Is That Business Legitimate or a Scam?

The FTC is drafting new rules to counter unfair practices. In the meantime, aspiring business owners should apply lots of common sense

by John Tozzi
July 23, 2008, 1:33PM EST | BusinessWeek

The Internet is littered with offers for home-based business opportunities that promise big profits for easy work. But many of these offers, which range from envelope stuffing to medical billing, are really scams that prey on people’s aspirations to work for themselves.

Business opportunities share three characteristics: a solicitation to the buyer, a mandatory payment to the seller, and a promise to help the buyer find locations or leads that will bring profits. They’re often advertised in classified ads, online, and in spam e-mail. Many claim to be low-risk ventures with money-back guarantees, and no experience necessary. Offers stress how much the participants can earn each week in specific dollar amounts, and fraudsters often have shills who falsely testify about their own success.

While some home-based business scams target vulnerable people such as the unemployed, experts say anyone can be taken in by the right pitch. “The techniques are no different in kind from the ordinary marketing techniques that normal sales people use. They’re just selling nothing,” says Michael Webster, a Toronto lawyer and the author of a blog on business opportunity fraud. “Anybody can be a mark on any given different day. Even I could be.”

Fraught with Deception

The Federal Trade Commission regulates many business opportunities under its franchise rule (BusinessWeek.com, 3/10/08). But for the first time, the agency is drafting regulations to cover home-based business opportunities and schemes that require investments under $500. The new rule would apply to about 3,000 business-opportunity sellers, including 500 not currently covered by the franchise rule, and the FTC estimates that about 250 opportunities pop up each year. (That number doesn’t include opportunities that drop out.) FTC attorney Monica Vaca could not estimate how many are scams but said in an e-mail that the industry “is fraught with unfair and deceptive practices.” The rule change would require sellers to disclose information to potential buyers, in much the way franchises must. It could go into effect in 2009 or 2010.

The average business opportunity scam runs for 12 to 18 months, ropes in 100 to 150 people, and takes a total of $3 million, Webster says. The FTC has taken about 240 civil actions against business-opportunity sellers since 1990, according to Vaca. The government also prosecutes a handful of cases under criminal law when repeat offenders are involved. But many home-based business scammers are never caught or punished. When victims lose money, they’re often reluctant to report the fraud. Instead, they blame themselves for their losses. “One of the things that’s tough about business-opportunity frauds is a lot of people have a hard time recognizing that they’ve been scammed. Everybody wants to live the American dream,” Vaca says.

Typical scams involve charging buyers up-front fees for materials, training, sales leads, or locations (for vending machines or kiosks). But the promised returns rarely materialize, and victims get stuck holding inventory they can’t sell. Some home-based business opportunities, such as envelope stuffing, are outright pyramid schemes where the only revenue comes from recruiting new victims, not actual product sales. Others are more subtle, like offers to set up medical billing services, in which buyers pay for training and leads without knowing that most doctors use in-house services or established billing companies.

In addition to the FTC’s proposed regulations, 26 states have their own disclosure laws. Webster says the best way to vet a potential opportunity is to check whether it is registered with the state. “Very, very few of these people are registered, and the fact that they have not gone through the trouble of registering tells you all you need to know about this particular opportunity,” he says.

 

Billings Used Dead Doctors’ Names

By Christopher Lee, Washington Post Staff Writer
washingtonpost.com | Wednesday, July 9, 2008

Medicare has paid as much as $92 million since 2000 to medical suppliers who billed the government for wheelchairs and other home equipment purportedly prescribed by physicians who, according to records, were dead at the time, congressional investigators said yesterday.

The Centers for Medicare and Medicaid Services (CMS) honored about 500,000 such claims despite pledging six years ago to correct the problem, which was identified by the Health and Human Services Department‘s inspector general in 2001.

In more than half the cases studied, the doctor listed as having ordered the equipment had died more than five years earlier, said a report by the Senate Homeland Security and Governmental Affairs Committee’s permanent subcommittee on investigations.

“We discovered that some medical equipment suppliers have scammed the Medicare system — and the American taxpayers — out of massive amounts of money,” Sen. Norm Coleman (Minn.), the panel’s top Republican, said in a statement. “Using the ID numbers of dead doctors, these scam artists have treated Medicare like an ATM machine, drawing money out of the government’s account with little fear of getting caught.”

The report is part of the committee’s ongoing investigations into waste, fraud and abuse in the fast-growing federal health program, which serves more than 43 million elderly and disabled Americans. Medicare pays annually more than $400 billion in benefits and is a fixture on the Government Accountability Office‘s “high-risk” list of troubled programs.

