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Fraud Surveillance in Annual CPE Audits

by Yvonne Tso, PharmD, MBA




In August 2023, CMS’ Fraud Investigations Group released 16 fraud case announcements via HPMS to alert all plan sponsors of potentially inappropriate billing by providers. These fraud cases occurred in multiple geographical areas: Massachusetts, Maryland, North Carolina, Virginia, Tennessee, Missouri, Georgia, Texas, Oklahoma and Utah. The amounts of fraud ranged from $788,000 to $142 million. The payers in the reported cases included Tricare, Medicare and Medicaid. The practices involved drugs, medical procedures, lab tests, telehealth visits, Medicare marketers, and dentistry.


While the tactics used in these fraud cases were not new, a trend has emerged – the perpetrators capitalized on chronic conditions such as pain management and behavioral/mental health/opioid use disorders for which long-term and recurrent treatments are needed. And these were not victimless crimes. In one case, deaths resulted from the malfeasance. If you have missed these HPMS alerts, here is a summary:


  1. Services billed but not rendered: home health and personal care services were allegedly provided to recipients so they could remain at home instead of going into a nursing home or a group home, but the services were not provided. Not only did the perpetrators defraud the payer, Medicaid in this case, but they also committed identity theft to rob the recipients of their pension payments.[1] The owner of a medical clinic billed a payer totaling $53 million for allergy tests and physical therapy which were never provided.[2]

  2. Inappropriate use of personnel to treat patients and upcoding services [3]: a Missouri physician who owned and operated urgent care centers recruited physician assistants (PA) to treat patients without the supervision of licensed physicians, which is a state requirement in Missouri. The physician owner recruited physicians to falsify records claiming they were supervising the PAs. The perpetrators also made false statements to Medicare and Medicaid by billing for services performed by multiple PAs as if the physician had provided those services, even if he was out of town or abroad. Another example: a mental health provider that provided intensive in-home services to children who qualify; this provider used individuals who were not properly trained or credentialed. One individual sexually abused a juvenile patient.[4]

  3. Indiscriminate prescribing and dispensing of opioids and opioid analogs: a pharmacy and its owner pharmacist-in-charge filled hundreds of prescriptions in violation of the Controlled Substances Act ignoring obvious “red flags” of drug abuse, drug diversion, and drug-seeking behavior. At least ten (10) patients died within 10 days of having controlled substance prescriptions filled at this pharmacy. This pharmacy also frequently filled prescriptions containing an opioid analog that can be used to treat opioid use disorder only if the product also contains an abuse-deterrent.[5] In another case, the perpetrator directed medical providers at a clinic he owned to make medical decisions, including whether a patient should be treated for opioid addiction or for pain management, whether a patient should receive a prescription, and what type of drug should be prescribed. The payers were Medicare and Medicaid. The owner was not medically trained.[6] In a separate case, Medicaid charged a provider that failed to provide treatment plans and adequate counseling for patients for whom they were providing methadone. The allegation also included falsifying records prior to visits by accreditation officials and auditors showing missing services had been provided. This provider maintained patient caseloads for counselors at a volume so high that it was physically impossible to offer required counselling services. The clinic also failed to provide increased services or attention to patients who tested positive for illicit substances, including fentanyl.[7]

  4. Prescribing drugs for non-FDA approved indications[8]: a PA who practiced in a pain management clinic injected patients suffering from joint pain with amnionic fluid for relief. Amnionic fluid is not approved by the FDA for joint pain. Medicare was the payer.[9] In another case, a physician sold human chorionic gonadotropin (HCG) in a sublingual tablet around the country as a weight loss drug. HCG is approved for some cases of infertility and hormone treatment in males, but not for weight loss in any formulation.[10]

  5. Billing for unnecessary procedures: a compounding pharmacy sold expensive and unnecessary prescriptions, receiving massive reimbursement from Tricare ($65 million) [11]. Another compounding pharmacy committed various health care frauds and illegal kickbacks totaling $40 million[12]. Three cases in this series of reports were for a) unnecessary genetic testing by a DME [13] provider[14], b) marketers who sold Medicare beneficiaries’ information to the perpetrators [15] and c) high utilization of epidural and facet joint injections exceeding coverage limits and sedation services not meeting medical necessity.[16]


Fraud surveillance should be an ongoing process. At a minimum, health plans should conduct fraud, waste and abuse (FWA) training, use data to detect and prevent FWA, and respond to CMS-issued fraud alerts[17]. Such activities should be in the scope of your annual Compliance Program Effectiveness (CPE) audits.


Integritas Medicare can assist by providing algorithms and detection methodology for your plan. Our professionals have expertise in detecting aberrant billing, data analytics, and utilization management to help you identify potentially inappropriate billing practices, stay compliant with Medicare rules, and minimize inappropriate and wasteful health care expenditure. Please contact us at 415-596-5277 or info@integritasmedicare.com

[1] Sharon Y. Johnson & Associates August 11, 2023 [2] Edgar Perez and Better Life Medical Services Corp. August 25, 2023 [3] Dr. Sonny Saggar & Renita Barringer August 25, 2023 [4] Health Connect America August 11, 2023 [5] Beckman’s Greene Street Pharmacy August 11, 2023 [6] John Gregory Barnes & L5 Medical Holdings LLC August 25, 2023 [7] Journey to Hope, Health, and Healing, Inc. August 11, 2023 [8] FDA= Food and Drug Administration [9] Ray Anthony Shoulders August 25, 2023 [10] Dr. Audrey Arona August 11, 2023. [11] Jimmy and Ashley Collins / Choice MD August 25, 2023 [12] Diabetic Care Rx & Patient Care America August 25, 2023 [13][13] DME = durable medical equipmenta). [14] Conclave Media & Nationwide Health Advocates August 25, 2023 [15] Lily Tran Daniel, Kenneth Reynolds, and Lillian Thai / ApolloMDx August 25, 2023 [16] Millennium Pain Management, LLC August 25, 2023 [17] Medicare Managed Care Manual, Chapter 21, and Prescription Drug Benefit Manual, Chapter 9: Compliance Program Guidelines.

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