Highlight on Alaska: ‘Good Faith’ Medicaid Fraud Guilty Plea

An ongoing federal and state criminal investigation led to guilty pleas from three individuals and entities involved in a far-reaching scheme to defraud Medicaid, according to the Alaska Department of Law’s Medicaid Fraud Control Unit (MFCU).


Good Faith Services, LLC (Good Faith), was an Anchorage personal care agency. Good Faith provided eligible Medicaid recipients with personal care, transportation, and care coordination services. A citizen complaint was filed against Good Faith, which led to a joint investigation by MFCU, the Alaska Department of Health and Social Services, the HHS Office of Inspector General (OIG), the Federal Bureau of Investigation (FBI), and Immigration and Customs Enforcement (ICE). The investigation revealed that 10 full-time Good Faith office employees billed Medicaid almost $400,000 for services they claimed to be providing while simultaneously working in the office; MFCU also alleges that Good Faith fraudulently billed Medicaid for more than $1 million in services provided in violation of Alaska Administrative Regulations by PCAs who had not yet received a valid background check.

In July 2013, 25 Anchorage-based personal care attendants (PCAs) and Medicaid recipients, all of whom were associated with Good Faith, were charged with criminal medical assistance fraud. An additional 53 individuals associated with Good Faith, including 13 of the company’s 16 office staff employees, have also been charged with criminal medical assistance fraud.

Plea Deals

On November 28, 2014, Good Faith pleaded guilty to a single count of medical assistance fraud, which is a class B felony. At the same time, one of Good Faith’s owners, Agnes Francisco, entered a guilty plea to a single count of attempted medical assistance fraud, a class C felony and a related entity, and Anchorage Adult Day Services entered a plea of guilty to a single count of class B misdemeanor medical assistance fraud.

Under its plea agreement, Good Faith will be required to pay a fine of $300,000 and restitution of $1.2 million. Further, Good Faith must permanently dissolve as a corporate entity and provide a declaration to the OIG that it will no longer provide Medicaid services. This follows the state suspending Good Faith’s billing privileges in November 2013. Anchorage Adult Day Services will pay a fine of $20,000 and is permanently suspended from providing Medicaid services.

Francisco, 55, will be sentenced by the court on March 31, 2015. Under the terms of her plea agreement, the court must find that Francisco’s conduct was designed to obtain a substantial pecuniary gain with a low risk of prosecution and punishment, which is an aggravating feature allowing the court to impose a longer period of incarceration. The presumptive range is zero to two years; with the aggravator, Francisco faces up to five years. She may also be fined up to $50,000.

Medicaid Expansion has Positive Effect on Health Care for the Homeless

The Medicaid expansion option has not only increased access to health care for the homeless, but has had a positive impact on their health outcomes, and has given providers who treat homeless patients wider treatment options and increased revenue streams leading to operational improvements and additional staffing. These findings were part of a Kaiser Family Foundation (KFF) web briefing on December 15, 2014, which examined the early impacts of the Patient Protection and Affordable Care Act’s (ACA) (P.L. 111-148) Medicaid expansion on the homeless population, as well as opportunities and challenges looking forward.

The briefing, offered by KFF’s Commission on Medicaid and the Uninsured, highlighted key findings obtained from focus groups conducted with administrators, providers, and enrollment workers at four sites serving homeless individuals in states that have expanded Medicaid (Albuquerque, New Mexico; Baltimore, Maryland; Chicago, Illinois; and Portland, Oregon) and one site in a state that has not expanded (Jacksonville, Florida).

The KFF briefing draws upon the recent paper, Early Impacts of the Medicaid Expansion for the Homeless Population, co-authored by Barbara DiPietro, Director of Policy for the National Health Care for the Homeless Council; Samantha Artiga, Associate Director of the Kaiser Commission on Medicaid and the Uninsured; and Alexandra Gates, a Policy Analyst at the Commission. The paper provides an early look at the impact of the expansion for homeless providers and the patients they serve, building on an earlier KFF brief examining the potential role of Medicaid expansion for the homeless population.

Prior to Medicaid Expansion

According to Early Impacts of the Medicaid Expansion for the Homeless Population, prior to Medicaid expansion, homeless individuals were uninsured at high rates even when compared to other low-income groups. For example, of the 851,641 patients served by Health Care for the Homeless grantees in 2013, 57 percent were uninsured, compared to 35 percent uninsured patients served at all health centers and over four times the rate of the general population. In addition, the paper contends that people who are homeless have high rates of both chronic disease and acute illnesses, with many of these conditions associated with or exacerbated by their living situations.

Homeless Enrollment Levels

The Early Impacts paper indicates that Medicaid enrollment of the homeless has increased in all five of the study sites from January 2012 through July 2014:

  • Albuquerque, New Mexico increased from 5 percent to 31 percent.
  • Baltimore, Maryland increased from 51 percent to 87 percent.
  • Chicago, Illinois increased from 36 percent to 47 percent.
  • Portland, Oregon increased from 60 percent to 84 percent.
  • Jacksonville, Florida (despite no Medicaid expansion) increased from 0 percent to 3 percent.

