OIG Spring Semiannual Report Highlights Medicare & Medicaid Investigative Results

OIG Semiannual Report Findings on Medicare and
Medicaid Fraud

The Medicare and Medicaid programs represent the largest area of work for the Department of Health and Human Services (HHS) Office of Inspector General (OIG). In the Spring 2018 Semiannual Report (Report), the OIG reported 374 criminal and 346 civil actions against individuals or entities that engaged in offenses related to health care. It also noted $1.24 billion in investigative HHS receivables, including $203.7 million related to Medicare and Medicaid. The OIG highlighted its key investigative areas involving patient harm; billing for services not rendered, medically unnecessary services, or services billed at a level higher than warranted; illegal billing, sale, and diversion of prescription drugs; marketing of off-label uses for prescription drugs; and solicitation and receipt of kickbacks. Kickback issues include illegal payments to patients for involvement in fraud schemes and illegal referral arrangements between physicians and medical companies.

Examples of Cases by Sector from the OIG Spring 2018 Semiannual Report

In its Report, the OIG provided some case examples from different health care sectors, and on different topics, as follows:

Prescription drugs. Advance Care Services pled guilty to charges resulting from an unlawful prescription drug operation. The scheme operated through pain management and HIV infusion clinics to which recruiters brought “patients.” These patients were actually brought to obtain medically unnecessary prescriptions for controlled substances. More than 700,000 dosage units of Hydrocodone, 240,000 dosage units of Alprazolam, and 2 million milliliters of promethazine with codeine cough syrup were illegally distributed. The two lead conspirators were sentenced to a combined 10 years in prison and ordered to pay $2.5 million in restitution.

Pharmacy. DaVita Rx, LLC entered into a settlement agreement of $63.7 million to resolve False Claims Act (FCA) allegations. The kidney disease and dialysis company allegedly billed federal health care programs for prescription medications that were not shipped or shipped but subsequently returned. It also allegedly failed to comply with requirements for documentation of the process. The settlement also resolved federal Anti-Kickback statute allegations of manufacturer copayment discount cards being used in lieu of collecting copayments from Medicare beneficiaries and writing off unpaid beneficiary debt.

Pharmaceutical Companies. United Therapeutics Corporation (UT) entered into a civil settlement agreement to resolve allegations associated with its donation to a non-profit foundation, Caring Voice Coalition. UT allegedly paid kickbacks to Medicare patients through donations it made to Caring Voice Coalition. The donations were allegedly used to pay copayments for patients as an inducement to use UT’s drugs. UT agreed to pay $210 million to resolve its liability and entered into a five-year Corporate Integrity Agreement (CIA) with the OIG.

Electronic Health Records. 21st Century Oncology and North Carolina Radiation Therapy Management Services, LLC and Radiation Therapy Associates agreed to pay $26 million and entered into a five-year CIA with the OIG for submitting false claims regarding its compliance with the Medicare EHR Incentive Program. CMS made incentive payments for performance years 2012-2014 to the defendants’ physicians, who did not meet the criteria for meaningful use. CMS also paid claims for the defendants’ physician services in CYs 2015 and 2016 at a rate that did not reflect the program’s required downward adjustments.

Home Health. Sila Luis was sentenced to six years and eight months in prison, and also ordered to pay restitution of $45 million for engaging in an elaborate fraud scheme. Luis was the co-owner and operator of two home health agencies that enlisted and paid patient recruiters kickbacks and bribes in exchange for the referral of Medicare beneficiaries. The two agencies billed Medicare for home health and physical therapy services that were not medically necessary, not provided, or both. In another case, Eric Ugorji, a registered nurse who owned and operated two home health agencies, was sentenced to 10 years in prison and ordered to pay $17.1 million in restitution for recruiting patients to receive home health services that were not medically necessary, not provided, or both. Ugorji also paid kickbacks to physicians who would falsely certify a plan of care.

Transportation. AmeriCare Ambulance Service, Inc., and its sister company, AmeriCare ALS, Inc., paid $5.49 million and entered into a five-year CIA for defrauding Medicare by billing for medically unnecessary ambulance transportation services. From January 2008 through December 2016, the companies allegedly submitted fraudulent claims to Medicare and TRICARE for Basic Life Support nonemergency ambulance transports that were not medically justified. Thousands of false reports and other documentation were created to support this illicit practice.

Durable Medical Equipment. Geoffrey Ricketts and Samuel Kim, operators of Care Concepts and Choice Home Medical Equipment and Supplies, were sentenced to prison for a $38 million Medicare fraud scheme in which they paid kickbacks to workers at call centers. Call operators would cold-call Medicare recipients to convince them to accept talking glucose meters and related supplies. Virtually all Medicare claims the equipment companies submitted from 2007 to 2015 were fraudulent.  

Laboratories. Primex Clinical Laboratories, LLC (Primex) and Mitch Edland, the CEO and owner of DNA Stat, LLC entered into settlement agreements to resolve allegations that they paid kickbacks in exchange for patient pharmacogenetic testing referrals. Primex agreed to pay $3.5 million and enter into a 5-year CIA, while Edland agreed to pay $270,000 and to be excluded for a period of five years.

Radiology. Orthopedic and Neuro Imaging (ONI) and its owner, Richard Pfarr, paid $16.2 million in penalties and $6.1 million in damages for fraudulent false claims. The investigation disclosed that ONI and Pharr knowingly submitted false claims to Medicare by administering contrast dye during MRI scans on patients without proper supervision by a physician.

Nursing Homes. Catholic Health System, Inc., Home & Community Based Care entered into a $6 million settlement and five-year CIA with the OIG to resolve allegations that it knowingly caused false claims to be submitted to Medicare. Between January 1, 2007 and December 31, 2014, a scheme of false claims was submitted to Medicare for rehabilitation therapy services at the Ultra High Resource Utilization Group level. The claims filed through the facilities were found to be unreasonable, not medically necessary, and unsupported by the medical records.

Mental Health. Region 8 Mental Health Services paid $6.9 million and $1.7 million for submitting false claims to Medicaid beneficiaries enrolled in Region 8’s preschool Day Treatment program from October 2004 through December 2010. The Medicaid claims were either not provided or were not provided by qualified individuals. 

Identity Theft. Miguel De Paula Arias was sentenced to 13 years and 5 months in prison and ordered to pay $1.6 million in restitution for identify theft. Arias stole the identities of five retired and semi-retired physicians, along with their Medicare provider numbers, to submit claims for services provided to patients. 

Hospitals. Meadows Regional Medical Center (MRMC) entered into two settlement agreements and a five-year CIA for paying physicians substantially more than the fair-market value of their services in exchange for patient referrals from the physicians in violation of the Stark and Anti-Kickback statutes. Three physician groups were also parties to one of the settlements. Two independent contractor physicians operating wound care centers were paid under medical director agreements, while another ten physicians involved in the scheme were MRMC employees. MRMC entered into one settlement agreement to resolve its FCA liability related to the physician groups for $3.6 million, which could increase up to $11.1 million. A second agreement to resolve its liability related to two individual physicians was for $1.7 million. MRMC also entered into a five-year CIA with an arrangements review.

Hospice. Chemed Corporation and subsidiaries paid $75.5 million and entered into a five-year CIA for submitting false claims for: (1) services provided to patients ineligible for hospice benefits; and (2) continuous home care services that were not medically necessary, not provided, or not performed in accordance with Medicare requirements.

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