The U.S. recovered $4 billion last year through healthcare fraud prevention and enforcement efforts, according to a report released by Attorney General Eric Holder and Health and Human Services (HHS) Secretary Kathleen Sebelius. The report says that the Health Care Fraud and Abuse Control Act (HCFAC) recovered more than $8 for every $1 it spent on healthcare fraud investigations over the last three years, the best ratio in the 17-year history of the program. See some of our other health care fraud coverage here.
As reported, highlights include:
- DOJ opened 1,013 new criminal health care fraud investigations involving 1,910 potential defendants and had 2,041 health care fraud criminal investigations pending
- DOJ opened 1,083 new civil health care fraud investigations and had 1,079 civil health care fraud matters pending
- DHHS’ Office of Inspector General (OIG) investigations resulted in 849 criminal actions and 458 civil actions
- OIG excluded 3,214 individuals and entities for criminal convictions related to Medicare and Medicaid (1,132) or other health care programs (311); patient abuse or neglect (180); and as a result of licensure revocations (1,324)
- Over $324 million paid to False Claims Act whistleblowers
“With these extraordinary recoveries, and the record-high rate of return on investment we’ve achieved on our comprehensive health care fraud enforcement efforts, we’re sending a strong message to those who would take advantage of their fellow citizens, target vulnerable populations, and commit fraud on federal health care programs,” said Attorney General Eric Holder.
“We’ve cracked down on tens of thousands of health care providers suspected of Medicare fraud,” said HHS Secretary Kathleen Sebelius. “New enrollment screening techniques are proving effective in preventing high risk providers from getting into the system, and the new computer analytics system that detects and stops fraudulent billing before money ever goes out the door is accomplishing positive results – all of which are adding to savings for the Medicare Trust Fund.”
Other areas of note from the report:
Medicare Fraud Strike Force
In the six and a half years since its inception, Strike Force prosecutors filed more than 788 cases charging more than 1,727 defendants who collectively billed the Medicare program more than $5.5 billion; 1,137defendants pleaded guilty and 148 others were convicted in jury trials; and 1087 defendants were sentenced to imprisonment for an average term of approximately 47 months.
Miami is cited as an example of a successful case initiated or concluded in a district where Strike Force prosecution teams were operating:
In June 2013 in the Southern District of Florida, the chief executive officer (CEO) of a state-licensed psychiatric hospital and three other hospital executives were convicted at trial in connection with a $67 million Medicare fraud scheme. This was the first Strike Force case involving charges against executives of a licensed hospital. According to trial evidence, the defendants and their co-conspirators paid illegal bribes and kickbacks to patient brokers in order to obtain Medicare beneficiaries as patients. The defendants then caused the submission of fraudulent Medicare claims for treatments for which these beneficiaries were not eligible. To cover up the fraudulent claims, employees of the hospital falsified patient charts and even administered unnecessary psychotropic medications to make it appear as if Medicare beneficiaries attending the hospital needed intensive mental health services. A fifth defendant, a patient recruiter, had pled guilty prior to trial. On September 10, 2013, a federal district judge sentenced the CEO to 25 years in prison for her leading role in the fraud, and two other executives to 15 years and 12 years in prison, respectively for their conduct.
Preventing and Detecting Medicaid Fraud
Every year, HHS/OIG conducts a substantial number audits and evaluations that disclose questionable or improper conduct in Medicare and Medicaid, and recommends corrective actions that, when implemented, return misspent funds and prevent future wasteful or improper payments. Examples of those completed in FY 2013 include:
Medicaid Fraud Control Units (MFCU)
MFCUs are key partners in the fight against fraud, waste, and abuse in State Medicaid programs. HHS/OIG is responsible for overseeing MFCUs’ activities. As part of this oversight, HHS/OIG conducts periodic reviews of all Units and prepares public reports based on these reviews.
HHS/OIG found that from FYs 2009 to 2011, the New Hampshire Unit reported recoveries of $14 million, filed criminal charges against 25 defendants, and obtained 15 convictions. The overall number of cases opened and closed by the Unit decreased. The Unit attributed the overall decrease primarily to staffing limitations; for all 3 years, the Unit’s staffing levels were below the number of staff that the Unit requested and HHS/OIG approved. Additionally, although the Unit reported that its best source of fraud referrals was the State’s Surveillance and Utilization Review Subsystem (SURS), the Unit noted that the number of referrals from SURS was low. HHS/OIG recommended that the New Hampshire Unit seek to expand staff sizes to reflect the number of staff approved in the Unit’s budget, ensure that it maintains an adequate workload through referrals from SURS, ensure that case files contain documented supervisory reviews, and establish annual training plans for each professional discipline.
