Federal prosecutors allege that this nurse practitioner ordered more genetic tests for Medicare beneficiaries than any other provider during 2020
Cases of Medicare fraud involving clinical laboratory testing continue to be prosecuted by the federal Department of Justice. A jury in Miami recently convicted a nurse practitioner (NP) for her role in a massive Medicare fraud scheme for millions of dollars in medically unnecessary genetic testing and durable medical equipment. She faces 75 years in prison when sentenced in December.
In their indictment, federal prosecutors alleged that from August 2018 through June 2021 Elizabeth Mercedes Hernandez, NP, of Homestead, Florida, worked with more than eight telemedicine and marketing companies to sign “thousands of orders for medically unnecessary orthotic braces and genetic tests, resulting in fraudulent Medicare billings in excess of $200 million,” according to a US Department of Justice (DOJ) news release announcing the conviction.
“Hernandez personally pocketed approximately $1.6 million in the scheme, which she used to purchase expensive cars, jewelry, home renovations, and travel,” the press release noted.
Hernandez was indicted in April 2022 as part of a larger DOJ crackdown on healthcare fraud related to the COVID-19 outbreak.
“Throughout the pandemic, we have seen trusted medical professionals orchestrate and carry out egregious crimes against their patients all for financial gain,” said Assistant Director Luis Quesada (above) of the FBI’s Criminal Investigative Division, in a DOJ press release. Clinical laboratory managers would be wise to monitor these Medicare fraud cases. (Photo copyright: Federal Bureau of Investigation.)
Nurse Practitioner Received Kickbacks and Bribes
Federal prosecutors alleged that the scheme involved telemarketing companies that contacted Medicare beneficiaries and persuaded them to request genetic tests and orthotic braces. Hernandez, they said, then signed pre-filled orders, “attesting that she had examined or treated the patients,” according to the DOJ news release.
In many cases, Hernandez had not even spoken with the patients, prosecutors said. “She then billed Medicare as though she were conducting complex office visits with these patients, and routinely billed more than 24 hours of ‘office visits’ in a single day,” according to the news release.
In total, Hernandez submitted fraudulent claims of approximately $119 million for genetic tests, the indictment stated. “In 2020, Hernandez ordered more cancer genetic (CGx) tests for Medicare beneficiaries than any other provider in the nation, including oncologists and geneticists,” according to the news release.
The indictment noted that because CGx tests do not diagnose cancer, Medicare covers them only “in limited circumstances, such as when a beneficiary had cancer and the beneficiary’s treating physician deemed such testing necessary for the beneficiary’s treatment of that cancer. Medicare did not cover CGx testing for beneficiaries who did not have cancer or lacked symptoms of cancer.”
In exchange for signing the orders, Hernandez received kickbacks and bribes from companies that claimed to be in the telemedicine business, the indictment stated.
“These healthcare fraud abuses erode the integrity and trust patients have with those in the healthcare industry … the FBI, working in coordination with our law enforcement partners, will continue to investigate and pursue those who exploit the integrity of the healthcare industry for profit,” said Assistant Director Luis Quesada of the Federal Bureau of Investigation’s Criminal Investigative Division, in the DOJ press release.
Conspirators Took Advantage of COVID-19 Pandemic
Prosecutors alleged that as part of the scheme, she and her co-conspirators took advantage of temporary amendments to rules involving telehealth services—changes that were enacted by Medicare in response to the COVID-19 pandemic.
The indictment noted that prior to the pandemic, Medicare covered expenses for telehealth services only if the beneficiary “was located in a rural or health professional shortage area,” and “was in a practitioner’s office or a specified medical facility—not at a beneficiary’s home.”
But in response to the pandemic, Medicare relaxed the restrictions to allow coverage “even if the beneficiary was not located in a rural area or a health professional shortage area, and even if the telehealth services were furnished to beneficiaries in their home.”
Hernandez was convicted of:
One count of conspiracy to commit healthcare fraud and wire fraud.
Four counts of healthcare fraud.
Three counts of making false statements.
Medscape noted that she was acquitted of two counts of healthcare fraud. The trial lasted six days, Medscape reported.
Hernandez’s sentencing hearing is scheduled for Dec. 14.
