Reuters shows how shell companies hide Medicare fraud in plain sight
Filed under: Government, Health care reform, Health data, Health journalism, Hot Health Headline, Public records
Reporting for Reuters, Brian Grow and Matthew Bigg used an analysis of public data to investigate the practice of using shell companies to defraud Medicare of millions while staying a step or two ahead of federal investigators.
While the specific damage inflicted by shell companies has not been tracked, “Last year, ‘improper payments’ resulted in $48 billion in losses to the Medicare program, nearly 10 percent of the $526 billion in payments the program made, according to a Government Accountability Office report last March.”
“Simply by reviewing the incorporation records of Medicare providers in two buildings” in Miami, they write, “reporters uncovered information that one government official said could prompt “a serious criminal investigation” of some of the companies.”
The fraud rings merge stolen doctor and patient data under the auspices of a shell company and then bill Medicare as rapidly as possible. Other shell companies are often layered on top to camouflage the fraud, law enforcement officials say.
Some of the shells purport to be billing companies; they form a buffer between the sham clinics and Medicare. Others pay kickbacks to doctors and patients who sign off on bogus medical claims or sell their Medicare ID numbers to enable the shell company to bill the government. Still other shells act as fronts to launder the profits.
The key to this kind of fraud, known as a “bust-out” scheme, is for each of the fake companies to bill as much as possible before authorities catch on. Shell companies become a tool that helps keep the crooks ahead of the cops.
The Armenian crime ring whose fraud made headlines last year used 118 shell companies in 25 states and bilked the feds out of at least $100 million. Varying incorporation rules make state-hopping and obfuscation “easy,” they write, especially since states don’t check to see if records are legit before they allow a company to incorporate. The reportes found that even a few simple safeguards would go a long way to detecting the boldest frauds.
In Florida, FBI agents say almost every Medicare fraud scheme involves shell companies. There, Reuters scrutinized incorporation documents for firms located in two buildings near the Miami International Airport. In a building with dimly lit corridors, a rickety elevator and almost no one in sight, a host of companies purport to provide services to Medicare recipients. But telltale signs of fraud abound.
Many of the 26 companies in the buildings had replaced corporate officers at least once in the last four years. Some had changed ownership, or their corporate executives represented more than one medical-related company. Law enforcement officials consider such activities to be red flags for fraud.
For its part, CMS told the reporters it simply didn’t have the resources necessary to conduct the widespread audits needed to catch fraud, though the $350 million allocated to such efforts under the 2010 health reform law should help.
Health journalists who will certainly want to review the “methodology” subheading at the end of the story.
Medicaid programs slow to act against system exploiters
Filed under: Conflicts of interest, Health data, Hot Health Headline, Public records
At ProPublica, senior reporters Charles Ornstein and Tracy Weber have published the latest turn in their ongoing analysis of conflicts of interest, problem physicians and the disciplinary systems meant to reign them in. This time, they look at Medicaid in Florida and find at least three instances when the state “allowed physicians to keep treating and prescribing drugs to the poor amid clear signs of possible misconduct.”
Their piece revolves around those key examples – two of which were, in all seriousness, brought to their attention by a Scientologist-run watchdog website – and I strongly recommend you read the whole thing for the details. Below, I’ve just highlighted the bigger picture.
In general, Ornstein and Weber found, state Medicaid programs, as well as the federal Centers for Medicare and Medicaid Services, which doesn’t track relevant state data, have failed to act on information which seems to strongly indicate that certain physicians are abusing or exploiting state programs.
Medicaid programs across the country have long had evidence that physicians have been prescribing risky drugs in excess and perhaps to the wrong patients. These prescriptions also racked up huge bills for the programs.
But like Florida, many states did not act on that evidence. Last year, (Sen. Charles) Grassley demanded data from each state about its highest prescribers of pain pills and antipsychotics, and he asked state and federal officials to determine whether the prescriptions written by these doctors were legitimate.
Medicare providers get reinstated when feds fail to attend hearings
Filed under: Health care reform, Health data, Health journalism, Health policy, Public records
Using data obtained through a public records request, Associated Press reporter Kelli Kennedy (@kkennedyap) reviewed federal Medicare fraud reports from between 2006 and 2009 and found that “Regulators fighting an estimated $60 billion to $90 billion a year in Medicare fraud frequently suspend Medicare providers, then quickly reinstate them after appeals hearings that government employees don’t even attend.”
Officials revoked the licenses of 3,702 medical equipment companies in the fraud hot spots of South Florida, Los Angeles, Baton Rouge, La., Houston, Brooklyn, N.Y., and Detroit between 2006 and 2009, according to data provided to the AP under a public records request. Those areas represent the highest concentrations of Medicare fraud in the country, according to federal authorities who have set up task forces there.
Of the providers who lost their licenses in those cities, about 37 percent, or 1,371, were eventually back in business, sometimes within days and often within months.
Furthermore, she writes, officials have not taken advantage of security bonds put in place two years ago to provide redress should a fraudulent provider vanish from the map. “Officials blame the delay on personnel changes,” she writes.