Last year, the government established a Medicare Fraud Strike Force to crack down on a problem that officials estimate costs taxpayers tens of billions of dollars annually. The program’s durable medical equipment component, in particular, has been a frequent target of companies seeking to bilk the government. The subcommittee has scheduled a hearing on the problem today. When the system works properly, a physician writes a prescription for home medical equipment for a Medicare beneficiary. He takes the order to a supplier, who sells or rents the equipment to him. The supplier, in turn, submits a claim for payment to a Medicare contractor for processing. The claim includes a number issued by Medicare that identifies the prescribing physician.

Senate investigators obtained from the American Medical Association a computer file of physicians who had died between 1992 and 2002. They selected 1,500 at random and asked Medicare officials to turn over medical-equipment claims filed with those doctors’ Medicare ID numbers between 2000 and 2007.

During that time, the review said, ID numbers for 734 deceased doctors were used to file 21,458 claims that totaled $3.4 million. Investigators counted the claims only if the equipment was bought more than a year after the doctor’s death.

Extrapolating from the sample, investigators estimate that 384,730 to 572,238 such fraudulent claims were submitted during that period, and Medicare paid an estimated $60 million to $92 million. There are still active ID numbers in Medicare’s system for as many as 2,895 dead physicians, investigators said.

They examined separate data for Florida, home to many retirees and a perennial leader in Medicare fraud. They found that more than a quarter of deceased Medicare doctors there still have active ID numbers in Medicare’s system.

The ID for one doctor, who died in 1999, appeared on 83 claims submitted by Professional Gluco Services Inc., a Miami company, between November 2005 and September 2006. A federal grand jury indicted two of the company’s owners last year on charges of defrauding the government of $1.3 million for equipment that had never been ordered or delivered. Both men pleaded guilty.

Medicare officials had promised to do a better job screening claims after the 2001 inspector general’s report found that the agency had paid $91 million for medical supply claims with invalid or inactive physician ID numbers in 1999.

Medicare officials said several new steps should help, including a plan to match monthly Social Security Administration data about U.S. deaths against a revamped Medicare provider-identification system. They also pointed to new accreditation requirements for suppliers under a new program, opposed by the industry, that sets some equipment prices through competitive bidding.

“Fraud and abuse in the context of Medicare-covered durable medical equipment has been a focal point of ours in recent years,” said CMS spokesman Jeff Nelligan. “Before this program, anyone could become a supplier, but now they must be fully accredited based on strict financial and quality standards.”

 

Muscling in on Medicare

Legislative fight in Washington puts patients in midst of doc-insurer struggle

July 8, 2008 | Newsday.com

A Medicare tweak on the table in Washington is pitting doctors against insurers – with patients in the middle. Doctors are facing a steep cut in Medicare payments, and many say that if that happens, they’ll reduce or end their participation in the program. And that will make it harder for elderly patients to get care.

The alternative is to trim what Washington pays private, Medicare Advantage plans. Insurers, some of whom underwrite those plans, are airing television commercials warning that will mean patients losing coverage or paying more.

For patients, this all sounds like heads you lose, tails you lose. But things aren’t that bleak. Not if Medicare Advantage plans take the hit, as they should.

The problem is that doctor reimbursements will be slashed 10.6 percent unless Congress acts to stop it. A cut that deep is unrealistic. The House voted June 24 to increase payments to physicians by 1.1 percent. But the bill is stalled in the Senate and, should it pass, President George W. Bush has threatened a veto. The sticking point is cost.

The bill would take the money from those private plans – which is where it should come from. Medicare Advantage plans were pushed by private marketers who said they would save taxpayer dollars. But Washington pays the plans 13 percent more per beneficiary than it would cost to cover that same person under government-run Medicare.

Pitting private plans against traditional Medicare is a sound idea. Competition should make each better. But a fair contest requires a level playing field, and right now it isn’t. Not with private plans being paid more per patient.

The pending legislation wouldn’t end that disparity. But it would reduce it and free up money to pay doctors. That would be a win for most Medicare patients and taxpayers.

 

FACTBOX: McCain and Obama on health care and retirement

Mon Jul 7, 2008 9:41am EDT | REUTERS

(Reuters) – Health care has ranked among the top issues with U.S. voters in this presidential election cycle, and the Social Security retirement program is a perennial issue for the country’s influential elderly population.

Both Barack Obama, who has claimed the Democratic nomination, and John McCain, the presumptive Republican nominee, have offered health care and retirement proposals. Here is a summary of their positions.

