Confidentiality Cloaks Medicare Abuse

Wall Street Journal
By MARK SCHOOFS And MAURICE TAMMAN

Christopher G. Wayne doesn't look like a typical family-practice doctor. Known to admirers as the "Rock Doc," he wears his hair spiked, punk style, and festoons himself with chains, bangles and leather bracelets.

He uses his upscale Miami Beach home as a production studio for Playboy photo spreads, and his MySpace page shows him posing with celebrities such as Paris Hilton and Aerosmith's Steven Tyler.



There's something else about Dr. Wayne that doesn't resemble a normal family-practice doctor: his earnings from Medicare, the government insurance program for the elderly and disabled. Dr. Wayne took in more than $1.2 million from Medicare in 2008, according to a person familiar with the matter, a large portion of it from physical therapy. That's more than 24 times the Medicare income of the average family doctor, according to a Wall Street Journal analysis of Medicare-claims data.

The regimen of physical therapy Dr. Wayne said he usually provided—30 minutes each of heat packs, massage, electrical stimulation and ultrasound—is also unusual.

Stephen Levine, a former board member of the American Physical Therapy Association, said those services are usually used in conjunction with more sophisticated forms of therapy, such as neuromuscular reeducation. Used on their own, with rare exceptions, "it's a form of abuse," said Mr. Levine. "Wouldn't we all love to…have someone rub our backs and have the government pay for it—but it's just not appropriate," he added.

Dr. Wayne, a 50-year-old osteopath, denies abusing the system and hasn't been accused of wrongdoing by authorities. He says his regimen "does wonders" if used correctly. He adds that he gave physical therapy to "patients who needed it, with appropriate diagnoses, and I should get paid for it."

Medicare administrators apparently felt otherwise. In 2009 he says he was placed on heightened scrutiny and eventually sold his business. But not until he had received more than $2.6 million from Medicare between 2007 and 2009, according to the person familiar with the matter.

Physical therapy, which cost Medicare almost $3.5 billion in 2008, offers a case study in how Medicare polices its payments. Even when Medicare identified providers whose physical-therapy billing raised red flags, it kept paying thousands or even millions of dollars, sometimes for years, The Wall Street Journal found. Among the cases:

•A physical therapist in Brooklyn who billed for so much therapy—more than $2.5 million in 2008 alone—that it would have been virtually impossible for him to have performed it all within state and Medicare guidelines, fraud experts say. Medicare has continued to pay him, shelling out nearly a million dollars through July of this year.

•A second doctor in Florida who pocketed more than $1.8 million from Medicare in 2007, much of it from physical therapy on patients with an extremely rare condition. Even after a Medicare antifraud contractor flagged this doctor, the agency paid him at least $6.7 million over more than two years.

•A Houston doctor whose Medicare billing under her provider number spiked from zero to more than $11.6 million in less than a year. At the time, this doctor was being investigated for misconduct in a company owned by a Nigerian with an alleged history of fraud.

There are plenty of reasons why Medicare often fails to stop questionable payments up front. To protect law-abiding doctors and hospitals—the vast majority—Medicare is required to pay nearly everybody within 30 days. Medicare says it is reluctant to suspend payments to providers who may have made honest mistakes, out of concern that beneficiaries might go without needed treatment. Law-enforcement agencies and Medicare contractors, overwhelmed by the sheer volume of Medicare fraud cases, can't investigate and prosecute them all. Sometimes, prosecutors and investigators ask Medicare to keep paying so as not to tip off targets of an investigation.

But a central problem is that Medicare hasn't fully exploited its most valuable resource: its claims database, a computerized record of every claim submitted and every dollar paid out.

"That's really the crux of the issue," said Kimberly Brandt, who led Medicare's antifraud efforts from 2004 through June of this year. She said the program is "definitely on the right path" to making better use of its database, "but it's not going to be a flip of the switch or an easy transition."

The Wall Street Journal originally identified Dr. Wayne and the other medical providers discussed in this article through a Medicare database that is much more limited than the one available to fraud investigators. The database, obtained in conjunction with the nonprofit Center for Public Integrity, contains records only through 2008, and includes the claims of just 5% of randomly selected Medicare beneficiaries.

Under a three-decade-old court decision protecting physician privacy, Medicare is prohibited from releasing to the public details of doctors' billings. The Journal agreed not to publish individual physician billing information obtained solely through the database as part of its arrangement with the Centers for Medicare and Medicaid Services, or CMS. Billing figures for doctors named in this article were obtained from the providers themselves or from others familiar with their businesses.

Some law-enforcement veterans argue that the government should release billing data to the public as a deterrent to fraud and abuse, so long as patient confidentiality isn't compromised. Kirk Ogrosky, a former assistant U.S. attorney specializing in health-care fraud and now a partner at the law firm Arnold & Porter LLP, says law enforcement can't do all the work on its own. He adds that when doctors "understand their billing information is public and people can examine it, that deters them from overbilling."