The gaps in the system grow out of poor communication between one set of contractors paid to inspect Medicare providers and alert officials to suspicious activity; a separate set of contractors that handles payments; and the agency that runs Medicare.
Kennedy’s report dives deep into the Medicare fraud reinstatement program, and reporters looking to better understand the system would be well served to read the full investigation.
Dallas hospital CEO claims reporters have a vendetta
The chief executive officer of Dallas’ Parkland Hospital claims a “vendetta” held by the Dallas Morning News‘ investigative team is to blame for “chipping away” at the public’s trust in the hospital.
The newspaper used public records to extensively document billing fraud, poor supervision of residents, preferential treatment for VIPs and patient harm. The Centers for Medicare & Medicaid Services inspected the hospital in July and, less than two weeks ago, the hospital responded by posting its plan to correct deficiencies as required by CMS.
The Morning News reported that the hospital delivered the plan “just ahead of a deadline for addressing the problems or losing hundreds of millions of dollars in federal health care funding. If the agency, on reinspection, finds that the patient care deficiencies aren’t corrected, Parkland could lose nearly half its patient revenue.”
The hospital’s board decided yesterday to hire a consultant to “redefine [Dr. Ron] Anderson’s role with the system between now and the end of the year, when his five-year contract expires,” reports Bill Hethcock in the Dallas Business Journal.
Regardless, Anderson says the Morning News‘ coverage is “sincere, but sincerely wrong,” and raises the specter that people in the community will suffer because they won’t come to Parkland to seek care:
“They’ll suffer as much as anything that an investigative reporter thinks he’s doing or she’s doing for the benefit of the patients.”
In January, Maud Beelman, the DMN deputy managing editor who leads the investigative team, wrote about the project for Nieman Watchdog. She detailed some of the struggles they faced to do the project, including efforts to derail the investigation and the backlash from the hospital.
Data, AHCJ article lead reporter to story on possible cuts at local hospital
Filed under: Government, Health journalism, Hospitals
St. Louis Post-Dispatch reporter Blythe Bernhard followed up on suggestions offered in Charles Ornstein’s recent AHCJ article about updated CMS data to produce an article about looming potential cuts in Medicare payments to St. Louis’ Barnes-Jewish Hospital.
The hospital’s problem? As Bernhard writes, Barnes-Jewish “is one of just three hospitals in the country to perform significantly worse than the national average in readmissions within 30 days for three conditions — heart attacks, heart failure and pneumonia — for each of the last three years.”
Medicare … plans to penalize hospitals with higher-than-expected readmission rates. Under health care reform, Barnes-Jewish and other hospitals could face up to a 3 percent reduction in Medicare payments, meaning millions of dollars, starting next year.
Reducing readmissions nationwide could save $26 billion over a decade, the government estimates.
Data shows disconnect between patient perception, hospital performance
Filed under: Health data, Hospitals, Hot Health Headline, Public records
Sifting through Medicare hospital rating data, USA Today reporters Steve Sternberg and Christopher Schnaars found an enlightening disconnect between patients’ subjective ratings of hospitals and hospital performance on quantitative measures such as death and readmission rates.
“This is a very important finding,” says Donald Berwick, director of the Centers for Medicare & Medicaid Services, adding that though patient-survey data offer critical insights into how it feels to be a patient at different hospitals, patients’ perceptions don’t tell the whole story.
The story is packaged with an infographic that allows readers to look up ratings for local hospitals.
AHCJ resources
- Updated hospital data allows reporters to identify ongoing problems: The release this month of federal data on hospital quality is a good reminder for reporters to give their local hospitals a checkup. To give you a head start, Charles Ornstein, senior reporter at ProPublica and AHCJ’s president, has done some preliminary analysis and points out states in which hospitals fared well and the states where hospitals did poorly.
- Deciphering hospital quality data
- Sorting out hospital rankings
- Making sense of hospital quality reports
- Analyze patient satisfaction surveys to evaluate local hospitals
Hospital sues to block release of records
Filed under: Hospitals, Hot Health Headline, Public records
Parkland Memorial Hospital in Dallas, the subject of recent reports that patients were at risk, has sued the Texas attorney general in an attempt to prevent the release of records requested by The Dallas Morning News.
Parkland filed the latest lawsuit — its fifth against the AG related to the newspaper — on Monday. This time the goal is to block release of Parkland police department records dealing with the psychiatric emergency room. The News is not seeking medical records.
Related:
- Reports detail Dallas hospital on brink of losing federal funds
- Dallas Morning News hospital investigation required extensive use of public records
Reports detail Dallas hospital on brink of losing federal funds
Filed under: Government, Health data, Hospitals, Public records
Late Friday, a damning federal report declaring that patients were at risk at Parkland Memorial Hospital in Dallas was released. Even later that same day, Dallas Morning News reporters Miles Moffeit, Sue Goetinck Ambrose, Reese Dunklin and Sherry Jacobsen published their first report online (available to subscribers only).