Co-Conspirators Plead Guilty
Two other co-conspirators in the case, Leonel Palatnik and Michael Stein, had previously pleaded guilty and received sentences, the Miami Herald reported.
Palatnik was co-owner of Panda Conservation Group LLC, which operated two genetic testing laboratories in Florida. Prosecutors said that Palatnik paid kickbacks to Stein, owner of 1523 Holdings LLC, “in exchange for his work arranging for telemedicine providers to authorize genetic testing orders for Panda’s laboratories,” according to a DOJ press release. The kickbacks were disguised as payments for information technology (IT) and consulting services.
“1523 Holdings then exploited temporary amendments to telehealth restrictions enacted during the pandemic by offering telehealth providers access to Medicare beneficiaries for whom they could bill consultations,” the press release states. “In exchange, these providers agreed to refer beneficiaries to Panda’s laboratories for expensive and medically unnecessary cancer and cardiovascular genetic testing.”
Palatnik pleaded guilty to his role in the kickback scheme in August 2021 and was sentenced to 82 months in prison, a DOJ press release states.
Stein pleaded guilty in April and was sentenced to five years in prison, the Miami Herald reported. He was also ordered to pay $63.3 million in restitution.
These federal cases involving clinical laboratory genetic testing and other tests and medical equipment indicate a commitment on the DOJ’s part to continue cracking down on healthcare fraud.
Plans by several national retail pharmacy chains to expand primary care services and even some clinical laboratory test offerings may be delayed because of financial woes
Times are tough for the nation’s retail pharmacy chains. Rite Aid Corporation, headquartered in Philadelphia, closed 25 stores this year and has now filed for bankruptcy. In a press release, the retail pharmacy company announced it has “initiated a voluntary-court supervised process under Chapter 11 of the US Bankruptcy Code,” and that it plans to “significantly reduce the company’s debt” and “resolve litigation claims in an equitable manner.”
Rite Aid may eventually close 400 to 500 of its 2,100 stores, Forbes reported.
Meanwhile, other retail pharmacy chains are struggling as well. CVS Health, headquartered in Woonsocket, Rhode Island, and Walgreens Boots Alliance of Deerfield, Illinois, are each closing hundreds of stores, according to the Daily Mail.
They are each experiencing problems with labor costs, theft, being disintermediated for prescriptions by pharmacy benefit managers (PBMs), and probably building too many stores in most markets.
This is a significant development, in the sense that Walgreens, CVS, and Walmart are each working to open and operate primary care clinics in their stores. This is a way to offset the loss of filling prescriptions, which has migrated to PBMs. Primary care clinics are important to the revenue of local clinical laboratories, but retail pharmacy chains do not yet operate enough primary care clinics in their retail pharmacies to be a major influence on the lab testing marketplace.
“With the support of our lenders, we look forward to strengthening our financial foundation, advancing our transformation initiatives, and accelerating the execution of our turnaround strategy,” said Jeffrey Stein (above), Rite Aid’s CEO/Chief Restructuring Officer, in a press release. Clinical laboratory leaders may want to closely monitor the activities of the retail pharmacies in their areas. (Photo copyright: Rite Aid.)
Multiple Pharmacy Companies at Financial Risk
Rite Aid Corporation (NYSE: RAD) confirmed it continues to operate its retail and online platforms and has received from lenders $3.45 billion in financing to support the company through the bankruptcy process.
However, according to the Associated Press (AP), Rite Aid has experienced “annual losses for several years” and “faces financial risk from lawsuits over opioid prescriptions,” adding that the company reported total debts of $8.6 billion.
Additionally, the US Department of Justice (DOJ) filed a complaint “alleging that Rite Aid knowingly filled unlawful prescriptions for controlled substances,” explained a DOJ press release.
Rite Aid is not the only retail pharmacy brand dealing with unwelcome developments. Fortune reported last year that Walgreens and CVS paid a combined $10 billion to 12 states for “involvement in the opioid epidemic.”
Walgreens intends to close 150 US and 300 United Kingdom locations, its former Chief Financial Officer James Kehoe shared in a third quarter 2023 earnings call transcribed by Motley Fool.
