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Catch of the Week: Feds Shut The Door on an Uncommon Fraud Scheme involving New York Indigent Care Pool

Posted  February 3, 2022

The Southern District of New York announced a $12.9 million settlement with healthcare provider The Door, which provided services to uninsured youth for which it received reimbursement from New York State’s Indigent Care Pool.  The settlement demonstrates the importance of whistleblowers, including the two that brought this case and stand to share in up to 25% of what the government collected, in helping to shut the door on fraud in government programs beyond the general headliners of Medicare and Medicaid.

Fraud in Government Healthcare Programs

Healthcare fraud dominates recoveries under the False Claims Act. Last fiscal year, the Department of Justice recovered nearly $5.7 billion under the law, over $5 billion, or 90%, of those dollars representing resolutions of cases involving federally funded healthcare programs. The vast majority of healthcare fraud cases involve the defrauding of either the Medicare or Medicaid programs.

The Medicare program is a federally funded insurance program that serves individuals who are over 65, have certain disabilities, or have been diagnosed with End Stage Renal Disease; there’s also a version of the program that’s administered via commercial insurers under a private-public partnership called Medicare Advantage. Medicaid is a different program, co-funded by the federal government and participating states, that covers medical expenses for low-income and disabled patients. Several states even have special versions of State False Claims Acts specifically to safeguard their Medicaid dollars.

However, in addition to those two, very large, sources of funding, the federal and several State governments spend on healthcare under a myriad of other programs. Examples include TRICARE and the Department of Veteran Affairs’ Patient Centered Community Care Program, both of which provide healthcare and insurance coverage for veterans and their families, the Children’s Health Insurance Program (CHIP), which provides insurance coverage for children of low-income families, and the Federal Employee Health Benefit Program (FEP), which provides insurance coverage for federal employees. There are also special programs for railroad workers, energy workers, miners, and longshoremen. As these examples demonstrate, the government’s involvement in the US healthcare system is broad, and so is the potential for fraudsters to exploit government spending.

New York’s Indigent Care Pool and The Door’s Fraudulent Cost Reports

This week’s Catch goes to an enforcement action involving yet another publicly funded healthcare program, New York’s Indigent Care Pool (ICP). The Indigent Care Pool is a state program, partially funded by Medicaid, that provides funds to medical providers that treat uninsured individuals. The amount of funds a given provider receives from the ICP is based on a formula with multiple variables, one of which is the number of uninsured patient visits that the provider performed. The ICP is a limited fund that must be split between many providers and distributions are zero-sum, meaning when money goes to a certain provider, less funds are available to all other providers in the state.

In a whistleblower-initiated case, the federal government accused New York City youth services provider The Door, of overcharging the Indigent Care Pool.  Among the services provided by the Door is an Adolescent Health Center, which offers dental, eye care, dermatology, nutrition, and sexual and reproductive care services; the entity is certified as a Diagnostic and Treatment Center under New York regulations.

According to the government’s complaint in intervention, The Door exaggerated the number of uninsured patient visits, resulting in improperly high payments from the ICP. The Door admitted to wrongdoing and will pay nearly $13 million to resolve the allegations.

As part of the settlement, The Door admitted to keeping two versions of Cost Reports that it was required to submit to the state. One version reflected an accurate accounting of patient visits and the other double-counted certain visits in a way that would yield higher payments from the ICP. That second version of the cost reports is what The Door submitted to the State.

The government’s investigation is ongoing, and the settlement requires The Door to cooperate in such investigation, including by providing documents and making witnesses available.

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Tagged in: Catch of the Week, FCA Federal, Healthcare Fraud, Medicaid, Provider Fraud,