OPA: Insurance firm padded bills

The NMI Retirement Fund lost an estimated $313,516 on fraudulent claims and over $500,000 in supported claims due to padded bills of physical therapy services rendered by Megaplus International CNMI, Inc.

Based on the result of the audit investigation of health insurance payments to Megaplus International, the Office of the Public Auditor disclosed that NMIRF through its Group Health and Life Insurance Branch paid the company over $800,000 on fraudulent health insurance claims of physical therapy services.

Public Auditor Mike S. Sablan asked Fund Administrator Juan S. Torres to expedite the hiring of the review utilization board to prevent possible recurrence of this type of problem and the immediate preparation of guidelines for the review and processing of claims.

Mr. Sablan also instructed the NMIRF to adopt a stricter measure to improve its internal control over the processing and payments of health insurance claims such as requirements of supporting claim documents and proper segregation of duties.

Since last year, the Fund has been pressing the Legislature to appropriate $6 million for the hiring of the utilization review firm who will scrupulously monitor and examine medical charges billed to the GHLIP.

The program suffered a major financial setback after two Hawaii-based hospitals forwarded medical bills amounting to $5 million incurred by program subscribers seeking off-island medical treatment.

Mr. Torres said the additional $1 million will be utilized as a revolving fund to finance the operation of the review board.

However, until early this year, the Fund and the Legislature are yet to firm up a decision on where the government will source out the needed financial assistance.

The audit report disclosed that the agency paid health insurance claims supported by falsified doctors’ prescription and padded health insurance claims by billing unperformed and unnecessary treatments.

The investigation was prompted by complaints in the past that Megaplus was involved in a fraudulent transactions and providing unnecessary physical therapy services to patients.

Following a thorough investigation through the joint effort of the Federal Bureau of Investigation and the OPA, two Megaplus officials were arrested in March 2000 and were subsequently charged with health care fraud violations under Title 8, Section 1347 of the United States Code.

The two were also required to reimburse GHLIB more than $700,000 which was the estimated amount of false and unsupported claims initially determined by the OPA.

Mr. Sablan has recommended that the NMIRF should pursue the hiring of a review utilization specialist instead of contracting with the firm and consider advertising outside the Northern Marianas to attract qualified applicants.

In addition, to prevent another incident similar to this, NMIRF should implement a stricter operating procedure such as submission of original referral letters from a doctor of medicine, submission of health insurance claim forms duly signed by patients, and submission of periodic treatment and evaluation reports by physical to justify extended medical treatment.