Exposing Fraud in Healthcare Industry: What You Need To Know on Healthcare Strike Force

SEGMENT 1:
Joshua A. Levy , Principal
Cunningham Levy LLP

• The need for a HEAT Strike Force at DOJ.  Recently, CMS spends roughly $500b on Medicare each year, and 3-10% of that is said to be fraudulent.  But only less than 1% in fraudulent funds is recouped each year by the entire government.  Part of the problem is CMS.  CMS (through its constellation of MACs, ZPICs and RAs) does not adequately identify, stop and deter fraud.  
  • MACs cannot identify fraud other than poorly completed paperwork on claims submissions. The Prompt Payment Rule requires MACs to reimburse claims within 14 days, so long as the paperwork is correctly submitted.  Real fraudsters don’t mess up on the paperwork; they’re often submitting perfect paperwork for quick cash payments, even though the underlying claim is bogus.  MACs are therefore nearly useless as fraud tool.
  • ZPICs cannot gain real-time access to MAC data, meaning the ZPICs cannot quickly identify fraud.
  • ZPICs and RACs (now RAs) are in different geographic zones, using different software, looking at different issues.  
  • Slow to use Big Data.  
• HEAT’s use of Big Data.  FBI analysts, working with HHS OIG analysts, have used big data to identify health care fraud trends (where CMS has not).  For example, when the use of certain drugs or devices should no longer be used according to the standard of care, per peer reviewed journals and the like, HEAT analysts have hunted for rampant continued use of such drugs/devices, often revealing phony patients and crooked doctors.
• The heartland of HEAT prosecutions.  HEAT prosecutors primarily investigate and prosecute fraudulent health care providers, DME suppliers and – to a lesser extent – drug companies.  Mass arrests in different cities have stopped fraudulent Medicare coding practices (not previously identified and ground to a halt by CMS).  While HEAT prosecutions have made an impact from the standpoint of criminal deterrence, they have been ineffective vehicles for helping the US recoup fraudulently spent funds.  To wit, HEAT prosecutions – since their existence – have identified a total of roughly $6 billion in health care fraud; have resulted in hundreds of convictions; and yet have recovered only about $200,000 in criminal restitution because the defendants frequently have laundered the money.  (From the standpoint of recoupment of funds, the government thus remains highly dependent on corporate-insider whistleblowers to file FCA cases against solvent defendants.)

SEGMENT 2:
David Stone, Managing Partner
Stone & Magnanini LLP

• HEAT’s Mission:  An explanation of HEAT’s purpose and mission and how the FCA is being used by HEAT as a tool to recover taxpayer dollars.
• The FCA:  A brief overview of the use of the federal and state False Claims Acts in combating Medicare and Medicaid fraud and the coordinated efforts with the State Medicaid Fraud Control Units.   
• HEAT’s Accomplishments:  In 2014, the Department of Justice recovered $2.3 billion in health care fraud alone.  Since January 2009, the Department of Justice has recovered over $23 billion through False Claims Act cases, with over $14.8 billion of that coming from cases involving health care fraud.  Indeed, many of the largest civil FCA recoveries have involved health care fraud. 
• Recent Examples:  A discussion about some of the recent Strike Force Enforcement Actions that are listed on the HHS website.

* False Claims Act cases under the Stark Law, Medicare and life science companies. The U.S. Supreme Court is slated to decide the case of Kellogg Brown & Root v. U.S. ex rel Carter. While that case deals with defense contracting, it could have significant impact on the healthcare industry as it deals with the first-to-file rule and the tolling of the 6-year statute of limitations. In addition, the Open Payments data release is likely to drive up False Claims Act qui tam suits since enterprising plaintiffs' attorneys can analyze the data for potential claims. Also the "worthless services" theory of recovery under the False Claims Act despite the 7th Circuit rejection of that theory in U.S. ex rel Absher v. Momence Meadows Nursing Center. There are actually lots of sub-subjects within the broader False Claims Act subject.

SEGMENT 3:
Michael Summerhill, Partner
Freeborn & Peters LLP

• The Foreign Corrupt Practices Act (FCPA) for life science companies operating in emerging markets.  2014 saw numerous enforcement actions brought against life science companies, and these actions are expected to increase. 
• Self-Disclosures of potential Stark and anti-kickback violations to both the Centers for Medicare and Medicaid Services and the Office of Inspector General of the Dept. of Health & Human Services.  This is probably the most attractive subject for me personally.  CMS proposed a 60 day rule in 2/2012 that requires all Medicare providers to report overpayments and return the money to CMS within 60 days of identifying them.  The final rule from CMS is expected later this year.  Question concern how far back must a provider look.  This is of particular concern given the prevalence of consolidation in the healthcare industry as potential overpayments are invariably discovered during the “due diligence” phase of a proposed merge.