14 October 2010
California Edition
Calendar
No Care – Just Dummy Firms And Hijacked Doctors
October 18-20
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October 19-21
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October 25-27
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E-Mail
info@payersandproviders.com with
the details of your event, or call
(877) 248-2360, ext. 3. It will be
published in the Calendar section,
space permitting.
A Sea Change For Medicare Fraud
Phony labs and medical practices. Out-of-
state physicians whose identities were
stolen.
That’s how sweeping indictments and
state corporate records say 10 individuals –
and were quickly arrested Wednesday –
bilked the Medicare program out of at least
$17 million last year.
Although the amount this ring is
accused of stealing from Medicare is
relatively modest compared to other cases,
officials say their methods represent a stark
shift in how such fraud is being
perpetrated.
“All of the activity – the businesses and
the care rendered – is completely
fabricated,” said Thom Mrozek, a
spokesman for the U.S Attorney’s office in
Los Angeles. Mrozek noted that past
Medicare fraud cases typically involve
patients hired to receive unnecessary care,
or “upcoding” of treatments rendered.
Many of the phony patients were either
deceased or had their identities stolen,
according to Mrozek. An FBI informant and
undercover agent were able to crack the
ring, helping the defendants cash checks in
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the names of the physicians or the bogus
businesses.
At least one of the physicians whose
identity was stolen suggested that
Medicare could have been more diligent
in checking his forged application as a
provider.
“As a pediatrician, I have maybe one
patient out of a thousand who’s in
Medicare. It makes you wonder,” said
David A. Partrick, M.D., a Colorado
practitioner whose name appears on
California corporate records as chief
executive officer for Hwy Clinical
Laboratory Services, a medical group that
claims an address in Orange but a San
Fernando Valley phone number linked to
an anonymous voice mail box.
The indictments, unsealed
Wednesday, come just weeks after U.S.
Attorney General Eric Holder declared
Los Angeles a “hot spot” for Medicare
fraud at a special summit (Payers &
Providers, Sept. 2). However, officials
noted that the investigation began at least
two years ago and predates a joint
Continued on Next Page
 Payers & Providers
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In Brief
Clinics Reap $95.1M In
Federal Grants
Community clinics around
California received a $95.1 million
windfall this week from the U.S.
Department of Health and Human
Services, part of an Affordable Care
Act initiative intended to bolster
primary care delivery.
“The newly constructed or
expanded community health
centers will provide care to an
additional 745,000 patients and
much needed employment
opportunities in both rural and
urban underserved communities,”
said HHS Secretary Kathleen
Sebelius.
Eighteen community clinics in
California received grants ranging
from $500,000 to $12 million. They
will be used primarily to improve
and expand infrastructure,
according to Sean South,
spokesman for the California
Primary Care Association.
“It is pretty much what we
expected in terms of awards,” South
said, but added that the state’s
stressed clinic infrastructure could
always use more funding.
The biggest recipient was
Family Health Centers of San
Diego, which received $12 million.
St. Johns Well Child and Family
Center in Los Angeles received
$9.5 million, while the Community
Health Centers of the Central
Coast in Nipomo received $7.5
million.
Setbacks Continue For
New Union
After narrowly losing a battle for
healthcare workers at Kaiser
Permanente last week, the upstart
National Union of Healthcare
Workers failed to attract members
Continued on Page 3
NEWS
Fraud (Continued from Page One)
initiative between the Justice Department
and the Department of Health and
Human Services to crack down on
Medicare fraud.
The indictment describes a laundry
list of fake or co-opted business
incorporated in Southern California, most
of which trace back to mail box services
in strip malls. Physicians were
unknowingly listed as the chief executive
officers of the enterprise, their identities
used to apply to Medicare as a provider.
Mrozek noted that the defendants
were able to obtain the Social Security
numbers and birth dates of the physicians
in order to bluff Medicare, but was
unable to say how.
Although the physician victims were
not disclosed in the indictments, Payers &
Providers was able to identify not only
Dr. Partrick, but Samir N. Tuma, M.D., a
Houston nephrologist who practiced in
California in the 1970s; David W. Bahler,
M.D., an associate professor of pathology
at the University of Utah; and Howard B.
Gutstein, a Houston anesthesiologist and
associate professor at the University of
Texas M.D. Anderson Cancer Center.
According to California corporate
records, Bahler is listed as the chief
executive officer of Sonic Labzone, with
corporate offices in Northridge. The
address traces back to a post office box in
a strip mall. Gutstein is listed as chief
executive officer of Stemcyte, Inc. It’s a
legitimate laboratory in West Covina, but
the mailing address provided traces back
to another strip mall post office box in
Sherman Oaks. Tuma’s name is connected
to an enterprise called S.N. Tuma, Inc. It
traces back to the Central California
Blood Center in Fresno. The corporation’s
listed president, Saydakhmetovich
Karayev, was arrested in Panama City, Fla.
last month on a suspected immigration
violation and is being held without bail,
according to records from the Bay County
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Page 2
Sheriff’s Office. He was not named in the
indictment.
Bahler confirmed having been
contacted by the FBI earlier this year, but
declined further comment. Tuma and
Gutstein did not respond to a request for
comment.
The person who Mrozek said was the
suspected ringleader of the alleged fraud,
37-year-old Pogos Satamyan of Glendale,
identified himself in his Linked In profile
as chief operating officer of Seacliff
Diagnostics, Inc. of Monterey Park. That
enterprise was not mentioned in the
indictment.
“I don’t know anything about
anything,” said the unidentified person
who picked up the phone at the number
listed for Seacliff’s corporate headquarters.
“I’m the only person here.” An 800
number provided on Seacliff’s website
went unanswered.
In addition to being named in illegal
activities in Los Angeles, Satamyan was
also named in an indictment unsealed in
New York Wednesday alleging a $100
million Medicare fraud perpetrated in 25
states. That indictment alleged the
defendants are members of an Armenian
organized crime ring.
Mrozek said that there was likely
some coordination between the New York
and L.A. groups, but that both primarily
acted on their own.
At last month’s fraud summit, Health
and Human Services Secretary Kathleen
Sebelius said the Centers for Medicare
and Medicaid Services was ratcheting up
the application process for would-be
providers, including the use of stronger
address and identity verification tools.
The changes can’t come sooner for
Partrick, who sounded about as pleased as
his experience as a young patient coming
in for a round of shots.
“It’s not good, and I’m not happy
about it,” he said.
Payers & Providers NEWS Page 3

