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Utah lawmakers hear allegations of horrific health-insurance fraud at treatment centers

First Published      Last Updated Oct 22 2015 10:37 pm

Substance-abuse facilities » Investigator tells Utah lawmakers fraudulent bills sent to insurance companies add up to tens of millions of dollars statewide.

Fly-by-night substance-abuse treatment centers are cashing in on tens of millions of dollars in fraudulent billings, shopping for patients — sometimes even importing them from out of state — and in some instances providing no care or treatment, a Utah legislative committee was told Thursday.

In some cases, owners of facilities were sleeping with patients; in others, they were drinking or doing drugs with those in treatment, a former manager of one treatment center told lawmakers.

Patients were listed as living in the homes of employees and in some cases actually slept on employees' couches while the treatment center collected insurance checks for the substance-abuse treatment.

The insurance companies apparently targeted most were Regence Blue Cross Blue Shield and BridgeSpan, sister companies both owned by Cambia Health Solutions.

"We were targeted because of our out-of-network benefit," said Randy Maurer, an investigator for Cambia.

House Majority Leader Jim Dunnigan, R-Taylorsville, asked Maurer how much the fraud was costing the insurance companies.

"It's in the tens of millions for the last year alone," Maurer said.

"Just in Utah?" Dunnigan asked incredulously.

"Just in Utah," Maurer said.

"Seriously, tens of millions of dollars? Just for your company?" Dunnigan pressed.

"It's put many of us in a huge cash-flow problem," he said.

Maurer's investigation has revealed that some rehab centers will have clients recruit acquaintances — even inmates leaving Salt Lake, Davis and Utah county jails — who need alcohol or drug treatment. The client doing the recruiting gets a kickback of $500 to $1,000 for every new client recruited, he said.

When the would-be client shows up at the center, she or he is signed up for health insurance, and the center promises to pay the premium and expenses up to the deductible. Sometimes, the clients are told to list the center for a personal address; other times, they're told to use employees' addresses, Maurer said.

Once insurance kicks in and approves treatment, the patient moves into the center for perhaps three months. A 90-day treatment might bring in $30,000 — and that's not counting any lab work the center bills insurance for, he said.

Some clients have gone from treatment center to treatment center, he said.

It costs the patient nothing, he said, but the providers rack up "exorbitant charges," billing the insurance providers for tens of thousands of dollars worth of care that no one is receiving.

Maurer said he has found claims for Utah patients with out-of-state phone numbers and Social Security numbers. When he visited one rehab center to meet the clients his company insures, he was told they were not there.

He was flanked at the hearing by the president of a trade group for substance-abuse centers and a former house manager for a rehab center that has since closed in Monticello, in southeastern Utah.

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