Lessons to Learn From Federal Convictions of HBOT Fraud

  In October 2000, the US Department of Health and Human Services Office of Inspector General (OIG) released its report Hyperbaric Oxygen Therapy: Its Use and Appropriateness. Despite the title’s suggestion, the federal government did not expend time and resources to tout and promote the merits of a medical treatment to the American citizenry. The report instead was an investigation — and more of an indictment of healthcare providers — on the inappropriate application and billing to the Centers for Medicare & Medicaid (CMS) of a treatment that had heretofore received little attention by CMS, but much in the way of financial reimbursement. Short of being explicit of the OIG’s intent, the report provided warnings in the form of ominous statements of the direction the federal government — specifically, CMS — would go in its recommendations to prevent inappropriate and overpayment for hyperbaric oxygen therapy (HBOT). Yet, arguably (for the most part), the HBOT field as a whole did not appear to show much concern for the report except for a vigilant few within academic and medical societies who tried to sound the alarm. When Medicare approved of diabetic foot ulcers (DFUs) as an accepted and reimbursable indication for HBOT in 2002, and then implemented in 2003, a steep proliferation in the number of hyperbaric oxygen chambers and treatments was seen — a result of wound care centers that decided to get into the lucrative business of HBOT now that one of its “bread-and-butter” pathologies had been accepted for a highly reimbursable treatment. The OIG saw this coming and warned in its report that there would be a sharp and substantial rise in the number of inappropriate and excessive reimbursements paid out once this occurred. Those excesses did occur, so much so that HBOT was among the items singled out in the OIG’s 2005 Orange Book,* a periodic report to Congress that identified significant, non-monetary administrative recommendations described in previous semiannual reports to Congress with respect to problems, abuses, or deficiencies for which corrective actions have not been completed among US Department of Health & Human Services’ programs. In the 2005 Orange Book, the OIG explicitly declared: “Eliminate inappropriate payments for hyperbaric oxygen therapy.” The federal government did not get to this determination regarding HBOT without cause. Taking a respective look at both the 2000 HBOT report and the 2005 Orange Book, the table above lists certain OIG significant findings.

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Identifying Fraud

  In its most basic form, the federal government distinguishes between Medicare fraud and Medicare abuse, but both carry penalties, fines, and/or imprisonment. Medicare fraud is defined as false statements or misrepresentation of facts to obtain benefit or payment. Examples include billing for services or supplies that were not furnished or provided and altering of claims or receipts to receive higher payment. Medicare abuse is defined as any direct or indirect action that results in unnecessary costs to the Medicare program. Examples include misusing codes on a claim, charging excessively for services or supplies, and billing for services that were not medically necessary.

  HBOT is neither the first, the last, nor the most egregious of arenas in which healthcare fraud has occurred. However, while worse has transpired elsewhere, fraud as it relates to HBOT can be pursued by different entities since one does not have to be a direct healthcare provider or working within a hospital to own a chamber and proceed forward in fraudulent schemes. A layperson could buy a chamber, set up shop, and find “creative ways” to bill Medicare, for example. A management company could procure many monoplace chambers, establish “wound and hyperbaric centers,” and coerce staff to apply “creative means” to bill. Business arrangements with hospitals, whereby the managing company directs all protocol and billing yet leaves the hospital in position to incur potential liability as the entity of record submitting reimbursement claims, can also occur. Hospital administration or providers seeking to increase revenues could establish an ancillary service for which it could “imaginatively bill.” Among those who commit fraud, rationalization and denial are common excuses, as is attempting to claim ignorance of or administrative distance from the actual fraud. However, the federal government is very clear: Ignorance of fraudulent or abusive actions is not a release from culpability or responsibility. It is important to remember that the party held legally responsible for fraudulent action is the individual or entity submitting Medicare claims. Those who receive inaccurate or improper billing advice from management companies or other individuals cannot convey their liability to those third parties.

