A former corporate compliance officer at the four-hospital health system in Upstate New York blows the whistle on his old employers and collects a $1.9 million share of the settlement.
Health Quest Systems, Inc. and affiliated Putnam Hospital Center will pay $15.6 million to settle False Claims Act allegations that it submitted inflated and ineligible bills to Medicare, the Department of Justice announced.
In the settlement announced Monday, DOJ said that Health Quest and PHC admitted that:
From April 2009 through June 2015, Health Quest did not sufficiently document claims for evaluation and management services, which were billed two levels higher than justified by the medical records.
From April 2011 through August 2014, Health Quest submitted insufficiently documented claims for home health services.
From March 2014 through December 2014, Putnam Hospital submitted false claims for inpatient and outpatient services referred by two orthopedic physicians, a violation of the Physician Self-Referral Law.
The physicians received compensation from the hospital that prosecutors said exceeded the fair market value for the services to induce referrals to the hospital, a violation of the Anti-Kickback Statute.
LaGrangeville, NY-based Health Quest includes four hospitals and provides surgical, medical and home healthcare services in the Hudson Valley and Northwest Connecticut. Putnam Hospital Center is located in Carmel Hamlet, NY.
The settlement resolves three whistleblower lawsuits brought by former employees of Health Quest, who will share a portion of the recovered money. Whistleblower Tim Cleary, the former corporate compliance officer at Health Quest will receive nearly $1.9 million, DOJ said.
The health system issued a statement saying that it "cooperated fully with the government's investigation."
"We appreciate the opportunity to work with and finally resolve the matter with all relevant parties, including the U.S. Department of Justice," Health Quest President and CEO Robert Friedberg said. “Our intent is always to comply with government regulations."
"Today, with this matter settled, we can focus on what means the most to us: providing superior quality care for our patients," he said.
Health Quest will pay $14.7 million to the federal government, and $895,427 to the State of New York's Medicaid program, and the health system will enter into a Corporate Integrity Agreement with the Department of Health and Human Services.
Florida spine surgeon Johnny Clyde Benjamin, 52, used his Vero Beach office to manufacture counterfeit oxycodone, which was traced to the overdose death of a Palm Beach County woman.
An orthopedic surgeon in Vero Beach, Florida, was sentenced to life in prison for his leading role in a counterfeit oxycodone ring that was linked to the death of a Palm Beach County woman.
Johnny Clyde Benjamin, Jr., MD, was convicted by a federal jury in April in the 2016 overdose death of Maggie Crowley, 34, of Wellington.
Prosecutors said Crowley died after overdosing on counterfeit oxycodone pills that contained a Fentanyl analog, Furanyl Fentanyl, a powerful synthetic opioid that is much stronger than heroin or oxycodone.
A subsequent investigation determined that Benjamin, 52, was the source of the counterfeit drugs, which he was manufacturing from his Vero Beach office and distributing mostly outside of the South Florida area,prosecutors said.
Crowley was among 590 opioid deaths in 2016 in Palm Beach County, a record high. The number of people dying from fentanyl in their system rose to 310 from 91 a year before.
Crowley's family confronted Benjamin at the sentencing hearing in Fort Lauderdale on Friday, where they made emotional pleas for a lengthy sentence, as TCPalm.com reported.
Crowley's husband, Shaun Crowley, told the court Benjamin was "an absolute monster."
Her parents asked the judge to sentence Benjamin to life in prison.
"Now that Maggie is gone, there is a bottomless, empty hole in my soul," said her mother, Margaret Divita.
"There hasn’t been a day gone by we don’t cry for her," said her father, Joseph DiVita, according to media accounts.
Benjamin's attorney Philip Reizenstein told local media that he would appeal the conviction and sentence.
The health system incorrectly billed for two types of severe malnutrition, which are classified as major complications or comorbidities that trigger higher Medicare payments, HHS says.