Peter Budetti, the head of CMS's new antifraud arm, says Medicare is moving away from its traditional "pay-and-chase" approach, in which it tries to recover improper payments already out the door. He says he'd like to emulate the credit-card industry, which has developed software to flag suspicious charges before paying them. "Fraud prevention is our new emphasis," he said.

The main responsibility for flagging fraudsters lies with a network of private contractors that are tasked with mining the data.

There are occasional false alarms. About two years ago, a claim for a prostate exam performed on a woman raised suspicions, according to executives at one Medicare contractor. It turned out to be a legitimate case because the patient had undergone a sex-change operation.

The final line of defense is law enforcement. The Bush and Obama administrations have expanded multiagency strike forces—called HEAT, for Health Care Fraud Prevention and Enforcement Action Teams—into new cities beyond their original base in southern Florida. In contrast to most previous efforts, these teams mine claims data to decide which cities, types of fraud, and providers to target. Since March 2007, federal health-fraud prosecutors with these strike forces have charged more than 850 defendants for alleged frauds exceeding $2 billion in billings, according to the government.

Overall, the highest-dollar schemes have involved pharmaceutical and drug-company fraud, followed by hospital scams, according to data from the Health and Human Services inspector general. Recently, physical-therapy abuse has cropped up on the federal radar screen. Law-enforcement authorities were so alarmed by the physical-therapy billing patterns in Brooklyn that they deployed a special strike force there. In Florida's Miami-Dade County, a known Medicare-fraud hot spot, 2009 per-patient expenditures on outpatient therapy were triple the national average, according to CMS.

A Journal analysis of the 5% database focused on the physicians and physical therapists in private practice who performed the most physical-therapy treatments per patient. Only 3% of providers administered 90 or more treatments per patient; the national average was about 40. That top 3% accounted for more than 14% of all Medicare physical-therapy expenditures from 2003-2008, or an estimated total of nearly $1.3 billion. While some of that billing would be legitimate, said Mr. Levine, much of it would likely be abusive or fraudulent.

One Florida physician—not Dr. Wayne—made almost all his money from physical therapy, according to the Journal's analysis of the 5% database. According to separate billing totals reviewed by The Wall Street Journal, this internal-medicine doctor took home more than $8.1 million from Medicare from 2007 through 2009.

The Journal cannot name this doctor because the paper was able to learn a crucial piece of information about his practice—the type of disorder he billed for—only from the database, not from any other source.

From 2006 through 2008, more than 40% of this doctor's patients in the database were described as suffering from brachial neuritis. That's a rare nerve-and-muscle condition estimated to occur in about three out of every 100,000 Americans. In 2008, the Florida doctor earned at least 25% more from brachial neuritis patients than any other provider, according to the Journal's database analysis.

A contractor in charge of ferreting out fraud in Florida—SafeGuard Services LLC, owned by Hewlett-Packard Co.—flagged this doctor for heightened scrutiny at least as early as June 2007. But it wasn't until September 2009 when Medicare stopped paying nearly all of his claims, according to a government official with knowledge of the matter. During that time, Medicare paid out more than $6.7 million to this doctor, according to the billing totals reviewed by the Journal.

Officials from SafeGuard and CMS declined to comment, citing the policy against discussing any particular provider.

In the 1990s, this doctor filed for bankruptcy. On a recent morning a Porsche and a late-model Mustang sat in the driveway of his spacious middle-class home. Asked about his medical practice, the doctor said, "I don't have anything to say to you," and shut his door.

The Journal's analysis suggests one center of intensive physical-therapy billing is Houston. That's where Dr. Theresa Rice works. Dr. Rice, who is in her late 70s and received her medical degree in the Philippines, has been licensed to practice medicine in Texas since 1981, public records show.

In 2004, she was convicted of shoplifting $748 in jewelry from a Foley's department store. In an interview, Dr. Rice at first denied the conviction, saying there must have been a computer error. After being told that the Journal had her booking photo, she admitted that she had shoplifted. "I lied to you," she said.

In 2007, the Texas Medical Board began probing Dr. Rice for her involvement in a business owned by a Nigerian businessman "who has a history of fraudulent activity, and is sought by authorities under several known aliases," according to a Medical Board document. Dr. Rice approved home health services based on patient assessments made by an unqualified physician assistant, and she could provide no medical records for those patients, the Board found.

Dr. Rice said she was duped in that case, an explanation the Medical Board accepted. She was fined $1,500 and required to take a course in medical ethics, according to the Medical Board document.

Dr. Rice billed Medicare nothing in 2007 for services she performed or supervised, according to a person familiar with her business. But starting in October 2008, billing under her provider number skyrocketed. In less than a year, Medicare received claims totaling over $11.6 million and paid out more than $7.1 million.

