Feds Found ‘Staggering’ Drug Testing Fraud at Tennessee Pain Clinics

By Fred Schulte, Kaiser Health News

The Justice Department has accused a defunct chain of Tennessee-based pain clinics of cheating Medicare and other taxpayer-funded health insurers out of at least $25 million in needless urine drug tests and genetic testing.

The civil lawsuit names Comprehensive Pain Specialists, also known as Anesthesia Services Associates PLLC; four of its physician owners; and a former top executive. The doctors include Tennessee Republican State Sen. Steven Dickerson and Peter Kroll, both anesthesiologists.

At its peak, CPS ran 60 pain clinics in a dozen states and treated some 48,000 patients per month, according to the suit. It shut down abruptly last summer, leaving many chronic pain patients scrambling to find a new source of narcotic medicines.

The Justice Department fraud case centers largely on the company’s lucrative urine-testing lab in Brentwood, Tenn., which CPS financed with a $1.5 million loan. The suit also alleges overbilling from acupuncture and other services offered to patients.

CPS was the subject of a November 2017 investigation by Kaiser Health News that scrutinized Medicare billings for urine drug tests.

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Medicare and other federal programs paid over $70 million from 2011 to 2018 for CPS-ordered urine tests, an amount the lawsuit called “staggering.” TennCare, the state’s Medicaid program, paid more than $9 million more during that time.

“For this reason, CPS considered [urine tests] to be ‘liquid gold’ — with revenues of tens of millions of dollars for what was largely unnecessary medical testing,” according to the suit.

The chain’s owners and then-CEO John Davis “viewed every CPS patient as an opportunity to make money, without regard to the individualized need for treatment,” the suit alleges. Davis was convicted last year in Nashville on federal criminal health care fraud charges. He has since filed a motion for a new trial.

Dan Martin, an attorney representing Kroll, said in an emailed statement: “We are aware of the allegations and very familiar with the actual facts. Dr. Kroll did not engage in any wrongdoing whatsoever, and we look forward to correcting the government’s misunderstanding of the facts.”

Dickerson’s attorney, Ed Yarbrough, also issued a statement that read: “Dr. Dickerson is an honest man. We will prove that in court.” 

$8.5 Billion Annually Spent on Drug Tests

In its investigation, KHN, with assistance from researchers at the Mayo Clinic, found that spending on urine screens and related genetic tests quadrupled from 2011 to 2014 to an estimated $8.5 billion a year — more than the entire budget of the Environmental Protection Agency. The federal government paid medical providers more to conduct urine drug tests in 2014 than it spent on the four most recommended cancer screenings combined.

CPS was among the nation’s most aggressive testers. KHN found that in 2014 five of its medical professionals stood among the nation’s top billers. Anita Bayles, a nurse practitioner working at a CPS clinic in Cleveland, Tenn., generated $1.1 million in urine-test billings that year, according to Medicare records analyzed by KHN.

The Justice Department suit says that CPS believed Bayles ordered too many urine tests and overprescribed opioids and in September 2016 decided to fire her. But the decision was reversed by CEO Davis “because of her ability to generate revenues,” according to the suit. Bayles could not be reached for comment.

IMAGE COURTESY OF MARK COLLEN AND PAIN EXHIBIT

IMAGE COURTESY OF MARK COLLEN AND PAIN EXHIBIT

Though CPS ran six or more urine tests a year on many patients receiving narcotics, its doctors often did not review the results to make sure patients did not abuse them, according to the suit.

Kroll, who also served as CPS’ medical director, told KHN in 2017 that the high volume of tests was justified to keep patients safe and to reduce chances of black market sales of pills.

Kroll billed Medicare $1.8 million for urine tests in 2015, the KHN analysis of Medicare billing records found.

Kroll said in a 2017 interview that he and Dickerson came up with the idea to open a high-quality pain practice over a cup of coffee at a Nashville Starbucks in 2005.

But the Justice Department alleges that CPS expanded rapidly through bilking the government, conduct that its top executives and founders “failed to take any action to stop,” according to the suit.

In what is called a “particularly egregious example of this fraudulent conduct,” the Justice Department alleged that Kroll caused over 2,500 claims to be submitted to Medicare, for which CPS was paid almost $350,000, during a 10-day period in May 2017 when Kroll was on vacation in Italy.

“Because of these fraudulent claims, Kroll’s billing privileges with Medicare have been revoked,” according to the suit.

The lawsuit states that Medicare officials began investigating overcharging for urine testing at CPS in 2014 and eventually directed the company to repay the government $27.4 million in an extrapolated penalty. But CPS aggressively appealed the decision and managed to get it overturned and stay in business.

Once among the largest pain management groups in the Southeast, CPS crumbled amid financial woes that included nearly a dozen civil suits alleging unpaid debts, as well as the criminal case against Davis. In a court filing in December, the company said that it had terminated all of its employees and that its debts “greatly exceed its assets.”

In total, Medicare paid CPS over $150 million from 2011 to 2018, a large part of which was related to urine testing, while TennCare paid CPS over $32.5 million, according to the suit.

The Justice Department complaint consolidates several whistleblower cases filed against the company by doctors and other former employees. Federal whistleblower cases seek recovery of money paid improperly and can include treble damages, or three times the amount of the original overpayment.

One of the whistleblowers said he toured the lab with CPS executives and observed an “overpowering and unpleasant smell of urine.” In response, a CPS executive said, “To me, it smells like money,” according to the whistleblower’s suit.

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation which is not affiliated with Kaiser Permanente.

