1. 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
Partners in Health Care Fraud and Abuse Solutions

2. US Health Care System
“Fraudster”

3. Partners in Health Care Fraud and Abuse Solutions
Ted Doyle
Director of Client 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 Secretary’s Award, 2-time recipient of CMS Administrator’s Citation, 2-time recipient of HHS Inspector General’s 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 1st National Health Care Fraud Summit hosted by HHS/DOJ
Requested speaker at Health Care Anti-Fraud Conferences/Meetings
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4. What is Health Care Fraud? What is the Scope of the Problem?

5. Health Care Fraud in the United States
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

6. PUBLIC PERCEPTION
20% of Americans say it’s acceptable to defraud insurers
40% say it’s okay to exaggerate claims to beat the deductible
One-third of doctors say it’s 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

7. 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
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8. Health Care Fraud “The Damage”
3% To 10% of annual U.S. Expenditure*
Translation: $78 billion to $260 billion in 2010 alone
SOURCES:
U.S. Government Accountability Office; National Health Care Anti-Fraud Association
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9. PRE Patient Protection and Affordable
PRE Patient Protection and Affordable Care Act (PPACA) Projected Medicare & Medicaid Spending & Estimated Fraud ($Bs) 9

10. System’s 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
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11. Partners in Health Care Fraud and Abuse Solutions
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
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12. The Collateral Damage Financial Damage for Health Care Payors
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

13. Partners in Health Care Fraud and Abuse Solutions
The Perpetrators
Dishonest patients
Dishonest providers (individuals or institutions)
Professional criminals/bogus providers
Other parties to the system
Dishonest billing services
Dishonest payer employees
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14. Most Common Forms of Provider Fraud
Billing for services not rendered
Misrepresentation of services provided
Provision of medically unnecessary services
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15. 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
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
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16. Trends in Provider/ Member Based Healthcare Fraud
Type of Fraud
Traditional 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
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17. Benefit/Program Trends Provider and/or Member Based Health Care Fraud
Type of Fraud
Traditional 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
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18. Partners in Health Care Fraud and Abuse Solutions
Fraud Schemes That Continue to Target Public Programs and Private Health Plans
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19. Partners in Health Care Fraud and Abuse Solutions
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 provider’s legitimacy
Risk/harm to patients
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20. Partners in Health Care Fraud and Abuse Solutions
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
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21. 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

22. Anorectal Manometry
Monday, March 8, 2010: 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 Karapetyan’s clinic, USA Independent Medical Corp
No patients received medical services, and no doctors provided any medical services

23. 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 -

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

25. 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
Physician’s plea agreement acknowledged that the public and private health insurance companies suffered losses of between $400,000 and $1 million
Source:

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

27. Armenian-American Crime Ring
Largest Medicare fraud scheme ever committed by a single enterprise
73 defendants—including 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

28. 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

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

30. Deceased But Not “Dead & Gone”
Deceased Members
Deceased Performing Providers
Deceased Ordering Providers
Identity Theft

31. “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:
Senate Hearing Viewable at:
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

32. Fraud Interdiction Program Former Deputy DA Albert Mackenzie
50 Crook Project
Program’s 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

33. 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

34. 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

35. Joint HHS/DOJ HEAT Initiative

36. 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

37. HEAT Initiative www.stopmedicarefraud.gov
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38. Partners in Health Care Fraud and Abuse Solutions
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
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39. Partners in Health Care Fraud and Abuse Solutions
The Good News!
Private health insurance 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 2009
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40. Partners in Health Care Fraud and Abuse Solutions
The Good News!
Health Care Fraud & Abuse Control Program Annual Report for Fiscal Year 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:
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41. Partners in Health Care Fraud and Abuse Solutions
Contact information
Ted Doyle
Director of Client Solutions
(414)
Partners in Health Care Fraud and Abuse Solutions

42. Questions