Keith Fernandez, CEO of National Diagnostic Solutions (NDS), is the second whistleblower to go public with an accusation of Medicare risk adjustment fraud against multiple Health Maintenance Organisations (HMOs), including Anthem Subsidiaries and Physician Partners LLC (PPL). Executives of these HMOs ostensibly sought to artificially increase the risk score of PPL’s Medicare Advantage to enhance their reimbursement payments from the government.

Ultrasound Screening Fear Mongering

In September 2015, Fernandez’s company NDS (an ultrasound provider and licenced health company) contracted with PPL (a management service organisation responsible for 22,000 Medicare Advantage patients) to supply ultrasound screening exams to PPL’s Medicare Advantage patients in Florida. As per the contract, NDS performed rare ultrasound screening exams ‘of the lower arteries of the legs and echocardiograms’ to PPL’s patients for a standard rate of $70USD per screening; 1,748 screening exams were conducted on PPL patients over the next two months.

Soon after, Fernandez discovered that PPL was allegedly routinely committing Medicare adjustment fraud by forging prescriptions for both leg and cardiac screening scans. Furthermore, instead of the scripts being sanctioned by their physicians directly, PPL implored patients to call a ‘toll-free’ number, during which, a PPL call centre was instructed to warn patients that for the sake of their health they could not afford to refuse the tests. This promotion of medically non-beneficial testing through fear mongering advertisements allowed PPL to submit medically unnecessary but profitable referrals.

Fernandez is certain that the aforementioned tests were commissioned to ‘increase the risk score’ of PPL’s Medicare Advantage to consequently enhance the government’s reimbursement payments from Medicare to PPL for a number of reasons. Firstly, there were in fact no medically-approved reasons to necessitate the need of such heavy radiology exams, and were supposedly purely made for the direct benefit of the Anthm Subsidiaries (Freedom Health & Optimum Health) as well as PPL. This assertion is compounded by the fact that echocardiograms are not normally ordered by primary care physicians – even specialised cardiologists refer to them only upon ‘a precipitating examination and medical necessity’.

Problems with Phyno Screenings

It is commonly believed amongst medical experts that the basic package of six cardiovascular disease screening tests advertised by HealthFair, especially for unselected, asymptomatic individuals in the general population is not appropriate and is more likely to cause harm than provide benefit.

When screening is performed so broadly on unselected, predominantly asymptomatic populations (i.e. not those at notable risk), it can lead to many false-positive test results, incurring physical, psychological and financial harms. Moreover, screened patients directly bear unnecessary cost as a result of the initial screening and any unnecessary follow up testing and treatment interventions incurred by the false-positive test result. Additionally, an indirect cost is borne by the broader insured population due to the insurance companies passing on the costs of superfluous follow-up testing and treatment via increased premiums.

Estimated Damages of the Fraud

Fernandez maintains that the scale of this fraud allowing HMO executives to live ‘lavish, opulent, no rules’ lifestyles is comparable to the size of the WorldCom, Enron, Galleon Group and Madoff scandals.

Furthermore, it is estimated that the damage to the government caused by PPL’s engagement with NDS is about equal to $6,000,000 per year in Medicare reimbursement (1000 false claims for screening ultrasounds x $500 increased capitation payments per month x 12 months per year). However, NDS was not the only company that PPL contracted to perform screening tests on their behalf; Fernandez was informed by Kollefrath that PPL had contracted HealthFair, another diagnostic testing company, that had administered ultrasounds to over 12,000 patients. Consequently, the final estimate of the aforementioned Medicare Risk Adjustment fraud is over $70,000,000 in damages to the U.S. Government. This poses a worrying issue of how this was able to happen at such a large scale, especially since the first whistleblower on this issue Darren Sewell, who tragically passed away at age 39 due to exhaustion shortly after his allegations against PLL.

Final Take

If Fernandez’s assertions of HMO executives exploiting screening to fund their own lifestyles is true, it’s immoral on multiple levels. Promoting medically non-beneficial testing through fear mongering adverts to generate medically unnecessary but profitable referrals violates the principles of beneficence and nonmaleficence these institutions are supposed to uphold.



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