HEALTH CARE

McCain would end tax breaks for employer-provided health insurance and instead provide a refundable tax credit of $2,500 per person, or $5,000 for families, to help people buy health policies. He would promote competition by allowing people to buy insurance across state lines and he would make it tougher to sue doctors in some cases.

Obama has proposed a national insurance program to allow individuals and small businesses to buy affordable health care similar to that available to federal employees, funded by a tax on employers who don’t provide coverage. Individuals would not lose coverage when they switch jobs.

He would lower premiums through a program that would reduce the exposure of employer health plans to the costs of a catastrophic illness. Drug costs would be lowered by allowing patients to buy drugs from abroad and letting the government negotiate for lower prices.

SOCIAL SECURITY

McCain has said he would work with Congress to rein in the growing costs of retirement programs and has suggested changing the way benefits are indexed to inflation. He has also supported creating private retirement accounts for younger workers.

Obama opposes private retirement accounts. Affluent workers would pay more in taxes to ensure that Social Security is fully funded.

Obama wants to automatically enroll workers in retirement plans to boost savings, though employees could opt out if they choose.

(Compiled by Andy Sullivan, Donna Smith and JoAnne Allen; editing by David Wiessler)

 

Healthcare groups use ads to lobby lawmakers on Medicare bill

July 03 2008 | McKnight’s Long Term Care News

Congress may be on break this week, but two industry groups launched ads spurring the Senate to take action on a Medicare bill that affects nursing home residents and other older adults when it returns from the Fourth of July recess.

The American Medical Association unveiled an advertising campaign to encourage passing the bill, H.R. 6331. Targeted towards opponents of the legislation, the ads say the issue boils down to a choice: insurance company profits, or seniors and disabled vets who will lose their access to healthcare. Meanwhile, insurance lobbyists are working on their own anti-H.R. 6331 advertising blitz. They argue that the cuts to Medicare Advantage plans that would fund the bill would limit choices, reduce benefits and pass on higher costs to seniors.

This week, two harmful actions went into effect: the expiration of the exceptions process for Part B outpatient therapy caps, and a freeze on Medicare physician payments. Therapy caps, which affect nursing home residents, impose a $1,810 limit on physical therapy and speech therapy combined and $1,810 on occupational therapy for nursing home residents. Residents in Medicare-certified beds at a skilled nursing facility will not have therapeutic services covered past $1,810, according to a note from the Centers for Medicare & Medicaid Services. Others who exceed the cap, however, may obtain medically necessary therapy services at a hospital.

 

EDS unit to process Medicare claims in four states

07/02/08 — 01:37 PM
By David Hubler | Washington Technology

NHIC Corp. will process Medicare payment claims from health care providers in four Northwestern states under a $148 million contract from the Centers for Medicare and Medicaid Services.

The contract, which has a one-year base period and four one-year options, will serve about 54,000 physicians and health care practitioners and 233 hospitals in Alaska, Idaho, Oregon and Washington state.

NHIC, a subsidiary of EDS Corp., will provide a variety of administrative functions for hospitals, skilled nursing facilities and physicians in those states and will be the providers’ first point of contact for processing and payment of Medicare Parts A and B fee-for-service claims.

The company will also handle appeals, audits and reimbursements, provider enrollment, educational outreach, print and mail services, financial and accounting services, contact-center support, electronic data exchange, mailroom operations, and medical and utilization reviews.

The contract will help CMS meet the requirements of the Medicare Modernization Act of 2003, which requires the agency to transition Medicare fee-for-service claims from fiscal intermediaries and carriers to Medicare administrative contractors, NHIC said in a statement.

NHIC is one of the largest Medicare Part B contractors in the country, serving more than 150,000 health care providers in California, Maine, Massachusetts, New Hampshire and Vermont.

EDS, of Plano, Texas, ranks No. 10 on Washington Technology’s 2008 Top 100 list of the largest federal government prime contractors.

 

Medicare Payment Fiasco Causes Delay in Claims Processing

Action Should Not Mean Delayed Payments

By James Arvantes | AAFP News Now
7/1/2008

The Bush administration has announced it will delay the processing, but not necessarily the payment, of Medicare claims to give Congress more time to pass a bill blocking a 10.6 percent reduction in the Medicare payment rate. However, the administration’s action should not result in delayed Medicare payments to physicians, said Kent Moore, the AAFP’s manager of health financing and delivery systems.