Pain Clinics Ordered Unnecessary Urine Drug Tests

By Fred Schulte, Kaiser Health News

A Tennessee-based chain of pain clinics that abruptly shut down last summer faces five whistleblower lawsuits accusing it of defrauding Medicare and other health insurers by billing for hundreds of unnecessary urine drug tests and other dubious health services, newly unsealed court records show.

The federal suits target Tennessee-based Comprehensive Pain Specialists, also known as Anesthesia Services Associates, PLLC, and several of its physician owners. At its peak, CPS ran 60 pain clinics in 12 states, according to the suits, as well as a lucrative urine-testing lab in Brentwood, Tenn. CPS closed with no warning in July, leaving patients in several states distressed and scrambling to find a new source of narcotic pain medicines.

In federal court filings unsealed in Nashville this week, federal prosecutors said they would take over the urine-testing allegations and sue several CPS owners, including co-founding anesthesiologists Peter Kroll and Steven Dickerson. Dickerson is a Republican state senator representing Nashville.

Kroll could not be reached for comment Wednesday. Dickerson did not respond to an email or a phone message left at his legislative office.

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It is not clear whether the whistleblowers, who include former CPS doctors and other employees, would pursue several allegations against the company that the federal government declined to join in. CPS, in an unrelated court filing in December, said the company had terminated all of its employees and that debts “greatly exceed its assets.”

Once among the largest pain management groups in the Southeast, CPS crumbled amid financial woes that included nearly a dozen civil suits alleging unpaid debts, and a criminal investigation that ensnared its former chief executive, John Davis. Davis, 41, was convicted this month in federal court in Nashville on health care fraud charges. He is to be sentenced later this year.

CPS was the subject of a November 2017 investigation by Kaiser Health News that scrutinized its Medicare billings for urine drug tests. Medicare paid the company at least $11 million for urine screenings and related tests in 2014, when five of CPS’ medical professionals stood among the nation’s top such Medicare billers. One nurse practitioner working at a CPS clinic in Cleveland, Tenn., generated $1.1 million in urine-test billings that year, according to Medicare records analyzed by KHN.

Kroll, who also served as CPS’ medical director, said at the time that the tests were justified for patient safety and to reduce chances the pills might be sold on the black market. Kroll billed Medicare $1.8 million for urine tests in 2015, the KHN analysis of Medicare billing records found.

Kroll in an interview with KHN at the time said that he and fellow anesthesiologist Dickerson came up with the idea for the pain clinics over a cup of coffee at a Nashville Starbucks in 2005.

One of the whistleblower suits alleging unnecessary urine tests was first filed under seal in 2016 by Suzanne Alt, a doctor who worked in the company’s pain clinics in Troy, Mo., and Keokuk, Iowa, from May 2014 to March 2015. She alleged CPS doctors were “strongly encouraged to order full-panel urine drug screens on each patient, every time, despite the patient’s history, compliance and risk.”

She also said that the company’s electronic medical records “made it extremely difficult to order anything less than the full panel.” Alt said she was told the Tennessee lab did about 600 of these screens daily. Another whistleblower said he toured the lab with CPS executives and observed an “overpowering and unpleasant smell of urine.” In response, a CPS executive said, “To me, it smells like money,” according to the suit.

“They were making a killing,” said Birmingham, Ala., attorney Don McKenna, who represents Alt in the case.

Another of the whistleblowers, former CPS anesthesiologist Cynthia Niendorff, alleged that the company billed Medicare about $754 for each additional urine test, even though earlier results had come back negative. She said CPS grossed approximately $6 million per month from the urine-testing lab and said about 20% of this amount was suspect, according to the suit.

Mary Butner, a former insurance specialist for CPS in Gallatin, Tenn., alleged that CPS charged some patients $1,500 for a drug test to measure blood levels of medication and $400 for a drug test designed to detect illegal drugs — charges that the suit called “grossly inflated and disproportional to the actual costs.” She also alleged that CPS would fill prescriptions for patients whose drug tests detected the presence of illegal drugs, or showed that they were not taking their medication as directed.

Butner also accused medical director Kroll of approving prescriptions for back braces when it was “clearly medically unnecessary,” including some people who had injuries to a knee or elbow.

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation which is not affiliated with Kaiser Permanente.

Medicare Paid Millions for Bogus Lab Tests

By Fred Schulte, Kaiser Health News

Five years ago, Companion DX Reference Lab hoped to cash in on cutting-edge genetic tests paid for by Medicare.

The Houston lab marketed a test to assess how a person’s genes affect tolerance for drugs such as opiates used to treat chronic pain. It also ran DNA tests to help treat cancer and urine screens to monitor drug abuse.

But the lab went bust last year after Medicare ordered it to repay more than $16 million for genetic tests health officials said were not needed.

Companion Dx is one of at least six clinical labs mired in bankruptcy court after Medicare alleged they improperly billed the government for unnecessary urine, genetic or heart disease tests expected to cause hundreds of millions dollars in losses to taxpayers, an investigation by Kaiser Health News found.

As the nation’s bill for drug and genetic tests has climbed to an estimated $8.5 billion a year, there’s mounting suspicion among health insurers that some testing may do more to boost profit margins than help treat patients.

Medicare has slashed fees for urine tests and tightened coverage of some genetic screens, which can cost Medicare $1,000 or more per person. Private insurers, who mostly have paid these bills without question, also are taking a more penetrating look at spending on the controversial lab work.

Yet, getting these firms to repay Medicare and private insurers remains a formidable challenge. While some doctor-owned labs have dodged collection efforts for years, several testing firms deeply in debt to Medicare appear to have few assets to repay overcharges dating back years, court records show.

