Federal prosecutors build the new healthcare-related fraud cases on previous nationwide enforcement actions from 2022
Federal charges have once again been brought against a number of physicians and clinical laboratory owners in what the US Department of Justice described as the “largest ever” coordinated nationwide law enforcement effort against COVID-19 pandemic-related healthcare fraud.
In total, the DOJ filed criminal charges against 18 defendants in five states plus the territory of Puerto Rico, according to an April 20 press release.
The highest dollar amount of these frauds involved ENT physician Anthony Hao Dinh, DO, who allegedly defrauded the Health Resources and Services Administration (HRSA) COVID-19 Uninsured Program for millions of dollars, and Lourdes Navarro, owner of Matias Clinical Laboratory, for allegedly “submitting over $358 million in false and fraudulent claims to Medicare, HRSA, and a private insurance company for laboratory testing” while performing “COVID-19 screening testing for nursing homes and other facilities with vulnerable elderly populations, as well as primary and secondary schools,” the press release states. Both court cases are being conducted in Southern California courtrooms.
The DOJ’s filing of charges came rather speedily, compared to other cases involving fraudulent clinical laboratory testing schemes pre-pandemic. The amount of money each defendant managed to generate in reimbursement from the fraud represents tens of thousands of patients. If feds were paying $100 per COVID-19 test, then the $153 million represents 153,000 patients, in just 18 to 24 months.
“Today’s announcement marks the largest-ever coordinated law enforcement action in the United States targeting healthcare fraud schemes that exploit the COVID-19 pandemic,” said Assistant Attorney General Kenneth A. Polite, Jr. (above), in an April 20 DOJ press release. “The Criminal Division’s Health Care Fraud Unit and our partners are committed to rooting out pandemic-related fraud and holding accountable anyone seeking to profit from a public health emergency.” Clinical laboratory managers may want to pay close attention to the DOJ’s prosecution of these newest cases of alleged COVID-19 fraud. (Photo copyright: Department of Justice.)
Prosecutors allege that Navarro and her husband, Imran Shams, who operated Matias—also known as Health Care Providers Laboratory—perpetrated a scheme to perform medically unnecessary respiratory pathogen panel (RPP) tests on specimens collected for COVID-19 testing, even though physicians had not ordered the RPP tests and the specimens were collected from asymptomatic individuals.
In some cases, the indictment alleges, Navarro and Shams paid kickbacks and bribes to obtain the samples.
The indictment notes that reimbursement for RPP and other respiratory pathogen tests is generally “several times higher” than reimbursement for COVID-19 testing. Claims for the tests were submitted to Medicare and an unidentified private insurer, as well as the HRSA COVID-19 Uninsured Program, which provided support for COVID-19 testing and treatment for uninsured patients.
Claims to the HRSA falsely represented that “the tested individuals had been diagnosed with COVID-19, when in truth and in fact, the individuals had not been diagnosed with COVID-19 and the tests were for screening purposes only,” the First Superseding Indictment states.
The indictment further states that both Navarro and Shams had previously been barred from participating in Medicare and other federal healthcare programs due to past fraud convictions. Navarro, the indictment alleges, was reinstated in December 2018 after submitting a “false and fraudulent” application to the HHS Office of Inspector General.
It also alleges that Navarro and Shams concealed their ownership role in Matias so the lab could maintain billing privileges.
More Alleged Abuse of HRSA Uninsured Program
In a separate case, Federal prosecutors alleged that Anthony Hao Dinh, DO, an ear, nose, and throat physician in Orange County, California, engaged in a scheme to defraud the HRSA COVID-19 Uninsured Program as well.
Dinh, prosecutors allege, “submitted fraudulent claims for treatment of patients who were insured, billed for services that were not rendered, and billed for services that were not medically necessary.”
The criminal complaint, filed on April 10, alleges that Dinh submitted claims for approximately $230 million, enough to make him the program’s second-highest biller. He was paid more than $153 million, prosecutors allege, and “used fraud proceeds for high-risk options trading, losing over $100 million from November 2020 through February 2022,” states the US Attorney’s Office, Central District of California press release.
