After Billing Flap, VascuFlo Pulls the Plug

March 11, 2013 Updated Mar 11, 2013 at 6:28 AM EDT

By Tracey Drury, Buffalo Business First


After Billing Flap, VascuFlo Pulls the Plug

March 11, 2013 Updated Mar 11, 2013 at 6:28 AM EDT

A Buffalo cardiac care provider will shut its doors Friday, following a severe reduction in reimbursement levels for care by area health insurers.

VascuFlo Heart Treatment Centers announced it will no longer offer cardiac rehabilitation services or enhanced external counterpulsation (EECP), a non-invasive treatment for heart and vascular patients.

Aaron Hirsch, CEO of VascuFlo Inc., said dozens of current patients will be impacted: VascuFlo was treating 40-50 patients daily, including 35 who came in for cardiac rehab services and 10-15 for EECP treatments.

"All of these patients would have nowhere else to go. There's no one else that offers it," he said.

Approved by the FDA in 1995 as a treatment for heart disease, the American Heart Association says the EECP procedure improves the balance between the amount of oxygen the heart needs and the amount it gets. The treatment provides relief of angina, shortness of breath and fatigue.

VascuFlo is the only independent clinic in the eight-county Western New York region offering the procedure. Hirsch founded the company in 2002 after his father underwent the treatment at a Rochester site over the course of a year. In Western New York, he partnered with cardiothoracic surgeons from Kaleida Health, placing counterpulsation systems within those physician offices and at its own site on Walden Avenue in Cheektowaga. By 2009, VascuFlo was operating 15 systems at five sites.

Eighteen months ago, following what Hirsch calls a "malicious complaint filing," the company underwent simultaneous audits from Independent Health, BlueCross BlueShield of WNY and Univera Healthcare.

Hirsch provided a copy of a letter he sent March 7 to the New York state Department of Financial Services that seeks to clarify information filed by both Univera and Independent Health about "abusive billing" practices. Hirsch said the company is now being forced into bankruptcy.

Hirsch says none of the three audits uncovered any intentional wrongdoing or fraudulent billing, but they did determine a misinterpretation on how to bill for the procedure that was missed by all three insurers as well as the company over a six-year period.

In response, all three insurers began withholding 80 percent of all current and future reimbursements to the company to cover the overpayments for a four-year period.

"We pleaded with them that this would undoubtedly put the company into bankruptcy in a very short time and eliminate patient access to these services," Hirsch said.

The company continued to deliver treatments at those rates while it continued to negotiate with the insurers. Ultimately, BlueCross BlueShield and Univera opted not to withhold reimbursements, but Independent Health stood firm, Hirsch said.

Independent Health said that beginning last May it attempted to negotiate a settlement with VascuFlo for repayment of $225,000 that the insurer said was improperly billed. In a statement Friday, Independent Health said it began withholding about $2,000 a month in September to satisfy the overpayment uncovered by the audit.

IH Spokesperson Frank Sava said eight patients with Independent Health coverage are being treated for Enhanced External Counterpulsation at VascuFlo. The insurer is working with their physicians provide continuity of care, he said.

During a phone interview, Hirsch said the billing issue had to do with whether multiple treatments for patients should have been bundled, rather than billed separately under five different codes. Hirsch said he looked at ways of changing the business model, including converting to a nonprofit corporation or having a physician practice take over the business, but those efforts were not successful.

That came on top of a decline in reimbursement by Independent Health for the EECP procedure of almost 50 percent over the past five years, a time during which other carriers increased reimbursement by 2-5 percent, Hirsch said. Independent Health members account for 65 percent of VascuFlo's patient base, he said.

Hirsch said in his statement issued Friday, the company has simply run out of money and can no longer afford its $10,000 monthly payroll.

"This is an unfortunate occurrence, as we believe it could have been handled much better by the audit departments of the carriers as well as the executive teams," he said. "We are stunned that despite all of the letters, emails and verbal communications to them over the last year that they still chose to enforce this drastic tactic, knowing it would put this small medical center out of business, therefore denying their members access to care, lead to the loss of jobs and unemployment and at the end of the day, not be able to collect their demanded overpayments."

In late February, Hirsch posted on VascuFlo's Facebook page in search of someone to take over the business with the impending relocation of company management. This week he started a new management job in Dallas, Texas, with QVL Pharmacy, a chain of 10-stores. Hirsch, who has continued to work as a pharmacist throughout the company's history, said he was looking for a new start in the pharmacy business.