COURTESY PAIN EXHIBIT

COURTESY PAIN EXHIBIT

“Medicare shouldn’t be paying for dubious tests, but the time to catch that is in the very beginning when [labs] are asking for payment,” said Steve Ellis, vice-president of Taxpayers for Common Sense, a budget watchdog group. “They need to increase oversight so the dollars don’t go out the door in the first place.”

A spokesman for the federal Centers for Medicare & Medicaid Services (CMS) had no comment. Neither did the Department of Justice, which represents the government’s interests in court.

Labs can run a range of genetic and drug tests using a saliva sample, blood or urine specimen. The price tag to Medicare can mount quickly, especially when doctors order highly specialized tests for large numbers of patients. Two bankrupt labs that federal officials say routinely overused tests to detect rare heart ailments in the elderly, for instance, could end up owing the government a total of more than $200 million, court records show.

Some labs have kept operating in bankruptcy while others liquidated equipment and sold off assets. Several bankruptcy trustees, whose duty is to ferret out assets, are suing suppliers, insurers and some doctors to recover funds.

Whether they can raise the pile of cash needed to repay Medicare is doubtful.

Companion Dx, according to bankruptcy records, had $117,497 cash on hand at the end of September. Medicare is seeking the return of $16.2 million paid to the company for services “not considered medically necessary,” according to a January court filing.

The Texas lab had no comment, but in court filings has blamed its collapse on disagreements with Medicare over the merits of its tests and government audits that retroactively disallowed claims. Medicare pays only for services it deems “medically necessary,” and audits typically take many years to complete.

Companion Dx opened in January 2012 expecting to “capture favorable profit margins that existed in connection with this cutting edge technology,” the company wrote in its bankruptcy filing.

However, starting in 2013, Medicare began having second thoughts about the validity of some tests and ultimately decided to cover them on just 1 percent of patients, according to the company. The lab declared bankruptcy in July 2016. The case is pending.

Iverson Genetic Diagnostics Inc. is another lab that turned to bankruptcy court as Medicare tried to reclaim $19.7 million, court records show. The case is pending.

Medicare took aim at the Seattle firm in November 2013 after reviewing “numerous” complaints of billings for genetic tests that patients “had not actually received,” federal officials wrote in a court filing.

A later federal audit concluded that Iverson had charged Medicare for tests that were “not reasonable and necessary.” In September 2015, about two months after Medicare called for the refund, the lab filed for bankruptcy.

Iverson denied overbilling Medicare and is appealing the Medicare decision, which it said in a court filing “was not based upon sufficient or proper evidence.” And Iverson denied wrongdoing in court filings.

Neither the lab, now located in Charleston, S.C., nor its lawyers would comment.

‘No Cash Left’

In another case, Pharmacogenetics Diagnostic Laboratory LLC in Louisville exited bankruptcy in late October without repaying Medicare $26.3 million for disallowed genetic tests. The lab, set up in 2004 by two University of Louisville professors, strongly disputed Medicare’s findings but said they were the “primary reason” for the bankruptcy, court records show.

Charity Neukomm, a lawyer for the lab, said another medical group agreed to purchase all its assets “free and clear of liens.” That left nothing for the government.

There’s also little chance that Natural Molecular Testing Corp., a defunct genetic testing lab, will repay the $71 million it owes Medicare, according to John Kaplan, an attorney for the bankruptcy trustee.

Kaplan said the lab near Seattle, which opened in 2010, was “printing money from billing Medicare” until the government suspended payments in April 2013. The company filed for bankruptcy in 2013 in the face of a Medicare audit of its billing and concern over its business practices, such as paying some doctors who ordered its tests as much as $10,000 a month in consulting fees, according to court records.

Five years in, the bankruptcy case is expected to settle next year, but there’s likely to be “no cash left” to repay Medicare, Kaplan said.

Critics argue that Medicare has been slow to assess the benefits of new and controversial tests and technologies — even when soaring costs signaled a warning of possible overuse.

Spending on genetic testing, for example, shot up from about $167 million in 2013 to more than $466 million a year later, according to Medicare billing data. In 2015, the program spent about $317 million on the tests and some $165 million last year. Government auditors credit tighter oversight for the sharp decline in billing.

Ellis, the budget watchdog, said the “huge jump” in these bills should have “sent out a red flag.”

Medicare officials don’t routinely verify that the sales claims labs make to doctors are rooted in scientific evidence. Some labs have hawked genetic tests as a tool for making pain management safer. The labs contend the tests can pinpoint the proper drugs and dosage for each patient based on their genetic makeup, thus reducing the threat of overdose or other injury.

However, many experts argue that the science hasn’t caught up to the sales pitch — and that some high-priced tests may do little to diagnose or treat illness.

Genetic tests “are not ready for prime time,” said Charles Argoff, professor of neurology at Albany Medical College in New York. He said their impact on medical care “hasn’t been measured.”

Court records show that the legal battles to recover assets from failed labs often plod on for years, especially when trustees believe labs paid illegal fees or other kickbacks to persuade doctors to order dubious tests.

“Some of these cases never go away,” said David Schumacher, a Boston health care lawyer who has defended doctors against these claims. Still, he said that even after years of legal wrangling Medicare often is unlikely to “be made whole and fully repaid.”

The trustee for Heart Diagnostic Laboratory, which marketed a panel of blood tests to detect heart disease and other illnesses before its June 2015 bankruptcy, has filed more than three dozen lawsuits to recover money paid to doctors and medical offices, including suspect consulting fees.

