Staying vigilant on MRI fraud schemes

By all accounts, Beverly Hills radiologist Ronald Grusd, who operated more than a dozen medical imaging clinics throughout California, was acclaimed and successful. Described in a 2005 Los Angeles Times article as someone who likes to entertain in his Beverly Hills Mediterranean-style house with no less than 19 televisions. Nearly 15 years later, Grusd is sitting in federal prison, serving a 10-year sentence for, among other things, fraudulently billing insurance companies over $22 million for medical services.

Grusd, nicknamed Dr. Kickback by another California newspaper, was convicted of paying bribes to physicians and chiropractors, often on a per-body-part basis, for magnetic resonance imaging (MRI) and other imagery and medical service referrals. Grusd relied on the big business of MRIs to fund his lavish lifestyle.     

One recent estimate pegs annual U.S. spending on MRIs at $50 billion. While certainly the vast majority of MRIs are ordered with the interest of the patient in mind, MRI related fraud is documented.

“The fraud is there,” says Ronald Michel, a Supervisory Special Agent with the National Insurance Crime Bureau’s Major Medical Fraud Task Force. “The challenge is identifying the fraudulent claims; the fraud-fighting community has to be vigilant and up to speed on the varied scams.”

In addition to kickbacks, like in the Grusd case, other MRI and related imaging schemes include:

Farming out: In this con, a medical provider that does not own an MRI machine sends patients to a facility that does. The former then pays the latter for the imagery, say $250, and then bills the insurance company an inflated fee, say $2,600, under the guise that they own the equipment and performed the MRI.

Three-dimensional padding: 3D MRIs can add a few hundred dollars to the final bill. The fraud occurs when a medical provider upcharges for a 3D MRI, but only used traditional, two-dimensional technology.

Services not rendered: Here, a provider bills an insurer for an MRI, but did not provide the service. Sometimes the “patient” is in on the scam and receives a financial incentive for going along.

Highlighting pre-existing or normal conditions: Scammers, looking to justify an extended treatment plan or greater damages in a lawsuit, may highlight conditions that existed before an accident or are inherent due to the age of the patient.

Manipulating imagery: Particularly in a standing or sitting MRI, and in which the “patient” is part of the fraud, practitioners may attempt to manipulate imagery by, for example, placing sandbags on the shoulders of the patient to exacerbate spinal compression.

Performing MRIs without appropriate medical staff: Some imagery testing may be lawful without a physician present, but not all, especially when contrasting dye is used as some patients can experience life-threatening reactions. Shady providers looking to cut corners have been known to unlawfully conduct MRIs without a doctor present, but bill insurers nonetheless.

Medically unnecessary testing: This occurs when a physician orders an MRI solely or primarily for the financial benefit, rather than the medical necessity. A variation of this is conducting imagery testing on body parts beyond the problem area.

Falsifying prescriptions: Some insurers and government health programs require prescriptions from treating physicians to cover the costs of an MRI. When a patient does not have a prescription from their treating physician, disreputable practitioners may forge a non-qualifying prescription or issue one after the fact.

Falsifying equipment records: MRI equipment requires regular maintenance and calibration. Some insurers, such as Medicare, require independent diagnostic testing facilities to be approved to ensure the safety and efficacy of the equipment. To ensure expensive equipment does not go unused, scammers may falsify maintenance records or alter records to make it seem that services performed at an unapproved facility actually took place at a facility that had passed inspection.

We must continue to work with insurance companies and law enforcement to protect policyholders from this type of medical fraud, which can ultimately drive up insurance costs for everyone. NICB supports sound policies to stop this type of abuse, and we stand ready and willing to assist in reforms in states to protect consumers.  

NICB members or law enforcement interested in medical imaging fraud training should contact NICB Learning and Development at [email protected]. State elected officials or staff interested in addressing laws or regulations to fight medical imagery fraud should contact NICB’s government affairs department at [email protected] or 800-447-6282. To report fraud, call 800-TEL-NICB.

Howard Handler, MPPA

Director, Government Affairs

National Insurance Crime Bureau