Federal Prosecutors Crack Down on Philadelphia Ambulance Fraud

Regulators still seek to stop fraud, waste and abuse in and around the city


HAROLD BRUBAKER, The Philadelphia Inquirer | | Tuesday, June 17, 2014

Federal prosecutors have been cracking down for the last three years on the ambulance fraud that has flourished in Philadelphia-area neighborhoods that are rich with seniors on Medicare.

Despite the gains in court against fly-by-night ambulance operators, Medicare regulators were still convinced earlier this year that "significant potential for fraud, waste, and abuse" remained in Philadelphia.

That is why Medicare officials in February temporarily blocked any new Philadelphia-area ambulance companies from becoming eligible for Medicare payments.

"Now, if they are going to put companies out of business in this market because they've been noncompliant, [those companies] can't just reorganize and come back in another form, as they could before the moratorium," said Todd Strine, an owner of Keystone Quality Transport Inc., one of the region's largest operators.

It was just the second such clampdown by Medicare nationwide and highlighted Philadelphia's status as a hotbed for this brand of fraud. The first was in Houston in 2013.

The reason? In 2012, Medicare paid Philadelphia ambulance companies an average of $1,314 for each Medicare patient they transported. That full-year total was 64 percent more than the $803 average in comparable counties nationally.

The release in April of Medicare payments to individual ambulance providers made possible a detailed look at the extremes of ambulance payments here.

It showed that 33 ambulance companies in Southeastern Pennsylvania collected at least $13,000 per Medicare patient for services in 2012 - or 10 times the $1,314 annual average that regulators flagged as they ordered a moratorium on new ambulance companies for Medicare service.

Topping the list locally in 2012 was Midlantic Medical Transport Inc. in Philadelphia's Olney section.

It collected an average of $39,366 for each of the 44 Medicare beneficiaries it served, records show.

That was the sixth-highest average among 9,814 U.S. ambulance providers that collected Medicare payments in 2012. Four of the top companies were in North Jersey.

A high average suggests a heavy reliance on repetitive trips for each patient, such as three-times-a-week trips for dialysis, even though only a small portion of dialysis patients meet Medicare's standards for ambulance rides, according to executives in the ambulance and insurance industries.

Medicare pays close to $200 for each one-way trip, plus about $6 a mile.

Numerous attempts since April to get additional information about the 33 companies in this region with high averages from Medicare officials - such as how many of them are still receiving Medicare payments and how much money Medicare has demanded back from them - were unsuccessful.

Attempts to reach the top dozen of those 33 companies were unsuccessful.

Patricia Hartman, a spokeswoman for the U.S. Attorney's Office for the Eastern District of Pennsylvania, would not confirm or deny the existence of ongoing investigations.

This month, Khusen Akhmedov, 23, of Philadelphia and Lancaster, was sentenced to 27 months in prison for his role in a $3.6 million health-care fraud by Penn Choice Ambulance Inc., which had operations in Philadelphia and Camp Hill, Pa.

The moratorium is supposed to give Medicare a chance to weed out fraudulent operators while blocking them from popping back up under a new name. More than 80 percent of the 33 ambulance operators with sharply higher average payments from Medicare were less than three years old in 2012.

"I believe some just change the name on the side of the ambulance," said Lisa Sofia, chief executive of Deer Meadows Retirement Community on Roosevelt Boulevard, which is a major thoroughfare for ambulances, many of which are based in Northeast Philadelphia.

"That's why we have our own transportation department," with a wheelchair van to handle most trips, Sofia said. For the very few residents who need ambulance transportation, Deer Meadows contracts with EMStar, she said.

EMStar received $3.96 million in Medicare payments for transporting 8,288 patients, which works out to an annual average of $477 per patient. That indicates that repetitive trips were insignificant to the business.

Midlantic Medical Transport, by contrast, collected $1.7 million from Medicare in 2012 for transporting just 44 patients.

The ambulance carrier Patient Care, with a business address in Elkins Park, ranked second behind Midlantic in the amount of revenue it collected per Medicare patient, with $35,600.

Both companies were affiliated with a man named Devin Spady. Attempts to reach him by e-mail and phone were unsuccessful.

Richard L. Gibbons, director of the Pennsylvania Bureau of Emergency Medical Services, said both firms are no longer licensed by the state.

Patient Care's license expired April 1, and the state received notification April 16 that Midlantic had shut down, despite the fact that its three-year license had been renewed in September, Gibbons said.

What happened?

Midlantic "went through [a Medicare] audit and didn't succeed through the audit, so it went out of business," said Vincent Dispoto, who was the company's landlord and listed on official documents as the company's owner.

Asked for clarification of his relationship with Midlantic, Dispoto said: "I never had anything to do with the management or day-to-day operations of any ambulance company. I am not an EMT."


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