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A Whistleblower's Story: How Many Died? Reporting Medical Fraud of the Worst Kind!

Updated on July 21, 2021

The Birth of Capitation and the IPA

In the early and mid-1990's, medical HMO's(medical insurance companies) discovered that the cheapest way to provide medical care was to fully capitate payments; meaning that they paid a specific amount of money each month to a doctor or hospital or IPA per patient. Whether it was $5.00 or $100.00 per patient, the accepted theory was that the medical provider would receive the per patient payment and that was all they would receive every month, regardless of what treatment was being provided. The health insurance companies also believed that this method would stop unnecessary testing, specialty visits, hospitalizations and needless procedures, because the contracted providers would receive no extra money for extra care. I often wonder how many people died or were injured because of unscrupulous IPA's that flourished during those years. And there were some unscrupulous IPA's, believe me.

IPA's are Independent Practice Associations that were born as a defense to capitation. In most areas of the country, doctors and often the local hospital would join forces in a loose partnership to manage(ration) care. Primary care physicians were the gatekeepers. Usually, it was they who determined which patients would get specialty care, sophisticated testing, surgery or hospitalization. Many fully capitated IPA's set up utilization review committees which met on a regular basis. These utilization committees consisted of mostly primary care physicians who would review requests for additional patient care based on medical records submitted by specialists or even other primary care physicians. The committee met daily. An example to illustrate: A patient injured his back and his regular doctor would send a request for the patient to receive an MRI or CT scan which could possibly determine what and how extensive the injury was and then, be a basis for subsequent treatment, if any.

The physicians who joined the IPA's came in as stockholders, putting their patients into the pool. So each physician had a financial interest. The less money spent, the more money available to split. If an IPA came in well under budget, they would receive quarterly or annual bonuses from the insurance companies.

The individual health insurance companies had guidelines imposed regarding the treatment of their members. Request turn-around time was regulated and different for each medical insurance company. There were other guidelines, but they are not important for this story.

The committee would either approve or deny the request. There was also another choice of action. The committee could pend the request, asking for additional information. Each and every time a patient required care that went above and beyond what could be provided in the primary care physician's office, a request had to be submitted, accompanied by records that would support the need for the requested treatment. Requests for emergency treatment were handled a little bit differently. There was always (most of the time) an on-call doctor, so that if after the morning meeting a patient required something of an urgent nature, the on-call doc would be contacted, the medical record would be read to him or her and he would approve or deny. If the emergency arose and the on-call doctor could not be reached, the decision would fall to the utilization review coordinator for the specific health plan.

The IPA's usually handled all of the health insurance companies that capitated. Commercial(Aetna, Blue Cross, Blue Shield, Cigna, etc.) as well as Medicare Advantage plans (FHP, Secure Horizons, etc.) were included. The IPA being used as an example here had well over 70,000 patient members and about 200 participating physicians.

At this point, you may be bored out of your mind, but laying the foundation for what happened next is critical. If you belonged to an HMO back in the early 90's, this may explain denials of necessary medical care that you experienced.


When the System Promotes Fraud, Fraud Happens

I was the utilization review coordinator for the largest, now defunct Medicare Advantage plan in the IPA. Ten thousand patients, most of them senior citizens and many of them battling life- threatening medical conditions were my patient load. I was the person responsible for gathering and organizing the medical records, handling both the phone and written requests made by the physicians, reviewing the requests for evidence of medical necessity and then presenting completed requests to the committee. If the requests were incomplete or if they did not contain evidence of medical necessity, I would contact the office nurse and let her know what additional information would be needed to process the request. If there was an emergency and the on-call physician could not be found, I was the person who would authorize or deny the requested emergency treatment based on the information I received. I was also the person that was blamed for authorizing those treatments if they were later deemed unnecessary.

Favorite Remark Made By Management When Denying Care: Too Bad, So Sad!

When I took the job, I never realized what I was getting myself into, or the things I would see. I had worked for doctors and insurance companies before and had seen alot. I had worked for a large insurance company and seen fraud committed quite often. The desire for profit motivated many false claims. I was familiar with the Federal False Claims Act, but this was not claim related. What I saw was profit motivated, but it involved more than just money. This was money made based on the denial of necessary care. These patients had paid their premiums and were entitled to care, but were being denied. Yes, utilization is something that must be monitored and I am a firm believer that duplication, unnecessary testing and procedures are wrong, but this was necessary care, in my opinion.

