Knowledge Base Article

I am so excited!! I just received an email letting me know that someone overseas is giving me $4 million, and all I have to do is send them my bank account information and a $5,000 transfer fee. I am so happy that I will finally be rich! What?!? You mean it isn’t true? I should have known because it sounded too good to be true.

Unfortunately, most things that sound too good to be true turn out not to be true at all or at least have some kind of glitch, up to being illegal. The same applies in the world of healthcare business. Below are two examples from recent Department of Justice (DOJ) settlements of deals that in the end were just too good to be true.

This business deal has been floating around for a while. Drug screening companies or their representatives approach hospitals, usually smaller rural hospitals, with a proposal to send their drug screening client specimens to the hospital. The hospital would process the specimens and send them to the reference drug screen testing laboratories for testing; the hospital would bill the insurance company and then pay the reference lab for testing. It is important to note here that hospitals billing the insurance company for their outpatient and non-patient testing and then paying the reference lab to perform that testing is a common and acceptable practice. The problem that caused this scheme to “sound too good to be true” and to “smell fishy” is that these rural hospitals ended up receiving specimens from all over the country. Were these patients really “hospital patients?” The other “fishy” factor was that everyone got money – the rural hospital made a lot of money, the drug testing lab made more money than they would have had they billed the insurance companies directly, the people arranging these relationships got money, and in some cases even the physicians referring the drug tests got money. Money was flowing faster and, in more directions, than the ocean during a hurricane. The “good” in this questionable scheme was the money that went to rural hospitals helped those hospitals keep their doors open in this time when most rural hospitals are struggling financially. Even some hospitals I know of were approached to participate in this type of deal. Hopefully, they recognized the “too good to be true” aspect of the deal and declined.

How is this turning out? Not well for some – evidently, the DOJ considers this hospital pass-through billing to be a type of money laundering.  Here is a link to a DOJ settlement titled “Substance Abuse Treatment Center Owner Pleads Guilty To $57 Million Money Laundering Conspiracy In Connection With Hospital Pass-Through Billing Scheme.” According to the DOJ announcement, the owner of a substance abuse treatment facility, “entered into an arrangement with a laboratory owner to send urine samples for the facility’s patients to the owner’s lab for urine drug testing (UDT), in exchange for receiving 40 percent of the insurance reimbursements.  The lab owner, in turn, arranged with the managers of (two) rural hospitals in Florida, to have the testing billed to private insurers through (the hospitals) and reimbursed at favorable rates under the hospitals’ in-network contracts with insurers.  (The defendant) also admitted that he brokered deals with other substance abuse treatment centers to have their UDTs billed through (the hospitals) in exchange for … receiving 10 percent of the insurance reimbursements, while the other substance abuse facilities would receive 30 percent of the insurance reimbursements.” Other hospitals and other substance abuse treatment facilities were eventually included in the deals. The announcement does not say if there will be any penalties or actions against the participating hospitals, treatment facilities, or testing labs. If not, they are lucky to get out of this unscathed.

Another recent DOJ settlement announcement involved an Anticoagulation Clinic, also commonly called a Coumadin Clinic. Similar to the issue above, this type of clinic skirts the edge of seeming acceptable. Patients go to this clinic to have their blood tested to determine if their anticoagulant dosage is in the acceptable therapeutic range. Patients may receive education while they are at the clinic concerning the use of anticoagulants and if the test results are outside therapeutic range, the physician/practitioner will adjust the dosage. First remember that patients have been taking this anticoagulant for years, with dosage adjustments based on the test results handled through a follow-up phone call from their physician’s office. Though nothing is technically wrong with a “clinic” for these patients, it all comes down to billing. Many of these clinics not only billed for the lab test, but also billed for a facility clinic visit with an evaluation and management (E&M) charge. According to the DOJ announcement, the “E/M services … were not medically reasonable and necessary at the same time it submitted and was paid for claims for the blood tests” and for a later period, separate payment was received for both lab and clinic visit services when the reimbursement should have been bundled into one payment.

More bad news here is that there is a whistleblower out there who is over $450,000 richer for having reported this wrong doing. Also, when you really think about this, doesn’t it seem obvious that it was “too good to be true” or in this case too good to be right?

As a former compliance officer, I tried to use my intuition on some arrangements. I was always leery of those arrangements that sounded too good to be right or “smelled fishy.” The best advice for those was to avoid them completely unless someone could prove they were completely appropriate. I would also caution to be careful whose advice you take. I listened earlier this week to NGS’s teleconference on the billing of Intensity Modulated Radiation Therapy (IMRT) planning services which includes bundled payments for many procedure (CPT) codes that are not separately reportable. The teleconference referenced an OIG report of widespread inappropriate payments due to the reporting of codes that should not have been separately reported, although I have heard that some consultants reportedly advised clients that this was acceptable billing.

Sadly, we all have to be cautious and carefully scrutinize our arrangements and whose advice we take. I guess I better not send my bank account information and money to get that $4 million dollars. Maybe I will win the lottery!