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January 16, 2012

Rural/Metro faces accusations of overbilling in NY

By Matthew Spina
Buffalo News

BUFFALO, N.Y. — Around the country, Rural/Metro has heard complaints about its billing.

It faces a criminal investigation in Kentucky after the FBI searched its offices in Louisville.

A former employee in Alabama filed a whistle-blower lawsuit accusing Rural/Metro units there of systematic fraud, and the Justice Department has joined the case.

In Ohio, Rural/Metro paid $2.4 million to settle a federal investigation of its billings.

Federal agents are now inquiring about practices at Rural/Metro Medical Services of Western New York, according to former and current employees of the region's largest ambulance provider.

The Buffalo News interviewed a dozen current or former workers. Five said they were either aware of an investigation or were approached by an agent.

The current and former workers told The News that Rural/Metro focuses so intently on profits it has broken from common industry practices when billing patients and insurers.

Publicly, the FBI would neither confirm nor deny a probe. And Rural/Metro's recently promoted general manager here, Jay Smith, said he knew of no federal inquiry into Rural/Metro of Western New York.

The company here maintains a "comprehensive compliance program that is modeled after federal guidance for the entire ambulance industry," Smith said, and he called the allegations relayed to him by The News "without merit."

Nonetheless, current and former workers, some of whom have jumped to Rural/Metro competitors, say Rural/Metro has:
* Asked that records be changed to justify costlier services.
* Gone out of its way to bill at its more expensive rates.
* Charged patients and insurers for extras that should be covered by the basic fee -- all in the corporate zeal to grow the bottom line across the 20 states in which Rural/Metro operates.

"I have seen other things that they have done that are very disturbing to me," said Lon Fricano, who in 2006 closed out 12 years with the Rural/Metro unit in Central New York, where he served as Cayuga County manager. He now manages a Rural/Metro rival, TLC EMS of Auburn.

Rural/Metro executives in Scottsdale, Ariz., always pressed company managers to meet budgeted goals, Fricano said.

In his opinion, they went overboard.

"The people at Rural/Metro are bean counters and accountants, and they are driving the bottom line," he said. "That's all you ever hear."

Today, Rural/Metro Corp. abides by a five-year corporate integrity agreement that executives in Scottsdale signed in 2007 with the U.S. Department of Health and Human Services' Office of Inspector General. The agreement is one of the many that the federal government has reached with many health care providers willing to set up strict internal compliance programs to settle investigations. Around the country, Rural/Metro has entered into three such agreements since 2005.

Before its acquisition by the private equity firm Warburg Pincus in 2011, Rural/Metro was a publicly traded company and provided investors with the frank unvarnished assessments that the Securities and Exchange Commission requires.

"We cannot assure you," Rural/Metro told investors in 2007, "that the [corporate integrity agreements] or the compliance programs we have initiated have prevented, or will prevent, any repetition of the conduct or allegations that were the subject of these settlement agreements."

Rural/Metro's Smith said the employees who spoke to The News were duty bound to report wrongdoing to company management, not a newspaper reporter. But they said the climate at Rural/Metro makes it difficult to report suspected abuses to management.

One emergency medical technician said a few employees went to management in 2009 with suspicions that two other EMTs were torching vacant structures while on duty. Prosecutors theorized the two wanted to appear heroic by alerting neighbors to blazes.

Seeing no action from management, an employee alerted Buffalo fire investigators, who arrested the two EMTs in June 2009 and obtained convictions. A Buffalo fire official confirmed that the tip came not from Rural/Metro managers but a rank-and-file employee who said supervisors had been notified.

A Rural/Metro manager said he did alert the Buffalo Fire Department. But by the time he did so, fire investigators had already begun their probe.

Rural/Metro employees, current and former, reported items they figured patients ought to know about how the company does business as it handles some 120,000 calls a year in Western New York. For example, they say:

* Rural/Metro has asked that records be changed to justify costlier services.

A former Rural/Metro paramedic, requesting to remain unidentified because of continued links to the company, told of being instructed to transport a patient by ambulance from Buffalo General Hospital to the patient's home in 2009, but the hospital-provided statement authorizing the transfer said no ambulance was needed. A less costly wheelchair van would do.

"I called my supervisor to say the paperwork says very clearly they don't need an ambulance," said the medic, who recalled then being told to cross out the instructions calling for a wheelchair van and to have the hospital fill out a new form.

"I did what I was told. And I wrote in my report what I was told to do," the paramedic said, adding "this isn't uncommon at all."

The practice was not limited to transports from any single hospital, said another Rural/Metro worker who recalled being told to have nursing homes change forms as well.

"We refuse to turn away any service we can generate money from," he said.

Donna Wypych owns Health Care Program Design LLC, a health care compliance company that helps local providers meet state and federal rules.

"If this is true," she said, "changing documentation in order to bill is serious. It is fraudulent. And the fact that employees are instructed to do that puts them in a precarious position because in the compliance area today employees can be charged as well as managers in a company."