CMS is required by law to hold Medicare claims it receives for 14 days before issuing payment on the claims. In normal circumstances, the agency starts to process claims within a few days of receiving them, paying them by the end of the 14-day time frame, Moore said. CMS now plans to hold Medicare claims for 10 business days before processing them to give Congress more time to pass Medicare payment legislation that is expected to negate a 10.6 percent payment cut effective July 1.

“CMS will use that 14-day window they have statutorily and refrain from processing the claim,” Moore said. “Instead of processing (a claim) at the front end of that 14 days, they will process it 10 days later on the hope that Congress will act within the first days of July,” said Moore. “Physicians should not see a delay in payment,” he added.

In late June, the House overwhelming passed an 18-month Medicare physician payment bill that would have prevented the 10.6 percent reduction scheduled for the remainder of this year, along with a 5.4 percent cut scheduled for 2009. But the Senate failed to pass the legislation, allowing the 10.6 percent cut to take effect on July 1. Congress adjourned for a weeklong July 4 recess on June 27 and will return on July 7. Senate Majority Leader Harry Reid, D-Nev., in a prepared statement, said the Senate would address the Medicare legislation shortly after returning from the July 4 break.

Many physicians, meanwhile, are upset and angry, said Moore, thinking CMS will withhold Medicare payments, a perception that he characterizes as a misunderstanding.

“CMS is simply saying that they are going to take advantage of the 14-day payment floor they already have by law,” Moore said. “They still intend to pay claims in a timely manner.”

Although physicians will experience a reduction in their Medicare payment levels if Congress and the Bush administration cannot agree on a Medicare payment bill by mid-July, there is an expectation that they will agree on a payment bill by then and will make the legislation retroactive to July 1.

CMS has said that physicians should submit their Medicare claims for services on or after July 1 using the pre-July 1 scheduled amount. Claims submitted after June 30 that reflect the 10.6 percent reduction will be paid based on that amount, and “will likely require providers to resubmit a revised claim,” said CMS in a June 30 press release.

Submitting claims with pre-July 1 amounts “will facilitate reprocessing of the claims by CMS, if needed, and will ensure that physicians are able to collect the full pre-July 1 allowed amount, when or if the cut is retroactively negated,” said Moore.

However, noted Moore, “physician practices may only collect copayments and deductibles from Medicare beneficiaries based on the reduced (Medicare) rate, even if they are charging the pre-July 1 rate to Medicare.”

Physician practices wishing to avoid confusion may choose to hold their Medicare claims in-house until it becomes clear that new legislation will be enacted or until cash flow becomes a problem, said Moore. “This will reduce the need for (physicians) to reconcile two payments — the initial claim and the reprocessed claim — and it will simplify physician billings of beneficiary co-insurance and payment calculations for payers that are secondary to Medicare,” said Moore.

 

Sheriff: It’s highly unlikely thieves accessed personal information

July 2, 2008
KSL team coverage | ksl.com

A tip led authorities to stolen medical billing records and to the arrest of the men behind it. That’s reassuring news for the million and a half patients affected by the theft, but is their personal information safe?

Authorities are confident the suspects did not access confidential information, even though they knew early on, from media coverage, what was in those stolen tapes. A $1,000 reward was just too much for one of their friends to keep quiet about it.

Sheriff Jim Winder said, “The criminal element in this case is a circle, and within that circle, fortunately, there was someone willing to contact us.”

A phone call Monday night led authorities to the missing records and to the suspects. Sheriff’s deputies arrested 37-year-old Shadd Hartman on one count of possession of stolen property and one count of unlawful possession of another’s ID.

Fifty-two-year-old Thomas Howard Anderson was arrested on one count of theft by receiving and one count of identity fraud. A third suspect is in jail on unrelated charges.

“These were individuals with substantial criminal histories that found an opportunity and did take these tapes,” Winder said.

Investigators say last month one of the suspects randomly broke into the SUV with the records inside. The vehicle belongs to a courier for an offsite storage company. That courier broke policy by taking the records to his Kearns home.

The records contained information for 1.5 million University of Utah Hospitals and Clinics patients, including Jenni Todd. She said, “I’m glad they found it. I’m glad that they found the records and arrested some people.”

But Todd says, she’s still a little concerned. “It almost scares me more because if there’s a ring of people, maybe they were really trying to steal our identities,” she said.

But authorities don’t believe any patient information was compromised. They say the suspects didn’t have the means or the knowledge to access them. “They definitely are not techies. There’s no question about that. I don’t know if they could find their rear ends with both hands,” Winder said.

But the U isn’t taking any chances. IT plans to work with the FBI to determine if any patients’ records are at risk. The U is still offering free credit monitoring for a year.

