Called by some the “King of Nursing Homes” for his many low-income nursing home patients in northeast Illinois, Dr. Venkateswara Kuchipudi was recently convicted for referring patients to Sacred Heart Hospital in Chicago in exchange for kickbacks.  Kuchipudi became the fifth physician and tenth defendant to be convicted for a massive Medicare and Medicaid fraud scheme that led to the closure of Sacred Heart Hospital.

Kuchipudi’s arrangement was not overly complicated.  He struck a deal with the Owner and CEO of Sacred Heart Hospital (who was recently sentenced to 4.5 years in prison) to refer all of his Medicare patients requiring hospital care to Sacred Heart in exchange for the Hospital’s assignment of an exclusive team of health care practitioners to treat Kuchipudi’s patients both inside and outside the Hospital.  In some instances, Kuchipudi referred patients to Sacred Heart for admission, despite the fact that other hospitals were closer in distance to the patients’ nursing homes and had better staffing and access to routine procedures, such as x-rays and lab work.

The arrangement allowed Sacred Heart Hospital to greatly increase its collections, netting the hospital owner upwards of $29 million over three years, while Kuchipudi was able to bill Medicare approximately $1.6 million for services provided by his exclusive team of Sacred Heart professionals.

Kuchipudi argued that his goal was to improve patient care and that he had no idea the arrangement could be construed as involving kickbacks for referrals.  The government countered by arguing that the anti-kickback statute is violated as long as at least one of the purposes of the arrangement is to induce referrals.  The jury sided with the government on 10 of the 12 charges.

Kuchipudi was convicted of one count of conspiracy to defraud the United States and nine counts of illegally soliciting or receiving benefits in return for referrals of patients covered under a federal health care program.  He was acquitted of two counts involving mileage reimbursements paid by the Hospital to one of the physician assistants assigned to treat Kuchipudi’s patients at nursing homes.

This case is another example of the federal government’s crackdown on fraud, waste and abuse in federal health care programs, and shows that violations of the federal anti-kickback statute can involve kickbacks in a form other than direct payment for referrals.  It underscores the need for physicians to carefully review their hospital and other provider relationships to be sure such arrangements do not – even inadvertently – run afoul of these complicated statutes.

Now that the new year is upon us, today’s post will look at the Department of Health and Human Services’ Office of Inspector General (OIG), in particular, OIG’s priorities for 2013.   According to OIG’s Fiscal Year 2013 Work Plan, it will be focusing upon a number of topics of interest – including some items not addressed last year.

OIG’s planned reviews of Medicare Part A and Part B will include:

● Billing patterns for nursing home stays.

● Accreditation of medical equipment suppliers, with a particular focus on quality standards.

● Claims submitted by medical equipment suppliers for lower limb prosthetics, power mobility devices and vacuum erection systems.

● Replacement of medical equipment, especially the frequency and necessity of that replacement.

● Independent physical therapists’ claims and whether the claims are reasonable, medically necessary and properly documented.

● Billing for electrodiagnostic testing.

● Ensuring that payments are not made for alien beneficiaries who were unlawfully present in the United States.

● Reviewing payments for Part A and Part B services to avoid claims starting after a beneficiary has died. 


Special attention should be paid to these areas in the coming year given OIG’s additional scrutiny.