Medicaid Overpayments
HHS/OIG found that as of December 2012, CMS reported collecting $987.5 million of the $1.2 billion in Medicaid overpayments that it had sustained in the 147 audit reports issued by OIG between fiscal years 2000 and 2009. However, CMS had not collected the remaining $225.6 million. The uncollected amount related to overpayments that OIG had identified in 10 audit reports that the States had not agreed to refund. In addition, CMS could not document that $7.2 million that it reported as collected had been collected. HHS/OIG recommended, among other things, that CMS collect the remaining $225.6 million that is due to the Federal government.
Detecting Fraud in Medicare
HHS/OIG found deficiencies in CMS’s and its contractors’ ability to identify and respond to potential fraud by home health agencies. The two CMS Medicare Administrative Contractors (MACs) in this review prevented $275 million in HHA improper payments and referred several instances of potential fraud, but the four Zone Program Integrity Contractors (ZPICs) reviewed did not identify any HHA-specific vulnerabilities and varied substantially in their efforts to detect and deter fraud. Two of the ZPICs recommended administrative actions and referred law enforcement cases for approximately eight times the number of HHAs as the other two. All four ZPICs served fraud-prone geographic areas. In addition, Medicare inappropriately paid five HHAs with suspended or revoked billing privileges. HHS/OIG recommended, among other things, that CMS establish additional contractor performance standards for high-risk providers in fraud-prone areas (including newly enrolled HHAs).
Other Fraud and Abuse Prevention Activities
HHS/OIG’s HEAT Provider Compliance Training initiative (HEAT PCT), launched in 2011, provided free, high-quality compliance training for providers, compliance professionals, and attorneys in Strike Force cities and elsewhere, and online. Following six live presentations in FY 2011, HHS/OIG made available online the comprehensive training materials it developed to accompany HEAT PCT, together with sixteen video modules dividing the presentation by subject area. HEAT PCT continues to reach the health care community with HHS/OIG’s message of compliance and prevention via these online offerings, which in FY 2012 expanded to include a series of twelve free, downloadable video and audio podcasts that summarize a range of compliance topics.
HCFAC funding also supported HHS/OIG’s continued enhancement of data analysis and mining capabilities for detecting health care fraud, including tools that allow for complex data analysis. OIG continues to use data mining, predictive analytics, trend evaluation, and modeling approaches to better analyze and target the oversight of HHS programs. Analysis teams use near- time data to examine Medicare claims for known fraud patterns, identify suspected fraud trends, and to calculate ratios of allowed services as compared with national averages, as well as other assessments. When united with the expertise of OIG agents, auditors, and evaluators, as well as the HEAT partners, HHS/OIG’s data analysis fosters a highly effective combination of technologies and traditional skills to the fight against fraud, waste, and abuse.
Industry Outreach and Guidance
Advisory Opinions: Central to the HIPAA guidance initiatives is an advisory opinion process through which parties may obtain binding legal guidance as to whether their existing or proposed health care business transactions run afoul of the AKS, the CMP laws, or the exclusion provisions. During FY 2013, the HHS/OIG, in consultation with DOJ, issued 23 advisory opinions, including two modifications of advisory opinions. A total of 299 advisory opinions have been issued during the 17 years of the HCFAC program.
Corporate and Other Integrity Agreements: Many health care providers that enter agreements with the government to settle potential liabilities for violations of the FCA also agree to adhere to a separate CIA, Integrity Agreement, or other similar agreement. Under these agreements, the provider or supplier commits to establishing a program or taking other specified steps to ensure its future compliance with Medicare and Medicaid rules. At the close of FY 2013, HHS/OIG was monitoring compliance with 201 such agreements.
Centers for Medicare & Medicaid Services
In FY 2013, CMS was allocated approximately $12.5 million by HHS, and appropriated $237.3 million in discretionary funds by Congress to support its comprehensive program integrity strategy for Medicare, Medicaid and the Children’s Health Insurance Program (CHIP). With these funds, CMS is working to ensure that public funds are not diverted from their intended purpose: to make accurate payments to legitimate entities for allowable services or activities on behalf of eligible beneficiaries of federal health care programs. CMS also performs many program integrity activities that are beyond the scope of this report because they are not funded directly by the HCFAC Account or discretionary HCFAC funding. Medicare Fee-for-Service error rate measurement and activities, and Recovery Audit activities are discussed in separate reports, and CMS will submit a combined Medicare and Medicaid Integrity Program report to Congress later this year.
The approach is guided by four major principles that support the strategic goal of improving program integrity: (1) Prevention; (2) Detection; (3) Transparency and Accountability; and (4) Recovery.