“Our analysis is that all of these payments were tainted and therefore we’re entitled to go after them,” said Richard Kanowitz. He added: “It’s an uphill battle.”

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation which is not affiliated with Kaiser Permanente.

Doctors Soak Up Profits With Urine Drug Tests

By Fred Schulte and Elizabeth Lucas, Kaiser Health News

The cups of urine travel by express mail to the Comprehensive Pain Specialists lab in an industrial park in Brentwood, Tenn., not far from Nashville. Most days bring more than 700 of the little sealed cups from clinics across 10 states, wrapped in red-tagged waste bags. The network treats about 48,000 people each month, and many will be tested for drugs.

Gloved lab techs keep busy inside the cavernous facility, piping smaller urine samples into tubes. First there are tests to detect opiates that patients have been prescribed by CPS doctors. A second set identifies a wide range of drugs, both legal and illegal, in the urine.

The doctors’ orders are displayed on computer screens and tracked by electronic medical records. Test results go back to the clinics in four to five days. The urine ends up stored for a month inside a massive walk-in refrigerator.

The high-tech testing lab’s raw material has become liquid gold for the doctors who own Comprehensive Pain Specialists. This testing process, driven by the nation’s epidemic of painkiller addiction, generates profits across the doctor-owned network of 54 clinics, the largest pain-treatment practice in the Southeast.

kaiser health news (Heidi de Marco)

kaiser health news (Heidi de Marco)

Medicare paid the company at least $11 million for urine and related tests in 2014, when five of its professionals stood among the nation’s top billers. One nurse practitioner at the company’s clinic in Cleveland, Tenn., single-handedly generated $1.1 million in Medicare billings for urine tests that year, according to Medicare records.

Dr. Peter Kroll, one of the founders of CPS and its medical director, billed Medicare $1.8 million for these drug tests in 2015. He said the costly tests are medically justified to monitor patients on pain pills against risks of addiction or even selling of pills on the black market.

“I have to know the medicine is safe and you’re taking it,” Kroll, 46, said in an interview. Kroll said that several states in which CPS is active have high rates of opioid use, which requires more urine testing.

$8.5 Billion in Urine Tests

Kaiser Health News, with assistance from researchers at the Mayo Clinic, analyzed available billing data from Medicare and private insurance billing nationwide, and found that spending on urine screens and related genetic tests quadrupled from 2011 to 2014 to an estimated $8.5 billion a year — more than the entire budget of the Environmental Protection Agency. The federal government paid providers more to conduct urine drug tests in 2014 than it spent on the four most recommended cancer screenings combined.

Yet there are virtually no national standards regarding who gets tested, for which drugs and how often. Medicare has spent tens of millions of dollars on tests to detect drugs that presented minimal abuse danger for most patients, according to arguments made by government lawyers in court cases that challenge the standing orders to test patients for drugs. Payments have surged for urine tests for street drugs such as cocaine, PCP and ecstasy, which seldom have been detected in tests done on pain patients. In fact, court records show some of those tests showed up positive just 1 percent of the time.

Urine testing has become particularly lucrative for doctors who operate their own labs. In 2014 and 2015, Medicare paid $1 million or more for drug-related tests billed by health professionals at more than 50 pain management practices across the U.S. At a dozen practices, Medicare billings were twice that high.

Thirty-one pain practitioners received 80 percent or more of their Medicare income just from urine testing, which a federal official called a “red flag” that may signal overuse and could lead to a federal investigation.

“We’re focused on the fact that many physicians are making more money on testing than treating patients,” said Jason Mehta, an assistant U.S. attorney in Jacksonville, Fla. “It is troubling to see providers test everyone for every class of drugs every time they come in.”

 ‘Almost a License to Steal’

As alarm spread about opioid deaths and overdoses in the past decade, doctors who prescribed the pills were looking for ways to prevent abuse and avert liability. Entrepreneurs saw a lucrative business model: persuade doctors that testing would keep them out of trouble with licensing boards or law enforcement and protect their patients from harm. Some companies offered doctors technical help opening up their own labs.

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A 2011 whistleblower lawsuit against one of the nation’s top billers for urine tests, a San Diego-based laboratory owned by Millennium Health LLC, underscores the potential for profit.

“Doctor,” one lab representative said during sales calls, according to an affidavit, “drug testing is not about medicine but about making money, and I am going to show you how to make a lot of money.”

Millennium Health, billing records show, took in more than $166 million from Medicare in 2014 despite being the target of at least eight whistleblower cases alleging fraud over the past decade. A Millennium sales manager involved in a 2012 case in Massachusetts reported earning $700,000 in salary and sales commissions in the previous year.

Millennium encouraged doctors to order more tests both as a way to lower patients’ risks and to shield the physicians against possible investigations by law enforcement or medical licensing boards, according to court filings. Millennium denied the allegations in the whistleblower suits and settled all of them with the Justice Department in 2015 by agreeing to pay $256 million; its parent company, Millennium Lab Holdings II, declared bankruptcy.

Tests to detect drugs in urine can be basic and cheap. Doctors have long used testing cups with strips that change color when drugs are present. The cups cost less than $10 each, and a strip can detect 10 types of drugs or more at once and display the results in minutes.

Tests to detect drugs in urine can be basic and cheap. Doctors have long used testing cups with strips that change color when drugs are present. The cups cost less than $10 each, and a strip can detect 10 types of drugs or more at once and display the results in minutes.