Cost of Fraud

  Medicare/Medicaid fraud and abuse is a multibillion-dollar industry, the monetary loss of which the federal government has been particularly resolute over the last seven years to curtail and to recover. To this end, the Medicare Fraud Strike Force launched in 2007 as a multi-agency team of federal, state, and local investigators in nine cities. HBOT became a specific target. Six years later, in 2013, the expanded Strike Force recovered a cumulative $5.5 billion in fraudulent payments in all areas of healthcare fraud. In fiscal year 2014 alone, $3.3 billion was recovered. At a return of investment of more than $7 for every $1 spent, the federal government is immensely incentivized to investigate and prosecute healthcare fraud. While CMS administers Medicare and Medicaid, it does not investigate or police those who utilize Medicare or Medicaid — that is the job of the FBI, which then works with other investigative bodies, including the Strike Force. Employing several laws and statutes to protect Medicare (eg, False Claims Act [qui tam, “whistleblower”], Anti-Kickback Statute, Stark Law, Social Security Code, and US Criminal Code), the Department of Justice then prosecutes fraud and abuse cases, which include civil and criminal healthcare fraud. Healthcare fraud investigations begin as civil cases that can then rise to the level or standard of criminal based upon fraud severity, which takes into account the level of intent to defraud as well as the monetary sum. When federal prosecutors determine that criminal statutes apply, the case will inevitably result in a criminal indictment and a criminal trial, assuming a trial is even reached. The overwhelming majority of cases are pleaded out, because the federal government invariably wins in healthcare fraud cases and defendants invariably lose. And in a criminal case, there will be a prison sentence.

Implication of Fraud Cases

  A number of specific fraud cases related to the use of hyperbaric oxygen therapy (HBOT) demonstrate just how seriously and/or severely the federal government approaches healthcare fraud. Consider:

  US ex rel. Vrabel v. Tomball Regional Hospital and Emanuel Paul Descant II, MD, 2007
  Allegation: Defendants billed and received payment of HBOT for services not rendered and for diagnosis codes not supported by documentation. Physician of record was not in attendance of hyperbaric oxygen treatments.

  Action Taken: Former employee of Tomball Regional Hospital in Texas filed qui tam lawsuit under the False Claims Act, which the US joined.

  Legal Resolution: Hospital and Descant settled under the False Claims Act:
    • $796,422 Medicare damages (3x the single damages);
    • $19,658 Medicaid damages (3x the single damages); and
    • hospital entered corporate integrity agreement (CIA) with OIG, completed in 2012.

  Aftermath: Physician still in practice.

  US v. Chaunsay Beckwith (International Alternative Medicine Inc., Atlanta), 2008
  Allegation: Defendant owned and operated Atlanta clinic conducting HBOT without holding medical license of any type. From 2003-07 submitted $1,577,827 in claims and was paid $1,035,144 from Medicare and private insurance. The claims included diagnostic codes for central retinal artery occlusion, arterial gas embolism, venous gas embolism, and acute arterial insufficiency that patients did not have.

  Action Taken: Criminally indicted on 35 counts of healthcare fraud.

  Legal Resolution: Guilty plea accepted to one count of healthcare fraud. Sentencing included
    • five years in prison;
    • $1 million in restitution; and
    • 50 hours of community service.

  US v. Winnie Joanne Barefoot (Advanced Hyperbaric Oxygen LLC), 2012
  Allegation: Defendant, aka Winnie JoAnne Conn, aka Winnie Jo Budzina, aka Joanne Knopsnyder, aka Olivia JoAnne Morgan, aka Olivia JoAnne Barefoot Morgan, a “serial fraudster” of real estate, business loans, Social Security, and bank fraud, hatched schemes in Maryland from 2002-10. Through fraudulently obtained funds started and operated two HBOT chamber businesses from 2007-10. Billed for physician HBOT sessions (Current Procedural Terminology [CPT] 99183) along with physician evaluation and management (E/M) services when none were provided.

