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The Obama administration has made it clear that cracking down on healthcare fraud and abuse is a priority, and the latest version of the America's Affordable Health Choices Act of 2009 includes an additional funding increase to ensure that government money is not lining the pockets of fraudsters.
That increase in enforcement will be essential if more people are covered under a government system, according to Robert A. Wade, Esq., partner at Baker & Daniels, LLP, in South Bend, IN.
Wade says he would expect an uptick in fraud and abuse cases if the reform passes simply because more people will be covered and more money will funnel through the system. If the federal program covers more people, more claims would fall under the False Claims Act and Stark Law.
Some opponents of a government-run healthcare system cite the high level of fraud and abuse in the Medicare and Medicaid programs as a sign that the government is incapable of running an efficient system. However, experts argue that government programs are no more susceptible to fraud and abuse than private insurers.
"If a physician or [healthcare] entity has the capacity to commit fraud, they will do it regardless of which bucket they are taking from," said Wade.
A report from the George Washington University Medical Center in Washington D.C. titled “Health Insurance Fraud: An Overview” concurs.
"What is absolutely clear from virtually every reliable source on the subject is that healthcare fraud is a systemic problem affecting public and private insurers alike, in the individual market, the employer-sponsored group market, and public programs," the report stated.
Authors of the report, Sara Rosenbaum, Nancy Lopez, and Scott Stifler, said the reason the public is more aware of Medicare and Medicaid fraud is because the government is required to tell taxpayers where their money is going. Most recently, Office of Inspector General Chief Counsel
Lewis Morris told Congress that the United States lost $60 million to healthcare fraud in 2008, which was 3% of the government's budget.
Private insurance companies are not obligated to release such numbers so fraud involving those companies stays out of the headlines. The amount of money private insurers lost to fraud is reported to the board of trustees, not the public.
"[Healthcare fraud enforcement] has been a theme we have seen in the president's budget and Medicare rule making," says Ed Dougherty, senior vice president of B&D Consulting. "I would say regardless of what happens in healthcare reform, there will be increased focus in all sites of service."
Endoscopic Technologies Inc., a medical device manufacturer, agreed to pay the United States $1.4 million to resolve civil claims, according to
a Department of Justice release.
The DOJ alleged the company violated the False Claims Act and the Food, Drug, and Cosmetic Act by:
- Marketing its medical devices to treat atrial fibrillation (the most common cardiac arrhythmia or abnormal heart rhythm), a use that is not approved by the FDA
- Promoting expensive heart surgeries using the company’s devices when less invasive alternatives were appropriate
- Advising hospitals to up-code surgical procedures using the company’s devices to inflate Medicare reimbursements
- Paying kickbacks to healthcare providers to use its devices
The whistleblower who filed the case on behalf of the government will receive $210,000 as the statutory share of the settlement.
On July 9, California authorities arrested 20 individuals believed to be involved in a Medicaid fraud scheme that defrauded the Medi-Cal program of allegedly $4.6 million, according to
a Department of Justice (DOJ) release.
The most recent arrests bring the total number of defendants connected to the scheme to 42. The DOJ alleges that the 42 defendants and two others conspired to bill the Medi-Cal program for in-home nursing services provided by unlicensed individuals.
The alleged organizer of the ring, Priscilla Villabroza, pleaded guilty to five counts of healthcare fraud last year and admitted that she and others hired unlicensed professionals to provide in-home nursing services to Medi-Cal beneficiaries, many of them children with cerebral palsy or developmental disabilities. Villabroza then billed the program, claiming the unlicensed nurses were licensed vocational nurses (LVN). Villabroza allegedly instructed the unlicensed nurse defendants, some of whom had no medical training, to lie to parents and claim they were LVNs.
According to the DOJ, patients complained about the nurses’ inability to provide care. In one instance, a nurse fled a medical situation, presumably because she was in over her head and unable to administer the proper care.
A report published by the George Washington University Medical Center,
Health Insurance Fraud: An Overview, states that the healthcare fraud problem is not specific to public insurers (i.e., Medicare and Medicaid). According to the report’s authors, Sara Rosenbaum, Nancy Lopez, and Scott Stifler, private insurance providers are just as susceptible to fraud as Medicare and Medicaid.
The report states, “What is absolutely clear from virtually every reliable source on the subject is that healthcare fraud is a systemic problem affecting public and private insurers alike, in the individual market, the employer-sponsored group market, and public programs.”
The report also states that medical providers commit 80% of healthcare fraud, consumers commit 10%, and a combination of insurers and their employees commit the final 10%.
The report’s authors argue the reason Medicare and Medicaid appear to be more susceptible to fraud and abuse is because those programs cover the elderly, women, minorities, the less educated, and the poor, who are also the most vulnerable to fraud.
The Louisiana State University Health Sciences Center-Shreveport (LSUHSC) will pay $706,000 to settle allegations that the teaching hospital billed Medicare for services that were not provided, according to
an article in the Shreveport Times.
