Case of the Month: Another MD-Owned Lab Gets Busted for Urine Drug Test Abuses

Fraudulent utilization and billing of urine drug screening first became a priority for federal enforcers since the $256 million Millennium settlement of 2016. But the opioid crackdown has heightened the urgency. At the center of the bull’s eye are Medicare and Medicaid billing abuses committed by physician-owned drug abuse, rehab and pain clinics. The most recent $4.1 million settlement by the physician owner of a now shuttered Milwaukee mental health clinic is in many ways typical of what’s been happening for the past three years.

The Acacia Case

Dr. Abraham Freund acquired the Acacia Mental Health Clinic LLC in 2009 recognizing its enormous potential as a source of Medicaid drug testing revenues. He soon implemented new rules requiring every patient to provide a urine sample for every type of visit, even when they weren’t being seen for drug abuse issues, according to the government’s lawsuit. Every sample collected was tested for the same drugs.

From Paper to Gold-Plated Technology

At first, Acacia used a simple “pee in a cup” test detecting the presence of several drugs which was reimbursable at $20 but often upcoded to nearly 10 times that amount. But in November 2012, Acacia bought a $40,000 analyzer which raised the level of reimbursement to $300 per test. Subsequent technological upgrades allowed Acacia to perform and bill for more complex and expensive tests to the point where the clinic was getting paid an average of $474.66 by 2013. Medicaid reimbursement grew from $332K in 2011 to $3.3 million (for nearly 9,000 urine drug screens) in 2014. Between 2011 and 2015, Acacia was accounting for an astounding 99% of all Wisconsin Medicaid payments for mental health and substance abuse counseling services.

The Whistle Blows

As is often the case, Acacia was undone by an inside source. In 2013, nurse practitioner Rose Presser filed a whistleblower suit accusing the clinic of requiring excessive drug screens and prescription refills as well as billing initial appointments as “assessments.” After initially declining to intervene, the DOJ had a change of heart.

Last month, Freund agreed to settle the case for $4.1 million (of which the whistleblower will be entitled up to 30%) and a 20-year Medicare and Medicaid exclusion. The one part of the settlement that makes it different from previous cases is the inclusion of charges that Acacia, Freund and his son, Isaac, falsely billed Medicaid for telemedicine services provided by psychiatrists located outside the US.

Analysis: Why Physician-Owned Labs Have Become the Primary Target

Urine drug test abuse has attracted the attention of whistleblowers and prosecutors because it amalgamates two forms of high-priority misconduct:

• Traditional Medicare fraud, i.e., generation of enormous revenues in overcharges or services that aren’t medically necessary; and
• Promotion of both legal and illegal opioid use.

Although big testing labs like Millennium have been involved, much of the recent focus has been on rogue physicians, particularly those who perform tests out of their own offices and labs. What makes these testing scams cases even more egregious is that the victims, which typically include the indigent, the mentally ill and patients with current or previous drug addictions, are often forced to undergo testing so that doctors can turn a profit.