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APA commended Rep. Joseph Barton (R-Tex.), chair of the House Commerce Subcommittee on Oversight and Investigations, for holding a hearing on the Medicare partial hospitalization benefit last month, but cautioned against gutting the program in response to abuses.
"Run properly, partial hospitalization is an important means of delivering the full range of services necessary to treat persons with mental illness and provides a cost-effective alternative to inpatient hospital care," said APA Medical Director Steven M. Mirin, M.D., in a written statement to Barton.
The partial hospitalization benefit came under congressional scrutiny because of rampant fraud and abuse reported in September by Department of Health and Human Services (HHS) officials after a two-year investigation of community mental health centers (CMHCs),
Health Care Financing Administration (HCFA) officials testified at the hearing that 20 CMHCs in Florida, Texas, and Louisiana have been expelled from the Medicare program for egregious noncompliance, and 80 more CMHCs in those and other states will be notified of their expulsion by early next year.
"APA applauds HCFA's efforts to combat fraud and abuse in this important benefit. There is no place in the Medicare program for unscrupulous operators who reportedly have warehoused seniors and disabled beneficiaries in order to bilk the system," Mirin stated in written testimony.
APA also urged congressional support for an antifraud bill sponsored by Rep. Fortney "Pete" Stark (D-Calif.) as a way to reform Medicare's partial hospitalization program.
Congress authorized Medicare to pay CMHCs for partial hospitalization services in 1990. There are about 1,150 CMHCs and 1,000 hospitals nationwide participating in the Medicare benefit program today.
ACMHC is defined by Medicare as an entity that provides these four categories of core services: outpatient services to the elderly, children, and severely mentally ill; 24-hour emergency care; day treatment or other partial hospitalization services; and screenings to determine whether to admit patients to state psychiatric hospitals. Moreover, CMHCs must meet applicable state licensing requirements.
Commenting on the HHS inspector general's report released at the hearing, Barton said, "I am shocked at this disgusting pattern of fraud and abuse by anyone wanting to make a buck. If, as the investigation suggests, there is a widespread pattern of abuse, it will threaten the very existence of the program."
Between September 1996 and September 1997 HHS audited CMHCs in five states (Texas, Florida, Alabama, Pennsylvania, and Colorado) that had high Medicare expenditures for partial hospitalization services. HHS officials became alarmed at the explosive growth in the number of CMHCs with Medicare provider numbers between 1993 and 1997 (from 296 to 769) and the sixfold growth in total benefit payments (from $60,000 to $349,000). Average Medicare payments per patient also rose sharply from $1,642 to $10,352 during this period.
The results of the five-state audit revealed that more than 90 percent of Medicare payments made for partial hospitalization services ($229 million out of $252 million) were highly questionable or not allowed under Medicare reimbursement requirements.
Michael Mangano, principal deputy inspector general of HHS, testified before the subcommittee, "We were paying for services that were recreational and diversionary rather than therapeutic, including Bingo, dominoes, arts and crafts, and other games. Moreover, the beneficiaries had no history of mental illness, and many were recruited from assisted-living facilities."
Although Mangano did not mention whether psychiatrists were involved in the Medicare fraud and abuse, his written statement referred to a case example involving a psychiatrist who was the medical director of a partial hospitalization program and had arranged for several of his patients to be transported to an adult activities center for arts and crafts and exercise classes.
Mangano testified that Medicare's cost-based method of payment enables unethical providers to maximize their reimbursement by including all sorts of unallowable costs in their calculations. For example, investigators found excessive compensation to owners and key personnel and charges unrelated to patient care, such as salaries paid to family members not employed by the facility, payments for unoccupied rental space, and payments for country clubs and golf resort memberships.
Furthermore, CMHC owners and investors often created front organizations for family members with no documentation to support that the services contracted were ever rendered or the goods delivered, said Mangano.
He also testified that HCFA has relied on the integrity of CMHC applicants to certify that they comply with requirements of the Social Security Act and state licensing laws. However, 60 percent of states do not have licensing requirements for CMHCs.
"We also believe that limited reviews by the Medicare fiscal intermediaries that process the claims have been inadequate," testified Mangano.
Partial hospitalization was not the only area in which fraud and abuse had occurred. HHS investigators identified in the report numerous problems relating to provider enrollment, patient recruitment, patient certification, staff certification, and other areas, said Mangano.
He stressed that the inspector general had worked closely with HCFA in its investigation and supports HCFA's aggressive actions.
Penny Thompson, director of HCFA's Program Integrity, testified at the hearing that HHS officials suspended Medicare payments to 18 CMHC providers in Florida last year and referred the providers to appropriate law enforcement agencies for fraud and abuse investigation.
Investigators found that 89 percent of sampled partial hospitalization beneficiaries were not eligible for partial hospitalization services, and Medicare did not cover 100 percent of the services provided in these facilities, stated Thompson.
Moreover, 17 of the 18 CMHCs did not provide all the core services required by law to participate in Medicare.
Margo Adams, executive director of the Florida Psychiatric Society, told Psychiatric News, "Without specific licensing requirements, anyone in the state can create an entity and call it a community mental health center."
Thompson also testified that this year HCFA had conducted site visits at about 700 CMHCs in Medicare's partial hospitalization program and to new applicants. "Many centers meet few, if any, of the requirements for Medicare participation, raising doubts about their ability to properly care for beneficiaries."
She referred to HCFA's 10-point action plan to protect the partial hospitalization benefit from further fraud and abuse by CMHCs and ensure that beneficiaries who need intensive psychiatric services get them from qualified providers.