Is That Business Legitimate or a Scam?

The FTC is drafting new rules to counter unfair practices. In the meantime, aspiring business owners should apply lots of common sense

by John Tozzi
July 23, 2008, 1:33PM EST | BusinessWeek

The Internet is littered with offers for home-based business opportunities that promise big profits for easy work. But many of these offers, which range from envelope stuffing to medical billing, are really scams that prey on people's aspirations to work for themselves.

Business opportunities share three characteristics: a solicitation to the buyer, a mandatory payment to the seller, and a promise to help the buyer find locations or leads that will bring profits. They're often advertised in classified ads, online, and in spam e-mail. Many claim to be low-risk ventures with money-back guarantees, and no experience necessary. Offers stress how much the participants can earn each week in specific dollar amounts, and fraudsters often have shills who falsely testify about their own success.

While some home-based business scams target vulnerable people such as the unemployed, experts say anyone can be taken in by the right pitch. "The techniques are no different in kind from the ordinary marketing techniques that normal sales people use. They're just selling nothing," says Michael Webster, a Toronto lawyer and the author of a blog on business opportunity fraud. "Anybody can be a mark on any given different day. Even I could be."

Fraught with Deception

The Federal Trade Commission regulates many business opportunities under its franchise rule (BusinessWeek.com, 3/10/08). But for the first time, the agency is drafting regulations to cover home-based business opportunities and schemes that require investments under $500. The new rule would apply to about 3,000 business-opportunity sellers, including 500 not currently covered by the franchise rule, and the FTC estimates that about 250 opportunities pop up each year. (That number doesn't include opportunities that drop out.) FTC attorney Monica Vaca could not estimate how many are scams but said in an e-mail that the industry "is fraught with unfair and deceptive practices." The rule change would require sellers to disclose information to potential buyers, in much the way franchises must. It could go into effect in 2009 or 2010.

The average business opportunity scam runs for 12 to 18 months, ropes in 100 to 150 people, and takes a total of $3 million, Webster says. The FTC has taken about 240 civil actions against business-opportunity sellers since 1990, according to Vaca. The government also prosecutes a handful of cases under criminal law when repeat offenders are involved. But many home-based business scammers are never caught or punished. When victims lose money, they're often reluctant to report the fraud. Instead, they blame themselves for their losses. "One of the things that's tough about business-opportunity frauds is a lot of people have a hard time recognizing that they've been scammed. Everybody wants to live the American dream," Vaca says.

Typical scams involve charging buyers up-front fees for materials, training, sales leads, or locations (for vending machines or kiosks). But the promised returns rarely materialize, and victims get stuck holding inventory they can't sell. Some home-based business opportunities, such as envelope stuffing, are outright pyramid schemes where the only revenue comes from recruiting new victims, not actual product sales. Others are more subtle, like offers to set up medical billing services, in which buyers pay for training and leads without knowing that most doctors use in-house services or established billing companies.

In addition to the FTC's proposed regulations, 26 states have their own disclosure laws. Webster says the best way to vet a potential opportunity is to check whether it is registered with the state. "Very, very few of these people are registered, and the fact that they have not gone through the trouble of registering tells you all you need to know about this particular opportunity," he says.

Billings Used Dead Doctors' Names

By Christopher Lee, Washington Post Staff Writer
washingtonpost.com | Wednesday, July 9, 2008

Medicare has paid as much as $92 million since 2000 to medical suppliers who billed the government for wheelchairs and other home equipment purportedly prescribed by physicians who, according to records, were dead at the time, congressional investigators said yesterday.

The Centers for Medicare and Medicaid Services (CMS) honored about 500,000 such claims despite pledging six years ago to correct the problem, which was identified by the Health and Human Services Department's inspector general in 2001.

In more than half the cases studied, the doctor listed as having ordered the equipment had died more than five years earlier, said a report by the Senate Homeland Security and Governmental Affairs Committee's permanent subcommittee on investigations.

"We discovered that some medical equipment suppliers have scammed the Medicare system -- and the American taxpayers -- out of massive amounts of money," Sen. Norm Coleman (Minn.), the panel's top Republican, said in a statement. "Using the ID numbers of dead doctors, these scam artists have treated Medicare like an ATM machine, drawing money out of the government's account with little fear of getting caught."

The report is part of the committee's ongoing investigations into waste, fraud and abuse in the fast-growing federal health program, which serves more than 43 million elderly and disabled Americans. Medicare pays annually more than $400 billion in benefits and is a fixture on the Government Accountability Office's "high-risk" list of troubled programs.

Last year, the government established a Medicare Fraud Strike Force to crack down on a problem that officials estimate costs taxpayers tens of billions of dollars annually. The program's durable medical equipment component, in particular, has been a frequent target of companies seeking to bilk the government. The subcommittee has scheduled a hearing on the problem today. When the system works properly, a physician writes a prescription for home medical equipment for a Medicare beneficiary. He takes the order to a supplier, who sells or rents the equipment to him. The supplier, in turn, submits a claim for payment to a Medicare contractor for processing. The claim includes a number issued by Medicare that identifies the prescribing physician.

Senate investigators obtained from the American Medical Association a computer file of physicians who had died between 1992 and 2002. They selected 1,500 at random and asked Medicare officials to turn over medical-equipment claims filed with those doctors' Medicare ID numbers between 2000 and 2007.

During that time, the review said, ID numbers for 734 deceased doctors were used to file 21,458 claims that totaled $3.4 million. Investigators counted the claims only if the equipment was bought more than a year after the doctor's death.

Extrapolating from the sample, investigators estimate that 384,730 to 572,238 such fraudulent claims were submitted during that period, and Medicare paid an estimated $60 million to $92 million. There are still active ID numbers in Medicare's system for as many as 2,895 dead physicians, investigators said.

They examined separate data for Florida, home to many retirees and a perennial leader in Medicare fraud. They found that more than a quarter of deceased Medicare doctors there still have active ID numbers in Medicare's system.

The ID for one doctor, who died in 1999, appeared on 83 claims submitted by Professional Gluco Services Inc., a Miami company, between November 2005 and September 2006. A federal grand jury indicted two of the company's owners last year on charges of defrauding the government of $1.3 million for equipment that had never been ordered or delivered. Both men pleaded guilty.

Medicare officials had promised to do a better job screening claims after the 2001 inspector general's report found that the agency had paid $91 million for medical supply claims with invalid or inactive physician ID numbers in 1999.

Medicare officials said several new steps should help, including a plan to match monthly Social Security Administration data about U.S. deaths against a revamped Medicare provider-identification system. They also pointed to new accreditation requirements for suppliers under a new program, opposed by the industry, that sets some equipment prices through competitive bidding.

"Fraud and abuse in the context of Medicare-covered durable medical equipment has been a focal point of ours in recent years," said CMS spokesman Jeff Nelligan. "Before this program, anyone could become a supplier, but now they must be fully accredited based on strict financial and quality standards."

Muscling in on Medicare

Legislative fight in Washington puts patients in midst of doc-insurer struggle

July 8, 2008 | Newsday.com

A Medicare tweak on the table in Washington is pitting doctors against insurers - with patients in the middle. Doctors are facing a steep cut in Medicare payments, and many say that if that happens, they'll reduce or end their participation in the program. And that will make it harder for elderly patients to get care.

The alternative is to trim what Washington pays private, Medicare Advantage plans. Insurers, some of whom underwrite those plans, are airing television commercials warning that will mean patients losing coverage or paying more.

For patients, this all sounds like heads you lose, tails you lose. But things aren't that bleak. Not if Medicare Advantage plans take the hit, as they should.

The problem is that doctor reimbursements will be slashed 10.6 percent unless Congress acts to stop it. A cut that deep is unrealistic. The House voted June 24 to increase payments to physicians by 1.1 percent. But the bill is stalled in the Senate and, should it pass, President George W. Bush has threatened a veto. The sticking point is cost.

The bill would take the money from those private plans - which is where it should come from. Medicare Advantage plans were pushed by private marketers who said they would save taxpayer dollars. But Washington pays the plans 13 percent more per beneficiary than it would cost to cover that same person under government-run Medicare.

Pitting private plans against traditional Medicare is a sound idea. Competition should make each better. But a fair contest requires a level playing field, and right now it isn't. Not with private plans being paid more per patient.

The pending legislation wouldn't end that disparity. But it would reduce it and free up money to pay doctors. That would be a win for most Medicare patients and taxpayers.