Dinh was also charged for allegedly attempting to defraud the federal Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program. He faces a maximum sentence of 50 years in federal prison, the press release states.
Dinh’s sister, Hang Trinh Dinh, 64, of Lake Forest, California, and Matthew Hoang Ho, 65, of Melbourne, Florida, are also charged in the complaint, the Los Angeles Times reported.
Both of these cases are notable because of the size of the fraud each defendant pulled off involving COVID-19 lab testing. Clinical laboratory managers may want to review the original court indictments. The documents show the brazenness of these fraudsters and detail how they may have induced other doctors to refer them testing specimens.
Investigators may look into various angles, including drive-through testing sites for COVID-19 and whether uninsured patients were verified before free tests
Three healthcare compliance attorneys gave a clear and concise message to clinical laboratory managers and pathologists at the 2022 Executive War College Conference on Laboratory and Pathology and Management: Expect the government to scrutinize reimbursements it paid for COVID-19 testing, particularly for testing conducted at drive-through sites that popped up all over the country.
“The important question is: What is the fair market value of those specimens?” noted attorney Emily Johnson, JD, a Member at law firm McDonald Hopkins in Chicago. Johnson spoke during a legal panel on Wednesday at the Executive War College in New Orleans.
The panel spent 75 minutes discussing various legal concerns, many of them related to COVID-19 testing, before a crowd of about 80 attendees.
Attorney Emily Johnson, JD, of Chicago law firm McDonald Hopkins explained possible COVID-19 test fraud enforcement to attendees at the 2022 Executive War College. (Photo copyright: The Dark Intelligence Group.)
Audits May Be Coming of HRSA Reimbursements for COVID-19 Testing
Consumer Reports noted in a January article that COVID-19 testing prices varied wildly both in traditional healthcare settings and popup sites—in some cases, exceeding $1,400.
The average price for such a test within an insurance company’s network was $130.
Some people paid for those tests out of pocket or got them covered by insurance. For uninsured patients, the federal Health Resources and Services Administration (HRSA) established a pool of money to reimburse labs for free COVID-19 tests. That pool recently dried up and Congress has not approved more funding.
The U.S. Department of Justice may investigate the uninsured aspect of claims—specifically, whether there were attempts by laboratory staff members to verify whether a patient truly was not covered by health insurance, explained Karen Lovitch, JD, Chair of the Health Law and Healthcare Enforcement Defense Practice at law firm Mintz in Washington.
These issues bring up False Claims Act risks, especially if a clinical laboratory audits its own COVID-19 test claims. “If labs go back retroactively and determine a claim was paid that shouldn’t have been paid, those labs must absolutely be prepared to return that money,” Lovitch warned.
Clinical Laboratories Need a Business Plan for Post-COVID-19 Testing
Related to HRSA payments ending for COVID-19 testing of uninsured payments, clinical laboratories should be wary about outright ending such testing without a documented business plan demonstrating the rationale for doing so, Johnson noted. That advice is relevant for labs and pathology groups that received financial assistance from HRSA’s Provider Relief Fund during the pandemic.
Some have interpreted information about the fund to mean providers are obligated to treat uninsured patients, Johnson added.
“If I stop accepting uninsured patients for COVID testing, am I in violation of the Provider Relief Fund?” she asked. A clearly documented reason for doing so, such as a need to keep the business afloat through paid testing, would be a first step for concerned medical laboratories to take, she added.
Another point for labs to ponder: In March, the federal government named Kevin Chambers, JD—who is currently Associate Deputy Attorney General at the DOJ—as the first Director of COVID-19 Fraud Enforcement.
That appointment emphasizes the government’s commitment to undercovering SARS-CoV-2 wrongdoing, said attorney David Gee, JD, a Partner at law firm Davis Wright Tremaine in Seattle. Gee rounded out the panel at the Executive War College.
