as well as bills of other patients. D’Agostino is assuring patients that important data such as their insurance and social security numbers and dates of birth were unlikely to be used inappropriately.

However, an expert on identity theft thought otherwise. The story quotes John Sileo, who notes that Strong’s statements had more than the average amount of medical identity information that could be stolen. He recommended two precautionary measures that a patient could take to protect the information, including freezing credit and monitoring medical records very closely.

Hospitals and medical facilities can prevent identity theft by taking information security more seriously, according to a recent Ponemon Institute survey, which advises organizations to:

• Educate staff members about the threat of medical ID theft
• Create comprehensive risk management programs
• Designate someone to enforce security policies
• Assess the security policies of business associates

In March 2010, a study by Pleasanton, CA-based market research firm Javelin Strategy & Research revealed that 275,000 cases of medical information theft occurred in the United States last year. Fraud resulting from exposure of health data rose from 3 percent in 2008 to 7 percent in 2009 (a 112 percent increase).

There is money to be given out to medical practices for using EMRs. AUDIO: Medical Coding 101: The Need-to-Know for CEOs.

Off-label marketing of food and drugs remains in feds’ crosshairs.

Giant drugmakers aren’t the only ones getting busted for off-label marketing: Look out for bad apples whose strange (and criminal) behavior could get themselves and the facility or practice where they work (or shop) into hot water.

That’s the lesson from the latest off-label marketing case out of Colorado.

A U.S. Magistrate judge sentenced Jason Eric Kay, 38, to two years of probation, and ordered him to pay a $1,000 fine for adulteration and removal of a label of food while held for sale, the U.S. Attorney’s Office in Colorado and the Food and Drug Administration Office of Criminal Investigations recently announced.

In 2009, Pfizer, Inc. was sentenced to pay $1.3 billion in criminal fines and revenue forfeiture for promoting four drugs, including the painkiller Bextra, for unapproved uses. Off-label marketing involves the act of routinely marketing and prescribing drugs for health conditions for which they have never even been studied. Drug companies have been accused of conspiring with doctors to carry out off-label marketing and engaging them in huge kickback payments.

According to court documents in the Kay case, beginning in January 2010, Kay made at least 11 separate purchases of various Gatorade products from Safeway and King Soopers stores, removing the labels from those products and replacing them with new ones that he manufactured or produced on his own. He then took the products back to the stores, placing it back on shelves for sale to consumers.

Kay made labels for Gatorade A.M. Tropical-Mango flavored products, but placed the labels on bottles that were not those products, but were, in fact, Gatorade Thirst Quencher Orange flavor. Further, these labels said the product contained vitamin C, when, in fact, Gatorade Thirst Quencher Orange does not contain vitamin C.

“The public needs to be confident that the product they purchase from a retailer is the same as when it left the manufacturer,” United States Attorney David Gaouette said, praising the agents involved in Kay’s arrest. He added that the case should serve as a warning to others who are contemplating jeopardizing the public or the public’s health by misbranding food and drugs.

Collect what your practice really deserves. AUDIO: You Can Use the Appeals Process Like a Pro.

Money will go to State Pension Fund to benefit future retirees.

Financial services firm UBS and three of its former employees reached a $117 million settlement with Office of the Attorney General (OAG) in Michigan. The amount settles UBS’s financial fraud case for allegedly deceiving the public about HealthSouth’s financial condition, Attorney General Mike Cox and Treasurer Robert Kleine announced in April.

In a press release, Cox said the settlement money will go to the Michigan’s pension fund and members of the class action against UBS. Because the Zurich-based firm lied about HealthSouth’s true financial picture to investors, “Retirees and pensioners lost millions of dollars in their hard-earned investments,” Cox added.

UBS is paying an addition of $100 million to HealthSouth’s bondholders. Ernst & Young, HealthSouth’s auditor, will also pay $33.5 million to bondholders. In 2009, the audit company sealed a $109 million settlement with OAG over fraud charges that involved losses to pensioners and investors nationwide.

HealthSouth admitted to bloating its income by more than $2.8 billion after federal agents raided its offices in Birmingham, AL in 2003, and 15 executives pleaded guilty. Despite HealthSouth’s fraudulent activity and gloomy financial state, UBS allegedly gave a positive review of its operations, finances, and future business prospects.