  Action Taken: Criminally indicted for fraud schemes totaling:
    • overall fraud = $2,659,430;
    • Medicare loss = $75,814;
    • CareFirst BlueCross BlueShield = $433,956;
    • Aetna Inc. = $354,736; and
    • Humana Inc. = $7,924.

  Legal Resolution: Guilty plea accepted. Sentencing included:
    • five years in prison; and
    • full restitution of $2.66 million.

  US v. Hutchinson Regional Medical Center (formerly Promise Regional Medical Center), 2013
  Allegation: From 2007-11, while known as Promise Regional Medical Center (Kansas), defendants billed and received payment from Medicare for HBOT services that were not medically necessary or lacked adequate documentation of medical necessity. Reimbursement claims resulted from kickback arrangements between the hospital, at least one of the physicians, and the company that managed and supplied the chambers.

  Action Taken: Hospital administration denied the allegations and did not admit to any wrongdoing, but agreed to settle the allegations of the False Claims suit.

  Legal Resolution: Civil penalties as of September 2013:
    • Hospital agreed to pay $835,651 in addition to amount already previously refunded to Medicare (total settlement = $1.7 million); and
    • Hospital entered into CIA with the OIG.

  US v. Stanley Thaw, Michael Kincaid, Kernell Thaw (HBO2 Works, TX), 2013-14
  Allegation: Non-physicians Stanley and Kernell Thaw and Kincaid owned and operated HBOT businesses in Hurst, Houston, and San Antonio, TX, that they contracted to and managed for hospitals. Due to the prohibition of the corporate practice of medicine in Texas, claims for physician reimbursement from Medicare were submitted under Cross Hyperbaric of Texas rather than through the company. “Physician A” did not treat any patients and was not involved in the business of Cross Hyperbaric of Texas, but was paid by Stanley Thaw and Kincaid to use his Medicare provider number to seek reimbursement and to sign his name to all Medicare documents. From 2008-11 Medicare was billed for each single physician supervision and attendance of HBOT as 2-6 sessions (usually two) of CPT 99183 although only one treatment was done daily. In August 2008, a healthcare consultant hired by Stanley Thaw and Kincaid to audit the company’s billing and collections found and reported to Stanley Thaw and Kincaid that CPT 99183 could only be billed once per session and that the company had been significantly overpaid and should refund those payments to Medicare. Stanley Thaw and Kincaid did not repay Medicare and instead billed E/M codes levels 3-4 along with CPT code 99183 for each daily HBOT treatments. In December 2008, a physician contracted with HBO2 Works notified in writing to Stanley Thaw and Kincaid that it was improper to bill Medicare for two sessions of physician supervision and attendance under CPT 99183 when a patient only received one treatment. Double billing under CPT 99183 continued to be submitted for reimbursement.

  Action Taken: Criminal indictments handed down in September 2012 included:
    • Stanley Thaw and Kincaid
      • five substantive counts of healthcare fraud;
      • one count of conspiracy to commit healthcare fraud; and
      • one count of money laundering.
    • Stanley Thaw and Kernell Thaw:
      • three counts of making false statements to a financial institution; and
      • one count of money laundering.

  Legal Resolution: Court trial initially sought by defendants, but plea agreement ultimately reached and included:
    • Stanley Thaw and Kincaid:
      • guilty of conspiracy to commit healthcare fraud.
    • Kernell Thaw:
      • guilty of conspiracy to make false statements to a financial institution.
    • Criminal sentencing in June 2014 included (Stanley Thaw and Kincaid):
      • five years imprisonment and
      • restitution of $1.5 million.

  Taking a particular look at one case, US v. Stanley Thaw, Michael Kincaid, Kernell Thaw, the fraud consisted of double (or more) billing of the Current Procedural Terminology (CPT) 99183 code and employing the evaluation and management (E&M) code of a regular office visit in conjunction with each instance of CPT 99183 billing for the actual hyperbaric oxygen (HBO₂) treatment. Though CPT 99183 is not a time-based billing code, Thaw et al ascribed each hour of treatment as one session and billed for a minimum of two sessions of HBOT for each patient each day.

