​An Injection of Fraud

Internal auditors and regulators need to look out for medical fraud disguised as legitimate care.

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​The CEO of a Michigan-based health-care group has pleaded guilty to charges of paying doctors to administer medically unnecessary injections "that resulted in patient harm," according to WXYZ in Detroit. In the $300 million scheme, Mashiyat Rashid, CEO of pain clinic operator Tri-County Wellness Group, rewarded doctors based on the number of back pain injections Medicare paid for. Many of the patients were addicted to opioids and agreed to receive the shots to obtain pills. As part of his plea, Rashid will forfeit more than $51 million as well as commercial and residential property he owns.

Lessons Learned

Medicare fraud continues to grow in size and scope, and now encompasses the widespread opioid crisis. Since 2007, the U.S. Medicare Fraud Strike Force has charged more than 4,000 defendants with billing the Medicare program for more than $14 billion collectively.

Fraudsters such as Rashid aim to profit illegally from schemes that harm taxpayers and expose patients to the dangers of opioid drugs. Internal auditors and regulators can help prevent these abuses by focusing on controls in several areas.

  • Always look out for the "shell game." Fraudsters often cover up fraud by operating a seemingly innocent activity. Rashid owned, controlled, and operated numerous pain clinics, laboratories, and other providers in Michigan and Ohio. For nine years until his arrest in 2017, Rashid conspired with physicians to require Medicare beneficiaries who wished to obtain controlled substances to submit to expensive, medically unnecessary, and painful back injections. 

    While it isn't known how many of these injections were forced on patients, U.S. Justice Department officials say Rashid and the doctors associated with his clinics distributed more than 6 million doses. Medicare eventually determined that 100 percent of the injection claims were not eligible for reimbursement. Auditors could have detected these red flags earlier using data mining techniques.
  • Establish robust controls over Medicare enrollment by fake companies. Shifting and multiple corporate registrations that trace back to the same owners is another red flag that might have been detected and investigated earlier in this case. The fraudsters created new shell companies that they enrolled in Medicare to keep the fraudulent billing going. Often, they only changed the name of the company on the door and invented new suite numbers to conceal themselves.
  • Enhance whistleblower programs and incentives. Many patients implicated in Rashid's scheme were motivated by gaining access to opioid drugs. Publicizing these Medicare frauds and providing ways for patients to report their concerns to authorities without fear of reprisal can help uncover these crimes. Financial incentives can motivate whistleblowers to come forward. But the fraudsters offer incentives, too. Rashid paid kickbacks to obtain patients and bribed physicians to refer Medicare beneficiaries to specific third-party home health agencies.
  • Pay attention to significant lifestyle changes of senior executives. Even in the medical industry, where many people are highly compensated, there are lifestyle clues that can lead the U.S. Internal Revenue Service and financial fraud trackers to illegal activities. Rashid pleaded guilty to money laundering in connection with a $6.6 million wire transfer. He used the money to live extravagantly, purchasing a mansion and other real estate, as well as luxury clothes, rare watches, and exotic automobiles
Art Stewart
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About the Author



Art StewartArt Stewart<p>​Art Stewart is an independent management consultant with more than 35 years of experience in internal audit, financial management, performance measurement, governance, and strategic policy planning.​​​</p>https://iaonline.theiia.org/authors/Pages/Art-Stewart.aspx


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