A few doctors learn how to be Medicaid millionaires

While most doctors spurn the Medicaid program because of low fees, a select few manage to pull in millions of dollars each year by running high-volume practices.

Ten doctors in Illinois were paid at least $1 million a year from the health care program between 2009 and 2011, according to a Crain's analysis of state payment records.

The totals for some of the highest-paid physicians are boosted by payments for services performed under their supervision.

For example, Dr. Jack Garon, head of pathology at the safety-net Sinai Health System in Chicago, received $5.9 million, more than any other doctor, Crain's found. He is one of four hospital pathologists among the highest-paid doctors in the program because they submit claims for thousands of tests done by labs.

Dr. Sam Lipshitz was the second-highest biller, receiving nearly $5 million before the state stopped payments in 2011 amid an investigation by the inspector general of the Illinois Department of Healthcare and Family Services. The Skokie urologist is one of two doctors in the top 10 who have been the subject of probes into billing practices. The other, the medical director of Planned Parenthood of Illinois, last week reached an agreement to settle claims of billing irregularities.

The department's efforts to crack down on error and fraud are likely to be tested in 2014, when about 800,000 Illinois residents become eligible for Medicaid under the federal overhaul of health care.

Statewide, 225 physicians received at least $1 million from 2009 through 2011. The annual median Medicaid reimbursement for all doctors was between $8,000 and $9,000, Crain's found.

The concentration of Medicaid care in the hands of a relatively small number of doctors is part of a cycle created in part because most physicians avoid the program.

Without physicians dedicated to Medicaid patients, many poor patients would go without care. Doctors who specialize in the program say they must treat large numbers of patients to make up for Medicaid's low reimbursement rates.

Yet high-volume practices increase the risk of errors and theft, particularly because Medicaid's low fees leave little capital for sophisticated records and billing systems, some experts say.

“The natural product of that lack of investment means a greater risk of negligent mistakes and greater risk of fraud,” says Patrick Coffey, a Chicago-based partner at law firm Locke Lord LLP who defends providers in health care enforcement matters.

Crain's reviewed Medicaid reimbursements for more than 32,000 physicians in the 2009-11 fiscal years, which end on June 30. The 2011 data include about 90 percent of payments for that year.

The Crain's analysis reveals:

• The top 225 account for less than 1 percent of doctors in Medicaid, but received a total of $362 million, about 13 percent of the total paid to doctors in 2009-11.

• On average, the group billed for 25 times as many services as for all doctors in the program.

• The median payment for the group is $1.3 million over three years.

In interviews, Medicaid doctors say that they are motivated in part by helping the poor and that they take seriously the obligation to comply with the program's complex billing system.

The highest-paid doctors typically bill for care provided by nurses and other staff members, which is allowed if the services are supervised by the physicians. With few exceptions, physicians cannot bill for services performed by another doctor. But treating physicians can direct payments to employers, such as other doctors.

The system, which makes the chief hospital pathologist the point person for millions of dollars in payments, reduces administrative costs for providers and the state, says Dr. Garon, who is also chief medical officer at Sinai Health System, where 46 percent of inpatients were on Medicaid in 2011.

The payments flow to the Sinai physicians group, he adds.

'NO SYSTEM IS PERFECT'

Pediatricians and obstetricians accounted for more than half of the payments in 2009-11 to the top 225 because Medicaid coverage is focused on pregnant women and children.

Obstetrician-gynecologist Michael Riermaier moved to Elgin 25 years ago, as the influx of Latino immigrants to the area was just beginning. A graduate of medical school in Guadalajara, Mexico, Dr. Riermaier was one of the few obstetricians in the northwest suburb who spoke Spanish and accepted Medicaid patients.

Employing two nurse-midwives, his practice delivers nearly 70 babies a month, compared with 12 deliveries a month for an average practice of similar size, he says.

“I enjoy what I do, and I do a lot of it,” he says.

Without large numbers of patients flocking to his offices in Lincolnwood and the Lincoln Square neighborhood, pediatrician Zaki Siddiqui says he would be “doomed.” “We try not to make mistakes, but no system is perfect,” he says.

Medicaid officials say they closely monitor payments to the program's biggest billers.

Last week, Planned Parenthood agreed to pay $367,000 to the state to settle a dispute over alleged overbilling by its medical director, Caroline Hoke, an obstetrician-gynecologist.

Dr. Hoke was the fourth-highest-billing physician in 2009-11, receiving $3.9 million, despite not receiving any payments for much of 2010 and all of 2011 because of an investigation by the DHFS inspector general.

In a statement, the nonprofit defends its record-keeping and says it struck the deal to end the dispute.

Meanwhile, in an administrative proceeding, DHFS is seeking to terminate Dr. Lipshitz from the program and recover $2.2 million because of allegedly improper billing.

Anticipating the expected rise in Medicaid patients, the Quinn administration is ramping up audits. DHFS Inspector General Brad Hart is also increasing his staff to 212 employees, from 175, but even that may not be enough.

“We have to have a certain amount of trust because there are 300,000 providers in the system,” he says. “We can't physically monitor them on every transaction.”