Park Avenue Medical Associates: Psychotherapy Bills Without Showing Patients Could Benefit

In the Park Avenue Medical Associates fraud case, the company agreed to pay $1 million to settle federal allegations of unnecessary or undocumented psychiatric services billed to Medicare. The government alleged that, during 2001 through 2012, the company billed far more of these services per psychiatrist and psychologist than other providers serving a similar patient population in the New York area.

Park Avenue Medical Associates, P.C., provided multispecialty medical services in New York. The Justice Department’s settlement announcement described services for elderly patients in nursing homes, hospitals, inpatient psychiatric facilities, assisted living facilities and other long-term-care settings. Park Avenue admitted billing for psychotherapy for patients with dementia or other cognitive disorders without demonstrating that they could benefit. The bill described a treatment. The clinical record needed to show why that treatment could help the person receiving it.

What Park Avenue Medical Associates Admitted

Park Avenue Medical Associates admitted three failures to demonstrate support for its Medicare bills: the clinical basis for diagnostic examinations, the justification for repeated examinations and the patient’s capacity to benefit from psychotherapy.

Diagnostic Examinations Without the Supporting History

Park Avenue admitted that, in many instances, it billed for psychiatric diagnostic examinations without demonstrating adequate documentation of the patient’s medical or psychiatric history or mental status. The history and mental-status documentation explain the clinical basis for that service.

Repeated Examinations After Repeated Orders

Park Avenue also admitted that, in many instances, it billed for repeated psychiatric diagnostic examinations without showing the break in the patient’s condition or new spell of illness that Medicare required. The company had received multiple orders. Its admission concerned the missing clinical support for billing the examinations those orders produced.

Psychotherapy Without Showing Capacity to Benefit

Park Avenue admitted that, in many instances, it billed Medicare for psychotherapy for patients with dementia or other cognitive disorders without demonstrating that they had the capacity to benefit.

The government’s explanation of the coverage rules focused on whether a patient could remember what occurred in therapy from one session to the next, and whether that capacity appeared in the medical record. It described coverage for patients with mild dementia who retained that ability. The broader allegation was stark: Medicare and taxpayers were billed for psychotherapy for patients whose severe dementia prevented them from benefiting.

The Bonus Followed the Services and the Reimbursement

The government alleged that Park Avenue paid psychiatrists and psychologists bonuses tied to how many services they provided and the reimbursement they generated. The bonuses came on top of their regular salaries. The financial incentive reached the clinicians performing the services.

The government’s account described Park Avenue as the employer of physicians, nurses and other medical professionals, with contracts at the facilities where they worked. It described patients with dementia, Alzheimer’s disease, schizophrenia, psychosis, depression and anxiety. A separate medical-services employer was working inside facilities caring for patients with substantial cognitive and psychiatric needs.

The California Research Bureau’s 1997 report, Fraud and Abuse in the Health Care Market of California, contrasts fee-for-service payment with payment on a fixed budget. Of fee-for-service, it says:

Park Avenue’s alleged compensation arrangement put that incentive into the clinician’s paycheck. The bonus formula and the patient record tell different parts of the same billing story.

The payment path matters in this health care fraud case. Under Medicare’s consolidated-billing framework, a skilled nursing facility’s payment bundles many services, while physicians’ professional services can be separately payable. The facility where a patient received care and the business submitting a professional claim can therefore be different. Here, the government identified Park Avenue Medical Associates as the business billing Medicare for the psychiatric services.

The Allegations Reached Beyond Missing Documentation

The government alleged that Park Avenue provided psychotherapy to patients whose severe dementia prevented them from benefiting and billed for duplicative psychiatric evaluations. It also alleged poor coordination among Park Avenue’s psychiatrists, psychologists and nurses, and between its employees and facility staff.

That coordination allegation connects the repeat examinations to how care was organized. An order may sit in the facility’s records, an examination in a clinician’s notes and a bill in the medical group’s system. We examine those records together to understand why another examination occurred and what the payer was told about it.

Vericare’s Standing Orders Show the Same Pressure

Vericare Management faced allegations that routine psychiatric evaluations followed admission to a facility instead of an individual patient’s need. The Justice Department’s account of that separate case described evaluations for all new admissions at 128 facilities without patient-specific medical-necessity orders.

The whistleblower’s complaint also alleged psychotherapy for patients with severe dementia or cognitive disorders who lacked capacity to benefit, and clinician bonuses tied to service volume and reimbursement. It described a separate incentive for the managers bringing in the business:

In that allegation, the bonus bought a standing order that supplied the next patient. Park Avenue’s case focused on repeated examinations and psychotherapy bills without demonstrated clinical support. Both cases connect the business arrangement to the patient-specific reason for the service.

A narrower parallel appears in the government’s case against Reliant Care Group. It alleged unnecessary physical, speech and occupational therapy for comparatively independent residents whose principal reason for living in the facilities was psychiatric. The government also alleged financial pressure on therapists who believed the services were unnecessary. Across these different treatments, the question returns to what the patient needed and what the business wanted billed.

The Settlement and Whistleblower Reward

The Park Avenue case began as a qui tam whistleblower case and ended in a settlement. The Justice Department announced court approval on July 18, 2013. Park Avenue also entered a Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General.

The settlement provided for a whistleblower reward of twenty percent of each federal payment received by the government. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

What Evidence Is Needed to Prove Fraud?

For psychiatric billing like this, the evidence connects the patient’s condition, the service ordered and documented, and the Medicare claim. Facility contracts and compensation records can help explain who controlled the volume and who benefited from it. We work with insiders to connect those clinical and business decisions.

A clinician may know why the treatment could not help the patient. A facility employee may understand the repeated orders. A billing or payroll employee may know how the services turned into reimbursement and bonuses. We bring those perspectives together around the actual claims.

You Saw the Patient Behind the Bill

If you saw psychiatric services billed despite clinical records showing the patient could not benefit, speak to one of our whistleblower experts about the psychiatric bills you saw. We build your Medicare billing case with you and bring in healthcare fraud whistleblower lawyers who understand psychiatric services and the records behind them. You have our expertise and support from the first account of the treatment through the pursuit of a recovery.