Jenni Todd plans to take advantage of it. She said, “Just to make sure, and it’s also just good to have credit monitoring anyway.”

The U has spent $2 million to notify affected patients and offer services. University Health Care says until the FBI verifies through forensic testing that the personal information was not accessed, the hospital will keep current safety measures in place.

“We take our patient confidentiality information very seriously, and so that’s currently in place. And we’ll continue to work with law enforcement officials to determine whether there’s any risk of that information having been accessed,” said David Entwistle, CEO of University Hospitals and Clinics.

University Health Care has also released a statement on the recovery of the records. Two class-action lawsuits have been filed in this case.

The KSL Team:

E-mail: syi@ksl.com
E-mail: corton@ksl.com
E-mail: mgiauque@ksl.com

 

California sues over practice of ‘balance billing’

The Associated Press

Article Launched: 07/02/2008 06:19:19 AM PDT

SANTA ANA, Calif.—California has sued one of the state’s largest hospital operators to stop the company from billing privately insured patients for balances on medical services not paid by the insurer.The practice—known as “balance billing—is becoming increasingly common in California. The Department of Managed Health Care has banned balance billing, but regulations aren’t expected to take effect until the fall, at the earliest.

That agency’s director, Cindy Ehnes, said Prime Healthcare Services Inc. is “the largest example of this egregious practice we’ve seen to date, and it must be stopped.”

Ehnes’ agency filed a lawsuit Friday in Orange County Superior Court against Prime Healthcare. The suit seeks to prohibit the Victorville-based company from billing patients for unpaid medical bills Prime contends insurers owe.

“Consumers who have purchased health coverage in good faith deserve to know that it will cover them in a medical emergency and not result in crushing medical debt,” Ehnes told the Los Angeles Times.

Prime acknowledged it has been billing thousands of patients the unpaid portions of their bills. The company contends it can legally do so—and that it wouldn’t have to if insurers paid their full portion of medical claims.

Prime has 12 hospitals in Southern California and has acquired all but one of its properties in the past four years.

The Times reported that when Prime takes over a hospital, it often cancels insurance contracts, allowing it to charge higher rates. Insurers contend they had begun sending Prime only partial payments on members’ bills.This spring, Kaiser Permanente sued Prime to prohibit the company from billing more than 5,000 of its members for unpaid bills. A temporary injunction prevents Prime from such billing until the case is resolved.

 

Process Improvement, not Cost Savings, Drives India’s Domestic BPO Biz

Posted by Ann All on July 2, 2008 at 3:58 pm | IT Business Edge

Earlier this year, I wrote about India’s burgeoning domestic market for outsourcing. The demand for BPO appears especially strong, as I wrote last August.

Although the forecasts I cited in these posts were optimistic, they now look downright conservative in light of more recent statistics included in this Knowledge@Wharton India article.

The domestic BPO market was worth $1.1 billion in 2007, up from $100 million in 2002, and is now estimated at $1.6 billion to $1.8 billion, notes the article. According to a report by The Everest Group and India’s National Association of Software and Services Companies (Nasscom), the market could be worth up to $20 billion over the next five years.

BPO providers do face challenges in serving the domestic market. For one, says outsourcing expert Ravi Aron, a senior fellow at Wharton’s Mack Center for Technological Innovation, banking and other industries normally served by BPO providers are heavily unionized in India, and will thus face resistance. Last March, I wrote about a threatened strike by state-owned bank workers if the prime minister refused to disallow outsourcing.

Like Europe, India is also filled with a diverse collection of regional languages and cultures. Also, unlike their U.S. counterparts, many potential Indian BPO clients lack the kinds of sophisticated technology platforms that facilitate outsourcing. Their processes are labor-intensive and “idiosyncratic,” says Aron, and thus difficult for BPO providers to replicate on a mass scale.

Process improvement is exactly what most Indian companies are seeking from BPO providers. Not as cost-focused as their Western counterparts, domestic companies want to step up their capabilities in hopes of expanding their businesses into markets outside India.

Expected to be especially popular, according to Aron and other experts, are vertical services such as mortgage loan processing and property and casualty insurance. Says Aron:

Many of these specialized services companies have the money, but not the managerial capacity or bandwidth to automate their processes and extract efficiencies.

Since margins are lower in domestic BPO deals, providers must figure out ways to cut their cost structures. Establishing operations in tier-2 and tier-3 cities is expected to be a common tactic. This should become easier, thanks to ambitious government efforts to improve the infrastructure in these areas, which I wrote about last week.