Investigators crack down on state mental health centers

After uncovering $229 million worth of allegedly fraudulent Medicare claims from community mental health centers (CMHCs) in five states, federal investigators are pushing for Congress to dump Medicare’s partial hospitalization benefit.

Recently, HCFA informed twenty CMHCs that the agency intends to terminate their Medicare provider agreements, and sixty more centers are expected to face termination over the next few months, HCFA officials say. In addition, HCFA has informed individual states about which CMHCs received notification letters. States will have to decide for themselves whether to terminate Medicaid agreements with these providers or initiate Medicaid-based fraud investigations, says Ben Jackson, OIG audit director for field operations for Medicare and Medicaid. Jackson notes that federal investigators are leaving the question of Medicaid fraud enforcement to the states because rules regarding partial hospitalization may differ among states and between Medicare and Medicaid.

Meanwhile, the OIG intends to pursue civil and criminal cases against CMHCs nationwide, says Ben St. John, an OIG spokesman. St. John notes that the OIG has already taken action against some CMHCs that provide partial hospitalization services. In at least one instance, the facility was hit with a monetary settlement and the imposition of a corporate integrity program.

HCFA’s actions against CMHCs come on the heels of a new OIG report that scrutinized Medicare claims filed by CMHCs in Florida, Texas, Colorado, Pennsylvania, and Alabama. OIG investigators reviewed 250 claims, which accounted for $252 million in payments. They found that 92% of the claims submitted, for a total of $229 million, failed to meet Medicare reimbursement requirements.

HCFA admits that lax enforcement of eligibility requirements for the program helped create the potential for massive fraud. The agency relied "exclusively on the integrity of the applicants" to certify that they met the program’s requirements, according to the report.

In a second OIG study, investigators performed on-site reviews of 700 CMHCs in nine states and found that "a large number" of them failed to meet Social Security Act requirements and therefore don’t qualify to bill Medicare. (Exact figures aren’t available as the study hasn’t been completed.)

According to the report, the false Medicare claims from CMHCs fell into five main categories:

1. Beneficiaries were ineligible.

2. Services were not reasonable and necessary, nor were they tailored to individual patients.

3. Services were not authorized, and some medical records lacked physician evaluations and signed plans of care.

4. Documentation was missing, including incomplete assessments and physician notes.

5. Providers were already under investigation, suspended, or terminated from the Medicare program.

In response to the OIG’s report, HCFA has released a "10-Point Action Plan" to "curb abuse and protect beneficiaries and taxpayers." Among the points are terminating those CMHCs the agency considers the worst offenders and increasing its scrutiny of new applicants to the partial hospitalization program.

[Note: The report, including HCFA’s action plan, is available at the following Web address:]