Healthcare groups use ads to lobby lawmakers on Medicare bill

July 03 2008 | McKnight's Long Term Care News

Congress may be on break this week, but two industry groups launched ads spurring the Senate to take action on a Medicare bill that affects nursing home residents and other older adults when it returns from the Fourth of July recess.

The American Medical Association unveiled an advertising campaign to encourage passing the bill, H.R. 6331. Targeted towards opponents of the legislation, the ads say the issue boils down to a choice: insurance company profits, or seniors and disabled vets who will lose their access to healthcare. Meanwhile, insurance lobbyists are working on their own anti-H.R. 6331 advertising blitz. They argue that the cuts to Medicare Advantage plans that would fund the bill would limit choices, reduce benefits and pass on higher costs to seniors.

This week, two harmful actions went into effect: the expiration of the exceptions process for Part B outpatient therapy caps, and a freeze on Medicare physician payments. Therapy caps, which affect nursing home residents, impose a $1,810 limit on physical therapy and speech therapy combined and $1,810 on occupational therapy for nursing home residents. Residents in Medicare-certified beds at a skilled nursing facility will not have therapeutic services covered past $1,810, according to a note from the Centers for Medicare & Medicaid Services. Others who exceed the cap, however, may obtain medically necessary therapy services at a hospital.

EDS unit to process Medicare claims in four states

07/02/08 -- 01:37 PM
By David Hubler | Washington Technology

NHIC Corp. will process Medicare payment claims from health care providers in four Northwestern states under a $148 million contract from the Centers for Medicare and Medicaid Services.

The contract, which has a one-year base period and four one-year options, will serve about 54,000 physicians and health care practitioners and 233 hospitals in Alaska, Idaho, Oregon and Washington state.

NHIC, a subsidiary of EDS Corp., will provide a variety of administrative functions for hospitals, skilled nursing facilities and physicians in those states and will be the providers’ first point of contact for processing and payment of Medicare Parts A and B fee-for-service claims.

The company will also handle appeals, audits and reimbursements, provider enrollment, educational outreach, print and mail services, financial and accounting services, contact-center support, electronic data exchange, mailroom operations, and medical and utilization reviews.

The contract will help CMS meet the requirements of the Medicare Modernization Act of 2003, which requires the agency to transition Medicare fee-for-service claims from fiscal intermediaries and carriers to Medicare administrative contractors, NHIC said in a statement.

NHIC is one of the largest Medicare Part B contractors in the country, serving more than 150,000 health care providers in California, Maine, Massachusetts, New Hampshire and Vermont.

EDS, of Plano, Texas, ranks No. 10 on Washington Technology’s 2008 Top 100 list of the largest federal government prime contractors.

Medicare Payment Fiasco Causes Delay in Claims Processing

Action Should Not Mean Delayed Payments

By James Arvantes | AAFP News Now
7/1/2008

The Bush administration has announced it will delay the processing, but not necessarily the payment, of Medicare claims to give Congress more time to pass a bill blocking a 10.6 percent reduction in the Medicare payment rate. However, the administration's action should not result in delayed Medicare payments to physicians, said Kent Moore, the AAFP's manager of health financing and delivery systems.

CMS is required by law to hold Medicare claims it receives for 14 days before issuing payment on the claims. In normal circumstances, the agency starts to process claims within a few days of receiving them, paying them by the end of the 14-day time frame, Moore said. CMS now plans to hold Medicare claims for 10 business days before processing them to give Congress more time to pass Medicare payment legislation that is expected to negate a 10.6 percent payment cut effective July 1.

"CMS will use that 14-day window they have statutorily and refrain from processing the claim," Moore said. "Instead of processing (a claim) at the front end of that 14 days, they will process it 10 days later on the hope that Congress will act within the first days of July," said Moore. "Physicians should not see a delay in payment," he added.

In late June, the House overwhelming passed an 18-month Medicare physician payment bill that would have prevented the 10.6 percent reduction scheduled for the remainder of this year, along with a 5.4 percent cut scheduled for 2009. But the Senate failed to pass the legislation, allowing the 10.6 percent cut to take effect on July 1. Congress adjourned for a weeklong July 4 recess on June 27 and will return on July 7. Senate Majority Leader Harry Reid, D-Nev., in a prepared statement, said the Senate would address the Medicare legislation shortly after returning from the July 4 break.

Many physicians, meanwhile, are upset and angry, said Moore, thinking CMS will withhold Medicare payments, a perception that he characterizes as a misunderstanding.

"CMS is simply saying that they are going to take advantage of the 14-day payment floor they already have by law," Moore said. "They still intend to pay claims in a timely manner."

Although physicians will experience a reduction in their Medicare payment levels if Congress and the Bush administration cannot agree on a Medicare payment bill by mid-July, there is an expectation that they will agree on a payment bill by then and will make the legislation retroactive to July 1.

CMS has said that physicians should submit their Medicare claims for services on or after July 1 using the pre-July 1 scheduled amount. Claims submitted after June 30 that reflect the 10.6 percent reduction will be paid based on that amount, and "will likely require providers to resubmit a revised claim," said CMS in a June 30 press release.

Submitting claims with pre-July 1 amounts "will facilitate reprocessing of the claims by CMS, if needed, and will ensure that physicians are able to collect the full pre-July 1 allowed amount, when or if the cut is retroactively negated," said Moore.

However, noted Moore, "physician practices may only collect copayments and deductibles from Medicare beneficiaries based on the reduced (Medicare) rate, even if they are charging the pre-July 1 rate to Medicare."

Physician practices wishing to avoid confusion may choose to hold their Medicare claims in-house until it becomes clear that new legislation will be enacted or until cash flow becomes a problem, said Moore. "This will reduce the need for (physicians) to reconcile two payments -- the initial claim and the reprocessed claim -- and it will simplify physician billings of beneficiary co-insurance and payment calculations for payers that are secondary to Medicare," said Moore.

Sheriff: It's highly unlikely thieves accessed personal information

July 2, 2008
KSL team coverage | ksl.com

A tip led authorities to stolen medical billing records and to the arrest of the men behind it. That's reassuring news for the million and a half patients affected by the theft, but is their personal information safe?

Authorities are confident the suspects did not access confidential information, even though they knew early on, from media coverage, what was in those stolen tapes. A $1,000 reward was just too much for one of their friends to keep quiet about it.

Sheriff Jim Winder said, "The criminal element in this case is a circle, and within that circle, fortunately, there was someone willing to contact us."

A phone call Monday night led authorities to the missing records and to the suspects. Sheriff's deputies arrested 37-year-old Shadd Hartman on one count of possession of stolen property and one count of unlawful possession of another's ID.

Fifty-two-year-old Thomas Howard Anderson was arrested on one count of theft by receiving and one count of identity fraud. A third suspect is in jail on unrelated charges.

"These were individuals with substantial criminal histories that found an opportunity and did take these tapes," Winder said.

Investigators say last month one of the suspects randomly broke into the SUV with the records inside. The vehicle belongs to a courier for an offsite storage company. That courier broke policy by taking the records to his Kearns home.

The records contained information for 1.5 million University of Utah Hospitals and Clinics patients, including Jenni Todd. She said, "I'm glad they found it. I'm glad that they found the records and arrested some people."

But Todd says, she's still a little concerned. "It almost scares me more because if there's a ring of people, maybe they were really trying to steal our identities," she said.

But authorities don't believe any patient information was compromised. They say the suspects didn't have the means or the knowledge to access them. "They definitely are not techies. There's no question about that. I don't know if they could find their rear ends with both hands," Winder said.

But the U isn't taking any chances. IT plans to work with the FBI to determine if any patients' records are at risk. The U is still offering free credit monitoring for a year.

Jenni Todd plans to take advantage of it. She said, "Just to make sure, and it's also just good to have credit monitoring anyway."

The U has spent $2 million to notify affected patients and offer services. University Health Care says until the FBI verifies through forensic testing that the personal information was not accessed, the hospital will keep current safety measures in place.

"We take our patient confidentiality information very seriously, and so that's currently in place. And we'll continue to work with law enforcement officials to determine whether there's any risk of that information having been accessed," said David Entwistle, CEO of University Hospitals and Clinics.

University Health Care has also released a statement on the recovery of the records. Two class-action lawsuits have been filed in this case.