“I guarantee Chambers’ bosses want him to demonstrate the government is serious about COVID-19 fraud,” Gee commented.
EKRA Becomes New Tool against COVID-19 Fraud
Finally, as Dark Daily previously reported, the Eliminating Kickbacks in Recovery Act of 2018 (EKRA) is sometimes being used to prosecute cases of alleged COVID-19 testing fraud.
EKRA has generally been associated with rules against paying clinical laboratory sales reps a commission based on testing volumes they generate. However, Johnson predicted more EKRA cases will be filed related to alleged kickbacks paid in return for referrals for COVID-19 testing.
“Prosecutors seem willing to go after these cases aggressively,” she added.
And in The Dark Report’s upcoming Regulatory Update, “Dept. of Justice: EKRA Governs Lab Sales and Marketing Commissions,” Dark Daily’s sister publication covers how a recent ruling by a federal judge may weaken EKRA and “immunize conduct that drives up medical costs.”
Subscribers to The Dark Report will want to stay informed on critical changes taking place that affect how EKRA operates.
Potentially increasing the revenue write-off burden for clinical laboratories, HRSA changes, insurance contracting, policy and coverage questions for genetic and genomic testing, and patient relationship disconnects will expose cracks in lab test claim generation and billing processes
Last year it was estimated that collection agencies held $140 billion in unpaid medical bills, in addition to the amount of unpaid bills in pre-collection status, according to a New York Times report. More recently, the American Hospital Association showed that hospitals have provided upwards of $700 billion in uncompensated care since 2000, with over $40 billion in 2019 alone.
Because strategies to collect the unpaid can be complicated and time-consuming, many healthcare organizations, including clinical laboratories, choose to write off these uncollectible bills. Dark Daily and The Dark Report have covered clinical laboratory revenue challenges for many years. In considering the paths forward, software-as-a-service (SaaS) provider FrontRunner Healthcare (FrontRunnerHC) recently provided snapshots into the how and where of improved collections.
Fixing Data Issues that Lead to Forfeited Clinical Laboratory Revenue
The underpinnings of unpaid lab tests are many. In a recent interview with Dark Daily, FrontRunnerHC CEO and Founder John (JD) Donnelly estimated that about one-third of claims (prior to submission) include incorrect or missing patient information, such as insurance policy identification or demographics. These gaps undermine an organization’s ability to get paid. Donnelly estimates that bad-debt write-offs for commercial payer claims average over 15% of charges. To address these challenges, the company’s clean claims SaaS provides “instantaneous” patient insurance, demographic, and financial information.
Whether lower-dollar accessions such as routine testing, or the higher-dollar accessions of genetic tests, uncollected payments add up. Donnelly said that, in 2021, almost one-third of the company’s clients uncovered revenue ranging from $1 million to over $90 million using the software. Donnelly also estimated that the return for clients averages eight times the value of the investment in using the automated solution.
In one example, Sonora Quest, a joint venture between Banner Health and Quest Diagnostics, reported a 10-15% decline in write-offs due to aged claims, a savings of over $1million annually, as published in a case study. “As an aside, in a presentation at the Executive War College last November, they also attributed improvements in patient satisfaction measures to the software, including a 65% decrease in abandoned calls, 28% improvement in their call service factor, and 19% decrease in patient call volumes,” stated Donnelly.
Questions About Cost of Care Likely Cause Stress for Patients
As many know, nonpay issues are problematic not only for lab businesses and anatomic pathology practices but also for patients and their families who have little predictability with their cost of care in the midst of stressful health events. “From the time a patient is registered to the time the claim is paid, there are more challenges than people realize that jeopardize the patient’s experience as well as the provider’s ability to get reimbursed,” Donnelly explained. Medical laboratory administrators have struggled to respond, often by using traditional manual methods such as call centers, or more recently by considering the use of data automation tools.