An incorrect Medicare billing code for "severe malnutrition" could force the University of Wisconsin Hospitals and Clinics Authority to return $2.4 million in overpayments to the federal government.
The Office of the Inspector General at the Department of Health and Human Services found the alleged error after examining $9.5 million in Medicare payments for 497 claims submitted by the health system from 2014 through 2016.
Auditors based their findings on a random sample of 100 claims totaling $1.7 million.
"The Hospital complied with Medicare billing requirements for severe malnutrition diagnosis codes for 10 of the 100 claims that we reviewed. However, the Hospital did not comply with Medicare billing requirements for the remaining 90 claims," HHS said.
UWHCA strongly contests the findings and the recommendation to return the overpayment.
"It is well-established that patients with malnutrition are at an increased risk of adverse outcomes, complications, readmissions, and longer lengths of stay," Troy G. Lepien, chief compliance officer at UWHCA said in a letter to HHS.
"UWHCA has devoted significant resources to ensuring our patients' nutrition needs are addressed and thus that they have improved outcomes. UWHCA also takes pride in the strength of its billing and coding compliance program," Lepien wrote.
The auditors said that "Nutritional Marasmus and other/unspecified severe protein-calorie malnutrition are two types of severe malnutrition listed in the International Classification of Diseases, Clinical Modification."
"Previous OIG reviews have determined that hospitals incorrectly billed for Kwashiorkor, a third type of severe malnutrition. Nutritional Marasmus and other/unspecified severe protein-calorie malnutrition are each classified as a type of major complication or comorbidity (MCC). Adding MCCs to a Medicare claim can result in a higher Medicare payment," HHS said.
For 88 claims, the billing errors resulted in net overpayments of $562,361.
"These errors occurred because the health system used severe malnutrition diagnosis codes when it should have used codes for other forms of malnutrition or no malnutrition diagnosis code at all," HHS said.
Auditors said the medical records held no evidence that the malnutrition was severe or that it had an effect on the treatment or the length of the hospital stay.
"On the basis of our sample results, we estimated that the Hospital received overpayments of at least $2,412,137 from 2014 through 2016," the audit said.
Follow Up
UWHCA issued a statement Friday morning saying it "intends to appeal all claims denied based on the OIG recommendations."
"UW Health strongly disagrees with the findings and recommendations in the OIG report. Most importantly, we believe the contractor did not apply nationally-accepted evidence-based standards to assign malnutrition diagnosis codes. UW Health uses the most up-to-date definition of malnutrition and current methodology for assessing malnutrition."
"Several international nutrition organizations have published evidence-based guidelines for diagnosing and coding malnutrition, and UW Health uses a metric that incorporates these current understandings."
The acquisition comes as the consortium finalizes the $1.4 billion acquisition of Curo Health Services. Humana will have a 40% stake in a separate home-health and hospice services unit.
Humana Inc. and private equity firms TPG Capital and Welsh, Carson, Anderson & Stowe this week finalized their $4.1 billion acquisition of Kindred Healthcare, Inc.,the companies said.
The deal, which was first announced in December, coupled with the soon-to-be finalized $1.4 billion purchase of privately held Curo Health Services, will make the three companies the nation's largest providers of hospice services.
Humana's acquisitions come as health insurers integrate outpatient services with their Medicare Advantage plans, as Forbes reports. Major payers including Humana, UnitedHealth Group, Anthem, Aetna, and Cigna are strengthening ties to providers that will funnel more seniors from doctors and clinics to insurance companies.
The acquisitions come amid speculation that Humana could be acquired by Walmart.
Under the Kindred acquisition:
Kindred's long-term acute care hospitals, inpatient rehabilitation facilities and contract rehabilitation services business, collectively known as Kindred Healthcare, were separated from Kindred's home health, hospice, and community care businesses, collectively known as Kindred at Home.
