Largest Medicare/Medicaid Fraud Takedown in History

The Department of Justice (DOJ) recently announced that it is charging hundreds of individuals across the country with committing Medicare fraud worth hundreds of millions of dollars. The takedown – being called the “largest takedown in history” both in terms of the number of people charged and the loss amount – mostly involves separate fraudulent billings to Medicare, Medicaid, or both, for treatments that were never provided.

The DOJ states that over three hundred people all across the country have been charged with about $900 million in false billing. The defendants are charged with various crimes, including conspiracy to commit health care fraud, violations of anti-kickback statutes, money laundering, and aggravated identity theft.

Florida has the high honor of being the state where most of the fraud was allegedly committed, with over $200 million of fraud allegedly carried out there. Individuals in California, Texas, and Michigan are charged with committing more than $100 million worth of fraud in each state.

In one particular instance, a Detroit clinic billed Medicare for more than $36 million, only to be revealed as a front for a narcotics diversion scheme. Another instance highlights a physician in Texas, who has been charged with participating in schemes to bill Medicare for “medically unnecessary home health services that were often not provided.” In Florida, the owner of several infusion clinics allegedly defrauded Medicare out of over $8 million for a scheme involving the reimbursement of expensive intravenous drugs that were never actually purchased and never given to patients.

The court documents for each case will be posted online, as they become available here.

Home Health Fraud

Interestingly, much of the fraud involved home health care agencies and other types of services that have previously been identified as particularly vulnerable to fraud by the Health and Human Services (HHS) Office of Inspector General (OIG).

Part D Fraud

Another trend noted was an increase in fraud involving the Medicare Part D prescription drug program. According to Attorney General Loretta Lynch, “We saw new evidence of identity theft, including the use of stolen doctors’ IDs to prepare fake prescriptions.” According to the DOJ, over sixty of those arrested and charged with fraud were charged with fraud related to Part D.

The HHS OIG office noted that one in three Part D beneficiaries received commonly abused opioids last year, a trend it considers concerning, stating, “[m]isuse of opioids not only has serious financial costs but also human costs, including deaths from overdoses. These continuing high rates provide further evidence of this crisis facing our Nation.”

As the federal government continues to crackdown on fraud, spending by Medicare Part D program for compound prescriptions rose 600% over the past decade. According to federal auditors, the trend raises questions about whether the drugs, which are customized for specific patient needs, were medically necessary or dispensed appropriately.

Attorney General Loretta Lynch stated,

As this takedown should make clear, health care fraud is not an abstract violation or benign offense. It is a serious crime. The wrongdoers that we pursue in these operations seek to use public funds for private enrichment. They target real people – many of them in need of significant medical care.

HHS OIG Reports

The HHS OIG released two reports recently on the topic, one of which shows that more than 1,400 pharmacies had questionable billings for opioid drugs and a number of cities had higher than average billings for certain medications last year. The other report calls on the Centers for Medicare & Medicaid Services (CMS) to implement more of the OIG’s recommendations for fighting fraud and abuse in Part D.

One area of concern for HHS is spending on commonly abused opioid drugs – such spending grew at a faster rate than spending for all Part D drugs – 156% versus 136%. The report also details questionable Part D billing practices in 1,432 retail pharmacies last year, including high numbers of prescriptions per beneficiary; high percentages of prescriptions for commonly abused opioids; high numbers of prescribers for commonly abused opioids per beneficiary receiving opioids; and high percentages of beneficiaries with excessive supplies of a drug.

The second report recommends that plan sponsors be required to report to the CMS and/or its Medicare Drug Integrity Coordinator all potential fraud and abuse, as well as data on inquiries and corrective actions they take in response to fraud and abuse. Additional recommendations are made, including that CMS implement a way to reject prescriptions written by exclusive providers; restrict certain beneficiaries to a limited number of pharmacies or prescribers; and determine the effectiveness of plan sponsors’ fraud and abuse detection programs.

The CMS has stated that in 2016, it will require Part D plans to stop filling and paying for prescriptions from providers who are not enrolled into Medicare, among a number of other ongoing initiatives to strengthen the integrity of Part D. CMS has also stated that it is already analyzing and monitoring potential fraud in hotspots and is working with the Medicare fraud strike force in those areas.