And in a news release, CVS announced plans to close 900 stores between 2022 and 2024.
Pharmacy Companies’ Investment in Primary Care
Though they are experiencing difficulties on the retail side, Walgreens and CVS have significantly invested in primary care.
In that same ebrief, we reported on CVS’ acquisition of Oak Street Health, a Chicago-based primary care company, for $10.6 billion. CVS plans to have more than 300 healthcare centers by 2026.
“We looked at our business, and we said, ‘We’re seeing an aging population.’ We know people don’t have access to primary care. We know that value-based care is where it’s going. We know that there’s been a renaissance in home (care). So that’s kind of how we approached our acquisitions,” Karen Lynch, CVS Chief Executive Officer told Fortune.
Other Challenges to Retail Pharmacies
It could be that these major pharmacy chains are hoping entry into primary care will offset the loss of sales from prescriptions that have migrated to PBM organizations.
In addition to reimbursement challenges, retail pharmacies are reportedly experiencing:
High labor costs,
Competition from online, bricks-and-mortar, and grocery businesses, and
Effects from the work-at-home trend, among other struggles.
“I think there’s a number of challenges which are coming to a head. One, you have ongoing reimbursement pressure. The reimbursement level for drugs continues to decrease, so profit margin on the core part of the business is under pressure,” Rodey Wing, a partner in the health and retail practices of global strategy and management consulting firm Kearney, told Drug Store News.
Additionally, the pharmacy’s drug sales need to be high enough to retain pharmacists, who are difficult to recruit in a post-pandemic market, Drug Store News explained.
And in the retail space where products are displayed, some pharmacies struggle to compete with Amazon on convenience and with “dollar” stores on price. And with more people working from home, retail pharmacies are seeing less foot traffic, Drug Store News noted.
Retail pharmacy companies also have competition from pharmacies conveniently situated in grocery and big-box stores, Forbes reported. These include:
Walmart, for its part, reduced operating hours of pharmacies at more than 4,500 sites, Daily Mail reported.
Thus, medical laboratory leaders would be wise to keep an eye on market changes in their local retail pharmacies. Some locations are equipped with clinical laboratory services and a closure could give local labs an opportunity to reach out to patients and physicians who need access to a new testing provider.
Many clinical laboratory professionals are aware of the significant amount of waste going into landfills from spent COVID-19 rapid PCR tests that use biosensors to produce results. These biosensor systems “use printed circuit boards, or PCBs, the same materials used in computers. PCBs are difficult to recycle and slow to biodegrade, using large amounts of metal, plastic, and non-eco-friendly materials,” according to a Penn Engineering Today blog post.
UPenn’s new test does not use PCBs. Instead, its biosensor uses “bacterial cellulose (BC), an organic compound synthesized from several strains of bacteria,” the blog post noted.
“This new BC test is non-toxic, naturally biodegradable and both inexpensive and scalable to mass production, currently costing less than $4.00 per test to produce. Its cellulose fibers do not require the chemicals used to manufacture paper, and the test is almost entirely biodegradable,” the blog post continued.
“There is a need for biodegradable diagnostic testing,” said Cesar de la Fuente, PhD (above), Presidential Assistant Professor in the Psychiatry Department at the University of Pennsylvania’s Perelman School of Medicine. “We will be continuing to perfect this technology, which could hopefully help many people in the future, while also looking to expand it to other emerging pathogens in anticipation of future pandemics.” Clinical laboratories engaged in SARS-CoV-2 testing during the COVID-19 pandemic can attest to the massive amounts of waste generated by traditional PCR testing. (Photo copyright: University of Pennsylvania.)
Evolution of Improvement for SARS-CoV-2 Diagnostic Assays
Cesar de la Fuente, PhD, is Presidential Assistant Professor in the Psychiatry Department at the Perelman School of Medicine. His lab has been hard at work since the start of the pandemic to improve COVID-19 testing. The recent study was a collaboration between University of Pennsylvania’s de la Fuente Lab and William Reis de Araujo, Professor in Analytical Chemistry at the State University of Campinas (UNICAMP) in São Paulo, Brazil.
De Araujo leads the Portable Chemical Sensors Lab and has been pairing his electrochemistry expertise with de la Fuente’s lab for years, Penn Engineering Today noted.