Kindred Healthcare will be operated as a separate specialty hospital company owned by TPG Capital and Welsh, Carson, Anderson & Stowe, Humana's private equity partners in the deal.
Kindred at Home will be operated as a standalone company owned 40% by Humana, with the remaining 60% owned by TPG and WCAS.
Humana will have an option to buy the remaining ownership interest in Kindred at Home over time through a put/call arrangement, the companies said.
Humana, TPG, and WCAS are also finalizing the previously announced $1.4 billion purchase of which provides hospice services at 245 locations in 22 states. Humana will have a 40% stake.
Louisville-based Kindred Healthcare generates annual revenues of about $3.4 billion, and includes 38,300 employees providing healthcare services in 1,831 locations in 45 states.
That includes 75 LTAC hospitals, 19 inpatient rehabilitation hospitals, 13 sub-acute units, 98 inpatient rehabilitation units and contract rehabilitation service businesses which served 1,626 non-affiliated sites of service.
Policymakers say modifications will encourage the use of new technologies by home health agencies and more effective care planning as data is shared by patients, caregivers, and providers.
The Centers for Medicare & Medicaid Services this week proposed an update of the payment model for home healthcare agencies that federal officials say will reward value over volume.
"Today's proposals would give doctors more time to spend with their patients, allow home health agencies to leverage innovation and drive better results for patients," CMS Administrator Seema Verma said Monday in a media release.
"The redesign of the home health payment system encourages value over volume and removes incentives to provide unnecessary care," she said.
Under the proposed rule change, CMS would allow the cost of remote patient monitoring to be reported by home health agencies as allowable costs on the Medicare cost report form.
The system now pays for 60-day episodes of care and relies on the number of therapy visits a patient receives to determine payment. However, the Bipartisan Budget Act of 2018 eliminated the number of therapy visits as a payment factor for home health, beginning in 2020.
The proposed rule would also implement a new Patient-Driven Groupings Model for home health payments that would eliminate the use of "therapy thresholds" to determine payment and changes the unit of payment to 30-day periods of care.
CMS said this modification will encourage the adoption of new technologies by home health agencies and more effective care planning as data is shared among patients, their caregivers, and their providers.
CMS projects that Medicare payments to HHAs in 2019 will increased by 2.1%, or $400 million, based on the proposed policies.
CMS also wants to eliminate the requirement that the physician estimate how much longer skilled services would be needed when recertifying the need for continuing home healthcare, as this information is already gathered on a patient's plan of care.
Verma said the initiative will advance the Administration's MyHealthEDatainitiative that gives patients ready access to their personal health data.
The Medicare Payment Advisory Commission reports that 3.4 million Medicare beneficiaries received home healthcare in 2016. The program spent about $18.1 billion on home healthcare services that year, and more than 12,200 agencies participated in Medicare.
The CMS proposed rule appears to be in line with a MedPAC recommendation that Medicare eliminated the number of therapy visits as a payment factor. However, that recommendation was made moot when Congress did exactly that under the Budget Act.
"Eliminating the number of therapy visits as a payment factor would base home health payment solely on patient characteristics and result in a more patient-focused approach to payment," MedPAC wrote.
The proposed rule also includes information on the implementation of home infusion therapy temporary transitional payments. In addition, the proposed rule solicits comments on elements of the new home infusion therapy benefit category and proposes standards for home infusion therapy suppliers and accrediting organizations of these suppliers as required by the 21st Century Cures Act.
Court documents show how the co-conspirators established a handful of shell companies that were all designed to facilitate referrals for the now-defunct Pacific Hospital of Long Beach.
A California hospital executive's plea agreement provides a detailed look at a long-running scheme dubbed "Operation Spinal Cap" that allegedly bilked the federal government of nearly $1 billion in fraudulent claims.
George William Hammer, 65, of Palm Desert, California, was the former chief financial officer of the physician management arm of the now-defunct Pacific Hospital of Long Beach. He pleaded guilty in May to tax evasion based on the fraudulent classification of illegal kickbacks in hospital-related corporate tax filings, the Department of Justice said.
