May 14, 2010

A recent report from the federal government showed that $2.5 billion was recovered in 2009 in cases involving healthcare fraud. That’s a 29 percent increase over fiscal year 2008.

The U.S. Department of Health and Human Services (HHS) and the U.S. Department of Justice (DOJ) jointly filed The Annual Health Care Fraud and Abuse Control Program Report. It contains a litany of added tools and funding for preventing, detecting and taking enforcement action against fraud in Medicare, Medicaid, the Children’s Health Insurance Program (CHIP) and private insurance.

These new approaches are part of the Affordable Care Act, signed into law on Mar. 23. The Act adds $350 million over the next decade for fighting fraud and hiring additional agents and officials to police all realms of the healthcare industry including physicians, pharmacies, hospitals, clinics, pharmaceutical companies, nursing homes, and mental health facilities.

“The Affordable Health Care Act gives us new tools to fight fraud, protect consumers, and safeguard taxpayer dollars,” said Secretary of Health and Human Services Kathleen Sebelius in a press release. “It strengthens our ability to stop fraud before it starts by making it harder to submit false claims and easier to catch those who try to cheat out consumers. And the new law will guarantee that those who try to game the system face severe consequences, ” she said.

Some of the new measures include increasing federal sentences for healthcare fraud by 20% to 50% in cases that cause more than $1 million in losses. To combat healthcare fraud on the front end the Act allows for fingerprinting, site visits and criminal background checks of providers before they start billing Medicare, Medicaid or CHIP. And if a credible fraud allegation has been made and an investigation is pending, HHS can hold Medicare and Medicaid payments of providers who have been accused of fraud.

One way the Affordable Care Act will enhance existing fraud fighting systems is to expand Project HEAT (Health Care Fraud Prevention & Enforcement Action Team). HEAT was born on May 20 last year to increase collaboration between the Departments of Justice and Health and Human Services and the Centers for Medicare and Medicaid Services. Project HEAT consists of key enforcement agents, prosecutors and staff in each of those agencies.

The HEAT will grow some existing partnerships between DOJ and HHS such as their Medicare Fraud Strike Forces. Those have been set up in health care fraud hot spots like South Florida, New York, Texas, California Louisiana and Michigan.

One of the most egregious crimes exposed by these strike forces was a case in Florida where a physician and a nurse administered hundreds of unnecessary HIV infusion treatments to patients. The patients were paid $150 per visit to accept the treatments. The physician was sentenced to 30 years in prison and the nurse got seven years. They were part of a large HIV infusion fraud operation in South Florida that included at least 11 clinics in scams generating more than $100 million in false Medicare claims.

Pharmaceutical companies have also been targeted. Pfizer Inc. agreed to pay $2.3 billion, the largest settlement for health care fraud in the history of the DOJ and HHS Office of Inspector General. Pfizer’s subsidiary Pharmacia and Upjohn Co. Inc. promoted the sale of the anti-inflammatory drug, Bextra, for uses not indicated on its label.  And Pfizer promoted three other drugs for off-label uses, an anti-psychotic, an antibiotic and an anti-epileptic drug.

Other pharmaceutical companies that got hit with fines were Eli Lilly and Co., which settled for $1.4 billion; Bayer HealthCare LLC, which agreed to pay $97.5 million and Abbott Laboratories Inc., which agreed to pay $28 million for false pricing on intravenous drugs and blood products.