The team wanted to combine the speed and cost-effectiveness of previous rapid tests with an eco-friendly biodegradable substrate material.
Bacterial cellulose (BC) was a great choice because it “naturally serves as a factory for the production of cellulose, a paper-like substance which can be used as the basis for biosensors,” Penn Engineering Today reported.
Additionally, BC has an excellent track record for a variety of uses, such as regenerative medicine, wound care, and point-of-care (POC) diagnostics, the blog post noted. UPenn’s test offers speed and accuracy without needing costly equipment making it desirable for clinical laboratories preparing to fight the next pandemic.
The test has shown to be capable of “correctly identifying multiple variants in under 10 minutes. This means that the tests won’t require ‘recalibration’ to accurately test for new variants,” Penn Engineering Today added.
Innovation Born from Inspiration
Though rapid tests are essential to help curb the spread of COVID-19, the negatives that come with these tests didn’t sit well with the UPenn team. This spurred them to strive for improvements.
PCR tests “are hampered by waste [metal, plastic, and the aforementioned PCBs]. They require significant time [results can take up to a day or more] as well as specialized equipment and labor, all of which increase costs,” Penn Engineering Today noted.
Additionally, “Sophistication of PCR tests makes them harder to tweak and therefore slower to respond to new variants,” the blog post concluded.
“There’s a tension between these two worlds of innovation and conservation,” de la Fuente told Penn Engineering Today. “When we create new technology, we have a responsibility to think through the consequences for the planet and to find ways to mitigate the environmental impact.”
Need for Biodegradable Diagnostic Tests
“COVID-19 has led to over 6.8 million deaths worldwide and continues to affect millions of people, primarily in low-income countries and communities with low vaccination coverage,” the Cell Reports Physical Science paper noted.
“There is a need for biodegradable diagnostic testing,” de la Fuentes told Penn Engineering Today. “We will be continuing to perfect this technology, which could hopefully help many people in the future, while also looking to expand it to other emerging pathogens in anticipation of future pandemics.”
While UPenn’s test will require clinical trials and FDA approval before it can become available to clinical laboratories and for point-of-care testing, it promises a bright, eco-friendly future for rapid viral testing.
Pathologists and clinical laboratory managers will want to stay alert to the concerns voiced by tech experts about the need to exercise caution when using generative AI to assist medical diagnoses
GPTs are an integral part of the framework of a generative artificial intelligence that creates text, images, and other media using generative models. These neural network models can learn the patterns and structure of inputted information and then develop new data that contains similar characteristics.
Through their proposal, the AMA has developed principles and recommendations surrounding the benefits and potentially harmful consequences of relying on AI-generated medical advice and content to advance diagnoses.
“We’re trying to look around the corner for our patients to understand the promise and limitations of AI,” said Alexander Ding, MD (above), AMA Trustee and Associate Vice President for Physician Strategy and Medical Affairs at Humana, in a press release. “There is a lot of uncertainty about the direction and regulatory framework for this use of AI that has found its way into the day-to-day practice of medicine.” Clinical laboratory professionals following advances in AI may want to remain informed on the use of generative AI solutions in healthcare. (Photo copyright: American Medical Association.)
Preventing Spread of Mis/Disinformation
GPTs are “a family of neural network models that uses the transformer architecture and is a key advancement in artificial intelligence (AI) powering generative AI applications such as ChatGPT,” according to Amazon Web Services.
In addition to creating human-like text and content, GPTs have the ability to answer questions in a conversational manner. They can analyze language queries and then predict high-quality responses based on their understanding of the language. GPTs can perform this task after being trained with billions of parameters on massive language datasets and then generate long responses, not just the next word in a sequence.
“AI holds the promise of transforming medicine,” said diagnostic and interventional radiologist Alexander Ding, MD, AMA Trustee and Associate Vice President for Physician Strategy and Medical Affairs at Humana, in an AMA press release.
“We don’t want to be chasing technology. Rather, as scientists, we want to use our expertise to structure guidelines, and guardrails to prevent unintended consequences, such as baking in bias and widening disparities, dissemination of incorrect medical advice, or spread of misinformation or disinformation,” he added.