According to a plea agreement, unsealed last week, Hammer and eight co-conspirators at Pacific Hospital and affiliated shell companies accumulated more than $950 million from 1998 through 2013.
Alleged ringleader Michael Drobot, the former owner of Pacific Hospital, paid more than $40 million in illegal kickbacks to doctors, chiropractors, and other medical professionals over a 15-year period in exchange for referring thousands of patients who received surgeries, imaging, and other services at the hospital.
How They Did It, Allegedly
In one example cited by prosecutors, Pacific Specialty Physician Management, Inc., a company that was "only in existence for Pacific Hospital's benefit," paid the office expenses of an orthopedic physician group referred to as "Downey Ortho."
In exchange, Downey Ortho provided referrals that generated $142 million of Pacific Hospital's claims to insurers between 1998 and 2014, of which the hospital was paid $56 million.
The scheme also used sham contract options that would provide physicians with monthly payments that were supposedly for the purchase of the physician practice.
"In reality, however, PSPM and the Kickback Induced Surgeons would not desire or expect to consummate any ultimate sale transaction," the plea deal read. "Rather payments, in the guise of an option contract, which would often vary from month to month, were made exclusively to 'reward' physicians to refer patients…."
PSPM also steered co-conspirator physicians to specific durable medical equipment vendors who had mutually beneficial financial arrangements that offset PSPM’s kickback costs.
Hammer and his co-conspirators attempted to hide kickbacks made under the sham option contracts. They deducted "termination of option fees" as "other deductions" and took a corresponding deduction on PSPM's income taxes from 2011 through 2013, and avoided about $2.1 million in federal taxes.
Hammer pleaded guilty to one count of Aiding and Assisting in the Preparation of a False Tax Return. He could face up to three years in prison and one year of probation. Under the plea deal, he will also forfeit $500,000, and could testify for the government in the prosecution of his co-conspirators, some of whom were identified by federal prosecutors as:
Daniel Capen, MD, 68, of Manhattan Beach, an orthopedic surgeon, who pled guilty to conspiracy and illegal kickback charges. Capen accounted for approximately $142 million of Pacific Hospital’s claims to insurers, on which the hospital was paid approximately $56 million.
Timothy Hunt, MD, 53, of Palos Verdes Estates, an orthopedic surgeon who referred spinal surgery patients to Capen and other doctors. He pled guilty to a conspiracy charge involving his receipt of illegal kickbacks stemming from various financial relationships with Pacific Hospital and related entities.
Lauren Papa, 52, of Tarzana, a chiropractor, who plead guilty to a conspiracy charge involving her receipt of illegal kickbacks to refer patients to a neurosurgeon with the understanding that the neurosurgeon would perform the surgeries at Pacific Hospital.
Tiffany Rogers, MD, 53, of Palos Verdes Estates, an orthopedic surgeon, who was named in an indictment unsealed last week in connection with receiving illegal kickbacks to refer patients for spinal surgeries at Pacific Hospital.
Brian Carrico, 64, of Redondo Beach, a chiropractor, was charged in connection with the receipt of illegal kickbacks to influence the referral of patients to Pacific Hospital.
An indictment unsealed Wednesday alleges that Carrico and his co-conspirators submitted approximately $80 million in claims to the federal workers' compensation program and were paid approximately $56 million in connection with patients referred to Pacific Hospital.
William Parker, 64, of Redondo Beach, was charged in a separate indictment unsealed last week in connection with the same kickback scheme involving Carrico and his companies.
The American Medical Association and other key stakeholders are calling for a coordinated effort to address a crippling nationwide shortage of drugs that include injectable opioid analgesics, IV fluids, and Epi-pens.
The nation's drug shortage has gotten so severe that hospitals are taking desperate measures to meet patients' needs, as emergency departments brace for the busy summer months.