From the patient payment perspective, Donnelly said, a good strategy is having the ability, on demand, to understand each patient’s specific financial situation and likelihood to pay. For example, using FrontRunnerHC’s software to gauge patients’ propensity to pay and determine financial disposition strategies, lab administrators may choose to offer payment plans or hardship discounts to those falling under the federal poverty level (FPL). Or they may choose to send a collection agency only the past-due accounts for patients who have a low likelihood to pay rather than sending them all past due accounts and focus in-house efforts on the others. One genetics lab client who recently started leveraging these software capabilities “is already seeing more than 5% in incremental net collections,” according to Donnelly.
Further, an estimated 2 million people switch insurance plans each month, reported Axios. “That velocity of change is tough for providers to manage, but it’s critical as insurance eligibility and registration issues are the number one reason for claims denials,” Donnelly said.
For a sense of the magnitude of the problem, “Between 25 and 33 cents of every dollar you spend on medical care pays for health care’s back office,” wrote Dana Miller Ervin in September 2021 for a series of investigations called “The Price We Pay,” published at WFAE 90.7 news in Charlotte, North Carolina. “Every medical provider and laboratory in the country has to negotiate with insurance companies. And since there are 900 health insurers, 6,000 hospitals and more than 100,000 physician practices—many of which are independent of larger systems—there are hundreds of thousands of negotiations.”
New Clinical Laboratory Business Challenges Making News Now
All these issues affecting revenue cycle management (RCM) for independent clinical laboratories, hospital and health system laboratories, and physician office laboratories could be compounded by three emerging issues.
Donnelly said that many lab clients have yet to be reimbursed for COVID tests they have performed, despite their HRSA-required due diligence prior to submitting the claims before the deadline. To avoid additional reimbursement risk, many labs have made the decision to stop testing the uninsured or charge them for it, ABC News reported in late March. As of early April, however, Congress was in discussions to re-fund at least some of the Uninsured Program, reported Politico.
Secondly, and also daunting, are the questions surrounding payer coverage and reimbursement for genetic tests and genomic testing. Thanks to high-deductible health plans (HDHPs), clinical laboratories and anatomic pathology groups increasingly must collect deductibles that may be the full amount of the test – and directly from patients rather than from insurance companies. Therefore, there is more demand from patients to understand their expected cost before the test, Donnelly added.
Problems can arise, for both labs and patients, if they don’t know whether a test has been preauthorized for medical necessity or if they lack accurate insurance information such as in-network or out-of-network. “Getting all the needed and accurate info upfront prior to it going into the LIS [Laboratory Information System] can be a reimbursement game changer,” stated Donnelly.
“For a high complexity, high-throughput diagnostic lab, an efficient workflow is critical,” stated Kyle Koeppler, President of nuCARE Medical Solutions Inc., a FrontRunnerHC client. “Capturing the correct patient demographics and insurance information at patient intake increases the accuracy of every order and makes every process involving patient information much more efficient,” Koeppler shared. “It’s simply too costly to risk having inaccurate information at intake.”
And lest we forget, the Protecting Access to Medicare Act (PAMA) is looming with its reimbursement cuts planned through 2026, and requirements of many labs to report private payer rates on a test-by-test basis. While delayed again, the 2023 PAMA reporting requirements and payment cuts must not be ignored, and planning is needed in order to ensure appropriate reimbursement, Donnelly added.
Addressing Long Payment Cycles for Claims, Dead Ends, and Decreased Collection Rates
The CAQH report cites that data automation resulted in efficiency savings of $122 billion annually for the US healthcare system in 2020 yet “meaningful opportunities for additional savings remain.”
Data automation can reduce the burden of labor-intensive functions in coding, billing, filing appeals, and collecting from payers and patients and, therefore, reduce overall RCM costs. The Council for Affordable Quality Healthcare’s (CAQH) 2020 Index reported, “Considering the millions of times these transactions occur every day, the savings potential across the healthcare economy [from streamlining administrative processes] is significant.”