Former LSUHSC employees William Overdyke M.D., a teaching physician in the hospital's orthopedic department, and Susan Belgert Hodnett, the orthopedic head nurse, alleged LSUHSC teaching physicians submitted claims stating they assisted residents in surgical procedures, but were in fact never present during the procedures. According to the article, the physicians and the hospital would then divide the reimbursement.
Overdike and Hodnett filed the charges in October 2002, and according to the article, both whistleblowers were fired within a year of the filing. The False Claims Act protects whistleblowers from being discriminated against by their employers. Overdike and Hodnett will split $141,335 from the settlement and plan to file another suit to collect lost wages, lost benefits, damage to their reputations, and other items allowed by state and federal whistleblower protection laws.
On June 24, the Medicare Fraud Strike Force in Detroit arrested 53 people on Medicare fraud charges, halting the defendants’ schemes to submit more than $50 million false Medicare claims, according to an HHS press release.
The Strike Force, a multi-agency team of federal, state and local investigators, executed arrest warrants in Detroit, Miami, and Denver. The defendants include not only physicians, medical assistants, and company owners, but also patients who allegedly accepted cash kickbacks in return for allowing providers to submit forms saying they had received treatments in infusion therapy and physical/occupational therapy.
Charges were unsealed Wednesday and included conspiracy to defraud the Medicare program, criminal false claims, and violations of the anti-kickback statutes.
According to the press release, the Strike Force operations in Detroit are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a renewed effort announced in May 2009 between the Department of Justice and HHS to focus their joint efforts to prevent fraud and enforce current anti-fraud laws around the country.
On June 18, many providers received an alert message from CMS informing them that scammers are sending fake faxes and posing as a Medicare carrier or Medicare Administrative Contractor (MAC) in order to obtain billing information.
The agency discovered the scheme when several providers called CMS after receiving the suspicious faxes, according to Peter Ashkenaz, CMS deputy director of media affairs. The faxes asked physician staff to respond to a questionnaire and provide an account information update within 48 hours in order to prevent a gap in Medicare payments. The faxes may have included the CMS or MAC logo.
Ashkenaz says CMS wanted to get the word out to providers immediately. “At this time, we don’t know much more than what is in the release,” Ashkenaz says.
Ashkenaz adds he could not speculate on what charges the scammer/scammers could face or what could be done with the information, but he said possession of billing information could lead to fraudulent billing of Medicare or other insurance providers.
CMS informed physicians and non-physician practitioners that they should be wary of the request and check with their contractor before submitting any information. Medicare providers should only send information to a Medicare contractor using the address found in the download section of the CMS.gov Web site found at
www.cms.hhs.gov/MLNGenInfo/ or
www.cms.hhs.gov/MedicareProviderSupEnroll.
Earlier this week, the University of Medicine and Dentistry of New Jersey agreed to pay the federal government $2 million to settle a whistleblower lawsuit alleging that it bilked Medicaid in a double-billing scheme that started in 1993 and ended in 2003, according to the Department of Justice (DOJ).
The settlement marks the second time UMDNJ paid the government for the double-billing scheme. The first was in 2005 when the hospital paid $4.9 million to the state of New Jersey to settle criminal charges.
In the end, UMDNJ ended up paying nearly $7 million total for the scheme, but, according to Marcella Auerbach, managing partner at Nolan & Auerbach, the hospital could have avoided the lengthy and costly litigation and saved millions, if it had acted differently.
According to Auerbach, a former federal prosecutor who now exclusively represents whistleblowers in healthcare fraud cases, UMDNJ’s in-house attorney discovered the hospital and its physicians were billing for the same services back in 2001—before any whistle was blown. The lawyer brought the issue to the hospital’s attention, but the management looked the other way, and continued to double-bill for the three years following the warning, he says.
The fact that UMDNJ knew about the double-billing, knew it was illegal, and continued to do it, is what makes the case so interesting. The hospital could have saved millions if it ceased double-billing and came clean to the government through a self-disclosure, Auerbach says.
“It’s a bet,” Auerbach says. “They are betting on the fact they won’t get caught.”
However, UMDNJ hit one too many times and ended up going bust. Steven Simring, MD, the man who filed the whistleblower lawsuit will collect $801,000 for his efforts.
Based on the details of the case, Auerbach was not surprised to see a doctor blow the whistle on the hospital. Evidence shows that there were many discussions about the double-billing in which doctors expressed concern. Auerbach says it comes as no surprise that Simring would come forward and blow the whistle rather than risk prosecution.
Auerbach says the gambler’s mind-set is common in whistleblower cases. Rather than play by the rules and fess up, many facilities try to sweep problems under the rug and pretend they never happened. Some even go one step further. Auerbach says many times concerned employees will raise compliance concern only to be handed a pink slip for their trouble, which raises another legal problem.
“These people are fired for bringing points up,” Auerbach says, “Then they come to us and they have two claims.”
Auerbach says this case can be seen as a message to healthcare leaders. The DOJ is saying take any compliance concerns presented by employees or legal council very seriously and, when appropriate, self-disclose. The alternative is a lengthy, expensive, public whistleblower case.
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