About 600,000 beneficiaries of the State Pension Fund will benefit from the settlement, as the money will be used to fund their retirement. “This settlement sends a very clear message that we will take all necessary steps to recover lost funds and ensure our pensions do not fall victim to fraudulent activity,” Cox noted.

OAG estimated that the State of Michigan Retirement Systems lost an estimated $33 million due to UBS, HealthSouth, and Ernst & Young’s collective alleged fraud.

UBS continues to deny wrongdoing, pointing toward Healthsouth as the true culprit. Kristopher Kagel, a spokesman for the company, said in a statement: “As established in multiple proceedings, HealthSouth’s corrupt insiders repeatedly lied to UBS bankers. This settlement is fully funded by insurance, except for a less than three percent co-insurance payment by UBS.”

FERA could be farther reaching than you know. AUDIO: Prepare for Unseen Liabilities: FCA, FERA and Their Impact on Healthcare.

The state of Georgia has found an effective way to recover fraud money: computer data analysis. The state Attorney General’s office hopes to make use of the new method of investigation to somehow bridge this year’s $608 million Medicaid funding gap, the Atlanta Journal-Constitution recently reported.

AG Thurbert Baker and his team usually uncover fraudsters through claims. Schemes such as overbilling and charging for services that were never performed are prevalent. In 2009, the Attorney General’s office recouped about $26 million through data analysis and old-fashioned investigative work. One case unfolded after police found labels for filled prescriptions in a car involved in a traffic stop.

“Over time, using techniques that included computer data analysis of these prescriptions, investigators discovered that Varian Scott of Miami and his cousin, Hezron Collie of Atlanta, were buying blank doctors’ prescription pads from a source at Emory University’s Winship Cancer Institute and other doctors’ offices in Atlanta and in Florida. The two then forged prescriptions for cancer and HIV medications and resold the expensive drugs on the so-called ‘gray market’ in Florida,” according to a press release by the US Department of Justice. The scammers bilked Medicaid for about $1.1 million.

DCH Inspector General Robert Finlayson, referring to the government effort, says: “We’re very aggressive about these reviews.” He acknowledges that the feds are doing a better job of protecting taxpayers’ money.

Computer data analysis also uncovered the case of Tina Webster-Fabayo, who owned and operated two mental health services companies in Stockbridge, GA. She submitted fake claims to Medicaid for services that were not rendered to patients and double-billed for services provided to adolescents but already paid for through the Georgia Department of Juvenile Justice.

Fabayo pleaded guilty to two counts of Medicaid fraud and was sentenced to five years in prison. She was ordered to pay $200,000 in restitution, said the ACJ.

Some fraudulent claims also involve billing the state at outrageous rates, such as billing for 24 hours a day, or for 365 days a year, Finlayson said.

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Conspiracy between workers and patients in a Detroit clinic cost Medicare nearly $5.4M.

A resident of Miami, FL has conceded to submitting $7.42 million in false claims to Medicare in a fraudulent medical testing scheme, the Departments of Justice and of Health and Human Services have  announced.

Twenty-five-year-old Hans Lobato pleaded guilty before US District Court Judge Alan S. Gold in the Southern District of Florida to one count of conspiracy to commit health care fraud. He faces a maximum penalty of 10 years in prison and a $250,000 fine when the court hands down the sentence in July 2010.

Medicare paid about $5.336 million of the fraudulent claims, DOJ and HHS report.

Lobato and his co-conspirators opened a Detroit-area clinic called Ritecare LLC in August 2007 and paid recruiters—who were also patients in the clinic—for bringing beneficiaries to the company. According to the DOJ new release, “Lobato admitted knowing that the patient recruiters would use a portion of that money to pay the patients kickbacks for agreeing to be seen at Ritecare and subjecting themselves to medically unnecessary tests.”

He also paid whoever would conspire with him—often Medicare beneficiaries who subjected themselves to medically unnecessary tests. To make the scheme more believable, Lobato instructed patient recruiters and Medicare beneficiaries to claim they had symptoms justifying medically unnecessary tests, including costly nerve conduction studies, on numerous occasions. These false symptoms appeared on patients’ medical records.

Learn more about Health Care Fraud Prevention and Enforcement Action Team (HEAT) at www.stopmedicarefraud.gov.

