Medicare’s Crackdown on Fraud Stirs Debate

A crackdown on Medicare billings for mental health care in Southern California that has saved about $1 million a month has thrown benefits into question for thousands of elderly and disabled people, and sparked a bitter battle over whether the savings are worth the human cost.

The 11-month-old effort is seen as a prelude to the coming national debate over how to curb spiraling Medicare claims. Both Congress and President Clinton have vowed to take up the Medicare issue during Clinton’s final term in office. At issue is a campaign that Medicare launched last December, aiming to wipe out a rash of “egregious” billing abuses among mental health care practitioners here.

Concerned about the high volume of claims for psychotherapy in Southern California, defined by Medicare as the southern half of the state, the government had done an audit and was appalled at the results. In some cases, counselors who had done little more than show up to nibble cookies at a nursing home coffee klatch had billed Medicare for “group therapy.” In others, psychologists had billed for more than 24 hours of therapy in a day, or for “sessions” with patients who turned out to be all but brain-dead.

But in its efforts to end the abuse and bring Southern California’s mental health payouts into line with other states, critics say, Medicare has jeopardized beneficial therapy, disrupting counseling and forcing an increasing number of practitioners to drop Medicare patients. The situation has primarily affected the elderly, professionals say, but has also been painful and difficult for the chronically mentally ill, for whom Medicare has begun to question most forms of treatment beyond drug management.

“We’re having to terminate abruptly with maybe 40 clients,” said Mary L. Adams, director of HELP, a San Diego mental health care agency that is among hundreds of practices that serve Southern California’s Medicare recipients. “These are elderly people, some of whom have no family or support system left. They are very isolated. And now they feel abandoned too.”

“I support a crackdown on abuse, but I think they’re throwing the baby out with the bathwater,” said Joel R. Sunkin, a clinical psychologist in Downey whose practice includes a number of board-and-care residents who are schizophrenic.

“I have people who, when I started seeing them, were so depressed they would sleep to noon or 1 in the afternoon. Now they’re up, they take walks, they take part in groups at the board-and-care home. One man who used to do nothing all day now goes to the library on his own. . . . The therapy does something drugs can’t do. It can bring people back to life. To not give these people treatment is to destroy their hope of getting better.”

But Alysson Blake, associate regional administrator for Medicare in San Francisco, said the restrictions have been a long time coming, and attributed the outcry largely to the fact that Medicare’s administrators were so lax for so long with mental health claims.

“We don’t want to be paying for services that are . . . not medically necessary,” she said. “There’s a limit to how much an insurer [is] required to pay, whether it’s Medicare, Medicaid or a private insurer.”

The controversy echoes the furor the managed care revolution has wrought among the privately insured. Eager to cut runaway health insurance costs, most companies have severely limited the amount and type of mental health care they will subsidize, raising a heated debate over what’s necessary, what works and what’s merely nice.

Until recently, that debate was not as immediate for the disabled and elderly, whose mental health care is paid for by Medicare. But in the last several years, Congress has been pressed to harness the rapid depletion of the Medicare trust fund, and that mandate has expanded the furor to the public sector as well.

The stringent reviews initiated in California are a preview of a model plan for inspecting psychiatric claims that medical directors for Medicare insurance carriers had been working on at a national level since early last year, officials said. The model was to have been tested at some point, they said, but the abuses here gave Medicare a chance to give it an early trial in December 1995. During the first half of 1995, Medicare was paying out an average of $5 million a month for mental health care in Southern California.

Medicare officials said that in the past several months, carriers in other states, including Florida and New York, have begun to implement reviews similar to the one going on in Southern California. They expect reviews to eventually be initiated nationwide.

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Government officials said the concern about Southern California began about two years ago, when several families took a close look at some routine statements the government had been sending them about the care of relatives in nursing homes.

Upon inspection, officials said, the families--whom they would not identify--found that taxpayers were being billed for psychotherapy that their relatives had never asked for.

About the same time, they said, Medicare investigators doing a separate audit noticed that people in nursing homes in Southern California seemed to be getting an extraordinary amount of counseling.

The situation prompted the Health Care Financing Administration, which runs Medicare, to take a closer look.

What the agency found was startling: Southern California, with 5% or less of the nation’s Medicare population, was generating about 20% of the program’s psychology bills.