After noticing that some labs were levying huge charges for these simple urine screens, the Centers for Medicare & Medicaid Services moved in April 2010 to limit these billings. To circumvent the new rules, some doctors scrapped cup testing in favor of specialized — and much costlier — tests performed on machines they installed in their facilities. These machines had one major advantage over the cups: Each test for each drug could be billed individually under Medicare rules.

“It was almost a license to steal. You had such a lucrative possibility, it was very tempting to sell as many [tests] as you can,” said Charles Root, a longtime lab industry consultant whose company, CodeMap, has tracked the rise of testing labs in doctors’ offices.

Voluminous Drug Tests

The CPS testing lab in Tennessee opened in 2013, not long before a pain specialist named William Wagner moved from New Mexico to open a CPS clinic in Anderson, S.C. He was lured by the promise of $30,000 a month in salary, which would grow as the clinic added patients and revenue, along with other benefits. His contract said he could be on-site for as little as 20 percent of the clinic’s operating hours.

When the company recruited him, Wagner said, he was told the job offered “potential to earn a great deal of money” from bonuses he would receive from services he generated, including a share of collections from lab services for urine tests done at the new Tennessee facility.

That did not happen, according to Wagner. He is suing CPS, saying that it failed to collect bills for services he rendered and then closed the clinic. CPS refutes Wagner’s claims and says it fulfilled its obligations under the contract. In a counterclaim, CPS argues that Wagner owes it $190,000.

pain exhibit (Mark collen)

pain exhibit (Mark collen)

“All of their money was being made off of urine drug screens. They weren’t doing anything else properly,” Wagner said. The lawsuit is pending in federal court in Nashville.

Former CPS chief executive John Davis, in an interview, described the urine-testing lab as part of a “strategic expansion initiative” in which the company invested $6 million to $10 million in computerized equipment and swiftly acquired new clinics. Kroll, one of the owners of CPS, said the idea was to “take the company to the next level.”

Davis, who led the initiative before leaving the company in June, would not discuss the private company’s finances other than to say CPS is profitable and that lab profits “to a great degree” drove the expansion. “Urine screening isn’t the reason why we decided to grow our company. We wanted to help people in need,” Davis said.

Kroll acknowledged that urine tests are profit-makers, but stressed that verifying that patients aren’t abusing drugs gives him a “whole different level of confidence that I’m doing something right for the patients’ condition.”

He said his doctors try to be “judicious” in ordering urine tests. Kroll said some of his doctors and nurses treat “high-risk” patients who require more frequent testing. The company said that its Medicare billing practices, including urine screens, had withstood a “very in-depth” government audit.  The audit initially called for repayment of $25 million but was settled in 2016 for less than $7,000, according to the company. Medicare officials had no comment.

Kroll’s orthopedic career took a sharp turn more than a decade ago after watching his brother suffer through multiple surgeries for muscular dystrophy, along with bone fractures, stiffness and pain. His brother died at age 25, and Kroll decided to switch to anesthesiology and become a pain specialist.

“It sensitized me to the plight of people with chronic conditions that we have no medical answer for,” Kroll said. His brother “battled for his whole life.”

Kroll’s career change coincided with a national movement to establish pain management as a vital medical specialty, with its own accrediting societies and lobbying and political arm to advance its interests and those of patients.

Joined by three other doctors, he formed Comprehensive Pain Specialists at a storefront in suburban Hendersonville, Tenn. It quickly gained a foothold on referrals from local doctors unsure, or uneasy, about treating unyielding pain with heavy narcotics such as oxycodone, morphine and methadone.

In 2014, when CPS was among Medicare’s major urine-test billers, Tennessee led the nation in Medicare spending on urine drug tests run by doctors with in-house labs, according to federal billing records.

How Much Is Too Much?

There is wide disagreement among legislators, medical trade associations and the state boards that license doctors over the best approach to urine testing. One association of pain specialists argued in 2008 that urine testing could be done as often as weekly, while others have balked at that frequency.

Indiana’s medical board ordered mandatory urine tests for all pain patients in late 2013, only to face a lawsuit from the American Civil Liberties Union, which argued that the policy was unconstitutional and an unlawful search. Officials backed down the next year, and current policy states that testing can be done “at any time the physician determines that it is medically necessary.”

The federal Centers for Disease Control and Prevention, wary of both cost and privacy concerns, declined to set a definitive national standard despite years of debate. In long-awaited guidelines issued in March 2016, the CDC called for testing at the start of opioid therapy and once a year for long-term users. Beyond that, it said, testing should be “left up to the discretion” of the medical professional.

There is likewise little scientific justification for many of these new types of drug testing that have made their way onto doctors’ order sheets and laboratory menus.

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Many pain patients on opioids are routinely tested for phencyclidine, an illegal, hallucinogenic drug also known as PCP, or angel dust, Medicare records show. Yet urine tests have rarely detected the drug. Millennium, the San Diego-based company that once topped Medicare billings for urine tests, found PCP in fewer than 1 percent of all patient samples, according to federal court filings.

In a tour of the CPS lab, Chief Operations Officer Jeff Hurst, who has more than two decades of experience working for commercial labs, rattled off a list of drugs ranging from cocaine to heroin and methamphetamine, which he said was “really big in East Tennessee.”

How often urine tests reveal serious drug abuse — or suggest patients might be selling some of their medications instead of taking them — is tough to pin down. Asked during a tour of the laboratory in Tennessee if CPS could provide such data, Hurst said he did not have it; Kroll said he didn’t either.

Hurst said the lab often ends up doing a “long list of tests” because CPS doctors are prescribing dangerous drugs that may be deadly if abused and “need to know what patients are taking.” Prescribed drugs, such as opiates and tranquilizers, are also measured at the CPS lab.

