MEDICAID INVESTIGATIONS DIVISION )-14 SUMMARY OF INV NORTH CAROLINA ATTORNEY GENERAL'S OFFICE ATION MEMORANDU! File Name: MID File Number: L-l-17 Activity: Memo prepared by: Date Memo Completed: 03/06/2019 Memo Profile Number: 1053512 Signature: Supervisor Approval: QUESTION PRESENTED: INVESTIGATOR(S): RELATED MATTER(S): PERIOD OF COVERED CONDUCT: METHOD OF VIOLATION: SOURCE OF CASE: CASE ASSIGNMENT: CONTACTS WITH SUSPECT(S): sl Mako Medical Laboratories, LLC Summary of Investigation Richard Bedford/Samantha Williams fébed ‘TRODUC’ 10) Billing Frequency, Age of Recipients, Billing Patterns, Kickbacks Richard Bedford & Samantha Williams V-57-17 Mako; V-13-18 Morse/Vance Recovery 2015 — 2018 May 15, 2017 2 IMARY OF INVESTIGATION ‘The Medicaid Investigations Division (MID) received an allegation of Medicaid This report is the property of the Medicaid Investigations Division. It and its contents may not he reproduced without permission. The report is for official use only and its disclosure (o unauth ved persons is prohibited.fraud against Mako Medical Laboratories, LLC (Mako). The allegation was based off certain billing patterns from claims submitted for reimbursement by Mako to the Division of Health Benefits (VHB). Ihe main concerns about Mako’s billing according l DEB personnel were, amount of juvenile recipients tested for drugs, frequency of urine testing of recipients, recipients sharing the same address and diagnoses, the amount of drug classes billed per recipient urine sample, and the majority of the urine tests Mako analyzed came from only a few referring providers, sugges ippropriate behavior between Mako and the referring providers. (Profile 920731) Mako is a laboratory that performs a variety of different tests for healtheare providers. Mako markets their services to healthcare providers and providers will sign a contract with Mako for testing services. Mako representatives Josh Arant (Arant) and Chad Price (Price) explained that the contracts do not require healthcare providers enter into an exclusivity agreement with Mako. Arant and Price explained that if the healthcare provider wanted to use a different laboratory, the healthcare provider could do so. (Profile 1038109) Once a medical provider has signed a contract with Mako, Mako will start to receive samples, for instance blood or urine samples, from the medical providers that ship the samples to Mako for testing. Mako will test the sample, and send the results hack to the requesting provider. Mako will bill the N.C. Medicaid system for the tests Mako performs. The referring provider is not supposed to bill for anything related to the tests of samples submitted to Mako. At the time of the referral, Mako was a relatively new company. Another issue that caught DHB’s attention was the rate of growth Mako experienced within 18 months of opening their business ‘The MID received an allegation against another provider that involved Mako. This allegation was a civil complaint. Bedford and Williams were assigned to investigate both complaints. Eventually, Financial Investigator Jennifer Brock (Brock) was assigned to investigate the civil complaint, and Redford and Williams investigated the criminal case against Mako. This summary pertains to information obtained in regards to their criminal investigation into Mako. Bedford and Williams interviewed DHB personnel, Kay Cox (Cox) and Patricia Meyer (Meyer), involved with the Mako referral to MID. Cox and Meyer provided guidance and clarification as to what DHB found during an on-site audit of Mako as well as policies related to laboratory testing. According to Cox and Meyer, there was no policy regarding the unbundling of billing claims tor definitive laboratory (ests until the summer of 2016. The majority of billing claims called into question in the Mako referral occurred prior to when the policy was enacted. Bedford and Williams also asked Cox and Meyer to explain the This report is the property of the Medicaid Investigations Division. It and its contents may not be reproduced without permission. The report is for official use only and its disclosure to unauthorized persons is prohibited.protocol for standing orders for laboratory testing. Cox and Meyer stated that standing orders must be on file at the provider’s office. However, Cox and Meyer indicated there is no DHB policy requiring a standing order to be checked prior to running a laboratory test. Bedford and Williams received more specific information about the drug testing and urinalysis policies from Jessica Kollins (Kollins) of DHB. Kollins confirmed the information Cox and Meyer provided Bedford and Williams earlier. Rollins also informed Bedford and Williams that providers still have the choice of which codes to bill in regards to Current Procedural Terminology (CPT) codes and HCPCS codes. This is relevant due to reimbursement rates for individual codes. Rollins also stated that the referring provider dictates what tests are medically necessary for a recipient’s urinalysis. Mako performs the tests ordered by the referring provider. After Bedford and Williams reviewed recipient patient files fiom different referring providers, they noticed the standing orders for most recipients noted drug testing for the maximum amount of allowed drug classes for every urine sample. During multiple interviews with guardians of adolescent recipients, when Bedford and Williams asked the guardians if they were aware their child was being tested for drugs such as cocaine, the guardians often expressed shock and confusion. Bedford and Williams further asked the guardians if they ever saw the test results or asked to see the results. The answer was no ‘The