Program Manager Viewpoint

During the briefing, Kascadare Causeya, a Program Manager at Central City Concern in Portland, Oregon, indicated that Medicare expansion resulted in the following challenges at his facility: (1) new Medicaid enrollment systems and requirements created confusion for frontline workers; (2) the lack of telephone numbers and email addresses for the homeless made follow-up contacts difficult; (3) the loss of year two funding created shortages in the enrollment workforce; and (4) the potential for Medicaid coverage loss upon annual renewal. From an enrollment worker’s perspective, however, Causeya found that their homeless clients were happy to enroll in Medicaid, willing to spread the word to other homeless persons, and their outward appearance was visibly improved after initial care.

Clinical Perspective

Nilesh Kalyanaraman, M.D., Chief Medical Officer for Health Care for the Homeless in Baltimore, Maryland, described the following clinical challenges in caring for the homeless: (1) the continued lack of reimbursement for key services (i.e., case management, outreach, and dental); (2) changing drug formularies and the need for prior authorization in managed care plans created delays in access; (3) the lack of housing; and (4) providers learning how to navigate the insurance landscape. Kalyanaraman, however, noted numerous improvements, including:

  • better access to comprehensive care (prevention services and specialty care);
  • increased availability and wider choices of medications (asthma, Hepatitis C, and arthritis drugs);
  • patients having greater control over their health (i.e., able to schedule appointments and obtain refills of medications on their own); and
  • the potential for improved health outcomes over the long term.

Administrator Viewpoint

Karen Batia, Executive Director of the Heartland Health Outreach in Chicago, Illinois, described the following challenges from the perspective of a program administrator:

  • the ongoing need for grant-based funding;
  • managed care plans require multiple provider contracts and significant increases in staff and infrastructure to fulfill compliance requirements;
  • homeless client data is fragmented and remains in silos;
  • increased demand for services stretches provider capacity and creates recruitment and retention issues; and
  • the cost of care for the homeless is initially high as clients access long-needed care.

Batia sees the following administrative opportunities: (1) increased revenue from Medicaid expansion will allow growth in staffing and infrastructure; (2) by treating the homeless, they will obtain better data on the population, which should result in a better understanding of their health needs and the associated costs; (3) the potential to establish risk stratified reimbursements based on the homeless population and appropriate outcomes; and (4) building a system of integrated services.

Kusserow on Compliance: OIG Reports $5B Return as Result of Its Efforts

The HHS Office of Inspector General (OIG) is required to issue semi-annual reports to Congress regarding the results of its efforts. On December 10, 2014, it released its second half of fiscal year (FY) 2014 report that included a summary of accomplishments for the entire year. The report included a lengthy list of achievements by the OIG. One of the major accomplishments claims was $4.9 billion improperly spent federal health care dollars having been returned to the government as result of the OIG’s oversight and investigation efforts conducted during the year. This was broken down to $834.7 million in program audits and about $4.1 billion in investigative work that included $1.1 billion as states’ shares of Medicaid restitution. The OIG also reported $15.7 billion in estimated savings resulting from legislative, regulatory, or administrative actions that were supported by report recommendations. Some other statistical accomplishments noted included a number of enforcement actions:

  • 4,017 individuals and entities were excluded from federal health care programs
  • 971 criminal actions against individuals or entities that engaged in crimes against HHS programs
  • 533 civil and administrative cases, including false claims and unjust-enrichment lawsuits filed in federal district court and civil monetary penalties administrative matters, which included both OIG-initiated actions and provider self-disclosures.
  • Participation in Department of Justice (DOJ) Strike Force efforts resulting in the filing of charges against 228 individuals or entities, 232 criminal actions, and $441 million in investigative receivables

Other highlights from the report included findings that:

  • The OIG conducted congressionally mandated reviews of the implementation of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) that include the Health Insurance Exchanges, also called Marketplaces, and found that not all internal controls implemented by the federal, California, and Connecticut Marketplaces were effective in ensuring that individuals were enrolled in qualified health plans (QHPs) according to federal requirements.
  • The Exchanges were unable to resolve 2.6 million of 2.9 million inconsistencies from October through December 2013, most commonly as citizenship and income issues.
  • Medicare inappropriately paid $6.7 billion for claims for evaluation and management (E/M) services in 2010 that were incorrectly coded and/or lacked documentation, representing 21 percent of Medicare payments for E/M services that year. A further note on this was that E/M services are 50 percent more likely to be paid for in error than other Part B services.
  • Medicare and beneficiaries could save $12 billion during calendar years (CYs) 2012 through 2017 if CMS reduces hospital outpatient department payment rates for ambulatory surgical center (ASC)-approved procedures to the same level as ASC payment rates. When outpatient surgical procedures that do not pose significant risk to patients are performed in an ASC instead of an outpatient department, the payment rates are generally lower.