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Keep up with constant Medicare billing changes: Improve Medicare Billing in Your Skilled Nursing Facility.

Fake HIV-related treatments said to bilk Medicare for a total of $82 million.

The FBI, with a little assistance from its friends in the HHS OIG, helped the feds in Miami net three more people who thought they were smarter than Medicare. No one’s smarter than Medicare!

Two residents of Miami-Dade County in Florida have pleaded guilty to one count each of conspiracy to commit health care fraud, the US Attorney Office of Southern District of Florida announced on April 8, 2010.

Efren Mendez and Damian Beltran admitted to billing Medicare about $21 million for HIV+ treatments that were either incomplete or never happened. “From October 2003 through November 2004, Research Center submitted $21,043,982 in Medicare claims, almost all of which were for treatment of HIV+ patients. Based on these claims, Medicare paid Research Center $10,944,088. However, Research Center personnel generally administered smaller doses of the medications than Research Center purported in its claims, or no treatment at all,” according to the press release.

Each defendant faces a maximum sentence of 10 years imprisonment.

Mendez, who was the vice-president of Research Center, claimed that he and the clinic’s president decided what claims to submit to Medicare, knowing that the treatment would not be provided. He further admitted arranging to pay cash kickbacks to Medicare beneficiaries to attend Research Center as purported patients.

Beltran, a medical assistant at Research Center, admitted preparing false documentation on the treatments that were supposed to have been provided to patients, but in fact were not.

U.S. Attorney for the Southern District of Florida Jeffrey H. Sloman praised the FBI and the OIG for their joint efforts in the investigation.

Meanwhile, another Miami-Dade County resident, Ihosvany Marquez, pleaded guilty to charges of conspiracy to commit Medicare fraud, conspiracy to commit money laundering, and aggravated identity theft.

The factual proffer submitted in the court describes how Marquez, along with co-defendant Michel De Jesus Huarte and others, operated and controlled eight purported medical clinics in Miami-Dade and Orange counties (Zigma Medical Care, Inc, Tender Loving Care Medical Center, Inc, Professional Medical Health, Inc, Metro Med Care, Inc, San Diego Medical & Rehab Center, Inc, Eulogia’s Diagnostic Medical Center, Inc, Stirling Medical & Rehab, and Stop Injury Medical Center, Inc). The clinics submitted about $61 million in false claims to Medicare for infusion therapy, injection therapy, and other expensive medical treatments for cancer, HIV, AIDS, chronic pain, and varicose veins.

“To conceal their involvement in the scheme, Marquez and his conspirators recruited nominee or ‘straw’ owners for each company, and paid them large sums of cash to sign the corporate records, bank records, and other business documents before fleeing the country to avoid arrest. One such nominee owner, Madelin Machado of Zigma Medical, was indicted in the Southern District of Florida in January 2008, and remains a fugitive today,” a press release by the Southern District of Florida’s Attorney’s Office.

Huarte pled guilty in November 2009 to a related Medicare fraud scheme, and was sentenced in January 2010 to 22 years’ imprisonment.

Click here to learn how to avoid trouble if the feds show up at your health care facility.

Aggressive power wheelchair marketing tactics part of a Medicare fraud scheme.

A fugitive owner of a Los Angeles-based durable medical equipment company was sentenced to nine years in prison following a more than $1 million power wheelchair fraud case, a Department of Justice (DOJ) press release announced on March 25.

Leonard Nwafor, owner and operator of Pacific City Group Inc (aka Pacific City Medical Equipment) will also serve three years of supervised release following his prison term, pay $526,243 in restitution and $25,000 in fines, and forfeit more than $526,000 in stolen Medicare funds.

He was convicted in September 2008 of conspiracy to commit health care fraud, as well as health care fraud. He has since fled and become a fugitive enemy of the government.

According to DOJ, Nwafor submitted $1,109,438 in fraudulent claims to Medicare and consequently received $526,243 in payments. All claims were for expensive, high-end power wheelchairs and wheelchair accessories that beneficiaries didn’t need.

Nwafor’s main scheme focused on recruiting beneficiaries through “marketers”, who approached potential recruits on the streets, community events, and at home. The marketers either forced or paid these beneficiaries in order to extract Medicare information and get more referrals, a witness claimed. Nwafor billed Medicare for power wheelchairs — at $7,000 each — on behalf of more than 170 beneficiaries who didn’t use them.

