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Mental health scams target Medicare and Medicaid

Programs spend billions to treat mental illness, making them ripe for fraud in this sector

Fraud involving Medicare and Medicaid mental health benefits has been "a special enforcement problem that stretches back decades," according to former Department of Health and Human Services Inspector General Richard P. Kusserow. "Many healthcare fraud investigators believe mental health caregivers, such as psychiatrists and psychologists, have the worst fraud record of all medical disciplines," Kusserow wrote. That belief is largely based on numbers of prescriptions for narcotics and exploitation of patients diagnosed with mental illness or Alzheimer's disease.

One fraud hotspot is community mental health centers (CMHCs) that offer partial psychiatric hospitalization programs. In Medicaid, there's been "an explosion of fraud in community-based treatments," including billing for services not rendered, services provided by unlicensed staff or services tainted by kickbacks, according to Assistant U.S. Attorney Ted Radway.

The Medicare Strike Force made arrests for significant CMHC fraud involving programs serving about 25,000 beneficiaries, Kusserow noted. Yet just one out of nine Medicare Audit Contractors reviewed last year by the Office of Inspector General worked to thwart CMHC fraud, Kusserow noted. This finding led the agency to recommend increased controls and enforcement in this area.

A recent case involved Louisiana psychiatrist Zahid Imran who was sent to prison for his role in a Medicare scam involving partial hospitalization services. Imran admitted patients who didn't need partial hospitalization and then recertified their appropriateness for the program to keep the Medicare reimbursement flowing. Imran's crimes were part of a $258 million fraud scheme in which 17 people were convicted, including therapists, marketers, administrators, and owners of facilities in two states. Perpetrators paid recruiters to round up patients and altered documentation to make it look like they received treatment.   

Mental health fraud is more pervasive in Medicaid, Kusserow wrote, since Medicaid and the states provide more funding to this area than Medicare. Last year, for example, New Mexico investigated 15 of its largest mental healthcare providers who were suspected of cheating Medicaid out of $36 million in three years.   

For more:
- read Kusserow's commentary

Related Articles:
Psychiatrist sent to prison for role in $258M fraud
Assistant U.S Attorney Ted Radway on fighting Medicaid fraud
Dual eligibles with mental disorders rack up higher costs
Dual-eligible programs need stronger quality-of-life measures
Connect behavioral and medical health to better serve dual eligibles
Healthcare fraud by unlicensed providers a growing concern