Federal prosecutors allege that this nurse practitioner ordered more genetic tests for Medicare beneficiaries than any other provider during 2020
Cases of Medicare fraud involving clinical laboratory testing continue to be prosecuted by the federal Department of Justice. A jury in Miami recently convicted a nurse practitioner (NP) for her role in a massive Medicare fraud scheme for millions of dollars in medically unnecessary genetic testing and durable medical equipment. She faces 75 years in prison when sentenced in December.
In their indictment, federal prosecutors alleged that from August 2018 through June 2021 Elizabeth Mercedes Hernandez, NP, of Homestead, Florida, worked with more than eight telemedicine and marketing companies to sign “thousands of orders for medically unnecessary orthotic braces and genetic tests, resulting in fraudulent Medicare billings in excess of $200 million,” according to a US Department of Justice (DOJ) news release announcing the conviction.
“Hernandez personally pocketed approximately $1.6 million in the scheme, which she used to purchase expensive cars, jewelry, home renovations, and travel,” the press release noted.
Hernandez was indicted in April 2022 as part of a larger DOJ crackdown on healthcare fraud related to the COVID-19 outbreak.
“Throughout the pandemic, we have seen trusted medical professionals orchestrate and carry out egregious crimes against their patients all for financial gain,” said Assistant Director Luis Quesada (above) of the FBI’s Criminal Investigative Division, in a DOJ press release. Clinical laboratory managers would be wise to monitor these Medicare fraud cases. (Photo copyright: Federal Bureau of Investigation.)
Nurse Practitioner Received Kickbacks and Bribes
Federal prosecutors alleged that the scheme involved telemarketing companies that contacted Medicare beneficiaries and persuaded them to request genetic tests and orthotic braces. Hernandez, they said, then signed pre-filled orders, “attesting that she had examined or treated the patients,” according to the DOJ news release.
In many cases, Hernandez had not even spoken with the patients, prosecutors said. “She then billed Medicare as though she were conducting complex office visits with these patients, and routinely billed more than 24 hours of ‘office visits’ in a single day,” according to the news release.
In total, Hernandez submitted fraudulent claims of approximately $119 million for genetic tests, the indictment stated. “In 2020, Hernandez ordered more cancer genetic (CGx) tests for Medicare beneficiaries than any other provider in the nation, including oncologists and geneticists,” according to the news release.
The indictment noted that because CGx tests do not diagnose cancer, Medicare covers them only “in limited circumstances, such as when a beneficiary had cancer and the beneficiary’s treating physician deemed such testing necessary for the beneficiary’s treatment of that cancer. Medicare did not cover CGx testing for beneficiaries who did not have cancer or lacked symptoms of cancer.”
In exchange for signing the orders, Hernandez received kickbacks and bribes from companies that claimed to be in the telemedicine business, the indictment stated.
“These healthcare fraud abuses erode the integrity and trust patients have with those in the healthcare industry … the FBI, working in coordination with our law enforcement partners, will continue to investigate and pursue those who exploit the integrity of the healthcare industry for profit,” said Assistant Director Luis Quesada of the Federal Bureau of Investigation’s Criminal Investigative Division, in the DOJ press release.
Conspirators Took Advantage of COVID-19 Pandemic
Prosecutors alleged that as part of the scheme, she and her co-conspirators took advantage of temporary amendments to rules involving telehealth services—changes that were enacted by Medicare in response to the COVID-19 pandemic.
The indictment noted that prior to the pandemic, Medicare covered expenses for telehealth services only if the beneficiary “was located in a rural or health professional shortage area,” and “was in a practitioner’s office or a specified medical facility—not at a beneficiary’s home.”
But in response to the pandemic, Medicare relaxed the restrictions to allow coverage “even if the beneficiary was not located in a rural area or a health professional shortage area, and even if the telehealth services were furnished to beneficiaries in their home.”
Hernandez was convicted of:
One count of conspiracy to commit healthcare fraud and wire fraud.
