Monday, March 9, 2009

Medi-Cal Fraud: Attorney Comments On Black Market

All Medi-Cal providers need to be aware of the black market that exists in Medi-Cal. To ignore it is to do so at your practice's peril. What is the black market? The most common is the buying and reselling of beneficiary provider numbers. There is a market for copies of Medicare and Medi-Cal beneficiary numbers. Since Medi-Cal beneficiaries do not get EOBs sent to them (unlike Medicare) it is easier to bill for services not provided to the patients without risk that the patient will contact Department of Health Care Services. Providers need to take steps to ensure that they are not caught up in the black market. Being involved even tangentially with a dirty provider can create administrative damage and you risk losing your provider number or having it temporarily suspended due to suspicion of fraud or abuse.

Here are four real examples of how a legitimate and unsuspecting provider can get caught up in the black market.

First, a pharmacy was contacted by a clinic that had a high number of Medi-Cal beneficiaries. The clinic asked that the prescriptions be delivered to the clinic where the patients would pick them up. The clinic faxed over the prescriptions and the pharmacy delivered the prescriptions. Unbeknownst to the pharmacy, the clinic had stolen the identity of some physicians and used their DEA numbers for the prescriptions. Later during an audit, it was discovered that the clinic did not deliver these prescriptions to the patients and that the Medi-Cal cards had been stolen. The clinic used the prescription medication for selling on the black market. Consequently, the pharmacy faced an audit that resulted in an overpayment and was initially suspected of being involved in the fraud and abuse.

Second, a physician faxed over prescriptions to a pharmacy. The pharmacy added on expensive medications to the prescriptions which it could sell on the black market. When the pharmacy was being investigated, the physician was initially assumed to be involved. It took months to prove that the physician was a victim and did not know that prescriptions had been added.

Third, a young physician who had just finished his residency began working at a clinic. The physician came to the clinic once a week and reviewed medical files where patients had been seen by a physician assistant. Unbeknownst to the physician, the clinic manager used the physician's name to order wheelchairs and other durable medical equipment. Most of the wheelchairs and DME were never provided to the patients but was a fraud perpetrated by the DME company and the clinic manager.

Fourth, a worker in a medical clinic copied the Medi-Cal cards and driver's licenses and sold them to a middleman without the knowledge of her employer. The worker was paid for the cards in diet pills by the middleman. When the case was investigated, the physician employer became a suspect until a presentation was made to show he did not know about the sale and had no reason to suspect this was happening at his office.

An awareness of the dirty side of Medi-Cal business in low-income communities is essential in order to avoid doing business with persons who could violate the law. Employees need to be screened and compliance plans implemented to ensure that they will follow the law. Only deal with pharmacies, DMEs and other entities who have an excellent reputation and can be trusted with patient identification. Physicians, physician assistants, nurses and other licensed personnel need to be careful where they work. Some of our clients will have us spend an hour or less investigating potential third parties since working with the wrong people or entities can be a very expensive lesson if it jeopardizes their provider number.

Any questions or comments should be directed to: Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals and businesses in civil, business, administrative and criminal proceedings, with a specialty in health care providers.


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