“One way to avoid potential write-offs is by reworking a claim, but the rework is often left undone,” stated John (JD) Donnelly (above), CEO and Founder of FrontRunnerHC. “The better way to avoid a potential write-off is to ensure you’ve got a clean claim in the first place.” (Photo copyright: FrontRunnerHC.)
The intended outcome is an increase in the total amount of revenue collected from the same number of claims.
To that end, FrontRunnerHC’s software links critical data within its partner ecosystem. This ecosystem includes the well-established credit reporting agencies as well as data available through connected healthcare payers and providers equipped with electronic data interchange (EDI) capabilities. “While an employee may be able to manually work about six accessions in an hour, clients can process approximately 40,000 patients in an hour through software automation, leaving staff to work on more value-added initiatives,” stated Donnelly.
Ideally, missing and inaccurate patient information or insurance verification, which are crucial for producing prompt payments and clean claims, should be corrected before a specimen is collected, Donnelly said. However, if the laboratory is nursing aging accounts receivable (AR), Donnelly advises an audit and cleanup of the AR backlog as a first step to quickly fix information errors and reduce write-offs. “In your AR bucket of $10 million, you may have $3 million that’s collectible or $9.8 million that’s collectible. By leveraging software to clean up what can be collected, clients can go after the money they deserve.”
Improve Collections Through Data Automation While Assisting in the Patient Financial Journey
With the rise of telehealth/telemedicine, healthcare consumerism, and care delivered to nontraditional sites, it makes sense that the idea of the clinical laboratory as a silent partner in healthcare could be changing.
“Could we one day see patients asked for not only their preferred pharmacy but their preferred clinical laboratory as well?” Donnelly pondered and added, “I think the answer is yes, and it’s sooner than many think.”
Understanding the patient’s experience is a key step in providing patient-centered care. Therefore, patient experience programs that originate at clinical laboratories where specimens are processed, but before specimens have been collected, could make these labs more visible in their markets and enable them to capitalize on the advantages of data automation to sustainably improve revenue cycle management.
“The patient’s financial journey which runs in parallel to their clinical journey can get pretty bumpy, and those bumps impact their overall experience as well as the provider’s bottom line,” added Donnelly. “Getting accurate patient information upfront and catching any changes to the information as needed throughout the process helps clients create a smoother patient journey by enabling them to quickly manage through the bumps or eliminate them altogether.”
—Liz Carey
This article was produced in collaboration with FrontRunnerHC.
Microhospitals already offer most of the critical features of traditional hospitals, and by featuring telemedicine technology at the point of care, they are becoming powerful tools for healthcare providers
Dark Daily reported in January that microhospitals are opening nationwide, including in such innovative states as Texas, Colorado, Nevada, and Arizona. In addition to being open 24/7 and mostly located in high-density areas, these scaled down hospitals feature the most critical aspects of full-size hospitals—medical laboratories, emergency departments, pharmacies, and imaging centers.
However, a report by the Health Resources and Service Administration (HRSA) predicted that by 2020 the US will be short as many as 20,000 primary care physicians! Many specialty practices also are expected to see stiff shortages of physicians in the near future. Without enough physicians, even microhospitals cannot provide adequate care.
Thus, the ever increasing practice of using telemedicine as a way to serve more people, while providing faster, more efficient care tailored to meet the needs of individuals and communities, is welcomed news. If this trend becomes more widespread, it will create new opportunities and challenges for clinical laboratories in hospitals, as well as health systems that own and operate microhospitals.
Filling a Need in Vulnerable Communities
At the end of 2016, there were approximately 50 microhospitals operating in the United States, mostly in the Midwest, Arizona, Colorado, Nevada, and Texas. Sometimes referred to as neighborhood or community hospitals, microhospitals are acute care facilities that are smaller than traditional hospitals but can deliver many of the same medical services. They provide more comprehensive treatments than typical urgent care and outpatient centers and fill a gap between freestanding healthcare centers and major hospitals.
