How LLC Owners Get Trapped in DME Billing Scams

0:00Introduction

Assalamu alaikum. It has been a long time since I last met my old friends. We haven't had discussions like this, so today Usman is here with me. And the two of us are going to talk about a topic being talked about across Pakistan right now. I don't like that a scam is running and that people are taking advantage of it. The trouble it is causing is hitting our fellow Pakistanis, the Pakistanis we have overseas, this scam that is going on. Please explain it. It has been a long time since we had a discussion like this.

And what new updates are there on this? Tell us a little. Absolutely. So there is a pattern going around in healthcare these days that is becoming very common here in Pakistan. What is happening is that, for people who own overseas LLCs, healthcare call centers sitting here that work in the United States are basically reaching out to them and after reaching out, they offer that we will do medical billing on your LLC.

0:51How the LLC partnership offer works

And they form an equity partnership, like 20 percent will be yours, or 30 percent will be yours, and the rest will be ours, of whatever amount is collected. And what they do is run the medical billing under that LLC for DME products and DME supplies. And there is a problem in this too. The first problem is with their marketing channel. In healthcare, compliant marketing means you cannot call patients directly.

1:35Red flag: calling patients directly

You can't do B2C. You have to do B2B. Either you go to home health agencies or nursing homes, or wound care clinics, and then you get your orders for durable medical equipment supplies from them. But what happens here is that B2C calling goes on. Cold calling goes on. They call the patient and after calling, once they get the patient interested, for that reason they have to waive the coinsurance, which is the 20% patient responsibility.

2:04Red flag: waiving the 20% coinsurance

They don't collect it from the patient. They waive it. This is another big compliance red flag. Then they send a prescription to the doctor's office on the patient's behalf. And the doctor's office is often very busy, so without looking at the prescription, without calling the patient, they sign the prescription. And the call center asks the doctor's office for chart notes to check medical necessity.

2:30Red flag: billing before delivery

Once those arrive, these LLCs that are basically operating, these agencies, they bill first and deliver later. Which is again a red flag. I think they don't deliver at all. I have solid proof of what these people are doing. But some do deliver as well, but you are absolutely right that there are some people who don't deliver at all. First you must deliver to the patient. Once delivered, with that date of service, then the delivery and all those other things. Many people reached out to me. At that time I was making the telecom videos.

We had posted old videos that we made earlier, and on that we had a brief discussion about all this LLC business, so on that I got so many messages, and people, I mean, 100 million rupees worth of scams is still sitting in my inbox, which has already happened to people.

3:31Real cases from viewers' messages

We will try our best not to tell you too much in the open, so that those who don't know about this work don't start it. That will be our effort, but this keeps growing. It keeps growing, and that is the reason for this session. And I was just about to say that, of all the people who have come to me so far, you mentioned that some people are not delivering, but of the ones who came to me, so many of them have those audit and overpayment letters, and the poor people say we will have to repay, and I mean, it looks to me, and I can see, that they may never have sent any products at all.

Exactly. And most LLC owners, the ones who are in the U.S., do not research much. Someone they know, or a person with a very good referral, asks them for their LLC, so they trust him blindly, even though this is a legal document. If someone else is using it, and tomorrow there is any issue, since you are the one working in U.S. healthcare, the call center obviously won't get caught, and call centers use exactly this as leverage. Of course. The territory is different, and jurisdiction there does not work here, and jurisdiction here does not work there, unless it is a Pakistani person and he files that case here, but it is very weak because you do not have any official contracts.

But there is another thing that came to mind: what these people do, now with AI, is that even the orders they prepare, they prepare a whole fake order, and in it they even add the doctor's signatures, you understand, as if the doctor is sitting in their office.

5:30Fake chart notes and face-to-face records

Secondly, the patient's medical notes, the chart notes, and besides that the face-to-face encounters, they create all of this themselves, and make it look fully realistic. When this started, I used to wonder when Medicare would find out about it. I remember you emailed some of the official agencies, you sent them an email too. You even showed me that draft, saying I sent an email, and I don't want Pakistan's name to be tarnished. And that way they should change policies, so their checks, balances and compliance get even better.

Exactly, because it will be like e-commerce, when Amazon work from Pakistan went bad. Then they red-flagged certain areas and regions of Pakistan. Because of that, people who did good, clean work were affected too. So in healthcare, it should not happen that all Indian and Pakistani people get affected because of this. That is the worry, because this scam originated, I think, in Pakistan, as far as I know, but it is now slowly spreading to India too, because Indians are also contacting me, and when they do, they ask me, Usman bhai, do you run LLCs?