The reporters write that the inspectors’ findings were released in response to a reform plan the hospital submitted just before its Friday deadline, a plan they report “involves hiring new nurses; rewriting some policies; retraining staff; retiring outdated medicines, supplies and equipment; and launching an intensive series of daily or weekly performance audits over at least the next five months.” According to those who have viewed the 600-page release, they have a lot to overcome.
“It appears safety was routinely relegated to a lower priority by other pressures,” said Vanderbilt University professor Ranga Ramanujam, a national expert in health care safety. “The CMS action is extraordinary. I am hard-pressed to think of an example of a similarly high-profile hospital facing the very real possibility of losing their CMS funding as a result of safety violations.”
The paper’s speedy, thorough response to the release shouldn’t be entirely surprising, considering that they’ve been out ahead of the story from the very beginning.
The top-to-bottom July inspection of Parkland was sparked by a News report of the death of a Parkland psychiatric patient in February. The hospital didn’t report the death to the Texas Department of State Health Services or to CMS, both of which then investigated the case. CMS regulators later determined that the rights of the patient, George Cornell, had been violated repeatedly by Parkland.
The hospital has until Sept. 2 to get its correction plan approved by CMS and to pass inspections, otherwise it could lose the Medicare and Medicaid funds on which it so heavily depends.
CMS releases hospital-by-hospital data on never events
Filed under: Health data, Health journalism, Hot Health Headline, Public records, Studies, Tools
About nine months after its original due date, the Centers for Medicare and Medicaid Services have overcome industry opposition and made data for hospital acquired conditions publicly available online. The data come in a 1.2 MB zip file, inside of which you’ll find a hulking 26,889-line spreadsheet.
The sheet breaks down the nation’s 4,700 or so hospitals, using Medicare fee-for-service claims from October 2008 through June 2010, based on the rates of eight different “never events,” each of which is compared with the national rate for the event in question. The hospitals can be sorted by name and state. Below, I’ve illustrated the national rates for all included HACs.
According to MedPage Today’s Emily Walker, CMS published the data to help patients make informed decisions and to help hospitals improve their quality of care. They did so, she points out, over strenuous industry objections.
The data was originally scheduled to be published in September 2010 but was met with strong resistance from hospital groups such as the American Hospital Association (AHA); the groups say that CMS never made specifics available for how it calculates the HAC rates, making “fundamental assessments of the accuracy of capturing the incidence of these conditions” impossible to conduct.
“Hospitals continue to urge CMS not to publish these data,” read a March 31 joint statement from the AHA, the Federation of American Hospitals and the Association of American Medical Colleges.
AHCJ leaders hold series of media access meetings with government officials
Filed under: Government, Health journalism, Public health
AHCJ representatives held a series of meetings in Washington, D.C., last week to press for government openness at the state and federal levels.
AHCJ President Charles Ornstein and board member Felice Freyer (chair of the 
organization’s Right to Know Committee) met with representatives of the Health and Human Services Department, the Food and Drug Administration and the Centers for Medicare & Medicaid Services, as well as 12 newly appointed state health directors organized by the Association of State and Territorial Health Officials.
The federal officials professed a commitment to openness, within limits, and promise to look into specific requests to further that goal. The state health officials, who heard a panel presentation about working effectively with reporters, were receptive and eager to talk with AHCJ about building relationships at the state level.
Read more for details from each meeting …
Related
Freyer will moderate a panel on this topic, “Right to know: Getting information from government agencies,” at Health Journalism 2011. The panel features Peter Ashkenaz, director of communications, FDA Office of Regulatory Affairs; Lisa Chedekel, senior writer and co-founder, Connecticut Health I-Team; Lucy A. Dalglish, executive director, Reporters Committee for Freedom of the Press; and Lilian Peake, M.D., M.P.H., director, Thomas Jefferson Health District, Virginia Department of Health.
- Reporter runs into wall requesting public records from FDA
- AHCJ asks FDA to re-evaluate embargo policy
- Health officials, journalists agree information is key in public health crisis
- Journalists, officials discuss information released in public health emergencies
- Committee works to improve access to experts, officials
- Health journalists cite uneven disclosure of H1N1 deaths across country
- Major journalism groups demand agency end newsgathering constraints
- AHCJ objects to federal agencies’ handling of story embargo
- AHCJ calls on new administration to improve access to federal experts
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Join us in Atlanta
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New at HealthJournalism.org
- Data gives depth to investigation of patient safety
- What reporters should know about Alzheimer’s and related dementias
- Apply for fellowships to attend Health Journalism 2012
- AHCJ asks Supreme Court to permit broadcast of arguments in health reform case
- Tips for print, online journalists to embrace broadcast opportunities
- Numbers reveal how often, or how rarely, states check doctors’ disciplinary records
- How I did it: Falsified charts in nursing homes linked to patient care
- Access Denied: Looking at a lack of health care availability
- Transparency & medical errors: Public reporting of patient harm is a potent force