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.

CMS Puts Off Incentive Reward Program Changes, Tightens Enrollment Rules

New rules designed to ensure that fraudulent entities and individuals do not enroll in or maintain their enrollment in the Medicare program have been finalized by CMS. The agency had also intended to increase the potential reward amount under the Incentive Reward Program (IRP) for information on individuals and entities engaging in sanctionable conduct in the Medicare program. However, based on adverse industry comments and the complexity of implementation, CMS chose not to finalize the proposed IRP provisions at this time. This Final rule will publish in the Federal Register on December 5, 2014.

Enrollment Rule Changes

The Final rule implements the following changes regarding provider/supplier enrollment:

  • Denial based on Medicare debt. Denial of enrollment will be allowed if the provider, supplier, or owner was previously the owner of a provider or supplier that had a Medicare debt existing when its enrollment was voluntarily terminated, involuntarily terminated or revoked and (1) the owner left the provider or supplier that had the Medicare debt within one year of that provider or supplier’s voluntary termination, involuntary termination, or revocation; (2) the Medicare debt has not been fully repaid; and (3) CMS determines that the uncollected debt poses an undue risk of fraud, waste, or abuse. This denial based on Medicare debt can be averted if the enrolling provider, supplier, or owner satisfies the CMS claim collection criteria set forth in 42 C.F.R. §401.607 and agrees to a CMS-approved extended repayment schedule for the entire outstanding Medicare debt or repays the debt in full.
  • Felony conviction. Denial of enrollment or revocation of Medicare billing privileges will be allowed if, within the preceding 10 years, the provider or supplier, or any owner or managing employee, has been convicted of a federal or state felony offense that CMS determines to be detrimental to the best interests of the Medicare program and its beneficiaries.
  • Pattern or practice of bad claims. Revocation of Medicare billing privileges will be allowed if the provider or supplier has a pattern or practice of submitting claims that fail to meet Medicare requirements.
  • Ambulance suppliers. The ability of ambulance companies to “back bill” for services furnished prior to enrollment will be limited. Currently, physicians, non-physician practitioners, physician and non-physician practitioner organizations, diagnostic testing facilities and suppliers of durable medical equipment, prosthetics, orthotics, and supplies cannot bill for services furnished prior to the later of the date the supplier filed a Medicare enrollment application or the date the supplier first began furnishing services at a new practice location. CMS is simply expanding this rule to include ambulance suppliers.
  • CAP limitation. The ability of revoked providers and suppliers to submit a corrective action plan (CAP) will be limited to situations where the revocation was based on 42 C.F.R. §424.535(a)(1), i.e., noncompliance with enrollment requirements, the enrollment application, or failure to pay user fees. The provider and supplier will have only one opportunity to correct all deficiencies through the CAP.
  • Submission of remaining claims. All revoked providers and suppliers will be required to submit all of their remaining claims within 60 days after the effective date of their revocation.

Incentive Reward Program

On April 29, 2013, CMS published a Proposed rule to revise the provider enrollment requirements and the IRP provisions (see CMS releases proposed rule on Medicare Incentive Program, provider enrollment, April 29, 2013). Under the Proposed rule, the reward would be increased from 10 percent of the overpayments recovered or $1,000, whichever is less, to 15 percent of the final amount collected applied to the first $66 million for the sanctionable conduct. The Proposed rule also specified that CMS would not will not give a reward for the same or substantially similar information that was the basis of a payment under the federal False Claims Act (31 U.S.C. sec. 3729 et seq.) or any state False Claims Act. The tip would need to provide sufficiently specific information to start a review or investigation by CMS, and the reward would go to the first person to give specific information on a provider or supplier.

CMS received a number of adverse comments regarding these proposed changes, including the following:

  • The significantly increased reward amount would lead to many reports containing irrelevant or erroneous information that would ultimately impose a heavy burden on CMS and its contractors.
  • The proposal to limit reward eligibility to the first reporter of information could create “shoot first, ask questions later” situations leading to tension between providers and patients.
  • The proposal would encourage whistleblowers to first report their concerns to CMS instead of using established internal compliance reporting methods created within Medicare provider organizations.
  • Does CMS have the resources in place to handle the large influx of tips and complaints that the proposal will generate?

In response to these concerns and due to the complexity of implementation, CMS chose not to finalize the proposed IRP provisions contained in its Proposed rule, but indicated that it may finalize them in the future.

Cost and Impact

According to CMS, savings from most of the finalized provider enrollment provisions cannot be quantified. However, with regards to the limitation on ambulance supplier back-billing, CMS believes that this provision will result in a transfer of $327.4 million per year from ambulance suppliers to the federal government. In addition, CMS believes that the requirement for revoked providers and suppliers to submit remaining claims within 60 days of revocation will limit Medicare’s vulnerability to fraudulent claims and allow for a more focused medical review. The agency believes this will likely lead to some future savings to the federal government.