Government officials have criticized the explosive growth in testing for some prescription drugs, notably a class of tranquilizers known as tricyclic antidepressants. Medicare paid more than $45 million in 2014 for more than 200,000 people to be tested for tricyclic drugs, often multiple times. Medicare was billed for 644,495 tests for one tricyclic drug, amitriptyline, up from 6,173 tests five years earlier.

The Department of Justice argued in a 2012 whistleblower case that these tests often couldn’t be justified because of “low abuse potential” of the drugs and a “lack of abuse history for the vast majority of patients.”

Income Breakdown Raises ‘Red Flag’

When told that drug screens accounted for most of the Medicare income for dozens of pain doctors, federal officials said that was troubling.

“Doctors who receive the lion’s share of their Medicare funds from urine drug testing would certainly raise a red flag,” said Donald White, a spokesman for the Department of Health and Human Services’ Office of the Inspector General. “Confirmation of fraud would require federal investigation and a formal judicial proceeding.”

In a report released last fall, the watchdog office said some uptick in testing might be justified by the drug abuse epidemic, but noted that the situation also “could provide cover for labs that might seek to fraudulently bill Medicare for unnecessary drug testing.”

Medicare pays only for services it considers “medically necessary.” While that sometimes can be a judgment call, pain clinics that adopt a “one-size-fits-all” approach to urine testing may find themselves under suspicion, said Mehta, the assistant U.S. attorney in Florida.

Mehta’s office investigated a network of Florida clinics called Coastal Spine & Pain Center for alleged over-testing, including routinely billing for a second round of expensive tests simply to confirm earlier findings. In a press release in August 2016, the government argued that these tests were “medically unnecessary.” The company paid $7.4 million last year to settle the False Claims Act case. Coastal Spine & Pain, which did not admit fault, had no comment.

Four Coastal Spine & Pain doctors were among the top 50 Medicare billers during 2014, when they charged nearly $6 million for drug tests, according to Medicare billing data analyzed by KHN.

Starting in 2016, Medicare began to crack down on urine billings as part of a federal law that is supposed to reset lab fees for the first time in three decades. Now tougher scrutiny of urine testing, and cuts in reimbursements, may be threatening CPS — or at least its profits.

CPS closed nine clinics last year and told its doctors that urine-testing revenue had dropped off 32 percent in the first quarter of the year, according to a letter then-CEO Davis sent its physician partners.

Davis said the company had to “make some changes” because of cuts in Medicare reimbursements for urine tests and other medical services. A company spokeswoman told KHN that the drop in urine revenue worsened through 2016 but has bounced back somewhat this year.

Despite the cuts, privately held CPS plans to open new clinics this year. Urine testing will remain a key service — for keeping patients safe, it said. CPS is just playing by the rules of the game. “Tell us how often to test,” said Hurst, the operations officer, “and we’ll be happy to follow it.”

Kaiser Health News is national health policy news service that is part of the nonpartisan Henry J. Kaiser Family Foundation.

Feds Say Bankrupt Drug Lab Paid Millions in Kickbacks

By Pat Anson, Editor

A bankrupt drug testing lab with a checkered history has been linked to a large money laundering and pill mill operation in Tennessee.

According to an updated indictment in U.S. District Court in Knoxville, Confirmatrix Laboratory in Georgia and Sterling Laboratories in Seattle paid nearly $3 million in illegal kickbacks to have thousands of urine drug test samples sent to them from patients at the Knoxville Hope Clinic (KHC). In return, the labs submitted false claims for "unnecessary" drug tests to Medicare and TennCare, Tennesee’s Medicaid program.

“Confirmatrix, by and through its principals and agents, paid bribes and kickbacks to defendants Clyde Christopher Tipton and Maynard Alvarez in return for causing Medicare and TennCare beneficiaries from KHC to be referred to Confirmatrix for medically unnecessary drug screenings,” the indictment alleges.

“Medical providers at KHC prescribed opioids and other controlled substances to thousands of purported pain patients in exchange for grossly excessive fees. The vast majority of the prescriptions were unreasonable and medically unnecessary. Patients were required to keep follow-up appointments every 28 days to continue receiving their prescriptions. Providers at KHC ordered medically unnecessary Drug Screenings for every patient every 28 days.”

Tipton, Alvarez and six other defendants are accused of drug trafficking and money laundering in the long-running investigation of Tennessee pill mills. The ringleader of the pill mill scheme, a 53-year old grandmother named Sylvia Hofstetter, allegedly made millions of dollars while running clinics that prescribed 12 million opioid prescriptions. Prosecutors have alleged that at least nine patients at the clinics died from drug overdoses.

No one affiliated with Confirmatrix or Sterling Laboratories has been indicted so far in the case. Prosecutors say the   alleged kickbacks were paid from August 2013 to July 2016.

As PNN has reported, Confirmatrix filed for Chapter 11 bankruptcy last November, just two days after its headquarters near Atlanta was raided by FBI agents.  The company was founded by Khalid Satary, a convicted felon and Palestinian national that the federal government has been trying to deport for years.

A 2013 study by the Centers for Medicare and Medicaid Services (CMS) listed Confirmatrix as the most expensive drug lab in the country, collecting an average of $2,406 from Medicare for each patient tested, compared to the national average of $751. The bills from Confirmatrix were high because the company ran an average of nearly 120 different drug screens on each patient, far more than any other drug lab.

These and other abusive billing practices finally caused Medicare to lower its reimbursement rates for drug testing, which led to Confirmatrix’s financial problems.

