2006-10-04 / Health Care

Largest Medicaid Fine Ever For Flushing Firm


A Flushing Medicaid provider, Community Related Services, has been hit with a $46.5 million enforcement action by New York state for providing "inappropriate and unnecessary patient services" and potentially fraudulent and excessive Medicaid billings.

The announcement by Governor George Pataki included a $16.5 million fine, the largest ever levied by either the state Office of the Medicaid Inspector General (OMIG) or the state Office of Alcoholism and Substance Abuse Services (OASAS), the two agencies which took the enforcement action.

In addition, the agencies also stopped payments of $30 million to Community Related Services (CRS), which provides chemical dependence outpatient treatment services.

As a result of the joint investigation, the Medicaid inspector general will terminate the CRS provider contract with the Medicaid program and exclude it and all of its principals from future participation in the Medicaid program.

Additionally, OASAS intends to revoke the firm's operating certificate, the announcement stated.

Commenting on the joint action, Pataki declared: "CRS was cheating the state's Medicaid program at the expense of patient care-an abhorrent practice-and a practice that will come to an end, thanks to the enforcement action."

The governor added that the action "sends a clear and concise message to Medicaid providers that if you bilk the system, you will be punished accordingly".

OASAS Executive Deputy Commissioner Henry F. Zwack commented, "With this enforcement action we are slamming the door shut on the largest, most abusive Medicaid mill in the OASAS system.

"This program was averaging five times the amount of billable services than the average treatment provider, a prime example of why OASAS is revising its regulations."

Zwack added, "Clearly, programs that don't adapt, don't adopt and don't improve their accountability standards will simply not survive in this ever-changing field."

Medicaid Inspector General Kimberly A. O'Connor said that her office and OASAS "want those who abuse the Medicaid program to know that excess billings for unnecessary services will not be tolerated. Those who attempt to [play] the Medicaid system will be caught, taxpayer funds will be recovered, and perpetrators will be thrown out of the system and kept out."

In all, the state cited CRS for more than 45 key regulatory violations and 25 findings of serious Medicaid fraud, waste and abuse.

Onsite inspections and interviews were conducted with current and former CRS staff after CRS triggered the investigation by failing to comply with its OASASissued operating certificate by providing too many inappropriate and unnecessary patient services and engaging in fraudulent billing.

The investigation showed that CRS had clearly provided excessive and unsuitable service over a period of years and had by far the highest average number of perpatient visits in the entire OASAS outpatient system. CRS averaged 152 patient visits per year compared to the system-wide average of 34.4.

Also, many of the individuals treated by CRS presented minimal alcohol and substance abuse patterns and many so-called patients had not had abuse or dependence issues for years.

"Despite this fact," the governor's announcement said, "CRS patients were assigned intensive treatment schedules and tended to

stay in the clinic an average of over 20 months, while the average length of stay for the statewide OASAS system is roughly 3.7 months per person."

Observers and critics of Medicaid, which takes up the largest part of the state budget annually, about $50 billion, have constantly clamored for elimination of fraudulent purveyors and providers.

As a result, ongoing investigations over the past three years have identified widespread instances of excessive treatment services under Medicaid. One result of these investigations is that OASAS has drafted regulations to identify providers of excessive services.

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