It is important to remember that an advanced practitioner supervising HBOT should bill the CPT code 99183 only one time for an HBOT session, regardless of air breaks or the length of time for which the treatment order occurs.

  The second fraudulent activity committed by Thaw et al was in employing the E&M office visit code simultaneously with the CPT procedural code. This should raise concerns for those delivering HBOT who are engaged in this very activity. While a private insurer has been known to be persuaded to allow the E&M charge when some form of wound care is provided on the same day as an HBO₂ treatment that is billed under CPT 99183, Medicare and its respective local coverage determinations (LCDs) have not. It is likely to be difficult to explain and to justify to CMS the daily application of E&M billing codes along with the daily CPT 99183 for HBO₂ treatments. It does not matter how the hyperbaric or wound care communities interpret the rightfulness of the employment of the E&M code on a daily basis with the daily CPT 99183, it only matters how Medicare views the application of daily E&M billing codes for reimbursement along with the daily CPT 99183. Further, the physician who allowed his Medicare number to be used by the company for reimbursement was fortunate in that he was not held accountable. The federal government is increasingly prosecuting physicians who have allowed their Medicare numbers to be fraudulently used for billing purposes. Physicians need to understand they are liable for the use of these billing numbers. For their fraud, Thaw and Kincaid were sentenced to five years imprisonment and with $1.5 million restitution.

  The civil case of US v. Hutchinson Regional Medical Center exhibits an important issue previously stated: The party held legally responsible for fraudulent activity is the individual or entity submitting Medicare claims. Hutchinson, like many hospitals across the country that do not operate their own HBOT services, entered into a contractual arrangement with a management company to provide wound care and HBO₂ to wound patients. In these contracts, it is the hospitals that submit claims for treatments using the time-based technical component Healthcare Common Procedure Coding System (HCPCS) code C1300. The hospitals in turn pay the contracted management company, either before or after the hospitals themselves are paid by CMS, depending on the contract. The C1300 facility code may only be submitted when HBO₂ treatments are conducted in hospital outpatient departments and cannot be used by freestanding facilities. This is why wound management companies seek a business partnership with hospitals to provide HBOT, either alone or tied to wound care, because without that arrangement management companies would not be able to obtain reimbursement from the technical billing of HBOT. The hospitals rely on the management companies to manage HBOT and to direct the hospitals on business operations.

  However, regardless of the way in which a management company or consultant may have directed the wound center, the hospitals incur the liability as the entity of record for facility charges. Hutchinson contended that there was no intent to commit fraud or to furnish illegal kickbacks, but that there were unintentional documentation errors that resulted in billing impropriety. Hutchinson discontinued its affiliation with the particular management company, but it was the hospital that incurred the penalties of the False Claims suit and the obligations of a corporate integrity agreement (CIA) with the OIG.

  Physician practices in similar business arrangements are not any less liable. If a physician is associated with a hospital receiving poor consultation from a management company, new CMS regulations allow Recovery Audit Contractors to recoup fees paid to the physician if the hospital’s claims have been discovered to be improperly paid, and vice versa. If a hospital’s claims are improper, the physician’s reimbursements are at risk. If the physician’s claims are improper, the hospital’s reimbursements are at risk. Hospitals and physicians carrying through with improper or faulty billing advice from consultants or management companies cannot transfer responsibility for their submitted claims to the entities who had provided them with the poor advice.