The KSL Team:

E-mail: syi@ksl.com
E-mail: corton@ksl.com
E-mail: mgiauque@ksl.com

California sues over practice of 'balance billing'

The Associated Press

Article Launched: 07/02/2008 06:19:19 AM PDT

SANTA ANA, Calif.—California has sued one of the state's largest hospital operators to stop the company from billing privately insured patients for balances on medical services not paid by the insurer.

The practice—known as "balance billing—is becoming increasingly common in California. The Department of Managed Health Care has banned balance billing, but regulations aren't expected to take effect until the fall, at the earliest.

That agency's director, Cindy Ehnes, said Prime Healthcare Services Inc. is "the largest example of this egregious practice we've seen to date, and it must be stopped."

Ehnes' agency filed a lawsuit Friday in Orange County Superior Court against Prime Healthcare. The suit seeks to prohibit the Victorville-based company from billing patients for unpaid medical bills Prime contends insurers owe.

"Consumers who have purchased health coverage in good faith deserve to know that it will cover them in a medical emergency and not result in crushing medical debt," Ehnes told the Los Angeles Times.

Prime acknowledged it has been billing thousands of patients the unpaid portions of their bills. The company contends it can legally do so—and that it wouldn't have to if insurers paid their full portion of medical claims.

Prime has 12 hospitals in Southern California and has acquired all but one of its properties in the past four years.

The Times reported that when Prime takes over a hospital, it often cancels insurance contracts, allowing it to charge higher rates. Insurers contend they had begun sending Prime only partial payments on members' bills.

This spring, Kaiser Permanente sued Prime to prohibit the company from billing more than 5,000 of its members for unpaid bills. A temporary injunction prevents Prime from such billing until the case is resolved.

Process Improvement, not Cost Savings, Drives India's Domestic BPO Biz

Posted by Ann All on July 2, 2008 at 3:58 pm | IT Business Edge

Earlier this year, I wrote about India’s burgeoning domestic market for outsourcing. The demand for BPO appears especially strong, as I wrote last August.

Although the forecasts I cited in these posts were optimistic, they now look downright conservative in light of more recent statistics included in this Knowledge@Wharton India article.

The domestic BPO market was worth $1.1 billion in 2007, up from $100 million in 2002, and is now estimated at $1.6 billion to $1.8 billion, notes the article. According to a report by The Everest Group and India’s National Association of Software and Services Companies (Nasscom), the market could be worth up to $20 billion over the next five years.

BPO providers do face challenges in serving the domestic market. For one, says outsourcing expert Ravi Aron, a senior fellow at Wharton’s Mack Center for Technological Innovation, banking and other industries normally served by BPO providers are heavily unionized in India, and will thus face resistance. Last March, I wrote about a threatened strike by state-owned bank workers if the prime minister refused to disallow outsourcing.

Like Europe, India is also filled with a diverse collection of regional languages and cultures. Also, unlike their U.S. counterparts, many potential Indian BPO clients lack the kinds of sophisticated technology platforms that facilitate outsourcing. Their processes are labor-intensive and “idiosyncratic,” says Aron, and thus difficult for BPO providers to replicate on a mass scale.

Process improvement is exactly what most Indian companies are seeking from BPO providers. Not as cost-focused as their Western counterparts, domestic companies want to step up their capabilities in hopes of expanding their businesses into markets outside India.

Expected to be especially popular, according to Aron and other experts, are vertical services such as mortgage loan processing and property and casualty insurance. Says Aron:

Many of these specialized services companies have the money, but not the managerial capacity or bandwidth to automate their processes and extract efficiencies.

Since margins are lower in domestic BPO deals, providers must figure out ways to cut their cost structures. Establishing operations in tier-2 and tier-3 cities is expected to be a common tactic. This should become easier, thanks to ambitious government efforts to improve the infrastructure in these areas, which I wrote about last week.

Vet Groups to Appeal Judge's Decision Over VA's Treatment of PTSD Cases

By Jason Leopold | The Public Record | Published in : Nation/World
Saturday, June 28, 2008

A federal Judge has ruled that he lacks the legal authority to force the Department of Veterans Affairs to immediately treat war veterans suffering from post-traumatic stress disorder (PTSD) and could not order the VA to overhaul its internal systems that handle benefits claims and medical services for war veterans.

Two veterans advocacy groups, Veterans for Common Sense (VCS) and Veterans United for Truth, filed a lawsuit seeking class-action status against the VA last year claiming a systematic breakdown at the agency had led to an epidemic of suicides among war veterans.

The lawsuit claimed that some war veterans were turned away from VA hospitals after they sought care for PTSD and later committed suicide. PTSD is a psychiatric disorder that can develop in a person who witnesses, or is confronted with, a traumatic event. Mental health experts have described PTSD as an event of overwhelming magnitude in which a victim's nervous system is afflicted with intense fear, helplessness and horror. The victim shuts down only to re-experience the traumatic event over and over again. Studies have shown that PTSD is the most prevalent mental disorder arising from combat.

Moreover, the complaint alleged, that a massive backlog of benefits claims had led to serious financial hardships among hundreds of thousands of veterans.

Those claims were borne to some extent by evidence that surfaced during the course of a three-week trial earlier this year.

Additionally, the lawsuit exposed the extent to which the VA went to conceal that information from the public. The federal lawsuit resulted in congressional hearings about the issue and led members of Congress to call for the resignation of several top VA officials.

In an 82-page ruling issued on June 25, U.S. District Court Judge Samuel Conti said that while it is “clear to the court” that “the VA may not be meeting all of the needs of the nation’s veterans...the court cannot find systemic violations system-wide that would compel district court intervention.”

Conti wrote that the appropriate parties to address the matter are “Congress, the Secretary of the Department of Veterans Affairs, the adjudication system within the VA, and the Federal Circuit.”

“The remedies sought by Plaintiffs are beyond the power of this Court and would call for a complete overhaul of the VA system, something clearly outside of this Court's jurisdiction,” Conti wrote in his ruling. "VCS plans to appeal the Court’s decision primarily on the grounds that the Judicial Branch must enforce the laws of the Legislative Branch ignored by the Executive Branch."

“The remedies to the problems, deficiencies, delays and inadequacies complained of are not within the jurisdiction of this Court. Congress has bestowed district courts with limited jurisdiction. Congress has specifically precluded district courts from reviewing veterans' benefits decisions and has entrusted decisions regarding veterans' medical care to the discretion of the VA Secretary. The broad injunctive relief that Plaintiffs request is outside the scope of this Court's jurisdiction,” he added.

Paul Sullivan, the executive director of Washington, D.C.-based Veterans for Common Sense, said his organization and Veterans United for Truth would immediately appeal the ruling.

“This ruling will only cause us to redouble our efforts and our pursuit of justice for our nation’s veterans,” Sullivan said. “We will not rest until our job is finished.”

Gordon Erspramer, the lead attorney representing the veterans advocacy groups, said if the decision is upheld on appeal it “would suggest that veterans have no enforceable rights in America, and the Constitution does not apply to veterans.”

“For all Americans, the implications of this decision are profoundly disturbing,” Erspamer said.

Sullivan said that as of June 2008, the VA has diagnosed 75,000 Iraq and Afghanistan war veterans with PTSD, but the agency has only been providing disability benefits covering the diagnosis to 37,000 veterans.

Early warnings ignored, Congress Slow to Act

Prior to the U.S. Invasion of Iraq in March 2003, the VA issued a report to Pentagon and White House officials saying that it expected that the number of U.S. troops who would suffer from PTSD would reach a maximum of about 8,000.

Sullivan, the executive director of Veterans for Common Sense, told lawmakers before the U.S. invasion of Iraq that those estimates were extremely low. He continued to sound early warning alarms about the extent of PTSD cases and the likelihood of veteran suicides during numerous appearances before Congress over the years.

“The scope of PTSD in the long term is enormous and must be taken seriously. When all of our 1.6 million service members eventually return home from Iraq and Afghanistan, based on the current rate of 20 percent, VA may face up 320,000 total new veterans diagnosed with PTSD,” Sullivan told a congressional committee in July 2007. If America fails to act now and overhaul the broken DoD and VA disability systems, there may a social catastrophe among many of our returning Iraq and Afghanistan war veterans. That is why VCS reluctantly filed suit against VA in Federal Court . . . Time is running out.”

Sullivan has urged Congress to enact legislation to overhaul the VA.