Michael Hughes speaks for Kaleida Health, which includes Buffalo General.

"Should there be something brought forth as a claim of fraud or abuse -- we take that very seriously," he said. "Our organization is one of integrity, and if one of our vendors is involved with something like that, it will be dealt with properly."

Rural/Metro's managers insisted on being interviewed for this article at the office of the crisis-management expert they first hired when their EMTs were charged in the arson case, Steve Bell of the firm Eric Mower and Associates.

"That's a former disgruntled employee making an allegation that we do not support," Smith said when asked to comment on the paramedic's story. He repeated the company's policy that employees can report complaints anonymously for investigation.

* Rural/Metro seems determined to charge at its more expensive rates.

When Rural/Metro responds to seemingly urgent calls, the company is determined to bill at its "advanced life support" rates even if it did not perform the services to bill at that rate, some employees say. When billing nongovernment insurers, Rural/Metro can collect hundreds of dollars more with advanced life support service over basic life support.

Today, Jeffrey A. Bono III serves as vice president and compliance officer at the nonprofit Lancaster Volunteer Ambulance Corps, which scrapped with Rural/Metro in 2010 and 2011 when the company tried to supplant the Lancaster volunteers as the town's primary service. The town board stayed with the volunteers, but tensions remain.

In 2009, Bono was working as a Rural/Metro EMT when he responded to a call for a 9-year-old with a badly cut toe that kept bleeding, a potentially serious situation, he said. It was dispatched as an advanced life support call that would require a paramedic, certified in advanced life-support procedures, Bono said. The Rural/Metro paramedic met him at the scene in a "fly car," a non-ambulance SUV with lights and sirens.

Bono said he treated the wound, wrapped it in heavy gauze and transported the child to a hospital as a precaution at the urging of his mother.

"The paramedic never touched the patient. Didn't get within 5 feet of the patient," Bono said.

Still, the paramedic, not Bono, signed off on the call because he "supposedly did an ALS assessment on that patient," Bono said. He said that act made the call eligible for advanced life support rates, though the paramedic did not assess the child.

"You are told in field training that's how you do it, that's always how it's done," said Bono, who volunteered that he was eventually fired from Rural/Metro after hopping into an ambulance while still holding a cigarette.

Other Rural/Metro employees said they, too, have seen the practice Bono described.

"If I am charging you for a steak, and I am giving you a hamburger, there is a big difference there," said a Rural/Metro EMT who admits having seen paramedics sign patient care reports, or "prehospital care reports," without tending to the patient.

The federal government lets ambulance companies bill an advanced life support rate even if only basic life support services were provided. In theory, ambulance providers deserve reimbursement for sending their better trained personnel to the scene of a call that sounded serious when dispatched and turned out not to be.

But other ambulance officials interviewed said paramedics are expected to at least assess the patient, and doing so requires making contact. That didn't happen in the case of the 9-year-old with the bloody toe, Bono said.

Fricano, the former Rural/Metro manager for Cayuga County, found Bono's story alarming.

"What you are describing to me is inappropriate and probably illegal and probably constitutes fraud," he said.

The News asked Rural/Metro's Smith about Bono's story. Is it fraud for a medical professional to sign a document asserting they have assessed a patient without coming into contact with the patient?

"If it's an ALS call, that medic is signing off that they assessed the patient. And if they didn't, it's fraud," Smith said in one interview.

In a second interview he responded differently.

"I'm not going to respond to Jeff Bono's allegations," Smith said. "I am going to respond that, if Jeff Bono felt like something was not appropriate, then he had a venue and an avenue to report that."

* Rural/Metro has charged for extras already covered.
All ambulance companies charge more for an advanced life support transport than a basic life support transport because advanced life support calls might require cardiac monitoring, life-saving drugs and oxygen, among other things.

Rural/Metro has charged a higher basic rate for the advanced calls -- around $1,000 -- and then thrown on extra charges for oxygen and cardiac monitoring, according to patient bills obtained by The News.

That's a departure from the industry standard established by Medicare.

The News obtained a number of bills presented to Rural/Metro patients, without information to identify the patients.

One such bill in November 2010 showed a $65.75 charge for oxygen and $108.95 for the cardiac monitor -- on top of the $1,029 advanced life support base rate. Another bill from 2009 revealed the same practice.

"What Rural/Metro appears to do is bill for extras that should be already included in the ALS package," said Anthony C. Balester, general manager for the Orchard Park Fire District EMS, a nonprofit ambulance service that has taken calls away from Rural/Metro. "So why are they doing that?"

On this subject, Rural/Metro officials were especially reluctant to comment.

Smith said he suspected The News obtained the bills in violation of federal health care privacy laws, and he stressed that under its compliance program, the company would report this to federal authorities. He also implied that Rural/Metro has revised its billing practice by now bundling certain costs into the flat rate, but he was unwilling to say if oxygen and cardiac monitoring were among them.

"We follow Medicare guidelines," he said.