Microhospitals typically have less than a dozen short-stay beds and have the ability to provide inpatient care, emergency care, and imaging and medical laboratory services. And, they are usually affiliated with larger healthcare systems, which allows them to expand into certain areas without incurring the high costs of building a full-scale hospital.
“Right now they seem to be popping up in large urban and suburban metro areas,” Priya Bathija, Vice President, Value Initiative American Hospital Association, told NPR. “We really think they have the potential to help in vulnerable communities that have a lack of access.”
Patient Satisfaction and Declining Physician Populations Drive Demand for Telemedicine
Telemedicine, a combination of telecommunications and information technology, is primarily used to remotely connect healthcare providers to patients during office visits. But it also is being used successfully at the point of care in emergency departments and even surgery.
Microhospitals like St. Vincent Neighborhood hospital in Noblesville, Ind., which offer most of the critical functions of traditional hospitals, such as clinical laboratories, ERs, and the CT scanning station above (left), are increasingly including telemedicine technologies (above right) at the point of care to offset reductions in primary care and specialty physicians. (Photo copyright: Jill Sheridan/IPB News.)
Consumers are becoming more accepting of telemedicine (AKA, telehealth) as these services offer savings in both time and money. A recent survey by the Health Industry Distributors Association (HIDA) found that many patients were pleased with telehealth services. More than 50% of the surveyed individuals stated they were very satisfied with a recent telemedicine encounter. In addition, 54% of those individuals described their telehealth experience as better than a traditional, in-person office visit.
Telemedicine and Microhospitals Mutually Beneficial, According to HRSA
Other research suggests microhospitals may generate a mutually beneficial alliance with telemedicine that increases the progress of both entities, especially when considering projected increases in the number of nurse practitioners and physician assistants.
In its report, “Projecting the Supply and Demand for Primary Care Practitioners Through 2020,” Health Resources and Service Administration (HRSA) estimates there will be a shortage of more than 20,000 primary care physicians working in the US by the year 2020. Other specialties expected to experience staff shortfalls include:
Anticipation of this decline in physician numbers is fueling the demand for telemedicine to help with patient loads, especially in remote areas.
Saving Time and Money with Televisits
A study by Nemours Children’s Health System indicates that telemedicine may reduce medical costs for both patients and healthcare providers while sustaining patient satisfaction.
“At Nemours, we’ve seen how telemedicine can positively impact patients’ lives,” Shayan Vyas, MD, Medical Director of Telehealth at Nemours, noted in a press release. “The overwhelmingly positive response we’ve seen from parents who are early adopters of telemedicine really reinforces the feasibility of online doctor visits and sets the stage for real change in the way healthcare is delivered.”
The Nemours study involved 120 patients under the age of 18. The majority of families surveyed stated they would be interested in future telehealth visits and an impressive 99% said they would recommend telemedicine to other families.
The study discovered that patients and family members saved an average of $50 and about an hour of time, by utilizing telehealth for sports medicine appointments. The health system also experienced some monetary perks with the televisits, as they cost approximately $24 less per patient.
“We know that telemedicine is often looked to for common childhood ailments, like cold and flu, or skin rashes. But we wanted to look at how telemedicine could benefit patients within a particular specialty such as sports medicine,” Alfred Atanda Jr, MD, Pediatric Orthopedic Surgeon at Nemours/Alfred I. DuPont Hospital for Children in Wilmington, DE., told FierceHealthcare. “As the healthcare landscape continues to evolve and the emphasis on value and satisfaction continues to grow, telemedicine may be utilized by providers as a mechanism to keep costs and resource utilization low, and to comply with payer requirements.”
Healthcare consumers and providers are increasing looking to technology to enhance medical care and solve resource shortfalls. Separately, telehealth and microhospitals already help with these needs, Combined, however, they are a powerful solution to our nation’s reducing ranks of primary care physicians and medical specialists.
If this trend of microhospitals using telemedicine should continue and increase, both components will give medical professionals vital tools to provide faster, more economical, and more personalized services, to more patients across wider areas of America.
