Insurers, Government Attack Mental Health Fraud

A popular though unscientific estimate is that one-tenth of the nation’s $800-billion annual health budget gets skimmed off by crooks.

Nobody claims to know how much of the toll goes to psychiatric scams, but industry and government have begun showing a new aggressiveness toward suspected mental health fraud.

Last summer, 600 federal agents blitzed 20 offices of National Medical Enterprises across the country, searching for evidence in a massive criminal probe of the Santa Monica-based hospital chain. The ongoing investigation is said to center on allegations of illegal patient recruitment and false billings and diagnoses, mainly in the company’s psychiatric hospitals.

National Medical, the target of more than 100 lawsuits alleging overtreatment, filing false claims and other transgressions, last month struck a final agreement to sell most of its psychiatric facilities to rival Charter Medical Corp.

Like Blue Cross of California, most large insurance companies now have their own health fraud units, whose investigators try to identify and plug holes in their defenses against scams.

Because health plans often have annual caps on inpatient psychiatric benefits, some unscrupulous operators treat chronic illness with one eye on the calendar.

One program under scrutiny by Aetna Health Plans flies depression patients to a clinic in Mexico for therapy that includes horseback riding. The treatment seems to cure the problem for a year, investigator James Garcia said, “but it’s a recurring type of illness, so you need to keep coming back.”

The mental health community is apprehensive that fraud and abuse are undermining support for appropriate psychiatric care and threatening to erode the gains that advocates have made in winning acceptance for legitimate treatment programs.

Frustrated by rising costs, many employers have slashed the number of days of inpatient mental health care that their health plans provide.

But whether the cap is high or low, “there’s a temptation to treat people till the benefits run out and then declare them cured,” said Jacque J. Sokolov, a Los Angeles physician and managed-care consultant.

Sokolov believes in holding psychiatric treatment to the same results-oriented standards as any other kind of health care.

Ronni B. MacLaren, an assistant U.S. attorney in Los Angeles involved in the National Medical Enterprises and A Place for Us investigations, said mental health is ripe for fraud for two reasons: Overhead is low because operators do not need expensive equipment, and diagnosis remains relatively subjective.

“Psychiatrists don’t have a fractured bone they can point to,” MacLaren said. “They’re talking about a mental state.”