The AMA plans to work with the federal government and other appropriate organizations to advise policymakers on the optimal ways to use AI in healthcare to protect patients from misleading AI-generated data that may or may not be validated, accurate, or relevant.
Advantages and Risks of AI in Medicine
The AMA’s proposal was prompted by AMA-affiliated organizations that stressed concerns about the lack of regulatory oversight for GPTs. They are encouraging healthcare professionals to educate patients about the advantages and risks of AI in medicine.
“AI took a huge leap with large language model tool and generative models, so all of the work that has been done up to this point in terms of regulatory and governance frameworks will have to be treated or at least reviewed with this new lens,” Sha Edathumparampil, Corporate Vice President, Digital and Data, Baptist Health South Florida, told Healthcare Brew.
According to the AMA press release, “the current limitations create potential risks for physicians and patients and should be used with appropriate caution at this time. AI-generated fabrications, errors, or inaccuracies can harm patients, and physicians need to be acutely aware of these risks and added liability before they rely on unregulated machine-learning algorithms and tools.”
According to the AMA press release, the organization will propose state and federal regulations for AI tools at next year’s annual meeting in Chicago.
In a July AMA podcast, AMA’s President, Jesse Ehrenfeld, MD, stressed that more must be done through regulation and development to bolster trust in these new technologies.
“There’s a lot of discomfort around the use of these tools among Americans with the idea of AI being used in their own healthcare,” Ehrenfeld said. “There was a 2023 Pew Research Center poll [that said] 60% of Americans would feel uncomfortable if their own healthcare provider relied on AI to do things like diagnose disease or recommend a treatment.”
WHO Issues Cautions about Use of AI in Healthcare
In May, the World Health Organization (WHO) issued a statement advocating for caution when implementing AI-generated large language GPT models into healthcare.
A current example of such a GPT is ChatGPT, a large language-based model (LLM) that enables users to refine and lead conversations towards a desired length, format, style, level of detail and language. Organizations across industries are now utilizing GPT models for Question and Answer bots for customers, text summarization, and content generation and search features.
“Precipitous adoption of untested systems could lead to errors by healthcare workers, cause harm to patients, erode trust in AI, and thereby undermine (or delay) the potential long-term benefits and uses of such technologies around the world,” commented WHO in the statement.
WHO’s concerns regarding the need for prudence and oversight in the use of AI technologies include:
Data used to train AI may be biased, which could pose risks to health, equity, and inclusiveness.
LLMs generate responses that can appear authoritative and plausible, but which may be completely incorrect or contain serious errors.
LLMs may be trained on data for which consent may not have been given.
LLMs may not be able to protect sensitive data that is provided to an application to generate a response.
LLMs can be misused to generate and disseminate highly convincing disinformation in the form of text, audio, or video that may be difficult for people to differentiate from reliable health content.
Tech Experts Recommended Caution
Generative AI will continue to evolve. Therefore, clinical laboratory professionals may want to keep a keen eye on advances in AI technology and GPTs in healthcare diagnosis.
“While generative AI holds tremendous potential to transform various industries, it also presents significant challenges and risks that should not be ignored,” wrote Edathumparampil in an article he penned for CXOTECH Magazine. “With the right strategy and approach, generative AI can be a powerful tool for innovation and differentiation, helping businesses to stay ahead of the competition and better serve their customers.”
GPT’s may eventually be a boon to healthcare providers, including clinical laboratories, and pathology groups. But for the moment, caution is recommended.
By analyzing strains of the bacterium from a hospital ICU, the scientists learned that most infections were triggered within patients, not from cross-transmission
Tracking the source of Hospital-acquired infections (HAI) has long been centered around the assumption that most HAIs originate from cross-transmission within the hospital or healthcare setting. And prevention measures are costly for hospitals and medical laboratories. However, new research puts a surprising new angle on a different source for some proportion of these infections.
The study suggests that most infections caused by Clostridioides difficile (C. Diff), the bacterium most responsible for HAIs, arise not from cross-transmission in the hospital, but within patients who already carry the bacterium.
A researcher performed whole genome sequencing on 425 strains of the bacterium isolated from the samples and found “very little evidence that the strains of C. diff from one patient to the next were the same, which would imply in-hospital acquisition,” according to a UM news story.