"So many substances are short, and we're dancing every shift," James Augustine, MD, an emergency physician in Cincinnati told The New York Times.
Michael Cohen, president of the Institute for Safe Medication Practices, told AP that the shortages prompt potentially harmful medication mix-ups and workarounds when nurses or pharmacists substitute unfamiliar painkillers or ones with different concentrations.
Cohen cited reports of at least two surgical patients who had overdosed when fentanyl wasn't available and they were mistakenly given the same amount of much stronger sufentanil.
In June, the American Medical Association declared the drug shortages an "urgent public health crisis," and urged the federal government to review the issue as national security initiative.
"The fact that drug shortages worsened when major hurricanes struck drug production facilities on Puerto Rico highlights the need to evaluate and plan for hazards that pose a threat to critical infrastructure for manufacturing pharmaceutical and medical products," said AMA Board Member William E. Kobler, MD.
This spring, Pfizer issued an advisory to hospitals, that provided special handling instructions due to potential for cracked needle hubs and particulate in the drug maker's glass syringes.
A survey of 343 hospitals this spring by the American Society of Health-System Pharmacists found that 98% had moderate or severe shortages of morphine, fentanyl and hydromorphone, aka Dilaudid. Many hospitals were completely out of at least one. Hospitals also are grappling with shortages of local anesthetics: lidocaine, bupivacaine and a third type that is standard for eye surgery, orthopedic procedures, and knee and hip replacements.
Nine in 10 emergency physicians responding to a recent poll said that in the past month, they have experienced shortages or absences of critical medicines in their emergency departments. "Emergency physicians are concerned that our system cannot even meet daily demands, let alone during a medical surge for a natural or man-made disaster," said Paul Kivela, MD, president of American College of Emergency Physicians.
Food and Drug Administration Commissioner Scott Gottlieb, MD, said drugs shortages "are an inevitable consequence of an imperfect system. With better planning, we can minimize shortages throughout the supply chain. But, in the near term, we won’t be able to fully eliminate the possibility that new shortages will arise. Meaningfully impacting the structures and market challenges that can give rise to shortages will require more coordination among public and private stakeholders."
The urgent care clinic chain will serve as an extension of Atlantic Health, offering walk-in urgent care, employer health services, and basic wellness and prevention services.
Atlantic Health Systemhas formed a coordinated care collaborative with MedExpress, an urgent care provider with 11 locations across northern New Jersey, the two providers announced.
The jointly owned clinics will enable MedExpress' urgent care patients to seek care at an Atlantic Health System facility if additional care is needed.
"Our mission is to build healthier communities," Amy Perry, CEO Hospital Division at Atlantic Health said in an email exchange with HealthLeaders Media. "We chose to partner with MedExpress to avoid duplicating expensive resources in our communities. We are looking for opportunities to collaborate whenever possible."
"Adding urgent care to our continuum of services helps us improve accessibility and affordability, providing our patients with the right care, at the right time and in the right place," Perry said, adding that the collaborative means that MedExpress "can offer care coordination beyond traditional urgent care, improving outcomes and patient satisfaction."
MedExpress clinics will serve as an extension of Morristown-based Atlantic Health, offering walk-in urgent care, employer health services, and basic wellness and prevention services.
"Atlantic Health is listening to our customers and building an ambulatory network that provides the accessibility and affordability that they are seeking," Perry says. "With shifting payment models driving patients to urgent and primary care sites, the ultimate goal is to build an all-inclusive network that can care for every health need."
Perry says Atlantic Health will assess the success of the partnership with MedExpress using quality outcomes, service scores and frequency of use over more expensive care models.
"We also hope to improve care management, decreasing redundant testing, leveraging data, expanding patient communication and education," she said.
Federal regulators say a demonstration waiver is needed because physicians would otherwise be subject to MIPS, even if they participate in Advanced APM models under Medicare Advantage.