Longer ALOS!*
LAC DHS Pushes Back On Flu Data
Advertise Here CDPH Conceded First-Time Reporting Was Flawed
(877) 248-2360, ext. 2
Ofcials with the Los Angeles County noted that the CDPH ignored an advisory
*For our ads, not your hospital
Department of Health Services questioned committee recommendation that the agency
data released last week by the California only report aggregated data.

In Brief
Department of Public Health claiming lower- The executive summary for the report
than-average rates of inuenza immunization acknowledged that “multiple versions of the
among its hospital workers. data collection form were created and
The CDPH report said that Los Angeles submitted,” and “there were signicant
County-USC Medical Center had an misinterpretations of the denitions on the
at two Northern California immunization rate below 20% for its workers data collection forms, particularly for
hospitals and a chain of nursing
during the 2008-2009 u season. The actual employees, non-employee healthcare
homes.
The NUHW withdrew from rate of compliance was 46%, according to personnel, and declinations.”
unionization votes last week at Catherine O’Brien, the DHS’s assistant CDPH spokesman Michael Sicilia
Chinese Hospital in San Francisco human resources administrator. conrmed that the study had quality issues,
and Enloe Medical Center in O’Brien blamed the discrepancy on the but said many would be resolved by the time
Chico. Votes the NUHW had
challenged at the Pradap use of various forms for reporting and hand the report for the 2009-2010 u season is
Poddatoori nursing home chain tallies of data. She and other DHS ofcials released before the end of this year.
taken earlier this year were
certified in favor of the Oakland-
based Service Employees
International Union–United
Healthcare Workers West, the
Prime, Union In Bitter Fight Over Data
NUHW’s primary rival.
Last week, the SEIU defeated
Sepsis Numbers: Upcoding Fraud or Brinksmanship?
NUHW in a ballot among Kaiser
Permanente healthcare workers.
The final count was 18,290 to The U.S. Department of Justice and U.S. on state ofcials to halt the issuance of any
11,364.
The NUHW was started by Department of Health and Human Services new hospital licenses to Prime.
former SEIU-UHW leaders last year are both investigating Victorville-based Prime "It would be unconscionable to put more
after a bitter rift. It represents less Healthcare Services for possibly overbilling patients at risk,” said SEIU-UHW trustee Dave
than 6,000 members, compared to the Medicare program $18 million for Regan.
2 million represented by SEIU-
septicemia claims in 2008, according to the Prime meanwhile, issued a statement
UHW.
Los Angeles Times and the investigative accusing the union of engaging in a “smear
website California Watch. campaign” and used the septicemia survey as
Kaiser Wins Award For However, both Prime and a union that a way to “extort concessions” from the
ALL/PHASE Program represent some of its workers traded erce hospital operator. It also claimed that its ER-
barbs revolving around the allegations earlier based admission model means it treats much
Oakland-based Kaiser Permanente this week. sicker patients who are more likely to contract
won the Quality Impact Award The Service Employees International septicemia, and that Medicare guidelines
from the Care Continuum Alliance
Union-United Healthcare Workers West, require it code sepsis as a primary diagnosis
for its protocol for reducing heart
attacks and strokers. which commissioned a study of septicemia, even if there are other conditions, which
The award, which recognizes or sepsis, rates at Prime’s 13 hospitals, called reduces its reimbursement.
protocols with great impacts on
health, lauded Kaiser’s ALL/PHASE
protocol. It uses low-cost generic
medications such as aspirins,
statins and beta blockers on HEALTHCARE’S BEST ADVERTISING VALUE
enrollees who are over the age of
55 with heart disease or diabetes, ]

