Medicare Compliance & Reimbursement

Beware: Medicare Part D now under scrutiny for upcoming fraud actions.

The biggest Medicare fraud bust to date is teaching providers and law enforcement alike a myriad of important lessons. If you want to stay off the government’s fraud watch list, make sure you’re keeping your Medicare billings squeaky clean.

What Happened in the Colossal Fraud Sweep

During a three-day sweep, government agencies coordinated a national Medicare fraud takedown involving 243 individuals who were allegedly involved in false billings totaling $712 million. Attorney General Loretta Lynch and Department of Health and Human Services (HHS) Secretary Sylvia Mathews Burwell announced the massive fraud takedown on June 18.

Led by the Medicare Fraud Strike Force — part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT) — and involving 17 districts, the fraud bust is the largest in Strike Force history in terms of both the number of individuals charged and monetary loss amount.

Significance: This fraud takedown “is a sign that healthcare fraud matters and is not going away,” Marilyn May, a Washington, D.C.-based attorney with Arnold & Porter LLP, tells Medicare Compliance & Reimbursement Alert. And fraud enforcement is increasing.

Here’s how the fraud bust breaks down by location:

• Miami — 73 defendants were charged with false billings for home health care, mental health services and pharmacy fraud, with Medicare billings totaling $263 million.
• Houston and McAllen, TX — 22 individuals face charges for allegedly billing Medicare for more than $38 million worth of fraudulent claims.
• Dallas — 7 individuals face charges for home health care fraud schemes involving purportedly fraudulently billing Medicare for $43 million in services.
• Los Angeles — 8 individuals face charges for Medicare fraud schemes totaling $66 million in false billings. In one case, a physician allegedly charged $23 million to Medicare for billing and referrals for durable medical equipment (DME) that were not medically necessary and/or not provided.
• Detroit — 16 defendants were charged for fraud, kickback and money laundering schemes involving $122 million in purportedly false claims for services that were medically unnecessary or not provided, as well as pharmaceuticals not dispensed. Services included home health care, physician visits and psychotherapy. Three owners of a hospice service allegedly paid kickbacks for referrals from two doctors who defrauded Medicare Part D by issuing medically unnecessary prescriptions.
• Tampa — 5 individuals face charges for participating in a variety of schemes, including fraudulent physical therapy billings and charging Medicare for physician services and tests never provided. In one case costing Medicare more than $1 million, a licensed pain management physician allegedly received reimbursement for nerve conduction studies and other services that he never performed.
• Brooklyn, N.Y. — 9 defendants were charged for two schemes involving purportedly fraudulent charges for physical and occupational therapy, totaling $58 million in Medicare reimbursement.
• New Orleans — 11 individuals face charges for allegedly conducting home health care and psychotherapy schemes that cost Medicare $110 million. In one case, operators of two companies that mass-marketed talking glucose monitors (TGMs) purportedly sent devices to Medicare beneficiaries regardless of whether they needed or requested them, and then billed Medicare for the devices.

Understand the New Era of Fraud Detection

“This takedown adds to the hundreds of millions we have saved through fraud prevention since the Affordable Care Act [ACA] was passed,” HHS Secretary Burwell said in a June 18 statement. “With increased resources that have allowed the Strike Force to expand and new tools, like enhanced screening and enrollment requirements, tough new rules and sentences for criminals, and advanced predictive modeling technology, we have managed to better find and fight fraud as well as stop it before it starts.”

The ACA provided new tools and resources to fight fraud in Medicare and Medicaid, and provides an extra $350 million for fraud prevention and enforcement efforts. The extra money allowed the DOJ to hire more prosecutors and for the Strike Force to expand to nine cities. The ACA also provided for tougher sentences, enhanced provider and supplier screenings and enrollment requirements, and increased data sharing across government.

Heads Up: The government is using more sophisticated analysis of data to figure out where and when fraud is occurring, instead of waiting for people to report fraud, May says. And this is “just the tip of the iceberg.”

Watch for Increasing Coordination Among Law Enforcement Agencies

The Medicare Fraud Strike Force was set up to include involvement with state and local law enforcement agencies, May explains. And as time has gone by, an increasing aspect of the Strike Force’s work is supporting not only federal indictments, but also state indictments for healthcare fraud. In this case, both Connecticut and Alaska levied state indictments.

In addition to the Strike Force and the Centers for Medicare & Medicaid Services (CMS), the Federal Investigative Bureau (FBI), the Centers for Medicare & Medicaid Services Center for Program Integrity, the HHS Office of Inspector General (OIG) and the U.S. Department of Justice (DOJ) were also involved in the takedown. Local law enforcement agencies, as well as federal district courts were involved as well.

What’s more: Also, each state has a Medicaid Fraud Control Unit (MFCU), some as part of the state’s Attorney General’s office, May notes. The National Association of Medicaid Fraud Control Units (NAMFCU) coordinates large cases of Medicaid fraud involving multiple states.

Prepare for New Fraud Focus on Medicare Part D

Right on the heels of the massive fraud takedown, the OIG released two scathing reports on the weaknesses and questionable billing of the Medicare Part D program. The first report, “Ensuring the Integrity of Medicare Part D,” is essentially a compilation of many other OIG reports that identified weakness in Part D and identifies numerous recommendations it made in previous reports to CMS that are not yet implemented, according to a June 25 analysis by the law firm Cooley LLP.

The second report, “Questionable Billing and Geographic Hotspots Point to Potential Fraud and Abuse in Medicare Part D,” describes OIG reviews revealing questionable billing associated with pharmacies, prescribers and beneficiaries, Cooley explained. The report concluded that more than 1,400 pharmacies had questionable billing for Part D drugs in 2014 that “warrant further scrutiny” and identified geographic “hotspots” for certain drugs.

For Medicare Part D fraud, the government is looking at enforcement on all fronts, May says. Part D is an expensive program, so a lot of money is at stake when it comes to potential fraudulent billing.

Bottom line: Government fraud-fighting agencies are ramping up enforcement and detection activities, looking for kickbacks, prescriptions written by excluded doctors, off-label promotion, and other fraudulent activities, May notes. Anybody involved with Part D — including pharmacies, plan sponsors, drug manufacturers, providers, and beneficiaries themselves — and any type of issue, are targets for the government.