Archives for September 23, 2014

Kusserow’s Corner: Mental Health Ranks High on Fraud Scale

Occasionally, I take time to bring attention to enforcement actions in various health care sectors. Some recent actions drew my attention back to a special enforcement problem that stretches back decades to my days as Inspector General—mental health. Billions of dollars are spent to address the ever-increasing demand to treat mental stress and illness. The primary purpose of mental health treatment must be the therapeutic care and treatment of individuals who are suffering emotional disturbance. Proper treatment therefore demands the highest level of trustworthiness and integrity in the practitioner, who treats some of the most vulnerable patients. Two sources of funding are Medicaid and state general fund dollars, which on average fund 90 percent of the system. However, about 10 percent is funded by Medicare, federal mental health services block grant funds, and county or municipal funds. As with other areas of health care, a significant portion of these funds are diverted to fraud within the mental health industry. Many health care fraud investigators believe mental health caregivers, such as psychiatrists and psychologists, have the worst fraud record of all medical disciplines. Much of that is attributable to prescriptions for narcotic drugs and taking advantage of some of the vulnerable individuals who suffer from mental illness or Alzheimer’s disease.

Last year the HHS Office of Inspector General (OIG) issued a report focusing on one aspect of the problem: detecting and deferring mental health fraud in community mental health centers (CMHCs). CMHCs provide partial hospitalization program services to approximately 25,000 Medicare beneficiaries. The OIG report cited numerous arrests by Medicare Fraud Strike Forces evidencing significant levels of CMHC fraud. The OIG review found that one of nine MACs reviewed performed activities to detect and deter CMHC fraud, and most of these were part of a CMS-led special project. Activities to detect and deter CMHC fraud varied substantially among ZPICs with many performing minimal activities to detect and deter fraudulent CMHC billing. The report provided a number of recommendations to increase control and enforcement in this arena. However, this is only one area of Medicare that addresses mental health. Other areas are equally prone to fraud and abuse.

The latest in the Medicare enforcement arena comes from Louisiana where the owner of three mental health centers was sentenced to pay $43.5 million in restitution and serve 8-and-one-half years in federal prison for a Medicare fraud scheme. A psychiatrist, who served as medical director and co-owner, was sentenced to 86 months in prison for his role in admitting mentally ill patients to the facilities, some of whom were inappropriate for partial hospitalization, and then re-certifying the patients’ appropriateness for the program in an effort to continue to bill Medicare for services. These were among 17 people who worked at the three facilities in a variety of roles who also been charged in the fraudulent operation that stretched seven years and involved over a quarter-billion dollars in Medicare fraud. They included therapists, marketers, administrators, owners, and the medical director. The companies billed Medicare for unnecessary or never provided partial hospitalization program services for the mentally ill. The companies, collectively, submitted more than one-quarter-billion dollars in claims to Medicare during this period. The scheme also involved falsifying records indicating patients had treatment they never received and paying recruiters to, in turn, pay patients to attend hospitalization programs at the facility in order to make Medicare claims.

The fraud problem is actually larger and more pervasive in the Medicaid program, which provides significantly more funding to this area. For example, last year New Mexico was in the midst of a sweeping criminal investigation into 15 of its largest mental health providers, suspected of defrauding Medicaid of $36 million over three years.

Examples of Fraud in the Mental Health Sector

  • Altering and/or falsifying records to match services billed
  • Billing for services not actually performed
  • Errors and falsification of patient charts
  • Fabricating patient files
  • Paying kickbacks paid to recruiters to find beneficiaries
  • Lack of a referral form from an approved provider source
  • Lack of documentation for service provided
  • Service notes lack specific treatment goal
  • Billing for service not covered by Medicaid as a covered service
  • Billing for a more expensive service than was actually rendered
  • Prescribing category narcotic drugs to addicts or for selling on the street
  • Changing the billed date of service to match client dates of eligibility
  • Deliberately applying for duplicate reimbursement in order to get paid twice
  • Inappropriate billing that results in a loss to the Medicaid program
  • Providing services which are not necessary
  • Billing for services performed by unqualified persons

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.

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

Fraud Conspirators Find a New Home in Prison

Three patient recruiters from a now defunct Miami home health care company were sentenced to prison terms and ordered to pay restitution on September 18, 2014, for their roles in a $20 million fraud scheme, thanks to the FBI and HHS Office of Inspector General. The threesome received kickbacks for bringing patients to Trust Care Health Services Inc. (Trust Care) for unnecessary and sometimes unprovided home health care and therapy services. Trust Care then fraudulently billed the Medicare program for the services. Several other co-conspirators were also involved in the scheme, and one received sentencing just two days prior.


Estrella Perez, Solchys Perez, and Abigail Aguila took part in the kickback scheme, but Estrella Perez and Solchys Perez also paid connections they had in doctors’ offices and clinics in exchange for home health and therapy prescriptions, patient plans of care, and medical certifications for their recruited patients. Others at Trust Care then used these documents to fraudulently bill the Medicare program for $20 million in services during March 2007 through January 2010. Medicare reimbursed Trust Care approximately $15 million for these false claims.


Estrella Perez and Solchys Perez pleaded guilty in July 2014 to conspiracy to commit health care fraud, and Aguila pleaded guilty to conspiracy to defraud the United States and receive health care kickbacks. Estrella received a three-year prison term, while Solchys Perez and Aguila received two-and-a-half-year prison terms. All were ordered to pay almost $2 million in combined restitution. Trust Care is now defunct.

The case was brought as part of the Medicare Fraud Strike Force, which operates in nine cities across the United States and has charged nearly 2,000 defendants whose fraudulent activities have cost the Medicare program more than $6 billion.