“In fact, there were only six genomically supported transmissions over the study period. Instead, people who were already colonized were at greater risk of transitioning to infection,” UM stated.
Arianna Miles-Jay, PhD, a postdoctoral fellow in The Snitkin Lab at the University of Michigan and Manager of the Genomic Analysis Unit at the Michigan Department of Health and Human Services, performed the genomic sequencing. “By systematically culturing every patient, we thought we could understand how transmission was happening. The surprise was that, based on the genomics, there was very little transmission,” she said in the UM news story.
“Something happened to these patients that we still don’t understand to trigger the transition from C. diff hanging out in the gut to the organism causing diarrhea and the other complications resulting from infection,” said Evan Snitkin, PhD (above), Associate Professor of Microbiology and Immunology, and Associate Professor of Internal Medicine, Division of Infectious Diseases at University of Michigan, in a UM news story. Medical laboratories involved in hospital-acquired infection prevention understand the importance of this research and its effect on patient safety. (Photo copyright: University of Michigan.)
Only a Fraction of HAIs Are Through Cross-Transmission
In the study abstract, the researchers wrote that “despite enhanced infection prevention efforts, Clostridioides difficile remains the leading cause of healthcare-associated infections in the United States.”
Citing data from the US Centers for Disease Control and Prevention (CDC), HealthDay reported that “nearly half a million C. diff infections occur in the United States each year. Between 13,000 and 16,000 people die from the bacterium, which causes watery diarrhea and inflammation of the colon. Many of these infections and deaths have been blamed on transmission between hospitalized patients.”
The new study, however, notes that 9.3% of the patients admitted to the ICU carried toxigenic (produces toxins) C. diff, but only 1% acquired it via cross-transmission. The carriers, the study authors wrote, “posed minimal risk to others,” but were 24 times more likely to develop a C. diff infection than non-carriers.
“Our findings suggest that measures in place in the ICU at the time of the study—high rates of compliance with hand hygiene among healthcare personnel, routine environmental disinfection with an agent active against C. diff, and single patient rooms —were effective in preventing C. diff transmission,” Snitkin told HealthDay. “This indicates that to make further progress in protecting patients from developing C. diff infections will require improving our understanding of the triggers that lead patients asymptomatically carrying C. diff to transition to having infections.”
Recognizing Risk Factors
Despite the finding that infections were largely triggered within the patients, the researchers still emphasized the importance of taking measures to prevent hospital-acquired infections.
“In fact, the measures in place in the Rush ICU at the time of the study—high rates of compliance with hand hygiene among healthcare personnel, routine environmental disinfection with an agent active against C. diff, and single patient rooms—were likely responsible for the low transmission rate,” the UM news story noted.
One expert not involved with the study suggested that hospitals’ use of antibiotics may be a factor in causing C. diff carriers to develop infections.
“These findings suggest that while we should continue our current infection prevention strategies, attention should also be given to identifying the individuals who are asymptomatic carriers and finding ways to reduce their risk of developing an infection, like carefully optimizing antibiotic usage and recognizing other risk factors,” Hannah Newman, Senior Director of Infection Prevention at Lenox Hill Hospital in New York City, told HealthDay.
Snitkin, however, told HealthDay that other factors are likely at play. “There is support for antibiotic disruption of the microbiota being one type of trigger event, but there is certainly more to it than that, as not every patient who carries C. diff and receives antibiotics will develop an infection.”
Another expert not involved with the study told HealthDay that “many patients are already colonized,” especially older ones or those who have been previously hospitalized.
“A lot of their normal flora in their GI tract can be altered either through surgery or antibiotics or some other mechanism, and then symptoms occur, and that’s when they are treated with antibiotics,” said Donna Armellino, RN, Senior VP of Infection Prevention at Northwell Health in Manhasset, New York.
This research also demonstrates the value of faster, cheaper, more accurate gene sequencing for researching life-threatening conditions. Microbiologists, Clinical laboratory scientists, and pathologists will want monitor further developments involving these findings as researchers from University of Michigan and Rush University Medical Center continue to learn more about the source of C. diff infections.