  The case of US ex rel. Vrabel v. Tomball Regional Hospital and Emanuel Paul Descant II, MD, evidenced one of the OIG’s major concerns regarding inappropriate delivery of HBOT. The hospital arranged with a retired physician to be in attendance at HBO₂ treatments in order to satisfy the CMS requirement of immediate physician availability. However, the hospital permitted Descant to bill for the hyperbaric chamber supervision, even though he was seeing his own patients across the street in his private office, in order to reward him for having referred most of the patients from his busy practice. Hospital officials felt they had met their obligation to ensure the treatments were attended and bore no responsibility for the fact that a physician who was not in attendance billed for the service. The OIG stated in its 2000 HBOT report that 74% of the payments deemed to be “inappropriate” by OIG physician reviewers did not appear to have a physician in attendance. Lack of physician attendance or questionable monitoring during active HBO₂ treatments raised quality of care concerns and caused CMS to impose stricter criteria of a physician being “immediately available” during every HBO₂ treatment so that any medical complication or safety issue can be quickly managed by the physician. While “immediately available” has not been defined by CMS as the tethering of the physician to the chamber — and there is still debate within the hyperbaric community as to what constitutes “immediately available” — CMS is clear that it would be fraud to claim CPT 99183 physician attendance of HBO₂ treatments when the physician is in another building a distance away.

  In a recently announced case on Oct.16, 2014, Our Lady of Lourdes Memorial Hospital in Binghamton, NY, self-disclosed billing improprieties for its HBOT services to the federal government. The hospital paid almost $3.4 million to resolve its False Claims Act liability for overpaid services. Lourdes acknowledged that it was overpaid by Medicare for services rendered by a third party in a facility that failed to satisfy the requirements for “provider-based status” set forth in federal regulations. Upon its discovery through an internal audit of the improper billing, the hospital took corrective steps and reported itself to the government. For voluntarily reporting itself and cooperating throughout the government’s investigation, the hospital was required to pay far less than the treble damages and penalties that the US seeks under the False Claims Act.

  Furthermore, due to the self-disclosure, the OIG decided Lourdes would not have to enter into a CIA. The corrective action taken by Lourdes is an example of what ought to be done when billing improprieties occur.

  These detailed cases and the outlined fraud cases typify the concerns of the OIG in its 2000 HBOT report and the 2005 Orange Book. The cases may seem to be a small number of HBOT fraud cases compared to other fields when taken as an absolute number, but in actuality, when considering the relative newness of the specialty and the comparative number of patients who receive HBOT yearly, this is considered to be a high rate of healthcare fraud from the viewpoint of the federal government and from those who investigate and prosecute cases.

  These fraud cases should serve as prime teaching examples of what not to do with HBOT. They also serve to illustrate how fraudulent HBOT billing can originate from a variety of sources: laypeople who operate HBOT without a medical license; physicians who accept payment for the use of their Medicare billing number; physicians who bill for HBOT supervision and attendance even when they do not provide this service; hospitals that operate their own HBOT program submitting claims for services not rendered; hospitals that submit improper claims for outsourced HBOT services under the faulty guidance of contracted management companies or consultants; and management companies that directly submit fraudulent claims for physician services. These are the known types of fraud that have been prosecuted. The OIG report outlines a number of activities based on overuse and improper use. Other schemes are known to have occurred, some of which are currently under investigation while others have not yet been prosecuted.

Consequences of HBOT Fraud

  As HBOT reimbursement decreases and coverage is eliminated entirely for many indications in certain areas across the country, the temptation may arise to search for an alternative path to bill for HBO₂ treatments or to augment reimbursement in ways that may not be appropriate. Lack of self-policing and poor uniform adherence to standards in the field have enabled this juncture. Hyperbaric medicine centers, individual physicians, hospitals, and other entities that administer HBOT appropriately are tainted by the fraud and disreputable activities that have stigmatized an entire industry. Nonetheless, it is no accident that HBOT is in its current state of microscopic scrutiny. The actions of some have had and will continue to have consequences for all. Capturing fraud after the fact does not solve the problem of the billions of dollars misappropriated that now must be recovered by the federal government and insurance payers through subsequent work, time, and cost expenditure.