parents or guardians also stated they did not ask the referring providers why the urine samples were required to be provided. During one of the interviews with Mako personnel, Arant detailed Mako’s testing procedures for urine samples to Bedford and Williams. Arant explained that the urine samples are refrigerated for 7 days for testing, then frozen for 53 days. After the 60 day period the samples are disposed of by a disposal company. Arant also detailed the process of receiving urine samples trom Mako drivers and how the samples are entered into and tacked in Mako’s system. Arant explained that their systems will not provide a report unless something is processed by the laboratory equipment. Someone cannot manually change or fabricate a test results in their system. Understanding Mako’s process for testing urine samples was important to MID’. investigation. Thomas Nisbet (Nisbet), an IBM contract worker for DHB provided data in the initial referral to MID. Bedford and Williams asked Nisbet to rerun the dala query so the dates of service would be more recent and for additional information. Upon rerunning the data query, Nisbet discovered a significant amount of time between claims that were billed for urinalysis, then those claims were adjusted and repaid to Medicaid. then billed and paid again at a higher rate for the same recipient and date of service ay the initial bili Knowing that urine samples were disposed of after 60 days, Bedford and Williams believed ‘This report is the property of the Medicaid Investigations Division. It and its contents may not he reproduced without permission. The report is for official use only and its disclosure 10 unauthorized persons is prohibited.there was a strong indication of fraudulent bil patterns described above. ing based off Mako’s billing Dur terview with Arant and Price when confronted with this suspicious billing activity of rebilling for urine tests after the sample was disposed of, Arant and Price explained that the new policy implementations had caused most billing claims to be denied by Medicaid. After addressing their concerns with DHB, Arant and Prive stated they were instructed by DHB to resubmit claims that were paid at a lower reimbursement rate then what was tested or for denied claims. Arant explained that after DHB policy implementations, confirmation or definitive tests for urinalysis were almost automatically denied by DHB duc to requirements of additional documentation that needed to be provided with the billing claim submission, Arant continued to explain that providers, including Mako, were told to bill for presumptive tests, which pay a lower reimbursement rate than confirmation tests. Arant stated that DHB instructed Mako to hold onto their documentation for confirmation urinalysis tests and resubmit those claims at the higher reimbursement rate. Arant provided MID with e-mail correspondences hetween Mako and DHR about the matter Redford and Williams saved those e-mails into MID's document management system. Bedford and Williams followed up with Rollins about the e-mails between her and Mako. Rollins stated she remembered there being issues with NCTracks and billing, but she could not remember if she instructed Mako or other providers on how to bill, Rollins stated she did not remember the e-mails, yet she did not deny she may have written the e-mails. Additionally, Bedford and Williams analyzed billing claims for Mako and identified the top referring providers that submitted urine samples for billing to Mako. Bedford and Williams decided to interview recipients from different referring providers in order to establish that the recipients were clients of the referring providers and that they provided urine samples. Bedtord and Williams served Records Requests on two of the top referring providers, Carter Clinic (Raleigh, N.C.) and Rowan Psychiatric and Medical Services (Wilkesboro, N.C.), Bedford and Williams reviewed recipient records received via the records requests. Bedford and Williams interviewed recipients in order to determine what services they received and if the recipients provided urine samples. Bedford and Williams also served a Records Request on Mako (Raleigh, N.C.) and obtained standing orders and test results for specific recipients. Each recipient interviewed by Bedford and Williams stated they provided at least vne sumple of urine Wo the referring provider in question. Most recipients provided multiple samples. None of the recipients or their guardians could remember exact, dates when they provided urine samples. This report is the property of the Medicaid Investigations Division. Tt and its contents may not be reproduced without permission. he report 1s tor official use only and its disclosure to unauthorized persons is prohibited. 4Bedford and Williams continued to interview recipients or otherwise identify fraudulent activity on the referring provider side. Again, all recipients claimed they received services and provided urine samples on multiple occasions. Based on urine samplés being collected and submitted to Mako, on a limitation of policy during part of the alleged period of fraudulent activity, on limitation of requirement of medically necessity of tests on Mako’s behalf, on e-mail correspondence from DHB personnel to Mako that seemed to indicate how to submit billings for denied or underpaid claims, Bedford and Williams believe this, criminal investigation should be closed at this time. "This report is the property of the Medicaid Investigations Division. It and its contents may not be reproduced without permission. The report is for official use only and its disclosure to unauthorized persons is prohibited. 5