Although it filed for Chapter 11 bankruptcy nine months ago, Confirmatrix remains in business and continues to bill patients and insurance companies for costly drug screens.

Some current and former patients at the Benefis Pain Management Center, a pain clinic in Great Falls, Montana, have received bills from a collection agency seeking well over $1,000 for drug screens that normally cost a few hundred dollars.

“Confirmatrix is out of network, hence I am stuck with the bill unless Benefis writes it off,” one patient told PNN. “I spoke to my insurance about it and they told me that there are labs in Montana that could have done the same thing and would have been covered by my insurance. She asked me, why they would go to a Georgia lab?”

In a statement to PNN in May, a Benefis official defended the clinic’s continued use of Confirmatrix, saying the company performs a valuable service and “waives many costs.”

“The company we have partnered with has an extensive patient assistance program, which is part of the reason they were selected. That company was selected two years ago because it was one of the few labs nationwide that offered quantitative and qualitative testing AND patient assistant programs,” said Kathy Hill, Chief Operating Officer at Benefis Medical Group.

Confirmatrix’s laboratory, office and warehouse space were recently put up for auction by the bankruptcy court under sealed bid.

New Drug Testing Guideline Warns Against Fraud

By Pat Anson, Editor

A new guideline on the use of drug testing by the American Society of Addiction Medicine (ASAM) warns against expensive and unnecessary tests that have led to “unethical and/or fraudulent activities.”

The ASAM is a professional society that represents over 4,300 physicians and specialists in addiction treatment. Its new guideline – the first attempt to set national standards for clinical drug testing – could also influence primary care providers and pain management specialists who are increasingly testing their patients for opioid misuse.  

"Drug testing is a valuable tool for supporting patients in addiction treatment, and this comprehensive set of recommendations should prove useful to providers in a variety of addiction treatment settings," said Margaret Jarvis, MD, Chair of ASAM's Quality Improvement Council.

The new guideline, developed by an 11-member expert panel, is published in the Journal of Addiction Medicine.

“ASAM is acutely aware that this document will be released in a context where a lack of clarity about the appropriate use of drug testing has led not only to inconsistent clinical practice, but also unethical and/or fraudulent activities,” the guideline says.

“One of the purposes of this document is to clarify appropriate clinical use of drug testing and, in so doing, shine a light on drug-testing practices that are clearly outside of these boundaries. The delineation of appropriate treatment practices will confer multiple benefits; most importantly, it will improve patient care. At the same time, it will reduce waste and fraud.”

Drug testing has grown into a multi-billion dollar industry – what some call “liquid gold” – largely because so many doctors who treat addicts and chronic pain patients require them to submit to urine drug screens. Many experts consider the “point-of-care” immunoassay tests widely used in doctors’ offices unreliable because they often give false negative or false positive results.

Several drug testing laboratories have also paid heavy fines to settle fraud and kickback charges after they bilked Medicare, Medicaid, private insurers, and patients for unnecessary and expensive lab tests. The practice was so egregious that the Department of Health and Human Services issued a Special Fraud Alert in 2014 to warn physicians not to accept any payments, referrals, rent or reimbursements from drug testing companies.

The new ASAM guidelines say drug tests "should be widely used in addiction treatment settings," but warn that negative or positive findings about a patient’s use of drugs do not necessarily mean they have a substance use disorder. A patient who consumes poppy seeds, for example, could have a positive finding for morphine.

“The list of potential sources of false positives is too extensive to list here, but a few noted examples include; cough suppressants resulting in positive opioid results, ephedrine in cold medicine resulting in positive result for amphetamines, and antidepressants resulting in positive opioid results,” the guideline says.

“There are known limitations to urine immunoassays for opiate use and providers should be cautious when interpreting their results. Providers should carefully review the testing report produced by the laboratory to ensure they understand which opiates and opioids a test is capable of detecting.”

The ASAM’s expert panel said there was no “magic formula” to determine how often a patient should be drug tested. Testing should be done at least weekly at the beginning of addiction treatment, according to the guideline, and at least monthly in patients in stable recovery. Testing should be performed on a random schedule, when possible.

The guideline also cautions physicians not to be confrontational with patients if a test has an unexpected finding.

“Drug testing should function as a therapeutic tool, so a provider's response to test results should not be confrontational. This approach can perpetuate an ‘us versus them’ mentality that reduces the effectiveness of drug testing to support recovery,” the guideline says.

The ASAM guideline also advises physicians on other issues such as urine tampering, patient confidentiality, practitioner education, and how to select reliable tests and laboratories.

Montana Urine Tests Sent to Bankrupt Drug Lab

By Pat Anson, Editor

Imagine getting an unexpected medical bill for over $1,500 that your insurance won’t cover. You can’t afford to pay it, have already missed several weeks of work due to chronic back pain, and you’re worried about losing your job.

That’s the dilemma faced by a Montana woman, one of the patients at a Great Falls pain clinic who are getting unusually large bills for urine drug testing at a laboratory over 2,000 miles away in Georgia. 

“I spoke to my insurance about it and they told me that there are labs in Montana that could have done the same thing and would have been covered by my insurance. She asked me, why they would go to a Georgia lab?” said the patient, who asked that we not reveal her identity.

The lab in question is Confirmatrix Laboratory, a financially troubled company near Atlanta that specializes in urine drug testing.

For the last two years, Confirmatrix has conducted drug screens for the Benefis Pain Management Center, which is part of Benefis Health System, a non-profit community-based health organization that operates a hospital and provides other medical services in Great Falls.