  Medicare Administrative Contractors, state health regulators, and private insurers have been dissecting HBOT coverage and reimbursement with the result being a variety of restrictions placed on HBOT coverage. An example of such restriction is the elimination of all but four of the 14 indications by BlueCross BlueShield of Tennessee for which HBOT was previously covered in that state. There is reason to believe other carriers will follow suit. In early November 2014, the Oregon Health Authority finalized its coverage decision for HBOT and reversed coverage for three indications. On Nov. 21, 2014, CMS announced the implementation of a Medicare prior authorization process for nonemergent HBOT rendered in three states (Illinois, Michigan, and New Jersey) for three years beginning March 1, 2015. As stated by CMS, “these states were selected as the initial states for the model because of their high utilization and improper payment rates for this service.” The plan is to test whether prior authorization will help reduce expenditures and reduce utilization of services that do not comply with Medicare policy by ensuring claims are not submitted for payment until after all relevant clinical and medical documentation requirements are met.

  CMS’s choice of these three states is notable for what it suggests about how HBOT fraud has evolved across the country. In 2000, the OIG noted in the HBOT report that the highest rates of use occurred in Colorado, Texas, Louisiana, and Mississippi. The mostly coastal states made sense since hyperbaric chambers were initially placed in areas where recompression HBOT would be necessary to treat decompression sickness experienced by divers and offshore workers. As indications for HBOT expanded, so did the entry of additional providers and chambers surrounding these areas. The choice of Illinois, Michigan, and New Jersey appears to suggest that the preponderance of improper HBOT claims are centered at non-diving related facilities — namely wound centers conducting HBO₂ treatments. To reiterate the OIG’s warning 15 years ago, there would be a substantial increase in the number of inappropriate and excessive reimbursements once nonhealing DFUs became an accepted indication for HBOT. Pursuant to the OIG’s plan to eliminate inappropriate payments for HBOT, CMS will continue to implement coverage and reimbursement policies that would fulfill this government objective, since the direct provider end is not able or not willing to do so. Pointedly stated in the OIG’s HBOT report, “many carriers (physicians) and intermediaries (hospitals) play only a limited role in assuring the quality of hyperbaric care.” Individual physicians and ancillary staff cannot control the actions of an entire business organization or persons who dishonestly practice, but they can act with due diligence and not participate in or enable questionable activity, nor turn a blind eye. They can actually do the right thing by reporting any wrongdoing witnessed. Trained specialists who practice hyperbaric medicine and those who are engaged in supervising HBOT for chronic wounds either as consultants or wound care specialists can and must reaffirm and assert their integrity despite any pressures that may be mounted by their facilities and perform evidence-based medicine in the specialty. Medical and professional societies could promote best practices; insist on the highest degree of quality physician training and highest level of nursing and technologist credentialing; and resist affiliations with entities that desire marginal standards that would enable borderline business activities. Otherwise, HBOT will continue to be a target for the US government. It would not be a far stretch for the federal government to shift from the standpoint of “eliminate inappropriate payments for HBOT” to simply “eliminate all payments for HBOT.”

Podcast

   In this exclusive podcast, TWC author Phi-Nga Jeannie Le, MD, discusses the responsibilities of physicians to act ethically and take responsibility on an individual level regarding the appropriate use and documentation of HBOT. She also explores the consequences of fraud for the future of the field and much more. Listen to the conversation here.

Phi-Nga Jeannie Le, MD is a fellowship trained and board certified undersea and hyperbaric medicine physician in Houston who assisted the federal government in a Texas-based HBOT fraud case. She also serves on the Accreditation Council and the Quality, Utilization, Authorization, and Reimbursement Committee of the Undersea and Hyperbaric Medical Society.

*As of 2007, the Orange Book was combined with the OIG’s Red Book to form the Compendium of Unimplemented OIG Recommendations. As of 2014, the publication is known as the Compendium of Priority Recommendations.

Caroline E. Fife, MD, FAAFP, CWS, contributed to this article.

Editor’s Note: Any opinions expressed in this article are those of the author and not necessarily those of HMP Communications LLC and/or the TWC Editorial Board.