Office of the General Counsel
In FY 2013, the Office of the General Counsel (OGC) was allocated approximately $8.88 million in HCFAC funding by HHS to supplement OGC’s efforts to support program integrity activities. OGC’s efforts in FY 2013 focused heavily on program integrity review, in which OGC reviews CMS’ programs and HCFAC activities in order to strengthen them against potential fraud, waste, and abuse. OGC also continued its active litigation role in order to assist in the recovery of program funds. During FY 2013, OGC was involved in a wide range of HCFAC efforts that resulted in Government recoveries of over $1.57 billion in judgments, settlements, or other types of recoveries, savings, or receivables as described elsewhere in this report.
The Affordable Care Act
The ACA significantly amended existing anti-fraud statutes. These provisions established fundamental expectations for compliance, disclosure, transparency, and quality of care, and are matched by corresponding enforcement provisions. Some specific provisions of the ACA that particularly support HCFAC priorities include amending Medicare and Medicaid provider/supplier enrollment requirements, overpayment provisions to specifically invoke the FCA, strengthening the anti-kickback statute, and creating a statutory disclosure protocol for violations of the physician self-referral prohibition known as the “Stark law.” During FY 2013, as new ACA programs were implemented, OGC spent significant time and resources working with the relevant agencies to ensure that program integrity issues were reviewed and resolved, and assisted the agencies in addressing program integrity and compliance problems as they occurred.
FCA and Qui Tam Actions
OGC assisted DOJ in assessing qui tam actions filed under the FCA by interpreting complex Medicare and Medicaid rules and policies in order to assist DOJ in discerning which allegations were program violations and should be pursued and to help DOJ focus on those matters which were most likely to result in a recovery of money for the government. When DOJ filed or intervened in a FCA matter, OGC provided litigation support, including interviewing and preparing witnesses and responding to requests for documents and information. In FY 2013, OGC participated in FCA and related matters that recovered over $1 billion for the government. The types of FCA cases that OGC participated included: drug pricing manipulation; illegal marketing activity by pharmaceutical manufacturers that resulted in Medicare and Medicaid paying for drugs for indications not covered; underpayment of rebates to state Medicaid programs; physician self- referral violations; and provider up coding cases.
Food and Drug Administration Pharmaceutical Fraud Program
In FY 2013, FDA was allocated $3.37 million in HCFAC funding by HHS for the FDA Pharmaceutical Fraud Program (PFP). The PFP was instituted to enhance the health care fraud- related activities of FDA’s Office of Criminal Investigations (OCI) and the Office of the General Counsel (OGC) Food and Drug Division. OCI, with the support of OGC, investigates criminal violations of the Federal Food, Drug, and Cosmetic Act (FFDCA), the Prescription Drug Marketing Act, the Federal Anti-Tampering Act, and related Federal statutes.
The PFP is designed to detect, prosecute, and prevent pharmaceutical, biologic, and medical device fraud. The PFP gathers information from sources inside and outside FDA and focuses on fraudulent marketing schemes, application fraud, clinical trial fraud, and flagrant manufacturing- related violations concerning biologics, drugs, and medical devices. The goal of the program is the early detection and prosecution of such fraudulent conduct and furthers FDA’s public health mission by helping to reduce health care costs, in most cases before they are incurred, and deter future violators.
Department of Justice
In FY 2013, the United States Attorney’s Offices (USAOs) were allocated approximately $42.0 million in FY 2013 HCFAC funding to support civil and criminal health care fraud and abuse litigation, as exemplified in the Program Accomplishments section. The USAOs dedicated substantial district resources to combating health care fraud and abuse in 2012, and HCFAC allocations have supplemented those resources by providing funding for attorneys, paralegals, auditors and investigators, as well as funds for litigation of resource-intensive health care fraud cases.
The 93 United States Attorneys and their assistants, or AUSAs, are the nation’s principal prosecutors of Federal crimes, including health care fraud. Each district has a designated Criminal Health Care Fraud Coordinator and a Civil Health Care Fraud Coordinator. Civil and criminal health care fraud referrals are often made to USAOs through the law enforcement network described herein, and these cases are usually handled primarily by the USAOs, although the civil referrals are sometimes handled jointly with the Civil Division’s Commercial Litigation Branch (Fraud Section). The other principal source of referrals of civil cases for USAOs is through the filing of qui tam (or whistleblower) complaints. These cases are often handled jointly with trial attorneys in the Frauds Section. USAOs also handle most criminal and civil appeals at the Federal appellate level.
Federal Bureau of Investigations
In FY 2013, the FBI was allocated $128.1 million in funding from HIPAA to support the facilitation, coordination and accomplishment of the goals of the HCFAC Program. This yearly appropriation was used to support 801 positions (480 Agent, 321 Support). In FY 2013, the FBI initiated 674 new health care fraud investigations and had 2,868 pending investigations. Investigative efforts produced 794 criminal health care fraud convictions and 1,023 indictments and informations. In addition, investigative efforts resulted in over 425 operational disruptions of criminal fraud organizations and the dismantlement of the criminal hierarchy of more than 115 HCF criminal enterprises.