Part of that statistic, officials said, has to do with the culture of Southern California, where psychotherapy is more generally accepted than in other parts of the country.

Part, too, was attributable to a policy change Medicare initiated in 1990, when a per-patient cap on mental health care was lifted. At the same time, coverage was expanded to make it easier for people to be treated by psychologists and social workers if they preferred one of those professionals to a medically trained psychiatrist.

Practitioners had seized on the change as an opportunity to make up for the cuts in reimbursement that were becoming the norm among their privately insured clients. As a result, HCFA found, Medicare billings for mental health services “multiplied considerably,” especially in populous states such as California.

But those factors didn’t seem to tell the whole story, so Medicare asked Transamerica Occidental Life--the insurance company that processes its claims for Southern California--to look more closely.

What Transamerica uncovered was a situation that the insurer would later describe as “egregious abuse.”

“Patients with senile dementia and severe Alzheimer’s were being seen several times a week, week after week,” said Dr. Daniel Borenstein, a psychiatrist who consulted on the audit. In other cases, practitioners would show up offering to do group therapy in nursing homes, and then bill for the services whether they were hired or not.

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The situation was deemed so severe that the Health Care Financing Administration and Transamerica decided to crack down immediately, using the draft review policy the carriers group had been working on as a rough guide for judging claims, according to Dr. Donald Adams, medical director for Transamerica.

At the same time, as is routine, Transamerica solicited advice from local practitioners and from its own mental health advisory panel to help sort the good claims from the bad, and the medically necessary therapy from the type of treatment that wasn’t covered by Medicare.

But some practitioners say the final policy settled on definitions of “medical necessity” that are far from resolved in the mental health field.

Many psychiatrists say schizophrenics don’t benefit much from psychotherapy. On the other hand, many psychologists believe that long-term psychotherapy is crucial for schizophrenics. They say it can help them overcome the extreme passivity and depression that make them seem so lifeless to others, and that renders them so vulnerable to “voices” in their heads.

Sunkin tells of one of his board-and-care patients, a middle-aged schizophrenic man whom he began seeing twice a month in the late 1980s. Once, the man had driven a delivery truck, but he had had a breakdown; he simply walked off into the desert one day. He ended up in the board-and-care home, where, day after day, year after year, he refused to speak.

When Sunkin took the case, the psychologist said, the man was spending his days lying on his bed and staring at the ceiling. Nothing engaged him, until, one day, the therapist had a thought, and murmured it aloud.

“You’re waiting,” he said. Something flickered in the man’s eyes. “You’ve been waiting all your life.”

Slowly, the man began to nod. And that was the beginning. Today the man has a job answering phones at the home and a holds hands with a female friend in the courtyard. When he sees Sunkin, he pesters the psychologist for his back issues of Newsweek.

“There’s a person, where there was only a shell before,” Sunkin said. “It wasn’t the drugs that changed.”

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But under the new Medicare policy, such long-term psychotherapy--weekly or bimonthly sessions that can continue for several years--is being actively discouraged, in part because other professionals say success stories such as Sunkin’s are rare. A recent letter to providers from Transamerica indicated that “treatment in excess of 20 sessions per [breakdown] could be considered prolonged treatment and may be subject to medical review.”

Officials at Transamerica said the 20-session figure is merely a benchmark for taking a closer look at a case. But psychotherapists say the figure has become a de facto cutoff point--as the insurer has increasingly denied treatment beyond that for various reasons--raising the broader concern that Transamerica may be denying claims arbitrarily.

Russ Newman, executive director for professional practice at the American Psychological Assn. in Washington, said the organization has received numerous complaints about Transamerica. He added that representatives of mental health care groups have met with the insurer, but have come away with little clarification about why so many claims are being denied.

Newman said the association, along with lobbyists for psychiatrists, have discussed the new policy with members of Congress, and are considering legal action.

But Adams, Transamerica’s medical director, said claims are carefully reviewed, not just by the company’s employees but by mental health professionals as well. He said there are ample opportunities for denials to be appealed.

The real issue, he said, is the struggle among mental health care professionals to separate “hand holding” from care that is medically necessary.

“I tell them they’re being reviewed by their peers,” Adams said, “and if they want to convince someone, that’s who they need to convince.”