Home health, hospice, laboratory fraud dominate Midwest

High-priced home health fraud cases in Michigan and Illinois, coupled with comments from the U.S. Attorney's Office in Detroit, offer insight into some of the high-risk areas of Medicare fraud among states in the Midwest.

Last week, the owner of two Chicago home health companies was sentenced to 10 years in prison for a Medicare fraud scheme that totaled more than $23 million, according to a statement by the U.S. Attorney's Office for the Northern District of Illinois. Jacinto "John" Gabriel Jr., obtained the information of hundreds of Medicare beneficiaries which he enrolled as patients in one of his two home health companies. Gabriel, who was seen as the mastermind behind the 12-person scheme, intentionally misdiagnosed patients and billed Medicare for unnecessary treatments.

In Detroit, another owner of a home health agency pleaded guilty to a $2.6 million home health scheme in which she paid kickbacks to recruiters and physicians for patient referrals, according to a release from the Department of Justice (DOJ). Rahmat Begum also made false statements pledging not to pay kickbacks, but continued doing so, and then laundered proceeds paid by Medicare.

In an interview with Law360, Barbara L. McQuade, U.S. Attorney for Detroit, and several top officials in her office said that home health fraud has actually gone down in the city, thanks to a moratorium on new home health agencies enacted by the Centers for Medicare & Medicaid Services last year. Law360 reports that Medicare paid $565 million for home health services in the Eastern District of Michigan in 2013, down from $745 million in 2010.

Instead, McQuade said prosecutors have been targeting other fraud hot spots linked to hospice care and molecular diagnostic testing by laboratories. Specifically, prosecutors are keeping a close eye on labs that unbundle samples sent for analysis as a panel, and instead charge separately for each service.

Recently, labs have received national attention as a high-risk area of fraud, after Health Diagnostic Laboratories, Inc. settled kickback allegations for $47 million last week. Within the hospice industry, the concern revolves around physicians that alter patient eligibility for end-of-life services in exchange for kickbacks from for-profit hospice agencies.

Other states in the region have faced similar problems with home health fraud. In Ohio, newspaper reports showed an industry that was rapidly expanding with hardly any state oversight, FierceHealthPayer: AntiFraud previously reported. This prompted legislators to take a closer look at regulating the industry in February. Media investigations in Minnesota found that the state remains vulnerable to home health fraud and often fails to recover Medicare funding lost to fraudulent billing, or prosecute those responsible.

For more:
- here's the Northern Illinois U.S. Attorney's statement
- read the DOJ statement
- here's the Law360 article