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Leadership/Management

Pinnacle: How the Feds Foil Fraud

Pinnacle fraud

For Trans-Star Ambulance Services of Kentucky, it was $948,000. For Maine’s North East Mobile Health Services, more than $1.4 million. For Medical Transport LLC of Virginia Beach, a staggering $9 million. 

Violating the False Claims Act can cost ambulance services painful amounts of money, as these recent settlements show. Wednesday at the Pinnacle EMS leadership conference in Phoenix, a pair of Medicare fraud experts from the Cincinnati law firm of Morgan Verkamp explained what can run services afoul of the law. Sonya Rao, JD, was a longtime Justice Department lawyer and onetime assistant U.S. attorney; Jay Strauch was a senior investigator with the Department of Defense and served in the Ohio attorney general’s office.

Why is Medicare fraud important? Because we spend so much on healthcare: In 2016 U.S. healthcare spending totaled around $3.3 trillion—17.9% of the entire gross domestic product. By 2026 it’s projected to reach $5.7 trillion, or 19.7%. The global average is 6%. The rate of fraud in Medicare billing has been estimated at anywhere from 3% to 10%, creating a lot of pressure on CMS and its investigators to identify and stop malfeasance and recoup wrongly paid funds. In particular, the large number of Part B ambulance transports are of interest to regulators.

Most of the funds recovered by Medicare stem from cases initiated by whistleblowers. A number of federal agencies investigate such cases, as do state, local, and private actors. Since 2007 Medicare fraud “strike forces” have operated in hotspots such as Texas and South Florida; by 2018 those teams had produced nearly 2,500 indictments. A 2017 crackdown produced 400 defendants who had falsely billed around $1.3 billion, while another this year yielded more than 600 who had wrongly claimed $2 billion. 

The key legislation, as many in EMS know, is the False Claims Act, which allows whistleblowers, or relators, to initiate action on behalf of the government. Many states have similar laws, and illegal claims can also cross into crimes like mail fraud, wire fraud, and tax violations. Defendants can be states and their entities, local governments, doctors and hospitals, ambulance companies, and facilities like SNFs, dialysis centers, and more. 

An interesting aspect of the FCA is its use of the term knowingly. That doesn’t necessarily mean an intent to defraud, Rao said, but can also encompass deliberate ignorance or reckless disregard of a claim’s accuracy. 

When a relator files a case, it’s typically sealed while the government investigates—a process that can take up to a year or two. During this time defendants likely won’t even know they’re being scrutinized. The government decides whether to intervene based on “whether there’s enough meat on the bone,” Rao said. If it doesn’t, the relator can proceed with a civil suit independently, and the government can join later. Only a small percentage of cases brought to investigators’ attention are ever actually prosecuted. 

The consequences of guilt can be severe: Damages can be tripled, meaning if you fraudulently billed $1 million, you may have to repay $3 million. You may also be on the hook for civil penalties and attorneys’ fees, and may be suspended or excluded from federal healthcare programs. 

For ambulance services, several types of violations are common:

  • Medically unnecessary transports—Medicare pays for nonemergency medical transportation only when it’s medically necessary, as certified by a physician. 
  • Upcoding—Exaggerating or falsifying medical necessity. 
  • Treatment not rendered—Billing for services or supplies not provided, such as oxygen during a transport or documenting the use of a stair chair when the patient actually walked.
  • Kickbacks—Remuneration for the referral of business, monetary or in kind. 

Besides whistleblowers, cases can also arise through data mining. Investigators will search for things like misused codes, providers already sanctioned, unusual drug or referral patterns, and billing for more services than could likely be rendered within a time period. Since 2011 a fraud prevention system (FPS) has used a predictive analytics tool to examine claims before they’re paid, comparing billing data to standard models. 

The takeaway for ambulance providers in all this remains simple: Don’t engage in fraudulent billing. Protective measures include training and overseeing staff, an honest corporate culture, communication with regulatory authorities, and self-reporting mistakes.

 

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