Four counts of healthcare fraud.
Three counts of making false statements.
Medscape noted that she was acquitted of two counts of healthcare fraud. The trial lasted six days, Medscape reported.
Hernandez’s sentencing hearing is scheduled for Dec. 14.
Co-Conspirators Plead Guilty
Two other co-conspirators in the case, Leonel Palatnik and Michael Stein, had previously pleaded guilty and received sentences, the Miami Herald reported.
Palatnik was co-owner of Panda Conservation Group LLC, which operated two genetic testing laboratories in Florida. Prosecutors said that Palatnik paid kickbacks to Stein, owner of 1523 Holdings LLC, “in exchange for his work arranging for telemedicine providers to authorize genetic testing orders for Panda’s laboratories,” according to a DOJ press release. The kickbacks were disguised as payments for information technology (IT) and consulting services.
“1523 Holdings then exploited temporary amendments to telehealth restrictions enacted during the pandemic by offering telehealth providers access to Medicare beneficiaries for whom they could bill consultations,” the press release states. “In exchange, these providers agreed to refer beneficiaries to Panda’s laboratories for expensive and medically unnecessary cancer and cardiovascular genetic testing.”
Palatnik pleaded guilty to his role in the kickback scheme in August 2021 and was sentenced to 82 months in prison, a DOJ press release states.
Stein pleaded guilty in April and was sentenced to five years in prison, the Miami Herald reported. He was also ordered to pay $63.3 million in restitution.
These federal cases involving clinical laboratory genetic testing and other tests and medical equipment indicate a commitment on the DOJ’s part to continue cracking down on healthcare fraud.
News stories are reporting that Walgreens is participating in ACOs now forming in New Jersey, Florida, and Texas
Retail clinics are positioning themselves to play a major role in the delivery of basic primary care services. Consumer and payer acceptance of the “convenience care” model has brought the concept to a tipping point in its potential to shift the way that some basic primary care—and medical laboratory testing—services are delivered.
Dark Daily has long predicted that retail clinics would want to expand their services beyond the original formula of a nurse practitioner who handles a basic menu of easy-to-diagnose conditions. Consumers have readily accepted this healthcare delivery model. In fact, a new title has been coined that has its own Wikipedia.com page: Convenient care clinic. (more…)
Blame it on informed, well-off consumers who pursue wellness and optimum health
Informed consumers may be shifting the healthcare paradigm even as Congress prepares to hammer out its vision of a radically-reformed healthcare system. At least that’s the view of one healthcare expert, who observes that the steady growth in the number of consumer home test kits, patient self-testing devices, and point-of-care tests is a major factor enabling this trend.
Retail care clinics-typically a nurse practitioner offering fast patient access to a limited number of clinical services in a pharmacy or other type of retail store-are now an accepted part of the provider mix in the United States. At least two studies published by credible organizations consider retail care clinics, also called convenient care clinics, to be an important source of care.
One study was released by the Center for Studying Health System Change, based in Washington, DC. Using data from the Health Tracking Study funded by the Robert Wood Johnson Foundation which included 18,000 telephone interviews, this study looked at the use of retail care clinics. It stated that 1.2% of American families reported visiting a retail care clinic in the past 12 months. By contrast, 2.3% of American families said that they have used a retail care clinic in recent years.
What Dark Daily found notable about this study is another finding by researchers. Uninsured families represent 27% of the users of retail care clinics, and the slowdown in the number of new convenient care clinics opening may inhibit access to care through this channel. “If the growth of retail clinics falters, underserved groups already facing access pressures may suffer from the loss of alternate sources of care more than the rest of the population,” stated researchers in the study.
This is an interesting turn of affairs. Dark Daily readers may recall that, several years ago, in the early days of the convenient care clinic movement, the business model of a nurse practitioner and a limited menu of clinical services providing care in a retail store came under plenty of criticism. Now, some healthcare researchers are acknowledging that retail care clinics do provide useful clinical services, at an affordable price, that benefit the uninsured.
