Kusserow’s Corner: Focus on Community Mental Health Center (CMHC) Fraud

Over the last year, this blog provided numerous examples of enforcement actions taken against individuals associated with CMHCs, which provide mental health services to individuals who reside in a defined geographic area. The HHS Office of Inspector General (OIG) released a new report focusing on CMHC fraud that cited findings and enforcement actions going back over a decade. In another study, titled Questionable Billing by Community Health Centers, they found approximately half of CMHCs had unusually high billing for at least one type of questionable billing characteristics. These characteristics include:

  1. Billing for patients with no mental health diagnoses
  2. Billing for patients who participated in CMHCs outside their own communities
  3. Billing for patients who were not referred by health care facilities

One of the most common features of CMHC fraud cases is bribes and kickbacks. Some go to those referring bogus cases, while others go to physicians and others to falsify referrals and even illicit payments to beneficiaries as bogus patients. As such, behind most of the fraud cases is the Anti-Kickback Statute.

The OIG reported that through programmatic recommendations, data analytics, and geographically targeted fraud-fighting efforts; significant progress has been made cracking down on CMHC fraud. In October 2013, final rule on CMHCs they reported findings on Questionable Billing report and adoption of their recommendation to complete CMHC conditions for participation in Medicare. Also, by analyzing payment trends, OIG agents determined the areas where suspicious billing by CMHCs is most rampant and deployed the Department of Justice (DOJ)-led Strike Force teams to investigate CMHCs with excessive Medicare billing and prosecute fraud. Many of these most recent cases were reported by this blog. The OIG states this has made an impact. Total national Medicare payments to CMHCs peaked in 2008 at $273 million. Targeted enforcement activities—centered in Miami, Baton Rouge, and Houston—led to major enforcement actions in all three cities from 2010-2012, some of which are described below. As result of the crackdown, payments to CMHCs dramatically decreased during and after this period. In 2012, payment levels fell to $31 million, a difference of over $240 million. This may suggest that the large-scale CMHC fraud convictions not only eliminated some of the “bad actors” but could have also deterred others. This could not come soon enough as the mental health services are expanding under the Affordable Care Act.

The OIG is currently reviewing the appropriateness of Medicare payments for partial hospitalization program psychiatric services in hospital outpatient departments and community mental health centers. Examples of enforcement actions in this area have been recently included in this blog site. Other examples include the following:

American Therapeutic Corporation (ATC)

American Therapeutic Corporation, which managed seven CMHCs along with American Sleep Institute (ASI), submitted more than $205 million in false and fraudulent claims to Medicare for services that were medically unnecessary, not eligible for Medicare reimbursement, or were never provided. The fraud scheme included paying large kickbacks in exchange for Medicare beneficiaries who claimed to receive ATC and ASI services. Medical directors signed patient files without reading them, did not see patients, and changed, removed, or placed patients on psychotropic medications without medical evaluation, designed to conceal the fact that many of the patients did not qualify for reimbursement. Twenty-four defendants have been sentenced to a combined total of more than 200 years in prison for crimes related to this scheme.

Biscayne Milieu

A Miami-based CMHC devised a $55 million Medicare scheme involving patient recruiters, kickbacks, billing for services not provided, and billing for ineligible patients. They billed Medicare for patients who were not mentally ill, but rather soliciting false diagnoses so they could be exempt from portions of their U.S. citizenship application. The fraud scheme also involved fake case managers and phony medical records. Owners and more than 25 other defendants either pled guilty or were convicted at trial. The three owners were jailed for a combined 77 years.

Spectrum Care P.A.

A CMHC based in Houston, Texas was charged with submitting $97 million in claims to Medicare for services that were unnecessary or not provided. The scheme included paying kickbacks in the form of cash, gifts cards, and even cigarettes in exchange for delivering Medicare patients who were willing to sign files documenting services they never received and/or were not qualified to receive. Meanwhile, the patients allegedly played bingo and watched movies. Eight were indicted in this case.

Health Care Solutions Network

A Florida CMHC submitted claims to Medicare using a personal Medicare provider number for individual therapy it claimed to provide, while knowing that they were simultaneously billing for services for the same patients. They also paid kickbacks to a local assisted living facility for referring patients, many of whom weren’t even eligible for the services. Employees forged records to support the $56 million in fraudulent claims submitted to Medicare and Florida Medicaid. In total, 12 defendants were sentenced to a combined 70 years in prison and ordered to pay $186 million in restitution.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

Connect with Richard Kusserow on Google+ or LinkedIn.

Copyright © 2014 Strategic Management Services, LLC. Published with permission.