Medical Device Daily Washington Editor

WASHINGTON – Fraudulent billing activity continues to pester the Medicare program, with hospitals and hospital systems serving as the usual suspects and employees typically serving as informants. However, a hospital in Louisiana recently reversed these roles by turning in a physician who is alleged to have performed unnecessary elective angiography, much of which was billed to Medicare and Medicaid, as well as Tricare, the health insurance program for members of the U.S. military and their families.

In an internal investigation, Our Lady of Lourdes Regional Medical Center (Lourdes; Lafayette, Louisiana), found reason to suspect Dr. Mehmood Patel's practices between 1999 and 2003 and forwarded their findings to the Office of Inspector General (OIG) at the Department of Health and Human Services (HHS) and the local U.S. Attorney General's office.

Lourdes has admitted to no wrongdoing, but has nonetheless agreed to pay fines totaling $3.8 million to settle with the U.S. Department of Justice. The hospital also will roll out a compliance program to evaluate internal policies, perform internal audits and assemble a review panel to oversee the compliance program.

In a prepared statement, William Barrow, president/ CEO of Lourdes, said that before it had entered into the corporate integrity agreement with the OIG, “Lourdes [had] developed a new internal compliance plan that includes many of the elements called for in the agreement.” Noting that the agreement runs five years, Barrow affirmed that “it is our intention to exceed government mandates well beyond any five-year timeline.”

Lourdes is part of the Franciscan Missionaries of Our Lady Health System (Baton Rouge), a non-profit Catholic hospital system with 23 hospitals and outpatient facilities in Louisiana.

Berch Stelly, director of community relations at Lourdes, confirmed Patel's suspension, hinting that the suspension amounts to a permanent termination of privileges.

On March 23, the New Orleans office of the Federal Bureau of Investigation announced it had obtained a federal grand jury indictment of Patel, charging the 60-year-old physician with bilking “public and private health insurance plans of approximately $2.5 million between 2001 and January 2004.” Patel's trial date has been pushed back to March 2007.

Fraud investigations give ROI

Healthcare fraud investigations can consume substantial law enforcement resources, but recent cases have yielded conspicuous returns on the investment. The recent $900 million settlement by Tenet Healthcare (Dallas) set the record (Medical Device Daily, June 30, 2006), but other recent cases also netted Uncle Sam sums that are well into nine figures, including the June 15 St. Barnabas Hospitals (West Orange, New Jersey) settlement that cost the hospital chain $265 million. The CMS web site says that Medicare spent $330 billion on 42.5 million beneficiaries in fiscal 2005.

A recent report by the Economic & Social Research Institute (ESRI; Washington) indicates that taxpayers get their money's worth from fraud investigations. According to the report, funded by Taxpayers Against Fraud (TAF; Washington), the federal government takes in $15 for every dollar it invests in healthcare fraud prosecutions. According to the TAF web site, “total False Claims Act settlements are almost certainly going to top $2.5 billion this year.”

TAF argues that the “benefit/cost ratio of $15 to $1 is likely to underestimate the real return that taxpayers are receiving on outlays for civil healthcare fraud enforcement” because of a deterrent effect. However, the association admits that “these deterrent effects cannot be measured accurately at this time.” According to the TAF-sponsored study, the federal government laid out almost $444 million in fraud investigations between 2000 and 2004 and took in more than $7 billion in fines during that period.

CDRH takes over heparin flushes

The FDA said recently that the Center for Devices and Radiological Health (CDRH) would assume responsibility for catheter lock-flush solutions using heparin from the Center for Drug Evaluation and Review (CDER), effective Oct. 16.

According to the Federal Register notice, dated Aug. 17, such solutions are effectively combination products and the move was prompted by “FDA's determination that the primary mode of action . . . is that of a device.” The agency said that this transfer “provides consistency and efficiency in the regulation of these combination products.”

The notice said that the agency had previously shuffled anti-microbial catheter flushes to CDRH from CDER and that the current move “reflects these more current jurisdictional determinations.” The underlying rationale for the jurisdictional change for heparin-based lock flushes is that “the primary mode of action…in maintaining catheter patency is attributable to the device component's role in physically occupying space and applying pressure within the catheter” and that the heparin serves a secondary function “by acting chemically to prevent thrombotic occlusions within the catheter.”

The FDA will reclassify the affected products, currently filed as pre-market approvals (PMAs) or abbreviated PMAs, as 510 (k) filings and existing holders will be automatically cleared so long as their current filings are in good standing. “No application user fees will be assessed for this administrative transfer,” the notice said.