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Feds in Fargo bust far-flung Medicare fraud scheme

FARGO - The scheme involved dozens of mail boxes for phantom medical clinics around the country and phony bills for health services never provided. Several co-conspirators in the sophisticated fraud ring, based in Los Angeles, which racked up mor...

FARGO – The scheme involved dozens of mail boxes for phantom medical clinics around the country and phony bills for health services never provided.
Several co-conspirators in the sophisticated fraud ring, based in Los Angeles, which racked up more than $13 million in bogus Medicare claims – causing more than $3 million in losses – ended up being prosecuted in U.S. District Court here. 

Several factors combined to bring the prosecution to a courtroom more than 1,400 miles from the epicenter of the fraud ring and far from the mail boxes for the nonexistent clinics.
One reason is the Medicare claims handler involved in many of the billings was Fargo-based Noridian Healthcare Solutions, giving prosecutors a “legal hook” to venue the case here.
Another reason is the recent addition of a special prosecutor in the U.S. Attorney’s Office in Fargo who works for the U.S. Department of Health and Human Services’ Office of the Inspector General.
That partnership is part of a broader federal collaboration between the Department of Health and Human Services and the Department of Justice, which combined five years ago to create a task force to crack down on costly Medicare fraud.
“This was rank fraud,” Timothy Purdon, the U.S. attorney for North Dakota, said of the fraud ring his office prosecuted. “This didn’t even have the pretense of delivering health services.”
Last week, a mid-level participant in the Medicare fraud scheme, Hovakim David Mkhitarian, 31, Glendale, Calif., was sentenced to serve seven months in prison, with another seven months of electronic home monitoring.
District Judge Ralph Erickson also ordered Mkhitarian to pay $2,000 in restitution. Two other co-conspirators in the case have pleaded guilty and await sentencing in December.

Searching for signs

Noridian Healthcare Solutions, a subsidiary of Blue Cross Blue Shield of North Dakota, is a leading Medicare claims processor, handling claims for about 40 states.
The company’s claims staff is trained to spot telltale signs of fraud, and Noridian uses analytical software to flag suspicious billings, said Jeanne Narum, a vice president who oversees compliance and audit functions.
Medicare providers must register every five years, filling out lengthy paperwork, to help ensure bona fide billings. Claims handlers also call providers.
In one recent case, the Noridian claims staff member was unable to get through to a provider. The call was returned – from a number traced to the Caribbean.
“It was a red flag,” Narum said, noting the provider was bogus. “It was a front.”
Automated software also screens claims looking for inappropriate or fraudulent billings.
“There is a significant amount of data analysis that occurs,” Narum said.
Blue Cross Blue Shield of North Dakota also uses software to screen for inappropriate billings in an ongoing effort to root out waste, abuse and fraud.
Most of the inappropriate billings involve waste – overuse or ineffective use of treatments – and abuse, excessive or improper use of health care services.
Actual fraud, which requires intentional deception, is rare, said Andrea Dinneen, a spokeswoman for Blue Cross Blue Shield of North Dakota.
So far this year, the North Dakota Blues’ provider audit and special investigations unit have identified $3.5 million in inappropriate medical billings, Dinneen said.
“I think for the most part it’s oversights, inaccurate keying, that sort of thing,” she said. “We have these processes in place to control costs for our members.”
When improper billings are found, Blue Cross Blue Shield works with providers to correct the problem and prevent recurrences, she said.
“We want to collaborate with our providers,” Dinneen added. “The intent is to have it be a collaborative approach.”

Fraud everywhere


The federal government’s crackdown on Medicare and Medicaid fraud recovered a record $4.2 billion in 2012, the most recent total available, and $14.9 billion from 2009 to 2012.
Medicare fraud, long prevalent in major metropolitan areas along both coasts and in the South, is spreading inland, Narum said, with big cases turning up in states including Missouri and Arkansas.
“There’s fraud, unfortunately, everywhere,” Narum said.
The special prosecutor based in Fargo who specializes in Medicare and Medicaid fraud, Matthew Greenley, a former prosecutor in the Clay County Attorney’s Office, started about 18 months ago.
Besides working on cases with a North Dakota connection, he sometimes travels to assist with cases elsewhere, including Seattle and Alaska, Purdon said.
“It’s been a very successful program,” he said. “We’ve been very happy with this.”
Noridian’s Fargo headquarters, Purdon added, made it a logical place to locate a medical fraud special prosecutor.
Noridian Healthcare Solutions is one of the top five Medicare claims processors, and last year handled $32 billion in claims payments, according to company figures.
More medical fraud prosecution cases are in the pipeline, Purdon said.

Related Topics: CRIMEHEALTH
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