“Congress should legislate a presumption of service connection for veterans diagnosed [with] PTSD who deployed to a war zone after 9/11,” Sullivan told lawmakers last year. “A presumption makes it easier for dedicated and hard-working VA employees to process veterans’ claims. This results in faster medical treatment and benefits for our veterans.”

Yet despite Sullivan’s dire predictions and calls for legislative action the issue has not been given priority treatment by lawmakers. Instead, Congress has continued to fund the war in Iraq.

VA’s Backlog

Meanwhile, a backlog of veterans’ benefits claims continues to pile up at the VA.

The VA said it has hired more than 3,000 mental healthcare professionals over the past two years to deal with the increasing number of PTSD cases, but the problems persist.

In opening statements in the federal court case, Richard Lepley, a Justice Department attorney, defended the VA, calling its network of hospitals a “world-class healthcare system.”

But Erspamer, the lead attorney representing the two veterans groups, said the VA has arbitrarily denied coverage to thousands of vets, that it takes nearly a year to decide whether it will provide coverage to veterans suffering from PTSD, and takes as long as four years to address veterans appeals cases.

“Seeking help from the Department of Veterans’ Affairs … involves a two-track system,” according to the plaintiff’s trial brief. “A veteran will go to the Veterans’ Health Administration for diagnosis and medical care; and a veteran goes to the Veterans’ Benefits Administration to apply for service-connection and disability compensation.

“VA is failing these veterans as they move along both of these parallel tracks. They are not receiving the healthcare to which they are entitled (and where they do receive it, it is unreasonably delayed) and they are not able to get timely compensation for their disabilities, which means that they have no safety net.

“These two problems combine to create a perfect storm for PTSD veterans: they receive no treatment, so their symptoms get worse; and they receive no compensation, so they cannot go elsewhere for treatment. The failings of these two separate but interrelated systems are what this action seeks to address.”

The lawsuit alleged that numerous VA practices stemming from a 1998 law violate the constitutional and statutory rights of veterans suffering from PTSD by denying veterans mandated medical care.

Justice Department attorneys had argued in court papers filed in March that Iraq and Afghanistan veterans were not “entitled” to the five years of free healthcare upon their return from combat as mandated by Congress in the “Dignity for Wounded Warriors Act.”

Rather, the VA argued, medical treatment for the war veterans was discretionary based on the level of funding available in the VA’s budget.

Explosive Emails

Two weeks before Conti issued his ruling, he hauled Justice Department attorneys into court to explain why a crucial email written by a VA official was not turned over to the plaintiffs.

The March 20 email was written by Norma Perez, a psychologist and the coordinator of a post-traumatic stress disorder clinical team in Temple, Texas.

“Given that we are having more and more compensation-seeking veterans, I’d like to suggest that you refrain from giving a diagnosis of PTSD straight out,” Perez’s email, titled “Suggestion,” says. “We really don’t or have time to do the extensive testing that should be done to determine PTSD.”

Other internal VA emails obtained by the veterans groups during the discovery phase of the trial also revealed that senior Veterans Health Administration officials covered up the rate of suicides among war veterans.

On Feb. 13, 2008, Ira Katz, the VA’s mental health director, and Ev Chasen, the agency’s chief communications director, exchanged e-mails discussing P.R. strategy for handling this troubling news.

The exchange came in the context of how to handle inquiries from CBS News, which was reporting on the surge of suicides among U.S. veterans – reaching an average of 18 per day – with part of that rise attributed to soldiers returning from the wars in Iraq and Afghanistan.

In an e-mail headlined “Not for the CBS News Interview Request,” Katz notified Chasen that the VA had identified some 1,000 suicide attempts per month among war veterans treated by the VA.

“Shh!” Katz wrote to Chasen. “Our suicide prevention coordinators are identifying about 1,000 suicide attempts per month among the veterans we see in our medical facilities. Is this something we should (carefully) address ourselves in some sort of release before someone stumbles on it?”

Chasen responded to Katz with suggestions about how to avoid too much negative attention to the data.

“Is the fact that we’re stopping [suicides] good news, or is the sheer number bad news? And is this more than we’ve ever seen before?” Chasen wrote to Katz, adding:

“It might be something we drop into a general release about our suicide prevention efforts, which (as you know far better than I) prominently include training employees to recognize the warning signs of suicide.”

In testimony to the House Veterans’ Affairs Committee on Dec. 12, 2007 – just two months before the e-mail exchange – Katz had stressed the VA’s successes in treating mental health problems and preventing suicides.

He also disputed that veterans from Iraq and Afghanistan face any special risk of suicide.

“VA’s latest data do not demonstrate an increased risk of suicide among [Afghan and Iraqi theatre] veterans compared to the age and gender matched American population as a whole,” Katz said.

Three days after the testimony, on Dec. 15, Katz painted a grimmer picture in an e-mail to Brig. Gen. Michael J. Kussman, the Veteran Health Administration’s undersecretary for health.

Katz’s e-mail said that from the total population of U.S. veterans from all wars, an average of 18 vets commit suicide each day. Katz said the data, which the VA obtained from the Center for Disease Control, showed that 20 percent of suicides in the United States are identified as war veterans.

“VA’s own data demonstrate 4-5 suicides per day among those who receive care from us,” Katz wrote.

On March 20, 2008, CBS News reported that it had obtained an internal VA study showing that 1,784 vets who received VA services still committed suicide in 2005, an increase from 1,403 such suicides in 2001.

Underscoring just how under-prepared the VA was for the number of PTSD cases that would emerge from the Iraq and Afghanistan wars, documents released to support the veterans’ lawsuit show that prior to the U.S. invasion of Iraq the VA believed it would likely see a maximum of 8,000 cases where veterans showed signs of PTSD.

PTSD Epidemic

In April, the RAND Corporation released a study that said about 300,000 U.S. troops sent to combat in Iraq and Afghanistan are suffering from major depression or PTSD, and 320,000 received traumatic brain injuries.

Since October 2001, about 1.6 million U.S. troops have deployed to the wars in Iraq and Afghanistan. Many soldiers have completed more than two tours of duty meaning they are exposed to prolonged periods of combat-related stress or traumatic events.

“There is a major health crisis facing those men and women who have served our nation in Iraq and Afghanistan,” said Terri Tanielian, a researcher at RAND who worked on the study.

“Unless they receive appropriate and effective care for these mental health conditions, there will be long-term consequences for them and for the nation. Unfortunately, we found there are many barriers preventing them from getting the high-quality treatment they need.”

Soldier’s suicide warnings ignored

Chris Scheuerman, a retired Special Forces masters sergeant, testified before a congressional committee in March and told lawmakers of an urgent need for mental health reform in the military.

Scheuerman said his son, Pfc. Jason Scheuerman, went to see an Army psychologist because he had been suicidal.

The Army psychologist wrote up a report saying Jason Scheuerman “was capable of (faking) mental illness in order to manipulate his command,” according to documents the soldier's father turned over to Congress.

“Jason desperately needed a second opinion after his encounter with the Army psychologist,” Chris Scheuerman testified in mid-March before the Armed Services Committee’s Military Personnel Subcommittee.

“The Army did offer him that option, but at his own expense. How is a PFC (private first class) in the middle of Iraq supposed to get to a civilian mental health care provider at his own expense?” he said. “I believe a soldier should be afforded the opportunity to a second opinion via teleconference with a civilian mental health care provider of their own choice.”

Jason Scheuerman shot himself with a rifle on July 30, 2005. The 20-year-old’s suicide note was nailed to the closet in his barracks. It said, “Maybe now I can get some peace.”

Dr. Arthur Blank, a renowned expert on PTSD who has worked closely with the VA, testified during the federal court hearing in San Francisco last month that multiple deployments are largely responsible for an increase in veterans suicides.

"I think it's because of multiple deployments, which means one is exposed to trauma over and over again," Blank testified.

Last update: Sunday, June 29, 2008

Obama for tough stance against job outsourcing by companies

Sridhar Krishnaswami
Washington, Jun 28 | Press Trust of India

Taking a tough stand against outsourcing, the presumptive Democratic nominee Senator Barack Obama said that the choice is between giving tax breaks to companies that ship jobs overseas or give benefit to those corporations that keep jobs domestically.

"We can keep giving tax breaks to companies that ship jobs overseas, or we can give tax benefits to companies that invest right here in New Hampshire," Senator Obama said at a joint appearance with Senator Hillary Clinton in Unity, New Hampshire.