So these days there is a line going around that goes, do you know how to run an LLC? If you do medical billing, what will you do? So they make the face-to-face sheet, they make the order too, they make the chart notes too, they make the proof of delivery too. They prepare all the documentation. Now, of course, this is the hardest thing for CMS, how to tackle this, because obviously they cannot, all of a sudden, change the whole standard written order policy structure, the whole system.

7:01How CMS responds: prior authorization and stricter rules

They can't change that. Chart notes and medical notes are used in thousands upon thousands of doctor offices, and they all follow one pattern. So this has become a bit challenging for them, but the point is that people are taking advantage of it. Even before, it's the same: wherever Medicare spots a trend, it puts up barriers, like last time, prior authorizations on some products so no excessive billing without medical necessity. In their latest CERT rate, improper billing came in above fifty percent, which is inappropriate. And then, in the budget, you can imagine what the repercussions will be.

As a result, first, Indian and Pakistani people won't be able to do this healthcare work in the U.S. And there is also a compliant way, which we will talk about later, and I will say a little about how, while staying compliant, you know, without a PTAN, because look, the biggest, as you already know, the biggest cost in a DME business or an HME business is the accreditation cost. It used to be valid for three years, and now Medicare has made it one year. So what happens is that it costs roughly five thousand to eight thousand dollars, and up to roughly thirteen thousand dollars.

For a PTAN, accreditation is essential. Then you need a $50,000 surety bond and liability insurance of $300,000. But if you form an LLC and bill Medicare Advantage, a 50 percent market, apart from Medicare FFS, then you do not need these things. But for some products you need accreditation, and with some payers you also need special permission, to bill their Medicare Advantage plans. But still, in this the cost is not as high as with a PTAN. Okay, so there is a compliant way for this too, and small startups that sit in Pakistan and want to start their own healthcare agencies, they can, with their agencies, do this work in a fully accurate, proper, compliant way too.

9:30A new scheme: lab test billing

But recently I have seen only one agency doing it, which I will discuss now. Okay, a really strange thing passed in front of me on Facebook yesterday regarding these DME LLCs. I am in some groups where people post about this. I keep watching what they are doing, and a post came up there and that person was saying, I need an LLC, and on it we will set up a lab and bill for the lab. I was thinking, this is a new thing too. It is a high-ticket item, and labs have those too, if it is a thousand dollars they charge, like a brace for example, three, four, five thousand, ten thousand dollars for that test, and they will bill on it.

Yes, it is like that. But besides that, in labs there is also this: in DME there is a restriction: if you gave a brace, the patient gets a brace after three or five years. But in a lab, what happens is that the test's eligibility time frame is short, so with that you can bill one patient again and again, and for multiple tests, multiple assays, multiple panels you can bill too. One important thing for our unsuspecting Pakistanis who are sitting overseas. As for my advice to them, I want you to tell me what you think.

I want that if, because of what someone says, they are about to take such a step, where someone tells you to open it in your name first, then you are answerable to the jurisdiction there. Is that so or not? In any business you enter, at least do a little research of your own. I have seen these poor people do not even know a product has to be delivered. They do not know that courier portals exist, where proof of delivery and all of your analytics are available.

I want you to look into the camera once and tell them, in simple language, in two or three minutes, if someone reaches out to you, what few things you must know, and what is most important for you.

11:35Red flags to check before you sign

Look, this is very simple. There are all kinds of people, and all kinds come to us. Whenever someone asks them for an LLC for this work, some people do their verification and immediately understand it is a red flag. Obviously this is the AI era now, you can put whole meetings into ChatGPT and find out how many things in it are red flags, so then there is no problem at all. But some people still cannot accept it, and they don't want to believe this work is not right, so whatever you tell them, however much awareness you give, they will opt into this program.

Slowly they realize that whatever happened was wrong, and we should not have done this. And then its result is that for those people, when audits come, then $100,000, $200,000, or $500,000, $1 million in reimbursements get recouped.

12:38After the audit: recoveries and credit damage

Audits come on overpayments, on repayments, and then the person whose LLC it is panics at the letters that are coming to him, and he has already sent all the money to the call center, so he doesn't have that much money, and he cannot get out of paying, so at the end of the day it lands on his credit score, and his credit score gets damaged. And in the U.S., you know that if a citizen's credit score is bad, then he is basically ruined. It is a big problem for him, of course; his credit cards get blocked, he can't get anything on credit, and the U.S. runs entirely on credit, absolutely.

