Company targeted by Feds for health care fraud

WASHINGTON — The official in charge of Medicare and Medicaid for the last 17 months says 20 to 30 percent of health spending is “waste” that yields no benefit to patients, and that some of the needless spending is a result of onerous, archaic regulations enforced by his agency.
The official, Dr. Donald Berwick, listed five reasons for what he called the “extremely high level of waste”: overtreatment of patients, the failure to coordinate care, the administrative complexity of the health care system, burdensome rules and fraud.
In an interview Thursday, his last day on the job, Berwick reflected on his successes, failures and frustrations in trying to engineer a rapid transformation of the health care.
President Barack Obama nominated Berwick to be the administrator of the Centers for Medicare and Medicaid Services in April 2010. While the Senate was investigating Berwick's qualifications, Obama circumvented Congress by giving him a temporary recess appointment, a shortcut that infuriated Republicans and irked some Democrats. The appointment was due to expire at the end of this year.
“I came with an agenda,” Berwick said. “I wanted to try to change the agency to be a force for improvement, covering one out of three Americans.”
Asked why Americans were still deeply divided over the new health care law, signed 20 months ago, Berwick said: “It's a complex, complicated law. To explain it takes a while. To understand it takes an investment that I'm not sure the man or woman in the street wants to make or ought to make.”


After last year's health care reform law gave prosecutors expanded enforcement tools, President Barack Obama pledged that auditors would cut deeply into fraud he estimated at tens of billions of dollars each year. Efforts in Tennessee alone have netted court orders and settlements recouping more than $100 million this year, up from $3 million the year before, authorities said.


"It used to be that if you were a U.S. attorney, the fraud cases didn't seem like the sexiest thing in the world," said Patrick Burns of the Washington, D.C.-based nonprofit Taxpayers Against Fraud. "Suddenly, fraud fighting, instead of having been a career liability, is in fact a career-maker."


U.S. Attorney Jerry Martin, in interviews and speeches, has vowed to prosecute fraud cases of all sizes in Middle Tennessee, from individuals running sham storefronts to elaborate false-billing schemes. Prosecutors here have closed several cases in recent years, ranging from an $82.6 million judgment against a company charged with overbilling for equipment to a probation sentence for a Nashville-area psychiatrist and minister who billed Medicare for prayer sessions described as psychotherapy.


Martin believes a lack of oversight in prior years led to widespread abuse throughout the system, with millions more to be saved in the federal safety-net programs in Tennessee. The National Health Care Anti-Fraud Association estimates that 3 to 10 percent of all health care spending is fraudulent.


The Murfreesboro Ambulance Service investigation actually began before the effort to root out Medicare and Medicaid fraud ramped up. It started with a 2006 audit by AdvanceMed, a Nashville firm hired by the Centers for Medicare and Medicaid Services.


The case came to the attention of auditors when the company surged to the top of transport service providers in the state, according to court records. In 2005, it became the fifth-highest paid provider of transport services among 82 companies that drove patients to dialysis appointments.


Auditors saw patients riding in the front seat of the ambulance, as well as trips carrying more than one patient at a time. Both circumstances should have disqualified them from Medicare and Medicaid reimbursement.


Company medics changed their habits briefly during the two-week audit in December 2006, records show. After being told to do so by supervisors, they put patients — previously allowed to walk — onto stretchers.


Days later, the records show, they went back to more casual rides, allowing patients to sit in the cab.


After interviews with five medics, Covington described a top-down scheme in which supervisors told medics to change descriptions in their driving logs to ensure reimbursement. Writing that patients "walked," for example, was barred, he said, although the rule was never put in writing.


All told, authorities charge, the ambulance company filed improper claims from 1998 to 2006 and collected more than $587,000 in reimbursements from Medicare and Medicaid.


Some of the money, prosecutors say, went to a Corvette and a Harley-Davidson motorcycle they seized.


The company employed about 30 employees and ran eight ambulances as of September 2008, according to court records. After authorities searched the Medlock home that year, Kathy Medlock told The Daily News Journal that her company had "nothing to hide," and blamed an unnamed "disgruntled employee" for triggering the probe.


"We are squeaky clean and will remain squeaky clean," she said.


The Medlocks each face maximum 20-year sentences and $250,000 fines.


Now that they're looking more closely at fraud, local authorities are still striving to get a handle on how widespread it is.


Martin, who spoke at the Taxpayers Against Fraud annual convention earlier this year, made it clear he "absolutely was looking for business," Burns said.


Anna Grizzle, a lawyer who helps health care companies develop regulatory compliance programs, said health care firms and their lawyers have gotten the message Martin and other prosecutors are sending. She said many are paying much closer attention to the complex rules of Medicare and Medicaid than they once were.


"Now more than ever, you need an active and robust compliance program to help the provider identify any potential problems or mistakes and correct those mistakes," she said. "The fear is, with the increased enforcement, with the changes to the laws ... a provider could be caught up in a situation where it's an innocent billing mistake."


Burns' group encourages use of the False Claims Act, which allows whistleblowers to file sealed lawsuits and invite federal prosecutors to take up cases. First passed by Congress during the Civil War, the act was updated in 2009 and strengthened as part of the 2010 health care reform law.


Martin has doubled the number of local prosecutors handling such cases, which are becoming more commonplace nationwide. It's just one more tool the government is using to go after fraud.