Medicare stopped paying in mid-2009, when federal investigators shut down the clinic where she worked, City Nursing. That clinic was owned by a different Nigerian businessman, Umawa Imo. At least seven people have been indicted on health-fraud charges connected to the clinic, in what a senior law-enforcement official called the largest physical-therapy fraud in Houston history. The alleged scheme involved several people of Nigerian descent as well as at least two American doctors, according to the federal indictment and law-enforcement officials. Medicare paid out about $27 million over 28 months, according to the indictment.

Dr. Rice wasn't indicted and maintains she was duped again. Mr. Imo has pleaded not guilty to health-care fraud and conspiracy charges. His lawyers said he is innocent and trusted the people running the clinic.

Short of an audit or investigation, there is often no way to tell who actually performs physical therapy. That's because doctors who "directly" supervise physical therapists—meaning the doctor is in the same office suite at the same time the therapy is being performed—don't need to state on the claim form who administered the therapy. It's billed as if the doctor performed it.

In the case of City Nursing, the clinic where Dr. Rice worked, an affidavit for a search warrant alleges there was only one physical therapist. The indictment charges that patients were paid to sign documents saying they had received physical therapy that never happened.

Dr. Rice is now working at a storefront operation called Clinica de la Familia. A CMS spokesman said she's no longer eligible to get paid by Medicare and declined to provide further details. Of her current clinic, Dr. Rice said, "We are not doing any fraudulent thing."

Federal authorities say that in Brooklyn, physical-therapy abuse appears to be especially rife among Russian immigrants. A Journal analysis of the 5% database shows that eight of Medicare's 30 top-earning physical therapists work in Brooklyn. Seven of them have names that seem Russian or from neighboring nations.

Brooklyn physical therapist Aleksandr Kharkover billed Medicare for more than $2.5 million in 2008, according to a person familiar with his business, and received more than $1.8 million.

On an autumn weekday at about 9:00 in the morning, two Journal reporters arrived at Mr. Kharkover's home, a brick bungalow. He appeared in a white T-shirt emblazoned with the slogan, "Freedom isn't free." Asked if billing $2.5 million to Medicare fit with his records, he replied, "I'd say that fits."

Mr. Kharkover and two people familiar with his practice said he sees patients only in their homes. Fraud experts say this makes it virtually impossible for him to have legitimately billed such high amounts.

New York State allows a physical therapist to supervise only two assistants on home visits, and the therapist must be in the same home at the same time as his assistants, according to New York State and Medicare officials. Unless Mr. Kharkover held therapy sessions in which several patients congregated in one home, he would effectively be limited to billing little more than what he himself could perform.

Under generous assumptions, a single therapist could earn $1 million from Medicare in a year by working 12.5 hours a day, seven days a week, with no time off. Medicare paid Mr. Kharkover more than $960,000 in the first seven months of this year, according to the person familiar with his business.

CMS and its main New York antifraud contractor, SafeGuard Services, declined to comment on Mr. Kharkover.

Mr. Kharkover declined a second interview. His attorney, Montell Figgins, said his client is a "successful businessman," adding that "there is no reason to believe my client was doing anything illegal."

As for Dr. Wayne, he said he expanded physical therapy at his clinic near Miami's design district because his patients needed it. Medicare regulations require that physical therapists billing under a physician must have completed an accredited physical-therapy education program. But Dr. Wayne said he trained his "office girls" to do the work in part because hiring full-fledged physical therapists was too expensive.

Referring to Medicare's therapist-education requirement, he said, "I interpret that as, 'If I train them in physical therapy, that should be good enough.'"

Dr. Wayne acknowledged grossing $1.1 million or $1.2 million from Medicare in 2008, and estimated his take-home that year from his clinic was roughly $400,000. He said his Medicare reimbursements plummeted after March 2009, when he says Medicare tightened scrutiny of his billing. According to the person familiar with the matter, Medicare paid only about 12.5% of his claims in the second half of 2009.

Dr. Wayne said he is appealing many of the denied claims, but that the drop in Medicare reimbursements and other business issues led him to sell his practice and caused him financial distress. On a recent evening, he opened envelopes from a bank, and said they were notices of bounced checks.

Still, full-scale replicas of medieval knights' armor greet guests at his home, and hanging on the walls are what he said are two original Picassos, several Dalis and photographs by Helmut Newton. Also present recently was Eliza Carson, a Playboy model who said she's 20 years old. She barely glanced up from texting on her phone as she asked Dr. Wayne how he managed to keep his hair spiky when he sleeps. He explained that he uses an airplane pillow.

Dr. Wayne now works in a pain-management clinic in Fort Lauderdale. He said he doesn't have a board certification in pain management, and said the clinic accepts only cash. Of his patients at the clinic, Dr. Wayne said, "I write their pain prescriptions, and they're gone." If you are having any divorce or family law issues including medicare plans in any state in the USA and need expert legal consultation, we recommend this Nashville Divorce Lawyer