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The Avanti Law Group

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The Avanti Law Group: Federal crackdown on Medicare fraud in metro Detroit hits it big


The U.S. Department of Justice could dub 2013 the year its fight against Medicare billing fraud in Southeast Michigan yielded the first real payoff.


Last year, the Detroit Medicare Fraud Strike Force, deployed here from Washington, and a locally organized Health Care Fraud Unit of prosecutors together brought charges in fraud schemes billing more than $380 million to the federal program. That's more than double the bad billing amount charged in any preceding year.


It's been a slow build since the strike force came to Detroit in 2009 as part of the national Health Care Fraud Prevention and Enforcement Action Team, referred to as HEAT, to ferret out what data analysis suggested was hundreds of millions worth of fraud here.


The effort is gaining traction, according to both investigators and a Crain's analysis of local casework and Justice Data.


In 2013, federal prosecutors obtained 18 local indictments against 46 defendants in fraud schemes totaling $380.2 million — fueled by $225 million in unnecessary medical treatment attributed to oncologist Farid Fata — but even without that, higher than the previous record of $143.3 million in billings charged in 2011.


But more significantly, that figure approaches for the first time the billing volume that experts believe is likely fraudulent within the $5 billion-plus in annual Medicare expenditures in Southeast Michigan. Since the first indictments from the increased enforcement presence came down in June 2009, nearly 170 people have pleaded guilty and nearly three dozen were convicted by juries. Another 110 await a finding by a jury or judge this year, including three who are on trial this week before U.S. District Judge Arthur Tarnow.


Investigators said the success is due to a mix of cutting-edge surveillance and witness interviews that establish crossover points between one bad billing scheme and another.


Over time, Justice has begun to catch criminals before they close shop and change markets as in years past, and the trickle of closed cases has become a verifiable stream.


Feeling the HEAT


Local prosecutions from the national HEAT program, a collaboration between Justice and the U.S. Department of Health and Human Services, and by the local Health Care Fraud Unit, formed by U.S. Attorney Barbara McQuade in Detroit in 2010, have together roped in 341 defendants in $745 million of alleged fraudulent Medicare billing schemes to date.


"Based on Medicare spending data, we see per-beneficiary spending is going down in this market. One possible conclusion from that is we are indeed making headway," McQuade said.


"That's consistent with what we see, but a lot of the law enforcement community will tell you about the balloon effect, where squeezing one area (of fraud) makes another expand."


The decline in per-beneficiary spending is tentative — the most recent year available is 2010, but it shows that reimbursements from Medicare fell anywhere from $50 to $400 per enrollee in five Southeast Michigan hospital referral regions from 2009, which was the first year of strike force prosecution. The regions saw nothing but increases the preceding five years.


Even so, the $10,944 average expenditure per Medicare enrollee across the region is more than the average payout in 90 percent of the 306 regions tracked nationwide.


The per-beneficiary data is compiled by the Dartmouth Atlas of Health Care, a program of the Dartmouth Institute for Health Policy and Clinical Practice.


Since January 2011, McQuade said, the amount billed to Medicare for psychotherapy locally has gone down by 70 percent, and home health care has seen reduced billings, although billings are still generally high.


"We do have a recently intercepted conversation on wiretap, where two individuals were recorded saying they need to be more careful now because they're really cracking down in this area. That's encouraging," McQuade said.


"Does that mean criminals stop, or do they go elsewhere? That's hard to know. But when you do bring down some of the actors, you do seem to bring down at least some of the fraud occurring along with them."


Nationwide, more than 1,500 people have been charged since March 2007 in connection with more than $5.1 billion in Medicare billings, by the strike force in nine cities where software operated by HHS found disproportionate Medicare billing volumes believed to be due to fraud.


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