The first indication I had that something was wrong was a Friday afternoon. One of my colleagues had received a call from a provider stating that one of their patients would run out of oxygen over the weekend and the patient required an emergency delivery. The manager and my colleague were arguing loudly. The manager was saying, "Look, the woman is going to die anyway, we'll just make it happen sooner." My colleague argued back that she was going to authorize the delivery. It met the criteria for necessary treatment. She authorized the oxygen delivery and soon after, resigned her position. There were so many other instances, one which struck me so deeply that I will never forget it. One young patient was 2 years old when she was attacked and mauled by a pit bull. The child was now 10. She had grown, but her surgery had not grown with her. She couldn't chew her food and was having constant jaw pain. The physician was requesting a revision of her plastic surgery and after review, the surgery was denied as cosmetic. Unbelievable!

Finally, it was my turn to take the heat. Ususally, I would just follow the medical necessity guidelines and approve care if it was warranted and covered. But this day was different. I approved not only a consult, but emergency hospital care. Of course it raised the red flags. It was lunch time and a physician called in for an emergency pulmonary consult for one of his patients. The patient was a Medicare Advantage patient, had stage 4 stomach cancer and was experiencing chest pain. He had come to see his primary care physician. I couldn't find the on-call physician and quickly reviewed the medical records that were faxed to me. The pulmonary doc was in the same office building as the primary doc. I authorized the pulmonary consult. Twenty minutes later, I authorized the ambulance service to transport the patient to the hospital and also authorized a direct admit. The patient, as I suspected, had a pulmonary embolism. I was so happy! I thought my quick action saved a life! It had, but that was not to be lauded. I was told that I violated protocol and I should have waited longer for the on-call doc to get back to me.

Late that afternoon, I contacted the FBI. I didn't know who else to call. The patient was a Medicare patient. The Federal government should have enforcement powers over this issue. I followed their instructions and began to monitor and document all of the denials that I thought were questionable. One week later, I met with 3 FBI agents. I gave them the information that I had and they told me to continue doing the same things. They, also, thought these denials were wrong. We scheduled another meeting and at that meeting they informed me that there were no laws on the books to govern this. IPA's were a relatively new thing and there were no federal guidelines or regulations in place to cover IPA's. They had concluded that this did not fall under the False Claims Act or any other regulations they could find.

Things got worse and worse, and after some digging, we found out that the doctors on the Board were greatly distressed because they were not going to make their yearly bonuses. It was ridiculous!

We Found An Employment Lawyer that Agreed with Us!

There were five of us that were either fired or quit our jobs as utilization review coordinators. Those of us that quit went through hell. We were harassed at work, intimidated, demoted and shunned by management and other employees.

We found a wonderful employment attorney and filed suit, based on constructive termination. The IPA settled with us out of court. To go to court would have meant opening themselves and the physicians up to malpractice lawsuits filed by the patients. Shortly after the settlement, the IPA filed for bankruptcy and closed down.

We didn't get rich; not even close, but that was not the point. We were regular people in a situation that required a choice. Either allow sick people to suffer even more or speak up and fight what we considered to be fraud and abuse. We made our choice. We went after them based on employment law and constructive termination. We had the patient care documentation that would have come into play.

There are laws in place now to cover IPA's so that these abuses shouldn't be happening anymore. Most IPA's are no longer fully capitated, so the motivation for IPA's to deny care for profit has been somewhat curtailed. During the early and mid 90's, if you had as little as $25,000.00, you and a few partners could open an IPA. There was one in Florida, probably the most notorious. Five men each put up $25,000.00. They started an IPA. During the year they were in business, they never paid a claim and they pended almost all requests for care. At the end of the year, they sold their interest in the IPA to a large corporation for $15 million dollars.

If You See or Suspect Fraud and Abuse, Report It!

If you are working in any area of the health care field and you see what you consider to be fraud, report it to the authorities. If you work in billing and collections for providers (doctors or facilities) and you know that medical billing fraud is being committed, especially with Medicare or Medicaid, you should contact a Qui Tam attorney to find out the avenues available to you. It is a difficult road, but you cannot participate in fraud. Not only do physicians end up going to prison, but in some cases, the government decides to prosecute office staff.


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