Here is a shocking statistic. Medicare pays more to ambulance companies than they do to cancer doctors. Much of that money, however, can be chalked up to fraud. The Centers for Medicare and Medicaid Services (“CMS”) and Justice Department have identified ambulance services as having one of the highest rates of Medicare fraud. Things became so bad that by 2013, regulators began issuing moratoria on licensing ambulance companies as eligible for Medicare coverage in Houston. The moratoria were later extended to other areas of the country and continue today.
The LifeStar case
Two weeks ago, the Justice Department unsealed another ambulance case, this one involving LifeStar Response Corporation. The allegations go back over a decade before LifeStar was acquired by Falck A/S, a Netherlands company that bills itself as the world’s largest “rescue” company.
The LifeStar case is in its infant stages meaning the company has not been found guilty of any wrongdoing. That case shares many commonalities with other Medicare fraud cases within the industry and, therefore, warrants more discussion. The allegations from the LifeStar case, and scores of similar cases across the nation, expose the dirty underbelly of the EMS world.
According to the LifeStar complaint, company officials bilked Medicare for ambulance transports that were not medically necessary. If doctors or nurses refused to sign medical necessity forms, called Physician Certification Statements, they were simply forged.
The LifeStar case is somewhat unique because the company is so large. With a nationwide presence, the company bills Medicare tens of millions of dollars a year. It isn’t the largest EMS provider in the country, however, nor is it the only to have faced accusations of fraud.
In 2006, the Justice Department settled Medicare fraud charges with American Medical Response (AMR). With 19,800 employees, AMR is one of the largest EMS providers in the United States. The company paid $9 million to settle allegations that it was engaged in illegal kickback or “swapping” arrangements with some hospitals in Texas.
Under that arrangement, the hospitals were able to free up beds and get patients home quicker or to assisted living facilities. The hospitals also received discounts from AMR. In exchange, AMR was billing Medicare for the services even if there was no medical necessity for the transport. The hospitals and AMR benefited from the scheme while honest competitors and taxpayers lost.
AMR apparently didn’t learn its lesson and paid an additional $2.7 million penalty in 2011 after being accused of inflating claims from two of its New York offices. In 2015, the company dodged a big bullet when a federal judge in Connecticut tossed a Medicare fraud suit against AMR on technical grounds.
Medicare fraud involving ambulance companies often appears to be clustered in certain geographic areas. One such area is Philadelphia where, since 2011, over 30 people and 8 ambulance companies have been implicated in federal fraud complaints.
Medicare and Medicaid will only pay for ambulance transportation when it is “medically necessary.” If the person can walk or if less costly methods of transportation exists, Medicare and Medicaid won’t cover the cost of an ambulance ride.
Complaints of unnecessary ambulance transports are common. One of the worst areas of abuse surrounds transports of dialysis patients.
People suffering from kidney failure must often visit a dialysis center twice a week. Most of these folks can drive. Even patients confined to a wheelchair rarely require transportation by ambulance.
A wheelchair van can cost $32 but taking a patient twice per week by ambulance can rack up a $1000 Medicare charge. Many ambulance companies fudge medical necessity paperwork to falsely indicate these patients need specialized transportation. Some even forge medical necessity forms or pay kickbacks to patients.
Last August, prosecutors convicted the owner, operator and managers of a Los Angeles ambulance company, ProMed Medical Transportation, for attempting to swindle Medicare of $2.4 million, most of that tied to medically unnecessary transports of dialysis patients. In June of last year, the Justice Department even prosecuted a patient in the Philadelphia area after finding that he was receiving kickbacks from a Philadelphia EMS provider, Brotherly Love Ambulance. (The owner of the company was also prosecuted and sentenced to prison.)
Their crimes? Giving rides to dialysis patients.
Nursing homes and hospitals are also part of the problem. Some nursing homes use ambulances like taxi cabs, shuffling non-ambulatory and elderly patients to and from physician and therapy appointments. Under CMS rules, a patient’s age and inability to walk are not dispositive of medical necessity. Again, wheelchair vans can do the job effectively and at a fraction of the cost.
Hospitals have a slightly different relationship. We have seen illegal kickback schemes between ambulance companies and hospitals. Ambulance companies want Medicare dollars and hospitals want patients moved quickly. Federal law prohibits kickbacks, whether they are paid as cash or disguised as exclusive provider arrangements. Healthcare decisions should be based on the need for services and medical necessity, not how much money can be squeezed from Medicare.
Hospitals and physicians can be liable even if there is no illegal kickback arrangement. Merely signing a false medical necessity form can land one in hot water. Last May, the Justice Department settled with five Jacksonville, Florida hospitals for improperly turning a blind eye to medical need forms presented by EMS providers. In announcing the settlement, a senior Health and Human Services spokesperson said,
“Hospital staff that certify the medical need for services when they are in fact not medically necessary fail in their role as gatekeepers of valuable taxpayer-funded health care programs.”
Yet another variant of the fraud scheme involves “upcoding,” a process that involves charging for a higher level of service than necessary. For ambulances, that means charging for ALS or “Advanced Life Support” when a transport only required BLS or “Basic Life Support.”
Prosecutors last year settled charges with a Florida EMS provider, Century Ambulance that upcoded some ambulance runs even though there was no medical need for an advanced level of care. In some instances, Century was accused of falsifying EKG results or billing for ALS transports even though the equipment allegedly used on the ambulance was inoperative. The company was turned in by one of its own employees, an EMT who said he was tired of the fraud.
The “epidemic” of ambulance fraud
The final chapter hasn’t been written in the LifeStar case. There have been many other examples of fraud within the EMS industry, however. So much fraud, in fact, that some FBI and Medicare officials call it an epidemic. One federal prosecutor described the private ambulance system this way,
“It’s a cash cow. It’s basically like a taxi service except an extremely expensive one that the taxpayers are financing.”
What can be done? CMS has increased its audits of ambulance companies. More whistleblowers need to come forward as well. Under the federal False Claims Act, whistleblowers can receive a percentage of whatever the government collects from wrongdoers. The 2006 AMR prosecution resulted in a whistleblower award of $1,620,000.00 to the two employees who stepped forward and originally reported the fraud. Many states have similar reward programs for false Medicaid billings.
One caveat, however, calling a toll-free Medicare fraud hotline won’t get you the big awards. For that, you must file a False Claims Act complaint.
Here are some books that you might find interesting (the TDWI team):