Like with any medical service, Rural/Metro patients are most often expected to cover what their insurers will not unless the company waives the balance, which Rural/Metro has done, according to one bill The News received. When Rural/Metro doesn't waive the balance, bill collectors pursue past-due amounts.

"They were just absolutely relentless in their collection efforts," said William Cansdale Jr., the Lancaster mayor, who was left with bills to pay after his father's death in August 2010. "They were threatening to take this into collection, which they eventually did. Immediately after his passing, they were calling my house."

He said the collection calls came first from Buffalo, then from Rochester, then from out West before Cansdale paid the $150 on Nov. 16, 2010, about 11 weeks after his father died. None of the other ambulance services owed money went to such extremes, he said. Largely because of the experience, Cansdale didn't want Rural/Metro taking over as Lancaster's primary ambulance provider, though it wasn't his decision.

From Scottsdale, Rural/Metro Corp. has acknowledged in reports to investors that in its heavily regulated industry "from time to time" it is "subject to investigations relating to Medicare and Medicaid laws." Among them:

* In Ohio, Rural/Metro units in May signed a five-year corporate integrity agreement with the U.S. Department of Health and Human Services and paid $2.4 million to address allegations that it billed for services that did not meet Medicare's medical-necessity and reimbursement requirements.
* In Alabama, the Justice Department joined a whistle-blower lawsuit alleging Rural/Metro billed for services not medically necessary under Medicare and Medicaid rules. Proceedings in the matter are stalled pending a federal criminal investigation into Rural/Metro in Kentucky. Company lawyers argued the criminal matter could affect the civil case.
* In Washington, D.C., Rural/Metro and Rural/Metro Mid-Atlantic surrendered $951,600 after a federal investigation showed Rural/Metro had billed Medicaid for services not medically necessary, not authorized by Medicaid or not provided at all, the Justice Department reported in 2008.
* In Sioux Falls, S.D., a Rural/Metro subsidiary paid $500,000 and signed a corporate integrity agreement in 2005 to resolve allegations into its billing and documentation practices.
* In 2007, Rural/Metro settled with the U.S. Justice Department over a pair of whistle-blower lawsuits alleging that the company offered kickbacks in exchange for Medicare and Medicaid business. Rural/Metro agreed to pay $2.5 million to settle the suits from 2000 and 2001. They asserted the company offered discounts to Texas hospitals in return for contracts to provide services billable to government-run health care programs.

Rural/Metro Corp. went on a buying binge in the 1990s, swallowing up mom-and-pop ambulance companies as it tried to grow, said Barry Palatas, who was a vice president for New York operations when he left Rural/Metro in 2008. Sometimes those acquired companies came with baggage; the Texas practices were undertaken by a company later acquired by Rural/Metro, Palatas said. But as the new owner, Rural/Metro signed the integrity agreement, he said.

"I believe that the mission that Rural/Metro had was that by having sort of a profit motive you could provide good-quality, cost-effective health care ambulance service. I don't think they are mutually exclusive goals," he said.

"Certainly we had financial targets and goals that we had to meet," Palatas continued. "But I don't think that I ever compromised health care quality in pursuit of a quarterly target. I never skinnied on breaking any regulations or any type of inappropriate billing or anything like that."

Some of Rural/Metro's fiercest critics in Western New York can be found within some of the volunteer, not-for-profit ambulance services that compete with the for-profit Rural/Metro. Those critics question whether the profit motive should drive ambulance care. Still, Rural/Metro covers more of Western New York -- including the City of Buffalo -- than any other provider. So it needs revenue to support a fleet of some 75 ambulances, 550 employees and round-the-clock operations, especially in Buffalo.

"If Rural/Metro leaves, who is left to pick up the slack? There is nobody," said Jamie Bono of Buffalo, a former Rural/Metro paramedic and a former fellow with the Center for Disaster Preparedness who now works as an assistant professor of English at Daemen College. He is not related to Jeffrey Bono. "That's my concern as a Buffalo resident who comes in to pick up the slack?" he said.

In addressing the assertions of some current and former employees, Smith said the Commission on Accreditation of Ambulance Services recently accredited Rural/Metro here -- the "only prehospital care provider in Western New York to successfully complete the voluntary review process," the company said in a news release.

Still, a number of people who have worked for Rural/Metro hold the opinion that profits, not quality of care, drive its management philosophy.

J-M Reed worked as a paramedic for Rural/Metro from the time it acquired Buffalo's LaSalle Ambulance in 1995 to 2003.

"Rural/Metro came in and they were very open that this was a for-profit business," he said.

He remembers a meeting in which the new managers announced they would no longer have an ambulance work overnight out of a long-standing station at the American Brass site.

"Somebody, another paramedic in this company meeting, stood up and said, 'What if somebody's baby stops breathing on Vulcan Avenue at 2 o'clock in the morning?' " Reed said.

"And one of the new managers stood up and said, 'We are willing to take that risk.' "

Copyright 2012 The Buffalo News

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