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“We recognize that preventive
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said Winston Wong, M.D., a Kaiser
medical director.
The award was presented at
the Forum 10 Conference earlier LEARN MORE HERE
this week in Washington.

OR CALL (877) 248-2360, ext. 2

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Payers & Providers
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OPINION Page 4
Cutting Off Healthcare’s Tube Issues
Cooperatives Could Use Clout to Address Problem
The New York Times recently published a So, were VHA and Premier to request all
front-page investigation into the tragedy of tube and tube connection manufacturers
incorrectly placed patient tubes, and the make their products less confusing to use – or
truculence of medical device manufacturers face elimination from their offerings list –
to make an easier-to-use product. they would have little alternative but to
The potential for incorrectly placing a comply. It would be a tough road to try and
tube is high: according to a study published sell directly to hospitals when they refused to
in the Joint Commission Journal on Quality follow a directive from the cooperatives,
and Patient Safety in 2006, more than 15% particularly given VHA and Premier have
of clinicians surveyed admitted to having been engaged in many initiatives to improve
such an error occur in their hospital. the quality of healthcare delivery.
Tube mix-ups are a grave error, leading Of course, this would likely lead to
to a sentinel event 33% of the time. In the shrieks of anti-competitive practices from the
case of accidentally placing feeding tubes manufacturers, even as they have leveraged
into the bloodstream, it leads the sour mood against the federal
to a sentinel event 66% of government to gull the FDA into
the time (more than two- treating their products with kid
thirds of sentinel events are gloves. No doubt lawsuits would
fatal). follow.
According to the Joint However, both cooperatives have
Commission, non-sentinel taken substantial pains to be
errors cost hospitals an transparent in their governance. Most
average of $4,700 apiece. of their owners – the hospitals – are
One can only imagine what also non-profit organizations.
a sentinel event costs a Moreover, the recent appointment of
hospital given the patient By Ron former Institute for Healthcare
resuscitation, intensive care and Improvement CEO Donald Berwick to
corrective procedures that must Shinkman head the Centers for Medicare and
be provided. Medicaid Services suggests the anti-
The Times article initially focused on government mood in the country is being
such errors, but then portrayed the Food matched by an equal passion for cost-
and Drug Administration’s reluctance to consciousness and value in our healthcare
make needed regulatory changes in its delivery, particularly given everyone will soon
product approval process, primarily due to be mandated to purchase coverage.
pressure from manufacturers. If such a sentiment isn’t shared by our
“F.D.A. could fix this tubing problem nation’s courts, perhaps the manufacturers
tomorrow, but because the agency is so can be reminded of the consequences of their
worried about making industry happy, inactions by the families of Jasmine Gant and
people continue to die,” Robert Smith, a Robin Rodgers, among those who have lost
physician and former FDA reviewer, told their lives due to tube mix-ups. Gant was 16;
the Times. Rodgers, 24.
In actuality, hospitals have just as much Within such a context, the manufacturers’
putative power as the FDA to change the grumblings that the FDA is an intrusive
tube and tube connector manufacturing government body will likely receive as
process. sympathetic an audience as such an argument
That power lies within VHA and deserves.
Premier, the two giant healthcare
purchasing alliances. Combined, they serve Ron Shinkman is the publisher of Payers &
3,800 hospitals throughout the U.S. Providers.
VHA and Premier work on a simple
principle: the more hospitals they
Op-ed submissions of up to 600 words are
represent, the larger the economies of scale welcomed. Please e-mail proposals to
they possess to wangle discounts from editor@payersandproviders.com,
manufacturers.
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Payers & Providers MARKETPLACE/EMPLOYMENT Page 5

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Payers & Providers MARKETPLACE/EMPLOYMENT Page 6

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