DOJ & HHS Health Care Fraud Enforcement Nets $4 Billion + In 2011

Government’s health care fraud prevention and enforcement efforts recovered nearly $4.1 billion in taxpayer dollars in Fiscal Year (FY) 2011 according to the FY 2011 Health Care Fraud and Abuse Control Program Report  jointly released by the Department of Health & Human Services (HHS)  and the Justice Department on Valentines Day. This is the highest annual amount ever recovered from individuals and companies who attempted to defraud seniors and taxpayers or who sought payments to which they were not entitled. These latest statistics should leave little room for doubt that health care providers need to exercise care to manage fraud investigation and exposures risks.

The Justice Department and HHS credit this fraud investigation and enforcement success to their vigorous use of enhanced fraud investigation and enforcement tools created under the Patient Protection & Affordable Care Act (Affordable Care Act) and other recently enacted laws, including:

  • Tough New Rules and Sentences for Criminals: The Affordable Care Act increases the federal sentencing guidelines for health care fraud offenses by 20-50 percent for crimes that involve more than $1 million in losses. The law establishes penalties for obstructing a fraud investigation or audit and makes it easier for the government to recapture any funds acquired through fraudulent practices. The law also makes it easier for the Department of Justice (DOJ) to investigate potential fraud or wrongdoing at facilities like nursing homes.  Convictions under the Health Care Fraud and Abuse Control Program increased by over 27 percent (583 to 743) between 2009 and 2011, and the number of defendants facing criminal charges filed by federal prosecutors in 2011 increased by 74 percent compared with 2008 (1430 vs. 821).
  • Enhanced Screening and Other Enrollment Requirements:Last year CMS published rules to enforce some of the Affordable Care Act’s most powerful new fraud prevention tools. 
    • New requirements for providers and suppliers wishing to participate in Medicare, Medicaid, and CHIP who may pose a higher risk of fraud or abuse are now required to undergo a higher level of scrutiny.  This scrutiny includes licensure checks and site visits to confirm legitimacy and location. 
    • To support the Affordable Care Act’s new requirements for risk-based provider enrollment CMS implemented a new Automated Provider Screening (APS) system in December 2011.  The APS uses existing information from public and private sources to automatically and continuously verify information submitted on a provider’s Medicare enrollment application including licensure status.  The new system replaces the time- and resource-intensive process of manual review of the enrollment application. 
    • In addition to the enhanced enrollment and screening requirements, the Affordable Care Act also allows the Secretary to impose a temporary moratorium on newly enrolling providers or suppliers of a particular type or in certain geographic areas if necessary to prevent or combat fraud, waste, and abuse.  CMS will publish a Federal Register notice to announce any enrollment moratorium and to explain the agency’s rationale for its action.
  • Increased Coordination of Fraud Prevention Efforts: Many of the Affordable Care Act antifraud provisions increase coordination among states, CMS, and its law enforcement partners at the Office of the Inspector General (OIG)  and DOJ.  For instance, the law expressly authorizes CMS, in consultation with OIG, to suspend Medicare payments to providers or suppliers during the investigation of a credible allegation of fraud.    This initiative  reverses a long-standing Medicare practice of paying claims then attempting to recoup funds if the claim is found to be an error or fraudulent.  States must also withhold payments to Medicaid providers where there is a pending investigation of a credible allegation of fraud unless the State Medicaid agency has good cause not to do so.  The Affordable Care Act also ensures that fraudulent providers and suppliers cannot move easily from state to state or between Medicare and Medicaid by requiring all states to terminate anyone whose billing privileges have been revoked by Medicare or who has been terminated by another state Medicaid program for cause.
  • Health Care Fraud Prevention and Enforcement Action Team (HEAT): One of the most visible examples of increased collaboration is the Health Care Fraud Prevention and Enforcement Action Team (HEAT), a joint effort between HHS and DOJ to fight health care fraud.  It has engaged law enforcement and professional staff at the highest levels of HHS and DOJ to increase coordination, intelligence sharing, and training among investigators, agents, prosecutors, analysts, and policymakers.  A key component of HEAT is the Medicare Strike Force: interagency teams of analysts, investigators, and prosecutors who can target emerging or migrating fraud schemes, including fraud by criminals masquerading as health care providers or suppliers.   In 2011, HEAT coordinated the largest-ever federal health care fraud takedown.  In one action, Strike Force teams charged 115 defendants in nine cities, including doctors, nurses, health care company owners and executives, for their alleged participation in Medicare fraud schemes involving more than $240 million in false billing.  In another takedown, Strike Force prosecution teams charged 91 defendants in eight cities for their alleged participation in a Medicare fraud scheme involving more than $290 million in false billings.
  • Use of State-of-the-Art Fraud Detection Technology: To target resources to highly suspect behaviors, CMS has implemented the new Fraud Prevention System, which uses advanced predictive modeling technology to fight fraud.  The system has been screening all Medicare fee-for-service claims before payment is made since June 30, 2011.  Much like the predictive technologies used in the credit card industry, the Fraud Prevention System uses advanced technology to identify suspicious behavior and billing irregularities. This targets investigative resources on areas of vulnerability that demand immediate attention and response.  By streaming claims on a prepayment basis, CMS and its investigative partners are  able to more efficiently identify fraudulent claims and respond quickly to emerging trends. 
  • New Focus on Compliance and Prevention: Under the new law, some preventive measures focus on certain categories of providers and suppliers that historically have presented concerns, including Home Health agencies, and Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) suppliers.  On November 17, 2010, CMS  published final regulations authorized under the Affordable Care Act requiring physician certification of a patient’s “face-to-face” visit with an appropriate health care professional to ensure Medicare only pays for necessary and covered Medicare home health and hospice services. On July 12, 2011, CMS proposed “face-to-face” encounter requirements for Medicaid home health including medical supplies, equipment and appliances.  Additional face-to-face requirements to combat fraud among Medicare DME suppliers will be proposed later this year.  
  • Expanded Overpayment Recovery Efforts:  The Affordable Care Act expands the Recovery Audit Contractor (RAC) program to Medicaid, Medicare Advantage, and Medicare Part D programs. The Medicaid RAC program became effective on January 1, 2012 and is projected to save $2.1 billion over the next five years, of which $900 million will be returned to states.  These efforts build on the success of the Medicare fee-for-service RAC program which in fiscal year 2011 recouped nearly $800 million in overpayments.
  • New Durable Medical Equipment (DME) Requirements: Under a new risk-based approach to fighting fraud, CMS has focused its efforts on combating fraud among DME suppliers by instituting enhanced enrollment standards and screening requirements.  On August 27, 2010, CMS issued final rules enhancing Medicare enrollment standards for DME suppliers such as more stringent operations and facilities requirements to ensure only legitimate suppliers can participate in Medicare.  Additionally, the competitive bidding program is expected to save the Medicare program and its beneficiaries $28 billion over 10 years.  The second phase of the program will be expanded from 9 to 100 metropolitan areas across the country.
  • New Resources to Fight Fraud: The Affordable Care Act provides an additional $350 million over 10 years to ramp up anti-fraud efforts, including increasing scrutiny of claims before they’ve been paid, investments in sophisticated data analytics, and an increased number of law enforcement agents and others to fight fraud in the health care system.
  • Greater Oversight of Private Insurance Abuses: The new law also provides enhanced tools and authorities to address abuses of multiple employer welfare arrangements and protect employers and employees from insurance scams. It also gives new powers to the Secretary and Inspector General to investigate and audit the health insurance exchanges. This, plus the new rules to ensure accountability in the insurance industry, will protect consumers and increase the affordability of health care.
  • Senior Medicare Patrols:  As a part of the new resources dedicated to fighting fraud, the Obama Administration has significantly expanded funding for Senior Medicare Patrols – groups of senior citizen volunteers to educate and empower their peers to identify, prevent and report health care fraud.  The 75 percent increased funding from FY2008 to FY 2011 has helped thousands of Medicare beneficiaries host thousands of community meetings and educational events to increase awareness of fraud among people with Medicare and to solicit their help in preventing fraud.