The Centers for Medicare & Medicaid Services is proposing a demonstration project that would waive Merit-Based Incentive Payment System requirements for clinicians who join some risk-bearing Medicare Advantage plans.
CMS Administrator Seema Verma said in a media release that the Medicare Advantage Qualifying Payment Arrangement Incentive Demonstration "aligns with the Agency's goal of moving to a value-based healthcare system, and aims to put Medicare Advantage on a more equal playing field with Fee-for-Service Medicare."
The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) gives physicians two payment tracks under fee-for-service Medicare: MIPS, which requires clinicians to report quality data to CMS and have their payment adjusted; and Advanced Alternative Payment Models, which require clinicians to take on risk.
Some Medicare Advantage plans are developing arrangements that resemble Advanced APMs. Without the demonstration, however, physicians would still be subject to MIPS, even if they participate extensively in Advanced APM-like arrangements under Medicare Advantage.
"CMS intends to test whether MIPS exemptions provided to clinicians under MAQI will increase participation in Medicare Advantage plans that are similar to Advanced APMs, and thereby accelerate the transition to a healthcare system that pays for value and outcomes," Verma said.
Federal regulators pledge to continue to work with the state to address soaring costs in the Medicaid program that covers about 1.3 million residents.
The Centers for Medicare & Medicaid Services has rejected a Massachusetts plan to kick about 140,000 people off the Medicaid rolls and limit some expensive prescription drugs covered under the program.
Massachusetts had submitted a waiver request last fall, asking CMS for the ability to negotiate the price of about 30 high-price drugs that make up $600 million — or 30% — of pharmacy spending for MassHealth, the state's Medicaid program.
The state said the reforms are needed to address ballooning program costs. MassHealth's pharmacy spending has doubled from $1.1 billion to $2.2 billion in the past five years.
In a letter this week to Daniel Tsai, assistant secretary of MassHealth, CMS said the state's Medicaid program can collect drug rebates but only if state Medicaid plans cover all drugs approved by the federal government. Massachusetts gets $900 million annually in drug rebates, and $550 million is sent back to the federal government.
In a statement, Gov. Charlie Baker's administration said: "While it is disappointing that our request to more effectively control rising pharmacy costs was not approved at this time, we remain committed to finding more innovative state-based solutions to reduce the growth in drug spending while maintaining access to necessary medications."
Matt Salo, executive director of the National Association of Medicaid Directors, called the rejection of the waiver "disappointing because it was an extremely well-thought out proposal that would have brought some rationality into the current environment of outrageous drug pricing."
"The Massachusetts waiver was heavy on patient protections and ensuring access to necessary cures/treatments," Salo said. "It would have given them the leverage they needed to bring some much needed market leverage to bear on the new 21st Century Cures innovations that are going to break the system before too long."
Salo said it appears that CMS is trying to force Massachusetts to opt for the '5 state demo' that was first outlined in President Trump's Budget.
"But nobody wants that demo," he said. "Massachusetts is saying that the current system works well enough for most patients and most products, so there’s no need to throw the baby out with the bathwater."
CMS also shot down the state's plan to remove about 140,000 Medicaid enrollees who earn more than 100% of the federal poverty level and shift them to ConnectorCare, which would have paid Massachusetts about $120 million more in federal reimbursements.
Medicaid patient advocates cheered CMS's rejection. Health Care For All Executive Director Amy Rosenthal urged the Baker administration to work with the state legislature to strengthen MassHealth's ability to negotiate lower drug prices, and to find "alternative avenues" for reducing spending growth, rather than simply kicking enrollees off the program.
Lindsay Bealor Greenleaf, director atADVI Health, said "It's a relief to see the administration do the right thing and reject this waiver request, because if Massachusetts had gotten its way, Medicaid patients would have limited treatment choices and industry would doubt whether future deals struck with the government will hold up over time."