"We can have a tax code that rewards wealth and hands out billions of dollars more to big corporations and multimillionaires. Or we can provide a USD 1,000 tax cut to 95 per cent of families in America, start rewarding work and not just wealth, and eliminate income taxes for seniors making USD 50,000 a year or less," Obama said, adding that's an agenda for change that we can believe in. That's the choice that we can make in this election.

"We can allow millions of Americans to work full-time but still not make enough to support their families, or we can raise the minimum wage, index it to inflation, and ensure that hard work pays off in America," the Illinois Senator said. - PTI

Texas Attorney General Abbott's Medicaid Fraud Control Unit Uncovers $6.1 Million Scheme; 11 Indicted

Eleven Houston suspects face felony Medicaid fraud charges

Texas Attorney General News Release
June 23, 2008

Austin, Texas – Texas Attorney General Greg Abbott’s Medicaid Fraud Control Unit (MFCU) has arrested three Medicaid providers for their involvement in a $6.1 million scheme to defraud Texas taxpayers. Seven other providers also were taken into custody while one fugitive remains at large. Harris County District Attorney Ken Magidson’s office will prosecute the suspects, who face multiple felony charges for participating in organized criminal activity.

The arrests stemmed from MFCU’s investigation into a Humble-based medical billing service, Frazier Medical Marketing, and its owners Dyain Eligha Frazier, 35, and Tajuana Krischell Frazier, 35. According to MFCU investigators, the Fraziers colluded with eight durable medical equipment companies to bill the Texas Medicaid program for supplies that were never delivered to recipients.

“These defendants are charged with orchestrating a complex scheme to bill Texas taxpayers for services not rendered,” Attorney General Abbott said. “The Medicaid program is designed to help the neediest Texans, including children and seniors, with basic health care services. Unfortunately, some Medicaid providers submit false billing records, thereby illegally enriching themselves to the detriment of the taxpayers and patients who depend upon Medicaid for health care.”

Attorney General Abbott added: “Thanks to an outstanding effort by the Medicaid Fraud Control Unit, the Texas Health and Human Services Commission and the Harris County District Attorney’s Office, a multi-million dollar scam to defraud the taxpayers has been shut down. We are grateful to HHSC for bringing this case to our attention and to Harris County District Attorney Ken Magidson for prosecuting the suspects in this case.”

MFCU investigators arrested the Fraziers on June 10 at a luxury automobile dealership in Houston, where the couple was attempting to trade in a 2006 Bentley for a new Mercedes-Benz and cash. The suspects were booked into the Harris County Jail.

The MFCU also arrested Charles Robertson Wickware, 26, on May 30, on charges that he received more than $400,000 in fraudulent reimbursements. On July 12, Mississippi authorities arrested another suspect, Vincent Alan Walker, 38, who operated Dreammakers Medical Supply in Humble. Walker is accused of receiving more than $300,000 in fraudulent Medicaid reimbursements.

Six providers voluntarily surrendered to law enforcement authorities, including:

• Demetria Monique Boston, 34, who operated Anointed Medical Supply in Houston; accused of stealing more than $1.9 million

• Marcus Lee Jefferson, 34, a former contractor with Anointed Medical Supply; accused of supplying illegally obtained Medicaid recipient numbers used to bill the program

• Wilma Perkins Gibson, 42, who operated Perkins Mobility in Houston; accused of stealing more than $300,000

• Christopher Charles Williams, 37, who operated Resource Solutions Medical Supply in Houston; accused of stealing more than $400,000

• Robert Christopher Turner, 38, and Jeffrey Bernard Scales, 37, who operated First American Medical Supplies in Humble; accused of stealing more than $400,000

Jacqueline Ann Briscoe, 41, who operated Briscoe Medical Supply in Houston, is accused of receiving more than $180,000 in illegal Medicaid reimbursements. Briscoe remains a fugitive. Texans with information on her whereabouts should contact the Medicaid Fraud Control Unit at (800) 252-8011.

The cases stemmed from a November 2006 MFCU investigation into 32 Harris County businesses that illegally billed Medicaid for adult diapers, wheelchairs and other medical supplies that were never provided to recipients. Thirty-three people were indicted in a scheme that cost Texas taxpayers more than $7 million. During the 2006 investigation, MFCU personnel conducted more than 1,200 interviews and prepared numerous investigative reports, including evidence against C&M Medical Equipment, which uncovered the Fraziers’ unlawful billing scheme.

In 2006 alone, the costs of the Medicaid program in Texas totaled more than $17 billion. As the state’s chief law enforcement official, Attorney General Abbott has dramatically expanded the Medicaid Fraud Control Unit to save more taxpayer dollars and increase protection for Texas seniors. The Unit has established field offices in Corpus Christi, Dallas, El Paso, Houston, Lubbock, McAllen, San Antonio and Tyler through authorization and funding from the 77th Texas Legislature. Attorney General Abbott’s MFCU works with federal, state and local agencies to identify and prosecute those who defraud Medicaid.

Attorney General Abbott’s MFCU was honored in 2004 by the U.S. Department of Health and Human Services with the Inspector General’s State Fraud Award for effectiveness and efficiency during federal fiscal year 2003 in combating fraud, patient abuse and neglect in the Medicaid program.

To obtain more information about the Attorney General’s efforts to fight Medicaid fraud, access the agency’s Web site at www.texasattorneygeneral.gov.

Keeping healthcare reform on the front burner

By Ellen Lutch Bender | June 16, 2008 | boston.com

NO SINGLE reform would do as much to improve the wealth of our nation and the lives of Americans as a comprehensive overhaul of our healthcare system. But the best chance of swift and major reform may have died with the end of Hillary Clinton's run for the White House.

Senator Clinton kept healthcare on the front burner, promising action in her first term. Healthcare has already slipped as the top domestic concern, a position it held earlier in the campaign for the first time since the last Clinton campaign in 1992. The economy has passed it. But you can't have a healthy economy without a functioning healthcare system.

Unfortunately, there are no easy fixes, no simple wands that can be waved to solve what ails our healthcare delivery system. Also, there are far too many constituents to alienate along the way.

America should be the envy of the world when it comes to delivering healthcare, since we pay more per capita than any other nation, soon nearly 20 percent of our gross domestic product. In many areas of medicine, particularly in research, we are leading the world. But in others, we are not keeping pace.

We have the second-worst newborn mortality rate in the industrialized world, and rank highest in preventable medical errors. Even worse, one in six Americans has no access to high-quality medical care. What we need from the next president is real leadership and a vision for changing what's wrong with our healthcare system.

Senators John McCain and Barack Obama have reform plans that take divergent paths, neither of which is as comprehensive as Clinton's. Obama would require that children have health coverage, but not adults. The problem with that is if there is no mandate for adults, the young and the healthy will opt out, leaving the older and sicker in the system. This would likely force premiums up.

Obama takes a page from the Massachusetts health reform law and would require employers to offer "meaningful coverage" or contribute to a new public plan for the uninsured and small businesses. He also says health insurance would be more affordable with lower co-pays and deductibles, and he would require insurers to offer coverage without exclusion for preexisting conditions. He would also allow those without insurance through an employer to buy into plans now available to some federal employees.

McCain's plan follows the Republican playbook, that the answer is to cut costs and inspire all Americans to buy insurance by means of tax incentives. His plan would end the tax deduction that employers get for their share of employees' premiums, thus undercutting the employer base of most families' insurance. Instead, he would give families a $5,000 tax credit toward any coverage they buy.

The McCain camp says the tax credit should encourage insurance companies to develop plans that come in at that price, no easy task in high-cost states like Massachusetts. He would encourage competition by allowing insurance to be sold across state lines.

Both plans fall short, and neither truly promises universal access. McCain's plan is particularly radical in that it would eliminate the "safety net" that employees have come to value and would undoubtedly put more of the cost of healthcare directly on individuals and families. It would likely swell the numbers of uninsured rather than reduce them. Furthermore, individual insurance sold on the open market is inevitably more inefficient for insurers and more expensive for consumers. It may make it harder for those with chronic conditions to get health insurance.

There are three areas the next president must focus on, and all three must be in balance: making sure every American has health insurance, improving the quality of care, and controlling costs. Viable solutions to our nation's healthcare crisis will require a bold plan for action, not rhetoric. We can thank Clinton for driving that point home. Whether her health plan was right or wrong, she was tenacious and brave, and her plan was the most comprehensive and detailed. We should demand the same from McCain and Obama.

