[author:  Ari Gerstin]

Just over two years after the raid on the Miami headquarters of mental healthcare chain American Therapeutic Corporation (American Therapeutic), a former program director and therapist in the Ft. Lauderdale office of the company were convicted of conspiring to defraud the Medicare program in a $205 million scheme. 

American Therapeutic operated partial hospitalization programs in seven different locations throughout South Florida and Orlando, providing intensive treatment for severe mental illness. According to federal officials, however, the company was little more than an elaborate scheme to bill Medicare for hundreds of millions dollars in false and fictitious services, for thousands of patients who were not actually not qualified for treatment under the government sponsored program.

Inadequate Documentation of Face-to-Face Encounters
Although documentation submitted by the company for reimbursement made it appear that the patients being treated were qualified for care under the Medicare program and that the treatments being provided were legitimate, investigation revealed that doctors at American Therapeutic were "robo-signing" patient files without seeing or treating the patients. Additionally, claims were submitted for care rendered to patients who were in neuro-vegative states, late stages of diseases causing permanent cognitive memory loss or were suffering from substance abuse addition without a severe mental illness, all of whom were ineligible under the Medicare program for the treatment allegedly provided. 

Provider Vacation and Travel Records Under the Microscope
In some instances, claim documentation showed that Medicare was billed for services allegedly rendered while the treating physician was out of the country on vacation. Due to the increased linkage of various databases maintained by government agencies and cooperation among agencies, the investigation of "robo-signing" (or absent provider) cases has become much more streamlined over the past several years. When investigating allegations of healthcare fraud, government investigators now routinely cross-check records of providers' air travel and border crossings, and even electronic state highway toll payments (such as SunPass or E-Pass) to determine whether the provider could have been present and rendered treatment as billed, or if the provider was out of town at the time. 

Ignorance of Fraud No Defense
The recent convictions came out of a retrial recently conducted in federal court in Miami.  The defendants previously escaped convictions when their initial jury deadlocked and was unable to reach a unanimous verdict. Now, after being convicted, the former senior employees are in federal custody and facing up to 10 years in prison at sentencing. At trial, their lawyers unsuccessfully argued that the women were unaware of the fraud being perpetrated around them at American Therapeutic and that they provided legitimate therapy services to patients.

The pursuit of American Therapeutic and its employees, even after the initial setback of receiving a hung jury verdict, demonstrates the government's commitment to aggressively investigate alleged healthcare fraud against government programs.  Approximately 35 defendants associated with American Therapeutic's seven-clinic mental healthcare chain have been charged and convicted of defrauding the Medicare program since it was shut down two years ago. Those include former company owner Lawrence Duran, who is now serving the stiffest Medicare fraud punishment on record, 50 years in prison. Also convicted in the scheme were several psychiatrists who were charged by the government with altered diagnoses and medications for thousands of patients to make it appears as if they qualified for services covered by Medicare.

New Focus on Cut-and-Paste Medical and Treatment Records
While technology has in some ways streamlined the billing process, it has also fostered the growth of "cut-and-paste" medical records and treatment notes. More and more, providers are receiving medical records from their colleagues that contains several pages of generic text and only a mere paragraph or two concerning the specific patient about which the record concerns, raising questions about the accuracy and reliability of such records. The government has already identified these practices as a target for future enforcement and is looking to make examples out of providers who fill records with generic background information to mask the dearth of personalized treatment information actually contained in the record.  See September 24, 2012 letter from HHS Secretary Kathleen Sebelius and Attorney General Eric H. Holder, Jr. to the chief executives of America's largest hospital associations, which notes "troubling indications" of abuse in the use of electronic health records and warns that the government will vigorously prosecute providers who attempt to "game the system" by "cloning" medical records, or "upcoding" either the intensity of care rendered or the severity of a patient's condition.

In these times of heightened enforcement, what may have previously been considered simple isolated calendaring or paperwork errors may suggest to the government that there is wide-spread billing for services rendered while providers are not in the office or other pervasive fraud.  This can lead to the commencement of an invasive audit or even a full-scale fraud investigation.  More than ever, it is now essential that providers have the appropriate procedures in place to catch billing errors and paperwork deficiencies before claims are submitted.  These procedures should be supplemented with regular audits of practices at all locations in a system to ensure that best practices are always being followed and that any issues are addressed in a timely fashion to avoid unwanted surprises later.