The second study, released by the Deloitte Center for Health Solutions, conducted an on-line poll of 3,000 adults in a nationally-representative sample and found that 16% reported that they had used a convenient care clinic located in a retail store. Interestingly, 17% of the uninsured and 11% of the Medicare enrollees in this survey had visited a retail care clinic. At a minimum, the survey results demonstrate that a significant portion of the American public is aware of these in-store clinics and is willing to use them.
Optimistic predictions that there would be 10,000 retail care clinics by 2010 will not come true. Starting in 2006, there were 60 retail care clinics in 18 states. The Convenient Care Association says the number of such clinics in the United States now totals approximately 1,150 retail care clinics in 38 states.
However, despite the slowdown in the rate at which new convenient care clinics are opening, this service delivery model seems to have established itself as a permanent fixture in the American healthcare system. Last summer, Dark Daily reported that Wal-Mart was introducing telemedicine access to a physician at the retail care clinics it operates in multiple Wal-Mart locations in Houston, Texas
Dark Daily believes that, as demonstrated by the telemedicine example at Wal-Mart’s convenient care clinics in Houston, there will be a steady expansion in the range of clinical services offered at these sites. It is highly likely that laboratory testing will be needed to support these additional clinical services. As that happens, these retail clinics will become both a threat and an opportunity for the nation’s laboratories.
Having jumped feet first into the in-store rapid clinic/minute clinic concept, Wal-Mart Stores, Inc. (NYSE:WMT) is introducing telemedicine services in selected Wal-Mart stores. This may put the company just steps away from an interest in providing appropriate diagnostic tests to customers coming into its in-store medical clinics.
This summer, Wal-Mart announced a joint operating agreement with two companies for the purpose of running telemedicine clinics in selected stores. This pilot project is taking place in Houston, Texas. Collaborating are My Healthy Access, Inc. (OTC:MYHA) and NuPhysicia, LLC . Both companies are based in Houston, Texas. Since August, the partners have opened telemedicine clinics in several Wal-Mart Supercenter stores. The service is marketed as “Walk-In Telemedicine Health Care.” It connects patients with physicians via a telemedicine arrangement. In response to the physician’s directions, medical professionals with the patient at the clinic site provide the appropriate care.
The first telemedicine location was a Wal-Mart store in Pearland, Texas, which opened with two other telemedicine clinics during August. “Changing to a Telemedicine based health care delivery system allows us to substantially decrease the overhead per patient, while simultaneously increasing the level of care each patient receives,” said Kathleen Delaney, President of My Healthy Access, Inc. This telemedicine arrangement allows one physician to provide care to multiple clinic sites. This addresses one criticism of the rapid clinic/minute clinic concept, which was the limited range of services offered to customers. These clinics, located in retail locations, are generally staffed with a nurse practitioner, who is only allowed to diagnose and treat a limited number of clinical conditions.
Over the past year, Wal-Mart has also been shifting its strategy for developing in-store, rapid clinics. It has decided to partner with regional hospitals, health systems, and physicians. Local hospitals and health systems like this approach, because it gives them access to patients. Dark Daily observes that this type of arrangement shows the rapid acceptance of the medical clinic located in a retail store. Healthcare providers are recognizing that, in order to reach more customers, they will need to offer services in non-traditional settings where today’s customers spend their time (and money).
Dark Daily further predicts that, as Wal-Mart gains more understanding about the opportunities to provide medical services in their retail stores, laboratory testing is likely to come on the radar screen. After all, with the growing number of point of care tests (POCT) and rapid tests, this diagnostic service would increase the customer-friendly and fast service offered by these in-store medical clinics. Should Wal-Mart decide that the telemedicine concept is a clinical and financial winner, then one logical path to expanding the clinical services of the retail store rapid clinic is to offer selected laboratory tests on site.