Ellen Lutch Bender is president and CEO of Bender Strategies LLC, a Boston-based healthcare consulting firm.

Health Insurance Falling Short for More People

Number of underinsured up 60% last year vs. 2003, study finds

By KRISTEN GERENCHER
June 13, 2008 3:38 p.m
Source: wsj.com - The Wall Street Journal

SAN FRANCISCO (MarketWatch) -- People without health insurance risk potential financial disaster if they should need expensive medical care, but a growing number of underinsured Americans also find themselves on shaky financial ground.

Despite the U.S. economy's growth in the last five years, the number of people with health insurance who face high out-of-pocket medical expenses relative to their incomes has risen sharply since 2003, according to a new study.

More than 25 million working-age Americans were underinsured last year, up 60% from the 16 million who had inadequate coverage in 2003, according to a report from the Commonwealth Fund, a private foundation in New York. The rate of underinsurance nearly tripled among middle- and higher-income families, those with at least $40,000 in family income.

"Lack of insurance is only one part of the problem, as even the insured have serious gaps in coverage," said Karen Davis, president of the Commonwealth Fund. "Insurance coverage is the ticket into the health-care system, but for too many, that ticket doesn't buy financial security or genuine access to care."

The upward trend in the underinsured rate reflects how much rising health-care costs have outpaced wage gains. Premiums for family coverage have jumped 78% since 2001, while wages have risen 19% and general inflation has gone up 17% in that time, according to the Kaiser Family Foundation.

Researchers considered people who had coverage all year long underinsured if they had out-of-pocket medical, prescription, dental and vision expenses that amounted to 10% or more of their total household income, or 5% if they were low income. People who had deductibles equal to or greater than 5% of their income also qualified as underinsured because of their potential financial exposure.

During 2007, 42% of adults, or 75 million people, were either uninsured or underinsured, up from one-third in 2003, according to the study of 2,616 people ages 19 to 64. It was published online Tuesday in the journal Health Affairs.

Similar patterns to uninsured

Employers burdened by rapidly rising health-care costs have been shifting more of those costs to workers or limiting benefits, the study found. The underinsured were more likely to have individual or small-group coverage, and those with employer-based health insurance were more likely to work in low-wage jobs or at small firms than their adequately insured counterparts. What's more, the underinsured were more likely to report paying high deductibles and many paid high annual premiums.

The underinsured often resembled the uninsured more so than the insured in their health-care choices and experiences. More than half of the underinsured -- 53% -- and 68% of the uninsured avoided needed care because of cost, compared with 31% of the adequately insured who went without, the study found. That includes not seeing a doctor when sick, not filling prescriptions and not getting recommended diagnostic tests or treatments.

About 45% of the underinsured reported difficulty paying medical bills, being contacted by collection agencies or changing their way of life to keep up on health-care payments, just shy of the 51% of uninsured who said the same.

In the U.S., even people with health insurance can rack up medical debt or face bankruptcy, said Cathy Schoen, senior vice president of the Commonwealth Fund. "As a nation we are losing ground. We need to move in new directions."

Leon Rousso, a certified financial planner in Ventura, Calif., who sells health insurance as part of his business, said he tries to place moderate-income people in health plans that have a sensible annual out-of-pocket maximum and reasonable coverage for their biggest potential out-of-pocket costs. Sometimes that means moving them to a higher deductible plan in exchange for lower premiums.

Of course, many people have to take whatever their employer offers them, he said.

Insured people "don't really have a lot of clout," Rousso said. "Middle to lower middle class, that's really where the vulnerable spot is. You see a lot of people who don't have a lot of money."

Those who shop for their own plan are wise to look for coverage of big-ticket items. Rousso advised focusing on financial protection for hospitalization charges and prescription drugs.

"Those are the biggest places to lose your fortune," he said. "It's all about protecting your assets."

Many of the underinsured are in scaled-down, more affordable health plans, said Nancy Davenport-Ennis, chief executive of the nonprofit Patient Advocate Foundation in Newport News, Va. The group tries to help people with chronic, debilitating and life-threatening conditions get the care they need, with 78% of its annual cases involving cancer patients.

"We actually found that an underinsured consumer has a tougher time getting to resources than a completely uninsured consumer," she said.

The underinsured are often in plans that have limits such as dollar caps on diagnoses and specific services and restrictions on the number and kind of drugs covered, which can undercut the kind of aggressive care many cancer patients count on, Davenport-Ennis said.

"In affordable plans, it's almost standard to see a cap on the number of radiation visits you can have a year - somewhere between 12 and 15 -- while most cancer therapies that have radiation as part of the treatment protocol historically require six consecutive weeks of daily treatments," she said. "If you're capped at 12, you're going to be a private-pay person for the next 18."

The Patient Advocate Foundation offers free case management for health-insurance issues of the seriously ill. Its hotline is 1-800-532-5274.

Controversy over cost controls

The U.S. spends enough on health care -- 16% of its gross domestic product -- to extend adequate health insurance to all, said Alan Sager, a health policy and management professor at Boston University's School of Public Health.

"It's something everyone wants and deserves, and crafting durably affordable health care is essential to rebuilding the economy," he said.

"If we continue to accelerate toward the cliff, we'll be spending more money on care but will have more uninsured and underinsured people, which means hospitals and doctors will work harder to overserve those of us who still have good insurance."

In Massachusetts, a statewide reform law passed in 2006 that aimed to cover all residents "took an important step" but introduced new tensions, he said, especially around politically palatable cost-control methods. Many of the ones currently in vogue in national politics as well won't do the trick, Sager said.

"The ideas that are under widespread political discussion -- electronic medical records, prevention, chronic-care case management or deinsuring patients so they will be more motivated to shop by price and quality -- none of these things will work to contain costs," Sager said. "They're all being pushed because they offer the shallow political promise of containing costs without actually disrupting business as usual in health care. Business as usual in health care means regular, large infusions of more money every year."

Still, Sager said he's optimistic that the next five years will bring major improvements in the nation's health-care system.

"We all know we're medically vulnerable because none of us is going to live forever, but as more of us realize that we're also financially vulnerable, we'll demand change and [solutions] that work financially, medically, ethically and politically."

Write to Kristen Gerencher at kgerencher@dowjones.com

Medical Fraud a Growing Problem

Medicare Pays Most Claims Without Review

By Carrie Johnson
Washington Post Staff Writer
Friday, June 13, 2008; A01

MIAMI -- All it took to bilk the federal government out of $105 million was a laptop computer.

From her Mediterranean-style townhouse, a high school dropout named Rita Campos Ramirez orchestrated what prosecutors call the largest health-care fraud by one person. Over nearly four years, she electronically submitted more than 140,000 Medicare claims for unnecessary equipment and services. She used the proceeds to finance big-ticket purchases, including two condominiums and a Mercedes-Benz.

Health-care experts say the simplicity of Campos Ramirez's scheme underscores the scope of the growing fraud problem and the need to devote more resources to theft prevention. Law enforcement authorities estimate that health-care fraud costs taxpayers more than $60 billion each year.

A critical aspect of the problem is that Medicare, the health program for the elderly and the disabled, automatically pays the vast majority of the bills it receives from companies that possess federally issued supplier numbers. Computer and audit systems now in place to detect problems generally focus on overbilling and unorthodox medical treatment rather than fraud, scholars say.

"You should be able to spot emerging problems quickly and address them before they do much harm," said Malcolm Sparrow, a Harvard professor and author of "License to Steal," a book about health-care fraud that advocates for greater federal vigilance. "It's a miserable pattern, a cycle of neglect followed by a painful and dramatic intervention."

Fallout from the Campos Ramirez case continues. After pleading guilty to filing false claims, she has helped authorities win indictments against more than half a dozen doctors and patients who allegedly accepted kickbacks for pretending to receive costly HIV drug therapy. With cooperation from Campos Ramirez, FBI agents this week arrested three Miami-area men who, the government alleges, financed sham clinics that billed the government more than $100 million.

Daniel R. Levinson, the inspector general of the Department of Health and Human Services, has warned repeatedly that the Medicare program is "highly vulnerable" to fraud, particularly in South Florida, where schemes center on expensive, infusion-based HIV medications and on equipment such as wheelchairs, walkers, canes and hospital beds.

