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Presentation on theme: " Partners in Health Care Fraud and Abuse Solutions Session Description This Presentation provides a firsthand-source look at the 'what, how."— Presentation transcript:


2 Partners 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

3 Fraudster US Health Care System

4 Partners in Health Care Fraud and Abuse Solutions 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 Secretarys Award, 2-time recipient of CMS Administrators Citation, 2-time recipient of HHS Inspector Generals 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 1 st National Health Care Fraud Summit hosted by HHS/DOJ Requested speaker at Health Care Anti-Fraud Conferences/Meetings Ted Doyle Director of Client Solutions

5 What is Health Care Fraud? What is the Scope of the Problem? 4

6 Health Care Fraud in the United States I 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

7 PUBLIC PERCEPTION 20% of Americans say its acceptable to defraud insurers 40% say its okay to exaggerate claims to beat the deductible One-third of doctors say its 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 6

8 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 7 Partners in Health Care Fraud and Abuse Solutions

9 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 8 Partners in Health Care Fraud and Abuse Solutions

10 9 PRE Patient Protection and Affordable Care Act (PPACA) Projected Medicare & Medicaid Spending & Estimated Fraud 2005-2015 ($Bs) 9

11 Systems 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 crime 10 Partners in Health Care Fraud and Abuse Solutions

12 Contributing Factors The Need to Pay Large Volumes of Claims Promptly and Electronically Complex Coding and Payment System Speed at Which Fraudulent National Schemes Can Payoff Regulatory and Compliance Considerations 11 Partners in Health Care Fraud and Abuse Solutions

13 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 Payors 12

14 The Perpetrators Dishonest patients Dishonest providers (individuals or institutions) Professional criminals/bogus providers Other parties to the system – Dishonest billing services – Dishonest payer employees 13 Partners in Health Care Fraud and Abuse Solutions

15 Most Common Forms of Provider Fraud Billing for services not rendered Misrepresentation of services provided Provision of medically unnecessary services 14 Partners in Health Care Fraud and Abuse Solutions

16 15 Insurers (Payers & Plans) need to be aware of heightened risk in these locations Trends 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 Partners in Health Care Fraud and Abuse Solutions

17 16 Trends in Provider/ Member Based Healthcare Fraud Type of FraudTraditional 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 Partners in Health Care Fraud and Abuse Solutions

18 17 Benefit/Program Trends Provider and/or Member Based Health Care Fraud Type of FraudTraditional 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 Partners in Health Care Fraud and Abuse Solutions

19 Fraud Schemes That Continue to Target Public Programs and Private Health Plans 18 Partners in Health Care Fraud and Abuse Solutions

20 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 providers legitimacy – Risk/harm to patients 19 Partners in Health Care Fraud and Abuse Solutions

21 Other Top Risks Ambulance 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 20 Partners in Health Care Fraud and Abuse Solutions

22 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 21

23 Anorectal Manometry Monday, March 8, 2010: California Medical Clinic Owner Convicted in $3.4 Million Medicare Fraud Scheme.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 Karapetyans clinic, USA Independent Medical Corp No patients received medical services, and no doctors provided any medical services 22

24 Anorectal Manometry USA 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 - are_fraud_scheme.html are_fraud_scheme.html medicare-patients-health-care 23

25 Anorectal Manometry Lessons Learned How does fraud or over-utilization like the ARM Occur? How can it be prevented? 24

26 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 Physicians plea agreement acknowledged that the public and private health insurance companies suffered losses of between $400,000 and $1 million Source: _million_health_care_fraud_scam.html _million_health_care_fraud_scam.html 25

27 Fraud and Organized Crime Armenian-American Crime Ring Mirzoyan-Terdjanian Organization 26

28 Armenian-American Crime Ring Largest Medicare fraud scheme ever committed by a single enterprise 73 defendantsincluding 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 27

29 Armenian-American Crime Ring Subjects 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

30 Fraudulent Billing & Ordered Services Independent Diagnostic Testing Facilities (Labs) Clinical Testing Laboratories Durable Medical Equipment Home Health Services Hospice Services for Terminally IllEQUALS Tests & Equipment Not Really Ordered and Likely NOT Performed Tests For Which A Clinical Relationship Does NOT Exist 29

31 Deceased But Not Dead & Gone Deceased Members Deceased Performing Providers Deceased Ordering Providers Identity Theft 30

32 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: rlLevin7908.pdf rlLevin7908.pdf – Senate Hearing Viewable at: Hearing&Hearing_id=eb856347-01f1-4b55-826e-a9bf5247072c 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

33 Fraud Interdiction Program Former Deputy DA Albert Mackenzie 50 Crook Project Programs core project wherein numerous medical doctors suspected of being involved in healthcare fraud have been identified as viable tax fraud cases Originally the list consisted of 50 medical doctors we identified who had failed to report over 122 million in income paid by Medicare As the suspects have been arrested, leads have been developed leading to additional suspects involved in these multi-million dollar healthcare fraud cases Led to recent Armenian-American Arrests in LA and other US cities 32

34 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 33

35 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 34

36 Joint HHS/DOJ HEAT Initiative 35

37 HEAT: HEATH CARE FRAUD PREVENTION AND ENFORCEMENT ACTION TEAM Cabinet-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 36

38 HEAT Initiative 37 Partners in Health Care Fraud and Abuse Solutions

39 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 38 Partners in Health Care Fraud and Abuse Solutions

40 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 ( - Anti-Fraud Management Survey CY 39 Partners in Health Care Fraud and Abuse Solutions

41 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 pending Source: 40 Partners in Health Care Fraud and Abuse Solutions

42 Partners in Health Care Fraud and Abuse Solutions Contact information Ted Doyle Director of Client Solutions (414) 828-6884

43 Questions 42


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