As its title makes clear, the August 2012 report “Questionable Billing by Community Mental Health Centers” (the Report) by the U.S. Department of Health and Human Services Office of Inspector General (OIG) demonstrates its significant concern with fraud, waste, and abuse in Medicare payments for mental health services.  The OIG’s key findings include that in 2010, about 50% of community mental health centers (CMHCs) exhibited unusually high billing for at least one of nine so-called “questionable billing characteristics” in seeking reimbursement for partial hospitalization program (PHP) services; about 33% exhibited at least two of these characteristics.  With respect to the CMHCs with questionable billing, the OIG also found that about 66% were located in just eight metropolitan areas and 90% were located in States that do not require licensure or certification of CMHCs.  In addition to highlighting potential problem areas for billing compliance in the mental health industry, the Report also provides a valuable window into how the OIG decides to investigate, and goes about investigating, particular types of providers and services.

Background on CMHCs and PHPs.  PHPs are intense, structured programs that provide a wide variety of mental health services on an outpatient basis.  CMHCs operate PHPs for  individuals with serious mental disorders who reside in or near the community in which the CMHC is located.  To be eligible for reimbursement for services provided to Medicare beneficiaries, PHPs must meet numerous criteria, including that:

• The beneficiaries’ mental disorders severely interfere with multiple areas of their daily lives;
• The services are reasonable and necessary for the diagnosis or active treatment of the beneficiaries’ conditions, and reasonably expected to improve or maintain those conditions;
• The PHP offers a combination of individual, group, family, occupational, and activity therapies;
• Beneficiaries receive 20 hours of services per week and are cognitively able to participate in the services; and
• A physician develops an appropriate individualized treatment plan for each beneficiary, supervises the services, and periodically evaluates the beneficiaries to ensure that their treatment goals are being met.

Medicare oversight of CMHCs is limited.  For example, while CMS did propose conditions of participation to ensure the quality, health, and safety of CMHC care in 2011, those conditions have yet to go into effect.  Nor is there any current requirement that CMHCs be accredited or even any statutory authority allowing CMS to grant deeming authority to accreditation organizations for CMHCs.  It is the case that CMS regional offices must approve CMHCs for them to participate in Medicare.  As a practical matter, however, that process often entails just a single onsite visit by CMS shortly after the time of initial enrollment.  Finally, Medicare requires that CMHCs meet any applicable licensure or certification requirements imposed by the States in which they’re located.  Not all States, however, have such requirements.

Reason for Investigation.  Against this backdrop of extensive program requirements and relatively limited CMS oversight of CMHCs and PHPs, the Report spells out three critical factors that led to the OIG’s decision to analyze this particular service and setting.  First, CMHCs provide a high volume of Medicare services – in 2010, 206 CMHCs received an estimated $218.6 million in payments for PHP services provided to approximately 25,000 eligible beneficiaries.  Second, past OIG reviews, including studies in 1998 and 1999, have found a significant degree of improper billing by CMHCs for PHP care.  Third, the government noted the high-profile convictions of four CMHC owners and managers in Florida in 2011.  These individuals took part in a scheme to fraudulently bill Medicare for over $200 million worth of medically unnecessary PHP and related services.  Although not cited in the Report, as recently as late August of 2012, a federal jury in Miami likewise convicted eight individuals and a mental health company in connection with a scheme to falsely bill Medicare for some $50 million worth of PHP services.  See United States v. Macli, No. 1:11-cr-20587-RNS (S.D. Fla. August 24, 2012).  Clearly, the past “vulnerabilities in Medicare payments to CMHCs” of concern to the OIG have not gone away.

Methodology, Selected Findings, and Recommendations.  To perform its analysis, the OIG identified all Medicare PHP reimbursement claims submitted by CMHCs for service dates in 2010, and all physician claims and inpatient services claims submitted for service dates in 2009 and 2010 for care provided to beneficiaries who participated in PHPs at CMHCs.  Based on its past studies and staff experience, the OIG then developed a list of nine questionable billing characteristics that were indicative of potential improper billing.  Finally, it calculated the percentage of beneficiaries at each CMHC with each of these billing characteristics, and identified those CMHCs that exhibited “unusually high percentages of the characteristics” – i.e., a percentage of the beneficiaries with the characteristic at the CMHC that exceeded a statistically significant threshold measure.

For example, the Report found that:                    

• 43 out of 195 CMHCs had unusually high percentages of beneficiaries who received only group psychotherapy.  The OIG considered this questionable because it raises concerns both that the CMHC is not offering the combination of individual, group, family, and other mental health services mandated by the federal rules and that the CMHC may be billing for medically unnecessary group services;
• 35 out of 195 CMHCs had unusually high percentages of beneficiaries who were not referred to the PHP by a health care facility. This statistic raises concerns as to whether the beneficiaries were ever evaluated by physicians and properly deemed eligible for PHP care; and
• 15 out of 195 CMHCs had unusually high percentages of beneficiaries who participated at a CMHC outside their communities.  This statistic raises concerns as to whether a CMHC may be offering financial kickbacks, obtaining beneficiary Medicare numbers and billing for services not provided, and/or providing PHP services that are not reasonable or necessary.  To bring home the point, the Report notes that one CMHC located in Broward County, Florida provided services to a beneficiary who resided in Hawaii, and its other 77 beneficiaries resided an average of nearly 550 miles away from the center.

The Report also noted two important geographic factors about CMHCs with questionable billing practices.  First, about 66% were located in just eight metropolitan areas in Florida, Louisiana, and Texas.  Second, 90% were located in States that do not require CMHCs to be licensed or certified.  Similarly, about 50% of the CMHCs located in States that did not require licensure or certification had questionable billing practices, while only about 33% of CMHCs in States that did have such requirements had such practices.

In light of these findings, the OIG recommended that CMS:  (1) increase monitoring of CMHC Medicare billing and fraud prevention controls, such as by instructing Medicare Zone Program Integrity Contractors in the eight metropolitan areas in which CMHC billing problems were most prevalent to monitor the questionable characteristics; (2) enforce an existing requirement that CMHCs list the physician who certified the care on PHP claims submitted to Medicare; (3) in recognition of the fact that CMHCs in States that require licensure and certification exhibited significantly fewer billing issues, finalize and implement the conditions of participation for CMHCs proposed in 2011; and (4) take appropriate enforcement actions against the CMHCs identified in the Report that exhibited unusually high questionable billing.  CMS concurred in all four recommendations.

Lessons Learned.  The Report underscores the OIG’s ongoing concern with improper billing for mental health services provided to Medicare beneficiaries.  It also reveals that the OIG will in particular scrutinize services and treatment settings that have proven vulnerable to fraud, waste, and abuse in the past, and that have recently been the subject of enforcement actions by prosecutors.  Finally, the Report shows specifically how the OIG relies on data mining techniques to spot billing trends that are not in themselves improper, but that are indicative of potential violations of program regulations and requirements.