Charges: Acupuncture business owner allegedly defrauded Medicaid providers of more than $1.75M

The owner of a Twin Cities acupuncture service faces more than a dozen felonies for her alleged role in a Medicaid billing scheme that over the course of four years netted more than $1.75 million in fraudulent payments.

A two-year investigation by the Minnesota Attorney General’s Office’s Medicaid Fraud Control Unit (MFCU) alleges Xiaoyan Hu, the owner of Chinese Acupuncture and Herb Center, directed her employees to bill insurance providers for full-hour sessions when the actual care provided to patients typically lasted 30 minutes, a criminal complaint states.

From March 2016 to June 2020, the MCFU found 41,858 separate fraudulent claims at Hu’s locations in Burnsville, Edina, Minneapolis, St. Paul, and briefly in Elk River. Those alleged offenses took place in Hennepin, Ramsey, Scott, and Sherburne counties, but prosecutors decided to have them all combined as one case filed in Hennepin County.

The 60-year-old from Eden Prairie is also accused of running a scheme to bill providers for interpreter services that did not correspond with any patient appointments; investigators found 1,381 interpreter logs that misrepresented services provided at Chinese Acupuncture and Herb Center.

In all, Hu is charged with 17 counts of aiding and abetting theft by false representation, with varying levels of severity based on the fraudulent payments received over the time period corresponding with each charge. Eight of the charges are for thefts of $35,000 or more, which each carry a maximum sentence of 20 years and a fine of up to $100,000.

“Minnesotans who receive Medical Assistance have a right to expect that they’ll receive all the care, dignity, and respect they’re entitled to,” Attorney General Keith Ellison said in a statement. “Minnesotans trying to afford their lives have a right to expect that every one of their tax dollars will be spent properly and legally. People who commit Medicaid fraud violate both of those rights. My office is working aggressively to hold them accountable and will keep doing so.”

5 EYEWITNESS NEWS made multiple attempts to reach Chinese Acupuncture and Herb Center for comment.

Treat to bill

Acupuncturists who spoke with MCFU investigators said Chinese Acupuncture and Herb Center had a policy of billing for one hour of acupuncture services for every patient appointment, regardless of the amount of time actually spent on patient care. A review of Chinese Acupuncture and Herb Center’s internal schedule returned 30,301 individual appointments. Of those, 29,736 — 98% — were listed as lasting 45 minutes or less, the criminal complaint states.

Additionally, acupuncturists said Hu would direct them to tailor their care to how she wanted to bill, “not based on what the client needed.”

When billing to Medicaid, acupuncture services must use specific billing codes for each 15-minute interval of treatment. Hu’s clinics usually billed using two codes: one for initial one-to-one contact and the insertion of one or more needle, and another for each additional 15 minutes of one-to-one contact with the patient and the reinsertion of needles.

The criminal complaint explains that the acupuncture service could not simply bill for the time a patient has a needle inserted and could not bill for one-to-one contact when an acupuncturist is servicing multiple patients at once.

Hu told acupuncturists to insert needles as soon as patients arrived, lay them on the table, and later do a reinsertion, the complaint states. One acupuncturist said she could be tending to two or three clients at once and said seeing someone every 15 minutes was not uncommon.

That acupuncturist quit when she found out the company was billing an extra 30 minutes for all of her patients. She also told investigators that Hu told her to falsify medical records to make it seem like patients were making progress to satisfy insurance companies. A second employee backed up that claim, stating Hu had asked her to change patient records to accommodate insurance company inquiries.

Another acupuncturist said her patients would be on-site for about an hour, but only 20 minutes of that time was actually spent on acupuncture; the rest was cupping or Tui-Na, services that are not covered by Medicaid.

One acupuncturist said Hu’s motivation was for the “insurance to keep rolling” and said Hu told staff to “only do light needle work so that the patient would feel a bit better and then want to come back.”

Chinese Acupuncture and Herb Center also continued to bill patients after they stopped scheduling appointments. In one case, investigators found a patient who had received acupuncture for “no more than 1 month,” yet the company continued to bill using her patient number for the next four years, ripping off $14,000 from insurers over that time.

‘Do what the interpreters want’

The MCFU’s investigation also overturned a scheme misrepresenting interpreter services for non-English-speaking patients.

The complaint states that starting in 2015, Hu drummed up business from clients in Faribault who did not speak English. They would typically frequent Chinese Acupuncture and Herb Center’s locations in Edina and Burnsville.

Medicaid does pay for interpreter services during medical appointments when the patient and practitioner do not speak the same language. Interpreters fill out logs for the services provided during medical appointments, and the care provider verifies the logs.

However, the complaint says an analysis of interpreter logs and patient appointments showed Hu’s business billed for interpreter services when no acupuncture appointment took place.

Based on acupuncturists’ accounts, Hu was fully aware of the fraud carried out through the interpreter logs, telling one employee to “just do whatever the interpreters want.”

The charging document states Hu would have her employees change appointment times in the schedule to match up with interpreter logs or sign off on interpreter logs for appointments that did not happen. In some instances, Hu or the interpreters would ask acupuncturists to sign blank logs. When one employee asked why she needed to sign the document, Hu said, “You don’t need to know.”

Hu would also sign the blank or falsified logs herself, according to the complaint.

At some point during an interview with MCFU investigators, Hu blamed the non-English-speaking clients for her business’s troubles, stating it had “a good reputation” before seeing them.

Frozen accounts

Investigators found that during the charging period, more than $2 million were transferred from Chinese Acupuncture and Herb Center to Hu’s personal bank accounts, including the proceeds of her company’s “fraudulent enterprise” — a total of $1,750,798.31. Out of those stolen funds, $62,337 came from fraudulent interpreter logs; the rest came from overbilling for acupuncture services.

On Thursday, a judge granted Assistant Attorney General Nicholas Wanka’s request to freeze Hu’s personal checking and savings accounts, as well as four bank accounts associated with Chinese Acupuncture and Herb Center, citing the “large amount of loss” and to prevent Hu from spending the stolen money while the case is pending.

Hu was charged via summons, and Hennepin County jail records indicate she has not been taken into custody. Her first court date has not been set.