Officials from the Centers for Medicare and Medicaid Services (CMS), which oversees federally funded health programs, say they have stepped up their efforts to combat fraud over the past year by working closely with investigators, removing the requisite billing numbers of nearly 900 companies and imposing new standards in high-fraud areas that would prevent people convicted of felonies from ever receiving a Medicare number.

"There's always more fraud than we have resources to combat," said Kimberly L. Brandt, director of program integrity at CMS. "We have done a much better job of realigning our resources to attack this problem."

Investigators and prosecutors trained their focus on Miami after noticing two troubling patterns:

· HHS investigators discovered that nearly half of 1,581 medical equipment companies they visited in the Miami area did not comply with basic Medicare requirements to be open during scheduled hours and to have a telephone number. The inspector general and the Government Accountability Office have flagged weak oversight of these kinds of suppliers for a dozen years, according to congressional testimony.

· The South Florida region bills Medicare more than $2 billion each year for injectable HIV medications. That figure is 22 times as high as the amount of similar claims in the rest of the country, and is far out of line with demographic data in a population of 2 million people in Miami-Dade County, HHS statistics show.

Justice Department officials moved to freeze money in suspicious bank accounts controlled by medical equipment company owners and they created a Washington-based strike force to handle the issue. The strike force, in concert with a small group of U.S. attorney's offices, has in the past year opened nearly 900 criminal investigations and convicted 560 defendants in health-care fraud offenses throughout the country.

Authorities say the strategy is working. They point to a $1.75 billion drop in Medicare claims in Miami since the operation began a year ago. But even government officials hope for a more comprehensive solution.

Christopher Dennis, the special agent in charge of the HHS inspector general's office in Miami, said fraudulent medical equipment companies appear to have shifted gears since the strike force arrived. After a crackdown in South Florida, at least some corporate owners moved to the north, he said. Investigators dubbed one initiative "Operation Whack-a-Mole," after the carnival game in which a creature pops up in different places after being hit with a hammer.

"The sheer number of zeroes following the dollar sign is irresistible to crooks and con men," Attorney General Michael B. Mukasey said last month during a Miami visit. "For every crooked company we bust, there is another one to replace it before the ink on the indictment is dry. . . . The money and the temptation are simply too big."

The strike force recently established a base in Los Angeles, another area rife with fraud. Prosecutors announced criminal charges last month against two medical equipment company owners who are accused of falsely billing Medicare more than $2 million. Plans call for a similar rollout this fall in Houston, another potential fraud hot spot.

"You can see how these frauds spread through communities," said Kirk Ogrosky, who is deputy chief in the Justice Department's fraud section and helps lead the strike force. "Family members and friends just get sucked into it. It's really rags to riches on the backs of the American taxpayer."

Officials who oversee the Medicare program say they are vigilant despite time pressure and limited resources. Employees review fewer than 5 percent of the nearly 1 billion claims filed each year. The vast majority of claims shuttle through computer systems that are tweaked when authorities notice fraud patterns. This year, CMS is working to finalize a rule that would prevent convicted felons from obtaining Medicare billing numbers. At present, that regulation applies only in a few high-fraud regions.

"It's a big volume," Brandt said. "No matter how hard we try to get people trained, there's always going to be a margin of error."

Sentenced to 10 years, Campos Ramirez, 60, may yet reduce her prison term by helping authorities unwind "the large web of medical clinics, doctors, nurses, money laundering companies and HIV clinic financiers who participated in this massive fraud," prosecutors wrote earlier this year in court papers. Her lawyer did not return calls seeking comment.

By many accounts, Campos Ramirez was unusually successful. Prosecutors say that corrupt medical clinic owners anticipate that Medicare will cover a quarter of their phony claims. But Campos Ramirez persuaded authorities to cover 60 percent of all the bills she submitted on behalf of 75 HIV clinics in South Florida, according to court filings.

As the owner of R and I Medical Billing, Campos Ramirez advised clinic owners how to justify the costly HIV treatments and manipulated Medicare claims to make sham clinics appear to be legitimate health-care facilities, prosecutors said. She personally collected more than $5 million with which she bought property and luxury items. Over the past year, however, Campos Ramirez has met repeatedly with law enforcement agents to unravel the scheme, which ran from 2002 to 2006.

At the time of her sentencing in March, Campos Ramirez had amassed a net worth of $1.5 million, including one of the condominiums where her son, an employee of her billing company, had lived.

State proposes ban on HMO billing practice

June 1, 2008 | By LORA HINES | The Press-Enterprise

State officials, hospitals and doctors are locked in a dispute over whether some patients can be charged if they are taken to an emergency room outside of their health care network. For some, that bill can be a couple of hundred dollars, but for others it can reach into the thousands.

The ban proposed by the California Department of Managed Health Care would affect members of HMOs, such as Kaiser Permanente, not members of other kinds of insurance plans. The department only regulates HMOs. Administrators and hospital-based doctors say the state should be targeting insurance companies.

Statewide, thousands of people get pressed for payment by doctors and hospitals, typically after they are taken to an emergency room outside their insurance plan. Doctors and hospitals that think health care plans and insurance companies have shortchanged them on payment for treatment then try to make up the difference by going after patients who already paid their share. It's called balance billing.

Karla and William Gledhill, of Chino Hills, understand the practice well.

The couple got hit with a $53,000 bill from Arrowhead Regional Medical Center in Colton after their insurance company, Anthem Blue Cross, paid about $25,000. Their 16-year-old son, Ryan, was flown to the hospital after a serious dirt bike crash in Lucerne Valley.

Karla Gledhill said she racked up late-payment fees and bill-collection threats as she repeatedly wrote letters and made telephone calls to the hospital and insurance company. Last week, the insurance company agreed to pay the bill.

Gledhill said she thought she would have to hire an attorney, which sometimes is a patient's only recourse, hospital officials say.

The hospital and insurance company said privacy laws prevented them from commenting on the family's claim.

"You don't know anything about balance billing until you're stuck in the middle, trying to hammer out what's right," Gledhill said.

Balance Billing

More than 1.75 million insured Californians who visited emergency rooms in the past two years were asked to pay more, even after their co-payments and deductibles, according to the California Association of Health Plans. The professional organization represents 40 health care plans that cover an estimated 21 million Californians.

The average balance bill was $300, which added up to about $528 million that patients spent in addition to their co-payments and deductibles, the association said. More than half of the patients who were balance billed paid.

"The practice needs to be banned, period," said association spokeswoman Nicole Kasabian Evans. "The patient shouldn't be placed in the middle. That's what the insurance companies and health care providers are doing."

In July 2006, Gov. Schwarzenegger ordered an end to balance billing after he realized many residents were being charged for medical expenses they didn't owe, said Cindy Ehnes, director of the state Managed Health Care Department. But the department couldn't come up with a suitable solution to HMOs and providers, she said. So, the department decided to merely ban the practice.

"We have tried many other approaches to solve this problem," Ehnes said. "We have decided to go back to our first job, which is to protect consumers."

Ehnes said she had hoped lawmakers would have passed legislation regulating balance billing. At least seven states have balance billing laws, including Colorado and Florida. Meanwhile, state Sens. Don Perata, D-Oakland, and Leland Yee, D-San Francisco, have introduced balance billing legislation.

HMO Vs. Hospital

The ban comes as Kaiser, the state's largest HMO, got a temporary restraining order earlier this month from Los Angeles County Superior Court against Prime Healthcare Services Inc., of Victorville, to stop it from collecting money from thousands of Kaiser patients or reporting them to credit agencies. A hearing is set for Thursday.

"This has been an ongoing dispute for a year or year and a half," said Dr. Ben Chu, president of Kaiser's Southern California region. "... They threatened to trash their credit ratings if they didn't pay."

Earlier this year, Prime Healthcare sued Kaiser, claiming that Kaiser owes $25 million for its patients who were treated at eight of Prime Healthcare's hospitals, including Desert Valley Hospital in Victorville, Chino Valley Medical Center and Montclair Medical Center.

Prime Healthcare attorney Michael Sarrao couldn't be reached for comment.

Prime Healthcare has accused Kaiser of delaying payments by repeatedly demanding patient medical records, claiming that care provided was unnecessary and requiring transfer of members to Kaiser hospitals.

Chu disputed the claims.

"It's not about delaying payment," he said. "It's about substantiating claims."

Calculating Health Cost

Dr. Richard Frankenstein, president of the California Medical Association, said the organization, which represents 35,000 doctors, will fight the state Managed Health Care Department's ban.