The continuing success of these and other federal health care fraud investigation and enforcement efforts continue to demonstrate the need for health care providers and payers to strengthen their compliance practices and documentation to avoid getting caught in the ever tightening health care fraud dragnet.

Act To Manage Risks

In response to the growing emphasis and effectiveness of Federal officials in investigating and taking action against health care providers and organizations, health care providers covered by federal false claims, referral, kickback and other health care fraud laws should consider auditing the adequacy of existing practices, tightening training, oversight and controls on billing and other regulated conduct, reaffirming their commitment to compliance to workforce members and constituents and taking other appropriate steps to help prevent, detect and timely redress health care fraud exposures within their organization and to position their organization to respond and defend against potential investigations or charges.

For More Information Or Assistance

If you need assistance reviewing or responding to these or other health care related risk management, compliance, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer, may be able to help. Vice President of the North Texas Health Care Compliance Professionals Association, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health industry clients about these and other matters. Her experience includes advising hospitals, nursing home, home health, rehabilitation and other health care providers and health industry clients to establish and administer compliance and risk management policies; prevent, conduct and investigate, and respond to peer review and other quality concerns; and to respond to Board of Medicine, Department of Aging & Disability, Drug Enforcement Agency, OCR Privacy and Civil Rights, HHS, DOD and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns.

A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns. Her presentations and programs include How to Ensure That Your Organization Is In Compliance With Regulations Governing Discrimination, as well as a wide range of other workshops, programs and publications on discrimination and cultural diversity, as well as a broad range of compliance, operational and risk management, and other health industry matters.

Her insights on these and other related matters appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.  You can get more information about her health industry experience here. If you need assistance responding to concerns about the matters discussed in this publication or other health care concerns, wish to obtain information about arranging for training or presentations by Ms. Stamer, wish to suggest a topic for a future program or update, or wish to request other information or materials, please contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

If you or someone else you know would like to receive future updates about developments on these and other concerns from Ms. Stamer, see  here.

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Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources including:

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©2012 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press.  All other rights reserved.

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