State withholds Eastern Shore clinic's Medicaid payments

Letter to Warwick Manor Behavioral Health cites evidence of "fraud or willful misrepresentation"

  • Warwick Manor Behavioral Health in East New Market.
Warwick Manor Behavioral Health in East New Market. (Scott Calvert, The Baltimore…)
January 12, 2011|By Scott Calvert, The Baltimore Sun

State health investigators disclosed Wednesday that they have uncovered evidence of "fraud or willful misrepresentation" by an Eastern Shore drug treatment and mental health clinic, including overbilling and charging for the work of physicians who were not at the facility.

The inspector general of the state health department sent a letter Wednesday to Warwick Manor Behavioral Health Inc., near Cambridge, saying the state has suspended all Medicaid payments to the clinic. Warwick Manor treats roughly 2,000 patients a year and billed the state's Medicaid program $1.5 million last year.

Separately, The Baltimore Sun found that Warwick Manor has been paying its chief executive, L. Wesley Fuhrman, an annual salary of up to $398,000, far higher than similar organizations nationwide. The clinic also has made $309,000 in loans, largely without collateral, which a former top Internal Revenue Service official called "unusual" for a nonprofit company and "highly risky."

Together the state's Medicaid investigation — which began with a tip — and The Sun's findings point to possible insufficiencies in the state's oversight, which lawmakers say they plan to address in coming weeks at hearings in Annapolis. The hearings were called in response to a Sun investigation last year that found questionable practices at one of Baltimore City's largest mental health clinics.

"The legislature's job is to make sure regulators have all the tools and direction they need," said Del. Dan K. Morhaim, a member of the House Health and Government Operations Committee. "If it's a management problem [at the health department], we'll attempt to deal with that. If it's a change in law, we'll hopefully make those changes, too."

Fuhrman did not respond to e-mail and phone messages Wednesday, and the clinic's lawyer did not return a message.

On Wednesday, Dr. Joshua Sharfstein used his first day as secretary of the Department of Health and Mental Hygiene to stress the importance of monitoring. In a memo to top department officials, he said he has asked Wendy Kronmiller, chief of staff and assistant secretary for regulatory affairs, to conduct a review of the department's oversight capabilities.

"It's a really important responsibility," Sharfstein said in an interview, "and we've got to make sure the system is working as well as possible."

With the state looking to close a projected $1.6 billion shortfall, the health department is expected to be a target for cuts because it spends nearly 40 percent of Maryland's $13 billion general fund. The department has been cut repeatedly in recent years, angering providers and advocates.

Morhaim, a Baltimore County Democrat and a physician, said he respects most providers who treat drug addiction and mental illness. "They are working hard in very tough jobs," he said. "They are underfunded, which makes it all the more important to make sure every dollar is spent wisely."

Still, Morhaim said, he hopes to address the issue of state oversight of healthcare providers at legislative hearings that his committee chairman, Del. Peter A. Hammen, plans to hold in Annapolis.

Hammen, a Baltimore Democrat, called for hearings in November after a Sun investigation of Baltimore Behavioral Health Inc., a mental health clinic that is among the city's largest drug treatment providers. That investigation found high Medicaid billings and documented how six family members who controlled the nonprofit's board collectively earned $1.4 million last year.

State health officials have forced the family members to cede control of BBH's board, fined the nonprofit $90,000 for employing a doctor who had been convicted of Medicaid fraud and required BBH to draw up a detailed corrective plan.

The letter from Inspector General Thomas V. Russell suspending Warwick Manor's Medicaid payments allows the clinic to continue treating Medicaid recipients and to submit new claims. Russell wrote that all Medicaid payments will be withheld, however, unless state officials determine there is "insufficient evidence of fraud or willful misrepresentation," or until any state legal actions are completed.

In the last fiscal year, Warwick Manor received $1.5 million from Medicaid for mental health services. Its tax filing last year shows it had total revenue of $7.2 million, much of it from private insurance and self-pay clients.

The health department's Mental Hygiene Administration oversees several hundred mental health providers that are eligible to bill Medicaid, the state-federal health program for the poor and disabled.

Each provider is supposed to be reviewed every three years by the Office of Health Care Quality. Also, ValueOptions, the private firm that administers Medicaid in Maryland, must review 60 programs a year.

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