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OIG busts multiple home health agencies, DME companies for fraud

August 28, 2014
by Pamela Tabar, Editor-in-Chief
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August was a busy month for the Medicare Fraud Strike Force, and several home health and durable medical equipment (DME) companies found themselves in the cross-hairs of the Department of Justice.

  • A Charlotte, NC, director of an acquisition company has been sentenced to 70 months in prison and ordered to pay $14 million in restitution for participating in a scheme to purchase several Florida-based physical therapy providers, set up straw ownership using recent immigrants as sham owners and then use the Medicare provider numbers to submit $28.3 million in fraudulent claims to Medicare.
  • A Detroit metro-area owner of three Michigan home health agencies pleaded guilty to $22 million in Medicare fraud, including fabricating and falsifying medical documents and then billing Medicare for home health services that were not medically necessary or were never delivered. The scheme included mining names of Medicare beneficiaries through Prestige Home Health Services, Platinum Home Health Services and Empirical Home Health Care and then inventing entire documentation charts for people who were never patients/clients of the companies.
  • A Carson, Calif., physician has been charged with fraud for receiving kickbacks in exchange for false prescriptions for DME equipment that was not medically necessary, including high-priced powerchairs, in a scheme with Adelco Medical Distributors. His bogus prescriptions and falsely documented services resulted in $2.2 million in false Medicare billings. In his plea agreement, the defendant also admitted that he engaged in a similar unlawful arrangement with another DME company, Esteem Medical Supply in Inglewood, Calif.
  • In a separate case from Carson, Calif., the owner of Lutemi Medical Supply, a DME company, was found guilty of spending 10 years defrauding Medicare of $8.3 million in claims for unnecessary medical equipment, including paying physicians to write fake prescriptions for DME.
  • The former director of nursing of Anna Nursing Services, a former Miami home health agency, pleaded guilty to falsifying documents, paying kickbacks for referrals and upcoding services and billing for physical therapy that was not provided or not medically necessary, resulting in $7 in Medicare fraud.
  • A co-owner of Professional Medical Home Health in Miami was sentenced to 70 months in prison and ordered to pay $6.2 million for participating in a Medicare fraud scheme involving home health and physical therapy services that were unnecessary, not provided and/or falsely documented.
  • The former director of operations of the Texas Durable Medical Company in Houston has been sentenced to almost eight years in prison and ordered to pay restitution of $1.2 million for fraudulent DME claims totalling $7.7 million, including feeding tubes, orthotic braces and incontinence products that were not necessary and/or never delivered.
  • The head of a Humble, Texas, DME company will spend six years in jail for falsifying prescriptions, upcoding and billing for orthotic braces that were never delivered. The defendant generated $2.4 million in false Medicare claims in just two years and used part of the money to purchase a house.
  • The owner of Columbus, Ohio, based Janis Home Health Care was sentenced to 3.5 years in prison and ordered to pay nearly a $1 million in restitution for falsifying claims for DME and for giving senior care facilities kickbacks in exchange for referrals.

Many of the sting operations are credited to Centers for Medicare & Medicaid Services' (CMS’) new Fraud Prevention System (FPS) software, which uses predictive analytics to identify fraud patterns in billing. Now in its second year of use, the high-tech system has reaped a 5-to-1 return on investment and has reduced Medicare’s once- traditional strategy of "pay and chase."

"In the second implementation year, which aligned with fiscal year 2013, CMS took administrative action against 938 providers and suppliers due to the FPS," noted CMS in its June report to Congress. "The identified savings, certified by the OIG, associated with these prevention and detection actions due to FPS was $210.7 million, almost double the amount identified during the first year of the program."

The Medicare Fraud Strike Force has expanded to field operations in nine metropolitan areas. Since 2007, the agency has prosecuted nearly 2,000 people who had submitted more than $6 billion in false Medicare claims, the Department of Justice notes.