Evidence at trial established that Bernice Brown was the owner and president of Wayne County Therapeutic Inc. (WCT) in Livonia, Mich. Daniel Smorynski was the vice president of WCT. WCT purported to be an outpatient clinic that specialized in physical and occupational therapy. Evidence at trial established that Brown purchased fake physical and occupational therapy files from certain third-party contractors, and she and Smorynski billed the services reflected in the files to Medicare as if WCT therapists had provided the services. Brown instructed her staff to create false documents and to add those documents to medical files to make it appear that the WCT therapists, who were licensed in the state and enrolled with Medicare, had performed the services, when she knew they had not. According to evidence presented at trial, Smorynski was in charge of billing at WCT and aided in the submission of claims for services he knew WCT did not provide. Between approximately October 2002 and September 2006, Brown and Smorynski submitted approximately $23.2 million in claims to Medicare for physical and occupational therapy services that were never provided. Medicare paid approximately $6,537,630.34 of those claims.

The ink has barely dried on the last summers round of sham therapy operator indictments as this was announced.  Detroit is one of the Medicare Strike Force cities where the DOJ and other federal and state authorities have teamed to stop fraudulent Medicare billing activities.  Also referenced in this indictment is the fact that the therapists were often not enrolled in the Medicare program and/or were not properly licensed to practice.  As with other schemes of this type Medicare beneficiaries were “paid” a kickback fee for the use of their Medicare number, and therapy orders from physicians were fake.

Evidence at trial showed that Brown and Smorynski, in addition to submitting claims for non-existent physical and occupational therapy, caused WCT to submit fraudulent claims for psychotherapy services. In January 2006, when Congress enacted a cap on physical and occupational therapy services to control costs, Brown and Smorynski devised a scheme to avoid the cap by billing for psychotherapy services. Evidence at trial showed that Brown and Smorynski launched a lobbying effort to repeal the cap, which included WCT staff drafting letters and petitions to Congress purportedly on behalf of Medicare patients. Brown and Smorynski then instructed WCT staff to bill Medicare for their lobbying efforts as psychotherapy evaluations and visits.

It is interesting to note that in these instances were Medicare beneficiaries have been complicit in the fraud that there is no mention of future action against them.  Stay tuned.

The chapter on ancillary services addresses outpatient therapy including physical, occupational and speech therapies.  Of note is the discussion regarding the growth of ancillary services which includes eliminating outpatient therapy from the in-office ancillary exception to the Stark regulations, noting that “incident to” services declined from 30 percent share to 16% share of spending for therapy services.  Also discussed is limiting the exception to practices that are clinically integrated.

The report consists of eight chapters:  2 chapters on the themes of Medicare payment accuracy and moving away from the   inherent volume incentives present in Medicare fee-for-service.  Three chapters highlight systemic changes to better align provider incentive with a “reformed delivery system.”  The role of beneficiaries in the delivery system reform.  The report also includes a chapter that discussed the role of CMS as a “value” purchaser vs. a “claims payer”.

For private practitioners working or employed in physician offices (billing under their own Medicare provider number assigned to the group), as well as those billing “incident to” under the physician number, put Chapter 8 on your summer reading list.

“By purchasing certified EHR technology, hospitals and eligible professionals and hospitals will be able to make EHR purchasing decisions knowing that the technology will allow them to become meaningful users of electronic health records, qualify for the payment incentives, and begin to use EHRs in a way that will improve quality and efficiency in our health care system,” said David Blumenthal, M.D., M.P.P., national coordinator for health information technology.  “We hope that all HIT stakeholders view this rule as the federal government’s commitment to reduce uncertainty in the health IT marketplace and advance the successful implementation of EHR incentive programs.”

According to the press release use of certified EHR technology  is a core requirement for providers who seek to qualify to receive incentive payments under the Medicare and Medicaid Electronic Health Record Incentive Programs  which was authorized by provisions  in the  HITECH Act as part of the American Recovery and Reinvestment Act (ARRA) of 2009.   CMS will issue final regulations to implement the EHR incentive programs also according to the press release.

For therapy and other small providers seeking to move to an electronic health record platform it is time to get in touch with the vendors that you have been considering, your incentive payments will depend on their certification through this program.

In an excerpt from his prepared remarks Mr. Morris describes health care fraud: 

Health care fraud schemes commonly include billing for services that were not provided or were not medically necessary, purposely billing for a higher level of service than what was provided, misreporting costs or other data to increase payments, paying kickbacks, and/or stealing providers’ or beneficiaries’ identities. The perpetrators of these schemes range from street criminals, who believe it is safer and more profitable to steal from Medicare than trafficking in illegal drugs, to Fortune 500 companies that pay kickbacks to physicians in return for referrals.

Also clarified in his testimony is the fact that the ACA authorizes the Secretary

to require providers and suppliers to adopt, as a condition of enrollment, compliance programs that meet a core set of requirements, to be developed in consultation with OIG. In addition, the ACA requires skilled nursing facilities and nursing facilities to implement compliance and ethics programs, also in consultation with OIG. These new requirements are consistent with OIG’s longstanding view that well-designed compliance programs can be an effective tool for promoting compliance and preventing fraud and abuse.

While this testimony is for the purpose of updating the noted sub-committees, it is also a concise read for providers to keep them up to date on fraud and abuse initiatives. 

For current CORFs providing respitory therapy programs, it is imperative that the plan of care for respiratory therapy be wholly developed by the physician (this can be the referring physician, or the CORF medical director).  For physical therapy programs in a CORF it is equally imperative that providers understand that the plan of care must be certified prior to therapy commencing, and that includes provding any services on the day of the evaluation other than the evaluation.

For all CORFs, as you get prepared for review under the Recovery Audit Contractor (RAC) program, make sure that you have all your regulatory reference material pulled together, particularly as it relates to the particular time period that is under review.  The RAC look-back period is 3 years, but no earlier than October1, 2007.  Scrapbooking your way to success is a good way to get started.

This change affects Part A outpatient therapy providers (billing on CMS 1450/UB04) including CORFs, Rehab Agencies, Hospitals, SNFs, Home Health Agencies.  A corresponding MLNArticle has also been published.

Other linked resources include the CMS Therapy Services webpage, rehab sections in the Medicare Benefit Policy Manula as well as the Medicare Claims Processing Manual, provider enrollement information and therapy studies and reports.  In other there are other general provider resouces links for fraud and abuse, beneficiary notices, and the physician fee schedule look-up.