That is true. I have seen it in movies there too, and my cousins and others tell me that some stores now don't even accept cash there. They say use a card or something, so that is the scene: if their credit score gets hit and goes below 600, goes below 500. So basically they are broke, and some even file for bankruptcy. There is also this, as we see: when your credit score is good, then for the surety bonds and liability insurance, when you meet all of Medicare's guidelines, applying for a PTAN, when your credit score is good, the surety bond rates are lower, and liability insurance costs less too, but once your credit score is bad, that same $250 or $500 surety bond The point is that, in the PECOS system, whoever's name is listed, the surety bond is in that same person's name, so he cannot use someone else's credit score. That is another thing too. But now, at the end, what matters most is this.

14:36The legal way to run a DME business

Okay, we have spread awareness, we have told them this work is not right, it is not compliant, but it is also necessary to explain what compliant actually is. That is the most important, and the purpose of my discussion today was this: I wanted us to discuss how, in a compliant way, work can be done with minimal investment. Look, Wali bhai, the compliant way is very simple. It is this: you have an LLC, and you know, but in marketing, what will you do? You will not do B2C.

You will not go to the consumer, to the patient. You will not cold call them. You can cold call a doctor's office. You can fax a doctor's office, but there is also a policy that there must be an opt-out option, so if the doctor's office is bothered by these faxes and wants to opt out, they can opt out. In the same way, try to reach the doctor's office manager, or the referral coordinator, or the social worker. Get hold of them, and after that pitch them your products, the products you want to supply, and after that, the order that comes to you directly from there, you then check its eligibility, its verification of benefits, its medical necessity, and from the chart note check the LCD and NCD, check the coverage determination, then you ship first and afterwards deliver, and your website should be next level so that for patients in the 20 percent market, the out-of-pocket one, people who don't want to go through insurance and just come and pay, your website should have all the durable medical equipment products with their prices listed, and there should be an insurance option too, like pay via insurance or pay via card, I mean Exactly, right.

So if he wants to go through insurance, he can do that, but if he wants to pay out of pocket, which as I told you is a 20 percent market, then he can pay out of pocket and give it to you. And the cost is low in this too. I mean, if in Pakistan your back office is there and you made a good compliance plan with a compliance officer, then all of yours will pass as well, and with commercial and private insurance, one benefit is that their audits are not as strict as Medicare's are.

Medicaid audits are not that strict either, because I am a compliance officer myself, and I have seen that Medicare audits are the strictest. That does not mean that you should ignore the policies of private insurance and commercial insurance, but there is certainly a bit of a comfort zone, some relaxation in their process. So yes, and another thing is that if you have there a 1099 sales rep for DME who goes to three or four doctor offices every day, goes to home health agencies, goes to nursing homes, in person, dealing with them, they can ask for orders for wheelchairs, rollators, diapers, and also other items like nebulizers.

So in this, for one thing, the cost is low. At low cost, you have a proper website for a DME, two or three people working, so the cost is low, and in this, you know, six, seven, eight months with a good workflow, which is also compliant, then you break even. And one benefit of that is that when you have quite a few doctor offices, then when you apply for Medicare, for a PTAN, from August, God willing, 855S applications will start again. The Medicare enrollment moratorium has closed this kind of work.

18:00Setup costs and final advice

Such people exist, because with this scam, whenever Medicare put a moratorium ban, these people, all of them, say a road is blocked in one place, and they come in from this side, you follow? So they came in from this side, and then they went for that Medicare Advantage and commercial market. There are two markets, one is Medicare FFS, fee for service, which is the 50 percent market, and the other is the Advantage and commercial market. So they started hitting that market, and it is very good to go directly to Medicare and in twenty-five thousand dollars, thirty, thirty-five thousand, your DME gets set up and your PTAN comes.

Here, though, everything gets built within five thousand dollars and over the next six months, you only have to put in five thousand dollars, and you reach break-even. Back office cost is $1,500 to $2,000, it keeps going, then slowly, over the next six months, after that you can apply for a PTAN, and by the time your PTAN comes through, brother, fifteen, twenty doctor offices are already ready for you. Now all you have to do is take their FFS patients from them as well. So yes, and one more thing I would definitely like to say at the end, which I have seen as a trend: with these people, the agency has billers and coders who aren't good, and they also get them into trouble, because they work on a five percent commission, so they bill without looking at medical necessity, and the money does come in, but once an audit comes, the money has to be returned.

Now, of course, a biller or coder, getting money back from them is not easy. In DME, one thing I have learned is that your product is documentation. If you have not maintained the documentation properly, no matter what you are billing, one day the insurance company will recoup all of it. I really enjoyed today's discussion, so let's end it here and on the next topic, God willing, we will meet again, God willing. Thank you.