Texas doctor indicted in $375 million health care fraud scheme

CMS says new predictive modeling technology will help prevent Medicare fraud before payments are made.

By Alicia Gallegos , Charles Fiegl — Posted March 8, 2012

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The Justice Dept. has charged a Texas physician with bilking the government to the tune of nearly $375 million in what it says is the single-largest health fraud scheme exposed in the nation's history.

Emergency physician Jacques Roy, MD, is accused of recruiting fake patients to sign for medical treatments he never provided, then billing Medicare and Medicaid for the care. Dr. Roy, 54, owned and operated Dallas-based Medistat Group Associates P.A., an association of health professionals that provided home health certifications and patient home visits, according to the Justice Dept.

Between January 2006 and November 2011, Medistat certified more Medicare beneficiaries than any other medical practice in the country, the Justice Dept said in a statement. These certifications allegedly resulted in $350 million being billed to Medicare and more than $24 million being billed to Medicaid by Medistat and associated home health agencies for care that never was provided.

"The conduct charged in this indictment represents the single-largest fraud amount orchestrated by one doctor in the history of ... our Medicare Fraud Strike Force operations," said U.S. Deputy Attorney General James Cole. "Thanks to the historic partnerships we've built to combat health care fraud, we are sending a clear message: If you victimize American taxpayers, we will track you down and prosecute you."

Dr. Roy and other Medistat physicians allegedly certified and recertified plans of care so home health agencies were able to bill Medicare for home health services that neither were medically necessary nor provided. Dr. Roy also allegedly performed unneeded home visits and ordered unnecessary medical services as part of the scam. Home health agency employees working with Dr. Roy are accused of visiting homeless shelters and encouraging residents to sign bogus health care forms. Recruiters were paid $50 for each person they persuaded to sign the forms, according to the Justice Dept.

Dr. Roy is charged with one count of conspiracy to commit health care fraud and nine counts of substantive health care fraud. If convicted on all counts, he would face up to 100 years in prison. In addition to charges against the physician and his staff members, the Centers for Medicare & Medicaid Services has suspended billing privileges for 78 home health agencies associated with the alleged fraud.

New technology could prevent fraud

Meanwhile, recent federal investments in predictive modeling technology to fight Medicare fraud have led to millions of dollars being returned to the program, officials said.

CMS launched its fraud prevention system by July 2011, and predictive analytics are being used across the Medicare program. The effort has cost $77 million. The technology analyzes billing patterns and flags suspicious activity for billing denials and further investigation.

The Senate Homeland Security and Governmental Affairs Committee questioned the effectiveness of the system in a Dec. 19, 2011, letter signed by Sens. Tom Carper (D, Del.), Orrin Hatch (R, Utah) and Tom Coburn, MD (R, Okla.). In a Jan. 27 reply, CMS Center for Program Integrity Director Peter Budetti, MD, insisted that the new measures have improved the way the Medicare agency detects fraud.

"For the first time, CMS has a real-time view of fee-for-service claims across claim types and the geographic zones of its claims processing contractors," Dr. Budetti said. "CMS can now more easily identify fraudulent providers by detecting patterns and aberrancies."

The Medicare agency still is trying to gauge the full impact of its fraud prevention technology, Dr. Budetti said. By Nov. 30, 2011, the system had prevented $1.6 million in improper Medicare payments through prepayment audits that trigger automatic denials.

Predictive modeling also has been successful in identifying nine instances of fraudulent billing between July and November 2011. Those investigations led to the return of $2.2 million. By the end of 2011, CMS contractors had started 437 investigations based on leads generated by the system.

However, the total amounts are small compared with overall improper payments in Medicare. CMS estimated a total of $34.3 billion in improper payments from the fee-for-service program in 2010.

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