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Case Study: Health Insurance Companies Are Watching Healthcare Providers — Carefully

Case Study: Health Insurance Companies Are Watching Healthcare Providers — Carefully by Evan SchwartzIn my practice, I am frequently confronted with cases involving health insurance companies seeking to audit and recover money already paid to healthcare providers for services they have rendered to patients.

In many of those cases, the insurance companies don’t really have a good-faith basis for seeking the money back. Instead, they operate through algorithms that allow them to seek out people that they think are billing more than what they believe to be as reasonable in a particular geographic area or region. Many times this leads to battles about the method and manner in which the insurance company chose to investigate what they believe to be overpayments. In practice, the insurance companies argue that services were not medically necessary, elevating the question of medical necessity to that of gross overbilling or fraud.

In a recent case, however, actual fraud occurred, and three clinic owners in Illinois were convicted for a $3.6 million fraud against Blue Cross Blue Shield. Specifically, these three individuals owned six medical clinics providing chiropractic, medical, and physical therapy services in the Chicago suburbs. As part of their marketing plan, they would go to health fairs and offer patients a free x-ray and a discounted office visit.

Unfortunately, these individuals apparently used them to create fake diagnoses to convince patients that they had problems requiring more treatment. Prosecutors alleged that the patients were instructed to return to the clinics to receive either physical therapy or other office visits as part of treatment plans that had been prescribed, regardless of their true diagnosis.

Rather than being a civil matter, this case was referred to be prosecuted, and federal prosecutors pursued these three doctors vigorously. Ultimately, convictions were secured against two of them, and a deferred prosecution obtained against one of them (one of them cooperated with the others and did not go to jail). Two out of the three ultimately pled guilty, and all three were ordered to pay almost $1.4 million in restitution. During sentencing, the judge described their fraud as a “deplorable use of human beings as commodities for billing purposes.”

The takeaway for healthcare providers who think they have discovered a good thing in reimbursement opportunities with large health insurers need to beware — those health insurers are watching. This particular case represented gross fraudulent and criminal conduct. Nevertheless, allegations of fraudulent conduct — whether founded or not — are frequently made by health insurers in an effort to thwart the opportunity for healthcare providers to obtain fair compensation for their services.

Please contact us with any questions or comments.

Evan-Schwartz

 

Evan S. Schwartz
Founder of Schwartz Law
800-745-1755
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