As PNN has reported, some current and former patients at the Benefis pain clinic believe they are being unfairly labeled and treated as addicts. Many are having their opioid doses reduced or stopped completely. All are required to take regular drug tests to prove they’re not abusing their pain medication.

“For the safety of our patients, regular urine drug screens are conducted to ensure the appropriate levels of prescribed medications, and only those medications, are present,” says Katrina Lewis, MD, a pain management specialist at Benefis.  “Presence of too high of a level of opioids or other substances in the urine can make it inappropriate and unsafe to continue prescribing opioids.  Presence of none of the prescribed opioids in the urine indicates the care plan is not being followed and further prescribing is medically unnecessary.”

Urine drug testing is not uncommon at pain clinics, but the selection of Confirmatrix is. The company was founded by Khalid Satary, a convicted felon and Palestinian national that the federal government has been trying to deport for years.

Satary was arrested in 2001 and served more than three years in federal prison after pleading guilty to running a counterfeit CD operation in the Atlanta area valued at $50 million. At the time, it was the largest counterfeit music case in U.S. history, according to the Atlanta Journal Constitution.

Khalid and jordan satary (instagram photo)

Khalid and jordan satary (instagram photo)

Shortly after his release from prison, Satary founded Confirmatrix, Nue Medical Consulting and GNOS Medical, a medical billing firm, and then transferred his interests in the companies over to his son Jordan, a recent high school graduate.

The Journal Constitution reported in 2014 that Satary was subject to a federal deportation order, but immigration officials were unable to find a country willing to accept him. He still apparently lives in the U.S.

On November 2nd of last year, the FBI and the Georgia Department of Health and Human Services served search warrants at Confirmatrix and GNOS Medical, and agents removed documents from both facilities.

The agencies have not said what prompted the raids and no charges have been filed against either company.

Just two days after the search warrants were served, Confirmatrix filed for Chapter 11 federal bankruptcy protection, with Satary’s son Jordan the largest shareholder to sign the petition in the Northern District Court of Georgia. GNOS Medical is listed as one of the creditors that Confirmatrix owes money to.

“Although historically very profitable,” Confirmatrix CEO Ann Durham told the court the company “began experiencing financial troubles when recent changes to Medicare’s reimbursement rates resulted in a decrease (in) revenue from its toxicology business.”

Drug testing has indeed been a very profitable business for Confirmatrix and other drug labs. A 2013 study by the Centers for Medicare and Medicaid Services (CMS) listed Confirmatrix as the most expensive drug lab in the country, collecting an average of $2,406 from Medicare for each patient tested, compared to the national average of $751. The bills from Confirmatrix were high because the company ran an average of nearly 120 different drug screens on each patient, far more than any other drug lab.

These and other abusive billing practices, not only by Confirmatrix but other drug labs such as Millennium Health, finally caused Medicare to lower its reimbursement rates for drug testing.

Millennium filed for Chapter 11 bankruptcy in 2015, soon after paying a $256 million dollar fine to settle fraud and kickback charges, and to reimburse the government for unnecessary urine and genetic tests.

Under its Chapter 11 filing, Confirmatrix is still able to conduct business and perform lab tests, but it is exploring options for a possible sale of the company or a restructuring “to focus its operations on the blood testing business.” 

The company said it has 152 employees in 15 different states, including one employee in Montana who apparently works at the Benefis pain clinic in Great Falls.

All about the Benjamins.jpg

“They had a gal who was there every day, I assume working there full time, and she was responsible for collecting the samples, processing them, and shipping them off to the lab,” said Rodney Lutes, a physician assistant who was discharged by Benefis in March. 

Benefis did not respond to inquiries from PNN about whether a Confirmatrix employee works at the pain clinic or if Benefis receives a commission or compensation from Confirmatrix for doing business with the company. According to clinic policy, patients on high doses of opioids "should have a minimum of one urine drug test every two months."

In a statement, a Benefis official said Confirmatrix performs a valuable service and “waives many costs.”

“The company we have partnered with has an extensive patient assistance program, which is part of the reason they were selected. That company was selected two years ago because it was one of the few labs nationwide that offered quantitative and qualitative testing AND patient assistant programs. This company does not send its patients to collections for an inability to pay a bill,” said Kathy Hill, Chief Operating Officer at Benefis Medical Group.

But some Benefis patients are getting letters from collection agencies demanding payment for Confirmatrix drug screens that cost well over $1,000, the same tests that Medicare is charged about $150 for under its new reimbursement rates. A call to Confirmatrix for comment was not returned.

Other patients say they are getting bills for drug tests they’ve already paid for, and that Benefis has lost some of their billing and medical records. Still other patients are surprised to learn they may be legally responsible for drug tests that their insurance company refused to pay for.  

“Confirmatrix is out of network, hence I am stuck with the bill unless Benefis writes it off,” said one woman, a chronic pain sufferer for over 30 years, whose opioid dose was recently reduced substantially. “In the last 6 weeks I have been dropped to one third of the dosage I was on with intentions that I will be dropped even more. I have no desire to live, because this is not living.”

In April, a suicidal patient at Benefis Health System burned down his doctor's home and killed himself during a standoff with police. David Herron was not a patient at the Benefis pain clinic, but suffered from chronic back pain and apparently had a long-standing grievance with his doctor, an orthopedic surgeon.

The incident prompted Benefis to upgrade security procedures at its facilities, including training employees to handle active shooter situations, according to the Great Falls Tribune, which reported that "danger presents itself in the form of patients who are drug addicted looking for an early prescription."