Medicare cheaters beware. The government is paying attention!
Improper payments to Medicare fee-for-service providers jumped almost $6.5 billion from 2012 to 2013, according to the Department of Health and Human Services. Fraudulent payments exceeded $36 billion. In fact, HHS figures are conservative. The Justice Department tags Medicare fraud costs at up to $90 billion a year.
The government is intent on curtailing the thievery that saps the system. Federal agencies are implementing programs and initiatives to combat and prosecute criminals who defraud the government.
Fraudsters are fearless and difficult to deter, but for every dollar spent successfully fighting fraud, the government can reap a seven-fold return. That’s a significant incentive.
The system has been beset by fraud and error. Both are closely watched by federal investigators. For example, the relationship between physicians and manufacturers draws regulators attention. In 2013, Johnson & Johnson paid $2.2 billion to settle criminal and civil False Claims Act violations relating to the branding and off-label promotion of certain drugs – and kickbacks to physicians. Some estimates suggest false claims violations can return 20 to 1 ROI for the government. Yes, investigators’ interest will remain piqued.
Recently, the Wall Street Journal reported on deals between large laboratory organizations and physicians, detecting a pattern of kickbacks for referrals, and threats if work doesn’t come. Some insurance companies “encourage” physicians to send specimens to specific labs, or risk being removed from the insurance company’s panel of preferred providers.
Further, the Wall Street Journal noted a clinical lab paid physicians to steer specimens to the lab, which then performed costly tests paid for by Medicare. The physician payments, which are positioned as “handling fees” can top thousands of dollars each week. These reportedly stopped after HHS issued a Special Fraud Alert in June, warning that such remittances presented “a substantial risk of fraud and abuse under the anti-kickback statute,” the paper reported. An investigation by the Office of the Inspector General continues.
In another laboratory/physician relationship model, the physician treats the lab as a service for which the doctor will bill the patient or the patient’s insurance company, carving out any service paid for by Medicare or other government benefit programs. The physician pays the lab a test fee that is far below fair market value, and then marks up the purchased test to what the lab could have charged and submits a claim to the insurance company for payment. This is a good deal for the lab since the physicians also agree to send their Medicare work to the lab, which bills Medicare directly and keeps the payment. This kind of carve out scheme is considered a suspect “swapping arrangement” by Medicare’s OIG.
In yet another practice, companies entice physicians to invest in suspect “joint ventures” with compounding pharmacies or clinical labs with assurances that the investment is safe because it complies with a Medicare safe harbor or carves out referrals of business paid by Medicare or other governmental health benefit plan. The physicians then are encouraged to refer work to the new ventures with promises of significant returns.
These situations are alluring to physicians. Thousands of dollars in referral fees for minimal effort can be all the incentive any business needs. Yet, the risks are enormous, especially as news media and federal investigators continue to dig deeper into such deals.
Other areas of concern include prescription fraud, with a focus on drug diversion, substitution of generics for name brands, pill short counting, and non-filled prescriptions or filling prescriptions without a refill and then billing Medicaid or other third party payers. Regulators pursue recovery of overpayments; HIPAA enforcement, including data security, integrity of electronic health records and privacy; and how funds spent on the Medicare and Medicaid DHR incentive programs are being used by fund recipients.
And of course, the government continues to pursue recovery of misappropriated, stolen or misspent money. The Health Care Fraud and Abuse Control program has not only recovered millions of dollars, it has successfully prosecuted participants. Agencies encourage and reward whistleblowers to provide knowledge or evidence of wrongdoing.
Running afoul of the law is expensive to defend. For hospitals, pharmaceutical companies, medical device manufacturers and physician practice groups remaining compliant is critical. Vigilance in staff training, and risk assessments to avoid even innocent errors is vital as is hiring experienced legal counsel to address causes or identify areas of future vulnerability.
The prevalence of fraud, combined with the strong returns from prosecuting offenders, mean the opportunity and incentive for targeting of fraud will encourage the government to continue and even enhance its enforcement efforts.
Lee F. Lasris is a board certified health law attorney and a founding partner of the Florida Health Law Center. Mr. Lasris has served as counsel to numerous healthcare providers, including physician practices, diagnostic imaging providers, managed care organizations, hospitals, physical therapy providers, value-added provider networks, home health agencies, management companies and other health-care related entities.