An emergency room management company and a psychiatric-care provider have settled separate cases that alleged their respective third-party billing agents improperly billed Medicare.
The settlements, both reached in July, highlight the government's ongoing focus on third-party billing companies and their role in padding Medicare and Medicaid payments to providers.
Last year, federal investigators began focusing on whether certain companies upcode-manipulate billing codes to artificially increase reimbursement-or unbundle-submit single rather than combined bills for laboratory tests-to inflate Medicare claims.
Spectrum Emergency Care, formerly owned by St. Louis-based Spectrum Health Services, and two of its subsidiaries have agreed to pay $3.1 million after allegations that they improperly billed Medicare through Emergency Physicians Billing Service, their third-party agent (See chart). Spectrum provides hospital emergency room staffing services.
The settlement is the latest in a series of agreements stemming from a lawsuit filed in 1994 against Oklahoma City-based EPBS.
At least two other companies together have paid more than $8 million to settle similar charges in the lawsuit, filed under the federal False Claims Act by whistleblower Teresa Semtner, a former billing coder who died in May 1996 (Dec. 22-29, 1997, p. 60). The lawsuit names EPBS and several of its clients as defendants.
Spectrum Emergency Care is now a subsidiary of Burlington, Ontario-based Laidlaw, which also owns Dallas-based EmCare. Last year EmCare paid $7.8 million to settle charges in the EPBS case. Laidlaw bought Spectrum in 1997, two months after it bought EmCare.
Although dozens of clients with smaller contracts were also named as defendants in the lawsuit, as yet none has settled or admitted guilt. U.S. District Court Judge Robin Couthron wrapped up the EPBS trial last month but has not yet made a ruling.
The EPBS case shows that prosecutors are willing to look at all of a billing company's clients for potential fraud even if just one client is charged with submitting false claims.
"When you use a third-party billing agent, you share in its problems," a Laidlaw spokesman acknowledged.
Spectrum denied any wrongdoing in connection with the matter.
EmCare Chief Executive Officer Leonard Riggs Jr. said that Spectrum was negotiating the settlement when Laidlaw bought the company.
"It was settled for business reasons," Riggs said. "We have our own internal billings department and a compliance program in place. It's an internal way for us to know we're doing it right."
The second settlement had Royal Geropsychiatric Services and its billing company, Nursing Home Services, agree together to pay $200,000 to settle Medicare fraud charges. Royal, which provides psychiatric services to nursing home residents in Ohio, hired NHS as its billing agent in 1993.
The government alleged that Royal, through NHS, filed false claims for psychotherapy services to nursing home residents who would not have benefited from such care. It also charged Royal with submitting bills to Medicare for patient record reviews that were not documented, and for double- and triple-billing Medicare for such services.
Federal investigators further alleged that Royal falsely claimed that licensed physicians performed psychotherapy care, which instead was provided by social workers.
Royal and NHS denied any wrongdoing or liability in the settlement. Attempts to contact Royal and NHS by deadline were unsuccessful.
MODERN HEALTHCARE obtained copies of the settlements earlier this month through the federal Freedom of Information Act.