"They ought to be regulating the insurance companies, not the doctors, which it does not have the authority to do," he said. "We see this as a $500 million transfer from patients to insurance companies, and the insurance companies aren't paying the bill."

On average, Frankenstein said, insurance companies pay all but about $30 of a doctor's bill.

"If that doctor sees 50 to 60 patients, that $30 does add up," he said.

Some specialists may not work on-call emergencies if insurance companies refuse to pay and they can't bill patients, Frankenstein said.

Frank Arambula, Arrowhead Regional Medical Center's chief financial officer, said the hospital compares its costs to those of other facilities, which are reported to the California Office of Statewide Health Planning and Development. The data are posted on the agency's Web site.

"We set our rates based on market-driven prices," he said. "We think it's a fair assignment and the payer is going to pay those charges."

Conversely, insurance companies rarely show patients and health care providers how they determine what to pay for service, Arambula said.

In a written statement, Anthem Blue Cross spokeswoman Peggy Hinz said the company reimburses out-of-network hospitals for what it considers reasonable and customary costs. It is changing its reimbursement policy to protect members who require emergency care, she wrote.

"It was not the intent of our reimbursement policy to increase out of pocket expenses for our members, who do not have a choice in selecting the place where health care services are performed, such as in the case of an emergency," Hinz wrote.

Anthem Blue Cross bases its reimbursement rates on factors including submitted charges for payment, comparisons of charges for services offered at other hospitals, and service costs that are reported to the state, Hinz wrote.

Fighting the Bill

The Gledhills didn't care whether Arrowhead Regional Medical Center was in their Anthem Blue Cross preferred provider organization network. Their son needed surgery on his pancreas.

"Worst case, we thought we would owe $6,000," said Karla Gledhill, whose husband owns a small Anaheim business.

Anthem Blue Cross first determined the Gledhills owed the hospital $53,273.17 after it paid $25,121.28, according to a claim recap. It paid another $12,606.15 after Karla Gledhill complained to the California Department of Insurance.

The Gledhills still faced a $40,667.12 bill and no explanation of how Anthem Blue Cross determined what it would pay.

"How could I fight a fair fight if I didn't have all the information?" Karla Gledhill asked. "I didn't think Arrowhead's charges were exorbitant for the care my son received."

On May 21, Anthem agreed to pay the rest of Ryan Gledhill's hospital bill after the company "made a one time administrative decision to remit payment," according to the letter the Gledhills received.

The letter did not include further explanation, and Hinz said privacy laws prevented her from offering one.

Reach Lora Hines at 951-368-9444 or lhines@PE.com

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Online Help

California Office of Statewide Health Planning and Development: www.oshpd.ca.gov

California Department for Managed Health Care: www.hmohelp.ca.gov

California Department of Insurance: www.insurance.ca.gov

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Inside Politics: Insurance law will bring monthly premiums back up

Rebecca Boyle | The Tribune
June 8, 2008

Colorado motorists who are unfortunate enough to be injured in a crash will have one less thing to worry about thanks to a bill signed by Gov. Bill Ritter late last week.

Or they'll have one more thing to worry about. It depends on your perspective.

Ritter signed Senate Bill 11, which will require every auto insurance policy issued in Colorado to have $5,000 of medical payments coverage, known as "med pay." It has an opt-out clause, too, so people who determine they don't need the extra coverage don't have to get it if they don't want it. But now they will have to have the option.

The law will help motorists, especially those who don't have health insurance, by offering enough money to cover the cost of a typical ambulance ride, for instance. Those who do have health insurance could use the med pay to cover their deductible or out-of-pocket expenses.

But the new system also is likely to increase the cost of insuring your car.

Colorado ended its long-standing no-fault auto insurance program in 2003 and switched to an at-fault system. Under the old system, a driver injured in a crash would have his medical expenses covered by his own insurance, even if it wasn't the driver's fault. Under the newer system, the at-fault driver is responsible for payment, and before payment can be made, someone has to determine whose fault it was.

Medical payments coverage became optional under the new system, and many motorists either thought they didn't need it or decided to save money on premiums by going without it.

But some drivers who don't know about that or don't buy enough coverage can't afford their medical bills. They can sue the at-fault driver, but that might not matter if the person at fault doesn't have much money.

That has meant trauma care providers are often unpaid because the injured motorist can't afford to pay.

The Trauma Care Preservation Coalition, a group of ambulance companies, hospitals and other emergency services providers that formed to address the problem, said the system has cost hospitals and ambulance companies millions of dollars in unpaid bills, and that translates to higher costs for patients who can afford to pay.

In 2002, under the old system, hospitals were reimbursed for about 60 percent of the care they provided to motor vehicle accident patients, according to a report commissioned by Ritter's office in February. By 2006, that number had dropped to 36 percent, the report found.

Reverting back to a mandatory med-pay system will ensure that more of those expenses are covered -- $5,000 worth, at least.

Ritter said the bill would help consumers and emergency services providers.

"Almost everyone has out-of-pocket medical expenses, such as co-pays and deductibles, which could be paid for by medical coverage in the event of an accident," he said in a statement. "Senate Bill 11 will help ensure that every Coloradan has the coverage that he or she needs and that ambulances, physicians and hospitals are paid for the critical care that they provide."

But that comes at a price.

Mandatory extra coverage will likely drive up insurance premiums, said Alan Miller, assistant public affairs manager for State Farm Insurance, based in Greeley.

"We were opposed to SB11 from the standpoint of, as much as we are happy to sell people our products, we don't feel people should be forced to buy additional insurance that they may not need, want or, frankly, be able to afford," he said. "This bill will require people to buy additional insurance."

Though they can opt out, Miller said many people don't, not only because they think they have no choice but because that option requires a written declination of the coverage. That will result in higher costs for everyone, as insurers are forced to carry more policies.

Since the at-fault system went in place, auto insurance premiums decreased throughout the state, up to 35 percent, he noted.

"That's really what moving away from no-fault was designed to do. With no-fault, it was so out of control; there were so many things that had been added on that, that it was becoming so expensive. It was just skyrocketing," he said.

Industry representatives said things like massages and even aquariums were covered under the old system, because they were considered rehabilitative. While SB11 won't reintroduce those kinds of problems, rates will likely creep skyward, Miller said.

"I think we've hit the bottom, and because of these legislative mandates, we're going to be seeing rates go up," he said.

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« School's out for summer ... and it will look different when you get back

Across-the-board tuition increases approved in the past week mean that students will have to pay even more next year to attend schools like Colorado State University and the University of Northern Colorado. But they can take comfort in one area: The campuses will look prettier.

Northern Colorado lawmakers were instrumental in finagling new ways to find extra money for projects at CSU, UNC and Front Range Community College, among others.

Gov. Bill Ritter signed a bill last week that will allow UNC to proceed with renovations to Butler-Hancock Hall, home to the athletics department.

Nate Haas, spokesman for UNC, said the money will pay for renovations to academic areas, including a classroom addition, upgraded electrical wiring and reconfiguring locker rooms to maximize space. The building will also get air conditioning, which does not currently exist throughout.

"The hope was that the facility would be more marketable for private users, and of course for the community who attend events there," he said.

He said the renovations had been on UNC's master plan for a couple years.

It was the first project on the state's list and will cost $11.591 million.

State Rep. Jim Riesberg, D-Greeley, is on the powerful Capital Development Committee and helped push for the legislation that allows the extra spending.

Two Fort Collins institutions will also see funding under the bill. Front Range's Larimer campus will get a hefty $14.81 million to pay for a science classroom addition and renovations.

CSU's monstrous Clark building didn't make out with as much -- just around $2 million -- but it'll be enough for "revitalization," which could mean fresh paint and carpeting.

The money will be available thanks to Senate Bill 218, a bipartisan measure sponsored by Western Slope lawmakers that alters the way Federal Mineral Lease revenues and bonus payments are allocated. According to Ritter's office, the measure creates two new funds to support higher education, one for construction and another for maintenance. Existing FML beneficiaries, including K-12 education, local communities impacted by oil and gas drilling and the Colorado Water Conservation Board, will also reap millions of dollars under the new law.

Last month, Ritter signed a companion measure, Senate Bill 233, which allows the state to issue certificates of participation backed by SB218's new revenue streams. Those certificates, which are similar to bonds, will amp up funding for more than a dozen higher-education construction projects around Colorado.