According to the latest press release by the Department of Justice, Gayk Akhsharumov, the owner of two hospice organizations in California, was caught up in a massive Medicare fraud scheme in a recent legal battle that rattled the healthcare industry. Akhsharumov and his accomplice, Karen Sarkisyan, constructed a complicated web of deception that resulted in the theft of nearly $9 million from Medicare through bogus claims for hospice services. This case serves as a sharp reminder of the ongoing fight against healthcare fraud, emphasizing the importance of strong oversight and enforcement measures to safeguard critical government programs and ensure the quality of patient treatment. But before we go forward, let’s understand the concept of healthcare fraud.
What is healthcare fraud?
Healthcare fraud entails deceptive tactics within the healthcare sector to secure financial gain. This encompasses various illicit activities such as the submission of false claims, involvement in kickback schemes, manipulation of coding for inflated reimbursement, unbundling services to increase billing, fraudulent billing for non-existent patients, identity theft for fraudulent billing purposes, fabrication of prescriptions, and fraudulent practices by healthcare providers. These actions not only result in significant financial losses for healthcare programs, insurers, and patients but also pose risks to patient safety and undermine confidence in the healthcare system. Detecting and addressing healthcare fraud necessitates ongoing vigilance, implementing robust enforcement measures, and collaborating among stakeholders to uphold the integrity of healthcare services and prevent exploitation.
Different Schemes under Healthcare Fraud
- Phantom Patients: Phantom patients are a malicious method used in healthcare fraud in which doctors falsify claims for people who do not exist or have died. This deceitful approach allows scammers to collect payments without providing any services, effectively scamming healthcare programs and insurers. Fraudsters use the identities of bogus or deceased patients to manipulate the system and obtain financial benefits to which they are not entitled. As a result, this fraudulent behavior not only threatens the integrity of healthcare programs but also causes financial losses and jeopardizes the faith placed in the healthcare system by both patients and insurers.
- Kickback Schemes: Healthcare providers may participate in kickback schemes, which involve receiving money or incentives in exchange for patient referrals, services, or the prescription of specific medications or treatments. These unlawful arrangements can skew medical decision-making by pushing practitioners to prioritize financial gain over patient well-being. Consequently, such kickbacks frequently result in the provision of redundant or unsuitable care, since healthcare practitioners may be motivated by monetary incentives rather than clinical necessity. This jeopardizes the quality of patient care and undermines trust and integrity in the healthcare system. Furthermore, bribe schemes contribute to increased healthcare expenses while raising ethical concerns about conflicts of interest in the medical profession.
- Upcoding and unbundling: Upcoding and unbundling are misleading methods common in healthcare billing. Upcoding is the practice of billing for a more expensive service or treatment than is actually provided, resulting in higher reimbursement rates. Unbundling, on the other hand, is the practice of invoicing separately for services that are generally packaged together as a single procedure, falsely raising prices. Both techniques result in unjustifiably higher reimbursement rates, misleadingly implying a higher degree of service than is really provided. Such fraudulent billing not only causes financial losses for healthcare programs and insurers but also distorts healthcare spending statistics, preventing appropriate cost assessments and resource allocation within the healthcare system.
- False billing: False billing is a common type of healthcare fraud that involves submitting false claims for services or procedures that were not provided, considered unnecessary, or misrepresented. This method is used by providers to inflate bills, bill for services that were never supplied, or charge for more expensive services than those that were provided. This dishonest tactic affects the integrity of healthcare billing systems, causing unnecessary financial losses for healthcare programs and insurers. Furthermore, it undermines patient trust and jeopardizes care quality, diverting resources away from legitimate medical requirements. To maintain the integrity of healthcare services, bogus billing must be addressed with strict control and enforcement procedures.
Hospice healthcare fraud case: San Gabriel Hospice and Palliative Care Inc.
From about January 2018 to May 2021, a scam was carried out to exploit flaws in the Medicare system. Akhsharumov, the mastermind of the enterprise, used his two hospice organizations, San Gabriel Hospice and Palliative Care Inc. (San Gabriel) and Broadway Hospice Inc., as fronts for fraudulent billing activities. The primary goal was to conceal Akhsharumov’s ownership and management over the hospice organizations from Medicare, which was accomplished by utilizing nominee owners.
Akhsharumov and Sarkisyan, posing as legitimate healthcare providers, engaged in a variety of illegal actions to support their fake business. Patient recruiters were paid kickbacks to entice people to hospice companies, increasing patient numbers and allowing the submission of bogus claims. Sarkisyan also played a key part in the deceit by submitting fake Medicare enrollment paperwork for San Gabriel, which obscured the true ownership structure and allowed the fraud to continue.
The ramifications of these actions were far-reaching, with Medicare unintentionally paying millions of dollars based on bogus claims made by hospice companies. San Gabriel alone collected about $3,668,050 from Medicare as a result of the false enrollment applications, demonstrating the extent of the government’s financial loss.
However, the scope of the deception did not end there. Akhsharumov attempted to profit from the COVID-19 outbreak, displaying blatant opportunism. After San Gabriel halted operating, he used the company as a conduit to illegally receive relief payments intended to help suffering healthcare providers. Akhsharumov stole an additional $50,000 from government relief programs by filing fake loan applications with the Small Business Administration and other institutions. Furthermore, he stole roughly $91,483 in cash granted to San Gabriel through the Provider Relief Fund, diverting critical resources meant to fight the public health issue for personal gain.
Legal Repercussions
The legal consequences of these actions were quick and harsh. Akhsharumov and Sarkisyan were both charged with conspiracy to commit healthcare fraud, and they pleaded guilty to their roles in the scheme. Akhsharumov was convicted to one year and one day in prison and compelled to pay $9,185,211 in restitution, which reflects the scale of the financial harm caused to Medicare. Similarly, Sarkisyan received a similar term and was forced to pay $3,688,050 in reparation, holding both offenders responsible for their heinous actions.
Conclusion
Looking ahead, the case involving California hospice companies serves as a sad reminder of the ongoing threat of healthcare fraud, as well as the important need to remain attentive to protecting public funds and maintaining the integrity of critical government programs. Stakeholders can effectively prevent fraud and ensure the long-term viability of the healthcare system by establishing a culture of compliance, improving detection capabilities, and holding wrongdoers accountable.
Combating healthcare fraud demands a collaborative effort from all parties. Implementing strong compliance controls, improving detection technologies, and enforcing severe fines for fraudulent activity are all critical steps toward eliminating this pervasive menace. We can protect public resources, maintain patient and insurer trust, and ensure that important healthcare programs are sustainable for future generations by cultivating an integrity and accountability culture in the healthcare industry. Let us be vigilant in our fight against healthcare fraud to defend the integrity of our healthcare system and the well-being of all citizens.