Nwafor and his co-conspirators went to great lengths to carry out their fraudulent scheme. One witness testified that an individual purporting to be from Medicare, but who was actually associated with Nwafor, threatened to terminate the Medicare benefits of the beneficiary and her husband unless they accepted two power wheelchairs that the beneficiary and her husband did not need.

He also used names of LA physicians on fake prescriptions, which he presented to support his fraudulent claims to Medicare. His accomplice Ajibola Sadiqr had pleaded guilty and is due to be sentenced in April.

The Medicare Fraud Strike Force (HEAT), supervised by the Criminal Division’s Fraud Section and the US Attorney’s Office for the Central District of California, is behind the filing of the case against Nwafor. Since its inception in 2007, the agency has gone after more than 500 individuals who have scammed Medicare for a total of about $1.1 billion.

Hospital billing consultant knew exactly how to blow the whistle — and gets $613,000 for his trouble.

Brookhaven Memorial Hospital Medical Center in Long Island, NY will pay the federal government $2.92 (excluding interest) to settle Medicare billing fraud allegations involving outlier payments.

What’s the problem with false claims for outlier payments? Part of the Medicare-provided reimbursement to hospitals is the “outlier payment,” which is basically an additional reimbursement paid to cover unusually expensive treatment and procedure costs incurred by the health care institutions. Brookhaven allegedly overcharged “for cases that were not extraordinarily costly and for which outlier payments should not have been paid,” stated the Department of Justice in a news release.

Who was this ‘professional whistleblower?’

Whistleblower Anthony Kite, who originally filed the qui tam lawsuit in 2005, was a former hospital billing consultant from New Jersey. The false claims act rewards the qui tam relator by giving him a share in the recovery, and Kite will get about $613,000 plus interest as share in the settlement proceeds for the Brookhaven settlement alone. Kite was not a Brookhaven employee, but rather, “appears to be a professional whistleblower working with a Washington-based law firm specializing in qui tam whistleblower cases,” according to The Health Care Bulletin, published online by Bricker & Eckler LLP.

Kite implicated several other New Jersey-based hospitals with the same outlier fraud allegation, including Warren Hospital in Phillipsburg, Bayonne Medical Center in Bayonne, Cathedral Healthcare System in Newark, and Raritan Bay Medical Center in Perth Amboy, according to the Bulletin. These institutions have since settled their cases.

As of November 2009, four other hospitals had settled the qui tam cases brought in by Kite. These are:

- Cooper University Hospital in Camden, New Jersey (settled for $3.85 million);

- St Vincent Hospital in Erie, Pennsylvania (settled for $1.9 million);

- St Joseph Healthcare System Inc in Paterson, New Jersey (settled for $1.75 million).

Available on CD: How to protect your health care organization from Kite and his ilk.

Lack of documentation for IRF services the crux of case

The federal government gets a $2.8 million settlement from Mercy Medical Center after the hospital admitted it violated the False Claims Act some three years ago by failing to provide, or failing to document that it provided, the minimum number of hours of rehabilitation therapy required under Medicare guidelines, the Department of Justice (DOJ) announced in a news release.

Lesson Learned: Document your services.

In 2007, Mercy owned up to its mistake when it could not show it provided a minimum amount of rehabilitative therapy to their patients — a Medicare requirement for inpatient rehabilitation hospitals. In turn, DOJ recognizes Mercy’s efforts of cooperating with the government. “As this settlement shows, those who come forward to disclose their violations will be dealt with fairly.” says Tony West, assistant attorney general, civil division, DOJ.

Pertaining to the settlement, Mark M Fulco, vice president for strategy and marketing for the Sisters of Providence Health System, maintains that Mercy “needed to do the right thing and take the high road,” according to an article published at masslive.com. The Sisters of Providence Health System operates the Mercy Medical Center.

Mercy will complete the payment of the settlement in a span of about five years and claims that this will have no bearing on the hospital’s services. Half of the $2.8 million are penalties for the claims violation, the masslive.com article adds.

The government has recovered about $3 billion since January 2009 in cases of health care fraud through the False Claims Act, says DOJ.

Is your facility complying with the IRF rules for 2010? Find out here.